Joh v. American Income Life Insurance Company

Background

Former American Income Life Insurance Company insurance salesperson trainees and agents who trained or worked in California alleged that the company did not pay them for training or adequately compensate them for work as sales agents. Their claims included alleged failures to pay minimum wages and overtime, provide meal and rest periods, reimburse work expenses, provide accurate wage statements, pay wages and commissions, and comply with California waiting-time and other wage laws. They also alleged improper commission chargebacks and asserted claims under California’s unfair-competition law, the Private Attorneys General Act, and other California statutes.

The plaintiffs sought to represent a class of people who trained to become or worked as sales agents for the company in California during the relevant period. The court had previously approved the proposed class for settlement purposes and preliminarily approved an earlier settlement. After objections, however, the court denied final approval because the earlier agreement distributed the waiting-time portion of the settlement according to workweeks. Because waiting-time penalties accrue once per employee, rather than by workweek, the court found that approach could unfairly reduce trainees’ share.

Revised Settlement

The revised agreement covered people who trained to become or worked as California sales agents during the class period of September 12, 2014, through August 16, 2019, whose training or work began before August 16, 2019. It also resolved claims in two related cases identified in the opinion.

American Income Life agreed to pay $5,750,000 into a non-reversionary settlement fund. Approximately 7,015 class members were eligible for payment. After deductions, including attorneys’ fees, costs, service awards, a payment to the California Labor and Workforce Development Agency under the Private Attorneys General Act, and administration costs, the net amount for class distribution was $4,127,531. Class members were eligible to receive cash payments without filing a claim form unless they opted out.

The revised agreement divided the net fund into two sub-funds. A $1,605,500.96 fund for terminated trainees and agents was to be distributed on a per-person basis to those who might have waiting-time claims. The remaining fund was to be distributed according to workweeks. The agreement also provided a process for class members to challenge the number of workweeks assigned to them.

Court’s Analysis and Rulings

The court found that the settlement class continued to satisfy the requirements for class certification under Federal Rule of Civil Procedure 23. It also found that the notice program, which included mailed and emailed notices and a settlement website, was adequate. The settlement administrator mailed notice packets to 7,014 people and emailed notice to 6,886 people for whom email addresses were available. The opinion states that no objections or workweek challenges were received and that thirteen class members opted out.

The court concluded that the revised settlement was fair, reasonable, and adequate. In particular, separating the waiting-time portion of the fund and distributing it per person corrected the problem identified in the earlier agreement and treated class members equitably relative to one another. The court therefore granted final approval of the Class Action Settlement and Release.

The court also approved the requested attorneys’ fees of 25% of the settlement fund, or $1,437,500. It found that the amount was supported by the results achieved, the risks and costs of continued litigation, counsel’s experience, the contingent nature of the representation, the class’s response, and the comparison with counsel’s lodestar. The court found the requested $20,996.99 in litigation costs and $55,000 in settlement-administration costs reasonable and approved them. It also approved incentive awards of $7,500 each for the three named plaintiffs.

Judge Thomas S. Hixson ordered American Income Life to fund the settlement and directed the settlement administrator to make the approved payments. He ordered that the plaintiff and all class members be bound by the settlement’s release provisions. The court retained jurisdiction to administer, enforce, interpret, and complete the settlement. The action was dismissed on the merits and with prejudice, subject to that retained jurisdiction.