Morrison v. American National Red Cross

Background

La Toiya Morrison brought a wage-and-hour class action against American National Red Cross on behalf of herself and a proposed class of individuals employed as Training Services instructors, formerly known as Preparedness and Health and Safety Services instructors, and/or Nurse Assistant Training instructors who taught courses to Red Cross clients in California. The proposed settlement class covered people who taught those courses from April 24, 2015, through the date the preliminary approval order was entered.

Morrison alleged that the Red Cross required instructors to use personal cell phones for scheduling without reimbursing their expenses. She also alleged that the Red Cross did not authorize or permit required paid rest breaks or meal breaks, did not compensate instructors for missed breaks and all hours worked, issued inaccurate wage statements, failed to maintain required payroll records, and failed to pay all compensation due when employment ended. Her claims invoked several California Labor Code provisions, California wage orders, California’s Unfair Competition Law, and the Private Attorneys General Act.

Settlement Terms

The parties executed a settlement agreement on June 2, 2020, after informal discovery and mediation. The agreement provided for a non-reversionary gross settlement payment of $377,000. Ten percent, or $37,700, was allocated to civil penalties under the Private Attorneys General Act: $28,275 to the California Labor and Workforce Development Agency and $9,425 distributed proportionally to eligible instructors.

The gross fund also covered court-approved attorneys’ fees and costs, settlement administration expenses, any incentive payment to Morrison, and payments to class members based on their pay periods during the relevant period. The parties estimated that individual class members would receive approximately $557 after deductions, taxes, and required withholdings. Uncashed checks would become void after 90 days, and the remaining funds would be donated to Bet Tzedek, a nonprofit legal-services organization.

The agreement allowed Morrison to seek an incentive award of no more than $10,000. Class counsel would seek no more than $125,666.67 in fees and $15,000 in costs under the agreement; counsel stated that it would request $94,250 in fees and $9,595.15 in costs. Class members would receive mailed notice explaining the settlement, estimated payments, released claims, and procedures for objecting or opting out. The Red Cross could rescind the settlement if at least 20 class members opted out. The parties amended the release language after the Court found that the original language might have been too broad.

Provisional Class Certification

For settlement purposes, the Court found the requirements of Federal Rule of Civil Procedure 23 satisfied. It found that joinder of the estimated 377 class members would be impracticable, that common questions existed concerning the Red Cross’s alleged wage-and-hour policies, and that Morrison’s claims were typical of the class claims. It also found no conflicts of interest and concluded that Morrison and proposed class counsel had prosecuted the case vigorously and would continue to do so.

The Court further found that common questions predominated for settlement purposes and that a class action was the superior method for resolving the dispute. The Court appointed Morrison as class representative and HammondLaw, P.C. as class counsel.

Preliminary Settlement Approval

Under Rule 23(e), a court must determine whether a proposed class settlement is fundamentally fair, adequate, and reasonable. Because the settlement was reached before certification, the Court applied heightened scrutiny for possible collusion and conflicts of interest.

The Court considered the settlement’s non-reversionary structure, its clear-sailing provision concerning attorneys’ fees and costs, the proposed donation of unclaimed funds, the possible incentive award, the estimated recovery compared with the estimated trial recovery, and any obvious deficiencies. The Court found that the settlement appeared to result from serious, informed, and non-collusive negotiations; did not provide improper preferential treatment; fell within the possible range of approval; and had no obvious deficiencies. The Court noted that the settlement represented approximately 71 percent of class counsel’s estimated realistic recovery at trial and that litigation involved risks, including class certification and prevailing at trial.

The Court preliminarily found Bet Tzedek to be an appropriate recipient for unclaimed funds and found a sufficient connection between that organization and the settlement class. It did not decide the final amount of attorneys’ fees, costs, or any incentive award. Those issues would be considered at the final approval stage.

Notice Plan and Disposition

The Court approved the proposed mailed notice plan subject to specified changes. A third-party administrator was directed to mail notice to identifiable class members at their last known addresses. The notice had to explain the case, class definition, settlement terms, payment estimates, released claims, and procedures for objecting or opting out. It also had to identify deadlines and explain how class members could review and object to requests for attorneys’ fees, costs, and an incentive award.

The Court GRANTED Morrison’s motion for preliminary approval of the class action settlement. It provisionally certified the settlement class, appointed the class representative and class counsel, and directed the parties to implement the revised notice plan and submit materials for later final approval. The order did not finally approve the settlement or resolve the merits of Morrison’s wage-and-hour allegations.