Case 1:12-cv-08333-ALC-SN Document 1192-3 Filed 10/01/21 Page 1 of 35
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`Exhibit 1
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`Case 1:12-cv-08333-ALC-SN Document 1192-3 Filed 10/01/21 Page 2 of 35
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`
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF NEW YORK
`
`MAXCIMO SCOTT, JAY ENSOR, MATTHEW
`MEDINA, EUFEMIA
`JIMENEZ, KRYSTAL
`PARKER, STACY HIGGS, and CHRISTINA JEWEL
`GATELEY, on behalf of themselves and all others
`similarly situated,
`
`
`
`
`
`
`Case No. 12 Civ. 8333 (ALC)(SN)
`
`
`
`
`
`
`Plaintiffs,
`
`
`v.
`
`CHIPOTLE MEXICAN GRILL,
`CHIPOTLE SERVICES, LLC,
`
`INC.,
`
`and
`
`
`
`
`
`
`
`
`
`Defendants.
`
`JOINT STIPULATION OF SETTLEMENT AND RELEASE
`
`This Joint Stipulation of Settlement and Release (the “Agreement” or “Settlement
`Agreement”) is entered into by and between Named Plaintiffs (as hereinafter defined), on behalf
`of Collective Members (as hereinafter defined); and Defendants (as hereinafter defined).
`
`RECITALS
`
`WHEREAS, Plaintiff Maxcimo Scott filed this class and collective action litigation against
`Defendants on November 15, 2012 asserting claims under the Fair Labor Standards Act (“FLSA”)
`and New York Labor Law (“NYLL”);
`
`WHEREAS, Plaintiff Maxcimo Scott was joined by Plaintiffs Jay Ensor, Matthew Medina,
`Eufemia Jimenez, Krystal Parker, Stacy Higgs, and Christina Jewel Gateley asserting claims under
`the FLSA and class claims under the NYLL, Missouri Labor Law (“MLL”), C.R.S. 8-4-101, et
`seq. and Colorado Wage Order No. 29, 7 C.C.R. 1103-1 (“Colorado Wage Laws”), Illinois
`Minimum Wage Law, 820 Ill. Comp. Stat. § 105/1, et seq., the Illinois Wage Payments and
`Collections Act, 820 Ill. Comp. Stat. §§ 115/1, et seq. (collectively, “Illinois Wage Laws”), North
`Carolina’s Wage and Hour Act, N.C. Gen. Stat. § 95-25.1, et seq. (collectively, “North Carolina
`Wage Laws”), Washington’s Minimum Wage Act, Rev. Code Wash. §§49.46.005, et seq.
`Washington’s Industrial Welfare Act, Rev. Code Wash. §§49.12.005, et seq.; Washington’s Wage
`Rebate Act, Rev. Code Wash. §§49.52.050, et seq.; and Washington Administrative Code §§296-
`126-092 (collectively, “Washington Wage Laws”), and the FLSA;
`
`WHEREAS, Named Plaintiffs sought recovery of, among other things, overtime wages,
`liquidated damages, attorneys’ fees, and costs;
`
`
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`
`
`WHEREAS, Defendants deny Named Plaintiffs’ allegations. Nonetheless, without
`admitting or conceding any liability whatsoever, Defendants have agreed to settle the Litigation
`on the terms and conditions set forth in this Agreement so as to avoid the burden, expense, and
`uncertainty of continuing the Litigation;
`
`WHEREAS, Plaintiffs’ Counsel (as hereinafter defined) has conducted extensive formal
`discovery including, but not limited to, interviewing Named Plaintiffs and Collective Members,
`and reviewing and analyzing hundreds of thousands of documents produced by Defendants, and
`taking and defending depositions;
`
`WHEREAS, Plaintiffs’ Counsel has analyzed and evaluated the merits of the claims made
`against Defendants in the Litigation, and the impact of this Agreement on Named Plaintiffs and
`the Collective Members;
`
`WHEREAS, based upon their analysis and their evaluation of a number of factors, and
`recognizing the substantial risks of continued litigation with respect to certain claims, including
`the possibility that the Litigation, if not settled now, might result in a recovery that is less favorable
`to the Collective Members, and that would not occur for several more years, or at all, Plaintiffs’
`Counsel is satisfied that the terms and conditions of this Agreement are fair, reasonable, and
`adequate and that this Agreement is in the best interests of the Collective Members.
`
`NOW, THEREFORE, in consideration of the mutual covenants and promises set forth in
`this Agreement, as well as the good and valuable consideration provided for herein, the Parties
`hereto agree to a full and complete settlement of the Litigation on the following terms and
`conditions:
`1.
`
`DEFINITIONS
`
`1.1
`
`1.2
`
`1.3
`
`1.4
`
`The defined terms set forth herein shall have the meanings ascribed to them below.
`
`Agreement. “Agreement” or “Settlement Agreement” shall mean this Joint Stipulation of
`Settlement and Release, and all exhibits hereto.
`
`Applicable Workweeks. “Applicable Workweeks” shall mean the following, as reflected
`on Defendants’ records: weeks worked by a Collective Member for Defendants as an
`exempt-classified Apprentice at any of Defendants’ Chipotle restaurant locations during
`the Collective Period. The settlement is estimated to include a total of no more than 18,000
`Collective Member workweeks.
`
`Apprentice. “Apprentice” shall mean the “apprentice manager” or “apprentice” job title
`held by Named Plaintiffs and Collective Members at various times during their
`employment within the Collective Period.
`
`Approval Order. “Approval Order” shall mean the Order entered by the Court approving
`the settlement and the manner and timing of providing notice and payment to Collective
`Members, and entering Judgment pursuant to this Agreement and in accordance with Fed.
`R. Civ. P. 58.
`
`
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`1.5
`
`1.6
`
`1.7
`
`1.8
`
`Claims Administrator. “Claims Administrator” shall mean the entity selected by the
`Parties to provide notice to the Collective Members, calculate settlement shares, and
`administer payment of the settlement to Collective Members in accordance with this
`Agreement. Rust Consulting has been selected to serve as the Claims Administrator.
`
`Court. “Court” shall mean the United States District Court for the Southern District of
`New York.
`
`Collective Fund. “Collective Fund” shall mean One Million Nine Hundred Thousand
`Dollars ($1,900,000.00) taken from the Total Settlement Amount to cover payments to
`Collective Members, approved service awards, Employer Payroll Taxes associated with
`W-2 portions of Collective Members’ settlement payments, and settlement administration
`costs.
`
`Collective Period. “Collective Period” shall mean three years prior to the date of the filing
`of a Collective Member’s consent to join form in this Litigation plus any applicable tolling
`period, through the date of settlement approval.
`
`1.9
`
`Defendants. “Defendants” shall mean Chipotle Mexican Grill, Inc. and Chipotle Services,
`LLC.
`1.10 Defendants’ Counsel. “Defendants’ Counsel” shall mean Kendra N. Beckwith with
`Messner Reeves LLP and Elizabeth Bulat Turner with Martenson, Hasbrouck & Simon
`LLP.
`1.11 Collective; Collective Member. “Collective” shall mean: (1) all persons who joined the
`Litigation by filing consent to join forms; (2) who worked as an Apprentice for Defendants;
`and (3) who have not been dismissed by the Court. A member of the Collective is a
`“Collective Member.” For avoidance of doubt, employees who did not work for
`Defendants as an Apprentice are not Collective Members. Individuals who are also
`members of the Alvarez v. Chipotle Mexican Grill, Inc., et al., No. 2:17-cv-04095-KM-
`JBC (D. N.J.) settlement collective may be Collective Members and may make claims from
`both the Scott settlement and the Alvarez settlement.
`1.12 “Employer Payroll Taxes” means all taxes and withholdings from earned income an
`employer is required to make in order to make payments for FICA, FUTA, and SUTA
`obligations.
`
`1.13
`
`Individual Settlement Amount. “Individual Settlement Amount” shall mean the amount
`offered to each Collective Member pursuant to Section 3 of this Agreement.
`1.14 Litigation. “Litigation” shall mean Scott v. Chipotle Mexican Grill, Inc., No. 12-cv-8333
`(ALC)(SN) (S.D.N.Y).
`1.15 Named Plaintiffs. “Named Plaintiffs” shall mean Maxcimo Scott, Jay Ensor, Matthew
`Medina, Eufemia Jimenez, Krystal Parker, Stacy Higgs, and Christina Jewel Gateley.
`
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`1.16 Net Collective Fund. “Net Collective Fund” shall mean the Collective Fund less Court
`approved service awards and settlement administration costs.
`1.17 Notice of Calculation. “Notice of Calculation” shall mean the proposed Notice advising
`Collective Members of their estimated pro rata settlement share and their employment
`dates and opt-in dates on which that calculation is based, attached hereto as Exhibit A.
`1.18 Notice of Calculation Period. “Notice of Calculation Period” shall mean: (1) the forty-
`five (45) day period1 from the issuance of the Notice of Calculation; or (2) the thirty (30)
`day period from the re-issuance of the Notice of Calculation, whichever is greater, pursuant
`to Section 2 of this Agreement.
`1.19 Parties. “Parties” shall refer to Named Plaintiffs and Defendants.
`1.20 Plaintiffs’ Counsel. “Plaintiffs’ Counsel” shall mean Outten & Golden LLP; Shavitz Law
`Group, P.A.; and Fitapelli & Schaffer, LLP.
`1.21 Qualified Settlement Fund. “Qualified Settlement Fund” or “QSF” shall mean the
`account established by the Claims Administrator from the Total Settlement Amount paid
`by Defendants. The QSF will be controlled by the Claims Administrator subject to the
`terms of this Agreement and the Court’s order(s). Interest, if any, earned on any monies in
`the QSF will revert to Defendants and any taxes thereon will be paid by Defendants.
`1.22 Reserve Fund. “Reserve Fund” shall mean the One Hundred Thousand Dollars
`($100,000.00) set aside from the Net Collective Fund to cover potential errors and
`omissions, including disputes related to Applicable Workweeks used to calculate
`Individual Settlement Amounts.
`1.23 Settlement. The “Settlement” shall mean the settlement embodied in this Agreement, and
`all exhibits.
`1.24 Settlement Administration Expenses. “Settlement Administration Expenses” are those
`expenses incurred and charged by the Claims Administrator in effectuating the Settlement.
`1.25 Total Settlement Amount. The “Total Settlement Amount” shall be the settlement
`amount Defendants are directed to pay by the Court in the Approval Order of up to Eight
`Million Dollars and Zero Cents ($8,000,000.00).
`1.26 Unclaimed Funds. “Unclaimed Funds” shall mean amounts remaining in the Collective
`Fund six (6) months after the first or second mailing of the settlement checks to claimants,
`whichever is later.
`
`
`
`
`1
`Unless otherwise indicated, all time periods provided by this Agreement are stated in
`calendar days, not business days.
`
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`
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`2.
`
`2.0
`
`2.1
`
`2.2
`
`APPROVAL AND NOTICE
`
`Stipulation to Certification. The Parties stipulate for settlement purposes only, to the
`final certification by the Court of a collective action as to all claims encompassed by this
`Settlement pursuant to the FLSA for the Collective Members. If for any reason the Court
`does not approve this settlement or does not enter an Approval Order, the collective action
`certification status shall remain as it was as of the time of this Agreement.
`
`Retention and Duties of Claims Administrator. The Claims Administrator shall be
`selected by the Parties and shall be responsible for the notice administration process,
`calculating settlement payments, and making distributions to Collective Members as
`provided herein, as well as for making any mailings and performing other services as
`required under this Agreement. The Claims Administrator shall have sole responsibility to
`compute Applicable Workweeks and Collective Periods and to resolve any disputes with
`Collective Members concerning the same; and determine which individuals are Collective
`Members, based on the Claims Administrator’s review of the list of Collective Members,
`the Defendants’ data delivered to the settlement administrator by Plaintiffs’ counsel,
`applicable statutory period(s), and the litigation docket, including opt-in dates, Court
`dismissals, and tolling if any (see ECF No. 76). The Claims Administrator shall also be
`responsible for calculating and paying all appropriate taxes, including Employer Payroll
`Taxes and Collective Members’ withholdings from the W-2 portion and excluding taxes
`on any interest that reverts to Defendants, and complying with all applicable tax reporting
`obligations, including preparing and filing all applicable tax forms. The Parties agree to
`cooperate with the Claims Administrator and assist it in administering the Settlement, and
`the Claims Administrator shall perform any other duties as jointly requested by the Parties
`or as are specified herein. All Settlement Administration Expenses shall come out of the
`Collective Fund. The Parties mutually selected Rust Consulting as the Claims
`Administrator after soliciting bids from claims administration firms, based upon quality of
`services and the costs of administration.
`
`Approval by the Court. No more than thirty (30) days following the execution of this
`Agreement, Plaintiffs’ Counsel will submit to the Court a Motion for an Order approving
`the settlement (“Approval Motion”), provided that the Approval Motion will be filed on a
`Friday. At least one week before filing the Approval Motion, Plaintiffs will submit it to
`Defendants for review and comment. In connection with the Approval Motion, Plaintiffs’
`Counsel will submit to the Court, among other things: (a) a proposed Notice of Calculation
`(to be distributed to Collective Members) which is attached as Exhibit A; and (b) a
`proposed Approval Order.
`
`2.3
`
`Notice of Calculation
`
`(A) Within fourteen (14) days of the Approval Order, Defendants will provide the
`Claims Administrator and Plaintiffs’ Counsel with a list of Collective Members’
`last known and if available: (1) address; (2) telephone numbers; (3) email
`addresses; and (4) social security number. On the same date, Plaintiffs’ Counsel
`shall send the Claims Administrator the employment data produced by Defendants
`on July 31, 2020 and December 22, 2020 (collectively with Defendants’ production
`
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`“Notice List”). If the Claims Administrator determines that any additional data are
`required to calculate settlement shares or otherwise discharge its duties, and such
`data are reasonably available, Defendants will make a supplemental production of
`such data by fourteen (14) days of the Claims Administrator’s request unless it is
`impracticable to provide it within this time period.
`
`(B)
`
`Prior to issuing the Notice of Calculation, the Claims Administrator will update the
`addresses for those on the Collective List using the social security numbers
`provided by Defendants, the National Change of Address database and other
`available resources deemed suitable by the Claims Administrator.
`
`(C) Within twenty-eight (28) days of the Approval Order, or as soon thereafter as
`practicable, the Claims Administrator shall send the applicable Notice of
`Calculation to each Collective Member. The Notice of Calculation shall be sent
`via First Class United States mail, postage prepaid, electronic mail, and text
`message. In addition, the Claims Administrator shall create a website allowing for
`live submission of workweek disputes and contact information updates by
`Collective Members as outlined in Section 2 of this Agreement. In the same packet,
`the Claims Administrator will send Service Award Plaintiffs who are not Named
`Plaintiffs the Service Award Claim Form and General Release described in Section
`3.6 of this Agreement, in the form attached as Exhibit B.
`
`(D) Within seventy-three (73) days after the Approval Order, Defendants will pay the
`Total Settlement amount into the QSF established by the Claims Administrator.
`
`(E)
`
`(F)
`
`The Claims Administrator shall give the Plaintiffs’ Counsel and Defendants’
`Counsel two (2) business days’ notice before issuing the Notice of Calculation to
`Collective Members. The Notice of Calculation shall inform all Collective
`Members of their: (1) rights under this Agreement; (2) estimated Individual
`Settlement Amount; and (3) the dates of employment and opt-in date on which the
`Individual Settlement Amount is based. The Claims Administrator shall take all
`reasonable steps to obtain the correct address of any Collective Members for whom
`the Notice of Calculation is returned by the post office as undeliverable and shall
`attempt re-mailings as described below. Defendants’ Counsel and Plaintiffs’
`Counsel have the right to make inquiries and receive any information from the
`Claims Administrator as is necessary to the administration of this Settlement.
`Plaintiffs’ Counsel shall also have the right to contact Collective Members as
`necessary in order to effectuate this Agreement.
`
`If any Notice of Calculation is returned as undeliverable, the Claims Administrator
`shall forward the undeliverable notices to any forwarding addresses provided by
`the U.S. Postal Service. If no such forwarding address is provided, or if the
`forwarding address(es) provided return undeliverable, the Claims Administrator
`shall perform skip traces using the Collective Member’s social security number to
`attempt to obtain the most recent address for such Collective Member and re-mail
`the Notice. The Claims Administrator shall send one (1) reminder to all Collective
`Members who have not updated their contact information and/or disputed the
`
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`2.4
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`workweeks used to calculate their Individual Settlement Amount. The reminder
`shall be sent within thirty (30) days after the initial mailing of the Notice of
`Calculation. The reminder postcard shall be sent by mail, via First Class United
`States mail, postage prepaid, text message, and electronic mail.
`
`(G) Collective Members shall have forty-five (45) days from the issuance of the Notice
`of Calculation to update contact information and/or dispute workweeks used to
`determine their Individual Settlement Amount. Any Notice of Calculation reissued
`by the Claims Administrator shall provide the Collective Member with thirty (30)
`days from the reissuance of the Notice of Calculation or the original forty-five (45)
`day period, whichever is longer, to update contact information and/or dispute
`workweeks used to determine their Individual Settlement Amount.
`
`(H) During the Notice of Calculation Period, Collective Members may submit
`documentation challenging the Applicable Workweeks used to determine their
`Individual Settlement Amount. Defendants’ records shall be presumed to be
`accurate. Any disputes regarding workweeks used to determine a Collective
`Member’s Individual Settlement Amount will be resolved by the Claims
`Administrator who will be the final decision-maker in resolving workweek
`disputes.
`
`(I)
`
`(J)
`
`Seven (7) days after the expiration of the Notice of Calculation Period for all
`mailings and re-issuances, the Claims Administrator shall prepare a final
`calculation of Collective Members’ pro rata settlement share as set forth in Section
`3.4(A) and send checks to Collective Members using the best address determined
`by the Claims Administrator or an updated address provided to the Claims
`Administrator by the Collective Member or Plaintiffs’ Counsel during the Notice
`of Calculation Period.
`
`For good cause shown, after the expiration of the Notice of Calculation Period and
`no later than one hundred eighty (180) days after the issuance of checks, Collective
`Members may submit disputes and/or self-identify as Collective Members and seek
`a settlement share from the Reserve Fund based on the same pro-rata workweek
`amount apportioned to other Collective Members.
`
`Effect of Failure to Grant Approval. In the event the Court fails to approve this
`Agreement, the Parties jointly agree to (a) attempt to renegotiate the Settlement and seek
`Court approval of the renegotiated settlement and/or Settlement Agreement, and/or (b) seek
`reconsideration or appellate review of the decision denying approval of the Settlement
`and/or Settlement Agreement. In the event any reconsideration and/or appellate review is
`denied, or a mutually agreed-upon settlement modification is not approved, the Litigation
`will proceed on the date the reconsideration or appellate review is denied, or the Court
`issues an order failing to approve the settlement or modification, whichever is later, as if
`no Settlement Agreement had been entered. In such event, the terms and provisions of the
`Settlement Agreement shall have no further force and effect with respect to the Parties and
`shall not be used in this Litigation or in any other proceeding for any purpose.
`
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`3.
`3.1
`
`
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`SETTLEMENT TERMS
`
`Settlement Payment.
`
`(A) Defendants agree to pay a maximum of Eight Million Dollars ($8,000,000.00),
`which shall resolve and satisfy all monetary obligations under this Agreement,
`including all attorneys’ fees, litigation costs, Settlement Administration Expenses,
`payments to Collective Members, the Employer Payroll Taxes, and all other
`applicable taxes, interest, and service awards. The Collective Fund, constituting
`One Million Nine Hundred Thousand Dollars ($1,900,000.00) of the Total
`Settlement Amount, shall be allocated to payments to Collective Members,
`approved service awards, Employer Payroll Taxes associated with W-2 portions of
`Collective Members’ settlement payments, and settlement administration costs.
`The remainder of the Total Settlement Amount shall be allocated to Court-approved
`attorneys’ fees, costs, and expenses and shall not exceed Six Million One Hundred
`Thousand Dollars ($6,100,000). Defendants shall only be required to pay those
`attorneys’ fees, costs, and expenses approved by the Court.
`
`(B) Within seventy-three (73) days after the Court enters the Approval Order,
`Defendants shall deposit into the QSF Account the Total Settlement Amount.
`
`(C) Within eighty-three (83) days following the Court’s Approval Order, the Claims
`Administrator will distribute the money in the QSF Account by making the
`following payments:
`
`(1)
`
`(2)
`
`(3)
`
`(4)
`
`(5)
`
`Paying Plaintiffs’ Counsel Court-approved attorneys’ fees as described in
`Section 3.2.
`
`Reimbursing Plaintiffs’ Counsel for all costs and expenses approved by the
`Court as described in Section 3.2.
`
`Paying the Claims Administrator as described in Section 2.1.
`
`Paying service awards in the amounts described in Section 3.3.
`
`Paying Collective Members their Individual Settlement Amounts as
`described in Section 3.4.
`
`(D)
`
`The Parties agree that the QSF Account is intended to be a “Qualified Settlement
`Fund” under Section 468B of the Internal Revenue Code of 1986, as amended (the
`“Code”), 26 U.S.C. Section 468B and Treas. Reg. §1.468B-1, 26 C.F.R § 1.468B-
`1, et seq., and will be administered by the Claims Administrator as such. With
`respect to the QSF Account, the Claims Administrator shall: (1) calculate,
`withhold, remit and report each Collective Member’s share of applicable payroll
`taxes (including, without limitation, federal, state and local income tax withholding,
`FICA, Medicare and any state or local employment taxes) and Employer Payroll
`
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`Taxes, and indemnify Defendants for any penalty arising out of any error or
`incorrect calculation and/or interest with respect to any late deposit of the same; (2)
`satisfy all federal, state and local and income and other tax reporting, return and
`filing requirements with respect to the QSF Account; and (3) satisfy out of the QSF
`Account all (i) taxes (including any estimated taxes, interest or penalties) with
`respect to the interest or other income earned by the QSF Account, and (ii) fees,
`expenses and costs incurred in connection with the opening and administration of
`the QSF Account and the performance of its duties and functions as described in
`this Agreement. The Claims Administrator will agree to indemnify and hold
`harmless the Parties for and against any claims or liabilities resulting from errors
`or omissions in its administration of the QSF Account.
`
`3.2
`
`Settlement Amounts Payable as Attorneys’ Fees and Costs.
`
`(A)
`
`(B)
`
`Plaintiffs’ Counsel shall petition the Court for attorneys’ fees and reimbursement
`of reasonable litigation costs and expenses from the Total Settlement Fund.
`Plaintiffs’ Counsel shall not seek more than Six Million One Hundred Thousand
`Dollars ($6,100,000) in fees, costs and expenses. Defendants will not oppose such
`applications provided that Plaintiffs’ Counsel has abided by the terms of this
`Agreement. Defendants shall have no additional liability for attorneys’ fees and
`costs relating to the Litigation, the Settlement, or any claims released by this
`Settlement. Defendants will pay fees, costs, and expenses approved by the Court,
`up to six million one hundred thousand dollars ($6,100,000), as part of the Total
`Settlement Amount.
`
`The substance of Plaintiffs’ Counsel’s application for attorneys’ fees and costs is
`not part of this Agreement and is to be considered separately from the Court’s
`consideration of the fairness, reasonableness, adequacy, and good faith of the
`settlement of the Litigation. The outcome of any proceeding related to Plaintiffs’
`Counsel’s application for attorneys’ fees and costs shall not terminate this
`Agreement, affect its validity or any of its terms, or otherwise affect the Court’s
`ruling on the Motion for Judgment and Approval. Plaintiffs’ Counsel shall have
`the right to appeal the Court’s determination with respect to their application for
`attorneys’ fees and costs. In the event Plaintiffs’ Counsel appeals a determination
`of the Court regarding the application for attorneys’ fees and costs, such appeal
`shall not affect the remainder of this Agreement. The Claims Administrator shall
`make all distributions required by Section 3.4 aside from the amount sought by
`Plaintiffs’ Counsel. Any additional administration costs caused by such an appeal
`shall be borne by Plaintiffs’ Counsel. In the event that the Court (or any appellate
`court) awards attorneys’ fees and costs in amounts less than those requested, only
`the awarded amounts will be paid and shall constitute full satisfaction of the
`obligations of this Section and full payment hereunder.
`
`3.3
`
`Service Awards. Plaintiffs’ Counsel will apply to the Court for the following service
`awards from the Collective Fund for services rendered to Collective: service awards in
`the amount of Fifteen Thousand Dollars ($15,000) to each of the Named Plaintiffs,
`Maxcimo Scott, Jay Ensor, Matthew Medina, Eufemia Jimenez, Krystal Parker, Stacy
`
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`Higgs, and Christina Jewel Gateley; and service awards of up to Five Hundred Dollars
`($500.00) to the 64 Opt-In Plaintiffs who appeared for a deposition (collectively with the
`Named Plaintiffs “Service Award Plaintiffs”). Defendants will not oppose such
`application provided it is made in accordance with the terms of this Agreement. The
`outcome of the Court’s ruling on the application for a service award shall not terminate
`this Agreement, affect its validity or any of its terms, or otherwise affect the Court’s
`ruling on the Motion for Judgment and Final Approval. The amount of service awards
`sought but not awarded shall remain in the Collective Fund.
`
`3.4
`
`Distribution of Payments.
`
`(A)
`
`The Net Collective Fund shall be the amount of money remaining from the
`Collective Fund after deducting (a) service awards approved by the Court pursuant
`to Section 3.3; and (b) amounts allocated for the Claims Administrator pursuant to
`Section 2.1. The Net Collective Fund shall be allocated as follows:
`
`(1)
`
`(2)
`
`(3)
`
`(4)
`
`(5)
`
`Each Collective Member will receive one (1) point for each Applicable
`Workweek he or she worked during Collective Period as calculated by the
`Claims Administrator.
`
`The Net Collective Fund allocated to Collective Members will be divided
`by the aggregate number of points accrued by all of the Collective Members
`(“Collective Fund Point Value”).
`
`Each Collective Member’s total points will be multiplied by the Collective
`Fund Point Value to determine his or her Individual Settlement Amount.
`
`Employer Payroll Taxes shall be paid out the Net Collective Fund and each
`Collective Member’s above-calculated allocation shall be reduced
`accordingly on a pro rata basis to account for payment of such Employer
`Payroll Taxes.
`
`No Collective Member will receive less than Five Hundred Dollars
`($500.00) unless he or she did not work as an Apprentice at any point.
`
`(B) Defendants, Plaintiffs’ Counsel, and the Claims Administrator shall exchange such
`information as is necessary and reasonably available for the Claims Administrator
`and Defendants to make proper tax withholdings and comply with tax reporting
`obligations as described in Section 3.1(D) and 3.5.
`
`(C)
`
`The Claims Administrator will calculate the amounts due to each Collective
`Member as the Individual Settlement Amount and issue checks payable to
`Collective Members.
`
`(D) Collective Members will have one-hundred and eighty (180) days after each check
`date to redeem or cash their settlement payments (“check cashing period”).
`
`
`4830-2982-7067, v. 1
`
`{04901054 / 1}10
`
`

`

`Case 1:12-cv-08333-ALC-SN Document 1192-3 Filed 10/01/21 Page 12 of 35
`
`
`
`(E)
`
`(F)
`
`Sixty (60) days after the initial distribution of settlement checks to Collective
`Members, the Claims Administrator will provide Plaintiffs’ Counsel with a list of
`any Collective Members who have not cashed their checks.
`
`After the expiration of the initial check cashing period, the Claims Administrator
`will inform the Parties of any amounts remaining in the Reserve Fund and the
`amount of any other unclaimed funds, and distribute on a pro rata basis the
`remaining amounts to Collective Members who previously cashed their settlement
`checks. Any unclaimed amounts remaining in the Net Collective Fund six (6)
`months after the first or second mailing of settlement checks to Collective
`Members, whichever is later, shall be returned to Defendants, along with any
`interest accrued on and any other amounts remaining in the QSF.
`
`3.5
`
`Taxability of Settlement Payments.
`
`(A)
`
`(B)
`
`(C)
`
`(D)
`
`(E)
`
`For tax purposes, the payments to Service Award Plaintiffs pursuant to Section 3.3
`shall be treated as deemed appropriate by the Claims Administrator.
`
`For tax purposes, the payments to Plaintiffs and Collective Members pursuant to
`Section 3.5 shall be allocated as follows: unpaid wages (50% of each settlement
`payment) and liquidated damages and/or interest (50% of each settlement
`payment).
`
`Plaintiffs and Collective Members will be exclusively responsible for their own
`portion of payroll and income taxes. Defendants shall cooperate with the Claims
`Administrator to timely arrive at an amount equal to the Employer Payroll Taxes
`due that are traditionally borne by employers, with respect to the amounts treated
`as wages, which amounts shall be withheld by the Claims Administrator from the
`applicable wage payments as set forth in Section 3.4(A)(4). The Claims
`Administrator shall be responsible for making all reporting, deposits, and
`withholdings with respect to Employer Payroll Taxes and all amounts payable to
`Collective Members required pursuant to any federal, state, or local tax law or
`regulation hereunder under the EIN of the QSF Account.
`
`Payments treated as wages shall be made net of all applicable employment taxes,
`including, without limitation, federal, state and local income tax withholding and
`the FICA tax, and shall be reported to the IRS and the payee under the payee’s
`name and social security number on an IRS Form W-2. Payments treated as interest
`and/or liquidated damages shall be made without withholding and shall be reported
`to the IRS and the payee, to the extent required by law, under the paye