Christine McEvoy and Leng Sam v. Henry Industries, Inc.

Summary

The United States District Court for the Eastern District of California denied without prejudice Plaintiffs’ motion for preliminary approval of a $300,000 class, FLSA collective, and PAGA settlement with Henry Industries, Inc. The Court identified insufficient information concerning FLSA collective certification, the adequacy and valuation of the settlement, the existence of a bona fide FLSA dispute, submission of the settlement to the California Labor and Workforce Development Agency, and the experience of proposed class counsel and representatives. The parties were ordered to supplement their motion within thirty days.

Holdings

1. A court may not preliminarily approve a settlement involving Rule 23 class and FLSA collective claims without addressing conditional certification of both the class and collective and determining whether the settlement falls within the range of possible approval.
2. A proposed class settlement cannot receive preliminary approval when the record does not adequately explain the valuation of the asserted claims and the defendants' maximum potential exposure.
3. The court must have sufficient information to determine that a bona fide dispute exists concerning the existence or extent of FLSA liability before approving an FLSA settlement or release.
4. A proposed PAGA settlement must be submitted to the California Labor and Workforce Development Agency at the same time it is submitted to the court before the court can determine whether the statutory requirement has been satisfied.

Questions Presented

1. Whether the proposed settlement could receive preliminary approval without an adequate showing that the proposed FLSA collective was similarly situated and properly defined and certified.
2. Whether the proposed settlement amount and allocation were adequately supported by a valuation of the maximum exposure on the asserted claims.
3. Whether the record established a bona fide dispute over FLSA liability sufficient to support an FLSA settlement and release.
4. Whether the parties had submitted the proposed PAGA settlement to the California Labor and Workforce Development Agency as required.
5. Whether the record adequately supported appointment of proposed class counsel, designation of class representatives, and proposed incentive awards.

Disposition

other