What 954 workers didn't know about their settlements – and what it means for employers
A California employer's mass settlement strategy during a pending class action unraveled when a court found the company misled workers into signing away their claims.
On January 14, 2026, a California appeals court delivered a split decision in The Merchant of Tennis, Inc. v. The Superior Court of San Bernardino County that carries both warning and guidance for employers navigating wage and hour class actions. The case centers on The Merchant of Tennis, Inc., which paid out more than $875,000 to approximately 954 employees while a class certification motion was pending.
The dispute began when Jessica Garcia, who worked at the California-based company from July through December 2019, filed a consolidated class action alleging violations of state wage laws and rest break requirements. In May 2024, she moved for class certification. That same month, and into June, Merchant approached employees and former employees with individual settlement offers in exchange for releasing their claims.
Garcia challenged the settlements, arguing the company had used fraud and coercion to obtain them. The trial court partially agreed, finding the agreements were voidable because Merchant had used false and misleading representations.
According to the court's findings, Merchant made several problematic statements to workers. The company made what the court called baseless representations that class members...
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