Posts belonging to Category Settlements

Gravina v. City of Los Angeles: City Settles Meal Break Claims with Sanitation Drivers for $26M

Following a grant of final approval of a $26 million settlement by Judge John Shepard Wiley Jr. at a fairness hearing in July 2014, the Los Angeles City Council officially adopted a motion on August 12, 2014, settling Gravina v. City of Los Angeles, No. BC356014, a wage-and-hour class action on behalf of a class of sanitation truck drivers (copy of the City Council’s motion available here). The parties had previously reached a settlement which was preliminarily approved by the trial court, and the council had approved the deal during a closed session meeting in February 2014, but had not publicly announced it because it was not yet final and required court approval.

Sanitation driver Gravina sued the city in 2006 on behalf of approximately 1,000 employees, alleging that the employer’s policies unlawfully restricted how he and other drivers spent their meal breaks. The lawsuit alleged that the city forbade them from congregating with other drivers or napping during their 30 minute meal breaks. The city filed a motion for judgment on the pleadings, arguing that it was exempt from California’s meal break laws, but the trial court rejected this argument. (The city’s subsequent petition for writ relief was also denied.)  

In March of 2011, Judge Emilie H. Elias certified a class of truck drivers employed since July 26, 2003, and certified for trial the issue of whether the city’s policy of restricting their workers’ activities and movements during their meal break transformed those breaks from off-duty to on-duty breaks. If they were found to be “on-duty,” the drivers would need to be compensated for those breaks. The case was re-assigned to another judge shortly thereafter, and in December of 2011, at a bifurcated trial on liability, Judge Wiley Jr. ruled in favor of the plaintiffs, finding that the restrictions rendered the breaks on-duty, entitling the drivers to compensation.

City officials negotiated the $26 million settlement while their petition to the California Supreme Court was pending (after the deal was struck, the city’s petition for review to the California Supreme Court was denied). The preliminary approval papers indicate the settlement will provide for a net average of $15,000 in lost wages per driver. The class includes sanitation truck drivers who worked for the city of Los Angeles from July 26, 2003, up to and including the date of trial in the action.  

Elite Model Management Settles Unpaid Intern Claims

U.S. District Judge Alison J. Nathan granted preliminary approval to a $450,000 settlement reached between Elite Model Management and former interns for alleged violations of New York and federal wage and hour laws. The plaintiffs alleged they were purposefully misclassified as “interns” when they were, in fact, performing the work of regular employees, except without pay. See Order Granting Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement, Davenport v. Elite Model Management Corp., No. 13-01061 (S.D.N.Y. Jan. 9, 2014) (available here).

The lawsuit alleged that Elite Model Management used its internship program as a way to obtain free labor that it would otherwise have had to hire and pay workers to perform. The Fair Labor Standards Act permits unpaid internship programs, but only if the internship meets strict criteria for the interns to be classified as trainees. For such a program to pass muster, the employer must derive no immediate advantage from the activities of the intern, the intern must be the primary beneficiary of the internship, and the interns must not displace regular employees.

Former interns who opt into the Davenport settlement will receive approximately $175 for each week they interned at the modeling agency, with a minimum of $700 for four-week internships, and up to $1,750 each. The settlement is considered to be the largest unpaid internship settlement to date. It follows a slew of recent unpaid intern cases filed in New York state and federal courts which typically involve entertainment and media companies, such as Gawker, Charlie Rose, Condé Nast, and Fox Searchlight. The Davenport settlement is set for a final approval hearing on May 1, 2014.

Ninth Circuit Follows Kagan’s Genesis Healthcare Dissent

In her stinging dissent in Genesis Healthcare Corp. v. Symczyk, Justice Kagan stressed that the majority opinion, which held that an FLSA collective action can be terminated if the class representative is “picked off” by a settlement offer that fully resolves her claims, should not be used as precedent for future cases: “Feel free to relegate the majority’s decision to the furthest reaches of your mind: The situation it addresses should never again arise.” Justice Kagan specifically referred to the case’s odd posture, wherein neither party contested the premise that an unaccepted Rule 68 settlement offer serves to moot the plaintiff’s individual action, a premise the dissenting justices found to be incorrect.

In Diaz v. First American Home Buyers Protec. Corp., No. 11-57239 (9th Cir. Oct. 4, 2013) (slip opinion available here), the Ninth Circuit considered whether an unaccepted Rule 68 offer would moot a Rule 23 class action prior to a ruling on class certification. Noting a circuit split on this issue, Diaz examined Justice Kagan’s reasoning in Genesis and found it to be the “correct approach,” concluding that “an unaccepted Rule 68 offer that would have fully satisfied a plaintiff’s claim does not render that claim moot.” Slip op. at 14. The Diaz court thus vacated the district court order dismissing the putative class action.

While Diaz distinguished Genesis on the ground that Justice Kagan identified, other courts have distinguished Genesis as being wholly inapplicable to Rule 23 class actions. See, e.g., Craftwood II, Inc. v. Tomy Int’l, Inc., No. 12–1710 (C.D. Cal. July 15, 2013) (“[Genesis] does not cover class actions, nor does it even address how a rejected offer could moot a claim.”); Chen v. Allstate Ins. Co., No. 13-0685 (N.D. Cal. June 10, 2013) (holding that Genesis has no application to Rule 23 class actions); see also, Kensington Physical Therapy, Inc. v. Jackson Therapy Partners, LLC, No. 11-02467 (D. Md. Oct. 2, 2013) (same). These cases indicate that Justice Kagan’s dissent has already proven to be quite influential in limiting Genesis’ impact. However, considering that Diaz has exacerbated an unresolved circuit split (by siding with the Second Circuit against the Sixth and Seventh Circuits), it will shock no one if the Supreme Court takes up this issue again in the near future.

Book Publisher Penguin Agrees to $75 Million Ebook Pricing Settlement

Ebook publishers continue to pay a steep price in settling actions alleging that prices were elevated well above what a truly competitive market would have determined. With ebook prices of as much as $12 or $15 – far above the marginal cost plus modest profit that standard economic theory predicts of competitive markets – three publishers have already agreed to substantial settlements: Hachette, $31.7 million; HarperCollins, $19.5 million, and Simon & Schuster, $17.7 million.

Now, Penguin has agreed to the largest such settlement, more than twice that of the Hachette settlement: $75 million to resolve claims brought by state attorneys general, after having earlier settled with the U.S. Department of Justice. Specifically, the settlement provides that Penguin will refund $75 million to consumers through credits to buy Penguin books through online retailers. Penguin’s parent company, Pearson PLC, has anticipated the settlement by way of a $40 million accounting charge, reflecting that the actual cost to Penguin is likely to be considerably less than the $75 million proffered.