Objectors’ Motion to Intervene in a Class Action Settlement Was Untimely, But the District Court Failed to Allow Sufficient Opportunity for Objections in the Approval Process.
Allen and Labor Ready Southwest, Inc. v. Bedolla, et al. (9th Cir. June 2, 2015)
Plaintiff filed a class action in state court alleged violations of California wage and hour law as well as the Fair Labor Standards Act of 1938 (FLSA) in April 2009. Four other plaintiffs (Objectors) filed four other actions in state court, the first in September 2010 and the other three in November 2011, raising similar claims as Plaintiff and adding addition claims for meal and rest periods. The employer removed Plaintiff’s case to the Central District of California, and in March 2011 the district court granted summary judgment on most claims. After two failed mediation sessions, the parties reached a settlement in October 2012. The Objectors sought to intervene upon learning of the agreement from the employer; the district court denied their motion but granted them leave to object at the preliminary approval stage. The district court granted preliminary approval in April 2013. The district court held a final fairness hearing and granting final approval of the class action settlement on August 27, 2013. The Objectors appeared and raised concerns, but the district court overruled them.
The Ninth Circuit Court of Appeals held the Objectors’ initial motion to intervene as a matter of right was untimely because the litigation had been ongoing for at least a year before they sought to intervene, for four years total, and in filing a motion to intervene on the eve of settlement approval the Objectors threatened to prejudice the settlement when they could have addressed their concerns through the normal objection process instead. However, applying the standard in In re Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 938 (9th Cir. 2011), the appellate court found that the district court had not scrutinized the settlement agreement carefully enough and therefore vacated final approval of the class action settlement, remanding it to the district court with broad discretion but admonishing the trial court to comply with proper objection procedures.
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