Thompson v. Costco Wholesale Corporation et al

Filing 66

ORDER Denying 64 Renewed Motion for Preliminary Approval of Class Action Settlement. Signed by Judge Cathy Ann Bencivengo on 4/26/2017. (jjg)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 10 11 SOUTHERN DISTRICT OF CALIFORNIA DOUGLAS THOMPSON on behalf of himself, others similarly situated, and the general public, 12 13 14 15 16 Case No.: 14-cv-2778-CAB-WVG ORDER DENYING RENEWED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Plaintiff, v. COSTCO WHOLESALE CORPORATION, Defendant. [Doc. No. 64] 17 18 19 This matter is before the Court on Plaintiff’s second attempt to obtain approval of a 20 class action and FLSA collective action settlement with Defendant Costco Wholesale 21 Corporation (“Costco”). The Court denied Plaintiff’s first attempt primarily because it 22 wholly ignored to distinctions between the Rule 23 class and the FLSA collective that the 23 named plaintiff and counsel seek to represent. Among other things, the settlement did not 24 have a proper opt-in procedure for the FLSA collective and would have required Rule 23 25 class members to release FLSA claims in exchange for no consideration simply to 26 participate in the settlement of the Rule 23 class claims. Although this renewed motion 27 corrects some of the shortcomings of the original settlement by creating a separate 28 settlement fund for the FLSA collective and including an appropriate opt-in procedure for 1 14-cv-2778-CAB-WVG 1 the FLSA collective, the release language remains inadequate. Accordingly, Plaintiff’s 2 motion is once again denied. 3 First, although the settlement agreement contains a separate release of FLSA claims 4 for participating collective members [Doc. No. 64-1 at 36], it still defines the “Released 5 Claims” by participating class members as including “any claims under federal law and 6 state law” that could have been alleged. [Doc. No. 64-1 at 35.] The FLSA, of course, is a 7 federal statute. Thus, participating class members would be releasing FLSA claims 8 regardless of whether they participate in the collective. 9 Accordingly, the parties must specify that FLSA claims are not included within the 10 This is impermissible. definition of Released Claims. 11 Second, the section of the agreement with the heading “Release of Claims by 12 Participating Class Members” contains the following sentence: “The Parties stipulate that 13 Costco shall not owe, beyond the amount of the Gross Settlement Fund, any further monies 14 to the Settlement Class or to the State of California based upon the claims made in the 15 Lawsuit during the Settlement Period.” [Doc. No. 64-1 at 36.] FLSA claims were made 16 in this lawsuit. Thus, this stipulation effectively amounts to a release of FLSA claims by 17 Rule 23 class members, regardless of whether they opted in to the FLSA collective. 18 Third, the motion itself and the Turley declaration both state that “the procedures 19 adopted under the Agreement will operate as a release of any FLSA claim by those 20 Settlement Class Members who cash, deposit, or endorse settlement checks.” [Doc. No. 21 64 at 19; 64-1 at 11, ¶ 36.] There is no citation to a provision in the Agreement that leads 22 to this result, but if this is the intent of the settlement, it is impermissible. The only 23 individuals who should be releasing any FLSA claim should be those who have opted in to 24 the FLSA collective. 25 These deficiencies further underscore the difficulty (if not impossibility) of 26 maintaining a Rule 23 class action and an FLSA collective action in the same lawsuit. Cf. 27 Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1093 (9th Cir. 2011) (declining to review the 28 district court’s holding that a Rule 23 class action and FLSA collective action cannot co2 14-cv-2778-CAB-WVG 1 exist, because the plaintiff abandoned the FLSA claim). Ultimately, however, any effort 2 to settle the claims of a Rule 23 class as well as FLSA claims in a collective manner using 3 only one settlement agreement must account for these differences. Although the parties 4 may choose the language to remedy these deficiencies, the easiest way to do so might be 5 to include an express statement in the release that notwithstanding any other terms in the 6 agreement, participating class members who do not opt-in to the FLSA collective do not 7 release any FLSA claims against Costco. 8 In light of the above, it is hereby ORDERED that Plaintiff’s Unopposed Renewed 9 Motion for Preliminary Approval of Class Action Settlement is DENIED. Plaintiff may 10 11 12 file a renewed motion for preliminary approval on or before May 10, 2017. It is SO ORDERED. Dated: April 26, 2017 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 14-cv-2778-CAB-WVG

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