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Talk about a minute order that speaks volumes.

In just three sentences, a judge in Colorado shot down an unpaid wage settlement, stating that “the parties and counsel should be ashamed of themselves for asking a federal court to approve this settlement.”

U.S. District Judge R. Brooke Jackson of the District of Colorado, who was appointed by President Barack Obama in 2011, blasted the settlement on Wednesday for including a “gag order on the plaintiffs” and granting attorney fees worth more than three times what the plaintiffs are getting. He said he would not approve such a deal “without an in-person hearing in which each client (named and opt-in) is present and testifies that she is satisfied with the fairness and adequacy of the settlement (and maybe not even then).”

Lawyers had submitted a motion on Monday asking Jackson to approve the settlement, which would have given $22,400 to three call center employees at Zurich American Insurance Co. who brought the suit as a prospective nationwide class action for unpaid overtime wages. The deal also would have awarded $77,599 in fees to their lawyers.

Plaintiffs lawyer Gregg Shavitz, founding partner of Shavitz Law Group in Boca Raton, Florida, said in a statement: “In this case, the clients are recovering more than 300 percent of their unpaid wages, and plaintiffs' attorney's fees were separately negotiated as a capped fee request whereby we asked the court to make its own determination of a reasonable fee within that cap. We will be supplementing our submissions to address such issues, including clarifying that there was no confidentiality provision at issue in the settlement.”

He added: “We believe that supplemental briefing and/or a hearing will give us an opportunity to speak to the court's questions and demonstrate the reasonableness and fairness of the proposed settlement.”

Zurich's attorney was Steven Moore, co-chairman of the class action litigation practice group and a Denver partner with Constangy Brooks, Smith & Prophete.

Zurich said in an email it “does not comment on pending litigation.”

The suit, filed on Jan. 19, alleged that Zurich failed to pay its call center employees and other customer care professionals for time spent booting up their computers, loading software and reviewing emails before and after their shifts, and for meal breaks. The suit was brought under the Fair Labor Standards Act.

After a settlement was reached, Jackson issued another minute order on Sept. 28 that said: “In putting together your settlement agreement you should bear in mind that the court will not approve a settlement of an FLSA case that contains a confidentiality provision or in which counsel receives an unreasonably large portion of a monetary settlement in relation to the plaintiffs.”

Plaintiffs lawyers acknowledged the cautionary warning in their motion to approve the settlement but defended their fee request, which was negotiated separately. They insisted that the request was far less than the $106,000 they billed in the case.

“If the FLSA required attorney's fees to be strictly proportionate to the amount of wages at issue, individuals with small claims effectively would be denied access to counsel,” they wrote. “In other words, only large employers who had deprived employees of hundreds of thousands of dollars in wages ever would need to be concerned about wage litigation. Smaller employees could engage in wage theft with impunity.”

Photo by Fotolia

Talk about a minute order that speaks volumes.

In just three sentences, a judge in Colorado shot down an unpaid wage settlement, stating that “the parties and counsel should be ashamed of themselves for asking a federal court to approve this settlement.”

U.S. District Judge R. Brooke Jackson of the District of Colorado, who was appointed by President Barack Obama in 2011, blasted the settlement on Wednesday for including a “gag order on the plaintiffs” and granting attorney fees worth more than three times what the plaintiffs are getting. He said he would not approve such a deal “without an in-person hearing in which each client (named and opt-in) is present and testifies that she is satisfied with the fairness and adequacy of the settlement (and maybe not even then).”

Lawyers had submitted a motion on Monday asking Jackson to approve the settlement, which would have given $22,400 to three call center employees at Zurich American Insurance Co. who brought the suit as a prospective nationwide class action for unpaid overtime wages. The deal also would have awarded $77,599 in fees to their lawyers.

Plaintiffs lawyer Gregg Shavitz, founding partner of Shavitz Law Group in Boca Raton, Florida, said in a statement: “In this case, the clients are recovering more than 300 percent of their unpaid wages, and plaintiffs' attorney's fees were separately negotiated as a capped fee request whereby we asked the court to make its own determination of a reasonable fee within that cap. We will be supplementing our submissions to address such issues, including clarifying that there was no confidentiality provision at issue in the settlement.”

He added: “We believe that supplemental briefing and/or a hearing will give us an opportunity to speak to the court's questions and demonstrate the reasonableness and fairness of the proposed settlement.”

Zurich's attorney was Steven Moore, co-chairman of the class action litigation practice group and a Denver partner with Constangy Brooks, Smith & Prophete.

Zurich said in an email it “does not comment on pending litigation.”

The suit, filed on Jan. 19, alleged that Zurich failed to pay its call center employees and other customer care professionals for time spent booting up their computers, loading software and reviewing emails before and after their shifts, and for meal breaks. The suit was brought under the Fair Labor Standards Act.

After a settlement was reached, Jackson issued another minute order on Sept. 28 that said: “In putting together your settlement agreement you should bear in mind that the court will not approve a settlement of an FLSA case that contains a confidentiality provision or in which counsel receives an unreasonably large portion of a monetary settlement in relation to the plaintiffs.”

Plaintiffs lawyers acknowledged the cautionary warning in their motion to approve the settlement but defended their fee request, which was negotiated separately. They insisted that the request was far less than the $106,000 they billed in the case.

“If the FLSA required attorney's fees to be strictly proportionate to the amount of wages at issue, individuals with small claims effectively would be denied access to counsel,” they wrote. “In other words, only large employers who had deprived employees of hundreds of thousands of dollars in wages ever would need to be concerned about wage litigation. Smaller employees could engage in wage theft with impunity.”