Franck v. New York Health Care Inc.

Background

Louis Franck and Li Zhen Feng filed a proposed class and collective action under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law. They sued New York Health Care Inc., Murry Englard, and Glen Persaud. The amended complaint identified Englard as New York Health’s chief executive officer and Persaud as its director of human resources.

Before Franck accepted an offer of judgment from New York Health, he amended the complaint to add Feng and the two individual defendants. The offer proposed a $50,000 judgment, plus reasonable attorneys’ fees incurred to that point, in full satisfaction of Franck’s claims against New York Health. Franck accepted the offer one minute after the amended complaint was filed. The court later entered judgment in accordance with the offer.

Defendants moved to remove Franck from the case, argued that Feng’s claims were inadequately pleaded or time-barred, and asked the court to decline jurisdiction because of related litigation in New York state court. Magistrate Judge James L. Cott recommended dismissing Franck from the case and dismissing the action after concluding that Feng’s federal claims could not proceed.

Offer of judgment and Franck’s claims

Judge Woods agreed that an accepted offer of judgment resolved Franck’s claims against New York Health. The offer expressly covered “all of his claims against” New York Health, and the court held that this language included claims for injunctive relief and any right to pursue class or collective relief. The court distinguished decisions concerning unaccepted offers of judgment, including Campbell-Ewald Co. v. Gomez, because Franck had accepted the offer.

The court disagreed, however, with the recommendation that Franck be dismissed entirely. At the time he accepted the offer, Franck had claims against New York Health and against Englard and Persaud. Applying ordinary contract principles, the court focused on the offer’s text. Because the offer was made only by New York Health and released claims against that company, it did not by its terms release Franck’s claims against Englard and Persaud. Those claims therefore survived at that time.

The court declined to decide whether the judgment against New York Health nevertheless barred Franck’s claims against the individual defendants under claim preclusion, also called res judicata. Defendants had not adequately developed that argument in their motion or briefing.

Feng’s FLSA claims

The plaintiffs did not specifically object to the recommendation concerning Feng’s claims. After reviewing those portions for clear error, the court found none. The court therefore left undisturbed the conclusions that Feng’s FLSA claims accruing before September 21, 2018, were time-barred and that her FLSA gap-time claim was not recoverable.

The conclusion states that Feng’s FLSA claims accruing before September 21, 2018, were dismissed with prejudice. The remainder of her FLSA claims were dismissed without prejudice, and the plaintiffs were granted leave to amend the complaint to address the deficiencies identified in the recommendation. The amended complaint was due by March 27, 2023.

Colorado River abstention

The court denied defendants’ request to abstain under the Colorado River doctrine, which permits a federal court in exceptional circumstances to defer to parallel state-court litigation. The court found that the federal and state cases were not parallel because they involved different parties and claims, including FLSA claims that were not part of the state case. The court also concluded that the relevant factors generally favored retaining federal jurisdiction.

Disposition

Judge Woods adopted the report and recommendation in part, granted defendants’ motion for judgment on the pleadings in part, and denied it in part. Franck’s claims against New York Health were resolved through his accepted offer of judgment, but his claims against Englard and Persaud were not dismissed on that basis. Feng’s older FLSA claims were dismissed with prejudice, her remaining FLSA claims were dismissed without prejudice, and the court denied defendants’ request for Colorado River abstention.