Lopez v. Pelham Pharmacy, Inc.

Background

The parties advised the court by letter filed January 5, 2024, that they had reached a settlement in principle in this action under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law, and New York Labor Law. They contemplated dismissal under Rule 41 of the Federal Rules of Civil Procedure.

Under Second Circuit precedent cited by the court, judicial approval is required for a proposed settlement of FLSA claims when dismissal under Rule 41 is contemplated. The court noted an exception for an FLSA settlement made through a Rule 68(a) offer of judgment, but the opinion does not state that the parties used that procedure.

Order

The court ordered the parties to submit the settlement agreement and a joint letter by January 19, 2024. The letter must explain the basis for the proposed settlement and why it should be approved as fair and reasonable, referring to the factors discussed in Wolinsky. It must also address any incentive payment to the plaintiff and any attorney’s fee award to plaintiff’s counsel, with supporting documentation for fees 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, they were required to file a fully executed consent form by January 19, 2024, and the magistrate judge would decide whether to approve the settlement.

The court stated that it would not approve a settlement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public-access right in judicial documents. It also stated that it would not approve a release or waiver covering claims that had not accrued or claims unrelated to wage-and-hour matters unless the parties provided case-specific justification. Finally, it would not approve a clause barring negative statements about the defendant unless the clause allowed truthful statements about the plaintiff’s experience litigating the case, absent case-specific justification for omitting that exception.

If the agreement contained any of those provisions, the parties had to say whether they wanted the court to consider approving the agreement with the provisions removed. The court noted that it could approve or reject the FLSA settlement but could not rewrite the agreement. All pending deadlines were postponed without a new date.

Disposition

Judge Arun Subramanian ordered further settlement submissions and did not approve, reject, or dismiss the case in this order.