Opinion
Case No. 15-cv-03646-EMC
04-06-2017
MARCUS BETORINA, et al., Plaintiffs, v. RANDSTAD US, L.P., Defendant.
ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
Docket No. 31
I. INTRODUCTION
Plaintiffs Marcus Betorina, Joseph Diaz, and Fred Bell filed this lawsuit against Defendant Randstad US, L.P., generally alleging that that Defendant's security guard employees were not properly compensated for wages as required under California law. Docket No. 1-3 Ex. C. Pending before the Court is Plaintiffs' motion for preliminary approval of class settlement. Docket No. 31. Defendant filed a statement of non-opposition regarding the motion for preliminary approval. Docket No. 34. For the reasons stated at the hearing and as set forth below, the Court GRANTS Plaintiffs' motion for preliminary approval.
II. BACKGROUND
A. Litigation History
Plaintiffs filed this lawsuit against Defendant in the Superior Court of the State of California for the County of Alameda on February 13, 2015. Docket No. 1-3 Ex. C. The original complaint generally alleged that Defendant's security guard employees were not properly compensated for wages as required under California law. On April 16, 2015, Plaintiffs filed the First Amended Complaint, which added a claim under the California Private Attorneys General Act. Docket No. 1-1 Ex. A; Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 7.
The First Amended Complaint alleges five causes of action: unfair competition in violation of California Business and Professions Code §§ 17200, et seq.; failure to provide accurate itemized statements in violation of California Labor Code § 226; failure to reimburse employees for required expenses in violation of California Labor Code § 2802; failure to timely pay wages when due in violation of California Labor Code § 203; and violation of the Private Attorneys General Act, Labor Code §§ 2698, et seq. Docket No. 1-1 Ex. A.
On August 7, 2015, Defendant answered the First Amended Complaint. Docket No. 1-2 Ex. B. The action was then removed by Defendant to the U.S. District Court for the Northern District of California on August 10, 2015. Docket No. 1; Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 8.
On May 5, 2016, this Court held an initial Case Management Conference. Docket No. 19. On August 6, 2016, Parties participated in a good faith, arms-length mediation presided over by Jeffrey Ross, a respected and experienced mediator of wage and hour class actions. Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 12. With the assistance of the mediator, the Parties agreed to settle the action and signed a Memorandum of Understanding. Id. Parties then negotiated and prepared the Settlement Agreement which sets forth the final terms of the Settlement. Id. B. Settlement Agreement
1. Second Amended Complaint
Attached to the Settlement Agreement as Exhibit B is Plaintiffs' Second Amended Complaint, which the Settlement Agreement explains to have "occurred during the Settlement Period." Docket No. 31-1 Ex. 1 (Settlement Agreement) at ¶ 48. The Second Amended Complaint differs from the First Amended Complaint in that it additionally asserts the following claims based on Defendant's uniform policy of failing to pay overtime compensation to non-exempt employees: failure to pay overtime wages in violation of California Labor Code §§510, et seq.; and failure to pay overtime compensation in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§201, et seq. Docket No. 31-1 Ex. 1 Ex. B (Second Amended Complaint). Because Parties have based their Settlement Agreement on the Second Amended Complaint, the Court treats the Second Amended Complaint as the operative complaint for settlement purposes.
2. Settlement Class
Parties agreed to the following definition of the Settlement Class: "all individuals who worked for Defendant Randstad US, L.P. as Security Guards who were placed out of Randstad business unit 14023, and classified as non-exempt employees, from February 13, 2011 to August 8, 2016." Docket No. 31-1 Ex. 1 (Settlement Agreement) at ¶ 12.
3. Payment Terms
Per Parties' agreement, Defendant pays $350,000 ("Gross Settlement Fund") as consideration for the Settlement Agreement. Docket No. 31-1 Ex. 1 (Settlement Agreement) at ¶ 29. This amount includes:
(i) all payments made to Qualified Claimants; (ii) service awards (i.e., service payments) to the Class Representatives (of up to $10,000 each for Plaintiffs Betorina, Bell, and Diaz); (iii) $3,500 for the release of any PAGA claims that could be and/or were asserted; (iv) Settlement Administration Expenses; (v) Class Counsel's approved attorneys' fees (of no more than 87,500); (vi) Class Counsel's approved litigation costs (of no more than $10,000); and (vii) all payroll taxes other than Defendant's portion of payroll taxes which shall remain the responsibility of Defendant.Id. at ¶ 29. Defendant shall fully fund the Gross Settlement to the Settlement Administrator within fifteen days of the Effective Date, the date upon which final approval of the Settlement Agreement is granted by the Court and the Court's judgment approving the Settlement becomes final. Id. at ¶ 6.
4. Releases
In exchange for the payments, the Settlement Class releases the following claims:
any and all claims, rights, demands, charges, complaint, causes of action, obligations or liability of any and every kind that were alleged in any version of any complaint filed in the Action or in the Second Amended Complaint which occurred during the Settlement Period, and expressly excluding all other claims, including claims for wrongful termination, unemployment insurance, disability, workers' compensation, and claims outside the Settlement Period, except that Settlement Class Members who do not submit signed Claim Forms will not release their claims under the Fair Labor Standards Act ("Released Class Claims").Id. at ¶ 48.
5. Procedures for Claims and Settlement
The Net Settlement Fund is the Gross Settlement Fund minus distributions for attorneys' fees and costs, expenses of the Settlement Administrator, service awards, and the payment to the California Labor & Workforce Development Agency for release of claims under the Private Attorneys General Act under Labor Code §§ 2699, et seq. Id. at ¶ 9. Each member of the Settlement Class who submits a valid Claim Form ("Qualified Claimant") shall be entitled to receive a pro rata portion of the Net Settlement Fund, calculated based on the number of workweeks in which the member worked during the Settlement Period, divided by the total number of workweeks worked by all Settlement Class Members during the said period ("Individual Settlement Share"). Id. at ¶ 29(c). The entire Net Settlement Fund will be distributed to Qualified Claimants, and there will be no reversion of the Net Settlement Fund to Defendant. Id. at ¶ 10. In order to receive their Individual Settlement Share, Settlement Class Members must submit a signed and completed Claim Form to the Settlement Administrator postmarked no later than forty-five days after the Class Notice is mailed (or not more than twenty calendar days after the Class Notice is re-mailed). Id. at ¶ 43.
6. Opt-Ins, Opt-Outs, and Objections
Unless a Class Member opts out of the Settlement, he or she will be bound by the terms of the Settlement Agreement, although in order to release FLSA claims and become a member of the FLSA Class, a Class Member must affirmatively sign the FLSA Opt-In. As described in the Class Notice, in order to opt out, a Class Member must submit to the Settlement Administrator, by First Class Mail, a written, signed, and dated request to opt out, postmarked no later than forty-five days after the Class Notice is mailed (or not more than twenty calendar days after the date the Class Notice is re-mailed). Id. at ¶ 39. Settlement Class Members who do not opt out may object to the Settlement by submitting an objection to the Court within forty-five calendar days after the Class Notice is sent (or not more than twenty calendar days after the date the Class Notice is re-mailed). Id. at ¶ 41.
III. DISCUSSION
A. Legal Standard
Federal Rule of Civil Procedure 23(e) provides that "[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval." Fed. R. Civ. P. 23(e). It further provides that, "[i]f the proposal would bind class members, the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). When parties reach a settlement agreement prior to class certification, as here, the court has an obligation to "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).
Thus, this Court engages in a two-step inquiry. First, the Court assesses whether a class exists with respect to both the Settlement Class and the FLSA Class. See id. (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)). Second, the Court "determine[s] whether the proposed settlement is fundamentally fair, adequate, and reasonable." Id. (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). B. Certification of the Settlement Class
1. Legal Standard
The Court must determine whether the Settlement Class meets the requirements for class certification under Federal Rule of Civil Procedure 23 before determining the fairness of the Settlement Agreement. See Hanlon, 150 F.3d at 1019.
Parties seeking class certification bear the burden of demonstrating the elements of Rule 23(a) are satisfied and "must affirmatively demonstrate . . . compliance with the Rule." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). If an action meets the prerequisites of Rule 23(a), the court must consider whether the class is maintainable under one or more of the three alternatives set forth in Rule 23(b). Narouz v. Charter Communs., LLC, 591 F.3d 1261, 1266 (9th Cir. 2010).
2. Rule 23(a) Requirements
The prerequisites of Rule 23(a) "effectively limit the class claims to those fairly encompassed by the named plaintiff's claims." General Telephone Co. of the Southwest. v. Falcon, 457 U.S. 147, 155-56 (1982) (citing General Telephone Co. v. EEOC, 446 U.S. 318, 330 (1980)). Rule 23(a) requires:
(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.Id. These prerequisites are generally referred to as numerosity, commonality, typicality, and adequacy of representation. Falcon, 457 U.S. at 156.
a. Numerosity
The numerosity requirement is satisfied where "the class is so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). Generally, 40 or more members will satisfy the numerosity requirement. Collins v. Cargill Mean Solutions Corp., 274 F.R.D. 294, 300 (E.D. Cal. 2011); Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.1995). The Court finds that numerosity is met in this case because the proposed Class would be composed of 81 Class Members, Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 25, or 65 Class Members as updated by Plaintiffs' Counsel during the March 29, 2017 hearing ("hearing").
b. Commonality
A class has sufficient commonality "if there are questions of fact and law which are common to the class." Fed. R. Civ. P. 23(a) (2). All questions of fact and law need not be common to satisfy the rule. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). However, "[c]ommonality requires the plaintiff to demonstrate that the class members have suffered the same injury . . . ." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011) (citing General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 157 (1982)). "This does not mean merely that they have all suffered a violation of the same provision of law"; rather, "[t]heir claims must depend upon a common contention" the determination of the truth or falsity of which "will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal- Mart, 131 S. Ct. at 2551.
Here, Plaintiffs allege uniform policies regarding meal and rest periods, reimbursement for travel expenses, and overtime pay. The Court finds that these allegations give rise to common questions of law and fact and thus that the commonality requirement is satisfied.
c. Typicality
The typicality requirement is met if "the claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). Typicality requires that a class representative "possess the same interest and suffer the same injury" as the putative class. Falcon, 457 U.S. at 156. Representative claims need only be "reasonably co-extensive with those of absent class members; they need not be substantially identical." See Hanlon, 150 F.3d at 1020.
The Court finds that the typicality requirement is satisfied. Class Representatives, i.e., Plaintiffs Betorina, Joseph Diaz, and Fred Bell, possess the same interest as the putative Class because they were employed by Defendant as a non-exempt security guard employee and thus were entitled to all legally required meal and rest periods, reimbursement of business expenses, and overtime wages. Class Representatives also suffered the same injury as the putative Class: they were denied the legally required meal and rest periods and overtime wages and incurred unreimbursed business expenses, as a result of Defendant's uniform practice applicable to non-exempt security guard employees.
d. Adequacy
The adequacy requirement is satisfied where "the representative parties will fairly and adequately protect the interest of the class." Fed. R. Civ. P. 23(a)(4). Courts are to inquire (1) whether the named plaintiffs and counsel have any conflicts of interest with the rest of the potential class members and (2) whether the named plaintiff and counsel will prosecute the action vigorously for the class as a whole. See Hanlon, 150 F.3d at 1020. Here, "there is no evidence of any conflicts of interest" between Plaintiffs and their Counsel and the rest of the Class. Viceral v. Mistras Grp., Inc., No. 15-CV-02198-EMC, 2016 WL 5907869, at *4 (N.D. Cal. Oct. 11, 2016). Rather, Plaintiffs claim:
Plaintiffs are well aware of their duties as the representatives of the class and have actively participated in the prosecution of this case to date. Plaintiffs effectively communicated with Class Counsel, providing documents to Class Counsel, appearing for their depositions and participated extensively in the investigation of the action. The personal involvement of the Plaintiffs was essential to the prosecution of the action and the monetary settlement reached.Docket No. 31 at 18 (citing Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 25). This claim is undisputed by Defendant. Docket No. 34. In addition, Plaintiffs' claims are aligned with those of Class Members: to maximize the monetary relief under the same set of facts and legal theories. There is no contention that named Plaintiffs are subject to unique, burdensome defenses that will consume the litigation. Furthermore, Plaintiffs, undisputedly, claim to have "retained competent counsel with extensive experience in class actions. Class Counsel has extensive experience in class action litigation in California and throughout the country. Class Counsel has been involved as class counsel in more than two hundred (200) class action matters, including many wage and hour class actions." Docket No. 31 at 18 (citing Resume, attached as Exhibit 2 to the Declaration of Kyle Nordrehaug at ¶ 26).
3. Rule 23(b) Requirements
As noted above, once the requirements of Rule 23(a) are satisfied, a class may only be certified if it is maintainable under Rule 23(b). Fed. R. Civ. P. 23(b); see also Narouz v. Charter Communs., LLC, 591 F.3d 1261, 1266 (9th Cir. 2010). Plaintiffs have moved for certification of the Class under Rule 23(b)(3). In order to maintain a class action under Rule 23(b)(3), the Court must find that "questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). As to superiority, when "[c]onfronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, see Fed. R. Civ. P. 23(b)(3)(D), for the proposal is that there be no trial." Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620 (1997). Thus, "any manageability problems that may have existed are eliminated by the settlement." Ruch v. AM Retail Grp., Inc., 2016 WL 1161453, at *10 (N.D. Cal. Mar. 24, 2016).
First, the Court finds that predominance is satisfied prima facie because all of Plaintiffs' claims arise from allegations of Defendant's uniform practice and thus liability can be determined on a classwide basis. While Defendant argues that its express policy in fact complies with the labor laws, Plaintiffs allege there is a classwide practice violative of labor laws. While there is a risk of individual variability as to such proof (as discussed below), there is a sufficient claim of predominance to satisfy Rule 23(b). The fact that the calculated damages among individual Class Members diverge does not defeat certification. See Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010) ("[D]amage calculations alone cannot defeat certification . . . . The amount of damages is invariably an individual question and does not defeat class action treatment.").
Second, the Court agrees that a class action is superior to other methods for adjudicating the controversy because individual actions would involve relatively small claims for damages and thus "would prove uneconomic for potential plaintiffs" because "litigation costs would dwarf potential recovery." Hanlon, 150 F.3d at 1022.
Thus, the Court certifies the Settlement Class under Rule 23 for settlement purposes. C. Certification of the FLSA Class
1. Legal Standard
The FLSA authorizes "opt-in" representative actions "where the complaining employees are similarly situated." Gerlach v. Wells Fargo & Co., 2006 WL 824652, at *2 (N.D. Cal. Mar. 28, 2006) (citing 29 U.S.C. § 216(b)); see generally Hoffman-LaRoche v. Sperling, 493 U.S. 165 (1989). While "[n]either the FLSA nor the Ninth Circuit have defined 'similarly situated,'" this Court has understood it to be a more lenient standard than is applicable under Rule 23. Harris v. Vector Mktg. Corp., 716 F.Supp.2d 835, 837 (N.D. Cal. 2010). In managing an FLSA representative action, "[f]or conditional certification at this notice stage, the court requires little more than substantial allegations, supported by declarations or discovery, that 'the putative class members were together the victims of a single decision, policy, or plan.'" Gerlach, 2006 WL 824652 at *2 (quoting Thiessen v. General Electric Capital Corp., 267 F.3d 1095 at 1102 (10th Cir. 2001)).
2. Discussion
This Court certifies the FLSA Class for at least two reasons: First, the Court certifies the Settlement Class, which is subject to a stricter standard than the FLSA Class; and, second, the FLSA Class Members were together the victims of Defendant's uniform policies and practices. D. Preliminary Approval of the Class Settlement
1. Legal Standard
Under Federal Rule of Civil Procedure 23(e), "[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval." "The purpose of Rule 23(e) is to protect the unnamed members of the class from unjust or unfair settlements affecting their rights." In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). Thus, before a court approves a settlement, it must conclude that the settlement is "fundamentally fair, adequate, and reasonable." In re Heritage Bond Litig., 546 F.3d 667, 674-75 (9th Cir. 2008). This inquiry requires that the Court balance factors such as "(1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement." Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004).
Prior to formal class certification, "[t]he dangers of collusion between class counsel and the defendant, as well as the need for additional protections when the settlement is not negotiated by a court designated class representative, weigh in favor of a more probing inquiry than may normally be required under Rule 23(e)." Hanlon, 150 F.3d at 1026; see also Churchill Vill., 361 F.3d at 575. The Ninth Circuit has therefore explained that "where . . . the settlement takes place before formal class certification, settlement approval requires a 'higher standard of fairness.'" Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012) (quoting Hanlon, 150 F.3d at 1026). This more "exacting review" is warranted "to ensure that class representatives and their counsel do not secure a disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a duty to represent." Id. (internal quotation marks omitted).
Here, Parties have agreed to the Settlement Agreement prior to class certification. Thus, the Court applies the more exacting standard in determining whether the settlement is fair, adequate, and reasonable.
For approval of class action settlements, district courts have interpreted Rule 23(e) to require a two-step process: "the [c]ourt first determines whether class action settlement deserves preliminary approval and then, after notice is given to class members, whether final approval is warranted." In re High-Tech Emp. Antitrust Litig., 2014 WL 3917126, at *3 (N.D. Cal. Aug. 8, 2014) (internal quotation omitted). As a general matter, "there is relatively scant appellate authority regarding the standard that a district court must apply in reviewing a settlement at the preliminary approval stage." Id. Although the Ninth Circuit has not specified what standard should apply at the preliminary approval stage, "district courts often state or imply that scrutiny should be more lax." Cotter v. Lyft, 193 F.Supp.3d 1030, 1035-36 (N.D. Cal. June 23, 2016). Recently, however, courts have begun to question this "lax review," noting that such a review "makes little practical sense, from anyone's standpoint." Id. at 1036. Rather, "by scrutinizing the agreement carefully at the initial stage and identifying any flaws that can be identified, the court allows the parties to decide how to respond to those flaws (whether by fixing them or opting not to settle) before they waste a great deal of time and money in the notice and opt-out process." Id. at 1037; see also O'Connor v. Uber Technologies, Inc., No. 13-CV-03826-EMC, 2016 WL 4398271, at *8 (N.D. Cal. Aug. 18, 2016).
This Court has previously explained that "[a]t the preliminary approval stage, the Court may grant preliminary approval of a settlement and direct notice to the class if the settlement: (1) appears to be the product of serious, informed, non-collusive negotiations; (2) has no obvious deficiencies; (3) does not improperly grant preferential treatment to class representatives or segments of the class; and (4) falls within the range of possible approval." Harris v. Vector Mktg. Corp., No. C-08-5198 EMC, 2011 WL 1627973, at *7 (N.D. Cal. Apr. 29, 2011). However, taking into account the more "exacting review" required for a settlement reached prior to class certification, the Court, in applying the Harris test, fully and closely considers all of the applicable factors enumerated in Churchill Village. See Churchill Vill., 361 F.3d at 575.
2. Settlement Process
The first factor the Court examines is the means by which the parties arrived at settlement. "An initial presumption of fairness is usually involved if the settlement is recommended by class counsel after arm's-length bargaining." Harris, 2011 WL 1627973, at *8 (internal quotation omitted); Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 965 (9th Cir. 2009) ("We put a good deal of stock in the product of an arms-length, non-collusive, negotiated resolution").
Here, Parties participated in a good-faith, arms-length mediation presided over by Jeffrey Ross, a respected and experienced mediator of wage and hour class actions. Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 12. "The assistance of an experienced mediator in the settlement process confirms that the settlement is non-collusive." Satchell v. Fed. Exp. Corp., 2007 WL 1114010, at *4 (N.D. Cal. Apr. 13, 2007).
The settlement is also recommended by Class Counsel. Specifically, Class Counsel claims:
Class Counsel has conducted a thorough investigation into the facts of the class action, including a review of relevant documents and data and a diligent investigation of the Class Members' claims against Defendant. Class Counsel also retained an expert to prepare a damage valuation in advance of mediation. Based on the foregoing documents and data, and their own independent investigation and evaluation, Class Counsel is of the opinion that the settlement with Defendant for the consideration and on the terms set forth in the Settlement Agreement is fair, reasonable, and adequate in light of all known facts and circumstances, including the risk of significant delay, defenses asserted by Defendant, and numerous potential appellate issues.Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 18.
Thus, the Court is satisfied that Parties reached the settlement in a procedurally sound manner and that it was not the result of collusion or bad faith by Parties or Counsel.
3. The Presence of Obvious Deficiencies
The next factor the Court considers is whether there are obvious deficiencies in the Settlement Agreement. There is no obvious deficiency in the Settlement Agreement.
4. Preferential Treatment
Under the third factor, the Court examines whether the Settlement Agreement provides preferential treatment to any class member. With the exception of the service award to the Class Representatives of up to $10,000 each for Plaintiffs Bentorina, Bell, and Diaz, each of the participating class members will receive a distribution based solely on the number of workweeks in which the member worked during the Settlement Period. Docket No. 31-1 Ex. 1 (Settlement Agreement) at ¶ 29. Thus, each of the Class Members will receive equal proportionate treatment. The Court finds that there is no problem of preferential treatment.
5. Whether the Settlement Falls Within the Range of Possible Approval
Lastly, the Court determines whether the settlement falls within the range of possible approval. In making the determination, the Court considers: (1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of class members to the proposed settlement. Churchill Vill., 361 F.3d at 575.
a. Strength of the Plaintiffs' case; the Risk, Expenses, Complexity, and Likely Duration of Further Litigation; and the Risk of Maintaining Class Action Status Throughout the Trial
Defendant "denies each and every one of the claims and contentions alleged" in this case. Docket No. 31 at 9. Defendant has asserted numerous defenses, Docket No. 1-2 Ex. B, three of which Plaintiffs concede to be persuasive, Docket No. 31 at 12. The Court agrees that Defendant's argument undermines the strength of Plaintiffs' case for the following reasons.
These defenses are: Defendant's assertion that the on-duty meal period was legal because the "nature of the work" permitted the meal period waiver which were signed by the security officers under Cal. Code Regs tit. 8, section 11090(11); Defendant's argument that the requirement that security guards remain on the premises did not create a rest break violations; Defendant's argument that any mileage claim was de minimis. Docket No. 31 at 12. --------
First, Defendant argues, undisputed by Plaintiffs during the hearing, that Defendant had an affirmative policy that gives meal and rest breaks to its employees in compliance with labor laws. Thus, proving a practice inconsistent with such policy could be challenging, not only on the merits but in demonstrating a sufficient pattern of practice as to maintain predominance for Rule 23(b) purposes.
Second, Defendant argues, undisputed by Plaintiffs during the hearing, that the nature of the work permitted waiver of meal breaks, at least for some Class Members. Section 11090, entitled "Order Regulating Wages, Hours, and Working Conditions in the Transportation Industry," provides as follows:
11. Meal Periods.Defendant explained during the hearing, undisputed by Plaintiffs, that some Class Members worked shifts shorter than six hours, thereby qualifying for the exception under Section 11090(11)(A), and that many signed such waivers.
(A) No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee.
Third, Defendant obtained declarations from some Class Members asserting that they were given meal and rest breaks.
If the case did not settle, there is a risk that Plaintiffs would be unable to maintain a certified class given some of the potential individual issues discussed above. Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 22. Indeed, meal period waivers and declarations from some Class Members support the existence of individual issues.
b. The Amount Offered in Settlement
With the assistance of a damage expert, DM&A, Plaintiffs calculated the alleged damages they believed they would receive if they prevailed, as follows.
Using the hourly rate of $12 per hour and 3,263 workweeks, Plaintiffs calculated that the resulting damages for meal period violations were $195,780, and similarly, the rest period damages were calculated to be $195,780. This valuation assumed a meal and rest period violation everyday, which is likely an overestimation. The off-the-clock claim for pre-shift work was valued at no more than $58,734 even if all of the off-the-clock time was considered
overtime. The mileage claim for expense reimbursement was de minimis. The settlement of $350,000, before deductions, represents 77% of the calculated damages estimated by the Plaintiffs, assuming these amounts could be proven in full at trial.Docket No. 31-1 (Declaration of Kyle Nordrehaug in Support of Motion) at ¶ 20. Even taking into account the possibility of the wage statement penalties, which were valued at approximately $66,000, and the waiting time penalties, which had a maximum value of approximately $192,000, the settlement of $350,000 constitutes 49% of the calculated damages estimated by Plaintiffs.
The Court finds that the settlement amount is a significant percentage of the maximum value of the claims at issue, particularly when viewed in the context of litigation risks. See Glass v. UBS Fin. Servs., 2007 U.S. Dist. LEXIS 8476 (N.D. Cal. Jan. 27, 2007) (approving a settlement of an action claiming unpaid overtime wages where the settlement amount constituted approximately 25% of the estimated overtime damages); Dunleavy v. Nadler (In re Mego Fin. Corp. Sec. Litig.), 213 F.3d 454, 459 (9th Cir. 2000) (affirming the approval of a class settlement which represented "roughly one-sixth of the potential recovery").
c. The Extent of Discovery Completed and the Stage of the Proceedings
The Parties have performed significant discovery. First, Parties served more than 1,000 pages of documents for written discovery. Second, each Plaintiff was deposed by Defendant. Id. Third, Parties have engaged in substantial investigation regarding the number of possible class members. Id. at ¶ 10. Fourth, Class Counsel has thoroughly analyzed the value of Class Members' claims. Id. Fifth, Counsels indicated during the hearing that they have reviewed Defendant's meal and rest break policies, break waivers by some Class Members, and time records and payroll data for each Class Members. Sixth, Counsels also indicated during the hearing that the damage expert, DM&A, was provided with the time records and payroll data in calculating the alleged damages.
Prior to the filing of the pending motion for preliminary approval, Parties participated in a mediation presided over by Jeffrey Ross, a respected and experienced mediator of wage and hour class actions, and were able to reach the basic terms of a class settlement. Id. at ¶ 12. Based on the mediator's proposal and Parties' negotiations, Parties agreed to settle the case and signed a Memorandum of Understanding. Parties then negotiated and prepared the Settlement Agreement, which is the subject of the pending motion for preliminary approval.
d. The Experience and Views of Counsel
As discussed in Part C.2.a.iv, Class Counsel has extensive experience in class action litigation in California and throughout the country, including many wage and hour class actions. In addition, as discussed in Part C.3.b, Class Counsel is of the opinion that the Settlement Agreement is fair, reasonable, and adequate.
e. The Presence of a Government Participant
Because there is no government participant in this case, this factor is inapplicable.
f. The Reaction of Class Members to the Proposed Settlement
Because the Class has not yet been notified of the settlement, the Court does not evaluate the Class's reaction to the settlement, including the number and substance of any objections. E. Class Notice
"For any class certified under Rule 23(b)(3), the court 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). "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.'" Churchill Vill., 361 F. 3d at 575 (quoting Mendoza v. Tuscon Sch. Dist. No. 1, 623 F.2d 1338, 1352 (9th Cir. 1980)).
Here, Parties have agreed to mail the Class Notice and Claim Form to Class Members at their last known address. If any notice packets are returned as undeliverable, the Settlement Administrator will perform a routine skip trace procedure to obtain a current address and re-mail the envelope to the updated address. The Court finds that this is the most efficient and effective method for notifying Class Members. Viceral v. Mistras Grp., Inc., No. 15-CV-02198-EMC, 2016 WL 5907869, at *10 (N.D. Cal. Oct. 11, 2016) (finding an analogous notification method to be the most efficient and effective).
The Court has reviewed the content of the proposed Notice and concludes that it would satisfy the requirements under Fed. R. Civ. P. 23(c)(2)(B) with the following proposed amendments:
1. On page 1, add to the "SUMMARY OF YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT" that even if a Class Member objects, he or she can still submit a Claim Form and receive a payment.
2. On page 1, instead of referring to the instant case as "the above-captioned action pending in the United States District Court for the Northern District of California," spell out the case name.
3. On page 2, instead of stating "Plaintiffs filed the Second Amended Complaint, which is the operative complaint," state that Plaintiffs attached the Second Amended Complaint to the pending motion for preliminary approval, which the Court recognized as the operative complaint in the instant Order.
4. On page 2, state a dollar amount for the attorneys' fees, in addition to stating "25% of the Gross Settlement Fund."
5. On page 5, under Question 9, add that a Class Member may make appearance through an attorney and describe how a Class Member can make a timely written request to speak at the Final Approval Hearing.
The Court has also reviewed the content of the proposed Claim Form. Class Members must complete, sign, and mail the Claim Form in order to receive settlement payment, and the Court approves this procedure, especially given the low number of Class Members. See In re ECOtality, Inc. Sec. Litig., 2015 WL 12942494, at *2 (N.D. Cal. Mar. 6, 2015) (approving the notice that requires class members to submit a Proof of Claim in order to get a payment). With respect to the FLSA Class, the Court notes that the Claim Form has a separate page requesting Class Members to affirmatively sign to opt into the FLSA settlement. The Court proposes the following amendments to the Claim Form.
6. On the Claim Form, under "Release of FLSA Claims," clarify that the release applies only to existing claims, not to future claims.
7. On the Claim Form, under "Release of FLSA Claims," add that Class Members have an option not to opt in and describe the consequences of choosing that option.
8. On the Claim Form, under "FLSA Opt-In," replace "consent to joint" with "consent
to join" in order to correct the grammatical error.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS preliminary approval of Parties' proposed Settlement Agreement. As discussed above, the Court also GRANTS provisional certification of the Class for settlement purposes and ORDERS Parties to file an amended Class Notice reflecting changes listed above within seven (7) days of the filing of this Order.
The Court hereby authorizes the retention of KCC/Gilardi & Co. as the Settlement Administrator for the purpose of the settlement with reasonable administration expenses not to exceed $19,000.
The Court hereby conditionally appoints Norman Blumenthal, Kyle Nordrehaug, and Aparajit Bhowmik of Blumenthal, Nordrehaug & Bhowmik as Class Counsel; and Plaintiffs as Class Representatives for the Settlement Class.
This order disposes of Docket No. 31.
IT IS SO ORDERED. Dated: April 6, 2017
/s/_________
EDWARD M. CHEN
United States District Judge