Frlekin v. Apple Inc.

Background

This California wage-and-hour class action concerned Apple’s policy requiring retail employees to undergo searches of bags, purses, backpacks, or briefcases whenever they left an Apple store. Because employees generally had to clock out before the search and the timekeeping systems were inside the stores, the recorded work hours did not include the time spent waiting for the searches. Plaintiffs alleged that this waiting time should have been compensated.

The previously certified class covered Apple non-exempt retail employees who worked in California during the relevant period. The parties later expanded the damages period through December 31, 2015, while the settlement class’s employment period extended through December 26, 2015. The proposed settlement would include the 13,884 existing class members, after opt-outs, plus 799 additional workers, for a total of 14,683 class members.

The parties had litigated the case through class certification, summary judgment, appellate proceedings, and preparation for damages trials. After three mediations, including one before retired Judge Edward Infante, they agreed to a proposed $29.9 million settlement.

Preliminary-Approval Standard

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 plaintiffs’ case, the stage and expense of the litigation, the complexity of continued proceedings, and the need to protect class members who were not involved in negotiating the settlement.

Court’s Analysis

The court found the proposed settlement adequate at the preliminary stage. A net amount of $18,895,333, or $19,007,458 when accounting for the Private Attorneys General Act portion, would go to the class. Apple would separately pay $757,000 for its share of payroll taxes. The settlement included $449,000 to resolve the Private Attorneys General Act claim, with 75 percent distributed to the Labor and Workforce Development Agency and 25 percent distributed to the eligible class members’ fund.

The court approved expanding the settlement class to include the 799 additional workers. Because those workers were added late, the court required them to receive 105 days, rather than 60 days, to object or request exclusion. Apple was required to pay for notice to 16 individuals who should have received notice in 2015 but were omitted from the roster, and Apple’s counsel had to report whether those individuals received notice before any motion for final approval.

The proposed distribution would average $1,286.96 per class member if there were no additional opt-outs. Payments would be calculated on a pro rata basis using Apple’s records concerning the number of shifts each employee worked. The court noted that the settlement assumptions favored the class, including an above-minimum average wage rate and five minutes of waiting time per shift. The settlement would not require class members to submit claim forms. The court also noted that payments would not count as earnings or compensation for Apple-sponsored benefits, but concluded that this issue did not defeat preliminary approval.

The fund would not revert to Apple. Uncashed checks would go to the California Alliance of Boys & Girls Clubs’ Workforce Readiness program under the settlement’s terms. The court required counsel and the claims administrator to respond to requests for reissued checks within seven days and required the notice concerning outstanding checks to explain that procedure.

The court identified Apple’s agreement not to oppose an attorney-fee award of up to 25 percent of the fund as a warning sign because such an agreement can create a risk of collusion. The court reserved attorney-fee and cost decisions for final approval. It also stated that the proposed $10,000 service payments to Amanda Frlekin and each of four other class representatives would not be approved.

The court found the proposed objection and exclusion procedures too burdensome. Class members were not required to use exact “magic words” to opt out. The parties had to provide a pre-filled opt-out template, honor requests that substantially identified the case, and give a person an opportunity to correct a missing requirement such as a signature. Objections likewise could not be rejected merely because a class member omitted a required item. The sender could identify the case by its name, number, or the descriptors used for opt-outs, and had to be told of omissions within seven days and allowed to correct them.

The court found the proposed release reasonably tailored to the claims pursued in the consolidated complaint. It also found that the parties’ extensive discovery and prolonged litigation supported a conclusion that the negotiations were serious and not collusive. The court noted that continued litigation would involve damages trials, individual estimates of bag checks, cross-examination, and disputes about applicable wage rates, statutory defenses, and liquidated damages.

Disposition and Deadlines

The court held that the settlement was adequate at the preliminary stage and GRANTED preliminary approval subject to final approval. It CERTIFIED the settlement class to include the additional 799 Apple employees described in the order. The court required class notice to be sent by January 11, 2022; set April 26, 2022, as the deadline for objections; set May 10, 2022, for replies to objections; required motions for final approval, costs, and attorney’s fees by May 30, 2022; and set July 7, 2022, for the final-approval fairness hearing. The order did not grant final approval of the settlement.