Northern District of California Judge Rebukes the Affirmative Requirement to Submit a Claim where Defendant Has Information to Simply Provide Eligible Classmembers with Compensation

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In a collective action under the FLSA which was also certified under Federal Rule 23(b)(3), preliminary approval of the proposed class settlement was denied, where “members of the opt-out California class would need to submit a claim form. The claim form asks only for a signature and also includes an option to submit a different address than the one to which the settlement notice will be mailed.

“This procedure is not ‘fair, reasonable, or adequate.’ Plaintiffs do not explain why they require a claim form for the opt-out class when they do not have any such requirement for the opt-in class. Presumably, it would be easier (and less costly) to implement a single administrative procedure for both classes, and no reason is given for the different treatment.

“More importantly, the parties neglect to consider the effect of requiring a claim form for an opt-out class. The proposed class notice states that those class members who ‘do nothing’ will remain bound by the settlement agreement but will receive no compensation in exchange for waiving their rights.  Yet experience teaches that this is precisely what the majority of the class will do — nothing. See Sylvester v. CIGNA, 369 F.Supp.2d 34, 52 (D. Me. 2005) (stating that “claims-made settlements regularly yield response rates of 10 percent or less”). Class members who decline to opt out are signaling their agreement to be part of the settlement class and to be bound by the settlement agreement. All else being equal, they should receive their share of the award. Yet as it is currently structured, the settlement makes it possible, and even probable, that the majority of the class will not receive any money.

“Nor it is clear why Plaintiffs believe a claims form is even necessary. As the parties have noted, Securitas is the current and former employer of all members of the class, and it has their mailing addresses. The parties have also set out the method by which class members’ awards will be determined and presumably already have the information they need to calculate each member’s share. Perhaps this is why the proposed claim form is nothing more than a request for a signature, with no need to submit any other personal information. These facts do not suggest that claim forms are necessary to the administration of the settlement. See Stewart v. USA Tank Sales, No.12-5136, 2014 WL 836212 at *7 (W.D. Mo. March 3, 2014) (‘Since the class members are all current or recent employees of USA Tank Sales, Defendant will have a name, recent address, and social security number for each class member. With this information, a settlement check can be mailed directly to each Rule 23 class member, which will ensure maximum participation in the settlement’).

“Accordingly, the Court concludes that the claim form requirement puts unnecessary impediments in the path of plaintiffs receiving their due compensation for their injuries under the proposed settlement.”

 

Deatrick v. Securitas Security, No.13-5016, 2016 WL 729622 (N.D. Cal. Feb. 24, 2016).

 

 

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