Parker v. Cherne Contracting Corporation

Background

Beatrice Parker worked for Cherne Contracting Corporation as an hourly-paid driver/driver-foreman at the Tesoro refinery in Martinez, California. Plaintiff Gurule worked as an hourly-paid pipefitter at the Tesoro refinery and at the Chevron refinery in Richmond, California. The plaintiffs alleged that Cherne used a policy under which employees were paid only from the time they reached the work area until they began leaving, excluding time spent badging in, traveling from a refinery gate to the worksite, and putting on required safety gear.

The plaintiffs alleged that this practice caused Cherne to violate California laws concerning minimum wages, accurate and itemized wage statements, wages due at termination, and the timing of wage payments. They also alleged violations of California’s Private Attorneys General Act, which allows an aggrieved employee to seek civil penalties on behalf of the state.

Parker filed the initial class-action complaint in February 2018. The court previously dismissed the unpaid-overtime and missed-meal-period claims on the ground that collective bargaining agreements precluded those claims. The court later denied certification of the unpaid wage-related claim but certified a Wage Statement Subclass consisting of certain former hourly California employees who received paper wage statements that did not include Cherne’s full name.

Proposed Settlement

After discovery and a full-day mediation, the parties agreed to settle the entire action. The proposed Settlement Class included current and former hourly employees who worked for Cherne in California and received one or more paper paychecks during the period from December 18, 2016, through June 6, 2019. The settlement identified 1,840 class members who received 28,343 paper paychecks.

The settlement also covered 2,211 aggrieved employees for purposes of the Private Attorneys General Act. Of those employees, 1,840 were also class members and 371 were not. Cherne agreed to fund a maximum settlement amount of $2,500,000. The agreement allocated $500,000 to the representative penalty claims, up to $750,000 in attorneys’ fees, estimated costs of up to $40,000, general-release payments of up to $40,000, incentive awards of up to $7,500, and settlement-administration costs of up to $16,000. The remaining estimated net settlement amount was $1,146,500.57, to be distributed to class members.

Class members would receive payments automatically, without submitting claim forms. Each payment would be calculated using the number of qualifying paper paychecks received by that class member compared with the total number received by all class members. The agreement also provided for payments to aggrieved employees under the representative penalty claims, with an average expected payment of $56.54.

The agreement included a limited release of the wage-statement claims asserted in the operative complaint. Parker would separately release claims for civil penalties, attorneys’ fees, and litigation costs under the Private Attorneys General Act. Parker and Gurule also agreed to general releases in exchange for $20,000 payments each; the court noted that approval of those payments would be addressed with a later motion for attorneys’ fees and costs.

Court’s Analysis

Under Federal Rule of Civil Procedure 23, a class-action settlement requires court approval. At the preliminary-approval stage, the court considered whether the agreement appeared to result from informed, non-collusive negotiations; whether it improperly favored class representatives; whether it fell within the range of possible approval; and whether it had obvious deficiencies.

The court found that the settlement followed substantial arm’s-length negotiations and mediation with an experienced mediator. It also found that class-member payments were tied to the potential value of their wage-statement claims and that the proposed incentive awards did not, at this stage, show improper preferential treatment. The court stated that it would revisit the general-release payments when the plaintiffs filed their later motion.

The court compared the proposed settlement with the estimated value of the certified claim. Class counsel estimated the maximum value of that claim at $2,742,300, while the maximum settlement amount was $2,500,000. The court also considered the plaintiffs’ asserted litigation risks, including difficulty proving damages and a knowing and intentional violation of California Labor Code section 226.

Disposition

The court preliminarily found the settlement fair, reasonable, and adequate and granted the plaintiffs’ motion for preliminary approval of the class-action settlement. It also found that the proposed mailed notice was the best practicable notice under the circumstances and satisfied Rule 23’s requirements. The order directed the parties to meet and confer, submit a schedule for notice and later approval events, and implement the proposed notice plan. The order did not set out final approval; it required a later final-approval motion and fairness hearing.