Beltran v. Olam Spices and Vegetables, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 THOMAS BELTRAN, et al., Case No. 1:18-cv-01676-NONE-SAB 12 Plaintiffs, ORDER VACATING JUNE 10, 2020 HEARING 13 v. FINDINGS AND RECOMMENDATIONS 14 OLAM SPICES AND VEGETABLES, INC., RECOMMENDING DENYING PLAINTIFFS’ MOTION FOR 15 Defendant. PRELIMINARY APPROVAL OF CLASS ACTION AND COLLECTIVE ACTION 16 SETTLEMENT 17 (ECF Nos. 25, 26) 18 OBJECTIONS DUE WITHIN TWENTY- ONE DAYS 19 20 21 Currently before the Court is Plaintiffs’ motion for preliminary approval of a class action 22 and collective action settlement. The matter has been referred to a United States magistrate 23 judge pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 302. 24 The Court, having reviewed the record, finds this matter suitable for decision without oral 25 argument. See Local Rule 230(g). Accordingly, the previously scheduled hearing set on June 26 10, 2020, will be vacated and the parties will not be required to appear at that time. 27 The Court issues the following findings and recommendations recommending denying the motion for preliminary approval. 1 I. 2 BACKGROUND 3 A. Beltran Action 4 On July 7, 2015, Plaintiff Thomas Beltran commenced a class action lawsuit against 5 Defendant, erroneously sued as Olam Spices and Vegetables, Inc., in the Alameda County 6 Superior Court, Case No. RG15776976 (“Beltran Action”). (Beltran Compl., ECF No. 1-1 at 5- 7 35.) On September 9, 2015, upon a motion filed by Defendant being granted, the Beltran Action 8 was transferred to the Fresno County Superior Court, Case No. 15CECG02993. (Defendant’s 9 Notice and Motion to Transfer Venue and Request for Reasonable Expenses and Attorney Fees, 10 ECF No. 1-1 at 56-114; Order Granting Motion for Change of Venue, id. at 176.) A first 11 amended complaint (“FAC”) was filed on November 10, 2015, adding Mario Martinez as a 12 plaintiff. (FAC, ECF No. 1-2 at 6-32.) Defendant filed a demurrer to the complaint after which 13 the parties were ordered to meet and confer on the filing of a second amended complaint (Def. 14 Olam West Coast Inc.’s Notice of Demurrer to Pl.’s FAC for Damages and Demurrer and Mot. 15 to Strike, ECF No. 1-2 at 50-85; Tentative Ruling, id. at 257-58.) A second amended complaint 16 was filed on April 25, 2016. (“SAC”), ECF No. 1-3 at 16-40.) Defendant filed an answer on 17 May 27, 2016. (Answer of Def. Olam West Coast, Inc. to SAC for Damages, ECF No. 1-3 at 48- 18 59.) 19 On March 16, 2017, the parties filed a notice that the matter had settled. (Joint Notice of 20 Class Action Settlement, ECF No. 1-13 at 47-48.) On June 1, 2017, Plaintiffs Beltran and 21 Martinez filed a motion for preliminary approval of a class action settlement. (Pls.’ Notice of 22 Mot. and Mot. for Preliminary Approval of Class Action Settlement; Memo. of P&A in Support, 23 ECF No. 1-11 at 65-ECF No. 1-12 at 58.) The motion for preliminary approval was denied on 24 July 18, 2017. (Law and Motion Minute Order, ECF NO. 1-12 at 74-78.) 25 On October 6, 2017, the state judge granted the request to release the names of the 26 putative class members to the class action administrator who did not opt out during the Belaire- 27 West opt out notice but no mass mailing to the putative class members could be done without 1 B. Other Actions 2 On September 15, 2015, Plaintiff Maria Claudia Obeso Cota filed a class action lawsuit 3 against Defendant in the Sonoma County Superior Court, Case No. SCV257741 (“Cota Action”). 4 (Decl. of Vincent C. Granberry (“Granberry Decl. ¶ 5, ECF No. 25-2 at 2-16.) Pursuant to a 5 stipulation and order, on or about January 22, 2016, the Cota Action was transferred to the 6 Fresno County Superior Court, Case No. 16CECG00081. (Id.) 7 On February 18, 2016, Plaintiff Alexander Solorio filed a complaint for civil penalties 8 pursuant to PAGA against Defendant in the Fresno County Superior Court, Case No. 9 16CECG00513 (the “Solorio Action”). (Id. at ¶ 6.) 10 On October 6, 2016, Plaintiff Juan Rivera filed a complaint for civil penalties under 11 PAGA against Defendant in the State of California for the County of Santa Clara, Case No. 12 16CV300758 (“Rivera Action”) on behalf of the State of California and other aggrieved hourly 13 paid or non-exempt employees who worked for Defendant since August 1, 2015. (Id. at ¶ 7.) 14 C. Consolidation of Actions 15 On March 14, 2018, the parties filed a stipulation granting Plaintiffs’ leave to file a third 16 amended class action complaint (“TAC”). (Joint Stip. Granting Pls. Leave to File TAC, ECF 17 No. 1-13 146-191.) The stipulation was granted and the third amended complaint was filed on 18 April 11, 2018, adding Plaintiffs Maria Claudia Obeso Cota, Juan Rivera, Mariana Ramirez, and 19 Alexander Solorio and claims under the Fair Labor Standards Act (“FLSA”). (ECF No. Joint 20 Stip. and Order Granting Pls.’ Leave to File TAC, ECF No. 1-13 at 194-197; TAC, id. at 214- 21 253.) 22 Plaintiffs filed a renewed motion for preliminary approval of the class action settlement 23 on June 26, 2018. (Pls.’ Renewed Notice of Mot. and Mot. for Preliminary Approval of Class 24 Action Settlement; Memo. of P&A in Support Thereof, ECF No. 1-14 at 27-357.) The parties 25 were provided with the opportunity to file supplemental briefing, and supplemental briefing was 26 filed. (Law and Motion Minute Order, ECF No. 1-15 at 23; Def. Olam West Coast Inc. Req. for 27 Judicial Notice in Support of Pls.’ Renewed Mot. for Preliminary Approval of Class Action 1 Brief in Support of Pls.’ Renewed Mot. for Preliminary Approval of Class Action Settlement, 2 ECF No. 1-17 at 3-ECF No. 1-19 at 22.) On October 25, 2018, a hearing on the motion was held 3 and the motion for preliminary approval was continued to allow the parties to file supplemental 4 briefing.1 (Law and Motion Minute Order, ECF No. 1-19 at 25.) 5 After the state court hearing on the motion for preliminary approval, but prior to the state 6 court deciding the renewed motion for preliminary approval, on December 10, 2018, Defendants 7 removed this matter to the Eastern District of California. (ECF No. 1.) A scheduling order was 8 issued on December 11, 2018 setting a mandatory scheduling conference for February 12, 2019. 9 (ECF No. 4.) After receiving several extensions of the mandatory scheduling conference, the 10 parties filed a joint scheduling report on October 29, 2019. (ECF Nos. 9, 11, 14, 16.) On review 11 of the joint report, all pending dates in this matter were vacated and the parties were ordered to 12 file a motion for preliminary approval of the class action settlement on December 11, 2019, and 13 the Court indicated that it was not likely to grant any further continuances due to the age of this 14 action. (ECF No. 18.) 15 On December 13, 2019, Plaintiffs filed a suggestion of death of Plaintiff Mariana 16 Ramirez. (ECF No. 19.) On December 16, 2019, a joint statement regarding the death of 17 Mariana Ramirez and an order requiring the parties to show cause why sanctions should not 18 issue for the failure to file the motion for preliminary approval were filed. (ECF Nos. 20, 21.) 19 On December 17, 2019, the order to show cause was discharged, and the parties were ordered to 20 file a motion for preliminary approval by April 13, 2020. (ECF No. 22.) 21 On April 8, 2020, an order issued dismissing Plaintiff Mariana Ramirez pursuant to Rule 22 25 of the Federal Rules of Civil Procedure. (ECF No. 24.) The instant motion for preliminary 23 approval of the class action and collective action settlement was filed on April 13, 2020. (ECF 24 No. 25.) On May 27, 2020, Defendant filed a statement of non-opposition to Plaintiffs’ motion 25 for preliminary approval of the class settlement. 26 1 The current motion states that the state court denied the motion for preliminary approval, however the minute order continued the hearing on the motion for supplemental briefing. There is no order otherwise addressing the motion. 27 Further, the parties filed a stipulation to continue the hearing from January 3, 2019 to January 23, 2019 contrary to Plaintiff’s contention that the motion for preliminary approval was denied on October 25, 2018. (ECF No. 1-19 at 1 II. 2 RELEVENT THIRD AMENDED COMPLAINT ALLEGATIONS 3 Thomas Beltran, Mario Martinez, Juan Rivera, Maria Claudia Obeso Cota, and 4 Alexander Solorio (collectively “Plaintiffs”) were employed by Olam West Coast, Inc. 5 (“Defendant”). 6 Plaintiffs seek to represent a class defined as: 7 All current and former persons who were employed by Defendant in a position classified by Defendant as non-exempt and/or hourly non-exempt and who 8 worked in that capacity at Defendant’s Fresno, Firebaugh, Hanford, Lemoore, Gilroy, and/or Williams locations within the State of California at any time during 9 the period from July 7, 2011 to final judgment. 10 (TAC ¶ 18.) The class is composed of approximately 6,000 individuals. 11 Plaintiffs Solorio, Rivera, and Ramirez provided written notice to the Labor and 12 Workforce Development Agency (“LWDA”) that Defendant had violated specific provisions of 13 the California Labor Code. 14 Plaintiff Beltran was employed by Defendant as an hourly paid, non-exempt employee, 15 from June 2006 to approximately March 2010, and from May 2011 to July 16, 2012 at 16 Defendant’s Gilroy location. Plaintiff Beltran was an industrial line operator and packaging 17 general labor. His duties included performing inventory, cleaning, and processing orders. 18 Plaintiff Martinez was employed by Defendant as an hourly paid, non-exempt employee 19 from August 2012 to October 2013 at Defendant’s Firebaugh location. Defendant Martinez was 20 a warehouse and packaging forklift operator. His duties included performing inventory, 21 cleaning, and pulling and processing orders. 22 Plaintiff Rivera was employed by Defendant as an hourly paid, non-exempt employee 23 from October 2006 to September 2015 at Defendant’s Gilroy location. Plaintiff Rivera was a 24 forklift operator whose job included pulling and processing products, organizing, and 25 maintaining paperwork. 26 Plaintiff Cota was employed by Defendant as an hourly paid, non-exempt employee at 27 Defendant’s Lemoore location from July 2013 to approximately October 2013. Plaintiff Cota 1 Plaintiff Solorio was employed by Defendant as an hourly paid, non-exempt employee at 2 Defendant’s Lemoore location from approximately 2012 to October 28, 2015. 3 Plaintiffs bring the following causes of action against Defendant: 1) failure to pay 4 overtime in violation of California Labor Code sections 510 and 1198; 2) failure to pay overtime 5 in violation of the FLSA, 29 U.S.C. § 207; 3) failure to provide meal breaks in violation of 6 California Labor Code sections 226.7 and 512(a) and the applicable industrial wage orders; 4) 7 failure to provide rest periods in violation of California Labor Code section 226.7 and the 8 applicable industrial wage order; 5) failure to pay minimum wages in violation of California 9 Labor Code section 1194, 1197, and 1197.1; 6) failure to pay minimum wages in violation of the 10 FLSA, 29 U.S.C. § 206; 7) failure to timely pay wages upon termination of employment in 11 violation of California Labor Code sections 201 and 202; 8) failure to provide accurate wage 12 statements in violation of California Labor Code section 226(a); 9) failure to reimburse for all 13 necessary expenditures in violation of California Labor Code sections 2800 and 2802; 10) unfair 14 and unlawful business practices in violation of California Business and Professions Code 15 sections 17200, et seq.; and 11) violation of California’s Public Attorney General Act (“PAGA”). 16 III. 17 TERMS OF THIRD AMENDED SETTLEMENT AGREEMENT 18 Defendant agrees to pay $4,500,000.00 to settle the claims in this action. 19 The settlement agreement covers the period from July 7, 2011, to the date of preliminary 20 approval. 21 The class is releasing all wage and hours claims that were pled or could have been pled in 22 the TAC, including, 23 any statutory, constitutional, contractual or common law claims for wages (including minimum wage, overtime, and premium wages, and for any failure to 24 pay overtime based on the regular rate of pay), damages, business expenses, or penalties (including waiting time penalties), liquidated damages, punitive damages, 25 interest, restitution, equitable relief, or any other relief, based on any and all applicable statutes (other than the Fair Labor Standards Act, including without 26 limitation the California Labor Code, the California Industrial Welfare Commission wage orders, Labor Code Private Attorneys General Act of 2004 (Cal. 27 Lab. Code §§ 2698, et seq.) (“PAGA”), California Business and Professions Code § 17200, et seq, or other law, including, but not limited to, claims based on the 1 unpaid overtime; (b) all claims for meal and rest period violations; (c) all claims for unpaid minimum wages; (d) all claims for untimely payment of wages upon 2 termination; (e) all claims for untimely payment of wages during employment; (f) all claims for failure to pay wages; (g) all claims for failure to provide accurate or 3 otherwise proper itemized wage statements; (h) all claims for failure to keep complete and accurate payroll records; (i) all claims for failure to reimburse 4 necessary business-related expenses and costs; (j) all claims asserted, or which could have been asserted, under PAGA arising out of the aforementioned claims; 5 (k) all claims asserted through California Business & Professions Code § 17200 et seq. arising out of the aforementioned claims; and (l) all other claims for penalties, 6 liquidated damages, punitive damages, interest, attorneys’ fees, litigation costs, restitution, equitable relief, or additional damages that allegedly arise out of the 7 aforementioned claims. 8 (Settlement Agreement ¶ II.31.) 9 The FLSA collective members are releasing all FLSA claims arising out of their 10 employment that were raised or could have been raised in this action through the effective date 11 of the agreement. 12 The class representatives are releasing any and “all options, claims, causes of action, 13 demands, damages, debts, liabilities, accounts, reckonings, obligations, losses, costs, expenses, 14 liens, actions, and claims of any sort, whether sounding in law or in equity. The General Release 15 includes, but is not limited to, any and all claims, demands, causes of action, obligations and 16 liabilities, whether or not presently known or unknown, fixed or contingent, that in any way 17 relate to or arise from each Plaintiff’s employment with Olam. . . .” (Third Am. Class Action 18 and Collective Action Settlement and Release Agreement (hereafter “Settlement Agreement”) ¶ 19 II.20, ECF No. 25-1.) 20 The settlement administrator shall be Simpluis, Inc. and the parties represent that they do 21 not have any financial interest in or otherwise have a relationship with Simpluis, Inc. that would 22 create a conflict of interest. The settlement administration costs shall be paid from the total 23 settlement fund. The administration costs to be paid to the settlement administrator are estimated 24 to be $58,000.00. 25 Defendant agrees not to oppose or impede any application or motion for attorney fees of 26 not more than $1,575,000.00, which is thirty-five percent of the total settlement funds plus costs 27 and expenses of not to exceed $65,000.00. Any attorney fees not awarded will be added to the net settlement fund. 1 Defendant agrees not to oppose or impede any application or motion for incentive awards 2 to the named class representatives. Plaintiffs Beltran, Martinez, Obeso Cota, and Solorio will 3 receive an incentive award of $7,500.00 and Plaintiff Rivera will seek an award of $3,500.00. 4 A total of $150,000.00 will be paid to settle the PAGA claims. Of this amount 5 $112,500.00 will be paid to the LWDA and $37,500.00 will be part of the net settlement fund. 6 The net settlement fund is the gross settlement fund less the settlement administration 7 costs; attorney fees, costs, and expenses; Defendant’s share of the payroll expenses; incentive 8 payments to the named representatives, and the payment to the LDWA. Seventy-five percent of 9 the net settlement fund is allocated to the Rule 23 class action and twenty-five percent is 10 allocated to the FLSA collective action. Each members allocation shall be determined by 11 multiplying the net settlement fund by the fraction that the individual member has worked. Each 12 member’s payment is allocated as thirty-four percent wages and sixty-six percent as penalties 13 and interest. Each member’s wage payment will be reduced by the employees required share of 14 the payroll taxes and withholdings. No portion of the payment shall be credited toward 15 calculating employee benefits under any employee benefit plan. 16 The settlement administrator shall mail the notice packet in Spanish and English to all 17 Rule 23 class and FLSA collective action members at the most current, known mailing address. 18 Prior to mailing the settlement administrator will perform a search of the National Change of 19 Address Database to update and correct any known or identifiable address changes. Any packets 20 that are returned as undeliverable prior to the response deadline will be resent by first class mail 21 to any forwarding address affixed thereto. If there is no forwarding address the settlement 22 administrator will conduct a skip trace or other search and will perform a single re-mailing. For 23 any packet that is re-mailed, the individual will have an additional fifteen calendar days to 24 respond. 25 The class notice will be mailed to all Rule 23 class members and the FLSA notice will be 26 mailed to all FLSA members.2 The Rule 23 class will be provided with information on how to 27 2 The Court notes that at this time the only FLSA members are those who have filed a consent to join and currently 1 opt out of the class action, object to the settlement or file a dispute of the workweeks credited to 2 the class member. To opt out, dispute the credited work weeks or object to the Rule 23 class 3 action settlement, the form must be postmarked or a fax received sixty days from the initial 4 mailing of the notice packet. If a request to opt out is defective, the class member will be 5 provided with an opportunity to cure the defect. The settlement administrator will mail the class 6 member a cure letter within three days. The class member will have until the response deadline 7 or fifteen days from the date of mailing to correct the form. 8 The FLSA notice will provide the deadline to postmark or fax workweeks disputes. 9 All class members who do not opt out will be bound by the settlement and will forever 10 discharge and release the released class claims. Only FLSA members who cash, deposit, or 11 otherwise negotiate their FLSA payment will be deemed to have consented to join the FLSA 12 collective and will be bound by the judgment. 13 The funds for any uncashed funds will be transmitted to the United Way for the local 14 chapters in Fresno County, Kings County, Santa Clara County, and Colusa County. 15 The Court will retain jurisdiction of the settlement until all payments and obligations of 16 the settlement agreement have been fully executed. 17 IV 18 LEGAL STANDARD 19 A. Rule 23 Class Action 20 The Ninth Circuit has declared that a strong judicial policy favors settlement of class 21 actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nevertheless, 22 especially where settlement occurs prior to class certification, courts must peruse the proposed 23 settlement to ensure the propriety of class certification and the fairness of the settlement. Staton 24 v Boeing, 327 F.3d 938, 952 (9th Cir. 2003). 25 To certify a class, a plaintiff must demonstrate that all of the prerequisites of Rule 23(a), 26 and at least one of the requirements of Rule 23(b) of the Federal Rules of Civil Procedure have 27 been met. Wang v. Chinese Daily News, Inc., 737 F.3d 538, 542 (9th Cir. 2013). This requires 1 certification has met the prerequisites of Rule 23.” Wright v. Linkus Enterprises, Inc., 259 2 F.R.D. 468, 471 (E.D. Cal. 2009). 3 Federal Rule of Civil Procedure 23(e)(2) requires that any settlement in a class action be 4 approved by the court which must find that the settlement is fair, reasonable, and adequate. The 5 role of the district court in evaluating the fairness of the settlement is not to assess the individual 6 components, but to assess the settlement as a whole. Lane v. Facebook, Inc., 696 F.3d 811, 7 818-19 (9th Cir. 2012) reh’g denied 709 F.3d 791 (9th Cir. 2013). In reviewing a proposed 8 settlement, the court represents those class members who were not parties to the settlement 9 negotiations and agreement. In re Toys R Us-Delaware, Inc.--Fair & Accurate Credit 10 Transactions Act (FACTA) Litig., 295 F.R.D. 438, 448 (C.D. Cal. 2014). 11 B. Collective Action Under the FLSA 12 The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees 13 that cannot be modified by contract or otherwise waived. Genesis Healthcare Corp. v. 14 Symczyk, 569 U.S. 66, 69 (2013); Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 15 740 (1981). The FLSA provides the right of an employee to represent similarly situated 16 employees in a suit against their employer for the failure to pay minimum wage or overtime 17 compensation. 29 U.S.C. § 216(b). Unlike a class action under Rule 23, to participate in the 18 collective action an employee is required to give his consent in writing to become a party. 29 19 U.S.C. § 216(b); see Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) (rights in a 20 collective action under the FLSA are dependent on the employee receiving accurate and timely 21 notice about the pendency of the collective action, so that the employee can make informed 22 decisions about whether to participate). “If an employee does not file a written consent, then 23 that employee is not bound by the outcome of the collective action.” Edwards v. City of Long 24 Beach, 467 F.Supp.2d 986, 989 (C.D. Cal. 2006). 25 Since an employee cannot waive claims under the FLSA, an FLSA claim “may not be 26 settled without supervision of either the Secretary of Labor or a district court.” Nen Thio v. Genji, 27 LLC, 14 F.Supp.3d 1324, 1333 (N.D. Cal. 2014); Selk v. Pioneers Mem’l Healthcare Dist., 159 1 (E.D. Cal. 2018). The Ninth Circuit has not established criteria for district courts to use in 2 determining whether an FLSA collective action settlement should be approved. Kerzich, 335 3 F.Supp.3d at 1183. District courts in this circuit have used the Eleventh Circuit’s approach which 4 considers whether the settlement is a fair and reasonable resolution of a bona fide dispute. Id.; Nen 5 Thio, 14 F.Supp.3d at 1333; Selk, 159 F.Supp.3d at 1172. 6 After determining that a bona fide dispute exists, the court must determine whether the 7 settlement is fair and reasonable. Nen Thio, 14 F.Supp.3d at 1340; Selk, 159 F.Supp.3d at 1172. 8 “In making this determination, many courts begin with the well-established criteria for assessing 9 whether a class action settlement is ‘fair, reasonable, adequate’ under Fed. R. Civ. P. 23(e),” 10 recognizing that not all the factors apply in an FLSA settlement Selk, 159 F.Supp.3d at 1172; 11 Kerzich, 335 F.Supp.3d at 1184; Smith v. Kaiser Found. Hosps., No. 3:18-CV-00780-KSC, 2019 12 WL 5864170, at *10 (S.D. Cal. Nov. 7, 2019). In this circuit, courts “have balanced factors such 13 as: the strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further 14 litigation; the risk of maintaining class action status throughout the trial; the amount offered in 15 settlement; the extent of discovery completed and the stage of the proceedings; the experience and 16 views of counsel; the presence of a governmental participant; and the reaction of the class 17 members to the proposed settlement. Kerzich, 335 F.Supp.3d at 1184 (quoting Khanna v. Intercon 18 Sec. Sys., Inc., No. 2:09-CV-2214 KJM EFB, 2014 WL 1379861, at *6 (E.D. Cal. Apr. 8, 2014), 19 order corrected, 2015 WL 925707 (E.D. Cal. Mar. 3, 2015)). If the settlement reflects a reasonable 20 compromise over a bona fide dispute, the district court may approve the settlement in order to 21 promote the policy of encouraging settlement of litigation. Nen Thio, 14 F.Supp.3d at 1340; 22 Kerzich, 335 F.Supp.3d at 1185. 23 V. 24 DISCUSSION 25 A. Deficiencies in the Proposed Settlement 26 Federal Rule of Civil Procedure 23(e)(2) mandates that any settlement in a class action 27 may only be approved by the court after finding that the settlement is fair, reasonable, and 1 (A) the class representatives and class counsel have adequately represented the 2 class; 3 (B) the proposal was negotiated at arm’s length; 4 (C) the relief provided for the class is adequate, taking into account: 5 (i) the costs, risks, and delay of trial and appeal; 6 (ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims; 7 (iii) the terms of any proposed award of attorney’s fees, including timing 8 of payment; and 9 (iv) any agreement required to be identified under Rule 23(e)(3); and 10 (D) the proposal treats class members equitably relative to each other. 11 Fed. R. Civ. P. 23(e)(2)(A)-(D); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). 12 In evaluating whether the settlement under the FLSA is fair and reasonable, courts in this 13 circuit “have balanced factors such as: the strength of the plaintiffs’ case; the risk, expense, 14 complexity, and likely duration of further litigation; the risk of maintaining class action status 15 throughout the trial; the amount offered in settlement; the extent of discovery completed and the 16 stage of the proceedings; the experience and views of counsel; the presence of a governmental 17 participant; and the reaction of the class members to the proposed settlement. Kerzich, 335 18 F.Supp.3d at 1184 (quoting Khanna, 2014 WL 1379861, at *6. 19 Upon review of Plaintiff’s instant motion for preliminary approval, the following obvious 20 deficiencies preclude the Court from finding that the proposed settlement is fair and reasonable. 21 1. Conflict of Interest Between Representative Plaintiffs and their Counsel and the Putative Class Members 22 23 Here, Defendants have offered $4,500,000.00 to settle the class and collective action 24 claims. The net settlement fund is the gross settlement fund less the incentive awards of 25 $33,500.00; settlement administration costs of $58,000.00; the LWDA payment of $112,500.00; 26 attorney fees of $1,575,000.00 and costs of $65,000.00; and employer’s share of the payroll 27 taxes of $117,000.00 to $168,000.00. (Settlement Agreement, ¶ II.39; Motion, 13.) The net settlement fund is estimated to be $2,656,000.00 prior to the deduction of the employer’s payroll 1 taxes. With the employer’s portion of the payroll taxes deducted, the net settlement fund is 2 somewhere between $2,539,000.00 and $2,488,000.00. 3 Counsel has set forth the potential value of each of the claims brought in this action. 4 (Aiwazian Decl. ¶ 28.) 5 Claim Potential Value Discounted Amount Calif. Overtime Claim $5,502,201.65 $352,140.90 6 FLSA Overtime Claim $9,609,444.56 $384,377.78 Calif. Minimum Wage Claim $3,667,210.47 $366,721.05 7 FSLA Minimum Wage Claim $3,509,746.76 $350,974.68 Meal Period and Premium Claim $11,001,631.41 $962,642.75 8 Rest Period and Premium Claim $3,667,201.47 $366,721.05 Pay Timely Wage Claim $18,222,472.80 $455,561.82 9 Complaint Wage Statement Claim $21,508,000.00 $537,700.00 Business Expense Claim $1,663,134.00 $83,156.70 10 PAGA Penalties $2,688,500.00 $134,425.00 11 (Aiwazian Decl. ¶ 28.) Plaintiffs assert that the potential value of the claims is $81,039,543.12. 12 The discounted amount for these claims is $3,994,421.73 which is 4.9 percent of the potential 13 value of the claims brought in this action. However, Plaintiffs have not addressed how they 14 calculated the potential value of these claims. 15 Balancing the class’s potential recovery against the amount offered in settlement is “perhaps the most important factor to consider” in preliminary approval, Cotter 16 v. Lyft, Inc., 176 F.Supp.3d 930, 935 (N.D. Cal. 2016), not a hollow exercise in which the Court blindly accepts the parties’ unsupported assertions. As another 17 court aptly put it: “Plaintiffs seeking preliminary approval should show their work by explaining the relative value of their claims in significant detail. For example, 18 in a wage-and-hour case like this one, plaintiffs should show or estimate how many employees were allegedly shortchanged, calculate and explain to the Court 19 the amount by which typical employees were allegedly shortchanged on an hourly or daily basis, and show or estimate the number of hours or days the employees 20 were allegedly shortchanged.” Eddings v. DS Servs. of Am., Inc., No. 15-CV- 02576-VC, 2016 WL 3390477, at *1 (N.D. Cal. May 20, 2016). 21 22 Haralson v. U.S. Aviation Servs. Corp., 383 F.Supp.3d 959, 970 (N.D. Cal. 2019). 23 Further, Plaintiffs have not addressed whether liquidated damages were included in the 24 FLSA damage calculation. Under 29 U.S.C. § 216(b), an employer who violates minimum wage 25 or overtime provisions of the FLSA can be liable for an equal amount of liquidated damages in 26 addition to the unpaid compensation due. Liquidated damages are the norm and single damages 27 are the exception in FLSA cases. Nellis v. G.R. Herberger Revocable Tr., 360 F.Supp. d 1033, 1 calculated using a two or three year limitations period. See 29 U.S.C. § 255(a). This could 2 mean that the discounted value of the FLSA claims is much greater than the 95 percent reflected 3 in the above figures. 4 “Even a fractional recovery of the possible maximum recovery amount may be fair and 5 adequate in light of the uncertainties of trial and difficulties in proving the case.” Millan v. 6 Cascade Water Servs., Inc., 310 F.R.D. 593, 611 (E.D. Cal. 2015). However, the information 7 provided is insufficient for the Court to find that the amount offered in settlement is fair and 8 reasonable. In any future motion for approval of the settlement agreement, the parties will need 9 to address these issues with the calculation of damages and more adequately explain in more 10 detail why such large deductions are appropriate. 11 Another issue that the Court finds problematic arises when considering the amount of 12 attorney fees and the incentive fees in relation to the overall settlement deductions and the actual 13 amounts that the putative class members will receive in settlement of their claims. The Ninth 14 Circuit has emphasized that courts “must be particularly vigilant not only for explicit collusion, 15 but also for more subtle signs that class counsel have allowed pursuit of their own self-interests 16 and that of certain class members to infect the negotiations.” In re Bluetooth Headset Prod. Liab. 17 Litig., 654 F.3d 935, 947 (9th Cir. 2011). The Ninth Circuit has identified that the following 18 aspects may be such signs of collusion: (1) “when counsel receive a disproportionate distribution 19 of the settlement, or when the class receives no monetary distribution but class counsel are amply 20 rewarded”; (2) “when the parties negotiate a ‘clear sailing’ arrangement providing for the 21 payment of attorneys’ fees separate and apart from class funds”; and (3) “when the parties 22 arrange for fees not awarded to revert to defendants rather than be added to the class fund.” Id. 23 (internal citations and quotation marks omitted). 24 The net settlement fund to be designated to the class settlement is $1,992,000.00. This 25 amount is to be distributed on a pro rata basis based on the number of weeks in the period and 26 the length of class member’s employment. Payments to the class members are estimated as 27 follows: 1 • 6 months: [(26 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $93.42 • 1 year: [(52 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $186.85 2 • 2 years: [(104 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $373.69 • 3 years: [(156 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $560.54 3 • 4 years: [(208 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $747.39 • 5 years: [(312 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $1,121.08 4 • 6 years: [(364 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $1,307.93 • 7 years: [(416 Workweeks÷ 554,378 total Workweeks) x $1,992,000] = $1,494.78 5 (ECF No. 25 at 14.) 6 The net settlement fund for the FLSA collective is estimated to be $664,000.00. (ECF 7 No. 25 at 15.) The FLSA settlement is distributed on a pro rata basis based on the length of the 8 collective member’s employment. Payments to the FLSA collective are estimated as follows: 9 • 6 months: [(26 Workweeks÷ 554,378 total workweeks) x $664,000] = $31.14 10 • 1 year: [(52 Workweeks÷ 554,378 total workweeks) x $664,000] = $62.28 • 2 years: [(104 Workweeks÷ 554,378 total workweeks) x $664,000] = $124.56 11 • 3 years: [(156 Workweeks÷ 554,378 total workweeks) x $664,000] = $186.85 • 4 years: [(208 Workweeks÷ 554,378 total workweeks) x $664,000] = $249.13 12 • 5 years: [(312 Workweeks÷ 554,378 total workweeks) x $664,000] = $373.69 • 6 years: [(364 Workweeks÷ 554,378 total Workweeks) x $664,000] = $435.98 13 • 7 years: [(416 Workweeks÷ 554,378 total Workweeks) x $664,000] = $498.26 14 (ECF No. 15.) 15 Of the $4,500,000.00 gross settlement fund, Plaintiffs estimate that the net settlement 16 fund will be $2,656,000. (ECF No. 25 at 14.) As discussed above, the putative class members 17 claims have been discounted by more than 95 percent. Based on the estimated class payments, 18 class member payments can range from $31.14 to $1,993.06. While the class representatives 19 will receive their pro rata share of the settlement, they are also seeking an incentive payment that 20 is almost double to over triple the most that any putative class member will be receiving.3 21 Similarly, in the Ninth Circuit, courts typically calculate twenty-five percent of the 22 common fund as the “benchmark” for a reasonable fee award providing adequate explanation in 23 the record for any special circumstances that justify departure. In re Bluetooth, 654 F.3d at 942. 24 The usual range for common fund attorney fees are between twenty to thirty percent. Vizcaino 25 v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). While the benchmark figure can adjust 26 upward or downward to fit the individual circumstances of a case, the deviation must be 27 3 This Court has previously approved incentive payments of $3,500.00 to $5,000.00 but requires the representative 1 accompanied by a reasonable explanation of why the benchmark is unreasonable under the 2 circumstances. Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 273 (9th Cir. 1989). 3 Here, Plaintiffs are seeking attorney fees in the amount of $1,575,000.00 which is 35 4 percent of the gross settlement fund.4 Plaintiffs assert that the amount is reasonable based on the 5 length of time this action has been proceeding, the amount of time expended and the possibility 6 that the litigation would not be successful and no fees would be recovered. But other than 7 making conclusory allegations, Plaintiffs do not set forth any argument as to why any of these 8 factors weigh in favor of awarding a percentage above the benchmark. 9 Further, the court notes that, while the parties point to the length of time that this action 10 has been proceeding, the parties agreed to settle this action in March of 2017 and this is the third 11 motion for preliminary approval that has been unsuccessful. Counsel is advised that should this 12 matter proceed to final approval, they will be required to provide detailed billing records to 13 support the fee request. The Court will conduct a lode star cross check for the fee request. 14 Especially, as here where there are multiple firms seeking attorney fees and the same motion has 15 been filed multiple times, the Court is concerned regarding the possibility of duplication of fees.5 16 See Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008) (hours for unnecessary 17 duplicative work may be deducted from a fee request). 18 Additionally, the parties have negotiated a smooth sailing agreement as Defendant has 19 agreed not to oppose the requests for incentive payments and attorney fees. The facts that the 20 class claims have received deductions of over ninety five percent, the incentive payments are far 21 in excess of the amount that any of the putative class member will be receiving, and that the 22 attorney fees sought in this matter are far in excess of the Ninth Circuit’s benchmark, raises the 23 24 4 Although the Court notes that Defendant’s share of the payroll taxes are being paid from the gross settlement fund. If the share of the payroll taxes that Defendant is required to pay are deducted from the gross settlement fund, then 25 the fees sought are 35.9 to 36.4 percent of the gross settlement fund. Here the amount of the settlement fund estimated to be dispersed to the class and collective action members is 59 percent of the gross settlement fund. 26 5 The parties are advised that to support an expense award, Plaintiffs should file an itemized list of expenses by category and the total amount advanced for each category, allowing the Court to assess whether the expenses are 27 reasonable.” Flores v. TFI Int’l Inc., No. 12-CV-05790-JST, 2019 WL 1715180, at *11 (N.D. Cal. Apr. 17, 2019). At final approval counsel is required to provides receipts to support their claimed expenses. Flores, 2019 WL 1 inference that the settlement has been reached due to the self-interest of the representative 2 Plaintiffs and their attorneys at the expense of the putative class members. Upon review of the 3 motion, the Court finds that there is an inference that a conflict of interest has been created 4 between the representative Plaintiffs and class counsel that would preclude approval of the 5 settlement agreement. 6 2. FLSA Claims 7 The Ninth Circuit has held that “plaintiffs are similarly situated, and may proceed in a 8 collective, to the extent they share a similar issue of law or fact material to the disposition of 9 their FLSA claims.” Campbell v. City of Los Angeles, 903 F.3d 1090, 1117 (9th Cir. 2018). 10 While it is unclear what standard should be used to determine if the employees are similarly 11 situated under the FLSA, given that the employee consents to participating in the FLSA actions 12 courts do find that “the requisite showing of similarity of claims under the FLSA is 13 considerably less stringent than the requisite showing under Rule 23 of the Federal Rules of 14 Civil Procedure.” Hill v. R+L Carriers, Inc., 690 F.Supp.2d 1001, 1009 (N.D. Cal. 2010); 15 accord Millan, 310 F.R.D. at 607. The plaintiffs can proceed as a collective action where they 16 allege a single, FLSA-violating policy and argue a common theory of defendant’s statutory 17 violations. Senne v. Kansas City Royals Baseball Corp., 934 F.3d 918, 949 (9th Cir. 2019). 18 Plaintiffs need to identify the FLSA violating policy that exists and argue a common theory for 19 the FLSA statutory violations to show that the employees who work at different locations and in 20 different positions are similarly situated. 21 Additionally, in order to settle claims under the FLSA there must be a bona fide dispute. 22 A bona fide dispute exists where there are legitimate questions about the existence and extent of 23 a defendant’s liability and there is some doubt that the plaintiffs would succeed on the merits of 24 their FLSA claims in the litigation. Selk, 159 F.Supp.3d at 1172. “If there is no question that the 25 FLSA entitles plaintiffs to the compensation they seek, then a court will not approve a settlement 26 because to do so would allow the employer to avoid the full cost of complying with the statute.” 27 Id. 1 they have not specifically addressed whether there is a bona fide dispute as to the FLSA claims. 2 Plaintiffs’ motion is unclear as to why these hours have not been paid. Federal law requires that 3 all hours worked be paid and if there is no dispute that the employees should have been paid for 4 this time then Defendant cannot avoid the full cost of complying with FLSA by settling these 5 claims. The Court finds that Plaintiffs have not demonstrated that a bona fide dispute exists for 6 the FLSA claims. 7 3. Notice and Opt-in Procedures for the FLSA Collective 8 The parties propose that a member will opt into the FLSA class by cashing their 9 settlement check. The FLSA payment shall contain the following statement: 10 By endorsing this check, I consent to join the lawsuit entitled Beltran, et. al. v. Olam West Coast, Inc., Eastern District of California, Fresno Division, Case 11 No.1:18-cv-01676-LJO-SAB, pursuant to the provisions of the Fair Labor Standards Act “FLSA”), 29 USC Section 216(b), for purposes of participating in 12 the settlement. I further understand and agree that my cashing, depositing, or otherwise negotiating this check constitutes a full and complete release of any and 13 all of Released FLSA Claims and that a copy of this check, may be filed with the Court, with personal information other than my name redacted, as evidence of my 14 consent. 15 (Settlement Agreement ¶ III.19(b).) 16 However, the FLSA provides that “[n]o employee shall be a party plaintiff to any such 17 action unless he gives his consent in writing to become such a party and such consent is filed in 18 the court in which such action is brought.” 29 U.S.C. § 216(b). Plaintiffs fail to address how 19 opting-into the class by signing the settlement check complies with the requirement that the 20 employee provide his consent in writing to become a party to this action. In essence, the 21 settlement agreement treats each employee as being included in the FLSA settlement and the 22 failure to cash the check would be the employee’s decision to opt-out. 23 This Court and other courts that have considered this procedure have found that it does 24 not comply with the FLSA.6 See Haralson, 383 F.Supp.3d at 969 (collecting cases); Smothers v. 25 6 The Court is aware that other courts have approved this procedure for opting into the collective action. For 26 example, Lee v. JPMorgan Chase & Co., No. SACV13511JLSJPRX, 2014 WL 12580237 (C.D. Cal. Nov. 24, 2014), approved opting in by signing the back of the check, but without any discussion as to whether this complies 27 with the FSLA opt-in requirement. This Court agrees with those courts that have considered the statutory language and the purpose of the opt-in requirement to find that opting into the FLSA collective by signing the back of the 1 NorthStar Alarm Servs., LLC, No. 217CV00548KJMKJN, 2019 WL 280294, at * 10-11 (E.D. 2 Cal. Jan. 22, 2019) (finding procedure suggested fatally flawed); Smith, 2019 WL 5864170, at 3 *10 (suggested procedure is not adequate consent to participate in collective action); Hudson v. 4 Libre Tech. Inc., No. 3:18-CV-1371-GPC-KSC, 2019 WL 5963648, at *8 (S.D. Cal. Nov. 13, 5 2019) (proposed “procedure flies squarely in the face of the FLSA”); Johnson v. Quantum 6 Learning Network, Inc., No. 15-CV-05013-LHK, 2016 WL 8729941, at *1 (N.D. Cal. Aug. 12, 7 2016) (“proposed opt in procedure does not comply with the plain language of the FLSA”); 8 Kempen v. Matheson Tri-Gas, Inc., No. 15-CV-00660-HSG, 2016 WL 4073336, at *9 (N.D. 9 Cal. Aug. 1, 2016) (proposed opt-in procedure violates the FLSA). 10 The Court is cognizant that there is a possibility of confusion due to the parties providing 11 notice to the FLSA class which requires them to opt-in and notice to the Rule 23 class which 12 requires providing the class members the opportunity to opt-out at the same time. See Edwards, 13 467 F.Supp.2d at 992 (confusion results where a collective action and Rule 23 action are allowed 14 to proceed in the same case); Misra v. Decision One Mortg. Co., LLC, 673 F.Supp.2d 987, 994 15 (C.D. Cal. 2008) (recognizing concerns related to simultaneous pursuit of FLSA opt-in collective 16 action and Rule 23 opt-out action). However, if Plaintiffs wish to pursue this as a hybrid action 17 the class members and collective members have the option to decide if they want to remain in the 18 class action and whether they want to opt-in to the collective action prior to final approval of the 19 settlement. 20 In an FLSA action, “the court must provide potential plaintiffs ‘accurate and timely 21 notice concerning the pendency of the collective action, so that they can make informed 22 decisions about whether or not to participate.’ ” Millan, 310 F.R.D. at 607. “A collective is not 23 formed until other plaintiffs file consent forms with the court joining (that is, ‘opting into’) the 24 original named plaintiff’s case.” Rangel v. PLS Check Cashers of California, Inc., 899 F.3d 25 1106, 1109, n.1 (9th Cir. 2018). The procedure here does not provide for a putative member of 26 the collective action to make an informed decision about whether they should choose to 27 participate in the collective action until after final approval of the settlement agreement. 1 opportunity for the putative members to opt into the collective action. The Court finds that to 2 comply with the FLSA the parties must provide notice and an opportunity to opt-in to the FLSA 3 action prior to final approval of the settlement agreement. The procedure proposed here, having 4 FLSA members opt-in to the collective action by signing the back of their settlement check, does 5 not comply with the requirements of the FLSA. 6 4. Notice to the LWDA 7 Civil penalties recovered under PAGA are distributed between the aggrieved employees 8 (25%) and the LWDA (75%). Cal. Labor Code § 2699(i). Any settlement of PAGA claims must 9 be approved by the Court. Cal. Labor Code § 2699(l). The proposed settlement must also be 10 sent to the agency at the same time that it is submitted to the court. Cal. Labor Code § 11 2699(l)(2). Plaintiffs have not demonstrated that notice of the proposed settlement was provided 12 to the LWDA. 13 5. Cy Press Beneficiary 14 The settlement agreement provides that all funds from uncashed checks are to be 15 transmitted to the United Way. Cy pres distribution allows the distribution of unclaimed funds to 16 indirectly benefit the entire class. Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 17 1301, 1305 (9th Cir. 1990). This requires the cy pres award to qualify as “the next best 18 distribution” to giving the funds directly to the class members. Dennis v. Kellogg Co., 697 F.3d 19 858, 865 (9th Cir. 2012). “Not just any worthy charity will qualify as an appropriate cy pres 20 beneficiary[,]” there must be “a driving nexus between the plaintiff class and the cy pres 21 beneficiary.” Dennis, 697 F.3d at 865 (quoting Nachshin v. AOL, LLC, 663 F.3d 1034, (9th Cir. 22 2011)). The choice of distribution options should be guided by the objective of the underlying 23 statute and the interests of the class members. Six Mexican Workers, 904 F.2d at 1307. 24 Here, Plaintiffs have not addressed the appropriateness of the United Way as a cy pres 25 beneficiary for any unclaimed funds, specifically how distribution to the United Way serves the 26 objectives of the underlying statutes or represents the interests of the class and collective action 27 members. 1 beneficiary, but does not address how any other unclaimed funds would be distributed. For 2 example, the parties are estimating the amount of Defendant’s payroll taxes and the cost of the 3 settlement administrator. If those expenses end up being less than anticipated how will those 4 unpaid funds be distributed. Further, what is to become of any excess funds apportioned to the 5 FSLA settlement if not all putative members opt-in to the collective action. 6 6. Notice 7 In light of the requirement to provide accurate and timely notice of the collective action, 8 and due to “the inherent differences between Rule 23 class actions and FLSA collective actions, 9 courts considering approval of settlements in these hybrid actions consistently require class 10 notice forms to explain: ‘(1) the hybrid nature of th[e] action; (2) the claims involved in th[e] 11 action; and (3) the options that are available to California Class members in connection with the 12 settlement, including how to participate or not participate in the Rule 23 class action and the 13 FLSA collective action aspects of the settlement; and (4) the consequences of opting-in to the 14 FLSA collective action, opting-out of the Rule 23 class action, or doing nothing.” Smith, 2019 15 WL 5864170, at *12 (quoting Pierce v. Rosetta Stone, Ltd., No. C 11-01283 SBA, 2013 WL 16 1878918, at *4 (N.D. Cal. May 3, 2013)). 17 Plaintiffs must provide for a mechanism for a recipient to participate in the Rule 23 class 18 but not opt in to the FLSA collective action that complies with the FLSA. Further, a member 19 may choose to opt out of the Rule 23 class and opt into the FLSA collective action. The notice 20 provided to the putative members must: “(1) explain how much of the settlement amount will be 21 paid for the release of the FLSA claims; (2) explain and provide a mechanism for recipients to 22 opt-in to the collective action that complies with the FLSA; and (3) explain the consequences of 23 opting into the FLSA collective, opting out of the Rule 23 class, or doing nothing” Smith, 2019 24 WL 5864170 at *13. 25 In addition to the above discussion finding that the proposed manner of opting into the 26 class does not comport with the FLSA, the Court notes the following corrections that need to be 27 made to both the Rule 23 class action and FLSA collective action notices. First, the case number 1 Lawrence J. O’Neill, and the case number is now 1:18-cv-01676-NONE-SAB. Also, the notice 2 states that Magistrate Judge Boone preliminarily approved the settlement and is the judge in this 3 action, however, the parties have not consented to the jurisdiction of the magistrate judge and 4 therefore it will be the district judge that would approve any settlement. Currently, there is no 5 district judge assigned to this action and any order that issues will be signed by District Judge 6 Dale A. Drozd. 7 7. Continuing Jurisdiction of Trial Court 8 Finally, the parties agreement states that the Court shall retain continuing jurisdiction 9 over the settlement agreement post-judgment. The Court declines to retain jurisdiction post 10 judgment without a specific showing that it is necessary in this action. This Court is one of the 11 busiest Court’s in the country and sees no need to tie up two judges with retention of jurisdiction 12 without good cause. 13 B. Request for Certification of the Rule 23 Class and FLSA Collective Action 14 The parties seek to certify a class under Rule 23 of the Federal Rules of Civil Procedure 15 and a collective action under the FLSA. In bringing any further motion for approval of the 16 settlement agreement, the issues need to be addressed with more than conclusory allegations 17 that a uniform policy or procedure exists. 18 Here, the employees work at six different job sites and the Plaintiffs’ declarations 19 themselves indicate that there may be site specific or individual issues rather than a common 20 policy or procedure that could preclude certification of the class or collective action. The court 21 is required to pay “ ‘undiluted, even heightened attention’ to class certification requirements in 22 a settlement context.” Hanlon, 150 F.3d at 1019 (quoting Amchem Products, Inc. v. Windsor, 23 521 U.S. 591, 620 (1997)). “[I]n all class actions, commonality cannot be determined without a 24 precise understanding of the nature of the underlying claims. Parsons v. Ryan, 754 F.3d 657, 25 676 (9th Cir. 2014). “To assess whether the putative class members share a common question, 26 the answer to which ‘will resolve an issue that is central to the validity of each one of the [class 27 members’s] claims,’ [the court] must identify the elements of the class members’s case-in- 1 threadbare allegations that a group is exposed to illegal policies and practices to confer 2 commonality. Id. at 683. “Rule 23(a) is not a pleading standard; rather, it requires proof that 3 there are ‘in fact ... common questions of law or fact.’ ” Id. (citations omitted). 4 The current motion relies on the declaration of the person most knowledgeable stating 5 that he was unable to identify any differences between the policies that are applied, but the 6 substance of the testimony was that all policy was legally compliant. Plaintiffs contend that 7 they were required by Defendant’s policies and procedures to be at their workstations and ready 8 to work at the start of their scheduled shift and therefore performed work such as donning 9 personal protective equipment and storing personal belongings prior to their start time and 10 without compensation. But the declarations of the named Plaintiffs state that while some 11 employees were not allowed to clock in prior to or clock out after their shift (Decl. of Maria 12 Claudia Obeso Cota, ¶ 6), other employees at different sites were allowed to clock in seven 13 minutes prior to and clock out seven minutes after their scheduled start time (Decl. Thomas 14 Beltran, ¶ 6; Decl. of Mario Martinez, ¶ 6; Decl. of Juan Rivera, ¶ 6.) This would appear to 15 indicate that the issue of donning and doffing may be due to decisions of the specific location 16 and not a company-wide policy. It is unclear from the declarations attached to the current 17 motion whether the violations alleged are due to a system wide policy or are site or supervisor 18 specific. 19 Plaintiffs also contend that they were required to purchase clothing to comply with 20 Defendant’s dress code policy, such as steel toed boots, and were not compensated for 21 necessary business expenses. But there is also evidence that the company had a policy offering 22 such equipment and it was the employee’s choice not to use such equipment and purchase their 23 own. (Decl. of Alexander Solorio, ¶ 7; Decl. of Vincent C. Granberry, ¶ 16). This raises an 24 issue of whether there are individualized issues that would preclude this claim from being 25 adjudicated on a class wide basis. 26 Plaintiffs have not identified any specific written policy that would apply to the class 27 and it is unclear from the current motion which unwritten policies were applied at all work 1 the evidence presented in Plaintiffs’ motion to try to determine which policies might be 2 sufficient to support class certification. Plaintiffs need to identify the specific policy or policies 3 that would support class certification and address how resolution of a common question 4 regarding the policy or policies is apt to provide common answers in this action. 5 It is the party seeking to certify the class or collective action’s burden to demonstrate 6 that the statutory requirements have been met, Ellis v. Costco Wholesale Corp., 657 F.3d 970, 7 979 (9th Cir. 2011), and this was precisely the reason that the state court denied approval of the 8 settlement in this matter.7 9 VI. 10 CONCLUSION AND RECOMMENDATION 11 For the reasons discussed above, the Court finds that viewing the settlement agreement in 12 its totality demonstrates that there are glaring deficiencies that preclude a finding that the 13 settlement is fair and reasonable. Further, Plaintiffs are advised that in filing a future motion for 14 preliminary approval of the settlement they must adequately brief the issues that the court must 15 address in determining if the settlement is fair and reasonable, providing sufficient information 16 for the court to evaluate the issues, and generic statements are not sufficient. Haralson, 383 17 F.Supp.3d at 970. 18 19 7 See Reporter’s Transcript of July 19, 2017 hearing, 8:22-10:7, ECF No. 1-12 at 112-139. 20 THE COURT: What are the common questions of law and fact that unite the Class? 21 MR. LAVI: It’s the same policies and procedures that was in place, at least that’s what plaintiff is claiming, Your Honor, is that the same policies, procedures, the same employee handbooks were 22 in use with regards to all these non-exempt employees. Obviously, defendants disagree and defendant claims that there is no common policy and procedure, and they have their expert 23 analysis showing how it is that these people should not be class members, but that was a dispute, and that’s what basically led to the negotiations and finally the settlement agreement in this matter. 24 So our contention is that the same policies and procedures that they have applies to all of the non- exempt employees, which basically, in our opinion, violates the issues in this case, Your Honor. 25 THE COURT: All right. What else? . . . THE COURT: Well, I don’t think what’s been submitted so far is adequate from my standpoint, so 26 I think you're going to have to do more. MR. LAVI: Okay. All right. 27 THE COURT: I'm not denying this – I’m not denying this forever; I’m denying the current application. There’s a lot of things that need to be much more discussed in detail than have been WAS 40°UV YVEYVEUUINVYINE SEN RVUETPOTI Gb POR Vere PAY eo VI 1 Accordingly, IT IS HEREBY RECOMMENDED that the joint motion for preliminary 2 | approval of the settlement, filed April 13, 2020, be DENIED. 3 IT IS ORDERED that the hearing set for June 10, 2020 is VACATED and the parties do 4 | not need to appear on that date. 5 This findings and recommendations is submitted to the district judge assigned to this 6 | action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within twenty- 7 | one (21) days of service of this recommendation, any party may file written objections to this 8 | findings and recommendations with the court and serve a copy on all parties. Such a document 9 | should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The 10 | district judge will review the magistrate judge’s findings and recommendations pursuant to 28 11 | U.S.C. § 636(b)(1)(C). The parties are advised that failure to file objections within the specified 12 | time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th 13 | Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 14 15 IT IS SO ORDERED. FA. ee 16 | Dated: _ June 2, 2020 UNITED STATES MAGISTRATE JUDGE 18 19 20 21 22 23 24 25 26 27 28