Lei v. Haryin Inc.

Background

Zhen Lei sued Haryin Inc. doing business as Blue Ginger, Zaien Chen, and Ricks Chen. He alleged that the defendants failed to pay him minimum wages, overtime pay, and spread-of-hours pay in violation of the Fair Labor Standards Act and the New York Labor Law. The parties submitted a settlement agreement, which the court approved on December 10, 2018. The agreement provided for payments of $14,500 to Lei and $8,000 to his counsel, including fees and costs. It also stated that, if the defendants defaulted, a confession of judgment could be entered for $45,000, less payments received.

The court’s 2018 order approved the settlement and dismissed the complaint with prejudice. The order did not expressly state that the court would retain jurisdiction to enforce the settlement, and it did not incorporate the settlement’s terms into the order. The agreement itself stated that the court would retain jurisdiction for enforcement and that, if the federal court lacked or declined jurisdiction, the parties consented to jurisdiction in New York State courts having jurisdiction over New York County.

In 2022, Lei moved under Federal Rule of Civil Procedure 60(b)(6) to reopen the case and enforce the settlement. He stated that the defendants had made payments of $1,875 and $3,000 but had failed to pay $17,625 that he claimed remained owed. He sought the $45,000 default amount, less payments received, plus prejudgment interest.

Court’s Analysis

The court explained that enforcing a settlement agreement is generally a contract matter governed by state law and requires an independent basis for federal subject-matter jurisdiction. A federal court may retain related jurisdiction to enforce a settlement only when its dismissal order either expressly retains jurisdiction over the agreement or incorporates the agreement’s terms into the order. Merely knowing about, approving, or giving judicial approval to the settlement is not enough.

Because the 2018 dismissal order did neither of those things, the court held that it lacked jurisdiction to enforce the settlement. The parties’ agreement could not create subject-matter jurisdiction by itself. The court rejected Lei’s reliance on another case because, in that case, the dismissal order had expressly stated that the court would retain jurisdiction. The court also noted that the settlement agreement provided for state-court jurisdiction if the federal court lacked or declined jurisdiction.

The court separately considered Lei’s Rule 60(b)(6) request. That rule permits relief from a final judgment or order in exceptional circumstances or when the judgment would cause extreme and undue hardship. The court held that Lei had not shown such circumstances. Because he could bring a separate action to enforce the settlement in state court, the availability of that alternative remedy weighed against reopening the federal case.

Disposition

The court denied in full Lei’s motion to reopen the case under Rule 60(b)(6) and enforce the settlement agreement. It did not decide whether the defendants breached the agreement or whether Lei was entitled to the requested payment. The clerk was directed to terminate the motion at docket number 32.