Paulino v. Veritas Property Management L.L.C.

Background

The plaintiff brought this action individually and on behalf of others similarly situated under the Fair Labor Standards Act, a federal wage-and-hour law, and New York Labor Law. The court was advised by letter filed March 16, 2023, that the parties had reached a settlement in principle.

The court explained that approval is required for a settlement of Fair Labor Standards Act claims when dismissal under Federal Rule of Civil Procedure 41 is contemplated. Approval is also required for a settlement of state-law claims on a class-wide basis under Rule 23. The order noted an exception: judicial approval is not required for a Fair Labor Standards Act settlement made through a Rule 68(a) offer of judgment.

Required filings

The court ordered the parties to file no later than April 6, 2023, a motion seeking three forms of relief: class certification, preliminary approval of the class-wide settlement, and approval of the Fair Labor Standards Act settlement. The motion papers must include the proposed settlement; a proposed schedule for notifying class members; a deadline for class members to opt out; dates for preliminary approval and a fairness hearing; and a proposal describing how notice will be provided.

The parties must also submit a proposed order as a separate docket entry and as a Word document emailed to chambers. If they contemplate dismissing the Fair Labor Standards Act claims under Rule 41, their supporting memorandum must explain why the settlement is fair and reasonable, referring to the factors identified in Wolinsky v. Scholastic, Inc. The memorandum must also address any proposed incentive payments to the plaintiffs and any proposed attorney-fee award, including supporting documentation when appropriate.

Settlement provisions identified by the court

The court stated that it would not approve a settlement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the common-law right of public access to judicial documents. It also stated that it would not approve a release or waiver covering claims that had not accrued or claims unrelated to wage-and-hour matters unless the parties showed case-specific reasons justifying that breadth.

The court further stated that it would not approve a provision barring a plaintiff from making negative statements about a defendant unless the provision included an exception for truthful statements about the plaintiff's experience litigating the case, or the parties showed case-specific reasons justifying a broader non-disparagement provision. If the agreement contained any of these provisions, the parties were directed to say whether they wanted the court alternatively to consider approval with the provisions removed. The court noted that it could approve or reject a Fair Labor Standards Act settlement but could not modify the agreement itself.

The parties were also reminded that they could consent to proceed before the assigned magistrate judge for settlement approval. If all parties consented for that purpose, they were directed to file an executed consent form by April 6, 2023.

Disposition

The order directed future settlement-approval filings and set requirements for those filings. It did not approve or reject the settlement in principle, certify a class, dismiss the action, or decide the merits of the wage-and-hour claims. Judge Jesse M. Furman entered the order on March 17, 2023.