Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-00539/USCOURTS-cand-3_07-cv-00539-12/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JACKIE FLORES, et al.,

Plaintiffs,

v.

ZALE DELAWARE, INC.,

Defendant.

NO. C07-0539 TEH

ORDER DENYING PLAINTIFFS’

MOTION TO ENFORCE CLASS

SETTLEMENT

This matter came before the Court on July 19, 2010, on Plaintiffs’ motion to enforce

the class settlement agreement. Plaintiffs seek a ruling from this Court either that the class

settlement agreement should be interpreted to include managers at Zales Outlet locations, or

that this case should be re-opened as to Zales Outlet managers. After carefully considering

the parties’ written and oral arguments, the Court now DENIES Plaintiffs’ motion for the

reasons discussed below.

BACKGROUND

On June 22, 2009, the Court signed the parties’ joint proposed order granting final

approval of the class settlement in this case. Pursuant to the parties’ settlement agreement,

the class was defined as:

all employees who worked for a least one Eligible Workweek as

a Store Manager and/or exempt Assistant Store Manager at one

or more Zales Jewelers retail locations in California between

November 29, 2002 and ending the later of January 31, 2009 or

the date the Court grants preliminary approval of the settlement

provided by this Agreement [which the Court granted on

January 12, 2009].

Settlement Agreement ¶ 42 (Ex. A to Grover Decl.) (emphasis added). The Court retained

“exclusive and continuing jurisdiction over the Lawsuit and the Parties, including all Class

Case 3:07-cv-00539-TEH Document 94 Filed 07/22/10 Page 1 of 6
United States District Court

For the Northern District of California

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Members, for purposes of enforcing and interpreting the Settlement, this Order and the

claims process established therein.” June 22, 2009 Order ¶ 18.

In September 2009, Rosela Maldonado, a manager at a Zales Outlet store in

California, contacted Plaintiffs’ counsel asking why she did not receive a class notice or

settlement payment. Grover Decl. ¶ 8. Eric Grover, counsel for Plaintiffs, e-mailed

Catherine Conway, counsel for Defendant, about this apparent omission on September 4,

2009. Ms. Conway returned the e-mail the same day, stating, “We will look into this and get

back to you.” Ex. F to Grover Decl.

It appears that Ms. Conway was unresponsive after that date, as Mr. Grover sent three

further e-mails – dated September 17, September 25, and September 30 – asking for

resolution of the issue. Id. Finally, on October 5, Ms. Conway explained to Mr. Grover via

e-mail that Ms. Maldonado “was removed from the final class list because she was not in a

covered position. She currently is an Outlet store manager. They rolled under the Zales

(ZNA) umbrella this February.” Id.

On October 9, Mr. Grover again e-mailed Ms. Conway, explaining that, according to

Ms. Maldonado’s 2006 and 2008 W-2 forms, she was employed by “Zale Delaware Inc.” 

Ex. H to Grover Decl. Mr. Grover explained Plaintiffs’ position that she therefore “worked

at a ‘retail’ store. An outlet is still a retail store. The definition of ‘retail’ is the sale of goods

directly to consumers. Although outlet stores may sell certain discounted or discontinued

merchandise, outlet stores are still selling goods at the retail level.” Id. Mr. Grover then

asked for confirmation “that all outlet Store Managers were left off the class list,” and, if so,

whether Defendant “would like to discuss resolving the situation as it at least applies to

Ms. Maldonado, if not more globally.” Id.

Mr. Grover did not receive a response to his October 9 e-mail, but he did not follow

up on the issue until six months later, when he sent a letter and e-mail to Ms. Conway on

April 2, 2010. The letter asked for either an explanation as to why Zales Outlet store

managers did not meet the class definition or an agreement that they did fall within the class

definition. Ex. I to Grover Decl. Mr. Grover stated that Plaintiffs would proceed with filing

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a motion before this Court unless Ms. Conway provided an explanation or agreement by

April 9, 2010. Id. Mr. Grover did not receive a response, and Plaintiffs subsequently filed

this motion to enforce the settlement on June 7, 2010 – two months after the deadline given

in Mr. Grover’s letter.

DISCUSSION

As set forth above, the settlement class consists of managers at “Zales Jewelers retail

locations in California” who meet certain criteria. The parties now dispute whether this

definition includes managers at Zales Outlet stores. 

Ordinary contract law applies when a court is tasked with construing or enforcing a

settlement agreement. Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989). The settlement

agreement provides that the agreement “shall be interpreted, construed, enforced, and

administered in accordance with the laws of the State of California, without regard to conflict

of law rules.” Settlement Agreement ¶ 70. Under California law:

The interpretation of a contract involves a two-step process: First

the court provisionally receives (without actually admitting) all

credible evidence concerning the parties’ intentions to determine

ambiguity, i.e., whether the language is reasonably susceptible to

the interpretation urged by a party. If in light of the extrinsic

evidence the court decides the language is reasonably susceptible

to the interpretation urged, the extrinsic evidence is then admitted

to aid in the second step – interpreting the contract.

Wolf v. Superior Court, 114 Cal. App. 4th 1343, 1351 (2004) (citations and internal

quotations omitted).

At oral argument, Plaintiffs’ counsel argued for the first time that there was no

“meeting of the minds” as to the meaning of “Zales Jewelers” in the settlement agreement. 

Under California law, this lack of mutual consent would mean that there is no contract. E.g.,

Weddington Prods., Inc. v. Flick, 60 Cal. App. 4th 793, 811 (1998). Far from seeking to

invalidate the contract, however, Plaintiffs have brought this motion to enforce the contract. 

Additionally, Plaintiffs’ counsel stated at oral argument that it would be impractical and

unrealistic to expect class members to return the settlement funds they have already received. 

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Plaintiffs’ unopposed requests for judicial notice are GRANTED.

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Thus, the Court construes Plaintiffs’ argument as originally presented in the moving papers:

that the settlement agreement should be interpreted to include managers at Zales Outlet stores

in California during the class period, not that there was a lack of mutual consent.

Plaintiffs argue that they understood use of the term “Zales Jewelers” in the settlement

agreement to clarify that other brands owned by Zale Delaware, Inc., including Gordon’s

Jewelers and Piercing Pagoda, were not covered by the lawsuit or settlement. However,

Plaintiffs offer no evidence to that effect.

In addition, Plaintiffs’ acknowledgment that other Zale brands are not part of this case

defeats their argument that Zales Outlet employees should be included in the class based on

the listing of Zale Delaware, Inc. on Outlet employees’ W-2 forms. There is no evidence that

Zale Delaware, Inc. is listed as the employer only for employees who work for stores that

carry the Zales name, as opposed to Gordon’s Jewelers, Piercing Pagoda, or other Zale

brands.

Plaintiffs next argue that Defendant’s 10-K filings with the Securities and Exchange

Commission (“SEC”) support their contention that Zales Outlet is a division of Zales

Jewelers. For example, the 1998 Form 10-K states that “the Zales Division had 695 Zales

stores and six Zales Outlet stores.” Ex. C to Pls.’ Req. for Judicial Notice at 4.1

 The 2008

and 2009 10-K filings state that “Zales Jewelers® is our national brand in the U.S., providing

jewelry to its value-oriented customers. We have further leveraged the brand strength

through Zales Outlet®. . . .” Exs. A (2009 Form 10-K) & B (2008 Form 10-K) to Pls.’ Req.

for Judicial Notice at 1. The SEC filings also state that “Zales outlet was established as an

extension of the Zales brand and capitalizes on Zales’ national advertising and brand

recognition.” 2008 Form 10-K at 2; 2009 Form 10-K at 3. However, all of the SEC filings

presented by Plaintiffs draw a distinction between “Zales stores” or “Zales Jewelers stores”

on the one hand, and “Zales Outlet stores” on the other. The 2008 and 2009 filings also talk

about Zales Jewelers and Zales Outlet as separate brands, as does the company’s website,

Ex. I to Conway Decl. Thus, in the absence of any evidence that the parties agreed that the

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class of “Zales Jewelers” managers would include Zales Outlet managers, the more

reasonable conclusion is that the Outlet managers should not be included in the class.

This conclusion is further bolstered by the history of discovery in this case. Plaintiffs

served an interrogatory asking Defendant to “state the store number and address of each of

DEFENDANT’S retail store locations doing business in California.” Ex. B to Conway Decl.

at 3. Defendant’s response included only the locations for Zales Jewelers stores and did not

include any of the Zales Outlet stores. Id. at 3-6. Another interrogatory asked Defendant to

“specify the square footage for each individual retail location in California” if Defendant

contended that class certification should be denied in part because of variation in square

footage. Ex. C to Conway Decl. at 4. Zale’s response again included only locations for

Zales Jewelers stores and not Zales Outlet stores. Id. at ZALE-FLORES003623-24. Not

once during the meet and confer process did Plaintiffs raise the issue of Zales Outlet stores. 

This is despite the fact that the locations of Zales Outlet stores are publicly available, so

Plaintiffs’ counsel could easily have checked this information against the list of stores

provided by Defendant in response to the interrogatories.

Plaintiffs’ counsel stated that they have litigated several other class actions involving

retail stores in California, and the defendants in those cases never disputed whether outlet

stores should be included. However, counsel did not explain whether these other cases

involved corporations that considered the regular and outlet stores to be separate brands, as

Defendant does here. In this case, as Plaintiffs’ counsel conceded at oral argument, counsel

“missed stuff,” and Zales Outlet stores and managers were never discussed by the parties

prior to Ms. Maldonado’s post-settlement contact.

Based on all of the above, it appears to the Court that Plaintiffs’ counsel either

assumed that Zales Outlet employees were covered by the settlement because outlet

employees were included in prior settlements involving different retail chains, or counsel

simply did not consider the issue. In any case, it is clear that Defendant considered the class

to include only Zales Jewelers managers, and not Zales Outlet managers, and Plaintiffs never

questioned that interpretation during discovery or settlement negotiations. Thus, after

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considering all of the evidence presented, the only reasonable conclusion is for the Court to

interpret “Zales Jewelers” in the settlement agreement to include only Zales Jewelers, and

not Zales Outlet, stores. Accordingly, with good cause appearing, Plaintiffs’ motion to

enforce the settlement agreement is DENIED.

IT IS SO ORDERED.

Dated: 07/22/10 

THELTON E. HENDERSON, JUDGE

UNITED STATES DISTRICT COURT

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