Opinion

2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 ERIC HERRERA, individually, and on Case No. 3:25-CV-2298-GPC-DEB 12 behalf of all others similarly situated, 13 ORDER DENYING MOTION FOR Plaintiff, PRELIMINARY APPROVAL OF 14 v. CLASS ACTION SETTLEMENT AND 15 CERTIFICATION OF CLASS CORECIVIC OF TENNESSEE, LLC, a 16 Tennessee limited liability company; [ECF No. 31] and DOES 1 through 50, inclusive; 17 18 Defendants.

19 Before the Court is Plaintiffs’ Motion for Preliminary Approval of Class Action 20 Settlement. ECF No. 31 (“Motion for Preliminary Approval” or “Mot.”). The Motion is 21 unopposed. See id. On July 31, 2026, the Court held a hearing on this matter. ECF No. 22 36. For the reasons set forth below, the Court DENIES without prejudice preliminary 23 approval of the Parties’ Settlement Agreement. 24 I. BACKGROUND 25 A. Factual and Procedural Background 26 Plaintiff Eric Herrera (“Plaintiff”) is a resident of Chula Vista, California and 27 28 1 worked for Defendant CoreCivic of Tennessee, LLC (“CoreCivic”) in California as an 2 hourly-paid, non-exempt employee from approximately August 2019 to April 2025. ECF 3 No. 30 (“First Amended Complaint” or “FAC”) ¶ 8. Plaintiff alleges that Defendants 4 violated various provisions of the California Labor Code during his employment by 5 failing to pay minimum, straight-time, and overtime wages; failing to provide compliant 6 meal and rest periods; failing to timely pay final wages; failing to furnish accurate wage 7 statements; failing to reimburse necessary business expenses; and failing to produce 8 requested employment records. Id. ¶¶ 1, 5. Plaintiff also asserts a claim under 9 California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq., and seeks 10 civil penalties under the California Private Attorneys General Act (“PAGA”), Cal. Lab. 11 Code §§ 2698 et seq. FAC ¶¶ 97-111, 112-117. Plaintiff seeks to represent a class 12 consisting of Plaintiff and all other persons employed by Defendants in California as 13 hourly-paid or non-exempt employees during the applicable statute of limitations period. 14 FAC ¶ 2. 15 On May 30, 2025, Plaintiff filed this putative wage-and-hour class action in the 16 Superior Court of California, County of Santa Clara. Mot. at 11.1 On July 11, 2025, 17 Defendant removed this action to the United States District Court for the Northern 18 District of California pursuant to the Class Action Fairness Act. ECF No. 1. On August 19 28, 2025, the parties stipulated to transfer venue to this District, and the case was 20 transferred to this Court. ECF Nos. 14, 15. Plaintiff also submitted a notice to Defendant 21 and the California Labor & Workforce Development Agency (“LWDA”) pursuant to 22 PAGA and, on August 29, 2025, filed a separate PAGA action in San Diego County 23 Superior Court. ECF No. 31-1 (Yslas Decl.) ¶ 5. On January 26, 2026, after the Court 24 granted leave to amend, Plaintiff filed the operative First Amended Complaint, which 25 incorporated the PAGA claim into this action. ECF No. 29; FAC. 26 / / / 27 28 1 1 B. Settlement Negotiation 2 On November 24, 2026, the parties participated in an Early Neutral Evaluation 3 Conference before Magistrate Judge Daniel E. Butcher. ECF No. 23. The settlement 4 negotiations “were at arm’s length and, although conducted in a professional manner, 5 were adversarial,” and included the exchange of initial disclosures and representative 6 time and payroll data. Mot. at 12. On December 16, 2025, another Early Neutral 7 Evaluation Conference was held, and the parties reached a settlement in principle. ECF 8 No. 25. The parties thereafter executed the Class Action and PAGA Settlement 9 Agreement. ECF No. 31-1, Ex. 2 (“Settlement Agreement” or “SA”). 10 C. Settlement Agreement 11 The material terms of the Settlement Agreement include the following: 12 Settlement Class. The Settlement Class consists of all current and former non- 13 exempt employees employed by Defendants in California between July 11, 2023, and 14 December 12, 2025. SA at 44. 15 Settlement Amount. A maximum settlement amount of $624,550.00 is to be paid 16 by Defendant in full satisfaction of all released claims, inclusive of all individual 17 settlement payments, any approved class representative service award, attorneys’ fees and 18 costs, settlement administration costs, the PAGA settlement payment, and the payment to 19 the California Labor and Workforce Development Agency. Id. 20 Escalator Provision. Defendant represents that approximately 1,200 Settlement 21 Class Members worked approximately 51,800 workweeks during the class period. If the 22 total number of workweeks exceeds that estimate by more than eight percent, Defendant 23 must proportionally increase the total Settlement Amount. Id. 24 Allocation of Settlement Payments. After deductions approved by the Court, the 25 Net Settlement Amount will be distributed on a pro rata basis according to each 26 participating Settlement Class Member’s qualifying workweeks during the class period. 27 Id. at 50. 28 1 Release. In exchange for settlement benefits, participating Settlement Class 2 Members will release all wage-and-hour claims that were asserted or could have been 3 asserted based on the facts alleged in this action, including claims arising under the 4 California Labor Code and California Business and Professions Code Sections 17200 et 5 seq., during the applicable release period. Id. at 40. 6 Released PAGA Claims. Aggrieved employees will release the PAGA claims 7 asserted in the operative complaint and PAGA notice arising during the PAGA period. Id. 8 Class Members who are also PAGA Members will receive a share of the PAGA 9 Settlement Payment regardless of whether the Class Member opts out of the SA. Id. at 10 40-41. 11 PAGA Allocation. The Settlement allocates $80,000.00 to resolve Plaintiff’s 12 PAGA claims. Of that amount, $52,000.00 (65%) will be paid to the California Labor and 13 Workforce Development Agency, and $28,000.00 (35%) will be distributed among 14 PAGA Members. Id. at 39, 49. 15 Tax Allocation. As to the portion of the Net Settlement Fund paid that constitutes 16 wages, the employer portion of the applicable employment taxes shall not be paid from 17 the Fund. Id. at 40. 18 Attorneys’ Fees, Costs, and Service Award. Class Counsel may seek attorneys’ 19 fees of up to thirty percent of the Settlement Amount ($187,365.00), litigation costs of up 20 to $12,000.00, and a service award of up to $10,000.00 for Plaintiff, subject to Court 21 approval. Id. at 38, 44, 45, 48. 22 Settlement Administration. The parties have designated Phoenix Class Action 23 Administrators as the Settlement Administrator, with administration costs capped at 24 $15,500.00. Id. at 43, 49. 25 Notice. Within twenty-one days of the Preliminary Approval Order, Defendant 26 will provide the Settlement Class List to the Settlement Administrator. Id. at 51. Within 27 twenty-one days after receiving the Settlement Class List, the Settlement Administrator 28 1 will mail a Notice Packet to Settlement Class Members by first-class U.S. mail, 2 informing them of the Settlement and their rights to participate, object, or request 3 exclusion. Id. at 51-52. 4 II. DISCUSSION 5 A. Legal Standard 6 The Ninth Circuit has a strong judicial policy that favors settlements in class 7 actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, 8 when the parties settle before class certification, the court must “peruse the proposed 9 compromise to ratify both the propriety of the certification and the fairness of the 10 settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). To that end, a 11 reviewing court must engage in two-step process. First, the court must “direct notice in a 12 reasonable manner to all class members who would be bound by the proposal if giving 13 notice is justified by the parties’ showing that the court will likely be able to: (i) approve 14 the proposal under Rule 23(e)(2); and (ii) certify the class for purposes of judgment on 15 the proposal.” Fed. R. Civ. P. 23(e)(1)(B). Second, after providing the class with notice 16 of the proposed settlement, a reviewing court may then approve it only after a hearing 17 and finding that it is “fair, reasonable, and adequate.” Fed. R. Civ. 23(e)(2). 18 At the preliminary approval stage, the reviewing court is engaged in the first 19 inquiry and considers whether it is likely to approve of the proposal and certify the class. 20 Fed. R. Civ. P. 23(e)(1)(B). 21 B. Preliminary Approval of Class Action Settlement 22 Federal Rule of Civil Procedure 23(e) requires judicial approval for any proposed 23 class action settlement. Before approving a proposed class action settlement, a court must 24 find that the settlement is “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e). Such an 25 evaluation is made in the context of the “strong judicial policy that favors settlements, 26 particularly where complex class action litigation is concerned.” In Re Syncor ERISA 27 Litig., 516 F.3d 1095, 1101 (9th Cir. 2008). At the preliminary approval stage, the 28 1 question is whether approval under the “fair, reasonable, and adequate” standard is likely. 2 Fed. R. Civ. P. 23(e)(1)(B). Any fairness determination requires the Court to “focus[ ] 3 primarily upon whether the particular aspects of the decree that directly lend themselves 4 to pursuit of self-interest by class counsel and certain members of the class—namely 5 attorney’s fees and the distribution of any relief, particularly monetary relief, among class 6 members—strictly comport with substantive and procedural standards designed to protect 7 the interests of class members.” Staton, 327 F.3d at 960. Courts evaluate the “settlement 8 as a whole, rather than assessing its individual components.” Lane v. Facebook, Inc., 696 9 F.3d 811, 818 (9th Cir. 2012). 10 Rule 23(e) was amended in 2018 to create uniformity amongst the circuits and to 11 focus the inquiry on whether a proposed class action is “fair reasonable, and adequate.” 12 Fed. R. Civ. P. 23(e), advisory committee notes (2018 amendment). As amended, Rule 13 23(e) provides that a court may approve a proposed class action settlement after 14 considering whether: 15 (A) the class representatives and class counsel have adequately represented the 16 class; (B) the proposal was negotiated at arm’s length; 17 (C) the relief provided for the class is adequate, taking into account: 18 (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of distributing relief to the 19 class, including the method of processing class-member claims; 20 (iii) the terms of any proposed award of attorney’s fees, including timing of payment; and 21 (iv) any agreement required to be identified under Rule 23(e)(3); and 22 (D) the proposal treats class members equitably relative to each other. 23 Fed. R. Civ. P. 23(e)(2). The first and second factors are viewed as “procedural” in 24 nature, and the third and fourth factors are viewed as “substantive” in nature. Fed. R. Civ. 25 P. 23(e)(2), advisory committee notes (2018 amendment) 26 The Court also considers factors outlined by the Ninth Circuit to determine the 27 fairness, adequacy, and reasonableness of the settlement: “(1) the strength of the 28 plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; 1 (3) the risk of maintaining class action status throughout the trial; (4) the amount offered 2 in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) 3 the experience and views of counsel; (7) the presence of a governmental participant; and 4 (8) the reaction of the class members to the proposed settlement.” Churchill Village, 5 L.L.C. v. General Electric, 361 F.3d 566, 575 (9th Cir. 2004). Further, because settlement 6 was reached before formal class certification, a “higher level of scrutiny for evidence of 7 collusion or other conflicts of interest [is] required....” Jones v. GN Netcom, Inc. (In re 8 Bluetooth Headset Prods. Liab. Litig.), 654 F.3d 935, 946 (9th Cir. 2011). 9 For the reasons that follow, the Court DENIES without prejudice preliminary 10 approval of the Settlement. 11 1. The Extent of Discovery and the Scope of the Investigation 12 A settlement that has been reached before plaintiff’s counsel “ha[ve] had the 13 benefit of the discovery necessary to make an informed evaluation of the case and, 14 accordingly, to strike a fair and adequate settlement” is inherently worthy of a court's 15 skepticism. Acosta v. Trans Union, LLC, 243 F.R.D. 377, 397 (C.D. Cal. 2007); Grady v. 16 RCM Techs., Inc., 671 F. Supp. 3d 1065, 1074 (C.D. Cal. 2023). Specifically, a plaintiff 17 will not be able to broker a fair settlement without having been “armed with sufficient 18 information about the case to have been able to reasonably assess its strengths and 19 value.” Acosta, 243 F.R.D. at 396. 20 When counsel “have taken few investigative steps that could reliably develop the 21 extent of [the defendant's] liability[,]” denial of preliminary approval is appropriate. 22 Wilson v. J.B. Hunt Logistics, Inc., 2020 WL 11626082, at *3 (C.D. Cal. Nov. 13, 23 2020) (cleaned up). Further, in wage-and-hour class actions, putative class counsel often 24 gather evidence of “company practices,” including “how often class members were 25 denied breaks [or] forced to take late breaks.” Id.; cf. Freeze v. PVH Corp., 2020 WL 26 5769085, at *6 (C.D. Cal. July 1, 2020) (granting preliminary approval when discovery 27 included “production of all relevant policy and procedure documents, data points relevant 28 1 to the potential damages, and time and payroll records for all Class Members for the 2 entire relevant time period” as well as “interviews, background investigations, and 3 analyses of employment records”). 4 Here, Plaintiff has not stated with any specificity what documentation Defendants 5 produced and how it was sufficient to estimate Defendants’ practices and policies 6 relevant to the class's claims. Plaintiff only states that initial disclosures were exchanged, 7 “extensive information on the company’s wage and hour policies and practices” as well 8 as “a sizable sample of time and payroll records for the Settlement Class Members” was 9 provided, and “hundreds of pages of relevant documents” were produced. ECF No. 31-1 10 at 6. 11 District courts have often denied preliminary approval of wage-and-hour class 12 settlements reached after far more extensive investigations than undertaken in this instant 13 case. See, e.g., Millan v. Cascade Water Servs., Inc., 310 F.R.D. 593, 610–11 (E.D. Cal. 14 2015) (denying preliminary approval of a class settlement where class counsel relied 15 heavily on information provided by the named plaintiff and defendant, assumed the 16 number of violations, and did not present documentation regarding the extent of 17 discovery); Wilson v. J.B. Hunt Logistics, Inc., No. 18-CV-03487-SVW-AFMX, 2020 18 WL 11626082, at *3 (C.D. Cal. Nov. 13, 2020) (“While class counsel does appear to 19 have conducted some interviews or depositions with class members, there is little 20 indication of what was learned. There is no indication how many class members were 21 interviewed or deposed, whether any class members provided information supporting 22 Plaintiff's allegations, and whether any class members gave estimates of the frequency of 23 the wage-and-hour violations at issue.”) (cleaned up). 24 Accordingly, Plaintiff’s provided statements as to extent of discovery and the 25 scope of the investigation here favor denying preliminary approval. 26 2. The Adequacy of the Class Relief 27 Balancing the class's potential recovery against the amount offered in settlement is 28 1 “perhaps the most important factor to consider” in preliminary approval. Cotter v. Lyft, 2 Inc., 176 F. Supp. 3d 930, 935 (N.D. Cal. 2016). It is “not a hollow exercise in which the 3 Court blindly accepts the parties' unsupported assertions.” Haralson v. U.S. Aviation 4 Servs. Corp., 383 F. Supp. 3d 959, 970 (N.D. Cal. 2019). “Plaintiffs seeking preliminary 5 approval should show their work by explaining the relative value of their claims in 6 significant detail. For example, in a wage-and-hour case like this one, plaintiffs should 7 show or estimate how many employees were allegedly shortchanged, calculate and 8 explain to the Court the amount by which typical employees were allegedly shortchanged 9 on an hourly or daily basis, and show or estimate the number of hours or days the 10 employees were allegedly shortchanged.” Eddings v. DS Servs. of Am., Inc., No. 15-CV- 11 02576-VC, 2016 WL 3390477, at *1 (N.D. Cal. May 20, 2016). Plaintiff should also 12 “explain the source of many of the figures or, if they are based on assumptions, why 13 those assumptions are reasonable.” Louangamath v. Spectranetics Corp., No. 18-CV- 14 03634-JST, 2021 WL 9274552, at *2 (N.D. Cal. May 19, 2021). 15 Here, Plaintiff calculated minimum and overtime wages claims by assuming 16 Defendants were liable for one hour of unpaid worktime per workweek, which resulted in 17 “an estimate of approximately $2,767,674.00 (51,800 workweeks x $35.62 hourly rate x 18 1.5 overtime rate x 0.50 hour of unpaid work per workweek).” Mot. at 24. However, 19 “Class Counsel applied a risk discount based on a 20% chance of succeeding at class 20 certification and a 20% chance of succeeding at trial on the merits because liability 21 depends on whether Defendant knew or should have known that class members were 22 working off-the-clock, yielding a realistic damage estimate of approximately $110,706.96 23 ($2,767,674.00 x 20% x 20%).” Id. 24 For meal period claims, “Class Counsel’s expert analyzed Defendant’s 25 timekeeping records and found that approximately 29.30% of all meal break violations 26 consisting of short, late, or missed meal periods.” Id. Thus, potential liability for the meal 27 period claim is approximately $2,230,763.02 (213,743 shifts x $35.62 hourly rate x 28 1 29.30% violation rate).” Id. However, “Class Counsel discounted this figure based on a 2 25% chance of succeeding at class certification and a 20% chance of succeeding at trial, 3 yielding a realistic damage estimate of approximately $111,538.15 ($2,230,763.02 x 25% 4 x 20%).” Id. at 25. 5 In terms of rest breaks, a violation rate of 29.30% was, again, assumed, but no 6 explanation for the assumption was provided. With that rate, “Defendant’s potential 7 liability for the rest period claim is approximately $2,257,439.12 (216,299 shifts x $35.62 8 hourly rate x 29.30% violation rate).” Id. Again, “Class Counsel discounted this claim 9 based on a 15% chance of succeeding at class certification and a 20% chance of 10 succeeding at trial, yielding a realistic damage estimate of approximately $67,723.17 11 ($2,257,439.12 x 15% x 20%).” Id. 12 As to reimbursements, Class Counsel assumed that Plaintiff’s “estimate that he 13 incurred $30.00 in unreimbursed expenses per month” could be applied to each class 14 member, resulting in approximately $388,500.00 in potential exposure. Id. at 26. Then, 15 “Class Counsel discounted this claim based on a 20% chance of succeeding at class 16 certification and a 25% chance of succeeding at trial, yielding a realistic damage estimate 17 of approximately $19,425.00 ($388,500.00 x 20% x 25%).” Id. 18 Finally, for waiting time penalties, inaccurate wage statements, and PAGA 19 violations, the calculated “maximum potential liability for waiting time penalties is 20 approximately $3,207,937.20 ([316 employees x $35.62 hourly rate x 8.00 hours/day x 21 30 days] + [316 employees x $35.62 hourly rate x 1 hour/day x 1.5 overtime rate x 30 22 days]) based on approximately 316 terminated class members during the 3-year statute of 23 limitations period, approximately $3,272,000.00 (818 employees x $4,000 statutory 24 maximum) for inaccurate wage statements based on approximately 818 class members 25 who worked during the 1-year statute of limitations period, and approximately 26 $1,285,300.00 for PAGA violations based on the Court assessing a $100 penalty for 27 initial violations for all 12,853 pay periods within the PAGA period.” Id. at 27. As 28 1 before, “Counsel discounted these figures to account for the risk and uncertainty of 2 prevailing at trial, resulting in a realistic evaluation of approximately $96,238.12 3 ($3,207,937.20 x 15% x 20%) for waiting time penalty claims, approximately $98,160.00 4 ($3,272,000.00 x 15% x 20%) for wage statement penalty claims, and $128,530.00 for 5 PAGA penalties, or approximately $322,928.12 total for statutory and civil penalties.” Id. 6 at 28. 7 These estimates do not provide sufficient detail. For example, Plaintiff’s counsel 8 does not explain (1) why it was assumed Defendants were liable for only one hour of 9 unpaid worktime for the minimum and overtime wage claims; (2) why a 29.30% 10 violation rate was used for the rest break claims; and (3) why Plaintiff’s specific 11 experience was representative of the class for reimbursement claims. See Louangamath, 12 2021 WL 9274552, at *3. 13 Additionally, the estimated maximum recovery was $15,409,613.34, and after 14 considering the discounts, Plaintiff’s “realistic estimated recovery” is $632,321.40. 15 Meanwhile, the proposed settlement is $624,550.00. This figure might be “98.77 % of the 16 realistic maximum recovery,” Mot. at 28, but it is only 4.05% of Plaintiff’s estimated 17 maximum recovery. Additionally, “to truly understand the discount of the class recovery, 18 the recoverable maximum should be compared to what the class will recover from the 19 settlement.” Louangamath, 2021 WL 9274552, at *3. Here, class members would only 20 collect $319,685.00 after deducting the maximum proposed attorney's fees and costs, 21 Class Representative incentive award, PAGA payment, and settlement administrator 22 fee. Thus, settlement amounts to only 2.07% of the maximum potential value of claims 23 based on Plaintiff's counsel's figures. None of Plaintiff's cited cases suggest that a 24 settlement representing 2.07% of what the class could get at trial is reasonable. 25 Finally, Plaintiff has failed to supply “enough information to evaluate the strengths 26 and weaknesses of [his] case.” Eddings v. DS Servs. of Am., Inc., No. 15-CV-02576-VC, 27 2016 WL 3390477, at *1 (N.D. Cal. May 20, 2016). Plaintiff has only provided generic 28 1 statements of various risks inherent to class action, namely, that the Court might deny 2 class certification as to one or more claims or that Plaintiff might fail to prove a claim at 3 trial. Mot. at 21-22. Courts often require more. See Haralson v. U.S. Aviation Servs. 4 Corp., 383 F. Supp. 3d 959, 970 (N.D. Cal. 2019); Hunt v. VEP Healthcare, Inc., No. 16- 5 CV-04790-VC, 2017 WL 3608297, at *1 (N.D. Cal. Aug. 22, 2017) (“The motion for 6 preliminary approval makes abstract gestures to the uncertainties of litigation, rather than 7 offering a careful analysis of the claims and the strength or weakness of any potential 8 defenses.”); Eddings, 2016 WL 3390477, at *1 (“The plaintiffs list legal issues that this 9 case might present and positions that the defendants might take, but they don't analyze 10 those issues or evaluate the strength or weakness of defendants' positions. A party 11 moving for preliminary approval should cite case law and apply it to explain why each 12 claim or defense in the case is more or less likely to prove meritorious.”); Grady v. RCM 13 Techs., Inc., 671 F. Supp. 3d 1065, 1076 (C.D. Cal. 2023). 14 In sum, any future motion should explain the basis for calculating the maximum 15 value of Plaintiff's claims and articulate particularized reasons why the proposed discount 16 is appropriate. 17 C. Provisional Class Certification under Rule 23 18 When a district court denies preliminary approval of a class action settlement, it 19 may decline to decide whether the proposed settlement class may be properly certified 20 under Rule 23(a) and 23(b)(3). See, e.g., Shin v. Plantronics, Inc., 2019 WL 2515827, at 21 *7 (N.D. Cal. June 17, 2019); Fisher v. Osmose Utilities Servs., 2021 WL 1259731, at *9 22 (E.D. Cal. Apr. 5, 2021), R&R adopted, 2021 WL 3124602 (E.D. Cal. July 23, 23 2021); Louangamath v. Spectranetics Corp., No. 18-CV-03634-JST, 2021 WL 9274552, 24 at *5 (N.D. Cal. May 19, 2021). Therefore, the Court does not decide at this time whether 25 class certification would be appropriate in this case. 26 / / / 27 / / / 28 | III. CONCLUSION 2 For the foregoing reasons, the Court DENIES WITHOUT PREJUDICE the motion for preliminary settlement approval. The Court defers ruling on preliminary class 4 | certification until the parties present a settlement that merits preliminary approval. > IT IS SO ORDERED. 6 Dated: August 3, 2026 7 sale □ g Hon. Gonzalo P. Curiel 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28