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)

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E-filed 4/14/2017 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 JUNHEE LEE, et al., Plaintiffs, 8 9 10 United States District Court Northern District of California 11 v. Case No.15-cv-01529-HRL ORDER TO SHOW CAUSE Re: Dkt. No. 53 ESRA JUNG, et al., Defendants. 12 Plaintiffs sue Defendants for, inter alia, violations of the Fair Labor Standards Act 13 (“FLSA”) and sections of the California Labor Code. The court had previously denied the parties’ 14 motion to approve a settlement agreement because the parties failed to provide factual support for 15 the proposed agreement’s fairness and reasonableness. Dkt. No. 43. The parties renewed their 16 motion, curing the factual deficiencies. Dkt. No. 45. The court, however, indicated at a hearing 17 on the renewed motion that the agreement’s proposed release of claims was overbroad (a concern 18 about which it had previously alerted the parties), that the agreement impermissibly failed to 19 disclose the amount of plaintiffs’ attorneys fees, and that the court would deny the parties’ motion 20 to seal the amount of the settlement agreement. Dkt. No. 48. The parties withdrew their motion 21 and continued negotiations. Dkt. No. 49. 22 Several months have passed. Rather than renewing their motion for settlement approval, 23 the parties have now filed a joint stipulated dismissal of all claims with prejudice pursuant to 24 Federal Rule of Civil Procedure 41(a)(1)(A)(ii). Dkt. No. 53. In this document, the parties 25 “stipulate that Plaintiffs’ Second Amended Complaint and this entire case be hereby dismissed 26 with prejudice pursuant to Federal Rules of Civil Procedure, Rule 41(a)(1)[(A)](ii) with each party 27 to bear their own attorneys’ fees and costs. The Parties entered into an Addendum to a Settlement 28 Agreement and no longer seek court approval of the resolution reached by the Parties in this case.” 1 2 Dkt. No. 53. The FLSA protects workers from unfair and oppressive working hours and substandard 3 compensation. McKeen-Chaplin v. Franklin Am. Mortg., No. C 10-5243 SBA, 2012 WL 4 6629608, at *2 (N.D. Cal., Dec. 19, 2012). Employees’ rights under the FLSA are non-waivable, 5 as employees’ ability to waive the statute in negotiations with employers would undermine its 6 purpose. Id. To ensure that the statute’s purposes are being upheld, settlements under FLSA 7 require the supervision of the Secretary of Labor or approval from a district court. Luo v. Zynga, 8 Inc., No. 13-cv-00186 NC. 2014 WL 457742, at *2 (N.D. Cal., Jan. 31, 2014). An “Addendum to 9 a Settlement Agreement” that purports to resolve the parties’ FLSA dispute sounds suspiciously 10 United States District Court Northern District of California 11 similar to a settlement agreement requiring court approval. Additionally, Rule 41 permits parties to dismiss claims without court involvement, except 12 “[s]ubject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute.” Fed. R. Civ. 13 P. 41(a)(1)(A) (emphasis added). In Cheeks v. Freeport Pancake House, Inc., the Second Circuit 14 concluded that the FLSA falls within Rule 41’s “applicable federal statute” exception and held that 15 “parties cannot settle their FLSA claims through a private stipulated dismissal with prejudice 16 pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii).” 796 F.3d 199, 200, 206 (2d Cir. 17 2015). The court finds the reasoning in Cheeks persuasive and consistent with the rule, followed 18 by courts in this district, requiring court or Department of Labor approval for private settlements 19 of FLSA claims. See Dunn v. Teachers Ins. & Annuity Ass’n of Am., No. 13-cv-05456-HSG, 2016 20 WL 153266 (N.D. Cal. Jan. 13, 2016); Luo v. Zynga, Inc., No. 13-cv-00186 NC. 2014 WL 21 457742, at *2 (N.D. Cal., Jan. 31, 2014); McKeen-Chaplin v. Franklin Am. Mortg., No. C 10-5243 22 SBA, 2012 WL 6629608, at *2 (N.D. Cal., Dec. 19, 2012). The parties cannot avoid this rule by 23 filing a stipulated dismissal rather than a motion to approve a settlement. The stipulated dismissal 24 is not effective. 25 The court therefore orders the parties to show cause, if any, why the proposed “Addendum 26 to a Settlement Agreement” is a fair and reasonable resolution of a bona fide dispute over FLSA 27 provisions. The court sets a show cause hearing for May 23, 2017, at 10:00 AM, in Courtroom 2, 28 Fifth Floor of the United States District Court, 280 South First Street, San Jose, California. If the 2 1 parties file a renewed motion to approve a settlement agreement prior to this date, the show cause 2 hearing will automatically be vacated. 3 IT IS SO ORDERED. 4 Dated: 4/14/2017 5 6 HOWARD R. LLOYD United States Magistrate Judge 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3

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