Massey v. Star Nursing, Inc.

Background

Sharae Massey filed a proposed class action against Star Nursing, Inc. The operative complaint alleged that Star Nursing, a healthcare staffing company employing hourly healthcare workers on short-term travel assignments at California healthcare facilities, underpaid overtime by excluding per diem payments from overtime-rate calculations.

The complaint asserted claims under California Labor Code sections 510 and 1194, California’s unfair-business-practices law, California Labor Code section 203, the federal Fair Labor Standards Act (FLSA), and California’s Private Attorneys General Act (PAGA). The parties reached a settlement before formal class certification after mediation and further negotiations.

Settlement Class and Notice

The court approved a settlement class consisting of non-exempt hourly employees employed by Star Nursing in California who, during the class period, worked at least one week in which they received overtime and a stipend. The class included 418 members. The court confirmed the conditional class certification previously granted for settlement purposes and confirmed Hayes Pawlenko LLP as class counsel and Massey as class representative.

The settlement administrator mailed notice packets to all 418 class members, updated addresses for some members, and remailed notices when new addresses were found. Twenty notice packets remained undeliverable. The court found that the notice procedures were adequate. No class member objected to or opted out of the settlement, and 47 members returned valid FLSA opt-in forms.

Settlement Terms

Star Nursing agreed to pay a non-reversionary $700,000 common fund without admitting liability. The fund covers class payments, attorneys’ fees and litigation expenses, settlement administration, Massey’s service award, and PAGA penalties. Star Nursing must separately pay its share of payroll taxes.

Approximately $457,000 was expected to remain for participating class members after the approved deductions. Payments are calculated pro rata according to the number of qualifying weeks worked. Each participating member receives 95 percent of the calculated share automatically. Members who timely submitted FLSA opt-in forms receive the remaining 5 percent, including a pro rata share of amounts allocated to members who did not opt in.

Participating members release the covered non-FLSA claims that accrued during the class period. Members who timely opted into the FLSA portion also release the covered FLSA claims. Massey separately gave a broader release of claims under the settlement agreement. The agreement states that Star Nursing denied the claims and that the settlement was not an admission of liability.

Court’s Analysis

Under Federal Rule of Civil Procedure 23, the court found that the settlement class met the requirements for class certification. The common issue was whether Star Nursing unlawfully excluded per diem payments when calculating overtime rates. The court found that common issues predominated and that a class action was superior to other methods of resolving the claims.

The court applied heightened scrutiny because the settlement was reached before formal class certification. It considered the risks and expense of continued litigation, the discovery conducted, the projected damages, Star Nursing’s stated financial limitations, the settlement amount, counsel’s experience, the negotiations, and the class’s reaction. The court found no evidence of collusion or unfairness and concluded that the settlement was fair, reasonable, and adequate.

Fees, Awards, Expenses, and Judgment

The court granted the motion for final approval of the class action settlement. It also granted the motion for attorneys’ fees, costs, the service award, and settlement-administrator expenses as follows:

- Class counsel received $175,000 in attorneys’ fees. - Class counsel received $11,604.83 in litigation costs. - Sharae Massey received a $5,000 service award. - CPT Group, Inc. received $10,500 for settlement administration.

Judge Edward J. Davila entered final judgment under the settlement agreement, retained jurisdiction over matters concerning the settlement’s interpretation and administration, ordered a post-distribution accounting, and directed the clerk to close the case. The order approved the settlement and ended the case but did not determine whether Star Nursing violated the cited laws or owed damages on the underlying claims.