Swain v. Anders Group, LLC ( 2022 )

1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 FOR THE EASTERN DISTRICT OF CALIFORNIA 11 12 LISA SWAIN, an individual on behalf of No. 1:21-cv-00197-SKO herself and others similarly situated, 13 ORDER GRANTING PRELIMINARY Plaintiff, APPROVAL OF CLASS ACTION 14 SETTLEMENT AND CONDITIONAL v. CLASS CERTIFICATION 15 ANDERS GROUP, LLC, (Doc. 18.) 16 Defendant. 17 18 19 This matter is before the court on Plaintiff’s motion for preliminary approval of a class 20 action settlement and conditional certification of settlement class filed on January 18, 2022. (Doc. 21 18.) Pursuant to General Order No. 617 addressing the public health emergency posed by the 22 COVID-19 pandemic, Plaintiff’s motion was taken under submission on the papers. (Doc. 19.) On 23 September 12, 2022, the parties consented to the jurisdiction of the U.S. Magistrate Judge. (See 24 Docs. 26–28.) 25 For the reasons explained below, the Court will grant preliminary approval of the proposed 26 class action settlement and conditional certification of the settlement class. 27 I. BACKGROUND 28 Defendant Anders Group, LLC (“Anders”) is a healthcare staffing company that employs 1 non-exempt hourly healthcare professionals (“travelers”) for travel assignments at healthcare 2 facilities throughout the United States. (Doc. 13 ¶ 11.) The travelers sign assignment contracts 3 with Anders that require them to work a minimum number of hours per week. (Id. ¶ 12.) In addition 4 to providing an hourly wage, Anders provides travelers with weekly per diem pay (the “per diem 5 pay”). (Doc. 13 ¶ 12; Doc. 18-1 at 8.) Although Anders labels the per diem pay as “meal and 6 lodging per diems,” Plaintiff contends that the per diem pay “is earned each week based on, and in 7 proportion to, satisfaction of the weekly hours requirements,” and if travelers “fail to satisfy their 8 weekly hours, the weekly per diem will be prorated based on the hours worked.” (Doc. 13 ¶¶ 14– 9 15.) Thus, the weekly per diem pay is “not based upon the actual housing and meal and incidental 10 expenses incurred but instead is based upon, and varies with, the number of weekly hours actually 11 worked” by the travelers. (Id. ¶ 16.) 12 Plaintiff and the putative class and collective members are or were employed as travelers 13 by Anders. (Doc. 13 at ¶¶ 21–22; Doc. 18-1 at 8.) Plaintiff contends that, notwithstanding that the 14 amount of weekly per diem pay is based on the number of hours worked by a traveler, Anders does 15 not include the value of the per diem in determining that traveler’s regular rate of pay when 16 calculating overtime wages. (Id. at ¶ 17.) Based on these allegations, Plaintiff asserts the following 17 claims: (1) class action claims for failure to pay overtime in violation of California Labor Code §§ 18 510 and 1194; (2) class action claims for unfair business practices in violation of California 19 Business and Professions Code § 17200 et seq.; (3) class action claims for waiting time penalties 20 in violation of California Labor Code §§ 201–203; (4) collective claims for violation of the Fair 21 Labor Standards Act (“FLSA”), 29 U.S.C. §§ 207 and 216; and (5) penalties under the Private 22 Attorneys General Act (PAGA), California Labor Code § 2698 et seq. (Doc. 13 at 6–9.) 23 After the lawsuit was filed, the parties “engaged in discovery regarding the policies 24 challenged in this lawsuit, Anders’ defenses to liability and class certification, and the potential 25 damages owing to members of the putative class,” including “the average hourly wage paid to 26 putative class members throughout the class period,” “the average weekly meals and incidental and 27 lodging per diems payments paid to putative class members throughout the class period,” and “all 28 weekly payroll data for a random sampling of one-third of the putative class members.” (Doc. 18- 1 3 at ¶¶ 11–13.) The parties engaged in private mediation with Lisa Klerman, Esq., who Plaintiff’s 2 counsel describes as “an experienced wage & hour class-action mediator.” (Doc. 18-1 at 10; Doc. 3 18-2 at ¶ 16.) At the conclusion of the mediation, the parties agreed in principle to settle the action, 4 and over the next few months continued to negotiate the terms of a settlement agreement, ultimately 5 executing a “Joint Stipulation and Settlement Agreement” (the “Settlement Agreement”). (Doc. 6 No. 18-1 at 10–11; Doc. 18-4.) On January 18, 2022, Plaintiff filed the pending unopposed motion 7 for conditional certification and preliminary approval of the class action settlement.1 (Doc. 18. See 8 Doc. 20 (Anders’ statement of non-opposition).) 9 II. THE PROPOSED SETTLEMENT 10 A. The Class 11 For settlement purposes, the parties request approval of the following class (the “Class”) of 12 an estimated 150 individuals (the “Settlement Class Members” or “Settlement Class”): “[a]ll non- 13 exempt employees employed by Defendant [Anders Group, LLC] in California who, at any time 14 between February 17, 2017 and February 13, 2022, worked one or more workweeks in which they 15 were paid overtime and received per diem pay.”2 (Doc. 18-1 at 11; Doc. 18-4 at 14.) 16 B. Aggrieved Employees Under the PAGA 17 Plaintiff has defined “Aggrieved Employees” as “all non-exempt employees employed by 18 Defendant [Anders Group, LLC] in California at any time between February 17, 2020 and February 19 13, 2022.” (Doc. 18-4 at 3.) Twenty-five percent of the civil PAGA penalties will be paid to the 20 Aggrieved Employees as part of their PAGA payment share, as described below. (Id. at 18.) 21 C. The Settlement Period 22 For settlement purposes, the parties have defined the “Settlement Class Period” as the time 23 period of “February 17, 2017 through February 13, 2022.” (Doc. 18-4 at 11.) By contrast, the 24 relevant period for the PAGA claims is February 17, 2020, through February 13, 2022. (Id. at 18; 25 see also Doc. 18-1 at 14.) 26 1 On September 12, 2022, the parties consented to the jurisdiction of the U.S. Magistrate Judge, whereupon the motion 27 was reassigned to the undersigned. (See Docs. 26–28.) 2 The Settlement Agreement does not provide for certification and settlement of the FLSA claim. Instead, it provides 28 that Plaintiff will dismiss without prejudice the FLSA claim alleged in the operative complaint. (See Doc. 18-4 at 20.) 1 D. The Release of Claims 2 The Settlement Agreement defines the Released Claims as: 3 all claims that have been alleged or could have been alleged based on the facts alleged in the operative complaint, which arose during the Settlement Class Period, 4 including but not limited to, failure to pay wages/overtime, failure to provide 5 accurate itemized wage statements, failure to pay all wages due upon separation of employment, waiting time penalties, violation of Business and Professions Code 6 section 17200, PAGA penalties arising from the violations alleged, violations of Labor Code sections 200, 201, 201.3, 202, 203, 204, 226, 226(a), 510, 558, 1194, 7 2698 et seq, Code of Civil Procedure section 1021.5, and applicable IWC Wage Orders. 8 9 (Doc. 18-4 at 9.) The Settlement Agreement provides, upon the settlement administrator’s 10 disbursement of the settlement payments, “Participating Settlement Class Members will be deemed 11 to have, and by operation of the Order of Final Approval will have, expressly and irrevocably 12 released, acquitted, and forever discharged Defendant [Anders Group, LLC], Defendant’s affiliated 13 companies, customers, and clients, and their respective parent companies, subsidiaries, affiliates, 14 shareholders, members, agents (including, without limitation, any investment bankers, accountants, 15 insurers, reinsurers, attorneys and any past, present or future officers, directors and employees) 16 predecessors, successors, and assigns, from all Released Claims.” (Id. at 25.) 17 E. Summary of the Settlement Terms 18 Under the proposed settlement, Anders will pay a total of $368,500 (the “Gross Settlement 19 Amount” or “GSA”) allocated as follows: (1) up to $92,125 (25% of the GSA) for attorney’s fees 20 and up to $15,000 for litigation costs; (2) $5,000 incentive award for Plaintiff; (3) $35,000 in civil 21 PAGA penalties, with $26,250 of the penalties payable to the California Labor and Workforce 22 Development Agency (“LWDA”);3 and (4) up to $20,000 for settlement administration costs. (Doc. 23 18-4 at 5, 15, 17–18; see also Doc. 18-1 at 11–13.) The GSA excludes all employer payroll tax 24 withholdings, which will be paid by Anders separately. (Doc. 18-4 at 6; see also Doc. 18-1 at 11.) 25 The funds in the GSA are non-reversionary. (Doc. 18-4 at 5, 15; see also Doc. 18-1 at 8, 11.) 26 27 3 Pursuant to the PAGA, 75% of the civil PAGA penalties, or $26,250, will go to the LWDA, and 25%, or $8,750, will be allocated to the net settlement amount (“Net Settlement Amount” or “NSA”). (Doc. 18-4 at 8–9, see also Doc. 18- 28 1 at 13.) See Cal. Lab. Code § 2699(i). 1 Assuming these allocations are awarded in full, approximately $210,125 (the “Net 2 Settlement Amount” or “NSA”) will be available for distribution to Settlement Class Members who 3 do not submit a timely and valid election not to participate in the settlement (“Participating 4 Settlement Class Members”). (Doc. 18-4 at 6, 8–9; see also Doc. 18-1 at 13.) From the NSA, each 5 Participating Settlement Class Member’s share will be calculated on a pro rata basis based on the 6 number of overtime hours worked within the Settlement Class Period. (Doc. 18-4 at 16; see also 7 Doc. 18-1 at 14.) Each Settlement Class Member’s share of the settlement will be calculated by 8 multiplying the NSA (less the $8,750 in PAGA penalties payable only to the “Aggrieved 9 Employees”) by a fraction, the numerator of which is the individual class member’s overtime hours 10 worked during the settlement class period, and the denominator of which is aggregate number of 11 overtime hours worked during the settlement class period by the entire settlement class. (Id.) 12 Members of the Settlement Class who qualify as “Aggrieved Employees” under the PAGA will 13 additionally receive a pro rata share of the $8,750 in PAGA penalties payable to the class based on 14 the overtime hours worked between February 17, 2020, and February 13, 2022. (Doc. 18-4 at 18– 15 19; see also Doc. 18-1 at 14.) 16 Participating Settlement Class Members are not required to submit a claim form in order to 17 receive their pro rata share of the NSA. (Doc. 18-4 at 16–17.) Instead, unless an individual chooses 18 to affirmatively opt-out, each Participating Settlement Class Member will automatically receive 19 their pro rata share of the NSA. (Id.) Plaintiff estimates that Participating Settlement Class 20 Members will receive an average recovery of $1,400.4 (Doc. 18-3 at ¶ 22.) 21 Class Members who do not wish to participate in the settlement or object thereto must give 22 notice within sixty days of the Settlement Administrator mailing out Notice Packets. (Doc. 18-4 at 23 22–23.) The pro rata shares of those settlement class members who choose to opt-out or object 24 will be redistributed on a pro rata basis to Participating Settlement Class Members. (Id. at 17.) 25 Settlement checks will remain valid for one hundred eighty days. (Doc. 18-4 at 20.) 26 Uncashed funds will be deposited with the State of California Controller’s Office pursuant to the 27 28 4 Plaintiff is directed to provide an updated estimate in the motion for final approval. 1 California’s Unclaimed Property Law. (Id.) 2 If ten percent or more of the Class Members opt-out of the settlement, Anders may elect to 3 rescind the settlement, such that the settlement will become null and void. (Doc. 18-4 at 27.) 4 Anders must exercise this option within fourteen calendar days of expiration of the opt-out period. 5 (Id.) 6 III. LEGAL STANDARD 7 A. Rule 23 Settlements 8 Class actions require the approval of the district court before settlement. Fed. R. Civ. P. 9 23(e) (“The claims, issues, or defenses of a certified class—or a class proposed to be certified for 10 purposes of settlement—may be settled, voluntarily dismissed, or compromised only with the 11 court’s approval.”). “Approval under 23(e) involves a two-step process in which the Court first 12 determines whether a proposed class action settlement deserves preliminary approval and then, 13 after notice is given to class members, whether final approval is warranted.” Nat’l Rural 14 Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). 15 The first step in the two-step process is preliminary approval. During preliminary approval, 16 the court conducts a preliminary fairness evaluation to determine if notice of the class action 17 settlement should issue to class members and, if applicable, whether the proposed settlement class 18 should be certified. See David F. Herr, Ann. Manual Complex Lit. § 21.632 (4th ed.). Under Rule 19 23(e)(1), the court must direct notice to all class members who would be bound by the settlement 20 proposal if the parties show that “the court will likely be able to:” (i) approve the proposal under 21 Rule 23(e)(2)’s fair, reasonable, and adequate standard; and (ii) certify the proposed settlement 22 class. Fed. R. Civ. P. 23(e)(1); see also Lounibos v. Keypoint Gov’t Sols. Inc., No. 12-cv-00636- 23 JST, 2014 WL 558675, at *5 (N.D. Cal. Feb. 10, 2014) (quoting In re Tableware Antitrust Litig., 24 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007)) (noting that federal courts generally grant 25 preliminary approval if “the proposed settlement appears to be the product of serious, informed, 26 non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential 27 treatment to class representatives or segments of the class, and falls within the range of possible 28 approval”). 1 The second step is the final approval. During final approval, “[i]f the proposal would bind 2 class members, the court may approve it only after a hearing and only on finding that it is fair, 3 reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). In doing so, the court must consider several 4 factors, including whether: “the class representatives and class counsel have adequately represented 5 the class”; “the proposal was negotiated at arm’s length”; “the proposal treats class members 6 equitably relative to each other”; and “the relief provided for the class is adequate.” Id. When 7 considering whether “the relief provided for the class is adequate,” the court should also take into 8 account: 9 (i) the costs, risks, and delay of trial and appeal; 10 (ii) the effectiveness of any proposed method of distributing relief to the class, including 11 the method of processing class-member claims; 12 (iii) the terms of any proposed award of attorney’s fees, including timing of payment; 13 and 14 (iv) any agreement required to be identified under Rule 23(e)(3). 15 Id. In addition to the two-step review process, Rule 23(e) also requires that: (i) the parties seeking 16 approval file a statement identifying the settlement agreement; (ii) class members be given an 17 opportunity to object; and (iii) no payment be made in connection with forgoing or withdrawing an 18 objection, or forgoing, dismissing, or abandoning an appeal. Fed. R. Civ. P. 23(e)(3), (5). 19 “Courts have long recognized that settlement class actions present unique due process 20 concerns for absent class members.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 21 946 (9th Cir. 2011) (internal quotation marks and citations omitted). To protect the rights of absent 22 class members, Rule 23(e) requires that the court approve such settlements “only after a fairness 23 hearing and a determination that the settlement is fair, reasonable, and adequate.” Id. at 946. When 24 approval is sought of a settlement negotiated before formal class certification, “there is an even 25 greater potential for a breach of fiduciary duty owed the class during settlement.” Id. In such 26 circumstances, the “settlement approval requires a higher standard of fairness” and a “more 27 exacting review” so as “to ensure that class representatives and their counsel do not secure a 28 disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a duty to 1 represent.” Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012) (internal quotation marks 2 and citations omitted). Rule 23 also “demand[s] undiluted, even heightened, attention” to the 3 certification requirements when class certification is sought only for purposes of settlement. 4 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997). Accordingly, the district court must 5 examine the propriety of certification under Rule 23 both at this preliminary stage and at a later 6 fairness hearing. See, e.g., Ogbuehi v. Comcast, 303 F.R.D. 337, 344 (E.D. Cal. Oct. 2, 2014). 7 B. PAGA Settlements 8 Under the PAGA, an “aggrieved employee” may bring an action for civil penalties for labor 9 code violations on behalf of herself and other current or former employees. Cal. Lab. Code § 10 2699(a).5 A plaintiff suing under the PAGA “does so as the proxy or agent of the state’s labor law 11 enforcement agencies.” Arias v. Superior Court, 46 Cal. 4th 969, 986 (2009). Thus, a judgment in 12 a PAGA action “binds all those, including nonparty aggrieved employees, who would be bound by 13 a judgment in an action brought by the government.” Id. 14 The PAGA statute imposes several limits on litigants. First, because a PAGA action 15 functions as a “substitute” for an action brought by the state government, a plaintiff suing under 16 PAGA is limited to recovery of civil penalties only, rather than damages or unpaid wages available 17 privately through direct or class action claims. Iskanian v. CLS Transportation L.A., LLC, 59 Cal. 18 4th 348, 381 (2014); ZB, N.A. v. Superior Court, 8 Cal. 5th 175, 182, 193 (2019), rev’d in part on 19 other grounds, Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022). Second, to bring an 20 action under PAGA, an aggrieved employee must first provide written notice to the LWDA as well 21 as to the employer. Cal. Lab. Code § 2699.3(a)(1). Third, any civil penalties recovered must be 22 divided 75% with the LWDA and 25% with the aggrieved employees. Id. § 2699(i). Fourth, and 23 finally, the proposed settlement must be submitted to the LWDA, and a trial court must “review 24 and approve” any settlement of PAGA claims. Id. § 2699(l)(2); see also Haralson v. U.S. Aviation 25 Servs. Corp., 383 F. Supp. 3d 959, 971 (N.D. Cal. 2019) (citation omitted) (noting that because 26 settling a PAGA claim “compromises a claim that could otherwise be brought be the state,” it 27 5 An “aggrieved employee” is defined as “any person who was employed by the alleged violator and against whom 28 one or more of the alleged violations was committed.” Cal. Lab. Code § 2699(c). 1 requires that a court “review and approve any settlement of any civil action pursuant to [PAGA]”). 2 Although there is no binding authority setting forth the proper standard of review for PAGA 3 settlements, California district courts “have applied a Rule 23-like standard, asking whether the 4 settlement of the PAGA claims is fundamentally fair, adequate, and reasonable in light of PAGA’s 5 policies and purposes.” Haralson, 383 F. Supp. 3d at 972 (internal quotation marks omitted). This 6 standard is derived principally from the LWDA itself. In commenting on a proposed settlement 7 including both class action and PAGA claims, the LWDA offered the following guidance: 8 It is thus important that when a PAGA claim is settled, the relief provided for under 9 the PAGA be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public and, in the context of a class action, the court 10 evaluate whether the settlement meets the standards of being “fundamentally fair, reasonable, and adequate” with reference to the public policies underlying the 11 PAGA. 12 O’Connor v. Uber Techs., Inc., 201 F. Supp. 3d 1110, 1133 (N.D. Cal. 2016) (citing the LWDA’s 13 guidance with approval).6 Recognizing the distinct issues presented by class actions, this Court is 14 persuaded by the LWDA’s reasoning in O’Connor and therefore adopts its proposed standard in 15 evaluating the PAGA portion of the settlement now before the court. See, e.g., Castro v. Paragon 16 Indus., Inc., No. 1:19-cv-00755-DAD-SKO, 2020 WL 1984240, at *6 (E.D. Cal. Apr. 27, 2020); 17 Patel v. Nike Retail Servs., Inc., No. 14-cv-04781-RS, 2019 WL 2029061, at *2 (N.D. Cal. May 8, 18 2019). Accordingly, the Court will approve a settlement of PAGA claims upon a showing that the 19 settlement terms (1) meet the statutory requirements set forth by the PAGA; and (2) are 20 fundamentally fair, reasonable, and adequate in view of the PAGA’s public policy goals. 21 When a proposed settlement involves overlapping class action and PAGA claims, courts 22 may employ a “sliding scale” in determining if the proposed settlement is “fundamentally fair, 23 reasonable, and adequate with reference to the public policies underlying the PAGA.” O’Connor, 24 201 F. Supp. 3d at 1134; see also Haralson, 383 F. Supp. 3d at 972 (following O’Connor); McClure 25 v. Brand Energy Serv., LLC, No. 2:18-cv-01726-KJM-AC, 2021 WL 2168149, at *10 (E.D. Cal. 26 27 6 The LWDA has also stated that it “is not aware of any existing case law establishing a specific benchmark for PAGA settlements, either on their own terms or in relation to the recovery on other claims in the action.” O’Connor v. Uber 28 Techs., Inc., No. 3:13-cv-03826-EMC (N.D. Cal. Jul. 29, 2016) (Doc. 736 at 2–3). 1 May 27, 2021) (same); Cooks v. TNG GP, No. 2:16-cv-01160-KJM-AC, 2020 WL 5535397, at *9– 2 10 (E.D. Cal. Sept. 15, 2020) (same). As the district court in O’Connor explained: 3 For example, if the settlement for the Rule 23 class is robust, the purposes of PAGA 4 may be concurrently fulfilled. By providing fair compensation to the class members as employees and substantial monetary relief, a settlement not only vindicates the 5 rights of the class members as employees, but may have a deterrent effect upon the defendant employer and other employers, an objective of PAGA. Likewise, if the 6 settlement resolves the important question of the status of workers as employees 7 entitled to the protection of the Labor Code or contained substantial injunctive relief, this would support PAGA’s interest in “augmenting the state’s enforcement 8 capabilities, encouraging compliance with Labor Code provisions, and deterring noncompliance.” 9 10 Id. at 1134–1135 (quoting the LWDA’s guidance). At the same time, where “the compensation to 11 the class amounts is relatively modest when compared to the verdict value, the non-monetary relief 12 is of limited benefit to the class, and the settlement does nothing to clarify [aggrieved workers’ 13 rights and obligations], the settlement of the non-PAGA claims does not substantially vindicate 14 PAGA.” Id. at 1135. Finally, “where plaintiffs bring a PAGA representative claim, they take on a 15 special responsibility to their fellow aggrieved workers who are effectively bound by any 16 judgment.” Id. at 1134. Plaintiff’s special responsibility to other aggrieved workers is especially 17 significant because the “PAGA does not require class action procedures, such as notice and opt-out 18 rights.” Id. Thus, 19 [t]he Court must be cognizant of the risk that despite this responsibility, there may be a temptation to include a PAGA claim in a lawsuit to be used merely as a 20 bargaining chip, wherein the rights of individuals who may not even be members 21 of the class and the public may be waived for little additional consideration in order to induce the employer to agree to a settlement with the class. 22 23 Id. 24 IV. ANALYSIS 25 A. Preliminary Class Certification 26 1. Rule 23(a) Requirements 27 The class action is a procedural mechanism whereby the “usual rule that litigation be 28 conducted by and on behalf of the named parties only” is swept aside so that multiple parties— 1 unwieldy in number but possessing similar or identical claims—may pursue common redress in an 2 efficient and economical manner. Comcast v. Behrend, 569 U.S. 27, 33 (2013) (citation omitted). 3 Here, the parties seek preliminary certification of the proposed class under Federal Rule of Civil 4 Procedure 23, which controls class certification and imposes a two-step process in deciding whether 5 a class may be certified. 6 First, Rule 23(a) requires the moving party to demonstrate the existence of four 7 prerequisites: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy. See Lozano v. 8 AT&T Wireless Services, Inc., 504 F.3d 718, 730 (9th Cir. 2007). If, and only if, a putative class 9 satisfies these four requirements may it then proceed to show it also satisfies the requirements of 10 Rule 23(b). The party seeking class certification bears the burden of establishing conformity with 11 these two rules and must do so by producing facts “affirmatively demonstrat[ing]” that certification 12 is warranted. Comcast, 569 U.S. at 33. Only after conducting a “rigorous analysis” of these facts 13 and determining they show “actual, [and] not presumed, conformance” with Rule 23(a) and (b), 14 may a district court certify a class. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 981 (9th Cir. 15 2011) (citation omitted); see also Patel v. Nike Retail Servs., Inc., Case No. 14-cv-4781-RS, 2016 16 WL 1241777, at *3 (N.D. Cal. Mar. 29, 2016) (“This ‘rigorous’ analysis applies both to Rule 23(a) 17 and Rule 23(b).”). If a court decides to certify a class, it must define the class claims and issues 18 and appoint class counsel. Fed. R. Civ. P. 23(c)(1), (g). 19 a. Numerosity 20 A proposed class must be “so numerous that joinder of all members is impracticable.” Fed. 21 R. Civ. P. 23(a)(1). The numerosity requirement demands “examination of the specific facts of 22 each case and imposes no absolute limitations.” Gen. Tel. Co. of Nw., Inc. v. EEOC, 446 U.S. 318, 23 330 (1980). Although courts have found that a class of 40 individuals is sufficient under Rule 23, 24 this metric is not a bright line requirement. Rannis v. Recchia, 380 Fed. App’x. 646, 651 (9th Cir. 25 2010) (“The numerosity requirement is not tied to any fixed numerical threshold .... In general, 26 courts find the numerosity requirement satisfied when a class includes at least 40 members.”). 27 Courts have found the numerosity requirement satisfied when the class comprises as few as thirty- 28 nine members or where joining all class members would serve only to impose financial burdens 1 and clog the court’s docket. See Murillo v. Pac. Gas & Elec. Co., 266 F.R.D. 468, 474 (E.D. Cal. 2 2010) (citation omitted) (discussing Ninth Circuit thresholds for numerosity and listing cases). 3 Here, Plaintiff estimates that there are approximately 150 members in the Settlement Class. (Doc. 4 18-1 at 11; see also Doc. 18-3 at ¶ 21.) This showing with respect to numerosity is adequate to 5 meet the requirements of Rule 23(a)(1). 6 b. Commonality 7 Rule 23(a) also requires “questions of law or fact common to the class.” Fed. R. Civ. P. 8 23(a)(2). To satisfy the commonality requirement, the class representatives must demonstrate that 9 common points of facts and law will drive or resolve the litigation. See Wal-Mart Stores, Inc. v. 10 Dukes, 564 U.S. 338, 350 (2011). “[C]ommonality requires that the class members’ claims depend 11 upon a common contention such that determination of its truth or falsity will resolve an issue that 12 is central to the validity of each claim in one stroke,” and the “plaintiff must demonstrate the 13 capacity of classwide proceedings to generate common answers to common questions of law or 14 fact that are apt to drive the resolution of the litigation.” Mazza v. Am. Honda Motor Co., 666 F.3d 15 581, 588 (9th Cir. 2012) (quoting Wal-Mart, 564 U.S. at 350). For example, “[c]ommonality is 16 generally satisfied where the lawsuit challenges a system-wide practice or policy that affects all of 17 the putative class members.” Benitez v. W. Milling, LLC, No. 1:18-cv-01484-SKO, 2020 WL 18 309200, at *5 (E.D. Cal. Jan. 21, 2020) (internal quotation marks and citations omitted). 19 The rule does not require all questions of law or fact to be common to every single class 20 member and “[d]issimilarities among class members do not [necessarily] impede the generation of 21 common answers to those questions[.]” Parsons v. Ryan, 754 F.3d 657, 684 (9th Cir. 2014); see 22 also Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998) (noting that commonality can 23 be found through “[t]he existence of shared legal issues with divergent factual predicates”). 24 However, the raising of merely any common question does not suffice. See Wal-Mart, 564 U.S. at 25 349 (“Any competently crafted class complaint literally raises common ‘questions.’”) (quoting 26 Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. REV. 97, 27 131–32 (2009)). 28 Plaintiff contends that the class claims “hinge on a single common contention that is capable 1 of classwide resolution.” (Doc. 18-1 at 17.) The crux of Plaintiff’s argument is that Anders 2 unlawfully excluded per diem payments from the regular rate of pay because they are “based on 3 the quantity of work performed and thus function to compensate for hours worked rather than 4 reimburse for expenses incurred.” (Id.) Given that the proposed class in this case is composed of 5 travelers who worked overtime and had the value of their per diems excluded from their regular 6 rate, there exists a common factual question about whether Anders intentionally adopted a policy 7 to exclude the value of the per diem benefits from the regular rates when calculating overtime. 8 Moreover, there exists a common question of law as well: Does Anders’ policy of tying a traveler’s 9 weekly per diem to the number of hours they worked in a week necessitate including the value of 10 the per diem in her regular rate when calculating overtime? The Court concludes that commonality 11 is therefore satisfied here because the claims of all proposed class members “will stand or fall on 12 whether the value of the per diem is a part of the regular rate when calculating overtime.” Carlino 13 v. CHG Med. Staffing, Inc., No. 1:17-cv-01323-DAD-JLT, 2019 WL 1005070, at *4 (E.D. Cal. 14 Feb. 28, 2019) (citing Wal-Mart, 564 U.S. at 350). 15 c. Typicality 16 “The typicality requirement looks to whether the claims of the class representatives are 17 typical of those of the class and is satisfied when each class member’s claim arises from the same 18 course of events, and each class member makes similar legal arguments to prove the defendant’s 19 liability.” Rodriguez v. Hayes, 591 F.3d 1105, 1124 (9th Cir. 2010) (citations and internal quotation 20 marks omitted); Fed. R. Civ. P. 23(a)(3). While representative claims must be “reasonably co- 21 extensive with those of absent class members,” they “need not be substantially identical.” Hanlon, 22 150 F.3d at 1020; see also Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). 23 Here, Plaintiff states that she “and all other members of the settlement class alike, received 24 housing and meals and incidentals payments which were excluded from their regular rates of pay.” 25 (Doc. 18-1 at 17–18.) To that end, Plaintiff asserts that her claims and those of the Class Members 26 “hinge on the common issue of whether Anders’ policy of excluding the value of per diem payments 27 from its employees’ ‘regular rate’ violates California law.” (Doc. 18-3 at ¶ 40.) 28 Because the proposed class consists of travelers, like Plaintiff, who were employed in 1 California, worked overtime, and had the valued of their per diems excluded from their regular rate 2 for purposes of calculating overtime pay, the court finds that plaintiff Plaintiff’s claims are 3 “reasonably co-extensive with those of absent class members.” Hanlon, 150 F.3d at 1020. 4 Typicality is therefore satisfied here. 5 d. Adequacy of Representation 6 The final Rule 23(a) prerequisite is satisfied if “the representative parties will fairly and 7 adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). Resolution of this issue 8 requires the court to address the following questions: “(a) do the named plaintiffs and their counsel 9 have any conflicts of interest with other class members and (b) will the named plaintiffs and their 10 counsel prosecute the action vigorously on behalf of the class?” Sali v. Corona Reg’l Med. Ctr., 11 909 F.3d 996, 1007 (9th Cir. 2018); see also Pierce v. Cty. of Orange, 526 F.3d 1190, 1202 (9th 12 Cir. 2008). “Adequacy of representation also depends on the qualifications of counsel.” Sali, 909 13 F.3d at 1007 (citation omitted). 14 Plaintiff contends that the adequacy of representation requirement is met here because she 15 there are “no known conflicts with the proposed Settlement Class” and that she and her counsel 16 have “vigorously prosecuted the action.” (Doc. 18-1 at 18; Doc. 18-3 at ¶ 41.) Based on these 17 assertions and the above description of Plaintiff’s claims, the court is satisfied that Plaintiff’s 18 interests align with those of the proposed Class Members and that Plaintiff would vigorously 19 prosecute the action on behalf of the class. 20 Plaintiff’s counsel also submitted a declaration to establish their adequacy as class counsel. 21 (Doc. 18-3 (“Hayes Decl.”).) Plaintiff’s counsel’s declaration establishes that both attorneys 22 working on this matter have significant experience in similar litigation. (Hayes Decl. at ¶¶ 2–5.) 23 Because Plaintiff and class counsel represent that there are no conflicts of interest with the 24 Class Members and attorneys at Hayes Pawlenko LLP, Matthew B. Hayes and Kye D. Pawlenko, 25 appear to be experienced in class action litigation, the Court finds that the adequacy of 26 representation requirement has been preliminarily satisfied. 27 2. Rule 23(b)(3) Requirements 28 The parties seek class certification under Rule 23(b)(3), which requires that: (1) the 1 questions of law or fact common to class members predominate over any questions affecting only 2 individual members; and (2) a class action be superior to other available methods for fairly and 3 efficiently adjudicating the controversy. See Amchem, 521 U.S. at 615; In re Hyundai and Kia Fuel 4 Econ. Litig., 926 F.3d 539, 556 (9th Cir. 2019) (en banc). The test of Rule 23(b)(3) is “far more 5 demanding” than that of Rule 23(a). Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 6 1172 (9th Cir. 2010) (quoting Amchem, 521 U.S. at 623–24). 7 a. Predominance 8 First, common questions must “predominate” over any individual questions. While this 9 requirement is similar to the Rule 23(a)(2) commonality requirement, the standard is higher at this 10 stage of analysis. Wal-Mart, 564 U.S. at 359. While Rule 23(a)(2) can be satisfied by even a single 11 question, Rule 23(b)(3) requires convincing proof that common questions “predominate” over 12 individual questions. Amchem, 521 U.S. at 623–24. “An individual question is one where 13 ‘members of a proposed class will need to present evidence that varies from member to member,’ 14 while a common question is one where ‘the same evidence will suffice for each member to make a 15 prima facie showing [or] the issue is susceptible to generalized, class-wide proof.’” Tyson Foods, 16 Inc. v. Bouaphakeo, 577 U.S. 442, 453 (2016) (quoting W. Rubenstein, Newberg on Class Actions 17 § 4:50, pp. 196–197 (5th ed. 2012)). “When common questions present a significant aspect of the 18 case and can be resolved for all members of the class in a single adjudication, there is clear 19 justification for handling the dispute on a representative rather than on an individual basis.” 20 Hanlon, 150 F.3d at 1022. 21 As discussed above, Plaintiff challenges Anders’ “uniform” policy of excluding per diem 22 value from the overtime calculation despite tying the per diem to hours worked. (Doc. 18-1 at 18.) 23 Class actions in which a defendant’s uniform policies are challenged generally satisfy the 24 predominance requirement of Rule 23(b)(3). See, e.g., Castro, 2020 WL 1984240, at *6; Palacios 25 v. Penny Newman Grain, Inc., No. 1:14-cv-01804-KJM-SAB, 2015 WL 4078135, at *5–6 (E.D. 26 Cal. July 6, 2015); Clesceri v. Beach City Investigations & Protective Servs., Inc., No. 10-cv- 27 03873-JLS-RZ, 2011 WL 320998, at *7 (C.D. Cal. Jan. 27, 2011). The Court therefore concludes 28 that the predominance requirement has been met in this case. 1 b. Superiority 2 Rule 23(b)(3) also requires that a court find that “a class action is superior to other available 3 methods for the fair adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). To resolve the Rule 4 23(b)(3) superiority inquiry, “the court should consider class members’ interests in pursuing 5 separate actions individually, any litigation already in progress involving the same controversy, the 6 desirability of concentrating in one forum, and potential difficulties in managing the class action— 7 although the last two considerations are not relevant in the settlement context.” See Palacios, 2015 8 WL 4078135, at *6 (citing Schiller v. David’s Bridal Inc., No. 10-cv-00616-AWI-SKO, 2012 WL 9 2117001, at *10 (E.D. Cal. June 11, 2012)). 10 Here, Plaintiff asserts that the superiority requirement is satisfied because “determining the 11 legality of Anders’ per diem and allowance policies in a single proceeding ‘will reduce litigation 12 costs and promote greater efficiency.’” (Doc. 18-1 at 19 (quoting Valentino v. Carter-Wallace, 13 Inc., 97 F.3d 1227, 1234 (9th Cir. 1996).) 14 Given that “[a] common nucleus of facts and potential legal remedies” predominate, the 15 Court finds that these questions can be resolved for all members more efficiently and expeditiously 16 in a single action. Hanlon, 150 F.3d at 1022. The Court also finds that class resolution is superior 17 to other available methods for adjudication of the controversy as each member’s individual pursuit 18 of the same claims would burden the judiciary. See Carlino, 2019 WL 1005070, at *5. Therefore, 19 the Court is satisfied that the superiority requirement has been met here. 20 For all the forgoing reasons, the requirements for preliminary certification under Rule 23 21 have been satisfied, and the court finds that conditional certification of the Class is appropriate. 22 B. Preliminary Settlement Approval 23 Plaintiff also seeks preliminary approval of the settlement. Under Rule 23(e), a court may 24 approve a class action settlement only if it is a fair, reasonable, and adequate resolution of the 25 dispute. Bluetooth, 654 F.3d at 946. “[P]reliminary approval of a settlement has both a procedural 26 and substantive component.” Tableware Antitrust Litig., 484 F. Supp. 2d at 1079 (citation omitted). 27 In particular, preliminary approval of a settlement and notice to the proposed class is appropriate 28 if: (1) the proposed settlement appears to be the product of serious, informed, non-collusive 1 negotiations; and (2) the settlement falls within the range of possible approval, has no obvious 2 deficiencies, and does not improperly grant preferential treatment to class representatives or 3 segments of the class. Id. 4 Because the proposed settlement also a PAGA component, the settlement must also meet 5 certain requirements. The court will first address in turn whether these requirements have been 6 met. 7 1. The PAGA Component 8 The PAGA requires that a proposed settlement be submitted to the LWDA. Cal. Lab. Code 9 at § 2699(l)(2); see also Haralson, 383 F. Supp. 3d at 971 (noting that a proposed settlement should 10 be submitted to the LWDA to allow it to comment if it so desires (citing Ramirez v. Benito Valley 11 Farms, LLC, No. 16-cv-04708-LHK, 2017 WL 3670794, at *2 (N.D. Cal. Aug. 25, 2017))). 12 Here, Plaintiff’s counsel avers that the Settlement Agreement was submitted to the LWDA 13 “concurrent with the filing of this motion.” (Doc. 18-3 at ¶ 45.) The parties have not disclosed 14 whether the LWDA has commented on the settlement to date.7 The Court will address the fairness, 15 reasonableness, and adequacy of the PAGA penalties below. 16 2. Procedural Fairness 17 Having addressed whether the applicable PAGA requirements have been met, the Court 18 must next consider whether the process by which the parties arrived at the settlement is the product 19 of arm’s-length bargaining, rather than collusion or fraud. See Millan v. Cascade Water Servs., 20 Inc., 310 F.R.D. 593, 613 (E.D. Cal. 2015). A settlement is presumed to be fair if it “follow[s] 21 sufficient discovery and genuine arm[‘]s-length negotiation.” Adoma v. Univ. of Phx., Inc., 913 F. 22 Supp. 2d 964, 977 (E.D. Cal. 2012) (citation omitted). In addition, the parties’ participation in 23 mediation “tends to support the conclusion that the settlement process was not collusive.” Palacios, 24 2015 WL 4078135, at *8 (citation omitted). 25 Here, as indicated above, the parties engaged in a private mediation with Lisa Klerman, 26 Esq., an experienced professional mediator, on October 6, 2021. (Doc. 18-1 at 10.) The mediation 27 7 In the motion for final approval, Plaintiff is directed to specify whether the LWDA has commented on the proposed 28 settlement. 1 took place after approximately seven months of litigation, and prior to mediation, Anders provided 2 Plaintiff’s counsel with “documents and information pertaining to, among other things, the 3 following: (1) all of Anders’ policies, procedures, and practices regarding paying employees, 4 calculating overtime, providing per diem payments, and adjusting or prorating per diems and 5 stipends when employees fail to work minimum required weekly hours; (2) all handbooks 6 applicable to the putative class; (3) all versions of the assignment agreements utilized by Anders 7 during the class period; (4) the average hourly wage paid to putative class members throughout the 8 class period; and (5) the average weekly meals and incidental and lodging per diems payments paid 9 to putative class members throughout the class period.” (Doc. 18-1 at 10; Doc. 18-3 at ¶ 13.) In 10 addition, prior to participating in mediation, Plaintiff’s counsel obtained from Anders “all weekly 11 payroll data for a random sampling of one-third of the putative class members, as well as payroll 12 data for the entire class reflecting the total number of overtime hours worked by each class 13 member.” (Doc. 18-1 at 10; Doc. 18-3 ¶ 14.) According to the parties’ Settlement Agreement, its 14 terms and conditions “are the result of lengthy, intensive arms-length negotiations between the 15 [p]arties.” (Doc. 18-4 at 28.) In sum, Plaintiff asserts that the settlement was the “product of an 16 arms-length, non-collusive, negotiated resolution.” (Doc. 18-1 at 21 (quoting Rodriguez v. W. 17 Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009).) 18 Based on these representations by the parties, the Court preliminarily concludes that the 19 parties’ negotiation constituted genuine, informed, and arm’s-length bargaining. 20 3. Substantive Fairness 21 a. Adequacy of the Settlement Amount 22 In evaluating the fairness of a settlement award, “the settlement’s benefits must be 23 considered by comparison to what the class actually gave up by settling.” Campbell v. Facebook, 24 Inc., 951 F.3d 1106, 1123 (9th Cir. 2020) (citing Protective Comm. For Indep. Stockholders of TMT 25 Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424–25 (1968) (“Basic to [the] process [of evaluating 26 settlements] ... is the need to compare the terms of the compromise with the likely rewards of 27 litigation.”)). However, “[i]t is well-settled law that a cash settlement amounting to only a fraction 28 of the potential recovery does not per se render the settlement inadequate or unfair.” In re Mego 1 Fin. Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 2000), as amended (June 19, 2000) (citation 2 omitted). To determine whether a settlement “falls within the range of possible approval,” a court 3 must focus on “substantive fairness and adequacy” and “consider plaintiffs’ expected recovery 4 balanced against the value of the settlement offer.” Tableware Antitrust Litig., 484 F. Supp. 2d at 5 1080. 6 The parties have agreed to a $368,500 Gross Settlement Amount. (Doc. 18-4 at 15.) 7 Assuming the various allocations described earlier in this order are awarded in full, approximately 8 $210,125 will be available for distribution to Participating Settlement Class Members. (Doc. 18-4 9 at 6, 8–9; see also Doc. 18-1 at 13.) The Net Settlement Amount will be distributed to the 10 Participating Settlement Class Members on a pro rata and non-reversionary basis, with any 11 uncashed funds to be donated to the California Unclaimed Property Fund. ((Doc. 18-4 at 5, 15, 16, 12 20; see also Doc. 18-1 at 11, 14.) 13 Plaintiff estimates that the maximum potential damages as to the claims asserted in this 14 action are approximately $873,857.35, making the Gross Settlement Amount of $368,500 an 15 approximately 42% recovery of plaintiff’s maximum potential claims. (See Doc. 18-3 at ¶¶ 23–28, 16 36; see also Doc. 18-1 at 24–15.) This settlement amount exceeds the range of the percentage 17 recoveries that California district courts—including this court—have found to be reasonable. See, 18 e.g., Singh v. Roadrunner Intermodal Servs., LLC, No. 1:15-cv-01497-DAD-BAM, 2018 WL 19 2412325, at *7 (E.D. Cal. May 29, 2018), modified, No. 1:15-cv-01497-DAD-BAM, 2018 WL 20 4382202 (E.D. Cal. Sept. 13, 2018) (approving a settlement of about 12% of the estimated 21 maximum damages); Glass v. UBS Fin. Servs., Inc., No. 3:06-cv-04068-MMC, 2007 WL 221862, 22 at *4 (N.D. Cal. Jan. 26, 2007) (approving a settlement of about 25–35% of the estimated 23 maximum). In addition, the Court notes that the pro rata allocation formula employed here is fair 24 and reasonable because each Settlement Class Member is allocated a payout that scales directly 25 with their overtime hours worked, and any Class Member may dispute the number of overtime 26 attributed to them. (See Doc. 18-4 at 16, 23.) 27 Plaintiff asserts that the settlement’s recovery rate is “fair and adequate when viewed in 28 light of the risks associated with continued litigation.” (Doc. 18-1 at 23.) The Court agrees. 1 According to Plaintiff, a “key issue in dispute underlying every claim in this lawsuit is whether or 2 not Anders’ housing and meals and incidentals per diem payments qualify as the type of reasonable 3 payments for traveling expenses, or other expenses, incurred by an employee in furtherance of his 4 employer’s interest and properly reimbursable by the employer that may be excluded from the 5 regular rate.” (Id. at 25 (internal quotation marks omitted); see also Doc. 18-3 at ¶ 30.) Plaintiff 6 asserts that the “fact that the payments are tied to the number of hours worked” weighs in her favor. 7 (Id.) She notes that weighing against her is that fact that the Ninth Circuit “declined to adopt a per 8 se rule that that per diem payments that vary with hours worked must always be included” in the 9 regular rate of pay. (Doc. 18-1 at 25 (citing Clarke v. AMN Servs., LLC, 987 F.3d 848, 856 (9th 10 Cir. 2021); see also Doc. 18-3 at ¶ 31.) Plaintiff points out that the derivative claim for waiting 11 time penalties “faces additional risks rendering it doubtful that any waiting time penalties could 12 actually be recovered in light of several defenses asserted by Anders,” including that it is exempt 13 from California Labor Code § 203. (Doc. 18-1 at 26; see also Doc. 18-3 at ¶¶ 32–34.) In addition, 14 Plaintiff asserts that even if it ultimately prevails on its PAGA claim, it is “likely that this Court 15 could exercise its discretion to reduce the amount of PAGA penalties ultimately awarded,” given 16 that “that the state of the law on the primary basis for liability in this lawsuit remains murky.” (Doc. 17 18-1 at 27 (citing Huff v. Securitas Security Servs. USA, Inc., 23 Cal. App. 5th 745, 759 (2018); see 18 also Doc. 18-3 at ¶ 35.) 19 While “a larger award was theoretically possible, ‘the very essence of a settlement is 20 compromise, a yielding of absolutes and an abandoning of highest hopes.’” Barbosa v. Cargill 21 Meat Sols. Corp., 297 F.R.D. 431, 447 (E.D. Cal. 2013) (citing Linney v. Cellular Alaska P’ship, 22 151 F.3d 1234, 1242 (9th Cir. 1998) (internal citations and quotation marks omitted)). For the 23 foregoing reasons, the Court will preliminarily approve the settlement amount reflected in the 24 proposed settlement. 25 b. PAGA Penalties 26 The settlement also provides for $35,000 in civil PAGA penalties. (Doc. 18-4 at 8, 18.) 27 Pursuant to the PAGA, 75% of the civil penalties, or $26,250, will go to the LWDA, and 25%, or 28 $8,750, will be distributed to Aggrieved Employees on a pro rata basis. (Id. at 18.) See Cal. Lab. 1 Code § 2699(i). 2 Plaintiff’s counsel estimates a total of $65,000 in PAGA penalties in this action, which 3 counsel discounted, as described above. (Doc. 18-3 at ¶¶ 23, 28.) The resulting $35,000 civil 4 penalty proposed by the settlement thus represents approximately 9% of the $368,500 GSA. The 5 amount proposed to settle the PAGA claims is consistent with, and in fact exceeds, other PAGA 6 settlements approved by this court. See, e.g., Syed v. M-I, LLC, No. 1:12-cv-01718-DAD-MJS, 7 2017 WL 714367, at *13 (E.D. Cal. Feb. 22, 2017) (approving PAGA penalties representing 1.4% 8 of the gross settlement fund); Garcia v. Gordon Trucking, Inc., No. 1:10-cv-0324-AWI-SKO, 2012 9 WL 5364575, at *7 (E.D. Cal. Oct. 31, 2012) (approving PAGA penalties representing 0.27% of 10 the gross settlement fund); Castro, 2020 WL 1984240, at *15 (approving PAGA penalties 11 representing 2% of the gross settlement fund). The Court therefore preliminarily concludes that 12 the settlement of the PAGA claims is fair, reasonable, and adequate in light of the PAGA’s public 13 policy goals. See O’Connor, 201 F. Supp. 3d at 1133. 14 c. Attorney’s Fees 15 When a negotiated class action settlement includes an award of attorney’s fees, the district 16 court “ha[s] an independent obligation to ensure that the award, like the settlement itself, is 17 reasonable, even if the parties have already agreed to an amount.” Bluetooth, 654 F.3d at 941; see 18 also Knisley v. Network Assocs., Inc., 312 F.3d 1123, 1125 (9th Cir. 2002) (citation omitted). 19 Where, as here, fees are to be paid from a common fund, the relationship between the class members 20 and class counsel “turns adversarial.” In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 21 994 (9th Cir. 2010) (citation omitted). As a result, the district court must assume a fiduciary role 22 for the class members and “act with a jealous regard to the rights of those who are interested in the 23 fund in determining what a proper fee award is.” Id. (internal quotation marks and citations 24 omitted). 25 In evaluating the award of attorney’s fees, “courts have discretion to employ either the 26 lodestar method or the percentage-of-recovery method.” Bluetooth, 654 F.3d at 942 (citations 27 omitted). Under either approach, “[r]easonableness is the goal, and mechanical or formulaic 28 application of either method, where it yields an unreasonable result, can be an abuse of discretion.” 1 Fischel v. Equitable Life Assurance Soc’y of U.S., 307 F.3d 997, 1007 (9th Cir. 2002). 2 Under the percentage of the fund method, the court may award class counsel a percentage 3 of the common fund recovered for the class; in the Ninth Circuit, the benchmark is 25%. Id. at 4 1007, 1047–48; see also Bluetooth, 654 F.3d at 942. Special circumstances that could justify 5 varying the benchmark award include when counsel achieves exceptional results for the class, 6 undertakes extremely risky litigation, generates benefits for the class beyond simply the cash 7 settlement fund, or handles the case on a contingency basis. See In re Online DVD-Rental Antitrust 8 Litig., 779 F.3d 934, 954–55 (9th Cir. 2015). An explanation is necessary when the court departs 9 from the 25% benchmark, Powers v. Eichen, 229 F.3d 1249, 1256–57 (9th Cir. 2000), but either 10 way, “[s]election of the benchmark or any other rate must be supported by findings that take into 11 account all of the circumstances of the case.” Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 12 (9th Cir. 2002). 13 With the lodestar method, the Court multiplies the number of hours the prevailing party 14 reasonably spent litigating the case by a reasonable hourly rate for counsel. Bluetooth, 654 F.3d at 15 941. The product of this computation, the “lodestar” amount, yields a presumptively reasonable 16 fee. See Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). 17 The Ninth Circuit has recommended that district courts apply one method but cross-check 18 the appropriateness of the determined amount by employing the other as well. See Bluetooth, 654 19 F.3d at 944. This diligence is particularly important “when counting all hours expended” in a case 20 “where the plaintiff has achieved only limited success” would yield an “excessive amount” of fees, 21 or when awarding a percentage of a “megafund would yield windfall profits for class counsel in 22 light of the hours spent on the case.” Bluetooth, 654 F.3d at 942 (“Just as the lodestar method can 23 confirm that a percentage of recovery amount does not award counsel an exorbitant hourly rate, the 24 percentage-of-recovery method can likewise be used to assure that counsel’s fee does not dwarf 25 class recovery.”) (internal quotation marks and citations omitted). Similarly, an upward adjustment 26 could be justified if the recovery is “too small . . . in light of the hours devoted to the case or other 27 relevant factors.” Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th 28 Cir. 1990). 1 Here, the Settlement Agreement provides that class counsel will seek an award of 25% of 2 the GSA, equivalent to $92,125.8 (Doc. 18-4 at 17–18.) This fee amount is consistent with the 3 benchmark rate in the Ninth Circuit. See In re Bluetooth, 654 F.3d at 947. As such, the Court will 4 approve the attorney’s fee request on a preliminary basis. However, in connection with the final 5 fairness hearing, the Court will consider any objections as well as the evidence presented by counsel 6 in order to determine whether the fee award of 25% is reasonable in this case.9 7 d. Incentive Payment 8 “Enhancements for class representatives are not to be given routinely.” Ogbuehi v. Comcast 9 of California, 303 F.R.D. 337, 352 (E.D. Cal. 2014) (quoting Morales v. Stevco, Inc., No. 1:09-cv- 10 00704-AWI-JLT, 2011 WL 5511767, at *12 (E.D. Cal. Nov. 10, 2011)). In determining whether 11 an enhancement award is appropriate, “[t]he district court must evaluate [the representatives’] 12 awards [ ], using ‘relevant factors includ[ing] the actions the plaintiff has taken to protect the 13 interests of the class, the degree to which the class has benefitted from those actions, . . . [and] the 14 amount of time and effort the plaintiff expended in pursuing litigation . . . .” Staton v. Boeing Co., 15 16 8 The settlement also provides for up to $15,000 in litigation costs. (Doc. 18-4 at 18.) Plaintiff’s counsel have not submitted a list of litigation expenses incurred thus far, nor any information that supports the $15,000.00 request. 17 Although this amount of costs is not per se unreasonable for counsel to have accrued in litigating a class action, see, e.g., Castro, 2020 WL 1984240, at *3, 19 (granting preliminary approval of a proposed settlement providing for up to 18 $55,000.00 in litigation costs), the Court is not able to conclude on the evidence currently before it that an award of up to $15,000.00 is reasonable and necessary here. Given the proceedings in this action, which include the filing of an 19 amended complaint and the pending motion for preliminary approval, the Court finds that documented litigation costs of up to $10,000 would be fair, reasonable, and adequate for the purposes of preliminary approval. See, e.g., Alberto 20 v. GMRI, Inc., No. 2:07-cv-01895-WBS-DAD, 252 F.R.D. 652, 665 (E.D. Cal. 2008) (granting preliminary approval of a class action settlement in which $10,000 of the $435,000 settlement fund would be allocated to documented 21 litigation costs, but requiring class counsel to submit an application for reimbursement of costs). Nonetheless, Plaintiff’s counsel are directed to provide an accounting for the requested $15,000.00 in litigation costs in seeking final 22 approval of the settlement. At that time, the court will carefully re-examine the amount of litigation costs to be awarded as part of the settlement. 23 9 Although Plaintiff’s counsel asserts that the proposed settlement “is an excellent result” for the Class, the settlement negotiations were “arms-length” and “adversarial,” and the requested 25% benchmark amount for attorney’s fees is 24 presumed to be reasonable, Plaintiff’s counsel have not submitted any information regarding the number of hours they have spent reasonably litigating this action or their hourly rates. (Doc. 18-1 at 20–21, 27.) Therefore, the Court is 25 unable to conduct a lodestar cross-check at this time. Plaintiff’s counsel are directed to provide the Court with detailed documentation pertaining to their hours spent working on this matter and their hourly rates at the final approval stage. At that time, the Court will carefully re-examine the award of attorney’s fees and conduct a lodestar cross-check. See 26 Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir. 2002) (“The 25% benchmark rate, although a starting point for analysis, may be inappropriate in some cases”); Perez v. All Ag, Inc., No. 1:18-cv-00927-DAD-EPG, 2020 WL 27 1904825, at *9 (E.D. Cal. Apr. 17, 2020) (“Though the court may well grant an award of that size under certain circumstances, the court cannot abdicate its obligation to protect the rights of absent members by simply defaulting to 28 the method [of determining attorneys’ fees] proffered by plaintiffs.”). 1 327 F.3d 938, 977 (9th Cir. 2003) (quoting Cook v. Niedert, 142 F.3d 1004, 1016 (9th Cir. 1998)). 2 According to the calculations provided by Plaintiff, Participating Settlement Class Members 3 will receive an average settlement payment of around $1,400. (Doc. 18-1 at 13; Doc. 18-3 at ¶ 22.) 4 Thus, an incentive award of $5,000 is roughly four times the average amount each Class Member 5 could expect to receive from the proposed settlement. Though this figure is not necessarily 6 excessive, see, e.g., Aguilar v. Wawona Frozen Foods, No. 1:15-cv-00093-DAD-EPG, 2017 WL 7 2214936, at *8 (E.D. Cal. May 19, 2017) (approving an incentive award of $7,500 to each class 8 representative where average class recovery was approximately $500), the Ninth Circuit has 9 repeatedly urged district courts to be “vigilant in scrutinizing all incentive awards to determine 10 whether they destroy the adequacy of the class representatives.” Radcliffe v. Experian Info. Sols. 11 Inc., 715 F.3d 1157, 1163 (9th Cir. 2013) (citation omitted). 12 Here, the benefit to the class provides significant support for the proposed award. The Court 13 therefore finds that an incentive payment of $5,000 to Plaintiff at this juncture is reasonable on its 14 face, and not an impediment to preliminary approval. However, for final approval, Plaintiff should 15 submit evidence, such as a declaration, describing in detail her contribution to the case to ultimately 16 justify the incentive award.10 17 e. Release of Claims 18 Class action settlement agreements cannot release claims of absent class members that are 19 unrelated to the factual allegations of the class complaint. Hesse v. Sprint Corp., 598 F.3d 581, 20 590 (9th Cir. 2010). Here, the Settlement Agreement provides that all Class Members who do not 21 timely opt-out of the settlement will be deemed to have released Anders from the Released Claims, 22 defined as claims that are “based on the facts alleged in the operative complaint, which arose during 23 the Settlement Class Period.” (Doc. 18-4 at 9.) As such, the settlement does not appear to release 24 unrelated claims that Class Members may have against Anders. The Court therefore finds that the 25 scope of the release is satisfactory. See Hesse, 598 F.3d at 590; 4 Newberg on Class Actions (4th 26 10 Plaintiff has provided the Court with the average award expected from the settlement, but has not provided the Court with estimates regarding the expected median, minimum, or maximum awards. Plaintiff is directed to provide this 27 information in the motion for final approval of the class and collective action settlement, so that the Court may satisfy itself that the requested award is commensurate with and does not dwarf the average or median award received by the 28 Class Members. 1 Ed. 2002) § 12:15, pp. 310–311 (“A clause providing for the release of claims may refer to all 2 claims raised in the pending action, or it may refer to all claims, both potential and actual, that may 3 have been raised in the pending action with respect to the matter in controversy.”). 4 C. Proposed Class Notice and Administration 5 For proposed settlements under Rule 23, “the court must direct notice in a reasonable 6 manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1); see 7 also Hanlon, 150 F.3d at 1025 (“Adequate notice is critical to court approval of a class settlement 8 under Rule 23(e).”). For a class certified under Federal Rule of Civil Procedure 23(b)(3), the notice 9 must contain, in plain and clear language: (1) the nature of the action; (2) the definition of the class 10 certified; (3) the class claims, issues, or defenses; (4) the right of a class member to appear through 11 an attorney, if desired; (5) the right to be excluded from the settlement; (6) the time and manner for 12 requesting an exclusion; and (7) the binding effect of a class judgment on members of the class. 13 Fed. R. Civ. P. 23(c)(2)(B). A class action settlement notice “is satisfactory if it generally describes 14 the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate 15 and to come forward and be heard.” Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 16 2004) (internal quotation marks and citations omitted). 17 Here, the Settlement Agreement provides that the Settlement Administrator will receive a 18 list identifying each Class Member, culled from Anders’ business records. (Doc. 18-4 at 20–21.) 19 Within five business days of Anders providing that information, the Settlement Administrator will 20 send the Notice Packets to all Class Members via first-class mail. (Id. at 21.) For mailings returned 21 as undeliverable, the Settlement Administrator will search for a more current address by, among 22 other things, conducting skip-tracing, and will remail the Notice of Settlement to all class members 23 for whom new addresses are found. (Id. at 22.) In addition, the Settlement Administrator will 24 process any opt-out requests and objections to the settlement. (Id. at 23–24.) 25 The Notice Packet includes a “Legal Notice” that describes the class action settlement. 26 (Doc. 18-5.) The Notice Packet (1) describes the nature of the lawsuit and claims at issue, (2) 27 defines the class, (3) explains the amount of the Settlement and how individual class member 28 settlement payments will be calculated, (4) discloses all deductions that will be requested from the 1 Settlement for fees, costs, service awards, and settlement administration expenses, (5) details the 2 claims that are being released, (6) explains how an individual can request exclusion from the class, 3 (7) explains how a class member can object to the Settlement, (8) discloses the time and place of 4 the final approval hearing, and (9) displays the contact information for class counsel and the 5 Settlement Administrator and advises that either may be contacted to answer questions about the 6 Settlement. (Doc. 18-5; see also Doc. 18-4 at 21.) The Notice Packet does not reference or describe 7 the “Voiding the Agreement” section of the Settlement Agreement, under which Anders retains the 8 right to void the settlement if more than 10% of the Class Members opt-out of the settlement.11 9 The Court finds that the notice and the manner of notice proposed by Plaintiff meets the 10 requirements of Federal Civil Procedure Rule 23(c)(2)(B) and that the proposed mail delivery is 11 appropriate under these circumstances. 12 D. Settlement Administrator and Settlement Administration Costs 13 The parties have agreed to retain CPT Group, Inc. to handle the notice and claim 14 administration process. (Doc. 18-4 at 10.) 15 The estimated cost of administering this settlement is “not to exceed $20,000,” which will 16 be deducted from the Gross Settlement Amount. (Id. at 7, 18.) This estimate is consistent with, 17 and in some cases lower than, other settlements submitted to this court. See, e.g., Castro, 2020 WL 18 1984240, at *19 (administration costs of $15,000 for a $3.75 million settlement); Gonzalez v. 19 CoreCivic of Tennessee, LLC, No. 1:16-cv-01891-DAD-JLT, 2020 WL 1475991, at *14 (E.D. Cal. 20 Mar. 26, 2020) (administration costs of $15,000 for a $3.2 million settlement); Dakota Med., Inc. 21 v. RehabCare Grp., Inc., No. 1:14-cv-02081-DAD-BAM, 2017 WL 1398816, at *5 (E.D. Cal. Apr. 22 11 In light of relevant case law, the Court preliminarily deems this “blow up” provision reasonable, fair, and adequate. 23 See Dynabursky v. Alliedbarton Security Services, LP, No. 8:12-cv-02210-JLS-RNB, 2016 WL 8921915, at *13, *2 n.1 (C.D. Cal. Aug. 15, 2016) (granting preliminary approval of a settlement agreement involving a blow up clause 24 with a 10% opt-out threshold); Four In One Co., Inc. v. S.K. Foods, L.P., No. 2:08-cv-03017-KJM-JDP, 2014 WL 28808, at *8, *14 (E.D. Cal. Jan. 2, 2014) (granting preliminary approval of a settlement agreement involving a blow 25 up clause with a 25% opt-out threshold); del Toro Lopez v. Uber Technologies, Inc., No. 4:17-cv-06255-YGR, 2018 WL 5982506, at *25 (N.D. Cal. Nov. 14, 2018) (granting final approval of settlement agreement involving a blow up clause with a 5% opt-out threshold); Jones v. Canon Business Solutions, Inc., No. 2:12-cv-07195-JAK-JEM, 2014 WL 26 12772083, at *5, *16 (C.D. Cal. Sept. 2, 2014) (granting final approval of a settlement agreement involving a blow up clause with a 10% opt-out threshold); see also Medina v. NYC Harlem Foods Inc., No. 1:21-cv-01321-VSB, 2022 WL 27 1184260, at *6 (S.D.N.Y. Apr. 21, 2022) (“Blow-up provisions thus encourage settlement by allowing defendants to limit their potential liability. Blow up provisions also give plaintiff’s counsel leverage to negotiate the strongest 28 possible settlement to discourage opt outs.”) (internal citation omitted). 1 19, 2017) (administration costs of $94,000 for a $25 million settlement); Aguilar v. Wawona Frozen 2 Foods, No. 1:15-cv-00093-DAD-EPG, 2017 WL 117789, at *7 (E.D. Cal. Jan. 11, 2017) 3 (administration costs of $45,000 for a $4.5 million settlement). 4 Accordingly, the court will appoint CPT Group, Inc. as the Settlement Administrator. 5 E. Implementation Schedule 6 Plaintiff has proposed an implementation schedule which may be summarized by the 7 below table: 8 Event Date 9 Deadline for Anders to provide the Settlement Fourteen (14) calendar days after the date of 10 Administrator with an updated list of Class service of entry of the Preliminary Approval Members (“Class Data”) Order 11 Deadline for the Settlement Administrator to Five (5) business days after receipt of the 12 send a Notice Packet to each Class Member Class Data 13 Deadline to file a Opt-Out Letter, objection to Sixty (60) calendar days after the initial the Settlement, or a dispute related to the mailing of the Notice Packet (the “Response 14 stated number of overtime hours worked Deadline”) during the Settlement Class Period 15 Deadline for Anders to exercise right to Fourteen (14) calendar days after expiration of 16 rescind settlement if 10% or more of the Class the Response Deadline Members opt-out 17 Deadline for Anders to deposit with Ten (10) business days after Final Effective 18 Settlement Administrator the Gross Settlement Date, as defined in the Settlement Agreement Amount plus Ander’s share of payroll taxes (the “Deposit Date”) 19 Deadline for Plaintiff to dismiss her individual The Deposit Date 20 FLSA claim 21 Deadline for Settlement Administrator to issue Ten (10) calendar days after the Deposit Date checks to Class and Aggrieved Employees 22 Deadline for recipients to cash Settlement One hundred eighty days (180) from the date 23 Checks of mailing 24 Deadline for Plaintiff to file a motion for final Twenty-eight (28) days before the final 25 approval approval hearing 26 (See Doc. No. 18-4 at 16, 19, 20, 21, 23, 27; Doc. 18-6 at 3.) However, the Court makes the 27 following adjustments to the parties’ proposed implementation schedule. First, the Court adds a 28 deadline for the Settlement Administrator to send a cure letter to Class Members who submit a 1 defective Opt-Out Letter, which shall be three business (3) days after receipt of a defective request 2 for exclusion. Second, the Court changes the deadline for the parties to file a motion for final 3 approval to be at least 35 days in advance of the final approval hearing, in accordance with Local 4 Rule 230(b). With these adjustments, the Court will approve the parties’ proposed implementation 5 schedule. 6 V. CONCLUSION 7 Accordingly: 8 1. Plaintiff’s motion for preliminary approval of class action settlement (Doc. 18) is 9 granted; 10 2. The proposed class identified in the Settlement Agreement (Doc. 18-4) is certified 11 for settlement purposes; 12 3. Plaintiff’s counsel, Matthew B. Hayes and Kye D. Pawlenko of Hayes Pawlenko 13 LLP, are appointed as class counsel for settlement purposes; 14 4. The named plaintiff Lisa Swain is appointed as class representatives for settlement 15 purposes; 16 5. CPT Group, Inc. is approved as the settlement claims administrator; 17 6. The proposed notice (Doc. 18-5) is approved in accordance with Federal Rule of 18 Civil Procedure 23; 19 7. The proposed settlement (Doc. 18-4) detailed herein is approved on a preliminary 20 basis as fair and adequate; 21 8. The hearing for final approval of the proposed settlement is set for May 3, 2023, at 22 9:30 a.m. before Magistrate Judge Sheila K. Oberto in Courtroom 7, with the motion 23 for final approval of class action settlement to be filed at least 35 days in advance of 24 the final approval hearing, in accordance with Local Rule 230(b); 25 9. Among other things the parties deem appropriate, the parties are direct to provide 26 the Court with the information in footnotes 4, 7, 8, 9, and 10 in connection with 27 Plaintiff’s motion for final approval of class action settlement; and 28 10. The settlement implementation schedule set forth above, as modified by the Court, 1 is adopted. 2 IT IS SO ORDERED. 3 Dated: October 5, 2022 /s/ Sheila K. Oberto . 4 UNITED STATES MAGISTRATE JUDGE 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28