69 Cal.App.5th 521
Cal. Ct. App.2021Background
- Anaheim Arena Management (AAM) faced multiple wage-and-hour/PAGA class actions: Navarro/Aller (2014), Cassaro (2016), and others; Amaro filed a similar action in April 2017.
- Amaro and AAM negotiated a global settlement that would release claims in the earlier actions without prior plaintiffs’ participation; Navarro/Aller and Cassaro plaintiffs (including Rhiannon Aller) intervened and objected.
- The trial court denied preliminary approval of the initial settlement for insufficient factual record; Amaro then obtained extensive informal discovery (pay/time records, interviews, deposition review, event inspection) and negotiated an amended settlement with increased monetary and PAGA allocations.
- The trial court granted preliminary and final approval of the amended settlement, awarded fees and costs, entered judgment, and Aller appealed as the sole objector.
- The Court of Appeal held the settlement’s class-member release was unreasonably overbroad (covered claims “in any way relating” to the operative facts and theories) and reversed and remanded for amendment of the release; it rejected challenges that the FLSA opt-in rule barred the release, that PAGA penalties beyond the filer’s one-year window were per se invalid, and that the settlement was the product of a collusive reverse auction or that discovery was required to probe collusion.
Issues
| Issue | Plaintiff's Argument (Aller) | Defendant's Argument (Settling Parties/AAM) | Held |
|---|---|---|---|
| Scope of class release (overbreadth) | Release reaches claims unrelated to Amaro’s pleaded factual allegations (language “in any way relating” is too broad) | Release is limited to claims arising out of or relating to operative facts/theories pled; struck, unrelated items show intent to limit | Reversed final approval: release overbroad; must be tethered to complaint facts (e.g., "reasonably arising" or "reasonably related") |
| Release of FLSA claims / opt-in requirement | Settlement’s check-cashing opt-in improperly substitutes for FLSA §216(b) written-filed consent; invalid | FLSA opt-in does not apply to approval of state-law class settlement releasing potential FLSA claims; statute does not forbid release in this context | Rejected Aller’s challenge: court may approve release of potential FLSA claims in a state-law class settlement; opt-in requirement inapplicable here |
| Release of PAGA claims outside plaintiff’s one-year notice period | Amaro can only release PAGA claims within one year prior to her LWDA notice; otherwise impermissible | PAGA limitations are an affirmative defense; defendant may waive it and plaintiff may settle/release older PAGA claims; settlement does not undermine LWDA process here | Rejected Aller’s challenge: releasing PAGA claims older than Amaro’s one-year window is not per se unlawful; trial court may still reject if unfair in context |
| Collusive reverse auction and discovery into negotiations | AAM “plaintiff-shopped” and extinguished other actions via a weak settlement; discovery into negotiations required | Negotiations (mediator, additional discovery after denial of preliminary approval, increased settlement) show good faith; objector lacks foundation for probing settlement talks | Affirmed: no substantial evidence of collusion; trial court did not abuse discretion in denying discovery into settlement negotiations |
Key Cases Cited
- Villacres v. ABM Industries Inc., 189 Cal.App.4th 562 (Cal. Ct. App. 2010) (court may release claims that could have been alleged but release must be tethered to factual allegations)
- Hesse v. Sprint Corp., 598 F.3d 581 (9th Cir. 2010) (release preclusion requires identical factual predicate)
- Officers for Justice v. Civil Service Com., 688 F.2d 615 (9th Cir. 1982) (courts may approve settlements but not rewrite parties’ agreements)
- Rangel v. PLS Check Cashers of Cal., Inc., 899 F.3d 1106 (9th Cir. 2018) (discusses preclusion of FLSA claims by prior class settlement; distinguishes present context)
- Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165 (U.S. 1989) (history and purpose of FLSA opt-in amendment)
- Negrete v. Allianz Life Ins. Co. of N. Am., 523 F.3d 1091 (9th Cir. 2008) (reverse-auction theory described; weak settlement may indicate collusion)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (courts must guard against counsel–defendant collusion in class settlements)
- Brown v. Ralphs Grocery Co., 28 Cal.App.5th 824 (Cal. Ct. App. 2018) (one-year limitations period for PAGA claims discussed)
- Williams v. Superior Court, 3 Cal.5th 531 (Cal. 2017) (PAGA notice requirement and LWDA role explained)
- Laffitte v. Robert Half Int’l Inc., 1 Cal.5th 480 (Cal. 2016) (attorney-fee standards; percentage vs. lodestar considerations)
- Chavez v. Netflix, Inc., 162 Cal.App.4th 43 (Cal. Ct. App. 2008) (typical class-fee benchmarks)
- Cassel v. Superior Court, 51 Cal.4th 113 (Cal. 2011) (confidentiality and protection of mediation communications)