Roe v. Jose Torres L.D. Latin Club Bar, Inc

Background

This was a wage-and-hour and employee-misclassification case brought under the Federal Labor Standards Act (FLSA), California law, the Redwood City Minimum Wage Ordinance, and California's Private Attorneys General Act (PAGA). Jane Roe alleged that Jose Torres L.D. Latin Club Bar, Inc., doing business as Hanky Panky Club, misclassified exotic dancers as independent contractors and failed to pay required compensation. The operative complaint asserted 11 claims, including minimum-wage, overtime, wage-statement, waiting-time, expense-reimbursement, conversion, unfair-competition, PAGA, FLSA, and Redwood City minimum-wage claims.

The case began in state court and was removed to federal court on September 25, 2019. After discovery, the parties entered into a settlement agreement and filed an unopposed motion for preliminary approval. The new agreement differed from an earlier proposed settlement by requiring the defendant to offer employment status to all current and future exotic dancers and by providing automatic mailing of settlement checks to people who did not opt out, without requiring claim forms.

Proposed settlement

The proposed class covered people who performed as exotic dancers for the defendant under an independent-contractor agreement during the period from December 4, 2013, through the date of preliminary approval. The court stated that there were approximately 90 class members. The settlement included a $135,000 cash pool for payments to class members, attorney's fees and costs as approved by the court, a $1,500 payment to the California Labor and Workforce Development Agency for PAGA penalties, a possible $10,000 service award to the class representative, administrative costs, and any cy pres payments. Counsel estimated a net settlement amount of $74,750 and estimated an average result of $836 per class member, although the court noted that the math needed to be checked before the final fairness hearing.

Payments would be distributed in proportion to each member's performance months. Checks would be mailed automatically and would expire 120 days after issuance. Uncashed-check funds would be paid to the Saint Francis Center of Redwood City or, if that recipient was not approved, the Justice and Diversity Center of the Bar Association of San Francisco. A class member who did not opt out and did not cash the check would release the case's claims but not the FLSA claims. A class member who cashed the check would release all claims, including the FLSA claim. The named plaintiff also agreed to a general release.

Conditional certification

For settlement purposes only, the court found that the proposed class met the requirements for certification under Federal Rule of Civil Procedure 23. It found that the approximately 90 members were numerous enough, that common questions predominated, that the representative's claims were typical, and that Jane Roe and her counsel could adequately protect the class's interests. The court conditionally certified the Rule 23 class for settlement, notice, and a final approval hearing.

The court also preliminarily authorized an FLSA collective action for settlement purposes only. An FLSA collective action allows employees who are similarly situated to join the case. The court found common factual and legal questions concerning the dancers' wage claims and employment status.

Preliminary approval

The court explained that preliminary approval authorizes notice to the class, while a later final fairness hearing determines whether the settlement may receive final approval. Applying the required fairness factors, the court concluded that preliminary approval was appropriate. It found that the settlement resulted from adversarial, arms-length negotiations; that the payment appeared fair in light of the potential recovery and litigation risks; and that continued litigation would involve additional complexity, expense, and delay. The court also preliminarily approved the settlement of the FLSA collective action and found the PAGA allocation to be within a reasonable range.

The court deferred attorney's fees and costs to the final fairness hearing. It also deferred consideration of the proposed service award and any cy pres award. The court provisionally appointed Jane Roe as class representative, Steven G. Tidrick and Joel Young of the Tidrick Law Firm LLP as class counsel for settlement purposes only, and CPT Group, Inc. as claims administrator. It approved the notice plan and found that the notice adequately described the case, settlement, estimated payments, release, opt-out rights, objections, final hearing, and proposed fees and awards.

Order and next steps

The court granted the motion for preliminary approval and ordered the parties and claims administrator to carry out the settlement procedures. The order conditionally certified the Settlement Class and FLSA collective for settlement purposes only, preliminarily approved the settlement, authorized notice, approved the notice plan, provisionally appointed the representatives and counsel, approved CPT Group, Inc. as administrator, and set deadlines for providing the class list, objections, exclusions, fee and service-award motions, and final approval. The final approval hearing was set for August 27, 2020. This order did not constitute final settlement approval.