Banegas et al v. The Mirador Corp. et al

Filing 45

MEMORANDUM OPINION AND ORDER. For the reasons stated above, Plaintiff's motion is DENIED without prejudice to renewal. Within two weeks of this Order, Plaintiff may show cause in writing why this Court retained jurisdiction to enforce the agreem ent when it approved the settlement. The Clerk of Court is respectfully directed to terminate Dkt. No. 36. SO ORDERED. re: 36 MOTION for Judgment to Enforce Settlement Agreement filed by Lesby Banegas. (Signed by Judge Alison J. Nathan on 3/17/2021) (rjm)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

3/17/21

Lesby Banegas,
Plaintiff,
14-cv-8491 (AJN)
–v–
MEMORANDUM
OPINION & ORDER

The Mirador Corp., et al.,
Defendants.

ALISON J. NATHAN, District Judge:
On October 23, 2014, Plaintiff Lesby Banegas filed a complaint in the Southern District
of New York alleging violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et
seq., the New York Labor Law (“NYLL”), Art. 19 § 650 et seq., and state and local
antidiscrimination laws. Dkt. No. 1 (“Compl.”). The Court approved the settlement on May 17,
2017, finding that the settlement was fair and reasonable in accordance with Cheeks v. Freeport
Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015). Dkt. No. 34. According to Plaintiff,
however, Defendants never paid the agreed-upon sums. Presently before the Court is Plaintiff’s
motion to enforce the settlement agreement. Dkt. No. 36. Plaintiff’s motion is DENIED without
prejudice.
I.

Background
The Court assumes the parties’ familiarity with the matter. As noted in the introduction,

this litigation began in October 23, 2014, when Plaintiff Lesby Banegas alleged violations of
the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the New York Labor Law
(“NYLL”), Art. 19 § 650 et seq., and state and local antidiscrimination laws. Dkt. No. 1. On
August 21, 2015, the parties reported that they had reached a settlement. Dkt. No. 23. The Court
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instructed the parties to submit their settlement, along with a joint letter explaining why the
settlement should be approved, so that the Court could review the settlement to ensure that it is
fair and reasonable, in accordance with Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199
(2d Cir. 2015). Dkt. No. 24. After reviewing the parties’ submissions, the Court declined to
approve the settlement, citing a number of concerns. Dkt. No. 28. On May 20, 2016, the parties
resubmitted the settlement, addressing each of the Court’s concerns. See Dkt. No. 33. The Court
then approved the settlement on May 17, 2017, finding the settlement fair and reasonable. Dkt.
No. 34.
On March 26, 2020, Plaintiff filed a motion to enforce the settlement. Dkt. No. 36. By
way of a sworn attorney declaration submitted along with the motion, Plaintiff contends that
Defendants never satisfied their end of the settlement agreement and never conveyed the agreedupon funds. See Dkt. No. 37. After the Court ordered Defendants to respond, Defendants’
former counsel responded that his representation ended upon approval of the settlement by the
Court; he also advised that the owner of the defendant business has since died and the defendant
business has closed. Dkt. Nos. 39, 40. The Court then ordered Defendants’ former counsel to
serve its order on the remaining Defendants and to file proof of service on the public docket, and
it ordered the remaining Defendants to respond to Plaintiff’s motion by July 24, 2020. Dkt. No.
42. It expressly warned those Defendants that failure to respond in a timely fashion would lead
to the Court deeming Plaintiff’s motion unopposed. Id. On July 9, 2020, the Court again
ordered Defendants’ former counsel to file proof of service with the Court. Dkt. No. 43.
Defendants’ former counsel did so the following day by filing an affidavit of service. Dkt. No.
44. No Defendant ever responded.

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II.

Legal Standard
Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of

Am., 511 U.S. 375, 377 (1994). “They possess only that power authorized by Constitution and
statute, [] which is not to be expanded by judicial decree.” Id. (citations omitted). Federal courts
must determine whether subject matter jurisdiction is present—sua sponte if necessary—and
dismiss if it is lacking. Cave v. E. Meadow Union Free Sch. Dist., 514 F.3d 240, 250 (2d Cir.
2008).
“Actions to enforce settlement agreements are, in essence, contract actions which are
governed by state law and which do not themselves raise a federal question unless the court
which approved the settlement retained jurisdiction.” Thurston v. Flyfit Holdings, LLC, No. 18CV-9044 (PAE) (SN), 2020 WL 2904065, at *2 (S.D.N.Y. June 3, 2020) (citing LaBarbera v.
Dasgowd, Inc., No. 03-CV-1762 (CPS), 2007 WL 1531895, at *2 (E.D.N.Y. May 22, 2007)).
As a result, where a party seeks to enforce a settlement agreement, the basis for subject matter
jurisdiction “may be found in the doctrine of ancillary jurisdiction, which allows a district court
to decide matters that are ‘factually interdependent’ with another matter before the court, or to
take actions necessary ‘to manage its proceedings, vindicate its authority, and effectuate its
decrees.’” Hendrickson v. United States, 791 F.3d 354, 358 (2d Cir. 2015) (quoting Kokkonen,
511 U.S. at 379–80).
Retention of ancillary jurisdiction does not happen automatically. Instead, to retain
ancillary jurisdiction to enforce a settlement agreement, “a district court’s order of dismissal
must either (1) expressly retain jurisdiction over the settlement agreement, or (2) incorporate the
terms of the settlement agreement in the order.” Id. (citing Kokkonen, 511 U.S. at 381). “In such
cases the district court ‘necessarily makes compliance with the terms of the settlement agreement

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a part of its order so that a breach of the agreement would be a violation of the order.’”
Thurston, 2020 WL 2904065, at *2 (quoting StreetEasy, Inc. v. Chertok, 752 F.3d 298, 305 (2d
Cir. 2014) (alterations in original)). When a district court has done so, it may “enforce the
settlement as an exercise of its ancillary jurisdiction.” StreetEasy, Inc., 752 F.3d at 305.
As the Supreme Court has admonished, “mere awareness and approval of the terms of [a]
settlement agreement do not suffice to make them part of [its] order.” Kokkonen, 511 U.S. at
381. Nor does a court retain jurisdiction by “plac[ing] its ‘judicial imprimatur’ on the
agreement.” Thurston, 2020 WL 2904065, at *2 (quoting Hendrickson, 791 F.3d at 358–59). So
where an order approving a settlement agreement lacks language “explicitly expressing intent to
retain jurisdiction or to incorporate the terms of the parties’ settlement agreement, courts
generally decline to enforce settlement agreements.” Id. (collecting cases); c.f. Hendrickson, 791
F.3d at 360–61.
III.

Discussion
Before the Court reaches the merits of Plaintiff’s motion, it must assure itself that it has

jurisdiction to grant the requested relief. Applying the standards above to the present case,
however, the Court is skeptical that it has jurisdiction to enforce the settlement agreement at
issue. As already noted, actions to enforce settlement agreements are contract actions that are
“governed by state law and which do not themselves raise a federal question.” Thurston, 2020
WL 2904065, at *2. The Court’s May 17, 2017 Memorandum & Order, in which it approved the
Settlement after finding it to be fair and reasonable, contains no language either expressly
retaining jurisdiction over the agreement or incorporating the terms of the agreement into the
order. See Hendrickson, 791 F.3d at 358, 360–61. It did not address the retention of jurisdiction
at all. “Nor is there any suggestion in Cheeks that by mandating review of FLSA settlements, the

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Second Circuit Court of Appeals was creating federal jurisdiction over enforcement of all such
agreements.” Mao v. Mee Chi Corp., No. 15-CV-1799 (JCF), 2016 WL 675432, at *1 (S.D.N.Y.
Feb. 11, 2016). Indeed, as observed by one court, “[i]n the context of FLSA settlements
approved as fair and adequate under Cheeks, courts have repeatedly denied motions to enforce
where the dismissal order did not contain language expressly retaining jurisdiction or
incorporating the terms of the settlement agreement.” Daoquan Bi v. Guan Dong Yi Jia, Inc.,
No. 17-CV-6563 (RML), 2020 WL 4059645, at *2 (E.D.N.Y. July 20, 2020) (collecting cases).
While the settlement agreement includes language that “[t]he parties consent and
stipulate to the exclusive personal jurisdiction of the United States District Court for the
Southern District of New York, in any subsequent proceeding to enforce this Agreement[,]” Dkt.
No. 26-1 ¶ 8, this, too, fails to confer subject matter jurisdiction on this Court. See Thurston,
2020 WL 2904065, at *3 (“The parties’ stipulation to the personal jurisdiction of the district
court that approved the settlement similarly has no bearing on whether the court has retained
ancillary jurisdiction over enforcement. . . . Stipulation to the district court's subject matter
jurisdiction over enforcement proceedings is similarly futile.”); Melchor, 2016 WL 3443649, at
*8 (“Subject matter jurisdiction, unlike personal jurisdiction, cannot be created by agreement,
consent, or any other act of a party.”).
As noted, in her motion to enforce the settlement agreement, Plaintiff does not address
whether the Court has subject matter jurisdiction. Because Plaintiff has not had an opportunity
to brief whether this Court retained subject matter jurisdiction, however, the Court will give
Plaintiff an opportunity to address the issue. Thus, Plaintiff may show cause in writing why this
Court retained jurisdiction to enforce the settlement agreement within two weeks of this Order.

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IV.

CONCLUSION
For the reasons stated above, Plaintiff’s motion is DENIED without prejudice to renewal.

Within two weeks of this Order, Plaintiff may show cause in writing why this Court retained
jurisdiction to enforce the agreement when it approved the settlement. The Clerk of Court is
respectfully directed to terminate Dkt. No. 36.
SO ORDERED.
Dated: March 17, 2021
New York, New York
____________________________________
ALISON J. NATHAN
United States District Judge

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