There is a newer update of the case as of June 20, 2011:
When RGIS offered the $27Million settlement, the company thought that it is in the best interest for both parties. RGIS denies any liability and states that it is entering into the agreement to avoid incurring further litigation costs. I think this is the right thing to do in a defendant's point of view. When a settlement is being offered, both parties can avoid very expensive litigation costs, save precious time, etc. The litigation cost is a major aspect that influences a settlement.
In many settlement cases, the offending party is in the position to offer the settlement, not necessarily because it is in the best interest of both parties but because it is strategically advantageous to the offending party especially when after weighing the evidence, previous court rulings, and the existence of a previous ruling that would point a favorable to judgement to the offended party.
Let me elaborate my point here:
The RGIS lawsuit was resolved partially in favor of the plaintiffs, more than a year ago by the district court (Wren v. RGIS Inventory Specialists, No. C-06-05778, 2009 WL 2612307, (N.D. Cal. Aug. 24, 2009)). In its 2009 opinion, the district court held that RGIS' policy of not paying the plaintiffs for time donning inventory equipment at the start of the workday violated the FLSA. The plaintiffs’ donning of audit machines, handheld scanners and related equipment at the start of the workday
“is an activity ‘performed pursuant to RGIS’ mandate, for RGIS’ benefit as an employer,’” The court then quoted the Alvarez v. I.B.P., Inc., 339 F.3d 894 (9th Cir. 2003) Supreme Court decision, and the donning time was
“‘integral and indispensable’” to the RGIS hourly employees' principal activity of conducting physical inventories.
Furthermore, the court ruled that the RGIS’ policy of not compensating RGIS hourly employees for time spent waiting between their donning of the equipment and the beginning of their inventory-related work violated the FLSA because such time is compensable under the
“continuous workday” rule. The continuous workday rule is the time that follows an employee’s performance of a principal activity at the start of the workday -- in this case, the donning of inventory equipment -- is compensable under the FLSA (see Alvarez v. I.B.P., Inc., 546 U.S. 21 (2005)).
Based on the opinion of the court, there is an FLSA violation. The court seemed to favor the
offended party ( in this case, the RGIS hourly employees). So the natural recourse for the
offending party (in this case, RGIS) IS to offer a settlement. That is a good legal move. But there is one question that needs to be settled:
Was the offer from RGIS a reasonable for the Plaintiff?
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| Image: renjith krishnan / FreeDigitalPhotos.net |
That is a
$27,000,000.00 question. And that is the exact gross settlement amount that RGIS LLC has offered to the Plaintiffs.
Was the number just magically pop out from nothing and became the basis for compensation? Or did it based on some mathematically feasible formula? Of course there is a basis for coming up such a number. In one side, settlement is computed based on the number of shifts an employee works for the employer, and the frequency of time that lapsed for donning an equipment (which may include wearing the Audit/RM machine, connecting scanner, testing just to make sure the equipment work, changing batteries if necessary, wearing belt bags, pocketing yellow tags, etc.) The other side, settlement may
also had been determined based on the gravity of, or the extent of "pain" incurred by RGIS hourly employees. RGIS thought that $27 Million offer is reasonable enough to cover both donning time and employees' grief.
But, what exactly is a reasonable settlement? How do we differentiate between a reasonable, an excessive, or a ridiculous settlement? One might argue that being reasonable means being fair to the
offended party. I assume that RGIS was simply negotiating the settlement using a bottom up strategy while the Plainitffs' attorneys are fighting the settlement from the maximum vantage point. I said this because it is a well known fact that most settlement amounts would be slightly lower and cheaper in comparison to the grant ruled by the court. Now, if we use this as a rule of thumb, then chances are, RGIS settlement offer is relatively lower than what should have been reasonable for the Plaintiffs.
And that is the reason why there will be another court hearing on January 2011 to give enough time for possible objections from the Plaintiff before the judge will sign the settlement. If there is no objection on the settlement as currently offered by RGIS on or before the next scheduled hearing on January 2011, then the offer IS reasonable. Judge Spero shall sign the final approval of the settlement on the date specified.
However, if majority of the class and/or Plaintiff's attorney object to the amount of settlement, then final approval of the settlement may be delayed.
Supreme Court ruling on IPB v. ALVAREZ:
The preceded data are for informational purposes only. No warranty or fitness is implied. It does not solicit, constitute, endorse, or construed to have legal basis, implications, weigh, or merit to a particular case, or any case in dispute.
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