Palega v. The Property Sciences Group, Incorporated

Filing 83

ORDER RE 78 JOINT MOTION FOR APPROVAL OF INDIVIDUAL SETTLEMENT by Judge William Alsup. (whalc1, COURT STAFF) (Filed on 8/2/2018)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 CANDIDA PALEGA, 11 For the Northern District of California United States District Court 10 12 13 No. C 17-00855 WHA Plaintiff, v. 14 15 ORDER RE JOINT MOTION FOR APPROVAL OF INDIVIDUAL SETTLEMENT THE PROPERTY SCIENCES GROUP, INCORPORATED, Defendant. / 16 INTRODUCTION 17 18 In this employment action, the parties jointly move for approval of a settlement of 19 plaintiff’s individual claims under the Fair Labor Standards Act. For the reasons stated below, 20 the motion is GRANTED. STATEMENT 21 22 Defendant Property Sciences Group, Inc., is a residential and commercial real estate 23 valuation and appraisal management company. To complete appraisals, defendant hired 24 appraisers who worked remotely and were paid on a salary basis with a bonus structure that 25 awarded extra compensation if an appraiser completed a certain number of appraisals per 26 week. Plaintiff Candida Palega worked for defendant as such an appraiser from November 27 2011 to February 2015. 28 In February 2017, plaintiff brought the instant action for violations of the Federal Labor Standards Act, the California Labor Code, and Section 17200 of the California Business and 1 Professions Code, alleging that defendant misclassified her as exempt from overtime, failed to 2 reimburse her for all reasonable and necessary business expenses, provided improper wage 3 statements, and failed to provide required meal and rest breaks (Dkt. No. 1). 4 Although plaintiff originally brought this case as a putative class and collective action, 5 a March 2018 order granted plaintiff’s motion for leave to remove the class and collective 6 action claims from the complaint. The parties later negotiated a settlement of plaintiff’s 7 individual claims. Under the terms of the parties’ agreement, defendant will pay a sum to 8 plaintiff and her attorneys to resolve the action. The parties also agree to a mutual general 9 release of claims. The parties now jointly move for approval of the settlement (Dkt. Nos. 63, 78). 11 For the Northern District of California United States District Court 10 ANALYSIS 12 The FLSA’s purpose is “to protect all covered workers from substandard wages and 13 oppressive working hours, ‘labor conditions [that are] detrimental to the maintenance of the 14 minimum standard of living necessary for health, efficiency and general well-being of 15 workers.’” Barrentine v. Arkansas–Best Freight System, 450 U.S. 728, 739 (1981) (citing 29 16 U.S.C. § 202(a)). An employee’s claims under FLSA are nonwaivable and may not be settled 17 without supervision of either the Secretary of Labor or a district court. Lynn’s Food Stores, 18 Inc. v. United States, 679 F.2d 1350, 1352–53 (11th Cir. 1982). Where an employee who 19 brings a private action for back wages under the FLSA “present[s] to the district court a 20 proposed settlement, the district court may enter a stipulated judgment after scrutinizing the 21 settlement for fairness.” Id. at 1353. The salient question for purposes of approving a FLSA 22 settlement is whether it constitutes a “fair and reasonable resolution of a bona fide dispute.” 23 Id. at 1355. 24 Here, the parties’ proposed settlement constitutes a fair and reasonable resolution of a 25 bona fide dispute. Taking into account the number of hours plaintiff worked and her claimed 26 unreimbursed expenses, plaintiff estimats her potential damages to be $52,511.64. The parties 27 point out, however, that during discovery they learned that during plaintiff’s employment she 28 operated an independent appraisal company out of her home and performed work for 2 1 defendant’s competitors. Defendant believes that this conduct violated the parties’ 2 employment agreement and during mediation informed plaintiff of its intent to file counter- 3 claims against her. Plaintiff accordingly submits that the mutual release contained in the 4 settlement agreement has particular value to her. 5 This order concludes that the settlement amount is reasonable given the variables counter-claims discussed above, plaintiff did not track her precise hours worked. Moreover, 8 defendant argues that any expenses incurred by plaintiff were partly incurred for plaintiff’s 9 own benefit or the benefit of plaintiff’s work for other appraisal companies. Defendant has 10 also continued to deny liability and asserts that it would have vigorously defended the action 11 For the Northern District of California affecting the potential value of plaintiff’s claims. For example, in addition to the potential 7 United States District Court 6 had the case proceeded. Accordingly, there is a distinct possibility that plaintiff would have 12 recovered nothing had she pursued the action through trial. The extent to which the parties had 13 completed discovery and the experience and views of counsel also weigh in favor of approving 14 the settlement. 15 Courts must also ensure that settlement agreements are not the product of fraud or 16 overreaching by, or collusion between, the negotiating parties. The undersigned judge is aware 17 that some lawyers prefer to settle class actions without the benefit of discovery and without 18 vetting the named plaintiff’s ability to serve as class representative. In order to prevent the 19 discounting of plaintiff’s class claims by the risk that class certification would be denied, a 20 May 2017 order prohibited the parties from engaging in settlement discussions prior to class 21 certification (absent a motion for appointment of interim class counsel). This action never 22 made it to the class certification stage. Rather, plaintiff abandoned her class claims in favor of 23 an individual action. At the same time, another former employee of defendant retained 24 plaintiff’s counsel, Galvin Kennedy and Don Foty of Kennedy Hodges, LLP, to pursue a 25 similar action in California state court. The undersigned judge accordingly worries that the 26 class claims in this action were dismissed and refiled in Superior Court to facilitate a collusive 27 settlement. 28 3 1 In seeking leave to drop her class claims, however, plaintiff gave a conceivable 2 explanation as to her decision to proceed in an individual capacity. And upon the Court’s 3 inquiry, counsel assured the undersigned judge that although the parties mediated both actions 4 simultaneously, the two matters were negotiated independently of one another. The parties 5 also note that the lead plaintiff in the Superior Court action has retained additional counsel to 6 represent the plaintiff’s interests and the interests of the putative class. This order accordingly 7 concludes that the record does not support a finding that the instant settlement is the product of 8 fraud, overreaching, or collusion. Nevertheless, out of the utmost caution, plaintiff’s counsel 9 shall provide a copy of this order to the judge presiding over the Superior Court action. 11 For the Northern District of California United States District Court 10 In sum, this order finds that the proposed settlement is a fair, reasonable, and adequate resolution of plaintiff’s individual claims. The settlement is accordingly APPROVED. CONCLUSION 12 13 For the reasons stated, the parties’ joint motion to approve the proposed settlement is 14 GRANTED. The parties shall file an unredacted settlement agreement on the public docket 15 unless emergency relief is obtained from our court of appeals by AUGUST 16 AT NOON. The 16 parties’ request to vacate all current deadlines in this action is DENIED. All deadlines remain 17 in place until a dismissal is filed. 18 19 IT IS SO ORDERED. 20 21 Dated: August 2, 2018 WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 28 4

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