Cifuentes v. CEVA Logistics U.S.: $1.75M Settlement for 65 Class Members

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CEVA Logistics US Inc., a delivery company, agreed to pay $1.75 million to settle a class action brought by 65 drivers for unpaid minimum wages, unpaid overtime, and business expenses premised on misclassification of the drivers as independent contractors. Cifuentes v. CEVA Logistics U.S., Inc., No. 3:16-cv-01957-H-DHB (S.D. Cal.), see Order Granting Preliminary Approval and Order Granting Final Approval of Class Settlement here and here, respectively. The final approval of the settlement comes approximately 14 months after Plaintiff Cifuentes commenced his suit in the Southern District of California. Cifuentes brought the wage-and-hour class action “on behalf of all individuals who have performed one or more deliveries in California for CEVA, while being classified as an independent contractor.” Preliminary Approval Order, at 2. The plaintiff claimed that the delivery company “improperly categorized class members as independent contractors, rather than as employees, and as a result denied them the rights and protections afforded by the California Labor Code,” which include meal and rest periods, accurate and itemized wage statements, and reimbursements for reasonable business expenses. Id. Cifuentes also claimed that CEVA “failed to compensate class members for all hours worked, overtime, and full wages upon departure from the company.”  Id.

The CEVA settlement translates to an average recovery of $15,855.26 for each of the 65 drivers and checks are issued automatically, without any requirement for a claim form. The court noted that the “settlement is outstanding when compared with other wage and hour settlements approved in recent years by federal courts sitting in California.” Final Approval Order, at 9. In finding that the settlement class met the predominance and superiority requirements of Rule 23(b)(3), U.S. District Judge Marilyn L. Huff held that the “common question of whether the class members were misclassified as independent contractors predominates over all individual issues, because once that issue is determined on a class-wide basis, the only remaining issues would be determining the amount of damages that each class member is entitled to.” Id. at 7. The court also found typicality and numerosity requirements satisfied because the settlement class consists 65 individuals, all of whom “held the same position with CEVA and claim the same injuries.” Id. at 6. Further, the court found the adequacy requirement satisfied and awarded class counsel $583,333 in fees, which represents approximately three times the anticipated lodestar, finding that a “multiplier of three is well within the accepted range for common fund cases where class counsel has taken the case on a contingency fee arrangement.” Id. at 12-13. Finally, the named plaintiff was awarded $7,500 incentive payment for his services as a class representative.

The settlement joins a growing number of settlements reached in California class actions brought by misclassified delivery drivers alleging wage-and-hour violations. This line of cases and plaintiff-favorable results suggest that, in California, companies must use great caution in classifying, or continuing to classify, their drivers as independent contractors. In addition, this should encourage independent contractors and workers in other industries and positions that share similar characteristics to come forward to assert their rights and protections under the California Labor Code.

Authored by:
Suzy Lee, Associate