Joh v. American Income Life Insurance Company

Background

The plaintiffs filed a renewed motion for final approval of a class-action settlement. The settlement agreement was unchanged from the agreement presented in the plaintiffs’ first motion. In an earlier order, the court had found that the proposed class met the requirements for certification under Federal Rule of Civil Procedure 23 and that class members had received adequate notice. The court also found that the settlement had been adequately negotiated and that its amount was adequate in light of the risks and costs of continued litigation.

The court previously rejected the settlement because it did not provide equitable treatment of class members. Based on the plaintiffs’ estimates, class members who trained but never became agents—the “trainee-only” group—would receive approximately 2% of the settlement fund even though their claims represented at least 12.6% of the estimated liability. The agreement distributed settlement funds based on weeks worked, which favored agents who had worked longer. The court also noted that the plaintiffs had previously represented that trainee-only claims were easier to prove and more valuable than agents’ claims.

Waiting-Time Claims

The plaintiffs argued in the renewed motion that claims for California Labor Code section 203 waiting-time penalties were riskier for trainees, especially trainees who never became agents. They contended that trainee-only claims should be reduced by 75% to account for the greater difficulty of proving them.

The court rejected this explanation. It noted that the plaintiffs had already understood that section 203 claims depended on the success of underlying wage claims. In the first motion, the plaintiffs had nevertheless represented that claims relating to training periods were comparatively easier to prove and more valuable than claims relating to post-training work. The plaintiffs also had previously identified additional issues affecting agents’ claims, including arbitration, independent-contractor classification, and the outside-salesperson exemption.

The court further noted that the settlement agreement continued to double-weight training workweeks because the plaintiffs still described training claims as relatively stronger. In the court’s view, the plaintiffs’ renewed argument that trainee claims were weaker did not explain the earlier statements or show that the court had misunderstood the value of those claims. The court concluded that the renewed motion did not fix the settlement’s unequal treatment of trainee-only claims.

Notice Issue and Disposition

Objectors argued that the plaintiffs needed to provide new notice of the renewed motion because the settlement allegedly resolved a $5 million meal-and-rest-break claim for agents who had not been told about its value. The court did not decide whether the notice was sufficient because it denied the renewed motion on other grounds.

Judge Thomas S. Hixson denied the plaintiffs’ Renewed Motion for Final Settlement Approval. The opinion does not state that the settlement agreement itself was dismissed or otherwise finally disposed of; it states that the motion was denied.