Class Action Settlements in California

The well-recognized factors that a trial court should consider in evaluating the reasonableness of the value of a class action settlement agreement include, but are not limited to:

[T]he strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and stage of proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.

Dunk v. Ford Motor Co. (1996) 48 Cal.App.4^th 1794, 1801.

[A] presumption of fairness [of a proposed class action settlement] exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small. Kullar v. Foot Locker Retail Inc. (2008) 168 Cal.App.4^th 116, 128 (quoting Dunk, supra, at 1801); Clark v. American Residential Services LLC (2009) 175 Cal.App.4^th 785, 799.

However, the Kullar and Clark courts also noted that a court must be independently satisfied that the consideration being received is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation. Clark, supra, at 452, quoting Kullar, supra, at 129.

A court must “receive and consider enough information about the nature and magnitude of the claims being settled, as well as the impediments to recovery, to make an independent assessment of the reasonableness of the terms to which the parties have agreed.” Kullar, supra, at 133.

Labor Code §§ 226.7 and 512 and the applicable wage orders require employers to authorize and permit meal periods to their employees. California law prohibits employers from employing an employee for more than five hours without a meal period of at least 30 minutes. “[A]n employer’s obligation is to provide an off-duty meal period: an uninterrupted 30–minute period during which the employee is relieved of all duty.” Brinker Rest. Corp. v. Super. Ct., 53 Cal. 4th 1004, 1035 (2012). “An employer must relieve the employee of all duty for the designated period.” Id. at 1034. An employer cannot “impede or discourage [employees] from [taking off-duty rest periods].” Id. at 1040. Unless the employee is relieved of all duty during the 30-minute meal period, the employee is considered “on duty” and the meal period is counted as time worked under the applicable wage orders. Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5^th 257, 264. When an employer fails to provide a meal period in accordance with the applicable wage orders, the employer must pay the employee one additional hour of pay at the employee’s regular rate of pay for each workday that a compliant meal period is not provided. Labor Code § 226.7.

There have been numerous wage and hour cases involving California missed break claims certified after Brinker. See Abdullah v. U.S. Sec. Assocs., 731 F.3d 952 (9th Cir. 2013); Mendez v. R+L Carriers, Inc., 2012 WL 5868973 (N.D. Cal. 2012); Faulkinbury v. Boyd & Assoc., Inc., (2013) 216 Cal.App. 4th 220; Benton v. Telecom Network Specialists, Inc., (2014) 220 Cal.App.4th 701; Martinez v. Joe’s Crab Shack Holdings, (2013) 221 Cal.App.4th 1148; Jones v. Farmers Ins. Exch., (2014) 221 Cal.App.4th 986; Bradley v. Net. Inter’l, (2012) 2012 WL6182473; Wang v. Chinese Daily News, Inc., No. 2:04-CV-01498- CBM, 2014 WL 1712180 (C.D. Cal. Apr. 15, 2014); Bickley v. Schneider Nat’l, No. C 08-05806 JSW (N.D. Cal.); Schulz v. Qualxserv, No. 09-CV-17-AJB (MDD) (S.D. Cal.); Paige v. Consumer Programs, No. CV-07-2498-MWF(RCx) (C.D. Cal.); Munoz v. Giumarra Vineyards, No. 1:09-cv-00703-AWI-JLT (E.D. Cal.); Cubillas v. Dav-El Los, No. BC 427918 (Cal. Sup. Ct., LA County); Membreno v. Intern’l House of Pancakes, No. 488181 (Cal. Super. Ct., San Mateo County); Drake v. John Stewart Co., No.CGC-11-507902 (Cal. Sup. Ct., San Francisco County).

The area of law regarding the propriety of class treatment of meal period requirements remains unsettled, notwithstanding the California Supreme Court’s ruling in Brinker v. Superior Court (2012) 54 Cal.4^th 1004.

As a result of unlawful meal period practices, an employer might also require the employees to perform work without compensation in violation of Labor Code §§ 200, 510, 1194(a) and applicable IWC Wage Orders. The Wage Orders define “hours worked” as the “the time during which an employee is subject to the control of an employer and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” Labor Code § 1194(a) provides that employees are entitled to recover the unpaid balance of their minimum wage or overtime compensation. Specifically, § 510 requires an employer to pay overtime compensation at one and one-half times the regular rate of pay for an employee where the employee works more than eight hours in a day or forty hours in a week.

Under Labor Code § 351, gratuities are the property of an employee, and not the employer. That statute prohibits an employer or its agent from imposing a mandated tip pooling policy that requires employees to share their tips with the employer or it’s “Agent.” Section 350 of the Labor Code defines “Agent” as “every person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees.”

California law vests the Court with broad discretion in fashioning an appropriate notice program so long as it satisfies all due process requirements. Civil Code § 1781; Cartt v. Superior Court (1975) 50 Cal.App.3d 960, 970-974; C.R.C. 3.769. The actual form and contents of the notice are within the Court’s discretion. Wershba v. Apple Computer (2001) 91 Cal.App.4^th 224, 251.