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Kempen v. Matheson Tri-Gas, Inc.

United States District Court, N.D. California

August 1, 2016

ROY VAN KEMPEN, Plaintiff,



         Before the Court is the motion for preliminary approval of a collective and class action settlement filed by Plaintiff Roy Van Kempen (“Plaintiff”). Dkt. No. 45 (“Mot.”). The proposed settlement would resolve Plaintiff’s wage-and-hour claims against Defendant Matheson Tri-Gas, Inc. (“Defendant”) under the Fair Labor Standards Act, 29 U.S.C. § 207, et seq. (“FLSA”), and various California statutes.

         For the reasons set forth below, the Court DENIES Plaintiffs’ motion for preliminary approval of collective and class action settlement. The parties may correct the deficiencies in the settlement agreement noted herein and refile an approval motion for expedited consideration.

         I. BACKGROUND

         A. Factual Allegations and Procedural History

         Defendant employed Plaintiff as an hourly, non-exempt delivery driver of industrial and medical gases. Dkt. No. 48 (“Van Kempen Decl.”) ¶¶ 3-4. In his operative complaint, Plaintiff alleges that Defendant intentionally failed to include the non-discretionary bonuses he received in calculating his rate of overtime pay. On that basis, Plaintiff claims that Defendant systematically underpaid his overtime wages in violation of § 207(a)(1) of the FLSA and California Labor Code § 510. Dkt. No. 26 (“Am. Compl.”) ¶¶ 38-39. Plaintiff further alleges that Defendant had a “use- it-or-lose it” vacation time policy by which accrued vacation time was automatically forfeited if not used within a specified time period. Id. ¶ 65. Plaintiff claims that this vacation-time policy violated California Labor Code § 227.3. Id. ¶ 66.[1] These claims are asserted in both Plaintiff’s individual capacity and on behalf of all other persons similarly situated. Id. ¶ 9.

         Defendant removed this action from state court under federal question, diversity, and Class Action Fairness Act jurisdiction. Dkt. No. 1 & Ex. A. In this Court, Plaintiff amended his initial complaint to add new state law claims and propounded formal and informal written discovery on Defendant. See Dkt. Nos. 26 & 49 (“Hague Decl.”) ¶¶ 4, 13. The parties then participated in a private mediation before a retired state court judge, and the case settled. Id. ¶ 5; Dkt. No. 42.

         B. Related Class Action Settlement

         Before turning to the terms of the proposed settlement agreement, the Court must address the class action settlement in a partially overlapping lawsuit, Ambriz v. Matheson Tri-Gas, Inc., No. 2:14-cv-04546 (C.D. Cal. Feb. 4, 2016).[2] In that case, the plaintiffs, who were also employed as delivery drivers by Defendant, asserted a variety of wage-and-hour claims under California law. Dkt. No. 50, Ex. 2. The parties entered into a class action settlement, over which the court granted final approval before the instant settlement motion was heard by this Court. Dkt. No. 54 ¶ 4.

         The Ambriz settlement class includes “all current and former drivers who were employed by Defendant from March 5, 2010 through June 25, 2015.” Dkt. No. 55, Ex. 1 ¶ 2. It releases, by the account of the parties to this action, every claim asserted in the operative complaint but for the FLSA overtime claim and the unpaid, accrued vacation time claim under California Labor Code § 227.3 discussed above. Mot. at 7; see also Dkt. No. 50, Ex. 3 ¶¶ 52-53. The instant settlement, therefore, purportedly functions only to “fill gaps” in the Ambriz settlement. See Mot. at 1.

         C. Overview of the Proposed Settlement

         With that background in mind, the Court now describes the key terms of the proposed class action settlement in this case. See Dkt. No. 54, Ex. 2 (“SA”).

         Class Definitions:

         There are three groups of proposed class members: (1) a FLSA overtime group comprised of all persons employed by Defendant nationwide and classified as non-exempt, who worked overtime while entitled to non-discretionary bonus pay; (2) a California overtime class comprised of persons employed by Defendant in California and classified as non-exempt, who worked overtime while entitled to non-discretionary bonus pay; and (3) a California vacation-time class comprised of all persons employed by Defendant in California, who accrued vacation time but forfeited it. Id. ¶ 8. The class period for all three proposed classes runs from January 9, 2011, through the date that the Court enters final approval of the class actions settlement. Id. ¶ 10. In total, the parties estimate that there are approximately 2, 400 putative class members. Id. ¶ 9.

         Monetary Relief:

         Defendant will pay a gross total of $370, 000 to resolve this action, less the requested $103, 000 in attorneys’ fees and $15, 000 in litigation costs, a $5, 000 incentive award for Plaintiff, settlement administration costs not anticipated to exceed $25, 000, and 75% of the $5, 000 penalty under the Private Attorneys General Act, Cal. Lab. Code § 2698, et seq. Id. ¶ 23. Based on these assumptions, the parties estimate that the putative classes will receive a total of $217, 650. Id. ¶ 34(a). Fifty-two percent of this amount is allocated to the FLSA nationwide and California overtime classes. Id. ¶ 33. The remaining 48% is allocated to the California vacation-time class. Id. Each individual putative class member’s payment within each proposed class will be calculated by dividing the net settlement amount by the total number of weeks that all members of the relevant proposed class worked during the class period and then multiplying that number of compensable workweeks that the individual worked. Id. ¶ 34(b)(i). Regardless of the outcome of this formula, each putative class member will receive a monetary payment of at least $25. Id.

         Cy Pres Recipients:

         Settlement checks left uncashed for 180 days by California class members will revert to California’s Division of Labor Standards Enforcement unclaimed wage fund. Id. ¶ 34(b)(vii). Settlement checks similarly left uncashed by FLSA class members will revert in equal part to the Employee Rights Advocacy Institute for Law & Policy and the UCLA Institute for Research on Labor and Employment. Id.


         There is both a class and individual component to the proposed release. Under the current settlement agreement, putative class members would release:

“[A]ny and all applicable claims . . . of any nature and description whatsoever, whether known or unknown . . . whether under federal, state, and/or local law, which were asserted in the Action or could have been asserted against the Released Parties arising out of, derived from, or related to in any way their compensation by the Released Parties, or to the claims, matters, transactions or occurrences referred to in the operative Complaint during the Claims Period.”

Id. ¶¶ 63-64 (emphasis added). Released claims also include derivative violations of California’s unfair competition law and any and all related PAGA penalties, as well as any claims “pertaining to . . . wages . . . whether known or unknown . . . based on claims related to or arising under those allegations in the operative Complaint[.]” Id. Plaintiff would also release these same claims, but “[i]t is understood and agreed that the [settlement] will not release Named Plaintiff from claims, if any, for workers compensation, unemployment, or disability benefits of any nature.” Id. ¶ 66. It does not appear that this carve-out for Plaintiff applies to the putative classes as well.

         Class Notice:

         The parties intend to send class notice packages to all last-known addresses of putative class members by U.S. mail. Id. ¶ 38. As part of that class notice package, there are two different class notice forms. See Id. Exs. 2a & 2b. One notice is apparently for nationwide FLSA overtime putative class members and the other is for California putative class members.

         Opt-Out Procedure:

         Putative members of the California overtime and vacation classes have the right to opt out of the settlement by submitting a request for exclusion form within 60 days after the settlement administrator transmits class notice. Id. ¶ 51. If five percent of either the California overtime or vacation putative class opts-out of the settlement, Defendant shall have the unilateral right to terminate the settlement agreement. Id. ¶¶ 42, 55.

         Putative members of the FLSA class must affirmatively opt in to participate in the FLSA settlement, as required by 29 U.S.C. § 216(b). FLSA overtime putative class members must opt in “by cashing/depositing his/her Settlement Payment.” Id. ¶ 53; see also Id. ¶ 32(a).

         Class Representative and Class Counsel:

         Plaintiff asks to be appointed class representative and for Sutton Hague Law Corporation to be appointed class counsel. Id. ¶¶ 26, 36.

         Incentive Award:

         Plaintiff seeks a $5, 000 incentive award as class representative. Id. ¶ 26.

         Attorneys’ Fees and Costs:

         Plaintiff’s counsel requests attorneys’ fees equal to 28% of gross settlement amount and litigation costs up to $15, 000. Id. ¶ 24. Defendant does not oppose this request. Id. If the fees and costs award that the Court approves is less than the requested amount, the difference will revert to Defendant and not to the putative classes. Id.


         As a prerequisite to settlement approval, Plaintiff seeks provisional certification of the nationwide FLSA overtime class and provisional certification of the California overtime and vacation classes. Mot. at 19-23. The Court discusses the propriety of each in turn.

         A. Nationwide FLSA Class

         Plaintiff seeks to conditionally certify for settlement purposes a nationwide FLSA overtime class comprised of all persons employed by Defendant nationwide and classified as non-exempt, who worked overtime while ...

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