Knox v. John Varvatos Enterprises, Inc.

What the order did

This order requested clarification from the plaintiffs; it did not grant or deny an incentive payment.

Issues identified by the court

The court asked why Tessa Knox sought an incentive payment only from the portion of the punitive-damages award attributable to class members who were not also opt-ins under the Fair Labor Standards Act. The court understood that Knox’s attorneys believed the named plaintiffs’ retainer agreements barred seeking an additional payment from the named plaintiffs’ recovery, but noted that the plaintiffs had not explained why Knox’s own incentive payment should be limited to the recovery of non-named plaintiffs.

The court also asked why the plaintiffs distinguished between compensatory damages and punitive damages as possible sources of the payment. It specifically asked whether the plaintiffs believed an incentive payment would be impermissible if the jury had awarded only compensatory damages.

The plaintiffs had cited cases awarding incentive payments, but the court noted that each involved a settlement fund. It asked what authority gives a court power to award an incentive payment from a jury award and whether the plaintiffs could identify cases in which a payment was ordered from a jury award.

Finally, the court asked whether the compensatory-damages award, the punitive-damages award, or both could qualify as a “common fund”—a fund from which attorney fees may sometimes be awarded—and requested the reasons for that position.

Next step and disposition

The plaintiffs were invited to address these questions in a letter filed as soon as possible, but no later than February 19, 2021. The court stated that it assumed the defendant did not plan to respond for the reasons given in its memorandum. Judge Gabriel W. Gorenstein entered the order on February 2, 2021. The opinion contains no ruling on whether an incentive payment should be awarded.