Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_90-cv-00167/USCOURTS-caed-2_90-cv-00167-1/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1 As of July 12, 2005, undistributed funds in the amount of

$41,873.92 and accrued interest in the amount of $600.30 are held

in the trust accounts of the law firm of Carroll, Burdick &

McDonough. 

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

CALIFORNIA UNION OF SAFETY

EMPLOYEES, JOSE M. PHILLIPS,

et al.,

NO. CIV. S-90-167 LKK/GGH

Plaintiffs,

v. O R D E R

STATE OF CALIFORNIA, et al.,

Defendants.

 /

 Plaintiffs brought suit under 29 U.S.C. § 216(b) of the Fair

Labor Standards Act (FLSA), alleging that they were owed unpaid

overtime wages. All individual claims have been resolved but not

all funds been distributed because there are 128 consenters who

cannot be located.1 Pending before the court is a motion for cy

pres distribution of unclaimed funds filed by plaintiffs. 

Case 2:90-cv-00167-LKK -GGH Document 292 Filed 10/13/05 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

2 Even if California law governed the matter, it seems

apparent that Cal. Civ. Proc. Code § 384 rather than § 1518 would

be the governing state statute. That statute, by its terms, does

not disturb the application of a cy pres remedy. See Cal. Civ.

Proc. Code § 384(c). The court also notes that § 384 is consistent

with Six Mexican Workers in that it provides for judicial

discretion and suggests that the distribution “further the purposes

of the underlying causes of action.” See Cal. Civ. Proc. Code 

§ 384; Six Mexican Workers, 904 F.2d at 1307. 

2

Defendants oppose, asserting that the funds must be placed with the

State Controller in the Unclaimed Property Fund pursuant to

California Code of Civil Procedure § 1518.

ANALYSIS

It is established that “[f]ederal courts have broad

discretionary powers in shaping equitable decrees for distributing

unclaimed class action funds. Six Mexican Workers v. Arizona

Citrus Growers, 904 F.2d 1301, 1307 (citing Van Gemert v. Boeing

Co., 739 F.2d at 730, 737 (2d Cir. 1984)). As I explain below,

consistent with governing federal law, the unclaimed funds should

be distributed, per the cy pres doctrine, to the Legal Aid

Society-Employment Law Center. See Six Mexican Workers, 904 F.2d

at 1301.

A. CAL. CIV. PROC. CODE § 1518 IS INAPPOSITE

Defendants argue that California Code of Civil Procedure 

§ 1518 “mandates” the escheat of the unclaimed funds. Opp’n at 3.

Defendants fail to explain why California law rather than federal

law governs the matter, and no good reason presents itself.2

////

////

Case 2:90-cv-00167-LKK -GGH Document 292 Filed 10/13/05 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

3 The Circuit Court also noted that a fourth option is pro

rata distribution of funds, but “did not express a view as to the

propriety of this distribution method.” Six Mexican Workers, 904

F.2d 1307 n. 4. The parties do not advocate this method of

distribution, and the court will not consider it further.

3

B. DISTRIBUTION TO THE LAS-ELC IS APPROPRIATE

The Ninth Circuit has explained that once a district court

finds that certification of a class is appropriate, the court must

“formulate a procedure for distributing unclaimed funds,” Six

Mexican Workers, 904 F.2d at 1307, which may include at least three

means for the disposition of unclaimed funds: 1) cy pres or fluid

distribution; 2) escheat to the government; and 3) reversion to

defendants.3 Id. at 1307. The Ninth Circuit, however, cautioned

that “[t]he district court's choice among distribution options

should be guided by the objectives of the underlying statute and

the interests of the silent class members.” Id. 

 Where, as here, “the only question is how to distribute the

damages, the interests affected are not the defendant's but rather

those of the silent class members.” Id. at 1307. Under Six

Mexican Workers, the court may consider cy pres distribution for

the purpose of distributing the unclaimed funds.

Having considered the parties’ papers submitted herein and

arguments raised during oral argument, I conclude that cy pres

distribution would further the objectives of the FLSA and would

further the interests of the absent class members.

The FLSA was enacted subsequent to a congressional finding of

“labor conditions detrimental to the maintenance of the minimum

Case 2:90-cv-00167-LKK -GGH Document 292 Filed 10/13/05 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4

standard of living necessary for health, efficiency, and general

well-being of workers.” 29 U.S.C. § 202(a)(2005); Torres-Lopez v.

May, 111 F.3d 633, 638 (9th Cir. 1997). The statute established

a minimum wage, regulations concerning maximum hours, recordkeeping

and reporting requirements, child labor provisions, and a system

of civil and criminal penalties for violations of the FLSA. Id.

(citing 29 U.S.C. §§ 201-219). 

Plaintiffs explain that LAS-ELC’s wage and hour work is

closely aligned with the interests of the class and engages in

various activities which relate to securing the rights of workers

to be paid wages due to them. Notably, the LAS-ELC’s Community

Legal Services Program and Claims Project provides free legal

information and counseling to low-income workers on wage and hour

issues. Gaitley Dec. at ¶¶ 2, 6. The Claims Project also engages

in administrative advocacy providing direct representation to

employees pursuing unpaid wage claims. Gaitley Dec. at ¶ 6. The

organization has secured over $325,000 in unpaid wages in 2004

alone. Mot. at 7. The LAS-ELC also files amicus briefs and

litigates wage and hour issues in state and federal court. Graff

Dec. at ¶ 8, Gaitley Dec. at ¶ 10. Further, LAS-ELC advocates for

the legislative expansion of wage and hour protections for workers.

Gaitley Dec. at ¶ 10. 

////

////

////

////

Case 2:90-cv-00167-LKK -GGH Document 292 Filed 10/13/05 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4 During oral argument, defendants for the first time argued

that the funds should escheat to the State because the Controller’s

office has implemented a new system which would more easily

facilitate locating the consenters. Plaintiffs object, explaining

that defendants have had the opportunity since 2001 to have the

Controller locate the consenters, but have failed to do so. As I

explained to the parties during oral argument, based on the record

before the court, I am unconvinced that escheating to the State

would be the best means of resolving this dispute.

5

In short, plaintiffs have tendered sufficient evidence showing

that there is a close connection between the interests of the

absent class members and the work performed by the LAS-ELC’s Claims

Project.4 

Accordingly, plaintiffs' motion for cy pres distribution of

unclaimed funds to the Legal Aid Society-Employment Law Center is

GRANTED.

IT IS SO ORDERED. 

DATED: October 12, 2005

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

Case 2:90-cv-00167-LKK -GGH Document 292 Filed 10/13/05 Page 5 of 5