DiMercurio v. Equilon Enterprises LLC

Background

The plaintiffs sought preliminary approval of a settlement in a certified class action and a representative action under California’s Private Attorneys General Act (PAGA). The defendant, identified in the opinion as Shell, owned and operated an oil refinery in Martinez, California. Four class representatives worked as operators there until the refinery was sold on January 31, 2020.

Shell required operators to be available for designated 12-hour standby shifts in addition to their regular 12-hour shifts. The complaint alleged that there were two 1.5-hour standby periods each day, during which operators had to remain reachable by phone and, if called, arrive at the refinery within two hours. Operators were not paid when they were not called in.

The operative complaint asserted claims for failure to pay reporting-time pay, failure to pay all wages owed at termination, inaccurate wage statements, unfair business practices, and civil penalties under PAGA. The case was filed in California state court in June 2019 and later removed to federal court. The court had previously certified the class as to all claims.

Proposed Settlement

The certified class covers operators who were scheduled for standby at the refinery between June 4, 2015, and January 31, 2020. The opinion states that the plaintiffs estimated there were 300 class members. Two subclasses concerned waiting-time penalties for class members who separated from employment between June 4, 2016, and June 3, 2019, or between June 4, 2019, and January 31, 2020, and who allegedly did not timely receive all wages owed because of reporting obligations.

The settlement required Shell to pay $3,200,000 into a settlement fund within 30 calendar days after the settlement’s effective date. Before distributing the remainder to class members, the proposed payments included:

- $7,500 service awards to each of the four class representatives, subject to court approval; - $1,066,666.67 in attorneys’ fees, equal to 33.33 percent of the gross settlement amount, subject to court approval; - up to $45,000 in class counsel’s costs, subject to court approval; - $50,000 for released PAGA claims, with 75 percent paid to the California Labor and Workforce Development Agency and 25 percent paid to class members, subject to court approval; and - reasonable settlement-administrator fees and expenses, subject to court approval.

The remaining funds would be divided proportionally according to each class member’s number of standby shifts during which the member was not activated for work. The settlement shares would be allocated 50 percent to wage claims, 25 percent to interest, and 25 percent to statutory penalties.

The proposed notice gave class members 45 days after the notice was postmarked to opt out, object to the settlement, or object to class counsel’s fee request. Class members who did not timely opt out would release claims alleged in the lawsuit, and claims that could have been brought based on the operative complaint, relating to wages, penalties, interest, fees, costs, and other allegations covering June 4, 2015, through January 31, 2020.

Court’s Analysis

For preliminary approval of a class-action settlement, the court considered whether the proposal appeared potentially fair, reasonable, and adequate. The court explained that a full fairness review would occur at the final approval stage. At the preliminary stage, the settlement needed to appear to result from serious, informed, and non-collusive negotiations, contain no obvious deficiencies, avoid improper preferential treatment, and fall within the possible range of approval.

The court found that the parties had engaged in three settlement conferences over more than a year, and that plaintiffs’ counsel had reviewed extensive documents, taken multiple depositions, and litigated class certification. The court also found no obvious deficiencies after the parties twice amended the proposed notice in response to the court’s concerns.

The only preferential treatment identified was the proposed service awards for the four class representatives. The court found those awards within the possible range of approval. The court also found the settlement amount within that range: the plaintiffs estimated Shell’s total exposure at $8,550,000, making the $3,200,000 gross settlement fund about 37 percent of that estimate. The court noted the risk that continued litigation could result in no recovery.

The court separately reviewed the PAGA settlement. It found that the proposed $50,000 PAGA allocation represented about 11 percent of the plaintiffs’ potential PAGA recovery at trial and about 1.6 percent of the overall settlement. At the preliminary approval stage, the court concluded that the PAGA settlement was fair, adequate, and reasonable in light of PAGA’s purposes.

The court found the second amended notice satisfied the required disclosures for a class certified under Federal Rule of Civil Procedure 23(b)(3), including the nature of the action, class definition, claims, exclusion procedures, objection procedures, and the binding effect of a class judgment. The court accepted the parties’ representation that email notice was not practicable.

The court did not finally decide the attorneys’ fee request. It found that the planned request of $1,066,666.67 was not so outside the permissible range as to prevent preliminary approval, but directed plaintiffs to file a separate fee-and-cost motion for review along with any objections. The court also stated that it would consider at final approval whether any payment of less than $25,000 in uncashed or returned checks to the East Bay Community Law Center was properly connected to the lawsuit and class members’ interests.

Order

Judge Jacquelyn Scott Corley granted plaintiffs’ motion for preliminary approval and approved the second amended proposed class notice. The court ordered Shell to provide class-member information to the settlement administrator within 10 business days, after which the administrator would mail the notice within 15 calendar days.

The court also ordered plaintiffs to file the final notice with the court, file the attorneys’ fee-and-cost motion within 21 days, and file the motion for final settlement approval by February 16, 2023. The court set a final approval hearing for March 30, 2023, at 9:00 a.m. The order granted preliminary approval only; it did not grant final settlement approval or finally approve attorneys’ fees, costs, service awards, or the PAGA allocation.