{"id":13521,"date":"2019-12-11T10:15:52","date_gmt":"2019-12-11T15:15:52","guid":{"rendered":"https:\/\/oilfieldovertime.com\/?p=13521"},"modified":"2019-12-11T10:15:52","modified_gmt":"2019-12-11T15:15:52","slug":"second-circuit-court-approval-not-required-for-offers-of-judgment-in-overtime-cases","status":"publish","type":"post","link":"https:\/\/oilfieldovertime.com\/second-circuit-court-approval-not-required-for-offers-of-judgment-in-overtime-cases\/","title":{"rendered":"Second Circuit: court approval not required for offers of judgment in overtime cases"},"content":{"rendered":"

Under the Federal Rules of Civil Procedure, a Defendant can make what is known as an offer of judgment to a Plaintiff in an effort to resolve the case.\u00a0 <\/span>FRCP 68 provides as follows:<\/p>\n

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.<\/h4>\n

This rule does not have much \u201cbite\u201d in the sense that the only real consequence to a plaintiff that does not accept the offer is that it allows the defendant to recover costs (but not attorney\u2019s fees) if the unaccepted offer is less favorable than the judgment that is ultimately obtained.\u00a0 <\/span>However, offers of judgment are sometimes used in overtime cases to try to resolve the case before the parties spend a significant sum on attorney\u2019s fees.\u00a0 <\/span>One question that has sometimes come up is whether or not that offer of judgment, once accepted by an overtime claimant, has to be approved by the court, before the case can be dismissed. The plaintiff in Mei Xing Yu v. Hasaki Restaurant, Inc.<\/i>, No. 17-3388 (2d Cir. 2019), worked as a sushi chef for the defendant. The plaintiff filed a complaint on behalf of himself and all others similarly situated and alleged violations of the overtime provisions of the Fair Labor Standards Act (\u201cFLSA\u201d). The defendant mailed the plaintiff a Rule 68 offer of judgment for $20,000 plus reasonable attorneys\u2019 fees, costs and expenses. The plaintiff accepted the offer of judgment and later filed a letter with the district court notifying the court of his acceptance. The district court judge ordered the parties to submit their settlement agreement along with a joint letter explaining why the settlement should be approved as fair and reasonable. The parties submitted a joint letter stating that they did not need judicial approval of their Rule 68(a) offer of judgment to settle the FLSA claims. Thus, the Second Circuit was left with the question of whether acceptance of a Rule 68(a) offer of judgment that disposes of a FLSA claim needs to be reviewed by a district court or the DOL for fairness before the court can enter the judgment.\u00a0<\/span><\/p>\n

The purpose of Rule 68 is to encourage settlement and avoid the time and expense of litigation. By the plain language, the rule\u2019s command that the clerk must enter judgment is mandatory and absolute. However, there are rare circumstances where a district court must approve the proposed settlement before the stipulated judgment can take legal effect. In terms of the FLSA, the court analyzed Marek v. Chesney<\/i>, 473 U.S. 1 (1985) for determining whether the FLSA contains the necessary expression of congressional intention required to exempt the statute from the operation of Rule 68.\u00a0<\/span><\/p>\n

The Second Circuit said that nowhere in the text of section 216 of the Act does it command that FLSA actions cannot be settled or otherwise dismissed without approval from a court. Mei Xing Yu v. Hasaki Restaurant, Inc.<\/i>, No. 17-3388 (2d Cir. 2019). Ordinarily, the lack of any textual requirement for judicial approval would be the end of the analysis, but amici, or legal term for people who are not part of a court case but who give information that may be used by the court in making its decision, and the dissent in Mei Xing Yu<\/i> argued that a judicial review requirement should be read into the FLSA for the following reasons:\u00a0<\/span><\/p>\n

    \n
  1. <\/b>Supreme Court precedents interpreting FLSA rights as nonwaivable require it;\u00a0<\/span><\/b><\/li>\n<\/ol>\n

    Amici asserted that there are only two ways where FLSA claims can be settled or compromised by employees: either through a DOL-supervised payment of unpaid wages by the employer under 216(c) or a stipulated judgment approved by a district court in a private action for unpaid wages under 216(b). Mei Xing Yu v. Hasaki Restaurant, Inc.<\/i>, No. 17-3388 (2d Cir. 2019). The Second Circuit disagreed. The court looked at Brooklyn Savings Bank v. O\u2019Nei<\/i>l, where the Supreme Court considered \u201cwhether in the absence of a bona fide dispute between the parties as to liability, [an employee\u2019s] written waiver of his right to liquidated damages under [the FLSA] bars a subsequent action to recover liquidated damages.\u201d 324 U.S. 697, 704 (1945). It reasoned that \u201cwaiver of statutory wages by agreement would nullify the purpose of the Act,\u201d as would \u201cwaiver of the employee\u2019s right to liquidated damages.\u201d Thus, it concluded that \u201ccontracts for waiver of liquidated damages … are void as contrary to public policy,\u201d and will not be entertained by courts as an employer\u2019s affirmative defense in a subsequent action by an employee to recover liquidated damages. Id<\/i>.\u00a0<\/span><\/p>\n

    Notably absent from any of these Supreme Court interpretations of the FLSA is any discussion on whether a settlement or dismissal of an action to vindicate FLSA rights under \u00a7 216(b) is conditioned on court approval. Mei Xing Yu v. Hasaki Restaurant, Inc.<\/i>, No. 17-3388 (2d Cir. 2019). Rule 68(a) judgments are one form of stipulated judgment and, by that Rule\u2019s plain terms, do not require court\u2010supervision. Nothing the Supreme Court has said suggests a different rule, much less amounts to \u201cthe necessary clear expression of congressional intent required \u2018to exempt the statute from the application of Rule 68.\u2019\u201d Id<\/i>.\u00a0<\/span><\/p>\n

      \n
    1. <\/b>the statutory history of the FLSA demonstrates a Congressional intent to only permit judicially or DOL\u2010approved settlements;\u00a0<\/span><\/b><\/li>\n<\/ol>\n

      Amicus then contended that the lack of any judicial approval requirement in the text of the FLSA is not dispositive because \u201ca statute\u2019s requirements . . . also include judicial interpretations of the statute, which are reached through application of traditional tools of statutory construction, including examination of the statute\u2019s text, legislative history, structure, and purpose.\u201d Id<\/i>. The court found this unpersuasive. The court said that it is only when a statute\u2019s text is ambiguous that it will turn to other tools of statutory interpretation to help clarify the ambiguity. Id.<\/i> In Mei<\/i>, there was nothing ambiguous about whether the FLSA requires judicial approval of offers of judgment before actions brought under \u00a7 216(b) can be settled or dismissed, because the text of the FLSA is devoid of any such requirement, even as it details, in \u00a7 216(b), the precise contours of how employees can file suit to vindicate their FLSA rights. Id<\/i>.\u00a0<\/span><\/p>\n

      Thus, in light of the unambiguously mandatory command of Rule 68(a) for the clerk to enter offers of judgment when they are accepted, and because the court found no indication by Congress or the Supreme Court that the FLSA requires judicial approval of stipulated judgments concerning FLSA claims in the context of ongoing litigation, the Second Circuit declined to pull such a requirement out of thin air with respect to Rule 68(a) offers of judgment settling FLSA claims. Id<\/i>.\u00a0<\/span><\/p>\n

        \n
      1. <\/b>this circuit\u2019s decision in Cheeks<\/i>, which explained the need for judicial review of Rule 41(a)(1)(A)(ii) dismissals with prejudice of FLSA claims, compels a similar result with respect to Rule 68 offers of judgment; and\u00a0<\/span><\/b><\/li>\n<\/ol>\n

        Amici also contend that a prior decision from the Second Circuit\u2014 Cheeks v. Freeport Pancake House, Inc.<\/i>, No. 14\u2013299\u2013cv (2d Cir. 2018)\u2014is determinative of whether Rule 68(a) offers of judgment involving FLSA claims must be approved by a court before they may be entered. While the Second Circuit acknowledged the similarities between the two cases, it declined to extend Cheeks<\/i> holding requiring judicial approval for stipulated dismissals settling FLSA claims with prejudice under Rule 41(a)(1)(A)(ii) to the context of Rule 68(a) offers of judgment.<\/p>\n

        The question in Cheeks<\/i> was whether parties could enter a \u201cstipulated dismissal of FLSA claims with prejudice, without the involvement of the district court or DOL, that may be enforceable,\u201d pursuant to Rule 41(a)(1)(A)(ii). The Cheeks<\/i> Court concluded that the FLSA met the \u201capplicable federal statute\u201d exception to Rule 41(a)(1)(A)(ii) because of \u201cthe unique policy considerations underlying the FLSA\u201d and the \u201cunderlying purpose\u201d of the Act. Therefore, it held that stipulated dismissals settling FLSA claims with prejudice pursuant to Rule 41(a)(1)(A)(ii) require approval of either the district court or the DOL to take effect. Cheeks<\/i>, 796 F.3d at 206.<\/p>\n

        Thus, the Second Circuit in Mei<\/i> reasoned and stated that the FLSA does not require judicial approval of Rule 68(a) offers of judgment and the court in Cheeks<\/i> declined to extend its judicial approval requirement to that context. Moreover, the Second Circuit did not believe that all of the reasons supporting the decision in Cheeks comfortably apply in the Rule 68(a) context.<\/p>\n

          \n
        1. <\/b>it would further \u201cthe underlying purpose of the FLSA, which is a uniquely protective statute.\u201d<\/b><\/li>\n<\/ol>\n

          Lastly, the district court and amici referred to the FLSA\u2019s \u201cunique features and policies,\u201d or the Act\u2019s \u201cremedial and humanitarian goals\u201d as justification for requiring judicial approval of Rule 68(a) offers of judgment settling FLSA claims. Mei Xing Yu v. Hasaki Restaurant, Inc.<\/i>, No. 17-3388 (2d Cir. 2019). The Second Circuit in Mei Xing<\/i> took issue with this. While interpreting the FLSA to require judicial approval of Rule 68(a) offers of judgment settling FLSA claims might be consistent with some of the policy goals of Congress when it enacted the FLSA in 1938, the court agreed with the defendant that the Congressional policy of timely entry of judgment upon acceptance of a Rule 68(a) offer would be frustrated by a judicial approval requirement. Id<\/i>. Moreover, the fact that a Rule 68(a) stipulated judgment must be entered by the clerk does not mean that the judgment cannot later be challenged as deficient under the common law of contract or under Rule 60(b) for fraud, misrepresentation, misconduct, or \u201cany other reason that justifies relief.\u201d Id<\/i>. In any event, the Second Circuit did not see its role as weighing those policy considerations and determining which policy to prioritize when the statute is unambiguous. Id<\/i>. \u201cThat is the job of Congress.\u201d Id<\/i>.\u00a0<\/span><\/p>\n

          The court considered amici\u2019s arguments and concluded that they are without merit. Thus, judicial approval is not required of Rule 68(a) offers of judgment settling FLSA claims. The district court\u2019s order was reversed and vacated and remanded to the district court with instructions that the clerk enter the judgment as stipulated in the parties\u2019 accepted Rule 68(a) offer.\u00a0<\/span><\/p>\n

          This case stands for the fact that parties can agree on a certain amount of money to resolve their issues without the need for judicial approval. Being able to successfully work on resolving cases without the need for the judiciary saves the court – and the parties – time and resources. If you have an unpaid overtime issue, consider speaking with an attorney today. Josh Borsellino is a Texas attorney that understands the rules surrounding the FLSA and its unpaid overtime laws. He works on a contingency fee basis meaning that you own him nothing unless there is a recovery. Call him today at 817.908.9861 or 432.242.7118.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

          Under the Federal Rules of Civil Procedure, a Defendant can make what is known as an offer of judgment to a Plaintiff in an effort to resolve the case.\u00a0 FRCP 68 provides as follows: At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing…<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3870,3868,3869],"tags":[],"_links":{"self":[{"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/posts\/13521"}],"collection":[{"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/comments?post=13521"}],"version-history":[{"count":0,"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/posts\/13521\/revisions"}],"wp:attachment":[{"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/media?parent=13521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/categories?post=13521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oilfieldovertime.com\/wp-json\/wp\/v2\/tags?post=13521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}