Ornelas v. Tapestry, Inc.

Background

John Ornelas brought this wage-and-hour class action against Tapestry, Inc. He alleged that Tapestry did not pay employees for time spent undergoing security checks before leaving its retail store and that the policy interfered with meal and rest breaks. A prior order granted Tapestry partial summary judgment on the meal-and-rest-break claims. A later order certified a class only as to claims for unpaid minimum wages and overtime resulting from the security-check policy.

The parties agreed in November 2021 to a class settlement creating a $342,500 non-reversionary fund. The fund was to be distributed pro rata based on the number of weeks each class member worked. Notice reached 188 of 190 class members. No class member opted out of or objected to the settlement or the requested fees and costs, and the court held a final fairness hearing.

Settlement approval

The court applied the factors used to evaluate whether a class settlement is fair, reasonable, and adequate. It found that the settlement was adequate despite being a low-end recovery because the plaintiff faced uncertainty about how regularly employees underwent security checks, how long the checks took, and whether some time was too brief to be recoverable. The court also considered the prior ruling that time spent waiting for security checks is compensable under California law.

The settlement allocated approximately $307,693.69 to the class after fees, costs, and other payments, with an average payment of approximately $1,227.50 per class member. The court found the allocation plan fair and reasonable. It also approved the settlement’s treatment of $10,000 in California labor-law penalty claims: $7,500 would go to the state labor agency and $2,500 would remain for participating class members.

The court identified a serious problem with an earlier version of the release. Although the certified claims concerned only unpaid wages and overtime caused by the security-check policy, the proposed release initially covered all unpaid minimum-wage and overtime claims. The parties corrected the language after the court identified the problem. The court approved the settlement only with the revised release, which is limited to the certified security-check claims. Two class members who never received notice will not be released and will be excluded from the class.

Attorney’s fees and costs

Class counsel requested $119,875 in fees, equal to 35 percent of the common fund. The court used the percentage-of-the-fund method and explained that 25 percent is the usual benchmark for attorney’s fees in this type of case. It found that the settlement’s limited recovery, lack of nonmonetary benefits, and counsel’s handling of the overbroad release did not justify the requested increase above the benchmark. The court awarded $76,923.42 in attorney’s fees, equal to 25 percent of the fund after deduction of costs and expenses, with the award divided between the two law firms in the proportions originally requested.

The court also approved $7,306.31 in unreimbursed costs, including expenses for deposition transcription and travel. Additional settlement-administration costs under $20,000 could be paid from the settlement fund without another application to the court.

Disposition

To the extent stated, final approval of the class settlement and plan of allocation was granted. The requests to find the notice adequate, authorize administration and distribution of the settlement, and approve the allocation plan were granted. The certified claims were dismissed with prejudice under the settlement agreement. The court retained exclusive jurisdiction over the agreement and ordered counsel and the parties not to represent that the release covers wage-and-overtime claims unrelated to the security-check policy.