Plaintiff Sanctioned for Bad Faith Negotiations

Originally published by Thomas J. Crane.

In federal court, sanctions are a real possibility. The parties need to behave themselves and act in a professional manner. That even applies to a settlement conference. In Chen v. Marvel Food Services, Inc., No. CV-15-6206 (E.D. N.Y. 11/21/2016) (FLSA), the court scheduled a settlement conference. The parties were required to come to court and discuss settlement. Under the local rules, that means both parties had to comply with certain deadlines in submitting settlement offers and responses. The plaintiff submitted his settlement offer weeks prior to the conference. But, minutes before the conference was to start in court, the plaintiff doubled his settlement demand. He explained that he had re-evaluated his case. The defendant was unable to proceed with the conference because he had come with authority to settle based on the prior amount.

The Defendant filed a motion for sanctions. The plaintiff did not oppose the motion, but he did move to strike the motion because it contained the prior settlement demands. The plaintiff argued that the motion for sanctions contained confidential information. The court denied the motion to strike. The court noted this was an action based on the Fair Labor Standards Act. Therefore, the ultimate settlement amount was not confidential. The court then found that in doubling his settlement demand just minutes before the conference was to start, the plaintiff acted in bad faith. It sanctioned the plaintiff $1,000, which were the expenses of the defendant’s lawyer for that day. See the decision here.

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