Opinion
3:14-cv-1528-JR
05-17-2022
MICHAEL MAKANEOLE, individually and on behalf of all similarly situated individuals, Plaintiffs, v. SOLARWORLD INDUSTRIES AMERICA, INC.; SOLARWORLD INDUSTRIES AMERICA, LP; SOLARWORLD INDUSTRIES SERVICES, LLC; RANDSTAD PROFESSIONALS US, LP; KELLY SERVICES, INC.; SUNPOWER NORTH AMERICA MANUFACTURING LLC; SUNPOWER MANUFACTURING OREGON, LLC; AND SUNPOWER CORPORATION, Defendants.
AMENDED FINDINGS AND RECOMMENDATION
JOLIE A. RUSSO UNITED STATES MAGISTRATE JUDGE
In this class action, the representative plaintiff alleges defendants SolarWorld Industries America, Inc., SolarWorld Industries America, LP, SolarWorld Industries Services, LLC, and SolarWorld Power Projects, Inc. (“SolarWorld”) violated various state wage and hour laws. After amendment, plaintiff added defendants SunPower North America Manufacturing LLC, SunPower Manufacturing Oregon LLC, and SunPower Corporation (“SunPower”) for the Or. Rev. Stat. §§ 652.120, 652.140, 652.150 claims under a successor employer theory. Makaneole v. SolarWorld Indus. America, Inc., 2019 WL 4620385, at *3-4 (D. Or. June 3, 2019). Class certification has also been granted as to the SunPower defendants. Because plaintiff seeks wages for work time related to SolarWorld's adjustment of the clock in time (five minutes before or after scheduled work time) and that issue is currently the subject of questions certified by the Ninth Circuit to the Oregon Supreme Court, the Court stayed this action pending resolution of the Ninth Circuit case. See Buero v. Amazon, Case No. 20-35633. However, plaintiff sought and received a lift of the stay so that the Court may consider whether to grant preliminary approval of a class action settlement between class plaintiffs and the SolarWorld defendants. On May 2, 2022, this Court issued a Findings and Recommendation (F&R) recommending denial of preliminary approval without prejudice so that revisions to the proposed order and notice could be made. On May 17, 2022, plaintiff submitted a supplemental motion for preliminary approval of the class action settlement with SolarWorld. Accordingly, the Court withdraws its F&R (ECF 389) and issues this amended F&R. For the reasons stated below, the motion should be granted.
This Court recommended granting summary judgment in favor of the class on the issue of the 5-Minute Rule and found SolarWorld liable for wages as “work time” for time on the clock during the five-minute periods covered under the 5-Minute Rule in the amount of $21,485.97 for regular time and $115,254.11 for unpaid overtime wages. While this Court also found SolarWorld willfully violated the Oregon statutes, it recommended deferral on damages related to willfulness until the issue of successor liability could be determined given the potential differences in the amounts under Chapters 652 and 653 of the state wage and hour laws. Judge Michael Mosman declined to adopt this recommendation based on the newly pending Ninth Circuit case. Regarding plaintiffs' claim for wages related to short meal breaks, Judge Mosman adopted this Court's recommendation that the claim be denied.
DISCUSSION
The proposed settlement agreement on behalf of the class negotiated with the SolarWorld defendants provides payment as follows: (1) $10,000.00 for administrative costs to the Settlement Administrator, which includes full accounting and issuing of all settlement payments; (2) $4,000.00 for a Service Award to Plaintiff as the Class Representative; (3) $100,000.00 for attorney fees and $82,000.00 for costs to Schuck Law as Class Counsel; (4) payment of any employer taxes based on the wages paid; and (5) equal distribution of the Maximum Settlement Amount to all Class Members, after payment of items 1 - 4 above. Proposed Stipulation and Settlement Agreement of Class Action Claims as to SolarWorld Defendants Only (ECF 376) at § 4.3.
In return for this payment, the class members:
fully release SolarWorld and the Releasees only from any and all wage and hour claims, along with any debts, liabilities, demands, obligations, penalties, guarantees, costs, expenses, attorney's fees, damages, action or causes of action of whatever kind or nature, whether known or unknown, contingent or accrued, that arose from or relate to their employment with SolarWorld that were alleged or that reasonably could have been alleged based on the facts alleged in the Action, as amended, including, but not limited to, any wage and hour claims under federal law and Oregon State law, statutes and regulations, any claims for unpaid overtime, claims for missed meal or rest breaks, claims for liquidated damages, claims for unlawful deductions from wages, claims for conversion of wages, claims for record-keeping violations, late payment and overtime penalties, and claims under applicable Oregon statutes including but not limited to ORS 652.120, 652.140, 652.150, 652.200, 653.010, 653.055, 653.261, 653.055, 653.261, 82.010, and OAR 839-020-0030, 839-020-0050, as well as any other Oregon State and federal wage and hour statute or regulation.Id. at § 4.2.1. In addition, class members release only the SolarWorld defendants from:
Any and all claims, rights, demands, actions, liability, counter claims, damages, claims for attorney fees and costs, causes of action of every kind and character, and compensation of whatever kind or nature, in law, equity, or otherwise, known or unknown, vested or contingent, suspected or unsuspected, matured or unmatured, which either party may now have or has ever had, whether based on tort, contract (express or implied), or federal, state, or local statute, regulation, ordinance, constitution, executive order, or other law, specifically including, but not limited to, Title VII of the Civil Rights Act of 1964, ORS Chapters 659 and 659A, the Fair Labor Standards Act, the 1991 Civil Rights Act, the Equal Pay Act, the Rehabilitation Act of 1973, the Americans with Disabilities Act, the Family Medical Leave Act, the Oregon Family Leave Act, the Plaintiff Retirement Income Security Act, the Consolidated Omnibus Reconciliation Act of 1985, Age
Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. section 621 et seq., State and Federal Racketeering Acts, Executive Order 11246, all federal and state retaliation statutes, and all federal and state Civil Rights statutes or ordinances (including sections 1981 and 1983).Id. at § 4.2.2.
The definition of “Releasees” “expressly excludes SunPower.” Proposed Stipulation and Settlement Agreement of Class Action Claims as to SolarWorld Defendants Only (ECF 376) at § 2.16.
The agreement does not have any effect on the class members' claims against the SunPower defendants. Id. at § 4.2. Class counsel also submitted an initial proposed order for preliminary approval of the settlement agreement in which the Court is asked to find: “Nothing in the Settlement between Plaintiff and SolarWorld or this Preliminary Approval Order shall in any way, directly or indirectly, affect the claims and rights of Plaintiff and any class member as to any other Defendant in this case, except for the SolarWorld Defendants.” Proposed Opinion and Order (ECF 376-2) at p. 5. Counsel has now submitted a revised proposed order stating:
This Order is not a decision on the merits regarding any claim or defense in this case asserted by any Party, including without limitation whether the Release in the Settlement Agreement limits or extinguishes Class Members' ability to continue to pursue damages against SunPower as a successor employer.(ECF 392-2) at ¶ 12.
Under Fed.R.Civ.P. 23(e)(1) the parties must provide the Court with sufficient information to determine whether to give notice to the class and the Court must direct notice in a reasonable manner. This rule generally requires the Court to determine whether a proposed settlement is fundamentally fair, adequate, and reasonable. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). The settlement must be examined as a whole, rather than the individual component parts, to comport with overall fairness. Officers for Justice v. Civil Serv. Comm'n of San Francisco, 688 F.2d 615, 628 (9th Cir. 1982).
Rule 23 requires a two-step process: first whether a proposed class action settlement deserves preliminary approval; and second, 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). At the final approval stage, the Court balances the following non-exhaustive factors to evaluate the fairness of the proposed settlement: strength of the plaintiffs' case; risk, expense, complexity, and likely duration of further litigation; risk of maintaining class action status throughout the trial; amount offered in settlement; extent of discovery completed and the stage of the proceedings; experience and views of counsel; presence of a governmental participant; and reaction of the class members to the proposed settlement. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993).
It is less established what factors should guide the Court's evaluation of the proposed settlement at the preliminary approval stage. “Some district courts ... have stated that the relevant inquiry is whether the settlement ‘falls within the range of possible approval' or ‘within the range of reasonableness.'” In re High-Tech Emp. Antitrust Litig., 2014 WL 3917126, at *3 (quoting In re Tableware Antitrust Litig., 484 F.Supp.2d 1078, 1079 (N.D. Cal. 2007)). Preliminary approval of a settlement and notice to the proposed class is appropriate if “the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval.” In re Tableware Antitrust Litig., 484 F.Supp.2d at 1079 (quoting Manual for Complex Litigation, Second § 30.44 (1985). In determining whether the proposed settlement falls within the range of reasonableness, the Court evaluates the relative strengths and weaknesses of the plaintiffs' case, and balances plaintiffs' expected recovery against the value of the settlement offer. Cotter v. Lyft, Inc., 176 F.Supp.2d 930, 925 (N.D. Cal. 2016) (quotations and citations omitted).
The supporting documents underlay a finding that the proposed settlement is the product of serious, informed, non-collusive negotiations, and that it lacks unreasonable preferential treatment to the class representative or other segments of the class.
As noted above, this Court determined damages owed to the class of approximately $136,739. In addition, plaintiffs calculated penalties of about $3,714,098 (see Expert Report of Jennifer Murphy (ECF 315) at pp. 5, 8-10 (calculating penalty wages separately for regular and overtime hours, but together for time punch adjustments and short meal periods and includes prejudgment interest)). Because the Court found no violation regarding the meal breaks, it is not clear what the penalty for the time punch violations is, but the purported direct damages for the meal break violation were nearly double the punch card violations. However, Judge Mosman declined to adopt a finding that SolarWorld violated Oregon wage statutes even with respect to the time punch issue and that issue is currently before the Ninth Circuit Court of Appeals which referred the issue to the Oregon Supreme Court. Thus, it is possible the plaintiffs could recover around $2,000,000 in penalties as well, but there is, given the current position of the district court, a strong chance of no recovery at all. Accordingly, the payment to class members of roughly $204,000, after administrative and other costs are deducted from the proposed $400,000 settlement, falls within the range of reasonableness.
However, the agreement purports to permit class members to continue to pursue further damages and class counsel to pursue further fees from the ostensible successor employer SunPower. Accordingly, SunPower objected to the initial motion.
Plaintiff asserted SunPower does not have standing to object, but regardless of its ability to object to the proposed settlement, the issue of successor liability has yet to be established. Moreover, the impact of a settlement and release of all claims against SolarWorld vis-a-vis SunPower is unclear. Plaintiff and SunPower provided brief discussions where plaintiff asserted, class members can continue to seek damages against a successor despite settling with and releasing the primary employer. SunPower asserts because the claims are derivative, class members cannot continue to seek damages against it after settling with and releasing the primary employer. As noted above, such issues may not be resolved given the stay of the proceedings. There does not appear to be any Oregon cases interpreting whether a settlement and release negates a finding that an employer includes a “successor to the business of any employer, or any lessee or purchaser of any employer's business property for the continuance of the same business, so far as such employer has not paid employees in full.” Or. Rev. Stat. § 652.310 (emphasis added). The Court does note, however, plaintiff specifically alleged “Defendants SUNPOWER is a successor employer and is liable to Plaintiff and class members to the same extent as Defendants SOLARWORLD.” Second Amended Complaint (ECF 260) at ¶ 27. Thus, there is also the issue of whether class members are estopped from asserting any further claims against SunPower after settling with and releasing SolarWorld.
The initial proposed settlement and notice did not apprise class members of any potential impact the settlement may have on their ability to continue to pursue SunPower for damages and left the impression there is no impediment to seeking further damages in this regard. In addition, the initial proposed order giving preliminary approval to the settlement appeared to seek the Court's determination that the settlement does not affect the claims against SunPower. As noted above, the revised proposed order specifically states that the issue has not been decided.
While the issue of SunPower as a successor employer, based on continued business operations, does not impact whether the proposal falls within the range of possible approval, the issues of estoppel or whether the claims against SunPower are derivative and thus possibly foreclosed by the settlement do impact the analysis. The class members could argue they are entitled to recover significant additional damages against SunPower and that the settlement will not impede such recovery. The initial proposed notice alerted class members the notice is not comprehensive of the entire case and invites them to refer to the Court record. However, it is unlikely class members will find, read, and understand SunPower's assertion that it cannot be liable if SolarWorld settles and obtains a release of all claims against it.
Class members may be more inclined to object to the proposed settlement if they know that the Court may rule, at a future date, that even if SunPower is a successor employer based on continued operations, it cannot be liable given the release granted to the primary employer. In the supplemental motion, class counsel proposes a notice that includes the following language:
After much litigation, the Court allowed Plaintiff to add SunPower North America Manufacturing LLC, SunPower Manufacturing Oregon, LLC, and SunPower Corporation (collectively “SunPower”) as defendants to this Action. Plaintiff alleges that SunPower is a “successor employer.” SunPower denies any and all liability and that they are a “successor employer”. This Settlement does not resolve the claims alleged against SunPower, and those continue to be litigated in the Action by Plaintiff and the attorneys at Schuck Law, as class counsel. SunPower has objected to the Settlement and argued that the Release in this Settlement limits or extinguishes Class Members' ability to continue to pursue damages against SunPower as a successor employer. The Court has not made any decision with respect to these issues. Class members should be aware that the Court could rule in the future that this Settlement and Release limits or extinguishes any potential claims against SunPower by Class Members.(ECF 392-1) at p. 2. Accordingly, class members are in a much better position to determine their options regarding the proposed settlement.
The revised notice also clarifies that the order does not alter the stay of the case currently in place and that the parties are unaware of others claims outside of the claims already asserted.
SunPower no longer objects to the proposed order or form of notice. With the proposed revisions, the Court should preliminarily approve the proposed settlement.
CONCLUSION
The F&R issued on May 2, 2022, (ECF 389) is withdrawn. Plaintiff's motion for preliminary approval of class action settlement (ECF 374) should be granted as revised by the supplemental motion for preliminary approval (ECF 391). The Court should issue the proposed order for preliminary approval (ECF 392-2), appoint Rust Consulting, Inc. as Settlement Administrator, and approve the proposed notice and notice procedures (ECF 392-1). A final settlement approval hearing should be set at least 100 days after entry of the preliminary approval order.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.