Kameoka v. Tokyo Restaurants Factory, Inc.

Background

Namiko Yamada and Masateru Kameoka sued Tokyo Restaurants Factory, Inc., Tokyo Restaurants Factory International NY Inc., Hidetaka Kasuga, and Hitoshi Watanabe under the Fair Labor Standards Act (FLSA). The court was notified that the parties had reached an agreement on all issues through mediation.

Settlement Approval Requirement

The court ordered that the parties could not dismiss the action with prejudice based on the settlement unless the settlement agreement was approved by either the court or the Department of Labor. A dismissal with prejudice generally ends the case and bars the claims from being brought again, but the opinion did not itself dismiss the case or approve the settlement.

If the parties wanted court approval, they had to file a joint letter motion and the settlement agreement publicly by February 18, 2023. The motion had to explain why the settlement was fair and reasonable, including the plaintiffs’ possible recovery, the burdens and expenses avoided through settlement, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. It also had to address whether there was a genuine dispute about the hours worked or compensation owed and the amount of attorney fees sought.

The court stated that, absent special circumstances, it was unlikely to approve an agreement filed under seal or in redacted form. It also warned that it was unlikely to approve a general release, or a release of unrelated claims, unless the parties explained why such a provision was appropriate. The court stated that failure to comply could result in denial of the motion and sanctions against the attorneys.

Alternative Dismissal Without Prejudice

The court noted that the Second Circuit had not decided whether an FLSA case could be settled without court or Department of Labor approval and then dismissed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). A dismissal without prejudice allows a new action, subject to any applicable deadline and other legal limits.

If the parties chose that route, they had to file a Rule 41(a)(1)(A) stipulation within 30 days. The stipulation had to include an affirmation from plaintiffs’ counsel stating that the plaintiffs had been clearly advised that the settlement would not prevent them from filing another lawsuit against the same defendants and confirming that the settlement agreement contained no release of the defendants. The court warned that this option carried a risk that the case could later be reopened.

Order and Disposition

The court did not rule on the underlying FLSA claims, approve the settlement, or dismiss the case. Instead, Judge Valerie Caproni set the procedures the parties had to follow for either court or Department of Labor approval of a dismissal with prejudice or a Rule 41(a)(1)(A) dismissal without prejudice. If no letter or stipulation was filed by February 18, 2023, the court ordered a conference for February 24, 2023, at 10:00 a.m.