Hakeem v. Transdev Services, Inc.
- Vince Chhabria
- 3:19-cv-02161
- U.S. District Court · Northern District of California
- 3
In Hakeem v. Transdev Services, Judge Chhabria denied without prejudice preliminary approval of a class settlement because its payment appeared too low.
The ruling affects the proposed employee class, class counsel, and Transdev Services, Inc. and the other defendants because the settlement was not preliminarily approved and could be renewed.
What happened
In Hakeem v. Transdev Services, the court said the employee class appeared entitled to $592,100 in penalties for inaccurate wage statements, while the proposed settlement would pay the class $280,500. Class counsel described the settlement’s maximum payment as $400,000 including expected costs and attorneys’ fees.
The court said the proposed discount was not adequately explained. It appeared that the class could likely win through summary judgment, and the penalties were mandatory rather than discretionary. The court also said it was misleading to compare a settlement amount that included attorneys’ fees with a potential judgment amount that did not include those fees.
Judge Vince Chhabria denied the motion for preliminary approval without prejudice. The court allowed the parties to file a renewed motion by December 20, 2021, and scheduled a case-management conference for January 5, 2022.
The detailed version
- Hakeem v. Transdev Services, Inc. · No. 3:19-cv-02161
- Vince Chhabria
- Dec. 2, 2021
Background
The plaintiff sought preliminary approval of a proposed class-action settlement concerning inaccurate wage statements under California Labor Code section 226(a). The court stated that, on the record before it, the class appeared entitled to $592,100 in penalties. The proposed settlement would provide $280,500 to class members. Class counsel instead emphasized a $400,000 “maximum payment,” which included anticipated costs and attorneys’ fees.
Court’s Analysis
The court found that class counsel had not explained why the class could not recover the full $592,100. The court stated that liability appeared automatic or nearly automatic and that a trial might not be necessary; it also indicated that summary judgment would likely be entered for the class.
The court rejected the comparison between the settlement’s gross amount, which included attorneys’ fees, and the maximum recovery amount, which did not. If the class obtained a judgment, the court said, class counsel would be entitled to statutory fees in addition to the monetary award. The court therefore viewed that comparison as misleading when assessing whether the settlement was reasonable for class members.
The court also acknowledged that inaccurate wage statements may cause less harm than withholding wages. But it explained that the penalties under section 226(a) are mandatory, reflecting the California Legislature’s decision that employees are entitled to that amount after proving a violation. On this record, the court said that consideration did not justify discounting the class’s apparent recovery.
Disposition
The court denied the motion for preliminary approval of the class-action settlement. The denial was without prejudice to filing a renewed motion by December 20, 2021. The court scheduled a case-management conference for January 5, 2022, and stated that the parties should be prepared to set a new litigation schedule if no renewed motion was filed.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.