Ceron De Orozco v. Flagship Facility Services, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MARTA L. CERON DE OROZCO and Case No.: 18-CV-2397 JLS (JLB) EMMA BARCENAS, individually and on 12 behalf of all similarly situated employees ORDER (1) GRANTING 13 of Defendants in the State of California, PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT, 14 Plaintiffs, (2) PROVISIONALLY CERTIFYING 15 v. SETTLEMENT CLASS, (3) APPROVING NOTICE AND 16 FLAGSHIP FACILITY SERVICES, NOTICE PLAN, (4) APPOINTING INC.; and DOES 1 THROUGH 50, 17 CLASS COUNSEL AND CLASS inclusive, REPRESENTATIVE, 18 Defendants. (5) APPOINTING SETTLEMENT 19 ADMINISTRATOR, AND (6) SETTING SCHEDULE FOR 20 FINAL APPROVAL PROCESS 21 (ECF No. 40) 22 23 Presently before the Court is Plaintiffs Marta L. Ceron De Orozco and Emma 24 Barcenas’ Unopposed Motion for (1) Preliminary Approval of Class Action Settlement, 25 (2) Provisional Certification of the Settlement Class, (3) Approval of the Class Notice and 26 Notice Plan, (4) Appointment of Class Counsel and Class Representative, (5) Appointment 27 of Settlement Administrator, and (6) Setting a Final Approval Hearing (“Mot.,” ECF No. 28 40). The Court vacated the hearing and took the matter under submission without oral 1 argument pursuant to Civil Local Rule 7.1(d)(1). See ECF No. 43. Having reviewed the 2 terms of the Proposed Settlement Agreement, Plaintiffs’ arguments, and the law, the Court 3 preliminarily concludes that the settlement falls within the range of reasonableness 4 warranting preliminary approval, i.e., that the settlement appears fundamentally fair, 5 reasonable, and adequate. Accordingly, the Court GRANTS the Motion. 6 GENERAL BACKGROUND 7 This case began on August 13, 2018, when Plaintiff Marta L. Ceron de Orozco filed 8 a putative class action against Defendant Flagship Facility Services, Inc. (“Flagship”) in 9 the Superior Court of California for the County of San Diego. Declaration of Graham S.P. 10 Hollis (“Hollis Decl., ECF No. 40-2”) ¶ 13. On October 18, 2018, Defendant removed 11 Ceron’s First Amended Complaint to the United States District Court for the Southern 12 District of California. See ECF No. 1. On January 9, 2019, Ceron filled a Second Amended 13 Complaint, adding Emma Barcenas as a Plaintiff. See ECF No. 23. 14 Ceron and Barcenas are both former non-exempt employees of Defendant. See Mot. 15 at 2. Ceron worked for Defendant as a janitor in San Diego, California, from January 1999 16 to October 2017. Id. Barcenas worked for Defendant as a janitor at the San Diego 17 International Airport from June 20, 2001 to December 20, 2016. Id. Plaintiffs allege that 18 Defendant (1) failed to provide off-duty meal and rest breaks, (2) failed to pay for all wages 19 for off-the-clock work, (3) failed to reimburse for necessary business expenses, and 20 (4) incurred waiting time and Private Attorneys General Act (“PAGA”) Penalties. See 21 Mot. at 2–3. In response, Defendant firmly denies all of Plaintiffs’ claims. Id. at 3. 22 The Parties began discovery on November 19, 2018, beginning with initial 23 disclosures, interrogatories, and document requests. Mot. at 4. In addition to written 24 discovery, the Parties also conducted depositions and litigated several discovery disputes 25 before Magistrate Judge Jill L. Burkhardt. Id. at 5. 26 After conducting extensive discovery, the Parties agreed to settlement negotiations. 27 Id. at 6. On August 6, 2019, the Parties participated in a private mediation with mediator 28 Tripper Ortman that resulted in a settlement agreement. Id. The resulting Joint Stipulation 1 of Class Action and PAGA Representative Action Settlement and Release (“Proposed 2 Settlement”) is now before the Court. See generally Mot. Ex. 1. (“Proposed Settlement,” 3 ECF No. 40 at 30–561). 4 SETTLEMENT TERMS 5 The Parties have submitted a comprehensive Joint Stipulation of Class Action and 6 PAGA Representative Action Settlement and Release with approximately twenty-six pages 7 of substantive terms, see generally Proposed Settlement, as well as a Proposed Notice, see 8 generally Mot. Ex. 1A (“Proposed Notice,” ECF No. 40 at 58–69), and the Fair Labor 9 Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”) Collective Action Member Consent to 10 Join. See generally Mot. Ex. 1B (“FLSA Opt In,” ECF No. 40 at 71–72). 11 I. Proposed Settlement Class 12 The Proposed Settlement Class (the “Non-Exempt Class”) includes “all current and 13 former non-exempt janitorial employees who worked for Defendant in California at any 14 time from August 13, 2014 through the date of Preliminary Approval of the Settlement.” 15 Proposed Settlement ¶ 1.22. According to the Parties’ investigation and available data, the 16 Non-Exempt Class constitutes 6,150 Class Members. Mot at 12. 17 The Proposed Settlement Subclass (the “Waiting Time Penalties Subclass”) includes 18 “all members of the Non-Exempt Class who separated from their employment with 19 Defendant at any time from August 13, 2015 through the date of the Preliminary Approval 20 of the Settlement.” Proposed Settlement at ¶ 1.39. 21 II. Proposed Monetary Relief 22 The Proposed Settlement Agreement provides for a $2,000,000 Maximum 23 Settlement Amount, Proposed Settlement ¶ 1.20, used to pay “[$600,000 in] Class 24 Counsel’s fees and [$35,000 in] costs, [$20,000 for] the Class Representative Service 25 Awards, [$39,000 for] the Settlement Administration Costs, and [$15,000 for] [the 26 27 28 1 Because both the Proposed Settlement and Proposed Notice are filed as part of ECF No. 40, the Court 1 California Labor & Workforce Development Agency (“LWDA”)]’s portion of the PAGA 2 Payment,” Mot. at 7, with the remaining Net Settlement of $1,291,000 to be “distributed 3 to the Class Members.” Id. 4 Each Class Member will receive a portion of the Net Settlement “calculated based 5 on the number of workweeks worked during the class period.” Id. at 8. First, the 6 Settlement Administrator will determine the number of workweeks the Class Member 7 worked during the class period. Id. Then, if the Class Member also is a member of the 8 Waiting Time Penalties Subclass, he or she will be allocated an additional six workweeks. 9 Id. Finally, each Class Member’s individual payment will be allocated based on the his or 10 her percentage of qualifying workweeks over the total number of qualifying workweeks 11 for all Class Members. Id. Consequently, although payments will vary, “if all Class 12 Members participate . . . [the] average individual payment to each Class Member will be 13 approximately $209.91 [$1,291,000 / 6,150] and the average payment per workweek will 14 be at least $3.22 [$1,291,000 / 400,000].” Id. 15 The Parties also have set aside 5% of the Net Settlement for the settlement of Class 16 Members’ FLSA claims. Id. Class Members will need to submit an opt-in form in a timely 17 manner to be eligible for their FLSA Settlement Payment. Id. Once a Class Member timely 18 submits their FLSA Opt-In Form, he or she is “entitled to a pro-rata share of the FLSA 19 Settlement Fund based on the ratio of the [individual’s] total number of Qualifying 20 Workweeks. . . to the total number of Qualifying Workweeks that all participating Class 21 Members worked during the Class Period.” Id. 22 In exchange, the Class Members will release “any and all claims alleged in the 23 Second Amended Complaint” which includes claims for 24 (a) Failure to provide meal periods, or premium pay; (b) Failure to provide rest periods, or premium pay; (c) Failure to pay all 25 minimum and regular wages; (d) Failure to pay all overtime 26 wages; (e) Failure to pay accrued vacation wages; (f) Failure to indemnify necessary business expenses; (g) Failure to timely pay 27 all wages due during, and upon separation of, employment; 28 (h) Failure to provide accurate itemized wage statements; 1 (i) Failure to maintain accurate records; (j) Violation of Cal. Business and Professions Code §§ 17200, et seq., arising from 2 the claims that are alleged in the Second Amended Complaint; 3 (k) All statutory and civil penalties arising from the claims alleged in the Second Amended Complaint; and (l) Related 4 damages, restitution, disgorgement, interest, attorneys’ fees, 5 costs, or expenses relating to any such claims. 6 Id. at 9. Further, any Class Members who opt-in to the FLSA Fund “will fully and forever 7 release and discharge Released Parties from . . . all claims made under the [FLSA] and any 8 alleged federal wage and hour violations/ allegations that were made or could have been 9 made based on the actual claims asserted or factual allegations in the Action.” Id. 10 None of the Maximum Settlement Amount will revert to Defendant. Id. To the 11 extent that any funds remain after distribution to the Class Members, that amount “will be 12 donated to Legal Aid at Work, a California non-profit agency [that] provides free legal 13 services on employment issues to low-income workers.” Id. at 9–10. 14 RULE 23 SETTLEMENT CLASS CERTIFICATION 15 Before granting preliminary approval of a class action settlement agreement, the 16 Court must first determine whether the proposed class can be certified. Amchem Prods. v. 17 Windsor, 521 U.S. 591, 620 (1997) (indicating that a district court must apply “undiluted, 18 even heightened, attention [to class certification] in the settlement context” to protect 19 absentees). 20 Class actions are governed by Federal Rule of Civil Procedure 23. To certify a class, 21 each of the four requirements of Rule 23(a) must first be met. Zinser v. Accufix Research 22 Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Rule 23(a) allows a class to be certified 23 only if: 24 (1) the class is so numerous that joinder of all members is impracticable; 25 26 (2) there are questions of law or fact common to the class; 27 (3) the claims or defenses of the representative parties are 28 typical of the claims or defenses of the class; and 1 (4) The representative parties will fairly and adequately protect the interests of the class. 2 3 In addition to Rule 23(a)’s requirements, the proposed class must satisfy the 4 requirements of one of the subdivisions of Rule 23(b). Zinser, 253 F.3d at 1186. Here, 5 Plaintiffs seek to certify the Settlement Class under subdivision Rule 23(b)(3), see Mot. at 6 13–15, which permits certification if “questions of law or fact common to class members 7 predominate over any questions affecting only individual class members” and “a class 8 action is superior to other available methods for fairly and efficiently adjudicating the 9 controversy.” Fed. R. Civ. P. 23(b)(3). The Court addresses each of these requirements in 10 turn. 11 I. Rule 23(a) Requirements 12 A. Numerosity 13 Federal Rule of Civil Procedure 23(a)(1) requires that a class must be “so numerous 14 that joinder of all members is impracticable.” “[C]ourts generally find that the numerosity 15 factor is satisfied if the class comprises 40 or more members and will find that it has not 16 been satisfied when the class comprises 21 or fewer.” Celano v. Marriott Int’l, Inc., 242 17 F.R.D. 544, 549 (N.D. Cal. 2007). 18 Here, the proposed Settlement Class consists of 6,150 Class Members. Mot. at 12. 19 Accordingly, joinder of all members would be impracticable for purposes of Rule 23(a)(1), 20 and the numerosity requirement is therefore satisfied. Jordan v. L.A. Cty., 669 F.2d 1311, 21 1320 n.10 (9th Cir.) (collecting “[c]lasses with fewer known class members [that] have 22 been certified”), cert. granted & judgment vacated, 459 U.S. 810 (1982), aff’d, 713 F.2d 23 503 (9th Cir. 1983). 24 B. Commonality 25 Federal Rule of Civil Procedure 23(a)(2) requires that there be “questions of law or 26 fact common to the class.” Commonality requires that “the class members ‘have suffered 27 the same injury.’” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349–50 (2011) (quoting 28 Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). “The existence of shared legal 1 issues with divergent factual predicates is sufficient, as is a common core of salient facts 2 coupled with disparate legal remedies within the class.” Hanlon v. Chrysler Corp., 150 3 F.3d 1011, 1019 (9th Cir. 1998). 4 Here, the Parties have defined the Settlement Class to encompass all non-exempt 5 janitorial employees who worked for Defendant in California at any time from August 13, 6 2014 through the date of Preliminary Approval of the Settlement. See Mot at 12; Proposed 7 Settlement at 33. Common questions thus revolve around the legality of Defendant’s 8 workplace policies—including the Flagship Mobile Phone Policy and the Unpaid Meal 9 Periods and Rest Break Policy—as applied to these non-exempt janitorial employees. See 10 Mot at 12. Because the policies apply to all Class Members, all Class Members have 11 suffered a common injury. Accordingly, it is appropriate for these issues to be adjudicated 12 on a class-wide basis, and Rule 23(a)(2) is satisfied. See McCowen v. Trimac Transp. 13 Servs. (W.), Inc., 311 F.R.D. 579, 584–586 (N.D. Cal 2015) (finding commonality satisfied 14 where the common question was whether the defendant failed to provide meal and rest 15 breaks). 16 C. Typicality 17 To satisfy Federal Rule of Civil Procedure 23(a)(3), the named plaintiffs’ claims 18 must be typical of those of the class. The typicality requirement is “permissive” and 19 requires only that the named plaintiffs’ claims “are reasonably coextensive with those of 20 absent class members.” Hanlon, 150 F.3d at 1020. “The test of typicality ‘is whether other 21 members have the same or similar injury, whether the action is based on conduct which is 22 not unique to the named plaintiffs, and whether other class members have been injured by 23 the same course of conduct.’” Hanon v. Dataprods. Corp., 976 F.2d 497, 508 (9th Cir. 24 1992) (quoting Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)). “[C]lass 25 certification should not be granted if ‘there is a danger that absent class members will suffer 26 if their representative is preoccupied with defenses unique to it.’” Id. (citation omitted). 27 Here, both Ceron and Barcenas are former janitorial employees whose claims arise 28 out of the same underlying policies and practices of Defendant as the claims pertaining to 1 the entire proposed Settlement Class. See Mot. at 13. As with the Settlement Class 2 Members, Plaintiffs were subject to Defendant’s alleged “unlawful wage and hour 3 practices.” Id. Further, the Parties have identified no defenses unique to either Ceron or 4 Barcenas. Accordingly, Plaintiffs’ claims are typical of the claims of proposed Class 5 Members, thus satisfying Rule 23(a)(3). See Kayes v. Pac. Lumber Co., 51 F3d 1449, 1463 6 (9th Cir. 1995) (typicality is satisfied where named plaintiffs have the same claims as other 7 class members and are not subject to unique defenses). 8 D. Adequacy 9 Federal Rule of Civil Procedure 23(a)(4) requires that the named representatives 10 fairly and adequately protect the interests of the class. “To satisfy constitutional due 11 process concerns, absent class members must be afforded adequate representation before 12 entry of judgment which binds them.” Hanlon, 150 F.3d at 1020 (citing Hansberry v. Lee, 13 311 U.S. 32, 42–43 (1940)). To determine legal adequacy, the Court must resolve two 14 questions: “(1) do the named plaintiffs and their counsel have any conflicts of interest with 15 other class members, and (2) will the named plaintiffs and their counsel prosecute the 16 action vigorously on behalf of the class?” Id. 17 Here, there is no reason to believe that the Class Representative or Class Counsel 18 have any conflict of interest with the proposed Settlement Class Members. There also is 19 no reason to believe that the Class Representatives or Class Counsel have failed vigorously 20 to investigate and litigate this case to this point. Plaintiffs have retained competent counsel, 21 who have “conducted extensive investigation of Plaintiffs’ claims.” Mot. at 1, 14. 22 Furthermore, Class Counsel has significant employment and class action litigation 23 experience. Id. 14; see also Hollis Decl. Ex. 2, ECF No. 40-2 at 74–82. Accordingly, the 24 Class Representatives and Class Counsel adequately represent the proposed Settlement 25 Class Members, and Rule 23(a)(4)’s adequacy requirement is met. 26 II. Rule 23(b)(3) Requirements 27 Federal Rule of Civil Procedure 23(b)(3) permits certification if “questions of law 28 or fact common to class members predominate over any questions affecting only individual 1 class members” and “a class action is superior to other available methods for fairly and 2 efficiently adjudicating the controversy.” 3 A. Predominance 4 “The Rule 23(b)(3) predominance inquiry tests whether the proposed classes are 5 sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., 521 U.S. 6 at 623. “Rule 23(b)(3) focuses on the relationship between the common and individual 7 issues.” Hanlon, 150 F.3d at 1022. 8 Here, the Plaintiffs allege several common questions of law and fact. See Mot. at 9 14. The common issues between all Class Members include whether Defendant’s policies 10 required non-exempt janitors to monitor their phones or radios during unpaid breaks and 11 whether Defendant’s written policies regarding said breaks were illegal. See Id. Both 12 Ceron and Barcenas and the Class Members share several common questions of fact and 13 law that are central to Plaintiffs’ alleged injuries and that predominate over individualized 14 issues. Id. Accordingly, the predominance requirement of Rule 23(b)(3) is satisfied. See 15 McCowen v. Trimac Transp. Servs. (W.), Inc., 311 F.R.D. at 597 (finding predominance 16 satisfied where “class-wide issues predominate over individualized issues”). 17 B. Superiority 18 The final requirement for certification pursuant to Federal Rule of Civil Procedure 19 23(b)(3) is “that a class action [be] superior to other available methods for fairly and 20 efficiently adjudicating the controversy.” The superiority inquiry requires the Court to 21 consider the four factors listed in Rule 23(b)(3): 22 (A) the class members’ interests in individually controlling the 23 prosecution or defense of separate actions; 24 (B) the extent and nature of any litigation concerning the 25 controversy already begun by or against class members; 26 (C) the desirability or undesirability of concentrating the 27 litigation of the claims in the particular forum; and 28 (D) the likely difficulties in managing a class action. 1 See also Zinser, 253 F.3d at 1190. A court need not consider the fourth factor, however, 2 when certification is solely for the purpose of settlement. See True v. Am. Honda Motor 3 Co., 749 F. Supp. 2d 1052, 1066 n.12 (C.D. Cal. 2010); see also Amchem, 521 U.S. at 620 4 (“Confronted with a request for settlement-only class certification, a district court need not 5 inquire whether the case, if tried, would present intractable management problems, for the 6 proposal is that there be no trial.”). The superiority inquiry focuses “‘on the efficiency and 7 economy elements of the class action so that cases allowed under [Rule 23(b)(3)] are those 8 that can be adjudicated most profitably on a representative basis.’” Zinser, 253 F.3d at 1190 9 (quoting 7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Fed. Practice & 10 Proc. § 1780, at 562 (2d ed. 1986)). A district court has “broad discretion” in determining 11 whether class treatment is superior. Kamm v. Cal. City Dev. Co., 509 F.2d 205, 210 (9th 12 Cir. 1975). 13 Here, the Class Members’ claims involve the same issues arising from the same 14 facts. If the Settlement Class Members’ claims were treated on an individual basis, more 15 than six thousand cases would follow a similar trajectory, and each would come to a similar 16 result. See Mot. at 15. Furthermore, the individual cases would consume a significant 17 amount of the Court’s and the Parties’ resources. It also is likely that the Settlement Class 18 Members would not pursue litigation on an individual basis due to the high cost of pursuing 19 their individual claims. Id. The interests of the Settlement Class Members in individually 20 controlling the litigation are minimal, especially given the same broad-based policies and 21 practices at issue. 22 There are, however, two related cases pending in Santa Clara Superior Court: Rivera 23 v. Flagship Facility Services, Inc., Case No. 18CV329704, filed June 8, 2018, and 24 Gonzalez v. Flagship Facility Services, Inc., Case No. 17CV316313, filed September 26, 25 2017. See Mot. at 15. Currently, Rivera’s discovery is on hold pending the outcome of 26 this Settlement, while Plaintiffs’ counsel suggests that the current Settlement Agreement 27 “will narrow the scope of the issues in Gonzalez.” Id. at 15–16. Accordingly, it appears 28 that neither of the Santa Clara proceedings will affect the Proposed Settlement. Id. at 15. 1 Having weighed the relevant factors, the Court concludes that class treatment is the 2 superior method of adjudicating this controversy and that the superiority requirement of 3 Rule 23(b)(3) is met. 4 III. Conclusion 5 For the reasons stated above, the Court finds certification of the Settlement Class 6 proper under Rules 23(a) and (b)(3). Accordingly, the proposed Settlement Class is 7 CERTIFIED for settlement purposes only. 8 RULE 23 PRELIMINARY FAIRNESS DETERMINATION 9 Having certified the proposed Settlement Class, the Court must next make a 10 preliminary determination as to whether the Proposed Settlement Agreement is “fair, 11 reasonable, and adequate” pursuant to Federal Rule of Civil Procedure 23(e)(1)(C). 12 Factors relevant to this determination include: 13 The strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining 14 class action status throughout the trial; the amount offered in 15 settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence 16 of a governmental participant; and the reaction of the class 17 members to the proposed settlement. 18 Hanlon, 150 F.3d at 1026. “Where a settlement is the product of arms-length negotiations 19 conducted by capable and experienced counsel, the court begins its analysis with a 20 presumption that the settlement is fair and reasonable.” Garner v. State Farm Mut. Auto 21 Ins. Co., No. CV 08 1365 CW (EMC), 2010 WL 1687832, *13 (N.D. Cal. Apr. 22, 2010) 22 (quoting Brown v. Hain Celestial Grp., Inc., No. 3:11-CV-03082-LB, 2016 WL 631880, 23 at *5 (N.D. Cal. Feb. 17, 2016)). “Additionally, there is a strong judicial policy that favors 24 settlements, particularly where complex class action litigation is concerned.” In re Syncor 25 ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008) (citing Class Pls. v. City of Seattle, 955 26 F.2d 1268, 1276 (9th Cir. 1992)). 27 / / / 28 / / / 1 I. Strength of Plaintiffs’ Case 2 To succeed on the merits, Plaintiffs would have to prove that Defendant maintained 3 a policy and/or perpetuated a practice of requiring non-exempt janitorial employees to 4 monitor their phones and/or radios during meal and rest breaks, resulting in the Defendant’s 5 failure to provide legally required meal and rest breaks despite time records showing full 6 off-the-clock meal periods. Mot. at 16. Plaintiff’s recognize the difficulties involved in 7 proving off-the-clock work as well as “maintaining class certification, proving liability, 8 and proving damages as to all claims.” Hollis Decl. ¶ 47. Defendant steadfastly denies 9 any wrongdoing and maintains it “provided all legally required, uninterrupted meal and 10 rest breaks” and “prohibit[ed] off-the-clock work.” Mot. at 16. Given this juxtaposition, 11 the Court finds that this factor weighs in favor of finding the Proposed Settlement fair, 12 reasonable, and adequate. 13 II. Risk, Exposure, Complexity, and Likely Duration of Further Litigation 14 Were the case to proceed to further litigation, the Parties would each bear substantial 15 risk and a strong likelihood of protracted and contentious litigation. Although the Parties 16 have agreed to settle this action, they fundamentally disagree regarding the validity of 17 Plaintiffs’ claims. See Mot. at 17. The Parties have yet to engage in substantial motion 18 practice, including for class certification. See generally Mot. Without this Settlement, the 19 Parties anticipate several years of litigation. See Mot. at 1. Accordingly, this factor weighs 20 in favor of the Proposed Settlement Agreement being fair, reasonable, and adequate. 21 III. Risk of Maintaining the Class Action Throughout Trial 22 Defendant “hotly dispute[s]” whether the classes can be validly certified in the 23 absence of the Proposed Settlement Agreement. See Mot. at 18. Implicit in this 24 disagreement is the likelihood of initial challenges to class certification and the potential 25 for decertification motions even if class certification were granted. Weighed against the 26 fact that Defendant does not object to a finding that the class certification requirements are 27 met for purposes of the Proposed Settlement Agreement, this factor weighs in favor of the 28 Proposed Settlement Agreement being fair, reasonable, and adequate. 1 IV. Amount Offered in Settlement 2 Defendant has offered to pay a $2,000,000 Maximum Settlement Amount. Proposed 3 Settlement ¶ 1.20. Less the Attorneys’ Fees and Expenses, Administrative Expenses, Class 4 Representative Service Awards, and LWDA’s portion of the PAGA Payment, the Net 5 Settlement Proceeds—currently estimated to be $1,291,000—are to be allocated and 6 distributed based on the number of weeks each Class Member worked during the class 7 period and whether or not the Class Member is a member of the Waiting Time Penalties 8 Subclass. See Mot. at 7. A straight allocation for each of the estimated 6,150 Class 9 Members would result in a distribution of $209.91 each. Id. at 18. Although Plaintiffs’ 10 counsel notes that this amount “represents a significant discount” on Plaintiffs’ estimated 11 $147 million exposure, Plaintiff also reports that the reduction “represents an extremely 12 reasonable compromise” in light of the substantial risks of further litigation. Id. These 13 risks include obtaining class certification and establishing the Defendant’s liability on all 14 claims. Id. at 18–19. Given the risks of litigation, the Court determines that the amount 15 offered in the Proposed Settlement Agreement is fair and reasonable and that this factor 16 weighs in favor of the settlement. 17 V. Extent of Discovery Completed and Stage of Proceedings 18 This action was originally filed in the Superior Court for the County of San Diego 19 on August 13, 2018. Hollis Decl. ¶ 13. Both Parties have sought extensive discovery from 20 one another, including requests for production of documents, special interrogatories, and 21 depositions. See Mot. at 19. Through this extensive discovery, “Class Counsel was able 22 to prepare a detailed analysis of the maximum liability exposure for Defendant if Plaintiffs 23 succeeded at trial.” Id. Accordingly, it appears the Parties have entered into the Proposed 24 Settlement Agreement with a strong working knowledge of the relevant facts, law, and 25 strengths and weaknesses of their claims and defenses. Therefore, this factor weights in 26 favor of the Proposed Settlement Agreement being fair, reasonable, and adequate. 27 / / / 28 / / / 1 VI. Experience and Views of Counsel 2 The recommendations of plaintiffs’ counsel should be given a presumption of 3 reasonableness.” Boyd v. Bechtel Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979). 4 Plaintiffs’ Counsel “have extensive experience in complex California wage and hour 5 litigation” and employment and class action lawsuits. Id. at 20; See generally Ex. 2. Both 6 Parties’ counsel recommend the Settlement as “fair, reasonable and adequate.” Mot. at 20; 7 Proposed Settlement ¶ 3.5–3.6. Because the presumption of reasonableness is warranted 8 under these circumstances, the Court concludes that this factor weighs in favor of finding 9 the Proposed Settlement Agreement fair, reasonable, and adequate. 10 VII. Presence of Governmental Participant. 11 The Proposed Settlement Agreement will result in $20,000 in PAGA penalties, 12 $15,000 of which will be paid to LWDA. Mot. at 7, 20. This factor therefore weighs in 13 favor of approval. See Adoma v. Univ. of Phoenix, Inc., 913 F. Supp. 2d 964, 977 (E.D. 14 Cal. 2012) (weighing PAGA penalties in favor of settlement approval); Ontiveros v. 15 Zamora, 303 F.R.D. 356, 371 (E.D. Cal. 2012); see also Dawson v. Hitco Carbon 16 Composites, Inc., No. CV167337PSGFFMX, 2019 WL 6138467, at *11 (C.D. Cal. July 9, 17 2019) (approving settlement where the “PAGA allocation represents 0.7 percent of the 18 $1,100,000 gross settlement amount, which falls within the zero to two percent range 19 for PAGA claims approved by courts”) (collecting cases); McKenzie v. Fed. Exp. Corp., 20 No. CV 10-02420 GAF PLAX, 2012 WL 2930201, at *6 (C.D. Cal. July 2, 2012) 21 (“California’s LWDA is a government entity affected by this action.”). 22 VIII. Attorneys’ Fees Provision 23 In the Ninth Circuit, a district court has discretion to apply either a lodestar method 24 or a percentage-of-the-fund method in calculating a class fee award in a common fund case. 25 Fischel v. Equitable Life Assur. Soc’y of U.S., 307 F.3d 997, 1006 (9th Cir. 2002). When 26 applying the percentage-of-the-fund method, an attorneys’ fees award of “twenty-five 27 percent is the ‘benchmark’ that district courts should award.” In re Pac. Enters. Sec. Litig., 28 47 F.3d 373, 379 (9th Cir. 1995) (citing Six Mexican Workers v. Ariz. Citrus Growers, 904 1 F.2d 1301, 1311 (9th Cir. 1990)); Fischel, 307 F.3d at 1006. A district court, however, 2 “may adjust the benchmark when special circumstances indicate a higher or lower 3 percentage would be appropriate.” In re Pac. Enters. Sec. Litig., 47 F.3d at 379 (citing Six 4 Mexican Workers, 904 F.2d at 1311). “Reasonableness is the goal, and mechanical or 5 formulaic application of either method, where it yields an unreasonable result, can be an 6 abuse of discretion.” Fischel, 307 F.3d at 1007. 7 Here, Class Counsel requests that the Court approve attorney fees not to exceed 30%, 8 or $600,000, of the Gross Settlement Fund and Class Counsel Costs of $35,000. See Mot. 9 at 22–24. At this point, without Class Counsel’s briefing, the Court finds no reason to 10 award fees that exceed the Ninth Circuit’s 25% benchmark. Class Counsel will need to 11 show what special circumstances exist warranting a higher percentage in their motion for 12 attorney’s fees. 13 IX. Class Representative Service Award Provision 14 The Ninth Circuit recognizes that named plaintiffs in class action litigation are 15 eligible for reasonable incentive payments. Staton v. Boeing Co., 327 F.3d 938, 977 (9th 16 Cir. 2003). The district court must evaluate each incentive award individually, using 17 “relevant factors includ[ing] the actions the plaintiff has taken to protect the interests of the 18 class, the degree to which the class has benefitted from those actions, . . . [and] the amount 19 of time and effort the plaintiff expended in pursuing the litigation.” Id. (citing Cook v. 20 Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998)). 21 Here, the Parties have agreed to a maximum Named Plaintiff Service Award of 22 $10,000 for each Named Plaintiff, $20,000 in total. See Proposed Settlement ¶ 4.5. Both 23 Ceron and Barcenas worked closely with Class Counsel to protect the interests of the Class 24 Members. Hollis Decl. ¶ 79. Plaintiffs base their requested awards on Ceron and Barcenas’ 25 assistance throughout the course of litigation. Id. Ceron and Barcenas each spent between 26 30 and 40 hours on this litigation “answering questions from counsel, answering discovery, 27 looking and providing documents, attending depositions, attending mediations and 28 / / / 1 reviewing settlement documents.” See Mot. at 22; Declaration of Ceron (“Ceron Decl.,” 2 ECF No. 40-3) ¶ 21; Declaration of Barcenas (“Barcenas Decl.,” ECF No. 40-4) ¶ 23. 3 The Named Plaintiffs’ requested Service Awards equate one percent of the 4 Maximum Settlement Amount, while the Parties estimate that the average individual 5 payment to each Class Member will be approximately $209.91. Mot at 8. On the current 6 record, the Court finds the requested award of $20,000 in total, or $10,000 for each Named 7 Plaintiff, unreasonable in light of the time expended and the average payment each of the 8 Class Members will receive. See Sandoval v. Tharaldson Emp. Mgmt., Inc., 2010 WL 9 2486346, 10 (E.D. Cal. 2010) (finding a service award of $12,500 unreasonable where 10 class members would receive an average payment of $749.60); see also Bellinghausen v. 11 Tractor Supply Co., 306 F.R.D. 245, 267 (N.D. Cal. 2015) (collecting cases where 12 incentive awards were under 1% of the settlement) (citing Sandoval, 2010 WL 2486346 at 13 *10). Consequently, at this time, the Court determines that a Named Plaintiff Service 14 Award of $5,000 for each Plaintiff, or $10,000 in total, is reasonable. See In re Mego Fin. 15 Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000) (authorizing an incentive payment of 16 $5,000 each for two class representatives in a $1.725 million settlement with 5,400 class 17 members); Cox v. Clarus Marketing Grp., LLC, (SD CA 2013) 291 F.R.D. 473, 483 18 (approving proposed incentive payment of $5,000 to each of three named plaintiffs where 19 settlement was valued at $2.65 million); Monterrubio v. Best Buy Stores, L.P., 291 F.R.D. 20 443, 463 (E.D. Cal. 2013) (reducing proposed incentive payments of $7,500, representing 21 1.8% of the total settlement amount, to $2,500 where the class members would receive an 22 average of $65.79). Plaintiffs may attempt to substantiate a $10,000 Named Plaintiff 23 Service Award in their motion for final approval. 24 X. Conclusion 25 For the reasons stated above, the Court GRANTS Plaintiffs’ unopposed Preliminary 26 Approval Motion. 27 / / / 28 / / / 1 PROPOSED SETTLEMENT NOTICE 2 Pursuant to Federal Rule of Civil Procedure 23(c)(2)(B), “[f]or any class certified 3 under Rule 23(b)(3) the court must direct to class members the best notice that is 4 practicable under the circumstances, including individual notice to all members who can 5 be identified through reasonable effort.” Because the Court has provisionally certified the 6 class under Rule 23(b)(3), see supra pages 5–11, the mandatory notice procedures required 7 by Rule 23(c)(2)(B) must be followed. 8 Where there is a class settlement, Federal Rule of Procedure 23(e)(1) requires the 9 court to “direct notice in a reasonable manner to all class members who would be bound 10 by the proposal.” “Notice is satisfactory if it ‘generally describes the terms of the 11 settlement in sufficient detail to alert those with adverse viewpoints to investigate and to 12 come forward and be heard.’” Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 962 (9th Cir. 13 2009) (quoting Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)); see 14 also Grunin v. Int’l House of Pancakes, 513 F.2d 114, 120 (8th Cir. 1975) (“[T]he 15 mechanics of the notice process are left to the discretion of the court subject only to the 16 broad ‘reasonableness’ standards imposed by due process.”). 17 According to the Proposed Settlement Agreement, within ten business days of the 18 Court filing this Order, Defendant will provide the Settlement Administrator with each 19 Class Member’s name, last known address, last telephone number, Social Security number, 20 and dates of employment, as well as “all other information necessary for the Settlement 21 Administrator to Calculate the number of Qualifying Workweeks worked by each Class 22 Member during the Class Period and to determine which Class Member is also a member 23 of the Waiting Time Penalty Subclass” (the “Employee List”). Proposed Settlement 24 Agreement at ¶ 6.1. Within fourteen calendar days of receiving the Employee List, the 25 Settlement Administrator “shall perform a National Change of Address (NCOA) search 26 and . . . an in-depth skip trace in order to obtain the best possible address for Class 27 Members” and then mail the Proposed Notice through first class mail. Id. ¶ 6.3–6.4. 28 / / / 1 The twelve-page Proposed Notice: (1) describes the nature of the lawsuit and claims 2 at issue, (2) defines the Settlement Class and Waiting Time Penalties Subclass, (3) explains 3 the Maximum Settlement Amount and how individual Class Member’s settlement 4 payments will be calculated, (4) discloses the Class Counsel’s fees and Class 5 Representative Service Awards that will be requested, (5) details the claims that are being 6 released, (6) explains how participating Class Members can opt in to the FLSA Settlement 7 Share, (7) explains how a member of the Settlement Class or Waiting Time Penalties 8 Subclass can object to the Proposed Settlement, (8) discloses the time and place of the Final 9 Approval Hearing, and (9) displays the contact information for Class Counsel and the 10 Settlement Administrator and advises that either may be contacted to answer questions 11 about the Proposed Settlement. See generally Proposed Notice. Having thoroughly 12 reviewed the Proposed Notice, the Court finds that both the method and content of the 13 Proposed Notice comply with Rule 23. Accordingly, the Court APPROVES both the 14 content of the Proposed Notice and the proposed notification plan. 15 CONCLUSION 16 For the reasons stated above, the Court GRANTS Plaintiffs’ Motion (ECF No.40) 17 and ORDERS: 18 1. PRELIMINARY APPROVAL OF PROPOSED SETTLEMENT 19 AGREEMENT: The Court PRELIMINARILY APPROVES the Settlement Agreement 20 as fair, reasonable, and adequate pursuant to Federal Rule of Civil Procedure 23(e). 21 2. PRELIMINARY CLASS CERTIFICATION: Pursuant to Federal Rules of 22 Civil Procedure 23(a) and (b)(3), this action is PRELIMINARILY CERTIFIED, for 23 settlement purposes only, as to the following Settlement Class and Subclass: 24 a. Non-Exempt Class: “[A]ll current and former non-exempt janitorial 25 employees who worked for Defendant in California at any time from August 13, 26 2014 through the date of Preliminary Approval of the Settlement.” 27 / / / 28 / / / 1 b. Waiting Time Penalties Subclass: “[A]ll members of the Non-Exempt 2 Class who separated from their employment with Defendant at any time from August 3 13, 2015 through the date of Preliminary Approval of the Settlement.” 4 3. CLASS COUNSEL, CLASS REPRESENTATIVES, AND 5 SETTLEMENT ADMINISTRATOR: Pursuant to Federal Rule of Civil Procedure 23, 6 the Court PRELIMINARILY CERTIFIES, for settlement purposes only, Plaintiffs 7 Marta L. Ceron De Orozco and Emma Barcenas as Class Representatives and Graham S.P. 8 Hollis, Vilmarie Cordero, and David Lin of GrahamHollis APC as Class Counsel. 9 Additionally, the Court APPROVES AND APPOINTS Rust Consulting as the Settlement 10 Administrator. 11 4. NOTICE AND FLSA OPT IN: The Court PRELIMINARILY 12 APPROVES the form and substance of both (a) the Proposed Notice set forth in Exhibit 13 A to the Settlement Agreement, see generally Proposed Notice; and (b) the FLSA 14 Collective Action Member Consent To Join Form as set forth in Exhibit B to the Settlement 15 Agreement. See generally FLSA Opt In. The form and method for notifying the Class 16 Members of the Settlement Agreement and its terms and conditions satisfy the 17 requirements of Federal Rules of Civil Procedure 23(c)(2)(B) and 23(e). The Court further 18 concludes that the Notice Procedure constitutes the best notice practicable under the 19 circumstances. As provided in the Settlement Agreement, the Settlement Administrator 20 SHALL PROVIDE notice to the Class Members and respond to Class Member inquiries. 21 Within ten (10) business days of the date of this Preliminary Approval Order, Defendant 22 SHALL PROVIDE the Settlement Administrator with the Employee List. Within 23 fourteen (14) calendar days of receiving the Employee List, the Settlement Administrator 24 SHALL DISSEMINATE the Notice and FLSA Opt In in the form and manner provided 25 in the Proposed Settlement Agreement. 26 5. REQUESTS FOR EXCLUSION AND FLSA OPT-IN DEADLINE: 27 Requests for Exclusion from the Settlement and FLSA Opt In Forms must be submitted to 28 the Settlement Administrator postmarked or faxed no later than sixty (60) calendar days 1 after the initial mailing of the Notice and FLSA Opt In to the Class Members. Class 2 Members who do not submit a timely and valid Request for Exclusion from the Settlement 3 on or before the response deadline shall be Participating Class Members bound by all terms 4 of the Settlement and any Final Approval Order entered in this Action. 5 6. OBJECTIONS: Objections to the Settlement must be mailed to the Court 6 and Settlement Administrator as instructed in the Notice, postmarked no later than sixty 7 (60) calendar days after the initial mailing of the Notice and FLSA Opt In to the Class 8 Members. To be valid, the Notice of Objection: (a) must contain the full name, address 9 and last four digits of the social security number of the Class Member; and (b) must be 10 signed by the Class Member. The Notice of Objection should also state the basis for the 11 objection and whether the Class Member intends to appear at the Final Approval Hearing. 12 7. FINAL APPROVAL HEARING: The Court SETS a Final Approval 13 Hearing on Thursday, December 17, 2020 at 1:30 p.m. in Courtroom 4D of the Edward J. 14 Schwartz United States Courthouse, 221 W. Broadway, San Diego, CA 92101, to consider: 15 a. the fairness, reasonableness, and adequacy of the Settlement Agreement; 16 b. Plaintiffs’ request for an award of attorneys’ fees and costs; 17 c. the Class Representative Service Awards; 18 d. dismissal with prejudice of this action with respect to Defendant; and 19 e. the entry of Final Judgment in this action. 20 At the Final Approval Hearing, the Parties also shall be prepared to update the Court as to 21 any new developments, including any untimely submitted opt-ins, requests for exclusion, 22 and/or objections and any other issues as the Court deems appropriate. The date and time 23 of the Final Approval Hearing SHALL BE INCLUDED in the Notice to be mailed to all 24 Class Members 25 8. MOTION FOR FINAL APPROVAL OF CLASS AND COLLECTIVE 26 ACTION SETTLEMENT: No later than sixteen (16) Court days before the Final 27 Approval Hearing, the Parties SHALL FILE a Motion for Final Approval of Class and 28 Collective Action Settlement. The Motion SHALL INCLUDE AND ADDRESS any 1 objections or responses received as of the filing date. In addition to the class certification 2 and settlement fairness factors, the Motion SHALL ADDRESS the number of putative 3 Class Members who have opted out and the corresponding claim value. The Motion also 4 SHALL ADDRESS the number of putative Subclass Members who have opted into the 5 FLSA collective and the corresponding claim value. 6 9. APPLICATION FOR ATTORNEYS’ FEES, COSTS, AND CLASS 7 REPRESENTATIVE SERVICE AWARDS: No later than sixteen (16) Court days 8 before the Final Approval Hearing, Class Counsel SHALL FILE an application for 9 attorneys’ fees, costs, and Class Representative Service Awards. Class Counsel SHALL 10 PROVIDE documentation detailing the number of hours incurred by attorneys in litigating 11 this action, supported by detailed time records, as well as hourly compensation to which 12 those attorneys are reasonably entitled. Class Counsel SHALL ADDRESS the 13 appropriateness of any upward or downward departure in the lodestar calculation, as well 14 as reasons why a percentage-of-the-fund approach to awarding attorney fees may be 15 preferable and the appropriateness of any upward or downward departure from the 25% 16 benchmark. Class Counsel SHALL BE PREPARED to address any questions the Court 17 may have regarding the application for fees at the Final Approval Hearing. 18 10. MISCELLANEOUS PROVISIONS: In the event the Settlement does not 19 become effective in accordance with the terms of the Settlement Agreement, or the 20 Settlement is not finally approved or is terminated, cancelled, or fails to become effective 21 for any reason, this Order SHALL BE rendered null and void and SHALL BE vacated, 22 and the Parties SHALL REVERT to their respective positions as of the commencement 23 of the litigation. 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 1 11. SCHEDULE: The Court orders the following schedule for further 2 proceedings: 3 EVENT DEADLINE 4 Defendant to provide Settlement 10 business days after entry of 5 Administrator with Employee this Order List 6 7 Settlement Administrator to mail 14 calendar days after receiving Notice to Class Members the Class Data 8 9 Objections/Exclusion Deadline 60 calendar days after mailing of Notice 10 11 FLSA Opt In Deadline 60 calendar days after mailing of the Notice 12 13 Settlement Administrator to 7 calendar days after the provide the Parties notice of the Objection/Exclusion Deadline 14 valid Request of Exclusion letters 15 and Objections received 16 Deadline for Defendant to 10 business days after Settlement 17 exercise its option to cancel the Administrator notifies the Parties Settlement if 5% or more of the of the number of valid and timely 18 Class Members submit a timely requests for exclusion 19 and valid Request for Exclusion 20 Deadline for Settlement 25 calendar days prior to Final 21 Administrator to provide Approval Hearing declaration of due diligence 22 23 Deadline for Class Counsel to file No later than 16 Court days prior Plaintiffs’ Motion for Final to the Final Approval Hearing 24 Approval of Class and Collective Date 25 Action Settlement and Award of Attorney’s Fees and Costs and 26 Class Representative Service 27 Award 28 2 3 IT IS SO ORDERED. 4 5 Dated: July 22, 2020 psi L. Lo meeaitie- 6 on, Janis L. Sammartino United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28