Dector v. RCI Plumbing Corp.

Background

Alvaro Dector and Wilson Romero brought this Fair Labor Standards Act (FLSA) case individually and on behalf of other similarly situated people. The plaintiffs were former employees of RCI PLBG, Inc. They alleged that the defendants failed to pay required overtime wages and failed to provide wage statements required by the FLSA and New York Labor Law.

The parties entered into a settlement agreement in August 2020, which the court approved. Under that agreement, the defendants were to pay the plaintiffs $550,000 in sixteen monthly payments. The agreement also required the defendants to provide affidavits confessing judgment, to be held in escrow and used if the defendants defaulted. The affidavits included a 35% penalty totaling $192,500.

The defendants did not make the settlement payments or initially provide the required affidavits. The parties later entered into a court-approved forbearance agreement requiring two payments totaling $550,000. That agreement also required Christopher Chierchio to provide an executed confession of judgment. The defendants still made no payments. The defendants did not oppose the plaintiffs’ motion to enforce the agreements.

Court’s Analysis

A federal district court may enforce a settlement reached in a case before it. The court treated the enforcement request as a contract-breach claim. It found that the settlement and forbearance agreements were court-approved, that the court had retained jurisdiction to enforce them, and that the defendants had repeatedly acknowledged their obligations. Because the defendants failed to make the required payments, the court found that they breached the agreements.

The plaintiffs sought enforcement of $742,500: the $550,000 settlement amount plus the $192,500 penalty. The court concluded that the plaintiffs were entitled to enforce the $550,000 amount against all defendants because that amount was stated in the initial settlement agreement signed by all parties. The court allowed enforcement of the $192,500 penalty against Chierchio only because he had signed and filed the confession of judgment. The court did not extend that penalty to the other defendants.

The plaintiffs also sought a declaration that Pro-Star Plumbing, Heating & Mechanical, Inc. was RCI PLBG, Inc.’s successor and could be held responsible for the judgment. They pointed to an overlapping license number and physical address and argued that the companies had undergone a merger in practice. The court denied that request without prejudice, finding that the record did not provide enough information to determine that Pro-Star was RCI PLBG, Inc.’s successor or that the judgment could be enforced against Pro-Star.

Disposition

The court granted in part and denied in part the plaintiffs’ motion to enforce the settlement agreement. Enforcement of the $550,000 settlement amount was permitted against all defendants, and enforcement of the $192,500 penalty was permitted against Chierchio only. The request concerning Pro-Star was denied without prejudice to a future application. The court also granted the motion by Nils C. Shillito and Stephen D. Hans & Associates, P.C., to withdraw as defendants’ counsel. Judge Edgardo Ramos directed the parties to appear for a telephonic status conference on October 3, 2023.