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TGI Friday's Hid $2M Mass. Wage Deal, NY Judge Told

Law360—Jeff Zalesin

Workers accusing TGI Friday’s of wage violations have told a New York federal judge the restaurant chain hid its efforts to settle federal labor law claims in Massachusetts state court for $1.9 million, a deal that may crumble for separate reasons.

The plaintiffs said in a Tuesday letter that TGI Friday’s Inc. kept them in the dark about the scope of the proposed deal in the Massachusetts suit, which had strictly been a state-law action but was expanded to include Fair Labor Standards Act claims for settlement. The issue may become moot because the Massachusetts deal has hit a roadblock and could be withdrawn, according to Shannon Liss-Riordan of Lichten & Liss-Riordan PC, an attorney for the plaintiffs in Rotatori v. TGI Friday’s, the state case.

But with the Massachusetts deal proceeding for now, the New York plaintiffs told U.S. District Judge Analisa Torres they are worried that Massachusetts members of the conditionally certified federal class could be presented with a “Hobson’s choice” between receiving compensation under state law and pursuing their federal claims. The Rotatori settlement notice states that class members can opt into the federal case, but that they will release their federal claims if they cash their state settlement checks.

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The New York plaintiffs also said TGI Friday’s “hid the details” of the Rotatori deal from them and the federal court. They said they were informed on Aug. 20 that the Rotatori case had settled, but only later found out the deal covered FLSA claims that overlapped with the New York case.

There was also “no indication” that TGI Friday’s told the Massachusetts judge about the ongoing class notice process in the New York case, the plaintiffs said. The Massachusetts settlement received preliminary approval on Sept. 3, and class notice in that case was supposed to be sent out this week, they said. 

The plaintiffs asked Judge Torres to order TGI Friday’s to ask the Massachusetts court to modify the Rotatori release and leave out FLSA claims covered by the federal class notice process. TGI Friday’s should also have to ask the Massachusetts court to push back the Rotatori class notice until the federal notice period is over, they said.

Judge Torres ordered TGI Friday’s to respond to those requests by Sept. 30.

The New York suit was filed in April 2014, bringing nationwide collective action FLSA claims and New York labor law class claims against TGI Friday’s and former parent Carlson Restaurants Inc. In January, the court granted the plaintiffs conditional collective action certification, a move the plaintiffs' counsel said allowed them to send notice of the suit to more than 40,000 workers.

According to the amended complaint, the defendants paid a “tipped” minimum wage, which is less than the full minimum wage for nontipped workers, but did not satisfy the strict requirements for paying the reduced wage under the FLSA.

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The plaintiffs are represented by Justin M. Swartz and Sally J. Abrahamson of Outten & Golden LLP and Joseph A. Fitapelli, Brian S. Schaffer and Frank J. Mazzaferro of Fitapelli & Schaffer LLP.

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The case is Flood et al. v. Carlson Restaurants Inc. et al., case number 1:14-cv-02740, in the U.S. District Court for the Southern District of New York.