United States District Court, E.D. California
JEREMY R. LUSK, Plaintiff,
v.
FIVE GUYS ENTERPRISES LLC; and ENCORE FGBF, LLC, Defendants.
ORDER RE PRELIMINARY FAIRNESS EVALUATION (DOC. NO.
36)
I.
Introduction
In this
lawsuit an employee, on behalf of himself and a proposed
class of his fellow employees, is suing his two employers for
violating California wage-and-hour laws and California and
federal consumer reporting laws. The employee is Plaintiff
Jeremy Lusk, and the employers are Defendant Five Guys
Enterprises LLC and Defendant Encore FGBF, LLC (collectively
“Defendants”).
After
Lusk initiated this lawsuit, the parties reached a proposed
class action settlement agreement, which the parties then
presented to the Court for approval under Rule 23(e) of the
Federal Rules of Civil Procedure. Accordingly, now before the
Court is Lusk's motion for a preliminary fairness
determination of the proposed settlement agreement. For the
reasons discussed infra, the Court does not find
that the proposed settlement agreement is fair or warrants
class treatment.
II.
Background
From
approximately August 2016 to November 2016, Lusk worked in
California as a manager-in-training for his fast-food
restaurant employers, Defendants. In addition to employing
Lusk, Defendants also employed a class of at least 2, 206
non-exempt employees (hereinafter the “Class”) in
California from August 2013 to the present. According to
Lusk, Defendants violated several California wage-and-hour
laws and California and federal consumer reporting laws with
respect to Lusk and the Class. Based on those violations,
Lusk filed this lawsuit against Defendants, pleading the
following claims:
FCRA,
ICRAA, and CCRAA disclosures (first, second, third, and
fourth claims): Defendants evaluated Lusk and the Class for
potential employment. In doing so, Defendants procured and/or
caused to be prepared credit reports, background reports, and
investigative consumer reports on Lusk and the Class.
Defendants failed to make disclosures to Lusk and the Class
that are required under the federal Fair Credit Reporting Act
(“FCRA”), [1] California's Investigative Consumer
Reporting Agencies Act (“ICRAA”), [2] and
California's Consumer Credit Reporting Agencies Act
(“CCRAA”).[3]
Meal
breaks (fifth claim): Defendants failed to provide Lusk
and the Class with meal breaks, and Defendants failed to pay
premium wages to Lusk and the Class for unprovided meal
breaks, thereby violating California's Labor Code.
Rest
breaks (sixth claim): Defendants failed to provide Lusk
and the Class with rest breaks, and Defendants failed to pay
premium wages to Lusk and the Class for unprovided rest
breaks, thereby violating California's Labor Code.
Minimum
wages and overtime wages (seventh claim): Defendants
forced Lusk and the Class to work off-the-clock.
Consequently, Defendants failed to pay Lusk and the Class
minimum wages and overtime wages, thereby violating
California's Labor Code.
Expenditure
indemnification (eighth claim): Defendants failed to
reimburse Lusk and the Class for necessary vehicle gas and
mileage expenditures, thereby violating California's
Labor Code.
Wage
statements (ninth claim): Defendants failed to provide
Lusk and the Class with accurate itemized wage statements,
thereby violating California's Labor Code.
Timely
payment of final wages (tenth claim): When the
employment of Lusk and the Class ended, Defendants failed to
timely pay Lusk and the Class all final wages, thereby
violating California's Labor Code.
Unfair
competition (eleventh claim): On the basis of
Defendant's alleged conduct identified supra in
the fifth, sixth, seventh, and eighth claims, Defendants
engaged in unfair competition, thereby violating
California's unfair competition law
(“UCL”).[4]
PAGA
(twelfth claim): On the basis of Defendant's alleged
violations of the California Labor Code, Lusk and the Class
are aggrieved employees who seek penalties from Defendants on
behalf of the State of California pursuant to
California's Private Attorney General Act
(“PAGA”).[5]
After
Lusk filed the foregoing claims against Defendants, Lusk and
Defendants conducted some discovery. Lusk and Defendants then
participated in a mediation with Deborah Crandall Saxe on
October 10, 2018. The mediation resulted in the parties
agreeing on October 12, 2018, to the terms of a proposed
class-wide settlement agreement.
According
to Lusk, the “primary material terms” of the
proposed settlement agreement are as follows:
1. For purposes of settlement, all of Lusk's claims will
be certified for class treatment pursuant to Rule 23(b)(3).
2. As noted supra, the Class consists of at least 2, 206
non-exempt employees who worked for Defendants in California
from August 2013 to the present. For purposes of the
settlement agreement and class notice, the Class will be
defined as follows:
All persons who, from August 22, 2013, to the date the Court
grants preliminary approval of this settlement, have
previously been or currently are employed in California by
Defendants, whether directly or through an employment agency
or a professional services organization, as a non-exempt or
hourly employee of Defendants.
3. Lusk will be appointed as the class representative.
4. Lusk's counsel, Shaun Setareh, will be appointed as
the class counsel.
5. Defendants will pay $1, 200, 000 as the “Gross
Settlement Amount” in a “claims-based settlement,
” exclusive of employer-side payroll taxes.
6. Class counsel will apply for a attorney's fee award of
up to $400, 000, which will be paid from the Gross Settlement
Amount.
7. Class counsel will apply for a cost reimbursement of $20,
000, which will be paid from the Gross Settlement Amount.
8. Lusk will apply for a class representative enhancement of
up to $15, 000, which will be paid from the Gross Settlement
Amount.
9. A third-party class claims administrator will be hired to
provide notice to the Class of the class settlement, and the
class claims administrator will be paid a fee of up to $30,
000, which will be paid from the Gross Settlement Amount.
10. The PAGA action will be settled for $100, 000, with that
amount being encompassed within the Gross Settlement Amount.
Accordingly, 75% (or $75, 000) of the $100, 000 PAGA
settlement will be paid to the California Labor Workforce
Development Agency from the Gross Settlement Amount. The
remaining 25% (or $25, 000) of the PAGA settlement is
included within the remaining $660, 000 of the Gross
Settlement Amount, discussed infra.
11. The remaining $660, 000 of the Gross Settlement Amount
will be paid to the non-opt-out members of the Class.
Therefore, assuming none of the 2, 206 putative class members
opt out, then the average settlement payment made to each
class member will be approximately $299.18.
12. In consideration for Defendants' payment of the Gross
Settlement Amount, the Class will release Defendants from all
claims in this lawsuit, which, as noted supra, includes
several California wage-and-hour claims as well as ...