Chin v. United Restaurant Group, Inc.

Background

The plaintiffs brought a wage-and-hour case against United Restaurant Group, Inc. and others. The opinion identifies Qifan, LLC and Qifan Li as the remaining defendants involved in the settlement. The plaintiffs and the Qifan Defendants consented to Judge James L. Cott’s jurisdiction under 28 U.S.C. § 636(c).

The parties submitted a joint letter and a fully executed settlement agreement for court approval. Because the claims arose under the Fair Labor Standards Act, a federal wage law, the court reviewed the settlement for fairness under the standards applied to these cases.

Court’s analysis

Judge Cott stated that courts generally presume that a settlement in a Fair Labor Standards Act case is fair, while recognizing that courts may not be as well positioned as the parties to assess the settlement’s reasonableness. He also considered the Qifan Defendants’ apparent financial situation resulting from the COVID-19 pandemic and the payment schedule in the agreement. The court concluded that the possible difficulty of collecting damages supported finding the settlement reasonable.

After reviewing the joint letter and settlement agreement, the court found that all settlement terms appeared fair and reasonable under the totality of the circumstances. This included the agreement’s allocation of attorneys’ fees and costs as one-third of the settlement amount. In a footnote, the court stated that its approval of that allocation was not approval of the hourly rate of the plaintiffs’ counsel. The court also said that, in the future, attorneys’ fees should preferably be stated explicitly in the settlement agreement itself.

Ruling and next steps

Judge Cott approved the proposed settlement between the plaintiffs and the Qifan Defendants. The opinion does not state the settlement amount.

Because the claims against the Qifan Defendants were settled, the plaintiffs were directed to submit a proposed judgment against the “Default Defendants” to Judge Koeltl by August 19, 2022. The opinion explains that Judge Koeltl had previously denied an application for partial final judgment because the claims involving the Qifan Defendants had not yet been resolved. The plaintiffs could renew that application, but it had to be directed to Judge Koeltl because the default defendants had not consented to Judge Cott’s jurisdiction.