Mashel Law Obtains $400K Settlement of a Wage and Hour Class And Collective Action Lawsuit

The United States District Court of the Northern District of New York recently granted final approval to a settlement in the matter entitled Spack, et. als. v. Trans World Entertainment Corporation, et. als., Civil Action No. 1:17-cv-1335, where Trans World Entertainment Corporation (TWEC) and its related entities agreed to pay to Plaintiffs and the collective and class consisting of Store Managers and Senior Assistant Store Managers for a gross sum of $400,000.00 to settle all claims including, but not limited to, those for alleged unpaid overtime wages under the federal Fair Labor Standards Act and state class action claims brought under New Jersey's Wage and Hour Law and the Pennsylvania Minimum Wage Act. The Settlement Fund covers any Court-approved Service Awards, attorneys' fees and expenses, Settlement Administrator's fees and Participating Class Members awards. Mashel Law, L.L.C. represented all the named plaintiffs and class and collective members in this lawsuit.

Settlement was reached only after the attorneys at Mashel Law conducted a thorough investigation, evaluated the claims and defenses, and negotiated extensively with counsel for the Defendants. Throughout this three-year litigation, the Mashel Law attorneys obtained and reviewed thousands of pages of payroll records, timekeeping records, policies and procedures, and emails produced by the Defendants. Mashel Law interviewed several non-party witnesses, obtained numerous signed supporting Declarations, and conducting depositions. In rendering its decision approving the settlement, the federal court was required to determine if the proposed terms of settlement were "fair and reasonable". Such a determination "does not involve use of a 'mathematical equation yielding a particularized sum.'" Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y.2005) (quotation omitted). "Instead, 'there is a range of reasonableness with respect to a settlement – a range which recognized the uncertainties of law and fact in any particular case and the concomitant risks and costs necessarily inherent in taking any litigation to completion.'" Id. (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1972)).

According to class and collective counsel Stephan T. Mashel, Esquire, there was ample reason to be concerned whether the TWEC Defendants would be able to satisfy a judgment greater than $400,000 had the case gone to trial. This is because during the pendency of the lawsuit TWEC entered into an asset sale where it sold its chain of FYE retail stores believed to be valued at $40 million for only $10 million with all proceeds being used to pay outstanding debts. Equally concerning was TWEC filing a form 10-Q with the Securities Exchange Commission (SEC) reporting that it had, "incurred net losses of $39.1 million and $31.7 million for the 39 weeks ended November 2, 2019, …" TWEC further represented that it expected to incur net losses for the "foreseeable future." Based on this, TWEC concluded, "there is substantial doubt about the Company's ability to continue as a going concern... for a period of one year after the date of filing of this Quarterly Report on Form 10-Q." According to Mashel, "In large part due to the apparent precarious financial condition of TWEC the parties in February 2020 participated in a settlement conference with the Court, and even though the settlement conference was unsuccessful, the parties continued to engage in extensive arms-length negotiations after the conference until a proposed settlement was reached. We are satisfied that under the circumstances presented, the settlement was a fair and reasonable one benefitting the class and collective members Mashel Law represented in this case."

If you believe you have been misclassified by your employer to avoid paying you overtime wages and/or are not being paid an overtime rate for all hours worked in excess of 40 hours in a workweek, call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help. At Mashel Law LLC, we are well experienced in handling federal and state law wage and hour based legal claims.