Richards v. Empire Scaffolding Systems, Inc.

Background

On May 4, 2023, the parties notified the court that they had reached an agreement on all issues. The case asserts claims under the Fair Labor Standards Act (FLSA). The opinion does not provide the settlement amount or other settlement terms.

Court’s Order

The court ordered that the parties may not dismiss the action with prejudice—that is, in a way that permanently bars the claims—unless the settlement agreement is approved by the court or the Department of Labor. If the parties seek that type of dismissal, they must file a joint letter motion asking the court to approve the settlement or provide documentation of Department of Labor approval. The filing must include the settlement agreement and must be placed on the public docket by June 8, 2023.

The court stated that the approval motion must explain why the proposed settlement is fair and reasonable. It must address the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, the litigation risks, whether experienced counsel negotiated the agreement at arm’s length, and the possibility of fraud or collusion. It must also address whether a genuine dispute exists about the hours worked or compensation owed and the amount of attorney’s fees sought by the plaintiff’s lawyer.

The court said it would generally not approve a settlement filed under seal or in redacted form absent special circumstances. It also warned that it was unlikely to approve a broad release of claims unrelated to the wage-and-hour claims in the complaint and related state-law claims. If the parties sought approval of a broader release, the motion would have to explain why that term was appropriate. The court warned that failing to comply could lead to denial of the motion and sanctions against the attorneys.

Alternative Dismissal Procedure and Disposition

The court noted that the Second Circuit had not decided whether the parties could settle an FLSA case without court or Department of Labor approval and dismiss it without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that route, they had to file a stipulation on the public docket within 30 days, accompanied by an affirmation from the plaintiff’s counsel stating that the plaintiff had been clearly advised that the settlement would not prevent another lawsuit against the same defendants and affirming that the settlement contained no release of the defendants. The court warned that this option could allow the case to be reopened.

If neither a settlement-approval letter nor a stipulation was filed by June 8, 2023, the court ordered a conference for June 16, 2023, at 10:00 a.m. Judge Valerie Caproni did not approve the settlement or dismiss the action in this order; she established the procedures the parties had to follow after reporting their agreement.