Troncoso v. Tejeda

Background

Roberto De Jesus Troncoso brought claims against 735 Supermarket Corp., Wilmer Tejeda a/k/a Wilbis B. Gonzalez, and Rosanna C. Tejeda de Gonzalez for allegedly unpaid minimum and overtime wages under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and parallel provisions of the New York Labor Law. He also sought liquidated damages, interest, attorney’s fees, and costs.

On February 14, the date Troncoso’s motion for default judgment was due, he filed a notice of voluntary dismissal under Federal Rule of Civil Procedure 41(a)(1)(A). The notice did not state whether the dismissal was with prejudice—that is, whether it would bar bringing the claims again—or without prejudice. It also did not say whether the parties had settled.

The court became concerned that the parties might have privately settled the FLSA claims to avoid the judicial review required by the Court of Appeals’ decision in Cheeks v. Freeport Pancake House, Inc. The court ordered Troncoso to report whether the claims had been settled and, if so, to provide the settlement agreement for review.

Settlement and Fee Issues

Counsel, Colin Mulholland, reported that the parties had reached a settlement. He stated that he had “nothing to do” with the settlement and had not learned of it until recently. The court found that account unclear because Mulholland appeared to have relied on the agreement when filing the dismissal notice and had privately negotiated with defense counsel a $1,000 payment directly to himself for costs and time. The opinion states that defense counsel had not appeared in the case and that the payment apparently occurred without Troncoso’s participation.

The court explained that approval by the Department of Labor or a district court is required when an FLSA claimant files a stipulation of dismissal with prejudice. Mulholland said the notice was intended to be without prejudice because he could not make the settlement-approval motion that would be required for a dismissal with prejudice. The court stated that it could not determine the parties’ actual agreement because the only document provided was a one-page document in Spanish that Mulholland represented to be Troncoso’s settlement agreement.

The court also explained that prevailing plaintiffs—not their attorneys—are entitled to reasonable attorney’s fees and costs under the FLSA and New York Labor Law. It stated that if Troncoso had agreed to dismiss his claims with prejudice, the direct payment to Mulholland would be subject to review and potentially disgorgement, meaning repayment.

Order

Judge Analisa Torres ordered Mulholland, by March 4, 2025, to provide a true and correct English translation of the purported settlement from a competent translator, together with the translator’s declaration confirming its accuracy. Mulholland also had to provide a sworn affidavit giving a comprehensive and detailed account of the case, including his communications with the defendants and their counsel, when he learned of and received the purported agreement, and whether and when he investigated its contents.

The court warned that failure to comply may result in sanctions. This order did not resolve whether the dismissal was with or without prejudice, approve or reject the settlement, determine the amount owed to Troncoso, or decide the underlying wage claims.