Class Action Settlements Are Never Rubber Stamped

To all those critics who claim that courts simply rubber stamp sweetheart deals in class actions, we offer this further exhibit in support of the class action bar and bench: Judge Jonathan Cannon's further inquiry into the reasons for the settlement in Pinto vs. Luxottica US Holdings Corp., Orange County Superior Court case number 04CC00639.

In a tentative ruling published today, Judge Cannon continued the hearing on a motion for preliminary approval of settlement, saying:

The settlement is rather low given the alleged violations of the Labor Code. The gross settlement is $495,000. After deduction of the requested fees and costs, the class will be left with a settlement fund of approximately $304,000.00. There are approximately 5,700 class members. That means each class member will receive an average of $53.00. That works out to approximately 17 cents a week if that employee worked all of the weeks included in the class definition. The parties need to explain to the Court what the expected payment per work week will be and why the amount is so low. Are there extenuating financial considerations on the part of the Defendant? Note: The declaration of counsel indicates he is seeking $58,500.00 in fees. The settlement agreement and notice to the class indicate counsel will seek fees of $148,500.00.

The parties were required to submit further briefing as to the fairness and reasonableness of the settlement ten days prior to the new hearing date.

This settlement might be a very reasonable settlement, and it may yet be approved, but when something comes in that looks too low, good judges will always scrutinize the deal to make sure class members are getting a fair deal. This is a good example of class action litigation working the way it was designed to look.

Comments

[michael walsh]

The settlement was eventually approved, with this explanation:

The class members will be receiving approximately $1.30 per week worked under the settlement. The parties have submitted declarations and evidence which support the low settlement figure. The nature of the business, the meal break waivers Defendant obtains from the employees and the pending debate of the proper statute of limitations for this type of claim support the reasonableness of the settlement.

The parties have not submitted a revised claim form indicating the payment of $1.30 per work week. The original claim form submitted as a blank for that information. It needs to be filled in. The information is necessary to allow the class members to make an informed decision as to whether or not to opt out of the settlement.