Foster v. Monticello Motor Club Sales and Management
- Vernon Broderick
- 1:21-cv-01400
- U.S. District Court · Southern District of New York
- 5
In Foster v. Monticello Motor Club Sales and Management, Judge Broderick ordered judgment under Rule 68 despite concerns about the offer’s release and fees.
Joseph Foster and the defendants, Monticello Motor Club Sales and Management and Managing Partner Ari Straus, were affected by the court’s order requiring entry of judgment under the accepted $10,000 Rule 68 offer.
What happened
In Foster v. Monticello Motor Club Sales and Management, the parties submitted an offer of judgment under Rule 68 after previously filing a proposed dismissal. The offer provided Joseph Foster $10,000 for all claims, including attorney’s fees and costs.
The court was concerned that the offer included a very broad release and did not specify how much of the $10,000 would go to fees and costs. The court said those terms might not be fair under the usual review required for settlements under the Fair Labor Standards Act, a federal wage law.
Judge Vernon S. Broderick nevertheless ordered that judgment be entered under the offer. He concluded that a controlling Second Circuit decision required that result, even though he believed the offer might not have satisfied the usual settlement protections.
The detailed version
- Foster v. Monticello Motor Club Sales and Management · No. 1:21-cv-01400
- Vernon Broderick
- Sept. 16, 2022
Background
The parties first filed a stipulation under Federal Rule of Civil Procedure 41(a)(1)(A)(ii), stating that the case would be dismissed without prejudice and without a right to appeal, with each side bearing its own attorney’s fees and costs. The court then ordered the parties to explain whether they had settled and, if so, to submit the settlement terms for review under Cheeks v. Freeport Pancake House, Inc. That decision requires court or Department of Labor approval of Fair Labor Standards Act (FLSA) settlements because of the law’s protections for workers’ wages.
The parties instead submitted a notice accepting an offer of judgment under Federal Rule of Civil Procedure 68(a). The offer provided a total of $10,000 for all of Joseph Foster’s claims, including attorney’s fees and costs. The court noted that the offer was made after the court had ordered the parties to provide settlement terms and demonstrate fairness. It also noted an apparent inconsistency between the earlier stipulation, which said each side would bear its own fees and costs, and the offer, which included Foster’s fees and costs in the $10,000 amount.
Court’s Analysis
The court explained that the Second Circuit had held in Mei Xing Yu v. Hasaki Restaurant, Inc. that court approval is not required for Rule 68(a) offers of judgment settling FLSA claims. The court concluded that this holding required it to enter judgment under the accepted offer.
The court nevertheless expressed concern that this result could allow parties to use Rule 68 to avoid the protections associated with Cheeks review. The court stated that it would likely consider some terms unreasonable under the usual review process. In particular, the offer released all claims Foster could have asserted against the defendants and numerous related people and entities, including claims unrelated to wage-and-hour issues. The offer also made the $10,000 amount inclusive of attorney’s fees, costs, expenses, and prejudgment interest without stating how much would be allocated to fees or costs, making it impossible for the court to evaluate their reasonableness.
Disposition
Judge Vernon S. Broderick ordered that judgment be entered in accordance with the parties’ Rule 68 offer. The proposed judgment was to be filed at the same time as the order. The opinion does not state the specific terms of the final judgment beyond its direction that it follow the accepted offer.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.