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News | Nov 16, 2015

Second Circuit Holds that Settled FLSA Wage And Overtime Lawsuits Cannot Be Dismissed As Settled Without Court Approval

In Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. Nov. 14, 2015) the New York-based Second Circuit Court of Appeals held that pending FLSA lawsuits cannot be dismissed as settled without court approval:

Dorian Cheeks appeals . . . from the refusal of the United States District Court for the Eastern District of New York (Joanna Seybert, J.) to enter the parties’ stipulation of settlement dismissing, with prejudice, Cheeks’ claims under the Fair Labor Standards Act (“FLSA”) and New York Labor Law. The district court held that parties cannot enter into private settlements of FLSA claims without either the approval of the district court or the Department of Labor (“DOL”). We agree that absent such approval, parties cannot settle their FLSA claims through a private stipulated dismissal with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii). We thus affirm, and remand for further proceedings consistent with this opinion.

Id. at 200.

Although the Third Circuit (which covers Pennsylvania, New Jersey, and Delaware) has not addressed whether court approval is required before FLSA lawsuits can be dismissed as settled, the Second Circuit’s Cheeks holding is consistent with the views expressed by many district courts within the Third Circuit.  See, e.g., Vargas v. General Nutrition Centers, Inc., 2015 U.S. Dist. LEXIS 35330, *1 (W.D. Pa. Mar. 20, 2015) (quoting Adams v. Bayview Asset Management, LLC, 11 F. Supp. 3d 474, 476 (E.D. Pa. Feb. 26, 2014) (“Because of the public interest in FLSA rights, there are only two ways that FLSA claims can be settled or compromised by employees: (1) a compromise supervised by the Department of Labor pursuant to 29 U.S.C. § 216(c); or (2) a district court-approved compromise pursuant to 29 U.S.C. § 216(b).”)); Dino v. Pennsylvania, 2013 U.S. Dist. LEXIS 111742, *11 (M.D. Pa. Aug. 7, 2013) (“Claims arising under the FLSA may be settled where either the Secretary of Labor supervises an employer’s payment of unpaid wages to employees or a district court enters a stipulated judgment after scrutinizing a proposed settlement for fairness.”); Deitz v. Budget Renovations & Roofing, Inc., 2013 U.S. Dist. LEXIS 75005, *4 (M.D. Pa. May 29, 2013) (“Although the Third Circuit has not addressed the issue, its district courts have taken the position stated by the Eleventh Circuit in Lynn’s Food Stores that court approval is required of proposed settlements in a FLSA lawsuit brought under 29 U.S.C. § 216(b).”).

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