Opinion
CIV. NO. 2:14-02851 WBS AC
06-27-2016
SHIRLEY GARNETT, on behalf of herself and all others similarly situated, Plaintiff, v. ADT, LLC, and DOES 1-50, inclusive, Defendants.
MEMORANDUM AND ORDER RE: MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT
Plaintiff Shirley Garnett brought this putative class action against defendant ADT, LLC, asserting claims arising out of defendant's alleged failure to reimburse for work-related vehicle expenses and failure to provide accurate wage statements as required by California law. Presently before the court is plaintiff's motion for final approval of the class action settlement, (Docket No. 87), and motion for attorney's fees, costs, and an incentive award for the named plaintiff, (Docket No. 86).
I. Factual and Procedural Background
To avoid repetition, the court will refrain from reciting the factual and procedural background, which remains the same as in its October 6, 2015 Order granting plaintiff's partial motion for summary judgment on plaintiff's itemized wage statement claim and denying defendant's cross-motion for summary judgment. (Oct. 6, 2015 Order (Docket No. 33).)
The court granted preliminary approval of plaintiff's class action settlement on April 18, 2016. (Apr. 18, 2016 Order (Docket No. 85).) Plaintiff now seeks final approval of the class-wide settlement pursuant to Federal Rule of Civil Procedure 23(e). (Pl.'s Mot. for Final Approval ("Pl.'s Mot.") (Docket No. 87-1).) Defendant does not oppose plaintiff's motions.
II. Discussion
Rule 23(e) provides that "[t]he claims, issues, or defenses of a certified class may be settled . . . only with the court's approval." Fed. R. Civ. P. 23(e). "Approval under 23(e) involves a two-step process in which the Court first determines whether a proposed class action settlement deserves preliminary approval and then, after notice is given to class members, whether final approval is warranted." Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004) (citing Manual for Complex Litig., Third, § 30.41 (1995)).
The Ninth Circuit has declared a strong judicial policy favoring settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nevertheless, where, as here, "the parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement." Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003).
A. Class Certification
A class action will be certified only if it meets the four prerequisites identified in Rule 23(a) and additionally fits within one of the three subdivisions of Rule 23(b). See Ontiveros v. Zamora, Civ. No. 2:08-567 WBS DAD, 2014 WL 3057506, at *4 (E.D. Cal. July 7, 2014); Fed. R. Civ. P. 23(a)-(b). Although a district court has discretion in determining whether the moving party has satisfied each Rule 23 requirement, see Califano v. Yamasaki, 442 U.S. 682, 701 (1979); Montgomery v. Rumsfeld, 572 F.2d 250, 255 (9th Cir. 1978), the court must conduct a rigorous inquiry before certifying a class, see Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982); E. Tex. Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 403-05 (1977).
1. Rule 23(a) Requirements
Rule 23(a) restricts class actions to cases where:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.Fed. R. Civ. P. 23(a). These requirements are more commonly referred to as numerosity, commonality, typicality, and adequacy of representation.
In its Preliminary Approval Order, the court found that the class satisfied these requirements, (Apr. 18, 2016 Order at 3-9), and the court is unaware of any changes that would alter its analysis.
2. Rule 23(b)
An action that meets all the prerequisites of Rule 23(a) may be certified as a class action only if it also satisfies the requirements of one of the three subdivisions of Rule 23(b). Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 2013). Plaintiff seeks certification under Rule 23(b)(3), which provides that a class action may be maintained only if (1) "the court finds that questions of law or fact common to class members predominate over questions affecting only individual members" and (2) "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3).
In its Preliminary Approval Order, the court found that both prerequisites were satisfied. (Apr. 18, 2016 Order at 9-10.) The court is unaware of any changes that would affect this conclusion. Accordingly, since the settlement class satisfied both Rule 23(a) and 23(b)(3), the court will grant plaintiff's motion for final certification of the settlement class.
3. Rule 23(c)(2) Notice Requirements
If the court certifies a class under Rule 23(b)(3), it "must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and content of a proposed notice. See Ravens v. Iftikar, 174 F.R.D. 651, 658 (N.D. Cal. 1997) (citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 172-77 (1974)). Although that notice must be "reasonably certain to inform the absent members of the plaintiff class," actual notice is not required. Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994) (citation omitted).
In this case, the court-appointed claims administrator, ILYM, mailed notice to 1,593 class members on May 9, 2016, after checking the names and addresses against the National Change of Address database maintained by the United States Postal Service and updating any changed addresses. (Mullins Decl. ¶¶ 7-8 (Docket No. 87-3).) One hundred sixty notice packets were returned and ILYM located updated addresses and re-mailed the packets. (Id. at ¶ 9.) Only nine notices were deemed undeliverable. (Id.)
The notice explained the proceedings; defined the scope of the class; informed the class members of the claim form requirement and the binding effect of the class action; described the procedure for opting out and objecting; and provided the time and date of the final fairness hearing. (Id. Ex. A, Notice.) In addition, the parties modified the text box on page two of the notice entitled, "YOUR LEGAL RIGHTS AND OPTIONS IN THIS LAWSUIT," to make it clear that class members must submit a claim form in order to receive a settlement check, pursuant to this court's instructions at the preliminary approval hearing. (Id. at 2; Workman Decl. in Support of Pl.'s Mot. for Final Approval ¶ 7 (Docket No. 87-2).)
Accordingly, the court finds that the content of the notice was reasonably certain to inform the class members of the terms of the settlement agreement and the method used was the best form of notice available under the circumstances. See Fed. R. Civ. P. 23(c)(2)(B); see also Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) ("Notice is satisfactory if it 'generally describes the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard.'" (citation omitted)).
B. Rule 23(e): Fairness, Adequacy, and Reasonableness of Proposed Settlement
Having determined class treatment to be warranted, the court must now determine whether the terms of the parties' settlement appear fair, adequate, and reasonable. See Fed. R. Civ. P. 23(e)(2); Hanlon, 150 F.3d at 1026. This process requires the court to "balance a number of factors," including:
the strength of the plaintiff's case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.Hanlon, 150 F.3d at 1026.
1. Strength of Plaintiff's Case
An important consideration is the strength of plaintiff's case on the merits balanced against the amount offered in the settlement. DIRECTV, 221 F.R.D. at 526. The district court, however, is not required to reach any ultimate conclusions on the merits of the dispute, "for it is the very uncertainty of outcome in litigation and avoidance of wastefulness and expensive litigation that induce consensual settlements." Officers for Justice v. Civil Serv. Comm'n of the City & Cnty. of SF, 688 F.2d 615, 625 (9th Cir. 2004).
The settlement terms compare favorably to the uncertainties with respect to liability in this case. If the case had not settled, defendant would have opposed any class certification request and continued to insist that it properly reimbursed class members for all expenses incurred on the job. (Pl.'s Mot. at 12.) Defendant also disagreed with this court's October 6, 2015 Order granting plaintiff partial summary judgment on her wage statement claim, as was evidenced by defendant's unsuccessful motion for reconsideration and motion for certification of the Order for interlocutory appeal, (Docket Nos. 48-49), and made clear its intention to appeal any final judgment in plaintiff's favor. (Pl.'s Mot. at 12.)
In comparing the strength of plaintiff's case with the proposed settlement, the court finds that the proposed settlement is a fair resolution of the issues in this case.
2. Risk, Expense, Complexity, and Likely Duration of Further Litigation
Further litigation could greatly delay resolution of this case and increase expenses. Prior to any judgment, the parties would have had to litigate class certification, which would have required additional discovery, time, and expense. (Id. at 13.) In addition, defendant planned to appeal any final judgment in plaintiff's favor. (Id.) This weighs in favor of settlement of the action.
3. Risk of Maintaining Class Action Status Throughout
Trial
If the case proceeded to trial, plaintiff would have a strong chance of certifying the class given the court's certification for the purposes of settlement. Plaintiff, however, acknowledges a risk that defendant would have defeated class certification on the reimbursement claim. (Id. at 12-13.) Accordingly, this factor also favors approval of the settlement.
4. Amount Offered in Settlement
In assessing the amount offered in settlement, "[i]t is the complete package taken as a whole, rather than the individual component parts, that must be examined for overall fairness." Officers for Justice, 688 F.2d at 628. "It is well-settled law that a cash settlement amounting to only a fraction of the potential recovery will not per se render the settlement inadequate or unfair." Id.
The gross settlement amount in this case is $2.7 million and about $1.6 million of the total fund will be distributed to class members, after the incentive award, attorney's fees, and costs are deducted. (Id. at 14.) Each of the 831 class members who submitted a claim form will receive a settlement check based on the number of workweeks he or she was employed by defendant during the class period. (Mullins Decl. ¶ 11, Ex. A, Notice.) The average amount class members will receive is $1,470.68 and the highest award is $4,280.01. (Id.) Plaintiff's anticipated award is $1,552.39. (Id.) No money from the class fund will revert to defendant and, as a result, the claims administrator estimates that there will be $458,728.15 remaining for distribution after the 831 claims are paid. (Id.; Suppl. Mullins Decl. ¶ 3 (Docket No. 88).) This amount will also be distributed on a workweek basis and the average additional amount each class member will receive is $552. (Suppl. Mullins Decl. ¶ 3.)
Sixty-nine class members submitted claim forms after the June 8, 2016 deadline but both parties agreed to accept the late claims. (Suppl. Workman Decl. ¶ 2 (Docket No. 88-1).) --------
While the $2.7 million settlement is on the lower end of the range of potential recovery for this case--the damage calculation experts hired by plaintiff estimated that the range is between $2.5 million and $11.7 million--class members will receive substantial cash awards rather than coupons or nominal awards. (Pl.'s Mot. at 14.) Class members will also be able to avoid the significant risks and costs associated with further litigation. Accordingly, the settlement amount is adequate and fair.
5. Extent of Discovery and the State of Proceedings
A settlement that occurs in an advanced stage of the proceeding indicates the parties carefully investigated the claims before reaching a resolution. Alberto v. GMRI, Inc., Civ. No. 07-1895 WBS DAD, 2008 WL 4891201, at *9 (E.D. Cal. Nov. 12, 2008). The parties in this case conducted a significant amount of discovery, took depositions, participated in two full mediations, and fully briefed motions and cross-motions for summary judgment before reaching a settlement. (Pl.'s Mot. at 15.) The parties' investigation of the claims through formal discovery, informal discovery, and mediation weigh in favor of settlement.
6. Experience and Views of Counsel
Plaintiff's counsel has extensive experience litigating class actions, particularly those involving employment law and wage and hour enforcement. (Workman Decl. in Support of Pl.'s Mot. for Final Approval ¶¶ 13-14.) Based on her experience, plaintiff's counsel believes the proposed settlement is fair, reasonable, and adequate to the class members. (Id. ¶ 9.) The court gives considerable weight to class counsel's opinions regarding the settlement due to counsel's experience and familiarity with the litigation. Alberto, 2008 WL 4891201, at *10. This factor supports approval of the settlement agreement.
7. Presence of Government Participant
No governmental entity participated in this matter; this factor, therefore, is irrelevant to the court's analysis.
8. Reaction of the Class Members to the Proposed Settlement
Notice of the settlement was sent to 1,593 class members and only seven class members submitted requests for exclusion prior to the June 8, 2016 deadline. (Mullins Decl. ¶ 10.) No class members have objected. (Id.) "It is established that the absence of a large number of objections to a proposed class action settlement raises a strong presumption that the terms of a proposed class settlement action are favorable to the class members." DIRECTV, 221 F.R.D. at 529. Accordingly, this factor weighs in favor of the court's approval of the settlement.
9. Conclusion
Having considered the foregoing factors, the court finds the settlement is fair, adequate, and reasonable pursuant to Rule 23(e).
B. Attorney's Fees
Federal Rule of Civil Procedure 23(h) provides, "[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." If a negotiated class action settlement includes an award of attorney's fees, that fee award must be evaluated in the overall context of the settlement. Knisley v. Network Assocs., 312 F.3d 1123, 1126 (9th Cir. 2002); Monterrubio v. Best Buy Stores, L.P., 291 F.R.D. 443, 455 (E.D. Cal. 2013) (England, J.). The court "ha[s] an independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount." In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011).
Plaintiff's counsel requests $891,000 in attorney's fees for 1,541.58 hours of attorney and paralegal work on this case. (Pl.'s Mot. for Att'y's Fees at 1 (Docket No. 86-1).) Plaintiff also requests $87,534.60 in costs. (Id. at 1.) The parties negotiated the agreed-upon attorney's fees and costs after reaching an agreement on the total settlement fund amount. (Id. at 10.) Defendant agreed not to oppose a request for attorney's fees that did not exceed 33% of the settlement and costs that did not exceed $90,000. (Id.) The attorney's fees requested by plaintiff constitute 33% of the total settlement fund and are slightly above the lodestar figure of $829,533, which plaintiff calculated based on hourly rates of $650 for partners, $350 for associates, and $150 for paralegals. Plaintiff's counsel submitted detailed time sheets justifying the hours worked on this case. (Workman Decl. to Mot. for Attn'y's Fees Ex. B (Docket No. 86-5).)
While such substantial hourly rates might not have been accepted by the court under different circumstances, the court finds plaintiff's counsel's request for attorney's fees and costs in the agreed-upon amount of $978,534.60 reasonable given her exceptional handling of this case. Plaintiff's counsel has demonstrated exceptional advocacy skills both at the hearing for the cross-motions for summary judgment and the preliminary approval hearing. Furthermore, plaintiff's counsel was able to prevail on a highly contested issue on summary judgment and to resolve the case in a manner that significantly benefits class members. Both because of plaintiff's counsel's able advocacy and the substantial awards the class members will receive in this case, the court will grant the requested fees and costs.
D. Incentive Payment to Named Plaintiff
The court may award "reasonable incentive payments" to named plaintiffs "to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general." Davis v. Brown Shoe Co., Inc., Civ. No. 1:13-01211 LJO BAM, 2015 WL 6697929, at *11 (E.D. Cal. Nov. 3, 2015). In assessing the reasonableness of incentive payments, the court should consider "the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefitted from those actions" and "the amount of time and effort the plaintiff expended in pursuing the litigation." Staton, 327 F.3d at 977 (citation omitted). The court must balance "the number of named plaintiffs receiving incentive payments, the proportion of the payments relative to the settlement amount, and the size of each payment." Id. In the Ninth Circuit, an incentive award of $5,000 is presumptively reasonable. Davis, 2015 WL 6697929, at *11.
The class representative in this case seeks an incentive payment of $7,500. (Pl.'s Mot. for Att'y's Fees at 6.) While the award amount is higher than the $5,000 award found to be presumptively reasonable in the Ninth Circuit, it is proportionate to the substantial settlement awards the class members stand to receive. As discussed above, unlike in cases in which class members receive nominal settlement awards, discounts, or coupons, the class members in this case will receive an average of $1,470.68, with a high of 4,280.01. Plaintiff is anticipated to receive an award of $1,552.39. The requested incentive award of $7,500 represents only 0.004% of the total $1.6 million available for distribution to class members.
In addition, the award fairly compensates plaintiff for the significant time and resources she committed to pursuing this case and representing the class. Plaintiff has dedicated at least forty hours to this case--traveling from Stockton to San Francisco to consult with and assist her attorney; traveling from Stockton to Sacramento for her deposition; assisting in answering document requests, interrogatories, and requests for admissions; searching for documents and requested information; and making herself available to answer any potential questions during the depositions and mediation sessions. (Garnett Decl. ¶ 10 (Docket No. 80-2).) In addition, plaintiff agreed to act as a private attorney general under California Labor Code section 2698 and risked her own reputation and future employment prospects by bringing a suit against her former employer. Lastly, plaintiff also agreed to a more expansive release of all claims against defendant than the other class members and a covenant not to sue. (Suppl. Workman Decl. Ex. A, Joint Stipulation and Agreement of Compromise and Settlement of Class Action ("Settlement Agreement") ¶ 8.2.4 (Docket No. 81).)
The court therefore finds that the incentive payment is reasonable and fairly compensates plaintiff for the work done on behalf of the class and the financial and reputational risks undertaken.
III. Conclusion
Based on the foregoing, the court grants final certification of the settlement class and approves the settlement set forth in the settlement agreement as fair, reasonable, and adequate. Consummation of the settlement agreement is therefore approved. The settlement agreement shall be binding upon all participating class members who did not exclude themselves.
IT IS THEREFORE ORDERED that plaintiff's motions for final approval of the class and class action settlement and for reasonable attorney's fees, expenses, and an incentive award (Docket Nos. 86, 87) be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED THAT:
(1) solely for the purpose of this settlement, and pursuant to Federal Rule of Civil Procedure 23, the court hereby
certifies the following subclasses:
- Wage Statement Settlement Class: All employees who worked as sales representatives for defendant from October 1, 2010 to April 18, 2016.
- Vehicle Expense Reimbursement Class: All employees who worked as sales representatives for defendant from October 1, 2010 to April 18, 2016 and employees who worked for defendant as sales managers from July 1, 2013 to April 18, 2016.
Specifically, the court finds that:
(a) the settlement class members are so numerous that joinder of all settlement class members would be impracticable;
(b) there are questions of law and fact common to the settlement class which predominate over any individual questions;
(c) claims of the named plaintiff are typical of the claims of the settlement class;
(d) the named plaintiff and plaintiff's counsel have fairly and adequately represented and protected the interests of the settlement class; and
(e) a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
(2) the court appoints the named plaintiff, Shirley Garnett, as representative of the class and finds that she meets the requirements of Rule 23;
(3) the court appoints Robin Workman and Aviva Roller,
Workman Law Firm, 177 Post Street, Suite 900, San Francisco, CA, 94108, as counsel to the settlement class and finds that counsel meet the requirements of Rule 23;
(4) the settlement agreement's plan for class notice is the best notice practicable under the circumstances and satisfies the requirements of due process and Rule 23. The plan is approved and adopted. The notice to the class complies with Rule 23(c)(2) and Rule 23(e) and is approved and adopted;
(5) having found that the parties and their counsel took appropriate efforts to locate and inform all putative class members of the settlement, and given that no class members filed an objection to the settlement, the court finds and orders that no additional notice to the class is necessary;
(6) as of the date of the entry of this Order, plaintiff and all class members who have not timely opted out hereby do and shall be deemed to have expressly waived and relinquished all claims, charges, complaints, liens, demands, causes of action, obligations, damages and liabilities, that each class member had, now has, or may hereafter claim to have against the released parties, arising at any time during the settlement class period, out of, or relating in any way to, the facts, legal theories, and alleged causes of action in the present case (as defined by paragraph 8.2.3 of the settlement agreement);
(7) plaintiff's counsel is entitled to fees and costs in the
amount of $978,534.60;The clerk is instructed to enter judgment accordingly. Dated: June 27, 2016
(8) the named plaintiff is entitled to an incentive payment of $7,500; and
(9) this action is dismissed with prejudice; however, without affecting the finality of this Order, the court shall retain continuing jurisdiction over the interpretation, implementation, and enforcement of the settlement agreement with respect to all parties to this action and their counsel of record.
/s/ _________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE