Pena v. Taylor Farms Pacific, Inc. ( 2019 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 FOR THE EASTERN DISTRICT OF CALIFORNIA 9 10 MARIA DEL CARMEN PENA, et al., Case No. 2:13-cv-01282-KJM-AC 11 Plaintiffs, 12 v. ORDER 13 TAYLOR FARMS PACIFIC, INC., et al., 14 Defendants. 15 16 Plaintiffs move for preliminary approval of a settlement reached with defendants in 17 this long-pending class action. Mot., ECF No. 287. The motion is unopposed. With leave from 18 the court, plaintiffs filed a supplemental brief and declaration to address several issues the court 19 raised at hearing on the motion. Supp. Br., ECF No. 301; Supp. Decl., ECF No. 302; ECF Nos. 20 303, 304 (statements of non-opposition to supplemental filings). After reviewing plaintiffs’ 21 supplemental brief in the context of the entire record on the pending motion, and as explained 22 below, the court DENIES the motion without prejudice to renewal. 23 I. BACKGROUND 24 Defendant Taylor Farms Pacific, Inc. operates two food production and processing 25 plants in Tracy, California. Mot. at 8.1 Defendants Abel Mendoza, Inc., Manpower, Inc. and 26 Quality Farm Labor, Inc. provide agricultural or manufacturing workers to third parties and, as 27 28 1 The court cites to ECF page numbers, not the briefs’ internal pagination. 1 relevant here, paid and acted as a joint or dual employer for employees who worked under Taylor’s 2 control. Seventh Am. Compl., ECF No. 101 ¶¶ 9−11. Defendant Slingshot Connections LLC 3 recruits, interviews and hires persons to work at Taylor’s Tracy facilities on behalf of Quality Farm 4 Labor, Inc., and also acts as a joint or dual employer for those employees. Id. ¶ 12.2 5 Plaintiffs Maria del Carmen Pena, Consuelo Hernandez, Leticia Suarez, Rosemary 6 Dail and Wendell T. Morris were hourly employees at the Tracey plants. Plaintiffs filed this action 7 seeking to represent a class of defendants’ current and former employees arising from the following 8 core allegations: (1) defendants did not properly compensate plaintiffs for time spent “donning and 9 doffing” equipment; (2) defendants did not provide plaintiffs with rest breaks and meal breaks 10 required under California labor law; and (3) defendants did provide plaintiffs with paychecks in the 11 form and timely manner required under California labor law. See Certification Order, ECF No. 12 200, at 2−3 (summarizing plaintiffs’ class claims). 13 On February 10, 2015, the court granted in part and denied in part plaintiffs’ motion 14 for class certification. Specifically, the court: (1) denied certification of all classes and subclasses 15 as to defendant SlingShot Connections, LLC; (2) denied certification of the donning and doffing 16 subclass; (3) granted certification of two meal break subclasses and approved Pena, Hernandez and 17 Morris as representatives of those subclasses, but denied certification of the rest break subclass; 18 (4) granted certification of the waiting time subclass, insofar as that subclass is entirely derivative 19 of the mixed hourly workers subclass, and appointed Pena and Hernandez as representatives of that 20 subclass; (5) denied certification of the wage statement subclass; and (6) appointed plaintiffs’ 21 counsel as class counsel. Certification Order at 42−43. The court later clarified that its order on 22 class certification did not certify any class as to defendant Manpower, but noted the court would 23 entertain a renewed motion as to Manpower. ECF No. 210. No such motion was filed. Tyson and 24 Abel Mendoza, Inc. appealed the court’s certification order, unsuccessfully. See ECF Nos. 217, 25 228 (notices of appeal), 243, 244 (memorandum disposition affirming order and mandate). The 26 court stayed the matter pending defendants’ filing a petition for writ of certiorari, and then lifted 27 2 Because plaintiffs’ motion did not address the non-Taylor defendants’ roles in the suit or 28 settlement, the court draws on allegations in plaintiffs’ operative complaint. 1 the stay when the petition was denied. ECF Nos. 254, 262. The parties then entered into settlement 2 negotiations. See 273, 277, 280 (minute orders resetting status conference pending parties’ 3 settlement discussions). 4 The parties attended two separate full-day mediation sessions, months apart, with “a 5 highly experienced and respected class action mediator.” Mot. at 7, 13. Following the parties’ 6 “arm’s-length bargaining,” the mediator “recommended the settlement amount as fair and 7 reasonable.” Id. at 9, 13. The parties propose a $5,300,000 gross settlement amount. Mot. at 9. 8 From the gross settlement, plaintiffs seek: (1) attorneys’ fees not to exceed 35 percent of the gross 9 settlement ($1,855,000), (2) costs not to exceed $250,000, (3) service awards of $7,500 for each 10 named plaintiff, including plaintiffs not certified as class representatives, not to exceed a total of 11 $37,500, and (4) settlement administrative costs not to exceed $23,000. Mot. at 9−10. Defendants 12 Quality Farm Labor, Inc. and Abel Mendoza, Inc. filed notices of non-opposition, requesting the 13 court grant the motion in its entirety. ECF No. 289 (Quality Farm Labor, Inc. statement of non- 14 opposition); ECF No. 291 (Abel Mendoza, Inc. statement of non-opposition). While Taylor is the 15 only defendant that signed the settlement agreement, that agreement would release all defendants 16 and plaintiffs represent that “if the settlement is finally approved it will result in this litigation being 17 dismissed in its entirety,” presumably with all defendants’ approval. Suppl. Br. at 2; see Fed. R. 18 Civ. P. 41(a)(1)(A)(ii) (requiring, for plaintiff’s dismissal without court order, stipulation of 19 dismissal signed by all parties who have appeared). 20 II. LEGAL STANDARD 21 There is a “strong judicial policy” favoring settlement of class actions. Class 22 Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nonetheless, to protect absent 23 class members’ due process rights, Rule 23(e) of the Federal Rules of Civil Procedure permits the 24 claims of a certified class to be “settled . . . only with the court’s approval” and “only after a hearing 25 and only on a finding [that the agreement is] fair, reasonable, and adequate . . . .” Fed. R. Civ. P. 26 ///// 27 ///// 28 ///// 1 23(e). To determine whether a proposed class action settlement is fair, reasonable and adequate, 2 courts consider several factors, as relevant, including: 3 (1) [T]he strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of 4 maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the 5 stage of the proceedings; (6) the experience and view of counsel; (7) the presence of a governmental participant; and (8) the reaction of 6 the class members of the proposed settlement. 7 In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 944 (9th Cir. 2015) (quoting Churchill 8 Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)); In re Tableware Antitrust Litig., 484 9 F. Supp. 2d 1078, 1080 (N.D. Cal. 2007) (noting, at preliminary approval stage, courts consider 10 whether “the proposed settlement appears to be the product of serious, informed, non-collusive 11 negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class 12 representatives or segments of the class, and falls within the range of possible approval . . . .”). 13 These factors substantively track those provided in 2018 amendments to Rule 14 23(e)(2), under which the court may approve a settlement only after considering whether: 15 (A) the class representatives and class counsel have adequately represented the class; 16 (B) the proposal was negotiated at arm’s length; 17 (C) the relief provided for the class is adequate, taking into account: 18 (i) the costs, risks, and delay of trial and appeal; 19 (ii) the effectiveness of any proposed method of distributing 20 relief to the class, including the method of processing class- member claims; 21 (iii) the terms of any proposed award of attorney’s fees, 22 including timing of payment; and 23 (iv) any agreement required to be identified under Rule 23(e)(3); and 24 (D) the proposal treats class members equitably relative to each 25 other. 26 Fed. R. Civ. P. 23(e)(2)(A)−(D).3 The Rule 23(e)(2) factors took effect on December 1, 2018 and, 27 3 Plaintiffs did not acknowledge the Rule 23(e)(2) factors in their motion but cited them in their 28 supplemental brief. See Mot. at 10−11; Suppl. Br. at 5. 1 as an advisory note to the Rule 23(e) amendment recognizes, “each circuit has developed its own 2 vocabulary for expressing [] concerns” regarding whether a proposed settlement is fair, reasonable 3 and adequate. Fed. R. Civ. P. 23(e)(2) advisory committee’s note to 2018 amendment. 4 Accordingly, the newly codified factors are not intended “to displace any factor, but rather to focus 5 the court and the lawyers on the core concerns of procedure and substance that should guide the 6 decision whether to approve the proposal.” Id.; see also 4 Newberg on Class Actions § 13:14 (5th 7 ed.) (noting Rule 23(e) “essentially codified [federal courts’] prior practice”). Moreover, the 8 Advisory Committee warned against allowing “[t]he sheer number of factors [to] distract both the 9 court and the parties from the central concerns that bear on review under Rule 23(e)(2).” Fed. R. 10 Civ. P. 23(e)(2) advisory committee’s note to 2018 amendment. The court thus draws on 11 longstanding precedent in applying these newly amended rules. 12 As a functional matter, a “[r]eview of a proposed class action settlement generally 13 involves two hearings.” Ann. Manual Complex Lit. (“MCL”) § 21.632 (4th ed. 2004). First, the 14 court conducts a preliminary fairness analysis and, if necessary, a preliminary class certification 15 analysis. Id. Second, after all absent class members are notified of the certification and proposed 16 settlement, the court holds a final fairness hearing where it revisits class certification and 17 determines whether to approve the settlement. Id. §§ 21.632–21.635. Here, the court undertakes 18 the first, preliminary step only. 19 III. DISCUSSION 20 Upon review of the plaintiffs’ filing, the court concludes that although plaintiffs 21 have adequately addressed most outstanding issues the court identified at hearing, they still have 22 not sufficiently explained the proposed class on whose behalf they wish to settle or the terms of 23 their settlement, which precludes the court’s ability to exercise its proper role here. Accordingly, 24 and as explained further below, the court is unable to grant the motion on the present record. 25 A. Plaintiffs Have Not Shown the Settlement Class Satisfies Rule 23 26 “Even if the parties have agreed to settle a case on a class-wide basis, the court must 27 determine whether the proposed class satisfies all the requirements of Rule 23(a) (numerosity, 28 typicality, commonality, and adequacy of representation) and either Rule 23(b)(1), (2), or (3).” 1 MCL § 22.921; see Fed. R. Civ. P. 23(e)(1)(B)(ii) (requiring court to direct notice of settlement “if 2 giving notice is justified by the parties’ showing that the court will likely be able to . . . certify the 3 class for purposes of judgment on the propos[ed] [settlement]”). “Settlement is relevant to a class 4 certification” and, thus, conducting a class certification analysis in the settlement context, “a district 5 court need not inquire whether the case, if tried, would present intractable management problems, 6 . . . for the proposal is that there be no trial.” Amchem Products, Inc. v. Windsor, 521 U.S. 591, 7 619−20 (1997) (citing Fed. Rule Civ. Proc. 23(b)(3)(D)). Even so, “other specifications of [] Rule 8 [23]—those designed to protect absentees by blocking unwarranted or overbroad class 9 definitions—demand undiluted, even heightened, attention in the settlement context.” Id.; In re 10 Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 556–57 (9th Cir. 2019) (noting “manageability is 11 not a concern in certifying a settlement class where, by definition, there will be no trial. On the 12 other hand, in deciding whether to certify a settlement class, a district court must give heightened 13 attention to the definition of the class or subclasses.”). 14 While a previously certified class may be expanded for settlement purposes, the 15 expansion must comport with Rule 23’s requirements. See, e.g., In re Charles Schwab Corp. Sec. 16 Litig., No. C 08-01510 WHA, 2010 WL 4055594, at *2 (N.D. Cal. Oct. 14, 2010) (“[A] settlement 17 class can end more claims than were certified for litigation so long as all the Rule 23 requirements 18 are re-done . . . .”); Burnham v. Ruan Transportation, No. SACV120688AGANX, 2015 WL 19 12646485, at *3 (C.D. Cal. Feb. 6, 2015) (denying preliminary approval motion where “the 20 settlement class exceeds the scope of the certified class” but motion for preliminary approval “fails 21 to apply the Rule 23 factors to the additional claims”). 22 Here, the court previously certified several subclasses but denied certification of 23 other subclasses. See Certification Order. The settlement agreement defines the “Settlement Class” 24 as: 25 [A]ll former and current non-exempt hourly employees who worked at Taylor Farms Pacific, Inc.’s Tracy, California facilities during the 26 relevant time period. (For purposes of this Settlement Agreement, ‘non-exempt hourly employees’ includes employees and direct hires 27 of Taylor Farms Pacific, Inc. as well as temporary workers who provided services to Taylor Farms, Pacific, Inc.). 28 1 Settlement, Mot., Ex. 2, ECF No. 287-1, at 12−48, § 2.1. This “Settlement Class” is significantly 2 broader than the certified subclasses and appears to include subclasses for which the court denied 3 certification, though plaintiffs neglected to acknowledge the expansion in their motion. 4 At hearing, plaintiffs’ counsel explained the broader class was warranted because 5 the court had denied certification as to certain proposed classes without prejudice, leaving open the 6 possibility of future certification, and because Taylor required assurances “a settlement for a certain 7 amount is going to ultimately and finally resolve all potential claims that were or could be raised 8 by any other action.” Tr., ECF No. 300, at 6:13−22. Plaintiffs’ counsel further explained he “hadn’t 9 thought about” whether the broadened class must satisfy Rule 23’s requirements, but the parties 10 agreed to supplemental briefing to address the issue. See id. at 7:1, 19:20−23. As noted above, 11 plaintiffs’ supplemental brief and declaration are now before the court. See ECF Nos. 301, 302. 12 While that brief addresses the Rule 23 factors, it does so in a cursory manner that prevents the court 13 from conducting any meaningful Rule 23 analysis and thus prevents the court from approving this 14 settlement. 15 Plaintiffs’ sparse attempt to address Rule 23(a)(2)’s commonality requirement 16 highlights the inadequacies of their supplemental brief. See Supp. Br. at 3. Plaintiffs appear to 17 suggest that, because the settlement class is defined to include all “individuals who are or were 18 employed as non-exempt hourly employees at Taylor Farms Pacific’s Tracy California production 19 facilities during the relevant time[,]” class members “[b]y definition . . . have in common the fact 20 that they worked in non-exempt positions at certain facilities.” Supp. Br. at 3. 21 Plaintiffs do not explain how class members’ shared employment status presents “a 22 common contention” that “is capable of classwide resolution” and will “resolve an issue that is 23 central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 564 24 U.S. 338, 350. This showing is what commonality requires. See id. Instead, perhaps tacitly 25 acknowledging the shortcoming in their briefing on this certification prerequisite, plaintiffs argue 26 “it is routine for courts to alter or expand previously certified classes for purposes of certifying a 27 settlement class” and “[i]n order for Taylor Farms to finally conclude the claims made in the 28 ///// 1 operative complaint, any settlement must necessarily include all such claims even though not 2 covered by this Court’s certification order.” Id. (footnote omitted). 3 In other words, plaintiffs do not make an argument for commonality, they make an 4 argument for the court’s foregoing a commonality analysis in favor of approving their settlement. 5 This argument is not persuasive, but it is emblematic of plaintiffs’ approach to the Rule 23 analysis 6 here. See, e.g., id. at 4 (arguing without elaboration that Rule 23(b)(3)’s predominance and 7 superiority requirements are satisfied because “those working at the subject facilities, as a whole, 8 were not afforded legally compliant working conditions and payment” and this case “is better 9 adjudicated as a class action”); cf. In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d at 558−60 10 (discussing predominance requirement in settlement context). 11 Moreover, the court has no way of knowing whether the parties’ proposed settlement 12 class may be comprised of unique groups of class members with unique interests, but without 13 necessary subclasses to recognize those differences; plaintiffs’ earlier class certification motion 14 clearly suggested as much. See Certification Order (granting in part and denying in part motion to 15 certify four subclasses). Plaintiffs offer no clarification on this point. 16 It is certainly possible that the proposed settlement class satisfies Rule 23’s 17 requirements, and this order should not be construed as finding otherwise. But plaintiffs provide 18 no concrete explanation of the relevant details of the entire settlement class they seek to certify and 19 they omit any cogent showing of how that class satisfies Rule 23. The court cannot approve their 20 motion on this record. 21 B. Reasonableness 22 While plaintiffs’ motion provides some explanation of the facts and circumstances 23 that led them to believe the settlement amount reached is adequate, here as well they provide little 24 detail. See Mot. at 12−13. Counsel’s supplemental declaration provides additional information, 25 but appears to address only meal break violations and not all claims the expanded settlement class 26 will release. Supp. Decl. at 3−4 (calculating class’s potential meal break damages); but see Mot. 27 at 7 (arguing settlement is particularly strong outcome in light of jury verdict in donning and doffing 28 case); Settlement § 2.6 (settlement agreement’s proposed release language under which class 1 members will release multiple claims arising under California Labor Code, “such as claims for off- 2 the-clock work, minimum wages and overtime, meal period or rest break violations of any kind, 3 unpaid wages, rounding of time entries, penalties for failure to provide accurate and itemized wage 4 statements, and penalties for failure to timely pay wages at the separation of employment, and any 5 other benefit claimed on account of the allegations asserted in the operative complaint”). Assuming 6 plaintiffs choose to renew their motion, they must more completely explain how those additional 7 claims are accounted for in the settlement, or, alternatively, why they need not be accounted for 8 despite being released under the parties’ agreement. 9 IV. CONCLUSION 10 While the court acknowledges and strives to further the strong judicial policy 11 favoring settlement, it cannot simply rubber stamp a class action settlement because it promises 12 recovery and follows years of hard-fought litigation. The motion is DENIED without prejudice to 13 a renewed motion that adequately addresses the court’s remaining concerns described above. 14 Assuming plaintiffs wish to renew the motion, they may do so by filing a notice of renewal and 15 reliance on prior briefing, with supplemental briefing focusing on only the issues called out by this 16 order. 17 IT IS SO ORDERED. 18 DATED: August 22, 2019. 19 20 21 22 23 24 25 26 27 28