Jose Urena v. Central California Almond Growers Assn. ( 2020 )

1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 JOSE URENA, an individual, on behalf of CASE NO. 1:18-cv-00517-NONE-EPG 10 himself and others similarly situated, FINDINGS AND RECOMMENDATIONS 11 Plaintiff, REGARDING MOTION FOR PRELIMINARY APPROVAL OF CLASS 12 ACTION SETTLEMENT v. 13 (ECF No. 37) 14 CENTRAL CALIFORNIA ALMOND GROWERS ASSN., et al., 15 Defendants. 16 17 18 Plaintiff Jose Urena (“Plaintiff”) filed his Motion for Preliminary Approval of Class 19 Action Settlement (ECF No. 37) on April 3, 2020. On May 29, 2020, the matter came before the 20 Court for hearing. Plaintiff’s counsel Kelsey Szamet and Defendants’ counsel Paul Bauer 21 telephonically appeared. 22 The Court ordered the parties to brief two additional issues: compliance with California 23 Labor Code § 2699(l)(2), (ECF No. 42), and Plaintiff’s typicality and adequacy under Rule 23(a), 24 given the specific nature of his employment, (ECF No. 43). On June 4, 2020, the parties filed a 25 joint statement concerning their compliance with section 2699(l)(2). (ECF No. 44). On June 15, 26 Plaintiff filed a supplemental brief and declarations concerning Plaintiff’s typicality and 27 adequacy. (ECF No. 45). 28 1 For the reasons set forth below, the Court recommends that Plaintiff’s unopposed motion 2 for preliminary approval be granted, subject to the findings and recommendations set forth herein. 3 I. BACKGROUND 4 Plaintiff filed his initial class action complaint on April 13, 2018. (ECF No. 3). He 5 amended it on August 13, 2018, alleging claims against Defendants Central California Almond 6 Growers Assn. (“CCAGA”) and Does 1-101 under various provisions of the California Labor 7 Code, an Industrial Welfare Commission Wage Order, the Migrant and Seasonal Agricultural 8 Worker Protection Act, and the California Private Attorney General Act (“PAGA”). (ECF No. 9 15). Defendant CCAGA answered on August 27, 2018. (ECF No. 16). 10 After formal and informal discovery, at least two depositions, and several rounds of 11 mediation with Honorable Howard Broadman (ret.), the parties and their respective counsels 12 reached a proposed settlement of the class action. (ECF No. 37-1 ¶¶ 5-7). 13 A. Proposed Class 14 The proposed class is composed of the following people: 15 all who are employed or have been employed by Defendant, in the State of 16 California, and who have worked one or more shifts as a non-exempt hourly agricultural employee, as defined by the California Labor Code, Industrial 17 Welfare Commission Wage Order 8-2001, and 29 U.S.C. §1892(3) from April 13, 2014 through April 30, 2019. 18 (ECF No. 37-2, at 5) (definition of “Settlement Class Members”). There are approximately 370 19 members of the proposed class. (ECF No. 37-1, ¶ 8). 20 B. Release 21 The proposed settlement releases the following claims by the proposed class: 22 any and all claims, debts, liabilities, demands, obligations, penalties, guarantees, 23 costs, expenses, damages, action or causes of action of whatever kind or nature, 24 contingent or accrued, that are alleged in the Action or that reasonable could have arisen out of the same facts alleged in the Action, including, but not limited to, all 25 claims related to the Migrant and Seasonal Agricultural Worker Protection Act. This Release shall include, without limitation, claims that were raised, or that 26 reasonably could have been raised, under the applicable Wage Order 8-2001 and California Labor Code provisions, including Labor Code §§203, 226.7, 510, 512, 27 28 1 Based on a review of the docket, the Doe defendants were never identified or served. 1 1194, and 1194.2 (collectively, the “Released Claims”). The period of the Released Claims shall extend through the Class Period [of April 13, 2014 through 2 April 30, 2019]. The Parties agree that the judgment, and release of claims provided herein, shall have res judicata effect. The definition of Released Claims 3 shall not be limited in any way by the possibility that Plaintiff or Class Members 4 may discover new legal theories or legal arguments, based on the facts alleged in the Action, and not alleged in the operative pleadings in the Action but which 5 might serve as an alternative basis for pursuing the same claims, causes of action, or legal theories of relief falling within the definition of Released Claims. 6 (ECF No. 37-2, at 4-5) (definition of “Released Claims”). The release covers CCAGA and 7 various related people and entities. (Id. at 5). 8 C. Monetary Recovery 9 The maximum recovery under the settlement is $375,000. (ECF No. 37-2, at 12). The 10 expected breakdown is as follows: 11 Maximum Settlement Fund $375,000 12 Class Representative Enhancement $5,000 13 Class Counsel’s Fees $125,000 Class Counsel’s Costs $19,000 14 PAGA Payment $15,000 15 LWDA Payment (75%) $11,250 Remaining to Net Settlement Amount $3,750 16 Settlement Administration Costs $10,441.45 17 Anticipated Net Settlement Amount $204,308.55 18 (ECF No. 37-2, at 12-13); (ECF No. 37-1, ¶¶ 9, 13). In addition to the amounts in the settlement 19 fund, Defendant “shall be responsible for paying . . . the employers’ share of payroll taxes it is 20 required to pay as the employer of the Plaintiff and Class Members, if any such payroll taxes are 21 required.” (ECF No. 37-2, at 7-8). 22 II. LEGAL STANDARD FOR CLASS ACTION CERTIFICATION AND 23 SETTLEMENT 24 A court tasked with determining whether to approve a proposed class action settlement 25 will almost always be required to engage in a “difficult balancing act.” Allen v. Bedolla, 787 F.3d 26 1218, 1223 (9th Cir. 2015). “On the one hand, … there is a strong judicial policy that favors 27 settlements, particularly where complex class action litigation is concerned.” Id. (internal 28 1 quotation marks and citations omitted). “But on the other hand, settlement class actions present 2 unique due process concerns for absent class members, and the district court has a fiduciary duty 3 to look after the interests of those absent class members.” Id. (internal quotation marks and 4 citations omitted). “The dangers of collusion between class counsel and the defendant, as well as 5 the need for additional protections when the settlement is not negotiated by a court-designated 6 class representative, weigh in favor of a more probing inquiry than may normally be required 7 under Rule 23(e).” Hanlon, 150 F.3d at 1026. 8 “To guard against this potential for class action abuse, Rule 23(e) of the Federal Rules of 9 Civil Procedure requires court approval of all class action settlements, which may be granted only 10 after a fairness hearing and a determination that the settlement taken as a whole is fair, 11 reasonable, and adequate.” In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 12 2011) (citing Fed. R. Civ. P. 23(e)(2); accord Staton v. Boeing Co., 327 F.3d 938, 972 n.22 (9th 13 Cir. 2003) (court’s role is to police the “inherent tensions among class representation, defendant’s 14 interests in minimizing the cost of the total settlement package, and class counsel’s interest in 15 fees”). 16 The Rule 23 class settlement process generally proceeds in two phases. In the first phase, 17 the court conditionally certifies the class, conducts a preliminary determination of the fairness of 18 the settlement (subject to a more stringent final review), and approves the notice of class action 19 settlement to be provided to the class. Ontiveros v. Zamora, 303 F.R.D. 356, 363 (E.D. Cal. 20 2014). The purpose of this preliminary review is to ensure that an appropriate class exists and that 21 the agreement is non-collusive, without obvious deficiencies, and within the range of possible 22 approval as to that class. See True v. Am. Honda Motor Co., 749 F. Supp. 2d 1052, 1062 (C.D. 23 Cal. 2010); 4 William Rubenstein, Newberg on Class Actions § 13:13 (5th ed.). Thus, at the 24 preliminary approval stage, courts typically review attorney fee awards only to see if they are 25 “unreasonably high” or have questionable timing. Lusk v. Five Guys Enterprises LLC, No. 1:17- 26 CV-00762-AWI-EPG, 2019 WL 7048791, at *4 (E.D. Cal. Dec. 23, 2019) (citing, inter alia, 27 Newberg on Class Actions § 13.15 (5th ed.)); accord Pokorny v. Quixtar Inc., No. 07-0201 SC, 28 2011 WL 2912864, at *1 (N.D. Cal. July 20, 2011) (deferring ruling on preliminary approval and 1 requiring additional briefing because, in part, “[w]hile a motion for attorneys’ fees is not yet 2 before the Court, the apparent disproportion between the size of the Cash Fund and the amount of 3 attorneys’ fees counsel intend to request is so great as to call into question the fairness of the 4 proposed settlement”). 5 In the second phase, the court holds a full fairness hearing where class members may 6 present objections to class certification, or to the fairness of the settlement agreement. Ontiveros, 7 303 F.R.D. at 363 (citing Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 8 1989)). Following the fairness hearing, taking into account all of the information before the court, 9 the court must confirm that class certification is appropriate, and that the settlement is fair, 10 reasonable, and adequate. See Valdez v. Neil Jones Food Co., 2015 WL 6697926, at *8 (E.D. Cal. 11 Nov. 2, 2015); Miller v. CEVA Logistics USA, Inc., 2015 WL 4730176, at *3 (E.D. Cal. Aug. 10, 12 2015). 13 III. DISCUSSION 14 When the parties have entered into a settlement agreement before the district court 15 certifies the class, the court “must pay undiluted, even heightened, attention to class certification 16 requirements.” Staton, 327 F.3d at 952–53 (internal quotation marks and citations omitted). For 17 class certification, the classes and sub-classes “must meet the four threshold requirements of 18 Federal Rule of Civil Procedure 23(a): numerosity, commonality, typicality, and adequacy of 19 representation.” Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 2013) (citing Fed. R. 20 Civ. P. 23(a); accord Hanlon, 150 F.3d at 1019. The proposed class must also satisfy the 21 requirements of Rule 23(b), which defines the three different types of classes allowed. Fed. R. 22 Civ. P. 23(b); Leyva, 716 F.3d at 512. The plaintiff bears the burden of demonstrating that the 23 requirements of Rule 23 have been satisfied as to the proposed class. See Wal–Mart Stores, Inc. v. 24 Dukes, 564 U.S. 338, 350 (2011); Narouz v. Charter Commc’ns, LLC, 591 F.3d 1261, 1266 (9th 25 Cir. 2010). “A court that is not satisfied that the requirements of Rule 23 have been met should 26 refuse certification until [those requirements] have been met.” Advisory Committee 2003 Note on 27 Fed. R. Civ. P. 23(c)(1). 28 As discussed below, the requirements for class certification in Rule 23(a) and (b) are 1 satisfied here. See Leyva, 716 F.3d at 512. 2 A. Rule 23(a) Requirements 3 1. Numerosity 4 A proposed class must be “so numerous that joinder of all members is impracticable.” 5 Fed. R. Civ. P. 23(a)(1). “The numerosity requirement requires examination of the specific facts 6 of each case and imposes no absolute limitations.” Gen. Tel. Co. of the Nw. v. Equal Employment 7 Opportunity Comm’n, 446 U.S. 318, 330 (1980). Courts in the Ninth Circuit have found the 8 requirement satisfied when the class is composed of as few as thirty-nine members. See Murillo v. 9 Pac. Gas & Elec. Co., 266 F.R.D. 468, 474 (E.D. Cal. 2010) (citing Jordan v. L.A. County, 669 10 F.2d 1311, 1319 (9th Cir. 1982) (noting that class sizes of thirty-nine, sixty-four, and seventy-one 11 are sufficient to satisfy the numerosity requirement), vacated on other grounds, 459 U.S. 810, 103 12 (1982)). 13 Here, the proposed class is defined as: 14 all who are employed or have been employed by Defendant, in the State of 15 California, and who have worked one or more shifts as a non-exempt hourly agricultural employee, as defined by the California Labor Code, Industrial 16 Welfare Commission Wage Order 8-2001, and 29 U.S.C. §1892(3) from April 13, 2014 through April 30, 2019. 17 (ECF No. 37-2). There are approximately 370 members of this proposed class. (ECF No. 37-1, ¶ 18 8). The Court finds that Plaintiff has demonstrated that the numerosity requirements of Rule 19 23(a)(1) are satisfied. 20 2. Commonality 21 Rule 23(a)(2) requires that there be “questions of law or fact common to the class.” Fed. 22 R. Civ. P. 23(a)(2). “The commonality preconditions of Rule 23(a)(2) are less rigorous than the 23 companion requirements of Rule 23(b)(3).” Hanlon, 150 F.3d at 1019. “Indeed, Rule 23(a)(2) has 24 been construed permissively.” Id. “All questions of fact and law need not be common to satisfy 25 the rule.” Id. “The existence of shared legal issues with divergent factual predicates is sufficient, 26 as is a common core of salient facts coupled with disparate legal remedies within the class.” Id. 27 To satisfy commonality, there must be a “common contention … of such a nature that it is 28 1 capable of classwide resolution – which means that determination of its truth or falsity will 2 resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart 3 Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). A plaintiff can meet this burden by showing 4 “[s]ignificant proof that an employer operated under a general policy” of harmful conduct if the 5 conduct “manifested itself in hiring and promotion practices in the same general fashion . . . .” Id. 6 at 353. 7 Here, Plaintiff contends that the class’s claims involve common questions of both fact and 8 law regarding whether Defendant (1) provided employees meal periods or compensate them in 9 lieu thereof; (2) kept records of meal periods; (3) provided rest periods or compensated 10 employees in lieu thereof; (4) provided accurate, itemized wage statements; (5) paid proper 11 wages; (6) timely paid compensation upon separation of employment; (7) complied with = 12 California labor law’s requirements; (8) complied with the Migrant and Seasonal Agricultural 13 Worker Protection Act’s associated requirements; and (9) owes PAGA penalties. (ECF No. 37, at 14 14-15). 15 Plaintiff has demonstrated that the commonality requirements of Rule 23(a)(2) are 16 satisfied. See Wal-Mart, 564 U.S. at 350. 17 3. Typicality 18 Rule 23(a)(3) requires that “the claims or defenses of the representative parties are typical 19 of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3); see Armstrong v. Davis, 275 F.3d 20 849, 868 (9th Cir. 2001). This typicality requirement is satisfied “when each class member’s 21 claim arises from the same course of events, and each class member makes similar legal 22 arguments to prove the defendant’s liability.” Armstrong, 275 F.3d at 868; see also Kayes v. Pac. 23 Lumber Co., 51 F.3d 1449, 1463 (9th Cir. 1995) (claims are typical where named plaintiffs have 24 the same claims as other members of the class and are not subject to unique defenses). While 25 representative claims must be “reasonably co-extensive with those of absent class members,” they 26 “need not be substantially identical.” Hanlon, 150 F.3d at 1020; see also Hanon v. Dataproducts 27 Corp., 976 F.2d 497, 508 (9th Cir. 1992). In the employment context, 28 1 typicality will not be satisfied if: the class representative is not a member of the class she purports to represent; the class representative is subject to a unique 2 defense, but only if that defense threatens to become the focus of the litigation; major factual differences exist between the class representative’s situation and 3 those of the absent class members; or the legal theory underlying the class 4 representative’s claims conflicts with the legal theories of the class members. 5 7 William B. Rubenstein, Newberg on Class Actions § 23:23 (5th ed.). 6 Here, Plaintiff was an almond sheller / huller at Defendant’s Kerman, California site from 7 August 16, 2017 to December 5, 2017. (ECF No. 37-1, at ¶ 21). Plaintiff’s claims concern 8 Defendant’s general practices, so his claims are typical in that regard. Moreover, there appear to 9 be no defenses specific to Plaintiff. However, two aspects warrant the Court’s attention: Plaintiff 10 worked at only one of Defendant’s two sites and he was employed for only four months during 11 the five-year class period.2 12 Plaintiff’s counsel stated at the hearing that, after conducting significant discovery, it 13 appeared Plaintiff’s case hinged on Defendant’s practices, not their policies. In his supplemental 14 brief, Plaintiff argues that the relevant policies applied to employees at both locations. (ECF 15 No.45-3, at 3-5). At least some evidence that Plaintiff provided confirms this. Defendant’s chief 16 operating officer, Robert Donnelly, testified that he agreed with the statement “that all the 17 policies [concerning meals and rest breaks] were applied equally to all employees at all times,” 18 including with respect to Plaintiff. (ECF No. 45-2, at 4-5). And Ashley Castro, who performs all 19 human resources functions for Defendant, including payroll, provided similar testimony. (ECF 20 No. 45-1, at 3, 5, 7). Thus, according to Plaintiff, Defendant’s relevant practices applied to all 21 California hourly employees. 22 And even though Plaintiff was employed only briefly, it appears his claims were still 23 typical of the class. Courts can find representatives typical even if they are employed for only a 24 25 2 Defendant operates shelling plants in Kerman and Sanger, CA. At the hearing, Plaintiff indicated that Plaintiff’s claims rested mostly on Defendant’s actual practices, rather than its policies. The Court ordered additional briefing concerning Plaintiff’s typicality and adequacy, given that Plaintiff was subject only to Defendant’s practices at the 26 Kerman location. Plaintiff argues that Defendant’s Sanger location is “much smaller” and “currently” has only five employees. That is somewhat misleading. There were only five when Defendant’s witness Ashley Castro was 27 deposed, but during shelling season (the relevant period), Ms. Castro testified Sanger has “about 30” employees. (ECF No. 45-1, at 6). Kerman is larger, though. Per Ms. Castro, it has “about a hundred” employees during season. 28 (Id. at 5). 1 short period. See Ribot v. Farmers Ins. Grp., No. 2:11-cv-02404, 2013 WL 3778784, at *11 (C.D. 2 Cal. July 17, 2013), modified on clarification on other grounds, 2013 WL 5351085 (C.D. Cal. 3 Sept. 24, 2013); cf. 7 Newberg on Class Actions § 23:23 (“Courts will certify classes that include 4 past, present, and future employees if the challenge is to an overarching discriminatory policy that 5 impacts all three groups . . . .”). 6 Those two shortcomings are analogous to a plaintiff’s in the wage-and-hour class action 7 Ribot. There, a plaintiff was a trainee customer service representative for only four months with a 8 class period of approximately five years. Id. at *3-4, 11. Nevertheless, there were no indications 9 that the trainee position was different from a regular position, and “[l]ike other class members, 10 she would have been subject to a policy of requiring off-the-clock work and would have suffered 11 the same injury as a result.” Id. at *11. Moreover, the court concluded that “[h]er typicality does 12 not appear to be impaired by her trainee status or her relatively brief period of employment.” Id. 13 Likewise, Urena was employed at one of two locations. Again, there are no indications 14 that the practices differed between the facilities. Also like Ribot, he was employed for four 15 months out of a five-year class. 16 Therefore, the Court finds that Plaintiff’s claims are typical because his claims are 17 reasonably coextensive with those of absent class members. 18 4. Adequacy of Representation 19 Before the Court can certify a class, the Court must be satisfied that “the representative 20 parties will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). “[A] 21 class representative must be part of the class and ‘possess the same interest and suffer the same 22 injury’ as the class members.” Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 625-26 (1997) 23 (citations omitted). “The proper resolution of this issue requires that two questions be addressed: 24 (a) do the named plaintiffs and their counsel have any conflicts of interest with other class 25 members and (b) will the named plaintiffs and their counsel prosecute the action vigorously on 26 behalf of the class?” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir. 2000), as 27 amended (June 19, 2000) (citations omitted). 28 Here, Plaintiff class representative, Urena, has submitted evidence that there is no conflict 1 of interest between him and the rest of the class, and his counsel has so averred. (ECF No. 45 ¶ 2 4). As discussed with typicality above, Plaintiff possesses the same injuries as absent proposed 3 class members. His counsel also has averred that he has vigorously prosecuted this case. (Id. ¶ 5) 4 (declaring that Plaintiff “has worked to actively represent” the proposed class, has been in regular 5 contact with counsel, compiled information and documents, and provided “helpful information” 6 to counsel throughout the litigation).The Court finds that Plaintiff Urena satisfies the adequacy of 7 representation requirement. 8 Plaintiff’s counsel also avers that it has no conflicts with the proposed class members. 9 (ECF No. 37-1 ¶ 27). Plaintiff’s counsel declares it has extensive experience prosecuting similar 10 class actions and has received class certification in fourteen wage-and-hour class actions. (ECF 11 No. 37-1 ¶¶ 28-29) (listing cases). The Court finds that Plaintiff class representative’s current 12 counsel of Kinglsey & Kingsley APC satisfies the adequacy requirements with respect to the 13 proposed class. 14 B. Rule 23(b) Requirements 15 Plaintiff seeks certification under Rule 23(b)(3), which requires that “the questions of law 16 or fact common to class members predominate over any questions affecting only individual 17 members, and that a class action is superior to other available methods for fairly and efficiently 18 adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3); see also Amchem, 521 U.S. at 615. The 19 test of Rule 23(b)(3) is “far more demanding,” than that of Rule 23(a). Wolin v. Jaguar Land 20 Rover N. Am., LLC, 617 F.3d 1168, 1172 (9th Cir. 2010) (quoting Amchem, 521 U.S. at 623–24). 21 1. Predominance 22 First, questions of law or fact common to class members must predominate over any 23 questions affecting only individual members. Fed. R. Civ. P. 23(b)(3). This “predominance 24 inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by 25 representation.” Hanlon, 150 F.3d at 1022 (quoting Amchem, 521 U.S. at 623). “This analysis 26 presumes that the existence of common issues of fact or law have been established pursuant to 27 Rule 23(a)(2); thus, the presence of commonality alone is not sufficient to fulfill Rule 23(b)(3).” 28 Id. “In contrast to Rule 23(a)(2), Rule 23(b)(3) focuses on the relationship between the common 1 and individual issues.” Id. “When common questions present a significant aspect of the case and 2 they can be resolved for all members of the class in a single adjudication, there is clear 3 justification for handling the dispute on a representative rather than on an individual basis.” Id. 4 (quoting 7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & 5 Procedure § 1778 (2d ed.1986)). 6 Here, Plaintiff asserts that common questions to class members raised in this action 7 predominate over any individualized questions. The Court agrees. Plaintiff’s case hinges on 8 whether Defendants maintained uniform practices of failing to provide employees with compliant 9 meal and rest breaks. If Defendant did not, Plaintiff maintains the class suffered unpaid wages 10 and inaccurate wage statements. (ECF No. 10 ¶¶ 30-35) (allegations in amended complaint 11 concerning meal and rest breaks and problems with wages and wage statements). The Court finds 12 that the predominance requirement is met here. 13 2. Superiority 14 Under Rule 23(b)(3), a class action must be “superior to other available methods for fairly 15 and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The matters pertinent to 16 this finding include: “(A) the class members’ interests in individually controlling the prosecution 17 or defense of separate actions; (B) the extent and nature of any litigation concerning the 18 controversy already begun by or against class members; (C) the desirability or undesirability of 19 concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in 20 managing a class action.” Id.; see Amchem, 521 U.S. at 616. 21 Here, Plaintiff contends that a class action is superior to other available means for the fair 22 and efficient adjudication of the claims. There are approximately 370 members of the putative 23 class, and the expected recovery (as discussed below) is $552 per plaintiff. It is not economical 24 for each class member to bring his or her claim separately. Thus, “[t]his case involves multiple 25 claims for relatively small individual sums. . . . If plaintiffs cannot proceed as a class, some – 26 perhaps most – will be unable to proceed as individuals because of the disparity between their 27 litigation costs and what they hope to recover.” Local Joint Exec. Bd. of Culinary/Bartender Tr. 28 Fund v. Las Vegas Sands, 244 F.3d 1152, 1163 (9th Cir. 2001); see Phillips Petroleum Co. v. 1 Shutts, 472 U.S. 797, 809 (1985) (class actions can provide a mechanism for plaintiffs to pool 2 claims that “would be uneconomical to litigate individually”); Wright, Miller & Kane, supra, at § 3 1779 (“[I]f a comparative evaluation of other procedures reveals no other realistic possibilities, 4 this [superiority] portion of Rule 23(b)(3) has been satisfied.”). 5 Further, it is unlikely that individual members of the proposed class have any interest in 6 individually controlling the prosecution or defense of individual actions. Lack of knowledge of 7 the legal system and limited economic resources would also likely deprive most class members of 8 the opportunity to pursue their claims outside of a class action. Class action treatment will allow 9 these similarly situated workers to litigate their claims in the manner that is most efficient and 10 economical for the parties and the judicial system. There also does not appear to be any related 11 pending litigation. Finally, there are no apparent difficulties likely to be encountered in managing 12 this class action. The Court finds that the superiority requirement is met here. 13 C. Rule 23(e)(2) Preliminary Fairness Determination 14 Plaintiff requests preliminary approval of the settlement agreement filed at ECF No. 37-2. 15 If a proposed settlement agreement will bind absent class members, the Court must find that it is 16 “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). A court considers whether: (A) the class representatives and class counsel have adequately represented the 17 class; 18 (B) the proposal was negotiated at arm's length; (C) the relief provided for the class is adequate, taking into account: 19 (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of distributing relief to the 20 class, including the method of processing class-member claims; (iii) the terms of any proposed award of attorney's fees, including timing 21 of payment; and 22 (iv) any agreement required to be identified under Rule 23(e)(3); and (D) the proposal treats class members equitably relative to each other. 23 Fed. R. Civ. P. 23(e)(2). The Ninth Circuit has provided further guidance regarding the Rule 23 24 factors. Although the exact factors will vary from case to case, courts generally must weigh: 25 (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely 26 duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of 27 discovery completed and the stage of the proceedings; (6) the experience and 28 views of counsel; (7) the presence of a governmental participant; and (8) the 1 reaction of the class members of the proposed settlement.” 2 Id. (citations omitted). “This list is not exclusive and different factors may predominate in 3 different factual contexts.” Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993) 4 (citations omitted). 5 When the parties settle before class certification, a court must also take extra care to 6 ensure that “the settlement is not the product of collusion among the negotiating parties.” 7 Bluetooth, 654 F.3d at 946. 8 Here, after balancing the relevant factors, the Court finds that it is appropriate to grant 9 preliminary approval. 10 1. Risks of Continued Litigation and Strength of Plaintiff’s Case 11 Along with the standard risks in class action cases at this stage—such as the risk of 12 obtaining and maintaining class certification—Plaintiff identifies several weaknesses in his case 13 that, he argues, warrant a drastic downward departure from the maximum possible recovery. 14 Plaintiff’s counsel represented that following discovery, Plaintiff’s case relied on 15 Defendant’s practices, rather than its policies. The facts elicited during Plaintiff’s deposition 16 testimony, along with evidence proffered by Defendants and lack of clarity in the law, weakened 17 his case. 18 a) Weaknesses in Meal and Rest Period Claims 19 Plaintiff alleged that Defendant violated California labor law because the employees’ 20 mandated, 30-minute meal periods were “routinely . . . shorter than 30 minutes, or were never 21 offered at all.” (ECF No. 10, ¶ 33). However, that does not align with Plaintiff’s deposition 22 testimony, during which he testified that he received lunch breaks every day: 23 Q. Were there any days that you worked in the stockpile yard where you do not believe that you took a lunch break? 24 . . . 25 THE WITNESS: I can't remember. BY MR. BAUER: Q. Okay. Do you remember any days working in the stockpile 26 yard where you didn’t go eat your lunch that you had put in the refrigerator at Paradise? 27 A. No. 28 1 (ECF No. 41-1, Urena Dep. Tr. at 110:4-14). 2 He also did not time how long his lunch breaks were, and he seemed to admit they were 3 30 minutes long: 4 Q. And how often would you time how long your lunch break was? 5 A. Well, we didn't really have to, because they would come on the Gator and scoop us up. They would be -- I mean, they would be there on the dot. As soon as 6 the break was over, they would be there and pick us up. Q. So as soon as the 30 minutes was up, they would come and grab you – 7 A. Yeah. Q. -- take you back to the stockpile yard? 8 A. Or holler at us. Yeah. 9 (Id. at 104:14-24). 10 Plaintiff also claimed employees were unable to leave the premises for their rest breaks as 11 required by California law. However, his counsel attested that Defendant proffered an employee’s 12 declaration saying he was free to leave the premises for rest breaks. (ECF No. 37-1 ¶ 49). 13 Other aspects of Plaintiff’s case apparently lack clear support in case law. For instance, 14 generally, employees working shifts longer than ten hours must be provided a second, thirty- 15 minute meal period. Cal. Labor Code § 512(a) (“An employer shall not employ an employee for a 16 work period of more than 10 hours per day without providing the employee with a second meal 17 period of not less than 30 minutes . . . .”). Plaintiff represented that Defendant’s meal policy fails 18 to state when the second meal period must commence; the parties contest whether policies must 19 so state. Plaintiff represents that this claim was discounted due to the possibility that the policy is 20 lawful. (ECF Nos. 37, at 24-25 and 37-1, at 11-12). 21 b) Weaknesses in Unpaid Wages Claim 22 Plaintiff’s complaint alleged that Defendant improperly automatically deducted meal 23 periods from time worked. (ECF No. 10 ¶ 33). According to Plaintiff, employees did not receive 24 the meal periods, so the automatic deduction was improper. (Id.). Plaintiff now believes a 25 discount from this claim is warranted because Defendant might be able to establish that the meal 26 periods were provided. (ECF No. 37 at 26-27). 27 // 28 1 c) Weaknesses in Derivative Claims 2 Plaintiff sought waiting time penalties for Defendant’s alleged failure to timely pay its 3 employees. According to Plaintiff’s counsel, Plaintiff’s main basis for waiting time penalties was 4 that Defendant failed to pay premium payments owed to former employees who missed meal 5 breaks, rest breaks, or both. (ECF No. 37-1 ¶ 58). A California Court of Appeals case cast 6 Plaintiff’s claim in doubt by holding that the premiums in Labor Code § 226.7 “do not entitle 7 employees to pursue the derivative penalties in sectio[n] 203 . . . .” Naranjo v. Spectrum Sec. 8 Servs., Inc., 40 Cal. App. 5th 444, 474 (2019). Although this case has been accepted for review by 9 the California Supreme Court, the Plaintiff discounted that claim. Plaintiff was also unsure 10 whether Defendant was willful in failing to pay its employees final wages owed upon separation, 11 which is necessary to obtain waiting time penalties. (Id. ¶ 60). 12 Plaintiff also sought wage statement penalties, Migrant and Seasonal Agricultural Worker 13 Protection Act penalties, and PAGA penalties, each of which is derivative on his other claims. 14 The weaknesses in the other cases informed Plaintiff’s counsel about the settlement size. (ECF 15 No. 37-1 ¶¶ 62-63). 16 The Court finds that the first, second, and third factors in Bluetooth weigh in favor of 17 settlement. 18 2. The Amount Offered in Settlement 19 In determining whether the amount offered in settlement is fair and reasonable, a court 20 compares the proposed settlement amount to the best possible outcome for the class. See 21 Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 964 (9th Cir. 2009). “It is well-settled law that a 22 cash settlement amounting to only a fraction of the potential recovery does not per se render the 23 settlement inadequate or unfair.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 24 2000), as amended (June 19, 2000) (citation omitted). For complex class action cases, Ninth 25 Circuit has “a strong judicial policy that favors settlements. Parties represented by competent 26 counsel are better positioned than courts to produce a settlement that fairly reflects each party’s 27 expected outcome in litigation.” In re Pacific Enter. Sec. Lit., 47 F.3d 373, 378 (9th Cir. 1995) 28 (internal quotation marks and citation omitted). 1 Here, the settlement provides for a maximum payment of $375,000.3 Before fees and 2 costs, that settlement is 1.266% of the maximum amount of $29,611,809. Given the use of a 3 mediator and both parties’ competent counsel, the Court finds that the parties are better positioned 4 than this Court to produce a settlement that fairly reflects the expected outcome. See In re Pacific 5 Enter. Sec. Lit., 47 F.3d at 378. A substantial portion of the maximum potential recovery is 6 threatened by Naranjo. This may in part warrant a downward departure. See In re Pacific Enter. 7 Sec. Lit., 47 F.3d at 378 (approving $12 million settlement where maximum damages allegedly 8 exceeded $1 billion in part because risk of California statute of limitations). 9 This is a substantial discount. Plaintiff has not pointed the Court to cases with similar 10 discounts. However, given Plaintiff’s extensive briefing about the weaknesses in his case, the 11 presence of a mediator, and the representations made at the hearing, the Court is persuaded that 12 counsel’s explanation suffices for preliminary approval. Counsel may wish to garner additional 13 support for this substantial discount at final approval. See Ferrell v. Buckingham Prop. Mgmt., 14 No. 1:19-CV-00332-LJO-SAB, 2020 WL 291042, at *18-19 (E.D. Cal. Jan. 21, 2020) (granting 15 preliminary approval of class action settlement where total settlement was approximately 5.2% of 16 the initial valuation and one claim was only 1% of the initial valuation but noting “that more 17 extensive explanation and support for the discounting may be needed to demonstrate fairness at 18 the final approval hearing”). 19 3. Nature of Settlement Negotiations; Extent of Discovery; Stage of 20 Proceedings; Experience and Views of Counsel 21 “An initial presumption of fairness is usually involved if the settlement is recommended 22 by class counsel after arm’s-length bargaining.” Riker v. Gibbons, No. 3:08-CV-00115-LRH, 23 2010 WL 4366012, at *2 (D. Nev. Oct. 28, 2010) (quoting 4 Alba Conte & Herbert B. Newberg, 24 Newberg on Class Actions § 11:42 (4th ed.2002)); see also Nat’l Rural Telecommunications 25 Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 527–28 (C.D. Cal. 2004) (“A settlement following 26 3 Of the $375,000 settlement, $204,308.55 is expected to go to the claimants. Each claimant will receive that net 27 settlement amount multiplied by (a) the number of compensable work weeks the claimant worked, divided by (b) the total number of compensable work weeks for all class members. (ECF No. 37-2, at 11). If all 370 class members 28 participate and the net settlement amount remains unchanged, the average payment will be $552.18. 1 sufficient discovery and genuine arms-length negotiation is presumed fair.” (citations omitted)). 2 Plaintiff’s counsel declares that the settlement took months of adversarial, non-collusive, 3 arm’s-length negotiations with the help of an experienced mediator, Hon. Howard Broadman 4 (ret.). (ECF No. 37-1 ¶¶ 5, 7, 36). According to Plaintiff’s counsel, the parties had engaged in 5 several months of discovery, including interrogatories, document production, and depositions. (Id. 6 ¶ 4). Defendant’s most qualified persons and Plaintiff were deposed. (Id. ¶ 6). 7 Through this process, Plaintiff determined the class’s maximum potential recovery was 8 $29,611,809. (ECF No. 37-1 ¶ 39). Most of that amount was waiting time penalties for four years. 9 If reduced to one year, the maximum potential damages4 is approximately $11 million. (Id.). The 10 Court concludes the parties were able to evaluate the strengths and weaknesses of their case and 11 the risks of continued litigation through this process. And as discussed above, the parties found 12 substantial weaknesses in Plaintiff’s case, warranting a substantial discount from the potential 13 maximum. Both Plaintiff’s and Defendant’s counsel view this settlement is fair and reasonable. 14 (ECF No. 37-1 ¶¶ 30, 41). 15 The Court thus finds the fifth and sixth factors, along with those in Rule 23(e)(2)(B), 16 factor approving this settlement. 17 4. Presence of a Governmental Participant 18 Although there is no governmental party to this lawsuit, the California Labor & 19 Workforce Development Agency (“LWDA”) may express its views. Under California Labor 20 Code § 2699(l)(2), a “proposed settlement shall be submitted to the [LDWA] at the same time 21 that it is submitted to the court” for the LWDA’s review and approval. Plaintiff submitted the 22 proposed settlement on April 3, 2020. (ECF No. 37-2). The parties did not submit the proposed 23 settlement for review until June 5, 2020. (ECF No. 44). 24 The Labor Code does not state what a court should do when a settlement is submitted late. 25 The parties, in their joint statement, point the Court to no answer. (ECF No. 44). Other courts 26 have noted that the notice provision exists “to allow the LWDA to comment on the settlement if 27 4 Plaintiff uses the phrase “damages exposure total,” which the Court takes to be equivalent to the maximum potential 28 damages. 1 the LWDA so desires.” Haralson v. U.S. Aviation Servs. Corp., 383 F. Supp. 3d 959, 971 (N.D. 2 Cal. 2019) (quoting Ramirez v. Benito Valley Farms, LLC, No. 16-cv-04708, 2017 WL 3670794, 3 at *2 (N.D. Cal. Aug. 25, 2017)); accord Castro v. Paragon Indus., Inc., No. 1:19-cv-755-DAD- 4 SKI, 2020 WL 1984240, at *12 (E.D. Cal. April 27, 2020) (citing Haralson for the same). But see 5 Shann v. Durham Sch. Servs., L.P., 182 F. Supp. 3d 1044, 1047 (C.D. Cal. 2016) (dismissing 6 PAGA claim for insufficient pre-filing notice required by Cal. Labor Code § 2699.3(a)(1)). 7 Given the purpose of section 2699(l)(2), that a substantial time has passed since the parties 8 notified PAGA, and that the requirement does not appear to be jurisdictional, the Court finds that 9 the late notice does not defeat the settlement. Final settlement will not happen for some time, and 10 the LWDA will have ample opportunity to voice its views before final approval. 11 Therefore, the seventh factor in Bluetooth weighs in favor of approving the settlement. 12 5. Additional Factors 13 The factors listed above are not exclusive. In re Bluetooth, 654 F.3d at 946. The Court 14 also notes the following factors from Rule 23 and elsewhere.5 15 a) Effectiveness of Proposed Method of Distributing Relief 16 The Court is to consider “the effectiveness of any proposed method of distributing relief 17 to the class, including the method of processing class-member claims.” Fed. R. Civ. P. 18 23(e)(2)(C)(ii). 19 Under the current plan, each class member’s settlement payment will be mailed first class 20 by the U.S. Postal Service to the member’s last known address. Class members will receive a 21 portion of the settlement unless they opt out, as discussed infra. (ECF No. 37-2, at 11). The initial 22 notice is six pages long, (ECF No. 37-2, at 21-26), and will be translated into Spanish, (ECF No. 23 37-1 ¶ 68). It will be prepopulated with the number of workweeks and the estimated settlement 24 amount. 25 Subject to the Court’s discussion below concerning notice procedures generally, the Court 26 is satisfied with the proposed method of distribution. 27 5 The eighth factor—the class’s reaction—is not relevant for preliminary approval, for the class has not yet received 28 notice. 1 b) Cy Pres Award 2 “In a majority of class actions at least some unclaimed damages or unlocated class 3 members remain.” Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1306 (9th 4 Cir. 1990). There are four main methods of distributing unclaimed class funds: “(1) reversion to 5 the defendant; (2) pro rata redistribution among the class members who did make claims; (3) 6 escheat to the state; and (4) cy pres distribution to charitable organizations.” 4 William 7 Rubenstein, Newberg on Class Actions § 12:30 (5th ed.).6 8 Here, the parties selected a cy pres recipient to receive any unclaimed funds. “The cy pres 9 doctrine allows a court to distribute unclaimed or non-distributable portions of a class action 10 settlement fund to the ‘next best’ class of beneficiaries.” Nachshin v. AOL, LLC, 663 F.3d 1034, 11 1036 (9th Cir. 2011). In the Ninth Circuit, a “cy pres distribution must be guided by (1) the 12 objectives of the underlying statute(s) and (2) the interests of the silent class members.” Id. at 13 1039 (rejecting cy pres distribution in a class-action case concerning the Electronic 14 Communications Privacy Act and various state-law claims to Legal Aid Foundation of Los 15 Angeles; the Federal Judicial Center Foundation; the Boys and Girls Club of America’s Los 16 Angeles and Santa Monica chapters; New Roads School of Santa Monica; Oklahoma Indian 17 Legal Services; and the Friars Foundation; the awards did not address the objectives of the 18 underlying statutes, target the plaintiff class, or provide reasonable certainty that any member will 19 be benefitted). 20 Deciding upon a cy pres recipient is premature. See Rodriguez v. West Publishing Corp., 21 563 F.3d 948, 966 (9th Cir. 2009). In Rodriguez, objectors appealed a district court’s approval of 22 a settlement. Id. at 954. The Ninth Circuit held their objections to the cy pres distribution were 23 premature because the “issue becomes ripe only if the entire settlement fund is not distributed to 24 class members. That trigger point has not been reached; no cy pres disbursement is imminent; and 25 6 Although the Ninth Circuit “express[ed] no view as to the propriety of” pro rata distributions to claiming class 26 members,” Six (6) Mexican Workers, 904 F.2d at 1307 n.4., district courts have permitted such distributions, see, e.g., Vandervort v. Balboa Capital Corp., 8 F. Supp. 3d 1200, 1204 (C.D. Cal. 2014) (approving settlement whereby any 27 initially unclaimed portion would be distributed to claiming class members up to a set maximum, and after which any unclaimed portion would be distributed to a to-be-determined cy pres charity). 28 1 the fund in this case may well be depleted before cy pres kicks in.” Id. at 966 (citation omitted). 2 Likewise, here, there is no imminent cy pres distribution, so any such determination is unripe. 3 The Court cautions, however, that the parties’ cy pres recipient might not qualify under 4 the Ninth Circuit’s standards. The parties designated CASA of Fresno County as the cy pres 5 recipient, which would receive funds from checks not cashed within 180 days or returned as 6 undeliverable. (ECF No. 37-2, at 11). The Court believes the parties are referring to Court 7 Appointed Special Advocates of Fresno and Madera Counties. According to the organization’s 8 tax Form 990 filed in 2017, “CASA of Fresno and Madera Counties is a 501(c)[(]3[)] community 9 based nonprofit organization whose mission is to recruit, train, and support citizen volunteers to 10 advocate and speak for the best interests of abused and neglected children in the Child Welfare 11 and Juvenile Court Systems.” Court Appointed Special Advocates of Fresno and Madera 12 Counties, Tax Form 990, 13 https://apps.irs.gov/pub/epostcard/cor/770401361_201806_990_2019072616524637.pdf.7 CASA 14 of Fresno and Madera Counties may be a noble organization. But it does not appear to have any 15 relation to California labor laws, and its target population—children in the Child Welfare and 16 Juvenile Court Systems—are unlikely to be in the proposed class. 17 At the final approval stage, the Court will consider this issue further, including whether a 18 more fitting charitable organization(s) should be used, or whether there can be a pro 19 rata redistribution among the class members who did make claims. 20 D. Fees, Costs, and Representative Service Payment 21 1. Attorney Fees and Costs 22 Under the terms of the Settlement Agreement, Plaintiff’s counsel will make a separate 23 application to the Court for an award of attorneys’ fees of not more than 33.33% of the gross 24 settlement amount plus a maximum of $19,000 in costs. (ECF No. 37-2, at 12). 25 When a negotiated class action settlement includes an award of attorneys’ fees, the fee 26 award must be evaluated in the overall context of the settlement. Knisley v. Network Assocs., 312 27 7 The Court takes judicial notice of this filing and its self-description. See Fed. R. Evid. 201(b)(2), (c)(1); see also Africare, Inc. v. Xerox Complete Doc. Solutions Md., LLC, --- F. Supp. 3d ----, 2020 WL 255856, at * 17 n.21 28 (D.D.C. Jan. 17, 2020) (taking judicial notice of Form 990s). 1 F.3d 1123, 1126 (9th Cir. 2002). At the same time, the court “ha[s] an independent obligation to 2 ensure that the award, like the settlement itself, is reasonable, even if the parties have already 3 agreed to an amount.” Bluetooth, 654 F.3d at 941; see also Zucker v. Occidental Petroleum Corp., 4 192 F.3d 1323, 1328–29 (9th Cir. 1999). Where, as here, fees are to be paid from a common fund, 5 the relationship between the class members and class counsel “turns adversarial.” In re 6 Washington Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1302 (9th Cir. 1994). As a result, 7 the district court must assume a fiduciary role for the class members in evaluating a request for an 8 award of attorney fees from the common fund. Id.; Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 9 968 (9th Cir. 2009). 10 The Ninth Circuit has approved two methods for determining attorneys’ fees in cases 11 where the attorneys’ fee award is taken from the common fund set aside for the entire settlement: 12 the “percentage of the fund” method and the “lodestar” method. Vizcaino v. Microsoft Corp., 290 13 F.3d 1043, 1047 (9th Cir. 2002) (citation omitted). The district court retains discretion in common 14 fund cases to choose either method. Id.; Vu v. Fashion Inst. of Design & Merch., No. CV 14- 15 08822 SJO (EX), 2016 WL 6211308, at *5 (C.D. Cal. Mar. 22, 2016). Under either approach, 16 “[r]easonableness is the goal, and mechanical or formulaic application of either method, where it 17 yields an unreasonable result, can be an abuse of discretion.” Fischel v. Equitable Life Assurance 18 Soc’y of the U.S., 307 F.3d 997, 1007 (9th Cir. 2002). 19 Under the percentage of the fund method, the court may award class counsel a given 20 percentage of the common fund recovered for the class. Id. In the Ninth Circuit, a twenty-five 21 percent award is the “benchmark” amount of attorneys’ fees, but courts may adjust this figure 22 upwards or downwards if the record shows “special circumstances justifying a departure.” Id. 23 (quoting Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990)). 24 Percentage awards of between twenty and thirty percent are common. See Vizcaino, 290 F.3d at 25 1047; In re Activision Sec. Litig., 723 F. Supp. 1373, 1377 (N.D. Cal. 1989) (“This court’s review 26 of recent reported cases discloses that nearly all common fund awards range around 30% even 27 after thorough application of either the lodestar or twelve-factor method.”). Nonetheless, an 28 explanation is necessary when the district court departs from the twenty-five percent benchmark. 1 Powers v. Eichen, 229 F.3d 1249, 1256–57 (9th Cir. 2000). 2 Factors courts may consider when assessing a requested percentage include: 3 the extent to which class counsel achieved exceptional results for the class, 4 whether the case was risky for class counsel, whether counsel’s performance generated benefits beyond the cash settlement fund, the market rate for the 5 particular field of law (in some circumstances), the burdens class counsel experienced while litigating the case (e.g., cost, duration, foregoing other work), 6 and whether the case was handled on a contingency basis. 7 In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 954–55 (9th Cir. 2015) (internal 8 quotation marks omitted). The Ninth Circuit has permitted courts to award attorneys’ fees using 9 this method “in lieu of the often more time-consuming task of calculating the lodestar.” 10 Bluetooth, 654 F.3d at 942. 11 Plaintiff brings various state law claims and, under California law, “[t]he primary method 12 for establishing the amount of reasonable attorney fees is the lodestar method.” In re Vitamin 13 Cases, 110 Cal. App. 4th 1041, 1053 (2003) (internal quotation marks and citations omitted). The 14 court determines the lodestar amount by multiplying a reasonable hourly rate by the number of 15 hours reasonably spent litigating the case. See Ferland v. Conrad Credit Corp., 244 F.3d 1145, 16 1149 (9th Cir. 2001). The product of this computation, the “lodestar” amount, yields a 17 presumptively reasonable fee. Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 18 2013); Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 (9th Cir. 2008). The Ninth Circuit 19 has recommended that district courts apply one method but cross-check the appropriateness of the 20 amount by employing the other as well. See Bluetooth, 654 F.3d at 944. 21 Here, Plaintiff will seek maximum attorneys’ fees of 33.33% of the gross settlement 22 amount and $19,000 for litigation costs. (ECF No. 37-1 ¶ 9). Plaintiff’s counsel will set forth the 23 exact amounts requested in a motion for final approval, which will be filed after the response 24 deadline. (Id.; ECF No. 37-2, at 14.) This fee amount is above the benchmark for this circuit. See 25 Bluetooth, 654 F.3d at 947 (setting a 25% benchmark); Staton, 327 F.3d at 952 (same); Six (6) 26 Mexican Workers, 904 F.2d at 1311 (same). However, the percentage is not unreasonable as an 27 upper bound. As such, the Court approves the attorneys’ fee request on a preliminary basis, but 28 1 reserves the right to further consider and reduce this amount when it considers final approval. 2 When the application for attorneys’ fees is submitted, Plaintiff’s counsel will be required 3 to explain the “special circumstances justifying a departure” from the benchmark. See Bluetooth, 4 654 F.3d at 942. In connection with the final fairness hearing, the Court will cross check the 5 requested amount with the lodestar amount based upon counsels’ submission and will determine 6 whether the award of an above-benchmark percentage in fees is reasonable here. See Powers v. 7 Eichen, 229 F.3d 1249, 1256-57 (9th Cir. 2000) (noting that an explanation is necessary when the 8 district court departs from the twenty-five percent benchmark). 9 2. Class Representative Service Payment 10 A district court may award incentive payments to named plaintiffs in class action cases. 11 Rodriguez, 563 F.3d at 958–59. The purpose of incentive awards is to “compensate class 12 representatives for work done on behalf of the class, to make up for financial or reputational risk 13 undertaking in bringing the action, and, sometimes, to recognize their willingness to act as a 14 private attorney general.” Id. To justify an incentive award, a class representative must present 15 “evidence demonstrating the quality of plaintiff’s representative service,” such as “substantial 16 efforts taken as class representative to justify the discrepancy between [his] award and those of 17 the unnamed plaintiffs.” Alberto v. GMRI, Inc., 252 F.R.D. 652, 669 (E.D. Cal. 2008). Such 18 incentive awards are particularly appropriate in wage-and-hour actions where a plaintiff 19 undertakes a significant reputational risk in suing her former employer. Rodriguez, 563 F.3d at 20 958-59. 21 The Ninth Circuit has emphasized, however, that “district courts must be vigilant in 22 scrutinizing all incentive awards.” Radcliffe v. Experian Info. Sols., Inc., 715 F.3d 1157, 1165 23 (9th Cir. 2013) (internal quotation marks and citation omitted). In keeping with that admonition, 24 district courts have declined to approve incentive awards that represent an unreasonably high 25 proportion of the overall settlement amount or are disproportionate relative to the recovery of 26 other class members. See Ontiveros, 303 F.R.D. at 365-66 (finding an incentive award of 27 $20,000, comprising 1% of the common fund, to be excessive under the circumstances, and 28 reducing the award to $15,000, where class representative spent 271 hours on the litigation and 1 relinquished the opportunity to bring several of his own claims in order to act as class 2 representative); see also Ko v. Natura Pet Prods., Inc., Civ. No. 09–2619 SBA, 2012 WL 3 3945541, at *15 (N.D. Cal. Sept. 10, 2012) (holding that an incentive award of $20,000, 4 comprising one percent of the approximately $2 million common fund was “excessive under the 5 circumstances” and reducing the award to $5,000); Wolph v. Acer Am. Corp., No. C 09–01314 6 JSW, 2013 WL 5718440, at *6 (N.D. Cal. Oct. 21, 2013) (reducing the incentive award to $2,000 7 where the class representatives did not demonstrate great risk to finances or reputation in bringing 8 the class action). In reducing the award, courts have noted that overcompensation of class 9 representatives could encourage collusion at the settlement stage of class actions by causing a 10 divergence between the interests of the named plaintiff and the absent class members, destroying 11 the adequacy of class representatives. See Staton, 327 F.3d at 977–78; see also Radcliffe, 715 12 F.3d at 1165. 13 Here, the settlement agreement provides for a maximum class representative payment of 14 $5,000. (ECF No. 37-2 at 13). Plaintiff’s counsel declared that Plaintiff researched and identified 15 counsel, provided information to counsel, having “several meetings and telephone conferences” 16 with the attorneys, reviewing case documents, and being deposed. (ECF No. 37-1 ¶ 82). In 17 addition, Plaintiff notes he took a serious reputational risk by suing his former employer. (ECF 18 No. 37-1 ¶ 83).8 The payment represents 1.33% of the gross settlement amount, or 2.45% of the 19 amount expected to go to class members. 20 The Court cautions that it cannot completely evaluate whether this amount is excessive as 21 it does not know exactly how much work Plaintiff had to do. The Court finds the proposed award 22 suffices for preliminary approval purposes. At the final approval hearing, however, the court will 23 review Plaintiff’s evidence that the requested incentive award is warranted here, including 24 evidence of the specific amount of time Plaintiff spent on the litigation, the particular risks and 25 burdens carried by Plaintiff as a result of the litigation, and the particular benefit that Plaintiff 26 8 Plaintiff argues he might have been liable for Defendant’s costs if he lost at trial. He cites to Koehl v. Verio, 142 Cal. App. 4th 1313 (2006) for this proposition. Although the court there affirmed an attorneys’ fee award to the 27 defendants, the court expressly noted that the plaintiff did not properly argue it. Id. at 1328 n.6 (“[N]owhere in their opening or reply briefs do Appellants make any argument as to the award of attorneys’ fees.”). Given the inadequate 28 case law Plaintiff cites, the Court will not include this factor in its analysis. 1 provided to counsel and the class as a whole throughout the litigation. See Goodwin v. Winn 2 Mgmt. Grp. LLC, No. 1:15-cv-00606-DAD-EPG, 2017 WL 3173006, at *12 (E.D. Cal. July 26, 3 2017) (citing Bautista v. Harvest Mgmt. Sub LLC, No. CV 12-10004 FMO (CWx), 2013 WL 4 12125768, at *15 (C.D. Cal. Oct. 16, 2013)). 5 E. Appointment of Settlement Administrator 6 The parties agreed to use third-party settlement administrator ILYM Group, Inc., which 7 submitted a $10,441.45 bid. According to Plaintiff’s counsel, “ILYM Group, Inc. has significant 8 experience in the administration of class action settlements and is qualified to perform all of the 9 duties required of it in the Settlement.” (ECF No. 37-1 ¶ 70). The Court finds ILYM Group is an 10 appropriate settlement administrator. 11 F. Notice Procedures 12 For proposed settlements under Rule 23, “the court must direct notice in a reasonable 13 manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1); see 14 also Hanlon, 150 F.3d at 1025 (“Adequate notice is critical to court approval of a class settlement 15 under Rule 23(e).”). A class action settlement notice “is satisfactory if it generally describes the 16 terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate 17 and to come forward and be heard.” Churchill Vill., LLC v. Gen. Elec., 561 F.3d 566, 575 (9th 18 Cir. 2004) (internal quotations and citations omitted). 19 1. Proposed Notice 20 The Court believes several small modifications should be made to the notice, as follows: 21 First, one page appears to contain track changes. (ECF No. 37-2, at 25). That should be 22 changed. 23 Second, the Court’s policy is to permit anyone to attend a final approval hearing and 24 object to the settlement. The Court will consider such objections but might find that they were 25 waived if not timely submitted in writing. The notice should state that. 26 Third, the notice uses several terms without defining them. The notice should clearly 27 define, in plain language, the following terms: “Plaintiff,” “Class Members,” and “Individual 28 Settlement Payment.” 1 Fourth, the notice should make clear that Defendant will pay any required payroll taxes. 2 Fifth, the notice should include a clearer mechanism to permit a class member to opt out. 3 The instructions alert class members that they may opt out “by completing, signing, and mailing a 4 letter indicating that they do not want to participate in the settlement” to ILYM at a certain 5 address. A recipient might not know what it takes to complete a letter indicating they do not want 6 to participate in the settlement. Including standard opt-out language in the notice would reduce 7 that concern. Moreover, the notice should contain an email address to which class members may 8 send their opt-out notifications. 9 Sixth, the notice should be clearer about how to object. The current settlement agreement 10 requires notices of objection to be sent by mail and include five pieces of specified information 11 (full name, dates of employment, last four digits of their Social Security number, the basis, and 12 whether they intend to appear at the final hearing). Additionally, the Court does not see a purpose 13 behind requiring a social security number in order to object. The Court recommends removing 14 this requirement. 15 In all other respects, the form of the notice is acceptable. The Court notes that it will be 16 translated into Spanish. The Court recommends that the parties file a revised proposed notice that 17 is consistent with this order within fourteen days of the Court’s order concerning these findings 18 and recommendations. 19 2. Notice Procedure 20 The current plan is as follows: 21 Once ILYM Group receives the class data (defined as class members’ names, last known 22 mailing address and phone number, Social Security numbers, and compensable workweeks) from 23 the Defendant,9 ILYM will search a change-of-address database to update and correct any 24 changes to class members’ addresses. Within fourteen days of receiving the class data, ILYM 25 Group will mail copies of the notice to all class members via regular First-Class U.S. Mail. ILYM 26 9 There does not appear to be a specific requirement for Defendant to provide the class data to ILYM. However, the 27 Court notes that section 51 of the settlement agreement might require Defendant to provide the data. (ECF No. 37-2, at 16) (“The Parties and their counsel will cooperate with each other and use their best efforts to effect the 28 implementation of the Settlement.”). 1 Group will exercise its best judgment to determine the current mailing addresses. (ECF No. 37-2, 2 at 2, 7-8). 3 If a notice is returned as undeliverable, then it will either be re-mailed to a forwarding 4 address if provided. If none is provided, then ILYM Group will use skip-tracing or another search 5 method to find the member’s mailing address. It appears that if ILYM Group cannot find the 6 correct address, then the class member will not be able to object or opt-out. (And, perhaps, not 7 receive a payment.) (ECF No. 37-2, at 8). 8 The deadline for class members to object or opt out is 60 days after ILYM Group sends 9 notices to the class members. (ECF No. 37-2, at 5). Settlement class members who received a re- 10 mailed notice will have an extra fifteen days. (Id. at 9). 11 As discussed above, objections must be received in writing and contain five specified 12 pieces of information. 13 The Court has the following recommendations for an improved procedure. 14 First, the Court is concerned that some class members might not have stable addresses. 15 ILYM should use other means of connecting with class members. The class data already includes 16 class members’ last-known phone numbers, so there could be automated calls or text messages (to 17 the extent the numbers are cell phones). 18 Second, as discussed supra, the process for opting out and for objecting should be easier. 19 There should be an email address to which class members can send their objections or opt-out 20 notices. 21 Finally, as also discussed supra, the notice procedure should align with the Court’s policy 22 for receiving objections at the final approval hearing. 23 IV. CONCLUSION AND ORDER 24 Based on the foregoing, IT IS HEREBY RECOMMENDED: 25 1. The proposed class be conditionally certified under Rule 23(c)(1), for purposes of 26 settlement only, as the proposed class satisfies the requirements of Rule 23(a) as well as the 27 requirements for certification under one of the subsections of Rule 23(b), including that: 28 a. The class is so numerous that joinder of all members is impracticable; 1 b. There are questions of law and fact common to the class; 2 c. The claims or defenses of the representative party are typical of the claims or 3 defenses of the class; and 4 d. The representative party will fairly and adequately protect the interests of the 5 class. 6 2. The following persons be preliminarily certified as Class Members solely for the 7 purpose of entering a settlement in this matter: 8 all who are employed or have been employed by Defendant, in the State of 9 California, and who have worked one or more shifts as a non-exempt hourly agricultural employee, as defined by the California Labor Code, 10 Industrial Welfare Commission Wage Order 8-2001, and 29 U.S.C. §1892(3) from April 13, 2014 through April 30, 2019. 11 3. The Settlement Agreement (ECF No. 37-2) be granted preliminary approval as it 12 falls within the range of possible approval as fair, adequate, and reasonable, and appears to be 13 the product of arm’s length and informed negotiations and to treat all Class Members fairly, 14 subject to the following recommendations: 15 a. The settlement administrator take additional actions to locate class members, 16 as discussed in this order. 17 b. All terms in the settlement agreement and notice be harmonized with each 18 other to the extent the Court order any changes to either. 19 c. The recipient(s) of unclaimed funds be determined only after the funds are 20 initially distributed. 21 4. A final approval hearing on the question of whether the settlement, attorneys’ fees 22 and costs to class counsel, and the class representative service payment should be finally approved 23 as fair, reasonable, and adequate be held as set forth below. 24 5. The form and content of the Notice of Class Action Settlement (ECF No. 37-2, at 25 21-26), be approved conditioned on the settling parties making the following modifications to 26 the notice: 27 a. Revise the objection provision of the notice of class action settlement to 28 1 include an explanation that a class member may raise objections at the final 2 approval hearing, but that the Court retains discretion to decline to consider 3 any objection that has not been timely submitted in writing. 4 b. Include suggested language to advise class members how to opt out and 5 include all relevant objection requirements. 6 c. Include an email address to receive opt-outs and objections. 7 d. Remove track changes. 8 6. The procedures for class members to be notified of, participate in, opt-out of, and 9 object to the settlement, as set forth in the Settlement (ECF No. 37-2 at 8-10), be approved as 10 the best practicable under the circumstances and constitution sufficient due notice to the class 11 members, conditioned on the settling parties making the following modifications: 12 a. The settling parties change the content of the notice consistent with the above. 13 b. ILYM Group use additional means of connecting with class members, such as 14 phone calls, text messages, or a combination thereof, with instructions for 15 updating their addresses. 16 c. Remove unnecessary requirements for opting out, including Social Security 17 numbers. 18 7. The settling parties be directed to file a second revised proposed notice and 19 settlement agreement incorporating the above modifications within fourteen (14) days of the 20 district court’s order adopting this recommendation. 21 8. That class members will receive a settlement share unless they opt out of the 22 settlement sixty (60) days after the notice is sent, except as otherwise set forth in the settlement 23 agreement. 24 9. ILYM Group, Inc. be appointed to act as the settlement administrator, under the 25 terms set forth in the settlement agreement. 26 10. Jose Urena be appointed as the Class Representative. 27 11. Kingsley & Kingsley, APC, be appointed as Class Counsel. 28 12. That the notice, (ECF No. 37-2, at 21-26), with the above modifications, be 1 distributed to class members in accordance with the procedures set forth in the Settlement 2 Agreement (ECF No. 37-2). Proof of distribution of the notice is to be filed by the parties in 3 conjunction with the motion for an order granting final approval of the Settlement. 4 13. That a final approval hearing be held on at a time to be determined upon approval 5 of the final notice and settlement agreement in Courtroom 10 (EPG) before Magistrate Judge 6 Erica P. Grosjean, to determine whether the Settlement should be granted final approval as fair, 7 reasonable, and adequate as to the class members. The Court will hear all evidence and 8 argument necessary to evaluate the Settlement, and will consider any request, made by separate 9 motion, by Plaintiff and class counsel for class representative payments, and for class counsel 10 fees and expenses payment. Class members and their counsel may support or oppose the 11 settlement and the motion for awards of class representative payments and class counsel fees 12 and expenses payment, if they so desire and as set forth in the notice. 13 14. That the motion for final approval of class action settlement be filed twenty-eight 14 (28) days in advance of the final approval hearing, in accordance with Local Rule 230. 15 15. That the Court reserves the right to continue the date of the final approval hearing 16 without further notice to class members. The Court retains jurisdiction to consider all further 17 applications arising out of or in connection with the Settlement. 18 16. That not later than fourteen (14) calendar days after the deadline for objection or 19 exclusion, Plaintiffs will file a motion for approval of their class counsel’s attorneys’ fees and 20 costs. The motion for class counsel attorneys’ fees and costs shall be heard concurrently with the 21 motion for final approval. 22 These Findings and Recommendations will be submitted to the United States District 23 Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within 24 fourteen (14) days after being served with these Findings and Recommendations, the parties may 25 file written objections with the Court. The document should be captioned “Objections to 26 Magistrate Judge’s Findings and Recommendations.” The parties are advised that failure to file 27 objections within the specified time may result in the waiver of the “right to challenge the 28 magistrate’s factual findings” on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014) aoe ENN NNN NER ENEEIMMMEEMIERME NES RAMEE VS 1 | (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 2 3 IT IS SO ORDERED. 4] Dated: _ June 26, 2020 [sf hey 5 UNITED STATES MAGISTRATE JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24