Margie Bedolla v. Labor Ready Southwest, Inc.
787 F.3d 1218
| 9th Cir. | 2015Background
- Labor Ready Southwest operated as a temp staffing agency; it did not pay workers for wait/travel time and charged $1 to use on-site cash disbursement machines (CDMs).
- Jeffrey Allen filed a putative class action alleging FLSA and California wage-and-hour and unfair-competition claims; class certification was denied and CDM/state claims were remanded; appeals were pending.
- Parties reached a proposed settlement: $4.5 million common fund; $10 per claimant for non-CDM claims and $25 for CDM users; unclaimed funds revert to Labor Ready; injunctive relief included removing CDMs and adopting free paycards; Labor Ready agreed not to contest a fee award up to 25% of the fund.
- Notice was sent to ~210,224 potential class members; 14,947 timely claims were filed (max monetary payout ≈ $373,675) while counsel sought $1.125 million (25%) in fees.
- Four plaintiffs in separate but similar suits (Objectors) sought to intervene, were denied intervention but allowed to object; district court approved settlement and awarded the 25% fee; Objectors appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of intervention | Objectors: intervention was timely after learning settlement details and necessary to protect their interests | Labor Ready/Allen: motion untimely—filed after years of litigation and on eve of settlement; objections were adequate | Denied intervention: motion untimely and prejudicial; normal objection process available |
| Sufficiency of district court’s procedural review of settlement negotiated without a certified class | Objectors: settlement shows signs of collusion (reverter, clear-sailing, disproportionate fees) and court failed to probe | Allen: approval proper; injunctive relief and common-fund benchmark fee justify approval | Vacated final approval and remanded for more searching inquiry under heightened Bluetooth scrutiny |
| Reasonableness of attorneys’ fees process | Objectors: fee briefing filed after objection deadline, denying class meaningful chance to object | Allen: schedule complied with preliminary order (implicit defense) | Vacated fee award; remand requires fee motion be filed before objection deadline per Mercury so class can object |
| Substantive fairness of settlement terms | Objectors: monetary relief to class is disproportionately low relative to fees; reverter and clear-sailing raise concerns | Allen: injunctive relief provides significant class benefit; 25% is typical common-fund benchmark | Court declined to resolve substance on record; remand for district court to evaluate substantive reasonableness after fuller fact-finding |
Key Cases Cited
- Rodriguez v. West Pub. Co., 563 F.3d 948 (9th Cir.) (standard of review for class-action settlement approval)
- Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir.) (abuse of discretion requires correct legal standard and reasonable findings)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir.) (heightened scrutiny for settlements negotiated without class certification; identifies signs of possible collusion)
- Dennis v. Kellogg Co., 697 F.3d 858 (9th Cir.) (district court must comprehensively explore factors and respond to non-frivolous objections)
- In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988 (9th Cir.) (Rule 23(h) requires objections to fees after fee motion is filed)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir.) (district court’s duty to police tensions among class representation, defendant, and class counsel)
- Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615 (9th Cir.) (judicial policy favoring settlement in complex class actions)
- In re Syncor ERISA Litig., 516 F.3d 1095 (9th Cir.) (settlements generally favored, especially in complex class litigation)