Reloj v. Government Employees Insurance Company Inc.

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
CONRAD RELOJ, et al.,
Plaintiffs,
v.
GOVERNMENT EMPLOYEES
INSURANCE COMPANY INC. dba
GEICO,
Defendant.
Case No.: 21cv1751-L-MSB
CLASS ACTION
ORDER DENYING PLAINTIFF’S
MOTION FOR PRELIMINARY
APPROVAL OF CLASS,
COLLECTIVE, AND PAGA ACTION
SETTLEMENT
[ECF NO. 275, 285]
Pending before the Court in this wage and hour action is Plaintiff Conrad Reloj’s
(“Reloj”) unopposed Motion for Preliminary Approval of Class, Collective, and PAGA
Action Settlement. (ECF No. 275, 285.) The Court decides this matter on the briefs
without oral argument. See Civ. L.R. 7.1.d.1. For the reasons stated below, Reloj’s
motion is denied.
Reloj was employed by Defendant Government Employees Insurance Company
Inc. (“GEICO”) for nearly twenty years as a non-exempt, hourly Auto Damage Adjuster
in San Diego, Los Angeles, and San Francisco, California. He alleged that he and other
similarly situated GEICO employees regularly worked more than eight hours per day,
were routinely denied meal and rest periods, and were not paid for all the hours worked,
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including minimum wages and overtime. Based on these allegations, Reloj also claimed
that GEICO failed to provide accurate itemized wage statements and pay all wages due
after termination of employment. Reloj asserted claims under the Fair Labor Standards
Act, 29 U.S.C. § 201 et seq. (“FLSA”), California Labor Code, and California Business
and Professions Code § 17200 et seq. on his behalf and on behalf of similarly situated
individuals.
Reloj initially filed this action as a collective action under 29 U.S.C. § 216(b) and
as a putative class action under Federal Rule of Civil Procedure 23.1 The Court granted
his motion for certification of a conditional collective action under 29 U.S.C. § 216(b)
and granted in part Defendant’s summary judgment motion. (ECF Nos. 101, 166.)
Subsequently, Reloj filed a class certification motion and Defendant filed a motion to
decertify the FLSA collective action. (ECF Nos. 219, 230.) During the pendency of
these motions, after four mediation attempts, the parties negotiated a settlement. (See
ECF no. 259; ECF No. 282-1, “Second Cottrell Decl.” Ex. A (Class, Collective, and
PAGA Action Settlement Agreement and Release (“Settlement”) ¶ 7).) The Settlement
included Reloj’s state court action, Reloj v. Government Employees Insurance Company
Inc., Superior Court of California, County of Alameda, Case No. 21cv003563, seeking
relief under the California Private Attorneys General Act, Cal. Lab. Code §§ 2698 et seq.
(“PAGA Action”). (See ECF No. 257 ¶ 3; Settlement ¶ 2.a.) Pursuant to the Settlement,
Reloj filed an amended complaint in this action (“Federal Action”), which incorporated
his claims from the PAGA Action. (See ECF No. 269, “Operative Complaint”).) He also
filed the pending motion for preliminary settlement approval. (ECF No. 275).2
/ / / / /
1 All references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure.
2 The motion for preliminary settlement approval was filed piecemeal. Relevant
filings in support of the motion are found at ECF Nos. 275, 282, 285, and 286.
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The Court has federal question jurisdiction under 28 U.S.C § 1331 because
Plaintiff alleged a federal claim under the FLSA. The Court has supplemental
jurisdiction over California state law claims. 28 U.S.C. § 1367.
The Operative Complaint incorporates, and the proposed Settlement seeks to settle,
three types of actions: (1) an FLSA collective action; (2) a federal Rule 23 class action
for violation of California wage and hour laws; and (3) a PAGA action under California
law. The settlement of each requires court approval. Fed. R. Civ. Proc. 23(e) (class
action); Seminiano v. Xyris Enter., Inc., 602 Fed. Appx. 682 (9th Cir. 2015) (FLSA); Cal.
Labor Code § 2699(e)(2) (PAGA); Oliveira v. Language Line Servs., Inc., 767 Fed. Supp.
3d 984, 1000 (N.D. Cal. 2025) (FLSA and PAGA).3 However, the class action standard
set forth in Rule 23 does not apply to FLSA and PAGA actions. Hamilton v. Wal-Mart
Stores, Inc., 39 F.4th 575, 584 (9th Cir. 2022) (“Rule 23 does not govern cases with
PAGA’s features.”); Campbell v. City of Los Angeles, 903 F.3d 1090, 1113 (9th Cir.
2018) (“[M]imicking the Rule 23 standards in evaluating section 216(b) collective
actions is not appropriate.”).
These three types of actions differ in significant respects which bear upon the
terms of the proposed Settlement. “Rule 23 provides a procedural mechanism for a
federal court to adjudicate claims of multiple parties at once, instead of in separate suits.”
Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 663 (9th
Cir. 2022) (en banc). A representative plaintiff can raise multiple claims on behalf of
absent putative class members. Hamilton, 39 F.4th at 583. This is “an exception to the
usual rule that litigation is conducted by and on behalf of the individual named parties
only.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348-49 (2011) (“Dukes”). To
justify a departure from that rule, a class representative must at least be part of the class
and possess the same interest and suffer the same injury as the class members. See id.
3 Internal citations, quotation marks, ellipses, and brackets are omitted from
citations.
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Rule 23 serves to assure this requirement is met. See id. In a class action under Rule
23(b)(3), as here, putative class members become parties to the case upon dissemination
of class action notice. See id. at 362-63. They are represented by class counsel. Fed. R.
Civ. Proc. 23(g). If they do not expressly exclude themselves from the class, class
members become bound by the class action judgment and potentially precluded from
filing claims on their own behalf. Dukes, 564 U.S. at 362-64. For this reason, class
actions present “unique due process concerns for absent class members and the district
court has a fiduciary duty to look after the interests of [the] absent class members.” Allen
v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015).
Under the FLSA, injured employees have the option to file a collective action
rather than a Rule 23 class action. Title 29 Section 216(b) “gives employees the right to
bring a private cause of action on their own behalf and on behalf of ‘other employees
similarly situated’ for specified violations of the FLSA.” Genesis Healthcare Corp. v.
Symczyk, 569 U.S. 66, 69 (2013). A suit brought on behalf of other employees is known
as a “collective action.” Id. at 69; Hoffman-LaRoche Inc. v. Sperling, 493 U.S. 165, 169
(1989). No employee becomes a party plaintiff to a collective action unless he gives his
consent in writing and the consent is filed with the court. 29 U.S.C. § 216(b).
“[P]articipation in the collective action is a statutory ‘right’ held equally and individually
by each party plaintiff, whether originally appearing in the complaint or later opting in.
Campbell v. City of Los Angeles, 903 F.3d 1090, 1108 (9th Cir. 2018). After a plaintiff
opts into the collective action, there is no distinction between the original and opt-in
plaintiffs. Id. “The FLSA leaves no doubt that every plaintiff who opts into the
collective action has party status.” Id.
[As opposed to a class action, a] collective action is more accurately
described as a kind of mass action, in which aggrieved workers act as a
collective of individual plaintiffs with individual cases—capitalizing on
efficiencies of scale, but without necessarily permitting a specific, named
representative to control the litigation, except as the workers may separately
so agree. The opt-in plaintiffs thus choose whether and when to become
parties to a collective action only by filing a written consent with the court.
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Id. at 1105 (emph. in orig.). “[U]nlike in the Rule 23 context, … certification in the
FLSA context does not ‘produce a class with an independent legal status or join
additional parties to the action.’” Id. at 1101 (quoting Genesis Healthcare, 569 U.S. at
75).
Finally, PAGA actions also differ from Rule 23 class actions. Under California
Labor Code, the California Labor Workforce Development Agency (“LWDA”) may
assess and collect civil penalties against employers for Labor Code violations. See Cal.
Lab. Code § 2699(a). PAGA actions are actions for civil penalties rather than monetary
damages. Hamilton., 39 F.4th at 590-91. PAGA allows for civil penalty actions to be
brought by an aggrieved employee on behalf of him- or herself and other similarly
situated employees. Cal. Lab. Code § 2699(a). However, unlike in Rule 23 class actions,
in bringing a representative action under PAGA, the aggrieved employee “represents a
single principal, the [LWDA.]” Hamilton, 39 F.4th at 583, 588 (“there is no individual
component to a PAGA action because plaintiffs may bring a PAGA claim only as the
state’s designated proxy, suing on behalf of all affected employees.”) (emph. in orig.);
see also Arias v. Super. Ct. (Angelo Dairy), 46 Cal.4th 969, 986 (2009). Any civil
penalties recovered in a PAGA representative action are distributed 25% to the aggrieved
employees and 75% to the LWDA. Cal. Lab. Code § 2699(l). Receiving 25% of
recovered penalties does not make similarly situated aggrieved employees parties to the
PAGA action, much less parties to an action for monetary damages. Hamilton, 39 F.4th
at 583, 588. “[A] PAGA claim is a law enforcement action brought by plaintiffs acting as
the state’s designated proxy [and is therefore] not a collection of individual claims for
relief[.]” Oliveira, 767 F. Supp. 3d at 998. Accordingly, “PAGA judgments are not
binding on nonparty employees as to any individually held claims” and "[a]bsent
employees are free to pursue any other remedies available by law, including damages and
equitable relief.” Hamilton, 39 F.4th at 583, 588 (citing Cal. Lab. Code § 2699(g)(1).)
/ / / / /
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The proposed Settlement seeks to dispose of these three types of actions roughly
by means of releases of claims in exchange for a $8.5 million from GEICO. The Court
denies preliminary approval of the Settlement for the reasons stated below.
1. Equitable Treatment of Class Members
The Settlement favors Class Members who worked for GEICO after October 8,
2020. (Settlement ¶ 35.a.iii.) A class action settlement must treat class members
“equitably relative to each other.” Fed. R. Civ. Proc. 23(e)(2)(D). The Class
encompasses individuals who worked for GEICO in certain positions since October 8,
2018. (Settlement Definitions ¶ 2.c.) Without an explanation why individuals who were
employed after October 8, 2020, should receive more, the Court is not inclined to
approve the proposed Settlement.
2. Releases
The release provisions (Settlement ¶ 18) are ambiguous in their scope. They
release “claims alleged, or that could have been alleged based on the facts alleged in the
Action[.]” (Id. (introductory paragraph) (emph. added).) The term “Action” is defined to
broadly include this Federal Action and Reloj’s separate state court PAGA Action.
(Settlement Definitions ¶ 2.a.) Accordingly, the releases encompass more than the claims
alleged, or that could have been alleged, in the Operative Complaint in this Federal
Action. For example, as to the Released FLSA Claims, the release covers FLSA claims
“that were pled or could have been pled based on or arising out of the factual predicates
and/or allegations of any Complaints in the Action, including but not limited to the
Operative Complaint[.]” (Settlement ¶ 18.a. (emph. added).) As to the Released Class
Claims, the release covers, among other things, claims “that are or could have been
alleged in the operative Complaints in the Action [and] any amendments thereto[.]” (Id.
¶ 18.b. (emph. added).)
The Operative Complaint was filed as an amended complaint in this Federal
Action. (ECF No. 269; see also Settlement ¶ 14.) An amended complaint supersedes all
prior complaints filed in the same action. See Valdez-Lopez v. Chertoff, 656 F.3d 851,
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857 (9th Cir. 2011). Accordingly, the references in the Settlement to multiple operative
complaints are incorrect and confusing.
Moreover, the releases appear to encompass the claims that were alleged, or that
could have been alleged, in the separate PAGA Action. This should be unnecessary,
because the Operative Complaint in this Federal Action “consolidates the claims, legal
allegations, and factual allegations pled in the PAGA Action and the Federal Action[.]”
(Settlement ¶ 14.) In addition, Class Members should not have to consult pleadings in
the PAGA Action to determine what rights they are giving up by cashing their settlement
checks in the Federal Action.
The Released Class Claims and the Released PAGA Claims require Class
Members to consult additional documents that were not filed in this Federal Action. The
Released Class Claims include claims “that are or could have been based on the factual
allegations contained [in the] PAGA notice to the [LWDA,]” and the Released PAGA
Claims include claims “alleged or that could have been alleged in Named Plaintiff’s
PAGA Letter[.]” (Settlement ¶ 18.b., c. (emph. added).) These provisions purport to
extend the scope of the released claims even further and would impose on Class Members
an even greater burden to locate these documents to find out what rights they are giving
up.
The Released PAGA Claims provision and related portions of the Settlement suffer
from a further defect in that they exceed the scope permitted by law. (See Settlement ¶¶
18.c., 20(d), 24.) The Released PAGA Claims provision, and the corollary provision
setting forth the language to be included on the settlement checks, purport to bind
Aggrieved Employees, including those who are not Class or Collective Members. (Id. ¶¶
18.c., 20(d).) A further provision states that “Aggrieved Employees are bound by and
cannot exclude themselves from the PAGA component of the Settlement even if they
request exclusion.” (Id. ¶ 24.)
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“Aggrieved Employees” are employees who worked for GEICO in certain
positions between October 2, 2019, and Preliminary Approval.4 (Settlement Definitions ¶
2.b.) A private PAGA action such as this, however, is not brought on behalf of aggrieved
employees but on behalf of the LWDA. Hamilton, 39 F.4th at 583. Aggrieved
employees are not parties to PAGA claims, and PAGA judgments do not preclude
aggrieved employees’ claims for damages or equitable relief. Id.; see also id. at 588
(“Absent employees are free to pursue any other remedies available by law, including
damages and equitable relief.”). For these reasons, the Released PAGA Claims provision
(Settlement ¶ 18.c.) and its corollary provisions (id. ¶¶ 20(d), 24) exceed the scope
permitted by law.
Further, to the extent it applies to the Deposed Opt-in Plaintiffs, the General
Release (Settlement ¶ 19) also exceeds the scope permitted by law. The Settlement
provides that Deposed Opt-in Plaintiffs who elect to do so in exchange for an additional
payment (Settlement ¶ 31.e.) will release, among other claims,
claims for discrimination, harassment, or retaliation pursuant to Title VII of
the Civil Rights Act of 1964, 42 U.S.C. section 2000 et seq., the California
Fair Employment and Housing Act, California Gov’t Code Section 12900 et
seq., and claims for violation of public policy.
(Id. ¶ 19.) Deposed Opt-Ins are plaintiffs who opted into the FLSA Collective and were
deposed in the Federal Action. (Settlement Definitions ¶ 2.k.) FLSA Collective
Members, including Deposed Opt-Ins, are Class Members unless they exclude
themselves. (Cf. Settlement Definitions ¶ 2.c. (Class Members) with ECF No. 101,
“Collective Cert. Order,” at 12 (defining the Collective); see also Settlement ¶ 24
4 Although Class Members are Aggrieved Employees, not all Aggrieved Employees
are necessarily Class Members. (Cf. Settlement Definitions ¶ 2.c. (Class Members) with
id. ¶ 2.b. (Aggrieved Employees).) For example, putative class members who exclude
themselves from the Class (see Settlement ¶ 24) are Aggrieved Employees but not Class
Members.
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(requests for exclusion).) The scope of permissible releases in class action settlements is
not unlimited:
A settlement agreement may preclude a party from bringing a related claim
in the future even though the claim was not presented and might not have
been presentable in the class action, but only where the released claim is
based on the identical factual predicate as that underlying the claims in the
settled class action.
Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010). Nothing in this Federal Action
suggests that it is based on employment discrimination, harassment, retaliation, or
violation of public policy. Accordingly, the General Release, which covers such claims,
is overbroad as to the Deposed Opt-Ins.
3. Procedural Provisions
The proposed Settlement allows Class Members and Collective Members to
exclude themselves from the Settlement. (Settlement ¶ 24.) It further provides for entry
of judgment dismissing all Participating Individuals’ claims. (See id. ¶¶ 16, 28.g.)
Participating Individuals include Collective Members. (Settlement Definitions ¶ 2.v.)
Each Collective Member is an individual Plaintiff in this Federal Action. See Campbell,
903 F.3d at 1105, 1108. The proposed Settlement would dismiss FLSA claims of
Collective Members who exclude themselves from the Settlement. Because this
provision appears contrary to 29 U.S.C. § 216, the Court declines preliminary approval.
Next, the proposed Settlement and Class Notice provide detailed requirements for
Class Members who wish to object to the Settlement or be heard at the Final Approval
Hearing. (See Settlement ¶ 23; Class Notice at 7-8.) Federal Rules have their own less
onerous provision:
Any class member may object to the proposal … . The objection must state
whether it applies only to the objector, to a specific subset of the class, or to
the entire class, and also state with specificity the grounds for the objection.
/ / / / /
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Fed. R. Civ. Proc. 23(e)(5). While the proposed Settlement and Class Notice may
encourage Class Members to comply with a stricter procedure than stated in Rule 2(e)(5),
the Court is not inclined to approve a Settlement or Class Notice that requires it.
Further, the proposed Settlement and Class Notice, which require objections no
later than the Notice Deadline (See Settlement ¶ 23; Settlement Definitions ¶ 2.t. (Notice
Deadline); Class Notice at 7-8) do not specify the time to object to Class Counsel’s
application for Class Counsel’s Fee Award and Class Counsel Costs. (See Settlement ¶
28.) An opportunity to object to the application is required by law. Fed. R. Civ. Proc.
23(h)(2); In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993 (9th Cir. 2010)
(Setting the objection deadline for class members on a date before the deadline for lead
counsel to file their fee motion was a misapplication of Rule 23(h) and “border[ed] on a
denial of due process because it deprive[d] objecting class members of a full and fair
opportunity to contest class counsel’s fee motion.”) Any proposed Settlement should
state when the Class Members may file their objections to the application for Class
Counsel’s Fee Award and Class Counsel Costs.
Finally, the Court is not inclined to approve a settlement which provides for
amendment or modification without court approval. (See Settlement ¶ 53.)
For the foregoing reasons, preliminary approval of the proposed Settlement is
denied. If Reloj files another motion for preliminary approval, the motion must be
accompanied by a redlined copy of the proposed settlement showing all changes to the
Settlement filed at ECF No. 282. The motion must also include any responses received
to GEICO’s notice under 28 U.S.C. § 1715 and Plaintiff’s notice to the LWDA pursuant
to PAGA, or a counsel’s declaration that no response was received.
IT IS SO ORDERED.
Dated: January 20, 2026
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