Chuchuca v. Fitzcon Construction G.C. Inc.

Background

The court preliminarily reviewed the parties’ proposed settlement agreement. The case involved plaintiffs’ claims that Fitzcon Construction/Ren Corp. and/or Fitzcon Construction G.C. Inc. and its owners and affiliates failed to pay minimum and overtime wages required by state or federal law.

Problems with the Settlement Papers

The court identified three problems:

1. Paragraph 2(a) described the release as “Release; Mutual,” but the agreement required only the plaintiffs to release claims. The court said the parties should either make the release mutual by having defendants provide a release or remove the word “mutual.”

2. The proposed stipulation of dismissal had been signed only by plaintiffs’ counsel. The court required a fully executed stipulation, meaning one signed by all necessary parties.

3. The settlement agreement lacked signatures from three plaintiffs: Alfredo Varela, Byron Espinoza, and Ivan Bonilla. Plaintiffs’ counsel had reported that Varela and Espinoza had not responded to repeated contact attempts, but the court also found no signature approving the settlement from Bonilla.

Authority to Settle for Unsigned Plaintiffs

Plaintiffs’ counsel argued that the three plaintiffs’ “Consent to Sue” forms authorized the representative plaintiffs to act as their agents in making litigation decisions, including settlement decisions. The court was not persuaded that the language in those forms authorized the representative plaintiffs to settle the three plaintiffs’ claims without their review and approval.

The court distinguished the cited decision in a prior related proceeding because the opt-in notice in that proceeding expressly told participating plaintiffs that they would be bound by any settlement or judgment. The court said the forms used here did not contain comparable language and that it was unaware of authority allowing representative plaintiffs to settle for these plaintiffs without giving them an opportunity to review the settlement terms.

The court also explained that a collective action is not the same as a class action. It noted that the representative plaintiffs might not have claims typical of or consistent with the opt-in plaintiffs’ claims and did not have the same duties as representatives of a class under the class-action rules. The court further stated that this case was not even a collective action.

Order

Judge James L. Cott directed the parties to correct the release, submit a fully executed stipulation of dismissal, and by August 30, 2023, either resubmit a fully executed settlement agreement containing signatures from Varela, Bonilla, and Espinoza or provide a letter explaining why the court could approve the agreement without all plaintiffs’ signatures. The court also identified an alternative possibility: approving the settlement as to the nine plaintiffs who had signed and dismissing the case as to the other three if they did not participate and sign by the deadline. This order did not approve or reject the proposed settlement.