Class Action

Class Action Defense Cases-Kullar v. Foot Locker: California Court Reverses Approval Of Class Action Settlement Holding Insufficient Evidence Provided To Support Reasonableness Of Class Action Settlement Particularly As To Class Action's Meal Period Claim

By Michael J. Hassen

Approval of Class Action Settlement of Labor Law Class Action must be Vacated and Remanded because Trial Court Lacked Sufficient Evidence to Determine Reasonableness of Proposed Class Action Settlement and because Objector (Plaintiff in a Separate Class Action) Wrongfully Denied Discovery Regarding Class Action Settlement California State Court Holds

Plaintiff filed a class action against Foot Locker alleging violations of California’s Labor Code; the class action complaint asserted that defendant failed to reimburse employees for expenses related to mandatory uniforms as required by California law. Kullar v. Foot Locker Retail, Inc., ___ Cal.App.4th ___ (Cal.App. November 7, 2008) [Slip Opn., at 2]. The class action complaint later was amended to include allegations concerning security checks performed by Foot Locker, and to include class action claims for missed meal and rest periods, and for overtime. Id. Foot Locker denied the allegations and asserted 23 affirmative defenses, id., at 3. Plaintiff’s discovery was limited, as were defendant’s responses, and did not include any of the theories advanced in the amended class action complaint (such as the meal period claim); further, while defense attorneys deposed the named plaintiff, plaintiff did not depose any of defendant’s officers or employees. Id. Eventually, the parties reached a proposed settlement of the class action, and the trial court gave preliminary approval to the class action settlement. Id., at 4. As finally approved, the class action settlement called for Foot locker to pay a maximum of $2 million, of which $500,000 would be sought as attorney fees by plaintiff’s counsel, with the settlement proceeds payable on a sliding scale, depending on the length of time worked by the employee and the number of forms returned by members of the class. See id., at 4-6. It was estimated that approximately $1.3 million would be available for the class, and that individual payments could fall within a wide range – for example, the highest amount an individual class member may receive ranged from $2,900 to more than $30,000, depending on the number of participants in the settlement. See id., at 6. Before the parties requested preliminary approval of the class action settlement, a separate class action was filed by Crystal Echeverria against Foot Locker alleging inter alia failure to provide meal breaks, id., at 7. Echeverria objected to the proposed class action settlement and sought discovery from the parties, including the deposition of Foot Locker’s person most knowledgeable about “meal period breaks, record keeping for meal period breaks, and payment of compensation for missed meal period breaks.” Id. The trial court denied leave to depose Foot Locker as “irrelevant because it related either to liability, which ‘doesn’t matter for the settlement,’ or to the amount of damages.” Id., at 8. The trial court ultimately approved the class action settlement over Echeverria’s objection, id., at 9-11, and she appealed. The California Court of Appeal reversed.

The appellate court recognized the limited scope of its review: “Our task is not to make an independent determination of whether the terms of the settlement are fair, adequate and reasonable, but to determine ‘only whether the trial court acted within its discretion.’” Kullar, at 11 (citation omitted). “Great weight” is afforded to trial courts in approving class action settlements, and the trial court’s finding will not be reversed absent an abuse of discretion. Id. Here, the trial court concluded that the class action settlement warranted approval because the four relevant factors were met – viz., the settlement was reached at arm’s-length, sufficient investigation and discovery had been pursued so as to allow the parties and the court to act intelligently, counsel were experienced in similar litigation, and only a small percentage of putative class members objected to the class action settlement. Id., at 11-12. Echeverria conceded that most of these factors indeed had been met, but she insisted that the second factor was missing because plaintiff plainly failed to conduct the investigation necessary to settle the meal period claim, id., at 12. The appellate court agreed.

Full post as published by Class Action Defense Blog on December 11, 2008 (boomark / email).