Santos Gonzalez v. Mott Haven Bagel & Barista Cafe LLC

Background

The action was brought under the Fair Labor Standards Act, a federal law that requires covered employers to pay overtime wages and, when overtime is unlawfully withheld, an equal amount as additional damages. On August 2, 2023, the parties reported that they had reached a settlement in principle.

Under Second Circuit precedent, a proposed settlement of Fair Labor Standards Act claims generally must be reviewed by the court or the U.S. Department of Labor before a dismissal under Rule 41 can take effect. The court explained that this review includes the fairness and reasonableness of the settlement and any proposed attorney’s fee award.

Order

The court ordered the parties to submit the settlement agreement and a joint letter by September 1, 2023. The letter must explain the basis for the proposed settlement and why it should be approved as fair and reasonable, using the factors identified in Wolinsky v. Scholastic, Inc. It must also address any incentive payment to the plaintiff and any attorney’s fee award to plaintiff’s counsel, including supporting documentation when appropriate.

The court reminded the parties that they could consent to proceed before the assigned magistrate judge for all purposes. If all parties consented, the magistrate judge would decide whether to approve the settlement, and the parties were required to file the completed consent form by September 1, 2023.

Settlement provisions

The court stated that it would not approve a settlement containing a confidentiality provision unless the parties showed case-specific reasons overcoming the public’s common-law right of access to judicial documents. It also would not approve a release of claims that had not yet accrued or claims unrelated to wage-and-hour matters unless the parties provided case-specific justification. A provision barring negative statements about a defendant would also require an exception for truthful statements about the plaintiff’s experience litigating the case, unless the parties justified the broader restriction.

If the agreement contained any of those provisions, the parties had to say whether they wanted the court to consider approval with the provisions removed. The court noted that it could approve or reject the agreement but could not rewrite it. The order did not approve or reject the settlement. The court also noted that the parties could instead use an offer of judgment under Rule 68(a), which would not require judicial approval.