Calling a settlement review error “harmless,” the U.S. Court of Appeals for the 10th Circuit in Denver says it won’t put a halt to an agreement reached in a California court by attorneys representing Vail Resorts and a group of employees who sued the company for illegal work practices.
Another group of workers, all of whom have opted out of the California settlement, is also suing the company in federal court in Colorado, where Vail Resorts is headquartered, alleging similar federal labor law violations. Those workers allege Vail Resorts owes potentially hundreds of millions to its employees in unpaid wages, overtime and other benefits.
That group of workers, referred to by the 10th Circuit Court as “Colorado Plaintiffs,” argue that the California case needs to be remanded and taken to court in Colorado.
“The Supreme Court has made clear that nationwide class or collective actions must be filed and litigated where the defendant is subject to general jurisdiction — i.e., where the company is headquartered or incorporated to curb ‘forum shopping’ or ‘litigation tourism,’” Colorado Plaintiffs argued in a June filing.
The Colorado Plaintiffs also contend the California settlement should be subject to a higher standard of review, something the 10th Circuit agreed should have been required.
“We agree with Colorado Plaintiffs that the court was required to review the (report and recommendation) de novo, but we decline to remand because the error was harmless error,” the 10th Circuit Court wrote in a decision issued Oct. 17.
The Colorado Plaintiffs have until the end of the month to file another rehearing petition on the matter. In a June rehearing petition which led to the Oct. 17 decision, the Colorado Plaintiffs argued that because they are currently appealing the state court settlement in California, the settlement is not yet final and therefore it’s still possible for the federal court to block the settlement.
On Sept. 29, the Colorado Plaintiffs filed their opening brief in that appeal, stating several opinions as to why the settlement should be thrown out.
Those opinions include the machinations that resulted in the case going to California state court in the first place, along with improper assumptions made as to the value of the claims.
“Since Vail was not headquartered or incorporated in California, the trial court lacked the requisite general jurisdiction to approve a nationwide settlement, and therefore its approval resolving thousands of non-California residents’ claims against a Colorado company violated ‘interstate federalism’ and the Fourteenth Amendment,” according to the appellants opening brief.
Assuming, for the sake of argument that the trial court did have proper jurisdiction, the settlement still does not meet approval standards under California law, the appellants argue.
“The action was not actively litigated — Vail never challenged the complaint, there was no motion practice, and the parties exchanged no formal discovery,” according to the appellants opening brief.
The settlement, which received final approval in August of 2022, was for $13.1 million, something the settling parties claimed was 12.1% of the damages. But with no formal discovery, that number was a mere “back of the envelope” estimation “based on data cherry-picked by Vail,” the appellants argue, saying Vail Resorts’ removal notices would put the estimated total recoverable damages at more than double the California case’s $108.1 million estimate.
Vail Resorts has until Dec. 26 to file a response to the appellants opening brief.