Villafan v. Broadspectrum Downstream Services Inc

Background

Current and former nonexempt employees who provided safety and support services at Broadspectrum’s oil refineries alleged violations of federal and state wage-and-hour laws. The claims concerned alleged unpaid off-the-clock work, missed meal and rest breaks, unreimbursed expenses, and related penalties. The case was brought as a proposed collective action under the Fair Labor Standards Act (FLSA) and a proposed class action under Federal Rule of Civil Procedure 23. The operative second amended complaint added T.R.S.C. as a named defendant.

The parties conducted formal and informal discovery, including document production, a deposition of Broadspectrum’s corporate representative, review of more than 1,140 documents, and production of data used to assess damages. After multiple mediations, they accepted a mediator’s proposal and settled. The settlement fund was reduced from $5.5 million to $5 million while the parties delayed funding because of the COVID-19 pandemic. The motion for preliminary approval was unopposed.

Settlement Terms

The proposed California class included approximately 1,862 current and former hourly, nonexempt employees of Broadspectrum or TRSC who performed work in California from November 6, 2014, through November 20, 2020, subject to specified exclusions. The FLSA collective, certified for settlement purposes only, included individuals employed by Broadspectrum or TRSC who filed a consent to join the action between November 6, 2015, and November 20, 2020. The court had previously conditionally certified the FLSA collective, and 842 members had filed opt-in notices.

The gross settlement amount was $5,000,000 and was non-reversionary. The estimated net amount for the class was approximately $3,216,730 after a $31,500 allocation to the Labor and Workforce Development Agency for the California Private Attorneys General Act claim, up to $15,000 for an enhancement payment to the named plaintiff, estimated administration expenses, and attorney’s fees of no more than one-third of the gross settlement amount plus costs capped at $40,000.

Members generally would receive checks without submitting claim forms. Payments would be calculated using workweeks during the applicable periods, with California workweeks weighted more heavily than workweeks in other states. Members could dispute the workweek information by submitting evidence. The release differed for FLSA opt-in plaintiffs, California class members, and the named plaintiff. Uncashed or undeliverable check funds would either go to Legal Aid at Work if less than $75,000 or be redistributed pro rata if $75,000 or more.

Court’s Analysis

The court found federal-question jurisdiction over the FLSA claim and supplemental jurisdiction over the state-law claims. Because the settlement occurred before final class certification, the court applied heightened scrutiny to the Rule 23 requirements and the proposed settlement.

For settlement purposes, the court preliminarily found that the Rule 23 requirements were met: the class was sufficiently numerous; common questions predominated; the representative’s claims were typical; the representative and counsel could adequately protect the class; and a class action was superior to other methods of resolving the dispute. The court conditionally certified the California class under Rule 23(b)(3) for settlement purposes, notice, and the final approval hearing.

The court confirmed the prior conditional certification of the FLSA collective and approved the FLSA collective settlement. Applying the factors used to evaluate class settlements, the court concluded that preliminary approval was appropriate because the settlement followed extensive negotiations and discovery, provided meaningful value in light of litigation risks and disputed damages, and accounted for differences in workweeks and state-law claims. The court also found the PAGA allocation reasonable.

The court deferred attorney’s-fee and service-award decisions until the final fairness hearing. It also deferred consideration of any cy pres award, meaning a distribution of certain remaining funds to an approved recipient, until that hearing. The court approved the proposed notice and found that it adequately described the lawsuit, settlement, estimated payments, releases, opt-out and objection rights, hearing information, and attorney’s fees and costs.

Order

Judge Laurel Beeler granted the plaintiffs’ motion. The court (1) conditionally certified the provisional California class for settlement purposes, preliminarily approved the settlement, and authorized notice; (2) confirmed the June 11, 2019 conditional certification of the FLSA collective and approved its settlement; (3) approved JND Legal Administration as settlement administrator; (4) provisionally appointed Angel Villafan as class representative and Schneider Wallace Cottrell Konecky LLP as class counsel; (5) appointed Villafan as collective representative and the firm as collective counsel; and (6) ordered the parties and administrator to follow the procedures and deadlines in the order and settlement agreement.

The order set a final approval hearing for April 8, 2021. It stayed other proceedings and vacated other deadlines pending further order, and stated that the proposed settlement would be null and void if the court did not enter a final approval order and judgment. The order granted the motion and disposed of ECF No. 129; it did not provide final approval of the settlement.