Stoddart v. Express Services, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 MICHAEL H. STODDART, et al., No. 2:12-cv-01054-KJM-CKD 12 Plaintiffs, 13 v. ORDER 14 EXPRESS SERVICES, et al., 15 Defendants. 16 17 18 Plaintiff Michael Stoddart (“Plaintiff”) brings this putative class action against 19 defendants Express Services, Inc. (“Express”), Phillips & Associates, Inc. (“Phillips”), and 20 Western Wine Services, Inc. (“Western Wine”), alleging several California Labor Code 21 violations. See generally Second Am. Compl. (“SAC”), ECF No. 94. On March 9, 2018, 22 plaintiff first moved for preliminary approval of class action settlement. Prelim. Approval of 23 Class Action Settlement Mem. P. & A. (“Pl.’s Mem. I”), ECF No. 156. The motion was 24 unopposed, but Elaine Martin (“Martin”), a named plaintiff in a related wage and hour class 25 action pending in Solano County Superior Court, requested leave to file an amicus brief in 26 opposition to plaintiff’s motion. Ex Parte Appl., ECF No. 158. On May 18, 2018, the court held 27 a hearing regarding both the settlement approval and ex parte application and granted Martin’s 28 1 request for leave to file her brief. Hr’g Minutes, ECF No. 164. For the reasons discussed below, 2 the court GRANTS plaintiff’s second motion for preliminary approval of class action settlement. 3 I. BACKGROUND 4 A. Factual and Procedural Background 5 To review, Express provides staffing, job placement, human resource, consulting 6 and related services to businesses worldwide. SAC ¶ 2. Phillips is a California corporation and 7 franchisee of Express. Id. ¶ 3. Defendant Western Wine contracts with Express for temporary 8 service employees. Id. ¶ 4. 9 Express formerly employed plaintiff in Vallejo, California, and assigned him to 10 work for Western Wine. Id. ¶ 5. Plaintiff alleges Express and Phillips systematically violated 11 employment laws by not providing legally mandated off-duty meal periods, failing to pay 12 overtime at the correct rate, issuing inaccurate and non-compliant wage statements, failing to pay 13 meal period premiums and failing to provide all wages due upon separation of employment. Id. 14 ¶¶ 11, 33, 70, 77, 88, 95, 102. In early 2012, plaintiff brought a putative class action in state court 15 for damages and injunctive relief. Compl., ECF No. 1-1, at 4. A month later, Express removed 16 the case to this court. Not. of Removal, ECF No. 1. The parties thereafter attended mediation 17 and in 2014 reached a tentative class-wide settlement, but Express’s Board of Directors rejected 18 it. Not. Re: Status of Settlement, ECF No. 42, at 2. As the docket reflects, the case proceeded in 19 this court with significant motion practice, including discovery motion practice. See ECF Nos. 20 44-148. 21 On February 1, 2019, the court denied plaintiff’s motion for preliminary approval 22 of the class action settlement, finding plaintiff had not demonstrated the putative class can be 23 certified under Rule 23 and the proposed agreement was fair, reasonable and adequate. Order, 24 ECF No. 174. On August 2, 2019, the parties filed a joint status report advising the court they 25 were in the process of revising the Settlement Agreement and requesting the deadline for filing a 26 renewed motion for preliminary approval be December 19, 2019. Joint Status Report, ECF No. 27 176, at 2. The December date reflected that Calbee North America Wage and Hour Cases, 28 Solano County Superior Court Coordinated Case No. FCS044527, was set for mediation on 1 November 20, 2019, and plaintiff believed the outcome of the Calbee mediation might impact the 2 revised Agreement as well as the contents of plaintiff’s renewed Motion for Preliminary 3 Approval. Id. The court granted this request and plaintiff filed a renewed motion for preliminary 4 approval of class action settlement on December 19, 2019. Prelim. Approval of Class Action 5 Settlement Mem. P. & A. (“Pl.’s Mem. II”); ECF No. 178. On February 7, 2020, the court held a 6 hearing on the renewed motion for preliminary approval of the class action settlement. 7 B. Proposed Settlement Agreement 8 After a contentious eight years, the parties returned to the mediation in 2017 and 9 reached a settlement agreement. Decl. of Graham S.P. Hollis (“Hollis Decl.”) ¶ 6, ECF No. 178- 10 3; Stip. & Settlement (“Proposed Agreement”), ECF No. 178-2, at 16. That agreement is 11 reviewed below. 12 1. Gross Settlement Amount 13 Under the Proposed Agreement, Settlement Defendants Express and Phillips 14 would make a $10 million gross payment to the claims administrator, Rust Consulting, Inc. 15 Proposed Agreement §§ I.21, III.7. The administrator would allocate the gross settlement as 16 follows: 17 (1) An amount not to exceed $2,500,000, one-fourth of the gross settlement, for class counsel 18 as attorneys’ fees. Id. § III.8. 19 (2) An amount not to exceed $70,000 for class counsel in litigation costs. Id. § III.8. 20 (3) An amount up to $10,000 for plaintiff in consideration of his work as the named plaintiff. 21 Id. § III.4. 22 (4) An amount currently estimated at $365,066 to the claims administrator, Rust Consulting. 23 Id. § III.9. 24 (5) A $50,000 California Private Attorneys General Act of 2004 (“PAGA”) penalty, with 75 25 percent ($37,500) paid to the California Labor and Workforce Development Agency and 26 25 percent ($12,500) to the PAGA group. Id. §§ I.30, I.8 (PAGA group includes those 27 “class members who worked assignments during the period March 23, 2011 through 28 December 31, 2017”). 1 (6) Any applicable tax withholding would be applied as required, not to include the 2 employer’s share of FICA, FUTA and SDI contributions on the portion of the settlement 3 payments attributed to wages. Id. § I.22. 4 2. Net Settlement Amount 5 Accounting for all proposed distributions described above, plaintiff estimates a net 6 settlement amount of $7,017,434. Decl. of Isam C. Khoury (“Khoury Decl.”) ¶ 29, ECF No. 7 178-2. The Settlement Parties propose distribution of the net settlement in payments to class 8 members who do not request exclusion from the settlement based on the number of weeks worked 9 during the period of March 13, 2008 through December 31, 2017, as 10 percent wages and 10 90 percent interest and penalties. Proposed Agreement § III.12. The range of expected payments 11 is referenced below. 12 3. Changes Since Court’s Prior Order 13 As plaintiff noted in the renewed motion for preliminary approval, the court 14 previously addressed the concerns of Ms. Martin, the objector to the settlement, in its order 15 denying plaintiff’s first motion for preliminary approval. Pl.’s Mem. II at 8 n.1. The parties 16 represent they have resolved Ms. Martin’s concerns in November 2019 and have apprised her of 17 the intervening events. Id. She has not filed anything further with the court. The parties have 18 also limited the release of the PAGA claims in the agreement to only those clients plaintiff named 19 in plaintiff’s letters to the Labor and Workforce Development Agency. Id. (citing Proposed 20 Agreement § III at ¶ 3). 21 II. LEGAL STANDARDS 22 A. Preliminary Class Certification and Approval of Settlement under Rule 23 23 1. Preliminary Class Certification 24 Although Rule 23 of the Federal Rules of Civil Procedure does not expressly 25 provide for preliminary class certification, district courts often certify settlement classes on a 26 preliminary basis for settlement purposes, deferring final class certification until the court holds a 27 final fairness hearing. See, e.g., Aguilar v. Wawona Frozen Foods, No. 1:15-CV-00093-DAD- 28 EPG, 2017 WL 117789, at *7 n.9 (E.D. Cal. Jan. 11, 2017) (citations omitted). 1 Whenever it reviews class certification, the court owes “undiluted, even 2 heightened, attention” to certification requirements in the settlement context. Amchem Products, 3 Inc. v. Windsor, 521 U.S. 591, 620 (1997); Molski v. Gleich, 318 F.3d 937, 946 (9th Cir. 2003), 4 overruled on other grounds by Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010); see 5 Berry v. Baca, No. CV 01-02069 DDP, 2005 WL 1030248, at *7 (C.D. Cal. May 2, 2005) (the 6 parties cannot merely “agree to certify a class that clearly leaves any one requirement 7 unfulfilled”). Preliminary certification is appropriate only if each Rule 23(a) certification 8 prerequisite is satisfied. Rule 23 requires that the class contain enough members; the suit 9 involves questions common to all class members; plaintiff’s claims are typical of the class 10 members; and plaintiff and his counsel fairly and adequately protect the class interests. Fed. R. 11 Civ. P. 23(a)(1)–(4). If Rule 23(a)’s threshold requirements are met, the proposed class must 12 satisfy Rule 23(b)(3)’s predominance and superiority requirements. Fed. R. Civ. P. 23(b)(3); see 13 Amchem, 521 U.S. at 615. 14 2. Preliminary Settlement Approval 15 Rule 23 mandates that “[t]he claims, issues, or defenses of a certified class . . . may 16 be settled, voluntarily dismissed, or compromised only with the court’s approval.” Fed. R. Civ. 17 P. 23(e). “Courts have long recognized that settlement class actions present unique due process 18 concerns for absent class members.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 19 946 (9th Cir. 2011) (citation and internal quotation marks omitted). When parties seek approval 20 of a settlement agreement negotiated prior to formal class certification, “there is an even greater 21 potential for a breach of fiduciary duty owed the class during settlement.” Id. Accordingly, the 22 reviewing court analyzes such agreements with “a more probing inquiry” for evidence of 23 collusion or other conflicts of interest than normally required under the Federal Rules. Hanlon v. 24 Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998), overruled on other grounds by Wal-Mart 25 Stores, Inc. v. Dukes, 564 U.S. 338 (2011); see also Bluetooth, 654 F.3d at 946. “Judicial review 26 must be exacting and thorough.” Manual for Complex Litigation (Fourth) § 21.61 (2004). 27 There is a “strong judicial policy” favoring settlement of class actions. Class 28 Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nonetheless, to protect absent 1 class members’ due process rights, Rule 23(e) of the Federal Rules of Civil Procedure permits the 2 claims of a certified class to be “settled . . . only with the court’s approval” and “only after a 3 hearing and only on a finding [that the agreement is] fair, reasonable, and adequate . . . .” Fed. R. 4 Civ. P. 23(e). To determine whether a proposed class action settlement is fair, reasonable and 5 adequate, courts consider several factors, as relevant, including: (1) [T]he strength of the 6 plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the 7 risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; 8 (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and 9 view of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class 10 members of the proposed settlement. In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 11 944 (9th Cir. 2015) (quoting Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 12 2004)); In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1080 (N.D. Cal. 2007) (noting, at 13 preliminary approval stage, courts consider whether “the proposed settlement appears to be the 14 product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not 15 improperly grant preferential treatment to class representatives or segments of the class, and falls 16 within the range of possible approval . . . .”) (citations omitted). 17 These factors substantively track those effected through 2018 amendments to Rule 18 23(e)(2), under which the court may approve a settlement only after considering whether: 19 (A) the class representatives and class counsel have adequately represented the 20 class; 21 (B) the proposal was negotiated at arm’s length; 22 (C) the relief provided for the class is adequate, taking into account: 23 (i) the costs, risks, and delay of trial and appeal; 24 (ii) the effectiveness of any proposed method of distributing relief to the 25 class, including the method of processing class-member claims; 26 (iii) the terms of any proposed award of attorney’s fees, including timing of 27 payment; and 28 (iv) any agreement required to be identified under Rule 23(e)(3); and 1 (D) the proposal treats class members equitably relative to each other. 2 Fed. R. Civ. P. 23(e)(2)(A)−(D). The Rule 23(e)(2) factors took effect on December 1, 2018 and, 3 as an advisory note to the Rule 23(e) amendment recognizes, “each circuit has developed its own 4 vocabulary for expressing [] concerns” regarding whether a proposed settlement is fair, 5 reasonable and adequate. Fed. R. Civ. P. 23(e)(2) advisory committee’s note. Accordingly, the 6 newly codified factors are not intended “to displace any factor, but rather to focus the court and 7 the lawyers on the core concerns of procedure and substance that should guide the decision 8 whether to approve the proposal.” Id.; see also 4 Newberg on Class Actions § 13:14 (5th ed. 9 2011) (noting Rule 23(e) “essentially codified [federal courts’] prior practice”). Moreover, the 10 Advisory Committee warned against allowing “[t]he sheer number of factors [to] distract both the 11 court and the parties from the central concerns that bear on review under Rule 23(e)(2).” Fed. R. 12 Civ. P. 23(e)(2) advisory committee’s note. Accordingly, the court draws on the Ninth Circuit’s 13 longstanding guidance and the Rule 23(e)(2) factors as relevant to resolve this motion. 14 III. DISCUSSION 15 A. Preliminary Certification of the Class Under Rule 23 16 At the preliminary stage, “[a] court that is not satisfied that the requirements of 17 Rule 23 have been met should refuse certification until they have been met.” Advisory 18 Committee 2003 Note on Fed. R. Civ. P. 23(c)(1). The court noted in its previous order plaintiff 19 argued then “only in cursory fashion each of Rule 23(a) and (b)(3)’s requirements.” Order at 5 20 (citing Pl.’s Mem. I at 17–19). The court focused on the problems Ms. Martin highlighted in her 21 amicus brief with respect to commonality and predominance. Order at 6; see also Amicus Curiae 22 Br. in Opp’n to Mot. for Prelim. Approval of Class Action Settlement (“Amicus Br.”), ECF No. 23 158 at 7. 24 As noted, the court previously found plaintiff did not adequately explain 25 commonality at the time of his initial motion. And defendants still “contend Plaintiff could not 26 prevail on certification because the variances in job placement locations and job positions would 27 create individual issues.” Pl.’s Mem. II at 10. The court probed the commonality requirement of 28 Rule 23 at hearing, following which plaintiff, as directed, provided supplemental briefing on the 1 commonality requirement. Suppl. Br., ECF No. 185. The court considers the authority presented 2 in plaintiff’s supplemental briefing, below. 3 1. Rule 23(a)(1)–Numerosity 4 The class must be “so numerous that joinder of all members is impracticable.” 5 Fed. R. Civ. P. 23(a)(1). Here, there are 162,993 putative class members. Pl.’s Mem. II at 28. 6 Joinder of individual suits for each putative member would not only be impracticable, but 7 essentially impossible. The numerosity requirement is satisfied. 8 2. Rule 23(a)(2)– Commonality 9 To satisfy the commonality requirement, there must be “questions of law or fact 10 common to the class.” Fed. R. Civ. P. 23(a)(2). Not all questions of fact and law must be 11 common to satisfy the rule. Hanlon, 150 F.3d at 1019. Only “a single common question” is 12 required. Dukes, 564 U.S. at 359. But the “claims must depend upon a common contention . . . 13 of such a nature that it is capable of classwide resolution—which means that determination of its 14 truth or falsity will resolve an issue that is central to the validity of each one of the claims in one 15 stroke.” Id. at 350. 16 “[C]ommonality is generally satisfied where . . . ‘the lawsuit challenges a system- 17 wide practice or policy that affects all of the putative class members.’” Franco v. Ruiz Food 18 Prods., Inc., No. 1:10-cv-02354-SKO, 2012 WL 5941801, at *5 (E.D. Cal. Nov. 27, 2012) 19 (internal quotation marks, citation omitted). Here, the court considers below any 20 “‘[d]issimilarities within the proposed class’ that ‘have the potential to impede the generation of 21 common answers.’” Dukes, 564 U.S. at 350 (alterations in original) (quoting Richard A. 22 Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132 (2009)). 23 As noted, the proposed agreement defines the class for settlement purposes as 24 “[a]ll current and former employees of Defendants who worked assignments during the period 25 March 23, 2008 through December 31, 2017.” Proposed Agreement § I.17. Previously, the 26 court noted plaintiff’s allegation, that Express failed to provide inclusive pay-range dates in wage 27 statements, identifies a time period that is not coextensive with the employment period for the 28 putative class. See Order at 7 (citing SAC ¶ 39(a)(v) (“All members of the Express Services 1 Class who received one or more itemized wage statements that . . . did not include the inclusive 2 dates of the period for which the employee is paid, from and after March 13, 2009.” (emphasis 3 added))). Although “[t]he Court may cure the defects of a proposed class definition where the 4 class is overbroad,” Soto v. Castlerock Farming & Transp., Inc., No. 1:09-cv-00701-AWI-JLT, 5 2013 WL 6844377, at *23 (E.D. Cal. Dec. 23, 2013) (collecting cases), the starting and ending 6 dates here are contained within the Proposed Agreement the Settlement Parties have submitted. 7 In reviewing that agreement, the court notes the dates have been corrected and the wage statement 8 subclass will receive a pro rata share of the net class settlement fund “based on the number of 9 workweeks they worked an assignment during the period March 23, 2009 through December 31, 10 2017.” Proposed Agreement § III.12. 11 With that correction, there are essentially three separate sets of claims in this case, 12 some of which apply to the entire class and some of which apply to only a portion of the class. 13 First, the entire class of employees who worked between March 23, 2008 and December 31, 2017 14 have potential claims revolving around non-compliant meal period policies and failure to pay 15 employees who did not receive a meal period at the correct rate. Pl.’s Mem. II at 14; Supp. Br. at 16 3. Second, the employees who worked between March 23, 2008 and December 31, 2017 have 17 potential claims related to (1) Express’s failure to calculate overtime rate of pay when employees 18 received a non-discretionary bonus, (2) whether retention and referral bonuses were non- 19 discretionary and warrant inclusion in the regular rate of pay, and (3) a derivative claim for 20 waiting time penalties. Pl.’s Mem. II at 14. Finally, the wage-statement sub-class involves 21 claims that Express issued non-compliant wage statements. Id. The PAGA claims are irrelevant 22 for class certification purposes. See Baumann v. Chase Inc. Services Corp., 747 F.3d 1117, 23 1122–24 (9th Cir. 2014) (“[U]nlike Rule 23(a), PAGA contains no requirements of numerosity, 24 commonality, or typicality […] Rule 23 and PAGA are more dissimilar than alike.) 25 The court’s previous order denying preliminary approval raised doubts about the 26 commonality of the class. Now, plaintiff alleges the same common questions: “whether 27 Defendants’ failure to provide a written meal period policy is unlawful; whether Defendants 28 practice of not including allegedly non-discretionary bonus payments into employees’ regular rate 1 of pay and failing to include the inclusive dates of the pay period on wage statements violate 2 California law.” Pl.’s Mem. II at 28; SAC ¶¶ 42–56, 75–80, 87–95. And in its initial motion, 3 plaintiff did not appear to provide any meaningful answer to the court’s previous determination 4 that he had not adequately supported commonality. Pl.’s Mem. II at 28. Rather plaintiff simply 5 stated, sweepingly, that answering these questions “would resolve class-wide issues in ‘one 6 stroke.’” Id. (citing Dukes, 564 U.S. at 359). As directed by the court, plaintiff supplemented his 7 briefing, pointing to some additional helpful authority within this circuit on the issue of 8 commonality. See generally Suppl. Br. 9 The leading authority, plaintiff reiterates, is the Supreme Court’s decision in Wal- 10 Mart Stores, Inc. v. Dukes. In Dukes, the Court held “commonality requires the plaintiff to 11 demonstrate that the class members have ‘suffered the same injury.’” Dukes, 564 U.S. at 350 12 (quoting General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 157 (1982)). “This does 13 not mean merely that they have all suffered a violation of the same provision of law.” Dukes, 14 564 U.S. at 350. Instead, “same injury” requires a “common contention” that “must be of such a 15 nature that it is capable of classwide resolution—which means that determination of its truth or 16 falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” 17 Id. 18 In his supplemental briefing, plaintiff further analyzes how each of the three 19 potential claims—those related to meal period policies, discretionary or bonus payments, and 20 wage statements—meets the commonality requirement. Suppl. Br. at 2–4. Regarding the first 21 claim related to meal period policies, plaintiff argues applying California law will “determine in 22 ‘one stroke’ whether Express’ meal period practices, uniformly applied to all of its non-exempt 23 California employees, are lawful.” Id. at 3. Plaintiff compares the meal period cause of action to 24 that of the plaintiff in Brinker Rest. Corp. v. Superior Ct., in which the court held: “Claims 25 alleging that a uniform policy consistently applied to a group of employees in violation of the 26 wage and hour law are of the sort routinely, and properly, found suitable for class treatment.” Id. 27 (quoting Brinker Rest. Corp. v. Superior Ct., 53 Cal.4th 1004, 1033 (2012)). Plaintiff also relies 28 on Bradley v. Networkers Int’l., LLC, in which the state appellate court reversed a denial of class 1 certification because “plaintiff’s theory of recovery is based on [defendant’s] (uniform) lack of a 2 rest and meal break policy and its (uniform) failure to authorize employees to take statutorily 3 required rest and meal breaks.” Id. (quoting Bradley v. Networkers Int’l., LLC, 211 Cal. App.4th 4 1129, 1150–51 (2012)). These cases are comparable to this one in terms of the issues raised. The 5 court agrees they support the court’s finding commonality within the class, at least with respect to 6 the meal period claims. 7 Plaintiff does not provide additional legal authority to support his claims of 8 commonality relating to the discretionary payments and wage statement claims, but he does 9 provide additional analysis. First, plaintiff asserts resolution of the claim regarding whether 10 bonuses are non-discretionary invokes “a common question of law, the answer to which will 11 resolve this claim on behalf of the putative class.” Suppl. Br. 3. Moreover, plaintiff highlights 12 Express admits this policy “was common to all California employees during a portion of the class 13 period” and the calculation of the overtime rate “was identical as applied to all of Express’ non- 14 express employees in California.” Id. at 3–4. With respect to the wage statement subclass, 15 plaintiff argues determining whether the wage statements “comply with the requirements of 16 Labor Code section 226(e) will yield a common legal answer.” Suppl. Br. at 4. 17 Having carefully considered plaintiff’s supplemental briefing, the court finds each 18 of plaintiff’s claims analyzed here appears capable of a classwide resolution. As plaintiff 19 demonstrates, each of these claims results from a policy affecting the entirety of the class. In this 20 way, the claims differ from those of the claims in Dukes. In Dukes, putative class members “held 21 a multitude of different jobs, at different levels . . . , for variable lengths of time, in [many 22 locations], . . . with a kaleidoscope of supervisors . . . , subject to a variety of regional policies 23 that all differed.” Dukes, 564 U.S. at 359–60 (quoting Dukes, 603 F.3d at 652 (Kozinski, C.J., 24 dissenting)). Class members here worked for different supervisors and at different franchisor 25 locations, but they were not subject to “a variety of regional policies that all differed” as was the 26 case in Dukes. The court notes, however, the wage statement claims apply to a “subclass” of 27 persons who only worked between March 23, 2009 and December 21, 2017. Because these 28 claims apply to employees who worked within a different range of dates than the dates for the 1 overall class, these claims are not capable of a “classwide resolution.” But the existence of a 2 subclass does not prevent a class from meeting the commonality requirement. Fed. R. Civ. P. 3 23(c)(5) (“When appropriate, a class may be divided into subclasses that are each treated as a 4 class under this rule.”). 5 Also, while plaintiff points to cases in which previous courts have found 6 commonality for classes making claims similar to those here, plaintiff does not explain whether 7 courts have ruled on cases in which there are separate, but related, issues and claims raised by the 8 entire class. There are cases finding a class fulfills the commonality requirement even when there 9 are multiple common questions that apply to all capable class members. For example, one court 10 found the class met the commonality requirement even when there were “numerous questions 11 common to the class: whether Defendants’ ‘All Natural’ representations are false and misleading, 12 whether the Challenged Ingredients may legally be included in a product labeled ‘All Natural,’ 13 and whether the representations constitute ‘unfair’ or ‘unlawful’ practices under the UCL, 14 constitute a breach of warranty, or are likely to deceive reasonable consumers in violation of the 15 FAL, CLRA, and UCL.” Lilly v. Jamba Juice Co., 308 F.R.D. 231, 241 (N.D. Cal. 2014). 16 Another found the class met the commonality requirement even when there were separate 17 questions of failure to pay wages and overtime, meal period violations, and rest-break liability. 18 Ching v. Siemens Industry, Inc., No. C 11-4838 MEJ, 2013 WL 6200190, at *1–4 (N.D. Cal. 19 Nov. 27, 2013) (citing Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 633 (S.D. Cal. 2010) 20 (“common factual questions, such as whether [d]efendants’ policies deprived the…class members 21 of meal periods, rest periods overtime pay, and reimbursement.”)). Here, the existence of 22 multiple common questions aligns with the questions raised by the classes in Lilly and Ching. As 23 in those cases, the existence of these multiple questions does not preclude the court’s finding 24 commonality satisfied. The class here meets the commonality requirement of Rule 23 for 25 purposes of preliminary approval. 26 3. Rule 23(a)(3)–Typicality 27 The typicality requirement is satisfied if “the claims or defenses of the 28 representative parties are typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). 1 “Measures of typicality include ‘whether other members have the same or similar injury, whether 2 the action is based on conduct which is not unique to the named plaintiffs, and whether other 3 class members have been injured by the same course of conduct.’” Torres v. Mercer Canyons 4 Inc., 835 F.3d 1125, 1141 (9th Cir. 2016) (quoting Hanon v. Dataproducts Corp., 976 F.2d 497, 5 508 (9th Cir. 1992)). Under this “permissive” requirement, “representative claims are ‘typical’ if 6 they are reasonably coextensive with those of absent class members; they need not be 7 substantially identical.” Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir. 2014) (quoting Hanlon v. 8 Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)). 9 Plaintiff alleges that he, along with class members, was subject to the same 10 Express meal period policies or payment of premiums for non-compliant meal periods. Pl.’s 11 Mem. II at 29. Because the factual predicates are the same, the claims of the named plaintiff and 12 absent class members are “based on identical legal theories.” Id. Nothing indicates plaintiff’s 13 claims differ from those of the class. As a result, the class meets the typicality requirement, 14 preliminarily. 15 4. Rule 23(a)(4)–Adequacy 16 The adequacy requirement is satisfied only if the representative plaintiffs “will 17 fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). Courts must 18 consider whether “(1) [] the named plaintiffs and their counsel have any conflicts of interest with 19 other class members and (2) [] the named plaintiff and their counsel [will] prosecute the action 20 vigorously on behalf of the class[.]” Hanlon, 150 F.3d at 1020. “Serious conflicts of interest can 21 impair adequate representation by the named plaintiffs, yet leave absent class members bound to 22 the final judgment, thereby violating due process.” In re Volkswagen ‘Clean Diesel’ Mktg., Sales 23 Practices, & Prod. Liab. Litig., 895 F.3d 597, 607 (9th Cir. 2018). 24 Plaintiff has participated in this litigation for seven years. His efforts include 25 answering written discovery, providing a sworn deposition, making himself available during 26 mediation and updating counsel with necessary information. Michael H. Stoddart Decl. ¶¶ 8–14, 27 ECF No. 178-4. Plaintiff’s interest appears to be aligned with those of the class; nothing in the 28 record currently before the court suggests otherwise. As discussed below, the proposed 1 representative award of $10,000 does not appear to incentivize plaintiff to act contrary to the 2 interests of the class as a whole. 3 In addition, plaintiff’s counsel has undertaken substantial efforts in this case. 4 See Graham P. Hollis Decl., ECF No. 178-3, at 2–3; Khoury Decl., ECF No. 178-2, at 1–13. 5 Mr. Hollis has specialized in employment litigation since 1994 and assisted in reaching 6 settlements in over fifty class action lawsuits with claims similar to those here. Hollis Decl. ¶¶ 3– 7 4. Mr. Khoury has practiced law for nearly fifty years and has focused on class action cases, 8 including claims similar to those here, since 1981. Khoury Decl. ¶ 4. Plaintiff’s counsel 9 participated in the nearly eight years of motion practice in this case, including two motions to 10 dismiss, discovery disputes, and two mediations; counsel also avers litigation expenses reached 11 approximately $70,000. Khoury Decl. ¶¶ 15–27. The court is satisfied counsel on this record 12 has prosecuted the action vigorously on behalf of the class to date. 13 5. Rule 23(b) –Superiority 14 The court must also be satisfied “that a class action is superior to other available 15 methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). “The 16 superiority inquiry under Rule 23(b)(3) requires determination of whether the objectives of the 17 particular class action procedure will be achieved in the particular case,” which “necessarily 18 involves a comparative evaluation of alternative mechanisms of dispute resolution.” Hanlon, 19 150 F.3d at 1023 (citation omitted). 20 Here, as noted above, individual resolution of each class member’s dispute would 21 require 162,993 separate lawsuits. Pl.’s Mem. II at 28. Moreover, the recovery range of $140 to 22 $1,411.20 for class members in this case is far less than the likely expense of trial, which would 23 make bringing the suits separately undesirable. Khoury Decl. ¶ 31. Class action is the superior 24 vehicle for resolving this dispute. 25 6. Rule 23(b)–Predominance 26 “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are 27 sufficiently cohesive to warrant adjudication by representation.” Amchem, 521 U.S. at 623. 28 Although similar to Rule 23(a)’s commonality requirement, the predominance requirement is 1 more demanding. Id. at 624; Dukes, 564 U.S. at 359. “When common questions present a 2 significant aspect of the case and they can be resolved for all members of the class in a single 3 adjudication, there is clear justification for handling the dispute on a representative rather than on 4 an individual basis.” Hanlon, 150 F.3d at 1022 (quoting Charles Alan Wright, et al., 5 7AA Federal Practice & Procedure § 1778 (2d ed. 1986)). But it is important to proceed with 6 “caution when individual stakes are high and disparities among class members great.” Amchem, 7 521 U.S. at 625. 8 The court’s previous order found the plaintiff had not met its burden of showing 9 common issues predominate. Order at 8; see also Vinole v. Countrywide Home Loans, Inc., 10 571 F.3d 935, 944 n.9 (9th Cir. 2009) (“The party seeking certification bears the burden of 11 demonstrating that he has met the requirements of Rule 23(b).”). In responding to the court’s 12 questioning at hearing and through supplemental briefing, plaintiff has addressed predominance. 13 Although potential class members may have worked at different “client companies,” their claims 14 relate to the allegedly unlawful policies and payments of the overall franchisor, Express, and its 15 franchisee who issued wage statements. Pl.’s Mem. at 29. As a result, facts relating to each 16 individual class member’s experiences supporting specific claims and based on particular 17 supervisors and policies are not as likely to overwhelm predominance. Instead, the class-wide 18 concerns emanate from a single source, which set the allegedly unlawful policies. See Ching v. 19 Siemens Industry, Inc., No. C 11-4848-MEJ, 2013 WL 6200190 (N.D. Cal. Nov. 26, 2013) 20 (finding “issues facing the class arise from common questions involving Defendant’s calculation 21 and payment of wages and overtime” is “sufficient to satisfy the commonality requirement”); 22 Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 633 (S.D. Cal. 2010) (holding “common factual 23 questions, such as whether Defendants’ policies deprived the putative class members of meal 24 periods, rest periods, overtime pay, and reimbursement” satisfy the commonality requirement). 25 The court finds that class-wide concerns predominate and the class meets this requirement of 26 Rule 23 at this stage. 27 ///// 28 ///// 1 B. Terms of the Proposed Agreement 2 In light of the court’s duty to absent class members, this court opts to “review class 3 action settlements just as carefully at the initial stage as [it] do[es] at the final stage.” Cotter v. 4 Lyft, Inc., 193 F. Supp. 3d 1030, 1036 (N.D. Cal. 2016); see Smothers v. Northstar Alarm Servs., 5 LLC, No. 2:17-cv-00548-KJM-KJN, 2019 WL 280294, at *10 (E.D. Cal. Jan. 22, 2019). 6 Under Rule 23(e), a court may approve a class action settlement only if the 7 settlement is fair, reasonable, and adequate. Fed. R. Civ. P. 23(e)(2); Bluetooth, 654 F.3d at 946. 8 Although the court must weigh several factors to approve a settlement, additional factors may be 9 relevant depending on the context of the case and the terms of the agreement. See Bluetooth, 10 654 F.3d at 946 (“The factors in a court’s fairness assessment will naturally vary from case to 11 case . . . .). In its previous order, the court identified problems with the extent of the release of 12 liability, the lack of information concerning claim value, and provisions of the release of PAGA 13 liability. Order at 8–9. Plaintiff has addressed those concerns here. 14 1. Claim Form Release 15 As noted above, the court considered Ms. Martin’s concerns regarding the 16 following language in the initial proposed agreement, which included the following language: 17 “Released Claims also include all such claims arising under the California Labor Code.” 18 Proposed Agreement § I.32; ECF No. 156-2. The court acknowledged Ms. Martin’s reading of 19 this language did not square with the inclusion of the word “such” in “all such claims arising 20 under the California Labor Code.” Rather, the preceding sentence in the agreement addresses 21 claims “arising from the facts and circumstances in the operative complaint or amendment 22 thereto,” and then specifies these claims “includ[e] without limitation statutory, constitutional, 23 contractual or common law claims for wages, damages, unpaid costs, penalties, liquidated 24 damages, interest, attorneys’ fees, litigation costs, restitution, equitable relief or other relief under 25 Business & Professions Code § 17200, et seq., based on the following categories.” Order at 9 26 (citing Proposed Agreement § I.32 (emphasis added)). The sentence Martin questioned 27 previously can be read as simply modifying the preceding list and providing further detail about 28 the enumerated releases. 1 At the same time, with this reading, the release language appeared duplicative. The 2 release already includes “any and all claims, under federal, state and/or local law, statute, 3 ordinance, regulation, common law, or other source of law, alleged or which could have been 4 alleged, arising from the facts and circumstances in the operative complaint or amendment 5 thereto.” Id. The current proposed agreement does not contain this duplicative, catchall 6 statement. Proposed Agreement § I.35. Rather, the agreement lists different categories for the 7 released claims, including descriptions of the allegations supporting the claims and the applicable 8 law, but includes no statement regarding claims arising under the California Labor Code. Id. It 9 instead references specific claims under the Fair Labor Standards Act, which are included in the 10 release for class members. Id. Given these changes, the proposed agreement no longer includes 11 the unclear wording. 12 2. Gross Settlement Amount 13 Plaintiff previously argued the $10 million settlement represented 40 percent of 14 defendants’ total exposure, but the court found it did not have enough information to determine a 15 reasonable valuation of the meal period claim, and plaintiff had not accounted for the value of his 16 other claims. Order at 10–11 (citing Pl.’s Mem. I at 14). As a result, the court could not 17 determine if the gross settlement amount was proportionate to the approximate value of recovery. 18 Cf. Cotter, 176 F. Supp. 3d at 931 (“Most glaringly, counsel for the plaintiffs pegged the $12.25 19 million settlement figure primarily to the estimated value of the drivers’ claim for mileage 20 reimbursement. But the lawyers estimated the value of the reimbursement claim to be $64 21 million, when in fact, using their own methodology, it is worth more than $126 million.”). 22 In the renewed motion for preliminary settlement, plaintiff provides far more 23 extensive information regarding the extent of defendants’ liability. Pl.’s Mem. II at 21–22. In 24 particular, plaintiff explains his claims against Express for failure to provide meal periods, 25 supporting a damages request totaling approximately $25,314,230. Id. at 22 (citing Khoury Decl. 26 ¶ 48). Plaintiff describes the process he and his counsel used to value the claims against Express 27 during mediation, using a cumbersome method of looking through handwritten time sheets. Id. 28 The settlement reached allows every class member a wage component and a penalty component 1 for each week worked at Express. Id. It is the estimated value of these claims that is 2 approximately $25,314,230. Id. Plaintiff argues the possibility of not prevailing at trial or on 3 class certification calls for a 75 percent discount of his realistic maximum exposure for settlement 4 purposes, to $6,328,557.50. Id. 5 With respect to defendant’s failure to pay overtime wages, plaintiff estimates 6 “class members who received one or more non-discretionary bonuses and worked overtime in the 7 same pay period were owed approximately $631,000 in underpaid overtime wages.” Id. at 23. 8 This calculation is based on data provided by defendants in mediation. Id. Plaintiff estimates the 9 probability of not prevailing at trial supports a settlement of $315,500 as reasonable. Id. 10 The claim for failure to provide accurate itemized wage statements requires an 11 employer to “pay the greater of actual damages, or $50 per employee per pay period for the initial 12 violation and $100 per employee for subsequent violations, not exceeding an aggregate $4,000.” 13 Id. Plaintiff estimates potential damages for these violations are $15,243,568, but concedes 14 defendants may have some strong arguments, including that they did not receive notice of an 15 initial violation. Id. As a result, plaintiff estimates a 75 percent discount of his realistic 16 maximum exposure for purposes of settlement, to $3,810,892. Id. 17 Finally, for the waiting time penalties, plaintiff estimates a penalty of $51,274,802 18 based on 30 days multiplied by the rate of daily pay. Id. at 24. However, this claim is a 19 derivative claim, and plaintiff concedes defendants would likely be able to establish a good faith 20 defense their failure to pay was not “willful.” Id. Plaintiff discounts the potential maximum 21 exposure by 75 percent for purposes of settlement, to $12,818,700.50. Id. 22 Plaintiff has sufficiently explained several potential impediments to full recovery 23 in this case, and the prospects of plaintiff’s losing at trial or on appeal, with all attendant costs, 24 indicates the settlement recovery here is reasonable. 25 3. Arm’s Length Settlement Negotiations 26 The court also considers whether the parties reached their settlement agreement 27 through arm’s length negotiations. Fed. R. Civ. P. 23(e)(2)(B); In re Tableware Antitrust Litig., 28 484 F. Supp. 2d at 1080 (considering whether “proposed settlement appears to be the product of 1 serious, informed, non-collusive negotiations”). Parties’ participation in mediation “tends to 2 support the conclusion that the settlement process was not collusive.” Villegas v. J.P. Morgan 3 Chase & Co., No. CV 09-00261 SBA (EMC), 2012 WL 5878390, at *6 (N.D. Cal. Nov. 21, 4 2012). 5 Here, the parties participated in mediation on two occasions: first on March 5, 6 2014 and again on September 27, 2017. Pl.’s Mem. II at 6. The first mediation was unsuccessful; 7 the second mediation, with a mediator the parties simply identify as Jeffrey Ross, eventually 8 resulted in the parties agreeing upon the principle terms of the proposed settlement. Id.; Khoury 9 Decl. ¶ 25. This factor weighs in favor of preliminary approval. 10 4. Adequate Representation 11 Whether “the class representatives and class counsel have adequately represented 12 the class” and whether “the proposal treats class members equitably relative to each other” also 13 factor into the court’s assessment of whether the proposed settlement is fair, reasonable and 14 adequate. Fed. R. Civ. P. 23(e)(2)(A), (D). To that end, a proposed agreement should “not 15 improperly grant preferential treatment to class representatives or segments of the class . . . .” In 16 re Tableware Antitrust Litig., 484 F. Supp. 2d at 1080. Here, plaintiff as the class representative 17 requests a payment of $10,000, in exchange for the release of all claims and for his time and 18 effort prosecuting the matter. Proposed Agreement § III.4. 19 “An excessive class representative service award may be an indication that the 20 named class member is not adequately representing the interests of the class.” Flores v. ADT 21 LLC, No. 1:16-CV-00029-AWI-JLT, 2018 WL 6981043, at *1 (E.D. Cal. Mar. 19, 2018) (citing 22 Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157, 1164 (9th Cir. 2013)). The court 23 ultimately will grant an incentive award only upon receiving “‘evidence demonstrating the quality 24 of plaintiff’s representative service,’ such as ‘substantial efforts taken as class representative to 25 justify the discrepancy between [his] award and those of the unnamed plaintiffs.’” Flores, 2018 26 WL 6981043, at *1 (quoting Reyes v. CVS Pharmacy, Inc., No. 1:14-CV-00964-MJS, 2016 WL 27 3549260, *15 (E.D. Cal. June 29, 2016)); In re Online, 779 F.3d at 947 (court considers 28 “proportion of the [representative] payment[s] relative to the settlement amount, and the size of 1 each payment”). Specifically, this court and others have adopted the following factors to 2 determine whether to approve an enhancement payment: (1) the risk to the class representative in 3 commencing suit, both financial and otherwise; (2) the notoriety and personal difficulties 4 encountered by the class representative; (3) the amount of time and effort spent by the class 5 representative; (4) the duration of the litigation; and (5) the personal benefit, or lack thereof, 6 enjoyed by the class representative as a result of the litigation. Van Vranken v. Atl. Richfield Co., 7 901 F. Supp. 294, 299 (N.D. Cal. 1995); see also Zakskorn v. Am. Honda Motor Co., Inc., 2:11- 8 CV-02610-KJM, 2015 WL 3622990, at *17 (E.D. Cal. June 9, 2015). This court has found 9 requests of $2,500 per representative, in cases involving three representatives, to be 10 presumptively reasonable. See Zakskorn, 2015 WL 3622990, at *17. In cases in which the class 11 representative requested an enhancement payment of $10,000, this court has required evidence of 12 substantial effort throughout a protracted case. See, e.g. Smothers v. NorthStar Alarm Services, 13 LLC, No. 2:17-CV-00548-KJM-KJN, 2020 WL 1532058, at *12 (E.D. Cal. Mar. 31, 2020) 14 (awarding a $10,000 enhancement payment to each representative plaintiff when they submitted 15 declarations describing their 100 hours of work each). 16 To support his request, Mr. Stoddart provides a declaration to the court detailing 17 his effort in support of this litigation. Stoddart Decl. Over the course of seven years, Mr. 18 Stoddart avers he answered written discovery, including 119 requests for production and 21 19 interrogatories, which required extensive research on his part. Id. ¶ 8. He provided two sworn 20 depositions, made himself available during mediation, and updated counsel with whatever 21 information they needed. Id. ¶¶ 8–14. Mr. Stoddart assumed this role knowing the risks he could 22 face, both during the litigation and after the litigation with future employers potentially looking 23 askance at his having filed suit here. Id. ¶ 5. 24 The court notes that while the $10,000 award is on the high end of what is 25 typically approved, plaintiff here has demonstrated significant effort throughout the seven-year 26 litigation. However, at the final approval stage, plaintiff should include analysis of the 27 “proportion of the [representative] payment[s] relative to the settlement amount, and the size of 28 each payment.” In re Online DVD-Rental Antitrust Litig., 779 F.3d at 947. At this preliminary 1 stage, the information Mr. Stoddart provides suggests he qualifies for the $10,000 award he 2 requests. 3 5. Attorneys’ Fees 4 The court also considers “the terms of any proposed award of attorney’s fees, 5 including timing of payment.” Fed. R. Civ. P. 23(e)(2)(C)(iii). 6 Under Rule 23(h), “[i]n a certified class action, the court may award reasonable 7 attorney’s fees and nontaxable costs that are authorized by law or by the parties’ agreement.” 8 Fed. R. Civ. P. 23(h). In diversity actions, state law governs both counsel’s right to fees and the 9 method for calculating fees. Mangold v. Cal. Public Util. Comm’n, 67 F.3d 1470, 1478 (9th Cir. 10 1995) (“Existing Ninth Circuit precedent has applied state law in determining not only the right to 11 fees, but also in the method of calculating the fees.”); Rodriguez v. Disner, 688 F.3d 645, 653 n.6 12 (9th Cir. 2012) (“If . . . we were exercising our diversity jurisdiction, state law would control 13 whether an attorney is entitled to fees and the method of calculating such fees.”). 14 “[B]oth state and federal courts consider similar tests to evaluate the 15 reasonableness of the fees requested from a settlement fund.” Flores v. ADT LLC, No. 1:16-CV- 16 0029-AWI-JLT, 2018 WL 1062854, at *12 (E.D. Cal. Feb. 27, 2018), report and 17 recommendation adopted as modified, No. 1:16-CV-00029-AWI-JLT, 2018 WL 6981043 (E.D. 18 Cal. Mar. 19, 2018). California courts have discretion to rely on either a percentage of the 19 recovery or lodestar approach, with “the goal under either . . . approach being the award of a 20 reasonable fee to compensate counsel for their efforts.” Laffitte v. Robert Half Int’l Inc., 1 Cal. 21 5th 480, 504 (2016)); Stetson v. Grissom, 821 F.3d 1157, 1165 (9th Cir. 2016) (quoting Fischel v. 22 Equitable Life Assurance Soc’y, 307 F.3d 997, 1006 (9th Cir. 2002) (“To calculate the fee in a 23 common-fund case, the district court ‘has discretion to apply either the lodestar method or the 24 percentage-of-the-fund method in calculating a fee award.’”)). 25 The Ninth Circuit has generally set a 25 percent benchmark for the award of 26 attorneys’ fees, and “courts may adjust this figure upwards or downwards if the record shows 27 special circumstances justifying a departure.” Ontiveros, 303 F.R.D. at 372 (internal quotation 28 marks omitted) (citing In re Bluetooth, 654 F.3d at 942). The Ninth Circuit has also approved the 1 use of lodestar cross-checks to determine the reasonableness of a particular percentage recovery 2 of a common fund. Seguin v. Cty. of Tulare, No. 1:16-CV-01262-DAD-SAB, 2018 WL 1919823, 3 at *6 (citing Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1050 (9th Cir. 2002)). 4 Here, defendants have agreed not to oppose any motion by plaintiff’s counsel for 5 attorneys’ fees “not in excess of 25 percent (25%), of $2,500,000 of the Gross Settlement 6 Amount, as well as an additional amount for actual litigation costs, not to exceed $70,000.” 7 Proposed Agreement § III.8. Such a clear sailing provision raises a red flag as its benefit accrues 8 primarily to counsel as opposed to the class. While this does not preclude preliminary approval, 9 the court ultimately will conduct a “lodestar cross-check” in the final fairness hearing to 10 determine whether the request is reasonable. See Ogbuehi, 303 F.R.D. at 352. 11 Plaintiff’s counsel has submitted declarations to the court describing their work on 12 this case, as well as their experience in this area of the law. See Hollis Decl. at 2–3; Khoury Decl. 13 at 1–13. As Mr. Khoury represents in his declaration, counsel will “detail the hours expended and 14 the litigation expenses advanced” in their motion for final approval of attorneys’ fees and costs. 15 Khoury Decl. ¶ 56. To allow the court to conduct the lodestar cross-check as planned, plaintiff’s 16 counsel will need to provide a breakdown of their hourly rates, hours expended by each attorney, 17 and what work occurred within those hours. See Bellinghausen v. Tractor Supply Co., 306 F.R.D. 18 245, 264 (N.D. Cal. 2015) (“[I]t is well established that ‘[t]he lodestar cross-check calculation 19 need entail neither mathematical precision nor bean counting . . . [courts] may rely on summaries 20 submitted by the attorneys and need not review actual billing records.’”) (citation omitted)). 21 Additionally, in performing the lodestar cross-check, the court will multiply the hours expended 22 on the litigation by the prevailing local rate for an attorney of the skill required to perform the 23 litigation. Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008). Plaintiff’s 24 counsel may wish to consider including evidence demonstrating how their hourly rates compare 25 to rates approved by courts in this district for practicing in this area of the law. 26 6. Notice 27 “The court must direct notice in a reasonable manner to all class members who 28 would be bound by the propos[ed] [settlement] . . . .” Fed. R. Civ. P. 23(e)(1)(B). Under Rule 23’s 1 provision for notifying class members of class certification, the notice must state in plain, easily 2 understood language: 3 (i) the nature of the action; 4 (ii) the definition of the class certified; 5 (iii) the class claims, issues, or defenses; 6 (iv) that a class member may enter an appearance through an attorney if the member so desires; 7 (v) that the court will exclude from the class any member who 8 requests exclusion; 9 (vi) the time and manner for requesting exclusion; and 10 (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 11 12 Fed. R. Civ. P. 23(c)(2)(B)(i). Furthermore, “due process requires at a minimum that an absent 13 plaintiff be provided with an opportunity to remove himself from the class by executing and 14 returning an ‘opt out’ or ‘request for exclusion’ form to the court.” Phillips Petroleum Co. v. 15 Shutts, 472 U.S. 797, 812 (1985). “In a Rule 23(b)(3) class, the notice and any Internet Web site 16 should include opt-out forms.” Ann. Manual Complex Lit. § 21.312 (4th ed.). “[D]ue process 17 requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself 18 from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the 19 court.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985). 20 Here, the proposed notice of settlement includes the necessary background 21 information about the nature of the action, the class itself, as well as the process that led to the 22 proposed settlement. Khoury Decl., Ex. 1, Notice, at 54. 23 The notice does not explicitly mention that a class member may enter an 24 appearance through an attorney if the class member so desires. The notice asks: “Who are 25 Attorneys for the Parties?”, then lists the contact information for plaintiff’s counsel and counsel 26 for defendants and states class members can contact plaintiff’s counsel if they have questions 27 about the settlement. Id. at 55 (emphasis in original). The notice then discusses how a class 28 member may “pursue a separate lawsuit, with a separate attorney at your own expense” should a 1 class member want to get out of the settlement. Id. at 59. These provisions could give lay class 2 members the impression they could only be represented by an independent attorney if they opt- 3 out of the settlement. As a result, the court finds the notice deficient in this respect. 4 Plaintiff has provided an opt-out form for class members to complete and return 5 should they wish to opt out of the settlement. Id. The opt-out form provides clear instructions 6 regarding the process for opting-out, including the address class members should return the form 7 to, and the notice also describes the difference between opting-out and objecting to the settlement, 8 as well as the separate processes for each. Id. at 59–60. The notice correctly informs class 9 members when counsel and plaintiff will file their respective motions for attorneys’ fees and costs 10 and an incentive award, and where and how class members may review those documents. Id. 11 Importantly, the class members may review the relevant documents on the claim administrator’s 12 website and the notice provides guidance on how to do so. Id. at 61. 13 The proposed notice is reasonable in all respects, except for clarifying class 14 members’ ability to appear with an attorney. Because this deficiency is easily correctable, the 15 court will GRANT approval of the form of the notice, contingent on the filing within fourteen 16 days of a corrected notice. 17 C. PAGA Settlement 18 The court must also consider whether the proposed PAGA settlement is adequate 19 to serve the public interest. When plaintiffs bring a PAGA action, they do so as the “proxy or 20 agent of the state’s labor law enforcement agencies, . . . who are real parties in interest.” Sakkab 21 v. Luxottica Retail N. Am. Inc., 803 F. 3d 425, 435 (9th Cir. 2015). Any PAGA judgment binds 22 not only members of the class, but similarly situated workers who opt out of the class and the 23 state’s labor law enforcement agencies. Arias v. Superior Court, 46 Cal. 4th 969, 986 (2014). 24 “[W]here plaintiffs bring a PAGA representative claim, they take on a special responsibility to 25 their fellow aggrieved workers who are effectively bound by any judgment.” O’Connor v. Uber 26 Technologies, Inc., 201 F. Supp. 3d 1110, 1133 (N.D. Cal. 2016) (citing Iskanian v. CLS Transp. 27 Los Angeles, LLC, 59 Cal. 4th 348, 381 (2014)). 28 1 A court analyzing the compromise of a PAGA claim must consider whether the 2 settlement is “‘fundamentally fair, reasonable, and adequate’ with reference to the public policies 3 underlying the PAGA.” O’Connor, 201 F. Supp. 3d at 1133. (citation omitted); Haralson v. U.S. 4 Aviation Servs. Corp., 383 F. Supp. 3d 959, 979 (N.D. Cal. June 7, 2019). In so doing, the court 5 may apply a sliding scale taking account of the Rule 23 class settlement with reference to the 6 PAGA settlement; where “the settlement for the Rule 23 class is robust, the purposes of PAGA 7 may be concurrently fulfilled.” O’Connor, 201 F. Supp. 3d at 1134. “By providing fair 8 compensation to the class members as employees and substantial monetary relief, a settlement not 9 only vindicates the rights of the class members as employees, but may have a deterrent effect 10 upon the defendant employer and other employers, an objective of PAGA.” Id. However, where 11 the compensation to the class is modest compared to the verdict value, non-monetary relief is of 12 limited benefit to the class, and the settlement does not clarify the rights and obligations of the 13 employees prospectively, the settlement of the non-PAGA claims may not vindicate the interests 14 of PAGA. Id. at 1135. “In these circumstances, the adequacy of settlement as a whole turns in 15 large part on whether the PAGA aspect of the settlement can stand on its own.” Id. 16 In its renewed motion for preliminary approval, plaintiff addresses the court’s 17 previous concerns regarding the release of liability including unnoticed PAGA claims and the 18 inadequate amount of the PAGA settlement. Order at 12. 19 The previous release of liability included “any and all penalties pursuant to the 20 Private Attorneys General Act (“PAGA”) of 2004,” Proposed Agreement § I.32. Order at 11. 21 Previously, plaintiff did not explain how the release of liability can include unnoticed PAGA 22 claims against the Settlement Defendants’ many client employers. Id. at 12. The current 23 proposed agreement no longer includes a release of all unnoticed PAGA claims and instead 24 provides for release of “solely as to Express Services Inc., Phillips & Associates Inc., and 25 Western Wine Services, Inc., all penalties pursuant to the Private Attorneys General Act 26 (“PAGA”) of 2004 for the period March 13, 2011 to December 31, 2017 based on the alleged 27 violations of the California Labor Code as set forth in the Complaint and amended complaints and 28 ///// 1 Plaintiff’s notice to the California Labor and Workforce Development Agency dated July 20, 2 2011 and as amended on February 3, 2012.” Proposed Agreement § 35. 3 Regarding the proposed PAGA recovery of $50,000, plaintiff argues his maximum 4 exposure is properly highly discounted because Express “changed its meal period policy, bonus 5 payments and format of itemized wage statements during the Class Period” and class members 6 worked many workweeks, not all of which would be entitled to a PAGA penalty. Pl.’s Mem. II at 7 25. Moreover, plaintiff has provided the court with authority suggesting the proposed PAGA 8 settlement falls within the range of or is higher than other equivalent settlements. See Nen Thio v. 9 Genji, LLC, 14 F. Supp. 3d 1324, 1330 (N.D. Cal. 2014) ($10,000 PAGA penalties in $1,250,000 10 gross settlement); Franco, 2012 WL 5941801, at *2 ($10,000 PAGA penalties in $2,500,000 11 gross settlement); Garcia v. Gordon Trucking, Inc., No. 1:10-CV-0324-AWI-SKO, 2012 WL 12 5364575 (E.D. Cal. Oct. 31, 2012) ($10,000 PAGA penalties in $3,700,000 gross settlement); 13 Chu v. Wells Fargo Invs., LLC, No. C 05-4526-MHP, 2011 WL 672645 (N.D. Cal. Feb. 16, 14 2011) ($10,000 PAGA penalties in $6,900,000 gross settlement.). Other cases, however, suggest 15 a far greater percentage of the overall settlement may be appropriate for the PAGA penalty here. 16 See Ahmed v. Beverly Health and Rehabilitation Servs., Inc., No. 2:16-CV-1747-WBS-KJN, 2018 17 WL 746393, at *10 (E.D. Cal. Feb. 6, 2018) (approving 1 percent of gross settlement as PAGA 18 settlement); Rodriguez v. RCO Reforesting, Inc., No. 2:16-CV-2523-WBS-DMC, 2019 WL 19 331159 (E.D. Cal. Jan. 24, 2019) (6 percent of total settlement as PAGA penalties). Here, while 20 the difference between the $50,000 proposed PAGA penalty and the gross settlement of 21 $10,000,000 does not prevent the court from approving the settlement preliminarily, at the final 22 approval stage, plaintiff should provide the court with more support explaining why the proposed 23 settlement serves the purposes of PAGA and takes account of these other cases. 24 IV. CONCLUSION 25 For the foregoing reasons, the court HEREBY MAKES THE FOLLOWING 26 DETERMINATIONS AND ORDERS: 27 1. The court finds, on a preliminary basis, that the Settlement Agreement incorporated in full 28 by this reference and made a part of this order granting preliminary approval has no 1 obvious deficiencies which could not be corrected by the time of final approval, does not 2 improperly grant preferential treatment to the class representatives or segments of the 3 class, and appears to be within the range of reasonableness of a settlement that could 4 ultimately be given final approval by this court. The court notes defendants agreed to pay 5 the non-reversionary maximum settlement amount of $10,000,000 in full satisfaction of 6 the claims as more specifically described in the settlement agreement. 7 2. The court also finds that, on a preliminary basis, the Settlement is fair, just, 8 adequate, and reasonable to all members of the Class when balanced against the probable 9 outcome of further litigation relating to class action certification, liability and damages 10 issues, and potential appeals of rulings. Good cause appearing, the motion for preliminary 11 approval of class action settlement is GRANTED. 12 3. As part of preliminary approval, the court finds for settlement purposes only, that the class 13 meets the requirements of Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure, 14 and conditionally certifies the class for the purposes of settlement as: 15 All current and former employees of Defendants who worked assignments during the period March 23, 2008 through 16 December 31, 2017. 17 4. The court approves and appoints plaintiff Michael Stoddart the class representative. 18 5. The court approves and appoints Graham Hollis, APC and Cohelan, Khoury, and Singer 19 as class counsel. 20 6. The court approves and appoints Rust Consulting, Inc. as the settlement administrator to 21 administer the settlement according to the terms of the settlement agreement. 22 7. The court finds the proposed class notice and the proposed method of dissemination 23 reasonably and adequately advises the class of the information required by Federal Rule of 24 Civil Procedure 23(c)(2)(B), with the exception of the need to clarify class members’ right 25 to make an appearance with an independent attorney, as discussed above. The court 26 APPROVES the proposed class notice CONTINGENT ON the filing within fourteen days 27 of an updated proposed notice correcting this deficiency. 28 1 8. The court finds the mailing to the class members’ present and last known address, with 2 safeguards to perform reasonable skip traces of returned as undeliverable Notice Packets, 3 constitutes an effective method of notifying class members of their rights with respect to 4 the proposed settlement. Accordingly, it is hereby ORDERED that: 5 a. No later than fourteen days from the court’s issuance of a minute order confirming 6 the court’s acceptance of the updated notice required in (7) above as satisfying the 7 contingency and resulting approval of the proposed class notice, defendants shall 8 forward to the appointed administrator the class data as provided for by the terms 9 of the settlement agreement. 10 b. No later than 21 days after receipt of the class data, the administrator shall mail the 11 Notice Packets to each class member, by first class United States mail, postage 12 pre-paid. The exterior of the mailing envelope shall include the following 13 language below the administrator’s address: 14 Important Legal Document: You may get Money from a Class Action 15 Settlement; your prompt reply to correct a Bad address is required 16 17 9. IT IS FURTHER ORDERED that: 18 a. Requests for Exclusion: Requests for exclusion from the settlement 19 must be mailed to the administrator at the address provided for in the class notice, 20 postmarked no later than 45 days from the initial mailing of the Notice Packets to 21 the class. If the notice response deadline falls on a Saturday or federal holiday, it 22 will be extended to the next day when the U.S. Postal Service is open. 23 b. Objections: Notices of objection to the settlement may be mailed to the settlement 24 administrator at the address shown in the class notice, by first class U.S. mail on or 25 before the notice response deadline. Any written notice of objection should be 26 signed by the class member and/or his or her representative; including the 27 objecting class member’s name, address, telephone number, the last four digits of 28 his/her Social Security number or full employee ID number, the case name and 1 number as shown in the class notice, the basis for each objection, and whether or 2 not the class member intends to appear at the final approval hearing. Class 3 members may also appear at the time of the final approval hearing to make any 4 objections they may have. 5 10. IT IS FURTHER ORDERED that within fourteen days of the notice response deadline, 6 class counsel shall file their application for awards of reasonable attorneys’ fees and 7 litigation expenses, the class representative service payments, and the administrator’s 8 expenses. 9 11. IT IS FURTHER ORDERED that all papers in support of the Motion for Order Granting 10 Final Approval of the Class Action Settlement shall be filed at least twenty-eight calendar 11 days before the final fairness/final approval hearing. 12 12. IT IS FURTHER ORDERED that all papers I support of the Motion for Order Granting 13 Final Approval of the Class Action Settlement shall be filed at least twenty-eight calendar 14 days before the final fairness/final approval hearing. 15 13. The final approval hearing shall be held before the undersigned at a date to be noticed in 16 the motion for final approval. 17 14. IT IS FURTHER ORDERED that if, for any reason, the court does not execute and file an 18 order granting final approval and judgment, or if the effective date, as defined by the 19 settlement agreement, does not occur for any reason whatsoever, the settlement agreement 20 and the proposed settlement subject of this order and all evidence and proceedings had in 21 connection therewith, shall be null and void and without prejudice to the status quo ante 22 rights of the parties to this litigation as more specifically set forth in the settlement 23 agreement. 24 15. IT IS FURTHER ORDERED that pending further order of this court, all proceedings in 25 this matter except those contemplated by this order and in the settlement agreement are 26 STAYED. 27 16. The court expressly reserves the right to adjourn or to continue the final approval hearing 28 from time-to-time without further notice to class members, except that a notice of 1 continuance shall be provided to all class members who submit a notice of objection. In 2 the event the settlement does not become final for any reason, this preliminary approval 3 order shall be of no further force or effect and the fact that the parties were willing to 4 stipulate to class certification as part of the settlement shall have no bearing on, and not be 5 admissible in connection with, the issue of whether a class should be certified in a non- 6 settlement conference. 7 The motion for preliminary approval is GRANTED and the joint status request is 8 DENIED AS MOOT. 9 IT IS SO ORDERED. This order resolves ECF Nos. 178 and 186. 10 DATED: October 6, 2020. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28