Miranda v. American National Red Cross

Background

Aleida Miranda filed the action in state court on May 13, 2022, alleging wage-and-hour and Private Attorneys General Act (PAGA) claims against the American National Red Cross. The Red Cross removed the case to federal court on June 21, 2022. The parties briefed two motions to dismiss, and class counsel conducted investigation and informal discovery. After mediation, the parties accepted a mediator’s proposal and signed a proposed class-action and PAGA settlement. Miranda later filed an unopposed motion for preliminary approval.

Legal standards

Federal Rule of Civil Procedure 23 requires the court to determine at the preliminary-approval stage whether it is likely able to approve the proposed class settlement and certify the class for purposes of entering judgment on the settlement. The court explained that preliminary approval requires sufficient information to evaluate whether the proposal resulted from serious, informed, non-collusive negotiations, has no obvious deficiencies, avoids improper preferential treatment, and falls within the possible range of approval. The court also stated that PAGA settlements generally must satisfy statutory requirements and be fundamentally fair, reasonable, and adequate in light of PAGA’s public policies.

Deficiencies in the proposal

The court identified the following problems:

1. Released claims. The proposed release covered claims under state, federal, or local law that arose from claims pleaded or that could have been pleaded in the action, as well as other claims based on the pleaded or potentially pleaded facts. Miranda provided no explanation for why the release extended beyond the allegations in the case.

2. Settlement amount. The motion did not provide the comparable-case information and easy-to-read charts required by the district’s settlement guidance.

3. Attorneys’ fees. The proposed settlement allowed attorneys’ fees of up to 35% of the fund. The court noted that 25% is typically used as a benchmark and that counsel had not identified special circumstances justifying a higher percentage. Counsel also did not provide the required lodestar calculation, meaning the total hours billed and any requested multiplier.

4. Class notice. The proposed notice did not include a settlement website with key documents and deadlines. The court stated that class members should not have to travel to the courthouse or pay for access to the federal docket to obtain information needed to decide whether to opt out. The notice also lacked a required instruction to check the settlement or court website for changed dates.

5. Notice distribution. The parties relied exclusively on mail and did not adequately explore other communication methods, explain whether class members had permanent addresses, provide a sample envelope, or explain how addresses would be updated. The court was not confident that the plan would effectively reach class members.

6. Opt-out procedures. The proposed process required class members to provide additional information, including Social Security numbers, without explaining why it was necessary. The proposed 45-day opt-out period was also too short; the court stated that a renewed motion should provide at least 60 days.

7. Objections. The proposed notice improperly directed written objections to the settlement administrator rather than the court. It also did not clearly explain that the court could approve or deny the settlement but could not change its terms. The court again stated that the objection period should be at least 60 days.

8. Settlement administrator. The motion did not provide the required information about competing bids, the selection process, or procedures for securely handling class-member data. It also did not assure the court that Phoenix Settlement Administrators had been selected through competitive bidding.

9. PAGA settlement. Miranda did not provide evidence that the proposed PAGA settlement had been submitted to the California Labor and Workforce Development Agency. The motion also did not sufficiently explain how the statutory penalties were calculated, including the $1,950 multiplier and whether penalties for subsequent violations were considered.

10. Class certification. Because the parties’ proposed class certification depended on approval of the settlement, the court declined to address class certification at that time.

Ruling and next steps

The court found that the parties had not made the showing required for preliminary approval under Rule 23. Judge Sallie Kim denied without prejudice the motion for preliminary settlement approval. The court set a further case-management conference for October 6, 2025, and required an updated joint case-management statement by September 29, 2025. It stated that the conference would be vacated if a revised motion for preliminary approval was filed by September 29, 2025.