John Utne v. Home Depot U.S.A., Inc.

Background

This wage-and-hour class action involved claims that Home Depot did not pay employees for time spent waiting inside locked stores after closing shifts until a supervisor let them out, and for time spent walking through stores to clock in. Two classes had already been certified: the Hourly Employee Class and the Post-Shift Class. Summary judgment had been granted to Home Depot on the rounding-policy claim, and other claims involving wage-statement and waiting-time penalties had also been dismissed.

After class certification, partial summary judgment, formal and expert discovery, a hearing concerning expert evidence, mediation, and further negotiations, the parties agreed to a proposed settlement. Home Depot would pay a gross amount of $72.5 million. The proposed deductions included approximately $24.16 million in attorney fees, costs of up to $3.5 million, service awards of $25,000 for the Estate of John Utne and $7,500 for Alfred Pinto, settlement-administration costs of up to $750,000, and a $10,000 reserve fund.

After those deductions, the agreement allocated 5%—approximately $2.2 million—to the settlement of claims under California’s Private Attorneys General Act. Seventy-five percent of that amount would go to the California Labor and Workforce Development Agency, and 25% would go to the PAGA group members. The remaining class settlement fund was approximately $41.8 million, allocated 41% to the Hourly Employee Class, 50% to the Post-Shift Class, and 9% to the Rounding Class. Class members would not need to submit claims; payments would be calculated using Home Depot’s records and distributed directly.

Court’s Analysis

Under Federal Rule of Civil Procedure 23, the court examined whether the settlement classes met requirements such as numerosity, commonality, typicality, adequacy, predominance of common questions, and superiority of the class-action process. The court concluded that the two previously certified classes continued to meet those requirements. It also concluded that the proposed Rounding Class could be certified for settlement purposes, even though the rounding claims had previously been dismissed on the merits.

The court considered whether the proposed settlement appeared fair, adequate, and reasonable. It found that the settlement amount fell within the range that courts commonly approve, given the estimated potential recoveries, the risks of trial and appeal, the costs and length of continued litigation, and the parties’ advanced stage of discovery. The court also found that the allocation among the classes appeared consistent with the relative value and risk of their claims.

The court identified issues for later review. Plaintiffs’ request for one-third of the gross settlement as attorney fees lacked a lodestar estimate—a calculation based on counsel’s hours and rates that can be used to check a percentage-based fee. The settlement also included a provision under which Home Depot would not oppose a fee request of up to one-third of the gross settlement. The court said that provision was not a bar to preliminary approval but warned that the fee request would receive close scrutiny.

The court also required correction of the Fair Labor Standards Act citation in the settlement agreement and proposed notice. The court noted that the agreement released claims that were or could have been asserted based on the facts alleged in the complaints or notices to the state agency, including Fair Labor Standards Act claims.

Order

Judge Richard Seeborg granted the motion for preliminary approval of the class-action and PAGA settlement. He preliminarily approved the settlement, preliminarily certified the Hourly Employee, Post-Shift, and Rounding Classes for settlement purposes, preliminarily appointed the plaintiffs as class representatives, and appointed the named attorneys as class counsel.

The court appointed KCC as settlement administrator and approved the proposed notice and notice procedures subject to correction of the Fair Labor Standards Act citation. It scheduled a final approval hearing for February 15, 2024, and required the parties to file a final implementation schedule. The order granted preliminary approval only; it did not grant final approval of the settlement or decide the attorney-fee request.