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Alberto v. GMRI

November 12, 2008

DENISE ALBERTO, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
GMRI, INC., D/B/A OLIVE SETTLEMENT GARDEN, AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



MEMORANDUM AND ORDER RE: FINAL APPROVAL OF CLASS ACTION

Plaintiff Denise Alberto brought this putative class action lawsuit against defendant GMRI Inc. d/b/a Olive Garden alleging violations of (1) Industrial Welfare Commission Order 5-2001, Cal. Code Regs. tit. 8, § 11070, (2) the California Labor Code, Cal. Lab. Code §§ 201-203, 226, 1194, and (3) California's Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200-17210. Presently before the court is plaintiff's motion for final approval of class action settlement.

I. Factual and Procedural Background

Defendant is a large casual dining restaurant company that owns, operates, and manages the restaurant chain known as the Olive Garden. (Compl. ¶ 6.) From approximately November 2003 to September 2006, defendant employed plaintiff as a server at its Olive Garden location in Vallejo, California. (Id. ¶ 10.)

On July 31, 2007, plaintiff filed a putative class action complaint in state court claiming that defendant failed to (1) pay employees the legal minimum wage, (2) properly address "reporting time pay,"*fn1 and (3) provide accurate itemized statements. (Id. ¶ 2.) Pursuant to 28 U.S.C. § 1441(b), defendant subsequently removed the case to this court on September 12, 2007, based on diversity jurisdiction, 28 U.S.C. § 1332. (Def.'s Notice of Removal 3:5-6.)

After plaintiff amended her Complaint once as a matter of course, defendant filed motions to dismiss and/or strike portions of plaintiff's First Amended Complaint. Before the court could hear these motions, however, the parties engaged in early mediation and thereafter notified the court that they had agreed to settlement terms.

The parties filed a joint motion for preliminary approval of class action settlement on May 12, 2008. In its Order granting the preliminary approval of the settlement, the court provisionally certified the following class: "All servers, including server breakers, who work or worked for defendant at any Olive Garden restaurants in the state of California from August 3, 2003, through June 10, 2008." The court appointed plaintiff Denise Alberto as class representative, the law firm Westrup Klick LLP as class counsel, and Simpluris Inc. as settlement administrator. The court also approved the class claim form, exclusion form, and notice of settlement, and directed class counsel to file with the court, within thirty-one days prior to the final fairness hearing, the settlement administrator's declaration setting forth the services rendered, proof of mailing, and list of all class members who opted out of the settlement. The court set the final fairness hearing for October 26, 2008, at 2:00 p.m.

Due to certain concerns expressed by the court in its Order, the parties requested clarification regarding the class-distribution formula for the net payment and participated in two status conferences before the court. Pursuant to the court's Minute Order of July 7, 2008, the parties submitted an alternative proposed class-distribution formula and revised notice and claim forms. The court approved the revised notice and claim forms and continued the date of the final fairness hearing from October 27, 2008, to November 10, 2008, at 2:00 p.m.

After conducting the final fairness hearing and carefully considering the settlement terms, the court now addresses whether the class should receive final certification; whether the proposed settlement is fair, reasonable, and adequate; and whether class counsel's requests for attorneys' fees and costs, as well as an incentive payment for the named plaintiff, should be granted.

II. Discussion

The Ninth Circuit has declared that a strong judicial policy favors settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nevertheless, where, as here, "parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both [1] the propriety of the certification and [2] the fairness of the settlement." Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003).

In conducting the first part of its inquiry, the court "must pay'undiluted, even heightened, attention' to class certification requirements" because, unlike in a fully litigated class action suit, the court will not have future opportunities "to adjust the class, informed by the proceedings as they unfold." Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620 (1997); accord Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). The parties cannot "agree to certify a class that clearly leaves any one requirement unfulfilled," and consequently the court cannot blindly rely on the fact that the parties have stipulated that a class exists for purposes of settlement. Berry v. Baca, No. 01-02069, 2005 WL 1030248, at *7 (C.D. Cal. May 2, 2005); see also Amchem, 521 U.S. at 622 (observing that nowhere does Federal Rule of Civil Procedure 23 say that certification is proper simply because the settlement appears fair). In conducting the second part of its inquiry, the "court must carefully consider'whether a proposed settlement is fundamentally fair, adequate, and reasonable,' recognizing that'[i]t is the settlement taken as a whole, rather than the individual component parts, that must be examined for overall fairness....'" Staton, 327 F.3d at 952 (quoting Hanlon, 150 F.3d at 1026); see also Fed. R. Civ. P. 23(e) (outlining class action settlement procedures).

Procedurally, the approval of a class action settlement occurs in two stages. In the first stage of the approval process, "'the court preliminarily approve[s] the Settlement pending a fairness hearing, temporarily certifie[s] the Class..., and authorize[s] notice to be given to the Class.'" West v. Circle K Stores, Inc., No. 04-0438, 2006 WL 1652598, at *2 (E.D. Cal. June 13, 2006) (quoting In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 227 F.R.D. 553, 556 (W.D. Wash. 2004)). At the fairness hearing, after notice is given to putative class members, the court entertains any of their objections to (1) the treatment of this litigation as a class action and/or (2) the terms of the settlement. See Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989) (holding that prior to approving the dismissal or compromise of claims containing class allegations, district courts must, pursuant to Rule 23(e), hold a hearing to "inquire into the terms and circumstances of any dismissal or compromise to ensure that it is not collusive or prejudicial"). Following the fairness hearing, the court makes a final determination as to whether the parties should be allowed to settle the class action pursuant to the terms agreed upon. DIRECTV, Inc., 221 F.R.D. at 525.

A. Final Certification of the Class

A class action will only be certified if it meets the four prerequisites identified in Federal Rule of Civil Procedure 23(a) and additionally fits within one of the three subdivisions of Federal Rule of Civil Procedure 23(b). Although a district court has discretion in determining whether the moving party has satisfied each Rule 23 requirement, Califano v. Yamasaki, 442 U.S. 682, 701 (1979); Montgomery v. Rumsfeld, 572 F.2d 250, 255 (9th Cir. 1978), the court must conduct a rigorous inquiry before certifying a class. Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982); E. Tex. Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 403-05 (1977).

1. Rule 23(a)

Rule 23(a) restricts class actions to cases where (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). These requirements are more commonly referred to as numerosity, commonality, typicality, and adequacy of representation, respectively. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).

In the court's Order granting preliminary approval of the settlement, the court found that the putative class satisfied both the numerosity and commonality requirements of Rule 23(a); the court expressed some concern, however, as to whether class counsel had provided sufficient information to demonstrate typicality and adequacy of representation. Since the court is unaware of any changes that would alter its analysis as to numerosity and commonality, and because the parties indicated at the fairness hearing that they were unaware of any such developments, the court will proceed to evaluate typicality and adequacy of representation for purposes of final certification.

a. Typicality

Rule 23(a) requires that the "claims or defenses of the representative parties [be] typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). Typicality requires that named plaintiffs have claims "reasonably coextensive with those of absent class members," but their claims do not have to be "substantially identical." Hanlon, 150 F.3d at 1020. The test for typicality "'is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.'" Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citation omitted).

In this case, class counsel first obtained plaintiff's time records, payroll records, and schedules from defendant pursuant to initial disclosure obligations under Federal Rule of Civil Procedure 26. (Oct. 10, 2008 Poliner Decl. ¶ 3; id. Ex. 2.) In order to assess putative class claims prior to mediation, defendant also provided class counsel with approximately 10,850 pages of documents consisting of clock-in/clock-out reports, wage compensation reports, confidential data sheets, and weekly work schedules of 112 randomly selected putative class members. (Oct. 10, 2008 Poliner Decl. ¶ 4; id. Ex. 3.)

An analysis of plaintiff's records revealed that her hours worked per day during the relevant period varied from 4.95 to 5.56 hours for an average of 5.18 hours per day. (Id. ¶ 8.) Plaintiff provides that she would be eligible for "reporting time pay," therefore, on any day when she worked less than 2.59 hours, or less than one-half of her average workday. (Id.) Nine such incidents occurred for a total "reporting time" of 6.72 hours and reporting-time pay of $45.36 at the applicable wage rate. (Id. ¶ 9.) Over the relevant thirty-one month period, plaintiff had an average reporting time of 0.21 hours per month. (Id. ¶ 16.)

Regarding the 112 servers in the random sample, their average workdays ranged from 3.6 to 6.07 hours per day for a sample average of 4.77 hours per day. (Id. ¶ 15.) In a typical month, a server would have a total of 0.61 hours of reporting time.*fn2 (Id. ¶ 16.) Plaintiff provides that most servers in the sample worked four to five hours per day, like plaintiff. (Id. ¶ 15.) Also like plaintiff, servers in the sample had reporting-time incidents fairly infrequently, although all but two servers in the sample had at least some reporting-time incidents. (Id. 5 n.4, ¶ 11.)

For purposes of assessing typicality, these measures are somewhat problematic. To calculate the reporting time of the average server in the sample, plaintiff pooled all of the sample servers' reporting time and distributed it evenly using the average days worked per month and the average frequency of reporting incidents for the entire sample. See supra note 2. All of this averaging effectively eliminates any variation that may exist within the sample. Measures of variability, rather than central tendency, are needed to determine whether the reporting-time injury may be concentrated only in certain servers rather than incurred by the entire class. See generally Timothy C. Urdan, Statistics in Plain English 10 (2005) ("[F]or the same reason that the mean and median are useful, they can often be dangerous if we forget that a statistic such as the mean ignores a lot of information about the distribution, including the great amount of variety that exists in many distributions.").

The court finds, however, that the lack of measures of sample variability is not fatal. First, class counsel's qualitative description of the data suggests that plaintiff and the sample servers are fairly homogenous as to their typical workdays and frequency and extent of reporting-time injuries. (See Oct. 10, 2008 Poliner Decl. 5 n.4; id. ¶¶ 15, 11.) Moreover, the court finds no reason to believe that the injury in this case is correlated with any variable other than hours worked; by distributing the net payment according to hours worked during the relevant time period, therefore, awards are likely to be individualized to the injuries of each class member. (See id. ¶ 18.) This conclusion is bolstered by the absence of a single objection lodged with settlement administrator or at fairness hearing regarding the class-distribution formula for the net payment. (Hoffman Decl. Ex. E.). Accordingly, the court concludes that the putative class satisfies the typicality requirement.

b. Adequacy of Representation

Rule 23(a) requires "representative parties [who] will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). To resolve the question of legal adequacy, the court must answer two questions: (1) do the named plaintiff and her counsel have any conflicts of interest with other class members and (2) has the named plaintiff and her counsel vigorously prosecuted the action on behalf of the class? Hanlon, 150 F.3d at 1020.

In its Order granting preliminary approval of the settlement, the court was sufficiently able to inquire into the first question and found that the interests of the named plaintiff and her counsel did not conflict with those of the putative class members. Since the court is unaware of any changes that would affect this conclusion, and because the parties indicated at the fairness hearing that they were unaware of any such developments, the court will proceed to evaluate whether the named plaintiff and her counsel vigorously litigated this action on behalf of the class.

"Although there are no fixed standards by which'vigor' can be assayed, considerations include competency of counsel and, in the context of a settlement-only class, an assessment of the rationale for not pursuing further litigation." Hanlon, 150 F.3d at 1021. Class counsel's competency with respect to class action litigation is significant. Specifically, a thorough declaration submitted to the court lists several class action proceedings in both state and federal court in which class counsel served as either lead or co-counsel.*fn3 (May 9, 2008 Poliner Decl. ¶ 8.) Moreover, the majority of these class action proceedings resulted in approved settlements. (Id.)

Probing plaintiff and her counsel's rationale for not pursuing further litigation, however, is inherently more complex. "District courts must be skeptical of some settlement agreements put before them because they are presented with a'bargain proffered for... approval without the benefit of an adversarial investigation.'" Hanlon, 150 F.3d at 1022 (quoting Amchem, 521 U.S. at 620). This logic is certainly applicable here, as the parties have not conducted formal discovery and the record is devoid of adversarial briefs. Nonetheless, plaintiff's counsel offers documentation to support the contention that the settlement resulted from vigorous informal investigation and careful consideration of the risks of pursuing litigation.

As mentioned previously, class counsel analyzed plaintiff's time records, payroll records, and schedules. (Oct. 10, 2008 Poliner Decl. ¶ 3; id. Ex. 2.) Class counsel also obtained and analyzed approximately 10,850 pages of documents consisting of clock-in/clock-out reports, wage compensation reports, confidential data sheets, and weekly work schedules of 112 randomly selected putative class members. (Oct. 10, 2008 Poliner Decl. ¶ 4; id. Ex. 3.) These analyses facilitated extensive mediation between the parties, which was conducted by David A. Rotman, "a prominent mediator with a specialty in employment discrimination cases." Parker v. Foster, No. 05-0748, 2006 WL 2085152, at *1 (E.D. Cal. July 26, 2006). Class counsel, moreover, expended over 250 attorney-hours and 370 paralegal-hours in developing this case, for a total of $202,650 in legal fees and $10,237.78 in costs, although counsel is only requesting $150,000 and $10,000, respectively. (Oct. 10, 2008 Poliner Decl. ¶¶ 24-26; Poliner Supp. Decl. Ex. A.)

Accordingly, the court concludes that the absence of conflicts of interest and the vigor of counsel's representation satisfies ...


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