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Cotter v. Lyft, Inc.

United States District Court, N.D. California

March 16, 2017

PATRICK COTTER, et al., Plaintiffs,
v.
LYFT, INC., Defendant.

          ORDER GRANTING FINAL APPROVAL OF SETTLEMENT AGREEMENT DKT NO. 271, 272

          VINCE CHHABRIA United States District Judge.

         The motion for final approval of the settlement agreement is granted. The agreement is not perfect. And the status of Lyft drivers under California law remains uncertain going forward. But the agreement falls within a range of reasonable outcomes given the benefits it achieves for drivers and the risks involved in taking the case to trial.

         This ruling does not rehash the history of the case or the issues addressed in prior rulings. For a full background on the case, please see those prior rulings, which can be accessed at the Court's website.[1] Cotter v. Lyft, Inc., Dkt. No. 94, 60 F.Supp.3d 1067 (N.D. Cal. 2015) (denying the parties' cross-motions for summary judgment); Cotter v. Lyft, Inc., Dkt. No. 200, 176 F.Supp.3d 930 (N.D. Cal. 2016) (denying the motion for preliminary approval of the $12 million settlement); Cotter v. Lyft, Inc., 193 F.Supp.3d 1030 (N.D. Cal. 2016) (granting the motion for preliminary approval of the $27 million settlement); Cotter v. Lyft, Inc., Dkt. No. 293, 13-cv-4065 (N.D. Cal. Dec 23, 2016) (requiring supplemental notice to class members). The first section of this ruling addresses one additional substantive objection to the settlement agreement. The second section adopts, in large part but not fully, the language from the proposed order submitted by the parties relating to final approval of the settlement agreement and the motion for attorneys' fees filed by the plaintiffs.

         I

         Almost all substantive concerns relating to the settlement agreement were addressed in two prior rulings: the order denying the request for preliminary approval of the $12 million settlement, and the order granting the request for preliminary approval of the $27 million settlement. Of the new substantive objections raised at the final approval stage, all are rejected, and only one is significant enough to merit a detailed written response: the objection by the Teamsters to a portion of the release language. Under this language, any driver who did not opt out of the settlement class will release all claims that were brought in the lawsuit, as well as all claims that arise under the facts raised in the lawsuit (even if those claims weren't brought). One claim not brought in this case, but that would arise under the same facts, is a claim based on the federal Fair Labor Standards Act. The Teamsters contend a district judge should not approve a settlement in a Rule 23 wage-and-hour class action, brought under state law, that releases FLSA claims.

         The language of the FLSA certainly doesn't cover this situation. The language the Teamsters cite speaks only to the circumstances in which a plaintiff will be allowed to participate in an FLSA action, not to circumstances in which a plaintiff who is not participating in an FLSA action will be allowed to release potential FLSA claims:

An [FLSA] action . . . may be maintained against any employer . . . in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.

29 U.S.C. § 216(b).

         The Teamsters argue that this is worker-protective language, designed to help ensure that potential FLSA plaintiffs will not lose the opportunity to pursue their own claims. They thus seem to contend that, even if the language of the statute doesn't directly speak to waivers of future FLSA claims, district courts should derive from this worker-protective language a principle that FLSA waivers may not (or should not) be included in Rule 23 class settlements. The problem with this argument, among other things, is that Congress did not actually adopt the above-quoted language with a worker-protective purpose. To the contrary, it was part of an effort by Congress in 1947 to limit FLSA liability for employers. See 29 U.S.C. § 251; Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 173 (1989). And as part of this effort, Congress amended the statute to limit the ability of workers to participate in FLSA actions, allowing participation only when a worker affirmatively opts in, as opposed to before, when a "class" in an FLSA action could include anyone who didn't opt out. See Portal-to-Portal Act of 1947, Pub. L. No. 80-49, § 5, 61 Stat. 84, 87.

         It's true, as the Teamsters note, that a couple of district court rulings suggest that Rule 23 settlements can't, or shouldn't, release FLSA claims. Stokes v. Interline Brands, Inc., No. 12-CV-05527-JD, 2014 WL 5826335, at *4 (N.D. Cal. Nov. 10, 2014); Tijero v. Aaron Bros., Inc., No. C 10-01089 SBA, 2013 WL 60464, at *7-8 (N.D. Cal. Jan. 2, 2013). But those decisions don't explain how the literal language of section 216 could be read to preclude a release of FLSA claims to settle a lawsuit asserting state law claims. Nor do they explain how the purposes behind this language could lead to a conclusion that FLSA claims should not be released.[2]

         In short, the statutory language does not bar the release of unasserted FLSA claims in Rule 23 class actions, and there is nothing about the purpose behind this language that should cause a district court to decline to approve such a waiver. In other words, there is no greater reason to prevent Rule 23 class settlements from releasing unasserted FLSA claims than there is to prevent those settlements from releasing other unasserted claims that arise from the facts of the case. What matters is that the settlement terms are fair and reasonable in light of all the claims being released (asserted or not), that class members receive appropriate notice of the proposed settlement, and that class members be given the chance to opt out of the class if they wish to preserve their own claims.

         II

         As is customary with class action settlements, the parties have submitted a proposed order for the Court to sign. These proposed orders typically contain language explaining how the procedural requirements for a class action settlement have been met, stating that all properly-filed objections have been considered, finding that the request for attorneys' fees is reasonable, and holding that the overall settlement is fair. Sometimes these proposed orders also contain language enjoining members of the settlement class from filing any action in the future based on claims that are released in the agreement. The proposed order submitted by the parties in this case includes language to that effect. This language is unnecessary and likely inappropriate (if not unconstitutional). If members of the settlement class wish to file an action against Lyft in the future, it will be up to the forum in which the action is filed to decide whether that action is barred by this settlement. The Court therefore declines to adopt that language. This has the practical effect of rendering inoperable the language in the settlement agreement by which the parties agree to an injunction barring future claims that may be released by virtue of the settlement. See Dkt. No. 206-1 at ¶¶ 17, 29(b), 30(1), 70.

         Other than that, the language from the proposed order submitted by the parties is adopted largely verbatim, as follows:

         1. The Court grants the Motion for Final Approval of the Revised Class Action Settlement Agreement and Release and grants final approval to the Settlement. The Settlement Agreement is hereby incorporated into this District Court Final Approval Order ("Order and Final Judgment"), and all terms used herein shall have the same meanings set forth in the Settlement Agreement.

         2. This Court has personal jurisdiction over all Settlement Class Members and subject matter jurisdiction to ...


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