Franco v. All City Ironworks, LLC

Background

Jose Franco brought this action under the Fair Labor Standards Act, a federal law that requires covered employers to pay overtime wages and, for violations, an additional equal amount as liquidated damages. On February 24, 2023, Franco asked the court to approve the parties’ proposed settlement, including a proposed attorney’s fee award.

Under Second Circuit precedent, a court must review and approve an FLSA settlement presented as a stipulated dismissal under Rule 41 of the Federal Rules of Civil Procedure. The court must determine whether the settlement is fair and reasonable, including whether any proposed attorney’s fee is reasonable.

Court’s Analysis

The court concluded that it did not have sufficient information to evaluate the proposed settlement. It required information about the nature of Franco’s claims, whether the litigation and negotiations were genuine, the employer’s potential exposure to Franco and any proposed class, the basis for estimating Franco’s maximum possible recovery, and the likelihood of success on the merits.

The court also said the parties needed to explain their positions concerning the disputed wages. If they disagreed about the wage calculation, they needed to provide their estimates of the hours worked and the applicable wage. For the proposed attorney’s fees, counsel needed to provide evidence supporting the award, including contemporaneous billing records showing each attorney’s date of work, hours spent, and type of work performed.

Order

Judge Jennifer H. Rearden ordered the parties to submit, by August 21, 2023, a joint letter explaining why the agreement should be approved as fair and reasonable and addressing the factors identified in the court’s cited precedent. The order did not approve or reject the proposed settlement. The parties were also reminded that they could consent to have the designated magistrate judge decide whether to approve the settlement.