Lee et al v. Jung et al

Filing 55

Order to Show Cause signed by Magistrate Judge Howard R. Lloyd on 4/14/2017. Show Cause Hearing set for 5/23/2017 at 10:00 AM in Courtroom 2, Fifth Floor, San Jose. (hrllc3S, COURT STAFF) (Filed on 4/14/2017)

E-filed 4/14/2017

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JUNHEE LEE, et al.,
Plaintiffs,

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United States District Court
Northern District of California

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v.

Case No.15-cv-01529-HRL
ORDER TO SHOW CAUSE
Re: Dkt. No. 53

ESRA JUNG, et al.,
Defendants.

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Plaintiffs sue Defendants for, inter alia, violations of the Fair Labor Standards Act

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(“FLSA”) and sections of the California Labor Code. The court had previously denied the parties’

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motion to approve a settlement agreement because the parties failed to provide factual support for

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the proposed agreement’s fairness and reasonableness. Dkt. No. 43. The parties renewed their

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motion, curing the factual deficiencies. Dkt. No. 45. The court, however, indicated at a hearing

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on the renewed motion that the agreement’s proposed release of claims was overbroad (a concern

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about which it had previously alerted the parties), that the agreement impermissibly failed to

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disclose the amount of plaintiffs’ attorneys fees, and that the court would deny the parties’ motion

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to seal the amount of the settlement agreement. Dkt. No. 48. The parties withdrew their motion

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and continued negotiations. Dkt. No. 49.

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Several months have passed. Rather than renewing their motion for settlement approval,

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the parties have now filed a joint stipulated dismissal of all claims with prejudice pursuant to

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Federal Rule of Civil Procedure 41(a)(1)(A)(ii). Dkt. No. 53. In this document, the parties

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“stipulate that Plaintiffs’ Second Amended Complaint and this entire case be hereby dismissed

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with prejudice pursuant to Federal Rules of Civil Procedure, Rule 41(a)(1)[(A)](ii) with each party

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to bear their own attorneys’ fees and costs. The Parties entered into an Addendum to a Settlement

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Agreement and no longer seek court approval of the resolution reached by the Parties in this case.”

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Dkt. No. 53.
The FLSA protects workers from unfair and oppressive working hours and substandard

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compensation. McKeen-Chaplin v. Franklin Am. Mortg., No. C 10-5243 SBA, 2012 WL

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6629608, at *2 (N.D. Cal., Dec. 19, 2012). Employees’ rights under the FLSA are non-waivable,

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as employees’ ability to waive the statute in negotiations with employers would undermine its

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purpose. Id. To ensure that the statute’s purposes are being upheld, settlements under FLSA

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require the supervision of the Secretary of Labor or approval from a district court. Luo v. Zynga,

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Inc., No. 13-cv-00186 NC. 2014 WL 457742, at *2 (N.D. Cal., Jan. 31, 2014). An “Addendum to

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a Settlement Agreement” that purports to resolve the parties’ FLSA dispute sounds suspiciously

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United States District Court
Northern District of California

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similar to a settlement agreement requiring court approval.
Additionally, Rule 41 permits parties to dismiss claims without court involvement, except

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“[s]ubject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute.” Fed. R. Civ.

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P. 41(a)(1)(A) (emphasis added). In Cheeks v. Freeport Pancake House, Inc., the Second Circuit

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concluded that the FLSA falls within Rule 41’s “applicable federal statute” exception and held that

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“parties cannot settle their FLSA claims through a private stipulated dismissal with prejudice

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pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii).” 796 F.3d 199, 200, 206 (2d Cir.

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2015). The court finds the reasoning in Cheeks persuasive and consistent with the rule, followed

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by courts in this district, requiring court or Department of Labor approval for private settlements

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of FLSA claims. See Dunn v. Teachers Ins. & Annuity Ass’n of Am., No. 13-cv-05456-HSG, 2016

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WL 153266 (N.D. Cal. Jan. 13, 2016); Luo v. Zynga, Inc., No. 13-cv-00186 NC. 2014 WL

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457742, at *2 (N.D. Cal., Jan. 31, 2014); McKeen-Chaplin v. Franklin Am. Mortg., No. C 10-5243

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SBA, 2012 WL 6629608, at *2 (N.D. Cal., Dec. 19, 2012). The parties cannot avoid this rule by

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filing a stipulated dismissal rather than a motion to approve a settlement. The stipulated dismissal

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is not effective.

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The court therefore orders the parties to show cause, if any, why the proposed “Addendum

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to a Settlement Agreement” is a fair and reasonable resolution of a bona fide dispute over FLSA

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provisions. The court sets a show cause hearing for May 23, 2017, at 10:00 AM, in Courtroom 2,

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Fifth Floor of the United States District Court, 280 South First Street, San Jose, California. If the
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parties file a renewed motion to approve a settlement agreement prior to this date, the show cause

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hearing will automatically be vacated.

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IT IS SO ORDERED.

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Dated: 4/14/2017

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HOWARD R. LLOYD
United States Magistrate Judge

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United States District Court
Northern District of California

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