Capsolas v. Pasta Resources Inc.

Background

The plaintiffs were workers who had been employed as captains, servers, waiters, bussers, runners, back waiters, bartenders, and/or barbacks at eight restaurants identified in the opinion. They brought a putative class action under Federal Rule of Civil Procedure 23 and a collective action under the Fair Labor Standards Act. Their claims arose under the New York Labor Law and the Fair Labor Standards Act and were asserted against named individuals and Pasta Resources, Inc., along with other defendants added in the amended complaint.

The parties reached the material terms of a settlement at mediation in October 2011. The court preliminarily approved the settlement in May 2012 and approved it in October 2012. The Settlement Agreement provided that money remaining after settlement checks were redeemed or became void would be redistributed to class members who had cashed their checks. If redistribution was not administratively feasible, the remaining money would be paid to a court-approved cy pres designee—an organization selected to receive funds because its work is sufficiently related to the interests of the original class.

The opinion states that approximately $192,000 remained after the initial checks were redeemed or became void. It then states that, after redistribution to class members who had cashed their checks, approximately $46,000,002 remained for payment to a cy pres designee. The parties could not agree on the designee.

Parties’ Positions

Class Counsel asked the court to approve Make the Road New York, referred to as MRNY, as the cy pres designee. Defendants opposed MRNY and proposed Bring Back Brooklyn or the National Restaurant Association Educational Foundation instead. Defendants argued that MRNY was inappropriate because of an alleged conflict involving MRNY and Class Counsel, including prior collaboration, recognition of Class Counsel, and financial contributions by Class Counsel to MRNY.

Legal Standard

The court stated that a cy pres designee must have some relationship to the original class. Courts have used either a “reasonable approximation” standard or a “next best” standard. The Second Circuit had not definitively chosen between those standards. Following reasoning from another district court decision, this court adopted the reasonable-approximation standard because it preserved the court’s supervisory authority over settlement funds. Under that standard, the selected organization must reasonably approximate the interests of the class.

Court’s Analysis

The court found that MRNY reasonably approximated the class’s interests. It described MRNY as a New York not-for-profit corporation that promotes workers’ rights to a living wage, dignity, and freedom to organize. The opinion also stated that MRNY protects workers through litigation, legislative advocacy, community education, and job training, and frequently represents workers seeking unpaid wages and overtime under the New York Labor Law and the Fair Labor Standards Act.

The court rejected Defendants’ conflict argument. It concluded that MRNY’s prior work with Class Counsel on pro bono matters and MRNY’s prior recognition of Class Counsel reflected their shared advocacy for workers’ rights. The court also stated that financial contributions by Class Counsel to MRNY did not create actual or apparent impropriety and instead indicated that Class Counsel viewed MRNY as legitimate and worthy and believed its interests aligned with those of the class.

The court concluded that Bring Back Brooklyn and the National Restaurant Association Educational Foundation did not reasonably approximate the class’s interests. It noted that both were part of employer organizations and did not enforce wage-and-hour laws.

Disposition

The court approved MRNY as the cy pres designee for the remaining settlement funds. The opinion was signed by Stewart D. Aaron, United States Magistrate Judge.