Toledo v. Delta Air Lines, Inc.

Background

Marvin Toledo sought preliminary approval of a proposed wage-and-hour settlement involving a Rule 23 class action and a representative action under California’s Private Attorneys General Act (PAGA). The proposed Settlement Class included people employed by Delta in non-exempt positions in California during the defined Class Period, with exclusions for flight attendants, pilots, and certain participants in Delta’s 2020 retirement or opt-out programs. Delta estimated that the class contained 5,000 members.

The proposed agreement established a maximum settlement amount of $12 million. It allocated $3,999,960 to class counsel for attorney fees, up to $70,000 for costs, $600,000 to the PAGA portion of the settlement, and $10,000 as a service payment to Toledo. The agreement also contained broad releases of claims and could affect several related cases.

Court’s Reasons

The court identified several deficiencies in the motion and proposed settlement:

- The motion did not adequately explain the basis for Delta’s estimate of 5,000 class members or how potential class members had been or would be identified. - Toledo did not meaningfully justify narrowing the proposed class from the original formulation, including by excluding people hired through staffing agencies or third parties. - The motion did not adequately support the proposed attorney-fee award. The court required comparator cases involving an award of one-third of a settlement, including at least one comparable California case. - The agreement stated that Delta would not oppose a fee application under the settlement. The court viewed this as resembling a “clear sailing arrangement” and required an explanation of why the provision did not signal collusion. - The motion did not explain why allocating 5% of the total settlement to PAGA claims was fair, adequate, and reasonable. The court also required a more thorough explanation for reducing the PAGA settlement by 98.36% compared with the claimed full verdict value and a comparator case involving a relatively low PAGA settlement. - Toledo did not cite a case supporting a service award of similar size or sufficiently describe the work supporting the proposed $10,000 payment. - The motion did not analyze whether the broad releases were appropriate or estimate the verdict value of all released claims, including claims broader than those alleged in the complaint. - The motion did not sufficiently explain how the settlement would affect identified related cases, whether counsel in those cases participated in negotiations, or how the settlement would affect relief sought there. The court also required additional compliance with the District’s procedural guidance concerning other cases.

Ruling

Judge Araceli Martinez-Olguin denied Toledo’s motion for preliminary approval of the class and PAGA settlement. The court stated that Toledo could file a renewed motion within 30 days if he remedied the identified deficiencies. If he did not file a renewed motion, the parties were required to submit a joint status report within 45 days proposing how the litigation should proceed. The hearing previously set for May 8, 2025, was vacated.