United States District Court, Northern District of California
KAREN TAYLOR, individually and on behalf of all others similarly situated, and PAULISA FIELDS, Plaintiffs,
WEST MARINE PRODUCTS, INC., Defendant.
ORDER RE PRELIMINARY APPROVAL OF CLASS SETTLEMENT
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
The joint motion to preliminarily approve a proposed class settlement is DENIED. The case schedule remains as stated in the amended case management order dated November 25, 2014 (Dkt. No. 145). This denial is without prejudice to further attempts to settle this case, but we will not delay our case schedule again to accommodate further settlement efforts.
The background of this action is set forth in prior orders (see Dkt. No. 113). In brief, defendant West Marine Products, Inc. is a national boating-supply retailer. Plaintiffs Karen Taylor and Paulisa Fields are two former hourly employees who worked for West Marine at its Santa Barbara facilities - from May 2011 to March 2012, and February 2012 to June 2013, respectively.
Plaintiffs asserted several claims relating to defendant's alleged failure to provide sufficient rest and meal breaks, failing to pay overtime wages, and providing employees with inaccurate wage statements. On September 19, 2014, the Court granted in part defendant's motion for partial summary judgment and certified three classes relating to the miscalculation of overtime pay. The first class consisted of hourly-paid West Marine workers who were paid for daily overtime work and compensated with a spiff in the same week during the four years prior to the filing of the complaint. The other two certified classes - the wage statement class and the former employee class - are derivative of the first class.
Under the settlement, all claims relating to a failure to include spiff awards in the calculation of overtime pay (not just daily overtime pay) of putative class members would be completely extinguished and replaced by an unclear claims procedure. Of the $435, 000 proposed settlement, class counsel requests $160, 500 in attorney's fees and expenses. In addition to their own shares of the settlement, $10, 000 total would be paid to the two named plaintiffs as "incentive payments." Costs of administration in the amount of $15, 000 would also be deducted.
Class actions are ideally suited to the efficient resolution of numerous parallel claims in a single proceeding and encourage the pooling of small claims against a common target. They are an engine of justice in our federal courts. But they can also lend themselves to abuse. One form of abuse is collusive settlement. Once the named parties reach a settlement in a purported class action, they are always solidly in favor of their own proposal. There is no advocate to critique the proposal on behalf of absent class members. That is one reason that Rule 23(e) insists that the district court vet all class settlements. While always giving deference to counsel's views of the advisability of a settlement, a district court may not simply rubber stamp stipulated settlements. We must be careful to make sure absent class members will be treated fairly. See Howard Erichson, Beware the Settlement Class Action, DAILY JOURNAL, Nov. 24, 2014.
As the Court reads it, there are three main problems with the proposed settlement: (1) the scope of the release is too broad; (2) the proposed incentive payments for named plaintiffs are unwarranted; and (3) the proposed claims procedure is incomprehensible from the settlement agreement and the parties' brief.
1. Scope of the Proposed Release.
The settlement agreement proposes to release any and all claims:
arising from any failure by defendant to include spiff awards in the calculation of the regular rate of pay for purposes of paying overtime compensation, including derivative claims for inaccurate wage statements and California Labor Code Private Attorney General Act penalties for any pay period in which a spiff was earned by a Participating Class Member, as well as waiting time penalties. No FLSA claims are released by this Settlement Agreement.
(Harris Exh. 1 at ¶ I. S.). The scope of this release is broader than the class definition this Court certified in ...