Labor & Employment Law Daily Wrap Up, WAGE-HOUR—SETTLEMENTS—S.D. Cal.: $19.9 million settlement of wage claims by aerospace employees preliminarily approved, (May 6, 2025)

By Ronald Miller, J.D.

The proposed Settlement Class consisted of approximately 1,755 persons, and common questions of law and fact predominate over individual issues.

A federal district court in California has granted preliminary approval of a $19.9 million settlement of wage and PAGA claims brought by unionized aerospace workers who alleged minimum wage and overtime violations, as well as meal and rest break violations, among other claims. Common questions of law and fact included whether the employer’s policies and practices prevented class members from taking rest breaks to which they were entitled and whether the employer engaged in time-shaving practices, among others. The court found the net settlement amount, even with payroll taxes deducted from the gross settlement amount, to be reasonable (Morgan v. Rohr, Inc., No. 3:20-CV-00574-GPC-AHG (S.D. Cal. May 1, 2025)).

The employer is an aerospace manufacturing company. The plaintiffs in this action are unionized, hourly-paid employees who worked for the employer as nonexempt workers in various departments.

Wage suit. On March 27, 2019, one of the employees filed a putative class action against the employer alleging various causes of action, including (a) failure to provide required meal periods; (b) failure to authorize and permit required rest periods; (c) failure to pay overtime wages; (d) failure to pay minimum wages; (e) failure to pay all wages due to discharged and quitting employees; (f) failure to furnish accurate itemized wage statements; and (g) failure to indemnify employees for necessary expenditures incurred in discharge of duties, among other claims.

PAGA action. On March 10, 2020, another employee filed a PAGA-only action against the employer alleging failure to provide required meal and rest periods; failure to pay overtime and minimum wages; failure to pay wages during employment; failure to pay all wages due to discharged and quitting employees; failure to maintain required records; failure to furnish accurate itemized wage statements; and failure to indemnify employees for necessary expenditures incurred in discharge of duties.

Settlement. The parties participated in two separate private mediation sessions. During these efforts, the parties contemplated a global settlement that would resolve both actions. Following a third mandatory settlement conference ordered by the court, the parties settled this matter 10 days before trial.

The settlement class means all individual employed in California by the employer as hourly paid, nonexempt union employees at any time during the settlement period. There are approximately 1,755 members of the settlement class. “Collective members” means all individuals employed in California by the employer as hourly paid, nonexempt union employees at any time during the FLSA period.

The settlement provides for the employer to pay a non-reversionary Gross Settlement Amount (GSA) of $19,900,000. The Net Settlement Amount will be distributed to participating class members on a pro rata basis according to the number of settlement workweeks. $500,000 of the GSA will be allocated for the resolution of the PAGA claims, 75 percent of which will be paid to the LWDA and 25 percent of which will be paid to members of the settlement class on a pro rata basis. $100,000 of the GSA will be allocated to the settlement of the collective claims.

The employees agreed to release the employer from the class claims, except for those members of the Settlement Class who submitted a valid request for exclusion.

Class certification. The employees sought certification of a Settlement Class consisting of all persons employed by the employer in California as hourly paid, nonexempt union employees at any time during the Settlement Period. Here, the court agreed with the employees regarding certification of the class for purposes of settlement under Rule 23. First, it noted that the proposed Settlement Class consisted of approximately 1,755 persons, such that the class was sufficiently numerous to make joinder impracticable.

Further, common questions of law and fact predominate over individual issues such that provisional certification was acceptable for settlement purposes, including (1) whether the employer’s policies and practices prevented class members from taking rest breaks that they were entitled to; (2) whether the employer engaged in time-shaving and automatic deduction practices; (3) whether it had a common practice of failing to provide a second meal period; and (4) whether it had a common practice of failing to reimburse employees for necessary business-related expenditures.

There were no extraneous circumstances that make any named plaintiff atypical. All their claims for damages were based upon the same or similar injuries from the same or similar conduct, such that the plaintiffs met the typicality requirement. Further, the named plaintiffs were adequate class representatives for nonexempt, unionized employees. They did not have a conflict of interest with the Settlement Class because their interests are aligned with the rest of the Class.

Superiority. Finally, with respect to Rule 23(b)(3), the court noted “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Here, certification of a settlement class would provide significant efficiencies compared to any alternative method of adjudication.

FLSA claims. The court also found that the proposed settlement met the requirements for conditional certification under the FLSA.

Preliminary approval. At the preliminary approval stage, the question is whether approval under the “fair, reasonable, and adequate” standard is likely. Here, the court found that the Settlement Agreement was likely fair, reasonable, and adequate, and granted preliminary approval of the Settlement on the basis that the named plaintiffs and class counsel adequately represented the class for the purposes of conditional class certification. The proposed Settlement arose out of an arm’s length negotiation process, and given the extensive discovery, the plaintiffs were able to make an informed decision regarding the Settlement.

Adequacy of relief. The parties agreed to settle this case for a non-reversionary Gross Settlement Amount (GSA) of $19.9 million. After proposed attorneys’ fees, litigation expenses, incentive awards, the PAGA Settlement, and the FLSA Amount, and administration costs are deducted from the GSA, the Net Settlement Amount would be $12,203,666.67, and the average recovery payment for each class member would be $6,953.66. Accounting for the deduction from the GSA of payroll taxes, the court calculated that the Net Settlement Amount of $12,036,503.61 represents approximately 9.7 percent of the maximum potential value of the class claims and approximately 25.1 percent of the discounted value of the class claims. The court therefore found the Net Settlement Amount, even with payroll taxes deducted from the GSA, to be reasonable.

Further, taking into account the risks of litigation including the risk and uncertainty of proving liability, damages, and PAGA penalties, as well as the risk of decertification, the merits of the defenses raised, the costs of continued litigation, the risk of appeal, and the fact that the Settlement will eliminate delays and further expenses weighed strongly in favor of approval. As such, the Settlement presented a substantial relief to the Settlement Class.

Attorneys’ fees. The Settlement calls for an award of attorneys’ fees in an amount not to exceed one-third of the Gross Settlement Amount, plus reimbursement of litigation costs incurred not to exceed $370,000. While the court acknowledged that attorneys’ fees awards in the amount of 33 1/3 percent of the total settlement value have been approved in the past by district courts in this circuit, it is in the upper bounds of what is considered typical. “When applying the percentage-of-the-fund method, an attorneys’ fee award of twenty-five percent is the ‘benchmark’ that district courts should award.

However, the court found it need not determine at the preliminary approval stage whether it will approve an award of 33 1/3 percent/ For the purposes of preliminary approval, the attorneys’ fees and expenses provision did not present a barrier to finding the Settlement Agreement fair, adequate and reasonable.

The case is No. 3:20-CV-00574-GPC-AHG.

Judge: Curiel, G.

Attorneys: Dalia R. Khalili (Matern Law Group) for Nathaniel Morgan. Bernard D. Olshansky (Seyfarth Shaw) for Rohr Inc.

Companies: Rohr, Inc.; United Technologies Corp.

Cases: WageHour ClassActions Overtime MinimumWage WorkingTime StateLawClaims AttorneysFees CaliforniaNews