Judge Reduces Class Counsel’s Fee in Settlement with CVS

On Friday, a judge approved a settlement in a class action lawsuit brought upon CVS Health Corporation by its employees. The approval comes after the plaintiffs’ original filings for pre-approval of the settlement were denied, as the plaintiff had not sufficiently established the basis for the court’s subject matter jurisdiction over the case. Since then, the plaintiffs amended their complaint and no objections were filed since then.

The plaintiff originally alleged in the lawsuit that workers who were employed at the CVS Patterson Distribution Center were subjected to shortened food and rest breaks caused by lengthy security checks conducted by the defendant. These delayed checks were also not compensated for by the defendant despite the fact that the time off work was being imposed upon the employees. The suit stated that these practices violated multiple California labor codes as well as California business and professions codes.

In order for a settlement to be approved, a court must ensure that notice is sent to all class members, have a hearing to establish that the settlement is fair, reasonable, and adequate, plaintiffs file a statement identifying the agreement, and class members must be given the opportunity to object. Since all these requirements have been satisfied, the settlement was approved. 

The court was not willing to reach any ultimate conclusions regarding the contested issues of fact and law that are core to the litigation because the evidence had not had a chance to be fully presented. While the plaintiff still states that he remains confident in, and committed to, the merits of the case throughout the litigation and settlement process, he still had to be “realistic” about the potential risks of further proceedings.

The court agreed that settlement was the necessary next step, citing the potential for a long, expensive, and potentially fruitless string of trial proceedings as a chief reason. With cases like this that involve modest wage workers, the plaintiff said, it can often be important that the plaintiffs receive compensation in a timely manner. Based on their own experience, the plaintiff’s counsel feared it would not have received compensation had the case been contested further.

The amount agreed upon within the settlement totals $1,850,000, which includes $616,666.67 in legal fees. The total amount of money reserved for the class is $1,084,569.53 and will be distributed proportionally based on the number of weeks worked during the appropriate time period. The average payment per person is $315.67 spread across over 3000 people covered in the suit.

While the court gave preliminary approval for the 33.33% fee award to the counsel, they did not feel as if the performance of the counsel was enough to warrant a fee that is above the benchmark for similar cases. The court cited counsel’s repeated failure to provide the court with sufficient and accurate information throughout this litigation, necessitating the issuance of an order to show cause and orders for supplemental briefing to clarify inconsistencies as a reason for its decision. The court also disagreed with the level of risk counsel claims they endured in this case, stating that of 337.65 hours worked by the counsel, 215 of those were worked after mediation had occurred, at which point the likelihood of a deal being reached was strong. As such, the court reduced the counsel’s share of the settlement from 33.33% to 25%, or $462,500.

Besides the counsel fees and a slightly reduced incentive reward for the lead plaintiff (from $10,000 to $7,500), all payments and stipulations were upheld by the court and the case is officially closed.

The class was represented by Bradley/Grombacher LLP. CVS was represented by Morgan, Lewis & Bockius LLP.