Ferrell v. Buckingham Property Management ( 2021 )

Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 1 of 60 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 KEVIN FERRELL, et al., Case No. 1:19 -cv-00332-NONE-SAB 12 Plaintiffs, FINDINGS AND RECOMMENDATIONS RECOMMENDING GRANTING MOTION 13 v. FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND GRANTING 14 BUCKINGHAM PROPERTY MOTION FOR ATTORNEYS’ FEES, MANAGEMENT, COSTS, AND INCENTIVE AWARDS 15 Defendant. (ECF Nos. 32, 33) 16 OBJECTIONS DUE WITHIN FOURTEEN 17 DAYS 18 19 I. 20 INTRODUCTION 21 Plaintiffs Kevin Ferrell and Cheryl Baker bring this action on behalf of themselves and 22 others similarly situated against Defendant Buckingham Property Management, alleging various 23 wage and hour violations under California state law, and claims under the Fair Labor Standards 24 Act, 29 U.S.C. § 201 et seq. (“FLSA”). Currently before the Court is Plaintiffs’ motions for final 25 approval of a class and collective action settlement, and Plaintiffs’ motion for attorneys’ fees, 26 costs, and incentive awards. (ECF Nos. 32, 33.) The Court held a hearing on the motion on 27 February 3, 2021. Having considered the moving papers, the declarations and exhibits attached 28 thereto, the arguments presented at the February 3, 2021 hearing, the supplemental briefing filed 1 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 2 of 60 1 following the hearing, as well as the Court’s file, the Court issues the following findings and 2 recommendations recommending granting Plaintiffs’ motion for final approval of the class and 3 collective action settlement, and granting Plaintiffs’ motion for fees, costs, and incentive awards. 4 II. 5 BACKGROUND 6 A. Factual Background 7 Defendant specializes in property management of residential real estate and manages 8 thousands of units in the State of California. (Pls.’ Mem. P. & A. Supp. Mot. Final Approval 9 (“Mot.”) 5, ECF No. 32-1; Decl. Rosemary Lynch Supp. Mot. Prelim. Approval (“Lynch Decl.”) 10 ¶¶ 2, 4, ECF No. 19-5, Ex. A.)1 Plaintiff Kevin Ferrell (“Ferrell”) was employed by Defendant 11 as a non-exempt Maintenance/Painting Technician, and Plaintiff Cheryl Baker (“Baker”) was 12 employed by Defendant as a non-exempt Community Manager. (Mot. 5; Decl. Kevin Ferrell 13 Supp. Mot. Prelim. Approval (“Ferrell Decl.”), ¶ 2, ECF No. 19-4; Decl. Cheryl Baker Supp. 14 Mot. Prelim. Approval (“Baker Decl.”) ¶ 2, ECF No. 19-3.) Plaintiffs’ principal allegations are 15 that Defendant violated the California Labor Code and the FLSA by, inter alia, failing to 16 properly pay minimum and overtime wages, failing to provide compliant meal and rest periods 17 or pay associated premiums, failing to timely pay wages upon termination, failing to provide 18 compliant wage statements, failing to maintain requisite payroll records, and failing to reimburse 19 necessary business-related expenses. (Mot. 6.) Plaintiffs contend that Defendant’s conduct 20 constitutes unfair business practices under the California Business and Professions Code and 21 gives rise to penalties under the Private Attorneys General Act of 2004, California Labor Code § 22 2698, et seq. (“PAGA”). (Id.) As a result, Plaintiffs contend that they, class members, and 23 proposed FLSA collective members are entitled to, inter alia, unpaid wages, penalties including 24 but not limited to those available under the PAGA, and attorneys’ fees. (Id.) 25 Defendant denies any liability of any kind associated with the claims and allegations, and 26 further denies that Plaintiffs, the class members, or proposed FLSA collective members are 27 1 All references to pagination of specific documents pertain to those as indicated on the upper right corners via the 28 CM/ECF electronic court docketing system. 2 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 3 of 60 1 entitled to any relief. (Id.) Defendant denies that this case is appropriate for class or 2 representative treatment for any other purpose other than the proposed settlement, and maintains 3 that it has complied with federal and California law in all respects. (Mot. 6-7.) Although not 4 referenced in the motion for final approval, Defendant has obtained release agreements for 5 several putative class members, and arbitration agreements exist between many of the class 6 members and Defendant. (Lynch Decl. ¶¶ 7-8, Exs. B, C.) 7 This action proceeds on Plaintiffs’ first amended complaint filed with the state court on 8 March 5, 2019. (First Am. Compl. (“FAC”), ECF No. 1-17.) The FAC brings the following 9 causes of actions: (1) violation of California Labor Code §§ 510 & 1198 for unpaid overtime; (2) 10 violation of California Labor Code §§ 226.7 & 512(a) for unpaid meal premiums; (3) violation of 11 California Labor Code § 226.7 for unpaid rest period premiums; (4) violation of California Labor 12 Code §§ 1194, 1197, & 1197.1 for unpaid minimum wages; (5) violation of California Labor 13 Code §§ 201 & 202 for final wages not timely paid; (6) violation of California Labor Code § 204 14 for wages not timely paid during employment; (7) violation of California Labor Code § 226(a) 15 for non-compliant wage statements; (8) violation of California Labor Code § 1174(d) for failure 16 to keep requisite payroll records; (9) violation of California Labor Code § 1198 for unpaid 17 reporting time pay; (10) violation of California Labor Code §§ 2800 & 2802 for unreimbursed 18 business expenses; (11) violation of California Business and Professions Code §§ 17200, et seq.; 19 (12) violation of the Fair Labor Standards Act, 29 U.S.C. § 207 for unpaid overtime; (13) 20 violation of the Fair Labor Standards Act, 29 U.S.C. § 207 for unpaid minimum wages; and (14) 21 violation of the California Labor Code Private Attorneys General Act of 2004. (Id.) 22 B. Procedural History 23 On August 8, 2014, Plaintiff Ferrell filed a putative class action against Defendant in the 24 Los Angeles Superior Court, on behalf of himself and all current and former California-based 25 non-exempt individuals employed by Defendant since August 8, 2011. (Mot. 5.) On December 26 4, 2014, the Los Angeles Superior Court entered an order approving the parties’ stipulation to 27 transfer venue to Fresno County and the action was transferred to the Superior Court for the 28 County of Fresno. (Mot. 5-6.) After engaging in discovery and investigation of the claims and 3 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 4 of 60 1 defenses, on January 27, 2016, the parties engaged in a private mediation with Paul Grossman, 2 “a well-respected mediator experienced in handling complex wage-and-hour matters.” (Mot. 6.) 3 The parties reached a settlement with the aid of the mediator’s evaluations and proposal. (Id.) 4 On February 22, 2017, Plaintiffs filed a motion for preliminary approval of settlement, 5 that was denied without prejudice by the Fresno County Superior Court. (Mot. 11; Decl. Edwin 6 Aiwazian Supp. Prelim. Approval (“Aiwazian Prelim. Decl.”) ¶ 11, ECF No. 19-1.) On May 18, 7 2018, Plaintiffs filed a renewed motion for preliminary approval of settlement that was also 8 denied without prejudice by the Fresno County Superior Court. (Id.) 9 On March 5, 2019, pursuant to the stipulation of the parties and an order granting leave 10 thereon, Plaintiff filed the first amended and operative complaint in this action. (Mot. 6.) On 11 March 11, 2019, Defendant removed this action to this court, the United States District Court for 12 the Eastern District of California, under 28 U.S.C. §§ 1331, 1441, and 1446. (Mot. 7; ECF No. 13 1.) 14 The parties engaged in additional negotiations regarding settlement, and ultimately 15 reached a settlement to address the points of concern raised by the Fresno County Superior 16 Court. (Mot. 7; Aiwazian Prelim. Decl. ¶ 11.) The changes included, but were not limited to: (1) 17 narrowing the class to property employees only, who like the named Plaintiffs, predominately 18 worked on properties managed by Defendant and thus had more common experiences and 19 claims; (2) adding a claim under the FLSA and allocating separate settlement amounts for FLSA 20 and class claims; and (3) guaranteeing a higher minimum distribution floor for the class 21 settlement amount. (Id.) 22 On November 25, 2019, Plaintiffs filed a motion for preliminary approval of the 23 proposed class settlement agreement and for certification of the class for purposes of settlement. 24 (ECF No. 19.) On January 21, 2020, the undersigned issued findings and recommendations 25 recommending granting Plaintiffs’ motion for preliminary approval of settlement and 26 conditionally certifying the class for purposes of settlement. (ECF No. 24.) Thereafter, on May 27 5, 2020, District Judge Dale A. Drozd entered an order requiring the filing of supplemental 28 briefing and documentation in support of Plaintiffs’ motion for preliminary approval. (ECF No. 4 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 5 of 60 1 26.) On June 4, 2020, the parties filed supplemental papers in support of the motion for 2 preliminary approval. (ECF No. 27.) On July 30, 2020, District Judge Drozd entered an order 3 adopting the findings and recommendations granting Plaintiffs’ motion for preliminary approval 4 of the class and collective settlement and conditionally certifying the class. (ECF No 28.) 5 On January 6, 2021, Plaintiffs filed a motion for final approval of the class and collective 6 settlement, as well as a motion for the attorneys’ fees, costs, and incentive awards. (ECF No. 7 33.) The Court held a hearing on the motion on February 3, 2021. (ECF No. 34.) Counsel 8 Melissa Huether appeared on behalf of Plaintiffs, and counsel Ellen Cohen appeared on behalf of 9 Defendant. Due to the COVID-19 pandemic, the hearing was held remotely via video and 10 telephone. Counsel appeared through the videoconference software Zoom, while the Court 11 provided a public access telephone number, made available on the Court’s website under the 12 Court’s public calendar information, for any member of the public to call in to the hearing. No 13 class members appeared on the public telephone line to submit any objections or statements. At 14 the February 3, 2021 hearing, the Court requested supplemental briefing from the parties. On 15 February 5, 2021, the parties filed supplemental declarations. (ECF No. 35.) 16 III. 17 LEGAL STANDARD 18 Class actions require the approval of the district court prior to settlement. Fed. R. Civ. P. 19 23(e) (“The claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or 20 compromised only with the court’s approval.”). The Ninth Circuit has repeatedly affirmed that a 21 strong judicial policy favors settlement of class actions. Allen v. Bedolla, 787 F.3d 1218, 1223 22 (9th Cir. 2015). Nevertheless, courts have long recognized that the settlement of class actions 23 presents unique due process concerns for the absent class members. Id.; In re Bluetooth Headset 24 Products Liability Litigation (“In re Bluetooth”), 654 F.3d 935, 946 (9th Cir. 2011). Thus, “the 25 district court has a fiduciary duty to look after the interests of the absent class members.” Allen, 26 787 F.3d at 1223. 27 Review of the proposed settlement of the parties generally proceeds in two phases. True v. 28 American Honda Motor Co., 749 F.Supp.2d 1052, 1062 (C.D. Cal. 2010). At the preliminary 5 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 6 of 60 1 approval stage, the court determines whether the proposed agreement is within the range of 2 possible approval and whether or not notice should be sent to class members. True, 749 F.Supp.2d 3 at 1063. “[I]f the proposed settlement appears to be the product of serious, informed, non- 4 collusive negotiations, has no obvious deficiencies, does not improperly grant preferential 5 treatment to class representatives or segments of the class, and falls within the range of possible 6 approval, then the court should direct that the notice be given to the class members of a formal 7 fairness hearing.” In re Tableware Antitrust Litigation, 484 F.Supp.2d 1078, 1079 (N.D. Cal. 8 2007) (quoting Manual for Complex Litigation, Second § 30.44 (1985)). 9 At the final approval stage, the court takes a closer look at the settlement, taking into 10 consideration objections and other further developments in order to make the final fairness 11 determination. True, 749 F.Supp.2d at 1063. The primary inquiry is whether the proposed 12 settlement “is fundamentally fair, adequate, and reasonable.” Lane v. Facebook, Inc., 696 F.3d 13 811, 818 (9th Cir. 2012) (citing Fed. R. Civ. P. 23(e); Hanlon v. Chrysler Corp., 150 F.3d 1011, 14 1026–27 (9th Cir. 1998)). “It is the settlement taken as a whole, rather than the individual 15 component parts, that must be examined for overall fairness.” Hanlon, 150 F.3d at 1026 (citing 16 Officers for Justice v. Civil Serv. Comm’n of City & Cty. of San Francisco, 688 F.2d 615, 628 (9th 17 Cir. 1982)); see also Lane v. Facebook, Inc., 696 F.3d at 818–19. In determining whether a 18 settlement is fair, reasonable, and adequate, district courts are to consider several factors, 19 including: (1) the strength of plaintiffs’ case; (2) the risk, expense, complexity, and likely duration 20 of future litigation; (3) the risk of maintaining class action status throughout the trial; (4) the 21 amount offered in settlement; (5) the extent of discovery completed, and the stage of the 22 proceedings; (6) the experience and views of counsel; (7) the presence of a governmental 23 participant; and (8) the reaction of the class members to the proposed settlement. Staton v. Boeing 24 Co., 327 F.3d 938, 953 (9th Cir. 2003) (citations omitted); Hanlon, 150 F.3d at 1026. 25 When the settlement takes place before formal class certification, as it has in this 26 instance, settlement approval requires a “higher standard of fairness.” Lane v. Facebook, Inc., 27 696 F.3d at 819 (quoting Hanlon, 150 F.3d at 1026). This more exacting review of class 28 settlements reached before formal class certification is required to ensure that the class 6 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 7 of 60 1 representatives and their counsel do not receive a disproportionate benefit “at the expense of the 2 unnamed plaintiffs who class counsel had a duty to represent.” Id. As recently emphasized by 3 the Ninth Circuit, this requires courts to apply “an even higher level of scrutiny for evidence of 4 collusion or other conflicts of interest than is ordinarily required under Rule 23(e).” Roes, 1-2 v. 5 SFBSC Mgmt., LLC, 944 F.3d 1035, 1043 (9th Cir. 2019) (quoting In re Bluetooth, 654 F.3d at 6 946). When reviewing a district court’s final approval of a settlement negotiated prior to 7 certification, the Ninth Circuit ensures the district court: (1) comprehensively explored all 8 factors; (2) has given a reasoned response to all non-frivolous objections; (3) adequately 9 developed the record to support its final approval decision; and (4) “looked for and scrutinized 10 any subtle signs that class counsel have allowed pursuit of their own self-interests . . . to infect 11 the negotiations.” Roes, 944 F.3d at 1043 (quoting Allen, 787 F.3d at 1223). 12 Having already completed a preliminary examination of the settlement agreement, the court 13 reviews it again, mindful that the law favors the compromise and settlement of class action suits. 14 See, e.g., In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008); Churchill Vill., L.L.C. 15 v. Gen. Elec., 361 F.3d 566, 576 (9th Cir. 2004). Ultimately, “the decision to approve or reject a 16 settlement is committed to the sound discretion of the trial judge because [they are] exposed to the 17 litigants and their strategies, positions, and proof.” Staton, 327 F.3d at 953 (quoting Hanlon, 150 18 F.3d at 1026). 19 IV. 20 DISCUSSION 21 Plaintiffs move for final approval of the class action settlement, the FLSA collective action 22 settlement, and the PAGA claims settlement (collectively, the “Settlement,” “Agreement,” or 23 “Settlement Agreement”), entered into by and between Plaintiffs and Defendant. (Mot. 4; Joint 24 Stipulation of Settlement and Release of Class, Collective, and PAGA Claims, ECF No. 19-1 at 28 25 .) Plaintiffs seek approval of all payments allocated and provided for by the Settlement, to be paid 26 from the Maximum Settlement Amount, including: (1) incentive awards in the amount of $3,000 to 27 Plaintiffs Baker and Ferrell; (2) attorneys’ fees in the amount of $210,000, and reimbursement of 28 litigation costs and expenses in the amount of $22,612.07 to Class/Collective Counsel; (3) a PAGA 7 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 8 of 60 1 settlement in the amount of $5,000, of which, seventy-five percent (75%) will be distributed to the 2 Labor Workforce and Development Agency (“LWDA”), and the remaining twenty-five percent 3 (25%) will be part of the net settlement amount to be distributed to class members who submit a 4 claim form; and (4) settlement administration costs in the amount of $16,000 to the settlement 5 administrator, Simpluris, Inc. (“Simpluris”). (Mot. 4.) 6 Plaintiffs argue the Settlement Agreement is fair, adequate, and reasonable, is the product 7 of good-faith negotiations by experienced counsel presided over by a highly regarded mediator 8 experienced in handling complex wage-and-hour class action lawsuits, and emphasize it was 9 seemingly well-received by the class given no objections were filed. (Mot. 5.) 10 A. The Settlement Agreement as Preliminary Approved With Updated Estimated Figures Following Claims Process 11 12 The Court will now outline the relevant terms of the Settlement Agreement as preliminarily 13 approved by this Court, and incorporate the updated costs, number of claimants, estimated 14 amounts to be dispersed, and estimated reversion back to Defendant following the claims process. 15 1. The Class and Proposed FLSA Collective Conditionally Certified 16 When moving for preliminary approval, the parties agreed to certification of the 17 following class consisting of approximately 803 individuals, for purposes of settlement: “All 18 current and former non-exempt Property Employees of Defendant within the State of California 19 from August 10, 2010 to the date the Settlement is preliminarily approved by the Court (‘Class 20 Members’ or ‘Class’).” (ECF No. 19 at 12.) Class Members who submit a timely and valid 21 “Class Claim Form” are bound by the Settlement Agreement and receive a share of the “Class 22 Settlement.” (Id.) 23 When moving for preliminary approval, Plaintiffs proffered the parties agreed to 24 conditional certification of the “Proposed FLSA Collective” consisting of: “all current and 25 former Property Employees of Defendant within the State of California during the period from 26 August 8, 2010 to the date on which the Settlement is preliminarily approved by the Court 27 (‘Settled Period’).” (Id.) Proposed FLSA Collective Members who submit a timely and valid 28 “FLSA Opt-In Form” are bound by the “FLSA Settlement” and receive their share of the FLSA 8 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 9 of 60 1 Settlement. (Id.) 2 When issuing the recommendation to grant preliminary approval, the undersigned noted 3 the Agreement’s definition of “Class” incorporates the term “Settled Period,” reading: “all 4 current and former Property Employees of Defendant within the State of California during the 5 Settled Period.” (Agreement ¶ 3; ECF No. 24 at 7.) The Agreement’s definition of “Proposed 6 FLSA Collective Members” also incorporates the term: “all current and former Property 7 Employees of Defendant within the State of California during the Settled Period.” (Agreement ¶ 8 49.) The Agreement provides a definition of “Property Employee(s)” defined as: “non-exempt 9 employees with the following job positions during the Settled Period: Area Relief Manager, 10 Assistant Community Manager, Community Manager, Contact Assistant Manager, Grounds 11 Keeper, Janitor, Maintenance Technician, Porter, Residential Service Coordinator, and Security.” 12 (Agreement ¶ 48.) 13 The Court certified the following Class and Proposed FLSA Collective for purposes of 14 settlement: 15 All current and former Property Employees of Defendant within the State of California from August 8, 2010 to the date this Order is signed by the Court 16 (“Settled Period”). “Property Employees” means non-exempt employees with the following job positions during the Settled Period: Area Relief Manager, Assistant 17 Community Manager, Community Manager, Contact Assistant Manager, Grounds Keeper, Janitor, Maintenance Technician, Porter, Residential Service Coordinator, 18 and Security. 19 (ECF No. 19-6 at 3; ECF No. 24 at 7-8.) 20 2. The Monetary Settlement Amounts Preliminarily Approved 21 Defendant will pay a “Maximum Settlement Amount” of up to $600,000 on a claims- 22 made basis. (Mot 8; Agreement ¶¶ 34, 62.) The “Net Settlement Amount” is the amount 23 remaining after deducting the following from the Maximum Settlement Amount: (1) attorneys’ 24 fees of up to thirty-five percent (35%) of the Maximum Settlement Amount, for a total of 25 $210,000.00, plus reimbursement of litigation costs and expenses up to $35,000.00, for a total of 26 up to $245,000.00 (the “Fees and Costs Award”) to “Class/Collective Counsel”2; (2) “Incentive 27 28 2 The total costs sought is now less, totaling only $22,612.07. (Mot. 4.) 9 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 10 of 60 1 Awards” of up to $3,000.00 each to Plaintiffs Kevin Ferrell and Cheryl Baker for a total of 2 $6,000.00; (3) $3,750.00 to the LWDA for its share of the “PAGA Settlement Amount”; and (4) 3 “Settlement Administration Costs,” currently estimated to be $16,000.00. (Mot. 4; Agreement ¶¶ 4 19, 28, 33, 34, 36, 58.) A twenty-five percent (25%) portion of the PAGA Settlement Amount 5 allocated to aggrieved employees ($1,250.00 of a total $5,000.00), will remain part of the Net 6 Settlement Amount. (Mot. 4; Agreement ¶ 15.) 7 At preliminary approval, the Net Settlement Amount available for distribution to Class 8 Members who submit timely and valid Class Claim Forms (“Claimants”), and Proposed FLSA 9 Collective Members who submit timely and valid FLSA Opt-In Forms (“FLSA Collective 10 Members”), was estimated to be $329,250.00. (ECF No. 19 at 13; Aiwazian Prelim. Decl. ¶ 17.) 11 Given the costs sought by counsel are only $22,612.07, the current Net Settlement Amount at 12 final approval is estimated to be $341,637.93. (Mot. 8; Suppl. Decl. Cassandra Cita Final 13 Approval (“Suppl. Simpluris Decl.”) ¶ 16, ECF No. 35-2.) Ninety-five percent (95%) of the Net 14 Settlement Amount, inclusive of the Employee’s PAGA portion, is to be allocated to the Class 15 Settlement and available to be distributed to Claimants (“Class Settlement Amount”), and the 16 remaining five percent (5%) of the Net Settlement Amount is to be allocated to the FLSA 17 Settlement and distributed to FLSA Collective Members (“FLSA Settlement Amount”). (Mot. 5; 18 Agreement ¶¶ 10, 26.) 19 The Class Settlement Amount, estimated to be $312,787.50 at preliminary approval, is 20 now estimated to be $324,556.03, and is to be distributed to Claimants based upon the number of 21 weeks they worked as Property Employees during the Settled Period (“Workweeks”). (Mot. 8; 22 Agreement ¶ 44; Suppl. Simpluris Decl. ¶ 19; ECF No. 19 at 13.) At least sixty-three percent 23 (63%) of the Class Settlement Amount is to be distributed to Claimants (the “Minimum 24 Distribution Floor”). (Mot. 8; Agreement ¶¶ 35, 67.) If less than sixty-three percent (63%) of 25 the Class Settlement Amount is claimed by Claimants, each Claimant’s share is to be 26 proportionately increased on a pro rata basis based on their number of Workweeks. (Mot. 8; 27 Agreement ¶¶ 67, 69(a).) Any amount of the Class Settlement Amount over the Minimum 28 Distribution Floor that is not claimed by the Claimants (“Remainder”) will be used to pay 10 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 11 of 60 1 Defendant’s share of payroll taxes and contributions in connection with the wages portion of the 2 “Estimated Class Settlement Shares” and “Estimated FLSA Settlement Shares” (“Employers 3 Taxes”), and the remaining amount (if any) is to be retained by Defendant. (Mot. 8-9; 4 Agreement ¶¶ 16, 67.) 5 As of the date of the final approval hearing, one hundred forty-seven (147) Claim Forms 6 have been received from Class Members, and one hundred thirty-one (131) FLSA Opt-in forms 7 have been received from FLSA Collective Members. (Suppl. Simpluris Decl. ¶¶ 14-15, Ex. D.) 8 The aggregate total Workweeks of all of the Class Members is 90,342, while the one hundred 9 forty-seven (147) Claimants are credited with approximately 21,816 Workweeks, representing 10 24.15% of the total Workweeks. (Suppl. Simpluris Decl. ¶ 17.) Thus, Claimants have claimed 11 approximately $78,374.56, or 24.15% of the Class Settlement Amount. (Id.) Because the 63% 12 Minimum Distribution Floor was not met by the number of Claimants, Simpluris proportionately 13 increased the Estimated Class Settlement Shares for each Claimant on a pro rata basis so that 14 63% of the Class Settlement Amount, or $204,470.30 of the total $324,556.03, will be 15 distributed to the Claimants. (Suppl. Simpluris Decl. ¶ 19.) 16 The FLSA Settlement Amount, representing five percent (5%) of the Net Settlement 17 Amount, was estimated to be $16,462.50 at preliminary approval, and is now estimated to be 18 $17,081.90. (Id. at ¶ 18; Mot. 9; ECF No. 24 at 9.) It will be distributed to FLSA Collective 19 Members based upon their respective Workweeks compared to the number of Workweeks of all 20 FLSA Collective Members. The entire FLSA Settlement Amount will be paid out to FLSA 21 Collective Members. The aggregate total Workweeks of the Proposed FLSA Collective 22 Members is 90,342. (Suppl. Simpluris Decl. ¶ 18.) The one hundred thirty-one (131) Collective 23 Members are credited with approximately 19,509 Workweeks, representing 21.59% of the 24 Workweeks. The entire FLSA portion of $17,081.90 will be distributed on a pro rata basis. (Id.; 25 Mot. 9; Agreement ¶ 69(b).) 26 3. Calculation of Class Settlement Shares 27 The Settlement Administrator calculates each Class Member’s Estimated Class 28 Settlement Share by: (1) calculating the total number of Workweeks worked by each Class 11 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 12 of 60 1 Member (Agreement ¶¶ 59, 71, 76); (2) dividing the Class Settlement Amount by the total 2 number of Workweeks worked by all Class Members to yield the “Initial Class Workweek 3 Amount” (Agreement ¶ 69(a)(i)); (3) multiplying the Initial Class Workweek Amount by each 4 Class Member’s total number of individual Workweeks to determine their Estimated Class 5 Settlement Share (Agreement ¶ 69(a)(ii)); (4) if the Estimated Class Settlement Shares that are 6 actually claimed by Claimants equal less than the Minimum Distribution Floor, the Estimated 7 Class Settlement Shares will be proportionately increased for each Claimant so that the total of 8 all Estimated Class Settlement Shares equals no less than the Minimum Distribution Floor 9 (Agreement ¶ 69(a)(iii)); and (5) Estimated Class Settlement Shares will be subject to reduction 10 for the employee’s share of taxes and withholdings with respect to the portion of the payment 11 that is deemed wages, and the payment to a Claimant that is the net of these taxes and 12 withholdings is the “Individual Class Payment” (Agreement ¶ 69(a)(iii)-(iv)). (ECF No. 24 at 9- 13 10.) 14 As of the time of the final approval hearing, after adjusting each Claimants’ Estimated 15 Class Settlement Share so that the Minimum Distribution Floor is reached, the highest gross 16 Estimated Class Settlement Share is estimated to be approximately $4,883.07, the lowest gross 17 Estimated Class Settlement Share is estimated to be approximately $84.35, and the average gross 18 Estimated Class Settlement Share is estimated to be $1,390.95. (Suppl. Simpluris Decl. ¶ 20.) 19 4. Calculation of FLSA Settlement Shares 20 The Settlement Administrator calculates each Proposed FLSA Collective’s Estimated 21 FLSA Settlement Share and each “Individual FLSA Payment” by: (1) dividing the FLSA 22 Settlement Amount by the total number of Workweeks worked by the Proposed FLSA Collective 23 to yield the “Initial FLSA Workweek Amount” (Agreement ¶ 69(b)(i)); (2) multiplying the 24 Initial FLSA Workweek Amount by each FLSA Collective Member’s individual number of 25 Workweeks to determine their Estimated FLSA Settlement Share (Agreement ¶ 69(b)(ii)); (3) if 26 the amount claimed by the FLSA Collective Members is less than the FLSA Settlement Amount, 27 the Settlement Administrator will increase each Estimated FLSA Settlement Share proportionally 28 so that the sum of all Estimated FLSA Settlement Shares equals the FLSA Settlement Amount, 12 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 13 of 60 1 and the final amount distributable to each FLSA Collective Member is the “Individual FLSA 2 Payment” (Agreement ¶ 69(b)(iii)). (ECF No. 24 at 10.) 3 As of the time of the final approval hearing, the highest gross Estimated FLSA 4 Settlement Share is estimated to be approximately $456.18, the lowest gross Estimated FLSA 5 Settlement Share is estimated to be approximately $5.25, and the average gross Estimated FLSA 6 Settlement Share is estimated to be $130.40. (Suppl. Simpluris Decl. ¶ 21.) 7 5. Taxes and Reversion to Defendant 8 Individual Class Payments will be allocated as one-third wages and two-thirds penalties, 9 interest, and non-wage damages. (Mot. 9; Agreement ¶ 85; ECF No. 24 at 10.) Individual FLSA 10 Payments will be allocated as one-third (1/3) wages and two-thirds (2/3) penalties and non-wage 11 damages. (Id.) The wages portion of these payments will be reported on an IRS From W-2, and 12 the portions allocated to interest and penalties will be reported on an IRS Form-1099. (Id.) The 13 Individual Settlement Payments will be reduced by the employee’s share of payroll taxes and 14 withholding on the wages portion of the Settlement Payments. (Mot. 9; Agreement ¶ 17.) 15 The Employer Taxes will be paid from the Remainder, and if the Remainder is not 16 sufficient to cover all the Employer Taxes, Defendant will pay an additional amount sufficient to 17 cover the Employer Taxes. (Mot. 9; Agreement ¶¶ 16, 31, 52, 62(a).) As of the date of the final 18 approval hearing, the estimated Employer Taxes that will be paid out of the unclaimed funds is 19 approximately $14,674.33, and the estimated amount of unclaimed funds that will revert back to 20 Defendant is approximately $105, 411.40. (Suppl. Simpluris Decl. ¶ 22.) 21 6. Settlement Opt-Out and Objection Procedures 22 Class Members who wished to opt out from the Class Settlement were required to submit 23 a written letter to the Settlement Administrator requesting to be excluded from the Class 24 Settlement (“Request for Exclusion”). (ECF No. 24 at 11; Agreement ¶¶ 53, 77.) In the event of 25 a re-mailed Notice Packet, the Response Deadline was to be extended ten (10) calendar days. 26 (Agreement ¶ 54.) Class Members who did not opt out of the Class Settlement (“Participating 27 Class Member(s)”), could object to the Class Settlement by filing a “Notice of Objection” with 28 the Court and serving copies upon counsel for the parties no later than the Response Deadline. 13 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 14 of 60 1 (ECF No. 24 at 12; Agreement ¶ 81.) 2 As of the final approval hearing date, there was only one request for exclusion filed, and 3 no objections filed. (Suppl. Simpluris Decl. ¶ 12, 13.) 4 7. Scope of the Class Release 5 The “Class Released Claims” that are the subject of the Settlement are “Released Claims” 6 which do not arise under the FLSA. The Released Claims are: 7 Any and all claims, charges, complaints, obligations, promises, agreements, suits, rights, costs, losses, liens, penalties, fines, wages, liquidated damages, 8 restitutionary amounts, interest, punitive damages, controversies, liabilities, debts, demands, money owed, guarantees, expenses, back wages, attorneys’ fees and 9 costs, damages, actions or causes of action, of any nature, under state, federal, or local law, that were made or could have been made based on the facts alleged in 10 the pleadings filed in the Action, which includes claims for failure to pay minimum, overtime, regular, and reporting time wages (California Labor Code, 11 §§ 510, 1194, and 1198, and the Fair Labor Standards Act, 29 U.S.C. § 207), failure to provide compliant meal periods and associated premium pay (California 12 Labor Code §§ 512 and 226.7), failure to provide compliant rest periods and associated premiums (California Labor Code § 226.7), failure to timely pay wages 13 upon termination (California Labor Code §§ 201-203), failure to timely pay wages during employment (California Labor Code § 204), failure to provide 14 accurate, itemized wage statements (California Labor Code § 226), failure to keep requisite payroll records (California Labor Code § 1174(d)), failure to reimburse 15 business expenses (California Labor Code § 2800 and 2802), civil penalties under the Private Attorneys General Act (California Labor Code § 2698, et seq.) based 16 on the aforementioned, and unfair business practices (California Business & Professions Code § 17200, et. seq.) based on the aforementioned, arising during 17 the Settled Period, excluding claims for workers’ compensation benefits or any of claims that may not be released by law. 18 (ECF No. 24 at 12-13; Agreement ¶¶ 8, 50.) 19 Upon the “Effective Date,”3 Plaintiffs and all Participating Class Members will release all 20 Class Released Claims with respect to all of the “Released Parties.” (ECF No. 24 at 13; 21 Agreement ¶¶ 8, 50, 51, 79.) Plaintiffs have also provided a general release of all claims with a 22 waiver of California Civil Code § 1542. (Agreement ¶ 90.) 23 8. The FLSA Released Claims 24 Proposed FLSA Collective Members who submit a valid FLSA Opt-In Form (i.e., FLSA 25 Collective Members), will be bound by the FLSA Settlement. (ECF No. 24 at 13; Agreement ¶¶ 26 3 The Effective Date is defined as: “the later of: (a) if no appeal is filed, the date that is thirty-five (35) calendar 27 days after the date of entry of the Final Order, or (b) if the Final Order is appealed, the date on which any reviewing court issues a decision, the time for further appeal has expired, and the trial court has regained jurisdiction.” 28 (Agreement ¶ 14.) 14 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 15 of 60 1 23, 78.) As of the Effective Date, Plaintiffs and all FLSA Collective Members will be deemed to 2 have released any and all FLSA Released Claims with respect to all of the Released Parties. 3 (Agreement ¶¶ 78, 80.) 4 B. Final Approval of the Class Action Settlement 5 The Court next addresses Federal Rule of Civil Procedure 23(e)(2)’s requirement that any 6 settlement in a class action be approved by the court as fair, reasonable, and adequate. At the final 7 approval stage, the court takes a closer look at the settlement, taking into consideration objections 8 and other further developments in order to make the final fairness determination. True, 749 9 F.Supp.2d at 1063. The settlement agreement in this action was previously filed on the Court’s 10 docket (ECF No. 19-1 at 25-66), and class members have been given an opportunity to object 11 thereto. The Court now turns to the adequacy of notice, certification of the class on final approval, 12 and review of the settlement following the final fairness hearing. 13 1. Adequate Notice to the Class 14 For proposed settlements under Rule 23, “the court must direct notice in a reasonable 15 manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1); see 16 also Hanlon, 150 F.3d at 1025 (“Adequate notice is critical to court approval of a class settlement 17 under Rule 23(e).”). For a “class certified under Rule 23(b)(3)— or upon ordering notice under 18 Rule 23(e)(1) to a class proposed to be certified for purposes of settlement under Rule 23(b)(3)—the 19 court must direct to class members the best notice that is practicable under the circumstances, 20 including individual notice to all members who can be identified through reasonable effort.” Fed. 21 R. Civ. P. 23(c)(2)(B). The notice may be by one or more of the following methods: United States 22 mail, electronic means, or other appropriate means. Id. The “notice must clearly and concisely state 23 in plain, easily understood language: (i) the nature of the action; (ii) the definition of the class 24 certified; (iii) the class claims, issues, or defenses; (iv) that a class member may enter an appearance 25 through an attorney if the member so desires; (v) that the court will exclude from the class any 26 member who requests exclusion; (vi) the time and manner for requesting exclusion; and (vii) the 27 binding effect of a class judgment on members under Rule 23(c)(3).” Id. 28 A class action settlement notice “is satisfactory if it generally describes the terms of the 15 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 16 of 60 1 settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come 2 forward and be heard.” Churchill Vill., LLC, 361 F.3d at 575 (internal quotations and citations 3 omitted). Any notice of the settlement sent to the class should alert class members of “the 4 opportunity to opt-out and individually pursue any state law remedies that might provide a 5 better opportunity for recovery.” Hanlon, 150 F.3d at 1025. It is important for class notice to 6 include information concerning the attorneys’ fees to be awarded from the settlement because it 7 serves as “adequate notice of class counsel’s interest in the settlement.” Staton, 327 F.3d at 963 8 n.15 (Where the class was informed of the amount of fees only indirectly and where the failure 9 to give more explicit notice could itself be the result of counsel’s self-interest, the courts must 10 be all the more vigilant in protecting the interests of class members with regard to the fee 11 award.”) (quoting Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993)). 12 The Court reviewed the class notice that was proposed when the parties sought 13 preliminary approval of the settlement and found the proposed form of notice to be satisfactory. 14 (ECF Nos. 24 at 42-46; 28 at 11.) The Court’s findings and recommendations discussed the 15 applicable notice standards in greater detail, and specifically highlighted recent developments 16 within the Ninth Circuit concerning the best notice practicable, Roes, 1-2 v. SFBSC Mgmt., 17 LLC, 944 F.3d at 1043. (ECF No. 24 at 45-46 n.26.) 18 On August 2, 2020, Simpluris received the Court-approved text for the Notice Packet 19 from Class/Collective Counsel. (Mot. 10; Decl. Cassandra Cita Re. Notice & Settlement Admin. 20 (“Simpluris Decl.”) ¶ 5, ECF No. 32-2.) On August 14, 2020, Simpluris received a data 21 spreadsheet from Defendant’s counsel containing each Class Member and Proposed FLSA 22 Collective Member’s full name, last known mailing address, telephone number, Social Security 23 number, dates of employment with Defendant as a Property Employee in California during the 24 period from August 9, 2010, through July 29, 2020, and number of Workweeks (the “Class 25 List”). (Id.) The Class List contained information for nine hundred twenty (920) individuals. 26 (Id.) 27 On August 21, 2020, after conducting a National Change of Address (“NCOA”) search to 28 update the addresses in the Class List, Simpluris mailed the Notice Packet to the nine hundred 16 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 17 of 60 1 twenty (920) individuals identified on the Class List via First-Class U.S. Mail. (Mot. 11; 2 Simpluris Decl. ¶ 7.) Two hundred thirteen (213) Notice Packets have been returned to 3 Simpluris as undeliverable, of which none had forwarding addresses. (Simpluris Decl. ¶ 8; 4 Suppl. Simpluris Decl. ¶ 8.) Simpluris performed a skip-trace search on the two hundred thirteen 5 (213) Notice Packets returned as undeliverable without forwarding addresses, located one 6 hundred ninety (190) updated addresses, and re-mailed the Notice Packets to the updated 7 addresses. (Id.) Twenty-two (22) Notice Packets were returned a second time without a 8 forwarding address. One (1) Class Member whose Notice Packet was returned to Simpluris by 9 the Post Office, contacted Simpluris to provide an updated address, and Simpluris re-mailed the 10 Notice Packet to the updated address. (Simpluris Decl. ¶ 8.) Ultimately, twenty-two (22) 11 Notice Packets remained undeliverable. (Id.; Suppl. Simpluris Decl. ¶ 8.) 12 On September 18, 2020, eight hundred thirty-four (834) reminder postcards were mailed 13 to individuals who had not yet submitted a Class Claim Form and/or FLSA Opt-in Form as of 14 such date. (Suppl. Simpluris Decl. ¶ 9.) On December 28, 2020, seven hundred ninety-seven 15 (797) reminder postcards were mailed to those individuals who had not yet submitted a Class 16 Claim Form and/or FLSA Opt-in Form as of such date, and advised the Class Members that the 17 deadline to submit a Class Form and FLSA Form had been extended to January 27, 2021. (Id. at 18 ¶ 10.) 19 Based on these facts presented by the Settlement Administrator, it appears that 20 approximately 2.39% of the class did not receive the mailed Notice Packets, and approximately 21 97.61% of the class received the mailed Notice Packets. The Court accepts the declaration and 22 report of the Settlement Administrator, and finds that sufficient notice has been provided. See 23 Silber v. Mabon, 18 F.3d 1449, 1453–54 (9th Cir. 1994) (courts need not ensure all class 24 members receive actual notice, only that “best practicable notice” is given); Winans v. Emeritus 25 Corp., No. 13-cv-03962-HSG, 2016 WL 107574, at *3 (N.D. Cal. Jan. 11, 2016) (“While Rule 26 23 requires that ‘reasonable effort’ be made to reach all class members, it does not require that 27 each individual actually receive notice.”). 28 / / / 17 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 18 of 60 1 2. Certification of Class, Representatives, and Counsel on Final Approval 2 To certify a class, a plaintiff must demonstrate that all of the prerequisites of Rule 23(a), 3 and at least one of the requirements of Rule 23(b) of the Federal Rules of Civil Procedure have 4 been met. Wang v. Chinese Daily News, Inc., 737 F.3d 538, 542 (9th Cir. 2013). The Court 5 previously found the class meets the prerequisites of numerosity, commonality, typicality, and 6 adequacy of representation. (ECF Nos. 24 at 14-20; 28 at 11.) The Court also found that common 7 questions predominate and allowing this action to proceed as a class action is the superior method 8 of adjudicating the controversy of these employment related claims. (ECF Nos. 24 at 21-22; 28 at 9 11.) The Court found that the putative class members were similarly situated such that the FLSA 10 collective should be conditionally certified. (ECF Nos. 24 at 22-24; 28 at 11.) 11 As of the filing of the motion for final approval, Simpluris has not received any objections, 12 has received only one (1) Request for Exclusion, and received only two (2) disputes concerning the 13 number of Workweeks, which have been resolved. (Mot. 10; Simpluris Decl. ¶¶ 9-11.) The Court 14 is unaware of any changes that would affect the class and FLSA collective certification findings. 15 For the reasons set forth in the January 21, 2020 findings and recommendations on preliminary 16 approval, the Court finds that the settlement classes continue to meet the requirements of Federal 17 Rule of Civil Procedure 23(a) and (b), and the similarly situated requirement of the FLSA. (ECF 18 No. 24 at 14-24.) 19 Accordingly, the Court finds that final class certification in this case is appropriate and 20 recommends the following Class and proposed FLSA Collective be certified on final approval: 21 All current and former Property Employees of Defendant within the State of California from August 8, 2010 to the date this Order is signed by the Court 22 (“Settled Period”). “Property Employees” means non-exempt employees with the following job positions during the Settled Period: Area Relief Manager, Assistant 23 Community Manager, Community Manager, Contact Assistant Manager, Grounds Keeper, Janitor, Maintenance Technician, Porter, Residential Service Coordinator, 24 and Security. 25 In addition, the Court recommends Plaintiffs Kevin Ferrell and Cheryl Baker be confirmed as 26 class representatives; that Edwin Aiwazian, Arby Aiwazian, and Joanna Ghosh of Lawyers for 27 Justice, PC, and Amir Nayebdadash and Heather Davis of Protection Law Group LLP, be 28 confirmed as counsel for the Class and Proposed FLSA Collective; and Simpluris, Inc. be 18 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 19 of 60 1 confirmed as the Settlement Administrator. 2 3. Final Fairness Hearing and Whether Settlement Agreement is Fair, Adequate, and Reasonable 3 4 On February 3, 2021, the court held a final fairness hearing, at which class counsel and 5 defense counsel appeared. No class members, objectors, or counsel representing the same 6 appeared at the hearing. For the reasons explained below, the court now determines that the 7 settlement reached in this case is fair, adequate, and reasonable. See Fed. R. Civ. P. 23(e)(2). 8 The Court set out the applicable legal standards above, but to restate, in assessing the 9 fairness of a class action settlement, courts balance the following factors: 10 (1) the strength of the plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status 11 throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and 12 views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement. 13 14 Churchill Vill., L.L.C., 361 F.3d at 575; see also In re Online DVD-Rental Antitrust Litig., 779 15 F.3d 934, 944 (9th Cir. 2015); Rodriguez v. West Publ’g Corp., 563 F.3d 948, 964–67 (9th Cir. 16 2009). Further, where the parties have reached a settlement agreement prior to class 17 certification, the Court has an independent duty to be vigilant for any sign of collusion among 18 the negotiating parties. See In re Bluetooth, 654 F.3d at 946. 19 The Court now turns to consideration of each of these eight factors, before additionally 20 considering whether the pre-certification settlement shows signs of collusion rendering the 21 settlement unfair. 22 a. Strength of Plaintiffs’ Case 23 “An important consideration in judging the reasonableness of a settlement is the strength 24 of the plaintiffs’ case on the merits balanced against the amount offered in the settlement.” Nat’l 25 Rural Telecommunications Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 526 (C.D. Cal. 2004) 26 (quoting 5 Moore Federal Practice, § 23.85[2][b] (Matthew Bender 3d. ed.)). A court’s role is 27 not to reach any ultimate conclusion on the facts or law which underly the merits of the dispute, 28 as the very uncertainty of the outcome and the avoidance of expensive and wasteful litigation is 19 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 20 of 60 1 what induces consensual settlements. Officers for Justice, 688 F.2d at 625. The court cannot 2 reach such a conclusion because evidence has not been fully presented. In re Wash. Pub. Power 3 Supply Sys. Sec. Litig., 720 F. Supp. 1379, 1388 (D. Ariz. 1989). Instead, a court “evaluate[s] 4 objectively the strengths and weaknesses inherent in the litigation and the impact of those 5 considerations on the parties’ decisions to reach these agreements.” Id. In reality, the reasonable 6 range of settlement is arrived at by considering the likelihood of a verdict for the plaintiff or 7 defendant, “the potential recovery, and the chances of obtaining it, discounted to a present 8 value.” Bellinghausen v. Tractor Supply Co., 306 F.R.D. 245, 255 (N.D. Cal. 2015) (quoting 9 Rodriguez v. West Publ’g Corp., 563 F.3d at 965). 10 While this action was removed to federal court in 2019, this is a protracted class action 11 that was in fact commenced in state court in August of 2014. (ECF No. 1.) Plaintiffs contend 12 the parties actively litigated this case since then, and used pre-mediation time to investigate the 13 veracity, strength, and scope of the claims, and counsel actively prepared the matter for class 14 certification. (Mot. 13; Decl. Edwin Aiwazian Supp. Pls’ Mot. Class Counsel Fees & Costs 15 (“Aiwazian Fees Decl.”) ¶ 6, ECF No. 33-4.) Plaintiffs describe the course of investigation, 16 discovery, negotiation, and eventual mediation leading to settlement. (Mot. 13-14.) 17 Plaintiffs emphasize the parties reached settlement after reviewing all of the available 18 evidence, participating in arm’s-length bargaining, participating in a private mediation conducted 19 by Paul Grossman, Esq., who is experienced in handling complex wage-and-hour matters, and 20 engaging in extensive settlement negotiations following mediation. (Mot. 14.) Prior to and 21 during the settlement negotiations, the parties exchanged information and discussed various 22 aspects of the case, including the principal claims by Plaintiffs, the risks and delays of further 23 litigation and of proceeding with class and collective certification, the laws relating to off-the- 24 clock theory, meal and rest periods, wage-and-hour enforcement, the FLSA claims, PAGA 25 representative claims, the evidence produced and analyzed, the possibility of appeals, and the 26 risks of recovery and continued employment of current-employee Class Members in light of 27 Defendant’s limited financial resources and precarious financial circumstances, among other 28 20 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 21 of 60 1 considerations.4 (Mot. 14-16; Aiwazian Fees Decl. ¶ 8.) 2 The briefing before the Court does not provide overly extensive or specific details 3 4 4 In issuing the findings and recommendations on preliminary approval, the Court stated the following in regards to the financial condition of Defendant as a proffered reason for the settlement amount: 5 The parties here also have used the financial difficulties of the Defendant as an additional reason 6 for the discounted valuations, partially to protect current employees from losing their job, in addition to being a reason for the necessity of funding the settlement in installment payments. 7 (Aiwazian Decl. ¶ 26; Lynch Decl. ¶¶ 10-14.) Thus, also relevant to the justification given here, the Hunt court rejected the argument that defendant was experiencing financial difficulties noting 8 and finding: “Courts should view such assertions with great caution, as employers tend to make threats about inability to pay more often than they are actually unable to pay. Therefore, if this 9 sort of assertion is to be the basis for approval of a discounted class settlement, it must be supported with detailed evidence. Plaintiffs’ counsel has not done that here. There is one 10 conclusory paragraph in a declaration from plaintiffs’ counsel, with parallel language in the proposed settlement, stating that VEP claims to be experiencing financial difficulty and that an 11 accountant hired by plaintiffs’ counsel agrees with that claim. [citations] Such conclusory assertions are not enough—there should be a much stronger showing before a defendant’s 12 financial hardship is taken into account.” Hunt, No. 16-CV-04790-VC, 2017 WL 3608297, at *1. The information provided here is more substantial than averred to in Hunt, but the parties are forewarned that more evidence, perhaps with support by an accountant’s analysis, may be 13 necessary to address the valuation at the hearing for final approval. 14 (ECF No. 24 at 32, n.19.) Given there was no additional information provided in the briefing materials, at the hearing on the motion for final approval, the Court inquired about this issue and requested supplemental briefing. 15 Counsel for Plaintiffs, as well as the President of Defendant, provided supplemental declarations. (ECF No. 35.) Plaintiffs’ counsel proffers that during the negotiations and mediation, Defendant’s financial circumstances were 16 key issues of discussion and consideration, and specifically, Defendant’s President, and general counsel, provided extensive and crucial information regarding financial data on performance and position, which the mediator as well 17 as Plaintiffs’ counsel gave serious consideration to when formulating the structure of the settlement. (Suppl. Decl. Edwin Aiwazian Supp. Final Approval (Suppl. Final Aiwazian Decl. 6, ECF No. 35 at 1.) Defendant’s President 18 and general counsel provided confidential information regarding these matters, including on the nature of Defendant’s property management business, Defendant’s cash and non-cash assets, revenue, profit, cash flow, and 19 expenses, as well as information as to why Defendant could only fund a settlement by way of installments. (Id. at ¶ 7.) Specifically, Defendant is a fee-based management company lacking significant assets other than operating 20 income; Defendant does not own the properties being managed and instead only provides management services; and among other reasons, Defendant operates on a slim margin, charging a small percentage of rent as a management 21 fee, with little to no scope to increase its management fee. (Id.) Ultimately, this information, the mediator’s proposal, and the later updated financial information, confirmed for counsel that the terms were appropriate, and 22 Defendant’s financial condition was one of many issues considered to reach the settlement amount. (Id. at ¶ 8.) 23 Defendant’s President’s supplementary declaration supports the reasoning in Plaintiffs’ counsel’s declaration. (Suppl. Decl. Rosemary Lynch Supp. Final Approval (“Suppl. Lynch Decl.”), ECF No. 35-1.) Defendant’s President affirms that through mediation and negotiations, confidential financial and business condition information 24 was disclosed to Plaintiffs’ counsel, including specifically overall revenue and cash projections; that 98% of the business is in affordable housing with associated regulations setting limits on the amount of money that can be paid 25 for property management service; that there are low profit margins in affordable housing; and the company has no significant hard assets other than operating income because of the nature of the business. (Suppl. Lynch Decl. ¶¶ 3- 26 8.) 27 The Court finds the supplemental declarations provide sufficient support for concluding Plaintiffs’ counsel performed due diligence and properly considered the financial condition of Defendant when structuring the terms of 28 the Settlement Agreement. 21 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 22 of 60 1 concerning the strengths or weaknesses of the merits of the principal claims. Plaintiffs generally 2 proffer that arriving at settlement that was acceptable to both sides was not easy, as Defendant 3 and its counsel were strongly of the view that Defendant would prevail on the merits and obtain a 4 denial of class certification. (Mot. 15.) After significant investigation of the facts, formal and 5 informal exchange of data and documents, depositions, negotiations, and with the aid of a 6 mediator, the parties agreed the case was well-suited for settlement given the legal issues relating 7 to Plaintiffs’ principal claims, as well as the costs and risks to the parties presented by further 8 litigation. (Mot. 15; Aiwazian Fees Decl. ¶ 8.) 9 Counsel interviewed, and obtained information from Plaintiffs and other Class Members, 10 reviewed and analyzed a large number of documents and data produced by Defendants and 11 obtained through other sources, and performed significant research into the law concerning class 12 and collective certification, off-the-clock theory, meal and rest breaks, wage-and-hour 13 enforcement, Plaintiffs’ claims, and Defendant’s defenses, as well as facts discovered. (Mot. 15; 14 Aiwazian Fees Decl. ¶¶ 6, 8.) Plaintiffs proffer the settlement takes into account the strengths 15 and weaknesses of each side’s position and the uncertainty of how the case might have 16 concluded at certification, trial, and/or appeals. (Mot. 15; Aiwazian Fees Decl. ¶ 8.) 17 The Court previously weighed the parties’ course of negotiation in relation to the merits 18 of the action and amount of settlement, and incorporates such discussion herein. (ECF No. 24 at 19 27-35.) The Court also expressed significant concerns regarding the amount of settlement in 20 relation to the initial damages analyses, ultimately finding that “[n]onetheless, the Court finds 21 counsel’s explanations sufficient for purposes of preliminary approval, taken in the context of the 22 risks of continued litigation and settlement as a whole, with the caveat that more extensive 23 explanation and support for the discounting may be needed to demonstrate fairness at the final 24 approval hearing.” (Id. at 30-33.) The Court discusses the amount of settlement in further detail 25 below in considering that separate factor. 26 Prior to adopting the findings and recommendations on preliminary approval, the District 27 Judge requested supplemental briefing regarding the potentially problematic aspects of the 28 estimated value of the claims, the reversionary clause, as well as the amount of attorneys’ fees 22 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 23 of 60 1 requested. (ECF No. 26.) The supplemental briefing emphasized and built upon many of the 2 reasons presented in the motion for preliminary approval for the discounting of the valuation in 3 relation to the strengths and weakness of the case and risks of continued litigation. (ECF No. 27 4 at 6-7.) Plaintiffs’ counsel filed a supplemental declaration with quantification of the value of 5 the claims and analysis, and why the estimates warranted such reductions. (Id.; Suppl. Aiwazian 6 Decl. ¶¶ 8-69, ECF No. 27-1.) In adopting the findings and recommendations on preliminary 7 approval, the District Judge considered the reasons offered for discounting the maximum 8 potential recovery, including: 1) overcoming defendant’s arguments and evidence that it properly 9 provided meal and rest breaks, paid for all hours of work, and properly reimbursed business 10 expenses; 2) the obstacles inherent in satisfying the requirements to certify a class, certify a 11 collective, and satisfy manageability requirements; 3) the challenges of proving the elements of 12 each cause of action; 4) the derivative nature of many of the claims; 5) the costs and expenses of 13 further litigation; and 6) the recovery rate, even if plaintiff were to prevail, after years of 14 continued and costly litigation. (ECF No. 28 at 5.) The Court noted that while a larger award 15 was theoretically possible, the Court would adopt the findings and recommendations 16 preliminarily approving the settlement amount. (ECF No. 28 at 6.) The District Judge also 17 considered the proffered strengths and weaknesses of the Plaintiffs’ case in considering the 18 reversionary clause and the attorneys’ fees request, as discussed in greater detail below. 19 Based on the above facts, Plaintiffs’ arguments, and supporting declarations regarding the 20 strengths and weaknesses of this action, it appears that while Plaintiffs have potentially 21 meritorious claims, it is far from certain that they would have prevailed on those claims or 22 achieved full recovery on them, particularly on a class-wide basis. The settlement in this action 23 provides the class members with substantial relief now; and given the uncertainty of ultimate 24 success at trial, the proposed settlement provides the parties with a fair resolution of the issues 25 presented which weighs in favor of settlement. 26 The court finds that consideration of the strength of Plaintiffs’ case weighs in favor of 27 granting final approval of the settlement in this action. 28 / / / 23 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 24 of 60 1 b. Risk, Expense, Complexity, and Likely Duration of Further Litigation 2 “[T]here is a strong judicial policy that favors settlements, particularly where complex 3 class action litigation is concerned.” In re Syncor ERISA Litig., 516 F.3d at 1101 (citing Class 4 Plaintiffs, 955 F.2d at 1276). As a result, “[a]pproval of settlement is preferable to lengthy and 5 expensive litigation with uncertain results.” Johnson v. Shaffer, No. 2:12-cv-1059-KJM-AC, 6 2016 WL 3027744, at *4 (E.D. Cal. May 27, 2016) (citing Morales v. Stevco, Inc., No. 1:09-cv- 7 00704-AWI-JLT, 2011 WL 5511767, at *10 (E.D. Cal. Nov. 10, 2011)). Employment law class 8 actions are, by their nature, time-consuming and expensive to litigate. Hightower v. JPMorgan 9 Chase Bank, N.A., No. 11-cv-1802-PSG-PLA, 2015 WL 9664959, at *6 (C.D. Cal. Aug. 4, 10 2015). 11 Plaintiffs argue the risks and expenses of further litigation outweighed any benefit that 12 might have been gained otherwise through any continued litigation, as if the case had settled 13 after further litigation, the settlement amount would have taken into account additional costs 14 incurred, and there might have been less money available for the Class Members thereafter. 15 (Mot. 16-17.) While often present in these types of actions, Plaintiffs proffer there are multiple 16 risks of further litigation, including: a determination that the claims were unsuitable for class 17 and/or collective treatment as Defendant would have vigorously challenged certifiability and 18 liability, and specifically contended that individualized questions of fact predominated over any 19 common issues; class de-certification after certification; the risks and costs of presenting these 20 claims to a jury; and ultimately, the real possibility of no recovery after years of litigation. (Mot. 21 17.) Plaintiffs highlight that the parties were moving into the stage of litigation that would 22 necessitate more substantial formal discovery, including additional written discovery requests 23 and depositions of Defendant’s Person Most Knowledgeable (“PMK”) designees, expert 24 witnesses, and percipient witnesses. (Mot. 17.) Plaintiffs note this extensive formal discovery 25 would certain result in discovery disputes that would require additional time and money, in 26 contrast to the fact the Settlement provides significant benefits for the Class Members and 27 Proposed FLSA Collective Members immediately, while avoiding further expenses, risks, and 28 delay of prolonged litigation with only the possibility of a recovery. (Mot. 17.) The parties also 24 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 25 of 60 1 considered Defendant’s limited financial resources and “precarious financial circumstances.” 2 (Mot. 16.) 3 Though the parties have been litigating this case for over six years, that timeline would be 4 extended even further by litigating this case to a final resolution through a jury trial. The parties’ 5 expenses would increase as litigation costs continue to accrue, and any recovery of a monetary 6 judgment, which is not guaranteed, would be prolonged. Further, as discussed in the following 7 subsection, the Court finds there are legitimate issues concerning maintaining class action status 8 throughout trial and the risk of decertification. 9 Accordingly, the Court finds consideration of the risk, expense, complexity, and likely 10 duration of further litigation, weighs in favor of granting final approval. 11 c. Risk of Maintaining Class Action Status Throughout Trial 12 As for the dangers of denying class certification, or potential for decertification, the Court 13 voiced some concerns regarding typicality and commonality in issuing the findings and 14 recommendations recommending conditional certification on preliminary approval. (ECF No. 24 15 at 15-22.) As discussed therein, the Court believes there are legitimate issues concerning class 16 certification, and thus is a relevant risk that Plaintiffs face with continued litigation. Plaintiffs 17 further argue that it would be grossly inefficient for a large class of current and former 18 employees to bring individual actions to recover for alleged violations of wage-and-hour laws, 19 and moreover, the potential individual recovery that could be obtained by a Class Member and 20 FLSA Collective Member would not be significant enough to provide him or her with the 21 incentive to sue, and thus granting final approval of the Settlement would provide these 22 individuals with a resolution that provides certain and substantial recovery. (Mot. 17.) 23 Accordingly, the Court finds that consideration of this factor weighs in favor of granting 24 final approval of the settlement in this action. 25 d. Amount Offered in Settlement 26 “It is well-settled law that a cash settlement amounting to only a fraction of the potential 27 recovery will not per se render the settlement inadequate or unfair,” and “[i]t is the complete 28 package taken as a whole, rather than the individual component parts, that must be examined for 25 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 26 of 60 1 overall fairness.” Officers for Justice, 688 F.2d at 628; In re Mego Fin. Corp. Sec. Litig., 213 2 F.3d 454, 459 (9th Cir. 2000) (same); Ontiveros v. Zamora, 303 F.R.D. 356, 370 (E.D. Cal. 3 2014) (same); see also City of Detroit v. Grinnell Corp., 495 F.2d 448, 455 (2d Cir. 1974) (“In 4 fact there is no reason, at least in theory, why a satisfactory settlement could not amount to a 5 hundredth or even a thousandth part of a single percent of the potential recovery.”), abrogated by 6 Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000). “To determine whether a 7 settlement ‘falls within the range of possible approval’ a court must focus on ‘substantive 8 fairness and adequacy,’ and ‘consider plaintiffs’ expected recovery balanced against the value of 9 the settlement offer.’ ” Collins v. Cargill Meat Sols. Corp., 274 F.R.D. 294, 302 (E.D. Cal. 10 2011) (quoting In re Tableware Antitrust Litig., 484 F.Supp.2d at 1080). 11 The settlement amounts and current estimated individual distributions, as currently 12 updated through supplemental briefing following the final approval hearing, are described above 13 in greater detail, supra Section IV(A)(2)-(5). In relevant sum, Defendant has agreed to pay a 14 Maximum Settlement Amount of up to $600,000, with the Net Settlement Amount calculated by 15 deducting the following amounts from the Maximum Settlement Amount: (1) attorneys’ fees of 16 $210,000 and reimbursement of litigation costs and expenses of $22,612.07 to Class Counsel; (2) 17 Incentive Awards of up to $6,000 total; (3) $3,750 to the LWDA for its share of the PAGA 18 Settlement Amount; and (4) Settlement Administration Costs of $16,000. A twenty-five percent 19 (25%) portion of the PAGA Settlement Amount allocated to aggrieved employees ($1,250.00 of 20 a total $5,000.00), will remain part of the Net Settlement Amount. Ninety-five percent (95%) of 21 the Net Settlement Amount, inclusive of the Employee’s PAGA portion, is to be allocated to the 22 Class Settlement and available to be distributed to Claimants (“Class Settlement Amount”), and 23 the remaining five percent (5%) of the Net Settlement Amount is to be allocated to the FLSA 24 Settlement and distributed to FLSA Collective Members (“FLSA Settlement Amount”). The 25 current Net Settlement Amount is now estimated to be $341,637.93. (Suppl. Simpluris Decl. ¶ 26 16.) 27 The Class Settlement Amount, now estimated to be $324,556.03, is to be distributed to 28 Claimants based upon the number of Workweeks they worked as Property Employees during the 26 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 27 of 60 1 Settled Period. Claimants have claimed approximately $78,374.56, or 21.45% of the Class 2 Settlement Amount. (Suppl. Simpluris Decl. ¶ 17.) Because the 63% Minimum Distribution 3 Floor was not met by the number of Claimants, Simpluris proportionately increased the 4 Estimated Class Settlement Shares for each Claimant on a pro rata basis so that 63% of the Class 5 Settlement Amount, or $204,470.30 of the total $324,556.03, will be distributed to the 6 Claimants. (Id. at ¶ 19.) After adjusting each Claimants’ Estimated Class Settlement Share so 7 that the Minimum Distribution Floor is reached, the highest gross Estimated Class Settlement 8 Share is approximately $4,883.07, the lowest gross Estimated Class Settlement Share is 9 approximately $84.35, and the average gross Estimated Class Settlement Share is $1,390.95. (Id. 10 at ¶ 20.) 11 The FLSA Settlement Amount is now estimated to be $17,081.90, and will be distributed 12 to FLSA Collective Members based upon their respective Workweeks compared to the number 13 of Workweeks of all FLSA Collective Members. The one hundred thirty-one (131) Collective 14 Members represent 21.59% of the total Workweeks, and the entire FLSA portion of $17,081.90 15 will be distributed on a pro rata basis. As of the time of the final approval hearing, the highest 16 gross Estimated FLSA Settlement Share is estimated to be approximately $456.18, the lowest 17 gross Estimated FLSA Settlement Share is estimated to be approximately $5.25, and the average 18 gross Estimated FLSA Settlement Share is estimated to be $130.40. (Id. at ¶ 21.) 19 Individual Settlement Payments will be allocated as one-third (1/3) wages and two-thirds 20 (2/3) penalties and non-wage damages. The Individual Settlement Payments will be reduced by 21 the employee’s share of payroll taxes and withholding on the wages portion of the Settlement 22 Payments. (Mot. 9; Agreement ¶ 17.) 23 The Employer Taxes will be paid from the Remainder, and if the Remainder is not 24 sufficient to cover all the Employer Taxes, Defendant will pay an additional amount sufficient to 25 cover the Employer Taxes. (Mot. 9; Agreement ¶¶ 16, 31, 52, 62(a).) As of the date of the final 26 approval hearing, the estimated Employer Taxes that will be paid out of the unclaimed funds is 27 approximately $14,674.33, and the estimated amount of unclaimed funds that will revert back to 28 Defendant is approximately $105, 411.40. (Suppl. Simpluris Decl. ¶ 22.) 27 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 28 of 60 1 In issuing the findings and recommendations recommending preliminary approval of the 2 settlement, the Court conducted a review of the damages and valuation analysis provided by 3 Class Counsel. (ECF No. 24 at 29-35.) The Court incorporates that review herein by way of 4 reference. Therein, the Court expressed significant concerns regarding the amount of settlement 5 as discounted in relation to the analyses of initial valuations. (Id.) The undersigned stated that 6 “[w]hile Plaintiffs put forth various reasoning for these steep discounts . . . counsel has not 7 exhaustively explained the reasoning for the discounts, particularly as to the individual claims 8 themselves,” and noted that “given the amount the valuation has been discounted, some courts 9 may not find such evidence sufficient, even at the preliminary approval stage [citations].” (ECF 10 No. 24 at 32.) The Court determined that “[n]onetheless, the Court finds counsel’s explanations 11 sufficient for purposes of preliminary approval, taken in the context of the risks of continued 12 litigation and settlement as a whole, with the caveat that more extensive explanation and support 13 for the discounting may be needed to demonstrated fairness at the final approval hearing.” (ECF 14 No. 24 at 33.) The undersigned ultimately found that “[w]hile on the lower end of approved 15 settlements, the amount is not, on its face, outside the bounds or range of reasonableness.” (ECF 16 No. 24 at 33.) In support of this finding, the Court provided a survey of nearly two dozen cases 17 where courts approved settlements with deep discounts from originally proffered damages 18 valuations, many of which where preliminary approval was granted with a warning to the parties 19 that additional evidentiary support may be required at the final fairness hearing. (ECF No. 24 at 20 33-35 n.20.) 21 As discussed above, prior to adopting the findings and recommendations on preliminary 22 approval, the District Judge requested supplemental briefing regarding the potentially 23 problematic aspects of the settlement agreement, including the estimated value of the claims, the 24 reversionary clause, payment of payroll taxes out of individual settlement amounts, as well as the 25 amount of attorneys’ fees requested. (ECF No. 26.) Plaintiffs’ supplemental briefing 26 emphasized and built upon many of the reasons presented in the motion for preliminary approval 27 for the discounting of the valuation in relation to the strengths and weakness of the case and risks 28 of continued litigation. (ECF No. 27 at 6-7.) Plaintiffs’ counsel filed a supplemental declaration 28 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 29 of 60 1 with quantification of the value of the claims and analysis, and why the estimates warranted such 2 reductions. (Id.; Suppl. Decl. Edwin Aiwazian Supp. Pls.’ Mot. Prelim. Approval (“Aiwazian 3 Suppl. Decl.”) ¶¶ 8-69, ECF No. 27-1.) In adopting the findings and recommendations on 4 preliminary approval, the District Judge considered the reasons offered for discounting the 5 maximum potential recovery, including: 1) overcoming Defendant’s arguments and evidence 6 that it properly provided meal and rest breaks, paid for all hours of work, and properly 7 reimbursed business expenses; 2) the obstacles inherent in satisfying the requirements to certify a 8 class, certify a collective, and satisfy manageability requirements; 3) the challenges of proving 9 the elements of each cause of action; 4) the derivative nature of many of the claims; 5) the costs 10 and expenses of further litigation; and 6) the recovery rate, even if Plaintiff were to prevail, after 11 years of continued and costly litigation. (ECF No. 28 at 5.) The Court noted that while a larger 12 award was theoretically possible, the Court would adopt the findings and recommendations 13 recommending preliminary approval. (ECF No. 28 at 6.)5 14 5 In the order granting preliminary approval following supplemental briefing, the District Judge noted the Court’s 15 calculations differed slightly than those provided in supplemental briefing, stating it appeared “particularly because plaintiffs used a different figure for the FLSA minimum wages claim in their supplemental briefing.” (ECF No. 28 16 at 3 n.1.) The District Judge directed Plaintiffs to address this discrepancy in advance of the final approval hearing. (Id.) In the declaration attached to the motion for attorneys’ fees, Plaintiffs’ counsel states the “discrepancy in the 17 value of the minimum wage claim under FLSA in the declarations filed in support of the Motion for Preliminary Approval was due to an inadvertent typographical error in the formula when the numbers were transferred over from 18 the valuation/damages models to the declaration that was filed on November 25, 2019. The correct estimated value of the liquidated damages of the minimum wage claim under the FLSA is $232,957, as state[d] in the declaration 19 filed on June 4, 2020.” Thus, Plaintiffs proffer the original calculations were based on a typographical error that showed an original valuation for the failure to pay minimum wages under the FLSA claim of $601,189.72 20 (Aiwazian Prel. Decl. ¶ 26(d)), when the correct original valuation the claim should have been $232,957. 21 As set forth in the findings and recommendations on preliminary approval (ECF No. 24 at 31), the original discounted valuation calculation for the FLSA claim was calculated by cutting the valuation by 50%, then 75%, and 22 again 75% ($601,189.72 × 0.5 x .25 x .25 = $18,787.18). Thus, the discounted valuation was approximately 3.1% of the original ($18,787.18 ÷ $601,189.72 = 0.03125). The grand total valuation based on these earlier numbers was 23 discounted from $11,353,147.53 to $591,798.32, and thus the previous discounted total valuation was approximately 5.21% of the of the original ($591,798.32 ÷ $11,353,147.53 = 0.0521). 24 The updated discounted valuation for the FLSA minimum wage claim was discounted in the same manner ($232,957.00 × 0.5 × 0.25 × 0.25 = $7,279.91), and thus the new discounted valuation on the FLSA minimum wage 25 claim represents the same proportion ($7,279.90625 ÷ $232,957.00 = 0.03125). The new grand total valuation based on the supplemental briefing’s numbers was discounted from $10,984,917.81 to $580,291.05, and thus the 26 new discounted total valuation is approximately 5.28% of the original ($580,291.05 ÷ 10,984,917.81 = 0.0528). Thus, the valuation discount based on the corrected numbers appears to slightly show a more favorable reduction to 27 Plaintiffs in percentage terms. The total $600,000 settlement is also now a larger proportion of the lowered total: ($600,000.00 ÷ $11,353,147.53 = 0.0528) vs. ($600,000.00 ÷ $10,984,917.81 = 0.05462). 28 29 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 30 of 60 1 Below, in applying the required stricter level of scrutiny for pre-certification settlements 2 and reviewing the agreement for the presence of potential signs of collusion, the Court addresses 3 the reversionary aspect of the settlement agreement. The Court also further addresses the 4 amount of attorneys’ fees in relation to the sufficiency of the settlement. 5 For all of the reasons discussed herein pertaining to the course of litigation since 2014, 6 the risks of continued litigation, the strengths and weaknesses of Plaintiffs’ case, the fact that the 7 settlement was reached with the use of an experienced mediator in this field, the supporting 8 declarations and analyses provided regarding damages valuations throughout settlement 9 negotiations provided to the Court at preliminary approval and supplemental briefing, the Court 10 finds the amount of the settlement weighs in favor of final approval. The Court again references 11 the survey of cases pertaining to discounted settlement amounts cited in the findings and 12 recommendations on preliminary approval. (ECF No. 24 at 33-35 n.20.) And again, “[t]he fact 13 that a proposed settlement may only amount to a fraction of the potential recovery does not, in 14 and of itself, mean that the proposed settlement is grossly inadequate and should be 15 disapproved.” Adoma v. Univ. of Phoenix, Inc., 913 F. Supp. 2d 964, 976 (E.D. Cal. 2012) 16 (quoting Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 1242 (9th Cir. 1998)). “[I]t is the 17 very uncertainty of outcome in litigation and avoidance of wasteful and expensive litigation that 18 induce consensual settlements [and a] proposed settlement is not to be judged against a 19 hypothetical or speculative measure of what might have been achieved by the negotiators.” 20 Linney, 151 F.3d at 1242 (quoting Officers for Justice, 688 F.2d at 625). As the Ninth Circuit 21 explained: 22 We are not persuaded otherwise by Objectors’ further submission that the court should have specifically weighed the merits of the class’s case against the 23 settlement amount and quantified the expected value of fully litigating the matter. For this they rely on the Seventh Circuit’s opinion in Synfuel Tech., Inc. v. DHL 24 Express (USA), Inc., 463 F.3d 646 (7th Cir.2006), which follows that circuit’s precedent requiring district courts to determine the strength of the plaintiff’s case 25 on the merits balanced against the amount offered in settlement by “ ‘quantifying the net expected value of continued litigation to the class.’ ” Id. at 653 (quoting 26 Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 284–85 (7th Cir.2002)). To do this, the Seventh Circuit directs courts to “ ‘estimate the range of possible 27 outcomes and ascrib [e] a probability to each point on the range.’ ” Id. However, our approach, and the factors we identify, are somewhat different. We put a good 28 deal of stock in the product of an arms-length, non-collusive, negotiated 30 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 31 of 60 1 resolution, Hanlon, 150 F.3d at 1027; Officers for Justice, 688 F.2d at 625, and have never prescribed a particular formula by which that outcome must be tested. 2 As we explained in Officers for Justice, “[u]ltimately, the district court’s determination is nothing more than an amalgam of delicate balancing, gross 3 approximations and rough justice.” 688 F.2d at 625 (internal quotation marks and citation omitted). The Seventh Circuit also recognizes that precision is impossible, 4 and that even its more structured approach is apt to produce only a “ballpark valuation.” Synfuel, 463 F.3d at 653. 5 In reality, parties, counsel, mediators, and district judges naturally arrive at a 6 reasonable range for settlement by considering the likelihood of a plaintiffs’ or defense verdict, the potential recovery, and the chances of obtaining it, discounted 7 to present value. 8 Rodriguez v. West Publ’g Corp., 563 F.3d at 965; see also Ontiveros, 303 F.R.D. at 371 (“The 9 court finds no reason to doubt class counsel’s assertion that a $3,680.19 average payout is a good 10 result in a wage and hour case involving blue collar workers . . . Additionally, class counsel’s 11 proposed formula for apportioning the settlement to class members appears to be well-researched 12 . . . Although the court is ill equipped to conclude how the $3,680.19 average payout compares 13 to actual damages recoverable at trial, the overall terms of the settlement appear fair.”). 14 Consistent with the reasons stated in the findings and recommendations recommending 15 preliminary approval, as strengthened by the supplementary materials filed by counsel regarding 16 the valuation of the claims considered by the Court in adopting the findings and 17 recommendations on preliminary approval, and the reasons discussed above, the Court finds that 18 the settlement amount in this case is appropriate and fair. Thus, consideration of this factor also 19 weighs in favor of final approval. 20 i. PAGA Penalty Claims 21 The Court briefly and separately addresses the PAGA penalty claims. 22 Civil penalties recoverable under the California Labor Code Private Attorneys General 23 Act of 2004, Labor Code section 2698, et seq. (“PAGA”), are being settled here for $5,000.00, of 24 which seventy-five percent (75%), or $3,750.00, will be paid to the California Labor Workforce 25 Development Agency (“LWDA”), and twenty-five percent (25%), or $1,250.00, will be part of 26 the Net Settlement Amount for distribution to the Class Members. (ECF No. 32 at 2-3; Mot. 4, 27 8.) 28 31 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 32 of 60 1 In the class action context, where PAGA claims are also often brought, a district court 2 must independently determine that a proposed settlement agreement is “fundamentally fair, 3 adequate and reasonable” before granting approval. See Officers for Justice, 688 F.2d at 625; 4 see also In re Heritage Bond Litigation, 546 F.3d 667, 674–75 (9th Cir. 2008). The LWDA has 5 provided some guidance regarding court approval of PAGA settlements. See Gutilla v. Aerotek, 6 Inc., No. 115CV00191DADBAM, 2017 WL 2729864, at *2 (E.D. Cal. Mar. 22, 2017) 7 (discussing California Labor and Workforce Development Agency’s Comments on Proposed 8 PAGA Settlement (“LWDA Comments”) (citing O’Connor v. Uber Techs., Inc., 201 F. Supp. 3d 9 1110, 1133 (N.D. Cal. 2016)). 10 In O’Connor, where both class action and PAGA claims were covered by a proposed 11 settlement, the LWDA stated that: 12 It is [] important that when a PAGA claim is settled, the relief provided for under the PAGA be genuine and meaningful, consistent with the underlying purpose of 13 the statute to benefit the public and, in the context of a class action, [it is important that] the court evaluate whether the settlement meets the standards of 14 being “fundamentally fair, reasonable, and adequate” with reference to the public policies underlying the PAGA. 15 16 Id. 17 The proposed $5,000.00 penalty payment in this case represents less than one percent 18 (0.83%) of the estimated $600,000.00 gross settlement amount. This amount falls within the 19 range of previously approved comparable PAGA penalties in other class actions, in this court 20 and others. See Wise v. Ulta Salon, Cosmetics & Fragrance, Inc., No. 117CV00853DADEPG, 21 2020 WL 1492672, at *5 (E.D. Cal. Mar. 27, 2020) (approving $75,000 PAGA penalty, or 22 approximately 2% of $3.4 million gross settlement); Garcia v. Gordon Trucking, Inc., No. 1:10- 23 cv-0324-AWI-SKO, 2012 WL 5364575, at *7 (E.D. Cal. Oct. 31, 2012) (approving $10,000 24 PAGA penalty, or approximately 0.27% of 3.7 million gross settlement); Chu v. Wells Fargo 25 Investments, LLC, No. C-05-4526-MHP, 2011 WL 672645, at *1 (N.D. Cal. Feb. 16, 2011) 26 (approving $10,000 PAGA penalty, or approximately 0.14% of $6.9 million gross settlement). 27 Having reviewed the parties’ submission and the terms of the proposed settlement, the 28 Court finds that the settlement amount related to Plaintiffs’ PAGA claims is fair, reasonable, and 32 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 33 of 60 1 adequate in light of the public policy goals of PAGA. Because of the risks associated with the 2 pursuit of further litigation in this action articulated above, the Court finds that the amount 3 offered in settlement of the PAGA claims here weighs in favor of final approval of the 4 settlement. 5 e. Extent of Discovery Completed and Stage of the Proceedings 6 It is appropriate for the Court to consider whether the process by which the parties 7 arrived at their settlement is truly the product of arm’s length bargaining, rather than collusion or 8 fraud. Millan v. Cascade Water Servs., Inc., 310 F.R.D. 593, 613 (E.D. Cal. 2015) “A 9 settlement following sufficient discovery and genuine arms-length negotiation is presumed fair.” 10 Adoma, 913 F. Supp. 2d at 977 (quoting DIRECTV, Inc., 221 F.R.D. at 528).6 A settlement that 11 occurs in an advanced stage of the proceedings indicates that the parties have carefully 12 investigated the claims before resolving the action. Ontiveros, 303 F.R.D. at 371 (citing Alberto 13 v. GMRI, Inc., Civ. No. 07–1895 WBS DAD, 2008 WL 4891201, at *9 (E.D.Cal. Nov. 12, 14 2008)). “In the context of class action settlement, ‘formal discovery is not a necessary ticket to 15 the bargaining table’ where the parties have sufficient information to make an informed decision 16 about settlement.” Linney, 151 F.3d at 1239 (quoting In re Chicken Antitrust Litig., 669 F.2d 17 228, 241 (5th Cir. 1982)). Approval of a class action settlement thus “is proper as long as 18 [formal or informal] discovery allowed the parties to form a clear view of the strength and 19 weaknesses of their case.” Monterrubio v. Best Buy Stores, L.P., 291 F.R.D. 443, 454 (E.D. Cal. 20 2013). 21 Here the settlement was reached prior to class certification but after significant discovery 22 and after attending mediation. At preliminary approval, the Court discussed and reviewed the 23 extent of discovery, negotiations, mediation, and other information concerning the stage of 24 6 However, as noted above, when the settlement takes place before formal class certification, as it has in this 25 instance, settlement approval requires a “higher standard of fairness.” Lane v. Facebook, Inc., 696 F.3d at 819 (quoting Hanlon, 150 F.3d at 1026). This more exacting review of class settlements reached before formal class 26 certification is required to ensure that the class representatives and their counsel do not receive a disproportionate benefit “at the expense of the unnamed plaintiffs who class counsel had a duty to represent.” Id. As recently 27 emphasized by the Ninth Circuit, this requires courts to apply “an even higher level of scrutiny for evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e).” Roes, 1-2 v. SFBSC Mgmt., 28 LLC, 944 F.3d at 1043 (quoting In re Bluetooth, 654 F.3d at 946). 33 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 34 of 60 1 proceedings prior to reaching settlement. (ECF No. 24 at 26-28.) In the present motion, 2 Plaintiffs again largely emphasize the same facts. (Mot. 13.) The parties engaged in significant 3 formal and informal discovery since this action was instituted in state court in 2014, filed 4 multiple motions in the state court, and participated in a mediation prior to reaching settlement. 5 Plaintiffs proffer that in addition to interviews of Plaintiffs and class members, they reviewed 6 and analyzed thousands of pages of data and documents, including: (1) Plaintiffs’ and Class 7 Members’ employment records, including detailed time and pay records; (2) Defendant’s 8 Employee Handbook which contains policies and procedures pertaining to meal and rest periods, 9 timekeeping requirements, dress code standards, overtime, and reimbursements; (3) class-wide 10 data regarding class-size, number of workweeks, pay periods, and terminations; (4) Defendant’s 11 arbitration agreement; (5) Defendant’s standard employment agreement; (6) Defendant’s new 12 employee checklist; (7) job descriptions for various positions; (8) Defendant’s memorandum 13 pertaining to cell phones; (9) Defendant’s mileage expense report form; (10) Defendant’s 14 Employee Handbook Acknowledgement form; (11) Defendant’s Business Mileage 15 Reimbursement Policy; (12) a list of all current and former properties managed by Defendant; 16 (13) agendas from internal meetings; (14) emails and internal memoranda; and (15) numerous 17 other documents regarding Defendant’s employment policies, practices, and procedures. (Mot. 18 13-14; Aiwazian Fees Decl. ¶ 6.) Plaintiffs state that these documents provided Class/Collective 19 Counsel with a critical understanding of the nature of the work performed by Class Members and 20 Defendant’s written and unwritten policies, practices and procedures, and this information was 21 utilized in analyzing liability and damages in various stages of litigation, and ultimately in 22 mediation and settlement negotiations thereafter. (Mot. 14.) 23 Further, depositions of Defendant’s President as person most knowledgeable, 24 Defendant’s Regional Director, as well as a Class Member, were completed. (Mot. 14; Aiwazian 25 Fees Decl. ¶ 6.) The deposition of the Defendant’s President lasted two days. (Id.) Plaintiffs 26 and Defendant both propounded and responded to multiple sets of written discovery requests. 27 28 34 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 35 of 60 1 (Id.) The parties engaged in a Belaire-West notice administration,7 by which Class/Collective 2 Counsel obtained the contact information of Class Members who did not opt-out of the 3 disclosure of their information. (Id.) Significantly, the parties reached settlement after 4 reviewing the above discussed evidence and then participating in a mediation conducted by Paul 5 Grossman, “a well-respected mediator experienced in handling complex wage-and-hour matters, 6 and extensive negotiations thereafter.” (Mot. 14; Aiwazian Fees Decl. ¶ 8.) Prior to and during 7 the negotiations, the parties exchanged information and discussed various factors, including the 8 risks and delays of further litigation, proceeding with class and collective certification, the law 9 relating to off-the-clock theory, meal and rest periods, wage-and-hour enforcement, FLSA 10 claims, and PAGA representative claims, the evidence and analysis thereof, the possibility of 11 appeals, the risks to recovery, and the “continued employment of current-employee Class 12 Members in light of Defendant’s limited financial resources and precarious financial 13 circumstances.” (Mot. 14-15; Aiwazian Fees Decl. ¶ 8.) 14 The fact that the parties believe they engaged in sufficient discovery to evaluate the 15 merits of the action weighs in favor of approving the class action settlement. Based on that 16 discovery, the parties engaged in a private mediation with an experienced mediator, which aided 17 in forming the settlement agreement now pending before the Court for final approval. The 18 course of litigation leading to the mediation and the use of mediation to reach settlement weigh 19 in favor of approving the settlement. See Ontiveros, 303 F.R.D. at 371 (“The parties use of 20 mediation, which took place after significant discovery, and their reliance on the mediator’s 21 proposal in settling demonstrates the parties considered a neutral opinion in evaluating the 22 strength of their arguments [and] [a]ccordingly, the parties’ apparent careful investigation of the 23 claims and their resolution in consideration of the views of a third party mediator weigh in favor 24 of settlement.”); Millan, 310 F.R.D. at 613 (“Participation in mediation prior to a settlement 25 ‘tends to support the conclusion that the settlement process was not collusive.’ ”) (quoting 26 7 A Belaire-West notice is where putative class members are provided with a written notice informing them of the 27 lawsuit and giving them an opportunity to opt-out of contact by plaintiffs’ counsel. See Austin v. Foodliner, Inc., No. 16CV07185HSGDMR, 2018 WL 1168694, at *1 (N.D. Cal. Mar. 6, 2018); Belaire-W. Landscape, Inc. v. 28 Superior Court, 149 Cal. App. 4th 554, 557-58 (2007). 35 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 36 of 60 1 Palacios v. Penny Newman Grain, Inc., 2015 WL 4078135 (E.D.Cal. July 6, 2015)) (quotation 2 marks omitted). 3 Based on the facts reiterated above, the reasons discussed in the Court’s findings and 4 recommendations recommending granting preliminary approval, and the applicable legal 5 standards, the Court finds the extent of discovery and the stage of proceedings weigh in favor of 6 final approval of the settlement. These facts, particularly the protracted nature of the litigation in 7 combination with the attendance of mediation and tenor of settlement negotiations also indicate 8 that the parties’ negotiations constituted genuine and informed arm’s length bargaining, though the 9 Court further scrutinizes whether aspects of the Agreement indicate any collusion below as 10 required for pre-certification settlements. 11 Accordingly, the Court concludes that consideration of this factor also weighs in favor of 12 granting final approval. 13 f. Experience and Views of Counsel 14 The Court is to accord great weight to the recommendation of counsel because they are 15 aware of the facts of the litigation and in a better position than the court to produce a settlement 16 that fairly reflects the parties’ expected outcome in the litigation. DIRECTV, 221 F.R.D. at 528. 17 Class/Collective Counsel proffer they have extensive experience in handling complex 18 wage-and-hour matters, including significant experience in employment class action litigation. 19 (Mot. 16, 22; Aiwazian Fees Decl. ¶¶ 15-18; Decl. Heather Davis Supp. Mot. Final Approval 20 (“Davis Decl.”) ¶¶ 7-10, ECF No. 33-5.) Specifically, the two law firms representing Plaintiffs 21 have been appointed class counsel in numerous complex wage-and-hour cases, and have 22 recovered millions of dollars for individuals in California, and overall, argue that both sides’ 23 counsel were capable of assessing the strengths and weaknesses of the Class Members’ claims 24 against Defendant, and determining the benefits of the settlement under the circumstances of this 25 case and in the context of the settlement negotiations. (Id.) The Court previously found the 26 same when conditionally certifying the class and determining the adequacy of representation. 27 (ECF No. 24 at 20.) 28 Based on their experience and qualifications, investigation of the disputed factual and 36 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 37 of 60 1 legal issues involved in this case, and evaluation of the risks of continued litigation, each of these 2 attorneys have concluded that this settlement is fair and reasonable. (Mot. 22.) Consideration of 3 class counsel’s experience and expressed opinions in this regard also weighs in favor of final 4 approval of the settlement. 5 g. Presence of a Governmental Participant 6 While there is no direct governmental party in this action, above, the Court discussed the 7 sufficiency of the PAGA portion of the settlement and payment of to the California LWDA. At 8 least one court has found such aspect of the settlement weighs in favor of approval. See Adoma, 9 913 F. Supp. 2d at 977 (“Plaintiffs sought to enforce claims under California’s Private Attorney 10 General Act of 2004 . . . on behalf of the state and affected employees . . . settlement will result 11 in a $50,000 payment to the California Labor and Workforce Development Agency [and thus] 12 [t]his factor weighs in favor of approval.”). 13 Accordingly, this factor either weighs in favor of approval or is not at issue. 14 h. Reaction of the Class Members 15 “It is established that the absence of a large number of objections to a proposed class 16 action settlement raises a strong presumption that the terms of a proposed class settlement action 17 are favorable to the class members.” DIRECTV, 221 F.R.D. at 529 (citations omitted). 18 Above, the Court described the process by which the Settlement Administrator mailed 19 Notice Packets to the Class Members, the successful additional efforts to locate addresses for 20 Notice Packets that were returned undeliverable, as well as the Court approved stipulation to 21 mail out additional Notice Packets to increase the rate of claims. 22 As of the date of the hearing on the motion for final approval, following the return of 23 Claim Forms, the Rule 23 class here consists of one hundred forty-seven (147) members, and 24 one hundred thirty-one (131) members opted into the FLSA collective action. (Suppl. Simpluris 25 Decl. ¶¶ 11-13.) The Settlement Administrator has not received any objections to the Class 26 Settlement, has received only one request for exclusion, and received two (2) Workweeks 27 dispute forms from Class Members, which have been resolved. (Id.; Mot. 11, 22-23; Simpluris 28 Decl. ¶¶ 10-11.) Additionally, no class members appeared at the final fairness hearing to raise 37 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 38 of 60 1 any objections to the settlement. The absence of any objections is compelling evidence that the 2 settlement is fair, adequate and reasonable. DIRECTV, 221 F.R.D. at 529 (“The absence of a 3 single objection to the Proposed Settlement provides further support for final approval of the 4 Proposed Settlement.”); Barcia v. Contain-A-Way, Inc., No. 07-cv-938-IEG-JMA, 2009 WL 5 587844, at *4 (S.D. Cal. Mar. 6, 2009) (“The absence of any objector strongly supports the 6 fairness, reasonableness, and adequacy of the settlement.”). 7 Accordingly, consideration of this factor weighs in favor of granting final approval. In 8 sum, after considering all of the above eight factors, the court finds on balance that the settlement 9 is fair, reasonable, and adequate. See Fed. R. Civ. P. 23(e); Staton, 327 F.3d at 953; Hanlon, 150 10 F.3d at 1026. The Court now turns to determine to what extent any of the “more subtle signs” of 11 collusion recognized by the Ninth Circuit are present here. 12 j. Signs of Collusion 13 Where a class action is settled prior to class certification, the Court must also consider 14 whether there is evidence of collusion or other conflicts of interest before approving the 15 settlement. In re Bluetooth, 654 F.3d at 946. The Ninth Circuit has provided examples of signs 16 that a settlement is the product of collusion between the parties, such as “(1) when counsel 17 receive a disproportionate distribution of the settlement, or when the class receives no monetary 18 distribution but class counsel are amply rewarded; (2) when the parties negotiate a ‘clear sailing’ 19 arrangement providing for the payment of attorneys’ fees separate and apart from class funds . . 20 .; and (3) when the parties arrange for fees not awarded to revert to defendants rather than be 21 added to the class fund.” Id. at 947. 22 Here, the settlement agreement does contain a reversion clause that allows for funds to 23 revert back to Defendant. Class Counsel is seeking an award of attorneys’ fees above the typical 24 benchmark in the Ninth Circuit, however, the agreement no longer contains an express “clear 25 sailing” provision, and as the Court finds below in reviewing the concurrently filed motion for 26 attorneys’ fees, the fee request is not unreasonable under the relevant factors and standards to the 27 point where it appears to be a result of collusion. 28 In recommending granting the motion for preliminary approval, the Court stated the 38 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 39 of 60 1 following as to the undersigned’s inclination toward reducing the requested attorneys’ fees, and 2 the fact there was no longer an express clear sailing agreement in the Settlement Agreement, 3 following the state court’s disapproval of such provision: 4 First, counsel seeks an award of attorneys’ fees in the amount of thirty- five percent (35%) of the Maximum Settlement Amount. This amount is not per 5 se excessive, and as the Court discusses in the next section, the Court is not likely to approve an amount over the Ninth Circuit’s benchmark of twenty-five percent 6 (25%) absent a showing that counsel achieved extraordinary results or otherwise prove they are entitled to such an amount. Given the Court’s inclination to reduce 7 the fee award, the Court finds it significant that the Agreement explicitly provides that should the Court approve a fee award of less than thirty-five percent, the 8 difference “shall become part of the Net Settlement Amount.” (Agreement ¶ 63(d).) Of further significance, the Agreement no longer contains an express 9 clear sailing agreement. The state court previously voiced concerns with the previous settlement agreement’s fee provision which expressly stated that 10 “Defendant will not oppose” an award of up to thirty-five percent (35%). (ECF No. 1-10 at 62, 213.) The Agreement now does not contain such language. 11 (Agreement ¶¶ 19; 63.) 12 (ECF No. 24 at 36.) While the agreement no longer contains an express clear sailing agreement, 13 it is not clear what practical effect the absence has on the inclination of a defendant to oppose the 14 attorneys’ fee award. 15 The Court then made the following findings regarding the reversionary aspect of the 16 settlement agreement: 17 Turning to the reversionary aspect of the Agreement, Plaintiffs argue that the reversion to employer is fair in this case because this is not the case where 18 there is a risk that Defendant will retain funds that correspond to an injury suffered by a Class Member, as the claims process allows all employees who 19 claim an injury to recovery, and only those amounts that do not correspond to any injuries (i.e. unclaimed amounts) will revert to Defendant. Plaintiffs also argue 20 the reversion is fair because: (1) there is a high Minimum Distribution Floor of 63% of the Class Settlement Amount; [Footnote 22 here reads: “The Court notes 21 that following denial of the proposed settlement by the state court, the parties have now raised the minimum distribution floor from 50% to 63%. (ECF No. 1- 22 16 at 8; 1-10 at 61-62.) The Court finds this enhancement to be a significant change in favor of the Class Members.”] (2) the parties have agreed to take steps 23 to increase participation in the settlement, including by causing Notice Packets to be mailed to each Class Member and then following up with those who do not 24 respond by sending reminder post cards; (3) the Class Notice fully informs Class Members about the potential for unclaimed Class Settlement Amounts to be 25 retained by Defendant; (4) reversion was a factor during mediation and settlement negotiations which was the product of arms’ length non-collusive negotiations 26 agreed upon by Plaintiffs and Class/Collective Counsel. (Mot. 23.) 27 Weighing these considerations, the Court finds the reversion provision to be within the bounds of reasonableness. See Glass v. UBS Fin. Servs., Inc., 331 28 F. App’x 452, 456 (9th Cir. 2009) (approving reversion clause that allowed any 39 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 40 of 60 1 reduction in attorney’s fees to revert to defendant) [Footnote 23 here reads: “Again, of significance here, the Agreement provides that in “the event the Court 2 approves a lesser Fees and Costs Award than Class/Collective Counsel request, the difference between (i) the amount requested by Class/Collective Counsel and 3 (ii) the amount actually awarded by the Court shall become part of the Net Settlement Amount.” (Agreement ¶ 63(d).) While such reduction in attorney’s 4 fees may ultimately revert back to Defendant, it will not if sufficient claim forms are returned.”]; Hightower v. JPMorgan Chase Bank, N.A., No. 5 CV111802PSGPLAX, 2015 WL 9664959, at *2, 6 (C.D. Cal. Aug. 4, 2015) (approving final approval of settlement agreement with reversion clause and 65% 6 minimum distribution floor with amounts not awarded as attorney’s fees funneling back to net settlement amount and noting that while the “reversion 7 clause certainly makes the Court suspicious, but in this instance, after reviewing the respective positions of the Parties, and considering the many weaknesses of 8 Plaintiffs’ case, the Court is persuaded that the reversion clause does not make the Settlement Agreement unfair nor does it show collusion among the parties.”); 9 Davis v. Brown Shoe Co., Inc., No. 113CV01211LJOBAM, 2015 WL 6697929, at *6 (E.D. Cal. Nov. 3, 2015) (recommending final approval where defendant 10 retained approximately 58% of the unclaimed funds as class members were adequately notified of retention of unclaimed funds and had opportunity to 11 participate, and no objections were filed, citing four cases in the Eastern District of California where reversions were approved in amounts ranging from 45% to 12 75% of the net settlement funds); Garcia v. City of King City, No. 14-CV-01126- BLF, 2017 WL 363257, at *9 (N.D. Cal. Jan. 25, 2017) (reversion approved in 13 part because product of arm’s length, non-collusive negotiations and assistance of magistrate judge in settlement negotiations); Minor v. FedEx Office & Print 14 Servs., Inc., No. C09-1375 TEH, 2013 WL 503268, at *4 (N.D. Cal. Feb. 8, 2013) (finding reversion clause not “inherently inadequate” for purposes of preliminary 15 approval where there was a minimum distribution floor of 45%, a contention that reversion was essential for defendant to agree to settlement, and parties 16 anticipated a relatively high claim rate). [Footnote 24 here reads: “Plaintiffs cite Dyer v. Wells Fargo Bank, N.A., 303 F.R.D. 326, 330 (N.D. Cal. 2014), in 17 support of their argument that the reversion clause is fair. However, in Dyer, the court was unconcerned with the reversion because it was not a typical reversion 18 clause “in which money allocated to a class member, but unclaimed by her, reverts to the Defendant,” but rather was one where the funds reverted back to 19 defendant corresponding to those members who opted out of the class. 303 F.R.D. at 331 n.1. Therefore, the case does not strengthen Plaintiffs’ position 20 here where the reversion corresponds to funds unclaimed by Class Members.”] 21 Significantly as well, courts have voiced concern where portions of settlement funds relating to FLSA claims revert back to the defendant. See 22 Millan, 310 F.R.D. at 612 (noting “that where a statute’s objectives include deterrence, as does the FLSA’s, it would contradict these goals to permit the 23 defendant to retain unclaimed funds,” and denying preliminary approval in part because the settlement agreement failed to separate the settlement fund based on 24 the FLSA claims and because the unclaimed FLSA portion was part of the reversion to defendant) (internal quotations and citations omitted). Here, although 25 the portion of the settlement allocated to the FLSA claim is relatively small compared to the total portion (5%), it does not revert back to Defendant. (Mot. 26 13; Agreement ¶ 69(b).) 27 Considering all of the factors discussed above, the Court finds the claims- made process is fair, reasonable and adequate. See Nur v. Tatitlek Support Servs., 28 Inc., No. 15CV00094SVWJPRX, 2016 WL 3039573, at *3 (C.D. Cal. Apr. 25, 40 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 41 of 60 1 2016) (approving claims-made settlement with reversion of funds to the employer, and listing sixteen (16) cases wherein courts approved claims-made 2 settlements with reversion of the unclaimed funds to the employer, described as “only a small sample” of such cases). 3 4 (ECF No. 24 at 36-38.) 5 Prior to adopting the findings and recommendations on preliminary approval, the District 6 Judge requested supplemental briefing regarding the reversionary aspect of this settlement. As 7 explained in the order adopting, the District Judge “had, and continues to have, serious concerns 8 regarding the reasonableness of that reversion clause,” and “directed the parties to submit 9 supplemental briefing addressing the fairness and reasonableness of reverting unclaimed amounts 10 above the Minimum Distribution Floor to defendant’s share of payroll taxes and contributions 11 (Employer Taxes), and the remaining amount to be retained by defendant (the Remainder) [and] 12 further directed submission of supplemental documentation regarding the estimate of the Employer 13 Taxes with respect to the wages portion of the settlement.” (ECF No. 28 at 7.) 8 14 In supplemental briefing, Plaintiffs asserted the reversionary component of the settlement is 15 fair and reasonable for the following reasons: 1) the Class Notice fully informs Class Members about 16 the structure of the Settlement (including the reversionary clause) in clear terms, and therefore, are 17 able to make informed decisions on whether to participate; 2) the parties are working to enhance 18 participation; 3) the reversion clause is the product of an arm’s-length negotiation facilitated by a 19 mediator; and 4) the “Minimum Distribution Floor (63% of the Class Settlement Amount) guarantees 20 that Class Members will receive significant percentages of settlement funds.” (ECF No. 27 at 22– 21 23.) 22 In adopting the recommendation to preliminarily approve the settlement, the District 23 Judge acknowledged that reversionary clauses are disfavored, but are reasonable “under some 24 8 On June 4, 2020, Plaintiffs provided the Court with supplemental documentation estimating its employer payroll 25 taxes and contributions as approximately $21,895.13, (ECF No. 27 at 24; Suppl. Aiwazian Decl. ¶ 4), and as noted by the District Judge, the supplemental briefing’s projections of expected taxes assumed a 100% claims rate. Based 26 on the 100% claims rate, the Maximum Settlement Amount of $600,000, with $329,250 available as the Net Settlement Amount for distribution to Claimants and FLSA Collective Members, the employer taxes represent 27 approximately 3.7% of the Maximum Settlement Amount and 6.7% of the Net Settlement Amount. (ECF No. 28 at 8.) 28 41 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 42 of 60 1 unique circumstances.” (ECF No. 28 at 9.) The District Judge accepted the terms of the 2 settlement at preliminary approval, however, forewarned the parties of the need to demonstrate 3 Defendant would not receive an unwarranted windfall in order for the Court to grant final 4 approval: 5 In light of the reasons cited in the supplemental submissions, as well as the parties’ assertions regarding the weaknesses of plaintiffs’ case, the court will at this time 6 adopt the magistrate judge’s finding that the reversion provision is arguably within the bounds of reasonableness, but will do so only for purposes of granting 7 preliminary approval. At the final approval stage, the parties must be prepared to more fully develop their justifications for the court’s permitting defendant to, in 8 effect, retain unclaimed funds, clearly addressing whether defendants will likely enjoy a windfall as a result and, if so, demonstrating the fairness of the provision 9 under the circumstances of this case. The parties are forewarned that if it appears defendants are likely to receive an unwarranted windfall from the reversion, the court 10 is unlikely to grant final approval of the settlement. See Wilson v. Metals USA, Inc., No. 2:12-cv-00568-KJM-DB, 2019 WL 1129117, at *7 (E.D. Cal. Mar. 12, 2019). 11 12 (ECF No. 28 at 9.) In their motion for final approval, Plaintiffs largely elaborate on the 13 arguments made in supplemental briefing. (Mot. 19.) In sum, Plaintiffs argue: the claims 14 process here allows any employee who claims an injury to recover, and thus only those amounts 15 not corresponding to any injury, the unclaimed funds, revert to Defendant; to lessen the concern 16 of a potential windfall to Defendant, the parties undertook additional “exceptional” efforts to 17 increase the claims rate, including negotiating an additional reminder mailing and extension of 18 the deadline to submit claims; caselaw finds such reversions can be proper, and that here, the 19 Parties have agreed to terms where less than 40% of the unclaimed funds revert to Defendant, a 20 proportion smaller than approved by this and other courts; and the reversionary aspect was the 21 product of arms’-length settlement negotiations facilitated by a well-respected mediator, 22 “allaying any concerns of potential collusion.” (Mot. 20-1.) 23 First, while it does not allay all concerns of potential collusion, the course of negotiation 24 through a well-respected mediator in this field does weigh in favor finding the settlement fair. 25 See In re Bluetooth, 654 F.3d at 948 (“[The mere presence of a neutral mediator, though a factor 26 weighing in favor of a finding of non-collusiveness, is not on its own dispositive of whether the 27 end product is a fair, adequate, and reasonable settlement agreement.”). 28 Plaintiffs proffer that perhaps most significant are the efforts to notify and increase claim 42 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 43 of 60 1 rates, emphasizing the parties provided a Notice Packet with a full explanation of the possibility 2 of reversion, and engaged in repeated and robust efforts to reach Class Members and Proposed 3 FLSA Collective Members and remind them of their opportunity to participate in the Settlement, 4 including: (1) the Settlement Administrator processed the Class List by utilizing the National 5 Change of Address Database (“NCOA”) to ensure the Notice Packets were sent to the most up- 6 to-date addresses; (2) the notice sent on August 21, 2020, explained “Defendant will pay no less 7 than sixty-three (63%) of the Class Settlement Amount (‘Minimum Distribution Floor’)”; (3) the 8 Settlement Administrator conducted skip traces to locate updated addresses for Notice Packets 9 returned as undeliverable, located one hundred ninety (190) updated addresses, re-mailed the 10 Notice Packets to the newfound addresses, and ultimately, only twenty-two (22) out of nine 11 hundred twenty (920) Notice Packets remained undeliverable (Simpluris Decl. ¶ 8); (4) on 12 September 18, 2020, the Settlement Administrator sent a reminder postcard to all Class 13 Members/Proposed FLSA Collective Members who had not yet submitted a Class Claim Form 14 (Simpluris Decl. ¶ 9, Reminder Postcard, Ex. E); (5) Defendant’s counsel represented that 15 Defendant engaged in informal internal efforts to encourage current employees to exercise their 16 right to participate in the Settlement; and (6) in December of 2020, in an effort to boost 17 participation, the Parties stipulated to send an additional reminder to non-participating Class 18 Members to provide them an additional 30 days to participate in the Settlement (ECF No. 31), 19 and the reminder postcard was sent on December 28, 2020, extending the deadline to submit 20 Claim Forms until January 27, 2021 (Simpluris Decl. ¶ 15). Based on these actions the parties 21 have undertaken to ensure that Class Members are fully informed and have had multiple 22 opportunities to participate in the Settlement, Plaintiffs argue it cannot be said that Defendant 23 stands to realize an improper “windfall.” 24 The Court finds the minimum distribution floor of 63% along with the notice’s 25 substantive format and the procedure for ensuring adequate notice, the initial reminder postcards, 26 the negotiated extension of the deadline with additional reminder notices, and the absence of 27 objections, weighs in favor of finding the settlement, the reversion clause, and the attorneys’ fees 28 aspects, to be fair and reasonable. See, e.g,, Davis v. Brown Shoe Co., Inc., Case No. 1:13-cv- 43 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 44 of 60 1 01211 (LJO) (BAM), 2015 WL 6697929 (E.D. Cal. 2015) (recommending final approval where 2 class members were adequately notified of retention of any unclaimed net settlement funds by 3 defendant and had the opportunity to participate)9; Hightower v. JPMorgan Chase Bank, N.A., 4 No. CV111802PSGPLAX, 2015 WL 9664959 (C.D. Cal. Aug. 4, 2015) (reversion approved 5 where parties took steps to increase participation such as sending reminder postcards).10 These 6 7 9 In Davis, in approving the reversion, the court considered the notification provided to the class members, the absence of objections, and other cases within the Eastern District where the court approved other significant 8 reversion amounts: 9 Initially, the Court questioned Defendant’s retention of unclaimed net settlement funds, which in this instance amounts to $552,250 ($952,250 - $400,000). The Court extensively questioned the parties 10 regarding this retention amount at oral argument and requested supplemental briefing. (Doc. 77, 78.) Considering the briefs and the parties’ arguments, the Court finds that the total amount offered in 11 settlement favors final approval. In this instance, class members were notified not only of the gross settlement amount ($1,500,000), but also of the net settlement amount available for individual 12 payments to class members to claim ($952,250), the minimum amount of the net settlement fund to be paid by Defendant ($400,000), and the retention of any unclaimed net settlement funds by Defendant. As discussed below, no class members objected to the proposed structure of the settlement agreement, 13 which included Defendant’s retention of funds, and only two class members opted out of the agreement. And, as discussed above, nearly 4,000 class members were adequately notified of this 14 action and had the opportunity to participate. A higher participation rate would have increased the amount claimed by the class and paid by Defendant. Further, courts in this district have approved 15 similar potential reversions (or retention) of class action settlement funds. See, e.g., Schiller v. David’s Bridal, No. 1:10-cv-00616-AWI-SKO (E.D. Cal. Jun. 28, 2012) (approving a reversion of 45% of the 16 net settlement fund); Mendez v. Tween Brands, Inc., No. 2:10-cv-00072-MCE-DAD (E.D. Cal. Aug. 8, 2011) (approving a reversion of 50% of the net settlement fund); Enabnit v. Petsmart, Inc., No. 2:07- 17 cv-00165-JAM-DAD (E.D. Cal. Apr. 23, 2009) (approving a reversion of 70% of the amount set aside for payment to the class members); Lewis v. Starbucks, 2:07-cv-00490-MCE-DAD (E.D. Cal. Dec. 10, 18 2008) (approving 75% reversion of the net settlement fund). 19 Davis, 2015 WL 6697929, at *6. 10 20 In Hightower, the settlement had a 65% minimum distribution floor with the remainder potentially reverting back to Defendant. 2015 WL 9664959, at *5. Significantly there were seven objectors to the settlement agreement, who 21 argued in part that the reversion clause rendered the agreement inadequate, and the attorneys’ fee portion of 30% was unreasonable. Id. Like here, the court ordered supplemental briefing prior to preliminary approval, and court 22 found the course of negotiation, weaknesses in the case, and efforts to increase participation indicated the agreement was fair and reasonable: 23 The Rosario Objectors argue that the reversion clause described above renders this settlement agreement unfair and indicates that the settlement agreement “was not a product of arms-length 24 negotiations in which the class’s interests were considered a priority.” See Rosario Objections 9:17– 10:15. The Court is sensitive to these concerns and, in fact, ordered the Parties to address this clause 25 before preliminarily approving the settlement agreement. Dkt. # 179. A reversion clause certainly makes the Court suspicious, but in this instance, after reviewing the respective positions of the Parties, 26 and considering the many weaknesses of Plaintiffs’ case, the Court is persuaded that the reversion clause does not make the Settlement Agreement unfair nor does it show collusion among the 27 parties.See Pffs.’ Supp. Mem.; Def.'s Supp. Mem. Plaintiffs would likely not have been able to negotiate a maximum amount of even $12 million without this clause and have taken methods to 28 increase participation in the Settlement Agreement. For example, Plaintiffs caused Notice Packets to 44 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 45 of 60 1 facts, combined with the protracted nature of the litigation, attendance of mediation, and tenor of 2 settlement negotiations, indicate that the parties’ negotiations constituted genuine and informed 3 arm’s length bargaining in agreeing to the reversionary aspect of this settlement agreement. 4 Consistent with the concerns and standards discussed in the findings and 5 recommendations recommending preliminary approval, as further addressed by the 6 supplementary materials filed by counsel and considered by the District Judge in adopting the 7 findings and recommendations on preliminary approval, and the facts and legal standards 8 discussed above, the Court finds that the reversion clause does not render the agreement 9 unreasonable or unfair. Additionally, in the next section, the Court finds the amount of 10 attorneys’ fees requested is reasonable and thus does not render the agreement unfair. 11 In sum, after considering the foregoing factors, the Court finds that the settlement is fair, 12 adequate, and reasonable pursuant to Rule 23(e). Further, the Court finds no evidence that the 13 settlement is the result of any collusion between the parties. In re Bluetooth, 654 F.3d at 946–47. 14 The Court now turns to consideration of the concurrently filed motion for attorneys’ fees, costs, 15 and incentive awards. 16 C. Motion for Attorneys’ Fees, Expenses, and Incentive Payments 17 In addition to the motion for final approval of the class action settlement, Plaintiffs also 18 concurrently filed a motion for attorneys’ fees, litigation expenses, and incentive payment 19 awards for the named Plaintiffs. (ECF No. 33.) Lawyers for Justice, PC, and Protection Law 20 Group, LLP, (“Class/Collective Counsel”), seek attorneys’ fees in the amount of $210,000, 21 representing thirty-five percent (35%) of the Maximum Settlement Amount, in addition to 22 $22,612.07 in litigation costs. Plaintiffs also move for incentive payments in the amount of 23 $3,000 each to Plaintiffs Kevin Ferrell and Cheryl Baker. 24 The attorneys’ fees, reimbursement of litigation costs and expenses, as well as the 25 incentive awards sought through the motion were fully disclosed in the Notice Packet mailed to 26 be mailed to over 145,000 putative class members and then reminder post cards a month later to those putative class members who had not responded. Morales Decl. ¶¶ 7–8. 27 Id. at *7. 28 45 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 46 of 60 1 the Class Members and Proposed FLSA Collective Members. (Mot. Atty. Fees 6.) No class 2 members have submitted objections to these amounts. 3 1. Attorneys’ Fees 4 This court has an “independent obligation to ensure that the award [of attorneys’ fees], 5 like the settlement itself, is reasonable, even if the parties have already agreed to an amount.” In 6 re Bluetooth, 654 F.3d 935, 941 (9th Cir. 2011). This is because, when fees are to be paid from a 7 common fund, the relationship between the class members and class counsel “turns adversarial.” 8 In re Mercury Interactive Corp. Secs. Litig., 618 F.3d 988, 994 (9th Cir. 2010); In re Wash. Pub. 9 Power Supply Sys. Secs. Litig., 19 F.3d 1291, 1302 (9th Cir. 1994). As such, the district court 10 assumes a fiduciary role for the class members in evaluating a request for an award of attorneys’ 11 fees from the common fund. In re Mercury, 618 F.3d at 994; see also Rodriguez v. Disner, 688 12 F.3d 645, 655 (9th Cir. 2012); Rodriguez v. West Publ’g Corp., 563 F.3d at 968. 13 The Ninth Circuit has approved two methods for determining attorneys’ fees in such 14 cases where the attorneys’ fee award is taken from the common fund set aside for the entire 15 settlement: the “percentage of the fund” method and the “lodestar” method. Vizcaino v. 16 Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (citation omitted). The district court 17 retains discretion in common fund cases to choose either method. Id.; Vu v. Fashion Inst. of 18 Design & Merch., No. 14-cv-08822-SJO-EX, 2016 WL 6211308, at *5 (C.D. Cal. Mar. 22, 19 2016). Under either approach, “[r]easonableness is the goal, and mechanical or formulaic 20 application of method, where it yields an unreasonable result, can be an abuse of discretion.” 21 Fischel v. Equitable Life Assurance Soc’y of U.S., 307 F.3d 997, 1007 (9th Cir. 2002). The 22 Ninth Circuit has generally set a twenty-five percent (25%) benchmark for the award of 23 attorneys’ fees in common fund cases. Id. at 1047–48; see also In re Bluetooth, 654 F.3d at 942 24 (“[C]ourts typically calculate 25% of the fund as the ‘benchmark’ for a reasonable fee award, 25 providing adequate explanation in the record of any ‘special circumstances’ justifying a 26 departure.”). 27 Reasons to vary the benchmark award may be found when counsel achieves exceptional 28 results for the class, undertakes “extremely risky” litigation, generates benefits for the class 46 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 47 of 60 1 beyond simply the cash settlement fund, or handles the case on a contingency basis. Vizcaino, 2 290 F.3d at 1048–50; see also In re Online DVD-Rental, 779 F.3d at 954–55. Ultimately, 3 however, “[s]election of the benchmark or any other rate must be supported by findings that take 4 into account all of the circumstances of the case.” Vizcaino, 290 F.3d at 1048. The Ninth 5 Circuit has approved the use of lodestar cross-checks as a way of determining the reasonableness 6 of a particular percentage recovery of a common fund. Id. at 1050 (“Where such investment is 7 minimal, as in the case of an early settlement, the lodestar calculation may convince a court that 8 a lower percentage is reasonable. Similarly, the lodestar calculation can be helpful in suggesting 9 a higher percentage when litigation has been protracted.”); see also In re Online DVD-Rental, 10 779 F.3d at 955. 11 a. Findings Re Preliminary Approval 12 Here, while the Court approved Plaintiffs’ request for attorneys’ fees on a preliminary 13 basis, finding that the requested fee amount of $210,000 was fair and reasonable for purposes of 14 preliminary approval, the Court specifically “forewarned” Plaintiffs that the Court would not be 15 inclined to grant an upward departure from the 25% benchmark absent presentation of 16 “compelling evidence supporting such a departure” at the time of final approval. (ECF No. 24 at 17 40.) The Court noted the litigation appeared to be a “relatively straight forward case and 18 lack[ed] a complexity which may justify a higher than benchmark rate, and presently counsel 19 have not demonstrated the achievement of exceptional results that would justify a departure, 20 particularly in light of the steep discounts from the original valuations discussed above. 21 However, counsel can and should show otherwise at the final settlement proceeding if a greater 22 rate is sought.” (Id.) In support of preliminary approval, the Court favorably considered the fact 23 that there was no longer an express clear sailing agreement, and the fact that any reduction in the 24 award would revert back to the funds available for Class Members, specifically noting: 25 As discussed in the previous section, given the Court is disinclined to approve an amount over the Ninth Circuit’s benchmark of twenty-five percent (25%), the 26 Court finds it significant that the Agreement explicitly provides that should the Court approve a fee award of less than thirty-five percent, the difference “shall 27 become part of the Net Settlement Amount.” (Agreement ¶ 63(d).) Of further significance, the Agreement no longer contains an express clear sailing agreement 28 after the state court previously voiced concerns with the previous settlement 47 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 48 of 60 1 agreement’s fee provision which expressly stated that “Defendant will not oppose” an award of up to thirty-five percent (35%). (ECF No. 1-10 at 62, 213.) 2 The Agreement now does not contain such language. (Agreement ¶¶ 19; 63.) 3 (ECF No. 24 at 40 n.25.) 4 b. Percentage of the Fund Review 5 Here, Class/Collective Counsel seek an award of attorneys’ fees equal to 35% of the 6 common fund, or $210,000. Counsel argue numerous factors support this requested award. 7 Counsel emphasizes this litigation was pursued purely on a contingency-fee basis, with 8 the resultant risk and bearing of the investment of time, effort, and monetary costs with no 9 guarantee of recovery. (Mot. Fees 17.) Class/Collective Counsel proffer that they devoted 10 approximately 690.90 hours and $22,612.07 in out-of-pocket expenses to litigating the case for 11 almost four years. (Mot. 23; Aiwazian Fees Decl. ¶ 19.) Absent successful resolution, none of 12 this attorney time or incurred expenses would have been compensated. See Vizcaino, 290 F.3d 13 at 1048 (“Risk is a relevant circumstance.”). The Court finds the fact that the case was based on 14 contingency along with the specific risks of this litigation given its protracted nature, weigh in 15 favor of granting the fee request. 16 However, the Court is particularly troubled that the billing spreadsheets provided by 17 counsel contain large portions that do not specify the precise date that attorney time was 18 expended. For example, counsel describe pre-lawsuit investigation or meeting with a named 19 Plaintiff, but do not provide the individual dates such research or meetings occurred, only 20 providing the total hours instead. (ECF No. 33-5 at 14-16, 35-40.) Other entries aver to general 21 dates for the tasks, such as noting the date that the deposition occurred, or the date that 22 interrogatories were served, however, not a precise breakdown of the individual time entries. 23 (ECF No. 33-5 at 27-34.) At least as presented to the Court, the form of the spreadsheet appears 24 to border on block billing, making the task of approving the attorneys’ fees requested a 25 significantly more treacherous task.11 At the hearing on the motion for final approval, counsel 26 11 As a judge in this district has explained: 27 Block billing is a practice where the amount of time spent by an attorney on each discrete task is not 28 identified, but instead all hours spent during the course of a day on multiple tasks are billed together. 48 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 49 of 60 1 for Plaintiffs appeared to concede as much, though explained that while the presentation of the 2 time spreadsheet is akin to block billing, the information in the spreadsheet is compiled through 3 use of attorneys’ own handwritten notes and other records pertaining to specific tasks. Counsel 4 stated that given the firm operates almost entirely on a contingency fee basis, they do not employ 5 an electronic timekeeping software program that tracks and compiles the entries 6 contemporaneously. 7 8 The California State Bar’s Committee on Mandatory Fee Arbitration has concluded that block billing “hides accountability” and may “increase time by 10% to 30%” by lumping together tasks. See The 9 State Bar of California Committee on Mandatory Fee Arbitration, Arbitration Advisory 03–01 (2003). 10 More importantly, the usage of block billing is fundamentally inconsistent with the lodestar method because it “render[s] it virtually impossible to break down hours,” leaving the court without the ability 11 to accurately determine whether a reasonable amount of time was spent by counsel on a discrete task. Bell v. Vista Unified Sch. Dist., 82 Cal.App.4th 672, 689, 98 Cal.Rptr.2d 263 (2000); see Welch v. 12 Metro. Life Ins. Co., 480 F.3d 942, 948 (9th Cir.2007) (“[B]lock billing makes it more difficult to determine how much time was spent on particular activities.”); Bonner, 2008 WL 410260, at *3. Without an itemization of the amount of time spent by the fee applicant on each discrete task in the 13 case, the court cannot accurately determine whether the rates charged or hours spent by lawyers in a matter are reasonable. An excessive amount of block billing thereby forces the court to take a “shot in 14 the dark” and guess whether the hours expended were reasonable, which is precisely the opposite of the methodical calculations the lodestar method requires. See Hensley, 461 U.S. at 434. 15 California courts have held that a trial court may “exercise its discretion in assigning a reasonable 16 percentage to the [block billed] entries, or simply cast them aside.” Bell, Cal.App. 4th at 689. Under federal law, however, when a court is faced with block billing, it may not simply make across the 17 board reductions in fees or toss block billed hours aside. Rather, a district court must “provide a clear explanation” for why any reduction in fees “properly compensate[s] for ... overbilling or duplication.” 18 Sorenson v. Mink, 39 F.3d 1140, 1146 (9th Cir.2001); see also Welch, 480 F.3d at 948 (rejecting an across the board reduction for block billed fees because the court failed to adequately explain a 19 rationale for its percentage reduction). 20 Block billing makes it virtually impossible for a court to comply with its requirement to give a clear, reasoned explanation for any fee reductions because those reductions would ultimately be nothing 21 more than guesswork based on an imprecise billing statement. Given block billing’s inherent inconsistency with the lodestar method, this court will not award fees for any blocked billed entries. 22 However, the court will give defendants an opportunity to submit an amended billing statement that will allow the court to determine the reasonableness of defendants’ fee request. 23 Yeager v. Bowlin, No. CIV 2:08-102 WBS JFM, 2010 WL 1689225, at *1–2 (E.D. Cal. Apr. 26, 2010); see also Moshir v. Automobili Lamborghini Am. LLC, 927 F. Supp. 2d 789, 799 (D. Ariz. 2013) (“While not forbidden by 24 case law, block-billing makes it nearly impossible for the Court to determine the reasonableness of the hours spent on each task. Where the Court cannot distinguish between the time claimed for the various tasks, the Court will 25 reduce the award accordingly.”); Banas v. Volcano Corp., 47 F. Supp. 3d 957, 967 (N.D. Cal. 2014) (“Without specifying how much spent was spent on each distinct task (most of which were also performed on additional days), 26 there is no way for me to determine whether the time spent on any of these tasks—e.g., trial preparation, summary judgment briefing, opposition to sanctions motion, preparations of jury instructions and verdict form—was 27 reasonable. Nor can I determine that the total amount of time spent on all the tasks, in combination, was reasonable, given the amount of time at issue and because most of Volcano’s tasks were performed on several days by various 28 attorneys.”). 49 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 50 of 60 1 This practice is clearly problematic when a large attorneys’ fee request is presented to the 2 Court for approval, and the Court must protect the interests of the class members and determine 3 whether the hours expended are reasonable. Nonetheless, the entries are at least largely broken 4 down by specific overarching task or court filing, even if they are not further delineated by 5 individual components or dates leading up to the filing or event. Overall, the tasks described in 6 the entries are supported by the declarations of counsel and the course of litigation since 2014, 7 and appear facially reasonable. (Mot. Fees 17-19; Aiwazian Fees Decl. ¶¶ 6, 11; Ex. A, ECF No. 8 33-4 at 17; Davis Decl. ¶ 17, Ex A, ECF No. 33-5 at 13.) “Although it is true that the fee 9 applicant bears the burden of submitting evidence supporting the hours worked and rates claimed 10 . . . the Supreme Court has also stated that plaintiff’s counsel is not required to record in great 11 detail how each minute of his time was expended [and] [i]nstead, plaintiff’s counsel can meet his 12 burden—although just barely—by simply listing his hours and identify[ing] the general subject 13 matter of his time expenditures.” Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000) 14 (finding the fee application met this basic requirement as “[t]he application provided a summary 15 of the time spent on a broad category of tasks such as pleadings and pretrial motions . . . the 16 application specifically states that it was a ‘summary compiled from time slips[,]’ and 17 [p]resumably, then, more detailed records were readily available.”) (internal citations and 18 quotation marks omitted). Based on the discussion and assurances at the hearing on the motion 19 for final approval concerning the manner of keeping notes and records supporting the 20 spreadsheet of time expended, the Court found it unnecessary to order supplemental briefing or 21 presentation of these notes and additional records. Accordingly, the Court finds the significant 22 number of hours expended by counsel prior to reaching settlement weighs in favor of approving 23 the fee request. 24 Counsel argues they have achieved significant relief for the class. (Mot. Fees 19-20.) 25 Above, the Court has voiced its concerns regarding whether the settlement amount is sufficient 26 given the initial valuations, the fact this is a claim-based settlement fund, and the reversionary 27 clause. Nonetheless, given the protracted nature of this action, extent of investigation and 28 discovery completed, completion of mediation, motion practice in state court with resultant 50 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 51 of 60 1 multiple modifications of the settlement agreement to align with court concerns, and extensive 2 negotiations, it appears counsel ultimately did achieve significant relief for the class. As 3 discussed above, the highest gross Estimated Class Settlement Share is estimated to be 4 $4,883.07; the average gross Estimated Class Settlement Share is estimated to be $1,390.95; the 5 highest gross Estimated FLSA Settlement Share is estimated to be $446.18; and the average 6 gross Estimated FLSA Settlement Share is estimated to be $130.40. (Suppl. Simpluris Decl. ¶¶ 7 20, 21.) Based on the totality of these circumstances, the Court agrees with Counsel that 8 settlement at this stage is preferable to facing the risks and expenses of further litigation, and will 9 provide immediate recovery as opposed to uncertain result through continued litigation and trial. 10 Although steeply discounted through protracted litigation and negotiations, these amounts to be 11 allocated to individuals do appear significant. 12 Further, counsel for Plaintiffs, are seasoned and experienced litigators of wage-and-hour 13 class actions. Specifically, counsel have provided declarations attesting to their years of 14 experience with complex and class action litigation, recovery of millions of dollars on behalf of 15 thousands of individual class members in California, and have detailed the wage-and-hour class 16 action cases they have been involved with. (Mot. Fees 20-21; Aiwazian Fees Decl. ¶ 18; Davis 17 Decl. ¶¶ 8-9.) Relatedly, counsel argues that Defendant retained well-respected counsel, and the 18 ability to obtain a settlement in the face of formidable legal opposition confirms the quality of 19 representation on behalf of the class. (Mot. Fees 21.) The Court does not disagree with movants 20 that it appears Defendant retained well-respected counsel that vigorously defended this action 21 since its inception in 2014, and courts have noted that the “quality of opposing counsel is also 22 important in evaluating the quality of Class Counsel’s work.” In re KeySpan Corp. Sec. Litig., 23 No. 01 CV 5852(ARR), 2005 WL 3093399, at *11 (E.D.N.Y. Sept. 30, 2005). The Court finds 24 the experience of counsel in litigating complex wage and hour class actions weighs in favor of 25 the fee award. 26 Moreover, the Court notes that the absence of any objections to the settlement and only 27 one (1) request for exclusion, also supports the award of the attorneys’ fees sought in this case. 28 The attorneys’ fees sought in the amount of $210,000 were fully disclosed in the Notice Packet 51 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 52 of 60 1 that were mailed to the Class Members and Proposed FLSA Collective Members. (Mot. Fees 6, 2 24.) Therefore, Class Counsel’s request for attorneys’ fees appears to have the support of the 3 class and that support weighs in favor of the requested award. 4 Following the filing of required supplemental briefing on the issue of attorneys’ fees 5 prior to the adoption of the findings and recommendations on preliminary approval, the District 6 Judge found for purposes of preliminary approval, that counsel had presented sufficient 7 justification to depart from the 25% benchmark, with the caveat regarding the undersigned’s 8 forewarning regarding such departure. (ECF No. 28 at 7 (noting 35% is “higher than the 25% 9 benchmark for the Ninth Circuit . . . but not a significant departure from several wage-and-hour 10 class actions brought in the Eastern District of California.”).) Given the issues of valuation and 11 amount of settlement discussed above and the typical benchmark in the Ninth Circuit, the Court 12 finds the relevant factors do not overwhelmingly persuade the Court that the 35% amount is 13 reasonable, and the Court will perform a lodestar cross-check to determine whether an upward 14 adjustment is warranted, particularly given the protracted nature of this case, as it has been 15 ongoing since 2014. Vizcaino, 290 F.3d at 1050 (“Where such investment is minimal, as in the 16 case of an early settlement, the lodestar calculation may convince a court that a lower percentage 17 is reasonable. Similarly, the lodestar calculation can be helpful in suggesting a higher percentage 18 when litigation has been protracted.”). 19 c. Lodestar Cross-Check of Reasonableness 20 The Court now performs a lodestar analysis in order to cross-check the reasonableness of 21 the requested attorneys’ fee award. Since the benefit to the class is easily calculated in a 22 common find case, courts may award a percentage of the common fund rather than engaging in a 23 “lodestar” analysis to determine the reasonableness of the fee request. In re Bluetooth, 654 F.3d 24 at 942. When applying the percentage of the common fund method in calculating attorney fees, 25 courts use the “lodestar” method as a crosscheck to determine the reasonableness of the fee 26 request. See Vizcaino, 290 F.3d at 1050. “This amount may be increased or decreased by a 27 multiplier that reflects any factors not subsumed within the calculation, such as ‘the quality of 28 representation, the benefit obtained for the class, the complexity and novelty of the issues 52 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 53 of 60 1 presented, and the risk of nonpayment.’ ” Adoma, 913 F. Supp. 2d at 981 (quoting In re 2 Bluetooth, 654 F.3d at 942). 3 Where a lodestar is used as a cross-check, the court “may use a ‘rough calculation of the 4 lodestar.’ ” Bond v. Ferguson Enters., Inc., No. 1:09-cv-1662-OWW-MJS, 2011 WL 2648879, 5 at *12 (E.D. Cal. June 30, 2011) (quoting Fernandez v. Victoria Secret Stores, LLC, No. 06-cv- 6 04149-MMM-SHx, 2008 WL 8150856 (C.D. Cal. July 21, 2008)). Moreover, beyond simply the 7 multiplication of a reasonable hourly rate by the number of hours worked, a lodestar multiplier is 8 often applied. “Multipliers in the 3–4 range are common in lodestar awards for lengthy and 9 complex class action litigation.” Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 298 10 (N.D. Cal. 1995) (citing Behrens v. Wometco Enters., Inc., 118 F.R.D. 534, 549 (S.D. Fla. 11 1988)); see also 4 Newberg on Class Actions § 14.7 (stating courts typically approve percentage 12 awards based on lodestar cross-checks of 1.9 to 5.1 or even higher, and “the multiplier of 1.9 is 13 comparable to multipliers used by the courts”); In re Prudential Ins. Co. Am. Sales Practice Litig. 14 Agent Actions, 148 F.3d 283, 341 (3d Cir. 1998) (“[M]ultiples ranging from one to four are 15 frequently awarded in common fund cases when the lodestar method is applied.”) (quoting 4 16 Newberg on Class Actions § 14.7). In Vizcaino, the Ninth Circuit noted that 83% of courts in 17 the common fund cases it surveyed assessed a multiplier between 1.0 and 4.0, and 54% applied a 18 multiplier in the range of 1.5 to 3.0. Vizcaino, 290 F.3d at 1051 n.6. 19 Here, Class Counsel assert that 690.90 hours of attorney were expended in litigating this 20 case. (Mot. Fees 22; Aiwazian Fees Decl. ¶ 11; Ex. A, ECF No. 33-4 at 17-44; Davis Decl. ¶ 17, 21 Ex. A, ECF No. 33-5 at 13-40.) The Court expressed its concerns regarding the presentation of 22 the billing timesheets above. 23 Counsel contends that the professional backgrounds and experience of counsel supports a 24 reasonable blended hourly rate of compensation of at least $780 per hour for services provided 25 by Lawyers for Justice, PC, and at least $685 per hour for services provided by Protection Law 26 Group, LLC, and specifically proffer that Lawyers for Justice has been awarded fees at the rate 27 of at least $780 per hour by California courts. (Mot. Fees 22; Aiwazian Fees Decl. ¶ 12; Davis 28 Decl. ¶ 21.) Protection Law Group calculated the blended rate by utilizing the hourly rates for 53 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 54 of 60 1 each attorney, multiplied by their number of respective of hours to reach total lodestar fee for the 2 firm based on these rates and hours, and then arriving at an average hourly rate based thereon. 3 (ECF No. 33-5 at 11.) The following rates and number of hours were used: 4 5 Attorney Title Admission Hourly Rate Hours Lodestar 6 Heather Davis Partner 2005 $750 129.30 $96,975 7 Amir Partner 2004 $650 28.50 $18,525 8 Nayebdadash 9 Eric Boyajian Associate12 2005 $500 24.50 $12,250 10 Luke Clapp Associate 2015 $350 8.50 $2,975 11 TOTAL: 190.8 $130,725 12 Blended $685.14 13 Hourly Rate: 14 Details regarding each attorneys’ experience is laid out in the declaration of counsel. 15 (Davis Decl. ¶ 19.) 16 Lawyers for Justice calculated the blended rate by utilizing the hourly rates for each 17 attorney, multiplied by their number of respective of hours to reach total Lodestar fee for the 18 firm based on these rates and hours, and then arriving at an average hourly rate based thereon. 19 (ECF No. 33-4 at 7-8.) The following rates and number of hours were used: 20 21 Attorney Title Admission Hourly Rate Hours Lodestar 22 Edwin Aiwazian Managing Member 2004 $975 148.6 $144,885 23 Arby Aiwazian Sole 24 Shareholder 2010 $850 42.50 $36,125 Joanna Ghosh Senior 25 Member 2010 $775 71.75 $55,606.25 26 Danielle Perry Member 2013 $675 125 $84,375 27 12 Although not expressly stated, it appears Eric Boyajian worked in the capacity of an associate, and was admitted 28 to practice in 2005. 54 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 55 of 60 1 D. Elliot Member Gonzalez 2012 $700 13 $9,100 2 Elizabeth Parker- Member Fawley 2014 $675 27.75 $18,731.25 3 Stephanie S. Member Ponek 2015 $675 35.50 $23,962.50 4 Henna Choi Member 5 2015 $500 1 $500 Julia Z. Wells Member 6 2016 $500 6 $3,000 Melissa A. Member 7 Huether 2017 $500 29 $14,500 8 TOTAL: 500.10 $390,785 9 Blended $781.41 Hourly Rate: 10 11 12 While Edwin Aiwazian describes the breadth of his own experience specifically, and the 13 law firm generally, counsel does not describe the individual experience of the other members of 14 the firm. (Aiwazian Fees Decl. ¶ 11-18.) Further, it is not clear what member means in relation 15 to senior member, but it appears Joanna Ghosh, Arby Aiwazian, and Edwin Aiwazian would be 16 considered at the partner level, while the “Members” would be considered at the associate or 17 senior associate level. 18 In calculating their lodestar, Class Counsel applied the rate of $780 per hour to the 19 500.10 hours expended by Lawyers for Justice, and the rate of $685 per hour to the 190.80 hours 20 expended by the Protection Law Group, to arrive at a base lodestar value of $520,776. (Mot. 21 Fees 22.) Counsel further demonstrates that even applying a significantly lower blended hourly 22 rate of $500 per hour for the 690.10 total ours of work performed would result in a lodestar of 23 $345,450. (Id.) Thus, even without a lodestar multiplier, a lodestar calculation falls well above 24 the requested $210,000 in fees, representing 35% of the total settlement amount. 25 These rates are higher than those previously accepted by this Court as reasonable. See, 26 e.g., Emmons v. Quest Diagnostics Clinical Labs., Inc., No. 1:13-cv-00474-DAD-BAM, 2017 27 WL 749018, at *8 (E.D. Cal. Feb. 27, 2017) (adopting as reasonable rates between $370 and 28 55 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 56 of 60 1 $495 for associates and $545 and $695 for senior counsel and partners); Englert v. City of 2 Merced, No. 118CV01239NONESAB, 2020 WL 2215749, at *13 (E.D. Cal. May 7, 2020) 3 (approving attorneys’ fees in an FLSA action that totaled approximately thirty-one percent (31%) 4 of the common fund, and in performing a lodestar cross-check, finding the corresponding rates of 5 $450.00 per hour for a partner with nineteen years of experience, $400.00 per hour for a senior 6 associate attorney with an unspecified amount of years of experience, and a rate of $325.00 per 7 hour for an associate with eight years of experience, to be reasonable.); In re Taco Bell Wage & 8 Hour Actions, 222 F.Supp.3d 813, 839 (E.D. Cal. 2016) (noting attorneys in Fresno Division 9 with twenty or more years of experience are awarded $350.00 to $400.00 per hour, and attorneys 10 with less than fifteen years of experience are awarded $250.00 to $350.00 per hour). 11 Since hourly rates will be used solely for the purpose of cross-checking the percentage of 12 the common fund awarded as attorneys’ fees, the Court will not define precisely the appropriate 13 rates for this district here. Even if the Court were to cut the requested rates by 50% thus making 14 the rates fall within or below a rate somewhere in the range previously approved, the lodestar 15 cross-check would result in a calculation of $260,388 ($520,776 ÷ 2). As noted above, block 16 billing has been found to increase time entries by 10% to 30%. See Yeager, 2010 WL 1689225, 17 at *1 (“The California State Bar’s Committee on Mandatory Fee Arbitration has concluded that 18 block billing ‘hides accountability’ and may ‘increase time by 10% to 30%’ by lumping together 19 tasks.”). Given the concerns expressed above regarding block billing, if the Court were then to 20 perform a further reduction of the hours expended by the middle figure of 20%, the lodestar 21 would result in a calculation of $208,310.40 ($260,388 x 0.80). Thus using a rough calculation 22 employing this significant reduction, the resultant baseline lodestar with no multiplier would still 23 remain very close to the requested award of $210,000 in attorneys’ fees. Further, given the 24 protracted nature of the litigation and factors discussed above, a modest multiplier would not be 25 unreasonable. 26 Thus, the Court finds a lodestar cross-check supports the requested award of $210,000 in 27 attorneys’ fees, an amount equal to 35% of the total fund in this case. 28 56 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 57 of 60 1 2. Expenses of Class Counsel 2 Additionally, class counsel seeks to recover the costs expended on this litigation. (Mot. 3 Fees 23.) Expense awards “should be limited to typical out-of-pocket expenses that are charged 4 to a fee paying client and should be reasonable and necessary.” In re Immune Response Secs. 5 Litig., 497 F. Supp. 2d 1166, 1177 (S.D. Cal. 2007). These can include reimbursements for: 6 “(1) meals, hotels, and transportation; (2) photocopies; (3) postage, telephone, and fax; (4) filing 7 fees; (5) messenger and overnight delivery; (6) online legal research; (7) class action notices; (8) 8 experts, consultants, and investigators; and (9) mediation fees.” Id. 9 The Settlement Agreement provides for reimbursement of litigation costs and expenses 10 up to $35.000. Here, class counsel requests reimbursement of their actual expenses in the 11 amount of $22,612.07. (Mot. 23; Aiwazian Fees Decl. ¶ 19, Ex. B, ECF No. 33-4 at 45-47; 12 Davis Decl. ¶ 15, Ex. B, ECF No. 33-5 at 41-42.) The difference between the allocated costs and 13 the incurred costs, $12,387.93, will remain part of the Net Settlement Amount. (Id.) 14 Specifically, the costs reimbursement is to be allocated as $22,227.07 to Lawyers for Justice, PC, 15 and $385 to Protection Law Group, LLP. (Id.) 16 The Court has reviewed counsels’ declarations, which attest to the costs they incurred, as 17 well as the exhibits attached thereto, and finds the expenses incurred to be reasonable. 18 Accordingly, the Court recommends reimbursement of expenses in the amount requested. 19 3. Class Representative Enhancement Payments 20 The Settlement Agreement provides for incentive payments in the amount of $3,000 21 each to Plaintiffs Kevin Ferrell and Cheryl Baker, to compensate them for the time and effort 22 they expended on behalf of the Class Members and Proposed FLSA Collective Members. (Mot. 23 Fees 23.) 24 “Incentive awards are fairly typical in class action cases.” Rodriguez v. West Publ’g 25 Corp., 563 F.3d at 958–59. However, the decision to approve such an award is a matter within 26 the court’s discretion. In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 463. Generally speaking, 27 incentive awards are meant to “compensate class representatives for work done on behalf of the 28 class, to make up for financial or reputational risk undertaken in bringing the action, and, 57 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 58 of 60 1 sometimes, to recognize their willingness to act as a private attorney general.” Rodriguez v. 2 West Publ’g Corp., 563 F.3d at 958–59. The Ninth Circuit has emphasized that “district courts 3 must be vigilant in scrutinizing all incentive awards to determine whether they destroy the 4 adequacy of the class representatives . . . . [C]oncerns over potential conflicts may be especially 5 pressing where, as here, the proposed service fees greatly exceed the payments to absent class 6 members.” Radcliffe v. Experian Info. Sols., Inc., 715 F.3d 1157, 1165 (9th Cir. 2013) (internal 7 quotation marks and citation omitted). A class representative must justify an incentive award 8 through “evidence demonstrating the quality of plaintiff’s representative service,” such as 9 “substantial efforts taken as class representative to justify the discrepancy between [her] award 10 and those of the unnamed plaintiffs.” Alberto, 252 F.R.D. at 669. 11 In assessing the appropriateness of class representative enhancements or incentive 12 payments, the Court must consider factors such as the actions the plaintiffs took to protect the 13 interests of the class, the degree to which the class has benefitted, the amount of time and effort 14 the plaintiff expended in pursuing litigation, and any notoriety or personal difficulties 15 encountered by the representative plaintiff. Khanna v. Intercon Sec. Systems, Inc., No. 2:09-cv- 16 2214 KJM EFB, 2014 WL 1379861, at *10 (E.D. Cal. Apr. 8, 2014); Reibstein v. Rite Aid 17 Corp., 761 F. Supp. 2d 241, 257 (E.D. Penn. 2011); see also Staton, 327 F.3d at 975-77. 18 “Incentive awards are particularly appropriate in wage-and-hour actions where plaintiffs 19 undertake a significant ‘reputational risk’ by bringing suit against their former employers.” 20 Bellinghausen, 306 F.R.D. at 267 (citation omitted). 21 The Court finds that $3,000.00 each is reasonable compensation for the services provided 22 by the class representatives in this action given the risks that they took in representing the class 23 and the time spent adjudicating this action. On preliminary approval, the Court reviewed the 24 declarations of Plaintiffs and noted the “extensive declared amount of time and work the class 25 representatives have put forth in in assisting with this litigation.” (ECF No. 24 at 28, 40-41.) At 26 the time of preliminary approval, Baker and Ferrell each declared they spent over thirty hours 27 working on the litigation. (Id.) The requested incentive awards were fully disclosed in the 28 Notice Packet and no objections have been made. 58 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 59 of 60 1 Accordingly, the Court recommends awarding the named class representatives Kevin 2 Ferrell and Cheryl Baker incentive awards of $3,000.00 each. 3 4. Settlement Administrator Costs 4 The court previously approved the appointment of Simpluris, Inc. as the settlement 5 administrator. (ECF No. 28 at 12.) The settlement agreement provides for the payment of 6 $16,000 to the settlement administrator and Plaintiffs request final approval of such payment. 7 (Mot. 24.)13 The costs incurred and to be incurred include expenses for preparing and mailing 8 the Notice Packet; conducting change of address database searches and skip-trace searches; 9 calculating individual class payments and FSLA payments; receiving and processing requests for 10 exclusion, notices of objection, and workweek disputes; distributing individual settlement 11 payments after tax reductions; and performing other associated required duties set forth in the 12 settlement agreement. (Mot. 23-24; Suppl. Simpluris Decl. ¶ 25, Ex. E, ECF No. 35-2 at 305.) 13 The Court finds these administration costs reasonable and will grant approval of this aspect of 14 the settlement agreement. 15 V. 16 CONCLUSION AND RECOMMENDATIONS 17 For all of the above reasons, the Court finds the settlement is fundamentally fair, 18 adequate, and reasonable. Fed. R. Civ. P. 23(e); Lane v. Facebook, Inc., 696 at 818; Hanlon, 150 19 F.3d at 1026–27. The Court also finds the requested amount of attorneys’ fees and costs, 20 incentive awards, and administrative costs, to be reasonable and appropriate. 21 Accordingly, IT IS HEREBY RECOMMENDED that: 22 1. Plaintiffs’ motion for final approval of the class action settlement (ECF No. 32) 23 be GRANTED and the Court approve the settlement as fair, reasonable, and 24 adequate; 25 2. Plaintiffs’ motion for attorneys’ fees and costs and incentive awards (ECF No. 33) 26 be GRANTED, and the following amounts be awarded: 27 13 Plaintiffs do not move for these amounts in the motion for attorneys’ fees (ECF No. 33), but request it in the 28 motion for final approval. (ECF No. 32 at 23-24.) 59 Case 1:19-cv-00332-NONE-SAB Document 36 Filed 02/10/21 Page 60 of 60 1 a. Class counsel shall receive $210,000.00 in attorneys’ fees and $$22,612.07 in 2 expenses; 3 b. Plaintiff Ferrell shall receive $3,000.00 as an incentive payment; 4 c. Plaintiff Baker shall receive $3,000.00 as an incentive payment; 5 3. Simpluris, Inc., shall receive $16,000.00 in settlement administration costs and 6 expenses; 7 4. The parties be directed to effectuate all terms of the settlement agreement and any 8 deadlines or procedures for distribution set forth therein; 9 5. This action be dismissed with prejudice in accordance with the terms of the 10 parties’ settlement agreement, with the court specifically retaining jurisdiction 11 over this action for the purpose of enforcing the parties’ settlement agreement; 12 and 13 6. The Clerk of the Court be directed to close this case. 14 These findings and recommendations are submitted to the district judge assigned to this 15 action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within fourteen 16 (14) days of service of this recommendation, any party may file written objections to these 17 findings and recommendations with the Court and serve a copy on all parties. Such a document 18 should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The 19 district judge will review the magistrate judge’s findings and recommendations pursuant to 28 20 U.S.C. § 636(b)(1)(C). The parties are advised that failure to file objections within the specified 21 time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th 22 Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 23 IT IS SO ORDERED. 24 25 Dated: February 10, 2021 UNITED STATES MAGISTRATE JUDGE 26 27 28 60