Massey v. Star Nursing, Inc.

Background

Sharae Massey brought a proposed class action against Star Nursing concerning overtime pay for hourly healthcare workers on short-term travel assignments. Massey alleged that Star Nursing unlawfully excluded hourly stipends from the regular rate used to calculate overtime. The Second Amended Complaint asserted claims for unpaid overtime under California law and the federal Fair Labor Standards Act, unfair business practices, waiting-time penalties, and civil penalties under California’s Private Attorneys General Act.

The parties reached a settlement before formal class certification, with assistance from retired federal magistrate judge Suzanne Segal. The motion for preliminary approval was unopposed by Star Nursing.

Proposed Settlement

Under the agreement, Star Nursing would pay $700,000 into a common settlement fund without admitting liability. The fund included attorneys’ fees and litigation costs, notice and administration expenses, the PAGA payment, and a service award for Massey. Star Nursing would separately pay its share of payroll taxes on settlement amounts treated as wages.

Counsel’s fees would not exceed 25% of the gross settlement, or $175,000, and litigation costs would not exceed $15,000. The agreement included up to $20,000 for settlement administration and up to $5,000 for Massey’s incentive award in exchange for a general release of claims against Star Nursing.

After deductions, approximately $447,500 would remain for participating class members. Payments would be made pro rata based on each member’s weeks worked. The agreement allocated $50,000 to PAGA penalties: $37,500 to the California Labor and Workforce Development Agency and $12,500 to participating class members. No settlement money would revert to Star Nursing. Uncashed checks would be deposited in the court’s Unclaimed Funds Registry after 180 days.

Conditional Class Certification

For settlement purposes, the court conditionally certified a class consisting of all non-exempt hourly employees employed by Star Nursing in California who, at any time from March 2, 2017, through the date of preliminary approval, worked at least one week in which they received overtime and a stipend.

The court found that the proposed class met the requirements for class certification under Federal Rule of Civil Procedure 23. It found that joining all members individually would be impracticable, that the members shared the common question whether stipends were unlawfully excluded from overtime calculations, and that Massey’s claims were typical of the class. The court also found that Massey and class counsel adequately represented the class and that common issues predominated over individual issues.

The court also found that the group met the requirements for a Fair Labor Standards Act collective action because the members were similarly situated and shared an identical legal and factual issue. Hayes Pawlenko LLP was provisionally appointed as class counsel, and Massey was provisionally appointed as class representative.

Preliminary Approval of Settlement

The court concluded that the settlement fell within the range of possible approval as fair, adequate, and reasonable. It considered the risks and expense of continued litigation, the possibility of an unsatisfied judgment, the amount offered, the discovery and investigation completed, counsel’s experience, and the absence of evidence of collusion or self-dealing.

The court noted that Massey’s damages analysis projected a maximum recovery of $1,645,260, including unpaid overtime, waiting-time penalties, and PAGA penalties. The proposed $700,000 settlement represented approximately 83% of the projected maximum recovery for unpaid overtime alone and approximately 42% when the waiting-time and PAGA penalties were included. The court also considered Star Nursing’s reported inability to withstand a judgment for the maximum projected damages and Massey’s financial investigation of that assertion.

The court granted preliminary approval of the class action settlement under Rule 23(e)(2). This was preliminary approval, not a final decision that the settlement was ultimately fair or binding.

Notice, Allocation, and Deadlines

The court approved the notice plan, subject to minor non-substantive changes discussed at the hearing. Class members were to receive written notice by first-class mail describing the settlement, payment rights, objection and exclusion rights, and the final-approval hearing.

Ninety-five percent of a participating member’s settlement share for state-law claims would be sent automatically. To receive the remaining 5% allocated to the Fair Labor Standards Act claim, a member had to timely submit an opt-in form. The court appointed CPT Group as settlement administrator at a flat fee of $10,500, within the agreement’s $20,000 administration-cost limit.

Class members could request exclusion or object by the deadlines stated in the notice. The order set December 19, 2022, as the deadline for motions for final approval and attorneys’ fees and costs, and February 23, 2023, at 9:00 a.m. for the fairness and final-approval hearing, subject to change without further notice. The court retained jurisdiction over further applications related to the settlement and required a post-distribution accounting if final approval was granted.

Disposition

Judge Edward J. Davila granted the parties’ motion for preliminary approval of the class action settlement, conditionally certified the settlement class, approved the notice and allocation plans, and set deadlines for exclusions, objections, fee requests, and final approval. The opinion does not state that final approval was later granted.