Defunct media startup The Messenger settles class action lawsuit with former employees for $4.5 million

Over a year after hundreds of journalists were suddenly left jobless and without severance pay when the troubled digital media startup The Messenger crashed and burned, the owners of the defunct site have settled the class action lawsuit brought by the laid-off employees for $4.5 million.

The settlement, which is still contingent upon a separate bankruptcy liquidation case in a Delaware court, brings to an end a contentious legal fight between the nearly 300 former employees of The Messenger and Jimmy Finkelstein, the media mogul who launched the ambitious news outlet in 2023 with $50 million of financial backing only to see it collapse within eight months.

The class action lawsuit, which senior producer Pilar Belendez-Desha filed on behalf of roughly 275 Messenger employees impacted by the site’s closure, was filed a day after Finkelstein informed the newsroom in January of last year that The Messenger was immediately shutting down and none of the staff would be receiving any severance pay or insurance benefits going forward.

At the time of the “centrist” news site’s implosion, Finkelstein – who had previously owned The Hill – had been desperately trying to raise additional capital to keep the publication afloat, only to come up short in the end.

Despite previously expressing optimism to staff that investors were lining up to pump money into The Messenger, Finkelstein broke the news in an email to employees on January 31, 2024, that he was “personally devastated” to announce the site was shutting down “effective immediately” as he had “exhausted every option available” to raise enough funds. In fact, much of the staff – including The Messenger’s editor-in-chief – said they hadn’t immediately been informed of the site’s shutdown after it was first reported by The New York Times.

According to the class action suit, the former employees alleged that The Messenger violated the New York Worker Adjustment and Retraining Notification Act by failing to provide proper notice prior to the site’s sudden closure.

“Plaintiff brings this action on behalf of herself and other similarly situated former employees who worked for Defendant and were terminated without cause, as part of, or as the foreseeable result of, a mass layoffs or plant closings ordered by Defendant on January 31, 2024 and within 90 days of that date and who were not provided 60 days advance written notice of their terminations by Defendant,” the lawsuit stated.

The plaintiffs sought wages, health insurance premiums, and accrued vacation and holiday pay for a period of 60 days following the closure of The Messenger. Additionally, they demanded two months’ worth of benefits, which included life and health insurance coverage.

Over the past few months, the case appeared close to reaching a settlement. In February, media newsletter Breaker reported that Finkelstein was “about to make good with the hundreds of workers who were abruptly laid off,” noting that the shuttered site’s parent company JAF Communications had agreed to settle the lawsuit with the former employees.

After some delays, the agreement was reached this month, and a joint motion for settlement approval was filed in the U.S. District Court for the Southern District of New York on Friday.

According to the settlement agreement reached between the parties, JAF Communications “has denied it violated any WARN Act, law, or regulation, and in fact it claims that it acted in full compliance with their requirements and does not owe any employee salaries or benefits.” At the same time, the company has agreed to settle with the plaintiffs through a consent judgment for a total of $4.5 million.

Still, it remains to be seen whether the former employees will receive all or even part of this money, as JAF is still undergoing an ABC proceeding to liquidate all of its assets.

“This settlement will not result in immediate payment to the class members, because Defendant’s assets are being liquidated in a separate proceeding in Delaware state court,” the agreement notes. “Class Counsel intends to recover any available proceeds (up to $4.5 million) from the liquidation.”

In a notice to the plaintiffs in the case, it also specifically states that “the settlement does not guarantee that you will be paid” due to the efforts to recover money from what remains of JAF Communications.

“Under the Settlement, JAF will consent to entry of a judgment against it for $4,500,000.00, which the Class Representative’s attorneys (known as Class Counsel) can attempt to enforce, and thereby recover money on, in the ABC proceeding,” the notice points out.

“The ABC proceeding is similar to a bankruptcy proceeding in Delaware State court, where JAF’s assets are being liquidated,” the notice continues. “The consent judgment here allows Class Counsel, the Class, and Plaintiff to go to the ABC proceeding to enforce the consent judgment of $4,500,000.00 against the assets of JAF being liquidated in the ABC proceedings.”

Lawyers for the plaintiffs and defendants did not immediately respond to a request for comment.