Picerni v. Bilingual Seit & Preschool Inc.

925 F. Supp. 2d 368, 84 Fed. R. Serv. 3d 1505, 20 Wage & Hour Cas.2d (BNA) 1241, 2013 WL 646649, 2013 U.S. Dist. LEXIS 24622
CourtDistrict Court, E.D. New York
DecidedFebruary 22, 2013
DocketNo. 12 CIV. 4938 BMC
StatusPublished
Cited by40 cases

This text of 925 F. Supp. 2d 368 (Picerni v. Bilingual Seit & Preschool Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Picerni v. Bilingual Seit & Preschool Inc., 925 F. Supp. 2d 368, 84 Fed. R. Serv. 3d 1505, 20 Wage & Hour Cas.2d (BNA) 1241, 2013 WL 646649, 2013 U.S. Dist. LEXIS 24622 (E.D.N.Y. 2013).

Opinion

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

Rule 41(a) of the Federal Rules of Civil Procedure gives the plaintiff or, after an answer or motion for summary judgment has been served, the parties the right to dismiss an action without the oversight or approval of the Court, subject to certain enumerated provisions of other Federal Rules, or “any applicable federal statute.” The Court has raised the issue, sua sponte, [369]*369of whether the Fair Labor Standards Act, 29 U.S.C. § 216(b) (“FLSA”), is one such applicable federal statute. It concludes that it is not. Since the parties have settled the case on the basis of a Rule 68 offer of judgment, the Clerk will be directed to enter judgment accordingly.

BACKGROUND

This case is typical of the substantial volume of cases regularly brought in this district under the FLSA. The complaint alleges that plaintiff was a teacher at defendant’s private educational business. She was paid on an hourly basis under an employment contract but alleges that she was not paid for about 15 hours of each work week, and that this brought her hourly rate below the minimum wage required by the FLSA.

Plaintiff brought this action under the FLSA “as a collective action” on behalf of herself “and all others who are/were similarly situated and who file consents to opt-in to this action ... She alleged a claim not only under the FLSA, but as is often done in these cases, she sought class action status for violations of corresponding provisions, under the Court’s supplemental jurisdiction, of New York State and New York City law. These statutes, in several areas, provide for even greater protection of employee rights than the FLSA, and unlike the FLSA, they allow class actions. In addition, plaintiff sought class action status for a common law breach of contract claim.

On October 19, 2012, prior to the convening of an initial status conference in this case, and prior to defendant having answered or appeared in the case (defendant has still not appeared), plaintiff filed a notice of acceptance of an offer of judgment that defendant had made under Fed. R.Civ.P. 68. The offer of judgment provided that the case would be settled on an individual basis (not as a collective or class action) for $5000 payable to plaintiff, plus attorney’s fees of $4590, “which represents 7.65 hours at $600 an hour.”

The Court declined to enter judgment under Rule 68. Instead, on the same day, it entered an Order (the “October 19th Order”), providing, in part, as follows:

Because this is an FLSA case, it cannot be resolved merely by acceptance of a Rule 68 offer. Stipulated settlements in an FLSA case must be approved by the Court in the absence of the direct supervision of the Secretary of Labor. See 29 U.S.C. § 216(c); Tuan Le v. SITA Information Networking Computing USA Inc., No. 07 CV 86, 2008 WL 724155, at *1 (E.D.N.Y. March 13, 2008). Even though this action was never certified as a collective action, it is still subject to Court approval. See id.; Sampaio v. Boulder Rock Creek Developers, Inc., No. 07 CV 153, 2007 WL 5209390, at *1 (E.D.N.Y. Sept. 6, 2007). Plaintiff is ORDERED to file a motion to approve the settlement by 11/2/12.

Plaintiff complied with the October 19th Order, and filed a motion in an effort to explain that the settlement and his attorney’s fees had a reasonable basis. That motion is presently pending before the Court.

DISCUSSION

Two venerable Supreme Court decisions make it clear that an employer who settles an FLSA claim without either Department of Labor or court approval is at risk of a subsequent suit by the same employee, even if the employer receives a release as part of the settlement agreement. Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945), considered two consolidated cases under the FLSA. In the first, the employer, upon demand from a former employee [370]*370but prior to the commencement of any litigation, paid the former employee all of the statutory overtime that he should have been paid while working, and obtained a release expressly waiving the employee’s rights under the FLSA. In the second, the Wage and Hour Administration, a predecessor to the Department of Labor, obtained an injunction against an employer, requiring compliance with the FLSA. The employer, in an out of court settlement but in recognition of its obligations under the injunction, thereupon tendered $500 to a former employee. Both the employer and former employee acknowledged that this was a compromise figure to which the parties agreed to avoid litigation, and that in fact, the employee was owed more in minimum wages and overtime under the FLSA. Nevertheless, the former employee signed a release that specifically included claims under the FLSA.

In the first of the consolidated Brooklyn Savings cases, the employee sued in state court under the FLSA (the statute provides for concurrent jurisdiction) for the liquidated damages to which he was entitled under the FLSA but which the settlement had not included. The Supreme Court, on direct appeal from the New York Court of Appeals, held that because the state courts had made no findings that there was a “bona fide dispute,” i.e., an actual controversy as to whether the employee had actually worked enough hours to be entitled to the wages he claimed, the release was ineffective to waive his right to liquidated damages under the FLSA: “... Congress did not intend that an employee should be allowed to waive his right to liquidated damages.” Id. at 706, 65 S.Ct. at 901. The Court further noted that “[t]he same policy which forbids waiver of the statutory minimum as necessary to the free flow of commerce requires that reparations to restore damage done by such failure to pay on time must be made to accomplish Congressional purposes.” Id. at 708, 65 S.Ct. at 902.

This conclusion, the Court held, dictated the outcome in the second constituent case of Brooklyn Savings. Since it was stipulated in that case that the both the employer and the former employee knew that he was owed more at the time he received the $500 compromise payment and signed the release, there was no “bona fide dispute” between them, and the release was ineffective.

A year later, in D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 66 S.Ct. 925, 90 L.Ed. 1114 (1946), the Supreme Court held that a “bona fide dispute” does not exist when an employer claims it is not covered by the FLSA and settles a claim “under threat of suit.” The Court therefore ruled that when a pre-litigation settlement occurs, and a release is given for what the parties agree is the payment in full of unpaid wages, the release is unenforceable to preclude a later suit for liquidated damages.

The application of Brooklyn Savings and Gangi in the lower courts was thoroughly discussed in Martinez v. Bohls Bearing Equipment Co.,

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925 F. Supp. 2d 368, 84 Fed. R. Serv. 3d 1505, 20 Wage & Hour Cas.2d (BNA) 1241, 2013 WL 646649, 2013 U.S. Dist. LEXIS 24622, Counsel Stack Legal Research, https://law.counselstack.com/opinion/picerni-v-bilingual-seit-preschool-inc-nyed-2013.