A California federal judge has denied approval of a nearly $3 million settlement between CVS Pharmacy Inc. and a proposed class of pharmacists claiming they were denied overtime wages, over concerns the settlement amount is too low. Judge George H. King, evaluating the settlement with the higher standard of fairness he said is required without formal class certification, expressed concern over the gap between the pharmacists’ initial $4.26 million claim and the present settlement amount of $2.94 million with only a “cursory” reasoning based on costs of continued litigation. Judge King said:
These broad concerns are always risks in class action cases. Rather, plaintiff must explain the specific risks of prevailing on each of her claims, an estimate of the likelihood of success of prevailing on each of her claims, and then explain why [$2.94 million] is an appropriate balance given the potential total recovery and the specific risks of litigation.
Lead Plaintiff Angil Sharobiem said in July that the settlement represents about a $202 payment for each week that a CVS pharmacist worked more than six days without receiving overtime pay in the company’s greater Los Angeles district. Judge King found the settlement lacking information on the methodology used to calculate the settlement amount, even though Plaintiffs’ counsel Schonbrun DeSimone Seplow Harris & Hoffman LLP said it performed “substantial work” to reach the settlement amount, including analysis of 8,997 alleged wage violations, and based the total in large part on settlements approved in previous wage class actions against CVS.
Judge King also took issue with a requirement that pharmacists automatically agree to a full release of all state claims arising under the Fair Labor Standards Act (FLSA) if they opt in to the class and receive any payment from the settlement. Judge King in that regard said:
We have serious reservations about the scope of this release. Here, no separate value is being paid for the release of the FLSA claims. Yet, if a class member chooses not to opt into the FLSA collective action by not filing a claim form, he or she would have released all state law claims for no compensation at all.
Considering the issues he found with the proposed settlement, Judge King found it impossible to decide whether the deal is “within the range of being fair, reasonable and adequate” and ordered the parties to file a new stand-alone motion within 30 days. Judge King denied conditional certification of the class and collective action, finding Sharobiem’s failure to provide a declaration that she is free from a conflict of interest as a class representative questionable. Judge King wrote:
We take seriously our duty to protect absent putative class members in evaluating the fairness of a proposed settlement, and we are not a rubber stamp of approval.
A similar $2.3 million settlement is pending in Northern California, where another group of CVS pharmacists claimed similar violations of overtime and state wage laws. It will be interesting to see what happens ultimately in each of the cases.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.