A federal judge has signed off on a $72.5 million deal ending a long-running class action in which plaintiffs alleged Home Depot underpaid workers in California.
Under the deal, workers included in the settlement would receive up to $77 each, while the plaintiffs' lawyers will get paid as much as $24 million.
On July 28, U.S. District Judge Richard Seeborg, of the Northern District of California, granted preliminary approval of a settlement in a lawsuit that started more than seven years ago when workers claimed the home improvement retail giant didn’t pay employees who worked closing shifts for the time they spent waiting in locked stores waiting for a supervisor, as well as time spent walking through stores before clocking in, among other allegations.
Seeborg said Home Depot won summary judgment regarding its rounding policy and dismissal of other elements, but only resolved the remaining claims through discovery, mediation and negotiations. The settlement includes a $25,000 service award for the estate of John Utne, a named plaintiff who died earlier this year, and $7,500 for Alfred Pinto, who was added as an additional class representative due to Utne’s failing health.
Utne filed the original complaint March 8, 2016, in Alameda County Superior Court. A month later he amended the complaint to seek civil penalties under the state’s Public Attorneys General Act.
In addition to up to $750,000 in settlement administration costs, the agreement calls for $24 million for the law firms that represented the plaintiffs, Setareh Law Group, of Beverly Hills, and Marlin & Saltzman, of Agoura Hills, along with up to $3.5 million in legal expenses. Seeborg called the request not unreasonable but incomplete insofar as it “does not provide a lodestar estimate, either in the motion or any of its accompanying declarations” and note the settlement agreement includes Home Depot’s pledge not to oppose a request for the maximum fee request, one third of the total amount.
“Plaintiffs’ motion does not address this provision, and it is difficult to ascertain on the record presented whether its inclusion is evidence of collusive behavior,” Seeborg wrote. “However, the non-reversionary nature of the fund means that even reducing or adjusting these amounts will ultimately benefit the class members, rather than defendant, thus reducing the likelihood of collusion or impropriety.”
The agreement also calls for a $10,000 reserve fund for “disputed, untimely and self-identified claims,” Seeborg wrote, with any money left in that pool to be donated to The Homer Fund. Following those deductions, Seeborg said, 5%, or $2.2 million, will go into a PAGA settlement fund, 75% of which will go to the California Labor and Workforce Development Agency with the remainder to PAGA group members.
“This leaves around $41.8 million as the net class settlement fund,” Seeborg wrote. That money will be divided among subclasses: half to post-shift claims, 41% for hourly employees claims, both of which were certified five years ago, and 9% to the rounding class. “This results in an average payout of roughly $77 for hourly employee class members, $72 for post-shift class members, $25 for rounding class members, and $2.50 for PAGA group members.”
Payments to class members will be calculated based on number of shifts worked, according to Home Depot’s records, and will be directly distributed without workers having to file claims.
“The agreement also contains an escalation clause that effectively limits defendant’s overall exposure should the actual number of class members increase,” Seeborg wrote.
All three classes are “composed of several hundred thousand employees,” Seeborg said, adding that “while the rounding claims themselves were sheared on summary judgment, this does not stand in the way of certification for the purposes of settlement.”
Had the plaintiffs prevailed at trial, they estimated a judgment between $181 million and $313 million, but Seeborg noted aside from the post-shift claims, others appeared “weaker and riskier” and winning on the rounding claims, as well as waiting time and hourly workers’ insufficient wage statement allegations would’ve required a successful appeal of dismissed claims.
A final approval hearing is set for Feb. 15, 2024.