Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—D.N.M.: Employer subject to sanctions for failing to provide pay data for all putative class members of settlement class, (Apr 16, 2025)

By Ronald Miller, J.D.

The employer’s failure to provide payroll data for all members of the proposed settlement class, and its failure to inform an employee of the exclusion it applied, violated the Order Granting Motion to Stay and constituted bad faith.

After an employer and its care coordinators completed negotiations for settlement of a collective and a class action concerning a wage dispute, a federal district court in New Mexico granted an employee’s motion for sanctions against employer, requiring it to provide class members’ complete pay data, regardless of whether they signed a 2016 Arbitration Agreement. The employee’s evidence demonstrated that the only limitation on the settlement class to which the parties agreed was to exclude employees holding the “Case Manager RN” position. Nonetheless, the employer unilaterally decided to exclude from the payroll data individuals hired after 2016 (Fedor v. United Healthcare, Inc., No. CV 17-13 MV/KBM (D.N.M. Apr. 15, 2025)).

Arbitration policy. The named plaintiff worked for United Healthcare as a “Care Coordinator” from November 2013 until on or about November 25, 2016. Consistent with the employer’s policies, along with their offer letter, the employee was provided with a copy of the employer’s then-current arbitration policy. The named plaintiff and opt-in plaintiffs electronically acknowledged receipt of, and agreement to, that arbitration policy. The employer periodically revised its arbitration policy, and on January 1, 2016, while the plaintiffs were still employed by United, it “issued” the most recent version of the arbitration policy.

On March 28, 2017, the employee commenced this action to recover overtime compensation from the employer. She brought a collective action under the FLSA and a class action under New Mexico law.

Motion to compel arbitration. Arguing that this lawsuit violated the 2016 Policy, which required arbitration of the alleged claims, and prohibited collective and class claims, the employer filed a motion to compel the employees to arbitrate their claims on an individual basis. In opposing the motion, the employees argued that the 2016 Policy was not enforceable against them because there was no evidence any of them “signed, read or even knew about this Policy.” According to the employees, they indicated acceptance only to prior versions of the arbitration policy.

In an opinion issued March 18, 2019, the court agreed with the employees that they electronically agreed to earlier policies and that, under New Mexico law, each of the earlier policies contained provisions that would render them unenforceable for lack of valid consideration. However, it noted that with respect to the 2016 Policy, it contained language that continued employment was deemed acceptance of the policy, and that it superseded prior versions of the agreement. Thus, the court concluded that the relevant question remained as to whether the 2016 Policy was applicable and enforceable.

The court ultimately decided that it was not authorized to answer this question because the 2016 Policy specifically delegated the threshold issue of arbitrability to the arbitrator. Accordingly, the court granted the employer’s request to enforce the delegation provision and compel the employees to arbitrate the issue of the applicability and enforceability of the 2016 Policy.

Appellate ruling. The employees appealed the March 2018 opinion to the Tenth Circuit, arguing that the district court impermissibly compelled arbitration before first finding whether the parties had indeed formed the arbitration agreement. The Tenth Circuit agreed, concluding that “[t]he issue of whether an arbitration agreement was formed between the parties must always be decided by a court, regardless of whether the alleged agreement contained a delegation clause or whether one of the parties specifically challenged the clause.” The appeals court remanded for the district court to determine whether the parties formed the 2016 arbitration agreement.

On remand, the district court considered whether the parties “formed” the 2016 Policy such that it was applicable and enforceable as to the employees. On May 5, 2021, the court found that, with the exception of one employee who had been rehired after the 2016 Policy was adopted, the 2016 Policy was not formed as to the remainder of the employees. The court further found that the earlier policies that the employees had signed were unenforceable for lack of consideration.

The employer appealed the May 2021 decision. The Tenth Circuit affirmed that decision on the basis that the employer had not raised its second theory of formation in the district court.

Settlement discussions. Thereafter, the parties agreed to a motion to stay proceedings pending settlement discussions. The order granting the stay stated that the employer would provide payroll data for members of the proposed settlement class.

Exclusions. On July 22, 2022, the employer provided payroll data for 239 individuals, whom it described as “former Care Coordinators.” However, the employees contended that “there was never any agreement to exclude individuals based on their date of hire or execution of an arbitration agreement,” and the employer never advised them that it excluded from the payroll data individuals hired after 2016.

Payroll data. The employees used the payroll data to create a damage model, which was used throughout settlement negotiations. The parties ultimately reached an agreement. Thereafter, a settlement administrator was appointed, and the employer transferred funds into a settlement fund for distribution. A claim form was mailed to each putative class member. To date, however, the employees have not agreed to dismissal of the case.

They explained that after settlement notices were mailed out, both the settlement administrator and plaintiffs’ counsel “began receiving calls from individuals who believed they should have been included in the settlement but did not receive a notice.” Defense counsel responded that the individuals who called: “(1) were hired after January 1, 2016, and therefore executed an enforceable arbitration agreement; (2) were employed as registered nurses or licensed practical nurses; or (3) were not in its records as employees.” Plaintiffs’ counsel insisted that the parties had agreed to exclude from the settlement class only those individuals “who worked specifically in the Case Manager RN position.”

Closing documents. In a subsequent conference, the parties discussed the status of closing documents. There was a dispute over some class members that the employee believed should have been on the class list but were not included. An order was issued for January 31, 2024, closing of the case. On January 23, the employee sought an extension because the employer’s counsel had not resolved deficiencies of the class list. The court ordered an extension to February 28, 2024. on February 28, the employee filed a motion for sanctions “for Defendants’ failure to provide complete pay data in connection with the settlement of this case.”

Putative class members. Here, the parties entered into a Settlement Agreement, which identified putative class members, set up a mechanism for the employer to fund a settlement fund, and fixed a time for the filing of a joint stipulation for dismissal of the action. However, the employee was unwilling to file a stipulation of dismissal because of the employer’s exclusion of individuals from the list of putative class members.

The court found that the employer’s failure to identify class members, disclose information about class members, and respond to the employee’s concerns about those failures were sanctionable. The employee discovered that while “many of the individuals were properly excluded because they were Case Manager RNs, a significant number of them were excluded for improper reasons, including being hired after January 1, 2016.”

The employee’s evidence demonstrated that the only limitation on the settlement class to which the parties agreed was “to limit the class by excluding a single job title – the ‘Case Manager RN’ position.” Nonetheless, the employer unilaterally decided to exclude from the payroll data individuals hired after 2016—and made this decision without ever informing the employee. The employer’s failure to provide payroll data for all members of the proposed settlement class, and its failure to inform the employee of the exclusion it applied, violated the Order Granting Motion to Stay and constituted bad faith.

In sum, the court found that sanctions were warranted against the employer and it was ordered to produce complete pay data for former and current Care Coordinators, regardless of hire date and regardless of whether that employee signed the 2016 Arbitration Agreement, and excluding only those individuals who held the job title of Case Manager RN.

The case is No. CV 17-13 MV/KBM.

Judge: Vázquez, M.

Attorneys: David Seligman (Kirkland & Ellis) for Dana Fedor. Jeremy W. Hawpe (Littler Mendelson) for UnitedHealthcare, Inc.

Companies: United Healthcare, Inc.; United Healthcare Services, Inc.

Cases: WageHour Overtime Arbitration RemediesDamages NewMexicoNews