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granting final approval to a settlement agreement that included modified release language without requiring additional notice as the added language did not "broaden the release being provided"
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CASE NO. 13cv2679-CAB (BGS)
12-23-2014
Javier Zamora, Plaintiff, v. Ryder Integrated Logistics, Inc., et al., Defendants.
FINAL APPROVAL OF CLASS SETTLEMENT AND AWARD OF ATTORNEYS' FEES [Doc. Nos. 29, 30, 33, 34, 35]
This matter is before the Court on the following motions: (1) the Motion to Intervene and Objections to Settlement by Francisco Martinez [Doc. Nos. 29, 30]; (2) the Joint Motion to Amend/Clarify the Settlement and Release Agreement [Doc. No. 33]; (3) the Unopposed Motion for Final Approval of Class Action Settlement [Doc. No. 34]; and (4) the Motion for Attorney's Fees from Plaintiff's counsel [Doc. No 35]. The Court held a hearing on these motions on December 18, 2014. As discussed below, the Court denies the motion to intervene, overrules the objections to the settlement, grants the motion for final approval, and grants the motion for attorneys' fees.
I. Motion to Intervene and Objections of Francisco Martinez
On August 28, 2014, the Court granted preliminary approval of the class settlement in this action. [Doc. No. 28.] In that order, the Court stated that any settlement class member could opt out of the class and also stated that any class member could object to the settlement agreement must submit their objections in writing to the settlement administrator on or before forty-five days after the initial mailing of the class notice packet. [Id. at ¶¶ 8, 9.] By letter dated October 10, 2014, putative class member Francisco Martinez validly and timely opted out of the class. [Doc. No. 37-3 at 14.] Five weeks later, Martinez filed the instant motion to intervene as well as objections to the class settlement. [Doc. Nos. 29, 30.]
Plaintiff and a Defendant filed separate oppositions to Martinez' motion and objections, arguing that because Martinez opted out of the class, he is no longer a class member and therefore lacks standing to object to the class settlement. See Fed. R.Civ. P. 23(e)(4)(A); see also Glass v. UBS Fin. Serv., Inc., No. C-06-4068 MMC, 2007 WL 221862, at *8 (N.D. Cal. Jan. 26, 2007) (declining to consider objections of individual who opted out of class). Martinez did not file a reply to the parties' oppositions and did not offer any valid argument or authority contradicting the parties' standing arguments at the final approval hearing. Accordingly, because the parties are correct that Martinez lacks standing to object, the Court declines to consider Martinez's objections.
Moreover, even assuming Martinez had standing, the Court finds that his objections lack merit and should be overruled on that ground as well.
Lack of standing is also fatal to Martinez's motion to intervene. See In re Vitamins Antitrust Class Actions, 215 F.3d 26, 29 (D.C. Cir. 2000) (affirming district court's denial of motion to intervene by class members who opted out of a settlement based on lack of standing). "An applicant seeking intervention as of right must show that: (1) it has a 'significant protectable interest' relating to the property or transaction that is the subject of the action; (2) the disposition of the action may, as a practical matter, impair or impede the applicant's ability to protect its interest; (3) the application is timely; and (4) the existing parties may not adequately represent the applicant's interest." Donnelly v. Glickman, 159 F.3d 405, 409 (9th Cir. 1998). "The party seeking to intervene bears the burden of showing that all the requirements for intervention have been met." United States v. Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004) (emphasis in original).
Here, by opting out of the class, Martinez fully preserved his right to litigate any claims he may have independently, and therefore has no significant protectable interest in the settlement. See Mayfield v. Barr, 985 F.2d 1090, 1093 (D.C. Cir. 1993) ("[T]hose who fully preserve their legal rights cannot challenge an order approving an agreement resolving the legal rights of others."). The settlement also will not impact Martinez's ability to protect his interests in the action he filed in Los Angeles County Superior Court on July 8, 2014, captioned Martinez v. Ryder Integrated Logistics, Inc., Case No. BC550965. Martinez lacks standing to intervene for these reasons alone.
In his motion to intervene, Martinez refers to the effect of the settlement here on Martinez's separate putative class action. Because Martinez has opted out, the settlement will have no impact on Martinez's individual claims, which is the only relevant interest. Martinez has no standing to intervene here simply because the settlement may impact the size or composition of the class he purports to represent. Cf. Mayfield, 985 F.2d at 1093 (noting that losing out on greater bargaining power and broader discovery as a result of a class action settlement is not the sort of prejudice that would give individuals who opted out a right to object because such harm "is no different than that experienced by any plaintiff who chooses to opt out of any class action and go it alone."). Nor does he have standing because of the possibility that by participating in this settlement, individuals may be precluded from any recovery in Martinez's separate class action. Cf. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1024 (9th Cir. 1998) ("The right to participate, or to opt-out, is an individual one and should not be made by the class representative or the class counsel. . . . There is no class action rule, statute, or case that allows a putative class plaintiff or counsel to exercise class rights en masse, either by making a class-wide objection or by attempting to effect a group-wide exclusion from an existing class.").
Further, the Court finds that the untimeliness of the motion precludes either intervention as of right or permissive intervention at the eleventh hour here. Donnelly, 159 F.3d at 412 ("An applicant who seeks permissive intervention must prove that it meets three threshold requirements: . . . (2) its motion is timely. . . "); In re Wachovia Corp., "Pick-A-Payment" Mortgage Mktg & Sales Prac. Litig., No. 5:09-md-02015-JF, 2011 WL 1877630, at *7 (N.D. Cal. May 17, 2011) (holding that motion to intervene filed "on the eve of the final approval hearing, simply is too late"). "Courts weigh three factors in determining whether a motion to intervene is timely: (1) the stage of the proceeding at which an applicant seeks to intervene; (2) the prejudice to other parties; and (3) the reason for and length of the delay." Alisal Water Corp., 370 F.3d at 921 (internal quotations omitted); see also Chavez v. PVH Corp., No. 13-CV-01797 LHK, 2014 WL 6617142, *7 (N.D. Cal. Nov. 20, 2014) (noting that same three factors apply to determine timeliness of intervention as of right and permissive intervention). "[T]he mere lapse of time, without more, is not necessarily a bar to intervention." Alisal Water Corp., 370 F.3d at 921.
Here, Martinez has been aware of the settlement of this lawsuit since at least before the preliminary approval hearing [See Doc. No. 37-3 at 7.], yet he waited until just about the last possible moment before the final approval hearing to intervene. Indeed, Ryder's counsel advised Martinez's counsel on August 12, 2014 that this action and Martinez's claims "are nearly identical and there is substantial overlap between the . . . class members and class claims." [See id.] To allow intervention now, after the parties have incurred significant expense notifying the class of the settlement and preparing for the final approval hearing "would waste the significant resources the parties and the class have expended in reliance on the settlement agreement and substantially prejudice the parties." Chavez, 2014 WL 6617142, *4.
This Court's local rules require at least twenty-eight days notice for a motion hearing. CivLR 7.1.e. Martinez filed his motion just thirty-one days before the December 18, 2014, final approval hearing that the Court set on August 28, 2014. Cf. Glass v. UBS Fin. Servs., Inc., No. C-06-4068 MMC, 2007 WL 474936, at *4 (N.D. Cal. Jan. 17, 2007) (noting that intervenor's delay until the last possible date to move to intervene, "resulting in his motion being heard on the same date as the final fairness hearing," weighed against a finding of timeliness.)
Martinez's claim that the motion is timely because he filed it "shortly after learning of Ryder's contentions as to the purported scope of the settlement" [Doc. No. 29-1 at 14.] does not excuse or justify his delay. "A potential intervenor must act 'as soon as he [or she] knows or has reason to know that his [or her] interests might be adversely affected by the outcome of the litigation." Chavez, 2014 WL 6617142, *5 (quoting Cal. Dept. of Toxic Substances Control v. Commercial Realty Projects, Inc., 309 F.3d 1113, 1120 (9th Cir. 2002) (emphasis in original)). Thus, "[t]he timeliness inquiry . . . does not allow a potential intervenor to wait until a potential harm 'crystallizes' or becomes 'certain.'" Id. at *6 (denying motion to intervene as untimely when it was filed after preliminary approval of class settlement and after the class received notice where the proposed intervenors' concerns with the settlement involved terms that had not changed since the first stipulation of settlement was filed).
Accordingly, in addition to the fact that Martinez has no protectable interest in the settlement, all three of the factors applicable to the timeliness inquiry also weigh in favor of denying Martinez's motion. Further, even if it were timely, the Court would decline to exercise its discretion to allow permissive intervention because the intervention would unduly delay this lawsuit. Donnelly, 159 F.3d at 412 ("In exercising its discretion, the district court must consider whether intervention will unduly delay the main action . . . .")
For all of the foregoing reasons, as well as the reasons discussed at the hearing, Martinez's Motion to Intervene [Doc. No. 29] is DENIED, and his objections [Doc. No. 30] are OVERRULED.
II. Motion to Amend/Clarify the Settlement Agreement and Release
The parties have filed a joint motion to amend the settlement agreement to clarify the scope of the release contained therein. Specifically, the parties want to add the following phrase to the end of the definition of "Released Claims" in the Settlement Agreement: "provided, however, that this release shall only apply to those workweeks in which a class member received any piece rate compensation." Because this language does not broaden the release being provided by the plaintiff class, and if anything narrows the release, the motion [Doc. No. 33] is GRANTED.
III. Final Approval of Settlement
A. Background
Plaintiff Javier Zamora is a former employee/driver for Defendant Ryder Logistics, Inc. ("Ryder"). On September 27, 2013, Zamora filed the instant wage and hour lawsuit in San Diego County Superior Court on behalf of himself and a class composed of "all individuals [Ryder] has employed as non-exempt Distribution Drivers in California at any time during the period of the relevant statute of limitations." [Doc. No. 1-3 at 10.] The gravamen of this lawsuit is that Ryder's piece-rate pay structures do not properly compensate its drivers in accordance with California law. The original complaint included causes of action for: (1) failure to pay wages at the agreed upon or statutorily mandated minimum rate; (2) unfair competition under California Business and Professions Code Section 17200; (3) failure to pay overtime; (4) failure to provide meal periods or compensation in lieu thereof; (5) failure to provide rest periods or compensation in lieu thereof; (6) failure to provide itemized wage statements; and (7) failure to pay wages due at the time of termination from employment.
On October 29, 2013, Plaintiff served document requests, interrogatories, and deposition notices on Ryder. Before Ryder's responses were due, on November 7, 2013, Ryder removed the lawsuit to this court pursuant to the Class Action Fairness Act ("CAFA"). In the notice of removal, Ryder provided what it deemed to be a "conservative" estimate of at least $7,461,000 for Ryder's exposure for the claims in the complaint. [Doc. No. 1 at 13-14.]
On December 4, 2013, the parties filed a joint motion to stay the case pending completion of an arbitration they had scheduled with a neutral third-party mediator on April 3, 2014. The court granted this stay until April 17, 2014. On March 13, 2014, the parties filed a joint motion notifying the Court that the mediation had been rescheduled until May 12, 2014, and asking for the stay to be extended until after that mediation. The Court granted the motion and extended the stay until May 27, 2014.
While the case was stayed, Ryder provided Plaintiff with documents and information relating to the scope of the class, piece-rate pay structures applicable to the class, wage and hour policies for piece rate drivers, and other details about piece-rate drivers. The production included thousands of documents and information about thirty-four different piece-rate pay structures applicable to the putative class of drivers during the class period.
In addition, prior to the mediation Ryder provided information and documents related to a prior class action suit that settled the same claims at issue in this case. In that case, captioned John Rodriguez v. Ryder System, Inc., Case No. BC456322, Los Angeles County Superior Court, the final approval order dated July 9, 2012, certified a class of current and former Ryder employees in California who worked as a driver between December 28, 2006, and February 6, 2012. Ryder informed Plaintiff that Ryder believed that members of this Rodriguez class released all claims in this lawsuit that accrued prior to February 6, 2012, meaning that the claims of a significant portion of the putative class here could not go back to September 27, 2009, as alleged in Zamora's original complaint.
On May 12, 2014, the parties participated in a full day mediation resulting in the settlement for which they now seek final approval. As a result of the Rodriguez class action settlement, the settlement discussions in the mediation here were limited to "all persons currently or formerly employed by Ryder as drivers in California who received any piece-rate compensation at any time between September 27, 2009, and the date of preliminary approval, except that the class definition shall not include drivers who terminated their employment prior to February 7, 2012, and are bound by the [Rodriguez] Settlement Agreement." This class is significantly more limited to the class identified in the original complaint, both with respect to the scope of the class and the time period of the claims.
B. Settlement Agreement
The key terms of the settlement include:
• Ryder agreeing to pay a maximum "Gross Settlement Amount" of
$1,500,000, to be distributed as follows:
(i) a class representative payment of $5,000 to Zamora;
(ii) settlement administration costs of up to $25,000;
(iii) a payment of $7,500 to the California Labor Workforce Development Agency;
(iv) the employer portion of payroll taxes to the appropriate authorities, estimated to be $96,834.77;
(v) class counsel fees of up to $375,000 (25% of the Gross Settlement Amount);
(vi) class counsel expenses of up to $20,000; and
(vii) payment to class members based on the number of qualifying workweeks worked by participating class members who submit a valid claim, subject to a 60% Floor, pursuant to which if less than 60% of the Net Settlement Amount (after reduction of the payments in (i) - (vi), above), the difference between the amount claimed and 60% of the Net Settlement Amount will be distributed equally to participating class members.
• A settlement class of "all persons currently or formerly employed by Ryder as drivers in California who received any piece-rate compensation at any time between September 27, 2009, and the date of preliminary approval, except that the class definition shall not include drivers who terminated their employment prior to February 7, 2012, and are bound by the [Rodriguez] Settlement Agreement."
• An agreement from Ryder not to oppose a motion to file an amended complaint to revise the class definition consistent with the settlement and insert a claim under the California Private Attorney General Act, Cal. Labor Code § 2698 et seq. ("PAGA").
On August 28, 2014, the Court held a hearing and issued an order preliminarily approving the settlement agreement and granting leave to amend the complaint. The Order approved the form of notice, as well as the timing and manner of distribution thereof as reasonably calculated to apprise the class members of the pendency of the action and proposed settlement in compliance with the requirements of Federal Rule of Civil Procedure 23(c)(2), due process under the Constitution and any other applicable law. The order also scheduled a Final Fairness and Approval Hearing for December 18, 2014. The following day, Plaintiff filed an amended complaint reflecting the more limited class and including a PAGA claim. [Doc. No. 27.]
The Final Approval hearing took place as scheduled on December 18, 2014. Counsel for both parties attended. No class members were present. Counsel for Martinez was present in connection with the motion to intervene and objections to the settlement, which the Court denied and overruled for the reasons set forth above.
C. Certification of the Settlement Class
A court "must pay 'undiluted, even heightened, attention' to class certification requirements in a settlement context." Hanlon, 150 F.3d at 1019. Here, the settlement envisions certification of a class of "all persons currently or formerly employed by Ryder as drivers in California who received any piece rate compensation at any time between September 27, 2009 and the date of this Order, except that the class definition shall not include drivers who terminated their employment prior to February 7, 2012 and are bound by the Rodriguez Class Action Settlement Agreement." Thus, before approving the settlement itself, the Court's "threshold task is to ascertain whether the proposed settlement class satisfies the requirements of Rule 23(a) of the Federal Rules of Civil Procedure applicable to all class actions, namely: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation." Id. In addition, the Court must determine whether class counsel is adequate (Fed. R.Civ. P. 23(g)), and whether common questions of law and fact predominate and whether a class action is the superior method to adjudicate these claims. Fed. R.Civ. P. 23(b)(3).
1. Numerosity
This requirement is satisfied if the class is "so numerous that joinder of all members is impracticable." Fed. R.Civ. P. 23(a)(1). Although the "requirement is not tied to any fixed numerical threshold . . . courts find the numerosity requirement satisfied when a class includes at least 40 members." Rannis v. Recchia, 380 Fed. App'x 646, 651 (9th Cir. 2010). Here, the parties identified over 900 potential class members and over 500 filed claims. Accordingly, this requirement has been met.
2. Commonality
This requirement is satisfied if "there are questions of law or fact common to the class." Fed. R.Civ. P. 23(a)(2). The Ninth Circuit construes this requirement permissively. Hanlon, 150 F.3d at 1019. "To satisfy the commonality requirement, plaintiffs need only point to a single issue common to the class." Vasquez v. Coast Valley Roofing, Inc., 670 F. Supp. 2d 1114, 1121 (E.D. Cal. 2009). "Commonality is generally satisfied where, as in this case, the lawsuit challenges a system-wide practice or policy that affects all of the putative class members. Differences in the ways in which these practices affect individual members of the class do not undermine the finding of commonality." Id. (citing Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir. 2001) (internal quotations and citations omitted).
Here, Zamora's claims and those of the class all raise the question of whether Ryder's piece-rate pay policies provide adequate meal and rest breaks and compensate the plaintiff class for all hours worked in accordance with California law. These questions of law and fact satisfy the commonality requirement.
3. Typicality
This requirement is satisfied 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). "Under the rule's permissive standards, representative claims are 'typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical." Hanlon, 150 F.3d at 1020. "Typicality refers to the nature of the claim or defense of the class representative, and not to the specific facts from which it arose or the relief sought. The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct." Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992).
Here, Zamora's claims are essentially identical to the class as a whole, as they are all drivers who were paid under Ryder's piece-rate pay practices and have suffered the same alleged injury - non-payment of wages and non-payment for allegedly unprovided meal and rest periods. Accordingly, the typicality requirement is satisfied.
4. Adequacy of Class Representative
The final Rule 23(a) requirement is that "the representative parties will fairly and adequately protect the interests of the class." Fed. R.Civ. P. 23(a)(4). "The proper resolution of this issue requires that two questions be addressed: (a) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (b) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir. 2000). This requirement is satisfied here because Zamora has the same interests as the class - obtaining payment for all hours worked and for unprovided meal and rest periods. Further, there is no apparent conflict between Zamora's interests and those of the class members, and Zamora is represented by experienced wage and hour class action counsel.
5. Adequacy of Class Counsel
A court certifying a class must consider: "(i) the work counsel has done in identifying or investigating potential claims in the action; (ii) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (iii) counsel's knowledge of the applicable law; and (iv) the resources that counsel will commit to representing the class." Fed.R.Civ.P. 23(g)(1)(A). The Court may also consider "any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class." Fed.R.Civ.P. 23(g)(1)(B). Ultimately, when only one applicant seeks appointment as class counsel, the court must determine that "[c]lass counsel . . . fairly and adequately represent the interests of the class." Fed. R.Civ. P. 23(g)(4).
Here, despite the fact that this settlement was reached before the commencement of formal discovery in this Court, class counsel have performed a significant amount of work in this case. To that end, lead class counsel William Turley submitted a declaration detailing the types of work he and his colleagues performed, which amounted to a total of 505 hours. [Doc. No. 34-2 at ¶¶ 51-72.] Mr. Turley also provided the details of his and his law firm's extensive experience with class action wage and hour litigation, including cases specific to the transportation industry. [Id. at ¶¶ 30-39.] Based on Mr. Turley's declaration and the Court's observation of class counsel's work in this case, the Court finds that the Turley Law Firm, APLC fairly and adequately represents the interests of the class.
6. Predominance and Superiority
Finally, the Court must determine whether (1) "the questions of law or fact common to class members predominate over any questions affecting only individual members," and (2) "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R.Civ. P. 23(b)(3). The Ninth Circuit refers to these questions as the "predominance" and "superiority" inquiries. Hanlon, 150 F.3d at 1022-23.
The "predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Id. (quoting Amchem Prods, Inc. v. Windsor, 521 U.S. 591, 623 (1997)). "[T]he presence of commonality alone is not sufficient. . . ." Id. Further, "[s]ettlement benefits cannot form part of a Rule 23(b)(3) analysis; rather the examination must rest on 'legal or factual questions that qualify each class member's case as a genuine controversy, questions that preexist any settlement.'" Id. (quoting Amchem, 521 U.S. at 623). "Courts have found that these requirements are generally satisfied in wage and hour class actions." Burden v. SelectQuote Ins. Servs., No. C 10-05966 SBA, 2013 WL 1190634, at *5 (N.D. Cal. Mar. 21, 2013) (citing cases).
Here, the questions of law and fact concerning the legality of Ryder's piece-rate policies predominate over any questions specific to individual class members. Moreover, individualized cases testing the legality of these policies would be inefficient, unwieldy, and cost-prohibitive. Indeed, the cost and complexity of such litigation combined with the relatively small sums at stake for each individual class member would likely dissuade most class members from undertaking the endeavor. Accordingly, the Court finds that the predominance and superiority inquiries have been satisfied.
In light of the foregoing, the Court conditionally certifies the class for the purposes of settlement.
D. Legal Standard for Final Approval of Class Settlement
Federal Rule of Civil Procedure 23(e) instructs 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. Pro. 23(e). "Adequate notice is critical to court approval of a class settlement under Rule 23(e)." Hanlon, 150 F.3d at 1025. In addition, Rule 23(e) "requires the district court to determine whether a proposed settlement is fundamentally fair, adequate, and reasonable." Id. at 1026. This determination requires the Court to "evaluate the fairness of a settlement as a whole, rather than assessing its individual components." Lane v. Facebook, Inc., 696 F.3d 811, 818 (9th Cir. 2012).
"Assessing a settlement proposal requires the district court to balance a number of factors: the strength of the plaintiffs' 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." Id. Further, "settlement approval that takes place prior to formal class certification requires a higher standard of fairness." Hanlon, 150 F.3d at 1026. However, "the question whether a settlement is fundamentally fair within the meaning of Rule 23(e) is different from the question whether the settlement is perfect in the estimation of the reviewing court." Lane, 696 F.3d at 819. Ultimately, a "district court's final determination to approve the settlement should be reversed 'only upon a strong showing that the district court's decision was a clear abuse of discretion.'" Id. (quoting In re Pacific Enter. Sec. Litig., 47 F.3d 373, 377 (9th Cir. 1995)).
E. Analysis
1. Adequacy of Notice
The Court approved notice of this class action and proposed settlement in the Preliminary Approval Order. The Notice informed the Class of the terms of the Settlement, of their right to submit a claim and receive their proportional share of the Settlement, of their right to submit objections, if any, and to appear in person or by counsel at the final approval hearing and to be heard regarding approval of the Settlement, of their right to request exclusion from the Class and the Settlement, and of the date set for the Final Approval hearing. Adequate periods of time were provided for each of these procedures.
The claims administrator distributed the notice to 939 potential class members at the mailing addresses provided by Defendant. Ultimately, only 32 notices were returned as undeliverable, all but five of which were re-mailed to alternative addresses from which they have not been returned. No class members have objected to the settlement or the adequacy of the notice. Accordingly, the Court finds that the class has received adequate notice.
2. Strength of Plaintiff's Case; Risk of Further Litigation; and Risk of Maintaining Class Action Status
"In most situations, unless the settlement is clearly inadequate, its acceptance and approval are preferable to lengthy and expensive litigation with uncertain results." Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 526 (C.D. Cal. 2004). Thus, "[w]hen assessing the strength of plaintiff's case, the court does not reach any ultimate conclusions regarding the contested issues of fact and law that underlie the merits of this litigation." Four in One Co. v. S.K. Foods, L.P., No. 2:08-CV-3017 KJM EFB, 2014 WL 4078232, at *7 (E.D. Cal. Aug. 14, 2014) (internal quotations omitted). To that end, "a proposed settlement is not to be judged against a speculative measure of what might have been awarded in a judgment in favor of the class." Nat'l Rural Telecomms. Coop., 221 F.R.D. at 526.
Here, the essence of Plaintiff's suit is that Defendant's piece-rate pay policies do not adequately allow for meal or rest breaks and do not compensate drivers for all hours worked in accordance with California wage and hour law. Along these lines, Plaintiff states that Defendant has provided evidence of thirty-four different piece-rate pay structures applicable to class members during the policy period. In addition to adding to the general complexity and expense of this case, this variety of pay structures created risks for class certification.
Furthermore, this case involves a rapidly changing area of law resulting in less certainty as to the strength of Plaintiff's claims. For example, the parties dispute whether Plaintiff's meal and rest period claims are preempted under the Federal Aviation Authorization Administration Act, an issue on which the Ninth Circuit overruled a district court finding of preemption while this settlement was pending. See Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. 2014). In addition, Defendant disputes Plaintiff's meal and rest period claims on factual grounds, insofar as Ryder claims its policies satisfy the more flexible principles outlined in Brinker v. Superior Court, 53 Cal. 4th 1004, 1040 (2012). Moreover, at the time of settlement, this case was in its nascency, and significant and costly litigation remained, including discovery, motion practice, experts, trial, and appeals. Defendant is represented by sophisticated counsel who certainly would have vigorously litigated the various legal and factual hurdles Plaintiff would need to overcome to succeed on these claims. The settlement prevents these expenses and the likely long duration of the litigation from eroding or delaying the ultimate recovery, if any, of the class members. Accordingly, the Court agrees with the parties that the benefits of the settlement outweigh any potential recovery that the plaintiff class could have obtained through trial.
3. The Amount Offered in Settlement
"Settlement is the offspring of compromise; the question we address is not whether the final product could be prettier, smarter or snazzier, but whether it is fair, adequate and free from collusion." Hanlon, 150 F.3d at 1027. "The fact that a proposed settlement may only amount to a fraction of the potential recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate and should be disapproved." Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1242 (9th Cir. 1998) (citation omitted).
Here, the Gross Settlement Amount is $1.5 million, with an average settlement share of $1,406 and a high of $4,955. In its Notice of Removal, Defendant calculated its potential exposure as at least $7,461,000. [Doc. No. 1 at 13.] Plaintiff, meanwhile, calculated possible damages in excess of $9 million in preparation for the parties' mediation. Thus, this settlement is roughly 15-20% of the exposure estimates from the parties. Moreover, the settlement class definition is significantly more limited than the class definition in the original complaint, meaning that the actual potential recovery for the actual settling plaintiffs is likely significantly less than the amounts estimated by the parties in advance of mediation. In any event, the average of $1,406 per settling class member is not an insignificant recovery. Accordingly, when considered in the context of all of the other factors, the amount of the settlement weighs in favor of approval.
4. Extent of Discovery
The parties moved for a stay of this lawsuit so they could mediate before extensive formal discovery occurred. "However, in the context of class action settlements, formal discovery is not a necessary ticket to the bargaining table where the parties have sufficient information to make an informed decision about settlement." In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 459 (internal quotations and citation omitted).
Here, prior to removal to this court, Plaintiff actually had served discovery on Defendant. Although Defendant did not formally respond to this discovery, during the stay Defendant provided Plaintiff with thousands of pages of documents that were responsive to Plaintiff's requests. Plaintiff's counsel asserts that it conducted an extensive analysis of these documents, including the thirty-four different piece-rate pay structures Defendant used with the class members. Thus, Plaintiff had sufficient information to make an informed decision about the settlement.
5. Experience of Counsel
"The recommendations of plaintiffs' counsel should be given a presumption of reasonableness." In re Omnivision Technologies, Inc., 559 F.Supp. 2d 1036, 1043 (N.D. Cal. 2008) (citation omitted). Here, lead class counsel has provided a declaration detailing his and his law firm's extensive experience in wage and hour class action litigation, and no party has provided any evidence contradicting the reasonableness of class counsel's recommendations concerning the settlement. Accordingly, this factor also weighs in favor of approving the settlement.
6. The Presence of a Government Participant
No government entity participated in this case. However, $7,500 of the settlement amount is being paid to the California Labor & Workforce Development Agency pursuant to Plaintiff's PAGA claim. Thus, this factor weighs in favor of approval as well. See, e.g., Adoma v. Univ. of Phoenix, Inc., 913 F.Supp. 2d 964, 977 (E.D. Cal. 2012) (factoring civil PAGA penalties in favor of settlement approval).
7. Reaction of Class Members
"[T]he 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." Nat'l Rural Telecomm. Coop., 221 F.R.D. at 529. Here, of the 939 Class Notice Packets mailed to class members, 545 were returned, claiming 79% of the Net Settlement Fund. Only one class member opted out, and no class members objected. The absence of a single objection to the settlement "is compelling evidence that the Proposed Settlement is fair, just, reasonable, and adequate." Id.
As discussed above, by opting out, Martinez is not a class member. --------
8. Signs of Collusion
When, "as here, a settlement agreement is negotiated prior to formal class certification, consideration of these . . . factors alone is not enough to survive appellate review." In re Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011). "The 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. Thus, a final approval order in this circumstance must show "that the settlement is 'not the product of collusion among the negotiating parties.'" Bluetooth, 654 F.3d at 947 (quoting In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 458).
Along these lines, courts "must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations." Id. Examples of such subtle collusion include:
(1) "when counsel receive a disproportionate distribution of the settlement, or when the class receives no monetary distribution but class counsel are amply rewarded," Id. (quoting Hanlon, 150 F.3d at 1021);
(2) "when the parties negotiate a 'clear sailing' arrangement providing for the payment of attorneys' fees separate and apart from class funds, which
carries 'the potential of enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel accepting an unfair settlement on behalf of the class,'" Id. (quoting Lobatz v. U.S. W. Cellular of Cal., Inc., 222 F.3d 1142, 1148 (9th Cir. 2000)); and
(3) "when the parties arrange for fees not awarded to revert to defendants rather than be added to the class fund," Id. (citing Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781, 785 (7th Cir. 2004) (Posner, J.)).
None of these indicia of collusion are present in the settlement agreement here. The parties reached the settlement after mediation with a neutral mediator. Although Defendant has agreed to not object to an attorney fee request of up to 25% of the Gross Settlement Amount, no unawarded fees, if any, would revert to Defendant, and all such unawarded fees would be distributed proportionately amongst Participating Class Members. Accordingly, the Court finds that the final settlement agreement was not a product of collusion among the parties.
F. Conclusion
For all of the foregoing reasons, the Court grants final approval to the parties' proposed settlement, which is fair, adequate, and reasonable.
IV. Attorney's Fees
"In 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." Fed.R.Civ.P. 23(h). However, "courts have 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 Products Liab. Litig., 654 F.3d at 942. "Where [as is the case here] a settlement produces a common fund for the benefit of the entire class, courts have discretion to employ either the lodestar method or the percentage-of-recovery method." In re Bluetooth Headset Products Liab. Litig., 654 F.3d at 942.
In their unopposed motion, Class Counsel asks for an award of the standard 25% of the gross settlement amount in attorney's fees, which equals $375,000. See generally id. ("[C]ourts typically calculate 25% of the [common settlement] fund as the 'benchmark' for a reasonable fee award."). Class counsel also points out that the Court could arrive at this total using the lodestar method with a 1.18 multiplier, which is well within the range of 1.0 to 4.0 often used by district courts in common fund cases. See Kakani v. Oracle Corp., No. 06-06493WHA, 2007 WL 4570190, at *2 (N.D. Cal. Dec. 21, 2007)("Although the range of multipliers used by district courts in common-fund cases varies widely, an overwhelming majority of district courts have used between 1.0-4.0 as the multiplier."); see also Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1052 (9th Cir. 2002) (including appendix listing the multiplier used in common fund cases of between $50 and 200 million between 1996 and 2001). Based on the hours worked by counsel, the result achieved, and the absence of any objection from class members, $375,000 is a reasonable fee. Accordingly, counsel's motion for attorney's fees is GRANTED.
V. Expenses
Class Counsel also seek $12,351.20 in actual litigation costs and expenses, which they have declared were all reasonable and necessary to the prosecution of this case. [See Doc. No. 35-2 at ¶85.] There is no opposition to this request, and the Court finds these expenses to be reasonable.
VI. Enhancement Award to Class Representative
The settlement agreement allows for a $5,000 enhancement award to the class representative. "Courts routinely approve incentive awards to compensate named plaintiffs for the services they provide and the risks they incurred during the course of the class action litigation." Barbosa v. Cargill Meat Solutions Corp., 297 F.R.D. 431, 454 (E.D. Cal. 2013). In support of such an award, Mr. Zamora submitted a declaration detailing his assistance to class counsel in the investigation and preparation of the complaint and preparation for the mediation that resulted in the settlement. [Doc. No. 35-4.]. In light of the work performed by Mr. Zamora, as well as the reputational and financial risk he took in serving as class representative, the $5,000 enhancement award is reasonable. See Barbosa, 297 F.R.D. at 454-55 (approving enhancement awards of $5,000 each to two class representatives in case with a gross settlement amount of $1,290,000).
VII. Payment to Claims Administrator
Finally, the settlement agreement allows for a payment of $25,000 to claims administrator Rust Consulting, Inc. ("Rust"). In support of this award, Plaintiff has provided a declaration from a senior project administrator with Rust detailing the work Rust has performed in connection with this litigation. [Doc. No. 34-5.] Based on the work performed by Rust and the fact that this amount is similar to the claims administration fees in other similarly sized class actions, this $25,000 fee is reasonable. See generally Barbosa, 297 F.R.D. at 454 (listing cases approving $25,000 as reasonable in wage and hour classes of 177 members and 1,868 members).
VIII. Disposition
For all of the foregoing reasons, it is hereby ORDERED as follows:
1. The Joint Motion to Amend/Correct the settlement agreement [Doc. No. 33] is GRANTED.
2. The Motion to Intervene and Objections of Francisco Martinez [Doc. Nos. 29-30] are DENIED and OVERRULED, respectively.
3. The Motion for Final Approval of Class Action Settlement [Doc. No. 34] is GRANTED.
4. The Motion for Attorneys' Fees is GRANTED.
5. The class is certified for settlement purposes only.
6. The Court grants final approval to the settlement agreement filed with the Court, subject to the amendment referenced above.
7. The Court approves an enhancement award of $5,000 to Javier Zamora.
8. The Court approves the payment of $25,000 to Rust as claims administrator.
9. The Court approves an award to class counsel of $375,000 in attorney's fees and $12,351.20 in expenses.
It is SO ORDERED. DATED: December 23, 2014
/s/_________
CATHY ANN BENCIVENGO
United States District Judge