United States District Court, S.D. New York
OPINION AND ORDER
NETBURN, UNITED STATES MAGISTRATE JUDGE.
April 13, 2017, the Honorable John G. Koeltl dismissed this
case without prejudice and referred the matter to my docket
for the purposes of fixing and enforcing a charging lien. ECF
Nos. 97, 98. Counsel for Plaintiff Fortunata Liana Ie
subsequently filed a motion to fix and enforce a charging
lien against Plaintiff and Defendants Ageha Japanese Fusion,
Inc. and Chun Yong Chen. ECF Nos. 102-03. As discussed below,
the motion to fix and enforce a charging lien is GRANTED in
part and DENIED in part.
2015, Plaintiff brought this action alleging that Defendants
violated the Fair Labor Standards Act (“FLSA”)
and the New York Labor Law. ECF No. 1. The last time
Plaintiff's counsel was able to contact Plaintiff was on
March 22, 2017, when counsel communicated to Plaintiff that
Defendants had refused to make an offer to settle the action.
ECF No. 86. Nevertheless, trial was scheduled to begin on
April 4, 2017, apparently in the hopes that counsel would
regain contact with Plaintiff before that date. Id.
On the eve of trial, however, defense counsel informed the
Court that Defendants had privately agreed to pay $15, 000 in
cash to Plaintiff to settle the action. ECF No. 91. The
parties reached this agreement without their counsel's
involvement. Id. Defense counsel then requested that
the Court approve the settlement and dismiss the case with
April 12, 2017, the Court held a conference with
Plaintiff's counsel and Defendants. ECF No. 105.
Plaintiff did not appear at the conference. Id. at
2:12-16. After hearing arguments from the parties, the Court
The plaintiff has apparently accepted a private settlement
from the defendants without involving her counsel. In
exchange, she will not pursue her claims. Dismissal with
prejudice would be the functional equivalent of judicially
approving the private settlement, which would effectively
circumvent the FLSA's court approval requirement. And,
without the plaintiff to confirm the substance of the
settlement, this Court could not approve the settlement.
On the other hand, it is clear that this case cannot proceed
without the plaintiff's involvement. Accordingly,
dismissal of this case for failure to prosecute without
prejudice is appropriate.
Id. at 22:20-23:7. In addition, the Court maintained
ancillary jurisdiction for the purposes of fixing and
enforcing a charging lien. Id. at 24:6-8. On
February 20, 2018, Plaintiff's counsel filed a motion to
fix and enforce a charging lien against Plaintiff and
Defendants, jointly and severally. ECF Nos. 102-03. On March
6, 2018, Defendants responded in opposition to the motion.
ECF No. 104.
charging lien is a security interest in the favorable result
of litigation, giving the attorney equitable ownership
interest in the client's cause of action . . . .”
Antonmarchi v. nConsol. Edison Co. of N.Y., 678
F.Supp.2d 235, 240 (S.D.N.Y. 2010) (quoting Chadbourne
& Parke, LLP v. AB Recur Finans, 794
N.Y.S.2d 349 (1st Dep't 2005)). Section 475 of the New
York Judiciary Law provides:
From the commencement of an action, special or other
proceeding in any court or before any state, municipal or
federal department . . . the attorney who appears for a party
has a lien upon his or her client's cause of action,
claim or counterclaim, which attaches to a verdict, report,
determination, decision, award, settlement, judgment or final
order in his or her client's favor, and the proceeds
thereof in whatever hands they may come; and the lien cannot
be affected by any settlement between the parties before or
after judgment, final order or determination. The court upon
the petition of the client or attorney may determine and
enforce the lien.
lien created by section 475, which attaches by its terms in
an action or proceeding ‘in any court or before any . .
. federal department, ' is enforceable in federal courts
in accordance with its interpretation by New York
courts.” Chesley v. Union Carbide Corp., 927
F.2d 60, 67 (2d Cir. 1991). “The statute is remedial in
character, and hence should be construed liberally in aid of
the object sought by the legislature, which was to furnish
security to attorneys by giving them a lien upon the subject
of the action.” Itar-Tass Russian News Agency v.
Russian Kurier, Inc., 140 F.3d 442, 450 (2d Cir. 1998)
(quoting Fischer-Hansen v. Brooklyn Heights R.R.,
173 N.Y. 492, 499 (1903)).
is well-settled that an attorney loses his right to enforce a
charging lien if the attorney withdraws or is discharged for
cause.” In re Harley & Browne, 957 F.Supp.
44, 48 (S.D.N.Y. 1997). Based “upon information and
belief, ” Defendants contend that Plaintiff instructed
her counsel to discontinue the lawsuit on April 3, 2017,
after she agreed to the private settlement with Defendants.
ECF No. 104 at 5. Defendants also claim that Plaintiff's
counsel refused to seek dismissal of the action as directed,
leading Plaintiff to discharge her counsel for cause.
Id. at 5, 6; see Allstate Ins. v. Nandi,
258 F.Supp.2d 309, 312 (S.D.N.Y. 2003) (“Courts
typically find a discharge ‘for cause' where there
has been a significant breach of legal duty.”). Yet
Defendants do not offer any evidence to support these factual
claims-their assertions about what transpired between
Plaintiff and her counsel appear to be based solely on
Defendants' own speculation. Moreover, Plaintiff's
attorneys state that the last time they communicated with
their client was on March 22, 2017. ECF No. 103 at 4; see
also In re Cooper, 32 N.Y.S.2d 158, 162 (Sup. Ct. 1941)
(taking as true allegations in a § 475 petition that
were not contradicted by affidavit), rev'd on other
grounds, 291 N.Y. 255 (1943). Plaintiff could not have
instructed her counsel to discontinue the lawsuit on April 3,
2017, if her last communications with counsel occurred twelve
days earlier. Thus, Defendants have not demonstrated that
Plaintiff's counsel was discharged for cause.
the event of settlement, the attorney's lien attaches to
the fund representing the cause of action extinguished by the
settlement.” In re Shirley Duke Assocs., 611
F.2d 15, 18 (2d Cir. 1979). Defendants cannot cut a
plaintiff's counsel out of settlement negotiations,
exclude attorneys' fees from the settlement, and thereby
decrease the amount of money they must pay to the plaintiff
to resolve a case. The attorney's lien “attaches to
the amount agreed upon in settlement the instant that the
agreement is made, and, if the defendant pays over to the
client without providing for the lien of the attorney, he
violates the rights of the latter, and must stand the
consequences.” Fischer-Hansen, 173 N.Y. at
502; cf. Cheeks v. Freeport Pancake House, Inc., 796
F.3d 199, 205-06 (2d Cir. 2015) (noting that “[w]ithout
judicial oversight, . . . employers may be more inclined to
offer, and employees . . . may be more inclined to accept,
private settlements that ultimately are cheaper to the
employer than compliance with the Act” (first two
alterations in original) (quoting Socias v. Vornado