Escuted v. Dermaclinic New York LLC

Background

The court was advised that the parties had reached a settlement in this Fair Labor Standards Act (FLSA) case. The opinion identifies the defendants as Dermaclinic New York LLC, Veronica Almeida, and Jane Doe, also known as “Nidi.” It does not state the settlement amount or describe the settlement’s other terms.

Settlement-Approval Requirement

The court explained that an FLSA action cannot be dismissed under Federal Rule of Civil Procedure 41 based on a settlement unless the settlement is approved either by the court or by the U.S. Department of Labor. Therefore, to the extent Escuted sought dismissal under Rule 41, she or the parties jointly had to do one of two things: file a letter motion asking the court to approve the settlement, together with the settlement agreement, or provide documentation of Department of Labor approval. The deadline for that filing was April 15, 2024.

The court required any approval request to explain why the settlement was fair and reasonable. It specifically directed the parties to discuss Escuted’s possible recovery, the burdens and expenses avoided by settling, the seriousness of the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. The submission also had to address whether a genuine dispute existed about the hours worked or compensation owed and how much the plaintiff’s attorney would seek in fees.

The court cautioned that general statements about possible recovery and litigation risks would not be enough. It also stated that, absent special circumstances, it would not approve a settlement filed under seal or in redacted form. Absent compelling circumstances, it would not approve sweeping nondisclosure provisions or broad releases covering claims unrelated to FLSA issues. Any request for attorney fees had to include contemporaneous billing records showing, for each attorney, the date, hours worked, and nature of the work.

Other Directions and Disposition

The parties could consent to proceed before Magistrate Judge Ona T. Wang, who would then oversee settlement approval. If they consented, they had to file a fully executed consent and reference form by April 1, 2024. The order states that the parties could withhold consent without negative consequences. Any appeal would go directly to the U.S. Court of Appeals for the Second Circuit.

Judge Analisa Torres did not approve the settlement in this order. She directed the parties to submit the required approval materials or Department of Labor documentation, declared any pending motions moot, and vacated all conferences.