Arteaga v. Steak N Shake Operations, Inc., 6:16-cv-02045

Plaintiff Arteaga sued former employer Steak N Shake alleging unpaid overtime under the FLSA and sought court approval of a private settlement under Lynn’s Food.
Parties filed a joint Motion to Approve Settlement and attached a Settlement Agreement providing $1,250 to plaintiff (contrasted with her alleged $29,401 claim) and separate attorney-fee language.
Magistrate Judge Smith issued an R&R recommending denial of approval and rejection of the Agreement, identifying specific defects in damages, release scope, jurisdictional consent, and execution/signature.
Plaintiff requested two extensions to object to the R&R; the first was granted, the second requested after the R&R but she did not file objections and said a revised agreement was being drafted.
District court reviewed the R&R for clear error, adopted it in full, denied the joint approval motion and the second extension, rejected the settlement agreement, and directed the parties to file a corrected proposed FLSA settlement by a set deadline.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Large disparity between claimed damages ($29,401) and settlement ($1,250)	Settlement reflects negotiated full compensation; fees negotiated separately	Agreed to settlement amount and asserted separate fee negotiation	Court found parties failed to explain disparity; R&R rejecting settlement adopted
Breadth of release provision	Parties executed a broad mutual release as part of compromise	Release was part of global settlement; parties characterized it as appropriate	Court held release was "exceptionally broad," covering claims not pled, and unacceptable
Consent to court's subject-matter jurisdiction in agreement	Parties included language purporting to consent to court jurisdiction to effectuate settlement	Inclusion intended to facilitate enforcement	Court held parties cannot contractually confer subject-matter jurisdiction; provision improper
Signatory and authority to bind defendant	Parties submitted signed agreement; asserted it was binding	Defendant relied on the submitted signature to bind the company	Court found the signature illegible and signatory capacity unclear; agreement defective

Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) (settlements of FLSA claims require court scrutiny and approval)
Marcort v. Prem, Inc., [citation="208 F. App'x 781"] (11th Cir. 2006) (district court review standard for unobjected-to magistrate R&Rs is clear-error review)