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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Approved Settlement of Federal and State Wage Claims Did Not Implicate CAFA

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Juvera v. Salcido, 2013 WL 6628039 (D. Ariz. Dec. 17, 2013)

A District Court in Arizona granted approval to a $157,000 settlement holding that the Settlement Agreement reflected a fair and reasonable resolution of wage issues in the action.

Current and former cashiers who were employed with the defendants brought this action alleging violations of the Fair Labor Standards Act and Arizona’s minimum wage laws.  Their grouse stemmed from the cashiers having to reimburse the defendants when the cash drawer or till did not add up correctly; and from the employees having to repay the defendants for the cost of replacement uniforms, as well as employee name and security tags.  According to the plaintiffs, these policies reduced their wages below the minimum wage required by the FLSA and Arizona law.  The Parties ultimately settled their disputes, and in this order, the District Court granted the parties’ joint motion for final approval of the Settlement Agreement.

Under the Settlement Agreement, the defendants agreed to pay $157,000, excluding the attorneys’ fees and costs and the cost of administration of the Settlement Agreement.  The Settlement Agreement ensured that each settlement class member (“SCM”) would receive about two-and-one half times the amount he or she was allegedly underpaid in minimum wage.  The Settlement Agreement further provided that the litigation costs and the attorneys’ fees would be paid separately.

 

As is the norm today, the District Court first made a ruling on whether CAFA would affect the settlement in anyway.  The District Court noted that CAFA was inapplicable here because the amount-in-controversy did not exceed $5 million, and then proceeded on its analysis on the other significant factors regarding the fairness of the settlement.

 

For the purposes of settlement, the defendants conceded that the two policies at issue reduced the cashier’s wages during the pay period where a payment was made, and that the class members’ payments under the two policies during the class period resulted in a potential underpayment of $62,377 in minimum wages.  The defendants also admitted that the plaintiffs’ case on liability was quite strong and after assessing the risk of liability and the likelihood of success on the merits, they had agreed to settle this action.

 

Irrespective of the defendants’ admissions, and concessions, the fact of the matter was that there was every possibility that the litigation process would not only be lengthy, it would also be expensive.  Additionally, a sword would always be hanging on the plaintiffs’ ability to extend the statute of limitations period to five years.  The Settlement Agreement here, ensured that the every cashier would receive full and fair compensation dating to 2007, and significantly, neither the named plaintiffs’ nor the SCM’s entitled settlement amount would be reduced to pay their attorneys’ and litigation costs.

 

All these factors along the experience of the class counsel aligned in such a way that the District Court found the settlement to be fair and just, and accordingly, finally approved the same.