Smith v. Proguard Protection Inc.

Background

Aaron Smith brought claims on behalf of himself and others similarly situated in a proposed collective action under the Fair Labor Standards Act (FLSA). The defendants are Proguard Protection Inc., Robert Hall, and Richard Stanley. On October 11, 2023, the parties informed the court that mediation had produced an agreement resolving all issues.

Court’s Order

The court did not approve the agreement or dismiss the case. Instead, it established the procedures the parties had to follow if they wanted to end the case based on the agreement.

The parties could not dismiss the action with prejudice unless either the court or the Department of Labor approved the settlement. A dismissal with prejudice would end the case in a way that generally prevents the claims from being brought again. To seek court approval, the parties had to file a joint letter motion and the settlement agreement on the public docket by November 12, 2023. The motion had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided through settlement, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. It also had to address whether there was a genuine dispute about the hours worked or compensation owed and how much the plaintiff’s attorney would seek in fees.

The court said it was unlikely to approve an agreement filed under seal or in redacted form without special circumstances. It also warned that it was unlikely to approve a general release or a 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, they had to explain why that term was appropriate. The court warned that failure to comply could lead to denial of the motion and sanctions against the attorneys.

The court also noted that the Court of Appeals for the Second Circuit had not decided whether parties may 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 the required stipulation on the public docket within 30 days. The stipulation had to include an affirmation from the plaintiff’s attorney stating that the plaintiff or plaintiffs had been clearly told that the settlement would not prevent another lawsuit against the same defendants and confirming that the settlement contained no release of the defendants. The court warned that this option could allow the case to be reopened in the future.

Disposition

The court ordered the parties to follow one of those filing procedures. If neither a settlement-approval letter nor a dismissal stipulation was filed by November 12, 2023, Judge Valerie Caproni ordered that a conference would take place on November 17, 2023, at 10:00 a.m. The opinion does not state that the settlement was approved or that the case was dismissed.