Hernandez v. Coriander Factory Inc.

Background

The court stated that it had been advised that the parties had reached a settlement in this case, which included claims under the Fair Labor Standards Act (FLSA), a federal law governing certain wage and hour rights. The order did not state the settlement amount or other terms, and it did not make a finding that the settlement was fair.

Court-Directed Options

The court explained three ways the parties could proceed:

1. Court approval for dismissal with prejudice. A dismissal with prejudice would end the FLSA claims and bar their later reassertion. Relying on the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc., the court stated that the parties could not dismiss FLSA claims with prejudice through the ordinary automatic dismissal procedure in Federal Rule of Civil Procedure 41(a)(1)(A). They instead had to seek court approval under Rule 41(a)(2).

Before seeking approval, the parties were ordered to discuss whether they would consent under 28 U.S.C. § 636(c) to having all further proceedings conducted by the assigned magistrate judge. If both consented, they had to file the required consent form by December 20, 2022. If either party declined, the parties had to file a joint letter by that date stating that they did not consent without identifying who declined. The court stated that withholding consent would have no negative consequences.

If the parties did not consent to proceed before the magistrate judge, they had to submit a joint motion by December 27, 2022, explaining why the settlement was fair and should be approved. The motion had to address the factors identified in Wolinsky v. Scholastic Inc. and include the settlement agreement. The court also stated that it would not approve settlement agreements containing confidentiality provisions and would not allow settlement-review materials to be filed under seal without a specific showing overcoming the presumption of public access to judicial records. If the settlement included attorney’s fees, the parties had to address whether those fees were reasonable and attach detailed attorney time records.

2. Dismissal without prejudice. A dismissal without prejudice would not bar the claims from being brought again. The court stated that it would accept a Rule 41(a)(1)(A) stipulation dismissing the FLSA claims without prejudice only if the parties certified that there had been no settlement of those claims. If they could not make that certification, they had to seek court review of the settlement as described above. Any such stipulation and certification had to be submitted by December 20, 2022.

3. Offer of judgment. The parties could also use an offer of judgment under Rule 68(a). The court explained that, under that procedure, a defending party may offer judgment on specified terms, and the opposing party may accept within the stated period. The court cited Second Circuit authority holding that court approval is not required for a Rule 68(a) offer of judgment in an action involving FLSA claims. If the parties chose this route, they had to submit the executed offer and acceptance, along with a proposed judgment, by December 20, 2022.

Disposition

Judge Gregory H. Woods issued directions for the parties’ next steps. The order did not grant or deny a dispositive motion, enter judgment, approve the reported settlement, dismiss any claim, or decide whether either party prevailed on the FLSA claims. It was an order managing the procedures for potentially resolving and dismissing the case.