Salas v. Sierra Chemical: Federal Immigration Law Preempts -- In Part -- FEHA Action By Unauthorized Worker; After-Acquired Evidence and Unclean Hands Are Not Complete Defenses in Such Actions

Salas v. Sierra Chemical Co. considers the impact of an employee using false documents to obtain employment in the context of an action for violation of the Fair Employment and Housing Act (FEHA).

Plaintiff Vicente Salas applied for work with defendant Sierra Chemical in 2003, providing Sierra with a social security number (SSN). In late 2004 or early 2005, Sierra received a "no match" letter from the Social Security Administration (SSA), stating that Salas's name and number did not match SSA's records. Sierra continued to employ Salas. In 2006, after injuring his back twice at work, Salas filed for workers compensation benefits. Later that year, he was laid off.

Salas sued Sierra for disability discrimination and retaliation in violation of FEHA. After Salas filed a motion in limine stating that he would not answer questions regarding his immigration status, Sierra investigated and found that Salas had used another person's SSN to obtain employment. The trial court granted summary judgment for Sierra, and Salas appealed. The Court of Appeal held that both the doctrine of after-acquired evidence and the doctrine of unclean hands barred Salas's claims. (Court of Appeal decision discussed here.)

On review, the California Supreme Court held as follows: 

Federal Preemption

The federal Immigration Reform and Control Act (IRCA) does not preempt the FEHA generally, nor does it preempt California's Senate Bill No. 1818, which provides in part: 

All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state. 

Government Code section 7285 (emphasis added). However, the IRCA does bar an award of lost pay damages for any period of time after an employer discovers that an employee is not eligible for employment under the IRCA.  

Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 127 (NLRB could not “award backpay to an illegal alien for years of work not performed, for wages that could not lawfully have been earned, and for a job obtained in the first instance by a criminal fraud”) does not answer the preemption question here because it does not address federal preemption of state antidiscrimination laws. Slip op. at 9-11. 

Express preemption does not apply because IRCA does not expressly preempt FEHA or Senate Bill 1818. Slip op. at 12-13. 

Field preemption also does not apply because the federal interest in regulating employment of unauthorized aliens is "not so dominant as to preclude state laws on the same subject," and the federal regulation imposed by IRCA "is not so pervasive as to leave no room for any state law on the same subject." Slip op. at 13-14. 

However, conflict preemption -- "which occurs when state law conflicts with federal law either because compliance with both laws is impossible or because state law is an obstacle to 

achieving the federal law's objectives" -- does apply, at least in part. Slip op. at 15-19. 

IRCA preempts "any state law award that compensates an unauthorized alien worker for loss of employment during the [period after an employer discovers that an employee is ineligible to work] because such an award would "impose liability on an employer for not performing an act (continuing to employ a worker known to be an unauthorized alien) expressly prohibited by federal law." Slip op. at 15. Not answered is whether this analysis applies to situations where an employer knowingly hires an unauthorized alien. Slip op. at 15-16 fn. 3. 

IRCA does not preempt an award that compensates an unauthorized alien worker for loss of employment during the period before an employer discovers that an employee is ineligible to work. Slip op. 16. 

After-Acquired Evidence

The after-acquired evidence doctrine "refers to an employer's discovery, after an allegedly wrongful termination of employment or refusal to hire, of information that would have justified a lawful termination or refusal to hire." Slip op. at 21. 

The after-acquired evidence doctrine is not "a complete defense to claims of retaliation and disability discrimination brought under the FEHA." Slip op. at 24. Instead, application of the after-acquired evidence doctrine requires courts to take into account "both the employee's rights and the employer's prerogatives" on a case-by-case basis. Slip op. at 25. 

Generally, the employee's remedies should not afford compensation for loss of employment during the period after the employer's discovery of the evidence relating to the employee's wrongdoing. When the employer shows that information acquired after the employee's claim has been made would have led to a lawful discharge or other employment action, remedies such as reinstatement, promotion, and pay for periods after the employer learned of such information would be “inequitable and pointless,” as they grant remedial relief for a period during which the plaintiff employee was no longer in the defendant's employment and had no right to such employment. 

The remedial relief generally should compensate the employee for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired information of the employee's wrongdoing or ineligibility for employment. Fashioning remedies based on the relative equities of the parties prevents the employer from violating California's FEHA with impunity while also preventing an employee or job applicant from obtaining lost wages compensation for a period during which the employee or applicant would not in any event have been employed by the employer. In an appropriate case, it would also prevent an employee from recovering any lost wages when the employee's wrongdoing is particularly egregious. 

Slip op. at 25-26. 

Applying the after-acquired evidence doctrine to the present case, the Supreme Court reversed the trial court's grant of summary judgment in favor of Sierra because the evidence could support a finding that Sierra continued to employ Salas after being put on notice of his immigration status. Slip op. at 26. "Such a finding could affect application of the after-acquired evidence doctrine and thus the remedies available to plaintiff employee." Slip op. at 27. 

Unclean Hands

The unclean hands doctrine -- which applies when a plaintiff has acted unconscionably, in bad faith, or inequitably in the matter in which he seeks relief -- is not a complete defense to a claim "based on a public policy expressed by the Legislature in a statute" such as the FEHA. Slip op. at 27. "Nevertheless, equitable considerations may guide the court in fashioning relief in cases involving a legislatively expressed public policy." Ibid.

Salas v. Sierra Chemical Co. is available here. 

Rosenfeld v. Heschel Day School: Where Plaintiff Only Puts Defendant on Notice of Disparate Treatment Claim, No Error in Precluding Plaintiff from Pursuing Disparate Impact Claim at Trial

In Rosenfeld v. Abraham Joshua Heschel Day School, Inc. (5/28/14) --- Cal.App.4th ---, the plaintiff, Ruth Rosenfeld, filed an age discrimination action against her former employer, Heschel, and Heschel prevailed at trial. On appeal, Rosenfeld argued that the trial court erred in precluding her from pursuing a disparate impact theory of liability at trial, in addition to her disparate treatment theory. She also argued that the court should not have allowed Heschel to introduce evidence that Rosenfeld did not  pursue Heschel’s internal grievance procedure before filing suit. The Court of Appeal affirmed, holding as follows: 

The trial court properly precluded Rosenfeld from pursuing a disparate impact theory of liability at trial because she failed to advise Heschel in a timely manner that she would be proceeding on such a theory. Slip op. at 5-10. The Court explained that a disparate treatment theory depends on the defendant's intent to discriminate, while a disparate impact theory does not. Slip op. at 6. "Disparate impact exists where, 'regardless of motive, a facially neutral employer practice or policy, bearing no manifest relationship to job requirements, in fact had a disproportionate adverse effect on members of the protected class.'" Slip op. at 7. Because Rosenfeld's complaint only alleged disparate treatment, the trial court properly precluded her from pursuing a disparate impact theory at trial. Slip op. at 10. 

The trial court did not err in admitting evidence to explain the meaning of "tenure" in Rosenfeld's written employment agreement. Slip op. at 11-13. In any case, because Rosenfeld sued for age discrimination in violation of FEHA, rather than breach of contract, her status as a tenured employee was irrelevant. Slip op. at 12. 

The trial court also did not err in refusing to instruct the jury that it could infer the ultimate fact of age discrimination as long as they disbelieved Heschel's evidence of age-neutral reasons for reducing Rosenfeld's hours. Slip op. at 13-14.

Finally, the trial court did not err in allowing Heschel to introduce evidence that Rosenfeld did not engage in Heschel's internal grievance procedure before filing suit. Slip op. at 15-16. Under the avoidable consequences doctrine, the evidence was relevant to show that Rosenfeld would not have suffered at least some of her alleged damages if she had followed the grievance procedure. Slip op. at 16. In any case, because the jury found that Rosenfeld's age was not a motivating reason for the reduction in her hours of work, any error was harmless. Slip op. at 16. 

The opinion is available here. 

Salas v. Sierra Chemical: Supreme Court Decision Due Today

In Salas v. Sierra Chemical Co. (Supreme Court Case No. S196568, docket here) (appellate decision discussed here) the California Supreme Court will consider whether an employee's use of a false social security number to obtain employment prevents the employee from later suing his employer for disability discrimination. The issues stated:

Did the trial court err in dismissing plaintiff's claims under the Fair Employment and Housing Act (Gov. Code § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff's use of false documentation to obtain employment in the first instance?  

Did Senate Bill No. 1818 (2001-2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000; Lab. Code § 1171.5.) 

On February 27, the Court asked the parties to address an additional issue:

Does federal immigration law preempt state law and thereby preclude an undocumented worker from obtaining, as a remedy for a violation of "state labor and employment laws" (Lab. Code § 1171.5; Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000), an award of compensatory remedies, including backpay? (See Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137.)

The Supreme Court will announce its decision at 10:00 am. As always, watch this space for details. 

Lane v. Franks: Supreme Court Rules on Public Employee's First Amendment Claim

In Garcetti v. Ceballos, 547 U. S. 410 (2006), the Supreme Court of the United States held that "when public employees make statements pursuant to their official duties, the employees are not speaking as citizens for First Amendment purposes, and the Constitution does not insulate their communications from employer discipline." Id., at 421. Applying that rule to the facts before it, the Court found that an internal memorandum prepared by a prosecutor in the course of his ordinary job responsibilities constituted unprotected speech, and the employee could not sue his employer for alleged retaliation and violation of his Frist Amendment rights under 42 U.S.C. § 1983. Id., at 424.

In Lane v. Franks, ___ U.S. ___ (6/19/14), plaintiff Edward Lane alleged that his former employer, a public entity, terminated him in retaliation for having testified in court regarding the alleged misconduct of another employee. Lane sued under section 1983 for violation of his First Amendment rights, naming his former supervisor, Franks, in his individual capacity and his former employer's acting president, Burrow, in her official capacity.

The Supreme Court held that Lane's testimony in court was speech as a citizen on a matter of public concern and thus was protected by the First Amendment. Slip op. at 8-12. Further, the Court held that the defendants had failed to show that the government had "an adequate justification for treating the employee differently from any other member of the public" based on the government's needs as an employer. Slip op. at 12-13. Accordingly, Lane could pursue a section 1983 action against both Franks and Burrows for violation of his First Amendment rights.

The Court next considered whether Lane's action against Franks, in his individual capacity, should be dismissed on the basis of qualified immunity. The Court held that Franks was entitled to qualified immunity because he reasonably could have believed, at the time that he fired Lane, that a government employer could fire an employee on account of testimony the employee gave, under oath and outside the scope of his ordinary job responsibilities. Slip op. at 13-17.

Lane v. Franks is available here.

Sanchez v. Carmax: Court Finds Arbitration Agreement Not Unconscionable

In Sanchez v. CarMax Auto Superstores (2/6/14, pub. 3/4/14) --- Cal.App.4th ---, the plaintiff, Sanchez, sued his former employer, CarMax, for wrongful termination in violation of public policy and a number of other employment law violations. CarMax moved to compel arbitration, the trial court denied the motion, and CarMax appealed. The Court of Appeal reversed, holding: 

The arbitration agreement was an enforceable contract, even though it stated that it did not form a contract of employment. The agreement was "is not a contract of employment, but rather a contract agreeing to arbitrate disputes." Slip op.  at 2-3. 

The agreement was procedurally unconscionable to some degree because it was a contract of adhesion, but Sanchez did not demonstrate oppression or surprise. Slip op. at 3-4. "The stand-alone arbitration agreement was not hidden, but prominently featured as part of the employment application, and there are no 'other indicia of procedural unconscionability.'" Slip op. at 4. 

The agreement was not substantively unconscionable. Slip op. at 4-11. Sanchez did not show that the agreement's limitations on discovery would prevent him from vindicating his rights. Slip op. at 4-7. The following provisions also were not unconscionable: requiring the employee to file an arbitration request form to initiate arbitration; requiring the employee to demonstrate that CarMax violated "applicable law" in order to prevail; staying litigation of any nonarbitrable claims while the arbitration proceeded; prohibiting the arbitrator from requiring CarMax to show "just cause" for any discipline or discharge of an employee; not requiring findings of fact and conclusions of law; requiring confidentiality of the arbitration proceedings; and prohibiting consolidation of more than one employee's claims. 

Sanchez v. CarMax Auto Superstores is available here. 

Iskanian v. CLS Transportation Los Angeles: Supreme Court Rules that FAA Preempts Public Policy and Unconscionability Analysis of Class Action Waivers, but Not PAGA Action Waivers

The California Supreme Court has just issued its decision in Iskanian v. CLS Transportation Los Angeles (6/23/14) --- Cal.4th ---. Without going into the details right now, here is the holding:

In this case, we again address whether the Federal Arbitration Act (FAA) preempts a state law rule that restricts enforcement of terms in arbitration agreements. Here, an employee seeks to bring a class action lawsuit on behalf of himself and similarly situated employees for his employer‘s alleged failure to compensate its employees for, among other things, overtime and meal and rest periods. The employee had entered into an arbitration agreement that waived the right to class proceedings. The question is whether a state‘s refusal to enforce such a waiver on grounds of public policy or unconscionability is preempted by the FAA. We conclude that it is and that our holding to the contrary in Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry) has been abrogated by recent United States Supreme Court precedent. We further reject the arguments that the class action waiver at issue here is unlawful under the National Labor Relations Act and that the employer in this case waived its right to arbitrate by withdrawing its motion to compel arbitration after Gentry.  

The employee also sought to bring a representative action under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). This statute authorizes an employee to bring an action for civil penalties on behalf of the state against his or her employer for Labor Code violations committed against the employee and fellow employees, with most of the proceeds of that litigation going to the state. As explained below, we conclude that an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy. In addition, we conclude that the FAA‘s goal of promoting arbitration as a means of private dispute resolution does not preclude our Legislature from deputizing employees to prosecute Labor Code violations on the state‘s behalf.  

Therefore, the FAA does not preempt a state law that prohibits waiver of PAGA representative actions in an employment contract. Finally, we hold that the PAGA does not violate the principle of separation of powers under the California Constitution. 

The opinion is available here. 

Stenehjem v. Sareen: Court Finds that Pre-Litigation Demand Constitutes Extortion as a Matter of Law

In Stenehjem v. Sareen (6/13/14) --- Cal.App.4th ---, the plaintiff, Stenehjem, sued his former employer and its president and CEO, Sareen. Sareen cross-complained against Stenehjem for civil extortion. Sareen alleged that Stenehjem sent a prelitigation demand in which Stenehjem threatened to file false reports with federal authorities unless Sareen paid to settle Stenehjem's case. 

The trial court granted Stenehjem's special motion to strike under the anti-SLAPP statute, Sareen appealed, and the Court of Appeal reversed.

Following Flatley v. Mauro (2006) 39 Cal.4th 299, 305, the Court of Appeal found that Stenehjem's prelitigation demand constituted extortion as a matter of law that was not protected under the anti-SLAPP statute. Slip op. at 15-26. Among the factors that the Court found important were the fact that Stenehjem threatened to report Sareen to federal authorities for violation of the False Claims Act, and the alleged criminal activity that Stenehjem threatened to expose was "entirely unrelated to any alleged injury suffered by" Stenehjem. Slip op. at 20. The Court found it irrelevant that the extortionate demand did not make a specific monetary demand because the demand had to be viewed in the context of other communications between the parties, which did include a demand to pay money. Slip op. at 23.

The opinion is available here.

Lane v. Francis Capital Management: Court Discusses Labor Code Section 229 Prohibition on Compelled Arbitration

In Lane v. Francis Capital Management (3/11/14) --- Cal.App.4th ---, the plaintiff filed suit against his former employer, FCM, alleging (1) wrongful termination in violation of public policy; (2) breach of oral contract; (3) failure to pay wages; (4) unpaid overtime wages; (5) unpaid meal period wages; (6) waiting time penalties; (7) itemized wage statement violations; and (8) unfair competition. The trial court denied FCM's motion to compel arbitration, and FCM appealed. The Court of Appeal affirmed in part and reversed in part, holding as follows: 

The arbitration agreement encompassed all of Lane's claims. Slip op. at 6-7. 

Labor Code section 229 prohibits enforcement of arbitration agreements in individual actions for non-payment of wages under Labor Code sections 200-244. Slip op. at 7-12. The third cause of action for failure to pay wages fell within the scope of section 229, and the defendant could not compel arbitration of that claim. The first, second, fourth, and eighth causes of action did not assert claims under sections 200-244. The fifth cause of action for unpaid meal and rest period compensation was not an action for wages, but one for a failure to provide mandated meal or rest breaks. (See Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1256-1257 (discussed here). The sixth and seventh causes of action for waiting time and check stub penalties also did not seek payment of unpaid wages.

The defendant failed to meet its burden to show that the Federal Arbitration Act (FAA) -- and thus FAA preemption -- applied. Slip op. at 12-14.

The arbitration agreement was not unenforceable as unconscionable. Slip op. at 15-19. Although the agreement may have been a contract of adhesion, its provisions were "clearly within the reasonable expectations of the parties," and the required elements of oppression or surprise were not present. Further, the defendant's failure to attach a copy of the applicable arbitration rules did not render the agreement procedurally unconscionable.

The agreement also was not substantively unconscionable. Slip op. at 19-21. The fact that the agreement incorporated the arbitration rules by reference did not render it substantively unconscionable. Nor did the fact that it contained no express provision for discovery because such a right was set forth in the applicable arbitration rules.

The opinion is available here.

Ruiz v. Affinity Logistics: Ninth Circuit Finds that Delivery Drivers Are Employees, Not Independent Contractors

In Ruiz v. Affinity Logistics, ___F.3d ___ (9th Cir. 6/16/14), the plaintiff sued on behalf of a putative class of furniture delivery drivers, alleging a number of wage and hour violations against the defendant, Affinity. The district court held that the drivers were independent contractors under California law, and California's wage and hour laws thus did not apply. The plaintiff appealed, and the Ninth Circuit reversed, holding as follows:

“[U]nder California law, once a plaintiff comes forward with evidence that he provided services for an employer, the [plaintiff] has established a prima facie case that the relationship was one of employer/employee.” Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010). The burden then shifts to the employer to “prove, if it can, that the presumed employee was an independent contractor.” Id. (citing Cristler v. Express Messenger Sys., Inc., 89 Cal. Rptr. 3d 34, 43–44 (Cal. Ct. App. 2009)). Because Ruiz has shown that he provided services for Affinity, the burden shifts to Affinity to demonstrate, if it can, that Ruiz and the other drivers were independent contractors, not employees.

Slip op. at 12-13.

Under S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal.3d 341, the primary factor in determining whether one is an employee or independent contractor is "whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired." Slip op. at 13-14. A number of "secondary indicia" also bear on the analysis. Slip op. at 14.

Affinity had the right to control the details of the drivers’ work, and Affinity retained all necessary control over the drivers’ work. Slip op. at 15-20. Among other important facts that the Court considered, Affinity controlled the drivers’ rates, schedules, and routes, set their flat “per stop” rates of pay, decided the days drivers worked, and retained the discretion to deny drivers’ requests for days off. Slip op. at 15-16.

Most secondary factors also demonstrated that the drivers were employees. Slip op. at 20-23. Drivers did not operate distinct businesses, but were integrated into Affinity's business. Affinity closely monitored the work of the drivers; their jobs did not require substantial skill; Affinity provided their trucks, which were their main tools of work; although Affinity paid the drivers per delivery, in fact this payment plan resembled an hourly pay arrangement; and drivers often stayed with Affinity for years. On the contrary, the parties understood that they were engaged in an independent contractor relationship.

Ruiz v. Affinity Logistics is available here.

Lawson v. FMR LLC: Sarbanes-Oxley’s Whistleblower Protections Extend to Employees of Contractors of Public Companies

I wanted to mention this case from the Supreme Court of the United States. In Lawson v. FMR LLC, ___ U.S. ___ (3/4/14) the Supreme Court held that the whistleblower protections of the Sarbanes-Oxley Act (18 U. S. C. §1514A(a)) extend not only to employees of public companies, but also to employees of contractors and subcontractors of public companies.

The opinion is available here.

Kim v. Konad USA: Exhaustion of FEHA Remedies Need Not Be Proven at Trial

In Kim v. Konad USA Distribution, Inc. (June 12, 2014) --- Cal.App.4th ---, the plaintiff prevailed in a bench trial on claims of quid pro quo sexual harassment, hostile work environment harassment, and wrongful termination. After trial, the defendants objected to the court's statement of decision, arguing that the court lacked subject matter jurisdiction because the plaintiff had failed to prove that she exhausted her remedies under FEHA and that the defendant had at least fie employees at the time of the alleged acts. The trial court entered judgment, and the defendants appealed.

The Court of Appeal affirmed, holding as follows:

Exhaustion of administrative remedies does not affect the fundamental subject matter jurisdiction of the trial court. Further, the defendants forfeited any right to a judgment of dismissal on the FEHA causes of action by failing to request dismissal of the FEHA causes of action before submitting the matter for decision. Slip op. at 12-13.

Although FEHA applies only to employers with five or more employees, a sexual harassment plaintiff need not prove that the defendant had five or more employees in order to prevail on a claim for wrongful termination in violation of public policy. Slip op. at 14-17. 

Even if the employee references FEHA as one source of the public policy at issue, the employer need not have five or more employees because "all employers (not just those with five or more employees) accused of harassment (based on sex or some other classification listed in Gov. Code, § 12940, subd. (j)(1)) are subject to a FEHA harassment claim." Slip op. at 16. Further, the plaintiff here based her claim on policies found in both FEHA and the California Constitution. Ibid.

Finally, the individual defendant could not be held liable for wrongful termination because he was not the plaintiff's employer. Slip op. at 17-18.

The opinion is available here.

Laguna v. Coverall: Ninth Circuit Issues Class Action Attorney Fee Decision

In Laguna v. Coverall North America, Inc., ___ F.3d ___ (9th Cir. June 3, 2014), the Ninth Circuit affirmed a district court's approval of a pre-certification class action settlement in an independent contractor wage and hour action. The Ninth Circuit held as follows:

The district court did not abuse its discretion in awarding fees based on the lodestar method because the lodestar method is most appropriate where the relief sought is “primarily injunctive in nature,” and a fee-shifting statute authorizes “the award of fees to ensure compensation for counsel undertaking socially beneficial litigation.” Slip op. at 6-7. The award of approximately $1 million in fees was reasonable where the injunctive relief provided in the settlement likely exceeded a value of $4 million. Slip op. at 7-8.

With regard to the settlement as a whole, the district court did not err in considering the difficulty of certifying the class, the defendant's poor financial health, the experience of class counsel, and the fact that only two settlement class members opted out of the settlement. Slip op. at 8-10.

The district court did not abuse its discretion in approving the settlement term that objectors be available for depositions. Slip op. at 14-15.

Finally, the district court did not abuse its discretion when it approved the settlement agreement consistent with the notice requirements contained within the Class Action Fairness Act (“CAFA”). 28 U.S.C. § 1715(b) and (d). Slip op. at 15.

The opinion is available here.

Duran Lawyers to Speak at LA County Bar Dinner

As you all know, the California Supreme Court has issued its opinion in Duran v. U.S. Bank on June 18, 2014, the Los Angeles County Bar Association will host a continuing education program with the lawyers who tried Duran and argued it in the California Supreme Court.

Edward J. Wynne, who represented the plaintiffs, and Timothy M. Freudenberger, who represented the defendant, will provide a lively discussion of the Court's opinion and the guidance it offers on these and other issues critical to the trial of wage and hour class actions.

"Duran v. US Bank: Trying Wage-Hour Class Actions" will take place at the Millennium Biltmore Hotel at 7:00 p.m. on Wednesday, June 18, 2014. Additional information is available here. 

Litwin v. iRenew: Class Member Objecting to Settlement Need Not Be Present at Final Approval Hearing

In Litwin v. iRenew Bio Energy Solutions, LLC (5/28/14) --- Cal. App. 4th ---, the parties settled a nationwide consumer class action and sent notice to the members of the settlement class. The notice of settlement required any class member who objected to the settlement to appear at the final approval hearing. Slip op. at 3-4.

A class member from outside of California objected that the settlement fund, after deduction of costs and attorney fees, was not sufficient. He also objected that requiring objectors appear at the final approval hearing violated their due process rights. The trial court overruled Chapa's objections. 

The Court of Appeal affirmed in part and reversed in part, holding as follows: 

The requested attorney fees and costs to plaintiffs' counsel were reasonsable. Slip op. at 5-7. First, counsel's lodestar exceeded the amount of the fee request. Second, the fees constituted 31% of the amount claimed by class members, which is close to the average award of one third of the common fund. 

The requirement that objectors attend the final approval hearing violated their due process rights. Slip op. at 7-9. Procedural due process requires that affected parties be provided with “the right to be heard at a meaningful time and in a meaningful manner," and the procedure used here deprived the class members of that right. 

The opinion is available here.