Judge: William D. Claster, Case: 19-01052326, Date: 2023-06-16 Tentative Ruling

Defendant and Cross-Complainant Sean Bose's Motion for Preliminary Approval of Class Action and PAGA Settlement  ROA 176

The motion for preliminary approval of class action settlement is DENIED. At the hearing, parties need to be prepared to discuss next steps in the case.

In supplemental briefing, Bose confirms his counsel’s earlier statement that the maximum potential value of his wage-and-hour claims was $275,243.60. (Supp. Br. p. 12.) Per ¶ 9 of counsel’s prior declaration (ROA 177), Bose’s $333,000 individual settlement was 53% of the overall maximum potential value (including his wrongful termination claims). Applying that 53% ratio to the wage-and-hour maximum value means Bose settled his individual wage-and-hour claims for $145,879.11.

Assuming 544 class members, and accounting for all proposed deductions from the GSA, individual class members will receive an average of $361.29 to settle their wage-and-hour claims. This is more than 400 times less than Bose will get to settle his wage-and-hour claims.

Bose correctly notes in his supplemental briefing that because the Court enforced the class waiver in his arbitration agreement, he would need to secure reversal of that ruling on appeal for the class claims to have any viability. As a result, he correctly argues the class claims have negligible value, if any, given current precedent approving the use of class waivers. For this reason, discounting each class claim’s value by 90% to account for the chance of getting them reinstated on appeal is appropriate. (Supp. Br. at pp. 5-10.)

But the class claims have negligible value because of their status as class claims, not because putative class members’ claims are worthless on the merits. In the ordinary case, the Court has no way of knowing how much an individual class member’s claims are realistically worth in settlement, and the Court’s task is to determine whether the settlement is fair on its own terms, not to compare the settlement against some hypothetical recovery. But here, the record shows Bose will receive about $145,000 in settlement of his individual claims. If Bose is typical of the class he purports to represent—which he must establish, and the Court must find, for the settlement to be approved—individual class members’ claims are worth far more than $361. Perhaps Bose is an outlier with larger claims than everyone else’s, but if he’s typical, his claims aren’t 400 times larger than everyone else’s. This settlement resolves class members’ wage-and-hour claims for orders of magnitude less than they appear to be worth.

Bose argues that class members have the right to opt out to pursue individual claims, so their interest will be protected. But this right means nothing unless class members are given enough information to make an intelligent choice about whether to exercise it. To that end, the draft notice says nothing about the amount of Bose’s individual settlement, making it impossible for a class member to compare his or her expected recovery as a class member to his or her potential recovery as an individual.

“‘The court has a fiduciary responsibility as guardian of the rights of the absentee class members when deciding whether to approve a settlement agreement.’” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129 [quoting 4 Newberg on Class Actions (4th ed. 2002) § 11.41].) Were the Court to approve this settlement based on the record before it, the Court would be abdicating that responsibility. For this reason, upon consideration of the record, and in an exercise of its discretion, the Court denies preliminary approval.