FORT WAYNE, Ind. (WANE) – For more than two years, Shahid Rizwan and Steak ‘n Shake haggled in federal court over unpaid overtime claims before both sides reached an agreement and proposed a settlement.
A federal judge denied that settlement.
U.S. District Court Judge Holly A. Brady ruled this week the settlement between the Fort Wayne man and the national eatery could not be approved because neither side provided enough evidence that the agreement was reasonable.
“The Court is left with more questions than answers,” she wrote in denying the motion.
The proposed settlement called for Steak ‘n Shake to pay Rizwan a total of $55,000, provided that $32,000 of that go to him – half in W-2 wages and half as 1099 payments – while the rest would be earmarked for attorney fees.
Rizwan would also not apply for employment at Steak ‘n Shake again.
Rizwan, who according to court documents worked as a general manager and manager at a few area Steak ‘n Shakes between 2017 and 2019, sued the eatery under the Fair Labor Standards Act. He claimed he was owed 2,200 hours overtime while Steak ‘n Shake said he was an exempt employee.
Later, he said he was passed over for further promotion due to the lawsuit.
In the presentation of a settlement – which attorneys for Steak ‘n Shake tried to seal – attorneys for the chain and Rizwan wrote:
“The settlement was reached in an adversarial context in which both parties were represented by competent and experienced counsel, and the totality of the proposed settlement is fair and reasonable.”
Brady, though, wrote in her order denying the motion she needed more than that.
“This stream of conclusory statements does little to provide the Court the information it needs to evaluate the settlement,” she wrote in court documents.
In her order denying the settlement, Brady cites case law in which a judge must be able to determine the fairness of a settlement under the Fair Labor Standards Act and make sure a reasonable compromise is made rather than a “mere waiver of statutory rights brought about by an employer’s overreaching.”
Brady also wrote a judge must consider the complexity of a case, the stage when evidence is completed, the risks of establishing liability, the risks of establishing damages and the ability of a defendant to withstand a larger judgement, as well as the range of reasonableness considering the risks of litigation.
“The Court has no ability to evaluate the risk of establishing liability or damages,” Brady’s order denying the settlement said. “The Court assumes the Defendant, a nationwide restaurant chain, could afford to pay a larger judgment.”
Brady ordered attorneys iron out a new agreement, one that “should provide the Court with the information necessary to evaluate the settlement.”