Martinez v. 189 Chrystie Street Partners, LP d/b/a The Box

Background

The parties reported that they had reached a settlement in principle after mediation. The plaintiff’s third amended complaint asserted 13 causes of action, only one of which—the sixth cause of action—was brought under the Fair Labor Standards Act (FLSA), a federal wage-and-hour statute. The parties consented to the court’s authority under 28 U.S.C. § 636(c) so the court could review the settlement of the FLSA claim. The order states that the non-FLSA claims would presumably be resolved in a separate settlement agreement.

Court’s analysis

The court stated that separate settlement of the plaintiff’s discrimination and other non-FLSA claims did not require judicial review. It relied on authority allowing parties to submit an FLSA settlement for public court review while using a separate, confidential agreement for non-wage claims. The order noted that the U.S. Court of Appeals for the Second Circuit had not directly decided whether such divided settlements are permissible, but concluded that the separate settlement structure did not appear to be an attempt to avoid legal limits on FLSA settlements.

The court directed the parties to review cited decisions concerning permissible and impermissible settlement terms. The guidance addressed, among other things, unreasonable restrictions on publicizing a settlement through social media, reemployment provisions, overly restrictive communications-with-the-media provisions, releases broader than the plaintiff’s release, mutual non-disparagement provisions without an exception for truthful statements, confidentiality provisions, and the scope of mutual general releases.

Order and effect

The court ordered the parties to file a joint letter motion and their fully executed settlement agreement concerning the plaintiff’s FLSA claim by April 8, 2024, requesting court approval. The filing must explain why the proposed settlement is fair and reasonable and otherwise complies with the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc. The order did not approve or reject the settlement. It also stayed all case-management deadlines pending further order of the court. Judge James L. Cott issued the order on March 13, 2024.