On February 22, 2013, U.S. District Judge Brian Cogan reversed his prior decision that required a plaintiff to seek court approval of a settlement before her action under the Fair Labor Standards Act (“FLSA”) could be voluntarily dismissed. In Picerni v. Bilingual SEIT & Preschool, Inc., No. 12 Civ. 4938 (BMC) (E.D.N.Y. Feb. 22, 2013), plaintiff Donna Piscerni sued her employer, defendant Bilingual SEIT & Preschool, Inc., alleging that she was not paid the requisite minimum wage for her work. In October 2012, the defendant made an offer of judgment and the plaintiff accepted the offer. The offer was accepted prior to the initial case management conference with the court, and prior to the defendant filing its answer or appearance. In considering the offer of judgment, Judge Cogan initially declined to enter judgment, citing 29 U.S.C. § 216(c), which gives the Secretary of Labor the right of approval over stipulated settlements in FLSA cases. In light of Judge Cogan’s initial ruling, the plaintiff filed a motion for approval.
In this sua sponte reversal of his earlier decision, Judge Cogan found that the Federal Rules of Civil Procedure, and particularly Rule 41, allow plaintiffs to discontinue an action for any reason, so long as it is done early in the case (i.e., before the defendant answers). The longstanding practice had been for courts to require judicial approval over settlements in cases brought under the FLSA out of a concern that employers who settle without court approval run the “risk of a subsequent suit by the same employee, even if the employer receives a release as part of the settlement.” Picerni, at *3. In reaching his decision, Judge Cogan reviewed two Supreme Court cases which articulated this risk and addressed these releases—Brooklyn Savings Bank v. O’Neil, 342 U.S. 697 (1945), and D.A. Schulte, Inc. v. Gangi, 328 U.S. 108 (1946). Both of these cases found that the respective releases were unenforceable absent a showing that a “bona fide dispute as to the number of hours worked or computation of the employees’ pay” had been determined by the lower courts. Id. at *4-5.
In bucking this long-standing practice, Judge Cogan noted that, “[a]lthough I have ruled to the contrary in the past, I have come around to the view that the procedure of a court requiring approval before it permits parties to voluntarily dismiss an FLSA action is incorrect.” Id. at *8. As such, Judge Cogan held that the dismissal was valid because actions under the FLSA are not statutorily exempt from Rule 41, and a plaintiff’s right to voluntarily dismiss an action should be honored.
Judge Cogan, however, did acknowledge the risk that remains to the defendant employer because there was no determination by a court of a bona fide dispute as to the wages owed to the plaintiff, thus leaving the door open to a later suit by the plaintiff.
In light of Judge Cogan’s decision, the option of making an early offer of judgment, and having the case dismissed without court approval remains a viable one that employers may wish to explore in certain cases, with the understanding that certain risks do exist.
Rachel Tischler is a law school intern currently attending Brooklyn Law School.