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Islands' $2.7M Settlement Gets Skeptical Stamp of Approval

In March 2011, Jonathan Chambless ("Chambless") accused a hamburger chain restaurant with over 50 locations, Islands Restaurants LP ("Islands"), of violating California wage and hour laws by denying employees mandated rest breaks. However, because of personal reasons, Chambless withdrew from the case and Kathryn Jacoby ("Jacoby") became the named plaintiff.

After years of litigation, Jacoby filed a motion for preliminary approval of a class settlement in January 2017, which covered all hourly workers who worked at Islands restaurants from March 2007 through October 2016. The proposed settlement provides for up to $2.7 million for the class, or roughly $70 per class member. The deal requires class members submit a claim form in order to collect their part of the settlement, and requires only $1.55 million of the $2.7 million be paid. Any leftover money not claimed by class members after the $1.55 million is paid will revert back to Islands.

On March 30, 2017, Los Angeles Superior Court Judge Kenneth Freeman pointed out the questionable structure of the settlement deal. According to Judge Freeman, he and other judges who handle employment class actions in Los Angeles, have found that oftentimes the amount of claims do not meet the minimum requirement. This results in giving a higher payout to employees that do make claims, but releases the claims of a majority of the class for no value while clearing the defendant of its liability for less money. Instead, Judge Freeman suggested that a deal that reduced the total amount of funds, but provided automatic payouts to workers without reverting any funds to the defendant, would be preferable.

Despite his reservations, Judge Freeman granted preliminary approval, and the final approval hearing is scheduled for August 2017. In the meantime, he encouraged the attorneys to reevaluate their approach for the final settlement.

The legal team at SFMS has substantial experience litigating employment matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (nlussier@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP, is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides our firm with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES

Siegal, Daniel. "Judge Swallows Islands' 'Questionable' $2.7M Wage Deal." Law360. Last modified on March 30, 2017.

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