Manzella v. Select Rehabilitation LLC

Background

The plaintiffs are Adrianna Manzella and Michele Dzula, individually and on behalf of others similarly situated. The defendants are Select Rehabilitation LLC, Select PT, OT & SLP Rehabilitation New York PLLC doing business as Select Rehab, Anna Gardina Wolfe, and Michael Capstick. The opinion states that the case includes claims under the Fair Labor Standards Act, a federal wage-and-hour law.

On May 20, 2024, the parties notified the court that mediation had produced an agreement on all issues. The order did not approve the settlement or enter a dismissal. Instead, it explained the procedures the parties must follow if they want to end the case based on the agreement.

Settlement-Approval Option

The parties may not dismiss the action with prejudice based on an FLSA settlement unless the settlement is approved by the court or the Department of Labor. A dismissal with prejudice generally ends the case and bars the same claims from being brought again, but the opinion does not itself enter such a dismissal.

If the parties want court approval, they must file a joint letter motion and the settlement agreement on the public docket by June 22, 2024. The motion must explain why the settlement is fair and reasonable. The court identified issues including the parties’ claims and defenses, the risks of continued litigation, whether the agreement resulted from arm’s-length negotiations between experienced counsel, and the possibility of fraud or collusion. The motion must also address whether there is a genuine dispute about the hours worked or compensation owed and how much of the settlement the plaintiffs’ attorney will seek as fees.

The court stated that it generally will not approve a settlement filed under seal or in redacted form absent special circumstances. It also warned that it is unlikely to approve a general release, or a release of claims unrelated to the wage-and-hour claims in the complaint and related state-law claims. If the parties nevertheless believe a broader release is appropriate because the case is unusual, the motion must explain why. The opinion text is incomplete at the end of the sentence discussing possible sanctions against attorneys for failing to provide that explanation.

Dismissal-Without-Prejudice Option

The court noted that the Second Circuit has not decided whether an FLSA case may be settled without court or Department of Labor approval and then dismissed without prejudice under Rule 41(a)(1)(A). If the parties choose that route, they must file a Rule 41(a)(1)(A) stipulation on the public docket within 30 days. The stipulation must include an affirmation from plaintiffs’ counsel stating that the plaintiffs were clearly told that the settlement does not prevent them from filing another lawsuit against the same defendants and affirming that the settlement contains no release of the defendants.

The court warned that this option carries a risk that the case could be reopened in the future. The opinion explains that a dismissal without prejudice allows a new action, assuming the limitations period has not expired, without the usual bar based on the earlier case.

Court’s Directives and Disposition

Judge Valerie Caproni canceled all previously scheduled conferences and other deadlines. If no approval letter or dismissal stipulation was filed by June 22, 2024, the court directed that a conference be held on June 28, 2024, at 10:00 a.m. The order established settlement procedures and deadlines; it did not grant or deny a settlement-approval motion, approve the settlement, or dismiss the action.