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Smith v. Kaiser Foundation Hospitals

United States District Court, S.D. California

November 7, 2019

MONICA SMITH and ERIKA SIERRA, individually and on behalf of all other similarly situated individuals, Plaintiff,
v.
KAISER FOUNDATION HOSPITALS, a California corporation, Defendant.

          ORDER DENYING MOTION FOR PRELIMINARY APPROVAL OF CLASS/COLLECTIVE ACTION SETTLEMENT [DOC. NO. 67]

          Hon. Karen S. Crawford United States Magistrate Judge

         This matter is before the Court on plaintiffs' Motion for Preliminary Approval of Class/Collective Action Settlement. [Doc. No. 67.] No opposition or objection to the motion has been filed, however, for the reasons set forth below, the Motion is DENIED.

         I. Background

         This lawsuit arises out of defendant Kaiser Foundation Hospitals' (“Kaiser”) alleged failure to properly compensate certain call center employees. Kaiser offers call center services to patients and insured members located in California, Georgia and Hawaii. [Doc. No. 70, First Amended Complaint (“FAC”), ¶ 2.] It employs “Telemedicine Specialists, ” “Customer Support Specialists, ” and “Wellness Specialists” to receive and respond to call center calls, among other duties. [Id.] Some of the Telemedicine Specialists, Customer Support Specialists and Wellness Specialists are employed at a brick-and-mortar facility in San Diego, California. Kaiser also employs “Remote” Telemedicine Specialists, Customer Support Specialists and Wellness Specialists, who work most or all of their hours from their residences in California. [Id. at ¶ 6.]

         Plaintiffs alleged that Kaiser does not compensate its Telemedicine Specialists, Customer Support Specialists and Wellness Specialists for certain activities required of their employment, including primarily: 1) starting-up and logging-into computers, programs and applications, before each shift and prior to clocking into Kaiser's timekeeping system; 2) performing computer, program and application shutdown and login tasks off-the-clock during their uncompensated meal periods; and 3) shutting-down and logging-out of computers, programs and applications, subsequent to each shift and after clocking out of Kaiser's timekeeping system. [Id. at ¶10.] Additionally, they contend Kaiser fails to pay Telemedicine Specialists, Customer Support Specialists and Wellness Specialists for time spent: prior to each shift locating equipment; subsequent to each shift shredding and disposing of patient notes; driving to Kaiser's brick-and-mortar locations on days they experience technical or connectivity issues with computers, programs and applications; in connection with reviewing their hours and punches on Kaiser's timekeeping system; and traveling to mandatory training and staff meetings or to pick up necessary equipment. [Id. at ¶¶ 10-11.] They also claim Kaiser fails to reimburse Telemedicine Specialists, Customer Support Specialists and Wellness Specialists for necessary business expenditures incurred in the execution of their job duties. [Id. at ¶11.]

         Plaintiff Monica Smith was initially employed by Kaiser as a Telemedicine Specialist at its brick-and-mortar call center, but has worked as a Remote Telemedicine Specialist since May 2012. [Id. at ¶¶ 31-33.] She is compensated at a base rate of $59.42 per hour with a shift differential and typically works approximately 40 or more hours per week (and more than 8 hours per day). [Id. at ¶ 31.] Her typical shift runs from 6:45 a.m. to 3:15 p.m. [Id.] From October 2012 through August 1, 2015, as part of her duties as a Remote Telemedicine Specialist, Kaiser required Smith to work one shift per month at its San Diego brick-and-mortar call center location. [Id. at ¶ 34.] Since August 1, 2015, Kaiser has required Smith to travel to its San Diego brick-and-mortar call center once every six month period to meet with her supervisor. [Id. at ¶ 35.]

         Plaintiff Erika Sierra is employed as a Customer Support Specialist and has worked for Kaiser since September 7, 2004. [Id. at ¶ 36.] Sierra is compensated at a base rate of $26.74 per hour, $.55 extra per hour for acting as a Qualified Interpreter of Spanish, and an additional $.35 per hour for longevity. She typically works approximately 40 or more hours per week (and more than 8 hours per day). Sierra's typical schedule is Monday through Friday from 6:00 a.m. to 2:30 p.m. and she rotates every other weekend and holidays, at the San Diego, California brick-and-mortar call center. [Id.]

         On December 21, 2017, Smith filed a hybrid class and collective action complaint in the District Court for the Northern District of California, asserting Kaiser had engaged in willful violations of the Fair Labor Standards Act (“FLSA, ” or 29 U.S.C. § 201, et seq.); California Labor Code §§ 221, 223, 226, 226.7, 510, 512, 1174, 1194, 1197, 1197.1, 1198, 2802; California Industrial Welfare Commission Wage Order No. 4; California Business & Professions Code § 17200; and the Private Attorneys General Act (“PAGA”), California Labor Code § 2698, et seq, with respect to its policies and practices for the payment of Telemedicine Specialists and Advice Nurses. [Doc. No. 1.] On April 20, 2018, the case was transferred to this Court, pursuant to the parties' stipulation, and on June 5, 2018, the case was transferred to the undersigned for all purposes, pursuant to the parties' consent. [Doc. Nos. 28 & 43.] Thereafter, the parties reached an agreement for conditional certification of a FLSA collective action and dissemination of Court-authorized notice, which was adopted by the Court. [Doc. Nos. 44 & 48.] At that time the conditionally certified collective action members were identified as:

All current and former hourly telemedicine specialists who work or have worked for Kaiser Foundation Hospitals, or KP on Call, LLC, any time since May 21, 2015.

[Doc. No. 44-1.] A Notice of Right to Join Lawsuit was then disseminated to the 286 conditionally certified collective action members. [Doc. No. 67-3, Decl. of Kevin J. Stoops, ¶ 16.] By the time the opt-in period closed, 64 Telemedicine Specialists had filed their consent to join this action. [Id.]

         Starting in July 2018, the parties engaged in a voluntary exchange of discovery and two mediation sessions with wage and hour class action mediator David Rotman. Additionally, plaintiffs informed Kaiser of their intention to amend the Complaint to expand it to include claims on behalf of Kaiser's Customer Support Specialists. Kaiser agreed to provide data and discovery concerning the Customer Support Specialists so that their claims could be thoroughly and adequately analyzed prior to mediation. This data sharing and mediation process culminated in a settlement between the parties, which was reached in February 2019. [Id. at ¶¶ 17-23.]

         Several months later, on May 30, 2019, plaintiffs filed the FAC, pursuant to the parties' Joint Motion. [Doc. Nos. 66 & 70.] The FAC adds Sierra, who had previously opted in as a FLSA collective action member, as a class representative, and adds two causes of action (Violation of California Labor Code § 226.7, 512 and IWC Wage Order 5-2001 - Failure to Provide Rest Breaks and Violation of California Labor Code §§ 201-203 - Waiting Time Penalties) on behalf of Customer Service Support Specialists. It also redefines and broadens the scope of the proposed FLSA collective action to include Customer Support Specialists and Wellness Specialists (formerly referred to as Advice Nurses), and reaches back an additional five months to December 21, 2014. In this pleading, which was filed contemporaneously with the instant Motion, the FLSA collective action group is nationwide and is defined as:

All similarly situated current and former hourly Telemedicine Specialists, Customer Support Specialists and Wellness Specialists, who work or have worked for Defendant (in a brick and mortar location or remotely) at any time from December 21, 2014 through judgment.

[Doc. No. 70, ¶ 84 (emphasis added).]

         The FAC defines the Fed.R.Civ.P. 23 California-based putative class:

All similarly situated current and former hourly Telemedicine Specialists, Customer Support Specialists and Wellness Specialists, who work or have worked for Defendant (in a brick and mortar location or remotely) in California at any time from December 21, 2013 through judgment.

[Id. at ¶ 98 (emphasis added).]

         II. Settlement Agreement Terms

         On May 28, 2019, plaintiffs filed the instant Motion, pursuant to which they request the Court enter an order “(1) preliminarily certifying a class for settlement purposes under the Federal Rules of Civil Procedure, Rule 23 (e.g., “Rule 23”) and conditionally certifying a FLSA collective for settlement purposes under 29 U.S.C. §201., et seq. (as defined in the Parties' Stipulation of Settlement); (2) preliminarily approving the parties' Settlement; (3) preliminarily appointing plaintiffs Monica Smith and Erika Sierra as Class Representatives for the Class/Collective and Plaintiffs' counsel as Class Counsel; (4) approving the form of the Parties' proposed Notice; and (5) scheduling a hearing on the final approval of the Settlement and approval of the application of Class Counsel and Plaintiffs for their requested attorneys' fees, costs, and service awards.” [Doc. No. 67, p. 2.]

         Plaintiff's Motion includes a Settlement Agreement, which is unsigned, but is purported to accurately reflect the parties' agreement. [Doc. No. 67-2.] The definition of the putative class that is offered in the Settlement Agreement is narrower than the FAC, in that it is limited to employees who worked at defendant's San Diego location, specifically:

All current and former employees who, between December 21, 2013 and preliminary approval (the “Class Period”), worked for Kaiser Foundation Hospitals at its San Diego, California location, with the job title of Customer Support Specialist, Wellness Specialist, or Telemedicine Specialist, in job codes 20005, 50278, and 20186.

[Doc. No. 67-2, ¶ 1.6.] A separate definition is not offered for the FLSA Collective Action.

         The Settlement Agreement requires Kaiser to pay a gross settlement amount of $1, 475, 000, in addition to any employer payroll taxes. [Id. at ¶ 5.1.] The manner in which the gross settlement amount, which is non-reversionary, is to be allocated is described somewhat differently in the Motion than the parties' Settlement Agreement. The Settlement Agreement allocates this amount as follows:

Fees not to exceed $442, 500, as well as incurred litigation costs, to plaintiffs' counsel (the motion indicates counsel's recovery of litigation costs shall not exceed $55, 000, however, the Settlement Agreement contains no restriction) [cf. Id. at ¶ 5.2 and Doc. No. 67-1, p. 19.];
$7, 500 as an incentive award for named plaintiff Smith, $5, 000 to opt-in plaintiff Fox, and $2, 500 to named plaintiff Sierra [Doc. Nos. 67-2, ¶ 5.3, 67-1, p. 19.]; $40, 000 to settlement of PAGA claims, of which $30, 000 is earmarked to go to the California Labor & Workforce Development Agency (“LWDA”) and $10, 000 will remain in the settlement fund for distribution thereof [Doc. No. 67-2, ¶ 5.4.];
$12, 000 or $15, 000 to Simpluris, Inc., the Settlement Administrator, for administrative costs [cf. Doc. No. 67-2, ¶ 5.1 (allocating $15, 000 for administrative costs) and Doc. No. 67-1, p. 19 (allocating $12, 000 for same).];
The remainder, i.e., the Net Settlement Amount, is to be distributed as Individual Settlement Payments to Class Members, including each Class Member's respective share of any payroll taxes owed. [Doc. No. 67-2, ¶ 1.23.]

         Plaintiffs estimate the Net Settlement Fund will total $920, 500, however, it is not clear how this total was calculated given the inconsistencies between the Settlement Agreement and the Motion. [Doc. No. 67-1, p. 19.] They estimate a class size of 437 class members, which they represent would yield an average payment of $2, 104.40 per class member. [Id.]

         In exchange for these payments, the Settlement Agreement provides that participating Class Members will release the following claims:

any and all claims, debts, liabilities, demands, obligations, guarantees, costs, expenses, attorney's fees, damages, action or causes of action, contingent or accrued for, which relate in any way to the allegations and claims asserted in the Complaint, failure to pay overtime compensation (Cal. Lab. Code §§ 510, 1194, 1198, 1199, and Wage Order 4-2001); failure to reimburse business expenses (Cal. Lab. Code § 2802); failure to pay minimum wages and regular wages for all hours worked (Cal. Lab. Code §§ 223, 1194, 1197.1 and Wage Order 4-2001); unlawful wage deductions (Cal. Lab. Code §§ 221 and 223); failure to provide compliant meal breaks (Cal. Lab. §§ 226.7 and 512 and Wage Order 4-2001); failure to provide compliant rest periods (Cal. Lab. § 226.7 and Wage Order 4-2001); failure to provide accurate itemized wage statements (Cal. Lab. § 226(a)); failure to pay all wages owed upon termination in violation of Cal. Lab. Code §§ 201-203; violations of the PAGA (Cal. Lab. § 2698, et seq.); Unfair Competition (Bus. & Prof. Code § 17200); violations of the FLSA (29 U.S.C. §§ 201, et seq.); claims for restitution and other equitable relief, liquidated damages, punitive damages, off the clock work, rounding/grace period, overtime, minimum wage, interest, wages, on call time, meal and rest period penalties, waiting time penalties, penalties of any nature whatsoever, any other benefit claimed on account of the allegations asserted in the operative Complaint (“Released Claims”). This release shall extend through the date of final approval.

[Doc. No. 67-2, ΒΆ 6.1.] The Agreement then further provides that Class Members release all FLSA claims by virture of cashing, depositing, or ...


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