Vilella v. Pup Culture LLC

Background

Ashley Vilella moved to enforce an alleged settlement with Pup Culture LLC and the other defendants. Vilella alleged that, while working for Defendants from January 2019 through January 2022, she sometimes worked more than 40 hours per week without overtime pay. She also alleged that she was not paid for all hours worked, did not receive required wage notices or wage statements, and was not paid a spread-of-hours premium. Her lawsuit asserted claims under the Fair Labor Standards Act of 1938 (FLSA) and the New York Labor Law, and was brought as a proposed collective and class action.

The parties participated in settlement discussions, including mediation and a settlement conference, but did not reach an agreement during those proceedings. On July 23, 2023, Defendants made a $50,000 offer of judgment to resolve Vilella’s individual claims, conditioned on dismissal of the action with prejudice; Vilella did not accept that offer.

On October 24, 2023, Defendants’ then-counsel emailed Vilella’s counsel that, in a final attempt to resolve the matter, Defendants authorized an offer for a redacted amount to resolve Vilella’s individual claims. On November 5, Vilella’s counsel replied, “We accept this offer. We will send you paperwork on Monday.” The parties later disagreed about whether the offer required dismissal of the entire action, including claims involving additional plaintiffs, or resolved only Vilella’s individual claims.

After further communications, Defendants’ counsel stated that ending the entire action was a material term and that the settlement could not proceed if another employee was added as a named plaintiff. Vilella’s counsel proposed a different arrangement involving Vilella’s settlement and a separate class case in state court for another employee. Defendants rejected that proposal. Meanwhile, the federal litigation continued: Vilella’s counsel argued for conditional certification of an FLSA collective, the court granted conditional certification, and additional people sought to join the action.

Legal standard and analysis

A district court may summarily enforce a settlement reached in a pending case, but the party seeking enforcement must prove that the parties formed a binding agreement. Because there was no settlement document signed by both sides, the court applied the four-factor test from Winston v. Mediafare Entertainment Corp. The factors ask whether the parties reserved the right not to be bound without a signed writing, whether there was partial performance, whether all material terms were agreed upon, and whether the type of agreement ordinarily is put in writing.

The first factor slightly favored Vilella. The court found that the correspondence appeared unequivocal: Defendants’ counsel stated the amount Defendants were prepared to offer “to resolve this matter,” and Vilella’s counsel responded, “We accept this offer. We will send you paperwork on Monday.” The court found no express reservation on either side.

The second factor favored Defendants. The court found no partial performance between November 5, 2023, and December 15, 2023, when Vilella’s counsel sent a proposed settlement agreement. Instead, the parties continued litigating. Vilella’s counsel appeared in court and argued for conditional certification, prepared a revised collective notice, and continued facilitating new members’ consent to join the collective. The court viewed those actions as inconsistent with an understanding that a contract had taken effect to settle the matter.

The third factor also favored Defendants. The court concluded that the parties had not agreed on all material terms, particularly what the settlement would resolve. Vilella’s counsel characterized the offer as an individual settlement, while Defendants’ counsel stated that the offer was intended to resolve the entire matter. The court relied on the October 24 email’s reference to resolving “this matter,” the parties’ negotiations concerning the case as a whole, Defendants’ request that the court be told the matter was resolved, and the November 9 discussion concerning adding a new plaintiff. The court concluded that the parties had not reached a meeting of the minds.

The fourth factor favored Defendants because FLSA settlements in the Second Circuit generally require formal written documentation and court review. The court explained that FLSA cases may be resolved through an accepted Rule 68 offer of judgment or through a written settlement agreement subject to a court hearing. In either situation, additional formal documentation is required. The proposed settlement agreement also would have involved terms that needed to be placed on the public docket and an agreement concerning confidentiality.

Disposition

The court denied Vilella’s motion to enforce the settlement and directed the clerk to close Docket No. 89. Defendants also asked for attorney’s fees and sanctions against Vilella’s counsel. The court denied that request because Defendants had not made a sanctions motion under Federal Rule of Civil Procedure 11 or complied with that rule’s requirements.