On April 11, U.S. Magistrate Judge Sallie Kim of the Northern District of California issued a two-page order vacating judgment and final approval of a class action settlement based upon the parties’ failure to send correct notices to more than 300 class members.  See Tyler Smith et al. v. Pacific Personnel Services Inc., No. 3:17-cv-03594, ECF No. 61 (N.D. Cal.).

The lawsuit was filed by current and former employees of defendant Pacific Personnel in June 2017, alleging that the company violated the Fair Credit Reporting Act’s “stand-alone” disclosure requirement in obtaining authorization to run background checks on employees.  The plaintiffs also claimed they were not provided appropriate meal and rest breaks, and that the company did not properly calculate overtime pay.

A proposed class settlement involving 2,006 class members was reached in July 2018, whereby Pacific Personnel agreed to pay $480,000 to a settlement fund ($120,000 of which was dedicated to attorneys’ fees and costs).  Judge Kim gave final approval to the settlement in February 2019.

However, the court vacated that approval on April 11, finding that 320 of the class members had been sent notices meant for a different class member with incorrect figures as to the amounts due to be paid from the settlement fund

Judge Kim ruled that the parties can submit another request for settlement approval and re-send the notices, while also explaining the mistake to all 2000+ class members.  In the meantime, the case has been reopened.

The Smith matter is another reminder of the importance of getting the class settlement process correct the first time to avoid the expenditure of unnecessary costs and time.  It reinforces the importance of careful attention to detail in the notice process and engagement of experienced class-settlement vendors to assure perfection in substance and delivery.

Troutman Sanders will continue to monitor these developments in the class-settlement arena and provide any further updates as they are available.