Kudatsky v. Tyler Technologies

Background

This was a wage-and-hour class action against Tyler Technologies, Inc. The plaintiffs alleged that Tyler misclassified implementation consultants as administratively exempt from overtime and other wage requirements. The asserted claims included claims under California wage laws and the federal Fair Labor Standards Act.

The court had previously certified a class only on the issue of whether Tyler properly classified enterprise-resource-planning implementation consultants as administratively exempt from overtime and other California labor laws. Other claims—including overtime, wage-statement, waiting-time-penalty, and unfair-competition claims—had not yet been certified for class treatment. The parties had briefed cross-motions for partial summary judgment, but the court did not decide those motions in this order.

The proposed settlement covered 295 class members. Notice was sent by first-class mail and email, and notice was also posted on counsel’s websites. The court found that the notice process appeared to reach all class members. Two members opted out, and no class member objected. Two members disputed Tyler’s employment-date and payment calculations. Tyler corrected the calculations for those two members and, on its own, corrected the hours for five others, resulting in an additional $128,979.45 for the class.

Settlement approval

In exchange for dismissal of the action with prejudice and a release of claims, Tyler agreed to pay $3,258,313.61. The settlement allocated $2,450,813.61 to 294 participating class members on a pro-rata basis. The court stated that payments ranged from $200 to $61,442.50. The settlement did not release claims accruing after April 19, 2021, and the release was limited to claims defined by the certified class. Legal Aid at Work was approved as the recipient of any cy pres distribution.

The court evaluated the settlement under Federal Rule of Civil Procedure 23, which requires a class settlement to be fair, reasonable, and adequate. It also considered the eight factors associated with the Ninth Circuit’s settlement review, including the strength of the plaintiffs’ claims, litigation risks and costs, the risks of maintaining class certification, the settlement amount, the stage of the proceedings, counsel’s experience, government participation, and the class members’ reactions.

The court found that the factors supported approval. It emphasized the risks concerning the administrative exemption, whether class members worked overtime, whether out-of-state workers performed work in California, potential defenses, damages, and continued class certification. The court also found the plan of allocation minimally fair in view of those risks. It concluded that the settlement was fair, reasonable, and adequate and retained jurisdiction to enforce the settlement for six months from the order’s date.

The court separately found that the settlement resolved a bona fide dispute under the Fair Labor Standards Act. It identified disputes about exemptions, knowledge and intent, limitations periods, hours worked, and damages calculations. The FLSA settlement approval was therefore granted.

Attorneys’ fees, costs, and incentive award

Class counsel requested $787,500 in attorneys’ fees. The court applied the percentage-of-the-fund method and found the request reasonable. The amount represented 25 percent of the original settlement fund and 24 percent of the revised fund, because counsel did not seek a percentage of Tyler’s additional $108,313.61 payment. The court also considered a lodestar cross-check—a comparison with fees based on hours worked and hourly rates—and noted a lodestar of $323,385 and a multiplier of 2.34. The request for $787,500 was granted.

The court approved $20,000 in litigation costs, including expenses for deposition transcripts, electronic document storage, mailing notices, advertising, and legal research. The court also considered Kudatsky’s requested $5,000 incentive award. Based on his work assisting counsel, preparing for and attending a deposition, attending settlement conferences, and other involvement, the court approved a $1,000 incentive award. It found that no additional incentive awards were warranted.

Disposition

Judge William Alsup granted, to the extent stated, final approval of the class settlement, the plan of allocation, attorneys’ fees, costs, and incentive awards. The order did not decide the pending summary-judgment motions or the underlying wage claims on their merits.