Gao v. Graceful Services, Inc.

Background

Mei Yue Gao brought claims under the Fair Labor Standards Act, New York Labor Law, New York State Human Rights Law, New York City Human Rights Law, and the Age Discrimination in Employment Act. Graceful Services, Inc. and Grace Macnow moved to enforce a settlement agreement they claimed had been reached with Gao. They also moved for attorney’s fees incurred in filing the enforcement motion.

Settlement discussions

The parties appeared at a settlement conference on July 17, 2019. They preliminarily agreed to a financial arrangement while leaving several material terms of a final agreement open for negotiation. Gao then insisted on certain non-monetary settlement terms. The defendants later argued that all material terms had been agreed upon when their counsel sent Gao’s counsel a revised proposal signed by Grace Macnow on November 1, 2019.

Gao argued that material terms remained unresolved, including terms concerning a mutual release and protection from retaliation. She also argued that her counsel’s October 31, 2019 email showed a lack of assent to an agreement.

Legal standard and ruling

The court explained that a settlement agreement is a contract and is enforceable only when the parties have an offer, acceptance, consideration, mutual assent, and an intent to be bound. The party seeking enforcement bears the burden of proving that a binding agreement exists. Whether the parties agreed on all material terms is an important factor in that determination.

Judge Sarah Netburn found that Gao intended to negotiate several additional material terms. The court therefore concluded that there was no mutual assent or intent by Gao to be bound, and that the parties had not reached an enforceable settlement agreement. The court denied Defendants’ motion to enforce the settlement agreement. It also denied Defendants’ motion for attorney’s fees because there was no allegation that Gao acted in bad faith.