United States District Court, N.D. California, San Jose Division
ORDER DENYING FINAL APPROVAL OF CLASS ACTION SETTLEMENT Re: Dkt. No. 97
LUCY H. KOH, District Judge.
Before the Court is the parties' joint motion for final approval of class action settlement. ECF No. 97. The Court held a hearing on the motion for final approval on January 15, 2015. Having considered the motion, the accompanying filings, declarations, and exhibits, and the oral argument presented at the hearing, the Court DENIES the motion for final approval, for the reasons stated below.
Plaintiffs Jessie Chavez and Anabel Armenta (collectively, "Plaintiffs") are former and current employees of Defendants PVH Corporation, Tommy Hilfiger Retail, LLC, and PVH Retail Stores LLC (collectively, "Defendants"). Plaintiffs have brought this putative class action on behalf of current former employees of Defendants, on the grounds that the Defendants allegedly violated provisions of the California Labor Code by paying employees with payroll debit cards, and providing employees with inaccurate or incomplete wage statements. ECF No. 40-1 ("Second Am. Compl.") ¶¶ 25-33. The instant action is one of three putative class action lawsuits filed against Defendants that raise similar and overlapping allegations regarding the Defendants' use of payroll debit cards: Scott-George v. PVH Corporation, 13-CV-00441-TLN, before Judge Nunley of the Eastern District of California (" Scott-George "); and Lapan et al. v. PVH Corporation, 13-CV-5006-LHK, which is a case related to Chavez that is also before this Court (" Lapan "). Because the Scott-George and Lapan actions are relevant to this Order, the Court summarizes them and their relationship to the instant lawsuit below.
A. The Scott-George Plaintiff Files Her Lawsuit
On January 29, 2013, the Scott-George plaintiff filed her lawsuit against PVH Corporation in the California Superior Court for Nevada County. ECF No. 113-2, Ex. B. This was the first of the three lawsuits against PVH Corporation. The complaint in Scott-George alleged PVH Corporation failed to pay wages for meal breaks, rest breaks, bag checks, overtime, double overtime, vested vacation pay, and failed to provide compliant wage statements, in violation of Labor Code §§ 201-203, 226(a), 226.7, 227.3, 510, 512(a), 1194, 1198. See id. The Scott-George Complaint also brought a claim for unlawful business practices based on the foregoing allegations in violation of Business and Professions Code §§ 17200 et seq. Id. The Scott-George complaint did not contain any allegations related to payroll debit cards. Id.
On March 5, 2013, the Scott-George action was removed to U.S. District Court in the Eastern District of California pursuant to the Class Action Fairness Act. Id., Ex. C ¶ 1.
B. The Chavez Plaintiff Files This Lawsuit
On March 20, 2013-approximately two months after the Scott-George plaintiff filed her lawsuit, and shortly after Scott-George was removed to federal court-Chavez filed the instant lawsuit in Santa Clara County Superior Court. ECF No. 113-2, Ex. A. The original Chavez Complaint alleged that Defendants had a "pattern and practice" of paying employees their final wages upon termination via payroll debit cards. Id. ¶ 32. Chavez further alleged that these payroll debit cards required fees for usage, which resulted in employees not receiving all wages owed upon termination. Id. Chavez alleged that this use of payroll debit cards violated Labor Code §§ 201-203. Id. Chavez also alleged that Defendants failed to provide wage statements that complied with California law and thereby violated Labor Code § 226. Id. ¶¶ 35-38. Chavez sought to represent a class of all current and former employees of Defendants in California from March 20, 2012 through the present. Id. ¶ 17.
The instant lawsuit was removed to this Court on April 19, 2013. ECF No. 1. Since then, Chavez has amended the Complaint twice to add Armenta as a class representative and to add classwide claims under the Private Attorneys General Act, Labor Code § 2698 et seq., and Business and Professions Code §§ 17200 et seq.  ECF Nos. 14 & 40. However, Plaintiffs' class-wide allegations regarding the use of payroll debit cards and the provision of noncompliant wage statements have remained unchanged. At no point have the Chavez Plaintiffs alleged any claims for failure to pay wages for meal breaks, rest breaks, bag checks, overtime, double overtime, or vested vacation pay, as the Scott-George plaintiff has alleged.
C. The Lapan Plaintiffs File Their Lawsuit
On October 25, 2013-approximately seven months after Chavez was filed-the plaintiffs in Lapan filed their lawsuit against PVH Corporation. Case No. 13-CV-05006-LHK, ECF No. 1. Like Chavez, the Lapan complaint alleged that PVH Corporation paid employees through a payroll card program which required that employees pay certain fees and charges. Id. ¶ 2. This allegedly resulted in employees not receiving their full wages. Id. The Lapan plaintiffs alleged that PVH Corporation's use of payroll debit cards constituted a common law breach of contract, and violated the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., as well as numerous provisions of the California Labor Code, including Labor Code § 203. Id. ¶¶ 80-82. The Lapan plaintiffs sought to represent several classes of all current and former employees of PVH Corporation in the United States and in California who, among other things, were paid via payroll debit cards and charged fees in connection with those cards. Id. ¶¶ 37-40. The Lapan plaintiffs, much like the Plaintiffs in Chavez, have not alleged any claims for failure to pay wages for meal breaks, rest breaks, bag checks, overtime, double overtime, or vested vacation pay independent of their pay card claim, as the Scott-George plaintiff has alleged.
D. The Scott-George Plaintiff Amends Her Complaint To Add A Payroll Card Debit Claim
On October 30, 2013-approximately seven months after Chavez was filed, and five days after Lapan was filed-the Scott-George plaintiff filed a Third Amended Complaint. ECF No. 93-1, Ex. A. The Third Amended Complaint added, for the first time, a factual allegation that PVH Corporation paid its employees with payroll debit cards. Id. ¶ 25. The Third Amended Complaint alleged that employees of PVH Corporation had fees and other charges associated with the payroll debit cards involuntarily deducted from their wages, which resulted in a reduction of earned wages. Id. ¶ 26. The Scott-George plaintiff asserted ...