Parker v. Cherne Contracting Corporation

Background

Beatrice Parker and Gurule were hourly employees of Cherne Contracting Corporation. The plaintiffs alleged that Cherne did not pay employees for certain time spent badging into refineries, traveling from refinery gates to work sites, and putting on required safety equipment. They also alleged violations involving minimum wages, wage statements, termination pay, and the timing of wage payments under California law.

The Court previously denied certification of the unpaid-wage-related claim but certified a wage-statement subclass consisting of former hourly California employees who, during December 18, 2016 through June 6, 2019, received paper wage statements that did not include Cherne’s full name and address. The settlement class covered current and former hourly California employees who received at least one paper paycheck during that period and did not validly opt out. Cherne identified 1,891 class members and 2,211 employees covered by the settlement’s claims under California’s Private Attorneys General Act (PAGA).

Settlement Terms

Cherne agreed to fund a maximum settlement amount of $2,500,000. After deductions for the PAGA payment, attorneys’ fees and costs, payments to the named plaintiffs, incentive awards, and administration costs, the remaining amount was to be distributed in full to settlement class members based on the number of qualifying paper paychecks they received. The estimated net settlement amount was at least $1,146,500.

The settlement allocated $500,000 to the PAGA claims. Twenty-five percent, or $125,000, was to be distributed to aggrieved employees, with the remainder paid as specified in the settlement agreement. The class members’ release was limited to the wage-statement claims alleged in the operative complaint. Parker, acting individually and as a representative or agent of the California Labor and Workforce Development Agency, released the specified PAGA claims; individual class members and aggrieved employees did not provide a PAGA release.

Parker and Gurule also had individual wage-and-hour claims. They agreed to release those individual claims in exchange for $20,000 each, in addition to their class and PAGA payments and service awards. Any unclaimed funds were to be divided between Build California and The Beavers Charitable Trust, subject to the settlement’s stated conditions; certain uncashed PAGA funds were to be paid to the California Labor and Workforce Development Agency.

Court’s Analysis and Rulings

Under Federal Rule of Civil Procedure 23, a court must approve a class settlement only after a hearing and a finding that it is fair, reasonable, and adequate. The Court found that the notice plan was properly implemented: only 34 of 1,891 notices were undeliverable, for a stated 98.2% success rate. The Court also considered the litigation risks, the settlement amount, the discovery and mediation completed, counsel’s experience and views, and the class members’ response. It concluded that the settlement was fair, adequate, and reasonable and that class members received adequate notice.

The Court held that the PAGA settlement was fair, reasonable, and adequate under either potentially applicable review standard, noting uncertainty about whether Federal Rule of Civil Procedure 23 applies to PAGA claims in federal court.

The Court granted final approval of the class action settlement. It also granted the motion for attorneys’ fees, costs, and incentive awards. The approved amounts were $750,000 in attorneys’ fees; $39,383.59 in litigation costs and expenses; a $5,000 incentive award for Parker; a $2,500 incentive award for Gurule; $20,000 general-release payments to each of Parker and Gurule; and $16,000 for RG2 Claims Administration LLC’s settlement-administration costs.

The Court approved the $2,500,000 settlement and directed the parties to carry out the settlement agreement and file a stipulated final judgment of two pages or less within 14 days of the order.