David Deluca v. Farmers Insurance Exchange

Background

The plaintiffs were former special investigators employed by Farmers Insurance Exchange. They alleged that they regularly worked more than 40 hours per week but were improperly classified as exempt from overtime requirements. They also alleged that Farmers failed to keep accurate records of their work time, did not pay final wages or provide required wage statements, and failed to provide legally required meal and rest periods.

The plaintiffs asserted claims under the Fair Labor Standards Act, California and New York wage laws, the California Labor Code, the California Unfair Competition Law, and the New York Wage Theft Prevention Act. They sought to represent a class of current or former special investigators.

Settlement Terms

The settlement class consisted of people employed by Farmers in California as special investigators, senior special investigators, or general special investigators—excluding those in the “Nationals” group—during the four years before the complaint was filed through February 27, 2018, when class certification was granted.

Farmers agreed to pay a maximum settlement amount of $5,400,000. The settlement contemplated payments to 78 class members, including the named plaintiffs, after deductions for attorneys’ fees and costs, service payments, and settlement-administration costs. The remaining money would be distributed proportionally based on damages calculations using Farmers’ payroll records, deposition testimony, and estimates of hours worked. No money would return to Farmers; any remaining amount would be donated in equal portions to specified charitable beneficiaries.

Court’s Analysis

The court explained that it could approve the settlement only if the class met the requirements of Federal Rule of Civil Procedure 23 and the settlement was fair, reasonable, and adequate, with adequate notice to the class. The court had previously approved the notice process. Notice was sent to all eligible participants, no notices were returned as undeliverable, and no class members objected or requested exclusion.

The court found that the plaintiffs and their attorneys adequately represented the class. The parties had exchanged nearly 10,000 pages of documents and completed substantial written and oral discovery, including depositions of 10 witnesses. The court also found that the settlement negotiations were conducted at arm’s length with assistance from Magistrate Judge Kandis A. Westmore.

The court determined that the $5.4 million settlement represented approximately 46.6% of the estimated maximum recovery of $11,588,507.19. It found that continued litigation would involve substantial expense and risk, including the possibility that the class could later be decertified. The court also found that the proportional allocation method treated class members equitably.

Fees, Costs, and Service Payments

The court approved attorneys’ fees equal to 30% of the settlement fund, or $1,620,000. It found that the fee was reasonable based on the results achieved, the risks of continued litigation, counsel’s skill and experience, the contingent nature of the representation, the class’s positive reaction, and awards in similar cases. As a cross-check, the court compared the requested fee with counsel’s lodestar—the reasonable hours worked multiplied by reasonable hourly rates—and found that the requested amount represented a multiplier of approximately 1.24.

The court also approved $85,430.76 in litigation costs and $11,500 in settlement-administration costs. It approved $10,000 service payments to each of the named plaintiffs, Deluca and Francis, and $1,000 service payments to each plaintiff and class member who was deposed, excluding the named plaintiffs. The court found that these payments were reasonable in light of the participants’ involvement and the benefits their efforts provided to the class.

Disposition

The court granted final approval of the Settlement Agreement and granted the motion for attorneys’ fees. It ordered Farmers to fund the settlement account and required the settlement administrator to make the approved payments. The plaintiff and all class members were bound by the settlement’s release provisions. The court retained jurisdiction to administer and enforce the settlement, and dismissed the action on the merits and with prejudice, subject to that continuing jurisdiction.