(Photo via Wikimedia Commons.)

A California federal judge vehemently rejected a proposed settlement that gives hundreds of current and former Aeropostale employees little to no money in return for waiving their rights to sue the clothing retailer for late overtime wages, accusing the attorneys behind the deal of “selling them down the river for nothing.”

U.S. District Judge William Alsup for the Northern District of California in San Francisco denied preliminary approval of the Fair Labor Standard Act (FLSA) collective-action settlement on May 29, calling it “one of the worst I’ve ever seen” and “so unfair, it cannot be fixed.”

“The court is tentatively convinced that the opt ins would be better off fending for themselves and escaping the negotiating authority of plaintiff’s counsel,” Alsup wrote in a 12-page ruling.

Alsup also ordered counsel for the parties to show why the class of about 600 Aeropostale workers shouldn’t be decertified and why this case should not go to trial Aug. 18 on the named plaintiff Portia Daniel’s claim only. Alsup granted conditional FLSA certification for the class in April 2013.

Daniels is a former store manager of Aeropostale West, a subsidiary of Aeropostale Inc., who filed suit in November 2012, alleging the retailer had violated the FLSA by failing to include earned bonus amounts in nonexempt store employees’ regular rate of pay for overtime purposes.

But Alsup said in his April 2013 order granting Daniels’ motion for conditional certification that the issue was Aeropostale’s late payments, not a failure to pay overtime at all.

Under the proposed settlement, “sixty percent of all collective-action opt-in members would give a release and covenant not to sue but would receive absolutely nothing,” Alsup said in his opinion.

To make matters worse, another 38 percent would receive between $1 to $25, meaning 90 percent of opt ins would receive nothing or virtually nothing, Alsup wrote.

“No one should have to give a release and covenant not to sue in exchange for zero (or virtually zero) dollars,” the judge said. “The opt ins presumably think they deserve something—otherwise they would not have opted in.”

The parties have represented that the current “true up amount” is $8,645.61 for all 594 opt ins, Alsup said. However, plaintiff’s counsel failed to provide any specific information about overtime hours worked and non-discretionary bonuses paid.

“It is thus virtually impossible to evaluate how much, if any, plaintiff’s counsel have left on the settlement table, but it is almost certain that the true settlement value for 594 opt ins would exceed $8,654.21, “he said. “If not, the opt ins would be better off walking away from this lawsuit with their rights to sue intact.”

Laura Castro contributes to law.com.