# Gatto v. Petco Animal Supplies, Inc.

> District Court, E.D. New York · September 15, 2020

URL: https://www.frixlaw.com/law-library/cases/10304811

## Case

- **Court:** District Court, E.D. New York
- **Decided:** September 15, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10304811

## How later opinions describe it (automated extraction)

- observing that stipulations of dismissal that “appear on their face to be without prejudice may, on closer inspection, prove not to be”

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------x

CINDY GATTO, et al.,

Plaintiffs,

-against- MEMORANDUM AND ORDER
19-cv-3394(EK)(RML)
PETCO ANIMAL SUPPLIES, INC.,

Defendant.

-------------------------------------------x
ERIC KOMITEE, United States District Judge:
Before the Court is the parties’ joint motion for
reconsideration of this Court’s Order dated September 9, 2020.
For the reasons set forth below, the Court finds it appropriate
to vacate the September 9 Order pending resolution of the
parties’ intended argument that no fairness review is required
under Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d
Cir. 2015), and its progeny when the settlement of a Fair Labor
Standards Act claim results in dismissal without prejudice.
I. Background
This is an individual, class and collective action
complaint filed in June 2019, following the completion of court-
referred mediation. Plaintiffs, who worked in the grooming
salons at various Petco store locations, allege violations of
the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 207(a) and
216(b), as well as violations of the New York Labor Law and the
wage and labor laws of other states. They claim, among other
things, that Petco knowingly and intentionally falsified
groomers’ time records at their stores, see ECF No. 22 ¶¶ 35-44,
and that Petco’s management was nonresponsive to complaints that
Plaintiffs were not paid all wages due. Id. ¶¶ 45-48.

In response to the amended complaint, Petco requested
a pre-motion conference on its anticipated motion to dismiss.
See ECF No. 23. After a pre-motion conference was scheduled,
the parties twice requested adjournments based on
representations that they were in the process of negotiating a
settlement. See ECF Nos. 27, 28. In their second such request,
the parties stated that they were “currently finalizing a
settlement” and that they expected to file “the various papers
necessary for the Court to consider the fairness and adequacy of
the Parties’ settlement within the next two weeks if not
sooner.” ECF No. 28 at ¶ 2.
Instead of a settlement, however, three of the named

Plaintiffs – Shay Boyd, Nicole Travis, and Olivia Williams –
filed stipulations of dismissal of their claims without
prejudice on August 31, 2020. See ECF Nos. 29-31. No
information concerning the reason for the dismissals was
provided. On the same day, Plaintiffs also filed a second
amended complaint that dropped Plaintiffs Boyd, Travis, and
Williams, and added two new named plaintiffs. See ECF No. 32.
Plaintiffs stated that they received the written consent of
Defendant to file the second amended complaint pursuant to Rule
15 of the Federal Rules of Civil Procedure. See ECF No. 32 at
n.1; see also Fed. R. Civ. P. 15(a)(2) (except for amendments as
a matter of course under Fed. R. Civ. P. 15(a)(1), all other

pre-trial amendments to the pleadings may be made “only with the
opposing party’s written consent or the court’s leave”).
Taken together, the parties’ representations that they
were finalizing a settlement agreement and would soon file
settlement papers, followed by (1) the filing of stipulations of
dismissal by three of the named Plaintiffs and (2) the addition
and removal of parties from the second amended complaint with
Defendant’s consent, raised questions about whether a settlement
agreement had been reached. Accordingly, the Order dated
September 9, 2020 referred the parties to Magistrate Judge Levy
for review of these developments. Pursuant to Cheeks v.
Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), which

requires court approval before FLSA settlements may take effect,
the Order also enjoined the parties from exchanging settlement
proceeds or executing the terms of any settlement they had
entered before receiving the Court’s approval. This motion for
reconsideration followed.
II. Motion for Reconsideration
On September 11, 2020, the parties jointly filed a
motion for reconsideration of the September 9 Order, arguing
that (1) the Order entered an injunction without prior notice
and opportunity to be heard, and (2) the Order did not consider

material facts and law concerning the stipulations of dismissal
filed by the three individual Plaintiffs. See ECF No. 33.
In their memorandum of law in support of the motion,
the parties revealed that the three Plaintiffs who filed
stipulations of dismissal without prejudice did in fact enter
into settlement agreements with Petco (hereinafter the
“Individual Settlements”). See Memorandum of Law in Support of
Motion for Reconsideration (“Joint Memorandum”) (ECF No. 33-1)
at 4-5. The parties now assert that the Individual Settlements
are not subject to Cheeks review because the Plaintiffs’ Rule
41(a) dismissals are without prejudice, based on district court
decisions that have reached this conclusion and the Second

Circuit’s recent decision in Mei Xing Yu v. Hasaki Rest., Inc.,
944 F.3d 395, 411 (2d Cir. 2019). See id. at 5-6. The parties
also revealed that they are in the process of finalizing a
class-action settlement (hereinafter the “Class Settlement”).
Id. at 6. They report that they expect to file those settlement
papers (relating to the class) with the Court for a fairness
review soon. See id. Based on the parties’ reading of the
September 9 Order, which enjoins them from “distribut[ing] the
proceeds from any settlement or execut[ing] the terms of any
settlement until it has been reviewed and approved and the
undersigned district judge,” the parties are unsure whether they
are enjoined from continuing to finalize their forthcoming Class

Settlement. Id. at 8, 9 n.6.
In light of the above, the parties ask the Court to
vacate the prior order and enter a “more limited” order that
would (1) refer to Magistrate Judge Levy the review of the
forthcoming class action settlement, and (2) refer the question
of whether Cheeks review is required to give effect to a
stipulation of dismissal without prejudice in light of the
recent Second Circuit decision in Mei Xing Yu v. Hasaki Rest.,
Inc., 944 F.3d 395, 411 (2d Cir. 2019).
III. Discussion
In an FLSA case, a Rule 41(a)(1)(A) stipulation of
dismissal without prejudice or notice of voluntary dismissal may

“raise a concern that the parties have covertly settled FLSA
claims in an effort to evade judicial review required by Cheeks
. . . .” De Jesus v. Magnetic Contracting Corp., No. 19-CV-
01842, 2019 WL 4737053, at *1 (E.D.N.Y. Sept. 27, 2019). Under
Cheeks, district courts have an obligation to review and approve
FLSA settlement agreements before the settlement takes effect.
Cheeks applied specifically to Rule 41(a)(1)(A) stipulations of
dismissal with prejudice and left open the question of “whether
parties may settle such cases without court approval . . . by
entering into a Rule 41(a)(1)(A) stipulation without prejudice.”
796 F.3d at 201 n.2 (emphasis added). Although the answer to
this question is not settled, many courts in this district have

held that parties cannot avoid judicial review by settling FLSA
claims pursuant to a stipulation of dismissal without prejudice,
at least without first providing the court with further
information about the settlement terms. See, e.g., De Jesus,
2019 WL 4737053, at *2 (“Where . . . there is reason to believe
the parties may have entered into a settlement, a court should
assure itself that dismissal without prejudice is not an
intended evasion of Cheeks.”); Gallardo v. PS Chicken Inc., 285
F. Supp. 3d 549, 552 (E.D.N.Y. 2018) (observing that
stipulations of dismissal that “appear on their face to be
without prejudice may, on closer inspection, prove not to be”)
(internal quotation marks omitted); Carson v. Team Brown

Consulting, Inc., 416 F. Supp. 3d 137, 139 (E.D.N.Y. 2017)
(concluding that judicial review of plaintiff’s dismissal
without prejudice was appropriate because “the district court
must be guided, first and foremost, by the policy considerations
underlying Cheeks”).
The Second Circuit has not yet addressed this
question. In Yu, the Second Circuit declined to extend the
Cheeks requirement of judicial review to offers of judgment
under Rule 68(a). See Yu, 944 F.3d at 411. The parties contend
that the reasoning in Yu suggests that the Second Circuit might
also decline to apply the Cheeks requirement of judicial review
to dismissals without prejudice under Rule 41(a)(1)(A). See

Joint Memorandum at 10. As set forth below, the parties are
directed to fully brief their argument that a Cheeks fairness
review is not required in light of Yu and to appear for oral
argument before this Court.
This Order applies only to the stipulations of
dismissal filed by Plaintiffs Boyd, Travis, and Williams. See
ECF Nos. 29-31. The Individual Settlements may not take effect
until the Court has completed a fairness review or concluded
that no such review is required.
Neither this Order nor the September 9 Order should be
read to apply to the parties’ contemplated Class Settlement.
The Court will review a future motion requesting review of the

Class Settlement and will refer the motion if appropriate.
IV. Conclusion
For the reasons set forth above, it is hereby ORDERED
that this Court’s Order dated September 9, 2020 be vacated
pending resolution of the question of whether a fairness review
of the Individual Settlements is required under recent Second
Circuit precedent. The Plaintiffs and Defendant shall submit
separate memoranda of law not exceeding five pages each in
length, or a joint memorandum not longer than ten pages, on or
before October 1, 2020. Oral argument shall be held on October
7, 2020 at 2:00 p.m. by telephone. The parties are directed to
call 888-808-6929 five minutes before the scheduled start of the

conference and use access code 564-7824.

SO ORDERED.

_/s/ Eric Komitee____________
ERIC KOMITEE
United States District Judge

Dated: Brooklyn, New York
September 15, 2020

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10304811. Public record. Not legal advice.