Williams v. Movage, Inc., 17 Civ. 2628 (KPF)

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtKATHERINE POLK FAILLA, District Judge
PartiesJEVON WILLIAMS; MITCHELL MARTINEZ; DIMITRIJE ZIVKOVIC; and DERRICK ADAMS, Plaintiffs, v. MOVAGE, INC.; BAJO VUJOVIC; and CHRISTIAN DOE, Defendants.
Docket Number17 Civ. 2628 (KPF)
Decision Date06 December 2019

JEVON WILLIAMS; MITCHELL MARTINEZ;
DIMITRIJE ZIVKOVIC; and
DERRICK ADAMS, Plaintiffs,
v.
MOVAGE, INC.; BAJO VUJOVIC; and
CHRISTIAN DOE, Defendants.

17 Civ. 2628 (KPF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

December 6, 2019


ORDER

KATHERINE POLK FAILLA, District Judge:

On September 19, 2019, the parties informed the Court that Plaintiffs had accepted an offer of judgment from Defendants pursuant to Federal Rule of Civil Procedure 68. (Dkt. #83). The Court ordered the parties to submit their Rule 68 settlement to the Court for a Cheeks review, although acknowledging that the Second Circuit was reviewing whether such a review was required. (Dkt. #84). Plaintiffs submitted the proposed judgment to the Court for review on December 3, 2019 (Dkt. #93), and the parties appeared before the Court on December 6, 2019, to discuss the proposed judgment. On the same day, the Second Circuit issued its decision in Yu v. Hasaki Restaurant, Inc., No. 17-3388-cv (2d Cir. Dec. 6, 2019), holding that judicial approval of Rule 68(a) offers of judgment is not required.

Therefore, the Court ORDERS the parties to file letters to the Court, not exceeding three pages each, by December 18, 2019, explaining how they believe the Court and parties should proceed given the Second Circuit's ruling.

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SO ORDERED.

Dated: December 6, 2019
New York, New York

/s/_________
KATHERINE POLK FAILLA
United States District Judge

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In the United States Court of Appeals For the Second Circuit

AUGUST TERM, 2018

ARGUED: OCTOBER 10, 2018
DECIDED: DECEMBER 6, 2019

No. 17-3388-cv

MEI XING YU, individual, on behalf of all other employees similarly situated, Plaintiff-Appellee,

v.

HASAKI RESTAURANT, INC., SHUJI YAGI, KUNITSUGA NAKATA, HASHIMOTO GEN, Defendants-Appellants,

JANE DOE AND JOHN DOE #1-10, Defendants.

Appeal from the United States District Court for the Southern District of New York.
No. 16 Civ. 6094 - Jesse M. Furman, Judge.

Before: WALKER, CALABRESI, AND LIVINGSTON, Circuit Judges.

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Mei Xing Yu, an employee of Hasaki Restaurant, filed a claim alleging violations of the Fair Labor Standards Act's ("FLSA" or the "Act") overtime provisions. Soon thereafter, Hasaki Restaurant sent Mei Xing Yu an offer of judgment, pursuant to Federal Rule of Civil Procedure 68(a), for $20,000 plus reasonable attorneys' fees. After Mei Xing Yu accepted the offer, the parties filed the offer and notice of acceptance with the district court. Before the Clerk of the Court could enter the judgment, however, the district court sua sponte ordered the parties to submit the settlement agreement to the court for a fairness review and judicial approval, which the district court believed was required under the Second Circuit's decision in Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015). Both parties disputed the district court's interpretation of the FLSA, Rule 68, and Cheeks, and filed an interlocutory appeal. Upon review of the text of the Act and judicial precedents interpreting the Act, we hold that judicial approval is not required of Rule 68(a) offers of judgment settling FLSA claims. Accordingly, we REVERSE and VACATE the district court's order and REMAND with instructions to direct the Clerk of the Court to enter the judgment as stipulated in the accepted Rule 68(a) offer. Judge Calabresi dissents in a separate opinion.

KELI LUI, WILLIAM M. BROWN, Hang and Associates, PLLC, Flushing, NY, for Plaintiff-Appellee.

LILLIAN M. MARQUEZ (Louis Pechman, Laura Rodriguez, on the brief), Pechman Law Group PLLC, New York, NY, for Defendants-Appellants.

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ADINA H. ROSENBAUM (Sean M. Sherman, Adam R. Pulver, on the brief), Public Citizen Litigation Group, for Court-Appointed Amicus Curiae.

JOHN M. WALKER, JR., Circuit Judge:

Mei Xing Yu, an employee of Hasaki Restaurant, filed a claim alleging violations of the Fair Labor Standards Act's ("FLSA" or the "Act") overtime provisions. Soon thereafter, Hasaki Restaurant sent Mei Xing Yu an offer of judgment, pursuant to Federal Rule of Civil Procedure 68(a), for $20,000 plus reasonable attorneys' fees. After Mei Xing Yu accepted the offer, the parties filed the offer and notice of acceptance with the district court. Before the Clerk of the Court could enter the judgment, however, the district court sua sponte ordered the parties to submit the settlement agreement to the court for a fairness review and judicial approval, which the district court believed was required under the Second Circuit's decision in Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015). Both parties disputed the district court's interpretation of the FLSA, Rule 68, and Cheeks, and filed an interlocutory appeal. Upon review of the text of the Act and judicial precedents interpreting the Act, we hold that judicial approval is not required of Rule 68(a) offers of judgment settling FLSA claims. Accordingly, we REVERSE and VACATE the district court's order and REMAND with instructions to direct the Clerk of the Court to enter the judgment as stipulated in the accepted Rule 68(a) offer. Judge Calabresi dissents in a separate opinion.

BACKGROUND

Plaintiff-appellee Mei Xing Yu worked as a sushi chef at a restaurant owned and operated by appellant Hasaki Restaurant, inc. On August 1, 2016, Mei Xing Yu filed a complaint against Hasaki

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Restaurant and various individual owners and managers of Hasaki Restaurant (collectively "Hasaki") in the Southern District of New York on behalf of himself and all other employees similarly situated, alleging violations of the overtime provisions of the Fair Labor Standards Act and New York labor laws.

On November 23, 2016, Hasaki mailed Mei Xing Yu a Rule 68 offer of judgment for $20,000 plus reasonable attorneys' fees, costs, and expenses through the date of the offer. Mei Xing Yu timely accepted the offer of judgment, and on December 8, 2016, Mei Xing Yu filed a letter with the district court (Furman, J.) notifying the court of his acceptance.

On December 9, 2016, Judge Furman ordered the parties to submit their settlement agreement to the district court along with a joint letter explaining why the settlement should be approved as fair and reasonable. Judge Furman explained that he believed our decision in Cheeks v. Freeport Pancake House, Inc.1 required him to scrutinize the parties' settlement to ensure it was fair and reasonable. Cheeks held that stipulated dismissals settling FLSA claims with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii) require the approval of either the district court or the Department of Labor ("DOL"). Alternatively, the district court offered the parties the opportunity to argue why they did not believe that judicial approval of the Rule 68(a) offer of judgment was required.

The parties then submitted a joint letter on December 22, 2016, arguing that they did not need judicial approval of their Rule 68(a) offer of judgment to settle Mei Xing Yu's FLSA claims. On January 13, 2017, the Secretary of Labor filed an amicus brief in a separate case in the Southern District of New York, Sanchez v. Burgers & Cupcakes

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LLC,2 arguing that judicial approval is required when a Rule 68(a) offer of judgment is accepted by a plaintiff raising FLSA claims. Pursuant to a district court order, the parties filed supplemental briefs in response to the Secretary's amicus brief in Sanchez, in which the parties maintained their position that judicial approval was not required.

On March 20, 2017, the district court issued a brief order concluding that "judicial approval of the parties' settlement is required, notwithstanding the fact that it was reached pursuant to Rule 68(a) of the Federal Rules of Civil Procedure."3 Shortly thereafter, the district court issued a follow-up opinion.4 The district court reasoned that although Rule 68(a) is phrased in mandatory terms—requiring the clerk of the court to enter judgment of an accepted offer of judgment without any reference to judicial approval—there are exceptions to the Rule's mandatory terms, such as class action and bankruptcy settlements, which require judicial approval.5 Accepting the fact that there are exceptions to Rule 68(a)'s mandatory language, the district court concluded that FLSA claims "fall within the narrow class of claims that cannot be settled under Rule 68 without approval by the court (or the DOL)."6 Relying on our opinion in Cheeks, the district court concluded that while "Cheeks may not apply a fortiori to a Rule 68 FLSA settlement given its reliance on the language of Rule 41, its reasoning—combined with the fact that

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Rule 68 is not always . . . mandatory—compels the conclusion that parties may not evade the requirement for judicial (or DOL) approval by way of Rule 68."7

Noting the existence of "substantial ground for difference of opinion" on the issue, and that the lower courts were divided on the question, the district court certified its order for interlocutory appeal under 28 U.S.C. § 1292(b).8 The parties filed a timely notice of appeal in the district court, but did not file a timely § 1292(b) petition for permission to take an interlocutory appeal in this court. Nonetheless, on October 23, 2017, a panel of our court granted the parties' motion to file a late § 1292(b) petition and then granted the petition.9 In addition, because both Mei Xing Yu and Hasaki took the same position before the district court, a panel of our court granted the Public Citizen Litigation Group's ("PCLG") motion to be appointed amicus curiae in order to defend the district court's ruling.10 We also invited and received an amicus brief from the Secretary of Labor.11

DISCUSSION

The question before us is straightforward: whether acceptance of a Rule 68(a) offer of judgment that disposes of an FLSA claim in litigation needs to be reviewed by a district court or the DOL for fairness before the clerk of the court can enter the judgment. The question is one of statutory interpretation. Therefore...

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