Note N - Commitments and Contingencies

3 Months Ended

Sep. 02, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE N – COMMITMENTS AND CONTINGENCIES

Litigation

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business. We provide reserves for such claims when payment is probable and estimable in accordance with GAAP. At this time, in the opinion of management, the ultimate resolution of pending legal proceedings, including the matter referred to below, will not have a material adverse effect on our operations, financial position, or cash flows.

On April 17, 2012, a wage and hour case styled Guttentag, et al vs. Ruby Tuesday, Inc. was filed in the United States District Court, Southern District of New York.  The named plaintiffs, and five additional former employees who have joined the suit as opt-in plaintiffs, alleged that the Company violated the Fair Labor Standards Act and state wage and hour laws in New York and Florida.  Plaintiffs filed their motion for conditional certification on March 8, 2013, which sought a nationwide putative class of all current and former servers, bartenders, and food runners who worked for the Company for the three-year period prior to the filing of the lawsuit.  On June 11, 2013, the court entered an order granting conditional certification of the nationwide class requested by plaintiffs, but for the time frame of June 11, 2010 to the present. Notice of the lawsuit and the right to opt-in was mailed to the putative class members in November 2013, and approximately 5%, or about 4,170 of the putative class members, filed consents to opt-in. The parties have been engaged in mediation and recently reached a preliminary settlement agreement that, when approved by the court, will resolve the lawsuit and result in its dismissal with prejudice. The total settlement sum is $3.0 million, and would cover the claims of all named and opt-in plaintiffs, including plaintiffs’ claims for costs and attorneys’ fees. Accordingly, included within Accrued liabilities – Rent and other in our September 2, 2014 Condensed Consolidated Balance Sheet is a $3.0 million accrual in connection with this case.

On October 2, 2014, the court granted the motion to approve the settlement without modification. After a thirty-day appeals period runs without the filing of any appeals, and none are anticipated, the settlement agreement will become effective, final, and binding. At that point, the Company has an obligation to fund at least $2.0 million of the settlement fund within 21 days. The Company can defer, at its option, funding the remaining $1.0 million for up to another 90 days, but will incur an obligation to pay 8% per annum simple interest on any amount deferred for the deferral period. Per the court’s approval order, the case has now been dismissed with prejudice, subject to the court retaining jurisdiction to enforce the terms of the settlement agreement.