There has been a great deal of controversy over whether FLSA claims can be released absent judicial or USDOL approval. There have been some courts that have ruled that parties cannot release claims and dismiss a suit voluntarily without judicial approval. Other courts, however, have taken a different view and this view might be gaining ascendance. A recent case highlights this tension in the law. The case is entitled Alcantara v. Duran Landscaping, Inc., and was filed in federal court in the Eastern District of Pennsylvania.
In this case, two workers sued for overtime and asserted a class action. Prior to conditional certification being granted, the plaintiffs settled their lawsuit. The lawyers advised the Court and sought judicial approval of the settlement. The Court, however, to the surprise of all probably, asserted that there might not be any legal compulsion for the parties to seek its approval. In that regard, the Judge noted that under Federal Rule of Civil Procedure 41(a)(1)(A), the parties could voluntarily dismiss the case, with no need to explain why the settlement was appropriate and fair and without any need to file the settlement papers in court, where they would be open to public view.
The Judge rejected the idea that judicial approval was needed to ensure fairness. The Judge note that the plaintiffs “represented by able counsel, are equipped to make that decision for themselves.” The Judge also asserted that “most of the time, courts have very little to add to the settlements that parties present.” The Court looked at the language of Fed. R. Civ. P. 41(a)(1)(A), which states that the parties could “dismiss their claims at any time, and without court action.” The Judge noted that although class action lawsuits required judicial approval for dismissal upon a settlement, those principles did not apply to individual plaintiff FLSA actions.
The Judge also rejected the reasoning of the Second Circuit decision in Cheeks v. Freeport Pancake House, Inc., finding that this decision was based more on policy considerations undergirding the FLSA rather than the actual language of the applicable FRCP. The Judge noted there were valid policy goals which cut against the need for judicial approval, such as the delay in getting plaintiffs paid their back wages and more legal fees generated in somewhat smaller cases.
On individual settlements, it seems that, depending on the jurisdiction, there may be no need to seek judicial approval. If the case is settled without judicial approval, the possibility exists that a court may in the future conclude that the settlement was invalid. That possibility may militate towards (always?) asking for judicial approval, no matter what. Why risk a later invalidation, especially if the settlement and the documents are “fair.”
Whatever that means…