Amaro v. Anaheim Arena Mgmt., LLC

• Citation: 284 Cal.Rptr.3d 566,69 Cal.App.5th 521
• Decision Date: 28 September 2021
• Docket Number: G058371
• Parties: Irean AMARO, Plaintiff and Respondent, v. ANAHEIM ARENA MANAGEMENT, LLC, Defendant and Respondent; Rhiannon Aller, Intervener and Appellant.
• Court: California Court of Appeals

69 Cal.App.5th 521

284 Cal.Rptr.3d 566

Irean AMARO, Plaintiff and Respondent,

v. ANAHEIM ARENA MANAGEMENT, LLC, Defendant and Respondent;Rhiannon Aller, Intervener and Appellant.

G058371

Court of Appeal, Fourth District, Division 3, California.

Filed September 28, 2021

Donahoo & Associates, Richard E. Donahoo, Tustin; Gleason & Favarote, Torey J. Favarote, Los Angeles; Law Offices of Joseph R. Becerra, Joseph R. Becerra, Long Beach; and Esner, Chang & Boyer, Stuart B. Esner, Los Angeles, Holly N. Boyer, Pasadena, for Intervener and Appellant Rhiannon Aller.

Sheppard, Mullin, Richter & Hampton, Jason A. Weiss, Matthew M. Sonne, Frances M.K. Hernandez and Tyler Z. Bernstein, Costa Mesa, for Defendant and Respondent Anaheim Arena Management, LLC.

Capstone Law, Ryan H. Wu, Liana Carter, Los Angeles, and Eduardo Santos for Plaintiff and Respondent Irean Amaro.

OPINION

MOORE, ACTING P.J.

Considering how often trial courts review and approve class action settlements, especially in the wage and hour context, there are few published California cases providing guidance on this process. Parties seeking approval must generally rely on federal authority. Due to this paucity in state law, we publish this opinion to provide guidelines for courts in evaluating class action settlements.

Plaintiff Irean Amaro filed this wage and hour class action and Private Attorneys General Act (PAGA) lawsuit against defendant Anaheim Arena Management (AAM) in 2017. At the time, there were already two existing class actions asserting the same claims. One had been filed in 2014 and the other in 2016. About a month after filing her lawsuit, Amaro and AAM reached a global settlement that covered the claims asserted in the two prior class actions. The plaintiffs from the prior actions, which included intervener Rhiannon Aller, were not involved in those settlement discussions. Aller intervened in this lawsuit and objected to the settlement. Initially, the trial court denied preliminary approval of the settlement on grounds Amaro had not given the court enough information to determine the adequacy of the settlement. Amaro then engaged in extensive informal discovery and entered into an amended settlement with AAM. The court approved the amended settlement over Aller's objections and entered judgment per the settlement's terms.

Aller appeals, claiming the court's approval of the settlement was erroneous for two reasons. First, she argues the class members' release in the settlement is improper because it extends to claims outside the scope of Amaro's complaint, waives class members' (from all class actions) claims under the Fair Labor Standards Act (FLSA) without obtaining their written consent, and releases PAGA claims beyond the limitations period of Amaro's own PAGA claim. We agree the release is overbroad. It covers "potential claims ... in any way relating to the" facts pled in the complaint. The "in any way relating" language causes the release to unreasonably extend to claims that may only be tangentially related to the allegations in Amaro's complaint, rendering it overbroad. However, we reject Aller's other contentions. The FLSA's written consent requirement does not apply to a release in a class settlement of state wage and hour claims. Further, nothing in the PAGA statute prevents Amaro from releasing claims outside the limitations period of her own claim.

Next, Aller contends the court abused its discretion in finding the settlement was not the product of a collusive reverse auction. Such an event occurs when a defendant sued in multiple class actions picks the most ineffectual class counsel to negotiate a weak settlement that precludes all the other class action claims. Aller primarily relies on the fact that AAM attempted to separately negotiate settlements with the plaintiffs in the two prior lawsuits. After those settlement discussions failed, AAM bypassed those plaintiffs and undercut their claims by negotiating a settlement with Amaro that extinguished the other class actions. We find there is nothing inherently wrong with this process. When such a settlement occurs, the objecting party must also show, at the very least, some evidence of unfairness to the class or misconduct to support a collusive reverse auction finding. Aller has not done so. Nor has she presented sufficient evidence to warrant discovery into whether the settlement was collusive.

Though we reject most of Aller's arguments, we reverse the judgment and remand with directions due to the overbreadth of the release.

IFACTS AND PROCEDURAL HISTORY

A. Prior Lawsuits Against AAM

AAM operates the Honda Center, a large indoor arena in Anaheim that hosts sporting competitions, concerts, and other large events. In December 2014, interveners Manuel Navarro-Cabrera and Rhiannon Aller filed a PAGA and wage and hour class action against AAM in Orange County Superior Court (the Navarro/Aller action). Generally, the plaintiffs in the Navarro/Aller action alleged AAM was not paying its nonexempt employees for all the hours they worked. Among other things, they alleged AAM (a) used a timekeeping rounding system that unlawfully shaved employee hours; (b) did not compensate employees for time spent walking or taking shuttles from Angel Stadium, where they were required to park, to the Honda Center; (c) did not pay employees for time spent waiting in line for security checks or to clock in; and (d) did not provide legally adequate meal and rest periods.

Based on these allegations, the plaintiffs in the Navarro/Aller action asserted claims based on multiple violations of the Labor Code,¹ including (a) failure to pay minimum wages (§§ 1194, 1194.2, 1197), (b) failure to pay wages (§§ 201, 202), (c) failure to pay overtime (§§ 510, 1194), (d) failure to provide accurate itemized wage statements (§ 226), (e) failure to provide meal periods (§§ 226.7, 512), (f) failure to permit rest breaks (§§ 226.7, 512), and (g) waiting time penalties (§ 203). They also asserted claims under PAGA ( § 2698 et seq. ) and Business and Professions Code section 17200 et seq. based on these Labor Code violations.

After conducting some initial discovery, the plaintiffs in the Navarro/Aller action and AAM engaged in a mediation in November 2015. The mediation was unsuccessful, so the plaintiffs continued their discovery efforts, including deposing representatives from AAM and AAM's third party timekeeping vendor.

Meanwhile, in February 2016, intervener Denise Cassaro filed a substantially similar wage and hour class action against AAM in Orange County Superior Court (the Cassaro action). Cassaro and AAM mediated the claims in June 2016, without involving the plaintiffs in the Navarro/Aller action. During negotiations, however, AAM indicated to Cassaro that it wanted a settlement that would also cover the Navarro/Aller claims. After the parties failed to settle, Cassaro's counsel contacted counsel for the plaintiffs from the Navarro/Aller action. They agreed it was in the best interest of the class to consolidate the two cases and litigate them together. The court granted their motion to consolidate in February 2017.

B. This Action

Plaintiff Amaro filed this PAGA and wage and hour class action against AAM on April 28, 2017, which largely asserted the same Labor Code violations and claims as the Navarro/Aller and Cassaro actions. Like those actions, Amaro alleged AAM's timekeeping system improperly shaved employees' time and that employees were not compensated for time spent on shuttles or waiting in line for security checks or to clock in. Similarly, she alleged employees either missed or had their meal and rest breaks cut short. Unlike the other two actions, Amaro also alleged AAM violated section 2802 by failing to reimburse employees for certain job-related expenses.

Prior to filing this action, Amaro's counsel conducted a two-and-a-half-month investigation into her claims. They conducted multiple interviews with Amaro, who worked for AAM from 2008 to 2016. They also reviewed her personnel file and other associated records, such as her earnings statements and correspondence with management. They examined 1,880 pages of AAM's policies and procedures, including information on AAM's operational guidelines, timekeeping system, employee clock-ins, attendance, meal and rest periods, and overtime pay, among other topics. Amaro's counsel also obtained time and payroll records from AAM for 238 class members and had a statistician analyze them to estimate AAM's exposure for the meal and rest period claims.

After conducting the above investigation but prior to filing the complaint, Amaro and AAM mediated the dispute with the Honorable Nancy Wieben Stock (Ret.). The parties were unable to settle at the mediation. Amaro rejected AAM's proposed terms and then filed this lawsuit. Judge Stock continued to work with the parties over several weeks, and she eventually made a proposal accepted by both sides.

Notably, two other similar lawsuits were filed against AAM after Amaro filed this action. In May 2017, Claire Gomez filed a substantially similar wage and hour class action against AAM (the Gomez action). Then, in October 2017, Gregory Maryarski filed a PAGA action against AAM that appears to be based on the same Labor Code violations as the prior lawsuits (the Maryarski action).

C. The Initial Settlement

In June 2017, AAM filed a case management statement in the Navarro/Aller action, which indicated this action had settled and that its release would cover the claims asserted in the Navarro/Aller, Cassaro , and Gomez actions (the Maryarski action had not yet been filed). Prior to being served with this document, the plaintiffs in the other actions were unaware of any settlement discussions between Amaro and AAM (collectively, the settling parties). The court stayed discovery in the other actions while the settling parties prepared a motion for preliminary approval of the settlement, which Amaro eventually filed in October 2017.²

The...