Thurston v. FlyFit Holdings, LLC

Background

Alexander Ray Thurston sued FlyFit Holdings, LLC, doing business as FlyFit Global, and Brian Chappon. He alleged that the defendants failed to pay him properly for hours worked, pay his wages on time, maintain required records, and reimburse him for DocHub Software, which he alleged was a work-related expense. He brought claims under the Fair Labor Standards Act and the New York Labor Law.

The parties later agreed to settle the case for a total award of $14,000. On June 26, 2019, the court approved the proposed settlement and dismissed the case with prejudice. The settlement agreement asked the court to retain jurisdiction to enforce it and stated that the parties consented to personal jurisdiction in the district. The dismissal order, however, did not state that the court retained jurisdiction or that it incorporated the settlement terms.

Thurston later alleged that the defendants defaulted on their settlement obligations. He moved to enforce the settlement and recover the costs and fees of that motion. In the alternative, he asked the court to reinstate the entire lawsuit. The defendants did not oppose the motion.

Jurisdiction to Enforce the Settlement

The court explained that enforcing a settlement is generally a contract matter governed by state law. A federal court may enforce a settlement through related jurisdiction only if its dismissal order either expressly retains jurisdiction over the settlement or incorporates the settlement’s terms into the order.

The court held that its June 26, 2019 approval of the settlement did neither. The order approved the agreement under the requirements applicable to wage settlements but did not expressly retain enforcement jurisdiction or incorporate the agreement. The court stated that merely approving or “so-ordering” a settlement is not enough. The parties’ agreement that the federal court had personal jurisdiction also did not create subject-matter jurisdiction, which the parties cannot establish by consent.

Because the dismissal order lacked the required language, the court declined to enforce the settlement for lack of subject-matter jurisdiction. The court stated that Thurston could pursue enforcement as a contract claim in a state court with authority to hear it.

Request to Reinstate the Case

The court also rejected Thurston’s alternative request to reinstate the lawsuit. It explained that the prior dismissal with prejudice was a final adjudication favorable to the defendants and triggered claim preclusion, meaning that issues already decided or that could have been decided in the case could not be litigated again in that suit. The court therefore concluded that it could not reopen the case for further litigation.

Disposition

The court denied Thurston’s motion for lack of subject-matter jurisdiction, directed the Clerk to terminate the pending motion, and ordered the case closed.