Foon v. Centene Management Company, LLC ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 MICHELE FOON, No. 2:19-cv-01420 AC 12 Plaintiff, 13 v. ORDER 14 CENTENE MANAGEMENT COMPANY, LLC, et al., 15 Defendants. 16 17 18 Plaintiff Michelle Foon brings this putative class action against defendants Centene 19 Management Company, LLC, Centene Corporation, Cenpatico Behavioral Health LLC, Envolve 20 Holdings, Inc., and Nebraska Total Care, Inc., alleging class violations of the Labor Code 21 including failure to provide rest breaks, failure to reimburse, failure to furnish accurate itemized 22 wage statement, and violations of the Business and Profession Code § 17200. ECF No. 25 (First 23 Amended Complaint) at 16-26. On the consent of all parties, this case was reassigned to the 24 Magistrate Judge for all purposes. ECF No. 50. On December 1, 2022, plaintiff moved for 25 preliminary approval of class action settlement, noting that the motion is unopposed. ECF No. 26 52. The matter was taken under submission for a decision on the papers. ECF No. 54. For the 27 reasons discussed below, the court GRANTS plaintiff’s motion for preliminary approval of class 28 action settlement on the terms provided at the conclusion of this order. 1 I. BACKGROUND 2 A. Factual and Procedural Background 3 Plaintiff Michele Foon (“Foon”) brought this putative wage-and-hour and Private 4 Attorney General (“PAGA”) class action against defendants Centene Management Company 5 LLC (“Centene Management”), Centene Corporation, Cenpatico Behavioral Health, LLC 6 (“Cenpatico”), Envolve Holdings, Inc. (formerly CenCorp Health Solutions, Inc. (“CenCorp 7 ”)), Nebraska Total Care, Inc. (“Nebraska Total Care”) and Does 1-10, inclusive as 8 referred to herein, for compensatory and statutory damages, penalties, injunctive relief, costs, 9 interest, and attorneys’ fees resulting from the defendants’ unlawful conduct. ECF No. 25 at 1. 10 On or about July 17, 2014, Foon became employed with Cenpatico in Texas. Plaintiff’s 11 position was classified as exempt at the time she was first employed by Cenpatico. Plaintiff 12 received a series of promotions until she became Utilization Manager (Specialty Therapy & 13 Rehabilitative Services) while working in Texas. Id. at 4. Plaintiff’s employment with Cenpatico 14 was terminated and she was then hired by Envolve. Id. Her employment with Envolve was then 15 terminated and she was rehired by Nebraska Total Care. Cenpatico, Envolve, and Nebraska Total 16 Care are separate and distinct legal entities. Id. Plaintiff alleges that though these are separate 17 legal entities, it is clear based on the control exerted over these wholly owned subsidiaries that 18 there is a unity of interest between Centene and Cenpatico, Envolve, and Nebraska Total Care 19 such that they are all controlled and operated by Centene. Id. In or about January 2019, Plaintiff 20 moved locations to Lodi, California as a remote employee of Nebraska Total Care. 21 The operative First Amended Complaint (“FAC”) alleges that, for both exempt and non- 22 exempt employees who were expected to work from home, defendants failed to reimburse 23 business expense; also, for non-exempt employees the FAC alleges that Defendants failed to pay 24 all wages earned, provide compliant meal and rest breaks and timely pay wages. ECF No. 25 at 25 5-7; Righetti Decl. ¶ 8. The Labor Code Section 2802 allegation, applicable to the entire class, 26 claims that both exempt and non-exempt employees were not reimbursed for the costs of using 27 their own personal telephones, computers, office space and utilities while working remotely for 28 Defendants. The home office expenses were approximately $235 to $300 per month. Righetti 1 Decl. ¶¶ 9. The higher cost of $300 a month for home office expenses resulted from living in 2 cities such as Los Angeles, Orange County, San Diego, and San Francisco. 3 Plaintiff alleges that several of defendants’ actions and policies violated and continue to 4 be in violation of the California Business and Professions Code section 17200, et seq. (predicate 5 statutes, including Cal. Labor Code) and California Labor Code. Plaintiff, on behalf of herself 6 and Class Members, in addition to the claims set forth under California Business and Professions 7 Code section 17200, et al. and the California Labor Code, brings a PAGA action and seeks 8 penalties for violations of the California Labor Code section 2699, et seq., including without 9 limitation sections 201, 202, 203, 204, 210, 218.5, 221-224, 226, 226.7, 510, 512, 558, 1174, 10 1174.5, 1182.12, 1194, 1194, 1197, 1197.1, 1198, 2751, and 2698 et seq., applicable IWC 11 California Wage Orders and California Code of Regulations, Title 8, section 11000, et seq. ECF 12 No. 25 at 2. 13 Plaintiff asserts class claims, including: (1) Violation of Labor Code §§ 226.7 and 512 14 (Failure to Provide Rest Breaks) (2) Violation of Labor Code §§ 2800, et seq. (Reimbursement 15 of Expenses) (42 U.S.C. § 1983); (3) Violation of Labor Code § 226 (Failure to Provide Accurate 16 Itemized Wage Statements); (4) “Violation of Business and Professions Code §§ 17200 et seq. 17 (Unfair Business Practices); (5) Violations of Labor Code §§ 2698 et seq. (Private Attorney 18 General Act); (6) Violation of Labor Code §§ 1198.5 et seq. (Failure to Produce Records upon 19 Request); (7) Violations of Labor Code §§ 201-203 et seq. (Unpaid Wages). Id. Plaintiffs seek 20 monetary damages. Id. at 27-28. The California Class includes California employees (non- 21 exempt and exempt) who worked from home between June 20, 2015 to July 12, 2021. Due to the 22 shorter one-year statute of limitations on PAGA, the PAGA group includes California employees 23 (non-exempt and exempt) who worked from home between April 18, 2018 and July 15, 2021. 24 Stipulated Settlement, pp. 1:19-22 and 4:23-27. The release extends to December 31, 2021. ECF 25 No. 52 at 8. 26 In November of 2020, defendants notified plaintiff of another pending wage and hour 27 class action in the Northern District of California, Del Toro v. Centene Corporation, et al., Case 28 No. 4:19-cv-05163-YGR. ECF No. 52 at 3. Counsel in this case agreed to cooperate with Del 1 Toro counsel in joint prosecution of the cases. The parties engaged in substantial early discovery 2 efforts and on May 21, 2021, the Foon and Del Toro parties participated in a full-day mediation, 3 at which they reached a tentative settlement. ECF No. 52 at 10. 4 On December 1, 2022, the plaintiff submitted a notice of a tentative class action 5 settlement asking the court to issue an order (1) granting preliminary approval of the proposed 6 Joint Stipulation of Class Action Settlement; (2) appointing Plaintiff as the Class Representative; 7 (3) appointing Plaintiff’s counsel as Class Counsel; (4) appointing ILYM Group, Inc. as the 8 Settlement Administrator; (5) approving the form of notice to the Class and Notice Procedures; 9 and (6) setting the hearing date for a Motion for Final Approval. ECF No. 52 at 2. The motion is 10 now before the court. 11 B. Proposed Settlement Agreement 12 The Settlement Class to be conditionally certified consists of 98 California-based 13 employees employed between June 20, 2015 and July 15, 2021 (“Class Period”), sub-classed as 14 follows: (1) 48 non-exempt remote employees who worked from home; and (2) 50 exempt remote 15 employees who worked from home (the “Class Members”). Righetti Decl. ¶ 22, Ex. A 16 (Settlement Agreement § D.1). The PAGA Period is from April 18, 2018 to July 15, 2021. 17 The Total Settlement Amount is $750,000.00, which will be used to (a) compensate Class 18 Members; (b) make a $28,125.00 penalty payment to the LWDA (75% of the $37,500 PAGA 19 allocation); and (c) pay the approved Settlement Administrator’s Expenses, the Class 20 Representative’s service payment, and Class Counsel’s attorneys’ fees and costs. Sett. Agmt. §§ 21 D.2-D.7. The employer-side payroll taxes on the wage portion of the settlement will be paid 22 separately and in addition to the Total Settlement Amount. Id. § D.10. 23 The participating Class Members (“Class Participants”) will be paid pursuant to an 24 allocation formula based on the subclass for each Class Member and the number of workweeks 25 they worked for Defendants during the Class Period. Sett. Agmt. § D.6.3. Each Class Member’s 26 Individual Settlement Payment will be calculated by dividing the Class Member’s Individual 27 Workweeks by the Total Workweeks, and multiplying the resulting ratio by the Net Settlement 28 Amount. Id. § D.6(a)-(b). For tax purposes, the Individual Settlement Payments will be allocated 1 as follows: 30% as wages, 40% as interest and expense reimbursements, and 30% as penalties. 2 Id. § D.9. The proposed Settlement provides an average payment of approximately $6,000.00 per 3 class member for the exempt sub-class group (50 individuals) and $9,375.00 per class member for 4 the non-exempt sub-class group (48 individuals). The Settlement will also provide a payment of 5 $28,125.00 to the California Labor and Workforce Development Agency (i.e., 75% of the amount 6 allocated to resolve the PAGA allegations). Defendants have also brought their practices into 7 compliance with California law as of March 2020. 8 This is a non-reversionary settlement. Sett. Agmt. § D.7. To make the relief provided by 9 the Settlement as accessible to Class Members as possible, the parties have agreed to eliminate 10 the claims process. Id. § C.6. Each Class Member who does not submit a timely and valid opt- 11 out request within 45 days after the Notice Packet is first mailed will be automatically mailed a 12 check for his or her pro rata portion of the Settlement. Id. § C.5. Pursuant to Arias v. Superior 13 Court, 46 Cal. 4th 969 (2009), PAGA Employees cannot opt out of the PAGA portion of the 14 Settlement. If approved, the Settlement will fully resolve the lawsuit. 15 II. LEGAL STANDARDS 16 A. Preliminary Class Certification and Approval of Settlement under Rule 23 17 1. Preliminary Class Certification 18 Rule 23 of the Federal Rules of Civil Procedure does not expressly provide for 19 preliminary class certification; however, district courts often certify settlement classes on a 20 preliminary basis for settlement purposes while deferring final class certification until the court 21 holds a final fairness hearing. See, e.g., Aguilar v. Wawona Frozen Foods, No. 1:15-CV-00093 22 DAD EPG, 2017 WL 117789, at *7 n.9 (E.D. Cal. Jan. 11, 2017) (citations omitted). When it 23 reviews class certification, the court owes “undiluted, even heightened, attention” to certification 24 requirements in the settlement context. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 620 25 (1997); Molski v. Gleich, 318 F.3d 937, 946 (9th Cir. 2003), overruled on other grounds by 26 Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010); see Berry v. Baca, No. CV 01- 27 02069 DDP, 2005 WL 1030248, at *7 (C.D. Cal. May 2, 2005) (the parties cannot merely “agree 28 to certify a class that clearly leaves any one requirement unfulfilled”). Preliminary certification is 1 appropriate only if each Rule 23(a) certification prerequisite is satisfied. Rule 23 requires that the 2 class contain enough members; the suit involves questions common to all class members; 3 plaintiff's claims are typical of the class members; and plaintiff and his counsel fairly and 4 adequately protect the class interests. Fed. R. Civ. P. 23(a)(1)-(4). If Rule 23(a)’s threshold 5 requirements are met, the proposed class must satisfy Rule 23(b)(3)’s predominance and 6 superiority requirements. Fed. R. Civ. P. 23(b)(3); see Amchem, 521 U.S. at 615. 7 2. Preliminary Settlement Approval 8 Rule 23 requires that “[t]he claims, issues, or defenses of a certified class ... may be 9 settled, voluntarily dismissed, or compromised only with the court’s approval.” Fed. R. Civ. P. 10 23(e). “Courts have long recognized that settlement class actions present unique due process 11 concerns for absent class members.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 12 946 (9th Cir. 2011) (citation and internal quotation marks omitted). When approval of a 13 settlement agreement negotiated prior to formal class certification is at issue, “there is an even 14 greater potential for a breach of fiduciary duty owed the class during settlement.” Id. Thus, the 15 reviewing court analyzes such agreements with “a more probing inquiry” for evidence of 16 collusion or other conflicts of interest than ordinarily required under the Federal Rules. Hanlon v. 17 Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998), overruled on other grounds by Wal-Mart 18 Stores, 564 U.S. at 338; see also Bluetooth, 654 F.3d at 946. “Judicial review must be exacting 19 and thorough.” Manual for Complex Litigation (Fourth) § 21.61 (2004). 20 There is a “strong judicial policy” favoring settlement of class actions. Class Plaintiffs v. 21 City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nonetheless, to protect due process rights 22 of absent class members, Rule 23(e) allows claims of a certified class to be “settled ... only with 23 the courts approval” and “only after a hearing and only on a finding [that the agreement is] fair, 24 reasonable, and adequate ....” Fed. R. Civ. P. 23(e). To evaluate whether a proposed class action 25 settlement is fair, reasonable and adequate, courts consider several factors, as relevant, including: 26 (1) [T]he strength of the plaintiff's case; (2) the risk, expense, complexity, and likely duration of 27 further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the 28 amount offered in settlement; (5) the extent of discovery completed and the stage of the 1 proceedings; (6) the experience and view of counsel; (7) the presence of a governmental 2 participant; and (8) the reaction of the class members of the proposed settlement. In re Online 3 DVD-Rental Antitrust Litig., 779 F.3d 934, 944 (9th Cir. 2015) (quoting Churchill Vill., L.L.C. v. 4 Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)); In re Tableware Antitrust Litig., 484 F. Supp. 2d 5 1078, 1080 (N.D. Cal. 2007) (noting that, at preliminary approval stage, courts consider whether 6 “the proposed settlement appears to be the product of serious, informed, non-collusive 7 negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to 8 class representatives or segments of the class, and falls within the range of possible approval . . .”) 9 (citations omitted). 10 These factors substantively track those effected through 2018 amendments to Rule 11 23(e)(2), under which the court may approve a settlement only after considering whether: 12 (A) the class representatives and class counsel have adequately represented the class; 13 (B) the proposal was negotiated at arm's length; 14 (C) the relief provided for the class is adequate, taking into account: 15 (i) the costs, risks, and delay of trial and appeal; 16 (ii) the effectiveness of any proposed method of distributing relief to 17 the class, including the method of processing class-member claims; 18 (iii) the terms of any proposed award of attorney's fees, including timing of payment; and 19 (iv) any agreement required to be identified under Rule 23(e)(3); and 20 (D) the proposal treats class members equitably relative to each 21 other. 22 Fed. R. Civ. P. 23(e)(2)(A)-(D). 23 The Rule 23(e)(2) factors took effect on December 1, 2018 and, as an advisory note to the 24 Rule 23(e) amendment recognizes, “each circuit has developed its own vocabulary for expressing 25 […] concerns” regarding whether a proposed settlement is fair, reasonable and adequate. Fed. R. 26 Civ. P. 23(e)(2) advisory committee’s note. The codified factors are not intended “to displace 27 any factor, but rather to focus the court and the lawyers on the core concerns of procedure and 28 substance that should guide the decision whether to approve the proposal.” Id. Indeed, the 1 Advisory Committee warned against allowing “[t]he sheer number of factors [to] distract both the 2 court and the parties from the central concerns that bear on review under Rule 23(e)(2).” Fed. R. 3 Civ. P. 23(e)(2) advisory committee’s note. Thus, the court draws on the Ninth Circuit’s 4 longstanding guidance and the Rule 23(e)(2) factors as relevant to resolve this motion. 5 III. DISCUSSION 6 A. Preliminary Certification of the Class Under Rule 23 7 At the preliminary stage, “[a] court that is not satisfied that the requirements of Rule 23 8 have been met should refuse certification until they have been met.” Advisory Committee 2003 9 Note on Fed. R. Civ. P. 23(c)(1). Here, the parties have provided clear explanations of how each 10 factor is met, as discussed below. The court is satisfied that preliminary certification is 11 appropriate. 12 1. Rule 23(a)(1) – Numerosity 13 The class must be “so numerous that joinder of all members is impracticable.” Fed. R. 14 Civ. P. 23(a)(1). There is no set numerical cutoff used to determine whether a class is sufficiently 15 numerous; courts must examine the specific facts of each case to evaluate whether the 16 requirement has been satisfied. See General Tel. Co. v. EEOC, 446 U.S. 318, 329-30 (1980). 17 Plaintiffs “need not state the exact number of potential members nor identify all the members 18 of the class so long as the putative class is not amorphous.” Arnold v. United Artists Theatre 19 Circuit, Inc., 158 F.R.D. 439, 448 (N.D. Cal. 1994) (internal quotation omitted). “As a general 20 rule, classes of 20 are too small, classes of 20-40 may or may not be big enough depending on the 21 circumstances of each case, and classes of 40 or more are numerous enough.” Ikonen v. Hartz 22 Mountain Corp., 122 F.R.D. 258, 262 (S.D. Cal. 1988). 23 In this case, numerosity is satisfied because the class seeking conditional certification 24 consists of 98 individuals. Righetti Decl. ¶ 22, Ex. A (Settlement Agreement § D.1). 25 2. Rule 23(a)(2) – Commonality 26 The commonality element requires that there be “questions of law or fact common to the 27 class.” Fed. R. Civ. P. 23(a)(2). Not all questions of fact and law must be common to satisfy the 28 rule. Hanlon, 150 F.3d at 1019. Only “a single common question” is required. Dukes, 564 U.S. 1 at 359. But the “claims must depend upon a common contention ... of such a nature that it is 2 capable of classwide resolution—which means that determination of its truth or falsity will 3 resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. at 350. 4 The central common question here is whether defendants violated California law when, 5 as alleged, they did not reimburse plaintiff and Class Members for expenses paid by employees 6 while performing from home. Resolution of the common question involves determining the 7 legality of practices and policies that applied uniformly to the entire Class. The putative class 8 here thus meets the commonality requirement of Rule 23 for purposes of preliminary approval. 9 3. Rule 23(a)(3) – Typicality 10 The typicality requirement is satisfied if “the claims or defenses of the representative 11 parties are typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). “Measures of 12 typicality include ‘whether other members have the same or similar injury, whether the action is 13 based on conduct which is not unique to the named plaintiffs, and whether other class members 14 have been injured by the same course of conduct.’” Torres v. Mercer Canyons Inc., 835 F.3d 15 1125, 1141 (9th Cir. 2016) (quoting Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 16 1992)). Under this “permissive” requirement, “representative claims are ‘typical’ if they are 17 reasonably coextensive with those of absent class members; they need not be substantially 18 identical.” Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir. 2014) (quoting Hanlon, 150 F.3d at 19 1020). 20 For the same reasons demonstrating that commonality exists, the requirement of typicality 21 is met. Plaintiff and the proposed class are composed of employees who worked from home and 22 were subject to the same set of wage-and-hour policies and practices under the same working 23 conditions (i.e., working from home and not being reimbursed for business related expenses). 24 Both exempt and non-exempt Class Members were required to pay for business expenses while 25 working from home. Plaintiff’s work experience was like that of the Class Members as they all 26 worked under common policies and practices – and all experienced alleged violations in the same 27 way. 28 //// 1 4. Rule 23(a)(4) – Adequacy 2 The adequacy requirement is satisfied only if the representative plaintiffs “will fairly and 3 adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). Courts must consider 4 whether “(1) [ ] the named plaintiffs and their counsel have any conflicts of interest with other 5 class members and (2) [ ] the named plaintiff and their counsel [will] prosecute the action 6 vigorously on behalf of the class[.]” Hanlon, 150 F.3d at 1020. “Serious conflicts of interest can 7 impair adequate representation by the named plaintiffs, yet leave absent class members bound to 8 the final judgment, thereby violating due process.” In re Volkswagen ‘Clean Diesel’ Mktg., Sales 9 Practices, & Prod. Liab. Litig., 895 F.3d 597, 607 (9th Cir. 2018). 10 Here there are no indications that the representative plaintiff has any conflicts of interest 11 with the class members. Plaintiff has put forth considerable time and effort in actively 12 participating in this case. Righetti Decl. ¶¶ 26. Plaintiff’s interests appear to be aligned with 13 those of the class; nothing in the record currently before the court suggests otherwise. 14 5. Rule 23(b) – Superiority 15 The court must also be satisfied “that a class action is superior to other available methods 16 for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). “The superiority 17 inquiry under Rule 23(b)(3) requires determination of whether the objectives of the particular 18 class action procedure will be achieved in the particular case,” which “necessarily involves a 19 comparative evaluation of alternative mechanisms of dispute resolution.” Hanlon, 150 F.3d at 20 1023 (citation omitted). 21 Here, as noted above, individual resolution of each class member’s dispute would require 22 98 or more separate lawsuits. Righetti Decl. ¶ 22. The Settlement eliminates the risk of 23 duplicative lawsuits and ensures that the Class Members’ claims are resolved in an efficient and 24 cost-effective manner. Class action is therefore the superior vehicle for resolving this dispute. 25 6. Rule 23(b) – Predominance 26 “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently 27 cohesive to warrant adjudication by representation.” Amchem, 521 U.S. at 623. While similar to 28 Rule 23(a)’s commonality requirement, the predominance requirement is more demanding. Id. at 1 624; Dukes, 564 U.S. at 359. “When common questions present a significant aspect of the case 2 and they can be resolved for all members of the class in a single adjudication, there is clear 3 justification for handling the dispute on a representative rather than on an individual basis.” 4 Hanlon, 150 F.3d at 1022 (quoting Charles Alan Wright, et al., 7AA Federal Practice & 5 Procedure § 1778 (2d ed. 1986)). But it is important to proceed with “caution when individual 6 stakes are high and disparities among class members great.” Amchem, 521 U.S. at 625. 7 Common issues predominate over individual issues in this case. Again, the central 8 common question involves whether defendants violated California law when, as alleged, they did 9 not reimburse plaintiff and Class Members for expenses paid by employees while performing 10 from home. Resolution of the common question involves determining the legality of uniform 11 practices and policies that applied to the entire Class. The class claims here are not the same as, 12 or dependent upon, any individualized claim(s) that representative plaintiffs or class members 13 might otherwise allege. The court finds that class-wide concerns predominate, and the class 14 meets this requirement of Rule 23 at this stage. 15 B. Terms of the Proposed Agreement 16 Considering the court’s duty to absent class members, the undersigned will “review class 17 action settlements just as carefully at the initial stage as [it] do[es] at the final stage.” Cotter v. 18 Lyft, Inc., 193 F. Supp. 3d 1030, 1036 (N.D. Cal. 2016); see Smothers v. Northstar Alarm Servs., 19 LLC, No. 2:17-cv-00548-KJM-KJN, 2019 WL 280294, at *10 (E.D. Cal. Jan. 22, 2019). 20 Under Rule 23(e), a court may approve a class action settlement only if the settlement is 21 fair, reasonable, and adequate. Fed. R. Civ. P. 23(e)(2); Bluetooth, 654 F.3d at 946. Although 22 the court must weigh several factors to approve a settlement, additional factors may be relevant 23 depending on the context of the case and the terms of the agreement. See Bluetooth, 654 F.3d at 24 946 (“The factors in a court’s fairness assessment will naturally vary from case to case ....). 25 1. Fairness and Adequacy of Terms 26 The proposed terms of settlement, outlined above, contain no obvious defects. Further, 27 plaintiffs have sufficiently explained several potential impediments to full recovery in this case, 28 and the prospects of plaintiffs’ losing at trial or on appeal, with all attendant costs, indicate the 1 settlement recovery here is reasonable. ECF No. 52 at 19. 2 2. Fairness and Adequacy of Notice and Claim Forms 3 “Adequate notice is critical to court approval of a class settlement under [Fed. R. Civ. P.] 4 23(e).” Hanlon, 150 F.3d at 1025. A class action settlement notice “is satisfactory if it generally 5 describes the terms of the settlement in sufficient detail to alert those with adverse viewpoints to 6 investigate and to come forward and be heard.” Churchill Village, LLC v. General Electric, 361 7 F.3d 566, 575 (9th Cir. 2004) (internal cite & quotations omitted). 8 The parties have jointly prepared a Class Notice (Righetti Decl., Ex. C) that meets the 9 standards of “the best notice practicable,” pursuant to Fed. R. Civ. P. 23(c)(2)(B). The Class 10 Notice adequately informs class members of the nature of the litigation, the essential terms of the 11 settlement agreement, the fact that they do not need to submit a claim to get automatic payment, 12 and information on what to do if they elect not to participate (“opt-out”), or object to the 13 settlement. Id. at 1. Further, the Class Notice identifies class counsel, specifies the amounts of 14 the class representative’s incentive payment, class counsel attorneys’ fees payment, and the 15 settlement administrator’s payment that plaintiff and class counsel will seek, and explains how to 16 obtain additional information regarding the action and the settlement. Id. at 6. 17 Within twenty-one (21) days of preliminary approval of the Settlement Agreement by the 18 court, defendants will provide the Settlement Administrator with the names, last known mailing 19 address, last known telephone number if available, social security number, and the respective 20 workweeks that each Class Member worked during the Class Period, and the number of pay 21 periods worked by each PAGA Employee in the PAGA Period in a readable MS Excel 22 spreadsheet (Collectively “Class List and Data”). ECF No. 52-1 (Joint Situation of Class Action 23 and PAJA Settlement) at 24. Within fourteen (14) calendar days of receiving the Class List and 24 Data, the Settlement Administrator will mail the Notice Packet to the Class Members and PAGA 25 Employees via first class regular U.S. mail. Id. Prior to mailing, the Settlement Administrator 26 will perform a search based on the National Change of Address Database information to update 27 and correct any known identifiable address changes. Id. These procedures provide the best 28 possible notice to the class members. 1 3. Arm’s Length Settlement Negotiations 2 The court also considers whether the parties reached their settlement agreement through 3 arm’s length negotiations. Fed. R. Civ. P. 23(e)(2)(B); In re Tableware Antitrust Litig., 484 F. 4 Supp. 2d at 1080 (considering whether “proposed settlement appears to be the product of serious, 5 informed, non-collusive negotiations”). In this case, the parties inform the court that, following 6 initial discovery involving production of over 1,800 documents, the parties participated in a full- 7 day mediation led by a mediator very knowledgeable and experienced in wage-and-hour class 8 actions, and they were ultimately successful in producing the instant settlement agreement. ECF 9 No. 52 at 9-11. This requirement is thus satisfied. 10 4. Adequate Representation 11 Whether “the class representatives and class counsel have adequately represented the 12 class” and whether “the proposal treats class members equitably relative to each other” also factor 13 into the court’s assessment of whether the proposed settlement is fair, reasonable and adequate. 14 Fed. R. Civ. P. 23(e)(2)(A), (D). Thus, a proposed agreement should “not improperly grant 15 preferential treatment to class representatives or segments of the class . . . .” In re Tableware 16 Antitrust Litig., 484 F. Supp. 2d at 1080. Plaintiff, as the sole class representative in this case, 17 will request a payment of up to $10,000 in recognition of their efforts in obtaining the benefits of 18 the settlement for the Settlement Class, and in acting as the representative plaintiff in this action. 19 ECF No. 52 at 13. 20 An excessive class representative service award may be an indication that the named class 21 member is not adequately representing the interests of the class. Flores v. ADT LLC, No. 1:16- 22 CV-00029 AWI JLT, 2018 WL 6981043, at *1 (E.D. Cal. Mar. 19, 2018) (citing Radcliffe v. 23 Experian Info. Solutions Inc., 715 F.3d 1157, 1164 (9th Cir. 2013)). The court ultimately will 24 grant an incentive award only upon receiving “evidence demonstrating the quality of plaintiff's 25 representative service,’ such as ‘substantial efforts taken as class representative to justify the 26 discrepancy between [his] award and those of the unnamed plaintiffs.’” Flores, 2018 WL 27 6981043, at *1 (quoting Reyes v. CVS Pharmacy, Inc., No. 1:14-CV-00964-MJS, 2016 WL 28 3549260, *15 (E.D. Cal. June 29, 2016)); In re Online, 779 F.3d at 947 (court considers 1 “proportion of the [representative] payment[s] relative to the settlement amount, and the size of 2 each payment”). Specifically, this court and others have adopted the following factors to 3 determine whether to approve an enhancement payment: (1) the risk to the class representative in 4 commencing suit, both financial and otherwise; (2) the notoriety and personal difficulties 5 encountered by the class representative; (3) the amount of time and effort spent by the class 6 representative; (4) the duration of the litigation; and (5) the personal benefit, or lack thereof, 7 enjoyed by the class representative as a result of the litigation. Van Vranken v. Atl. Richfield 8 Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995); see also Zakskorn v. Am. Honda Motor Co., Inc., 9 2:11-CV-02610 KJM, 2015 WL 3622990, at *17 (E.D. Cal. June 9, 2015). 10 This court has found requests of $2,500 per representative, in cases involving three 11 representatives, to be presumptively reasonable. See Zakskorn, 2015 WL 3622990, at *17. In 12 cases in which the class representative requested an enhancement payment of $10,000, this court 13 has required evidence of substantial effort throughout a protracted case. See, e.g., Smothers v. 14 NorthStar Alarm Services, LLC, No. 2:17-CV-00548 KJM KJN, 2020 WL 1532058, at *12 (E.D. 15 Cal. Mar. 31, 2020) (awarding a $10,000 enhancement payment to each representative plaintiff 16 when they submitted declarations describing their 100 hours of work each). “Whether to 17 authorize an incentive payment to a class representative is a matter within the court’s discretion.” 18 Id. at 11. “[C]ourts may consider the following factors: (1) the risk to the class representative in 19 commencing suit, both financial and otherwise; (2) the notoriety and personal difficulties 20 encountered by the class representative; (3) the amount of time and effort spent by the class 21 representative; (4) the duration of the litigation; and (5) the personal benefit (or lack thereof) 22 enjoyed by the class representative as a result of the litigation” Id. (citing Van Vranken v. 23 Atlantic Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995)). 24 An incentive award of $10,000 for the representative plaintiff is a substantial request. The 25 plaintiff has not submitted information regarding the effort expended, assumed risk, personal 26 difficulties, or personal benefits assumed. ECF No. 52 at 21. While this does not preclude 27 preliminary approval, and the undersigned does not mean to suggest that the amount is excessive 28 in this case as the court will review the reasonableness of the incentive award amount at the final 1 fairness hearing, the representative plaintiff is strongly encouraged to submit a declaration 2 substantiating the hours and level of work they have each put into this case. Further, at the final 3 approval stage, plaintiffs should include an analysis of the “proportion of the [representative] 4 payment[s] relative to the settlement amount, and the size of each payment.” In re Online DVD- 5 Rental Antitrust Litig., 779 F.3d at 947. 6 5. Attorneys’ Fees 7 The court also considers “the terms of any proposed award of attorney’s fees, including 8 timing of payment.” Fed. R. Civ. P. 23(e)(2)(C)(iii). Under Rule 23(h), “[i]n a certified class 9 action, the court may award reasonable attorney’s fees and nontaxable costs that are authorized by 10 law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). “The Ninth Circuit has approved two 11 methods of assigning attorney's fees in common fund cases: the ‘percentage of the fund’ method 12 and the ‘lodestar’ method.” Ontiveros v. Zamora, 303 F.R.D. 356, 372 (E.D. Cal. 2014). The 13 Ninth Circuit has generally set a 25 percent benchmark for the award of attorneys’ fees, and 14 “courts may adjust this figure upwards or downwards if the record shows special circumstances 15 justifying a departure.” Id. (internal quotation marks omitted) (citing In re Bluetooth, 654 F.3d at 16 942). The Ninth Circuit has also approved the use of lodestar cross-checks to determine the 17 reasonableness of a particular percentage recovery of a common fund. Seguin v. City of Tulare, 18 No. 1:16-CV-01262 DAD SAB, 2018 WL 1919823, at *6 (citing Vizcaino v. Microsoft Corp., 19 290 F.3d 1043, 1050 (9th Cir. 2002)). 20 Here, the proposed settlement includes an attorneys’ fee and expense award not to exceed 21 $225,000.00, representing not more than thirty percent (30%) of the total settlement amount. 22 ECF No. 52 at 21. The actual litigation costs will not exceed $15,000.00. To date, plaintiff’s 23 counsel asserts it has billed approximately 308.9 in attorney hours and 28.6 in paralegal hours on 24 this case, and that additional hours will be required to see the case through final approval and will 25 be detailed in plaintiff’s motion for final approval. Currently, counsel represents its lodestar is 26 $274,140.00, which represents a negative multiplier. Id. The costs incurred to date amount to 27 $7,493.75, including the costs of having and expert prepare a damages analysis for mediation. Id. 28 A motion for attorneys’ fees will be filed by the ninth day after the Notice Packet is mailed to 1 ensure Class Members have 35 days to review the motion. To the extent the Court awards less 2 than the requested amount of fees and costs, the difference will be distributed pro rata to the Class 3 Members. Id. 4 6. Notice 5 “The court must direct notice in a reasonable manner to all class members who would be 6 bound by the propos[ed] [settlement]....” Fed. R. Civ. P. 23(e)(1)(B). Under Rule 23’s provision 7 for notifying class members of class certification, the notice must state in plain, easily understood 8 language: 9 (i) the nature of the action; 10 (ii) the definition of the class certified; 11 (iii) the class claims, issues, or defenses; 12 (iv) that a class member may enter an appearance through an attorney if the member so desires; 13 (v) that the court will exclude from the class any member who 14 requests exclusion; 15 (vi) the time and manner for requesting exclusion; and 16 (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 17 18 Fed. R. Civ. P. 23(c)(2)(B)(i). Furthermore, “due process requires at a minimum that an absent 19 plaintiff be provided with an opportunity to remove himself from the class by executing and 20 returning an ‘opt out’ or ‘request for exclusion’ form to the court.” Phillips Petroleum Co. v. 21 Shutts, 472 U.S. 797, 812 (1985). “In a Rule 23(b)(3) class, the notice and any Internet Web site 22 should include opt-out forms.” Ann. Manual Complex Lit. § 21.312 (4th ed.). “[D]ue process 23 requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself 24 from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the 25 court.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985). 26 Here, the proposed notice of settlement includes the necessary background information 27 about the nature of the action, the class itself, as well as the process that led to the proposed 28 settlement. Rhighetti Decl., Ex. C, Notice. The notice explicitly mentions that a class member 1 may enter objections through an attorney if the class member so desires. Id. at 5. The notice 2 identifies and lists the contact information for plaintiff’s counsel and counsel for defendants and 3 states class members can contact plaintiff’s counsel if they have questions about the settlement. 4 Id. at 6. The notice then discusses how a class member may opt out of the settlement. Id. at 5. 5 Plaintiffs have included an opt-out from; there is no claim form as Class Members are not 6 required to file a form to receive payment. Rhighetti Decl., Ex. D, Opt-Out Form. The notice 7 correctly informs class members when counsel and plaintiff will file their respective motions for 8 attorneys’ fees and costs and an incentive award, and where and how class members may review 9 those documents. Rhighetti Decl., Ex. C at 6. Importantly, the class members may contact class 10 counsel for more information or to review the relevant documents. Id. The proposed notice is 11 reasonable in all respects. 12 IV. CONCLUSION 13 For the foregoing reasons, the court HEREBY MAKES THE FOLLOWING 14 DETERMINATIONS AND ORDERS: 15 1. The court finds, on a preliminary basis, that the Settlement Agreement incorporated in 16 full by this reference and made a part of this order granting preliminary approval: (1) is the 17 product of informed and non-collusive negotiations; (2) has no obvious deficiencies; (3) falls 18 within the range of possible approval; and (4) the Class Notice (Righetti Decl. Ex. C) is, in all 19 respects, fair, reasonable, adequate, and in compliance with all applicable requirements of Rule 20 23 of the Federal Rules of Civil Procedure, the California and United States Constitutions. 21 2. The court also finds that, on a preliminary basis, the Settlement is fair, just, adequate, 22 and reasonable to all members of the Class when balanced against the probable outcome of 23 further litigation relating to class action certification, liability and damages issues, and potential 24 appeals of rulings. Good cause appearing, the motion for preliminary approval of class action 25 settlement is GRANTED. 26 3. As part of preliminary approval, the court finds for settlement purposes only, that the 27 class meets the requirements of Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure, 28 and conditionally certifies the class for the purposes of settlement as: “all California-based 1 employees of Defendants employed from June 20, 2015 through July 16, 2021 (“Class Period”) 2 as follows: (1) all non-exempt remote employees who had work-from-home arrangements that 3 started prior to March 20, 2020; and (2) all exempt remote employees who had work-from-home 4 arrangements that started prior to March 2020. ECF No. 52-1 at 28. 5 4. The court approves and appoints plaintiff as the Representative Plaintiff of the Class 6 for settlement purposes only, subject to Final Approval. Any Settlement Class Member who does 7 not elect to be excluded from the Settlement by submitting a Request to be Excluded by the 8 Objection/Exclusion Deadline may, but need not, enter an appearance in this Action through his 9 or her own attorney. Settlement Class Members who do not enter an appearance through their 10 own attorneys will be represented by Class Counsel. 11 5. The court approves and appoints plaintiff’s counsel as Class Counsel for settlement 12 purposes only, subject to Final Approval. 13 6. The court finds the proposed class notice and the proposed method of dissemination 14 reasonably and adequately advises the class of the information required by Federal Rule of Civil 15 Procedure 23(c)(2)(B). 16 7. The court finds the mailing to the class members’ present or last known address 17 constitutes an effective method of notifying class members of their rights with respect to the 18 proposed settlement. Accordingly, it is hereby ORDERED that: 19 a. Not later than 35 days from the date of this order, the settlement administrator shall 20 mail the Notice Packets to each class member, by first class United States mail, postage pre-paid. 21 The exterior of the mailing envelope shall include the following language below the 22 administrator’s address: 23 Important Legal Document: 24 You may get Money from a Class Action Settlement; your prompt reply to correct a bad address is required 25 26 8. IT IS FURTHER ORDERED that: 27 a. Requests for Exclusion: Requests for exclusion from the settlement must be mailed 28 counsel at any address provided for in the class notice, postmarked no later than 45 days from the 1 initial mailing of the Notice Packets to the class. If the notice response deadline falls on a 2 Saturday or federal holiday, it will be extended to the next day when the U.S. Postal Service is 3 open. 4 b. Objections: Any Settlement Class Member who did not elect to be excluded from the 5 Settlement by submitting a Request to be Excluded by the Objection/Exclusion Deadline may, but 6 need not, submit objections to the proposed Settlement by filing and serving an Objection to the 7 Settlement by the Objection/Exclusion Deadline: no later than 45 days from the initial mailing of 8 the Notice Packets to the Class. Notices of objection to the settlement may be mailed to counsel 9 at any address shown in the class notice, by first class U.S. mail on or before the notice response 10 deadline. Any written notice of objection should be signed by the class member and/or his or her 11 representative; including the objecting class member’s name, address, telephone number, the case 12 name and number as shown in the class notice, the basis for each objection, and whether or not 13 the class member intends to appear at the final approval hearing. Class members may also appear 14 at the time of the final approval hearing to make any objections they may have. 15 9. IT IS FURTHER ORDERED that all Settlement Class Members who do not seek to be 16 excluded from the Settlement by submitting a Request for Exclusion by the Objection/Exclusion 17 Deadline are enjoined from proceeding against the Settling Defendants, including their present or 18 former elective and/or appointive boards, agents, servants, employees, consultants, departments, 19 commissioners, attorneys, officials and officers, and all other individuals and entities, whether 20 named or unnamed in the Action, as to the claims asserted in the Action in the event the final 21 settlement is approved. 22 10. IT IS FURTHER ORDERED that within fourteen days of the notice response 23 deadline, class counsel shall file their application for awards of reasonable attorneys’ fees and 24 litigation expenses and class representative service payments. 25 11. IT IS FURTHER ORDERED that counsel shall submit a Motion for Order Granting 26 Final Approval of the Class Action Settlement with a noticed hearing date in accordance with the 27 Local Rules of this Court and the Standing Orders of Magistrate Judge Allison Claire, located on 28 the court’s website. The hearing shall be set to occur not sooner than 80 days from the date of 1 | filing the motion. All papers in support of the Motion for Order Granting Final Approval of the 2 || Class Action Settlement shall be filed at least twenty-eight calendar days before the final 3 || fairness/final approval hearing. 4 12. The final approval hearing shall be held before the undersigned at a date to be noticed 5 || in the motion for final approval. 6 13. ITIS FURTHER ORDERED that if, for any reason, the court does not execute and 7 || file an order granting final approval and judgment, or if the effective date, as defined by the 8 | settlement agreement, does not occur for any reason whatsoever, the settlement agreement and the 9 || proposed settlement subject of this order and all evidence and proceedings had in connection 10 || therewith, shall be null and void and without prejudice to the status quo ante rights of the parties 11 | to this litigation as more specifically set forth in the settlement agreement. 12 14. ITIS FURTHER ORDERED that pending further order of this court, all proceedings 13 || in this matter except those contemplated by this order and in the settlement agreement are 14 | STAYED. 15 15. The court expressly reserves the right to adjourn or to continue the final approval 16 | hearing from time-to-time without further notice to class members, except that a notice of 17 || continuance shall be provided to all class members who submit a notice of objection. In the event 18 || the settlement does not become final for any reason, this preliminary approval order shall be of no 19 | further force or effect and the fact that the parties were willing to stipulate to class certification as 20 || part of the settlement shall have no bearing on, and not be admissible in connection with, the 21 || issue of whether a class should be certified in a non-settlement conference. 22 The motion for preliminary approval (ECF No. 52) is GRANTED. 23 IT IS SO ORDERED. 24 | DATED: February 1, 2023 Cthten— Lape 25 ALLISON CLAIRE 26 UNITED STATES MAGISTRATE JUDGE 27 28 20