Alkady v. First Transit, Inc. ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ANDREW ALKADY, Case No.: 16-cv2291-L-BGS 12 Plaintiff, ORDER (1) GRANTING 13 v. PLAINTIFF'S MOTION FOR FINAL APPROVAL OF CLASS ACTION 14 FIRST TRANSIT, INC., SETTLEMENT; (2) GRANTING IN 15 Defendant. PART MOTION FOR ATTORNEYS’ FEES, COSTS, AND CLASS 16 REPRESENTATIVE’S INCENTIVE 17 AWARD; AND (3) DISMISSING ACTION 18 19 [ECF Nos. 69, 70] 20 21 In this class action alleging wage and hour violations on behalf of non-exempt 22 fixed-route bus drivers at Defendant's Orange County Transportation Authority locations 23 in Santa Ana and Irvine, Plaintiff filed unopposed motions for final approval of class 24 action settlement and for attorneys’ fees, costs, and class representative’s incentive 25 award. (ECF nos. 69 (“Fee Motion”), 70 (“Settlement Approval Motion,” together 26 “Motions”).) No objections have been received. Having read and considered the 27 Motions, including supporting declarations, exhibits, and Settlement Agreement in light 28 / / / 1 of prior proceedings in this action, and given no objection or opposition to the Motions, 2 the Settlement Approval Motion is granted, and the Fee Motion is granted in part. 3 I. BACKGROUND 4 In the operative first amended complaint (ECF no. 9 (“Am. Compl.”)), Plaintiff 5 alleges failure to pay minimum and overtime wages, failure to provide meal periods and 6 rest breaks, failure to provide accurate itemized wage statements, failure to timely pay all 7 wages due upon termination, violation of the Unfair Competition Law, Cal. Bus. & Prof. 8 Code §§ 17200 et seq. (“UCL”), and a cause of action pursuant to the Private Attorneys 9 General Act of 2004, Cal. Lab. Code §§ 2698 et seq. ("PAGA"). After investigating 10 Plaintiff's claims through formal and informal discovery, and fully briefing a class 11 certification motion (ECF no. 43), the parties entered into the First Amended Joint 12 Stipulation of Class Action Settlement, which is presented for final approval. (ECF no. 13 70-2, Dec. of Jessica L. Campbell in Supp. of Mot. for Final Approval of Class Action 14 Settlement Ex. 1 (“Settlement Agreement”).) 15 This action was removed from State court. This court has subject matter 16 jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d). 17 In his motion for preliminary approval of class action settlement, Plaintiff 18 requested certification for and settled only the rest period claim under California Labor 19 Code § 226.7 and three derivative claims for inaccurate wage statements under § 226, 20 waiting time penalties under §§ 201-204, and unfair competition under the UCL on 21 behalf of the class and pursuant to PAGA. He proposed to dismiss the remaining claims 22 alleged in the Amended Complaint without prejudice as to the class and partially release 23 them as to himself. (Cf. Settlement Agreement Art. I(o) with Art. I(j) and (gg) &§§5.01, 24 5.02.) 25 The Settlement Agreement provides for Defendant’s payment of a non- 26 reversionary Gross Settlement Amount of $397,500 to be distributed as follows: (i) 27 settlement administration expenses not to exceed $18,500; (ii) class counsel litigation 28 costs not to exceed $11,000; (iii) Plaintiff’s incentive award not to exceed $10,000; (iv) 1 $15,000 to the California Labor and Workforce Development Agency (“LWDA”) for the 2 PAGA claim; and (v) class counsel’s attorneys’ fees not to exceed $132,500. What 3 remains of the Gross Settlement Amount after the foregoing distributions is defined as 4 the Net Settlement Amount, of which 37.5% is to be designated as the Waiting Time 5 Penalty Award distributed to the subclass members in equal shares. The remaining 6 62.5% is to be distributed to the class members pro rata based on the number of 7 Qualifying Workweeks, as the term is defined in the Notice and Settlement Agreement. 8 Any returned or uncashed settlement checks are to be remitted to the California State 9 Controller’s Unclaimed Property Fund to be held in the name of the class member. (See 10 Settlement Agreement §§ 4.11(c)-(g).) In exchange, the class members are to release 11 their claims based on the alleged rest break violations. (See id. § 5.01 & Art. I(gg).) 12 On November 13, 2020, the court granted Plaintiff’s preliminary approval motion. 13 (ECF no. 68.) On a preliminary basis the court certified a settlement class, found that the 14 proposed settlement was fair, adequate, and reasonable, and approved the content and 15 method of distribution of the proposed notice of class certification and settlement. (Id.) 16 The court appointed Plaintiff as the class representative, his counsel as the class counsel, 17 and ILYM Group, Inc. (“ILYM”) as the settlement administrator. (Id.) 18 The court-approved notice was distributed on December 14, 2020 by First Class 19 U.S. Mail to 1,114 putative class members at the addresses provided by Defendant and 20 verified by ILYM. (ECF no. 70-3, Supp. Dec. of Madely Nava Regarding Notice and 21 Settlement Administration (“Supp. Nava Dec.”) and Ex. A (“Notice”).) The addresses of 22 returned notices were updated, and the notices were re-mailed by First Class U.S. Mail. 23 (Supp. Nava Dec. at 2.) The due date for exclusions and objections was February 17, 24 2021. (Notice at 4.) On January 8, 2021, Plaintiff filed his Fee Motion, and on March 1, 25 2021, he filed his Settlement Approval Motion. Out of 1,114 putative class members, 63 26 notice packets were ultimately deemed undeliverable. (Supp. Nava Dec. at 2.) Two 27 members excluded themselves. (Id.) No class members have objected or disputed their 28 estimated individual settlement amounts. (Id. at 3.) 1 II. DISCUSSION 2 A. Class Certification and Notice 3 This action meets the class certification requirements of Federal Rule of Civil 4 Procedure 23(a) and (b)(3). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997); 5 see also id. at 620-27. The class is sufficiently numerous. According to Plaintiff, his rest 6 break claims arise out of Defendant’s class-wide policies and practices. For example, 7 Defendant maintained a common practice of failing to authorize or permit class members 8 to take rest periods and failed to pay minimum wages for an additional hour of 9 compensation for missed rest periods as required by Labor Code § 226.7.1 Plaintiff 10 contends that this practice is apparent from Defendant’s own time and pay records. 11 Accordingly, the legal and factual issues are sufficiently uniform to meet the 12 commonality and predominance requirements. Plaintiff is a former employee whose rest 13 break claims are typical of the class and the subclass. Plaintiff and his counsel have 14 demonstrated they can adequately represent the absent class members. Finally, the court 15 finds that maintenance of this action as a class action is superior to individual litigation. 16 The Notice distributed to the putative class members satisfies the requirements of 17 due process and Rule 23(c)(2), (e)(1),2 and was the best notice practicable under the 18 circumstances. 19 For purposes of the Settlement Agreement the court certifies a class (“Class”) 20 defined as: 21 All current and former employees employed by First Transit as non-exempt fixed route bus drivers at First Transit’s Orange County Transportation 22 Authority locations in Santa Ana and Irvine, California at any time during 23 the time period of May 15, 2015 through October 2, 2018. 24 25 26 1 All references to “Labor Code” are to the California Labor Code. 27 2 All references to “Rule” are to Federal Rules of Civil Procedure. 28 1 For purposes of the Settlement Agreement the court also certifies a Waiting Time 2 Penalty subclass comprised of all members of the Class whose employment with 3 Defendant ended at any time during the period of May 15, 2015 through October 2, 2018 4 (“Subclass”). 5 Paula Rogers and Vincent Huynh requested exclusion from this class action. 6 (Supp. Nava Dec. at 2.) Accordingly, they are excluded from the Class and the Subclass. 7 The court appoints Plaintiff Andrew Alkady as a class representative for settlement 8 purposes only pursuant to Rule 23(a)(4), Plaintiff's counsel Samuel A. Wong, Jessica L. 9 Campbell, Laura Birnbaum, and Simon Kwak as counsel for the Class and Subclass 10 ("Class Counsel") pursuant to Rule 23(g) for settlement purposes only, and ILYM as the 11 settlement administrator. Class Counsel are authorized to act on behalf of class members 12 with respect to all acts or consents required by, or which may be given pursuant to, the 13 Settlement Agreement and such other acts reasonably necessary to consummate the 14 settlement. 15 B. Settlement Fairness 16 "[S]ettlement of class actions present[s] unique due process concerns for absent 17 class members [in part because] class counsel may collude with the defendants, tacitly 18 reducing the overall settlement in return for a higher attorney's fee." In re Bluetooth 19 Headset Prod. Liability Litig., 654 F.3d 935, 946 (9th Cir. 2011); see also Evans v. Jeff 20 D., 475 U.S. 717, 733 (1986) (noting the possibility of tradeoff between merits relief and 21 attorneys' fees often implicit in class action settlement negotiations.)3 The court's role in 22 reviewing class action settlements "is to police the inherent tensions among class 23 representation, defendant's interests in minimizing the cost of the total settlement 24 / / / 25 26 27 3 Unless otherwise noted, internal quotation marks, citations, and footnotes are 28 1 package, and class counsel's interest in fees." Staton v. Boeing Co., 327 F.3d 938, 972 2 n.22 (9th Cir. 2003); see also Bluetooth, 654 F.3d at 946. 3 In determining whether a class action settlement is fair, adequate, and reasonable, 4 the court considers whether: 5 (A) the class representatives and class counsel have adequately represented the class; 6 (B) the proposal was negotiated at arm's length; 7 (C) the relief provided for the class is adequate, taking into account: (i) the costs, risks, and delay of trial and appeal; 8 (ii) the effectiveness of any proposed method of distributing relief 9 to the class, including the method of processing class-member claims; 10 (iii) the terms of any proposed award of attorney's fees, including 11 timing of payment; and (iv) any agreement required to be identified under Rule 23(e)(3); 12 and 13 (D) the proposal treats class members equitably relative to each other. 14 15 Fed. R. Civ. Proc. 23(e)(2). 16 After extensive formal and informal discovery, including voluminous document 17 productions, two depositions, and a fully briefed class certification motion, the Class 18 Counsel had sufficient information to negotiate a fair settlement. According to Plaintiff’s 19 representations, which are uncontradicted by the record, the settlement was negotiated at 20 arm’s length. 21 The Class Counsel’s requested fees and costs totaling approximately $140,000 and 22 Plaintiff’s requested incentive award of $10,000 are relatively high in relation to the 23 Gross Settlement Amount of $397,5000. However, these requests are not so large as to 24 raise questions regarding the integrity of the settlement. Further, they are subject to court 25 approval to ensure reasonableness. See Bluetooth, 654 F.3d at 942; Rodriguez v. West 26 Publ'g Corp., 563 F.3d 948, 958 (9th Cir. 2009). If the court awards less, the Settlement 27 Agreement requires the difference to be distributed to the class members. (See 28 / / / 1 Settlement Agreement Art I(q) (“No part of the Gross Settlement Amount shall revert to 2 Defendant.”); see also id. § 4.11(b).) 3 The settlement represents a substantial compromise of the maximum recovery 4 available to the Class and Subclass if they fully prevailed on the claims they are settling 5 and proved all of the claimed damages and penalties. The Gross Settlement Amount 6 represents approximately 10% of the maximum possible recovery. However, in light of 7 the expense, delay, and uncertainty of further litigation, the settlement confers adequate 8 benefits upon the Class and Subclass. 9 Each member of the Class is to receive his or her pro rata share for the claims 10 arising from the alleged rest break violations during employment. The average estimated 11 individual payment is $119.92. The estimated payments range from $1.85 to $327.79. 12 (Supp. Nava Dec. at 3-4.) Consistent with Labor Code §§ 201-204, the Waiting Time 13 Penalty Award is to be distributed in equal shares. Each of the 708 members of the 14 Subclass will receive an estimated payment of $113.01. (Id. at 3.) The proposed 15 settlement treats the class members equitably relative to each other. 16 The class members will not have to file a claim to receive a distribution. The 17 information necessary to calculate each member’s individual payment and the estimated 18 individual payment were confirmed in the Notice, subject to each class member’s right to 19 dispute. (Notice at 2.) None of the class members disputed the amounts disclosed in the 20 Notice. (Supp. Nava Dec. at 3.) The class members will receive their payments by check 21 sent by First Class U.S. Mail. (Settlement Agreement §4.11(g); Notice at 3.) This 22 method of distribution is adequate. 23 ILYM requests a payment of $17,838 for notice and settlement administration 24 services. (ECF no. 69-3, Dec. of Madely Nava Regarding Notice and Settlement Admin. 25 at 2 and Ex. 1.) This is less than the estimated amount disclosed in the Notice. (Cf. 26 Notice at 2.) Based on review of the record, including ILYM’s detailed invoice, the court 27 finds the amount reasonable. 28 / / / 1 The court finds that the PAGA amount in the sum of $20,000, of which $15,000 is 2 to be distributed to the LWDA and $5,000 to the Class, is reasonable. See Cal. Labor 3 Code § 2699(l)(2). 4 The relevant government agencies have been notified of the settlement pursuant to 5 28 U.S.C. § 1715 and Labor Code § 2699(l). (See ECF nos. 66 & 64-3.) The parties 6 have not reported any objections from the agencies. 7 Based on the foregoing, the court finds that Plaintiff and Class Counsel have 8 adequately represented the Class and the Subclass. The relief provided by the Settlement 9 Agreement is adequate under the circumstances of this case. Accordingly, the Settlement 10 Agreement is approved pursuant to Rule 23(e)(2) as fair, reasonable, and adequate. 11 C. Class Counsel Fees 12 The Class Counsel seek $ 132,500 in attorneys' fees. The Settlement Agreement 13 allows for this amount without objection from Defendant, and the request was noticed to 14 the class. (Settlement Agreement § 4.11(c); Notice at 2.) 15 "[A]ttorneys' fees and costs may be awarded in a certified class action where so 16 authorized by law or the parties' agreement." Bluetooth, 654 F.3d at 941 (citing Rule 17 23(h)). “The award of attorneys’ fees in a class action settlement is often justified by the 18 common fund or statutory fee-shifting exceptions to the American Rule, and sometimes[, 19 as here], by both.” Id. Labor Code § 226(e) makes an award of reasonable attorney's 20 fees mandatory to an employee suffering an injury cognizable under § 226(a). See 21 Harrington v. Payroll Entm't Servs., Inc., 160 Cal.App.4th 589 (2008). In addition, 22 Labor Code § 2699(g)(1) provides for attorney's fees in PAGA actions. See also 23 Villacres v. ABM Indus., Inc., 189 Cal.App.4th 562, 578 (2010). 24 The courts have an independent obligation to ensure that the award, like the 25 settlement itself, is reasonable, even if the parties have already agreed to an amount." 26 Bluetooth, 654 F.3d at 941. Two different methods for calculating reasonable attorneys' 27 fees have been approved depending on the circumstances -- the lodestar method and 28 percentage-of-recovery method. Id. at 941-42. 1 Where a settlement produces a common fund for the benefit of the entire class, courts have discretion to employ either the lodestar method or the 2 percentage-of-recovery method. Because the benefit to the class is easily 3 quantified in common-fund settlements, we have allowed courts to award attorneys a percentage of the common fund in lieu of the often more time- 4 consuming task of calculating the lodestar. Applying this calculation 5 method, courts typically calculate 25% of the fund as the "benchmark" for a reasonable fee award, providing adequate explanation in the record of any 6 "special circumstances" justifying a departure. [] Though courts have 7 discretion to choose which calculation method they use, their discretion must be exercised so as to achieve a reasonable result. 8 9 Id. at 942; see also Staton v. Boeing Co., 327 F.3d 938, 965- 71 (9th Cir. 2003). 10 The Class Counsel seek attorneys' fees of $132,500, which amounts to one third of 11 the common fund of $397,500. They claim the lodestar is $259,036.50. 12 In setting the amount of common fund fees, the district court has a special duty to protect the interests of the class. On this issue, the class's lawyers 13 occupy a position adversarial to the interests of their clients. [T]he district 14 court must assume the role of fiduciary for the class plaintiffs. Accordingly, fee applications must be closely scrutinized. Rubber-stamp approval, even 15 in the absence of objections, is improper. 16 17 Staton, 327 F.3d at 970. 18 The court uses the lodestar method to cross-check whether awarding more than the 19 25% benchmark is reasonable. 20 The lodestar figure is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation (as supported by 21 adequate documentation) by a reasonable hourly rate for the region and for 22 the experience of the lawyer. Though the lodestar figure is “presumptively reasonable,” the court may adjust it upward or downward by an appropriate 23 positive or negative multiplier reflecting a host of “reasonableness” factors. 24 25 Bluetooth, 654 F.3d at 941-42. 26 The Class Counsel provided a declaration and billing summary in support of the 27 Fee Motion. (ECF no. 69-2.) They further supplemented the record as ordered by the 28 court. (See ECF nos. 73, 74, 74-1, 74-2.) Six attorneys contributed to the work on behalf 1 of the Class and Subclass. Samuel A. Wong is a partner with approximately twenty years 2 of legal experience mostly in the wages-and-hours litigation area. Included in the Class 3 Counsel’s lodestar calculation are 56.9 hours for his work. He charges $785 per hour. 4 Jessica A. Campbell is a partner with approximately ten years of legal experience mostly 5 in plaintiff-side class action litigation. She charges $650 per hour. The Class Counsel 6 include 254.2 hours for her work. The partners were assisted by three associates. Laura 7 Birnbaum has approximately eight years of legal experience. The Class Counsel include 8 25.2 hours at $350 per hour for her work. Simon Kwak has approximately seven years of 9 legal experience. Class Counsel include 100.8 hours at $400 per hour for his work. Ali 10 Carlsen has approximately eight years of legal experience. Through March 2017, the 11 Class Counsel were also assisted by former co-counsel Scott Cooper who at that time had 12 approximately 23 years of legal experience. Class Counsel do not seek compensation for 13 any work performed by Ms. Carlsen or Mr. Cooper. The Class Counsel’s lodestar 14 calculation of $259,036.50 comprises of approximately 437 hours at the average billing 15 rate of $592.5. 16 The court finds that a partner billing rate of $785 is unreasonably high in this 17 District for wages-and-hours litigation. The remaining hourly rates are reasonable. 18 Review of the billing records shows duplication of work between partners and between 19 partners and associates. 20 Upon review of the time records and case file, the court reduces the Class 21 Counsel’s lodestar calculation by $60,500. This is the result of reducing the $785 hourly 22 rate to $700 and eliminating unnecessary duplication in billing. Accordingly, the lodestar 23 is $198,536.5, representing 340.5 hours at an average hourly rate of $583.4 Even so, the 24 25 26 4 The lodestar does not include, and the Class Counsel do not request compensation 27 for, the work of two attorneys and the preparation of the Fee Motion or the Final Approval Motion. Because no billing records were submitted for this work, the court 28 1 Class Counsel request less than the lodestar. Although the requested sum of $132,500 is 2 more than the 25% benchmark, it is reasonable under the circumstances of this case. 3 D. Costs 4 The Class Counsel request reimbursement of $8,803.06 in litigation expenses and 5 court costs. The request is supported by an itemized list of costs and expenses, including 6 a $4,375 invoice paid to Data Analysis in connection with the expert opinion prepared in 7 support of class certification. (See ECF nos. 69-2, 74-2.) Other costs and expenses 8 include filing and process server fees, document delivery expenses, legal research 9 expenses, fees related to a document subpoena and a deposition, as well as travel 10 expenses. Upon review of the records provided, the court finds the request to be 11 reasonable. 12 E. Class Representative’s Incentive Award 13 Plaintiff requests an incentive award of $10,000.00. Incentive awards such as this 14 "are discretionary and are intended to compensate class representatives for work done on 15 behalf of the class, [and] to make up for financial or reputational risk undertaken in 16 bringing the action . . .." Rodriguez, 563 F.3d at 958-59. The amount of the award 17 should be related to the actual service or value the class representative provides to the 18 class. See id. at 960. Although incentive awards are "fairly typical in class actions," id. 19 at 958, they "should not become routine practice," lest the representatives be "tempted to 20 accept suboptimal settlements at the expense of the class members whose interests they 21 are appointed to guard." Radcliffe v. Experian Information Solutions Inc., 715 F.3d 1157, 22 1163 (9th Cir. 2013). 23 Plaintiff prosecuted this action on behalf of the class since inception. He conferred 24 with counsel and assisted them with the class certification motion. He provided them 25 with information and documents, submitted to a deposition, and reviewed Defendant’s 26 discovery. (ECF No. 69-4, Dec. of Andrew Alkady in Supp. of Fee Mot. at 1.) Plaintiff 27 exposed himself to the risk of liability for increased costs of litigation, delay in his own 28 / / / 1 recovery, and damage to his reputation with potential employers by filing this class 2 action. (Id. at 2.) 3 Nevertheless, Plaintiff’s declaration does not support the large sum he is 4 requesting. In comparison to the average class member recovery of $119.92 for rest 5 break violations and $113.01 for the waiting time penalties, Plaintiff’s request of $10,000 6 is excessive. The court finds that $3,000 adequately compensates him for his work on 7 behalf of the class. 8 III. ORDER 9 Based on the foregoing, the court orders as follows: 10 1. Plaintiff’s Final Approval Motion (ECF no. 70) is granted. 11 2. The parties and ILYM shall complete their respective duties and obligations 12 under the Settlement Agreement and this Order. ILYM shall treat all class member 13 personal information as confidential, not to be disclosed for any purpose other than as 14 provided by the Settlement Agreement. 15 3. ILYM shall receive $17,838 from the Gross Settlement Amount for its 16 notice and settlement administration services. 17 4. Plaintiff’s Fee Motion is granted in part and denied in part. 18 5. The Class Counsel shall receive $132,500 for their fees and $8,803.06 for 19 costs from the Gross Settlement Amount. 20 6. Plaintiff shall receive $3,000 from the Gross Settlement Amount as an 21 incentive award. 22 7. Plaintiff and the class members shall be deemed to have released their 23 claims as provided in the Settlement Agreement. 24 8. Without affecting the finality of this Order, the court retains continuing 25 jurisdiction over the interpretation, implementation, and enforcement of the Settlement 26 Agreement. 27 9. This action is hereby dismissed in its entirety. Plaintiff dismisses the 28 Amended Complaint as provided in the Settlement Agreement § 5.02 and Art. I(j). The 1 members dismiss without prejudice the first, second, and third causes of action 2 || alleged in the Amended Complaint and dismiss with prejudice the remaining causes of 3 || action. 4 IT IS SO ORDERED. 5 6 || Dated: May 20, 2021 : 1 fee fp 8 H . James Lorenz, 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28