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