12 F. Supp. 3d 373
E.D.N.Y2014Background
- Plaintiff Alan Archer sued TNT USA under the FLSA alleging unpaid overtime; parties notified the court they had settled and filed a stipulation of dismissal with prejudice.
- The court declined to "so order" the stipulation and struck it, directing the parties to submit the settlement agreement and a joint memorandum explaining fairness.
- Archer moved for reconsideration, arguing (principally relying on Martin) that court approval of FLSA settlements is not required and that the stipulation under Rule 41(a)(1)(A)(ii) effectuates dismissal without court approval.
- The court reviewed governing authority (Supreme Court and circuit precedent) addressing when FLSA rights can be waived or compromised and whether judicial approval is required.
- The court concluded plaintiff cited no controlling Second Circuit authority that it overlooked and that Martin does not broadly abolish judicial scrutiny — it allows private settlements only in narrow circumstances (bona fide disputes over hours/rates, not waiver of substantive FLSA rights).
- The court denied reconsideration and ordered that, if the parties wish dismissal with prejudice, they must file by a date certain (copy of settlement agreement and a joint fairness memorandum) or appear in court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial approval is required to settle FLSA back-wage claims | Martin shows court approval not required; Rule 41 dismissal suffices | Judicial approval is required except where DOL supervises settlement or judicially‑approved stipulated judgment | Court denied reconsideration; judicial scrutiny required absent proof settlement resolves only a bona fide dispute and does not waive non-waivable FLSA rights |
| Whether a Rule 41(a)(1)(A)(ii) stipulation can avoid court review of an FLSA compromise | Parties can voluntarily dismiss under Rule 41 and avoid seeking approval | Allowing form to evade substance would eviscerate protections; stipulation cannot circumvent need for court scrutiny where claims implicate non‑waivable FLSA rights | Court rejected attempt to circumvent approval by procedural form and required submission of agreement and joint memorandum if dismissal with prejudice sought |
| Effect of Martin v. Spring Break on Second Circuit practice | Martin demonstrates private settlements are permissible when resolving bona fide disputes about hours | Martin is narrow and consistent with requiring proof of bona fide dispute and counsel; does not liberate all private settlements | Court read Martin narrowly: private settlements may be enforceable only when they resolve bona fide disputes over hours/rates and do not compromise substantive FLSA protections |
| Burden to show settlement is acceptable | No submission made showing bona fide dispute or that rights not waived | Court needs evidence (settlement agreement and joint memorandum) to scrutinize fairness | Court ordered parties to produce settlement agreement and joint memorandum or appear in court; motion for reconsideration denied |
Key Cases Cited
- Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (1945) (Supreme Court: employees cannot waive liquidated damages under FLSA absent bona fide dispute)
- D.A. Schulte, Inc. v. Gangi, 328 U.S. 108 (1946) (Supreme Court: compromises that effectively waive FLSA remedies undermine statutory policy; suggested judicially scrutinized stipulated judgments may differ)
- Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) (Eleventh Circuit: FLSA back-wage claims settle only via DOL supervision or judicially approved settlements)
- Martin v. Spring Break ’83 Prods., L.L.C., 688 F.3d 247 (5th Cir. 2012) (Fifth Circuit: private settlement enforceable where it resolved a bona fide dispute about hours worked and did not compromise guaranteed FLSA rights)
- Nall v. Mat‑Motels, Inc., 723 F.3d 1304 (11th Cir. 2013) (reiterating Lynn’s Food rule that judicial scrutiny is required for stipulated settlements of FLSA claims)