Allen v. Bedolla

A district court must comprehensively review all factors to a class action settlement, and must give a reasoned response to all non-frivolous objections when determining the settlement’s substantive fairness.

Jeffrey Lee Allen filed a class action suit against Labor Ready Southwest (“Labor Ready”), a temporary staffing agency, for failing to compensate employees for wait and travel times, and for making unlawful paycheck deductions. The district court granted summary judgment to Labor Ready, and a settlement was reached between Labor Ready and Allen. Four other individuals who had brought class action suits against Labor Ready for similar claims attempted to “intervene as of right and to intervene permissively in Allen’s lawsuit.” The district court approved the final settlement between Labor Ready and Allen, however the district court denied the motion to intervene by the other individuals. On appeal, the individuals argued that their motion to intervene was timely, and also challenged the district court’s settlement approval. The Ninth Circuit determined that the individuals’ motion to intervene was untimely because the individuals had known about Allen’s lawsuit for more than a year before filing the motion. The panel also stated that it “will rarely overturn” an approved settlement, unless the settlement was made based on class counsel’s self-interest, rather than the class’s interest. The panel noted there are three subtle signs of self-interest, but the presence of those signs does not necessarily indicate the settlement cannot still be fair, reasonable, or adequate. The panel found that the district court did not fulfill the procedural standard for determining a settlement’s substantive fairness by not appropriately supplementing the record. The panel therefore remanded the settlement approval to the district court for a more complete inquiry of whether the settlement was fair, reasonable, and adequate. AFFIRMED in Part, VACATED and REMANDED in Part.