Guzman v. Three Amigos SJL Inc.

Background

The court had planned to hold a telephone conference about certain matters but issued this order instead because the parties had difficulty finding a mutually convenient date and time. The parties had submitted a proposed settlement for court approval.

Issues identified by the court

The court asked the parties to explain the legal requirements, if any, for releasing the claims of plaintiffs who had opted into the case but did not sign the settlement agreement. The court stated that plaintiffs who cashed payment checks could be bound by the agreement, but noted that the agreement also appeared to bind people who did not respond to efforts to locate them or who did not cash their checks.

The court also asked whether existing opt-ins were being given, or were required to be given, an opportunity to object to or reject the settlement. If rejection was possible, the parties were asked to explain the status of an opt-in who rejected it. The court noted that the opt-in form might be sufficient to bind an opt-in permanently, but requested case law addressing the situation.

The court requested clarification about how the parties would obtain a W-9 tax form from each opt-in and what steps would be taken to locate people who did not provide one. It also asked why the court should not approve the proposed initial notice informing opt-ins of their obligation to provide the form.

The settlement agreement described the allocation of payments to individual opt-ins only in general terms. Because the court believed its settlement-review responsibilities required approval of the specific allocation method, it requested that the parties disclose the method and explain why it was reasonable, unless they could explain why disclosure was inappropriate.

The court further stated that the proposed payment notice contained extensive legal terminology and would likely be difficult for an average reader to understand. It directed that the notice be rewritten at a high-school reading level, with legal language removed except where necessary. The court also noted that the notice contained two paragraphs numbered “1.” on page 2. Finally, it asked the parties to clarify what would happen to funds from checks that were not cashed.

Disposition

The order did not approve or reject the proposed settlement. It required the parties to submit a letter addressing the court’s questions and requested revisions and explanations before the court acted on approval. Judge Gabriel W. Gorenstein signed the order on November 21, 2019.