UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT …2 conclusion of the first meeting of creditors...

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION IN RE: ) ) ITT EDUCATIONAL SERVICES, INC., et al.1 ) Case No. 16-07207-JMC-7A ) Debtors. ) Jointly Administered

CERTIFICATE OF SERVICE I hereby certify that on July 30, 2020, pursuant to 28 U.S.C. § 1715(b), a copy of the Notice of Proposed Settlement of Class Action attached hereto as Exhibit 12 was mailed via first-class U.S. Mail, postage prepaid, and properly addressed to the following appropriate Federal official and appropriate State official as defined by 28 U.S.C. § 1715(a)(1) and (a)(2):

William Pelham Barr, Attorney General U.S. Department of Justice 950 Pennsylvania Avenue, NW Washington, DC 20530-0001

Xavier Becerra, Attorney General Office of the Attorney General 1300 “I” Street Sacramento, CA 95814-2919

CAFA Coordinator Office of the Attorney General Consumer Protection Section 455 Golden Gate Ave., Suite 11000 San Francisco, CA 94102

Julie A. Su, Secretary California Labor & Workforce Development Agency 800 Capitol Mall, Suite 5000 (MIC-55) Sacramento, CA 95814

Leslie Rutledge, Attorney General 323 Center Street, Suite 200 Little Rock, AR 72201

Ashley Moody, Attorney General Office of the Attorney General State of Florida PL-01 The Capitol Tallahassee, FL 32399

Chris Carr, Attorney General 40 Capitol Square, SW Atlanta, GA 30334

Lawrence G. Wasden, Attorney General State of Idaho Office of the Attorney General 700 W. Jefferson Street, Suite 210 P.O. Box 83720 Boise, ID 83720

1 The debtors in these cases, along with the last four digits of their respective federal tax

identification numbers, are ITT Educational Services, Inc. [1311]; ESI Service Corp. [2117]; and Daniel Webster College, Inc. [5980].

2 Exhibit C to the Notice of Proposed Settlement of Class Action is not included with this filing in order to protect the personal information of potential class members; provided however, Exhibit C was included in the mailing to the appropriate Federal official and appropriate State official as required by 28 U.S.C. § 1715(b).

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Josh Stein, Attorney General 9001 Mail Service Center Raleigh, NC 27699

Gurbir S. Grewal, Attorney General Office of the Attorney General RJ Hughes Justice Complex 25 Market Street, Box 080 Trenton, NJ 08625

Letitia James, Attorney General Office of the Attorney General 28 Liberty Street New York, NY 10005 Attn: Managing Attorney’s Office/Personal Service

CAFA Coordinator Office of the Attorney General 28 Liberty Street, 15th Floor New York, NY 10005

Aaron Ford, Attorney General 100 North Carson Street Carson City, NV 89701

Ellen F. Rosenblum, Attorney General Oregon Department of Justice 1162 Court Street NE Salem, OR 97301

Josh Shapiro, Attorney General Pennsylvania Office of Attorney General Strawberry Square Harrisburg, PA 17120

Ken Paxton, Attorney General Office of the Attorney General P.O. Box 12548 Austin, TX 78711

Bob Ferguson, Attorney General 1125 Washington Street SE P.O. Box 40100 Olympia, WA 98504

Respectfully submitted,

By: /s/ James E. Rossow Jr. Deborah J. Caruso (Atty. No. 4273-49)

James E. Rossow Jr. (Atty. No. 21063-29) Joshua W. Casselman (Atty. No. 27055-49) RUBIN & LEVIN, P.C. 135 N. Pennsylvania Street, Suite 1400 Indianapolis, Indiana 46204 Telephone: (317) 634-0300 Facsimile: (317) 263-9411

Counsel to the Trustee

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EXHIBIT 1

[NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION]

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INDIANAPOLIS DIVISION IN RE: ) ) ITT EDUCATIONAL SERVICES, INC., et al. ) Case No. 16-07207-JMC-7A ) Debtors. ) Jointly Administered ) SEAN MINER, DAVID HEUMANN, and ) SHAWNA ADMIRE, on their own behalf and on ) Adv. Proceeding No. 19-50105 behalf of all other persons similarly situated, ) ) Plaintiffs, ) ) v. ) ) DEBORAH J. CARUSO, CHAPTER 7 ) TRUSTEE FOR THE BANKRUPTCY ESTATE ) OF ITT EDUCATIONAL SERVICES, et al. ) ) Defendant. )

NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION Deborah J. Caruso, the chapter 7 trustee in this case (the “Trustee”) in the above-

captioned cases of ITT Educational Services, Inc. (“ITT”), et al. (collectively, the “Debtors”), by

counsel, hereby provides notice, pursuant to 28 U.S.C. § 1715(b), of the proposed settlement of

the class action filed by the Plaintiffs (defined below), and states as follows:

1. On September 16, 2016 (the “Petition Date”), each of the Debtors filed a

voluntary petition for relief under chapter 7 of title 11 of the United States Code (the

“Bankruptcy Code”). The Trustee was appointed interim trustee in each of the Debtors’

bankruptcy cases on the Petition Date pursuant to section 701(a)(1) of the Bankruptcy Code.

The Trustee became the case trustee in each of the Debtors’ bankruptcy cases following the


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conclusion of the first meeting of creditors on November 1, 2016, pursuant to section 702(d) of

the Bankruptcy Code.

2. On October 4, 2016, the Court entered its Order Granting Motion for Joint

Administration of Chapter 7 Cases [Docs 221-222], directing the Debtors’ bankruptcy cases to

be jointly administered for procedural purposes only in Case No. 16-07207 (“Bankruptcy Case”).

3. Prior to the Petition Date, ITT was a public, for-profit corporation engaged in the

business of providing post-secondary degree programs in approximately thirty-nine states and

through on-line services. ESI Services Corp. and Daniel Webster College, Inc. are subsidiaries of

ITT. ITT had at least fourteen (14) campuses located in California.

4. Prior to the Petition Date, Sean Miner, David Heumann, and Shawna Admire (the

“Class Representatives”), on behalf of themselves individually and the Settlement Class (defined

in the Class Action Settlement) (collectively, the “Plaintiffs”) filed a Class Action Complaint on

July 20, 2016 against ITT in the Superior Court for the State of California, County of Alameda,

Case No. RG16824000, in an action entitled Sean Miner, David Heumann, and Shawna Admire,

individually and on behalf of all others similarly situated v. ITT Educational Services, Inc., a

Delaware corporation (“California Class Action”). The California Class Action was thereafter

removed by ITT to the United States District Court, Northern District of California, Case No.

3:16-cv-04827-VC (“California District Court”), on August 22, 2016. The California Class

Action is presently stayed pursuant to section 362 of the Bankruptcy Code.

5. On September 30, 2016, Plaintiffs Miner and Heumann, as agents of the State of

California, pursuant to California Labor Code Private Attorneys General Act of 2004 (Cal. Lab.

Code §§ 2698 et seq.), filed in the Bankruptcy Case a proof of claim, Claim No. 27 (“PAGA

Proof of Claim”), in the amount of $13,776,000.00, which included as an attachment a copy of


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the Class Action Complaint filed in the California Class Action. As part of this claim amount,

the PAGA Proof of Claim asserted a priority claim pursuant to section 507(a)(4) of the

Bankruptcy Code in the amount of $3,400,000.00 and a pre-petition general unsecured claim in

the amount of $10,376,000.00.

6. On October 5, 2016, Plaintiffs filed a subsequent class proof of claim in this

Bankruptcy Case, Claim No. 52 (“Class Proof of Claim”), in the amount of $20,219,000.00,

which also included as an attachment a copy of the Class Action Complaint filed in the

California Class Action. As part of this claim amount, the Class Proof of Claim stated a priority

claim under section 507(a)(4) of the Bankruptcy Code in the amount of $3,400,000.00 (“Class

Priority Claim”) and a pre-petition general unsecured claim in the amount of $16,819,000.00

(“Class Unsecured Claim”).

7. On September 29, 2016, Plaintiffs also filed in the Bankruptcy Case Sean Miner,

David Heumann, and Shawna Admire’s Motion Pursuant to FRBP 9014 Seeking Application of

FRBP 7023 to Class Proof of Claim at the “Claim Filing Stage” of this Case [Bankruptcy Case,

Doc 181].

8. On October 12, 2016, the Bankruptcy Court entered its Order Granting Motion

Pursuant to FRBP 9014 Seeking Application of FRBP 7023 to Class Proof of Claim at the

“Claim Filing Stage” of this Case [Doc 340], which made Bankruptcy Rule 7023 applicable

through all stages of the Bankruptcy Case, including claims resolutions of class claims.

9. On January 20, 2017, the Bankruptcy Court entered an Order appointing

HammondLaw, P.C. as interim class counsel to represent Plaintiffs in the Bankruptcy Case

[Bankruptcy Case, Doc 982].


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10. On April 29, 2019, the Trustee and Plaintiffs filed their Joint Motion Between

Deborah J. Caruso, Chapter 7 Trustee of ITT Educational Services, Inc., and Putative Class

Representatives Sean Miner, David Heumann and Shawna Admire to Proceed with the “Miner

Claims Litigation” in an Adversary Proceeding [Bankruptcy Case, Doc 3357].

11. On May 22, 2019, the Bankruptcy Court entered the Order Granting Joint Motion

Between Deborah J. Caruso, Chapter 7 Trustee of ITT Educational Services, Inc., and Putative

Class Representatives Sean Miner, David Heumann and Shawna Admire to Proceed with the

“Miner Claims Litigation” in an Adversary Proceeding [Bankruptcy Case, Doc 3412].

12. On May 29, 2019, Plaintiffs initiated an adversary proceeding, Adv. Pro. No. 19-

50105, against ITT by filing the Class Action Adversary Proceeding Complaint (“Adversary

Proceeding”). On June 7, 2019, Plaintiffs filed their Amended Class Action Adversary

Proceeding Complaint [Adversary Proceeding, Doc 6]. The Trustee filed the Trustee’s Answer

and Affirmative and Additional Defenses to Plaintiffs’ Amended Class Action Adversary

Proceeding Complaint [Adversary Proceeding, Doc 12] on July 8, 2019.

13. In the California Class Action, Class Proof of Claim, PAGA Proof of Claim, and

Adversary Proceeding, Plaintiffs assert claims against ITT for violating various provisions of the

California Labor Code, California Industrial Welfare Commission (“IWC”) Wage Order No. 4-

2011, and Private Attorneys General Act, including failure to pay wages for all hours worked,

including hours worked outside the classroom teaching time (Cal. Labor Code §§ 1194, 1194.2;

IWC Wage Order No. 4-2001, § 4); failure to provide paid rest periods and pay missed rest break

premiums (Cal. Labor Code §§ 226.7; IWC Wage Order No. 4-2001, § 12); failure to pay

compensation due upon discharge from employment (Cal. Labor Code §§ 201-203); failure to

issue accurate wage statements (Cal. Labor Code § 226); failure to reimburse for business-related


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cell phone expenses, including cellphone usage (Cal. Labor Code § 2802); unfair, unlawful, or

fraudulent business practices (Cal. Bus & Prof. Code §§ 17200 et seq.); and Private Attorneys

General Act claim for civil penalties (Cal. Labor Code §§ 2698 et seq.). Plaintiffs sought, among

other relief, unpaid wages, actual and compensatory damages, restitution, interest, statutory and

civil penalties, attorney’s fees, expenses and costs.

14. On July 24, 2019, with the agreement of Plaintiffs, the Trustee filed Trustee’s

Motion to Refer Adversary Proceeding to Mediation in the Adversary Proceeding [Adversary

Proceeding, Doc 13], which the Bankruptcy Court granted on August 14, 2019 [Adversary

Proceeding, Doc 14]. The Parties selected Honorable Steven Rhodes (Ret.), a panelist with

Judicial Arbitration and Mediation Services, Inc., as mediator [Notice of Selection of Mediator,

Doc 14]. On September 11, 2019, Judge Rhodes conducted a mediation in Indianapolis, Indiana,

at which the Parties reached a settlement in principle, subject to the necessary Bankruptcy Court

and California District Court approvals provided herein, and set forth in the Class Action

Settlement Agreement (the “Class Action Settlement”).

15. On July 29, 2020, the Trustee filed in the Bankruptcy Case the Trustee’s Motion

to Compromise and Settle Claims of California Adjunct Instructor Class Action (the “Settlement

Motion”) [Bankruptcy Case, Doc 4021].

16. Pursuant to Section 3.3 of the Class Action Settlement, the “Settlement Effective

Date” shall occur on the date on which all of the following conditions have been met or, if

applicable, have been waived:

(a) The Bankruptcy Approval Order shall have become a Final Order;

(b) The California District Court Approval Order containing the California District Court Settlement Components shall have become a Final Order;


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(c) The Trustee shall have given notice in accordance with 28 U.S.C. § 1715;

(d) Plaintiffs shall have voluntarily dismissed the Adversary Proceeding, with prejudice; and

(e) 15% (952) or more members of the Settlement Class do not opt out of

the settlement.

Accordingly, the Class Action Settlement will not become effective until at least 90 days

after the date of this notice.

17. In accordance with 28 U.S.C. § 1715(b), the Trustee hereby provides notice of the

following:

(a) Copies of the Adversary Proceeding Complaint and Amended Class Action Adversary Proceeding Complaint are attached as Exhibits A-1 and A-2;

(b) A copy of the Class Action Settlement is attached as Exhibit B, which includes a copy of the proposed notice to the Settlement Class as Exhibit 4 to the Class Action Settlement; and

(c) A list of the names and addresses (if available) of potential members of

the Settlement Class is attached as Exhibit C. There is a total of 1,154 potential members of the Settlement Class. Potential members of the Settlement Class resided in California at the time of the events and circumstances giving rise to the claims asserted in Amended Adversary Proceeding Complaint. The Trustee does not have current mailing addresses for approximately 361 potential members of the Settlement Class. The remaining 793 potential members of the Settlement Class are believed to reside in the following states:

State Approx. # of Potential Members Arkansas 1 California 779 Florida 2 Georgia 1 Idaho 1 North Carolina 1 New Jersey 1 New York 1 Nevada 2 Oregon 1


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Pennsylvania 1 Texas 1 Washington 1

At this time, the estimated proportionate share of the claims of individual members of the Settlement Class to the entire settlement is unknown.

18. The Trustee hereby further provides notice that a hearing on the Settlement

Motion is currently scheduled for August 19, 2020 at 1:30 p.m. (prevailing Eastern time), in

Room 325 of the United States Courthouse, 46 East Ohio Street, Indianapolis, IN 46204. The

dial-in telephone number for interested parties to participate in the hearing by conference call is

1-800-829-7603, passcode 6899341#.


Dated: July 30, 2020 By: /s/ James E. Rossow Jr. Deborah J. Caruso (Atty. No. 4273-49) James E. Rossow Jr. (Atty. No. 21063-29) Joshua W. Casselman (Atty. No. 27055-49) RUBIN & LEVIN, P.C. 135 N. Pennsylvania Street, Suite 1400 Indianapolis, Indiana 46204 Telephone: (317) 634-0300 Facsimile: (317) 263-9411 Counsel to the Trustee


EXHIBIT A-1

[CLASS ACTION ADVERSARY PROCEEDING COMPLAINT]


PLAINTIFFS’ CLASS ACTION COMPLAINT

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UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

Chapter 7

Case No. 16-07207-JMC-7A

Jointly Administered

Adv. Pro. No. 17-___________________

CLASS ACTION ADVERSARY PROCEEDING COMPLAINT

Plaintiffs Sean Miner, David Heumann, and Shawna Admire (“Plaintiffs”), by and

through their undersigned counsel, hereby file this class action adversary proceeding against

Debtor, ITT Educational Services, Inc. (the “Debtor” or “ITT”), its affiliates, and alter egos, and

respectfully represents as follows:1

1 Plaintiffs and the Debtor’s representative, Chapter 7 Trustee, Deborah J. Caruso, have agreed to proceed by

adversary proceeding, rather than a Class Claim contested matter, to resolve the class claims set forth herein.

IN RE:

ITT EDUCATIONAL SERVICES, INC., et al.,

Debtors.

SEAN MINER, DAVID HEUMANN, and

SHAWNA ADMIRE, on their own behalf and on

behalf of all other persons similar situated,

Plaintiffs,

v.


Defendants.

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NATURE OF THE ACTION

1. Plaintiffs bring this action on their own behalf and on behalf of former adjunct

instructors employed by the Debtor in California (“Class Members”) from January 12, 2012 to

September 6, 2016 (“Class Period”), pursuant to Fed. R .Civ. P. 23 made applicable to these

proceedings by Fed. R. Bankr. P. 7023, seeking unpaid wages, restitution, damages, and

declaratory judgment on the grounds that the Debtor violated California Labor Code §§ 1194,

1194.2, 226.2, 226.7, 226(a), 201-203, and 2802, Industrial Welfare Commission (“IWC”) Wage

Order (“Wage Order”) No. 4, §§ 4, 12, and Business & Professions Code § 17200 et seq.

(“UCL”).

2. Plaintiffs also bring this action for unpaid wages on their own behalf and on

behalf of a subclass of similarly situated former adjunct instructors employed by the Debtor in

California (“Priority Subclass Members”) from 180 days prior to the filing of the petition for

bankruptcy in this proceeding (“Priority Subclass Period”) in accordance with 11 U.S.C.

§ 507(a), by reason of the Debtor’s violation of the California Labor Code §§ 1194, 1194.2,

226.2, 226.7, 201-203, and Industrial Welfare Commission Wage Order (“Wage Order”) No. 4,

§§ 4, 12.

3. In addition, as a result of the Debtor’s willful failure to issue accurate itemized

wage statements pursuant to Labor Code § 226(a), the Debtor also owes Plaintiffs and other

adjunct instructors employed between January 12, 2015 and September 6, 2016 (“Wage

Statement Subclass Members”) statutory penalties pursuant to Labor Code § 226(e).

4. Finally, Plaintiffs bring this action as agents of the State of California pursuant to

California Private Attorneys General Act of 2004, Labor Code §§ 2698 et seq. (“PAGA”) for

civil penalties from January 12, 2015 through to September 6, 2016, based on the Debtor’s



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violation of Labor Code §§ 1194, 226.7, 226.2, 2802, 201-203, and 226(a) and §§ 4, 12 of IWC

Wage Order No. 4. PAGA permits private individuals to step into the shoes of the State of

California and bring suits for unpaid wages (see Cal. Lab. Code § 558) and civil penalties on

behalf of themselves, the State, and similarly situated employees aggrieved by their employer’s

actions.

JURISDICTION AND VENUE

5. This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C.

§§ 157 and 1334(b) and 11 U.S.C. § 105. This is a core proceeding under 28 U.S.C.

§ 157(b)(2)(B).

6. This Court has jurisdiction over this adversary proceeding pursuant to California

Labor Code §§ 1194, 226.2, 226.7, 226(a), (e), 201-203, 2802, Business & Professions Code

§ 17200 et seq. and Wage Order No. 4, §§ 4, 12.

7. Venue is proper in this District pursuant to 28 U.S.C. § 1409.

THE PARTIES

8. Plaintiff Sean Miner is an individual resident of Roseville, California who was

employed by ITT as an adjunct instructor at ITT’s Rancho Cordova campus from October 2013

to March 2015. Plaintiff Miner taught courses offered as part of ITT’s School of Criminal

Justice program. During his employment by ITT, Plaintiff Miner was subject to ITT’s unlawful

conduct described herein.

9. Plaintiff David Heumann is an individual resident of Rancho Cordova,

California who has been employed by ITT as an adjunct instructor at ITT’s Rancho Cordova

campus since, as relevant here, December 2012 until the present. Plaintiff Heumann teaches



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courses offered as part of ITT’s School of Drafting and Design. Throughout his employment by

ITT, Plaintiff Heumann has been subject to ITT’s unlawful conduct described herein.

10. Plaintiff Shawna Admire is an individual resident of Oceanside, California who

was employed by ITT as an adjunct instructor at ITT’s San Diego campus from December 2008

until October 2013. Plaintiff Admire taught courses offered as part of ITT’s School of

Information Technology. During her employment by ITT, Plaintiff Admire was subject to ITT’s

unlawful conduct described herein.

11. The Debtor is a corporation organized under the laws of the State of Delaware,

with its principal place of business located at 13000 North Meridian Street, Carmel, Indiana. It

operated nationwide under the name ITT Technical Institute as a for-profit post-secondary

educational institution, with 140 campus locations in 39 states, including 14 campuses in

California, in addition to offering online educational programs.

FACTUAL ALLEGATIONS COMMON TO THE CLASS

A. General Background

12. ITT’s curriculum in California included 51 different education programs across its

six “schools of study”: Business, Drafting and Design, Electronics Technology, Criminal

Justice, Information Technology, and the Breckinridge School of Nursing and Health Sciences.

The programs and courses were scheduled based on four 12-week academic quarters per

calendar year. Typically courses were taught Monday through Saturday in 3.5 hour to 5.5 hour

class sessions, ranging from one to three days a week.

13. At each of its 140 campuses across the United States, ITT employed (i) a campus

director who managed and oversaw all campus functions, including recruitment, finance,

registration, academics and career services, (ii) a dean who worked underneath the campus



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director to manage and oversee all academic activities, and (iii) chairpersons for each of the

campus’s schools of study who managed the day-to-day academic activities within their

respective programs.

14. ITT employed Class Members as adjunct instructors to teach the courses offered

at each campus and to substitute and teach classes when another assigned adjunct instructor

would be absent. ITT’s Employee Handbook defined “adjuncts” as temporary employees

assigned to work for the duration of a specific project or assignment. Class Members taught

courses to students, in a classroom or laboratory environment, using materials from approved

curricula in accordance with an assigned schedule. In addition to Course and Substitute Class

instruction, ITT also employed Class Members to conduct one-on-one tutoring sessions with

students who requested tutoring time outside of class time (“Tutoring Sessions”). During the

Class Period, ITT employed anywhere from about 20 to 70 Class Members per campus at any

one time, for a combined total of approximately 1,151 Class Members during the entire Class

Period.

B. Unpaid Wages

15. During the Class Period, Class Members and Priority Subclass Members were

non-exempt employees who were compensated on a piece rate and earned less than the monthly

equivalent of two times the California state minimum wage (see IWC Wage Order No. 4,

§ 1(A)), yet the Debtor maintained a policy and/or practice of classifying Class Members and

Priority Subclass Members as exempt employees not entitled to the protections of the California

Labor Code minimum wage laws.

16. During the Class Period and Priority Subclass Period, the Debtor maintained

policies and/or practices that required and expected Class Members and Priority Subclass



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Members to perform work outside of piece (i.e. outside of teaching the course), including but not

limited to: (1) creating course materials, such as syllabi, in-class and homework assignments,

tests and quizzes; (2) building daily lesson plans and lectures; (3) grading assignments, tests and

quizzes; (3) assisting students with their coursework by consulting with students outside of class

time and during breaks to provide regular and timely feedback; (4) advising students in matters

relating to academics, vocational goals, attendance, and behavior; (5) recording student

attendance and grade records and submitting the information to the school, either manually to the

dean or electronically through ITT’s online portal; (6) conducting student retention and re-entry

activities; (7) completing professional development and in-service activities in accordance with

ITT’s standards; and (8) attending faculty meetings (“Non-Teaching Tasks”).

17. As a result, the Debtor was required to compensate Class Members and Priority

Subclass Members for their rest breaks and other non-teaching tasks separately from any piece-

rate compensation, yet failed to do so in violation of Labor Code §§ 226.2, 1194, 1194.2, and

Wage Order No. 4, § 4. As a result, Class Members and Priority Subclass Members are entitled

to be paid at least minimum wage for all non-productive time, and one hour of pay at his or her

average hourly rate for the Debtor’s failure to pay for rest breaks separately and apart from his or

her piece rate.

18. In addition, the Debtor maintained a policy and/or practice that denied Class

Members and Priority Subclass Members an off-duty ten-minute paid rest break by maintaining a

facially invalid rest break policy and requiring Class Members and Priority Subclass Members to

remain on duty during breaks. As a result, Class Members and Priority Subclass Members are

entitled to be paid wages at a one hour of pay per missed rest break pursuant to Labor Code

§ 226.7 and Wage Order No. 4, § 12(B), which the Debtor failed to pay them.



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19. As an additional consequence of ITT’s failure to pay wages owed for rest breaks

and Non-Teaching Tasks, Plaintiffs Miner and Admire and Class Members (including Priority

Subclass Members) who worked for ITT anytime from January 12, 2013 to September 6, 2016,

did not receive all compensation due to them in their final paychecks, including but not limited

to, pay for Non-Teaching Tasks and their time spent on rest breaks and/or premium pay. As a

result, they did not receive all wages due upon termination; nor did they receive these wages due

within 30 days of the separation of their employment from ITT. Thus, ITT owes them 30 days of

wages pursuant to Labor Code § 203.

20. ITT also failed to issue to Plaintiffs Miner and Heumann and Wage Statement

Subclass Members accurate itemized wage statements. Specifically, the itemized wage

statements failed to include accurate entries for the total number of hours worked, the number of

piece rate units earned or the number of Courses taught, the applicable piece rate or Course Rate,

and the applicable hourly rates for tutoring time.

21. Furthermore, as a consequence of ITT’s failure to pay wages for rest breaks and

Non-Teaching Tasks, ITT failed to itemize accurately on the wage statements the actual amount

of gross and net wages earned, and the applicable rate by virtue of their exclusion of hours and

pay on an hourly basis for the time spent on rest breaks and Non-Teaching Tasks.

22. As a result of ITT’s non-compliant wage statements, Plaintiffs Miner and

Heumann and Wage Statement Subclass Members were unable to determine their total hours

worked and whether they were paid correctly, or at all, for rest breaks and Non-Teaching Tasks,

and are entitled to statutory penalties pursuant to Labor Code § 226(e).



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C. Unreimbursed Expenses

23. Throughout the Class Period, in order to carry out their required Non-Teaching

Tasks of assisting, consulting, and advising students outside class time regarding their

coursework, academic and vocational goals, attendance, and behavior, and contacting absent

students to encourage attendance, ITT expected and required Class Members to make phone calls

to and take phone calls from students. ITT also required students to call or send a text message

to their instructors if they were absent or planned on being absent. ITT maintained a faculty

room for each campus where Class Members can make phone calls to students; however, the

faculty room was inadequately equipped with only two or three landline phones for all of the

Class Members on campus to use. When the faculty room phones were not available, or when

Class Members were not on campus or in a different area of the campus, ITT instructed Class

Members to use cell phones and provide students with cell phone numbers to accept from and

make phone calls to students, as ITT required Class Members to timely reply to student phone

calls and messages.

24. Throughout the Class Period, ITT did not furnish Plaintiffs and Class Members

with a cell phone to use throughout the day. Plaintiffs and Class Members were thus expected by

ITT to pay for, and have personally paid for, the purchase and maintenance of cell phones in the

discharge of their job duties (“cell phone business expenses”). As such, ITT was aware, or

should have been aware, that Class Members were using their personal cell phones at their own

expense in direct consequence of the discharge of their job duties. ITT did not reimburse Class

Members in any amount for any such expenses incurred throughout the Class Period.

25. Throughout the Class Period, ITT maintained uniform policies and practices

relating to the reimbursement of business expenses to Plaintiffs and Class Members that denied



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lawful reimbursement to Plaintiffs and Class Members for their cell phone business expenses.

ITT’s expense-related policies and practices expected and required, and/or with the ITT’s

knowledge thereof permitted, Plaintiffs and the Class Members to pay for cell phone business

expenses incurred in direct consequence of discharging their necessary and business-related job

duties on behalf of ITT, without reimbursement in full by ITT for such expenses, as required by

California law under Labor Code § 2802.

D. The Debtor’s Labor Code Violations Constituted Unfair Business Practices

26. During the Class Period, ITT adopted, and used unfair business practices to

reduce its adjuncts’ compensation and increase profits. These unfair business practices include

failing to pay Class Members for their time spent on rest breaks and Non-Teaching Tasks, failing

to provide paid rest breaks as required by California law, failing to issue accurate itemized wage

statements, and failing to reimburse all cell-phone business expenses.

CLASS ACTION ALLEGATIONS

27. Plaintiffs bring this class action pursuant to Fed. R. Civ. Proc. 23 on behalf of the

Class Members as set forth in ¶ 1 above, on behalf of the Priority Subclass Members, as set forth

in ¶ 2 above, and on behalf of Wage Statement Subclass Members, as set forth in ¶ 3 above.

Plaintiffs claim brought on behalf of the State of California is representative in nature and is not

subject to class certification requirements. Upon information and belief, there are approximately

1,151 Class Members, well over 100 Priority Subclass Members, and well over 100 Wage

Statement Subclass Members.

A. Numerosity

28. Class Members, Priority Subclass Members, and Wage Statement Subclass

Members are so numerous that joinder of all members is impractical. In the interest of judicial

economy, this dispute should be resolved through class action.



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B. Commonality

29. Common questions of law and fact exist as to all members of the Class, members

of the Priority Subclass, and members of the Wage Statement Subclass and predominate over

any questions solely affecting individual members of the Class and each Subclass. Among the

questions of law and fact common to the Class and Subclasses are the following:

(a) Whether a Course Rate is a form of piece rate compensation.

(b) Whether ITT violated Labor Code § 1194, 226.2 and IWC Wage Order

No. 4, § 4 by failing to pay Class Members and Priority Subclass at least minimum wage for

Non-Teaching Tasks during the Class Period;

(c) Whether ITT is liable for liquidated damages to the members of the Class

under Labor Code §1194.2;

(d) Whether ITT violated Labor Code §§ 226.7, 226.2 and IWC Wage Order

No. 4, § 12 by failing to pay Class Members and Priority Subclass for rest break time separately

from the Course Rate and at their average hourly rate;

(e) Whether ITT violated Labor Code § 226.7 and IWC Wage Order No. 4,

§ 12 by failing to permit and authorize Class Members and Priority Subclass Members to take

compliant rest breaks;

(f) Whether ITT violated Labor Code §§ 226.7, 226.2 and IWC Wage Order

No. 4, § 12 by failing to pay one hour of premium pay to each member of the Class and each

member of the Priority Subclass for each day that a paid rest period was not provided or a missed

rest break occurred during the Class Period;

(g) Whether ITT’s alleged violations of Labor Code §§ 226.7, 226.2, and IWC

Wage Order No. 4, § 12 resulted in unpaid wages to the Class and Priority Subclass Members;



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(h) Whether ITT violated Labor Code § 203 by failing to pay Class Members

who worked during the relevant time period for all of their wages due to them upon separation of

their employment, including the wages owed to them for their time spent on rest breaks and Non-

Teaching Tasks;

(i) Whether ITT violated Labor Code § 226(a) by issuing wage statements

that failed to include Wage Statement Subclass Members’ total hours worked, and that failed to

accurately reflect the total wages earned by them (since pay for rest breaks and Non-Teaching

Tasks was never included in the wage statements);

(j) Whether ITT’s violation of Labor Code § 226(a) were knowing and

intentional and thus entitle Wage Statement Subclass Members to penalties under subdivision (e)

of § 226;

(k) Whether Class Members incurred unreimbursed business expenses in the

discharge of their duties as employees, including cellular phones expenses;

(l) Whether ITT’s failure to reimburse business expenses incurred by Class

Members was the result of, and/or pursuant to, a business policy or regular practice of ITT;

(m) Whether ITT violated Labor Code § 2802 by denying Class Members

reimbursement for their cell phone expenses;

(n) Whether ITT violated the UCL by failing to pay Class Members at the

appropriate rate for their time spent on rest breaks and Non-Teaching Tasks during the Class

Period, by failing to authorize and permit a rest breaks, by failing to pay them rest break

premium payments, and by failing to reimburse them for a reasonable percentage of their cell

phone bill;



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(o) Whether Class Members are entitled to restitution under Bus. & Prof.

Code § 17200 et seq. for uncompensated wages and unreimbursed business expenses; and

(p) The proper formula(s) for calculating wages, damages, interest, and

restitution owed to Class Members and Priority Subclass.

C. Typicality

30. Plaintiffs’ claims are typical of the claims of the members of the Class and of the

Subclasses because they were adjunct instructors who were not paid wages and sustained

damages arising out of ITT’s failure during the Class Period and Priority Subclass Period to (a)

pay wages owed for Non-Teaching Tasks; (b) pay Class Members and Priority Subclass

Members hourly and separately for rest breaks separate and apart from the piece; (c) issue

accurate wage statements to Wage Statement Subclass Members containing their total hours

worked and accurate wages earned; and (d) compensate Class Members for business-related cell

phone usage.

D. Adequacy of Representation

31. Plaintiffs will fairly and adequately represent the interests of the Class, the

Priority Subclass, and the Wage Statement Subclass. Plaintiffs have no conflict of interest with

any member of the Class and Subclasses. Plaintiffs have retained competent and experienced

counsel in complex class action litigation, including employment litigation. Plaintiffs’ counsel

has the expertise and financial resources to adequately represent the interests of the Class.

E. Predominance and Superiority

32. Class action treatment is superior to any alternative to ensure the fair and efficient

adjudication of the controversy alleged herein. Such treatment will permit a large number of

similarly situated persons to prosecute their common claims in a single forum simultaneously,

efficiently, and without duplication of effort and expense that numerous individual actions would



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entail. No difficulties are likely to be encountered in the management of this class action that

would preclude its maintenance as a class action, and no superior alternative exists for the fair

and efficient adjudication of this controversy. Class Members and members of the Subclasses

are readily identifiable from ITT’s employee rosters and/or payroll records.

33. ITT’s actions are generally applicable to the entire Class and Subclasses.

Prosecution of separate actions by individual members of the Class and each Subclass creates the

risk of inconsistent or varying adjudications of the issues presented herein, which, in turn, would

establish incompatible standards of conduct for ITT.

34. Because joinder of all members is impractical, a class action is superior to other

available methods for the fair and efficient adjudication of this controversy. Furthermore, the

amounts at stake for many members of the Class and each Subclass, while substantial, may not

be sufficient to enable them to maintain separate suits against ITT.

CLAIMS FOR RELIEF

COUNT I

Unpaid Wages: Failure to Pay for All Hours Worked – Violation of Cal. Labor Code §§

1194, 1194.2, 226.2; IWC Wage Order No. 4, § 4

(On Behalf of Class Members and Priority Subclass Members)

35. Plaintiffs re-allege and incorporate by reference each and every allegation set

forth in the preceding paragraphs.

36. Labor Code § 1194 provides, in relevant part:

Notwithstanding any agreement to work for a lesser wage, any employee

receiving less than the legal minimum wage ... applicable to the employee is

entitled to recover in a civil action the unpaid balance of the full amount of this

minimum wage […], including interest thereon, reasonable attorney’s fees, and

costs of suit.

Labor Code § 1194.2 provides, in relevant part:



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In any action under ... Section 1194 to recover wages because of the payment of a

wage less than the minimum wage fixed by an order of the commission, an

employee shall be entitled to recover liquidated damages in an amount equal to

the wages unlawfully unpaid and interest thereon. ...

37. IWC Wage Order 4, § 4 requires employers to pay employees no less than

minimum wage “for all hours worked.”

38. Labor Code § 226.2(a)(1) states that “employees shall be compensated for

rest…and other nonproductive time separate from any piece-rate compensation.”

39. As set forth above, during the Class Period, Class Members and Priority Subclass

Members were not paid separately from the Course Rate for Non-Teaching Tasks. Instead, they

were paid a Course Rate for the time spent on teaching courses, but ITT did not compensate

them for the time spent on Non-Teaching Tasks separate from the Course Rate, or at all.

40. Accordingly, pursuant to § 4 of the Wage Order and Labor Code §§ 1194, 226.2

the Debtor owes the Class Members and the Priority Subclass Members wages for all

uncompensated work, plus liquidated damages in an additional amount equal to the total amount

of applicable minimum wages unlawfully withheld during the Class Period.

COUNT II

Unpaid Wages: Failure to Pay Separately and Hourly for Rest Break Time; Failure to

Permit and Authorize Compliant Rest Breaks; Failure to Pay Premium Pay – Violation of

Labor Code §§ 226.7, 226.2; IWC Wage Order No. 4, § 12




42. California Labor Code § 226.7(a) expressly provides, “No employer shall require

any employee to work during any meal or rest period mandated by an applicable order of the

Industrial Welfare Commission.”

43. IWC Wage Order No. 4, § 12(A) further provides:



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(A) Every employer shall authorize and permit all employees to take rest

periods, which insofar as practicable shall be in the middle of each

work period. The authorized rest period time shall be based on the

total hours worked daily at the rate of ten minutes net rest time per

four hours or major fraction thereof. However, a rest period need not

be authorized for employees whose total daily work time is less than

three and one-half (3 1/2) hours. Authorized rest period time shall be

counted as hours worked for which there shall be no deduction from

wages.”

44. Labor Code § 226.2(a)(1) states that “employees shall be compensated for rest

and recovery periods…. separate from any piece-rate compensation.”

45. Thus, California law requires employers to authorize and permit employees to

take paid off-duty rest breaks of 10 minutes for every 3.5 hours or major fraction thereof worked.

46. As alleged herein, Class Members and Priority Subclass Members regularly

worked more than 3.5 hours in a workday. However, the Debtor did not compensate them for

their time spent on rest breaks separately and apart from the Course Rate, as required under

Labor Code § 226.2.

47. The Debtor also regularly failed to authorize and permit, Class Members and

Priority Subclass Members to take off-duty rest breaks by requiring them to remain on duty

during breaks in violation of Wage Order No. 4, § 12.

48. As a result of the Debtor’s policies and practices or failing to pay separately and

hourly for rest break time, and as a separate matter, as a result of the Debtor’s policies and

practices of failing to authorize and permit rest breaks, the members of the Class and members of

the Priority Subclass are entitled to recover one hour of pay at their regular rate of compensation

for each day in which the Debtor failed to pay hourly and separately, and/or failed to authorize

and permit a paid or off-duty rest break as required under Labor Code § 226.7 and Wage Order

No. 4, § 12(B).



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COUNT III

Failure to Pay All Wages Owed At Termination – Labor Code §§ 201-203

(On Behalf of Class Members Employed During Relevant Period)

49. Plaintiffs Miner and Admire re-alleges and incorporates by reference each and

every allegation set forth in the preceding paragraphs.

50. Labor Code §§ 201 and 202 require ITT to pay all compensation due and owing

to adjunct instructors formerly employed during the period between January 12, 2013 and

September 6, 2016 promptly after the time their employment was terminated. Labor Code § 203

provides that if an employer willfully fails to pay compensation promptly upon discharge or

resignation, as required by §§ 201 and 202, then the employer is liable for continued

compensation up to 30 work days.

51. As alleged herein, ITT willfully failed to pay Class Members and Priority

Subclass Members employed during the actionable period for this claim, for their time spent on

rest periods and Non-Teaching Tasks during their employment or upon their termination or

separation from employment with the Debtor as required by Labor Code §§ 201 and 202. In

light of the clear law requiring ITT to pay for legally required rest periods and time spent on

Non-Teaching Tasks this be paid hourly and separately from the Course Rate, ITT’s failure to

pay wages for such time was willful.

52. As a result, Class and Priority Subclass Members employed at anytime between

January 12, 2013 and September 6, 2016 are entitled to recover wages amounting to thirty (30)

days of compensation pursuant to Labor Code § 203.



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COUNT IV

Inaccurate Wage Statement Penalties – Violation of Labor Code § 226(a), (e)

(On Behalf of Wage Statement Subclass)



54. Labor Code § 226(a) provides:

Every employer shall, semimonthly or at the time of each payment of wages,

furnish each of his or her employees, either as a detachable part of the check,

draft, or voucher paying the employee’s wages, or separately when wages are paid

by personal check or cash, an accurate statement in writing showing (1) gross

wages earned, (2) total hours worked by the employee, (3) the number of piece-

rate units earned, (4) all deductions, (5) net wages earned, (6) the inclusive dates

of the period for which the employee is paid, (7) the name of the employee and his

or her social security number, (8) the name and address of the legal entity that is

the employer, and (9) all applicable hourly rates in effect during the pay period

and the corresponding number of the hours worked at each hourly rate by the

employee…

55. As set forth above, ITT provided Wage Statement Subclass Members with

inaccurate itemized wage statements lacking or containing inaccurate information regarding total

hours worked, gross and net wages earned, number of piece rate units earned, the applicable

piece-rate, and the applicable hourly rate.

56. ITT’s failure to provide Wage Statement Subclass Members with accurate

itemized wage statements during the Wage Statement Subclass Period has caused them to incur

economic damages in that they were not aware that they were owed and not paid compensation

for their time spent on rest period and Non-Teaching Tasks.



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COUNT V

Unreimbursed Business Expenses – Violation of Labor Code § 2802

(On Behalf of Class Members)



58. The actionable period for this cause of action is January 12, 2013 through

September 6, 2016.

59. Labor Code § 2802 provides that “[a]n employer shall indemnify his or her

employee for all necessary expenditures or losses incurred by the employee in direct

consequence of the discharge of his or her duties.”

60. In order to discharge their duties for ITT, the Class Members were expected and

required by ITT’s policies to use their own personal cell phones for work-related calls to

students. Although having knowledge of such usage, ITT did not reimburse the Class Members

for their cell phone business expenses, as required by Labor Code § 2802.

61. ITT’s failure to pay Class Members’ business expenses violated non-waivable

rights secured to them by Labor Code § 2802. Class Members are entitled to reimbursement for

these necessary expenditures under Labor Code § 2802, as well as attorneys’ fees and costs

under Labor Code § 2802(c).

COUNT VI

Violation of Unfair Competition Laws – Business & Professions Code § 17200 et seq.




63. The UCL prohibits any unlawful, unfair, or fraudulent business practices. Labor

Code § 90.5(a) states that it is the public policy of California to vigorously enforce minimum



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labor standards in order to ensure employees are not required to work under substandard and

unlawful conditions, and to protect employers who comply with the law from those who attempt

to gain competitive advantage at the expense of their workers by failing to comply with

minimum labor standards. Through its actions alleged herein, ITT has engaged in unfair

competition within the meaning of the UCL, because ITT’s conduct has violated state wage and

hour laws as herein described.

64. Beginning at least four years prior to the filing of this Complaint, the Debtor

committed acts of unfair competition, as defined in the UCL by, among other things, engaging in

the acts and practices described above, specifically by wrongfully denying the Class Members

payment of wages for their Non-Teaching Tasks in violation of Labor Code § 1194, failing to

provide paid rest periods to the Class and/or pay rest break premiums in violation of Labor Code

§ 226.7 and IWC Wage Order No. 4, § 12, and failing to reimburse Class Members for their

necessarily incurred cell phone expenses in violation of Labor Code § 2802. By its actions and

omissions, ITT has substantially injured Class Members.

65. The harm to members of the Class in being denied payment in the amount of at

least minimum wage for their rest periods and Non-Teaching Tasks and in not being provided

paid rest periods and not being reimbursed for their business-related cell phone usage,

outweighed the utility, if any, of the Debtor’s policies and practices. Therefore, ITT’s actions

described herein constitute an unfair business practice or act within the meaning of the UCL.

COUNT VII

Private Attorneys’ General Act - Cal. Labor Code §§ 2698 et seq.

(On Behalf of Plaintiffs Miner and Heumann and the State of California)

66. Plaintiff Miner and Heumann re-allege and incorporate by reference each and




- 20 -

67. The actionable period for this cause of action is January 12, 2015 through the

present.

68. Plaintiffs Miner and Heumann seek to recover the PAGA civil penalties through a

representative action as permitted by PAGA and the California Supreme Court in Arias v.

Superior Court, 46 Cal. 4th 969 (2009). Therefore, class certification of the PAGA claims is not

required.

69. California Labor Code § 558(a)(1)-(a)(2) provides that an aggrieved employee

whose employer violates any provision of the Wage Order is entitled to recover on behalf of the

state, in addition to denominated $50/$100 civil penalties, “an amount sufficient to recover

underpaid wages.” As a result, based on ITT’s violation of Wage Order No. 4, §§ 4, 12 alleged

above, Plaintiffs Miner and Heumann as agents of the State of California are entitled to recover

unpaid wages for Non-Teaching Tasks and rest period premium pay pursuant to Labor Code

§ 558.

70. Labor Code § 2699(f)(2) provides for a default penalty of $100 for each initial

pay period with a violation and $200 for each subsequent pay period with a violation for

provisions of the Labor Code for which there is no specified civil penalty. As a result, based on

ITT’s violation of Labor Code §§ 2802, 226(a) alleged above, Plaintiffs Miner and Heumann as

agents of the State of California are entitled to recover $100 for each initial violation and $200

for each subsequent violation.

71. Labor Code § 256 provides for a civil penalty “in an amount not exceeding 30

days as waiting time under the terms of Labor Code 203.” As a result of ITT’s violation,

Plaintiffs Miner and Heumann as agents of the State of California are entitled to a civil penalty in

the amount not exceeding 30 days of compensation.



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72. Plaintiffs Miner and Heumann as agents of the State of California are also

entitled to recover their attorneys’ fees and costs under Labor Code § 2699(g)(1).

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs request that the Court enter judgment on behalf of

themselves and the members of the Class and each Subclass they seek to represent against ITT as

follows:

A. Certification that this action may proceed and be maintained as a class action,

with the Classes and Subclasses as designated and defined in this Complaint, and that the

Plaintiffs and their counsel be certified as representatives and Counsel for the Classes and

Subclasses, respectively.

B. That the Court award Plaintiffs, the Class, and the Subclasses appropriate relief,

to include unpaid wages, actual and compensatory damages, restitution, interest, statutory and

civil penalties;

C. Such additional orders or judgments as may be necessary to restore to any person

interest any money or property which may have been acquired by means of the violations;

D. That the Court award Plaintiffs, the Class, and Subclasses such other favorable

relief as may be available and appropriate under the law or at equity;

E. That the Court award Plaintiffs, the Class, and Subclasses reasonable attorneys’

fees and costs; and

///

///

///



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F. Such other and further relief as this Court deems proper.

JURY DEMAND

Plaintiffs hereby demand trial by jury of all claims against ITT alleged herein.

Dated: May 29, 2019


HAMMOND LAW P.C.

/s/ Julian Hammond

By: Julian Hammond, (CA State Bar No. 268489)

Polina Pecherskaya (CA State Bar No. 269086)

Ari Cherniak (CA State Bar No. 290071)

HAMMONDLAW, P.C.

1829 Reisterstown Rd. Suite 410

Baltimore, Maryland 21208

Telephone: (310) 601-6766

Facsimile: (310) 295-2385

[email protected]

[email protected]

[email protected] -and-

COLE SCHOTZ P.C.

/s/ Gary H. Leibowitz_______________________

By: Gary H. Leibowitz (MD State Bar No. 24717)

300 East Lombard Street, Suite 1450


410-528-2971 (Phone)

410-528-9401 (Facsimile)

[email protected]

Counsel for Plaintiffs and the Proposed Classes


EXHIBIT A-2

[AMENDED CLASS ACTION ADVERSARY PROCEEDING COMPLAINT]


AMENDED CLASS ACTION ADVERSARY PROCEEDING COMPLAINT

- 1 -

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

Chapter 7

Case No. 16-07207-JMC-7A

Jointly Administered

Adv. Pro. No. 19-50105


Plaintiffs Sean Miner, David Heumann, and Shawna Admire (“Plaintiffs”), by and

through their undersigned counsel, hereby file this class action adversary proceeding against

Defendant Deborah J. Caruso, Chapter 7 trustee for the bankruptcy estate of ITT Educational

Services, Inc., et al. (the “Defendant”), and respectfully represent as follows:1

1 Plaintiffs and Defendant have agreed to proceed by adversary proceeding, rather than a Class Claim contested

matter, to resolve the class claims set forth herein.

IN RE:


Debtors.

SEAN MINER, DAVID HEUMANN, and

SHAWNA ADMIRE, on their own behalf and on

behalf of all other persons similar situated,

Plaintiffs,

v.

DEBORAH J. CARUSO, CHAPTER 7

TRUSTEE FOR THE BANKRUPTCY ESTATE

OF ITT EDUCATIONAL SERVICES, ET AL.,

Defendant.



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NATURE OF THE ACTION

1. Plaintiffs bring this action on their own behalf and on behalf of former adjunct

instructors employed by the Debtor, ITT Educational Services, Inc. (the “Debtor” or “ITT”) in

California (“Class Members”) from January 12, 2012 to September 6, 2016 (“Class Period”),

pursuant to Fed. R .Civ. P. 23 made applicable to these proceedings by Fed. R. Bankr. P. 7023,

seeking unpaid wages, restitution, damages, and declaratory judgment on the grounds that the

Debtor violated California Labor Code §§ 1194, 1194.2, 226.2, 226.7, 226(a), 201-203, and

2802, Industrial Welfare Commission (“IWC”) Wage Order (“Wage Order”) No. 4, §§ 4, 12,

and Business & Professions Code § 17200 et seq. (“UCL”).

2. Plaintiffs also bring this action for unpaid wages on their own behalf and on

behalf of a subclass of similarly situated former adjunct instructors employed by the Debtor in

California (“Priority Subclass Members”) from 180 days prior to the filing of the petition for

bankruptcy in this proceeding (“Priority Subclass Period”) in accordance with 11 U.S.C.

§ 507(a), by reason of the Debtor’s violation of the California Labor Code §§ 1194, 1194.2,

226.2, 226.7, 201-203, and Industrial Welfare Commission Wage Order (“Wage Order”) No. 4,

§§ 4, 12.

3. In addition, as a result of the Debtor’s willful failure to issue accurate itemized

wage statements pursuant to Labor Code § 226(a), the Plaintiffs and other adjunct instructors

employed between January 12, 2015 and September 6, 2016 (“Wage Statement Subclass

Members”) are owed statutory penalties pursuant to Labor Code § 226(e).

4. Finally, Plaintiffs bring this action as agents of the State of California pursuant to

California Private Attorneys General Act of 2004, Labor Code §§ 2698 et seq. (“PAGA”) for

civil penalties from January 12, 2015 through to September 6, 2016, based on the Debtor’s



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violation of Labor Code §§ 1194, 226.7, 226.2, 2802, 201-203, and 226(a) and §§ 4, 12 of IWC

Wage Order No. 4. PAGA permits private individuals to step into the shoes of the State of

California and bring suits for unpaid wages (see Cal. Lab. Code § 558) and civil penalties on

behalf of themselves, the State, and similarly situated employees aggrieved by their employer’s

actions.

JURISDICTION AND VENUE

5. This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C.

§§ 157 and 1334(b) and 11 U.S.C. § 105. This is a core proceeding under 28 U.S.C.

§ 157(b)(2)(B). Plaintiffs confirm their consent, pursuant to Federal Rule of Bankruptcy

Procedure 7008 to the entry of final orders or judgment by the Court in connection with this

adversary complaint.

6. This Court has jurisdiction over this adversary proceeding pursuant to California

Labor Code §§ 1194, 226.2, 226.7, 226(a), (e), 201-203, 2802, Business & Professions Code

§ 17200 et seq. and Wage Order No. 4, §§ 4, 12.

7. Venue is proper in this District pursuant to 28 U.S.C. § 1409.

THE PARTIES

8. Plaintiff Sean Miner is an individual resident of Roseville, California who was

employed by ITT as an adjunct instructor at ITT’s Rancho Cordova campus from October 2013

to March 2015. Plaintiff Miner taught courses offered as part of ITT’s School of Criminal

Justice program. During his employment by ITT, Plaintiff Miner was subject to ITT’s unlawful

conduct described herein.

9. Plaintiff David Heumann is an individual resident of Rancho Cordova,

California who has been employed by ITT as an adjunct instructor at ITT’s Rancho Cordova



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campus since, as relevant here, December 2012 until the present. Plaintiff Heumann teaches

courses offered as part of ITT’s School of Drafting and Design. Throughout his employment by

ITT, Plaintiff Heumann has been subject to ITT’s unlawful conduct described herein.

10. Plaintiff Shawna Admire is an individual resident of Oceanside, California who

was employed by ITT as an adjunct instructor at ITT’s San Diego campus from December 2008

until October 2013. Plaintiff Admire taught courses offered as part of ITT’s School of

Information Technology. During her employment by ITT, Plaintiff Admire was subject to ITT’s

unlawful conduct described herein.

11. The Defendant is the Chapter 7 trustee for the bankruptcy estate of ITT

Educational Services, Inc., et al.

FACTUAL ALLEGATIONS COMMON TO THE CLASS

A. General Background

12. ITT operated nationwide under the name ITT Technical Institute as a for-profit

post-secondary educational institution, with 140 campus locations in 39 states, including 14

campuses in California, in addition to offering online educational programs. ITT’s curriculum in

California included 51 different education programs across its six “schools of study”: Business,

Drafting and Design, Electronics Technology, Criminal Justice, Information Technology, and the

Breckinridge School of Nursing and Health Sciences. The programs and courses were scheduled

based on four 12-week academic quarters per calendar year. Typically courses were taught

Monday through Saturday in 3.5 hour to 5.5 hour class sessions, ranging from one to three days a

week.

13. At each of its 140 campuses across the United States, ITT employed (i) a campus

director who managed and oversaw all campus functions, including recruitment, finance,



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registration, academics and career services, (ii) a dean who worked underneath the campus

director to manage and oversee all academic activities, and (iii) chairpersons for each of the

campus’s schools of study who managed the day-to-day academic activities within their

respective programs.

14. ITT employed Class Members as adjunct instructors to teach the courses offered

at each campus and to substitute and teach classes when another assigned adjunct instructor

would be absent. ITT’s Employee Handbook defined “adjuncts” as temporary employees

assigned to work for the duration of a specific project or assignment. Class Members taught

courses to students, in a classroom or laboratory environment, using materials from approved

curricula in accordance with an assigned schedule. In addition to Course and Substitute Class

instruction, ITT also employed Class Members to conduct one-on-one tutoring sessions with

students who requested tutoring time outside of class time (“Tutoring Sessions”). During the

Class Period, ITT employed anywhere from about 20 to 70 Class Members per campus at any

one time, for a combined total of approximately 1,151 Class Members during the entire Class

Period.

B. Unpaid Wages

15. During the Class Period, Class Members and Priority Subclass Members were

non-exempt employees who were compensated on a piece rate and earned less than the monthly

equivalent of two times the California state minimum wage (see IWC Wage Order No. 4,

§ 1(A)), yet the Debtor maintained a policy and/or practice of classifying Class Members and

Priority Subclass Members as exempt employees not entitled to the protections of the California

Labor Code minimum wage laws.



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16. During the Class Period and Priority Subclass Period, the Debtor maintained

policies and/or practices that required and expected Class Members and Priority Subclass

Members to perform work outside of piece (i.e. outside of teaching the course), including but not

limited to: (1) creating course materials, such as syllabi, in-class and homework assignments,

tests and quizzes; (2) building daily lesson plans and lectures; (3) grading assignments, tests and

quizzes; (3) assisting students with their coursework by consulting with students outside of class

time and during breaks to provide regular and timely feedback; (4) advising students in matters

relating to academics, vocational goals, attendance, and behavior; (5) recording student

attendance and grade records and submitting the information to the school, either manually to the

dean or electronically through ITT’s online portal; (6) conducting student retention and re-entry

activities; (7) completing professional development and in-service activities in accordance with

ITT’s standards; and (8) attending faculty meetings (“Non-Teaching Tasks”).

17. As a result, the Debtor was required to compensate Class Members and Priority

Subclass Members for their rest breaks and other non-teaching tasks separately from any piece-

rate compensation, yet failed to do so in violation of Labor Code §§ 226.2, 1194, 1194.2, and

Wage Order No. 4, § 4. As a result, Class Members and Priority Subclass Members are entitled

to be paid at least minimum wage for all non-productive time, and one hour of pay at his or her

average hourly rate for the Debtor’s failure to pay for rest breaks separately and apart from his or

her piece rate.

18. In addition, the Debtor maintained a policy and/or practice that denied Class

Members and Priority Subclass Members an off-duty ten-minute paid rest break by maintaining a

facially invalid rest break policy and requiring Class Members and Priority Subclass Members to

remain on duty during breaks. As a result, Class Members and Priority Subclass Members are



- 7 -

entitled to be paid wages at a one hour of pay per missed rest break pursuant to Labor Code

§ 226.7 and Wage Order No. 4, § 12(B), which the Debtor failed to pay them.

19. As an additional consequence of ITT’s failure to pay wages owed for rest breaks

and Non-Teaching Tasks, Plaintiffs Miner and Admire and Class Members (including Priority

Subclass Members) who worked for ITT anytime from January 12, 2013 to September 6, 2016,

did not receive all compensation due to them in their final paychecks, including but not limited

to, pay for Non-Teaching Tasks and their time spent on rest breaks and/or premium pay. As a

result, they did not receive all wages due upon termination; nor did they receive these wages due

within 30 days of the separation of their employment from ITT. Thus, they are owed 30 days of

wages pursuant to Labor Code § 203.

20. ITT also failed to issue to Plaintiffs Miner and Heumann and Wage Statement

Subclass Members accurate itemized wage statements. Specifically, the itemized wage

statements failed to include accurate entries for the total number of hours worked, the number of

piece rate units earned or the number of Courses taught, the applicable piece rate or Course Rate,

and the applicable hourly rates for tutoring time.

21. Furthermore, as a consequence of ITT’s failure to pay wages for rest breaks and

Non-Teaching Tasks, ITT failed to itemize accurately on the wage statements the actual amount

of gross and net wages earned, and the applicable rate by virtue of their exclusion of hours and

pay on an hourly basis for the time spent on rest breaks and Non-Teaching Tasks.

22. As a result of ITT’s non-compliant wage statements, Plaintiffs Miner and

Heumann and Wage Statement Subclass Members were unable to determine their total hours

worked and whether they were paid correctly, or at all, for rest breaks and Non-Teaching Tasks,

and are entitled to statutory penalties pursuant to Labor Code § 226(e).



- 8 -

C. Unreimbursed Expenses

23. Throughout the Class Period, in order to carry out their required Non-Teaching

Tasks of assisting, consulting, and advising students outside class time regarding their

coursework, academic and vocational goals, attendance, and behavior, and contacting absent

students to encourage attendance, ITT expected and required Class Members to make phone calls

to and take phone calls from students. ITT also required students to call or send a text message

to their instructors if they were absent or planned on being absent. ITT maintained a faculty

room for each campus where Class Members can make phone calls to students; however, the

faculty room was inadequately equipped with only two or three landline phones for all of the

Class Members on campus to use. When the faculty room phones were not available, or when

Class Members were not on campus or in a different area of the campus, ITT instructed Class

Members to use cell phones and provide students with cell phone numbers to accept from and

make phone calls to students, as ITT required Class Members to timely reply to student phone

calls and messages.

24. Throughout the Class Period, ITT did not furnish Plaintiffs and Class Members

with a cell phone to use throughout the day. Plaintiffs and Class Members were thus expected by

ITT to pay for, and have personally paid for, the purchase and maintenance of cell phones in the

discharge of their job duties (“cell phone business expenses”). As such, ITT was aware, or

should have been aware, that Class Members were using their personal cell phones at their own

expense in direct consequence of the discharge of their job duties. ITT did not reimburse Class

Members in any amount for any such expenses incurred throughout the Class Period.

25. Throughout the Class Period, ITT maintained uniform policies and practices

relating to the reimbursement of business expenses to Plaintiffs and Class Members that denied



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lawful reimbursement to Plaintiffs and Class Members for their cell phone business expenses.

ITT’s expense-related policies and practices expected and required, and/or with the ITT’s

knowledge thereof permitted, Plaintiffs and the Class Members to pay for cell phone business

expenses incurred in direct consequence of discharging their necessary and business-related job

duties on behalf of ITT, without reimbursement in full by ITT for such expenses, as required by

California law under Labor Code § 2802.

D. The Debtor’s Labor Code Violations Constituted Unfair Business Practices

26. During the Class Period, ITT adopted, and used unfair business practices to

reduce its adjuncts’ compensation and increase profits. These unfair business practices include

failing to pay Class Members for their time spent on rest breaks and Non-Teaching Tasks, failing

to provide paid rest breaks as required by California law, failing to issue accurate itemized wage

statements, and failing to reimburse all cell-phone business expenses.

CLASS ACTION ALLEGATIONS

27. Plaintiffs bring this class action pursuant to Fed. R. Civ. Proc. 23 on behalf of the

Class Members as set forth in ¶ 1 above, on behalf of the Priority Subclass Members, as set forth

in ¶ 2 above, and on behalf of Wage Statement Subclass Members, as set forth in ¶ 3 above.

Plaintiffs claim brought on behalf of the State of California is representative in nature and is not

subject to class certification requirements. Upon information and belief, there are approximately

1,151 Class Members, well over 100 Priority Subclass Members, and well over 100 Wage

Statement Subclass Members.

A. Numerosity

28. Class Members, Priority Subclass Members, and Wage Statement Subclass

Members are so numerous that joinder of all members is impractical. In the interest of judicial

economy, this dispute should be resolved through class action.



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B. Commonality

29. Common questions of law and fact exist as to all members of the Class, members

of the Priority Subclass, and members of the Wage Statement Subclass and predominate over

any questions solely affecting individual members of the Class and each Subclass. Among the

questions of law and fact common to the Class and Subclasses are the following:

(a) Whether a Course Rate is a form of piece rate compensation.

(b) Whether ITT violated Labor Code § 1194, 226.2 and IWC Wage Order

No. 4, § 4 by failing to pay Class Members and Priority Subclass at least minimum wage for

Non-Teaching Tasks during the Class Period;

(c) Whether members of the Class are entitled to liquidated damages under

Labor Code §1194.2;

(d) Whether ITT violated Labor Code §§ 226.7, 226.2 and IWC Wage Order

No. 4, § 12 by failing to pay Class Members and Priority Subclass for rest break time separately

from the Course Rate and at their average hourly rate;

(e) Whether ITT violated Labor Code § 226.7 and IWC Wage Order No. 4,

§ 12 by failing to permit and authorize Class Members and Priority Subclass Members to take

compliant rest breaks;

(f) Whether ITT violated Labor Code §§ 226.7, 226.2 and IWC Wage Order

No. 4, § 12 by failing to pay one hour of premium pay to each member of the Class and each

member of the Priority Subclass for each day that a paid rest period was not provided or a missed

rest break occurred during the Class Period;

(g) Whether ITT’s alleged violations of Labor Code §§ 226.7, 226.2, and IWC

Wage Order No. 4, § 12 resulted in unpaid wages to the Class and Priority Subclass Members;



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(h) Whether ITT violated Labor Code § 203 by failing to pay Class Members

who worked during the relevant time period for all of their wages due to them upon separation of

their employment, including the wages owed to them for their time spent on rest breaks and Non-

Teaching Tasks;

(i) Whether ITT violated Labor Code § 226(a) by issuing wage statements

that failed to include Wage Statement Subclass Members’ total hours worked, and that failed to

accurately reflect the total wages earned by them (since pay for rest breaks and Non-Teaching

Tasks was never included in the wage statements);

(j) Whether ITT’s violation of Labor Code § 226(a) were knowing and

intentional and thus entitle Wage Statement Subclass Members to penalties under subdivision (e)

of § 226;

(k) Whether Class Members incurred unreimbursed business expenses in the

discharge of their duties as employees, including cellular phones expenses;

(l) Whether ITT’s failure to reimburse business expenses incurred by Class

Members was the result of, and/or pursuant to, a business policy or regular practice of ITT;

(m) Whether ITT violated Labor Code § 2802 by denying Class Members

reimbursement for their cell phone expenses;

(n) Whether ITT violated the UCL by failing to pay Class Members at the

appropriate rate for their time spent on rest breaks and Non-Teaching Tasks during the Class

Period, by failing to authorize and permit a rest breaks, by failing to pay them rest break

premium payments, and by failing to reimburse them for a reasonable percentage of their cell

phone bill;



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(o) Whether Class Members are entitled to restitution under Bus. & Prof.

Code § 17200 et seq. for uncompensated wages and unreimbursed business expenses; and

(p) The proper formula(s) for calculating wages, damages, interest, and

restitution owed to Class Members and Priority Subclass.

C. Typicality

30. Plaintiffs’ claims are typical of the claims of the members of the Class and of the

Subclasses because they were adjunct instructors who were not paid wages and sustained

damages arising out of ITT’s failure during the Class Period and Priority Subclass Period to (a)

pay wages owed for Non-Teaching Tasks; (b) pay Class Members and Priority Subclass

Members hourly and separately for rest breaks separate and apart from the piece; (c) issue

accurate wage statements to Wage Statement Subclass Members containing their total hours

worked and accurate wages earned; and (d) compensate Class Members for business-related cell

phone usage.

D. Adequacy of Representation

31. Plaintiffs will fairly and adequately represent the interests of the Class, the

Priority Subclass, and the Wage Statement Subclass. Plaintiffs have no conflict of interest with

any member of the Class and Subclasses. Plaintiffs have retained competent and experienced

counsel in complex class action litigation, including employment litigation. Plaintiffs’ counsel

has the expertise and financial resources to adequately represent the interests of the Class.

E. Predominance and Superiority

32. Class action treatment is superior to any alternative to ensure the fair and efficient

adjudication of the controversy alleged herein. Such treatment will permit a large number of

similarly situated persons to prosecute their common claims in a single forum simultaneously,

efficiently, and without duplication of effort and expense that numerous individual actions would



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entail. No difficulties are likely to be encountered in the management of this class action that

would preclude its maintenance as a class action, and no superior alternative exists for the fair

and efficient adjudication of this controversy. Class Members and members of the Subclasses

are readily identifiable from ITT’s employee rosters and/or payroll records.

33. ITT’s actions are generally applicable to the entire Class and Subclasses.

Prosecution of separate actions by individual members of the Class and each Subclass creates the

risk of inconsistent or varying adjudications of the issues presented herein, which, in turn, would

establish incompatible standards of conduct for ITT.

34. Because joinder of all members is impractical, a class action is superior to other

available methods for the fair and efficient adjudication of this controversy. Furthermore, the

amounts at stake for many members of the Class and each Subclass, while substantial, may not

be sufficient to enable them to maintain separate suits against Defendant.

CLAIMS FOR RELIEF

COUNT I

Unpaid Wages: Failure to Pay for All Hours Worked – Violation of Cal. Labor Code §§

1194, 1194.2, 226.2; IWC Wage Order No. 4, § 4




36. Labor Code § 1194 provides, in relevant part:

Notwithstanding any agreement to work for a lesser wage, any employee

receiving less than the legal minimum wage ... applicable to the employee is

entitled to recover in a civil action the unpaid balance of the full amount of this

minimum wage […], including interest thereon, reasonable attorney’s fees, and

costs of suit.

Labor Code § 1194.2 provides, in relevant part:



- 14 -

In any action under ... Section 1194 to recover wages because of the payment of a

wage less than the minimum wage fixed by an order of the commission, an

employee shall be entitled to recover liquidated damages in an amount equal to

the wages unlawfully unpaid and interest thereon. ...

37. IWC Wage Order 4, § 4 requires employers to pay employees no less than

minimum wage “for all hours worked.”

38. Labor Code § 226.2(a)(1) states that “employees shall be compensated for

rest…and other nonproductive time separate from any piece-rate compensation.”

39. As set forth above, during the Class Period, Class Members and Priority Subclass

Members were not paid separately from the Course Rate for Non-Teaching Tasks. Instead, they

were paid a Course Rate for the time spent on teaching courses, but ITT did not compensate

them for the time spent on Non-Teaching Tasks separate from the Course Rate, or at all.

40. Accordingly, pursuant to § 4 of the Wage Order and Labor Code §§ 1194, 226.2

the Class Members and the Priority Subclass Members are owed wages for all uncompensated

work, plus liquidated damages in an additional amount equal to the total amount of applicable

minimum wages unlawfully withheld during the Class Period.

COUNT II

Unpaid Wages: Failure to Pay Separately and Hourly for Rest Break Time; Failure to

Permit and Authorize Compliant Rest Breaks; Failure to Pay Premium Pay – Violation of

Labor Code §§ 226.7, 226.2; IWC Wage Order No. 4, § 12




42. California Labor Code § 226.7(a) expressly provides, “No employer shall require

any employee to work during any meal or rest period mandated by an applicable order of the

Industrial Welfare Commission.”

43. IWC Wage Order No. 4, § 12(A) further provides:



- 15 -

(A) Every employer shall authorize and permit all employees to take rest

periods, which insofar as practicable shall be in the middle of each

work period. The authorized rest period time shall be based on the

total hours worked daily at the rate of ten minutes net rest time per

four hours or major fraction thereof. However, a rest period need not

be authorized for employees whose total daily work time is less than

three and one-half (3 1/2) hours. Authorized rest period time shall be

counted as hours worked for which there shall be no deduction from

wages.”

44. Labor Code § 226.2(a)(1) states that “employees shall be compensated for rest

and recovery periods…. separate from any piece-rate compensation.”

45. Thus, California law requires employers to authorize and permit employees to

take paid off-duty rest breaks of 10 minutes for every 3.5 hours or major fraction thereof worked.

46. As alleged herein, Class Members and Priority Subclass Members regularly

worked more than 3.5 hours in a workday. However, the Debtor did not compensate them for

their time spent on rest breaks separately and apart from the Course Rate, as required under

Labor Code § 226.2.

47. The Debtor also regularly failed to authorize and permit, Class Members and

Priority Subclass Members to take off-duty rest breaks by requiring them to remain on duty

during breaks in violation of Wage Order No. 4, § 12.

48. As a result of the Debtor’s policies and practices or failing to pay separately and

hourly for rest break time, and as a separate matter, as a result of the Debtor’s policies and

practices of failing to authorize and permit rest breaks, the members of the Class and members of

the Priority Subclass are entitled to recover one hour of pay at their regular rate of compensation

for each day in which the Debtor failed to pay hourly and separately, and/or failed to authorize

and permit a paid or off-duty rest break as required under Labor Code § 226.7 and Wage Order

No. 4, § 12(B).



- 16 -

COUNT III

Failure to Pay All Wages Owed At Termination – Labor Code §§ 201-203

(On Behalf of Class Members Employed During Relevant Period)

49. Plaintiffs Miner and Admire re-alleges and incorporates by reference each and


50. Labor Code §§ 201 and 202 require ITT to pay all compensation due and owing

to adjunct instructors formerly employed during the period between January 12, 2013 and

September 6, 2016 promptly after the time their employment was terminated. Labor Code § 203

provides that if an employer willfully fails to pay compensation promptly upon discharge or

resignation, as required by §§ 201 and 202, then the employer is liable for continued

compensation up to 30 work days.

51. As alleged herein, ITT willfully failed to pay Class Members and Priority

Subclass Members employed during the actionable period for this claim, for their time spent on

rest periods and Non-Teaching Tasks during their employment or upon their termination or

separation from employment with the Debtor as required by Labor Code §§ 201 and 202. In

light of the clear law requiring ITT to pay for legally required rest periods and time spent on

Non-Teaching Tasks this be paid hourly and separately from the Course Rate, ITT’s failure to

pay wages for such time was willful.

52. As a result, Class and Priority Subclass Members employed at anytime between

January 12, 2013 and September 6, 2016 are entitled to recover wages amounting to thirty (30)

days of compensation pursuant to Labor Code § 203.



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COUNT IV

Inaccurate Wage Statement Penalties – Violation of Labor Code § 226(a), (e)

(On Behalf of Wage Statement Subclass)



54. Labor Code § 226(a) provides:

Every employer shall, semimonthly or at the time of each payment of wages,

furnish each of his or her employees, either as a detachable part of the check,

draft, or voucher paying the employee’s wages, or separately when wages are paid

by personal check or cash, an accurate statement in writing showing (1) gross

wages earned, (2) total hours worked by the employee, (3) the number of piece-

rate units earned, (4) all deductions, (5) net wages earned, (6) the inclusive dates

of the period for which the employee is paid, (7) the name of the employee and his

or her social security number, (8) the name and address of the legal entity that is

the employer, and (9) all applicable hourly rates in effect during the pay period

and the corresponding number of the hours worked at each hourly rate by the

employee…

55. As set forth above, ITT provided Wage Statement Subclass Members with

inaccurate itemized wage statements lacking or containing inaccurate information regarding total

hours worked, gross and net wages earned, number of piece rate units earned, the applicable

piece-rate, and the applicable hourly rate.

56. ITT’s failure to provide Wage Statement Subclass Members with accurate

itemized wage statements during the Wage Statement Subclass Period was willful and knowing

and has caused injury to the Wage Statement Subclass Members in that they were not aware that

they were owed and not paid compensation for their time spent on rest period and Non-Teaching

Tasks.

57. As a result, Wage Statement Subclass Members are entitled to recover statutory

penalties pursuant to and in the amount specified in Labor Code § 226(e), in addition to costs and

attorney’s fees.



- 18 -

COUNT V

Unreimbursed Business Expenses – Violation of Labor Code § 2802




59. The actionable period for this cause of action is January 12, 2013 through

September 6, 2016.

60. Labor Code § 2802 provides that “[a]n employer shall indemnify his or her

employee for all necessary expenditures or losses incurred by the employee in direct

consequence of the discharge of his or her duties.”

61. In order to discharge their duties for ITT, the Class Members were expected and

required by ITT’s policies to use their own personal cell phones for work-related calls to

students. Although having knowledge of such usage, ITT did not reimburse the Class Members

for their cell phone business expenses, as required by Labor Code § 2802.

62. ITT’s failure to pay Class Members’ business expenses violated non-waivable

rights secured to them by Labor Code § 2802. Class Members are entitled to reimbursement for

these necessary expenditures under Labor Code § 2802, as well as attorneys’ fees and costs

under Labor Code § 2802(c).

COUNT VI

Violation of Unfair Competition Laws – Business & Professions Code § 17200 et seq.




64. The UCL prohibits any unlawful, unfair, or fraudulent business practices. Labor

Code § 90.5(a) states that it is the public policy of California to vigorously enforce minimum



- 19 -

labor standards in order to ensure employees are not required to work under substandard and

unlawful conditions, and to protect employers who comply with the law from those who attempt

to gain competitive advantage at the expense of their workers by failing to comply with

minimum labor standards. Through its actions alleged herein, ITT has engaged in unfair

competition within the meaning of the UCL, because ITT’s conduct has violated state wage and

hour laws as herein described.

65. Beginning at least four years prior to the filing of this Complaint, the Debtor

committed acts of unfair competition, as defined in the UCL by, among other things, engaging in

the acts and practices described above, specifically by wrongfully denying the Class Members

payment of wages for their Non-Teaching Tasks in violation of Labor Code § 1194, failing to

provide paid rest periods to the Class and/or pay rest break premiums in violation of Labor Code

§ 226.7 and IWC Wage Order No. 4, § 12, and failing to reimburse Class Members for their

necessarily incurred cell phone expenses in violation of Labor Code § 2802. By its actions and

omissions, ITT has substantially injured Class Members.

66. The harm to members of the Class in being denied payment in the amount of at

least minimum wage for their rest periods and Non-Teaching Tasks and in not being provided

paid rest periods and not being reimbursed for their business-related cell phone usage,

outweighed the utility, if any, of the Debtor’s policies and practices. Therefore, ITT’s actions

described herein constitute an unfair business practice or act within the meaning of the UCL.

COUNT VII

Private Attorneys’ General Act - Cal. Labor Code §§ 2698 et seq.

(On Behalf of Plaintiffs Miner and Heumann and the State of California)

67. Plaintiff Miner and Heumann re-allege and incorporate by reference each and




- 20 -

68. The actionable period for this cause of action is January 12, 2015 through the

present.

69. Plaintiffs Miner and Heumann seek to recover the PAGA civil penalties through a

representative action as permitted by PAGA and the California Supreme Court in Arias v.

Superior Court, 46 Cal. 4th 969 (2009). Therefore, class certification of the PAGA claims is not

required.

70. California Labor Code § 558(a)(1)-(a)(2) provides that an aggrieved employee

whose employer violates any provision of the Wage Order is entitled to recover on behalf of the

state, in addition to denominated $50/$100 civil penalties, “an amount sufficient to recover

underpaid wages.” As a result, based on ITT’s violation of Wage Order No. 4, §§ 4, 12 alleged

above, Plaintiffs Miner and Heumann as agents of the State of California are entitled to recover

unpaid wages for Non-Teaching Tasks and rest period premium pay pursuant to Labor Code

§ 558.

71. Labor Code § 2699(f)(2) provides for a default penalty of $100 for each initial

pay period with a violation and $200 for each subsequent pay period with a violation for

provisions of the Labor Code for which there is no specified civil penalty. As a result, based on

ITT’s violation of Labor Code §§ 2802, 226(a) alleged above, Plaintiffs Miner and Heumann as

agents of the State of California are entitled to recover $100 for each initial violation and $200

for each subsequent violation.

72. Labor Code § 256 provides for a civil penalty “in an amount not exceeding 30

days as waiting time under the terms of Labor Code 203.” As a result of ITT’s violation,

Plaintiffs Miner and Heumann as agents of the State of California are entitled to a civil penalty in

the amount not exceeding 30 days of compensation.



- 21 -

73. Plaintiffs Miner and Heumann as agents of the State of California are also entitled

to recover their attorneys’ fees and costs under Labor Code § 2699(g)(1).

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs request that the Court enter judgment on behalf of

themselves and the members of the Class and each Subclass they seek to represent against the

Defendant as follows:

A. Certification that this action may proceed and be maintained as a class action,

with the Classes and Subclasses as designated and defined in this Complaint, and that the

Plaintiffs and their counsel be certified as representatives and Counsel for the Classes and

Subclasses, respectively.

B. That the Court award Plaintiffs, the Class, and the Subclasses appropriate relief,

to include unpaid wages, actual and compensatory damages, restitution, interest, statutory and

civil penalties;

C. Such additional orders or judgments as may be necessary to restore to any person

interest any money or property which may have been acquired by means of the violations;

D. That the Court award Plaintiffs, the Class, and Subclasses such other favorable

relief as may be available and appropriate under the law or at equity;

E. That the Court award Plaintiffs, the Class, and Subclasses reasonable attorneys’

fees and costs; and

///

///

///



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F. Such other and further relief as this Court deems proper.

Dated: June 7, 2019


HAMMOND LAW P.C.

/s/ Julian Hammond

By: Julian Hammond, (CA State Bar No. 268489)

Polina Pecherskaya (CA State Bar No. 269086)

Ari Cherniak (CA State Bar No. 290071)

HAMMONDLAW, P.C.

1829 Reisterstown Rd. Suite 410


Telephone: (310) 601-6766

Facsimile: (310) 295-2385

[email protected]

[email protected]

[email protected] -and-

COLE SCHOTZ P.C.

/s/ Gary H. Leibowitz_______________________

By: Gary H. Leibowitz (MD State Bar No. 24717)

300 East Lombard Street, Suite 1450


410-528-2971 (Phone)

410-528-9401 (Facsimile)

[email protected]

Counsel for Plaintiffs and the Proposed Classes


EXHIBIT B

[Class Action Settlement]


CLASS ACTION SETTLEMENT AGREEMENT

THIS CLASS ACTION SETTLEMENT AGREEMENT (the “Agreement”) is made this ____ day of ________, 2020 by and between Plaintiffs Sean Miner, David Heumann, and Shawna Admire, on their own behalf and on behalf of the Settlement Class (as defined below) (collectively, “Plaintiffs”), and Deborah J. Caruso, not individually but as the chapter 7 Trustee for the Bankruptcy Estate of ITT Educational Services, Inc., et al. (“Trustee”). Plaintiffs and the Trustee are each a “Party,” and collectively the “Parties.”

RECITALS

A. On September 16, 2016 (the “Petition Date”), ITT Educational Services, Inc. (“ITT”), ESI Service Corp. (“ESI”), and Daniel Webster College, Inc. (“DWC,” and together with ITT and ESI, the “Debtors”) each filed a voluntary petition for relief under chapter 7 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Indiana, Indianapolis Division (“Bankruptcy Court”), which cases were ordered jointly administered under Case No. 16-07207 (“Bankruptcy Case”).

B. The Trustee became the case trustee in each of the Debtors’ bankruptcy cases

following the conclusion of the first meeting of creditors on November 1, 2016, pursuant to section 702(d) of the Bankruptcy Code.

C. Prior to the Petition Date, ITT was a public, for-profit corporation engaged in the

business of providing post-secondary degree programs in approximately thirty-nine states and through on-line services. ESI and DWC are subsidiaries of ITT. ITT had at least fourteen (14) campuses located in California.

D. Prior to the Petition Date, Plaintiffs filed a Class Action Complaint on July 20, 2016

against ITT in the Superior Court for the State of California, County of Alameda, Case No. RG16824000, in an action entitled Sean Miner, David Heumann, and Shawna Admire, individually and on behalf of all others similarly situated v. ITT Educational Services, Inc., a Delaware corporation (“California Class Action”). The California Class Action was thereafter removed by ITT to the United States District Court for the Northern District of California, Case No. 3:16-cv-04827-VC (“California District Court”), on August 22, 2016. The California Class Action is presently stayed pursuant to section 362 of the Bankruptcy Code.

E. On September 30, 2016, Plaintiffs Miner and Heumann, as agents of the State of California, pursuant to California Labor Code Private Attorneys General Act of 2004 (Cal. Lab. Code §§ 2698 et seq.), filed in the Bankruptcy Case a proof of claim, Claim No. 27 (“PAGA Proof of Claim”), in the amount of $13,776,000.00, which included as an attachment a copy of the Class Action Complaint filed in the California Class Action. As part of this claim amount, the PAGA Proof of Claim asserted a priority claim pursuant to section 507(a)(4) of the Bankruptcy Code in the amount of $3,400,000.00 and a pre-petition general unsecured claim in the amount of $10,376,000.00. On October 5, 2016, in the Bankruptcy Case, Plaintiffs filed a subsequent proof of claim, Claim No 52 (“Class Proof of Claim”), in the amount of $20,219,000.00, which also included as an attachment a copy of the Class Action Complaint filed in the California Class Action. As part of this claim amount, the Class Proof of Claim stated a priority claim under section


2

507(a)(4) of the Bankruptcy Code in the amount of $3,400,000.00 (“Class Priority Claim”) and a pre-petition general unsecured claim in the amount of $16,819,000.00 (“Class Unsecured Claim”).

F. On September 29, 2016, Plaintiffs also filed in the Bankruptcy Case Sean Miner,

David Heumann, and Shawna Admire’s Motion Pursuant to FRBP 9014 Seeking Application of FRBP 7023 to Class Proof of Claim at the “Claim Filing Stage” of this Case [Bankruptcy Case, Doc 181].

G. On October 12, 2016, the Bankruptcy Court entered its Order Granting Motion

Pursuant to FRBP 9014 Seeking Application of FRBP 7023 to Class Proof of Claim at the “Claim Filing Stage” of this Case [Doc 340], which made Bankruptcy Rule 7023 applicable through all stages of the Bankruptcy Case, including claims resolutions of class claims.

H. On January 20, 2017, the Bankruptcy Court entered an Order appointing

HammondLaw, P.C. as interim class counsel to represent Plaintiffs in the Bankruptcy Case [Bankruptcy Case, Doc 982].

I. On April 29, 2019, the Trustee and Plaintiffs filed their Joint Motion Between

Deborah J. Caruso, Chapter 7 Trustee of ITT Educational Services, Inc., and Putative Class Representatives Sean Miner, David Heumann and Shawna Admire to Proceed with the “Miner Claims Litigation” in an Adversary Proceeding [Bankruptcy Case, Doc 3357].

J. On May 22, 2019, the Bankruptcy Court entered the Order Granting Joint Motion

Between Deborah J. Caruso, Chapter 7 Trustee of ITT Educational Services, Inc., and Putative Class Representatives Sean Miner, David Heumann and Shawna Admire to Proceed with the “Miner Claims Litigation” in an Adversary Proceeding [Bankruptcy Case, Doc 3412].

K. On May 29, 2019, Plaintiffs initiated an adversary proceeding, Adv. Pro. No. 19-

50105, against ITT by filing the Class Action Adversary Proceeding Complaint (“Adversary Proceeding”). On June 7, 2019, Plaintiffs filed their Amended Class Action Adversary Proceeding Complaint [Adversary Proceeding, Doc 6]. The Trustee filed the Trustee’s Answer and Affirmative and Additional Defenses to Plaintiffs’ Amended Class Action Adversary Proceeding Complaint [Adversary Proceeding, Doc 12] on July 8, 2019.

L. In the California Class Action, Class Proof of Claim, PAGA Proof of Claim, and

Adversary Proceeding, Plaintiffs allege ITT violated various provisions of the California Labor Code, California Industrial Welfare Commission Wage Order No. 4-2011 and Private Attorneys General Act Civil Penalties, including failure to pay wages for all hours worked (Cal. Labor Code §§ 226.2, 1194, 1194.2; IWC Wage Order No. 4-2001, § 4); failure to provide paid rest periods and pay missed rest break premiums (Cal. Labor Code §§ 226.2 and 226.7; IWC Wage Order No. 4-2001, § 12); failure to pay compensation due upon discharge from employment (Cal. Labor Code §§ 201-203); failure to issue accurate wage statements (Cal. Labor Code § 226); failure to reimburse for business-related expenses, including cellphone usage (Cal. Labor Code § 2802); unfair, unlawful, or fraudulent business practices (Cal. Bus & Prof. Code §§ 17200 et seq.); and Private Attorneys General Act Civil Penalties (Cal. Labor Code §§ 2698 et seq.). Plaintiffs sought, among other relief, unpaid wages, actual and compensatory damages, restitution, interest, statutory and civil penalties, attorney’s fees, expenses and costs.


3

M. On July 24, 2019, with the agreement of Plaintiffs, the Trustee filed Trustee’s Motion

to Refer Adversary Proceeding to Mediation in the Adversary Proceeding [Adversary Proceeding, Doc 13], which the Bankruptcy Court granted on August 14, 2019 [Adversary Proceeding, Doc 14]. The Parties selected Honorable Steven Rhodes (Ret.), a panelist with Judicial Arbitration and Mediation Services, Inc., as mediator [Notice of Selection of Mediator, Doc 14]. On September 11, 2019, Judge Rhodes conducted a mediation in Indianapolis, Indiana, at which the Parties reached a settlement in principle, subject to the necessary Bankruptcy Court and California District Court approvals provided herein.

N. The Parties desire to resolve all disputes between them without further expense and

litigation. NOW, THEREFORE, subject to approval by the Bankruptcy Court and California District

Court, as provided herein, in consideration of the above promises and the mutual covenants of the Parties set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trustee and Plaintiffs, intending to be legally bound, agree as follows:

1. DEFINITIONS

In addition to the terms defined above and elsewhere in this Agreement, the following terms shall have the meanings specified below.

1.1 “Adjunct Instructors’ Proofs of Claim” mean both the singular and plural of

the proofs of claim filed by individual adjunct instructors who are members of the Settlement Class, as identified on the attached Exhibit 3 by name, claim number, and case number, to the extent that such proofs of claim are encompassed by the Class Proof of Claim and PAGA Proof of Claim, as described in Recital E.

1.2 “Bankruptcy Approval Order” means the Order provided for in Section 3.1 of this Agreement in the form of Exhibit 1 hereto.

1.3 “California District Court Preliminary Approval Order” means the

preliminary order provided for in Section 3.2 of this Agreement in the form attached as Exhibit 2-A.

1.4 “California District Court Approval Order” means the Final Order provided

for in Section 3.2 of this Agreement in the form attached as Exhibit 2-B. 1.5 “Class Counsel” means HammondLaw P.C. 1.6 “Class Representative” means Sean Miner, David Heumann, and Shawna

Admire, individually, and “Class Representatives” means Sean Miner, David Heumann, and Shawna Admire, collectively.


4

1.7 “Estate” means the chapter 7 bankruptcy estates of one or more of the Debtors. 1.8 “Final Order” means an order that is no longer subject to appeal or certiorari

proceedings. 1.9 “Settlement Administrator” means Simpluris, Inc. or another entity retained by

Class Counsel and approved by the Bankruptcy Court and California District Court to administer the settlement and related matters as set forth herein.

1.10 “Settlement Class” means all individuals who were at any time employed by

ITT as adjunct instructors in California from January 12, 2012 through September 16, 2016.

2. INCORPORATION OF RECITALS

2.1 The foregoing recitals are incorporated into, and are made a part of, this

Agreement. 3. CERTIFICATION OF SETTLEMENT CLASS AND CLASS COUNSEL AND

SETTLEMENT APPROVAL

3.1 Approval by the Bankruptcy Court. Promptly after the execution of this Agreement by all signatories, the Trustee will file a motion in the Bankruptcy Case requesting entry of the Bankruptcy Approval Order that approves this Agreement, including granting limited relief from the automatic stay for the purpose of allowing Class Counsel to seek approval of the California District Court Settlement Components (defined in Section 3.2). The Bankruptcy Approval Order shall:

3.1.1 Approve the allowance of the Class Priority Claim against ITT in the aggregate amount of $520,000.00 on an “all-in” non-reversionary basis (meaning the amount shall not be increased or reduced based on opt-outs by members of the Settlement Class or any other conditions that could otherwise alter this amount), which allowance shall be a priority claim pursuant to section 507(a)(4) of the Bankruptcy Code (“Allowed Priority Claim”). The Bankruptcy Approval Order will incorporate the proposed allocation of any distributions made on account of the Allowed Priority Claim among the Priority Subclass members (defined below) in the manner set forth below;

3.1.2 Allow the Class Proof of Claim against ITT in the aggregate amount of $4,500,000.00 as a pre-petition general unsecured claim (“Allowed Unsecured Claim”). The Bankruptcy Approval Order will incorporate the proposed allocation of any distributions made on account of the Allowed Unsecured Claim among the Unsecured Subclass members (defined below) in the manner set forth below, provided, however, that any distribution will be conditioned upon notification from the Trustee that there are funds of the Estate of ITT available for distribution on account of the Allowed Unsecured Claim;


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3.1.3 Disallow with prejudice all other amounts asserted in the Class Proof of Claim;

3.1.4 Disallow with prejudice the PAGA Proof of Claim pursuant to Bankruptcy Rule 3007(d)(1), as it is duplicative of the Class Proof of Claim;

3.1.5 Disallow with prejudice the Adjunct Instructors’ Proofs of Claim only to the extent such claims encompass the matters asserted in the Class Proof of Claim or the PAGA Proof of Claim, including, but not limited to, the facts alleged in the California Class Action and the grounds for recovery asserted in any of the foregoing. The disallowance of the Adjunct Instructors’ Proofs of Claim shall not apply to that portion of a claim for relief that is not encompassed by the matters asserted in the Class Proof of Claim or PAGA Proof of Claim. Notwithstanding any of the foregoing, if the holder of an Adjunct Instructor’s Proof of Claim opts out of the Settlement Class, the Adjunct Instructor’s Proof of Claim filed by that holder shall not be disallowed and instead the Bankruptcy Court will determine the allowability of such Adjunct Instructor’s Proof of Claim as part of the normal procedures for resolving proofs of claim;

3.1.6 Determine that the settlement satisfies the standards developed under Rule 9019 of the Federal Rules of Bankruptcy Procedure and condition consummation of this Agreement upon entry of a preliminary order and entry of the California District Court Approval Order by the California District Court approving the California District Court Settlement Components which becomes a Final Order;

3.1.7 Provide that, if the California District Court does not enter the California District Court Approval Order approving the California District Court Settlement Components in full and/or the Settlement Effective Date does not occur within 270 days after the entered Bankruptcy Approval Order first becomes a Final Order or if the California District Court Approval Order does not become a Final Order, then the Trustee may in the Trustee’s sole discretion declare this Agreement null and void, in which event the provisions of Section 13.2 shall apply.

3.2 Approval by the California District Court. Promptly after the Bankruptcy Approval Order first becomes a Final Order, the Class Representatives will file a motion with the California District Court requesting entry of the California District Court Preliminary Approval Order and thereafter entry of the California District Court Approval Order approving the following components:

3.2.1 Certifying the Settlement Class for purposes of settlement only;

3.2.2 Approving the retention of the Settlement Administrator;

3.2.3 Approving the form and content of the notices to be issued by the Settlement Administrator to potential members of the Settlement Class, including notice to the Priority Subclass (as defined below) and Unsecured Subclass (as defined below) in the forms attached as Exhibits 4 and 5;


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3.2.4 Establishing a date for the final approval hearing that complies with the notice requirements of 28 U.S.C. § 1715(d);

3.2.5 Making a final determination that this Agreement and the settlement contemplated herein is fair, reasonable, adequate, and within the range of possible approval under the standards developed pursuant to Rule 23(e)(2) of the Federal Rules of Civil Procedure;

3.2.6 Approving compensation for Class Counsel and bankruptcy co-counsel;

3.2.7 Approving service awards proposed to be made to representatives of the Settlement Class;

3.2.8 Authorizing payment pursuant to the California Private Attorneys General Act (“PAGA”) of $20,000.00 (the “PAGA Payment”) out of the distribution to be made on account of the Allowed Priority Claim, representing payment of penalties under PAGA. Seventy-Five Percent (75%) ($15,000) of the PAGA Payment shall be paid to the California Labor and Workforce Development Agency for its portion of the PAGA penalties and the remaining 25% ($5,000) shall be paid to the Priority Subclass Members as part of the distribution made in accordance with Sections 4 and 6 below;

3.2.9 Establishing a procedure for members of the Priority Subclass and Unsecured Subclass to object to the settlement and to opt out of the Priority Subclass and Unsecured Subclass; and

3.2.10 Approving the method of distribution to members of the Settlement Class who are entitled to a distribution as provided herein.

(collectively, the “California District Court Settlement Components”).

3.3 The “Settlement Effective Date” shall occur on the date on which all of the following conditions have been met or, if applicable, have been waived:

3.3.1 The Bankruptcy Approval Order shall have become a Final Order;

3.3.2 The California District Court Approval Order containing the California District Court Settlement Components shall have become a Final Order;

3.3.3 The Trustee shall have given notice in accordance with 28 U.S.C. § 1715;

3.3.4 Plaintiffs shall have voluntarily dismissed the Adversary Proceeding, with prejudice; and

3.3.5 15% (952) or more members of the Settlement Class do not opt out of the settlement.


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4. DISTRIBUTIONS ON ACCOUNT OF THE ALLOWED PRIORITY CLAIM. Distributions made on account of the Allowed Priority Claim shall be allocated as follows:

4.1 Each member of the Settlement Class employed by ITT as an adjunct instructor in California at any time from March 20, 2016 through September 16, 2016 (“Priority Subclass”) shall be eligible to receive his or her share of the Allowed Priority Claim calculated in accordance with Section 6.1 below.

4.2 Each Class Representative shall receive up to $5,000 for his or her efforts taken on behalf of the Priority Subclass, which shall be paid out of the Allowed Priority Claim, and shall be in addition to any distribution to which the Class Representative may otherwise be entitled under this Agreement. The payment shall not be considered wages, and the Settlement Administrator shall issue each Class Representative an IRS Form 1099 reflecting such payment.

4.3 Costs incurred and fees earned by the Settlement Administrator in connection with its administration of distributions made on account of the Allowed Priority Claim, including, but not limited to, providing the Priority Subclass with required notices, locating Priority Subclass members, processing opt out requests and objections, and calculating, administering and distributing the Allowed Priority Claim and related tax forms, shall be paid from the Allowed Priority Claim in an amount not to exceed $13,000.

4.4 Class Counsel may apply for an award of attorneys’ fees and expenses with the fee portion not to exceed 33.33% of the Allowed Priority Claim, which will be paid out of the Allowed Priority Claim. In addition, Class Counsel may apply for out-of-pocket costs in an amount not to exceed $25,000, which will also be paid out of the Allowed Priority Claim.

5. DISTRIBUTIONS ON ACCOUNT OF THE ALLOWED UNSECURED CLAIM. Distributions, if any, made on account of the Allowed Unsecured Claim shall be allocated as follows:

5.1 Each member of the Settlement Class employed by ITT as an adjunct instructor in California at any time from January 12, 2012 through March 20, 2016 (“Unsecured Subclass”) shall be eligible to receive their share of distributions, if any, made on account of the Allowed Unsecured Claim calculated in accordance with Section 6.2 below.

5.2 Non-Income Taxes (as defined below) shall be the first deduction made out of any distributions to be made on account of the Allowed Unsecured Claim.

5.3 Each Class Representative shall receive up to $5,000 for their efforts taken on behalf of the Unsecured Subclass, which shall be paid out of distributions, if any, made on account of the Allowed Unsecured Claim, and shall be in addition to any distribution to which the Class Representative may otherwise be entitled under this Agreement. The payment shall not be considered wages, and the Settlement Administrator shall issue each Class Representative an IRS Form 1099 reflecting such payment.


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5.4 Costs incurred and fees earned by the Settlement Administrator in connection with its administration of distributions, if any, made on account of the Allowed Unsecured Claim, including, but not limited to, providing the Unsecured Subclass members with required notices, locating Unsecured Subclass members, processing opt out requests and objections, and calculating, administering and distributing amounts on account of the Allowed Unsecured Claim and related tax forms, shall be paid from the Allowed Unsecured Claim in an amount not to exceed $13,000.

5.5 Class Counsel may apply for an award of attorneys’ fees and expenses with the fee portion not to exceed 33.33% of the distributions made on account of the Allowed Unsecured Claim, which will be paid out of the Allowed Unsecured Claim. In addition, Class Counsel may apply for out-of-pocket costs in an amount not to exceed $1,500, which will also be paid out of distributions made on account of the Allowed Unsecured Claim.

6. CALCULATIONS OF DISTRIBUTIONS TO INDIVIDUAL PRIORITY SUBCLASS AND UNSECURED SUBCLASS MEMBERS.

6.1 The amount of the Allowed Priority Claim distributable to each Priority Subclass member shall be determined after first deducting the amounts set forth in Sections 4.2 through 4.4 above from the Allowed Priority Claim. Thereafter, the Settlement Administrator will divide the remaining amount by the combined number of workweeks that all of the Priority Subclass members worked between March 20, 2016 and September 16, 2016 (the “Weekly Priority Amount”). The Settlement Administrator will then multiply the Weekly Priority Amount by the total number of workweeks each Priority Subclass member was employed by ITT between March 20, 2016 and September 16, 2016 to arrive at the portion of the Allowed Priority Claim distributable to each Priority Subclass member. If any Priority Subclass member opts-out of the settlement, that person’s share will be added to the amount available for distribution to the other Priority Subclass members who did not opt out. The Parties acknowledge and agree that, under no circumstances can a member of the Priority Subclass receive more than $12,850 as a claim entitled to priority pursuant to section 507(a)(4) of the Bankruptcy Code, which includes any other claims that a member of the Priority Subclass may hold even if such claims do not relate to the Class Proof of Claim.

6.2 In the event the Trustee determines there are funds of the Estate of ITT available to pay some portion of the Allowed Unsecured Claim, the Trustee will provide Class Counsel with the total amount of the distribution on the Allowed Unsecured Claim (“Distributable Unsecured Amount”). Thereafter, the Distributable Unsecured Amount paid to each Unsecured Subclass member, if any, will be calculated as follows: The amounts set forth in Sections 5.2 through 5.5 above will first be deducted from the Distributable Unsecured Amount. Thereafter, the Settlement Administrator will divide the remaining amount by the combined number of workweeks that all of the Unsecured Subclass members worked between January 12, 2012 and March 20, 2016 (the “Weekly Unsecured Amount”). The Settlement Administrator will then multiply the Weekly Unsecured Amount by the total number of workweeks each Unsecured Subclass member was employed by ITT between January 12, 2012 and March 20, 2016 to arrive at the portion of the Distributable Unsecured Amount distributable to each Unsecured Subclass


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member. If any Unsecured Subclass member opts-out of the settlement, that person’s share will be added to the amount available for distribution, if any, to the other Unsecured Subclass members who did not opt out.

6.3 The Trustee will make a good faith effort to provide the Settlement Administrator with access to the ITT data reasonably necessary to perform the calculation of the number of workweeks for each member of the Priority Subclass and Unsecured Subclass and other reasonably required information the Settlement Administrator requests to perform the calculations required under this Agreement or to respond to disputes received from members of the Priority Subclass and Unsecured Subclass related to the calculations (collectively, the “ITT Data”); provided, however, the Trustee shall not be required to incur expenses (excluding the Trustee’s attorneys’ fees) in providing access to the ITT Data in an amount that exceeds $15,000.00. If the Trustee determines that the estimated expenses for providing access to the ITT Data exceeds $15,000.00, then the Trustee will notify Class Counsel, who shall then make a determination as to whether such expense is necessary, and Class Counsel and the Trustee shall attempt to reach a mutually agreeable expense-sharing arrangement. In the absence of any agreement regarding the sharing of the expense for providing access to the ITT Data, then the Trustee may in the Trustee’s sole discretion declare this Agreement null and void, in which event the provisions of Section 13.2 shall apply. The Trustee shall have no responsibility for the calculation of any amounts that may be distributable to the members of the Priority Subclass and Unsecured Subclass (or the formulas used to arrive at those calculations) under this Agreement or any other payments made pursuant to this Agreement.

6.4 TAXES ASSOCIATED WITH DISTRIBUTIONS. The Settlement Administrator will establish a Qualified Settlement Fund in accordance with Section 468B of the Internal Revenue Code for all settlement funds distributed pursuant to this Agreement. The Trustee will report distributions constituting wages/back pay and pay any Unemployment Insurance, Employment Training Tax, and State Disability Insurance to the appropriate taxing authorities (“Non-Income Taxes”). All Non-Income Taxes paid by the Trustee will be deducted from any distributions made on account of the Allowed Unsecured Claim. The Settlement Administrator shall report Personal Income Tax wages/back pay and withhold Personal Income Tax from the payments. The members of the Settlement Class who receive payments from the Settlement Administrator shall be solely responsible for the payment of any and all other individual tax obligations associated with the amounts received.

7. TREATMENT OF DISTRIBUTIONS. With respect to each member of the Settlement Class, one-third (1/3) of each distribution each class member receives shall constitute wages in the form of wages/back pay (and each member of the Settlement Class will be issued an IRS Form W-2 from the Settlement Administrator for such payment to him or her), one-third (1/3) shall constitute interest, and one-third (1/3) shall constitute penalties (and each member of the Settlement Class will be issued an IRS Form 1099 from the Settlement Administrator for such payment to him or her).


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8. NOTICE TO SETTLEMENT CLASS.

8.1 Class List. Within fifteen (15) calendar days after the California District Court enters a preliminary order approving the California District Court Settlement Components, the Trustee will forward a class list to the Settlement Administrator, with the last known contact information.

8.2 Distribution of the Notice Packet. Within thirty (30) calendar days after the California District Court enters a preliminary order approving the California District Court Settlement Components, the Settlement Administrator will distribute the Notice in substantially the same forms, subject to California District Court approval, attached as Exhibits 4 (“Class Notice”) to the Priority Subclass and Unsecured Subclass members. In the event that any Class Notices are returned without a forwarding address, the Settlement Administrator will conduct a standard skip trace to ascertain the current address for the particular member and resend the Class Notice to the new address within five (5) calendar days of the date on which the Settlement Administrator is informed that a Class Notice is undeliverable or is otherwise invalid.

8.3 Duties of the Settlement Administrator. The Settlement Administrator will be responsible for mailing the Class Notices, handling inquiries from members of the Settlement Class concerning the Class Notices, calculating amounts distributable to members of the Settlement Class, maintaining the settlement funds in an appropriate interest-bearing account, preparing, administrating and distributing any and all amounts to members of the Settlement Class, issuing a final report and performing such other duties as the Parties may direct.

8.4 Opt Out Procedure. In order to opt out of the settlement, a member of the Settlement Class must submit a letter or postcard to the Settlement Administrator, postmarked no later than sixty (60) days following the date on which the Settlement Administrator first mails the Class Notice to that member (“Response Deadline”) in accordance with the instructions in the Class Notice. A member of the Settlement Class may also send an email to the Settlement Administrator no later than the Response Deadline, in accordance with the instructions in the Class Notice. The opt out request must state the Settlement Class member’s name, address, telephone number and signature and a statement that the Settlement Class member wishes to opt out, except in the case of an opt out request submitted by email, which will be deemed signed by the submitting member of the Settlement Class. Any opt out request that is not postmarked by the Response Deadline will be invalid. Those Settlement Class members who do not timely and validly opt out will be bound by the release set forth herein, will be deemed to participate in the settlement and shall become a settlement participant without having to take any other action.

8.5 Objections. Any Class Member may object to the proposed settlement, or any portion thereof, by mailing a written objection, and supporting papers, if any, to the Settlement Administrator at the address set forth in the Class Notices. To be timely, objections must be postmarked no later than the Response Deadline. A written objection must contain the objecting person’s full name, the case name and number, and each specific reason in support of the objection. A Class Member who desires to object but


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who fails to comply with the time and objection procedure set forth herein shall be deemed to have not objected, which means they will be bound by the release of the Trustee set forth herein, will be deemed to participate in the settlement and shall become a participant in the settlement. Any Settlement Class member who files an objection remains eligible to receive monetary compensation from the settlement.

8.6 Dispute Procedure. Settlement Class members may dispute their workweeks worked if they believe they worked more or less workweeks than ITT’s records show by submitting information to the Settlement Administrator no later than the Response Deadline. The Settlement Administrator will jointly work with the Parties to resolve the dispute in good faith. ITT’s records will be presumed determinative, unless the Settlement Class member produces payment stubs, wage statements or other documents which conflict with ITT’s records. If the Parties cannot agree over the workweeks to be credited, the Settlement Administrator shall make the final decision based on the information presented by the Settlement Class member and ITT’s records.

8.7 Contradictory Forms. If a Settlement Class member submits both a timely opt out and a timely objection, only the objection shall be given effect and the Settlement Class member will remain in the Settlement Class.

9. PAYMENT PROCEDURE

9.1 Funding the Qualified Settlement Fund.

9.1.1 No later than 10 days after the Settlement Effective Date, the Trustee shall deposit into the Qualified Settlement Fund $520,000 for the Allowed Priority Claim.

9.1.2 As soon as reasonably practicable after the Qualified Settlement Fund is funded with the Allowed Priority Claim amount, it shall be distributed by the Settlement Administrator, according to the distributions provided for in Sections 4 and 6 above.

9.1.3 Any distribution on account of the Allowed Unsecured Claim will be made in the normal course of the Trustee’s administration of the Estate of ITT. At such time as the Trustee is authorized to make a distribution, if any, on account of the Allowed Unsecured Claim, the Trustee will provide Class Counsel with the total pro-rated amount available for distribution, if any, on account of the Allowed Unsecured Claim, and the Trustee shall deposit into the Qualified Settlement Fund the amount determined available for distribution.

9.1.4 As soon as reasonably practicable after the Qualified Settlement Fund is funded with the Allowed Unsecured Claims amount, if any, it shall be distributed by the Settlement Administrator, according to the distributions provided for in Sections 5 and 6 above.

9.2 Uncashed Payments.


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9.2.1 If the funds in the Qualified Settlement Fund deposited for the Allowed Priority Claim remain undistributed and unused for any reason after the date of issuance of payments to Priority Subclass members, including checks that were not deposited, endorsed or negotiated within six (6) months, the Settlement Administrator shall contribute the residual funds to a charitable beneficiary selected mutually by the Parties.

9.2.2 If the funds in the Qualified Settlement Fund deposited for the Allowed Unsecured Claim remain undistributed and unused for any reason after the date of issuance of payments to Unsecured Subclass members, including checks that were not deposited, endorsed or negotiated within six (6) months, the Settlement Administrator shall contribute the residual funds to a charitable beneficiary selected mutually by the Parties.

10. RELEASES

10.1 Release by the Settlement Class. Except for the rights, duties, and obligations created by this Agreement, effective upon the Settlement Effective Date, Plaintiffs, the Class Representatives and the Settlement Class (including the Priority Subclass and Unsecured Subclass) hereby release and discharge the Trustee, as Trustee and in her individual capacity, all professionals engaged by the Trustee on her behalf and on behalf of the Debtors, the Debtors, and the Estate of each and all of the Debtors, and all successors and assigns thereof, from any and all claims, demands, obligations, damages, action, or causes of action, in law or in equity, whether sounding in tort or contract, or based on federal or state law, and whether known or unknown, which Plaintiffs, the Class Representatives and the Settlement Class (including the Priority Subclass and Unsecured Subclass), or any one or more of them, have or may have against the Trustee, the Debtors and the Estate of each and all of the Debtors, for any reason whatsoever existing prior to or as of the Settlement Effective Date based on the facts alleged in the California Class Action, Class Proof of Claim, Class Priority Claim, PAGA Proof of Claim, and/or Adversary Proceeding. Members of the Settlement Class who do not opt out in accordance with Section 8.4 above will be deemed to have acknowledged and agreed that the payments received under this Agreement constitute payment of all sums allegedly due to them. Members of the Settlement Class will be deemed to have acknowledged and agreed that California Labor Code Section 206.5 is not applicable to the payments received under this Agreement. That section provides in pertinent part as follows:

“An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made.”

10.2 Unknown Claims. The releases provided for in this Agreement extend to claims based on the facts alleged in the California Class Action, Class Proof of Claim, Class Priority Claim, PAGA Proof of Claim, and/or Adversary Proceeding, that Plaintiffs, the Class Representatives, the Settlement Class, or members of the Settlement Class (including the Priority Subclass and Unsecured Subclass) do not know or suspect to exist at the time of the release, which if known, might have affected the decision to enter into the release (“Unknown Claims”). In releasing the Unknown Claims, Plaintiffs, the Class


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Representatives and the Settlement Class (including the Priority Subclass and Unsecured Subclass) expressly waive (and each Settlement Class member by operation of law shall be deemed to waive) any and all protections, provisions, rights and benefits conferred by any law of the United States or any state or territory of the United States, or principle of common law, which governs or limits a person’s release of Unknown Claims, including Section 1542 of the California Civil Code. Section 1542 of the California Civil Code provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

The Parties acknowledge and understand (and each Settlement Class member by

operation of law shall be deemed to acknowledge) the significance of these waivers of California Civil Code Section 1542 and/or of any other applicable law relating to limitations on releases of Unknown Claims. In connection with such waivers and relinquishment, the Parties acknowledge (and each Settlement Class member by operation of law shall be deemed to acknowledge) that they are aware that they may hereafter discover facts in addition to, or different from, those facts which they now know or believe to be true with respect to the subject matter of the Agreement, but that they release fully, finally and forever all Unknown Claims, and in furtherance of such intention, the release will remain in effect notwithstanding the discovery or existence of any such additional or different facts. The Parties acknowledge (and all Settlement Class members by operation of law shall be deemed to acknowledge) that the release of Unknown Claims as set forth herein was separately bargained for and was key element of the settlement.

11. REPRESENTATIONS AND WARRANTIES

The Parties hereby represent and warrant to each other the following, each of which is a continuing representation and warranty:

11.1 Each of the Parties is the sole and lawful owner of all right, title, and interest in and to every claim and other matter purported to be released herein. None of the Parties has assigned or transferred, or purported to assign or transfer, to any person or entity any claims or other matters herein released.

11.2 Except as otherwise expressly provided in this Agreement, no consent or approval is required by any other person or entity (other than the Bankruptcy Court and California District Court) in order for the Parties to carry out the provisions of this Agreement and the Parties (subject to approvals of the Bankruptcy Court and California District Court) have obtained all necessary approvals to enter into and perform the obligations under this Agreement.

11.3 Each of the Parties has received, or has had the ability to obtain, independent legal advice from attorneys of their choice with respect to the advisability of


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making the agreements provided herein and with respect to the advisability of executing this Agreement.

11.4 Except as otherwise expressly stated in this Agreement, the Parties have not made any statement or representation to the other regarding any facts relied upon by them in entering into this Agreement, and each of them specifically does not rely upon any statement, representation or promise of the other Party or any other person in entering into this Agreement, except as expressly stated in this Agreement. Each Party has relied upon its own investigation and analysis of the facts and not on any statement or representation made by any other Party in choosing to enter into this Agreement and the transactions contemplated herein.

11.5 The Parties and their respective attorneys have made such investigation of the facts pertaining to this Agreement and all of the matters pertaining thereto, as they deem necessary.

12. MISCELLANEOUS

12.1 The Trustee will incur and pay the expense of providing notice, as required by the Bankruptcy Court’s Case Management and Administrative Procedures approved on October 4, 2016 in the Bankruptcy Case, of the Motion for Authority to Enter into the Settlement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. Plaintiffs will bear all other expenses pertaining to securing approval of the settlement from the California District Court.

12.2 Counsel for Plaintiffs shall provide the Trustee with the names of all members of the Settlement Class who receive a distribution on the Class Priority Claim, along with the amount of the distribution.

12.3 The California Class Action may remain pending only for purposes of consummating the settlement set forth therein and shall be dismissed by Plaintiffs, with prejudice, once performance under this Agreement has been completed.

13. BANKRUPTCY AND CALIFORNIA DISTRICT COURT APPROVALS

13.1 Approvals. This Agreement is subject to and conditioned upon (a) entry of the Bankruptcy Approval Order that is a Final Order; and (b) entry of the California District Court Approval Order containing the California District Court Settlement Components that is a Final Order.

13.2 Return to Status Quo Ante. In the event any of the approvals set forth in Section 13.1 are not obtained or any of the other conditions to the Settlement Effective Date are not met, this Agreement and the conditional class certification shall be of no further force and effect and the Parties shall be returned to status quo ante as of the date of this Agreement, as if no Agreement had been negotiated or executed. Moreover, the Parties shall be deemed to have preserved all of their rights and defenses of any kind that they may have had against each other and any other person.


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13.3 Cooperation. The Parties agree to use reasonable efforts to support the entry of the orders set forth in Section 13.1. The Parties further agree not to cause any other person or entity to object to or otherwise oppose the entry of the orders set forth in Section 13.1. Each of the Parties shall promptly and in good faith execute all documents and perform all acts necessary and proper to effectuate the terms of this Agreement; provided, however, that nothing in this Section requires either Party to waive any of the conditions to the Settlement Effective Date.

14. MISCELLANEOUS

14.1 Entire Agreement, Amendments, and Waivers. This Agreement constitutes and contains the entire agreement between the Parties and supersedes any and all prior negotiations, conversations, correspondence, understandings, and letters respecting the settlement of the California Class Action and Adversary Proceeding. This Agreement may be amended or modified or one or more provisions hereof waived only by a written instrument signed by the Parties. No delay or omission by any Party in exercising any right or power arising from any default by the other Party shall be construed as a waiver of such default, nor shall any single or partial exercise thereof preclude any further exercise thereof or the exercise of any other right or power arising from any default by a party. No waiver of any breach of any covenant or other condition shall be construed to be a waiver of or consent to any previous or subsequent breach of the same or of any other covenant or condition.

14.2 Captions. The captions to this Agreement are for convenience only and are to be of no force or effect in construing and interpreting the provisions of this Agreement.

14.3 Jurisdiction, Governing Law. This Agreement shall be interpreted, enforced and governed by the laws of the State of Indiana, without regard to choice of law principles. The Parties further agree that any dispute arising out of this Agreement shall be adjudicated in the Bankruptcy Court and the Bankruptcy Court shall retain the ability to approve and enforce this Agreement to the full extent of the Bankruptcy Court’s jurisdiction.

14.4 Notices. Any notice required or permitted under this Agreement shall be given in writing and shall be sent to the following Parties via electronic mail with a copy sent by overnight mail or hand delivery:

To the Plaintiffs: Julian A. Hammond Polina (formerly Pecherskaya) Brandler HAMMONDLAW, P.C. 1829 Reisterstown Rd. Suite 410 Baltimore, MD 21208 [email protected] [email protected]


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To the Trustee: James E. Rossow Jr. Joshua W. Casselman RUBIN & LEVIN, P.C. 135 N. Pennsylvania Street, Suite 1400 Indianapolis, Indiana 46204 [email protected] [email protected] 14.5 No Party Deemed Drafter. The Parties shall jointly be deemed to be the

drafters of this Agreement. The rule that any ambiguity in a contract shall be construed against the drafter of the contract shall not apply to this Agreement.

14.6 Voluntary Settlement. The Parties acknowledge and agree that each of them is entering into this Agreement freely and voluntarily and not acting under any misapprehension as to the effect hereof, and has acted and does hereby act freely and voluntarily and not under any coercion or duress.

14.7 No Mistake of Fact or Law. In entering into this Agreement, each Party recognizes that no facts or representations are ever absolutely certain. Accordingly, each Party assumes the risk of any mistake, and if it should subsequently discover that any understanding of the facts or of the law was incorrect, each Party understands and expressly agrees that it shall not be entitled to set aside this Agreement by reason thereof, regardless of any mistake of fact or law.

14.8 Binding Agreement. This Agreement is binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, personal representatives, predecessors, successors, and assigns.

14.9 Counterparts. This Agreement may be executed in multiple counterparts and by facsimile and/or by e-mail, and all executed counterparts together shall constitute the original instrument. Faxed or emailed signatures shall be binding.

14.10 Settlement of Disputed Claims. Nothing in this Agreement shall be construed as or deemed to be an admission by any Party of any liability, culpability, negligence, or wrongdoing toward any other Party, or any other person, and the Parties specifically disclaim any liability, culpability, negligence, or wrongdoing toward the each other or any other person.

14.11 Invalidity of Any Provision. Before declaring any provision of this Agreement invalid, the Bankruptcy Court shall first attempt to construe the provisions valid to the fullest extent possible consistent with applicable precedents so as to define all provisions of this Settlement Agreement valid and enforceable.

IN WITNESS WHEREOF, the Parties have executed this Agreement.

[Signatures appear on the following page.]


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Plaintiffs: Trustee: _______________________________ SEAN MINER Date:___________________________ _______________________________ DAVID HEUMANN Date:___________________________ _______________________________ SHAWNA ADMIRE Date:___________________________

_______________________________ DEBORAH J. CARUSO, not individually but as Trustee for ITT Educational Services, Inc. Date:___________________________


EXHIBIT 1 - Bankruptcy Approval Order



INDIANAPOLIS DIVISION IN RE: ) ) ITT EDUCATIONAL SERVICES, INC., et al.1 ) Case No. 16-07207-JMC-7A ) Debtors. ) Jointly Administered

ORDER GRANTING TRUSTEE’S MOTION TO COMPROMISE AND SETTLE CLAIMS OF CALIFORNIA ADJUNCT INSTRUCTOR CLASS ACTION

This matter is before the Court on the Trustee’s Motion to Compromise and Settle Claims

of California Adjunct Instructor Class Action (the “Motion”) [Doc ___], filed by Deborah J.

Caruso, the chapter 7 trustee (the “Trustee”)2 in the above-captioned cases of ITT Educational

Services, Inc. (“ITT”), et al. (collectively, the “Debtors”). The Court, being duly advised in the

premises and noting that no objections were filed to the Motion, or if filed were withdrawn

1 The debtors in these cases, along with the last four digits of their respective federal tax

identification numbers, are ITT Educational Services, Inc. [1311]; ESI Service Corp. [2117]; and Daniel Webster College, Inc. [5980].

2 Capitalized terms used but not defined herein have the meanings given to them in the Class Action Settlement (as defined in the Motion).


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prior to the entry of this Order, determines that the Motion should be GRANTED. It is

HEREBY FOUND and ORDERED that:

1. The Trustee is authorized to take all action required to comply with the Class

Action Settlement, the terms of which are approved and incorporated in this Order as Exhibit A.

2. The Class Action Settlement satisfies the standards developed under Bankruptcy

Rule 9019; provided however, the Class Action Settlement is conditioned upon entry of a

preliminary order an entry of the California District Court Approval Order by the California

District Court approving the California District Court Settlement Components which becomes a

Final Order.

3. The automatic stay provided by section 362 of Title 11 of the United States Code

(the “Bankruptcy Code”) is hereby lifted to permit the California District Court to consider the

California District Court Settlement Components, including the following matters:

a. Certification of the Settlement Class for settlement purposes only; b. Approval of the retention of a Settlement Administrator; c. Approval of the form and content of proposed notices to be issued

by the Settlement Administrator to potential members of the Settlement Class; d. Establishment of a date for a final approving hearing that complies

with the notice requirements of 28 U.S.C. § 1715(d); e. Convening a hearing and make a final determination that the Class

Action Settlement is fair, reasonable, adequate, and within the range of possible approval under the standards developed by Rule 23(e)(2) of the Federal Rules of Civil Procedure;

f. Approval of compensation for Class Counsel and bankruptcy co-

counsel; and g. Approval of service awards proposed to be made to representatives

of the Settlement Class.


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The stay provided by section 362 of the Bankruptcy Code shall remain in effect as to all other

matters that are the subject of the Adversary Proceeding, property of the Debtors’ bankruptcy

estates, or the Trustee administration of these chapter 7 cases.

4. The Trustee shall file a notice in the Bankruptcy Case notifying the Court of the

Settlement Effective Date and will serve such notice on all members of the Settlement Class. In

the event the California District Court does not enter a Final Order approving the California

District Court Settlement Components in full within 270 days following the date this Order

becomes a Final Order, then the Trustee may in the Trustee’s sole discretion declare the Class

Action Settlement null and void, and the Adversary Proceeding shall proceed as set forth in section

13.2 of the Class Action Settlement. In such an event, the Trustee shall file notice in the

Bankruptcy Case declaring the Class Action Settlement null and void and serve such notice on all

members of the Settlement Class.

5. As of the Settlement Effective Date:

a. The Class Priority Claim shall be allowed in the aggregate amount of $520,000.00 on an “all-in” non-reversionary basis, with such allowance being a priority claim pursuant to section 507(a)(4) of the Bankruptcy Code (“Allowed Priority Claim”).

b. The Class Unsecured Claim shall be allowed in the aggregate amount of

$4,500,000.00 as a pre-petition general unsecured claim (“Allowed Unsecured Claim”).

c. All other amounts asserted in the Class Proof of Claim shall be disallowed with prejudice.

d. The PAGA Proof of Claim shall be disallowed with prejudice pursuant to

Bankruptcy Rule 3007(d)(1), as it is duplicative of the Class Proof of Claim. e. All Adjunct Instructors’ Proofs of Claim, except to the extent an Adjunct

Instructor opts out of the Settlement Class, shall be disallowed with prejudice to the extent such claims encompass the matters asserted in the Class Proof of Claim or the PAGA Proof of Claim, including, but not limited to, the facts alleged in the California Class Action and the grounds for recovery asserted in any of the foregoing.


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6. The Trustee is authorized in accordance with the Class Action Settlement to

distribute the Allowed Priority Claim following the Settlement Effective Date. To the extent

required, the Trustee is authorized to make this distribution via wire transfer.

7. The Court shall retain jurisdiction to interpret, implement and enforce the terms of

this Order.

###


Exhibit 2-A – California District Court Preliminary Approval Order


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[PROPOSED] ORDER GRANTING PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION

SETTLEMENT - CASE NO.: 3:16-CV-04827-VC

Julian Hammond, (CA State Bar No. 268489) [email protected] Polina Brandler (f/k/a/ Pecherskaya) (CA State Bar No. 269086) [email protected] Ari Cherniak (CA State Bar No. 290071) [email protected] HAMMONDLAW, P.C. 1829 Reisterstown Rd. Suite 410 Baltimore, MD 21208 Telephone: (310) 601-6766 Facsimile: (310) 295-2385

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA (SAN FRANCISCO)

SEAN MINER, DAVID HEUMANN, and SHAWNA ADMIRE, individually and on behalf of all others similarly situated,

Plaintiffs, vs. ITT EDUCATIONAL SERVICES, INC., a Delaware corporation,

Defendant.

Case No.: 3:16-cv-04827-VC [PROPOSED] ORDER GRANTING PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Date: ______, 2020 Time: ___________ Courtroom: 4 – 17th Floor Judge: Hon. Vince Chhabria Complaint Filed: July 20, 2016


1 [PROPOSED] ORDER GRANTING PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION


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Plaintiffs have filed a Motion for Preliminary Approval of the class action settlement reached

with the chapter 7 Trustee for the Bankruptcy Estate of ITT Educational Services, et al., Deborah J.

Caruso (“Trustee”), a hearing on which was held on ______________, 2020. The Court’s scrutiny of

the proposed Settlement has been as rigorous at the preliminary stage as it will be at the final approval

stage. See Cotter v. Lyft, Inc., 193 F. Supp. 3d 1030, 1036-37 (N.D. Cal. 2016). In accordance with

that level of scrutiny, the Court has carefully considered the Settlement Agreement, all the filings

related to the Settlement, including the Approval Order of the Bankruptcy Court, the arguments of

counsel, and the record in this case. The Court hereby gives its preliminary approval of the Settlement;

finds that the Settlement and Settlement Agreement are sufficiently fair, reasonable and adequate to

allow dissemination of notice of the Settlement to the Settlement Class, including the Priority Subclass

and the Unsecured Subclass, in accordance with the Settlement Agreement and this Order; and

schedules a Final Approval Hearing to determine whether the proposed Settlement is fair, adequate and

reasonable.

IT IS HEREBY ORDERED THAT:

I. PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

1. All defined terms contained herein shall have the same meanings as set forth in the

Class Action Settlement Agreement executed by the Settling Parties and filed with this Court (the

“Settlement Agreement”).

2. The Court finds that the requirement of Rules 23(a)(1)-(4), 23(b), 23(c)(4), and 23(e) of

the Federal Rules of Civil Procedure have been satisfied for purposes of preliminary approval of the

Class Action Settlement and the Settlement Agreement, such that notices of the Class Action

Settlement and the Settlement Agreement should be directed to the Priority Subclass members and

Unsecured Subclass members and a Final Approval Hearing should be set.

3. The Class Action Settlement and the Settlement Agreement are preliminarily approved

by the Court.

II. FINDINGS REGARDING THE SETTLEMENT CLASS AND SUBCLASSES

4. The Settlement Class is defined as “All individuals who were at any time employed by

ITT as adjunct instructors in California from January 12, 2012 through September 16, 2016.”




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5. The Settlement Class consists of two Subclasses.

a. Priority Subclass consists of “each member of the Settlement Class employed by ITT as an adjunct instructor in California at any time from March 20, 2016 through September 16, 2016.”

b. Unsecured Subclass consists of “each member of the Settlement Class employed by ITT as an adjunct instructor in California at any time from January 12, 2012 through March 19, 2016.”

6. Pursuant to Fed. R. Civ. P. 23(a) and (b)(3), the Court certifies, for settlement purposes

only, the Settlement Class and the Subclasses.

7. The Court finds, for settlement purposes only, that the Action may be maintained as a

class action on behalf of the Settlement Class because:

a. Numerosity: Based on ITT’s records there are approximately 1,154 individuals who are

members of the Settlement Class, approximately 564 of whom are members of the Priority Subclass,

and approximately 1,136 of whom are members of the Unsecured Subclass. This satisfies the Rule

23(e)(1) numerosity requirement.

b. Commonality: The threshold for commonality under Rule 23(a)(2) is not high and a

single common issue will suffice. Plaintiffs allege, among other things, that the members of the

Settlement Class were paid on a piece-rate basis and ITT was therefore required under the California

Labor Code but failed to pay them separately and hourly for nonproductive time and rest break time.

Plaintiffs also alleged that, even if their fixed per course compensation is not considered a piece rate,

the members of the Settlement Class are also non-exempt as they earned less than the salary basis test

required for an employee to be exempt in California. See IWC Wage Order No. 4-2001, § 1. As a

result, ITT was required under the California Labor Code to pay them for all hours worked and to

provide them with off-duty rest breaks, which it also failed to do. Plaintiffs allege this creates a

uniform right to relief for all members of the Settlement Class.

c. Typicality: Named Plaintiffs’ claims are typical of the claims of the Settlement Class

members and satisfy Rule 23(a)(3).

d. Adequacy: There are no conflicts of interest between the Class Representatives and

Settlement Class members and Class Representatives have retained competent counsel and bankruptcy




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co-counsel to represent the Settlement Class. Class Counsel regularly engages in complex litigation

similar to the present case and have dedicated substantial resources to the prosecution of this matter.

The adequacy requirement is satisfied.

e. Predominance and Superiority: there is predominance and superiority. A class action is

superior to other available methods for the fair and efficient adjudication of this controversy. The

common legal and factual issues listed in the preliminary approval papers all predominate over other

issues. Resolution of the common question constitutes a significant part of Plaintiffs’ and Settlement

Class members’ claims.

8. The Court appoints as class representatives, for settlement purposes only, named

Plaintiffs Sean Miner, Shawna Admire, and David Heumann. The Court finds, for settlement purposes

only, that the named Plaintiffs will adequately represent the Settlement Class.

9. Pursuant to Federal Rule of Civil Procedure 23(g), and for settlement purposes only, the

Court designates as Class Counsel the law firm of HammondLaw, P.C. The Court preliminarily finds

that, based on the work Class Counsel has done identifying, investigating, and prosecuting the claims

in this Action; Class Counsel’s experience in handling class actions and claims of the type asserted in

this Action; and the resources Class Counsel has and will commit to representing the Class, that Class

Counsel have represented and will represent the interests of the Settlement Class fairly and adequately.

III. FINDINGS REGARDING THE CLASS ACTION SETTLEMENT AND THE SETTLEMENT AGREEMENT

10. Plaintiffs have provided sufficient information, including the Motion for Preliminary

Approval and related submissions and presentations, “to allow the district court to carefully evaluate

the strength of the claims, the risks of litigating those claims all the way through, and the value of the

relief each class member will receive rom the settlement.” Cotter, 193 F. Supp. 3d at 1036-37. The

proposed Class Action Settlement and the Settlement Agreement were reached between Plaintiffs and

the Trustee for the Defendant ITT’s bankruptcy estate. The Settlement provides a substantial benefit

for the Priority Subclass, the members of which have a priority claim pursuant to section 507(a)(4) of

the Bankruptcy Code for their unpaid wages incurred during the six-month period preceding the ITT’s

filing for bankruptcy. The Settlement also provides a substantial benefit in the form of an allowed




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claim for the Unsecured Subclass, whose claims do not have priority in bankruptcy. The Settlement is

the product of intensive, thorough, serious, informed, and non-collusive negotiations assisted by the

Hon. Steven Rhodes (Ret.); has no obvious deficiencies; does not improperly grant preferential

treatment to the Class Representatives, or segments of the Subclasses; and is fair, reasonable, and

adequate. Accordingly, the Court has taken the Rule 23(e)(2) factors and applicable precedent into

account in finding that it will likely be able to approve the proposed Class Action Settlement and the

Settlement Agreement as fair, reasonable, and adequate.

IV. NOTICE TO THE SETTLEMENT CLASS, INCLUDING PRIORITY SUBCLASS AND UNSECURED SUBCLASS AND OPT OUT AND OBJECTION PROCEDURES

11. The Court appoints Simpluris, Inc. as the Settlement Administrator, which shall

administer the Settlement in accordance with the terms and conditions of this Order and the Settlement

Agreement.

12. The Court finds that the proposed Class Notice (Exhibit 4 to the Settlement

Agreement) and the proposed plan of distribution of the Class Notice meets the requirement of Federal

Rule of Civil Procedure 23(c)(2)(B), and hereby directs the Settlement Administrator to proceed with

the notice distribution in accordance with the terms of the Settlement Agreement.

13. Any Settlement Class members who wish to opt out from the Settlement Agreement

must do so within 60 days following the date on which the Settlement Administrator first mails the

Class Notice and in accordance with the terms of the Settlement Agreement.

14. Any Settlement Class members who wish to object to the Settlement Agreement must

do so within 60 days following the date on which the Settlement Administrator first mails the Class

Notice and in accordance with the terms of the Settlement Agreement.

15. The Court finds that the Notice plan, including the form, content, and method of

dissemination of the Class Notices to the Settlement Class, including the Priority Subclass and the

Unsecured Subclass, as described in the Settlement Agreement, is the best practicable notice, is

reasonably calculated under the circumstances to apprise the Settlement Class members of the

pendency of the lawsuits and the Settlement and of their right to object to or exclude themselves from

the proposed Settlement. The Court finds that it is reasonable and constitutes due, adequate, and




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sufficient notice to all persons entitled to receive notice, and meets all applicable requirements of

Federal Rules of Civil Procedure 23 and due process.

16. The Court approves the procedures set forth in the Settlement Agreement and the

notices of Settlement of Class Action for exclusion from and objections to the Settlement.

V. FINAL APPROVAL HEARING

17. The Court directs a hearing be scheduled on ____________ at ______ a.m./p.m. (the

“Final Approval Hearing”) to assist the Court in determining whether the Settlement is fair, reasonable

and adequate; whether the claims asserted in this California Class Action and the Adversary

Proceeding should be dismissed with prejudice; whether Class Counsel’s application of fees and

expenses from the Allowed Priority Claim, including fees and expenses of bankruptcy co-counsel,

should be approved; whether Class Counsel’s request for service awards to the Class Representatives

from the Allowed Priority Claim should be approved; and whether the payment of penalties pursuant

to PAGA to the LWDA from the Allowed Priority Claim should be approved. Plaintiff shall file a

motion for final approval of the Settlement no later than 14 days before the Final Approval Hearing.

18. Plaintiffs may file motions for attorneys’ fees, costs, and class representative service

awards from the Allowed Priority Claim. Such motions shall be filed no later than 14 days before the

deadline for objecting to the settlement.

19. If the Settlement is not finally approved, including approval of the California District

Court Settlement Components as defined in the Settlement Agreement, is terminated under its terms, or

if the Settlement Effective Date does not occur, then the Parties will return to status quo ante as of the

date of the Settlement Agreement, as if no Agreement had been negotiated or executed. The Parties

shall be deemed to have preserved all of their rights and defenses of any kind that they may have had

against each other and any other person.

20. The Court directs that the following deadlines are established by this Preliminary

Approval Order:

a. Notice Date: 30 days of this Preliminary Approval Order

b. Opt-out Deadline: 60 days after the Notice Date

c. Objection Deadline: 60 days after the Notice Date




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d. Final Approval Hearing: ___________________ at _____ a.m./p.m.

IT IS SO ORDERED.

Dated: _____________________________ _________________________________ HON. VINCE CHHABRIA UNITED STATES DISTRICT COURT


EXHIBIT 2-B – California District Court Approval Order


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[PROPOSED] ORDER GRANTING PLAINTIFFS’ MOTIONS FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND

FOR ATTORNEYS’ FEES, COSTS, AND SERVICE AWARDS - CASE NO.: 3:16-CV-04827-VC

Julian Hammond, (CA State Bar No. 268489) [email protected] Polina Brandler (f/k/a/ Pecherskaya) (CA State Bar No. 269086) [email protected] Ari Cherniak (CA State Bar No. 290071) [email protected] HAMMONDLAW, P.C. 1829 Reisterstown Rd. Suite 410 Baltimore, MD 21208 Telephone: (310) 601-6766 Facsimile: (310) 295-2385

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA (SAN FRANCISCO)

SEAN MINER, DAVID HEUMANN, and SHAWNA ADMIRE, individually and on behalf of all others similarly situated,

Plaintiffs, vs. ITT EDUCATIONAL SERVICES, INC., a Delaware corporation,

Defendant.

Case No.: 3:16-cv-04827-VC [PROPOSED] ORDER GRANTING PLAINTIFFS’ MOTIONS FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND FOR ATTORNEYS’ FEES, COSTS, AND SERVICE AWARDS Date: ______ Time: ___________ Courtroom: 4 – 17th Floor Judge: Hon. Vince Chhabria Complaint Filed: July 20, 2016


1 [PROPOSED] ORDER GRANTING PLAINTIFFS’ MOTIONS FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND


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Plaintiffs’ Motion for Final Approval of Class Action Settlement and Motion for Attorneys’

Fees, Costs, and Service Awards, came on for hearing on ____________ at ______ a.m./p.m. in

Courtroom 4 of the above captioned court, the Honorable Vincent Chhabria presiding. HammondLaw,

P.C. appeared on behalf of Plaintiffs Sean Miner, David Heumann, and Shawna Admire (“Plaintiffs”)

and Rubin & Levin appeared on behalf of the chapter 7 Trustee for the Bankruptcy Estate of ITT

Educational Services, et al., Deborah J. Caruso (“Trustee”).

The parties have submitted their Settlement, which this Court preliminarily approved by its

order entered on ______________, 2020 (Dkt. _). In accordance with the preliminary approval order,

members of both Subclasses have been given notice of the terms of the Settlement and the opportunity

to object to it or to exclude themselves from its provisions.

Having received and considered the Settlement, the supporting papers filed by the parties, and

the evidence and argument received by the Court at the hearing before it entered the Preliminary

Approval Order and at the final approval hearing on ___________, the Court grants final approval of

the Settlement, and HEREBY ORDERS and MAKES DETERMINATIONS as follows:

1. The Settlement Agreement is hereby finally approved.

2. The Court finds that the proposed Settlement is “fair, reasonable, and adequate” based

on the value of the claims in this case, the fact that Defendant ITT is no longer an operating entity and

filed for chapter 7 bankruptcy on September 16, 2016, the fact that only claims for unpaid wages

incurred during the six-months period preceding the filing of the bankruptcy petition have priority

under section 507(a)(4) of the Bankruptcy Code, the monetary value of the proposed settlement and the

risks that the Plaintiffs would face in proceeding with litigation. The Settlement was arrived at after

sufficient investigation and discovery, assisted by an experienced mediator. It appears that the

settlement negotiations were at arm’s length.

3. The Court finds that the approved notice plan has been fully implemented. Pursuant to

the Court’s Order Granting Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement

(Dkt. _) (hereinafter referred to as the “Order Granting Preliminary Approval”), Notices of Class

Action Settlement (hereinafter referred to the “Notice”) were disseminated in accordance with the

procedure described in the Settlement Agreement, and were published on the Settlement




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Administrator’s websites.

4. The Court finds that ____ Settlement Class members have objected to the Settlement

and ____ Settlement Class Members have requested exclusion from the Settlement.

5. The Court hereby GRANTS FINAL APPROVAL of the terms and conditions contained

in the Settlement as to the Settlement Class. The Court finds that the terms of the Settlement are

within the range of approval, pursuant to Federal Rule of Civil Procedure 23 and applicable law.

6. The Court finds that: (1) the Allowed Priority Claim settlement amount is fair and

reasonable to the Priority Subclass when balanced against the probable outcome of further litigation

relating to class certification, liability and damages issues, and potential appeals; (2) the Unsecured

Priority Claim settlement amount is fair and reasonable to the Unsecured Subclass when balanced

against the probable outcome of further litigation relating to class certification, liability and damages

issues, and potential appeals; (3) significant informal discovery, investigation, research, and litigation

have been conducted such that counsel for the Plaintiffs and counsel for the Trustee at this time are

able to reasonably evaluate their respective positions; (4) settlement at this time will avoid substantial

costs, delay, and risks that would be presented by the further prosecution of the litigation; and (5) the

proposed Settlement has been reached as the result of intensive, serious, and non-collusive negotiations

between the Parties. Accordingly, the Court finds that the Settlement Agreement was entered into in

good faith.

7. The Court hereby makes final its earlier conditional certification of the Settlement

Class in accordance with the Settlement, for the purposes of this Settlement only. The California Class

is defined as “All individuals who were at any time employed by ITT as adjunct instructors in

California from January 12, 2012 through September 16, 2016.” The Settlement Class consists of two

Subclasses: (a) Priority Subclass consists of “each member of the Settlement Class employed by ITT

as an adjunct instructor in California at any time from March 20, 2016 through September 16, 2016”;

(b) Unsecured Subclass consists of “each member of the Settlement Class employed by ITT as an

adjunct instructor in California at any time from January 12, 2012 through March 19, 2016.”

8. The Court hereby confirms its final approval of the terms and conditions contained in

the Settlement as to the Settlement Class as set forth in its _________, 2020 Preliminary Approval




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Order. (Dkt. No. __.) The Court has already found that the terms of the Settlement are within the range

of possible approval.

9. The Court has also already found that: (1) the Allowed Priority Claim settlement

amount is fair and reasonable to the Priority Subclass and the Allowed Unsecured Claim is fair and

reasonable to the Unsecured Subclass when each settlement amount is balanced against the probable

outcome of further litigation relating to class certification, liability and damages issues, and potential

appeals; (2) significant informal discovery, investigation, research, and litigation have been conducted

such that counsel for the Parties at this time are able to reasonably evaluate their respective positions;

(3) settlement at this time will avoid substantial costs, delay, and risks that would be presented by the

further prosecution of the litigation; and (4) the proposed Settlement has been reached as the result of

intensive, serious, and non-collusive negotiations between the Parties. Accordingly, the Court finds

that the Settlement was entered into in good faith.

10. The Court hereby confirms the appointment of Simpluris, Inc. as Settlement

Administrator for the purpose of the Settlement, and approves its reasonable administration costs of

$_____ with respect to the Allowed Priority Class, which is to be paid out of the Allowed Priority

Claim settlement amount, and of $_____ with respect to the Allowed Unsecured Claim, which is to be

paid out of the Allowed Unsecured settlement amount.

11. The court finally appoints HammondLaw, P.C. as Counsel for the Settlement Class, and

Plaintiffs as Class Representatives for the Settlement Class.

12. The Court finds that the approved Class Notices (originally submitted to the Court at

Dkt. No. ___) constituted the best notice practicable under the circumstances and is in full compliance

with the applicable laws and the requirements of due process. The Court further finds that the Class

Notices fully and accurately informed the members of the Priority Subclass and the members of the

Unsecured Subclass of all material elements of the proposed Settlement, of their right to be excluded

from the Settlement, and an opportunity to object to the Settlement. The Court also finds that the

Trustee has given all of the notices required by the Class Action Fairness Act, 28 U.S.C. § 1715. (Dkt.

No. __.) A full opportunity has been afforded to the Settlement Class members to participate in this

hearing and all Class Members and other persons wishing to be heard have been heard. Accordingly,




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the Court determines that __Settlement Class members, since ____timely and properly executed a

request for exclusion, are bound by this Order and the Judgment.

13. No later than 21 days after the distribution of checks to the Allowed Priority Claim

Class, Counsel shall file Post-Distribution Accounting consisting of the following: the total settlement

fund of the Allowed Priority Claim, the total number of settlement Priority Subclass members, the total

number of settlement Priority Subclass members sent notices not returned as undeliverable, the number

and percentage of opt-outs, the number and percentage of objections, the date on which distribution

was made, the number of settlement Priority Subclass members who were sent payments, the total

amount paid to Priority Subclass members, the average and median recovery per Priority Subclass

member, the largest and smallest amounts paid to the Priority Subclass member, the method of notice

and of payment, the number and value of checks cashed, the number and value of checks not cashed,

the amounts distributed to the cy pres recipient, total administrative costs, total amount of attorneys’

fees and costs, attorneys’ fees as a percentage of the settlement fund on the Allowed Priority Claim,

and the lodestar multiplier.

14. No later than 21 days after the distribution of checks to the Allowed Unsecured Claim

Subclass, Counsel shall file Post-Distribution Accounting consisting of the same information with

respect to the Allowed Unsecured Subclass as will be provided for the Allowed Priority Claim

described in the previous paragraph.

15. The Court finally approves Class Counsel’s request for attorneys’ fees of one-third of

the Allowed Priority Claim, for a total of $173,333.33 in fees, to be paid out of the Allowed Priority

Claim. The Court also finally approves Class Counsel’s request for attorneys’ fees of one-third of the

distributions made on account of the Unsecured Priority Claim, to be paid out of the Allowed

Unsecured Claim. These amounts are justified under the common fund doctrine, the range of awards

ordered in this District and Circuit, the excellent results obtained, substantial risk borne by Class

Counsel in litigating this matter, particular in light of the bankruptcy proceedings, the high degree of

skill and quality of work performed, financial burden imposed by the contingency basis of Class

Counsel’ representation of Plaintiffs and the Class, and additional work required of them to bring this

Settlement to conclusion. The Court finds the fees award further supported by the lodestar crosscheck,




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whereby it finds that HammondLaw, P.C.’s hourly rates and the hourly rates of bankruptcy co-counsel

Cole Schotz, P.C. are reasonable, the estimated hours expended are reasonable. In fact, Class

Counsel’s total fees are $_______. Thus, the Court applies a negative multiplier to Class Counsel’s

lodestar in issuing this fee award.

16. The Court finally approves Class Counsel’s request for costs in the amount of

$__________.

17. The Court finally approves service awards of $5,000.00 for each of the three named

Plaintiffs and Class Representatives Sean Miner, David Heumann, and Shawna Admire from the

Allowed Priority Claim. The Court also finally approves service awards of up to $5,000 for each of

three named Plaintiffs and Class Representatives Sean Miner, David Heumann, and Shawna Admire

from the Allowed Unsecured Claim, which service awards shall be proportionate to the distributions, if

any, made on the account of the Allowed Unsecured Claim. The Court finds that these awards are fair

and reasonable for the work these individuals provided to the Class.

18. The Court finally approves and authorizes payment pursuant to California Private

Attorneys General Act (“PAGA”) of $20,000, out of the distribution made on the account of the

Allowed Priority Claim, representing payment of the PAGA penalties, with $15,000 to be paid to the

California Labor and Workforce Development Agency as its 75% share of the PAGA penalties, and

the remaining 25% ($5,000) to be paid to the Priority Subclass as part of the Allowed Priority Claim

distribution.

19. Accordingly, GOOD CAUSE APPEARING, the Court hereby APPROVES following

implementation schedule:

Settlement Effective Date ______________

Trustee shall deposit into the Qualified Settlement Fund $520,000 for the Allowed Priority Claim (10 days after the Settlement Effective Date)

______________

Trustee shall provide Settlement Administrator with access to the ITT data needed to perform the calculations of the number of workweeks

______________

Settlement Administrator shall distribute the Allowed Priority Claim amount in accordance

______________




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with the Settlement Agreement as soon as reasonably practicable

Uncashed checks from the Allowed Priority Claim sent to cy pres (6 months after mailing)

______________

Trustee shall deposit, in the normal course of the Trustee’s administration of the Estate of ITT, into the Qualified Settlement Fund amount, if any, available for distribution on the account of the Unsecured Claim amount

N/A

Settlement Administrator shall distribute the Allowed Unsecured Claim amount in accordance with the Settlement Agreement as soon as reasonably practicable

N/A

Uncashed checks from the Allowed Unsecured Claim sent to cy pres (6 months after mailing)

6 months after mailing

20. The Court hereby enters final judgment in this case in accordance with the terms of the

Settlement Agreement, Order Granting Preliminary Approval, and this Order.

21. This Order shall constitute final judgment.

///

///

22. The Parties shall bear their own costs and attorneys’ fees except as otherwise provided

by the Settlement Agreement and this Court.

IT IS SO ORDERED.

Dated: _____________________________ _________________________________ HON. VINCE CHHABRIA UNITED STATES DISTRICT COURT


EXHIBIT 3 – Identification of Adjunct Instructors’ Proofs of Claim

Name Claim No. Case No.

Douglas J. Praska 1251 16-07207

Douglas J. Praska 339 16-07208

Howard G. Smith 657 16-07207

Kevin Matthew Keane 2077 16-07207

Mariah Spriggsbruce 2958 16-07207



Martin Andaya 1023 16-07207

Mary Dietz 1797 16-07207

Mary Dietz 443 16-07208

Mary Dietz 363 16-07209

Samuel Morris 2478 16-07207



Sharjeel Ahmad 1509 16-07207

Sharjeel Ahmad 392 16-07208

William M. Collins 2103 16-07207


EXHIBIT 4 – Notice to Settlement Class


- 1 – Questions? Contact the Settlement Administrator [INSERT PHONE NUMBER]// [INSERT EMAIL ADDRESS]

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

DATE: _______________, 20___

TO: All individuals who were at any time employed by ITT Educational Services, Inc. (“ITT”) as adjunct instructors in California from January 12, 2012 through September 16, 2016 (“Settlement Class”) with the following subclasses:

o Each member of the Settlement Class employed by ITT as an adjunct instructor at any time from March 20, 2016 through September 16, 2016 (“Priority Subclass”); and

o Each member of the Settlement Class employed by ITT as an adjunct instructor in

California at any time from January 12, 2012 through March 19, 2016 (“Unsecured Subclass”).

YOU ARE ELIGIBLE TO RECEIVE A SETTLEMENT PAYMENT.

PLEASE READ THIS NOTICE CAREFULLY.

NO ACTION NEEDS TO BE TAKEN TO BE ELIGIBLE TO RECEIVE MONEY UNDER THE SETTLEMENT: If you are a member of the Settlement Class (as defined above) and received this Notice, you are automatically included in the Settlement and do not need to take any further action to receive a payment. If you do nothing, you will be eligible to receive a settlement award and you will release the claims described in Section V, below.

This “NOTICE OF PROPOSED CLASS ACTION SETTLEMENT” (“Notice”) is to inform you that a settlement has been reached regarding claims asserted against ITT on behalf of the Settlement Class that argued ITT violated various California wage and hour laws, by, among other things described below, not paying adjunct instructors separately from the per course compensation for non-class preparation time, failing to compensate instructors for rest periods, and failing to reimburse instructors for work-related cell phone expenses during the period from January 12, 2012 through September 16, 2016. As explained in further detail below, Sean Miner, David Heumann, and Shawna Admire (“Plaintiffs”) initiated a lawsuit against ITT on July 20, 2016 by filing a Class Action Complaint in the Superior Court for the State of California, County of Alameda, Case No. RG16824000 (“Class Action”). The case was transferred, or “removed,” to the United States District Court for Northern District of California on August 22, 2016, which is the Court that approved this Notice (“District Court”).

SEAN MINER, DAVID HEUMANN, and SHAWNA ADMIRE, individually and on behalf of all others similarly situated. Plaintiff, vs. ITT EDUCATIONAL SERVICES, INC., a Delaware corporation. Defendant.

Case No. 3:16-cv-04827-VC NOTICE OF PROPOSED CLASS ACTION SETTLEMENT Judge: Hon. Vince Chhabria

I. INTRODUCTION



On September 16, 2016, ITT, together with its affiliates ESI Service Corp. and Daniel Webster College, Inc. (“Affiliated Debtors”), each filed voluntary petitions for relief under chapter 7 of title 11 of the United States Code (“Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Indiana (“Bankruptcy Court”), which cases were ordered jointly administered under Case No. 16-07207 (“Bankruptcy Case”).

The District Court has granted preliminary approval of the Settlement and ordered this Notice be sent to you because you may be entitled to money under the Settlement and because the Settlement affects your legal rights.

The Class Action Complaint alleges claims against ITT for violating various provisions of the California Labor Code, California Industrial Welfare Commission (“IWC”) Wage Order No. 4-2011, and Private Attorneys General Act, including failure to pay wages for all hours worked, including hours worked outside the classroom teaching time (Cal. Labor Code §§ 1194, 1194.2; IWC Wage Order No. 4-2001, § 4); failure to provide paid rest periods and pay missed rest break premiums (Cal. Labor Code §§ 226.7; IWC Wage Order No. 4-2001, § 12); failure to pay compensation due upon discharge from employment (Cal. Labor Code §§ 201-203); failure to issue accurate wage statements (Cal. Labor Code § 226); failure to reimburse for business-related cell phone expenses, including cellphone usage (Cal. Labor Code § 2802); unfair, unlawful, or fraudulent business practices (Cal. Bus & Prof. Code §§ 17200 et seq.); and Private Attorneys General Act claim for civil penalties (Cal. Labor Code §§ 2698 et seq.). Plaintiffs sought, among other relief, unpaid wages, actual and compensatory damages, restitution, interest, statutory and civil penalties, attorney’s fees, expenses and costs. ITT strongly denied liability for all of Plaintiffs’ claims and contended that it fully complied with California law. Specifically, ITT contended that its rest break policies and expense reimbursement policies complied with California law and ITT properly compensated the Settlement Class for all hours worked. As noted in the introduction, ITT filed a chapter 7 bankruptcy, which means ITT ceased operations, and a trustee was appointed to manage the liquidation of ITT’s property and resolution of claims so that any remaining funds could pay for the expense of administering the bankruptcy case and provide a distribution to claimants and creditors pursuant to priorities established by the Bankruptcy Code. Deborah J. Caruso is the trustee (“Trustee”) for ITT’s property available to pay the expenses of administration and creditor claims, otherwise known as ITT’s “bankruptcy estate.” Due to the Bankruptcy Case, the Class Action was stayed in the District Court, and the Bankruptcy Court assumed jurisdiction over the Class Action Complaint as part of its role in resolving disputes regarding claims against ITT’s bankruptcy estate. On September 11, 2019, the Plaintiffs and the Trustee participated in a mediation, resulting in a settlement to resolve all of the claims in the Class Action, subject to approval of the Bankruptcy Court and the District Court (“Settlement”). For settlement purposes, Plaintiffs and the Trustee (the “Parties”) have agreed to the establishment of the Settlement Class, the Priority Subclass, and the Unsecured Subclass. The reason for having two subclasses is that the Bankruptcy Code affords a higher priority claim status for wages and certain related compensation incurred by an individual within 180 days before the filing of the petition in bankruptcy up to a maximum of $12,850. Therefore, members of the Settlement Class who were employed by ITT as adjunct instructors from March 20, 2016 to September 16, 2016 are included in the Priority Subclass. Members of the Settlement Class who were employed by ITT as adjunct instructors from January 12, 2012 through March 19, 2016 are included in the Unsecured Subclass. Furthermore, members of

II. DESCRIPTION OF THE LAWSUIT



the Settlement Class who were employed by ITT as adjunct instructors for both periods are members of both the Priority Subclass and the Unsecured Subclass. Neither the District Court, nor the Bankruptcy Court has determined whether Plaintiffs’ claims have merit. Plaintiffs would still have to successfully certify the class and prove their claims at a trial on a class-wide basis. However, to avoid additional expense, inconvenience, and risks of continued litigation, and in light of ITT’s chapter 7 bankruptcy filing, the Parties have concluded that it is in their respective best interests and the interests of the Settlement Class to settle the Class Action and the claims in the Bankruptcy Case on the terms summarized in this Notice. After litigating the matter for several years and making significant exchanges of information, the Settlement was reached after arms-length non-collusive negotiations between the Parties. In these negotiations, both sides recognized the substantial risk of the Bankruptcy Court deciding against them at trial, and the parties determined the Settlement is a fair, reasonable and adequate way to resolve the disputed claims. Plaintiffs and Class Counsel support this Settlement, finding it fair, adequate, reasonable, and in the best interest of the Settlement Class. Among the reasons for support are the defenses to liability potentially available to ITT (and the Trustee), the inherent risk of trial on the merits, the potential for the Bankruptcy Court to deny certification of the class, and the delays and uncertainties associated with litigation. On _________________, 2020, following approval of the Settlement by the Bankruptcy Court, the District Court preliminarily approved the Settlement. This Notice is being sent to you because ITT’s records indicate that you were employed by ITT as a California adjunct instructor between January 12, 2012 and September 16, 2016. Plaintiffs are represented by Julian Ari Hammond, Polina (formerly Pecherskaya) Brandler, and Ari Cherniak, Hammondlaw, P.C. (“Class Counsel”).

There are two monetary components of the Settlement. The Trustee has agreed to the allowance of the following claims in ITT’s Bankruptcy Case:

o A claim in the amount of $520,000.00 (“Allowed Priority Claim”) on behalf of the Priority

Subclass as a priority claim pursuant to section 507(a)(4) of the Bankruptcy Code; and

o A claim in the amount of $4,500,000.00 (“Allowed Unsecured Claim”) on behalf of the Unsecured Subclass as a pre-petition general unsecured claim;

A. Allowed Priority Claim (Priority Subclass)

The Trustee shall disburse the Allowed Priority Claim to the Settlement Administrator within 10 days following the Settlement Effective Date, the date when the District Court finally approves the Settlement, and 15% or more members of the Settlement Class do no not opt out of the Settlement. The following allocations shall be paid from the Allowed Priority Claim:

1. Settlement Administration Costs. The District Court has approved Simpluris, Inc. to act as the “Settlement Administrator," who is sending this Notice to you and will perform many other duties relating to the Settlement, including, but not limited to, locating Priority Subclass members, processing opt out requests and objections, and calculating, administering, and distributing amounts on account of the Allowed Priority Claim Under the Settlement, a maximum of $13,000 can be paid from the Allowed Priority Claim to pay costs of administration.

III. TERMS OF THE SETTLEMENT



2. Attorneys’ Fees and Expenses. Class Counsel has been prosecuting the lawsuit on behalf of the Settlement Class on a contingency fee basis (that is, without being paid any money to date) and has been paying all litigation costs and expenses. To date, the Parties have aggressively litigated many aspects of the case and spent hundreds of hours in the process. The District Court will determine the actual amount awarded to Class Counsel as attorneys’ fees and expenses, which will be paid from the Allowed Priority Claim. Priority Subclass members are not personally responsible for any of Class Counsel’s attorneys’ fees or expenses. Class Counsel will ask for fees and costs of 33.33% of the Allowed Priority Claim, or $173,333.33, as reasonable compensation for the work Class Counsel performed, and will continue to perform, in this lawsuit. Class Counsel will also ask the District Court for reimbursement of up to $25,000 of their actual out-of-pocket expenses.

3. Service Award Payments to the Class Representatives. The District Court has preliminarily approved service awards to Plaintiffs as representatives of the Priority Subclass, in the amount of $5,000 each to compensate them for their service and extra work provided on behalf of the Priority Subclass. Plaintiffs may also be entitled to payment of a share of the Allowed Priority Claim to the extent they are a member of the Priority Subclass.

4. Penalties to the California Labor Workforce and Development Agency. The District Court has preliminarily allocated $20,000 of the Allowed Priority Claim to Plaintiffs’ civil penalty claim under the Private Attorneys General Act of 2004. Of this amount, 75% (i.e. $15,000) will be paid to the State of California, California Labor and Workforce Development Agency in accordance with California law, and the rest will remain for distribution in the Net Settlement Amount.

5. Net Settlement Amount. After deducting the amounts in paragraphs A.1 through A.4 above, the balance of the Allowed Priority Claim will form the Net Settlement Amount for distribution to members of the Priority Subclass.

B. Allowed Unsecured Claim (Unsecured Subclass) The Trustee’s administration of ITT’s bankruptcy estate is ongoing. The Trustee continues to pursue lawsuits to recover money or property, and is in the process of working to resolve claims against ITT’s bankruptcy estate. Creditors with allowed general unsecured claims are entitled to receive a pro rata share of funds available in ITT’s bankruptcy estate after Bankruptcy Court-approved professional fees and expenses have been paid and all allowed priority claims are paid. Therefore, it is not possible to state with precision what amounts, if any, will be distributed to the Allowed Unsecured Claim. If there are funds available to distribute to the Allowed Unsecured Claim, the following allocations will be made from the amount distributed:

1. Non-Income Taxes. All distributions constituting Unemployment Insurance, Employment Training Tax, and State Disability Insurance that is required to be paid as a result of the Settlement shall be deducted from any distribution on account of the Allowed Unsecured Claim.

2. Settlement Administration Costs. Costs incurred and fees earned by the Settlement Administrator in connection with its administration of distributions, if any, made on account of the Allowed Unsecured Claims, including, but not limited to, providing the Unsecured Subclass members with required notices, locating Unsecured Subclass members, processing opt out requests and objections, and calculating, administering and distributing amounts on account of the Allowed Unsecured Claim and related tax forms in an amount not to exceed $13,000.

3. Service Award Payments to the Class Representatives. The District Court has preliminarily approved service awards to Plaintiffs as representatives of the Unsecured Subclass, in the amount of $5,000



each to compensate them for their service and extra work provided on behalf of the Unsecured Subclass. Plaintiffs may also be entitled to payment of a share of the General Unsecured Claim to the extent they are a member of the Unsecured Subclass.

4. Attorneys’ Fees and Expenses. Class counsel has been prosecuting this lawsuit on behalf of the

Settlement Class on a contingency fee basis (that is, without being paid any money to date) and has been paying all litigation costs and expenses. To date, the Parties have aggressively litigated many aspects of the case and spent hundreds of hours in the process. The District Court will determine the actual amount awarded to Class Counsel as attorneys’ fees and expenses. Unsecured Subclass members are not personally responsible for any of Class counsel’s attorneys’ fees or expenses. Class counsel will ask for fees and costs of up to 33.33% of the distribution made on account of the Unsecured Claim, the dollar amount of which will depend on the amount available for distribution to the Unsecured Subclass members, as reasonable compensation for the work Class Counsel performed, and will continue to perform, in this lawsuit. Class Counsel will also ask the District Court for reimbursement of up to $1,500 of their actual out-of-pocket expenses.

5. Net Settlement Amount. After deducting the amounts in paragraphs B.1 through B.4 above, the

balance of the General Unsecured Claim will form the Net Settlement Amount for distribution to members of the Unsecured Subclass.

Allowed Priority Claim (Priority Subclass) After payment of the amounts set forth in paragraphs A.1 through A.4 in Part III above under “Allowed Priority Claim,” the Settlement Administrator will divide the Net Settlement Amount by the combined number of workweeks that all of the Priority Subclass members worked between March 20, 2016 and September 16, 2016 (the “Weekly Priority Amount”). The Settlement Administrator will then multiply the Weekly Priority Amount by the total number of workweeks each Priority Subclass member was employed by ITT between March 20, 2016 and September 16, 2016 to arrive at the portion of the Allowed Priority Claim distributable to each Priority Subclass member. If any Priority Subclass member opts out of the settlement, that person’s share will be added to the amount available for distribution to the other Priority Subclass members who did not opt out.

Allowed Unsecured Claim (Unsecured Subclass) Once the administration of ITT’s bankruptcy estate is concluded, the Trustee will provide Class Counsel with the total amount of the distribution on the Allowed Unsecured Claim (“Distributable Unsecured Amount”). Thereafter, the Distributable Unsecured Amount paid to each Unsecured Subclass member, if any, will be calculated as follows: After payment of the amounts set forth in paragraphs B.1 through B.4 in Part III above under “Allowed Unsecured Claim,” the Settlement Administrator will divide the remaining amount by the combined number of workweeks that all of the Unsecured Subclass members worked between January 12, 2012 and March 19, 2016 (the “Weekly Unsecured Amount”). The Settlement Administrator will then multiply the Weekly Unsecured Amount by the total number of workweeks each Unsecured Subclass member was employed by ITT between January 12, 2012 and March 19, 2016 to arrive at the portion of the Distributable Unsecured Amount distributable to each Unsecured Subclass member. If any Unsecured Subclass member opts out of the Settlement, that person’s share will be added to the amount available for distribution, if any, to the other Unsecured Subclass members who did not opt out.

IV. YOUR INDIVIDUAL SHARE OF THE SETTLEMENT AMOUNT

Case 16-07207-JMC-7A Doc 4022-1 Filed 07/30/20 EOD 07/30/20 08:22:02 Pg 100of 105


Treatment of Distributions One-third (1/3) of each distribution each member of the Settlement Class receives shall constitute wages in the form of wages / back pay (and each member of the Settlement Class will be issued an IRS Form W-2 from the Settlement Administrator for such payment), one-third (1/3) shall constitute interest, and one-third (1/3) shall constitute penalties (and each member of the Settlement Class will be issued an IRS Form 1099 from the Settlement Administrator for such payment). The members of the Settlement Class who receive payments from the Settlement Administrator shall be solely responsible for the payment of any and all individual tax obligations associated with the amounts received other than Non-Income Taxes. Share Form Attached herewith is a Share Form which includes an estimate of your Individual Settlement Amount for the Priority Subclass if applicable. Because the actual amount of a distribution toward the Allowed Unsecured Claim, if any, is not known, the Share Form includes an estimate of your pro rata share of the Net Settlement Amount expressed in percentage terms. In addition to the uncertainty regarding any distribution to the Allowed Unsecured Claim, the amount you are eligible to receive may change depending on the participation of other members of the Settlement Class and the District Court’s approval of the Settlement.

If the District Court approves the Settlement, all members of the Settlement Class who do not opt out before the deadline will release and discharge the Trustee, as Trustee and in her individual capacity, all professionals engaged by the Trustee on her behalf and on behalf of the ITT, the Affiliated Debtors, the bankruptcy estates of each, and all successors and assigns thereof, from any and all claims, demands, obligations, damages, action, or causes of action, in law or in equity, whether sounding in tort or contract, or based on federal or state law, and whether known or unknown, which Plaintiffs, and the Settlement Class (including the Priority Subclass and Unsecured Subclass), or any one or more of them, have or may have against the Trustee, the Debtors and the Estate of each and all of the Debtors, for any reason whatsoever existing prior to or as of the based on the facts alleged in the Class Action and related filings by Plaintiffs in the Bankruptcy Case. Members of the Settlement Class who do not opt out will be deemed to have acknowledged and agreed that the payments received under the Settlement constitute payment of all sums allegedly due to them. Members of the Settlement Class will be deemed to have acknowledged and agreed that California Labor Code Section 206.5 is not applicable to the payments received under the Settlement. That section provides in pertinent part as follows: “An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made.”

The releases provided for in the Settlement extend to claims based on the facts alleged in the Class Action and related filings by Plaintiffs in the Bankruptcy Case that members of the Settlement Class do not know or suspect to exist at the time of the release, which if known, might have affected the decision to enter into the release (“Unknown Claims”). In releasing the Unknown Claims, members of the Settlement Class expressly waive any and all protections, provisions, rights and benefits conferred by any law of the United States or any state or territory of the United States, or principle of common law, which governs or limits a

V. THE RELEASE OF CLAIMS



person’s release of Unknown Claims, including Section 1542 of the California Civil Code. Section 1542 of the California Civil Code provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Each members of the Settlement Class by operation of law shall be deemed to acknowledge the significance of these waivers of California Civil Code Section 1542 and/or any other applicable law relating to limitations on releases of Unknown Claims.

The “Settlement Effective Date,” or the date the Settlement shall become “final,” shall mean: The date on which all of the following conditions have been met or, if applicable, have been waived:

o The Bankruptcy Court has approved the Settlement in a Final Order; o The District Court approves the Settlement in a Final Order; o The Trustee shall have given notice in accordance with 28 U.S.C. § 1715 (notice to certain state and

federal officials); o Plaintiffs have voluntarily dismissed with prejudice the adversary proceeding they filed in connection

with the Bankruptcy Case; and o Fifteen percent (15%) or more members of the Settlement Class do not opt out of the Settlement.

“Final Order” means an order that is no longer subject to appeal. In the event the District Court does not enter a Final Order approving the Settlement or if the Settlement Effective Date does not occur within 270 days after the Bankruptcy Court enters a Final Order approving the Settlement (absent exceptions for court closures), the Trustee may, in the Trustee’s sole discretion, declare the Settlement null and void, and the Parties will resume litigation regarding the Class Action.

A. Do Nothing and Be Eligible to Receive Your Portion of the Settlement

You are automatically included as a Class Participant and will be eligible to receive a settlement payment and do not have to take any further action to be eligible to receive your settlement payment. By participating in the Settlement, you will be bound by the Release. It is your responsibility to ensure that the Settlement Administrator has your current address on file, or you may not receive important information or a settlement payment. The estimated amount of your settlement payment if you do nothing is included on the attached Share Form.

B. Opt-Out and Be Excluded from the Class and the Settlement

If you do not wish to take part in the Settlement, you may exclude yourself (i.e., opt-out) by sending to the Settlement Administrator at the address on the last page of this Notice an “Opt-Out Request from the Class Action Settlement” letter/card postmarked no later than ________________, 20___, with your name, address, telephone number, and signature. Alternatively, you may submit an Opt-Out Request from the Class Action Settlement to the Settlement Administrator via email to the following address: [INSERT EMAIL ADDRESS] no later than _______________, 20___. The Opt-Out form should state:

VI. WHAT ARE YOUR OPTIONS?



“I WISH TO BE EXCLUDED FROM THE CLASS IN THE ITT LAWSUIT. I UNDERSTAND THAT IF I ASK TO BE EXCLUDED FROM THE CLASS, I WILL NOT RECEIVE ANY MONEY FROM THE CLASS SETTLEMENT OF THIS LAWSUIT AND WILL NOT BE RELEASING ANY CLAIMS I MIGHT HAVE.”

By filing a timely Opt-Out Request, you will no longer be a member of the Settlement Class, and will receive no benefits from the Settlement.

C. Object to the Settlement

You also have the right to object to the terms of the Settlement. However, if the District Court rejects your objection, you will still be bound by the terms of the Settlement. If you wish to object to the proposed Settlement, or any portion of it, you must file with the Settlement Administrator a written objection stating your name, address, telephone number, dates of employment with ITT, the case name and number, each specific reason in support of your objection, and any legal support for each objection. Objections must be in writing and must be mailed to the Settlement Administrator by no later than ___________, 20__ for your objection to be considered. OBJECTIONS THAT DO NOT INCLUDE ALL REQUIRED INFORMATION, OR THAT ARE NOT SUBMITTED TIMELY, MAY NOT BE CONSIDERED BY THE DISTRICT COURT.

If you choose to object to the Settlement, you may also appear at the Final Approval Hearing scheduled for ___________, 20___, at _____ __.m. at the United States District Court, Phillip Burton Federal Building & United States Courthouse, 450 Golden Gate Avenue, Courtroom 4 – 17th Floor, San Francisco, CA 94102. Due to the COVID-19 pandemic, hearings before the judge overseeing this case are currently being conducted remotely via Zoom Webinar. If that remains the case at the time of the Final Approval Hearing, members of the Settlement Class who wish to appear at the Final Approval Hearing should visit the Court’s website at the following link: https://www.cand.uscourts.gov/judges/chhabria-vince-vc/ to access the Zoom Webinar on the date and time of the Final Approval Hearing. The date and time of the Final Approval Hearing may change without notice to the Settlement Class. Check the settlement websites at ___________________ or the case docket via PACER at https://pacer.uscourts.gov/ to confirm the date has not been changed. You will need to register for a PACER account in order to access the case docket. You may then enter the case information under the “Search for a Case” link to view the District Court’s docket. You have the right to appear either in person or through your own attorney at this hearing. Objections not previously filed in writing in a timely manner as described above may not be considered by the District Court. Any attorney who intends to represent an individual objecting to the Settlement must file a notice of appearance with the District Court and serve counsel for all parties on or before ___________, 20___. All objections or other correspondence must state the name and number of the case. The Court will only require substantial compliance with the requirements for submitting an objection. The requirement to submit a written objection may be excused upon a showing of good cause.

D. Participate in the Settlement but Dispute Your Workweeks Your inclusion in the Priority Subclass and / or the Unsecured Subclass was determined following a review of ITT’s records. If you feel that you were wrongly not included in the Priority Subclass or Unsecured Subclass, you may fill out the “dispute” portion of your Share Form and submit evidence to the Settlement Administrator on or before _______________, 20__ with documentation to establish the number of pay periods or pay weeks you claim to have actually worked during the Class Period. DOCUMENTATION SENT TO THE SETTLEMENT ADMINISTRATOR WILL NOT BE RETURNED OR PRESERVED; DO NOT SEND ORIGINALS. The Parties and Settlement Administrator will promptly evaluate the evidence submitted and discuss in good faith how many workweeks should be credited. The Settlement


https://www.cand.uscourts.gov/judges/chhabria-vince-vc/

https://pacer.uscourts.gov/


Administrator will make the final decision as to how many weeks are credited, and report the outcome to the Class Participant.

If you move after receiving this Notice or if it was misaddressed, please complete the Change of Address portion of the Share Form and mail it to the Settlement Administrator at the address below as soon as possible. THIS IS IMPORTANT SO THAT FUTURE NOTICES AND/OR THE SETTLEMENT PAYMENT REACH YOU.

If the Settlement is not approved by the District Court, or if any of its conditions are not satisfied, the conditional settlement will be voided, no money will be paid, and the case will return to litigation. If that happens, there is no assurance that any decision at trial or subsequent appeal would be in favor of members of the Settlement Class.

PLEASE DO NOT CALL OR CONTACT THE COURT. If you have any questions about the settlement, you may contact the Settlement Administrator at: [INSERT TELEPHONE NO.] or by e-mail at [INSERT EMAIL ADDRESS]. The pleadings and other records in this litigation, including the Settlement Agreement, may be obtained on the settlement website here: [INSERT SETTLEMENT ADMINISTRATOR’S WEB SITE]. The pleadings and other records in this litigation may also be examined online on the PACER website in the manner described above. You may also contact Class Counsel at the address or phone number listed below. THE ATTORNEYS REPRESENTING THE SETTLEMENT CLASS ARE:

HAMMONDLAW, P.C. Julian Hammond 1829 Reisterstown Rd. Suite 410 Baltimore, MD 21208 Telephone: (310) 601-6766 Facsimile: (310) 295-2385

SETTLEMENT ADMINISTRATOR ADDRESS:

All written correspondence, including requests for exclusion, objections, or disputes, must be mailed to the Settlement Administrator at the following address:

[INSERT ADDRESS]

Requests for exclusion may also be emailed to the Settlement Administrator at [INSERT EMAIL ADDRESS]

IX. QUESTIONS OR COMMENTS?

VIII. IF THE SETTLEMENT IS NOT APPROVED

VII. UPDATE FOR YOUR CHANGE OF ADDRESS


EXHIBIT C

[Names and Addresses of Potential Members of Settlement Class]


UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT …2 conclusion of the first meeting of creditors...

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