Hong v. Lin's Garden Restaurant, Inc.

Background

The court considered the parties’ Rule 68 filings and proposed judgment. The parties had informed the court that they had reached a settlement in principle and had asked to adjourn a jury trial. The court then directed them to provide the settlement terms and show that the agreement was a fair and reasonable compromise under Cheeks v. Freeport Pancake House, Inc., which requires court or Department of Labor approval of many Fair Labor Standards Act (FLSA) settlements.

Instead, the parties filed a notice accepting defendants’ offer of judgment under Rule 68(a), along with a proposed judgment. The offer, dated September 12, 2022, awarded Yingcai Hong $90,000, including attorneys’ fees, expenses, and costs. Hong’s acceptance and the proposed judgment were filed on September 13, 2022.

Court’s Analysis

The court noted that the timing of the offer raised concerns that the parties were using Rule 68(a) to avoid the protections described in Cheeks. The court also identified terms that it likely would have found unreasonable under the Cheeks review process.

First, the offer released defendants from “any and all” known or unknown claims under the FLSA and the New York Labor Law, without limiting the release by time, date, or the facts of this lawsuit. The court stated that courts in the district routinely reject such broad releases because they can waive unrelated or future wage claims.

Second, the offer included attorneys’ fees, expenses, and costs within the $90,000 total but did not identify the amount allocated to fees or costs. The court said this made it impossible to assess whether those amounts were reasonable.

Despite these concerns, the court relied on the Second Circuit’s decision in Mei Xing Yu v. Hasaki Restaurant, Inc., which held that judicial approval is not required for Rule 68(a) offers of judgment settling FLSA claims. The court concluded that this decision required it to enter judgment under the parties’ offer and acceptance, even though the court likely would not have approved the terms under the Cheeks process.

Disposition

The court ordered that judgment be entered in accordance with the parties’ Rule 68 offer and acceptance. It stated that the judgment would be filed at the same time as the order. Judge Vernon S. Broderick also expressed concern that the appellate rule could allow parties to use Rule 68(a) to avoid review intended to protect workers’ wages, but he did not decline to enter the judgment.