Kudatsky v. Tyler Technologies

Background

Aaron Kudatsky brought this class and collective action against Tyler Technologies under the Fair Labor Standards Act and California wage-and-hour law. The claims concerned whether Tyler improperly classified Munis enterprise-resource-planning implementation consultants as exempt from overtime and whether it violated California itemized wage-statement requirements.

Kudatsky worked for Tyler as an implementation consultant from July 2016 through March 2019 and often worked more than eight hours per day while in California. The court had previously conditionally certified a collective of 60 opt-in federal-law plaintiffs and certified a California class of Munis implementation consultants, excluding senior implementation consultants. The certified issue was whether Tyler properly classified those consultants as administratively exempt from overtime and other California labor laws.

The parties had pending summary-judgment motions and a motion to decertify the federal collective, but they withdrew those motions while pursuing settlement. They presented a proposed settlement after mediation sessions before Magistrate Judge Donna M. Ryu.

Proposed Settlement

The proposed settlement had a total value of $3.15 million for 295 individuals. The parties used Tyler’s payroll records and estimated the maximum value of the claims at $7,653,620.09. Class counsel estimated the wage loss at $3,857,415.50 but valued the claims’ realistic settlement value at approximately $2.94 million after accounting for the estimated likelihood of success on liability, limitations, liquidated damages, penalties, and other issues.

The settlement would distribute approximately $2.3425 million among the 295 individuals after administrative costs and attorneys’ fees. Payments were estimated to average $7,844.07, with amounts ranging from $200 to $61,442.50. The agreement also allowed for a possible $5,000 enhancement award to the named plaintiff and $500 payments to plaintiffs who were deposed. It did not require Tyler to reclassify the implementation-consultant position and did not release claims accruing after April 19, 2021.

Court’s Analysis

Under Federal Rule of Civil Procedure 23(e), a settlement that binds absent class members must be fair, reasonable, and adequate. The court considered the settlement amount, the strength of the claims, the stage of the case, the expense and complexity of continued litigation, the negotiations, and the proposed notice.

The court found the settlement adequate at the preliminary stage. It noted that the parties had conducted 11 depositions and exchanged more than one million pages of discovery, giving them information with which to evaluate the claims. The court also found that the proposed release was sufficiently narrow and that the case remained complex because only some claims involving some class members had been certified for class treatment.

The proposed notices were initially revised at the court’s direction to explain that claims arising after April 19, 2021, would not be released and that Tyler was not agreeing to reclassify the position. After those revisions, the court found the notice adequate, while requiring first-class mail and additional steps if mail was returned as undeliverable. The court stated that it would retain jurisdiction for six months after entry of judgment.

Disposition

The court granted preliminary approval of the proposed settlement, subject to final approval. It ordered class counsel to send notice by August 10, 2021; set September 23, 2021, as the deadline for objections; set October 7, 2021, for replies to objections; required a motion for final approval by October 19, 2021; and scheduled the final-approval fairness hearing for November 4, 2021. The opinion did not grant final approval of the settlement.