Wage Law

We love Chinatown, but it is teeming with employers who oppress their laborers and refuse to pay minimum wage and overtime, or violate other labor laws such as those requiring meal and rest breaks. The latest violator is Dick Lee Pastry, a poorly reviewed restaurant in San Franscisco's Chinatown. Dick Lee Pastry was recently ordered to pay back wages and penalties after forcing employees to work up to 80 hours per week for under $4 per hour. According to the San Francisco Chronicle, Dick Lee Pastry paid $525,000 to settle the wage theft claims. But it wasn't the first, and it won't be the last.

Places with large concentrations of immigrant workers are notorious violators of California wage and hour laws. Sadly, this is even true when the employers are also immigrants, even of the same ethnicity. The more vulnerable the worker, the higher the probability that they are going to be exploited.

U.S. District Judge Philip M. Pro has given preliminary approval to an $85 million wage and hour class action settlement resolving 30 cases against Wal-Mart Stores Inc. in coordinated proceedings entitled In Re: Wal-Mart Wage and Hour Employment Practices Litigation, MDL 1735, U.S. District Court, District of Nevada (Las Vegas). The approval covers just part of a larger $640 million settlement reached last December.

We wondered what happened in Banda v. Richard Bagdasarian, Inc. 2008 WL 888524, one of the penalty/wage cases that was a companion case to Murphy v Kenneth Cole Productions, Inc. (2007) 40 C4th 1094, and checked to see if it was still pending. It is not. In April 2008, in an unpublished opinion, the Fourth District, Division Two, ordered the Superior Court to approve a settlement agreement in the matter. In Banda, a class of farmworkers challenged the defendant’s failure to provide meal periods and rest breaks, and its practice of requiring them to taste unwashed and pesticide-laden grapes for sweetness. The claims were brought under the Unfair Competition Law. The first unpublished Fourth District opinion, 2006 WL 1554441, had been transferred by the Supreme Court back to the Fourth District on May 23, 2007, for reconsideration in light of Murphy.

The main provisions of the settlement agreement create a settlement fund to be distributed by a settlement administrator (1) to pay specified fees, costs, and expenses and (2) to make specified payments in compensation for omitted breaks ( Lab.Code, § 226.7) to plaintiffs and other persons employed by defendant during the 2001 and 2002 harvests who show their entitlement under the settlement agreement by timely submitting a settlement claim form. No provision is made for payment of wait time penalties. ( Lab.Code, § 203.) Claimants must execute a release of any and all claims “resulting from or occurring in connection with [the claimant's] employment by [defendant].” The settlement agreement includes a procedure to notify potentially eligible claimants.

...

Pursuant to the Supreme Court's transfer order, the opinion previously filed June 8, 2006, is vacated. Pursuant to the stipulation of the parties, the judgment is reversed. This reversal of the judgment does not indicate a ruling on the merits of the judgment, but serves only to vacate the judgment and restore jurisdiction to the trial court so that it may carry out the following directions implementing and enforcing the parties' settlement agreement.

The clerk of this court is directed to send, with the copy of this opinion sent to the superior court, a copy of the recitals re: stipulation to reverse, with the attached settlement agreement, filed in this court April 2, 2008. The trial court is directed: (1) to approve the settlement agreement, and to approve the form and content of the settlement notice and claim form attached to the settlement agreement; (2) to enter a judgment ordering the agreed permanent injunction, which shall terminate at the conclusion of the 2012 grape harvest, and ordering the parties to abide by the terms of the settlement agreement; and (3) to retain jurisdiction until the permanent injunction is terminated to take any actions necessary to implement and enforce the injunction, the judgment, and the settlement agreement.

The opinion did not mention the dollar amount of the settlement, but two news stories reported that the cash value of the settlement was $585,000.

Have any of you been curious about what happened on remand in On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079? That was a case in which an employee, as a cross-complainant, sued his former employer for unpaid wages. The action was settled pursuant to a statutory offer of compromise under Code of Civil Procedure § 998, and the employee moved for attorney fees. The Superior Court denied the motion for attorney fees, and the employee appealed.

Cross-complainant David Mazur appeals from an order denying his motion for attorney’s fees after settling his action for unpaid wages pursuant to a statutory offer of compromise. (Code Civ. Proc., § 998.) Because the trial court erred in ruling that the Labor Code provisions ensuring an employee’s right to payment of wages did not apply to salaried corporate executives, we reverse and remand for further proceedings.

So the employee is entitled to seek attorney fees after settling his action pursuant to statutory offer of compromise, and the Labor Code provisions ensuring an employee's right to payment of wages applied to employee, as a salaried corporate executive, not just to hourly workers. Great. But what happened on remand?

Nothing.

A month later, On-Line Power, Inc. filed for bankruptcy and nothing more happened in the case.

Case Number: BC294513
ONLINE POWER INC VS MILTON HANSON

Filing Date: 04/23/2003
Case Type: Other Employment Complaint (General Jurisdiction)
Status: Other Judgment 10/20/2005

Future Hearings
None

06/26/2007 Remittitur (REVERSED AND REMANDED REMITTITUR ISSUED ON 6-21-07 S/T D-30 6-29-07 )
Filed by Clerk

05/21/2007 Notice of Bankruptcy Stay
Filed by Atty for Defendant and Cross-Compl

It would have been interesting, perhaps.

If you lose a summary adjudication motion and motion for class certification, you cannot settle all of your individual claims and stipulate to the entry of a judgment bawed upon that settlement while still preserving your right to appeal the summary adjudication and class certification issued. If you try, your appeal will be dismissed as moot. Larner v. L.A. Doctors Hosp. Assocs. (2008) 168 Cal.App.4th 1291.

Josephine Larner, a nurse, sued her former hospital employer for violation of overtime laws, purporting to represent a class of current and former nonexempt employees. The trial court granted in part the hospital’s motion for summary adjudication of Larner’s claim that the hospital failed to pay for overtime hours. Larner then amended her complaint, stating individual and class claims for failure to properly calculate overtime pay rates and for failure to keep accurate and complete wage records. The trial court denied Larner’s motion for class certification. The parties entered into a settlement agreement and stipulated to the entry of final judgment in favor of the hospital. Larner appeals both the summary adjudication of her overtime hours claim and the denial of her certification motion. We dismiss the appeal as moot. 

“Generally, courts decide only ‘actual controversies’ which will result in a judgment that offers relief to the parties. [Citations.] Thus, appellate courts as a rule will not render opinions on moot questions . . . . The policy behind this rule is that courts decide justiciable controversies and will normally not render advisory opinions. [Citations.] [¶] One such event occurring for which a reviewing court will dismiss an appeal is when the underlying claim is settled or compromised.” (Ebensteiner Co., Inc. v. Chadmar Group (2006) 143 Cal.App.4th 1174, 1178-1179.) When a case has settled, dismissal of the appeal is the appropriate disposition because “settlement operates as a merger and ban as to all preexisting claims and those alleged in the lawsuit that have been resolved.” (Id. at p. 1179, citing Armstrong v. Sacramento Valley R. Co. (1919) 179 Cal. 648, 651].)

This may not mean that a plaintiff cannot settle a case individually and still proceed with some classwide claims on behalf of others. See La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 871. Individual relief to the named plaintiffs in a class action does not, in itself, render those plaintiffs unfit per se to represent the class. Kagan v. Gibraltar Sav. & Loan Assn. (1984) 35 Cal.3d 582, 594. A defendant’s offer to settle, by waiving its right to enforce a complained-of clause in a contract against class representatives, or by offering the named plaintiff reimbursement of fees the class action challenged as improperly deducted, does not necessarily end the class action. Even after an offer of individual relief, the named plaintiff may retain an interest in proceeding on behalf of the other members of the class who are similarly situated. If, because of such relief, the court concludes that the named plaintiff is no longer a suitable representative, the court should grant the plaintiff leave to amend the complaint to redefine the class, or add new class representatives, or both.

You just can't do it by stipulating to a final judgment on the settlement after losing your class certification motion, and then appealing, as they did here. You can download the full text of Larner here in PDF or Word format. 

Peculiar procedural detail: "After a number of continuances, the court set a final trial date of July 11, 2007 on Larner’s remaining claims. On May 23, 2007, Larner moved for certification of two separate classes, one for each of her two remaining issues: improper calculation of overtime rates and failure to keep accurate and complete wage records. The trial court denied the motion on June 20, 2007, because the motion was unduly tardy, because Larner’s claims were not typical of the proposed classes, and because the class definitions were overbroad." A certification motion set for hearing three weeks before trial? That must have been a nightmare.

Here's the first of three 2008 cases we'll mention today that pertain to attorney's fees, which often present an important issue in wage and hour cases and class actions. In and unpublished case entitled Fernandez v. Victoria’s Secret Stores, LLC (CD Cal. 2008) Case 2:06-cv-04149-MMM-SH,  the U.S. District Court gave final approval to a wage and hour class action settlement in a case against Victoria’s Secret stores, alleging a failure to pay wages, unfair trade practices and unfair competition, and conversion of wages. The basic underlying claim was the the company required job applicants to participate in a sales tryout during which they are trained and directed to work in Victoria’s Secret stores without pay.

The settlement included payment to class members in the form of $67.50 in store gift cards ("Each class member who submits a valid claim form will receive a gift card from Victoria’s Secret in the amount of $67.50. This gift card will not expire, will be freely transferrable, and can be used to purchase products sold at any Victoria’s Secret store or online."). The agreement calls for Victoria’s Secret to pay up to a maximum of $10 million, with $3.5 million going toward attorney fees. Because the settlement involved gift cards, the court reduced the actual cash value of the settlement to $8.5 million. At that amount, the attorney fee request represented 39.4% of the total settlement compensation. The court found this to be too high, and cut the fees to $2.9 million, or 34% of the value of the settlement. The amount reflected a lodestar multiplier of 1.82.

It is quite uncommon to see "coupon settlement" in a wage and hour case, particularly a case that was removed from Superior Court under CAFA. The only kind of wage and hour case in which this is common is when the claims include "wardrobing" claims, whereby clothing stores (Gap, Polo, J. Jill, Chico's, etc.) require their employees to buy clothes from their employer. We've had restaurants offer food coupons as part of meal and rest break settlements, but we've never accepted such offers.

The order also reflects an interesting tactic the class counsel used to increase notice. In additional to mailings to 77,411 class members, a notice was published in five major California newspapers and a Facebook flyer was also made available to visitors at Facebook.com. "According to Facebook, the flier was viewed 584,000 times." Approximately 4.4% of the notices were returned as undeliverable. There were 7,280 timely claim forms, a 9.4% response rate. There were 29 opt-outs and three objectors, one of whom objected because she felt she had been treated well as a Victoria’s Secret employee and would like to be rehired.

You can download the order here.

U.S. District Judge Morrison C. England Jr. has approved a $3 million settlement between Starbucks and approximately 6,000 of its California shop managers, arising out of claims for reimbursement of travel expenses - mileage for business errands run using the employees' own vehicles. The settlement will net the average class member about $86. The class consists of managers, assistant managers and shift supervisors who worked in California Starbucks coffee shops between March 12, 2003, and March 19, 2008. Starbucks also agreed to change its policy to reimburse store managers for mileage expenses. The court also awarded an enhancement of $5,000 to class representative Jonelle Lewis.

The nation's largest retailer announced yesterday that it will pay up to $640 million to settle 63 class action wage and hour lawsuits across the country, some of which date back to 2000. Not among the cases settled: Savaglio v. Wal-Mart Stores, Inc., which we previously discussed in posts you can find at links here, here, here and here.

Trial courts must determine the fairness of a class action settlement agreement based upon admissible evidence presented to the court during the approval process. Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116.

Objector Crystal Echeverria and two other objectors appeal from a judgment approving the terms of a settlement agreement entered in this class action against defendant Foot Locker Retail, Inc. (Foot Locker). They contend the trial court erred in finding the terms of the settlement to be fair, reasonable and adequate without any evidence of the amount to which class members would be entitled if they prevailed in the litigation, and without any basis to evaluate the reasonableness of the agreed recovery. The settlement was reached in arms-length negotiations between competent counsel with the assistance of an experienced mediator and may well, in fact, be entirely reasonable in view of the strength of the claims and defenses and the cost and risks of further litigation. Nonetheless, we agree with objectors that the court bears the ultimate responsibility to ensure the reasonableness of the settlement terms. Although many factors must be considered in making this determination, and the court is not required to decide the ultimate merits of the class members’ claims before approving a proposed settlement, an informed evaluation cannot be made without an understanding of the amount that is in controversy and the realistic range of outcomes of the litigation. It is possible that the data necessary to make such an evaluation in this case was given to the trial court during informal discussions with counsel, but no such information appears in the record. Therefore, we must vacate the order approving the settlement and remand the matter to permit the trial court to reconsider the fairness and adequacy of the settlement in light of such additional information as the parties may present concerning the value of the class members’ claims should they prevail in the litigation and the likelihood of their so prevailing.

The approval was reversed on appeal because the trial court and the objectors were not given sufficient information with which to evaluate the fairness of the settlement.

More fundamentally, neither Dunk, 7-Eleven, nor any other case suggests that the court may determine the adequacy of a class action settlement without independently satisfying itself that the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation. The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s length transaction entered without self-dealing or other potential misconduct. While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. “The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.” (4 Newberg on Class Actions, supra, § 11.41 at p. 118; 7-Eleven, supra, 85 Cal.App.4th at p. 1151.) “The courts are supposed to be the guardians of the class.” (Dickerson, Class Actions: The Law of 50 States (2008 ed.) § 9.02[2], p. 9-6.)

On remand, the settling parties shall have the opportunity to supplement their showing in support of the settlement; the objectors will be permitted to renew their discovery requests, "which should not be denied simply because the requested information was disclosed during the mediation leading to the proposed settlement." The trial court will limit discovery in view of the context in which it is being requested, namely, to provide sufficient information to permit an intelligent evaluation of the terms on which the case is proposed to be settled. "The objecting parties should not be permitted to frustrate the mutual interest of the class members and the defendant to resolve the litigation promptly by conducting extended or unnecessary discovery." Thereafter, the trial court shall redetermine whether the proposed settlement is fair, adequate and reasonable.

The court may and undoubtedly should continue to place reliance on the competence and integrity of counsel, the involvement of a qualified mediator, and the paucity of objectors to the settlement. But the court must also receive and consider enough information about the nature and magnitude of the claims being settled, as well as the impediments to recovery, to make an independent assessment of the reasonableness of the terms to which the parties have agreed. We do not suggest that the court should attempt to decide the merits of the case or to substitute its evaluation of the most appropriate settlement for that of the attorneys. However, as the court does when it approves a settlement as in good faith under Code of Civil Procedure section 877.6, the court must at least satisfy itself that the class settlement is within the “ballpark” of reasonableness. (See Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-500.)
...
By remanding we do not suggest that the proposed settlement ultimately may not pass muster. We hold only that the trial court may not finally approve the settlement agreement until provided with sufficient information to assure itself that the terms of the agreement are indeed fair, adequate and reasonable.

We've seen Superior Court judges compare the "good faith settlement" standards under Tech-Bilt with the fairness analysis under Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794. After Kullar, we'll probably see more of that. The mediator in this case, by the way, was Mark Rudy. 

You can download the full text of Kullar here in PDF or MS Word format. If you handle wage and hour class actions in California, this is must-read material. 

A request for depublication has been filed with the Supreme Court.

In our post earlier today regarding Freedom Communications, Inc. v. Superior Court (2008) 167 Cal.App.4th 150, we neglected to mention that the case settled recently.

The Orange County Register and the home delivery carriers who deliver the newspaper have agreed to a settlement of a class action lawsuit filed on behalf of those carriers. Through such settlement, The Register will pay to the class members not more than $22 million through a claims-made settlement process. The ultimate amount paid will be based on the number of claims submitted and validated through this process.

No amount has been set for Plaintiffs’ attorneys’ fees. It is up to the sound discretion of the trial court to determine the reasonable amount of such fees. Although Plaintiffs’ counsel is seeking $12 million in fees, it is by no means certain that the Court will award that amount, and it can award less.

The Register also changed the way it classifies its carriers some of its policies and practices regarding newspaper carriers.

Wal-Mart Stores Inc. has agreed to pay up to $54.25 million to settle a wage and hour class action lawsuit involved breaks and off the clock work brought on behalf of roughly 100,000 employees in Minnesota. The class period runs from September 11, 1998 to November 14, 2008. As part of the settlement, Wal-Mart also agreed to maintain electronic systems, surveys and notices to stay compliant with wage and hour requirements under Minnesota law. Earlier this year, a judge found Wal-Mart to have committed two million violations. At the punitive damages stage, Wal-Mart faced a potential $2 billion liability. The court will hear a motion for preliminary approval of the settlement on January 14, 2009.

It isn't a wage & hour case, but this is the most ridiculous b.s. settlement tactic we've ever seen in an employment dispute: Nelson v. American Apparel, Inc. In an unpublished opinion, which should be published if for no other reason than so that people will read the facts, the Second District enforced an arbitration agreement under the most bizarre of circumstances:

Defendants, American Apparel, Inc., Dov Charney, and Martin Bailey, appeal from an order denying their petition to compel arbitration under a settlement agreement. Defendants seek to arbitrate two issues. First, defendants seek to arbitrate the issue of whether plaintiff, Nancy Nelson, and her attorneys breached the settlement agreement by failing to appear in San Francisco at an “arbitration” with foreordained facts and a predetermined award which would be followed by the issuance of a misleading press release. Second, defendants seek to compel arbitration of whether plaintiff or her attorneys breached the confidentiality provisions of the settlement agreement. We conclude the language in the arbitration clauses in the settlement agreement required the petition to compel arbitration of these two disputes be granted. We emphasize defendants are not seeking to compel arbitration of the questionable “arbitration” with foreordained facts and a predetermined award which would be followed by the issuance of a misleading press release.

Here are the facts:

On May 4, 2005, plaintiff filed an action against defendants American Apparel, Inc., its chief executive officer, Mr. Charney, and a vice president, Mr. Bailey. Plaintiff alleged that during her employment as a sales manager for American Apparel, Inc., Mr. Charney subjected her to a hostile work environment based on her gender by regularly making unwelcome, inappropriate comments, and suggestive non-verbal gestures, and ultimately wrongfully terminating her employment. In her first amended complaint, filed on September 19, 2005, plaintiff asserted causes of action for violations of the Government, Labor, and Business and Professions Codes, wrongful termination in violation of public policy, and defamation. The matter was set for trial on January 24, 2008.

On January 23, 2008, however, the parties entered into the settlement agreement. In the settlement agreement, defendants, without admitting liability, agreed to pay plaintiff $1.3 million. Also, plaintiff agreed to release all of her claims against defendants and to dismiss the present lawsuit.[1] Additionally, the parties agreed that an arbitrator selected by and paid for by defendants would enter a specified award (stated word for word) in defendant’s favor based on a stipulated record.

Paragraph 7 of the settlement agreement provided in part: “Confidential Arbitration [¶] The parties agree to conduct a confidential arbitration pursuant to the following terms and conditions: [¶] (a) The Arbitrator shall be selected by American Apparel at its sole and unfettered discretion. The Arbitrator’s fee will be paid by American Apparel. [¶] (b) The issue presented to the Arbitrator will be, ‘Did American Apparel or Dov Charney subject Mary Nelson to unlawful sexual harassment in violation of the California Fair Employment & Housing Act.’ [¶] (c) The Arbitrator will issue a decision based solely on the following stipulated record: [¶] (i) The Supreme Court’s decision in Lyle v. Warner Brothers Television Productions, including the concurring opinion by Justice Chin, 38 Cal.4th 264 (2006), is the governing law. [¶] (ii) Nelson complains that she was unlawfully harassed by American Apparel’s marketing materials, as well as the use of sexual speech by employees of American Apparel. [¶] (iii) Dov Charney never sexualized, propositioned or made any sexual advances of any nature whatsoever towards Mary Nelson. [¶] (iv) The marketing materials, sexual speech and much of the conduct about which Nelson complains are protected under the First Amendment’s guarantee of free speech. [¶] (v) The remainder of the speech and conduct about which Nelson complains was not directed at her or other women because of their gender. [¶] (d) The Arbitrator’s decision will state only the following: [¶] ‘Mary Nelson was not subjected to unlawful sexual harassment in violation of the California Fair Employment & Housing Act. Dov Charney never sexualized, propositioned or made any sexual advances of any nature whatsoever towards Mary Nelson. The marketing materials, sexual speech and much of the conduct about which Nelson complains are protected under the First Amendment’s guarantee of free speech and cannot form the basis for any claim. The remainder of the speech and conduct about which Nelson complains was not directed at her or other women because of their gender and therefore was not actionable.’”

The settlement agreement contemplated that following defendants’ receipt of the arbitrator’s order, and concurrent with receipt from plaintiff of a fully executed request for dismissal with prejudice—no later than February 7, 2008—defendants would deliver the $1.3 million to plaintiff.

Finally, the parties agreed American Apparel, Inc. would be allowed to issue a press release stating an arbitrator had ruled in defendants’ favor. Paragraph 7(e) of the settlement agreement provided: “Following issuance of the Arbitrator’s decision and order, American Apparel may issue the following press release:

‘American Apparel and its CEO Dov Charney announced today that an Arbitrator has ruled in their favor in the highly-publicized action brought by former sales manager Mary Nelson. The Arbitrator ruled that the marketing materials, sexual speech and much of the conduct about which Nelson complained are protected under the First Amendment’s guarantee of free speech and could not form the basis for any claim. The Arbitrator further ruled that Dov Charney never sexualized, propositioned or made any sexual advances of any nature whatsoever towards Mary Nelson, and the remainder of the speech and conduct about which Nelson complained was not directed at her or other women because of their gender, and therefore was not actionable. The decision puts an end to the sexual harassment claims against Charney and the Company. ‘I am pleased that we have been able to bring clarity to the role of the First Amendment in the American workplace,’ Charney stated.”

[1] Defendants, without admitting liability, agreed to compensate plaintiff as follows: “In consideration of the covenants undertaken and releases given herein by Plaintiff, specifically including but not limited to, the Arbitrator’s Award referenced in Paragraph 7 below, the Company shall provide Plaintiff with the following consideration in full and final settlement of any and all matters of any kind or nature which were alleged by, or could have been alleged by, Plaintiff against the Company and/or any of the Releasees identified in Paragraph 4 below: following receipt by the Company of the decision and order of the Arbitrator pursuant to Paragraph 7, below, and concurrent with the receipt by counsel for the Company of a fully executed Request for Dismissal with prejudice, as set forth in Paragraph 3, below (and in no event later than February 7, 2008), the Company will pay the total amount of One Million Three Hundred Thousand Dollars ($1,300,000.00), for alleged emotional distress damages . . . .”

Apparently, $1.3 million can buy you a fair amount of free speech, but it didn't really turn out to be so free.

Next week: we'll be reviewing 24 cases that came down in the last quarter and haven't yet been discussed here.

According to its most recent SEC filing, Darden Restaurants paid $700,000 to settle another wage and hour class action filed by a former Olive Garden server in California. The employee alleged that Olive Garden had failed to properly make minimum shift payment and pay minimum wage, and that Olive Garden had failed to provide itemized wage statements and to timely pay employees such wages upon termination. Darden previously $9.5 million settle two class action lawsuits brought by its California Red Lobster and Olive Garden employees.

Darden Restaurants, Inc. has agreed to pay another $4 million to settle another two class action lawsuits involving California employees of Red Lobster and Olive Garden restaurants. The suits accused the company of requiring servers and bartenders to make up for cash shortages at the end of their shifts. The settlements were disclosed in recent S.E.C. filings. A company spokesman said the settlements the allegations were "almost impossible to prove one way or the other," but that the defending the cases would be too costly.

A wage & hour class action lawsuit brought against Staples Inc. on behalf of approximately 1,700 current and former assistant store managers in California has been settled for $38 million. The settlement is still subject to court approval. A trial had been scheduled to start earlier this month. The suit alleged that the stores misclassified assistant managers as exempt under overtime pay regulations. According to a 2003 SEC filing, the lawsuit alleged damages of up to $150 million. The company denied the claims and admitted no wrongdoing in the settlement. A spokesperson for the office products firm said that "Staples believes that its store labor model, which is based on a commitment to fair and respectful treatment of its associates, is fully compliant with applicable California law.''

Last month, the Seventh Circuit reversed a U.S. District Court order regarding attorneys' fees in a class action settlement because the trial court used the wrong method and, consequently, may not have awarded enough fees. Sutton v. Bernard (7th Cir. 2007) __ F.3d __ will be going into our research folder immediately.

Coral Gables-based communications construction firm MasTec will pay up to $12.6 million to settle wage disputes raised in a 2005 FLSA collective action filed in U.S. District Court in Tampa, Florida. The settlement class includes current and former employees from California, Florida, Georgia, Maryland, New Jersey, New Mexico, North Carolina, South Carolina, Texas and Virginia, who worked for the company or its affiliates from 2001 to 2007. One of the affiliates was MasTec Advanced Technologies, a firm handling DirecTV installation services. The complaint alleged that the company failed to pay overtime wages, including wages for off-the-clock mandatory meetings. Court records reflect that the settlement amount was calculated by assuming 1.61 hours of unpaid overtime for each day of work from October 10, 2002 to May 26, 2006. The settlement requires court approval, which has not yet been ordered. The $12.6 million maximum payout is based upon a 100% FLSA opt-in rate. In all likelihood, the total payout will be less than $6 million, including $3.8 million to the plaintiffs' attorneys, $750,000 for the named plaintiffs, and perhaps as much as $2 million for class members who opt in, based upon historically average opt-in rates.

We are not aware of any California class actions against MasTec for wage violations under state law, but we would be surprised if there isn't one out there.

Sony Computer Entertainment America will pay up to $8.5 million to settle a wage and hour class action lawsuit brought on behalf of current and former employees who worked as artists and modelers known as "Image Production Employees." The suit, filed in 2005, and settlement will cover employees who worked at Sony February 2001 and September 2007. Under the terms of the settlement, Sony will also reclassify class members with a job title of Associate Artist and Artist 1 as nonexempt employees. As usual, the employer denies any liability or wrongdoing. The settlement is subject to court approval at a hearing set in September.

Approximately 75 employees of the City and County of San Francisco will share $625,000 to settle an FLSA claim filed in April 2005. The case Alba, et al. v. City and County of San Francisco (ND Cal., case number 3:05-CV-01667-TEH) is not a class action and need not be approved by the court. It is, however, still subject to approval by the Board of Supervisors.

Q: May a party lose its contractual right to compel arbitration if, when negotiating and seeking approval of a class action settlement, it misrepresents the benefits of the proposed settlement to the court, opposing counsel and others?
A: Yes.

In Aviation Data, Inc. v. American Express Travel Related Services Company, Inc., the trial court refused to approve a class action settlement when it concluded that counsel for defendant American Express Travel misled the plaintiffs in the course of negotiations by offering to make significant modifications to its travel insurance program that, unbeknownst to the plaintiffs, it had already made for reasons unrelated to the lawsuit. The trial court then ruled that, that due to its misleading conduct, Amex lost its right to compel arbitration. The Court of Appeal affirmed.

By soliciting amendment of the complaint to allege a nationwide class and then crafting a proposed settlement structured around largely illusory relief, Amex forced ADI to intervene in the California action and required ADI and the plaintiff class to engage in protracted and costly discovery and appearances before the court as its deception about the implementation of the TAA code gradually surfaced. Only after the truth was unearthed and the settlement failed did Amex move to compel arbitration. Amex’s conduct smacks both of “substantive” prejudice “such as when a party loses a motion on the merits and then attempts, in effect, to relitigate the issue by invoking arbitration”; and of the situation in which a party “too long postpones his invocation of his contractual right to arbitration, and thereby causes his adversary to incur unnecessary delay or expense.” (Thyssen, Inc. v. Calypso Shipping Corp., S.A., supra, 310 F.3d at p. 105.)

It's interesting reading for anyone who does class action litigation or needs, from time to time, to challenge an arbitration agreement. You can download the full opinion here in pdf or word format.

Last month, U.S. District Court Judge Thelton E. Henderson gave final approval to an $87 million settlement in a meal and rest period class action brought by a class of drivers against United Parcel Service for forcing employees to work off the clock. A pre-certification mediation with David Rottman was unsuccessful. After the case was certified and the class members won several key rulings, the case settled. Fully 94% of the class members participated in the settlement. The court approved attorney's fees of 25%, along with $15,000 to $25,000 in class representative enhancements. Approximately $4 million in settlement fund residue will be donated to food banks.

The lawsuit alleged that UPS package car drivers who worked more than ten hours a day routinely worked through their meal and rest breaks. They routinely had to wait more than five hours for their first meal break. The class action was filed after the class representatives were unable to change the policies through union grievances. Some of the 23,000 affected drivers received award of nearly $20,000. Congratulations to William Kershaw (Kershaw, Cutter & Ratinoff, LLP), Lyle Cook, Wendy York, Scott Cole and their entire team, for obtaining what is undoubtedly the largest meal and rest period settlement we've seen.

We haven't seen a press release, but according to its most recent SEC filings, it looks like Darden Restaurants Inc. (Red Lobster and Olive Garden restaurants) has agreed to pay up to $11 million to settle five wage and hour class actions pending in Los Angeles, Orange and Sacramento Counties. Unlike our case, which settled for $9.5 million, these cases included overtime claims on behalf of service managers, beverage and hospitality managers and culinary managers who were classified as exempt employees.

Here is what DRI had to say about our case:

Like other restaurant companies and retail employers, we have been faced in a few states with allegations of purported class-wide wage and hour violations. In March 2002 and March 2003, two purported class action lawsuits were brought against us in the Superior Court of Orange County, California by three current and former hourly restaurant employees alleging violations of California labor laws with respect to providing meal and rest breaks. Although we continue to believe we provided the required meal and rest breaks to our employees, to avoid potentially costly and protracted litigation, we agreed during the second quarter of fiscal 2005 to settle both lawsuits and a similar case filed in Sacramento County, for approximately $9.5 million. Terms of the settlement did not include any admission of liability by us, and all settlement proceeds were paid as of the end of the third quarter of fiscal 2006.

Here's what they had to say about the latest settlement:

Beginning in 2002, a total of five purported class action lawsuits were filed in Superior Courts of California (two each in Los Angeles County and Orange County, and one in Sacramento County) in which the plaintiffs allege that they and other current and former service managers, beverage and hospitality managers and culinary managers were improperly classified as exempt employees under California labor laws. The plaintiffs sought unpaid overtime wages and penalties. Two of the cases were removed to arbitration under our mandatory arbitration program, one was stayed to allow consideration of judicial coordination with the other cases, one is proceeding as an individual claim, and one remains a purported class action litigation matter. Although we continue to believe we correctly classified these employees, to avoid potentially costly and protracted litigation, we agreed in February 2006 to a tentative settlement. Without admitting any liability, we agreed to pay up to a maximum total of $11 million to settle all five cases, of which $9 million was recognized during fiscal 2006 and is included in selling, general and administrative expenses. The tentative settlement will be documented in a full settlement agreement and must have court approval. We cannot predict when the settlement will be final but estimate preliminary court approval will occur in the first half of fiscal 2007, with final court approval and payment of the settlement proceeds no earlier than the second quarter of fiscal 2007.

That last bit makes it sound like the final approval will come before the preliminary approval, which can't be the case, but we infer from it that the payments will be made shortly.

According to a SEC Form K-8 filed by Rubio's Restaurants, Inc., the company will pay $7.5 million over 36 months to settle a consolidated class action lawsuit filed in Orange County Superior Court on behalf of current and former general managers and assistant managers who were classified as exempt executive employees. One third of the settlement will be paid within 65 days after the court's final approval of the settlement and dismissal of the case; another third will be paid within 18 months; and the last third shall be paid 36 months after final approval. An additional interest charge of $337,500 will be paid with the final installment. The case, filed in 2001, was scheduled to go to trial in June 2007. The settlement is subject to approval by Orange County Superior Court Judge Thierry Colaw.

This morning, Los Angeles County Superior Court Judge Aurelio Munoz conditionally certified a class action against Real Mex Restaurants, Inc. and granted preliminary approval of a settlement under which Real Mex will pay up to $5 million to settle claiming arising out of its policies and practices concerning meal and rest breaks and employee uniforms at its California restaurants. The settlement involves hourly restaurant workers who worked in the State of California at El Torito, El Torito Grill, Acapulco, Las Brisas, El Paso Cantina or Guadalharry's restaurants between December 2000 and December 2006. Notice will be sent to class members on or before April 10, 2007. Class members who wish to participate in the settlement will need to sign and return their proof of claim forms within 50 days after the notice is mailed. A final fairness hearing will be conducted on June 22, 2007.

The class members are represented by Walsh & Walsh, P.C., Langford & Langford, P.C., The Carter Law Firm and the Law Office of Jose Garay. Class members seeking additional information can contact us by email, through our website (where further details will be posted after the notice is completed and mailed) or by telephone at (714) 544-6609.

E-Loan Inc. has agreed to pay up to $13.6 million to settle a wage and hour class action brought on behalf of more than mortgage loan consultants in its Pleasanton and Dublin, California offices. Mousai v. E-Loan, Inc. (N.D. Cal, Case #3:06-cv-01993-SI). involved claims for back pay, penalties and other remedies for unpaid overtime, and meal and rest break violations. Employees who worked during a period from December 2001 through June 2006 are eligible to participate in the settlement. The average award, after attorney's fees (25%) and costs are deducted, is nearly $20,000. The lead plaintiff will receive an extra payment of $20,000, and 42 class members who joined the suit in 2006 will received an extra payment of $1,000 each. U.S. District Judge Susan Illston granted preliminary approval of the settlement on January 12, 2007. It is still subject to a final approval hearing in May 2007. Claims forms are scheduled to be mailed to eligible class members on February 12, 2007.

E-Loan, Inc. claims a mutual victory for the company and its workers. "While we strongly dispute the claims made in the action, we are pleased that a resolution was reached which most benefits our employees whom we truly value," said Rosemarie Carbone, vice president of people and leadership.

One of the cases we mentioned last month, in the context of the Labor Code § 226.7 wage/penalty issue, was Cornn v. United Parcel Service, Inc., (N.D. Cal., Case #3:03-cv-02001-TEH ).  Judge Thelton E. Henderson had previously made a ruling determining meal and rest period pay to be a wage under California law. Cornn v. United Parcel Service, Inc. (N.D. Cal. 2006) 2006 U.S. Dist. LEXIS 20095. A reader emailed us to ask if that was the UPS case that settled last month. It is. Well, actually, it settled in October, and the settlement was approved in December; but yes, it's the case you recall reading about in the news.

Cornn v. United Parcel Service Inc. was a wage and hour class action lawsuit filed on behalf of 20,000 drivers, seeking unpaid overtime, meal and rest period pay, pay stub penalties and other remedies. To settle the case, UPS has agreed to pay up to $87 million. The settlement was reached only after the court certified the class and the employees prevailed in a number of motions, including motions for summary adjudication, reconsideration of the class cert. order and several other determinations on liability. A trial had been scheduled for March 2007.

Judge Henderson will conduct a final fairness hearing on April 9, 2007. Congratulations to Wendy York (York Law Corporation) and William Kershaw (Kershaw Cutter & Ratinoff LLP), who lead the legal team for the employees, for their outstanding result.

Siebel Systems, Inc. has agreed to pay up to $27.5 million to settle an overtime class action complaint filed on behalf of its software engineers. The settlement has been preliminarily approved by San Mateo Superior Court Judge Marie Weiner, and awaits final approval in late April 2007. The settlement affects approximately 800 California employees with the job title "software engineer" or "senior software engineer" who worked for the company between 2000 and 2005. A typical employee who worked throughout the claims period is expected to recover as much as $27,000.

A wage and hour class action against the San Francisco Marriott Hotel to enforce the city’s $9.14 per hour living wage ordinance has settled for $1.35 million. The settlement in the action, Aubrey v. Marriott, is subject to final court approval. The settlement announced is a claims-made settlement, with any undistributed residue from the settlement fund being paid to the City’s Office of Labor Standards and Enforcement for enforcement of the local minimum wage ordinance. The plaintiffs' attorney, Matt Gonzalez, is a former supervisor who supported the ballot measure that established the living wage ordinance.

That Britney Spears story we mentioned yesterday brought back some old and fond memories. We have enjoyed the privilege of litigating wage claims against very famous people from time to time. Our most curious settlement ever occurred in a wage case where we represented the personal assistant of an extremely famous person who will undoubtedly still be famous 500 years from now. During the settlement conference, when we got to be about $10,000 apart, our client became frustrated and observed that the defendant could easily make up the $10,000 difference just by signing his name 100 times. What, then, we asked, if he agreed to sign his name 100 times and we were done with it? In an age of eBay and other efficient markets, the client thought it might work.

The judge, the defense lawyer and his client all looked at us like we were crazy when we made that our "last and best offer" at the end of the day. The negotiations then got even stranger.

Them: He'll sign 50 times. Not 100.
Us: Okay, but then he has to sign 50 of those limited edition thingies.
Them: Done.

Our fee on the 50 signed limited edition thingies was, believe it or not, a percentage of the signed limited edition thingies. We donated some, sold some and hung a few as objects d'art in the office.

Citigroup's and its Smith Barney brokerage group have agreed to pay $98 million to settle overtime and expense reimbursement claims asserted in a class action filed on behalf of several thousand current and former brokers. The settlement, reached last month in a case pending in the U.S. District Court, Northern District of California, is another obtained by Nevada attorney Mark Thierman and his legal team that also secured impressive settlements against Morgan Stanley, Merrill Lynch and UBS. As in the prior cases, the brokers were classified as exempt administrative employees, but their job duties actually made them more akin to non-exempt salespeople. Thierman is currently preparing similar cases against more than a dozen other retail brokerage firms with similar compensation arrangements.

We couldn't comment on this one earlier because of a confidentiality provision in a document, the nature of which we are not permitted to discuss, but it appears that the 24 Hour Fitness class action settlement is now a matter of public record. On January 27, 2006, the United States District Court granted final approval to a $38 million settlement on behalf of almost 50,000 workers employed at 24 Hour Fitness locations in California. The case involved manager overtime pay, off-the-clock work, meal and rest period claims, improper commission deductions, and uniform violations.

The settlement resolved seven class action lawsuits filed against 24 Hour Fitness. The plaintiffs' class was represented by Rene Barge of the law firm Spiro, Moss, Barness, Harrison & Barge LLP, Gregory G. Petersen of Castle, Petersen & Krause LLP; James M. Trush of the Trush Law Office; Greg K. Hafif of the Law Offices of Herbert Hafif, APC; and the Law Offices of Larry A. Sackey. A smaller class action remains pending.

First shift production workers at Northrop Grumman's El Segundo manufacturing facility will share in a $2 million settlement involving meal period violations dating from January 2001 to April 2004, pursuant to a settlement approved by a court-appointed referree this afternoon. The settlement resolves two cases pending in the Los Angeles County Superior Court. Our law firm is one of two firms involved in the action. The primary claims alleged in both cases arose from non-compliant meal period scheduling at the facility. Approximately 900 current and former production workers will be eligible to share in the proceeds.

The settlement will require the company to mail claim forms to all eligible employees. Workers must submit these forms in order to be eligible to receive their payments under the settlement. More information about the lawsuit can be obtained at a website we set up for the employees. We will post copies of the claims forms and notices as soon as they are printed, which will be sometime in April.

Source/Contact: Walsh & Walsh, P.C. Michael J. Walsh, Esq. 420 Exchange, Suite 270 Irvine, CA 92602 Tel: (714) 544-6609 Fax: (714) 544-6621 E-mail: [email protected]. The employees were represented by Walsh & Walsh, P.C. (Michael J. Walsh and Mark A. Walsh) of Irvine, California, Langford & Langford, APLC (Michael S. Langford and Karin A. Langford) of Santa Ana, California.

Morgan Stanley announced yesterday that it had agreed to pay $42.5 million to settle a class action lawsuit filed on behalf of 5,000 California brokers and trainees who claimed that they had been denied overtime pay and had been forced to pay the securities firm's administrative expenses. U.S District Judge Roger T. Benitez will oversee the settlement.

The employees were represented by a group of lawyers, including Mark Thierman, who was quoted in the Los Angeles Times, saying "I think that there's got to be a change in the way the industry pays brokers." Thierman is correct. Perhaps the settlement of this case, as well as similar cases against UBS and Merrill Lynch, will mark a change in the way brokers can be chewed up and spit out by their employers.

The firm issued the usual denial of liability, stating: "We believe financial advisers are exempt professionals under the law and should not be paid on an hourly basis or be forced to keep track of their work time. However, we have settled this litigation to put the matter behind us."

The $37 million Merrill Lynch settlement was just the tip of the iceberg. Earlier this month, financial services firm UBS AG agreed to pay up to $89 million to settle overtime wage disputes in a class-action lawsuit. The plaintiffs were employees, mostly financial advisors, who were improperly classified as exempt, made to work exhorbitant hours, and paid no overtime compensation. We are told that parties in several similar lawsuits are very close to announcing similar settlements.

Orange County Superior Court Judge Stephen Sundvold recently approved a $500,000 class action settlement in a case brought by a group of current and former employees of consumer lender Speedy Cash (Rivas v. Speedy Cash). The case involved alleged for denials of meal and rest periods. Though we aren't intimately familiar with the case, it appears, from some of the court records, that the settlement was previously given preliminary approval, including approval of a class representative enhancement of $10,000 and approval of an attorney's fee to the class counsel of $166,666.

Unfortunately for the class counsel, only $67,600 of the class fund was claimed by the interested employees. The judge wasn't about to trash the entire deal over that, but the apathy of the claimants certainly influenced his final approval decision, as he slashed the fees (from $166,666 to $45,000) and class representative enhancement (from $10,000 to $1,500). The ruling published last week was as follows:

The Settlement is fair, adequate and reasonable. It is approved.

This Action and its settlement cause the Court to ponder the efficiency and efficacy of the use of the time and efforts of Plaintiff’s Counsel. Barely 30% of the potential class members have made claims. This is a sad reflection on the Action, especially since each will receive in excess of $500 for a total of $67,600.

The requested attorney fees in the amount of $116,666 amount to nearly 200% of the benefits paid to the class members.

There is no legal justification for an enhancement of $10.000. An enhancement of $1,500 is awarded. Attorney costs in the amount of $2,433.35 are awarded. Administrative costs of $16,500 are approved. Attorney fees in the amount of $45,000 are granted. This amounts to over 66% of the payout to the class.

Who is the lucky beneficiary of these reductions? If the settlement was a typical "claims made" settlement, then the money is kept by the defendant rather than spread among the class members who made claims.

At a recent class action defense seminar I attended, one of the key pieces of advice offered to class action defendants was this:

"Do not ever tie the class counsel's fees to the number or amount of submitted claims."

The implication of that advice is that, unless the class counsel's recovery depends upon it, they will not actively seek to rally the class members to submit claims. But, as the Speedy Cash case demonstrates, even if the defendant does not correlate those two figures, the court might. And while some class lawyers will recite the old cliche about leading a horse to water, the prudent class counsel will always make sure he is not only leading the horses to water, but that he is also strongly encouraging them to drink.

Employees at California stores operated by Guitar Center, Inc. (Nasdaq: GTRC) will share in a significant settlement [the terms of which we are prohibited from disclosing, but have been discussed openly by Guitar Center executives] involving meal and rest period violations and off the clock pay claims, pursuant to a tentative settlement our office reached last week on behalf of several thousand current and former Guitar Center workers. The terms are subject to court approval.

The settlement resolves two cases pending in the Los Angeles County Superior Court. Our law firm is among five firms involved in the action; we represent plaintiffs James McClain, Vincent Musolino and Joshua Castaneda. The cases were filed in 2004 and settled after two mediation sessions with highly regarded employment litigation mediator Mark Rudy. The primary claims alleged in both cases stemmed from a failure on the part of Guitar Center to permit its workers to take required meal periods.

Leland P. Smith, Executive Vice President and General Counsel for Guitar Center, commented, "While the Company denies all liability or wrongdoing in these cases, we chose to settle these lawsuits in order to put them behind us and avoid the distraction and additional, unnecessary legal expenses that we would otherwise incur."

On behalf of the class, however, we would add that the employees emphatically insist that the case, particularly with respect to the meal period violations, was supported by substantial evidence and was quite meritorious, which justifies the significant amount of the settlement. Guitar Center is known for working its sales force ("the sales force that rocks") hard, and this environment has resulted in strong profits and shareholder value. However, it has also resulted in a practice, if not a policy, that runs afoul of California law concerning mandatory employee breaks. Consider these excerpts from a recent article about the company in the magazine Business 2.0:

Some mornings Marks psyches up his staff by showing them Glengarry Glen Ross, the 1992 David Mamet film about a group of worn-out salesmen hustling to move empty lots. Marks always plays the same scene: Alec Baldwin, looking like a high-paid Wall Street exec, dressing down his lowly crew. Baldwin mocks their clothes, their watches, their cars. At one point, he turns to sad sack Jack Lemmon and gets in a vicious dig: "Put that coffee down! Coffee is for closers only." The scene always gets laughs, but it's meant to inspire. The not-so-subtle message: Close the deal, or else.

The hustle doesn't stop at closing time. After salespeople lock the doors, they grab vacuums and toilet brushes and go to work. Cleaning helps build store pride, Marks explains. But it wears on some, and if they haven't faded recently, toilet patrol only compounds the misery. "That's the only time of the day when I'm questioning what the hell I'm doing," says another salesman.

Despite this corporate culture, workers have the right to rest during their long shifts. Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 7, retail store employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid.

The settlement will require the company to mail claim forms to all eligible employees. Workers must submit these forms in order to be eligible to receive their payments under the settlement.

Source/Contact: Walsh & Walsh, P.C. Michael J. Walsh, Esq. 420 Exchange, Suite 270 Irvine, CA 92602 Tel: (714) 544-6609 Fax: (714) 544-6621 E-mail: [email protected]. The employees were represented by Walsh & Walsh, P.C. (Michael J. Walsh and Mark A. Walsh) of Irvine, California, Langford & Langford, APLC (Michael S. Langford and Karin A. Langford) of Santa Ana, California, Kingsley & Kingsley (Eric B. Kingsley) of Encino, California, the Law Offices of Stevel Miller (Steve Miller) and the Law Office of Scott A. Miller, of Encino, California.

The settlement in our class action against J. Jill the Store (Balogh v. The Birch Pond Group, Inc.) has been given final approval by Riverside County Superior Court Commissioner Joan F. Burgess. The case involved the wardrobing and employee break policies of The Birch Pond Group's J. Jill The Store retail clothing stores in California from July 1999 to July 2003. Several hundred current and former hourly workers at J. Jill the Store's retail stores in Calfornia will share in approximately $287,000 in cash and merchandise as part of a settlement involving claims that they were required to purchase J. Jill clothing as a condition of employment, and that some workers were denied meal and rest periods.

The lawsuit was filed by a former sales associate and former assistant manager at J. Jill's Palm Desert store. On April 15, 2005, the settlement was given preliminary approval by Riverside County Superior Court Roger Leubs. Final approval was given at the court's final fairness hearing by Commissioner Joan F. Burgess on October 12, 2005.

To settle the wardrobing claims, full-time employees were compensated with J. Jill gift cards worth $150, plus $35 per full month of employment, beginning with the third month of employment during the relevant period. Part-time employees received gift cards worth $150, plus $20 per full month of employment, beginning with the third month of employment during the relevant period. The gift cards are good for the purchase of any merchandise available to the general public, including sale or clearance items, but may not be used: in conjunction with employee discounts, at J. Jill outlet store or on Amazon.com. They also may not be used to pay any J. Jill credit card account. Employees were given the option of accepting cash equivalent to 50% of their gross gift card allowance. To settle the meal and rest period claims, employees were paid up to $21 per month of employment. Checks and gift cards will be mailed to class members no later than November 4, 2005.

Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 7, retail store employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 7, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms or clothing of a particular style or maker, from the company.

Here is our press release concerning the GMRI meal and rest period case:

Court Approves $9.5 Million Settlement For Red Lobster and Olive Garden Employees in Meal and Rest Break Class Actions (Irvine, California)

More than 40,000 current and former hourly workers at California Red Lobster and Olive Garden restaurants will share $9.5 million as part of a settlement involving claims that they were prevented from taking breaks, and that they were required to purchase and maintain their own employee uniforms. Red Lobster workers from more than 40 locations in California who worked there from February 21, 1998 to the present will share $5.5 million, while Olive Garden employees who worked from March 24, 1999 to the present will share another $4 million.

Two food servers at the Brea Red Lobster restaurant filed the first class action complaint in Orange County Superior Court in February 2002, alleging that Red Lobster refused to allow breaks to its non-exempt workers throughout the State of California. The complaint was subsequently amended to include damages and restitution for Red Lobster’s former policy of charging workers for uniforms, and for making the employees maintain their own uniforms. In March 2003, an Olive Garden employee filed a similar complaint, seeking certification of all GMRI workers, including both the Red Lobster and Olive Garden chains. In May 2004, while the first case was on appeal from an Orange County Superior Court ruling denying the defendant’s motions for summary judgment and to compel arbitration, a third lawsuit was filed in Sacramento, California.

Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 5, employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 5, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms, from the company.

This is one of the largest rest period class actions ever certified in California. This case was hard fought for three years, in two counties, the Court of Appeal and the California Supreme Court. The Red Lobster case was settled more than two years after the first mediation session. A second mediation session was scheduled after the California Supreme Court denied review of a 4th District Court of Appeal ruling preventing Red Lobster from compelling the employees to arbitrate the Red Lobster class claims. Several weeks after the second mediation, before respected mediator Mark S. Rudy of San Francisco, the parties reached a tentative settlement agreement. The Olive Garden case settled shortly thereafter, and an integrated and final settlement of the three lawsuits was signed on June 25, 2005.

The settlement was given preliminary approval by the Sacramento County Superior Court earlier this year. Sacramento Judge Loren E. McMaster granted final approval to the settlement yesterday, October 18, 2005. Checks to class members will be mailed no later than December 6, 2005.

GRMI, Inc., a subsidiary of Darden Restaurants, Inc. (stock symbol DRI), which operates the Red Lobster and Olive Garden restaurant chains in California, did not admit liability in the settlement. The settlement does not dictate any change in the restaurant chain’s practices. However, attorneys for the class do not foresee any ongoing problems with GMRI’s policies. Since 2002, the reports of employees missing their meal and rest breaks have been few, and we have seen instances in which restaurant managers who did not permit employees to take breaks have been subject to discipline by the company.

Information on the settlement was previously posted here and here.

Electronic Arts Inc., the world's largest independent video game producer, announced yesterday that it has agreed to pay $15.6 million to settle an overtime class action brought by its graphic artists. The company also agreed to reclassify its entry-level artists as non-exempt workers eligible for overtime pay. The case had been pending for just over one year in the San Mateo County Superior Court. The employees, who were represented by San Francisco law firm Schubert & Reed LLP, alleged that EA forced them to work long hours, including weekends, without any additional pay beyond their 40 hours per week.

Long hours without pay seems to be a common practice in the video game industry, and this settlement is likely to be the first of many against software firms that have refused to obey state and federal overtime laws. EA, of course, denies any wrongdoing.

Four farmworkers who filed a federal class-action suit in Fresno against Kovacevich Five Farms on behalf of themselves and about 500 co-workers have agreed to a $1.7 million settlement against the grape grower. Kovacevich Five Farms also expressly agreed not to retaliate in any way against the workers, including cutting staff or supplies. The claims arose from the requirement that workers arrive on the job half an hour before their starting time to unload wheelbarrows and other supplies, off the clock. The settlement includes $320,000 in back wages and more than one million dollars in penalties, attorney's fees and other damages. In approving the settlement, the U.S. District Court judge called the settlement "a significant victory" for the workers.

Wage and hour violations are widespread in the agricultural industry, with growers often failing to provide paid breaks, lunch breaks and overtime pay, or forcing employees to work off the clock, provide their own tools, or accept less than minimum wage, sometimes in cash with little or no documentation. However, it is always difficult to pursue claims in the agricultural industry because farmworkers are often unaware of their rights. Most are immigrants unfamiliar with the California legal system, and they usually perceive that they have no ability to challenge any injustices, or, worse, fear that they will be retaliated against and ruined by an angry employer. As a result, many times, plaintiffs sometimes struggle to rally support and assistance from their co-workers. Congratulations to Tom Lynch and his team of attorneys representing the plaintiffs.

Bank of America Corp. has agreed to pay up to $9 million to settle a class action lawsuit brought by its California loan workers who sued to recover back overtime pay. The eligible class members include account executives, trainees and other workers selling home mortgages and personal loans.

Bank of America, of course, denies any wrongdoing. If approved by the U.S. District Court in San Francisco, the bank will pay up to $6.68 million to the workers and $2.25 million to their lawyers, depending upon the number of claims made.

Allstate Corporation agreed on Thursday to pay as much as $120 million to settle a class-action lawsuit pending in Los Angeles County Superior Court, brought by its California claims adjustors, who sought back overtime pay, and compensation for meal and rest break violations. The settlement affects Allstate claims adjusters who worked in California from November 27, 1996 to December 31, 2004. Approximately 2,000 adjusters are eligible to receive payments from $1,000 to $95,000, depending on their length of service and workload. The payout to the average worker is expected to be around $50,000, comparable to an adjuster's typical annual salary, but a worker who was employed throughout the entire claim period would expect to receive about $95,000.

An attorney for the adjusters, R. Rex Parris, had this comment:

It's very similar to what happened in the '40s with the sweatshops. The laptop had become the sewing machine of the 2001 era. Companies were sending these people home with their laptops. They'd work long hours at work, and then they'd go home and continue to work.

The settlement is a claims-made agreement, which means that employees must submit claim forms to collect their share of the settlement, and the value of claims that are not submitted will not be paid by the company. The settlement is not yet approved by the court, but approval is likely.

Despite 120 million indications of wrongdoing, the company steadfastly maintains that it did nothing wrong.

Several years ago, we had a wage and hour lawsuit against a very, very famous celebrity. Indeed, we would go so far as to call him a historical figure. If they still have Jeopardy on TV in the year 2305, most contestants will know this man's name. So we were at a settlement conference, and we got to the point where we had agreed on everything except the total dollar compensation. We were $10,000 apart.

Exasperated, our client blurted out "This is bullshit. [Greedy Famous Employer] could make $10,000 just by signing his autograph a hundred times." "Oh well," came the response, "he's not putting another dime on the table."

"What if he didn't put another dime on the table," we suggested, "but he signed his name a hundred times for us on something marketable." Everyone at the table, including our client, cocked their heads like dogs hearing a strange noise for the first time.

About thirty minutes later, we had a deal. Our client insisted that our fee from the autograph portion of the settlement be taken in autographs. Eventually, we donated most of ours to charity, but kept one for each lawyer's office as a trophy.

Merrill Lynch & Company agreed this month to pay $37 million to settle a class action, but, for a change, the plaintiffs in this case were its own employees. Merrill Lynch brokers are paid primarily on a commission basis, and the company denied them overtime, treating them as exempt from state and federal overtime laws. Last year, the federal Fair Labor Standards Act (FLSA) was amended to exempt from overtime pay all white-collar workers earning more than $100,000, as long as those earing included $455 or more per week in salary. The brokers typically received no such salary.

The settlement is the first of its kind, and is likely to lead to other similar cases (we are preparing a similar action ourselves) because the industry standard was to treat brokers exactly as Merrill Lynch did. As many as 3,000 current and former brokers will be paid up to $15,000 each, depending upon length of service and time worked. San Francisco District Court Judge Maxine M. Chesney will review and approve or reject the settlement terms in a hearing set for September 9, 2005.

HCA will pay $4.75 million to settle a collective action (Abasi v. HCA, the Healthcare Co. Inc., C.D. Cal., No. CV 03-7606) for unpaid overtime and rest and meal break violations. Approximately 1100 employees will share in the settlement, based on a formula that applies their pay rate to their length of service. The settlement was approved on May 9, 2005 by U.S. District Court Judge George King.

The workers claimed various violations of the federal Fair Labor Standards Act and California wage and hour laws, including claims for pay under Labor Code § 226.7 and claims that workers were undercompensated for working 12-hour shifts violated the federal FLSA. The terms of the deal require HCA subsidiary Los Robles Hospital & Medical Center to pay an average of slightly more than $3,000 per employee, after attorney's fees and other costs.

Our Press Release of this date, celebrating the settlement of our most significant case:

More than 20,000 current and former food servers, bussers, hosts and hostesses, bartenders and kitchen workers at California Red Lobster and Olive Garden restaurants will share $9.5 million as part of a settlement involving claims that they were prevented from taking breaks, and that they were required to purchase and maintain their own employee uniforms. Red Lobster workers from more than 40 locations in California who worked there from February 21, 1998 to the present will share $5.5 million, while Olive Garden employees who worked from March 24, 1999 to the present will share another $4 million.

Two food servers at the Brea Red Lobster restaurant filed the first class action complaint in February 2002, alleging that Red Lobster refused to allow breaks to its non-exempt workers throughout the State of California. The complaint was subsequently amended to include damages and restitution for Red Lobster’s former policy of charging workers for uniforms, and for making the employees maintain their own uniforms. In March 2003, an Olive Garden employee filed a similar complaint, seeking certification of all GMRI workers, including both the Red Lobster and Olive Garden chains. Then, in May 2004, while the first case was on appeal from an Orange County Superior Court ruling denying the defendant’s motions for summary judgment and to compel arbitration, a third lawsuit was filed in Sacramento, California.

Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 5, employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 5, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms, from the company.

This is one of the largest rest period class actions ever certified in California. This case was hard fought for three years, in two counties, the Court of Appeal and the California Supreme Court. The Red Lobster case was settled more than two years after the first mediation session. A second mediation session was scheduled after the California Supreme Court denied review of a 4th District Court of Appeal ruling preventing Red Lobster from compelling the employees to arbitrate the Red Lobster class claims. Several weeks after the second mediation, before respected mediator Mark S. Rudy of San Francisco, the parties reached a tentative settlement agreement. The Olive Garden case settled shortly thereafter, and an integrated and final settlement of the three lawsuits was signed on June 25, 2005.

The settlement requires the company to mail claim forms to all eligible employees. Workers must submit these forms in order to be eligible to receive their payments under the settlement. Employees can visit www.lobsterlawsuit.com for an update on the status of these legal actions.

GRMI, Inc., a subsidiary of Darden Restaurants, Inc. (stock symbol DRI), which operates the Red Lobster and Olive Garden restaurant chains in California, did not admit liability in the settlement. The settlement does not dictate any change in the restaurant chain’s practices. However, attorneys for the class do not foresee any ongoing problems with GMRI’s policies. Since 2002, the reports of employees missing their meal and rest breaks have been few, and we have seen instances in which restaurant managers who did not permit employees to take breaks have been subject to discipline by the company. Employees are no longer required to purchase uniforms.

Fact Sheet:
Class Representatives: For Red Lobster: Michelle Whalen-Camacho, Miguel Perez, Jason Nash and Torrey Hughes. For Olive Garden: Kelly Mancuso and Jessica Springer. · Defendant: GMRI, Inc., a subsidiary of Darden Restaurants, Inc. (DRI), a publicly traded corporation headquartered in Orlando, Florida.
Courts: The initial lawsuit was filed by Perez and Whalen-Camacho on February 21, 2002 in the Superior Court of the State of California, for the County of Orange, Case No. 02CC00038. The Mancuso action was filed March 24, 2003 in the Superior Court of the State of California, for the County of Orange, Case No. 03CC00098. The Nash case was filed on May 11, 2004, in the Superior Court of the State of California, for the County of Sacramento, Case No. 04AS01949. Whalen-Camacho, Perez, Mancuso and Springer intervened in the Nash case in April 2005. That case is currently assigned to the Honorable Loren E. McMaster.
Claims alleged: Violations of California Labor Code § 226.7 and Industrial Welfare Commission Wage Order No. 5, for failure to provide 30 minute meal periods and 10 minute rest periods; violations of California Labor Code § 450 and Industrial Welfare Commission Wage Order No. 5, for compelling employees to purchase and maintain uniforms. The class also alleges that the meal and rest break violations, uniform violations and equipment sales constitute violations of California Business & Professions Code § 17200 et seq. California’s Unfair Competition Law.
Primary factual allegations: Until 2002, GMRI, Inc.’s Red Lobster and Olive Garden chains prevented employees from taking breaks at their restaurants throughout California, and failed to pay employees an extra hour of pay when such breaks could not be taken. From 2002 to the present, although the restaurants had systems in place to provide for breaks in most instances, on the occasions when breaks were missed, employees were still not paid the extra hour of pay. In addition, for a portion of the relevant time period, Red Lobster required employees to purchase, launder and press their employee uniforms at the employee’s sole expense. The court did not rule upon the merits of these allegations, which GMRI has continued to dispute.
Relief sought: Payment of up to one hour of pay per day for each meal period violation, and one hour of pay per day for each rest period violation, for employees who worked during the relevant time periods of February 1998 to June 2005; restitution for all hourly California employees who were denied paid rest breaks, or who were required to purchase uniforms or equipment, from February 1998 to June 2005.
Plaintiffs' attorneys: The employees were represented by Walsh & Walsh, P.C. (Michael J. Walsh and Mark A. Walsh) of Irvine, California, Langford & Langford, APLC (Michael S. Langford and Karin A. Langford) of Santa Ana, California, Kingsley & Kingsley (Eric B. Kingsley) of Encino, California, the Law Offices of Michael L. Carver (Michael L. Carver), of Chico, California, and the Law Offices of Robert S. Skripko, Jr. (Robert S. Skripko, Jr.) of Santa Ana, California.
Defendant’s attorneys: The employer was formerly represented by Littler Mendelson LLP, but at the time of the settlement, was represented by Jackson Lewis LLP (Mia Farber, David S. Bradshaw and Cary Palmer), Sacramento, California.
Source/Contact: Walsh & Walsh, P.C. Michael J. Walsh, Esq. 420 Exchange, Suite 270 Irvine, CA 92602 Tel: (714) 544-6609 Fax: (714) 544-6621 E-mail: [email protected] Website: http://www.lobsterlawsuit.com

Countrywide Financial Corp. has agreed to pay $30 million to settle a class action lawsuit alleging that its misclassified its account executives as exempt employees and overworked them with no overtime pay. Approximately 400 employees at the firm's Southern California call centers will share in the settlement. The terms were given preliminary approval last month by Los Angeles County Superior Court Judge Victor Person. A hearing on final approval is set for late June.

The employees claimed that Countrywide denied them overtime pay by giving them management titles but mostly nonmanagerial job duties. Countrywide alleges that the employees were exempt, and that the lawsuit was meritless, and it asserts that the $30 million settlement was given solely to avoid the risks of litigation.

"While the company continues to believe that its original classification of account executives was lawful and that it would have been upheld at trial, it decided to settle in order to avoid the expense and uncertainty of litigation."

We had never actually seen or heard of a company paying out $30 million to settle a meritless claim, so we looked more closely at the case. After reviewing the facts and the publicly available evidence, we still think we've never seen or heard of a company paying out $30 million to settle a meritless claim.

Since the landmark decision in Bell v. Farmer's Insurance, holding that typical insurance adjusters are "production workers" who are entitled to overtime pay, most large insurance companies have revised their policies to either reduce adjustors' work schedules to 40-hour weeks and 8-hour days, or have begun paying overtime to adjusters who work longer hours. Still, it has been too little and too late for the large-scale violators to avoid liability for back pay owing to adjusters who worked long hours under the old policies. While most insurers continue to argue that their adjusters are exempt administrative employees, since the Bell case, courts have routinely granted summary judgment or summary adjudication motions in favor of the claims adjusters. Invariably, once the companies lose thos motions, settlements follow.

State Farm Insurance is the latest to come to terms with its adjusters. Earlier this month, Los Angeles County Superior Court Judge Anthony Mohr approved a $135 million settlement in an overtime class action involving 2,600 claims adjusters in California. Typically, the employees would work six to seven hours of overtime each week. Many worked weekends. Until the policy changed, none of the adjusters ever received overtime pay. Because the adjusters worked such long hours, for such a long period of time, the average award for each plaintiff submitting a claim is expected to be approximately $34,000. Those with the maximum claim -- workers who were denied overtime pay for eight years -- could expect a settlement of as much as $64,000 each.

The State Farm case is one of the oldest wage and hour class action cases still pending in California. The case was filed in 2000; the settlement was reached in 2004, after the court ruled in favor of the class on a determination of whether the adjusters were exempt from overtime pay entitlement.