A $1.2 million proposed settlement in a wage and hour lawsuit against burger chain Five Guys was rejected by a federal judge in California for the fourth time on Monday.
Plaintiff Jeremy R. Lusk, who filed the complaint in May 2017, alleges Five Guys Enterprises LLC and Encore FGBF LLC violated California credit reporting laws and failed to provide employees with minimum wages, adequate meal and rest breaks, reimbursement for business expenses and payment of final wages in a timely manner.
The judge rejected the proposed settlement again because it failed to address the court’s concerns over the adequacy of class relief and the treatment of putative class members. First, Lusk did not address the value or risks of his claims under California’s Unfair Competition Law.
“Without this information, the Court is left to surmise that the claim is worthless,” the order denying the settlement states. “This is exactly where the Court was with Lusk’s last motion as well.”
Second, the court is not convinced the stated class period of August 22, 2013 through October 19, 2020 is accurate since it fails to account for the two-year period between when the parties agreed on a settlement in 2018 and when the second motion for preliminary approval was denied in 2020.
“Like before, the Court suspects that the failure to account for this two-year span represents an undervaluation of the claims. And as the Court previously explained, undervaluing the claims in this fashion also comes with a gratuitous release of potential claims that could have been raised to secure the recovery that is being overlooked here,” court documents state.
Finally, the court is not convinced that class members are treated equitably under the proposed settlement. For example, Lusk indicates the value of his wage statement claim is partially based on 996 first violations of Section 226 of the California Labor Code. However, this number of aggrieved employees is far less than the 2,206 putative class members. Such discrepancies lead to the larger problem of class certification, as the court cannot prove that Lusk’s claims are typical of the class’ claims.
“The Court…requests that the parties carefully consider how they would like to proceed before another motion of this kind is immediately filed,” the order denying the motion states. “At this point, Lusk appears to be doing himself and the putative class he seeks to represent a disservice by trying to fit a square peg in a round hole.”
The plaintiff is represented by Setareh Law Group. The defendants are represented by Littler Mendelson.
