November 2, 2017 / 10:26 PM / a year ago

Judge: Lawyers on both sides 'should be ashamed' of proposed FLSA settlement

(Reuters) - On Monday, lawyers for three Zurich American Insurance employees submitted a motion asking U.S. District Judge R. Brooke Jackson of Denver to approve a settlement of their clients’ wage-and-hour suit under the Fair Labor Standards Act. Collectively, said lawyers from Shavitz Law Group, the employees would receive $22,400 – more than four times the wages they claimed to have been shortchanged. The plaintiffs’ firm said Zurich backed the motion for approval of the settlement, which included a provision requiring the employees “to refrain from making any oral or written statements about the company, its products or services that are adverse to the company’s business interests or reputation.”

The insurer, which is represented by Constangy Brooks Smith & Prophete, also agreed not to oppose a fee request of about $77,000, although plaintiffs’ lawyers said in a footnote that they and Zurich understood Judge Jackson might call for lower fees.

On Wednesday, the judge told Zurich, the plaintiffs and their lawyers what he thought of their proposed settlement. Here’s the entire minute order he entered in the docket:

“This court will not approve an FLSA settlement where the lawyers receive more than three times what the clients are receiving without an in person hearing in which each client (named and opt in) is present and testifies that she is satisfied with the fairness and adequacy of the settlement (and maybe not even then),” Judge Jackson wrote. “Moreover, the court will not approve an FLSA settlement that includes a gag order on the plaintiffs. The court believes that the parties and counsel should be ashamed of themselves for asking a federal court to approve this settlement.”

The Shavitz and Constangy firms can’t say Judge Jackson didn’t warn them. In late September, after the two sides submitted a status report notifying the judge that they’d reached a settlement, he docketed an order that said they “should bear in mind that the court will not approve a settlement of an FLSA case that contains a confidentiality provision or in which counsel receives an unreasonably large portion of a monetary settlement in relation to the plaintiffs.”

Clearly, Judge Jackson has strong feelings about protecting employees in FLSA suits. He’s not alone. As I wrote last month, the 2nd U.S. Circuit Court of Appeals highlighted the FLSA’s “uniquely protective” intent in a 2015 decision, Cheeks v. Freeport Pancake House (796 F.3d 199), that required FLSA settlements to be approved by judges or the U.S. Department of Labor. Since then, many federal judges in New York have refused to seal or redact FLSA settlements, citing the public interest in fair wages for employees covered by the statute. U.S. District Judge William Pauley of Manhattan has been particularly tart in denying motions to keep FLSA settlements hidden.

But I haven’t seen any previous decisions with the same punch as Judge Jackson’s order.

I emailed plaintiffs’ lawyer Gregg Shavitz and Zurich counsel Steven Moore of Constangy for their reaction to the order. Shavitz did not respond. The Constangy firm referred my request to Zurich, which said in an email that it does not comment on pending cases.

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