Rodriguez v. BELFOR USA Group, Inc.

Background

The court held a hearing on January 23, 2024, concerning Rodriguez’s unopposed motion for preliminary approval of a proposed settlement involving class claims, a Fair Labor Standards Act (FLSA) collective action, and claims under California’s Private Attorneys General Act (PAGA). The proposed settlement defined the settlement class as people employed in California in non-exempt positions during the class period. Class members who did not timely opt out would release all claims asserted in the action, including FLSA claims.

Issues Identified by the Court

The court questioned whether it had authority to approve a settlement releasing FLSA claims on an opt-out basis. The FLSA permits collective actions only for plaintiffs who affirmatively consent to participate. The court explained that the cited Ninth Circuit decision, Rangel v. PLS Check Cashers of California, Inc., did not address a settlement combining state-law and FLSA claims in the same action and releasing FLSA claims without affirmative participation in the collective action. The court stated that it was not aware of authority supporting the approach used in the proposed settlement and cited Haralson v. U.S. Aviation Services Corp. for discussion of problems involving FLSA releases in combined class and collective settlements.

The court also questioned whether Rodriguez was an adequate representative of the FLSA collective. Although he had FLSA claims, the proposed FLSA collective excluded employees who worked in California, including Rodriguez. The court therefore questioned whether he was similarly situated to the other members of that collective, as required by the FLSA.

The court further found that the motion did not meaningfully address the strength of the state-law, FLSA, and PAGA claims, the defendants’ defenses, or other factors relevant to whether each group of claims was resolved fairly, adequately, and reasonably under Federal Rule of Civil Procedure 23(e)(2). It directed the supplemental filing to explain the proposed allocation of settlement funds among the different sets of claims.

The court additionally required a declaration from the proposed settlement administrator describing measures to protect the security and confidentiality of class and collective members’ personal information. It also required information about Worksafe, the proposed cy pres recipient, including its relationship to the subject matter of the case and any relationships with the parties or their lawyers.

Order

Judge Virginia K. Demarchi directed the plaintiff to file a supplemental submission addressing these issues. The defendants could join that submission or file their own. The parties were ordered to file by February 23, 2024, unless they stipulated to a later deadline. The order requested further information and did not rule on whether the proposed settlement should receive preliminary approval.