Western Express $1.1M proposed settlement denied by federal court

A California federal judge has denied preliminary approval of a $1.1 million settlement in a wage lawsuit against Western Express, sending the parties back to the drawing board.

On May 1, U.S. District Judge Jesus G. Bernal denied Marc Rivera’s preliminary settlement against Western Express worth more than $1 million. Both Rivera and Western Express were seeking certification of the settlement. The class action lawsuit accuses the company of underpaying California drivers by violating rest and meal break wage laws.

Explaining the decision, Bernal pointed to the “Release” section of the settlement. Found in nearly all settlements, the release prevents plaintiffs from bringing a related claim against the defendant in the future. If the agreement were to release claims based on different facts, the court can deny the approval.

The proposed settlement was filed in court on Feb. 26. Shortly after, plaintiffs for a different class action lawsuit in California, Markson v. CRST, objected to the settlement.

Calling the release “overbroad,” Markson’s counsel filed the objection on behalf of absent class members in the Western Express lawsuit who are also members of the Markson case.

Western Express is a named defendant in both cases.

Language of the release portion of the settlement includes (emphasis added):

“… all claims, rights, demands, liabilities, penalties, fines, debts and causes of action of every nature and description, under state, federal, and local law, whether known or unknown, arising from or related to the claims pled in the Plaintiffs’ complaints filed in the action or that could have been pled based on the factual allegations in the operative complaint …”

Both the objectors and the court took issue with the phrase “related to” within the settlement. The phrase could be interpreted to include claims not within the complaint in the Rivera v. Western Express case. Bernal declared the release to be overbroad.

Also, the court was not satisfied with the lack of discovery conducted. More specifically, the court was not clear how a review of Western Express’ shift, pay and class aggregated wage data supported the plaintiffs’ claims of being encouraged to skip meal and rest breaks.

Lastly, the court questioned the amount being offered. After accounting for attorney costs and other fees, the net settlement to be claimed is $636,200. That averages out to about $318 per class member. Since plaintiffs failed to provide a maximum potential recovery, the court referred to $40 million in damages calculated by Western Express in a notice of removal.

The proposed settlement is only 2.5% of maximum damages.

The cost of damages could potentially be higher if a similar case against Western Express joins Rivera’s.

“It is well-settled law that a cash settlement amounting to only a fraction of the potential recovery does not per se render the settlement inadequate or unfair,” Bernal stated in the order. “However, where a settlement represents only 1/40 of the maximum potential recovery or less, plaintiff must explain why such a huge discrepancy is justified. Because he has failed to do so, this factor weighs heavily against approval.”

The plaintiffs in the case can still submit another motion for preliminary approval with a revised release and additional information about the settlement, according to the order.