The Critical Case Recap: Week of June 2, 2014
Laguna v. Coverall North America, Inc. (Ninth Circuit)
What It’s About: Over an objection and the dissent of Judge Chen, this Ninth Circuit majority opinion approved the pre-certification class settlement of misclassification claims, as well as claims related to the franchise agreements between the defendant janitorial franchising company and its franchisees. The decision held that district courts are not required to assign a monetary value to purely injunctive relief and upheld the nearly one million dollar attorneys’ fees award in the case through a lodestar analysis and because it was likely less than 25% of the value of the injunctive relief.
Why It’s Important: The majority opinion provides controlling support for plaintiffs’ attorneys who seek fees after settling for purely or predominantly injunctive relief, though attorneys may be wise to consider Judge Chen’s advice: (1) avoid claims processes where unnecessary; (2) no reversions to the defendant; (3) recognize that coupons may be considered an “illusory monetary benefit”; and (4) where available, provide evidence of the financial value of injunctive relief.
Johnson v. Metlife Inc. (Central District of California)
What It’s About: A Central District judge denied without prejudice a pre-certification motion for the class action settlement of financial services representatives’ claims for wrongfully deducted commissions, unpaid overtime, and unreimbursed business expenses. Among other reasons, the court rejected the settlement as inequitable because certain damages were suffered only by class members who had worked more than ten quarters, yet all class members were subject to the same damages distribution formula.
Why It’s Important: This decision illustrates increasingly careful court scrutiny of proposed class action settlements, particularly prior to class certification. Per this decision, counsel should be aware of potential subgroups with different or additional claims and account for those differences accordingly when determining the distribution of settlement funds.
Sutter Health Wage and Hour Cases (California Court of Appeal – First Appellate District)
What It’s About: The California Court of Appeal upheld the trial court’s denial of class certification in a case on behalf of registered nurses alleging unpaid regular and overtime wages, missed meal and rest breaks, waiting time penalties, unlawful wage statements, and unfair business practices. Despite survey evidence suggesting that there were over 4.4 million instances of no required meal breaks, the court held that not all missed meal breaks are necessarily violations and that determining whether employees had waived their meal breaks was an issue not susceptible to class-wide proof under these circumstances.
Why It’s Important: This decision raises important questions about post-Brinker meal and rest break cases, particularly with respect to methods of proof regarding employee waiver. The court here suggests that why an employee doesn’t take a meal break is just as important as the existence of a missed meal break and it also raises questions—without providing much in the way of answers—regarding how employee waiver can be shown on a classwide basis. There is, however, some dicta suggesting that perhaps plaintiffs would find more success with a theory that asserts the defendant’s failure to adopt a lawful policy.