Alabsi v. Savoya, LLC

Background

Billy Alabsi filed a proposed class and collective action against Savoya, LLC, alleging violations of the Fair Labor Standards Act (FLSA) and California wage-and-hour laws. Alabsi alleged that Savoya misclassified its drivers as independent contractors rather than employees. According to the allegations, Savoya controlled many aspects of the drivers’ work, including assignments, pickup times, vehicle requirements, passenger-service procedures, app status updates, early arrival times, meetings, insurance, and termination notice.

Alabsi alleged that the classification resulted in unpaid minimum wages and overtime, unreimbursed business expenses, unpaid time for early arrival and meetings, missed meal and rest periods, inaccurate wage statements, waiting-time penalties, unfair business practices, and penalties under California’s Private Attorneys General Act. The court had previously denied Savoya’s motion to transfer and granted in part and denied in part its motion to dismiss, but this order addressed only preliminary approval of the settlement.

Proposed Settlement

Savoya agreed to pay a total settlement amount of $750,000 for the claims of 44 drivers who worked for Savoya in California. The proposed allocation included $187,500 in attorney’s fees, $6,000 in litigation costs, a $7,500 incentive payment for Alabsi, estimated administration costs, and $10,000 in California Private Attorneys General Act penalties. The court stated that the estimated net settlement amount for the 44 class members was $531,500.

Settlement payments would be distributed based on the number of workweeks completed during the relevant period. Five percent of the net settlement amount would be allocated to waiting-time penalties and divided among former drivers based on their average weekly earnings. The settlement would release the claims asserted in the action and additional wage-and-hour claims that could have been asserted based on the facts and transactions alleged in the complaint.

Class members who did not timely exclude themselves would be bound by the settlement and receive a check. Cashing the check would also constitute opting into and releasing the covered FLSA claims. Savoya would make the settlement payments in three equal installments every six months and provide a standby letter of credit guaranteeing payment. Class members would have 180 days to cash their checks. The court-approved notice explained the settlement and the procedures for opting out or objecting.

Class Certification for Settlement Purposes

Before reviewing the settlement, the court considered whether the proposed settlement class met the requirements of Federal Rule of Civil Procedure 23. The court found that numerosity, commonality, typicality, and adequacy of representation were satisfied. It also found that common questions predominated and that a class action was superior to individual lawsuits, because individual claims could involve small damages and litigation costs could exceed potential recovery.

The court therefore provisionally certified the class for settlement purposes only. This was not a final decision on whether Savoya violated wage laws or whether the allegations were ultimately proven.

Reasons for Preliminary Approval

The court found that the settlement fell within the possible range of approval. Alabsi estimated the value of the non-Private Attorneys General Act claims at $1,440,752.55 and estimated Private Attorneys General Act penalties at $1,042,000. The $750,000 settlement represented approximately 52% of the estimated non-Private Attorneys General Act claims and 30.2% of all estimated claims.

The court considered risks involving whether the drivers were employees, whether the applicable California worker-classification test would apply to all claims, whether that test would apply retroactively, whether Alabsi could prove willful violations, and whether Savoya could pay a judgment. The court also found that the parties conducted substantial discovery and participated in a full-day mediation, supporting its finding that the settlement resulted from informed, arm’s-length, non-collusive negotiations.

The court found no obvious deficiencies after the parties made requested changes to the class notice and objection procedures. It noted, however, that the proposed $7,500 incentive payment to Alabsi would be reviewed again at the final-approval stage, and that Alabsi would need to explain why the payment should exceed a $5,000 benchmark referenced in other district court decisions. The court also found that the settlement did not provide improper preferential treatment because payments were generally based on workweeks and the additional payments to former drivers addressed their waiting-time claims.

Order

The court granted preliminary approval of the settlement agreement, including provisional certification of the settlement class. It approved the revised notice, appointed Billy Alabsi as class representative, Bryan Schwartz Law as class counsel, and Rust Consulting as settlement administrator, and established deadlines for notice, objections, exclusions, attorney’s-fee and cost requests, and a motion for final approval. The final approval hearing was set for May 21, 2020, at 1:30 p.m. Judge Kandis A. Westmore signed the order.