It is no secret that most FLSA class action lawsuits settle. The costs of litigation, the fee shifting nature of the statute, plus the fact that oftentimes the merits/defenses are not that clear (or good) for the employer militate settlements being made. However, that is not the end of the story because the settlement then has to be approved by the Judge and that may be easier said than done, as the parties to a suit involving Ricoh Americas Corporation just were made to realize.
The Court would not approve a $325,000 settlement between the company and a class of 400 technicians, finding it was unfair and that insufficient information was provided to the Court to allow it to approve the settlement. The case is entitled Ramirez v. Ricoh Americas Corp. and was filed in federal court in the Southern District of New York.
U.S. District Judge Fox ruled that the lead plaintiff did not give enough details to support the validity of the settlement. The plaintiff failed to identify how much additional discovery was needed, e.g. number of class members to be deposed, what experts might be required and, most importantly, why "the instant litigation would be complex, expensive and time consuming." The Judge also noted a dearth of evidence showing that putative class members supported the deal and he chided the plaintiff for only taking a single deposition in the seven months since the litigation commenced.
The plaintiff(s) were technicians and sued under the FLSA, the New York Minimum Wage Act and the overtime provisions of the New York Labor Law; the suit was filed in December 2013. However, the plaintiff did not explain what a comparable position to the position of technician meant and that the class definition (as set forth in the plaintiff's memorandum of law) was inconsistent with the definition set forth in his notice of motion seeking conditional certification and there was no definition in the proposed settlement agreement.
The Court stated that "the inconsistency of the proposed class definition in the plaintiff's notice of motion and the memorandum of law and the absence of a definition of the proposed class from the proposed settlement agreement and notices, makes it unclear to the court — as it will make it to anyone who would receive the plaintiff's notices — who the putative class members might be." That was enough, by itself, for the Court to reject the proposed settlement.
The Takeaway
Both parties must take heed when they reach a deal to ensure that all details are addressed so the settlement will get court approval. The last thing either side wants is to get a deal shot down and then go back to the drawing board, i.e. engage in more protracted discovery, at more expense for both sides and then hope/pray that the settlement then gets approved. I have (on more than one occasion) had to "help" adversaries prepare and frame settlements so that they get court approval.
Sometimes easier said than done!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
