Peck v. Swift Transportation Co., No. 20-55119 (9th Cir. 2022)
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Plaintiffs and Swift reached a settlement pertaining to class claims alleging violations of California labor law, and claims brought under the California Private Attorney General Act (PAGA), which allows private citizens to recover civil penalties on behalf of themselves “and other current or former employees.” Peck and Mares objected to the settlement agreement. The district court gave final approval of the settlement.
The Ninth Circuit dismissed the appeal of the PAGA settlement. Peck may not appeal the PAGA settlement because he was not a party to the underlying PAGA action. Although Peck is a class member of the class action, a PAGA action is distinct from a class action. Objectors to a PAGA settlement are not “parties” to a PAGA suit in the same sense that absent class members are “parties” to a class action. The fact that Peck may ultimately receive a portion of the PAGA settlement did not make him a party. Although Peck has a separately-filed PAGA action, that does not make him a party to this PAGA case.
The court vacated the approval of the class action settlement. The district court erred in applying a presumption that the settlement was fair and reasonable, and the product of a non-collusive, arms-length negotiation; the error was not harmless. That erroneous presumption cast a shadow on the entire order. On remand, the district court must make findings in accordance with the applicable heightened standard.
Court Description: Class Action Settlement / CA Private Attorney. General Act The panel dismissed an objector’s appeal of the district court’s approval of a California Private Attorney General Act (“PAGA”) settlement, vacated the district court’s approval of the class-action settlement, and remanded for further proceedings. Plaintiffs and Swift Transportation Company reached a settlement pertaining to plaintiffs’ class claims, alleging violations of California labor law, and claims brought pursuant to PAGA, which allows private citizens to recover civil penalties on behalf of themselves “and other current or former employees” for violations of the California Labor * The Honorable John E. Steele, United States District Judge for the Middle District of Florida, sitting by designation. 4 PECK V. SWIFT TRANSPORTATION Code. Lawrence Peck and Sadashiv Mares filed separate objections to the settlement agreement. The district court overruled the objections, and gave final approval of the settlement. The panel held that Peck may not appeal the PAGA settlement because he was not a party to the underlying PAGA action. The PAGA claim was brought by two private plaintiffs, and Peck was not a party to the PAGA action. Accordingly, the panel held that Peck failed to show that he had any right to appeal the district court’s approval of the PAGA settlement. The panel rejected Peck’s arguments as to why he may appeal the PAGA settlement anyway. Although Peck is a class member of the class action, a PAGA action is distinct from a class action, and objectors to a PAGA settlement are not “parties” to a PAGA suit in the same sense that absent class members are “parties” to a class action. The fact that Peck may ultimately receive a portion of the PAGA settlement did not make him a party to the lawsuit. Moreover, a PAGA action has “no individual component.” Finally, although Peck has a separately filed PAGA action, that does not make him a party to this PAGA case. The panel dismissed Peck’s appeal and did not consider whether the district court erred in approving the PAGA settlement. The panel next considered the objection to the class action settlement. Mares contends that because the district court approved the settlement before certifying a class, the court should have applied a heightened standard of review. Swift argued that the panel could not reach the merits of Mares’s objection because he did not raise such an objection in the district court. Mares countered that “he could not pre- object” to the district court employing the incorrect legal PECK V. SWIFT TRANSPORTATION 5 standard. The panel held that when the district court considered an issue in its final order approving a class action settlement, the issue was not waived on appeal even if no objector to the settlement raised that issue to the district court. Therefore, Mares did not, and could not, waive his objection to the legal standard employed by the district court in its final order. Concerning the proper legal standard for the class action settlement, the panel held that the district court erred in applying a presumption that the settlement was fair and reasonable, and the product of a non-collusive, arms-length negotiation. The district court applied the presumption that this court reversed in Roes 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1048 (9th Cir. 2019) (holding that “[w]here . . . the parties negotiate a settlement agreement before the class has been certified, settlement approval requires a higher standard of fairness and a more probing inquiry than may be normally required under Rule 23(e)”). The panel rejected attempts to distinguish the district court’s order from the decision in Roes. The panel held further that the district court’s error was not harmless. Applying the erroneous presumption cast a shadow on the entirety of the district court’s order. The panel vacated the district court’s approval of the class-action settlement. The panel remanded so that the district court could make findings in accordance with the applicable heightened standard. The panel offered no opinion as to the merits of Mares’s allegations. 6 PECK V. SWIFT TRANSPORTATION
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