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High Court Leaves Gristede's Owner On Hook For FLSA Deal

Law360—Kat Greene

The U.S. Supreme Court on Monday declined to hear an appeal by the owner of Gristede's Foods Inc., shutting down his claim that he can’t personally be held responsible as an employer under the Fair Labor Standards Act in a $3.5 million class action settlement.

The denial leaves standing a ruling by the Second Circuit that found grocery chain owner John Catsimatidis could be held liable because he was heavily involved in the day-to-day operations of the business, rendering him responsible for violations of the law as an employer in the wage-and-hour class action.

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The Supreme Court’s decision not to hear the case leaves Catsimatidis responsible for $2 million of the $3.5 million settlement, according to court records.

The lawsuit traces back to April 2004, when plaintiff Carlos Torres filed a class action seeking damages on behalf of nearly 500 Gristede's department managers and co-managers for unpaid overtime, in violation of the FLSA and New York Labor Law.

The class was certified in September 2006, and the parties agreed on a settlement on the eve of trial in June 2009. Negotiations on key settlement terms continued, and in June 2010, the court granted preliminary approval to a $3.5 million settlement that provided for a lump payment of $425,000, followed by 27 monthly payments. The court granted final approval to the deal in December.

The deal ran into trouble when Gristede's, Manhattan’s largest supermarket chain, had problems making payments. In July 2011, the grocery chain filed a motion saying it had missed scheduled payments and sought to modify the settlement terms and block an acceleration provision in the settlement agreement.

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In response, U.S. District Judge Paul A. Crotty ruled that Catsimatidis himself would be responsible for paying any damages the company owed. As president, CEO and chairman of the company, Catsimatidis was known to stop by the stores on the weekends, change promotional displays and check in on operations, according to court records.

Catsimatidis argued that for at least the past 10 years, he hasn't overseen hiring and firing of employees in the grocery stores, made payroll decisions, or directly negotiated with the supermarket workers' unions.

But the Second Circuit held that Catsimatidis was personally responsible for the FLSA violations alleged in the suit, finding he could be held liable under the federal employment law because he personally profited from them and exercised enough control over the grocery store chain to meet FLSA's definition of an employer.

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The plaintiffs are represented by Justin M. Swartz and Molly A. Brooks of Outten & Golden LLP and Deepak Gupta of Gupta Beck PLLC.

The case is John Catsimatidis v. Bobby Irizarry et al., case number 13-683, in the U.S. Supreme Court.

--Additional reporting by Abigail Rubenstein, Zach Winnick, Scott Flaherty and Erica Teichert. Editing by Elizabeth Bowen.