Amaro v. Anaheim Arena Management ( 2021 )

Filed 9/28/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
IREAN AMARO,
Plaintiff and Respondent, G058371
v. (Super. Ct. No. 30-2017-00917542)
ANAHEIM ARENA MANAGEMENT, OPINION
LLC,
Defendant and Respondent;
RHIANNON ALLER,
Intervener and Appellant.
Appeal from a judgment of the Superior Court of Orange County, Glenda
Sanders, Judge. Reversed and remanded as directed.
Donahoo & Associates, Richard E. Donahoo; Gleason & Favarote, Torey J.
Favarote; Law Offices of Joseph R. Becerra, Joseph R. Becerra; and Esner, Chang &
Boyer, Stuart B. Esner, Holly N. Boyer for Intervener and Appellant Rhiannon Aller.
Sheppard, Mullin, Richter & Hampton, Jason A. Weiss, Matthew M.
Sonne, Frances M.K. Hernandez and Tyler Z. Bernstein for Defendant and Respondent
Anaheim Arena Management, LLC.
Capstone Law, Ryan H. Wu, Liana Carter and Eduardo Santos for Plaintiff
and Respondent Irean Amaro.
* * *
Considering how often trial courts review and approve class action
settlements, especially in the wage and hour context, there are few published California
cases providing guidance on this process. Parties seeking approval must generally rely
on federal authority. Due to this paucity in state law, we publish this opinion to provide
guidelines for courts in evaluating class action settlements.
Plaintiff Irean Amaro filed this wage and hour class action and Private
Attorneys General Act (PAGA) lawsuit against defendant Anaheim Arena Management
(AAM) in 2017. At the time, there were already two existing class actions asserting the
same claims. One had been filed in 2014 and the other in 2016. About a month after
filing her lawsuit, Amaro and AAM reached a global settlement that covered the claims
asserted in the two prior class actions. The plaintiffs from the prior actions, which
included intervener Rhiannon Aller, were not involved in those settlement discussions.
Aller intervened in this lawsuit and objected to the settlement. Initially, the trial court
denied preliminary approval of the settlement on grounds Amaro had not given the court
enough information to determine the adequacy of the settlement. Amaro then engaged in
extensive informal discovery and entered into an amended settlement with AAM. The
court approved the amended settlement over Aller’s objections and entered judgment per
the settlement’s terms.
Aller appeals, claiming the court’s approval of the settlement was
erroneous for two reasons. First, she argues the class members’ release in the settlement
is improper because it extends to claims outside the scope of Amaro’s complaint, waives
class members’ (from all class actions) claims under the Fair Labor Standards Act
(FLSA) without obtaining their written consent, and releases PAGA claims beyond the
limitations period of Amaro’s own PAGA claim. We agree the release is overbroad. It
covers “potential claims . . . in any way relating to the” facts pled in the complaint. The
“in any way relating” language causes the release to unreasonably extend to claims that
may only be tangentially related to the allegations in Amaro’s complaint, rendering it
2
overbroad. However, we reject Aller’s other contentions. The FLSA’s written consent
requirement does not apply to a release in a class settlement of state wage and hour
claims. Further, nothing in the PAGA statute prevents Amaro from releasing claims
outside the limitations period of her own claim.
Next, Aller contends the court abused its discretion in finding the
settlement was not the product of a collusive reverse auction. Such an event occurs when
a defendant sued in multiple class actions picks the most ineffectual class counsel to
negotiate a weak settlement that precludes all the other class action claims. Aller
primarily relies on the fact that AAM attempted to separately negotiate settlements with
the plaintiffs in the two prior lawsuits. After those settlement discussions failed, AAM
bypassed those plaintiffs and undercut their claims by negotiating a settlement with
Amaro that extinguished the other class actions. We find there is nothing inherently
wrong with this process. When such a settlement occurs, the objecting party must also
show, at the very least, some evidence of unfairness to the class or misconduct to support
a collusive reverse auction finding. Aller has not done so. Nor has she presented
sufficient evidence to warrant discovery into whether the settlement was collusive.
Though we reject most of Aller’s arguments, we reverse the judgment and
remand with directions due to the overbreadth of the release.
I
FACTS AND PROCEDURAL HISTORY
A. Prior Lawsuits Against AAM
AAM operates the Honda Center, a large indoor arena in Anaheim that
hosts sporting competitions, concerts, and other large events. In December 2014,
interveners Manuel Navarro-Cabrera and Rhiannon Aller filed a PAGA and wage and
hour class action against AAM in Orange County Superior Court (the Navarro/Aller
action). Generally, the plaintiffs in the Navarro/Aller action alleged AAM was not
3
paying its nonexempt employees for all the hours they worked. Among other things, they
alleged AAM (a) used a timekeeping rounding system that unlawfully shaved employee
hours; (b) did not compensate employees for time spent walking or taking shuttles from
Angel Stadium, where they were required to park, to the Honda Center; (c) did not pay
employees for time spent waiting in line for security checks or to clock in; and (d) did not
provide legally adequate meal and rest periods.
Based on these allegations, the plaintiffs in the Navarro/Aller action
1
asserted claims based on multiple violations of the Labor Code, including (a) failure to
pay minimum wages (§§ 1194, 1194.2, 1197), (b) failure to pay wages (§§ 201, 202),
(c) failure to pay overtime (§§ 510, 1194), (d) failure to provide accurate itemized wage
statements (§ 226), (e) failure to provide meal periods (§§ 226.7, 512), (f) failure to
permit rest breaks (§§ 226.7, 512), and (g) waiting time penalties (§ 203). They also
asserted claims under PAGA (§ 2698 et seq.) and Business and Professions Code
section 17200 et seq. based on these Labor Code violations.
After conducting some initial discovery, the plaintiffs in the Navarro/Aller
action and AAM engaged in a mediation in November 2015. The mediation was
unsuccessful, so the plaintiffs continued their discovery efforts, including deposing
representatives from AAM and AAM’s third party timekeeping vendor.
Meanwhile, in February 2016, intervener Denise Cassaro filed a
substantially similar wage and hour class action against AAM in Orange County Superior
Court (the Cassaro action). Cassaro and AAM mediated the claims in June 2016,
without involving the plaintiffs in the Navarro/Aller action. During negotiations,
however, AAM indicated to Cassaro that it wanted a settlement that would also cover the
Navarro/Aller claims. After the parties failed to settle, Cassaro’s counsel contacted
counsel for the plaintiffs from the Navarro/Aller action. They agreed it was in the best
1
All further statutory references are to the Labor Code unless otherwise specified.
4
interest of the class to consolidate the two cases and litigate them together. The court
granted their motion to consolidate in February 2017.
B. This Action
Plaintiff Amaro filed this PAGA and wage and hour class action against
AAM on April 28, 2017, which largely asserted the same Labor Code violations and
claims as the Navarro/Aller and Cassaro actions. Like those actions, Amaro alleged
AAM’s timekeeping system improperly shaved employees’ time and that employees
were not compensated for time spent on shuttles or waiting in line for security checks or
to clock in. Similarly, she alleged employees either missed or had their meal and rest
breaks cut short. Unlike the other two actions, Amaro also alleged AAM violated section
2802 by failing to reimburse employees for certain job-related expenses.
Prior to filing this action, Amaro’s counsel conducted a two-and-a-half-
month investigation into her claims. They conducted multiple interviews with Amaro,
who worked for AAM from 2008 to 2016. They also reviewed her personnel file and
other associated records, such as her earnings statements and correspondence with
management. They examined 1,880 pages of AAM’s policies and procedures, including
information on AAM’s operational guidelines, timekeeping system, employee clock-ins,
attendance, meal and rest periods, and overtime pay, among other topics. Amaro’s
counsel also obtained time and payroll records from AAM for 238 class members and
had a statistician analyze them to estimate AAM’s exposure for the meal and rest period
claims.
After conducting the above investigation but prior to filing the complaint,
Amaro and AAM mediated the dispute with the Honorable Nancy Wieben Stock (Ret.).
The parties were unable to settle at the mediation. Amaro rejected AAM’s proposed
terms and then filed this lawsuit. Judge Stock continued to work with the parties over
several weeks, and she eventually made a proposal accepted by both sides.
5
Notably, two other similar lawsuits were filed against AAM after Amaro
filed this action. In May 2017, Claire Gomez filed a substantially similar wage and hour
class action against AAM (the Gomez action). Then, in October 2017, Gregory
Maryarski filed a PAGA action against AAM that appears to be based on the same Labor
Code violations as the prior lawsuits (the Maryarski action).
C. The Initial Settlement
In June 2017, AAM filed a case management statement in the
Navarro/Aller action, which indicated this action had settled and that its release would
cover the claims asserted in the Navarro/Aller, Cassaro, and Gomez actions (the
Maryarski action had not yet been filed). Prior to being served with this document, the
plaintiffs in the other actions were unaware of any settlement discussions between Amaro
and AAM (collectively, the settling parties). The court stayed discovery in the other
actions while the settling parties prepared a motion for preliminary approval of the
2
settlement, which Amaro eventually filed in October 2017.
The settlement covered all nonexempt employees that worked for AAM
between December 1, 2010 until the date the court granted preliminary approval of the
settlement. AAM agreed to pay a gross amount of $1,750,000, with $40,000 of this sum
allocated to Amaro’s PAGA claim. The settling parties agreed to deduct various
expenses from the gross amount, which were subject to court approval: $583,333 in
attorney fees, which was one-third of the gross amount, and up to $15,000 in costs to
Amaro’s counsel, $30,000 in penalties to the Labor and Workforce Development Agency
2
California Rules of Court, rule 3.769 governs court approval of class action
settlements. First, the court must preliminarily approve a settlement. If such approval is
granted, class members are notified of the settlement and given the opportunity to object.
The court then “conducts a final approval hearing to inquire into the fairness of the
proposed settlement. [Citation.] If the court approves the settlement, a judgment is
entered with provision for continued jurisdiction for the enforcement of the judgment.”
(Cellphone Termination Fee Cases (2009) 180 Cal.App.4th 1110, 1118.)
6
(LWDA) as required by section 2699, subdivision (i), $10,000 as an enhancement to
Amaro, and up to $50,000 in administrative costs to a nonparty settlement administrator.
Court approval of these deductions would have left $1,061,667 to split among the
estimated 5,133 class members (as of April 2017), resulting in average payments of about
$207 per member.
In addition to the monetary component of the settlement, AAM agreed to
make certain policy changes. It agreed to replace its timekeeping rounding system with
one that paid employees based on their exact clock-in times. It also agreed to
automatically add five minutes of paid time to each employee’s shift to compensate them
for any time spent waiting in lines for security checks or to clock in. Amaro’s counsel
estimated these policy changes would generate approximately $510,000 a year in extra
wages to employees.
The plaintiffs in the Navarro/Aller and Cassaro actions (collectively, the
interveners) filed a motion to intervene in this lawsuit, which was granted. Following
extensive briefing by the settling parties and the interveners, the court denied Amaro’s
motion for preliminary approval in June 2018. It recognized the settling parties were
“represented by experienced, competent class action counsel and they relied on the
services of a retired senior judge [with] substantial experience in complex class actions.”
But it concluded Amaro had failed to provide the court with sufficient information to
“‘understand[] . . . the amount that is in controversy and the realistic range of outcomes
of the litigation.’” (Quoting Clark v. American Residential Services LLC (2009) 175
Cal.App.4th 785, 801-802.)
Among other things, the court noted that Amaro’s counsel had not
conducted any formal discovery. Nor had they reviewed the transcripts from the
depositions previously taken in the Navarro/Aller and Cassaro actions, which contained
“testimony giv[ing] some credence to the notion that some of the claims involve systemic
violations more likely to be certified than those involving individualized assessments.”
7
Further, the sources of information Amaro’s counsel reviewed would not have allowed
them to evaluate all the allegations in Amaro’s complaint, such as whether employees
were required to falsely record meal and rest breaks, purchase supplies for which they
were not reimbursed, and wait in line for security screenings or to clock in. Nor did the
information reviewed by her counsel “take into account the claim that AAM had a policy
of improper rounding as a result of the [timekeeping] system . . . .”
D. The Amended Settlement
After the court denied preliminary approval of the initial settlement,
Amaro’s counsel engaged in further informal discovery. They obtained time and payroll
records for all 5,494 nonexempt employees who worked for AAM between December 5,
2010 to June 30, 2018, and had them analyzed by a statistician to determine potential
exposure for meal and rest period violations. Counsel also conducted 20 to 30 minute
interviews with 25 class members to learn more about the violations alleged in Amaro’s
complaint. They also interviewed three management-level AAM employees regarding
the relevant policies and reviewed the deposition transcripts from the Navarro/Aller and
Cassaro actions. Further, Amaro’s counsel retained a private investigator to assist them
in conducting an on-site inspection of the Honda Center during an event, which involved
observing and timing employees taking shuttles to and from work and going through
security and clock-in lines.
The settling parties then reconvened settlement negotiations with the
assistance of Judge Stock. They eventually agreed to an amended version of the
settlement in September 2018, and filed a new motion for preliminary approval.
Similar to the initial settlement, the amended settlement covered nonexempt
AAM employees that worked from December 5, 2010 to the date the court granted
preliminary approval of the settlement. AAM agreed to pay a gross amount of
$2,212,500, a $462,500 or 26.4 percent increase from the initial settlement. The
8
proposed deductions for attorney fees and costs, administrative costs, and Amaro’s
enhancement remained the same. But the amended settlement allocated $240,000 to the
PAGA claim, with 75 percent of this sum ($180,000) going to the LWDA and 25 percent
($60,000) going to the class per section 2699, subdivision (i). It also contained an
escalator clause, which provided for an increase in the gross amount proportionate to any
increase in the class size between the date of the settlement and the date of preliminary
approval (there were an estimated 6,037 class members as of the settlement date). The
policy changes to which AAM had previously agreed were included in the amended
settlement and had already been implemented by AAM.
The court granted preliminary approval of the amended settlement in
December 2018 over the interveners’ opposition. It concluded “[t]he amount and terms
of the settlement appear fair, reasonable and adequate, and the settlement [was] supported
by substantial evidence that counsel for [Amaro] adequately assessed the value of the
case and the risks, and came to a fair settlement. Although much of the information was
obtained through informal processes, the information was sufficient to allow [Amaro] to
assess and value potential recovery.” Further, the court found “the settlement [was] not
collusive.” (Italics omitted.)
Notice of the settlement was then mailed to the 6,151 confirmed class
members, and they were given 60 days to either opt out of or object to the settlement. In
all, 39 people opted out of the settlement (0.6 percent of the class), and only Aller
submitted a valid objection. Based on the number of participating class members, the
settlement administrator determined the smallest class member payment would be $1.68
(for people that worked only one shift during the class period), the average payment
would be $231.67, and the largest payment would be $3,662.12.
When Amaro moved for final approval of the settlement in March 2019, the
gross amount of the settlement had increased by $41,780 to $2,254,280, which appears to
be the result of the escalator clause. The court granted final approval over Aller’s
9
objection and issued a detailed minute order addressing the arguments. In connection
with the motion, the court granted Amaro’s counsel $583,333 in fees and $10,266.87 in
costs. Amaro was awarded a $5,000 enhancement, and the settlement administrator was
allowed $43,500 in costs.
The court subsequently entered judgment in accordance with the
3
settlement. Intervener Aller appeals on grounds the court erred in approving the
settlement. First, she argues the scope of the release was impermissibly overbroad. Next,
she asserts the settlement was the product of a collusive reverse auction. Finally, she
contends the court erred by denying her request to take discovery as to whether the
settlement was collusive. As explained below, we agree the release was overbroad but
are not persuaded by the other arguments.
II
DISCUSSION
A. Legal Standard
“‘“‘[T]o prevent fraud, collusion or unfairness to the class, the settlement or
dismissal of a class action requires court approval.’”’ . . . The purpose of the
requirement is ‘the protection of those class members, including the named plaintiffs,
whose rights may not have been given due regard by the negotiating parties.’” (Dunk v.
Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1800-1801.) “‘Due regard’ . . . ‘should
[also] be given to what is otherwise a private consensual agreement between the parties.
The [court’s] inquiry “must be limited to the extent necessary to reach a reasoned
judgment that the agreement is not the product of fraud or overreaching by, or collusion
3
Throughout the remainder of this opinion, we use the term “settlement” to refer to the
amended settlement approved by the court, and we use the term “initial settlement” and
“amended settlement” when necessary to distinguish between the two.
10
between, the negotiating parties, and that the settlement, taken as a whole, is fair,
reasonable and adequate to all concerned.” [Citation.] “Ultimately, the [trial] court’s
determination is nothing more than ‘an amalgam of delicate balancing, gross
approximations and rough justice.’”’” (7-Eleven Owners for Fair Franchising v.
Southland Corp. (2000) 85 Cal.App.4th 1135, 1145.)
The appellate court “‘make[s] no independent determination whether the
settlement terms are “fair, adequate and reasonable,” but only determine[s] whether the
trial court acted within its discretion.’” (Nordstrom Com. Cases (2010) 186 Cal.App.4th
576, 581.) “Great weight is accorded the trial judge’s views. The trial judge ‘“is exposed
to the litigants, and their strategies, positions and proofs. [She] is aware of the expense
and possible legal bars to success. Simply stated, [she] is on the firing line and can
evaluate the action accordingly.”’ [Citations.] To merit reversal, both an abuse of
discretion by the trial court must be ‘clear’ and the demonstration of it on appeal
‘strong.’” (7-Eleven Owners for Fair Franchising v. Southland Corp., supra, 85
Cal.App.4th at pp. 1145-1146.)
“The abuse of discretion standard is not a unified standard; the deference it
calls for varies according to the aspect of a trial court’s ruling under review. The trial
court’s findings of fact are reviewed for substantial evidence, its conclusions of law are
reviewed de novo, and its application of the law to the facts is reversible only if arbitrary
and capricious.” (Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 711-712, fns.
omitted.)
B. Scope of the Release
Aller asserts the class members’ release in the settlement is improper for
several reasons. We review her arguments in turn.
11
1. Overbreadth
Aller claims the release is unlawfully overbroad because it extends to
claims that are entirely unrelated to the wage and hour allegations in Amaro’s complaint.
While the release is not as broad as Aller suggests, we agree it impermissibly extends to
claims outside the scope of the complaint.
The parties’ dispute over the scope of the release is unsurprising. The
release clause is an unwieldy monstrosity of a 375-word sentence that we only partially
include here. It covers “all claims asserted in Amaro’s operative Complaint, and any
amended Complaints, and potential claims reasonably arising out of or in any way
relating to the same set of operative facts and/or theories pled therein, including the
alleged failure of AAM to provide Plaintiff with compensation as required by federal
and/or state law, and including but not limited to Class Members’ Claims and potential
claims concerning wages, expense reimbursements, deductions, record keeping, off the
clock work, commissions, incentive pay, bonuses, reporting time pay, minimum wages,
overtime, meal periods and premiums, rest periods and premiums, split shift premiums,
itemized wage statement penalties and damages under California and/or federal law,
including the [FLSA], the failure to pay penalties and premiums under the California
Labor Code, including without limitation Labor Code §§ 201-203, 204, 206, 206.5, 210,
218, 218.6, 223, 224, 225.5, 226, 226.3, 226.7, 227, 227.3, 510, 512, 551, 552, 558, 1174,
1174.5, 1182.12, 1194, 1194.2, 1197, 1197.1, 1198, 2698, et seq., 2753, 2800, 2802,
2810.5, Bus. and Prof. Code sections 17200, et seq., the [FLSA] . . . , and [PAGA], the
Wage Orders, and any other claims whatsoever alleged in this action, including without
limitation all claims predicated on time rounding, time-shaving, grace periods, off the
clock work (including but not limited to, time spent subject to AAM’s control, time spent
waiting for and traveling in shuttles, time spent walking from shuttle drop-off to security,
time spent passing through security, time spent walking from security to time clocks,
time spent waiting in line to clock in, time spent walking from time clocks to building
12
exits and shuttle pick-up areas), maintaining and/or purchasing uniforms, tools, and
equipment, requests for personnel or payroll records, calculation of the regular rate for
overtime purposes, meal and rest periods, split shift premiums, reporting time pay,
itemized wage statements, deductions, payment of overtime, straight time, minimum
wages, vacation, bonuses/commissions, transportation in shuttles, for restitution and other
equitable relief, liquidated damages, waiting time penalties, other compensation,
commissions, or benefits, arising from their employment with AAM, or separation from
employment, whether known or unknown, during the Class Period . . . .” (Italics &
underlining added, strikethrough in original.)
The struck terms were initially included in the release. They were removed
by the settling parties after the court commented during final approval that “split shifts,
bonuses, commissions and reporting time claims . . . are not at issue in this case. The
release is not limited to those claims specifically made and investigated in connection
with this suit and must be revised.”
The parties’ primary dispute is whether the italicized language in the above
release clause modifies the remainder of the sentence. The settling parties say that it
does, while Aller contends it does not based on the sentence’s punctuation. In particular,
Aller believes the underlined terms above are not modified by the italicized language,
which allows the release to engulf employment claims entirely unrelated to this action,
such as claims for discrimination or wrongful termination. The settling parties provide
the better interpretation.
“‘The basic goal of contract interpretation is to give effect to the parties’
mutual intent at the time of contracting. [Citations.] When a contract is reduced to
writing, the parties’ intention is determined from the writing alone, if possible.’”
(Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1022.) Based on its structure,
the settling parties intended to limit the reach of the release to “potential claims
reasonably arising out of or in any way relating to the same set of operative facts and/or
13
theories pled” in Amaro’s complaint. The placement of the word “including” after this
phrase signals the remainder of the sentence provides a noninclusive list of examples of
released claims. Supporting this interpretation is the fact that claims completely
unrelated to the allegations in Amaro’s complaint were struck from the sentence, such as
4
claims relating to split shifts, bonuses, and commissions. Further, while not dispositive,
it is notable that the settling parties insist they intended the italicized language to modify
the remainder of the sentence.
Next, Aller maintains that even if the settling parties are correct on the
above point, the release is still overbroad because it covers claims “in any way relating to
the same set of operative facts and/or theories pled” in the complaint. She argues the
phrase “in any way relating” unreasonably extends the release to claims beyond the scope
of the allegations in Amaro’s complaint. We agree.
In a class action settlement, “‘[a] clause providing for the release of claims
. . . may refer to all claims, both potential and actual, that may have been raised in the
pending action with respect to the matter in controversy.’” (Villacres v. ABM Industries
Inc. (2010) 189 Cal.App.4th 562, 586 (Villacres).) “‘[A] court may release not only
those claims alleged in the complaint and before the court, but also claims which “could
have been alleged by reason of or in connection with any matter or fact set forth or
referred to in” the complaint.’” (Ibid., italics omitted.) While these statements do not
expressly address the limits of a class release, they contain an implicit boundary: a court
cannot release claims that are outside the scope of the allegations of the complaint. This
reading of Villacres is bolstered by the fact that it relied heavily on federal law. Nearly
all federal circuits have found that “[a] settlement agreement may preclude a party from
bringing a related claim in the future . . . only where the released claim is ‘based on the
identical factual predicate as that underlying the claims in the settled class action.’”
4
The release includes claims relating to “vacation,” which was not at issue in Amaro’s
complaint. The inclusion of this term appears to be an oversight by the settling parties.
14
(See, e.g., Hesse v. Sprint Corp. (9th Cir. 2010) 598 F.3d 581, 590-591, italics added;
6 Newberg on Class Actions (5th ed. 2021) § 18:19.) “‘Put another way, a release of
claims that “go beyond the scope of the allegations in the operative complaint” is
impermissible.’” (Marshall v. Northrop Grumman Corp. (C.D. Cal. 2020) 469
F.Supp.3d 942, 948-949.)
Here, the release extends past this boundary. The allegations in Amaro’s
complaint pertain to AAM’s timekeeping system, unpaid time spent waiting in line,
missed meal and rest periods, and reimbursement for work-related expenses. By
extending to claims that “in any way relat[e]” to these allegations, the release ensnares
claims outside the scope of Amaro’s complaint. To illustrate, suppose a class member
filed a lawsuit alleging AAM retaliated against her for reporting to a government agency
that AAM was breaking the Labor Code by failing to provide employees meal and rest
breaks during the release period. (See § 1102.5, subd. (b); see, e.g., Gould v. Maryland
Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1148-1150.) This retaliation claim is
not based on the same factual predicate as Amaro’s complaint. The crux of the claim –
retaliation – is completely absent from the pleading. Nor can it be inferred from the
complaint’s allegations. But since this retaliation claim tangentially relates in some way
to Amaro’s meal and rest period allegations, it appears to have been released by the
settlement.
A class action settlement must be approved by the court to protect “‘“class
members . . . whose rights may not have been given due regard by the negotiating
parties.”’” (Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 93.) Consequently,
courts must remain vigilant and ensure that class releases do not extend to claims that are
beyond the scope of the allegations in the complaint. Releases must be appropriately
tethered to the complaint’s factual allegations. For example, the portion of the release
covering “potential claims reasonably arising out of . . . the same set of operative facts”
pled in the complaint is sufficiently tailored. The retaliation claim identified above does
15
not “reasonably aris[e]” from the facts pled in the complaint. Similarly, the release
would have been acceptable had it been limited to claims “reasonably related” to the
allegations in the complaint rather than “in any way relat[ed].” Requiring a reasonable
connection prevents the release from extending to claims that are only remotely related to
the allegations in the complaint.
To be clear, we do not mean to suggest the above examples provide the
only acceptable phrasing of class releases. Rather, these examples are only meant to
provide some guidance to the trial courts that review class action settlements. There are
certainly other formulations that properly limit the scope of the class release to the
allegations in the complaint. We only mean to encourage courts to scrutinize class
releases to ensure they are reasonably tethered to the complaint’s allegations.
Finally, the release is overbroad for another reason. As drafted, it releases
“potential claims . . . relating in any way to the . . . theories pled” in the complaint. As
discussed above, the release must be tied to the factual allegations in the complaint, not
the claims or theories of liability asserted. (See Villacres, supra, 189 Cal.App.4th at p.
586; Hesse v. Sprint Corp., supra, 598 F.3d at pp. 590-591.) Class members could
potentially have claims that arise from the same legal theories as Amaro’s complaint but
are not based on the same allegations.
Due to the unreasonable overbreadth of the release, the court should not
have granted final approval of the settlement. This error, however, does not warrant
throwing out the entire settlement and demanding the settling parties start the approval
process from scratch. We also recognize that neither “the [trial] court nor this court is
empowered to rewrite [a] settlement agreed upon by the parties. [Courts] may not delete,
modify, or substitute certain provisions of the [settlement].” (Officers for Justice v. Civil
Service Com. (9th Cir.1982) 688 F.2d 615, 630.) Thus, on remand, we direct the court to
hold final approval proceedings to determine whether the settling parties can amend the
release so it conforms with this opinion.
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2. Release of FLSA claims
Aller also argues the settlement’s procedure for releasing FLSA claims (29
U.S.C § 201 et seq.) is unlawful. As background, the FLSA establishes standards for
minimum wages and overtime pay, and it allows employees to bring collective actions
against their employers for violating those standards. (Haro v. City of Rosemead (2009)
174 Cal.App.4th 1067, 1070-1071.) There is an inherent tension between FLSA
collective actions and class actions. Class actions under California and federal law
generally require class members to opt out to avoid being bound by the terms of a
judgment. In contrast, an employee must opt in to become a plaintiff in an FLSA
collective action. (Id. at pp. 1070-1072, 1076.) “No employee shall be a party plaintiff
to [an FLSA] action unless he gives his consent in writing to become such a party and
such consent is filed in the court in which such action is brought.” (29 U.S.C. § 216,
subd. (b).) Due to this tension, California courts have found FLSA actions cannot be
maintained as class actions under state law. (Haro v. City of Rosemead, supra, 174
Cal.App.4th at p. 1070.)
Though Amaro did not assert an FLSA claim, the settlement attempts to
comply with the statute’s opt-in requirement to effectuate a release of class members’
FLSA claims. The class notice explains that class members who cash their settlement
checks “will be deemed to have opted into the action for purposes of the FLSA and [will]
thereby release and waive any of their claims under the FLSA.” In contrast, class
members that participate in the settlement but do not cash their checks will retain their
FLSA claims. Aller insists this check cashing opt-in procedure does not comply with the
FLSA, which requires filed written consent. (See 29 U.S.C. § 216, subd. (b).) In
response, the settling parties argue the FLSA’s opt-in requirement does not apply to the
settlement under Rangel v. PLS Check Cashers of Cal., Inc. (9th Cir. 2018) 899 F.3d
1106 (Rangel). We agree with the settling parties but for reasons other than Rangel.
17
To our knowledge, no state appellate court has addressed this issue in a
published decision. Both sides extensively discussed Rangel in their briefs, which we
find inapposite. In Rangel, the Ninth Circuit found the plaintiff’s FLSA claim was
precluded by a prior class action settlement of state law claims that released “all claims
arising from the allegations on which [the plaintiff’s] FLSA action [was] predicated.”
(Rangel, supra, 899 F.3d at p. 1108.) The plaintiff’s FLSA claim was based on the same
primary right as the state law claims, and the court determined the opt-in requirement was
irrelevant to the primary rights analysis. (Id. at pp. 1110-1111.) Significantly, though,
the Ninth Circuit expressly declined to address the issue we face here: whether a plaintiff
can circumvent the FLSA’s opt-in requirement by “first bringing state law labor claims in
an opt-out class action, then reaching a settlement that extends to the FLSA.” (Id. at pp.
1111-1112.) Instead, the proper time to raise this argument was during the settlement
approval process (ibid.), which Aller did here. The plaintiff in Rangel did not. (Ibid.)
Though the settling parties’ reliance on Rangel is misplaced, we are
persuaded the FLSA’s opt-in requirement does not apply for other reasons. First, nothing
in the text of the FLSA requires that the opt-in requirement be applied here. The statute
provides that “[n]o employee shall be a party plaintiff to [an FLSA] action unless he
gives his consent in writing to become such a party . . . .” (29 U.S.C. § 216, subd. (b),
italics added.) This is not an FLSA action. Amaro did not assert an FLSA claim for
other employees to join. And nothing in the statute suggests it applies to a class
settlement of state law claims that also releases potential FLSA claims based on the same
allegations. “‘[E]ven when the court does not have power to adjudicate a claim, it may
still “approve release of that claim as a condition of settlement of [an] action [before
it].”’” (Villacres, supra, 189 Cal.App.4th at p. 586; Cotter v. Lyft, Inc. (N.D. Cal., Mar.
16, 2017, No. 13-cv-04065-VC) 2017 WL 1033527, at p. *1 [the FLSA’s opt-in
requirement “speaks only to the circumstances in which a plaintiff will be allowed to
18
participate in an FLSA action, not to circumstances in which a plaintiff who is not
participating in an FLSA action will be allowed to release potential FLSA claims”].)
Second, nothing in the purpose behind the FLSA’s opt-in requirement hints
it has any application here. There was no opt-in requirement when Congress passed the
FLSA in 1938. It was added in a 1947 amendment. (Hoffmann-La Roche Inc. v. Sperling
(1989) 493 U.S. 165, 173.) “The legislative history clearly indicates that the purpose of
the amendment was to protect employers from facing ‘financial ruin’ and prevent
employees from receiving ‘windfall payments, including liquidated damages.’” (Harris
v. Investor’s Business Daily, Inc. (2006) 138 Cal.App.4th 28, 33-34, italics added;
Hoffmann-La Roche Inc., at p. 173 [“The relevant amendment was for the purpose of
limiting private FLSA plaintiffs to employees who asserted claims in their own right and
freeing employers of the burden of representative actions”].)
These concerns are not implicated here. Rather, allowing employers to
settle FLSA claims within the context of a state law wage and hour class action furthers
the purpose of the opt-in requirement by preventing defendants from facing repetitious
litigation for the same underlying conduct. (See Bell v. Farmers Ins. Exchange (2004)
115 Cal.App.4th 715, 741 [“Class actions offer a means of avoiding ‘repetitious
litigation’ [citation] and ‘a multiplicity of legal actions dealing with identical basic
issues’”]; Hoffmann-La Roche Inc. v. Sperling, supra, 493 U.S. at p. 173.) Moreover,
there is no concern of class members receiving windfall payments by failing to opt in.
3. Release of PAGA claims
PAGA allows an “‘aggrieved employee’” to bring a representative civil
action against their employer on behalf of other current or former employees to recover
civil penalties for Labor Code violations. (Arias v. Superior Court (2009) 46 Cal.4th
969, 980-981.) Aller makes a series of arguments that distill to a single issue: whether
Amaro can release class members’ PAGA claims beyond the one-year limitations period
19
of her own PAGA claim. (See Brown v. Ralphs Grocery Co. (2018) 28 Cal.App.5th 824,
839 (Brown) [establishing one-year limitations period for PAGA claims].) The
settlement releases class members’ PAGA claims dating back to December 5, 2010.
However, since Amaro submitted her PAGA notice to the LWDA on February 21, 2017,
Aller maintains Amaro can only release class members’ PAGA claims arising on or after
February 21, 2016. We disagree. Nothing in the statute prohibits Amaro from releasing
PAGA claims outside the limitations period of her own claim. Nor is this practice
5
contrary to PAGA’s purposes.
“In civil cases, the statute of limitations is not jurisdictional but merely
serves a procedural function and constitutes an affirmative defense that is waived unless
pleaded and proved.” (People v. Williams (1999) 77 Cal.App.4th 436, 457-458; Brown,
supra, 28 Cal.App.5th at pp. 842-843 [“A defendant waives a statute of limitations
defense by failing to plead it in an answer or raise it as a ground of a general demurrer”].)
If the Legislature had intended to make the limitations period for PAGA jurisdictional
rather than an affirmative defense, it would have said so. (See Kim v. Reins International
California, Inc. (2020) 9 Cal.5th 73, 85.) Since it did not, we must presume the general
rule applies. As such, it was within AAM’s discretion to waive its statute of limitations
defense so Amaro could release class members’ PAGA claims dating back to December
2010. And even if PAGA’s statute of limitations were jurisdictional, that would not bar
the court from approving a release of claims outside the limitations period. (Villacres,
supra, 189 Cal.App.4th at p. 586.)
5
Unlike a class action, “there is no mechanism for opting out of [a] judgment entered on
[a] PAGA claim.” (Robinson v. Southern Counties Oil Co. (2020) 53 Cal.App.5th 476,
482.) As such, it seems a single settlement of PAGA and class claims should consist of
two separate payments and releases. One for the PAGA claims, from which aggrieved
employees cannot opt out, and the other for the class claims, from which class members
can opt out. Since Aller does not raise this issue, though, we will not decide it.
20
Further, nothing in the purpose of the statute convinces us that plaintiffs
should be barred from agreeing to such a release of PAGA claims. PAGA “‘“is
fundamentally a law enforcement action,”’ not one for the benefit of private parties.”
(ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 196-197.) “The Legislature’s sole
purpose in enacting PAGA was ‘to augment the limited enforcement capability of the
[LWDA] by empowering employees to enforce the Labor Code as representatives of the
[LWDA].’ [Citations.] Accordingly, a PAGA claim is an enforcement action between
the LWDA and the employer, with the PAGA plaintiff acting on behalf of the
government.” (Kim v. Reins International California, Inc., supra, 9 Cal.5th at p. 86.)
The “civil penalties recovered on the state’s behalf are intended to ‘remediate present
violations and deter future ones,’ not to redress employees’ injuries.” (Ibid.)
Before filing a PAGA claim, a plaintiff “must provide notice to the
employer and the responsible state agency ‘of the specific provisions of [the Labor Code]
alleged to have been violated, including the facts and theories to support the alleged
violation.’ [Citations.] If the agency elects not to investigate, or investigates without
issuing a citation, the employee may then bring a PAGA action.” (Williams v. Superior
Court (2017) 3 Cal.5th 531, 545.) “The evident purpose of the notice requirement is to
afford the relevant state agency, the [LWDA], the opportunity to decide whether to
allocate scarce resources to an investigation, a decision better made with knowledge of
the allegations an aggrieved employee is making and any basis for those allegations.
Notice to the employer serves the purpose of allowing the employer to submit a response
to the agency [citation], again thereby promoting an informed agency decision as to
whether to allocate resources toward an investigation.” (Id. at pp. 545-546.)
PAGA’s one-year limitations period is intended to facilitate these
processes. “[T]he Legislature[] desire[d] . . . quick action on workplace violations.”
(Brown, supra, 28 Cal.App.5th at p. 840.) “If a plaintiff could wait many years to assert
violations of the Labor Code or amend deficient notices, the LWDA would be hard
21
pressed to make an informed decision about allocating scarce resources to old violations,
the employer would be faced with responding based on stale evidence, and workplace
violations could continue for years without being remediated or deterred.” (Id. at pp.
840-841.)
Allowing Amaro to release PAGA claims outside the limitations period of
her own PAGA claim does not interfere with these statutory goals. Amaro acted as the
LWDA’s representative to enforce the Labor Code as to AAM. The Labor Code
violations she identified were the same as those alleged in the Navarro/Aller action, albeit
from a more recent time period. Her notice did not deprive or interfere with the LWDA’s
opportunity to investigate the violations asserted by Aller or AAM’s opportunity to
respond to them. Moreover, due to Amaro’s enforcement action, AAM agreed to pay
$240,000 in PAGA penalties to remediate the Labor Code violations alleged in this
lawsuit and the other actions. Aller has not shown this amount is unfair. (See Williams v.
Superior Court, supra, 3 Cal.5th at pp. 549-550.)
Aller suggests Amaro’s PAGA notice established the temporal scope of her
authority to act on behalf of the LWDA. In other words, PAGA plaintiffs are only
authorized by the LWDA to pursue and/or settle PAGA claims that arise within the year
prior to their PAGA notice. We are unpersuaded. As discussed, the PAGA statute of
limitations is an affirmative defense meant to facilitate the LWDA’s investigation and the
employer’s response. It is not jurisdictional. Aller’s reliance on Brown in support of her
argument is misplaced. In Brown, the court sustained a demurrer on grounds the
plaintiff’s PAGA notice failed to adequately describe the factual allegations underlying
her PAGA claims. (Brown, supra, 28 Cal.App.5th at pp. 829, 832.) “The notice did not
give sufficient information for the LWDA to assess the seriousness of the alleged
violations and decide whether to allocate scarce resources to an investigation, or for
defendants to determine what policies or practices were being complained of, have an
opportunity to cure the violations, and prepare a meaningful response.” (Id. at pp. 837-
22
838.) Nothing in this portion of Brown suggests Amaro can only release PAGA claims
within the limitations period of her own claim.
Our opinion only finds that allowing a named plaintiff to release PAGA
claims beyond the one-year limitations period of his or her own claim is not unlawful per
se. A trial court may still refuse to approve such a release if it is unfair given the
circumstances of the case. (See § 2699, subd. (l)(2); Williams v. Superior Court, supra, 3
Cal.5th at p. 549.) No such circumstances exist here.
C. Collusive Reverse Auction
Next, Aller contends the court erred in finding the settlement was not the
product of a collusive reverse auction. However, that finding is supported by substantial
evidence.
“‘When a trial court’s factual determination is attacked on the ground that
there is no substantial evidence to sustain it, the power of an appellate court begins and
ends with the determination as to whether, on the entire record, there is substantial
evidence, contradicted or uncontradicted, which will support the determination, and when
two or more inferences can reasonably be deduced from the facts, a reviewing court is
without power to substitute its deductions for those of the trial court. If such substantial
evidence be found, it is of no consequence that the trial court believing other evidence, or
drawing other reasonable inferences, might have reached a contrary conclusion.’”
(Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.)
“Courts have long recognized that ‘settlement class actions present unique
due process concerns for absent class members.’ [Citation.] One inherent risk is that
class counsel may collude with the defendants, ‘tacitly reducing the overall settlement in
return for a higher attorney’s fee.’” (In re Bluetooth Headset Products Liability
Litigation (9th Cir. 2011) 654 F.3d 935, 946.) “A reverse auction is said to occur when
‘the defendant in a series of class actions picks the most ineffectual class lawyers to
23
negotiate a settlement with in the hope that the district court will approve a weak
settlement that will preclude other claims against the defendant.’ [Citation.] It has an
odor of mendacity about it.” (Negrete v. Allianz Life Ins. Co. of North America (9th Cir.
2008) 523 F.3d 1091, 1099.) “To guard against this potential for class action abuse,”
class action settlements require court approval, “which may be granted only after a
fairness hearing and a determination that the settlement taken as a whole is fair,
reasonable, and adequate.” (In re Bluetooth Headset Products Liability Litigation, supra,
654 F.3d at p. 946.)
There is sufficient evidence to support the court’s finding the settlement
was not the product of a collusive reverse auction. Amaro’s counsel engaged in a two-
and-a-half-month investigation before the initial mediation between Amaro and AAM,
including a review of AAM’s policies and procedures and an expert analysis of 238 class
member’s time and payroll data. Further, the parties did not settle at the mediation. The
settlement was the product of several weeks of negotiation guided by a neutral mediator.
Then, after the court refused to approve the initial settlement, Amaro’s counsel engaged
in additional informal discovery. They analyzed time and payroll records for nearly
5,500 employees, interviewed 25 class members and three management-level employees,
reviewed deposition transcripts from the earlier actions, and conducted an on-site
inspection of an event at the Honda Center to view working conditions. With the help of
the same mediator, the parties then negotiated an amended settlement, which the court
approved. Few class members opted out of the settlement and only Aller submitted an
objection. From these facts, it can be reasonably inferred that the settlement was the
product of good faith negotiation and was not a weak settlement agreed to by ineffectual
counsel.
Moreover, Amaro’s counsel did not seek an abnormally high fee. “‘[F]ee
awards in class actions average around one-third of the recovery’” regardless of
“‘whether the percentage method or the lodestar method is used.’” (Chavez v. Netflix,
24
Inc. (2008) 162 Cal.App.4th 43, 66, fn. 11.) Here, the settlement allocated $583,333 in
fees to Amaro’s counsel (which the court approved), representing only 25.9 percent of
the gross settlement fund. The request was also in line with counsel’s claimed lodestar of
$533,384. While Aller argues that much of that lodestar relates to counsel’s effort to
obtain approval of the settlement, it was reasonable for Amaro’s counsel to include such
fees in their lodestar calculation. Obtaining court approval is an essential part of the class
action settlement process. Regardless, a court is not required to reduce a percentage
recovery just because it is substantially higher than the lodestar. (Laffitte v. Robert Half
Internat. Inc. (2016) 1 Cal.5th 480, 505.)
Aller’s reply brief modifies her argument, claiming a reverse auction can
occur even without evidence of collusion. She believes a reverse auction occurred here
because AAM sought to negotiate a global settlement separately with each of the named
plaintiff(s) of the three class actions rather than negotiating with them collectively. When
negotiations with the plaintiffs in the Navarro/Aller and Cassaro actions failed, AAM
then reached a settlement with Amaro specifically designed to extinguish the claims of
6
those plaintiffs without their knowledge. Aller contends AAM’s act of “plaintiff
shopping” led to a massively discounted settlement that should not have been approved.
But there is nothing inherently wrong with such a process. (See Rutter & Wilbanks Corp.
v. Shell Oil Co. (10th Cir. 2002) 314 F.3d 1180, 1189; Gallucci v. Gonzales (9th Cir.
2015) 603 Fed.Appx. 533, 535.) In such a scenario, a defendant may choose to negotiate
collectively with all the plaintiffs from the separate class actions to avoid objections to a
future settlement (as occurred here). But we are not aware of any authority requiring a
defendant to do so. Nor does such a rule seem prudent, as there will inevitably be
plaintiffs with unreasonable assessments of the merits of their claims or unrealistic
6
The earliest limitations period for Amaro’s claims began running on April 28, 2013,
but the release in the settlement extends back to December 5, 2010, to presumably cover
the claims in the Navarro/Aller and Cassaro actions.
25
damage valuations that would thwart reasonable settlement offers. In such a case, a
defendant would be unable to reach a global settlement with a reasonable plaintiff
without being accused of engaging in a reverse auction.
We are unconvinced by Aller’s contention that permitting a defendant sued
in multiple class actions to negotiate separately with each named plaintiff will lead to a
“race to the bottom.” This assertion overlooks that trial courts are the gatekeepers of
class action settlements. They must review and approve such settlements to ensure they
are fair, adequate, reasonable, and free of collusion. (Clark v. American Residential
Services LLC, supra, 175 Cal.App.4th at pp. 798-799.) Class members may object if they
believe these standards have not been met in a given settlement. And objectors may
appeal if they believe the trial court erred in approving a settlement.
For these reasons, the manner in which AAM settled with Amaro to
extinguish the claims in the Navarro/Aller and Cassaro actions is not sufficient by itself
to establish a reverse auction. When such a settlement occurs, the objector must at least
provide some evidence of unfairness to the class or misconduct to support a reverse
auction finding. (See Negrete v. Allianz Life Ins. Co. of North America, supra, 523 F.3d
at p. 1099 [collusive reverse auction results in a weak settlement]; see, e.g., Gallucci v.
Gonzales, supra, 603 Fed.Appx. at p. 535 [rejecting reverse auction argument because
there was no evidence of a bidding war between potential class counsel].) Aller has not
met this burden.
Aller implies the settlement is unfair because the amount paid by AAM
represents a massive discount from its potential liability. Yet this discount could have
been warranted for a variety of reasons. The court found the amount of the settlement
was fair, reasonable, and adequate, and Aller fails to show this finding was unsupported
by substantial evidence. In her reply brief, Aller briefly mentions that in calculating
AAM’s potential liability, Amaro failed to consider interest or liquidated damages
available under the Labor Code. But she fails to explain why either would have applied
26
here. Nor does she describe how this purported error impacted Amaro’s damage
calculations, much less how it rendered the settlement unfair, unreasonable, or
inadequate.
Likewise, Aller suggests the settlement amount was too low because her
class claims were highly certifiable. But she has not provided any reasoned argument as
to why the claims were likely to be certified. Nor has she explained how the potential for
certification would have impacted the valuation of the claims or how it renders the
settlement unreasonable. “When an appellant raises an issue ‘but fails to support it with
reasoned argument and citations to authority, we treat the point as waived.’” (Hearn v.
Howard (2009) 177 Cal.App.4th 1193, 1207.) Given Aller’s limited showing, we will
not question the court’s finding that the settlement amount was fair, adequate, and
reasonable.
Next, Aller contends the court’s refusal to preliminarily approve the initial
settlement shows the settling parties’ negotiations were fundamentally flawed from the
start and is evidence of a reverse auction. Even if we agreed the initial negotiations were
flawed, Amaro remedied this issue after the court denied preliminary approval. The court
rejected the initial settlement because Amaro had not “provide[d] the Court with the
information necessary for ‘an understanding of the amount that is in controversy and the
realistic range of outcomes of the litigation.’” Had the settling parties simply increased
the settlement amount and returned to court for approval, Aller’s argument might be
persuasive. But after the court’s denial, Amaro engaged in extensive informal discovery
before entering into the current settlement. In approving the settlement, the court found
Amaro’s counsel “adequately assessed the value of the case and the risks, and came to a
fair settlement. Although much of the information was obtained through informal
processes, the information was sufficient to allow plaintiff to assess and value potential
recovery.” (Italics omitted.) Aller has not shown this finding is unsupported by
substantial evidence.
27
D. Discovery as to Collusion
Aller requests that if we find insufficient evidence of collusion, we should
remand this case and allow her to conduct discovery into the negotiations between the
settling parties. She maintains the court improperly denied her request for such
discovery. We find the court did not abuse its discretion. (See Cho v. Seagate
Technology Holdings, Inc. (2009) 177 Cal.App.4th 734, 748-749.)
“‘It is well established . . . that objectors are not entitled to discovery
concerning settlement negotiations between the parties without evidence indicating that
there was collusion between plaintiffs and defendants in the negotiating process.’” (Cho
v. Seagate Technology Holdings, Inc., supra, 177 Cal.App.4th at pp. 748-749.) “‘The
objecting parties should not be permitted to frustrate the mutual interest of the class
members and the defendant to resolve the litigation promptly by conducting extended or
unnecessary discovery.’” (Ibid.) “[D]iscovery of evidence pertaining to settlement
negotiations is appropriate only in rare circumstances. Because ‘settlement negotiations
involve sensitive matters,’ the courts have consistently applied the principle that
‘“discovery [of settlement negotiations] is proper only where the party seeking it lays a
foundation by adducing from other sources evidence indicating that the settlement may
be collusive.”’” (Hemphill v. San Diego Ass’n of Realtors, Inc. (S.D. Cal. 2005) 225
F.R.D. 616, 620; see Cassel v. Superior Court (2011) 51 Cal.4th 113, 136 [“[T]he
encouragement of mediation to resolve disputes requires broad protection for the
confidentiality of communications exchanged in relation to that process, even where this
protection may sometimes result in the unavailability of valuable civil evidence”].)
Here, the court acted within its discretion by denying the requested
discovery. We have discussed Aller’s evidence supporting her collusive reverse auction
theory above. None of that evidence materially shows or hints of any collusion between
the settling parties. Thus, it was reasonable for the court to deny the discovery.
28
III
DISPOSITION
Because of the overbreadth of the release, we reverse the judgment of the
trial court. As discussed above, on remand the court is directed to hold proceedings to
determine whether the settling parties can amend the release to conform with this
opinion. The parties shall bear their own costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
FYBEL, J.
ZELON, J.*
* Retired Justice of the Court of Appeal, Second Appellate District, Division Seven,
assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.
29