Swanson v. Two 7 Three Kitchen Corp.
- Andrew Krause
- 7:23-cv-02817
- U.S. District Court · Southern District of New York
- 3
In Swanson v. Two 7 Three Kitchen Corp., Judge Krause ordered the parties to document how they will seek approval of their reported Fair Labor Standards Act settlement.
The plaintiff, Two 7 Three Kitchen Corp., the other defendants identified in the caption, and their counsel were affected by the order’s requirements for documenting the reported settlement.
What happened
In Swanson v. Two 7 Three Kitchen Corp., the parties told the court that they had settled their dispute, including claims under the Fair Labor Standards Act, a federal wage-and-hour law.
The court ordered the parties to file a joint motion by January 16, 2024, explaining whether they would use a formal offer of judgment or ask the court to review and approve the settlement. The court did not approve the settlement in this order.
Judge Andrew E. Krause also described materials the parties must provide if they seek approval, including the signed settlement agreement and support for any attorneys’ fees and costs. The court cautioned about confidentiality, non-disparagement, future-employment restrictions, and overly broad release terms.
The detailed version
- Swanson v. Two 7 Three Kitchen Corp. · No. 7:23-cv-02817
- Andrew Krause
- Dec. 18, 2023
Background
The parties reported that they had settled their dispute, including claims under the Fair Labor Standards Act (FLSA). They had consented to the magistrate judge’s jurisdiction for all proceedings.
Order
Because the case included FLSA claims, the court explained that the parties had two options under Second Circuit law: file a notice accepting an offer of judgment under Federal Rule of Civil Procedure 68, or ask the court to approve the private settlement. The court ordered the parties to submit a joint motion by January 16, 2024, identifying which option they would pursue and attaching the required supporting documents.
If the parties sought judicial approval, the court required a joint letter motion explaining why the settlement was fair and reasonable under all the circumstances, addressing the nine factors identified in Wolinsky v. Scholastic Inc. They also had to provide the written settlement agreement signed by all parties and, if applicable, counsel’s contingency-fee agreement and time and expense records supporting any proposed attorneys’ fees and costs.
Settlement Terms and Fees
The court cautioned that confidentiality provisions are rarely appropriate in wage-and-hour settlements and noted that non-disparagement provisions may also be improper if they prevent the plaintiff from making truthful statements about the litigation. The court further warned that courts in the Second Circuit have consistently rejected settlement terms preventing plaintiffs from having a future employment relationship with the defendant. It noted that releases are frequently limited to the wage-and-hour claims asserted or that could have been asserted, although broader mutual releases may be approved in appropriate circumstances.
The court stated that its fairness review would include the reasonableness of attorneys’ fees and costs. Any proposed fees and costs had to be included in the signed settlement agreement and supported by properly authenticated fee and expense records. The submissions had to contain enough information to permit a lodestar calculation, including contemporaneous time records, counsel’s experience, and hourly rates. Costs had to be supported by invoices, receipts, or a sworn statement describing the expenses incurred.
Disposition
The order directed the parties to submit the required joint motion and supporting materials. It did not itself approve or reject the reported settlement.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.