United States District Court, N.D. California
ORDER RE: MOTION FOR FINAL APPROVAL OF CLASS ACTION
SETTLEMENT RE: DKT. NO. 42
S. HIXSON UNITED STATES MAGISTRATE JUDGE.
the Court is the Plaintiffs' Motion for Final Approval of
Class Action Settlement and Attorneys' Fees, Costs, and
Service Awards. ECF No. 42. Having reviewed the Settlement
agreement and the parties' arguments and papers, the
Court DENIES the Motion.
Factual and Procedural History
are former insurance salesperson trainees or agents of
American Life Insurance Company (“AIL”), who
trained and worked at locations in California. Plaintiffs
allege that as prospective AIL agents, trainees underwent
training that lasted one week or more, during which they did
not earn a commission and were not otherwise paid. Sec. Am.
Compl. (“SAC”) ¶ 18, ECF No. 30. They allege
that AIG promised prospective agents salaried positions, but
then hired them as commission-only employees, and failed to
pay or reimburse them while they worked as sales agents.
Id. ¶ 42. They allege that as trainees and
agents they were not paid a minimum wage or overtime pay, did
not receive proper meal and rest breaks, and had to pay their
own work-related expenses. Id. ¶ 20. They also
allege that agents were subject to “chargebacks,
” meaning that if they sold policies and those policies
were later cancelled by the customer, AIL illegally collected
back commissions from the agents earned wages. Id.
seek to represent a class of “[a]ll individuals who
trained to become and/or worked as sales agents in California
for Defendant during the last four years prior to the filing
of the original Complaint.” Id. ¶¶
32-33. Plaintiffs assert the following claims: unlawful,
unfair, and fraudulent business practices in violation of
California Business and Professions Code §§ 17200,
et seq.; failure to pay California overtime
compensation in violation of California Labor Code
§§ 510 and 1094, and Industrial Welfare Commission
(“IWC”) Wage Order No. 4; failure to pay minimum
wages in violation of California Labor Code §§ 1194
and 1197, and IWC Wage Order No. 4; failure to provide meal
periods in violation of California Labor Code §§
226.7 and 512, and IWC Wage Order No. 4; failure to provide
rest periods in violation of California Labor Code §
226.7 and IWC Wage Order No. 4; waiting time penalties
pursuant to California Labor Code §§ 202 and 203;
failure to furnish accurate wage statements in violation of
California Labor Code § 226 and IWC Wage Order No. 4;
failure to reimburse expenses and illegal chargebacks in
violation of California Labor Code §§ 221 and 2802,
and IWC Wage Order No. 4; failure to pay wages/commissions in
violation of California Labor Code §§ 221, 203 and
204; declaratory relief pursuant to 28 U.S.C. § 2201;
and civil penalties pursuant to the California Private
Attorneys General Act (“PAGA”), California Labor
Code §§ 2698, et seq.
action is the first-filed of a group of similar actions
against AIL. Joh filed this case on September 12, 2018 in
Contra Costa County Superior Court and AIL removed to this
court. Joh filed on behalf of a class of current and former
AIL agents who sold insurance in California, for California
Labor Code violations, unfair business practices, and PAGA
penalties. ECF No. 11. AIL moved to compel individual
arbitration on November 21, 2018. ECF No. 12. Joh opposed,
arguing that the arbitration agreement's PAGA waiver was
unlawful and that the non-severability clause therefore
rendered the entire section unenforceable. ECF No. 17.
December 14, 2018, Hamilton filed a separate case against AIL
in this district. Hamilton v. American Income Life Ins.
Co., Case No. 4:18CV7535. Hamilton named as
plaintiffs both Hamilton and Smith, now Plaintiffs in this
matter. They allege they were misclassified as independent
contractors and deprived of compensation and benefits while
participating in training and working as sales agents for
AIL. Dkt. No. 14 ¶¶ 41(g), 88(h). That action also
includes class and representative allegations concerning
unpaid training time and improper training practices of
prospective agents. Hamilton and Smith sought to represent a
class of “[a]ll current and former California-based AIL
agents who began training on or after December 14,
2014.” Id. ¶ 30. Hamilton asserted claims
against AIL for unfair business practices under
California's Unfair Competition Law (“UCL”);
failure to pay overtime; failure to pay minimum wages;
failure to provide meal and rest periods; waiting time
penalties; failure to furnish accurate wage statements;
failure to reimburse expenses; declaratory relief; and civil
penalties under PAGA.
Golz, one of the objectors to the proposed Settlement, filed
a case against AIL in the Los Angeles County Superior Court
on October 18, 2018. AIL removed that case to the U.S.
District Court for the Central District of California on
November 26, 2018. Golz v. American Income Life Ins.
Co., Case No. 2:18CV9879. Golz sought to represent a
class of “[a]ll individuals employed by [AIL] who held
job titles of Insurance Agents, Insurance Agent Trainee or
likewise that were classified as ‘Independent
Contractors' during the Class Period.” Dkt. No. 20,
¶ 73. She likewise brought claims of California meal and
rest break violations; failure to pay California overtime
compensation; failure to pay California minimum wage; failure
to reimburse expenses in violation of the California Labor
Code; and unfair competition in violation of the California
Business and Professions Code.
the parties in this matter had fully briefed AIL's Motion
to Compel Arbitration, they agreed to attempt to resolve both
Joh and Hamilton through mediation. Mot.
For Final Settlement Approval (“Mot.”) 3, ECF No.
42. On April 16, 2019, AIL and the plaintiffs in Joh
and Hamilton participated in a full-day joint
mediation with an experienced employment class action
mediator, David Rotman. Id.; Decl. of Tindall in
Supp. of Pl.'s Mot. (“Tindall Decl.”), Ex. B,
ECF No. 42-1; Supp. Decl. of Tindall in Supp. of Pl.'s
Reply Mem. (“Supp. Tindall Decl.”) ¶ 3, ECF
No 50-1. The parties did not reach a resolution that day.
Id. After the mediation ended, Rotman communicated a
mediator's proposal to the parties, which included a
total settlement amount. Id. Both sides accepted the
proposal with conditions. Id.
August 1, 2019, the Plaintiffs filed their Motion for
Preliminary Approval of Class Action Settlement, ECF No. 39,
which the Court granted on August 16, 2019, ECF No. 41. The
Court set a hearing on the motion for final approval for
January 9, 2020. Id. ¶ 19. On November 5, 2019,
Golz along with a number of other class members, filed an
Objection to Final Settlement Approval. ECF No. 44.
The Settlement Agreement
terms of the Settlement agreement (“SA”), Ex. A,
ECF No. 42-2, are as follows: Class Definition: The
Settlement includes, “all individuals who trained to
become and/or worked as sales agents in California for
Defendant during the last four years prior to the filing of
the original Complaint in Joh and whose training
and/or work began before the date of preliminary approval of
this settlement.” SA 5, § II.C.
will pay a total settlement amount of $5, 750, 000. SA 7,
§II.X. The SA contemplates amounts paid to class
members, including Plaintiffs, after excluding: settlement
fund costs and fees; administration costs of approximately
$49, 500, Decl. of Zachary Cooley of Settlement Adm'r KCC
(“Cooley Decl.”) ¶ 7, ECF No. 46; any
incentive awards to Plaintiffs, up to $7, 500 each ($22, 500
total), SA 14, § III.I; any attorneys' fees and
costs awarded, equal to not more than $1, 437, 500 in fees
(approximately 25% of the value of the Settlement fund) plus
litigation costs of $32, 000, SA 14-15, § III.J; and a
payment of $75, 469 to the Labor Workforce Development Agency
(“LWDA”) pursuant to PAGA, SA 15, § III.K.
SA 9, § III.C.
settlement payments will be calculated proportionately based
on the number of workweeks a class member accumulated while
training or working as an agent for AIL. Class members who
never entered into an agent contract with AIL, those who
never completed training but who underwent at least one day
of training with AIL, will receive a rebuttable one-work
training presumption, double weighted. SA 10, § III.F.
All class members who entered into an agent contract with AIL
after training during the class period will receive a
rebuttable four-workweek training presumption, double
weighted, plus the total number of weeks contracted as agents
with AIL during the class period. Id. Class members
who trained prior to the class period but worked as agents
during the period will receive a share of the net settlement
amount based on the number of weeks worked as agents during
the class period. Id. Individual settlement amounts
will average $590.52, and the maximum allocation is estimated
to be $5, 548.54. Cooley Decl. ¶ 7.
All settlement class members will release:
[A]ny and all rights, duties, obligations, claims,
counterclaims, defenses, actions, causes of action or
liabilities (including penalties of every kind or nature
whatsoever), whether known or unknown, suspected or
unsuspected, asserted or unasserted, foreseen or unforeseen,
actual or contingent, liquidated or unliquidated, punitive or
compensatory as of the date of the Final Approval
Order/Judgment: (a) that were brought by Plaintiffs in this
Action; or (b) that reasonably arise out of the facts alleged
in the Action. The Parties intend for the releases to be
sufficiently broad enough to cover all claims brought on
behalf of all individuals who trained to become and/or worked
as sales agents California for Defendant during the last four
years prior to the filing of the original complaint in
Joh, including the claims asserted in the operative
complaints in Joh and Hamilton as well as
in Golz v. American Income Life Insurance Co.,
18-CV-09879 (C.D. Cal.) and Putros v. American Life
Insurance Co., Case No. 30-2019-01044772-CU-OE-CXC
(Orange Cty. Sup. Ct.).
SA 19, § III.R.
Final Settlement Approval
Court may not grant final approval of the Settlement unless
it determines that (1) the proposed class meets the
requirements for certification under Federal Rule of Civil
Procedure 23, and (2) the Settlement reached on behalf of the
class is fair, reasonable, and adequate. “Especially in
the context of a case in which the parties reach a settlement
agreement prior to class certification, courts must peruse
the proposed compromise to ratify both the propriety of the
certification and the fairness of the settlement.”
Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir.
2003); Amchem Prods. v. Windsor, 521 U.S. 591, 620
(1997) (“[S]pecifications of the rule--those designed
to protect absentees by blocking unwarranted or overbroad
class definitions-- demand undiluted, even heightened,
attention in the settlement context.”).
approval of a class action settlement requires an assessment
of whether the proposed class satisfies the requirements of
Federal Rule of Civil Procedure 23(a) and (b). ...