Koeppen v. Carvana, LLC

Background

Ronell Koeppen alleged that Carvana violated California wage-and-hour laws and California’s unfair-business-practices law. He alleged failures to pay minimum and overtime wages, provide compliant meal and rest periods or related premium pay, timely pay wages during employment and at termination, provide compliant wage statements, maintain payroll records, and reimburse necessary business expenses. He also asserted penalties under California’s Private Attorneys General Act. Carvana denied liability and denied that Koeppen or the proposed class members were entitled to relief.

The parties reached a settlement after mediation and investigation that included review of employment records, payroll and time data, company policies, and other documents. For settlement purposes only, they proposed a class of approximately 1,224 current and former hourly-paid or nonexempt employees who worked for Carvana in California from December 16, 2016, through the date of preliminary approval.

Settlement terms

Carvana agreed to pay a non-reversionary gross settlement amount of $1,050,000. Deductions could include up to $367,500 in attorneys’ fees, up to $27,000 in litigation costs, up to $7,500 as an enhancement payment to Koeppen, and estimated settlement-administration costs of no more than $11,000. If those amounts were awarded in full, the amount available for participating class members was estimated to be at least $637,000.

The net settlement amount will be distributed based on each class member’s share of total workweeks during the class period. Individual payments will be allocated 20 percent to wages and 80 percent to non-wage amounts for interest and penalties. The settlement provides procedures for class members to request exclusion, object, or dispute the number of workweeks attributed to them. Uncashed or undeliverable checks remaining after 180 days will be sent to the California State Controller as unclaimed property in the class member’s name.

The settlement does not allocate money to Koeppen’s Private Attorneys General Act claim. The opinion states that, at final approval, Koeppen would request dismissal of that claim without prejudice and would not intervene in a prior related Private Attorneys General Act matter or object to approval of that matter’s settlement. The court separately noted that attorneys’ fees and costs would be assessed later and had not been finally awarded in this order.

Court’s analysis

Federal Rule of Civil Procedure 23(e)(2) requires a class settlement to be fair, reasonable, and adequate. At the preliminary-approval stage, the court need only determine whether the settlement is potentially fair, appears to result from informed and non-collusive negotiations, has no obvious deficiencies, does not improperly favor the class representative or groups of class members, and falls within the range of possible approval.

The court found the settlement process fair because the parties negotiated through mediation with Jeffrey A. Ross and class counsel investigated the claims by reviewing documents and data. The court found no obvious deficiencies and determined that the $7,500 enhancement payment to Koeppen was within the range of possible approval. The court also found that the proposed settlement amount was within the range of possible approval because the parties estimated Carvana’s risk-adjusted exposure at $924,675.89, below the $1,050,000 gross settlement amount.

The court found that the proposed notice plan adequately described the action, class definition, settlement terms, estimated individual payments, deadlines, exclusion and objection procedures, workweek-dispute procedures, and released claims. The parties revised the notice to allow objections and exclusion requests by email as well as mail.

Conditional class certification

The court conditionally certified the proposed class for settlement purposes only. It found the proposed class sufficiently numerous, with approximately 1,224 members; found common questions because the claims concerned alleged common and systematic wage practices; found Koeppen’s claims typical of the class; and found that Koeppen and Lawyers for Justice, PC would adequately represent the class. The court also found that common questions predominated and that a class action was superior to individual actions, which could involve relatively small amounts of damages.

Order

Judge Thomas S. Hixson granted the unopposed motion for preliminary approval. The court preliminarily approved the settlement agreement and notice plan; conditionally certified the settlement class; preliminarily appointed Edwin Aiwazian, Arby Aiwazian, Joanna Ghosh, and Yasmin Hosseini of Lawyers for Justice, PC as class counsel; appointed Ronell Koeppen as class representative; and appointed ILYM Group Inc. as settlement administrator.

The order required Carvana to provide class-member information to the settlement administrator within 20 calendar days and required the administrator to mail and email the approved notice within 15 calendar days after receiving that information. It required Koeppen to file a motion for attorneys’ fees and costs within 21 days and a motion for final settlement approval on July 11, 2024. The court scheduled the final approval hearing for August 22, 2024. The order granted preliminary approval only; it did not grant final approval or resolve whether Carvana violated the asserted laws.