In a 29-page decision, the U.S. Court of Appeals for the Second
Circuit held in Fisher v. SD Protection
Inc., No. 18-2504, that a district court had
abused its discretion by rewriting a Fair Labor Standards Act
(FLSA) settlement agreement to modify the allotment of the
settlement funds to dramatically reduce the fees and costs provided
to plaintiff's counsel. In its holding, issued on February 4,
2020, the court determined that the district court had committed
three errors requiring that its decision be vacated and remanded
for further consideration.
The Three Errors
First, the court confirmed that a district court cannot rewrite
the terms of a proposed FLSA settlement agreement submitted by and
on behalf of the parties for judicial approval, as was done here.
The court noted that a district court has one of three options when
reviewing a proposed FLSA settlement agreement for reasonableness
and fairness: (1) accept and approve the proposed settlement
agreement;
