Rojas v. Kaleo Construction Corp.

Background

Jorge Rojas filed this action under the Fair Labor Standards Act (FLSA), a federal law governing wage and overtime requirements, against Kaleo Construction Corp. and Andrew Hazantonis, individually. Rojas brought the case on behalf of himself and all others similarly situated. On February 6, 2023, the parties notified the court that they had reached a settlement.

Under the FLSA, an employer that violates overtime-pay requirements may owe unpaid overtime compensation and an equal amount as additional damages. The court explained that when parties seek to settle and dismiss FLSA claims under Rule 41 of the Federal Rules of Civil Procedure, the settlement—including any proposed attorney’s fee award—must be reviewed for fairness.

The Court’s Analysis

The court said it did not have enough information to determine whether the proposed settlement was fair and reasonable. It required information about:

- the nature of Rojas’s claims; - whether the litigation and settlement negotiations were genuine and conducted in good faith; - the defendants’ potential financial exposure to Rojas and any proposed group of similarly situated workers; - the basis for estimating Rojas’s maximum possible recovery; - the likelihood of success on the merits; and - evidence supporting any requested attorney’s fee award.

The court also explained that proposed attorney’s fees must be reasonable. Courts compare the requested amount with the lodestar—the reasonable hourly rate multiplied by the reasonable hours worked. Counsel must provide evidence supporting the request, including contemporaneous billing records identifying each attorney’s dates, hours, and work performed.

Order

The court ordered the parties to submit a joint letter by May 25, 2023, explaining why their agreement should be approved as fair and reasonable under the factors discussed in the court’s cited precedent. The letter must also address any proposed incentive payment to Rojas, if applicable.

The court reminded the parties that they could consent to have the designated magistrate judge decide whether to approve the settlement. If all parties consented, they were required to file a fully executed consent form by May 25, 2023.

The court further stated that it would not approve a settlement containing any of the following provisions unless the parties provided sufficient, case-specific reasons:

- a confidentiality provision that did not overcome the common-law right of public access to judicial documents; - a release or waiver covering claims that had not accrued or that were unrelated to wage-and-hour matters; or - a non-disparagement provision that barred negative statements without an exception for truthful statements about a plaintiff’s experience litigating the case.

If the agreement contained any such provision, the parties were directed to state whether they wanted the court to consider approving the agreement with that provision removed. The court noted that it could approve or reject an FLSA settlement but could not rewrite the agreement itself. The order required additional submissions and did not itself approve or reject the proposed settlement.