Moreno Martinez v. Rockwood

Background

The parties advised the court that they had reached a settlement in this Fair Labor Standards Act (FLSA) action. The FLSA requires an employer that violates overtime-pay requirements to pay the unpaid overtime and an additional equal amount as liquidated damages. The order does not describe the alleged violations, the settlement amount, or the agreement’s other terms.

Under Second Circuit precedent, a settlement resolving FLSA claims through a stipulated dismissal generally must be reviewed and approved by the district court or the Department of Labor. The court explained that it must assess whether the settlement, including any proposed attorney’s fee award, is fair and reasonable.

Options for Finalizing the Settlement

Assuming the parties intended to dismiss the case under Rule 41 of the Federal Rules of Civil Procedure, the court gave them two options, each with a March 8, 2024 deadline:

1. Submit the settlement agreement and a joint letter explaining why the settlement should be approved as fair and reasonable, addressing the factors identified in the court’s cited authority. The letter should also address any incentive payments to the plaintiffs and any attorney’s fee award, with supporting documentation when appropriate. 2. Consent to proceed before Magistrate Judge Stein for all purposes, in which event Magistrate Judge Stein would decide whether to approve the settlement.

The court noted that judicial approval is not required for an FLSA settlement made through a specified offer-of-judgment procedure under Rule 68(a).

Settlement Provisions Identified by the Court

The court stated that it would not approve an agreement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public’s common-law right of access to judicial documents.

The court also stated that it would not approve a provision releasing or waiving claims that had not accrued or claims unrelated to wage-and-hour matters unless the parties showed case-specific reasons justifying that broad release.

Finally, the court stated that it would not approve a provision barring a plaintiff from making negative statements about the defendant unless the provision preserved the plaintiff’s ability to make truthful statements about the plaintiff’s experience litigating the case, or the parties showed case-specific reasons justifying the broader restriction.

If the agreement contained any of these provisions, the parties were directed to say whether they wanted the court alternatively to consider approving the agreement after the provisions were removed. The court noted that it could approve or reject the agreement but could not modify it itself.

Disposition

The order did not approve or reject the settlement. It directed the parties to choose one of the two procedures for seeking approval and adjourned the March 7, 2024 conference without setting a new date. Judge Jesse M. Furman entered the order.