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Labarca v. GRJH, Inc.

United States District Court, N.D. New York

March 1, 2018

VINCENT J. LABARCA, on behalf of themselves and all others similarly situated, and TRISHA A. FLINT, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
GRJH, INC., doing business as Cobble Pond Farms; JAMES METZ, individually; ALICIA H. METZ, individually; and LAUREN H. SIMONS, individually, Defendants.

          IANNIELLO ANDERSON, P.C. Attorneys for Plaintiffs

          FRIEDMAN, HIRSCHEN & MILLER, LLP Attorneys for Defendants

          SARAH J. BURGER, ESQ., JEANNE GONSALVES LLOYD, ESQ.

          MEMORANDUM-DECISION AND ORDER

          Mae A. D'Agostino, U.S. District Judge

         I. INTRODUCTION

         Plaintiffs commenced this action on July 6, 2016, seeking declaratory and monetary relief to redress alleged deprivations of their rights under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (the "FLSA"), and New York Labor Law § 190. See Dkt. No. 1. On June 8, 2017, Defendants made an Offer of Judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. On June 12, 2017, Plaintiffs filed a Notice of Acceptance of the Rule 68 Offer. See Dkt. No. 47. As such, the Court entered judgment on June 15, 2017 and closed this case. See Dkt. No. 53.

         Currently before the Court is Defendants' motion seeking to revoke or rescind their Rule 68 Offer, or, in the alternative, to amend, alter, or revoke the judgment. See Dkt. No. 58.

         II. BACKGROUND

         This action was commenced by Plaintiffs Vincent J. LaBarca and Tricia A. Flint on behalf of themselves and all others similarly situated, on or about July 7, 2016, against their former employer, GRJH, Inc., d/b/a Cobble Pond Farms, and the purported officers of GRJH, Inc., James Metz, Alicia H. Metz, and Lauren H. Simons. See Dkt. No. 1. The Complaint contains three causes of action, alleging primarily the failure to pay Plaintiffs no less than one and one-half times their regular pay rate for hours worked in excess of forty hours in a workweek, in violation of the FLSA and New York Labor Law. See Id. at ¶¶ 58-68. All three causes of action listed reasonable attorneys' fees and costs as part of the relief Plaintiffs were seeking.

         After completion of mandatory disclosures, paper discovery, and the depositions of the representative Plaintiffs, the parties attended a mediation session with the Honorable Randolph Treece, on March 28, 2017, as part of the Northern District of New York's Mandatory Mediation Program. See Dkt. No. 58-1 at ¶ 8. While offers and counteroffers were exchanged during the mediation, the case did not settle at that time. See Id. All of the offers and counteroffers extended at that time contemplated a global resolution to all claims asserted in the complaint, including all claims for wages, attorney's fees, costs and interest. See id.

         Settlement negotiations continued with the assistance of the mediator until April 27, 2017. See Id. at ¶ 9. In response to Plaintiffs $85, 000 settlement demand, on April 14, 2017, Defendants authorized their attorney, Jeanne M. Gonsalves Lloyd, Esq., to extend a global settlement offer to Plaintiffs in the amount of $70, 000, payable over a two-year period. See Id. at ¶ 10; see also Dkt. No. 61-1 at ¶ 6. On April 26, Plaintiffs' counsel, Sarah Burger, Esq., responded to the April 14 offer as follows: "We are getting close. I just spoke to my clients again. The two year payment plan for $70k seems excessive, especially in light of the offer being $10k more than the last lump sum offer of $60k. If your clients require a two year payment plan then the total settlement would need to be around $100, 000.00. At this time I am authorized to make a counteroffer of $77, 500.00. We are open to suggestions on how to structure the settlement. Hope we can close the gap. Thanks." Dkt. No. 58-1 at ¶ 11.

         Upon receipt of this email from Ms. Burger, Ms. Lloyd responded as follows:

I am quite confident that my clients will not agree to the $77, 500.00, however, I will pass this counteroffer on to them. If my clients will agree to a $70, 000.00 up front payment, will that settle the case? I am not sure that this is even a possibility they will consider, but I will recommend it if you tell me that your clients will accept that.

Id. at ¶ 12. That same day, Ms. Burger responded "I will speak to them again. I am fairly certain they will accept $75, 000.00 based upon prior discussions. At $75, 000.00 we are taking a 25% cut on attorney fees. We cannot do much better than that." Id. at ¶ 13. The next day, April 27, 2017, Ms. Burger sent another email stating as follows: "$75, 000.00 is as low as we can go. That's our final. Thanks. Otherwise, let's coordinate to get the 8 depositions scheduled." Id. at ¶ 14.

         Counsel for all parties appear to agree that each of the settlement offers and settlement demands extended at the mediation and continuing thereafter in April 2017 contemplated full resolution of all claims in the Complaint, including Plaintiffs' claims for attorney's fees. See Id. at ¶ 15; see also Dkt. No. 61-1 at ¶¶ 5-8. After settlement discussions failed, the depositions of the individually named Defendants was scheduled for June 13, 29-30, 2017, and subpoenas for the depositions of five non-party witnesses were served and their depositions scheduled for July 11-13, 2017. See Dkt. No. 61-1 at ¶ 8.

         On June 8, 2017, Ms. Lloyd was directed by her clients to serve a Rule 68 Offer of Judgment in the sum of $70, 000.00. See Dkt. No. 58-1 at ¶ 17. According to Ms. Lloyd, "[i]nstead of the $70, 000.00 being made payable over a two year period as previously offered, however, in order to make the offer more palatable to plaintiffs and their counsel, the defendants instructed me to make the $70, 000.00 payable over a period of 9 months as opposed to two years." Id. The Offer of Judgment served on Plaintiffs stated, in relevant part, as follows:

The defendants . . . hereby make an Offer of Judgment, pursuant to Rule 68 of the Federal Rules of Civil Procedure, to the Plaintiffs, Vincent J. LaBarca and Trisha A. Flint, on behalf of themselves and all others similarly situated, in the amount of $70, 000.00, with costs as set forth in 28 U.S.C. Section 1920, accrued to date, which Judgment shall be payable as follows:
-$17, 500.00 with costs pursuant to 28 U.S.C. Section 1920, accrued to date, within 30 days of service of written notice accepting the offer;
- $17, 500.00 payable within three (3) months of the initial payment;
- $17, 500.00 payable within six (6) months of the initial payment; and
- $17, 500.00 payable within nine (9) months of the initial payment.

Dkt. No. 47 at 3.

         On June 9, 2017, Ms. Burger emailed Ms. Lloyd, indicating that she would discuss the Rule 68 Offer with her clients. See Dkt. No. 58-1 at ¶ 21. Later that day, Ms. Burger called Ms. Lloyd regarding the offer. See Id. at ¶ 23. According to Ms. Lloyd, Ms. Burger asked whether, if accepted by her clients, GRJH, Inc. would be reporting the payments as 1099 or W-2 income to her clients. See Id. Ms. Lloyd responded that she was unsure, as she is neither an accountant or tax attorney, but stated that she did not believe that all of the payments could be properly reported as W-2 income for two reasons: "1) plaintiffs are no longer employees of GRJH; and 2) the $70, 000.00 included both wages and attorney's fees." Id. Ms. Lloyd claims that Ms. Burger's only response to this was to indicate that "'[y]our Offer of Judgment is very clear.'" Id.[1]

         On June 12, 2017, Ms. Burger sent Ms. Lloyd an email informing her that her clients were accepting the Rule 68 Offer and that she would shortly file the Notice of Acceptance. See Id. at ¶ 24. Later that day, Ms. Burger filed Plaintiffs' Notice of Acceptance with the Court, which included the following language: "Pursuant to Rule 68(a) of the Federal Rules of Civil Procedure, plaintiffs Vincent J. LaBarca and Tricia A. Flint, through their undersigned counsel, hereby accept and provide notice that they have accepted Defendants' Offer of Judgment to Plaintiffs dated June 8, 2017, attached hereto as Exhibit 'A.'" Id. at ¶ 26. In their motion, Defendants note that, while the Rule 68 Offer was made not only to LaBarca and Flint, but also "on behalf of themselves and all others similarly situated[.]" Id. at ¶ 27. The Rule 68 Offer was worded that way because, according to Defendants, LaBarca and Flint brought this action not just in their individual capacities, but "'on behalf of themselves and similarly situated persons who are current and former employees of defendants since the date three years prior to the filing of this action who elect to opt-in to this action (the "FLSA Collective").'" Id. at ¶ 28.

         On the morning of June 13, 2017, Defendant Metz contacted Ms. Lloyd to request that she contact Ms. Burger and/or the Court to request that entry of Judgment on the Rule 68 Offer of Judgment be held in abeyance pending Defendants' final payment, at which time both the Judgment and Satisfaction piece could be filed. See Dkt. No. 58-1 at ¶ 32. When asked, Ms. Burger indicated that the proposed delayed filing of the Judgment was not possible under Rule 68. See Dkt. No. 61-1 at ¶ 16. Later that day, Ms. Lloyd filed a letter motion with the Court seeking the delayed entry of judgment, which Plaintiffs "vehemently object[ed]." Dkt. Nos. 49 & 50.

         Although there was no mention of attorney's fees in Plaintiffs' letter in opposition to Defendants' motion, Ms. Lloyd claims that she first became suspicious of the possibility that Plaintiffs would be seeking such fees because of the authority cited in the June 13, 2017 letter. See Dkt. No. 58-1 at ¶ 34.[2] On June 14, 2017, Ms. Lloyd attempted to call Ms. Burger to discuss her suspicion, but Ms. Burger was unavailable. See Id. at ¶ 35. At this point, Ms. Lloyd sent Ms. Burger a lengthy email in which she indicates, among other things, that it was always the intent of all parties to resolve all issues, including attorney's fees in a global settlement and asked for clarification on whether Ms. Burger was intended to file a separate application for additional fees. See Id. at 73-74. Shortly thereafter, Ms. Burger sent a return email, which did not address her intent regarding the issue of attorney's fees and simply reiterated that the Rule 68 Offer had been accepted. See Id. at 72. Since Ms. Burger did not address the concerns raised in her response, Ms. Lloyd sent Ms. Burger the following email:

I do not wish to burden the Court unnecessarily. I am simply seeking clarification from you concerning the basis of your objection. If you[r] objection is simply based on the question of the timing of when the Judgment is to be entered, and we are in agreement that the $70, 000 plus Section 1920 costs accrued to date will resolve all claims and causes of action in the case, inclusive of attorney's fees, there is no need to further burden the Court. In the event, however, that it is plaintiffs' intent to pursue additional attorney's fees on top of those contemplated as part of the $70, 000 set forth in the Offer of Judgment, as well as Sec. 1920 costs, further communication with the Court will be necessary. Kindly clarify your intentions in this regard by stating whether or not you will be pursuing attorney's fees in addition to the $70, 000. If not, we will abide by whatever decision the Court renders concerning our request that the entry of the Judgment be held in abeyance. If you are pursuing additional attorney's fees, we will make a further application to the Court.

Id. at 72. Ms. Burger never responded to this follow-up email. See Dkt. No. 58-1 at ¶ 36.

         On June 15, 2017, the Court denied Defendants' letter requesting asking the Court to delay filing the Judgment and entered Judgment and closed the case. On June 16, 2017, Ms. Lloyd filed a letter with the Court requesting a telephone conference to discuss the issue of attorney's fees and that the Court delay entering judgment until after the conference. See Dkt. No. 54. Although Judgment had already been entered on June 15, 2017, a telephone conference was scheduled for June 29, 2017. On June 28, 2017, Plaintiffs filed motions for attorney's fees and costs. See Dkt. Nos. 55 & 56. During the telephone conference on June 29, 2017, ...


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