Chang v. CK Tours, Inc.

605 F.Supp.3d 529

Xuguang CHANG, Jun Ning, Haitao Wang a/k/a Leo Wang, and Chuan Hui Wang, on their own behalf and on behalf of others similarly situated, Plaintiffs,

v.CK TOURS, INC. d/b/a CK Tours; d/b/a Da Xing Tours; Win Li Tours, Inc. d/b/a Win Li Tour; d/b/a Heng Xing Tours; Skyliner Travel & Tour Bus Corp d/b/a Skyliner Travel; Hyon-Sak Kim a/k/a Peter Kim, and Joanna Lau a/k/a Kin-Ching Lau, Defendants.

18 Civ. 6174 (PAC)

United States District Court, S.D. New York.

Signed June 6, 2022

Aaron B. Schweitzer, John Troy, Troy Law, PLLC, Flushing, NY, for Plaintiffs.

Diana Y. Seo, Seo Law Group, PLLC, Flushing, NY, Jian Hang, Shan Zhu, Yongjin Bae, Hang & Associates, PLLC, Flushing, NY, for Defendants.

OPINION & ORDER

PAUL A. CROTTY, United States District Judge

On the morning of April 20, 2022, minutes before the Court was set to begin jury selection for trial in this case, the parties reported they had reached a settlement agreement, and that trial would no longer be necessary. The Court agreed to adjourn the matter, withdrew its request for prospective jurors (who had already arrived at the courthouse), and ordered the parties to re-convene the following month to finalize the settlement.

Two days later, Defense counsel wrote the Court purporting to "revoke" the settlement, claiming that one of the five Defendants in this case—Mr. Hyon-Sak Kim—had lacked capacity to enter into the agreement, and asking the Court to set a new trial date. Plaintiffs opposed that request, and cross-moved for enforcement of the parties’ original settlement agreement (the "April 20 Settlement"). This Opinion addresses both motions in tandem.

The Court concludes that the April 20 Settlement is enforceable for two reasons. First, the parties each manifested an objective intent to be bound. Second, Defendants’ incapacity defense is feeble to the point of frivolity. The Court also notes that our civil justice system would be ill-served if civil defendants were permitted to finagle their way out of trial by appearing to settle on the eve (or indeed, the morning) of trial, only to renege days later.

The Court therefore GRANTS Plaintiffs’ motion to enforce the settlement agreement, and DENIES Defendants’ motion to set a new trial date. The Court also ORDERS Defense counsel to pay assessed jury costs, and—having evaluated the parties’ preliminary arguments concerning sanctions—directs Defense counsel to show cause why sanctions should not issue pursuant to Rule 11, 28 U.S.C. § 1927, and the Court's inherent sanction powers.

BACKGROUND

The Court presumes familiarity with the factual and procedural backdrop of this case, as set forth in its prior orders. See Xuguang Chang v. CK Tours, Inc. , No. 18-cv-6174 (PAC), 2021 WL 1317211 (S.D.N.Y. Apr. 8, 2021), For purposes of this Opinion, it therefore focuses on the specific circumstances that prompted the instant motions. In deciding those motions, the Court relies upon facts that the parties do not dispute.¹

Defendants’ maneuvering did not begin the morning of trial. Their attempts to erect roadblocks began weeks earlier when—roughly 19 months after the Court adopted a summary judgment briefing schedule, and 18 months after summary judgment motions were to be fully briefed—Defendants sought leave to file a second summary judgment motion. See ECF No. 104. The Court ruled that the proposed summary judgment motion was both untimely and meritless, and declined to postpone trial on that basis. See ECF No. 106. Then, just one week before trial, on April 13, 2022, Defendants requested that trial be adjourned, purportedly so Mr. Kim could travel to South Korea to be with his mother.² See ECF No. 119. In their initial submission to the Court (accompanied by a five-sentence affidavit and no other documentary support), Defendants claimed that Mr. Kim's mother was under "intensive treatment" and that she needed Mr. Kim at her side because he "is the only family member she has." Id.

That turned out, at least in large part, not to be true. At a conference that same day, Defense counsel represented that Mr. Kim in fact has a sister who was attending to their mother. April 13, 2022 Tr. at 5. They then explained that Mr. Kim's mother had suffered a "fracture in ankle and other areas of her body," which was complicated due to underlying conditions. Id. at 2–3. When the Court pressed counsel for details on the underlying condition, observing that it was unusual for this kind of request to be so scantly supported, counsel were unable to meaningfully elaborate. Id. at 4–5. The Court then denied Defendants’ request to adjourn without prejudice, pending the submission of further detail and documentation. Id. at 5. Defendants instead withdrew the request, advising the Court that because Mr. Kim's mother was in fact unable to receive hospital visitors due to the COVID-19 pandemic, Mr. Kim had "decided to stay in the States to testify" at trial. ECF No. 121. The Court therefore continued its preparations for a trial set to begin on April 20.

That trial, like all trials in the Southern District of New York since early 2020, was to be substantially constrained by the COVID-19 pandemic. To start, receiving a jury assignment in the first place was a significant milestone. Under the relevant pandemic protocols, all jury trial requests are subject to review by the assignment committee, who evaluates each request and schedules trials based on certain prioritizing factors. See generally United States v. Tagliaferro , No. 19-cr-472 (PAC), 2021 WL 2767154, at *1 n.1 (S.D.N.Y. July 1, 2021). Under these protocols—particularly for civil trials—a jury request may not be satisfied. Requests that the assignment committee deems to be lower priority may be given a later trial date, awarded a less favorable place in the pecking order for prospective jurors on the scheduled trial date, or deferred altogether until the next quarter's trial calendar.

The constraints do not cease once a trial has been scheduled. Prospective jurors must endure significant restrictions upon arrival at the courthouse. Beyond the ordinary (substantial) burdens imposed upon prospective jurors even outside of the pandemic context, jurors must currently, inter alia , fill out a COVID questionnaire each time they enter the courthouse, remain masked at all times, attempt to stay socially distanced even as they are herded into crowded courtrooms for jury selection, and otherwise absorb the risks associated with convening in indoor public spaces during a pandemic. In this case, the parties were aware of these many constraints and burdens, which were incorporated into the pre-trial jury instructions circulated in advance of trial. See April 13, 2022 Tr. at 16–18.

On the morning of April 20, minutes before the Court was to begin preliminary trial proceedings, the parties announced that after a flurry of last-minute negotiation, they had reached a "settlement in principle." Apr. 20, 2022 Tr. at 2, ECF No. 127. Although they did not disclose the complete terms of the agreement on the record, the parties indicated that they had agreed to "a dollar amount" and a "payment plan" moments earlier. Id. Plaintiffs’ counsel, without dispute from Defense counsel, reported that the final outstanding hurdle was the "fairly painless process" of "discuss[ing] further the remaining material terms"—specifically, deciding whether they would memorialize the deal via a settlement stipulation under Rule 41 or an offer of judgment under Rule 68. Id.

When the Court pressed the parties to specify what precisely remained to be finalized, Plaintiffs’ counsel reiterated the stipulation/offer of judgment decision. Id. at 2–3. Neither party disclosed any other open terms. Id. at 3. When prompted for next steps, Defense counsel recommended the Court "discharge the jury because the trial is no longer needed." Id. at 3. Both parties answered in the affirmative, without qualification, when the Court asked: "So in 30 days you will come back with a settlement, is that correct?" Id.

That also turned out not to be true. Two days later, Defendants informed the Court that Mr. Kim had "withdr[awn] the acceptance of Plaintiffs’ settlement offer," and "revoked the settlement." Defs.’ Ltr. at 1, ECF No. 124. Requesting a new trial date, Defendants asserted that "the agreement entered on the record is not enforceable" because Mr. Kim—one of two individual defendants, alongside three corporate defendants—"took medicine which led him under undue influence in making a reasonable judgment [sic] for settlement on the trial date." Id. According to Defense counsel, Mr. Kim had been suffering from insomnia and "taking Zolpidem to get some sleep." Id. Mr. Kim had been "worried about his mother's medical condition," counsel continued, and therefore "did not have a clear mind enough to make decision [sic] to settle this case," and now "wants to proceed with trial." Id.

Defendants’ letter was accompanied by two exhibits: (1) a picture of a bottle purported to be Mr. Kim's prescribed sleeping pills, along with (2) records and phone screenshots concerning his mother's medical conditions. See ECF Nos. 124-1, 124-2. Although one medical document was accompanied by a certified translation, there was no accompanying affidavit or declaration affirming the authenticity of any of these exhibits, or otherwise substantiating the factual assertions³ in Defendants’ letter to the Court.

In their letter, Defendants also disclosed some of the details of the parties’ negotiations. They reported they had accepted Plaintiffs’ offer of $330,000 to settle the case. Defs.’ Ltr. at 1. Plaintiffs subsequently confirmed this account of the settlement terms, and added that the parties had agreed the total would be payable over eight months, through an initial payment of $50,000 followed by seven payments of $40,000. Pls.’ Ltr. at 2, ECF No. 126.

DISCUSSION

I. Type I Enforceability

a. Applicable Law

"A district court has the power to enforce summarily, on...