Litigating California Wage & Hour and Labor Code Class Actions

More documents

Recommendations

Info

For example, in particular industries where there is a transient workforce, it is common for only about one quarter of the class members to make claims—either because they do not receive notice or because the value of the individual settlement amounts is too low to attract their attention. When a small percentage of the class submits claims in a reversionary settlement, it may actually result in class counsel receiving significantly more money than the class as a whole. For example, in connection with a settlement of one million dollars, if class counsel received thirty percent, that would leave no more than $700,000 for the class (actually less, because settlement administration costs are typically paid out of the gross settlement). If the class claims only 25% of the amount set aside for claims, then the class would receive no more than $175,000 versus the $300,000 class counsel would be slated to receive. While this arrangement could be defended on the ground that class counsel secured a potential one million dollar settlement, courts have looked unfavorably on large payouts to class counsel as compared to the payment received by the class. One way courts can address this inequity is simply to cut the attorney’s fee and distribute the difference to those members of the class who made claims. In the above example, if class counsel’s fee was reduced to 15% of the gross, then it would result in the lawyers obtaining $150,000, and the class receiving $325,000, an effective contingency of 31%. Of course, this result is at odds with what class counsel negotiated, so a routine reduction in fees would substantially reduce the willingness of plaintiff’s counsel to agree to reversionary settlements. Courts could also take greater pains to ensure that class members understand that they have claims and make an informed decision whether to make claims. Courts could extend the notice period, could order that the claims administrator send multiple reminders of the need to return a claim form, or even that the administrator (or class counsel) actually telephone class members and encourage them either to make claims or opt out. While such steps make settlement administration more expensive, they serve the goal of minimizing the number of situations where class members unwittingly receive no money under a settlement as a result of simple ignorance. Rather than address the problem of low claims rates through better notice or adjustment of the attorney’s fee, many courts have simply refused to approve reversionary settlements. 473 That is, court have been reluctant to approve a settlement by which attorney’s fees are calculated as a percentage of the gross value, but to the extent class members fail to claim their designated portion of the settlement fund, the money is returned to the defendant. 474 473 474 See Managing Class Action Litigation, A Pocket Guide for Judges (Federal Judicial Center, 2005) http://www.fjc.gov/public/pdf.nsf/lookup/classgde.pdf/$file/classgde.pdf. This can be contrasted with a true “claims made” settlement, where the employer simply agrees to pay a sum consisting of: (1) payments to class members who submit claims (pursuant to a formula), (2) payment to class counsel for fees Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 104
Initially, there appeared to be a valid statutory basis for this approach. Specifically, Code of Civil Procedure Section 384(b) provides: [P]rior to the entry of any judgment in a class action . . . the court shall determine the total amount that will be payable to all class members [and] shall also set a date when the parties shall report to the court the total amount that was actually paid to the class members. After the report is received, the court shall amend the judgment to direct the defendant to pay the sum of the unpaid residue, plus interest . . . to nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons, or that promote the law consistent with the objectives and purposes of the underlying cause of action, to child advocacy programs, or to nonprofit organizations providing civil legal services to the indigent. Many trial courts interpreted this language as forbidding the return of any funds from a class settlement fund to the defendant. Instead, leftover funds either had to be distributed to other class members, donated to charity, or escheated to the state. 475 This interpretation of Section 384 was rejected, however, in In Re Microsoft I-V Cases. 476 The court in that case faced a settlement where a portion of unclaimed funds from a consumer class action would be returned to Microsoft. The court analyzed the statutory language and legislative history of Section 384 and determined that it applied only to funds an employer paid as a result of a judgment entered in favor of the class on the merits, and not from a stipulated settlement of class claims. 477 Accordingly, In re Microsoft makes clear that there is no absolute prohibition under California law on parties agreeing to reversions in class settlements. Nonetheless, some trial courts have continued to exercise their general discretion to determine fairness as a basis to refuse to approve reversionary settlements. This tendency became more widespread following a determination in Kakani v. Oracle Corporation, 478 in 475 476 477 478 and costs that is based on the value of the money paid out in claims rather than some fictional “gross settlement value”, and (3) payment of settlement administration costs. In this scenario, there is no money returned to the employer. Cy pres settlements should ensure that the class is benefited and the purposes of the underlying statutes sued upon are best served. Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011) (trial court abused its discretion in approving cy pres settlement because the proposed distribution did not address the objectives of the underlying statutes sued upon, did not target the nationwide plaintiff class, and did not provide a reasonable certainty that any member of the class would be benefited.) 135 Cal. App. 4th 706 (2006). Id. at 722. 2007 U.S. Dist. LEXIS 47515 (N.D. Cal. Jun 19, 2007). Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 105
Page 1 and 2:
Litigating California Wage & Hour a
Page 3 and 4:
Table of Contents I. Introduction a
Page 5 and 6:
A. Disclosure of Class Member Names
Page 7 and 8:
associated statutory penalties. 1 T
Page 9 and 10:
who does not meet the threshold com
Page 11 and 12:
exempt work is of a kind which in e
Page 13 and 14:
3) The employee performs his or her
Page 15 and 16:
decisions have concluded that under
Page 17 and 18:
Bell court to look beyond the Wage
Page 19 and 20:
place of business, would that quali
Page 21 and 22:
IWC had the authority to promulgate
Page 23 and 24:
stores” by providing them a porti
Page 25 and 26:
declare such a system illegal witho
Page 27 and 28:
employers should be able to defend
Page 29 and 30:
waive the right to reimbursement, s
Page 31 and 32:
Due to the ambiguity in the meaning
Page 33 and 34:
For each workday the employer fails
Page 35 and 36:
Arguably, no additional $100-per-pa
Page 37 and 38:
permitted” the employee to work t
Page 39 and 40:
federal decisions also held that an
Page 41 and 42:
for all overtime hours worked. The
Page 43 and 44:
much broader, such as the court’s
Page 45 and 46:
In the appeal of Chau, the appellat
Page 47 and 48:
years before the lawsuit, or for an
Page 49 and 50:
imposition of penalties, 194 routin
Page 51 and 52:
In one such class action, Elliot v.
Page 53 and 54:
First, there has been a substantial
Page 55 and 56: Recent court decisions have begun t
Page 57 and 58: of her hours was paid at a rate of
Page 59 and 60: the limitations period for a penalt
Page 61 and 62: passage, then the employee could st
Page 63 and 64: all, but rather simply to proceed w
Page 65 and 66: Shortly thereafter, another Divisio
Page 67 and 68: and the ability to bring a collecti
Page 69 and 70: XIII. Class Action Fairness Act of
Page 71 and 72: the plaintiff is “master of her c
Page 73 and 74: alleged conduct or any related cond
Page 75 and 76: Initially, the decisions were split
Page 77 and 78: XIV. Class Certification A. General
Page 79 and 80: expectations and the realistic requ
Page 81 and 82: In the immediate wake of Sav-On, th
Page 83 and 84: Similarly, employers may argue that
Page 85 and 86: A 5 to 4 ruling reversed the Ninth
Page 87 and 88: facility to the next, or variations
Page 89 and 90: employer’s defense arsenal, and t
Page 91 and 92: In reaching this conclusion, the Co
Page 93 and 94: party who seeks the same relief, pr
Page 95 and 96: is to be so maintained.” This det
Page 97 and 98: speech. 429 Therefore, the court he
Page 99 and 100: Puerto, or Crab Addison cases would
Page 101 and 102: epresentative. That question was an
Page 103 and 104: CashCall to disclose the identities
Page 105: nothing but still are bound by the
Page 109 and 110: the case. As any one of these class
Page 111 and 112: have any great impact on class sett
Page 113 and 114: plaintiff’s attorney and putative
Page 115 and 116: the California Supreme Court issued
Page 117 and 118: While California courts have essent
Page 119 and 120: The plaintiffs attempted to justify
Page 121: Breadth. Depth. Results. www.seyfar
show all

Litigating California Wage & Hour and Labor Code Class Actions

Create successful ePaper yourself

Delete template?

Save as template?