In an opinion yesterday, Judge Furman weighed in on — and certified for interlocutory appeal — an issue that has divided judges in the Southern District: whether the requirement that FLSA settlements be approved by the DOL or the Court can be avoided by a settlement accomplished via a Rule 68 offer of judgment. Because Rule 68 is phrased in mandatory terms (when an offer is accepted, the “clerk must then enter judgment”), some courts have held that there is no room for judicial or DOL approval.
Judge Furman disagreed:
[A]lthough it is sometimes said that a court “has no choice about entering” a Rule 68 judgment, “this general statement is too broad to encompass all instances in which Rule 68 offers are made.” . . . . “[I]n the context of class actions,” for example, “Rule 68 offers of judgment are routinely employed despite the fact that all agreements must subsequently be approved by the court after a fairness hearing.” Gordon v. Gouline, 81 F.3d 235, 239 (D.C. Cir. 1996) (citing cases). And as the D.C. Circuit has held, in bankruptcy cases, Rule 68 does not override the requirement that compromises or settlements must be approved by the court. See id. at 239-40.
In fact, there are a host of situations in which parties may not, without approval of either or both a government agency and a court, enter into a settlement. For instance, the relator in a qui tam action under the False Claims Act may not agree to a settlement without the “written consent” of both “the court and the Attorney General.” 31 U.S.C. § 3730(b). Similarly, many jurisdictions, such as New York, require judicial approval for settlement of any action commenced by or on behalf of a minor. It is unimaginable that Congress and the Supreme Court intended to allow parties to bypass these requirements through the mechanism of a Rule 68 settlement. Indeed, it is so unimaginable that no party seems to have even attempted such a maneuver in these settings, let alone successfully.
Judge Furman concluded that there was a “substantial ground for difference of opinion” on the issue and so certified it for interlocutory appeal.