Second District, Division 8 Finds That Class Notice Capping Costs Would Not Allow For Higher Settlement Costs Award.
In Clark v. American Residential Services LLC, Case No. B203476 (2d Dist., Div. 8 July 6, 2009) (certified for publication), a trial court approved a wage/hour class action settlement for a total of $2 million, inclusive of attorney’s fees and costs. The settlement provided for incentive awards of $25,000 to each of the two named putative class representative, with the other 2,360 class members receiving an average payment of $561.44. The settlement approved by the lower court also awarded $600,000 as attorney’s fees as well as total litigation costs and claims administrator fees of $44,574.27. Earlier, a class notice had gone out to class members about the proposed settlement stating that plaintiffs’ counsel would request reimbursements “of costs of up to $40,000.” Some objectors appealed, arguing that the costs had been capped..
Their appeal was successful.
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Orange County Superior Court Judge Ronald Bauer (sitting by designation), on behalf of a 3-0 panel of the Second District, Division 8, vacated the settlement approval based on several grounds, including the $25,000 enhancements to the putative class representatives. With respect to the cost award, the appellate panel found that the actual award of over $44,500 did exceed the capped amount communicated to class members in the preliminary settlement notice. This required reversal because “the trial court was not at liberty to award an amount exceeding $40,000 in costs without further notice to the class.” (Slip Opn., at p. 24.)