Rodriguez v. BELFOR USA Group, Inc.

• Court: District Court, N.D. California
• Decided: January 24, 2024
• Docket: 5:22-cv-02071
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 RICHARD RODRIGUEZ, Case No. 22-cv-02071-VKD

9 Plaintiff, ORDER REQUESTING 10 v. SUPPLEMENTAL SUBMISSION

11 BELFOR USA GROUP, INC., et al., Re: Dkt. No. 39 Defendants. 12

13 14 On January 23, 2024, the Court held a hearing on plaintiff’s unopposed motion for 15 preliminary approval of the parties’ class, collective, and PAGA action settlement. Dkt. No. 43. 16 As discussed at the hearing, the Court directs plaintiff to file a supplemental submission 17 addressing the following issues. Defendants may join in plaintiff’s submission or separately file 18 their own. 19 1. Released Class Claims: The proposed settlement defines “Class Members” (or the 20 “Settlement Class”) as “all persons who were employed in the State of California in non-exempt 21 positions” at any time during the “Class Period.” Dkt. No. 39-1, Ex. 1 ¶ 5. All Class Members 22 who do not submit timely requests for exclusion (i.e. “opt out”) from the settlement release all 23 claims asserted in the action, including claims for violation of the Fair Labor Standards Act 24 (“FLSA”), 29 U.S.C. § 201, et seq. See id. ¶¶ 27, 30. Because the FLSA only authorizes 25 collective actions on behalf of plaintiffs who affirmatively consent to participate (i.e. “opt in”), 29 26 U.S.C. § 216(b), the Court questions whether it has authority to approve a settlement that results in 27 the release of Class Members’ FLSA claims on an “opt out” basis, without their affirmative 1 Rangel v. PLS Check Cashers of California, Inc., 899 F.3d 1106 (9th Cir. 2018), which 2 plaintiff cited during the hearing, does not address this question. Rangel holds merely that, as a 3 matter of California law, a settlement of a class action for violation of provisions of the California 4 Labor Code that included a release of “all claims that . . . could have been pled based on the 5 factual allegations of the Complaint” barred a later FLSA claim asserted by an individual class 6 member based on those same factual allegations. Id. at 1108-09. The Ninth Circuit concluded 7 that because the FLSA claim was within the scope of the release, the state court judgment 8 following settlement had a preclusive effect with respect to the plaintiff’s separate FLSA claim. 9 Id. at 1110-12. Rangel does not address the circumstances presented here, where plaintiff asserts 10 state law and FLSA claims in the same action, and proposes to have all Class Members release 11 their FLSA claims without opting in to the collective action. Indeed, Rangel described as “not 12 wrong” the premise that “the FLSA claims could not have been litigated through an opt-out class”; 13 rather, the Ninth Circuit concluded that the plaintiff in that case was “wrong about the import [of 14 collective action and opt out class mechanisms] for res judicata purposes.” Id. at 1111. The Court 15 is not aware of any authority for the approach reflected in the parties’ proposed settlement with 16 respect to the FLSA claims released by the Class Members. See, e.g., Haralson v. U.S. Aviation 17 Servs. Corp., 383 F. Supp. 3d 959, 968-69 (N.D. Cal. 2019) (discussing several unsatisfactory 18 approaches to release of FLSA claims in hybrid Rule 23/collective action settlements). 19 2. Adequacy of representation by Mr. Rodriguez: Mr. Rodriguez has FLSA claims, 20 but he is not an “FLSA Collective Action Member” for purposes of the proposed settlement, as the 21 FLSA Collection Action excludes employees, like Mr. Rodriguez, who worked in California. See 22 Dkt. No. 39-1, Ex. 1 ¶ 13. In these circumstances, the Court questions whether Mr. Rodriguez is 23 an adequate representative for the FLSA collective for purposes of settlement, as he is not 24 similarly situated to other members of the FLSA collective. See 29 U.S.C. § 216(b) (plaintiff may 25 maintain a FLSA collective action “for and in behalf of himself or themselves and other 26 employees similarly situated”). 27 1 3. Whether the settlement is fair, adequate, and reasonable: Plaintiff's motion does 2 || not address in any meaningful way the strength of plaintiff's state law, FLSA, and PAGA claims, 3 or how defendants’ defenses and other factors bear on the Court’s assessment of whether the 4 || proposed resolution of each set of claims is “fair, adequate, and reasonable.” See Fed. R. Civ. P. 5 23(e)(2). It is not sufficient to simply observe that the outcome of litigation is uncertain, and that 6 || plaintiff would actually have to prove his claims, as this is true for all litigation. The supplemental 7 submission should supply enough information to permit the Court evaluate the proposed 8 || resolution of the state law, FLSA, and PAGA claims, and should explain how the parties chose to 9 allocate settlement funds to each set of claims. 10 4. Data security: Plaintiff shall submit a declaration from the proposed settlement 11 administrator addressing the steps the administrator will take to maintain the security and 12 || confidentiality of class and collective action members’ personal information. See Procedural 13 Guidance for Class Action Settlements, Preliminary Approval Guidelines § 2(b).! 14 5. Cy pres recipient: The supplemental submission shall describe Worksafe and its 3 15 relationship to the subject matter of this case, and shall disclose any relationships between a 16 || Worksafe and the parties or their counsel. See Preliminary Approval Guidelines § 8. 3 17 The parties shall file their supplemental submissions by February 23, 2024, unless they 18 stipulate to a later deadline. 19 IT IS SO ORDERED. 20 || Dated: January 24, 2024 21 . 22 Vara QiMarcle VIRGINIA K. DEMARCHI 23 United States Magistrate Judge 24 25 26 27 | The Northern District of California’s Procedural Guidance for Class Action Settlements is 28 available at: https://www.cand.uscourts.gov/forms/procedural-guidance-for-class-action- settlements/.