CASE#: MSC13-01136

CASE NAME: NICHOLS  vs.  VITAMIN SHOPPE

HEARING ON MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

FILED BY GINA NICHOLS, REGINALD SAMUEL

* TENTATIVE RULING: *

The Court appreciates the time and effort of the parties in negotiating this settlement.  However, the Court questions whether the Settlement Agreement as drafted is adequate to protect the rights and interests of class members.  The Court requests that the parties appear to address at least the following issues:

1. Reversion:  The Settlement Agreement provides for the net settlement amount (after payment of attorneys’ fees, costs, administration costs, service payments to plaintiffs, and PAGA penalties) to be distributed pro rata to class members based on the number of weeks worked by each class member and the date of the class member’s separation from employment.  Settlement Agreement, Exhibit 1 to the Declaration of David Spivak, ¶ 44 (c).  After the deadlines for submission of claims and submission of requests for exclusion has passed, the Settlement Agreement provides for the amount to be distributed to each claimant to be adjusted to redistribute the amounts allocated for class members who have requested exclusion and the amounts of any reductions by the court in the amount of attorneys’ fees, costs or service payments awarded.  Settlement Agreement ¶ 44 k.  The Settlement Agreement does not provide for the amounts allocated to class members who fail to submit timely claims to be redistributed – thus these funds would revert to defendant.  Indeed, there is no provision in the Settlement Agreement guaranteeing any minimum amount to be paid out in settlement:  if no claims were submitted, there could be no payment made to class members.  The Court requests the parties to discuss how best to protect the interests of class members – including consideration of payment without requiring a claim form to be submitted (as discussed in Number 2, below), of providing for redistribution of unclaimed amounts to claimants, and/or of setting a minimum amount to be distributed to class members.
2. Claims Process:  Why is it necessary for class members to submit a claim form in order to receive payment?  Could the settlement be structured so that a class member who does nothing (but whose Notice of Settlement is not returned as undeliverable) receives the payment he or she is estimated to be entitled to receive?
3. Clarification of calculation of settlement payments:  The parties should be prepared to explain how they arrived at the point system by which the settlement payments are to be calculated, and how the points to be awarded relate to the claims at issue in this case.  In addition, the Settlement Agreement and Notice of Settlement are unclear as to how the points for each class member are to be calculated, in particular whether the points given for class members in various categories are cumulative.  For example, if a class member was separated from employment after May 22, 2012, does he or she get ten points for that and another ten points for having been separated from employment after May 22, 2010?  Similarly, are the two points for each week worked between May 13, 2012 and the date of preliminary approval in addition to the three points awarded for weeks worked between November 25, 2010 and the date of preliminary approval?  The Notice of Settlement should be clarified as to how the points are calculated.
4. Clear notice to class members of information points are based on.  The proposed Notice of Settlement and Claim Form submitted to the Court inform each class member of the estimated amount he or she will receive from the settlement, and the number of points that estimate is based on.  It may be difficult for class members to understand from this information what the points are based on, and therefore difficult for a class member to challenge the information as to his or her dates of employment and date of separation from employment.  The Claim Form should show, at a minimum, the number of weeks worked for the class member and the date of separation (if any), so that class members will have a meaningful opportunity to determine whether the records accurately reflect their employment.
5. Time for making a claim.  There is a discrepancy between the Settlement Agreement and the Notice of Settlement and Claim Form as to the time allowed for making a claim.  Under the Settlement Agreement, the “bar date” by which a claim must be received is set as sixty days after the Notice of Settlement is mailed.  Settlement Agreement, Exhibit A to Declaration of David Spivak, ¶ 18.  In the Notice of Settlement (included as part of the Proposed Order submitted to the Court), the overview on the first page states that the claim form must be returned 45 days from the mailing of the Notice. Settlement Agreement, p. 7.  The Claim Form (also included as part of the Proposed Order) states that the form must be completed and returned 65 days from the mailing of the Notice – and then later on the same page says it must be postmarked 45 days from the mailing of the Notice. Claim Form, p. 15.    These dates should be corrected to conform with the 60 day deadline set in the Settlement Agreement.  Moreover, the Notice of Settlement and the Claim Form should consistently reflect that the Claim Form must be postmarked within 60 days of the mailing of the Notice of Settlement.
6. Time for mailing of Notice of Settlement.  The Settlement Agreement provides that within fifteen business days after entry of the preliminary approval Order, defendant is to provide the Settlement Administrator and Class Counsel with a report detailing information on the Class Members.  Class Counsel then has ten days to approve of this information and provide the Administrator with information necessary to determine the settlement payments.
7. Time for mailing of notices.  The Settlement Agreement sets forth a schedule of events leading to the mailing of the Notice of Settlement:  within fifteen business days of the entry of the Order granting preliminary approval, defendant is to submit class member data to the Settlement Administrator and Class Counsel; ten days after that Class Counsel is to approve the information and provide information to the Settlement Administrator for calculation of each class member’s estimated settlement amount; the Notice of Settlement is to be mailed ten days after that.  Settlement Agreement, ¶44.  The time for mailing the Notice of Settlement in the schedule set forth in the Proposed Order is twenty days after the Order granting preliminary approval.  This should be changed to conform with the terms of the Settlement Agreement.