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Acuna v. So. Ne T.B.A. Supply Co.

United States District Court, D. Nevada

March 19, 2018

DANIEL ACUNA and JERRY SHAFFER, as individuals and on behalf of others similarly situated, Plaintiffs,
v.
So. Nev. T.B.A. Supply Co., a Nevada corporation, doing business as Ted Wiens Tire & Auto Centers, Defendant.

          ORDER RE: MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

          GEORGE FOLEY, JR. UNITED STATES MAGISTRATE JUDGE

         This matter is before the Court on the parties' Joint Motion to Approve Settlement (ECF No. 63) and Amended Joint Motion to Approve Settlement (ECF No. 78), filed on March 9, 2018 (hereinafter “Joint Motion” and “Amended Joint Motion”).

         PROCEDURAL BACKGROUND

         The parties filed their Joint Motion to Approve Settlement on March 20, 2017. On November 29, 2017, the parties filed a Notice, Consent, and Reference of a Civil Action to a Magistrate Judge (ECF No. 68) which was approved by the Chief District Judge on December 4, 2017. This case has been assigned to the undersigned Magistrate Judge to conduct all proceedings and order entry of final judgment. The Court conducted a hearing on this matter on January 11, 2018.

         Following the January 11th hearing, Plaintiffs filed a Supplemental Brief (ECF No. 74), in support of their request for an award of attorney's fees and to clarify the request for reimbursement of litigation costs. The parties also filed a Supplement to the Joint Motion (ECF No. 75) on February 2, 2018 which included as an amendment to the settlement agreement, a revised Uniform Laundering Fee Settlement Claim Form and a Request for Exclusion from the Rule 23 Uniform Subclass Settlement.

         On February 2, 2018, the Court ordered the parties to clarify the Rule 23 subclass, the release of claims of members of the Rule 23 subclass, and the payment of awards to Rule 23 class members. Order (ECF No. 76). The parties addressed these matters in the Amended Joint Motion (ECF No. 78).

         BACKGROUND AND DISCUSSION

         Plaintiffs Daniel Acuna and Jerry Schaffer alleged in their amended complaint that Defendant So. Nev. T.B.A. Supply Co., doing business as Ted Wiens Tire & Auto Centers (“Ted Wiens”), had a company-wide policy of deducting $7.50 from employees' paychecks for cleaning their company-issued uniforms. Amended Complaint (ECF No. 6). Plaintiffs allege that this policy violates Nevada Revised Statute (NRS) § 608.165 which states:

All uniforms or accessories distinctive as to style, color or material shall be furnished without cost, to employees by their employer. If a uniform or accessory requires a special cleaning process, and cannot be easily laundered by an employee, such employee's employer shall clean such uniform or accessory without cost to such employee.

         Defendant gave employees the option of cleaning their uniforms at their own expense or participating in the uniform rental plan pursuant to which Defendant deducted the $7.50 from their paychecks.[1] Plaintiffs allege that employees have a private right of action against their employer for the violation of this statute. They argue that Defendant violated this statute because their uniforms became soiled with grease and other chemicals and could not be adequately cleaned by ordinary household laundering processes. Defendant disputes whether a violation of NRS § 608.165 gives rise to a private right of action, or that employee uniforms required a special cleaning process.

         The amended complaint identified a “Laundry Fee Class” consisting of those employees who had $7.50 deducted from their paychecks. Id. at ¶17.a. Plaintiffs alleged that as a result of the Laundry Policy some employees' pay could be reduced below the federal minimum wage required by 29 U.S.C. § 206(a)(1)(c). Id. at ¶ 37. They further alleged that the Laundry Policy had the effect of depriving quitting or discharged employees of all the wages due to them in violation of NRS §§ 608.020, 608.050 and 608.110.

         The amended complaint also identified a “Minimum Wage Class.” Id. at ¶ 17.b. Plaintiffs alleged that Mr. Acuna and possibly other employees were paid an hourly wage less than Nevada's $7.25 minimum wage in violation of NRS § 608.260 vis-a-vis Nevada's Constitution, Article 15, Section 16.A. Id. at ¶ 42[2] Plaintiffs alleged that a class should be certified pursuant to Fed.R.Civ.P. 23(b)(3) for all employees who were not paid the correct minimum wage under Nevada law. Id. at ¶ 17.b. The amended complaint also identified a “Technicians Class” which consisted of technician employees who were improperly classified as “exempt” from the overtime pay requirements of the Fair Labor Standards Act (“FLSA”). Id. at ¶¶ 17.c., 18. Alternatively, Defendant allegedly classified the technicians as “non-exempt, ” but failed to pay them overtime wages required by the FLSA. Id. at ¶ 18. The amended complaint sought certification of an FLSA collective action class consisting of all “technicians” employed by Defendant since at least 2011.

         The amended complaint alleged causes of action for (1) unpaid minimum wages and overtime pay pursuant to pursuant to 29 U.S.C. § 206(a)(1)(C) and 207; (2) monies illegally deducted from the Plaintiffs' and other employees' paychecks for uniform laundering pursuant to NRS §§ 608.165, 608.020, 608.050 and 608.110, and for unpaid minimum wages pursuant to NRS § 608.260 vis-a-vis Article 15, Section 16.A of the Nevada Constitution; (3) unjust enrichment and (4) conversion. Id. at ¶¶ 55-90.

         Defendant filed a motion to partially dismiss the amended complaint on the grounds that (1) the claims are barred by the statute of limitations; (2) NRS §§ 608.020, 608.050 and 608.110 do not give rise to a private cause of action under Nevada law; and (3) the Laundry Policy did not violate NRS 608.165 or give rise to a claim for failure to pay minimum wages under 29 U.S.C. § 206(a)(1)(C). Motion to Dismiss (ECF No. 16). Plaintiffs filed a motion for class certification pursuant to Fed.R.Civ.P. 23(b)(3) and 29 U.S.C. § 216(b) in which they requested certification of (1) a “Laundry Fee Class” pursuant to Rule 23(b)(3); (2) a “Minimum Wage Class” pursuant to Rule 23(b)(3); and (3) a “Technician Class” pursuant to 29 U.S.C. § 216(b). Motion for Class Certification (ECF No. 23). Both parties filed motions for partial summary judgment with respect to the laundry policy.

         The parties state that they exchanged written discovery requests and responses, and that Plaintiffs obtained extensive personnel records, wage records, and other pertinent documents from the Defendant. The parties thereafter participated in a mediation conference on January 25, 2017 which resulted in the proposed settlement agreement. Defendant agrees to pay a maximum of $295, 000.00 in ten (10) equal monthly installments which may vary by up to 5 percent so long as the total payment does not exceed $295, 000.00. The proposed settlement provides that attorney's fees, litigation costs including the amount to be paid for the services of the the Claims Administrator, and the enhancement payments to the class representatives, will be deducted from the total settlement payment, leaving an estimated $182, 900.00 for payment to class members who participate in the settlement. Payments will be made on a pro rata basis. Joint Motion, at 3; Amended Joint Motion, at 18, 25, 27.

         Pursuant to the “Stipulation and Agreement for Settlement and Release of Fair Labor Standards Act Collective Action and Settlement and Release of Claims in Accompanying Class Action” (“Settlement Agreement”), Joint Motion, Exhibit 1, and the second amended stipulation thereto, Amended Joint Motion, Exhibit 5, the parties request certification of two FLSA opt-in subclasses under 29 U.S.C. § 216(b) which are defined as follows:

(1) The “Mechanics Subclass, ” for which Plaintiff Acuna is the Class Representative, is comprised of those present and former employees of Defendant who, during the Class Period of March 2, 2013, through January 31, 2017, performed automobile maintenance and repair; were and are paid mostly by commissions; and for whom Defendant claims the retail/service commission exemption under the FLSA and Nevada law. Settlement Agreement at ¶ 1.i.
(2) The “Technicians Subclass, ” for which Jerry Shaffer is the Class Representative, consists of those present and former employees who, during the Class Period, performed either (a) commercial tire repair and servicing or (b) specific types of automobile servicing, but not the same work as Mechanics; these employees all were and are paid at hourly rates supplemented by commissions. Id. at ¶ 1.j.

Amended Joint Motion, at 9.

         The parties also request the preliminary certification of a Uniform Subclass pursuant to Rule 23 of the Federal Rules of Civil Procedure which is defined as follows:

The “Uniform Subclass” is those persons employed by Defendant during the Class Period of March 2, 2013 to January 31, 2017 who paid, through payroll deductions, fees to cover the costs of laundering their uniforms. Id. at ¶ 1.k.

         The parties have clarified in the amended joint motion that they do not seek to certify the “Mechanics Subclass” or “Technician Subclass” as Rule 23 subclasses. Members of the Mechanics Subclass and Technician Subclass who are also members of the Uniform Subclass, however, will be deemed to release their state law claims relating to the laundering of uniforms if they do not request exclusion from the Rule 23 class action settlement.

         The parties have also clarified that the only claims being settled by members of the Uniform Subclass are those alleging that Defendant violated Nevada law by charging them for laundering their uniforms. Unless a Uniform Subclass member requests exclusion from the Rule 23 class action settlement, he or she will be bound by the settlement and will be eligible to receive monies from the settlement as set forth in paragraphs 1.1., 20.a. (iii) and (iv), and 20.b. (ii) of the Settlement Agreement. Amended Joint Motion, Exhibit 5, at ¶ 2. The parties have agreed to amend Paragraph 1.bb. of the Settlement Agreement to make clear that only claims arising under Nevada law will be released pursuant to the settlement of the Uniform Subclass claims. Id. at ¶ 4. The parties have also clarified that the exclusion process in Paragraph 32 of the Settlement Agreement applies only to the Rule 23 Uniform Subclass. Id. at ¶ 5.

         Defendant reserves the right to oppose class certification in the event the action proceeds on its merits. “This would occur if the Court did not approve the Settlement, or Defendant exercises its right to rescind and void the Settlement in the event that more than ten percent (10%) of the Class members object, opt out, and do not return a valid claim form.” Settlement Agreement, at ¶ 21. The parties state that approximately 259 present or former employees are eligible for one or more of the proposed subclasses. Joint Motion, at 7.

         The parties propose that the maximum payment of $295, 000.00 be apportioned and paid as follows: (1) $97, 350.00 to Class Counsel as attorney's fees; (2) $14, 600.00 to Class Counsel for costs, which includes a payment of up to $10, 000 to Swarts & Swarts, CPA, as Claims Administrator; and (3) $1, 000.00 each to Plaintiffs Acuna and Schaffer for their services as class representatives. Amended Joint Motion, at 18-27.[3] If the Court approves a lower amount for attorney's fees, costs or payments to the Plaintiffs as class representatives, then the difference shall be added to the amount available for payment to class members. Settlement Agreement, at ¶ 25.

         The Settlement Agreement provides that payments to class members will be made from three sub-funds allocated to the Mechanics Subclass, Technicians Subclass and Uniform Subclass. Id. at ¶ 20.a. (ii). The amount of payments to subclass members shall be determined by the Claims Administrator on the basis of the following procedures and formulae:

         Mechanics Subclass and Technicians Subclass members who return signed, valid Claim/Consent and Release Forms will receive shares of the Mechanics or Technicians Subclass funds calculated with reference to a percentage of the portion of the Settlement Fund allocated to the Mechanics or Technicians Subclass members that corresponds to the number of full or partial calendar months each Mechanics or Technician Subclass member was employed by Defendant during the Class Period. The following information will be obtained from Defendant's records to determine the award to each potential class member: The total number of full or partial calendar months all Mechanics or Technicians Subclass members were employed during the Class Period; and the total number of full or partial calendar months each Mechanics or Technicians Subclass member was employed. Defendant will prepare a spreadsheet for each subclass that lists (A) the actual number of full and partial calendar months each subclass member was employed during the Class Period; and (B) the total number of full and partial calendar months all persons in the subclass were employed during the Class Period. The Claim/Consent and Release Form for each member of the Mechanics or Technicians Subclass will inform the subclass member of the number of full or partial calendar months that the subclass member was employed and of the calculated settlement payment. Id. at ¶20.a. (ii).

         The payment for each eligible member of the Mechanics Subclass or Technicians Subclass will be based on the following formula: (A) the number of full or partial calendar months each subclass member was employed during the Class Period, (B) divided by the total number of full work weeks all members of the subclass were employed during the Class Period, to (C) obtain the percentage of full or partial calendar months for each member of the subclass. That percentage will then be applied to the monies allocated to each subclass to determine the amount of the subclass member's payment. Id. at ¶ 20.a. (iv).

         The Uniform Subclass members will receive a percentage of the monies allocated to the Uniform Subclass calculated with reference to the number of full or partial calender months the specific Uniform Subclass member was employed and had deductions from his or her paychecks for uniform laundering during the Class Period. The following information will be obtained from Defendant's records to determine the payment to each potential Uniform Subclass member: The total number of full or partial calendar months of employment for each person from whose paychecks Defendant deducted money for uniform laundering during the Class Period; and the number of full or partial calendar months of all Uniform Subclass members' employment in which Defendant deducted from paychecks for uniform laundering during the Class Period. Id. at ¶ 20.a. (iii).

         The following formula will be used to calculate the payment for each eligible member of the Uniform Subclass: (A) the number of full or partial calendar months each subclass member was employed during the Class Period and had deductions from his or her paycheck for uniform laundering, (B) divided by the total number of full work weeks all subclass members who were employed during the Class Period and had deductions from their paychecks for uniform laundering, to (C) obtain the percentage of full or partial calendar months applicable to each Uniform Subclass member's share of the total number of full or partial months for which there were paycheck deductions for uniform laundering during the Class Period. That percentage will then be applied to the monies allocated to the Uniform Subclass to determine the amount of the subclass member's payment. Id. at ¶ 20.a. (i)-(iv).

         The Settlement Agreement, as amended, and the proposed Notice of Settlement, Amended Joint Motion, Exhibit 6, provide that the claims of putative members of the Mechanics or Technicians Subclasses who do not return a completed Claim/Consent Form and Release will not be released. Settlement Agreement, ¶¶ 1.aa., 37. As stated above, the only claims of the Rule 23 Uniform Subclass members that will be released pursuant to the settlement are Uniform Subclass members' state law claims relating to paycheck deductions for uniform cleaning. Uniform Subclass members who timely request exclusion from the settlement may pursue their state law claims on an individual basis and will be subject to any defenses available to the Defendant.

         The revised version of the Notice of Settlement, Amended Joint Motion, Exhibit 6, still contains incorrect or misleading information about the scope of claims that will be released. First, paragraph 17, at page 4, states: “If you are a member of one or more Subclasses, you will be bound by the proposed settlement if it is approved, unless in some cases you make a written Request for Exclusion in the manner described below.” This paragraph is vague and could cause confusion for members of the Mechanics and Technicians Subclasses whose state and federal ...


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