UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
November 17, 2009
ROSALBA SANDOVAL, INDIVIDUALLY, AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED CURRENT AND FORMER EMPLOYEES OF COURTYARD MARRIOTT AND THARALDSON EMPLOYEE MANAGEMENT, INC., PLAINTIFF,
THARALDSON EMPLOYEE MANAGEMENT, AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.
The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge
[Motion filed on July 28, 2009]
ORDER GRANTING PLAINTIFF'S MOTION FOR ORDER: (1) CONDITIONALLY CERTIFYING SETTLEMENT CLASS; (2) GRANTING PRELIMINARY APPROVAL TO PROPOSED CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION; (3) DIRECTING DISSEMINATION OF CLASS NOTICE AND CLAIM FORM TO CLASS; AND (4) SETTING FINAL APPROVAL HEARING DATE AND RELATED DATES [Link & Term Doc. Nos. 32 & 39]
On October 30, 2007 in the California Superior Court for the County of San Bernardino, Plaintiff Rosalba Sandoval ("Plaintiff") filed a putative class action Complaint against Defendants Courtyard Marriott ("Marriott") and Theraldson Employee Management Inc. ("Tharaldson" or "Defendant") with the following claims:
(1) Failure to Pay Overtime Compensation, Labor Code § 1194; (2) Unlawful Collection of Receipt of Wages Previously Paid and Failure to Indemnify for Expenditures in Discharge of Duties, Labor Code §§ 221, 2802; (3) Failure to Provide Required Meal Periods, Labor Code § 226.7; (4) Failure to Provide Required Rest Periods, Labor Code § 226.7; (5) Failure to Provide Accurate Statements and Maintain Required Records, Labor Code §§ 226, 1174; and (6) Unlawful Business Practices, Business and Professions Code § 17200. On April 9, 2008, Defendant Tharaldson Employee Management Inc. removed the case to this Court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). On July 8, 2008, pursuant to Federal Rule of Civil Procedure 41, Plaintiff dismissed Defendant Courtyard Marriott from the action.
On March 4, 2009, Plaintiff filed a "Notice of Settlement" as to all claims against Defendant Tharaldson. On July 28, 2009, Plaintiff filed a "Motion for Order: (1) Conditionally Certifying Settlement Class; (2) Granting Preliminary Approval to Proposed Class Action Settlement and Plan of Allocation; (3) Directing Dissemination of Class Notice and Claim Form to Class; and (4) Setting Final Approval Hearing Date and Related Dates" ("Motion"), the Declaration of Matthew J. Matern ("Matern Declaration"), a Stipulation of Class Action Settlement ("Stipulation"), and proposed Claim and Notice Forms. On August 7, 2009, Defendant Tharaldson filed a "Notice of Non-Opposition" to Plaintiff's Motion. During a hearing on August 24, 3009, the Court requested the parties file additional declarations. On September 3, 2009, Plaintiff filed the Declaration of Rosalva Sandoval ("Sandoval Decl.") and the Supplemental Declaration of Matthew J. Matern ("Matern Supplemental Decl.") in support of the Motion.
II. LEGAL STANDARD
A. Class Certification
Parties seeking class certification for settlement purposes must satisfy the requirements of Federal Rule of Civil Procedure 23 ("Rule 23"). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997). A court considering such a request should give the Rule 23 certification factors "undiluted, even heightened, attention in the settlement context." Id.
To bring a class action under Rule 23(a), a plaintiff must demonstrate: the class is so numerous that joinder of all members is impracticable ["numerosity"], (2) there are questions of law or fact common to the class ["commonality"], (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class ["typicality"], and (4) the representative parties will fairly and adequately protect the interests of the class ["adequacy of representation"].
In addition to these prerequisites, a plaintiff must satisfy one of the Rule 23(b) prongs to maintain a class action. Where, as here, a plaintiff moves for class certification under Rule 23(b)(3), the plaintiff must prove: the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum.*fn1
B. Preliminary Approval of Settlement
Rule 23(e) states: "The court must approve any settlement, voluntary dismissal or compromise of the claims, issues, or defenses of a certified class." Fed. R. Civ. P. 23(e)(1)(A). The court must hold a hearing and find that "the settlement... is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(1)(C). Review of a proposed settlement generally proceeds in two stages, a hearing on preliminary approval followed by a final fairness hearing. See Federal Judicial Center, Manual for Complex Litigation, § 21.632 (4th ed. 2004).
At the preliminary approval stage, a court determines whether a proposed settlement is "within the range of possible approval" and whether or not notice should be sent to class members. In re Corrugated Container Antitrust Litig., 643 F.2d 195, 205 (5th Cir. 1981); see also the purpose of a preliminary approval hearing is "to ascertain whether there is any reason to notify the class members of the proposed settlement and to proceed with a fairness hearing"); Manual for Complex Litigation § 21.632.
A. Certification of Settlement Class
In this Motion, Plaintiff seeks certification of the settlement class, described as: "all persons who were employed in any non-exempt position at any Courtyard by Marriott property ("Property") which was or is managed by Tharaldson in the State of California between October 30, 2003 and the Date of Preliminary Approval." (Settlement Stip. § 1.5.)
To establish, under Rule 23(a)(1), that joinder of all members is "impracticable," the plaintiff need not show that it would be "impossible" to join every class member. Haley v. Medtronic, Inc., 169 F.R.D. 643, 647 (C.D. Cal. 1996). There is no specific number requirement, as the court may examine the specific facts of each case. Ballard v. Equifax Check Servs., Inc., 186 F.R.D. 589, 594 (E.D. Cal. 1999). Indeed, courts have not required evidence of specific class size or identity of class members to satisfy the requirements of Rule 23(a)(4). Robidoux v. Celani, 987 F.2d 931, 935 (2d Cir. 1993).
Here, Plaintiff's counsel avers the settlement class consists of over one thousand current and former employees of Defendant. (See Matern Decl. ¶ 24; Mot. at 9.) This satisfies "numerosity" for purposes of Rule 23. See Ballard, 186 F.R.D. at 594.
Courts have construed Rule 23(a)(2)'s commonality requirement permissively. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). As the Ninth Circuit explained:
All questions of fact and law need not be common to satisfy the rule. The existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class.
Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).
Additionally, this Court, Pfaelzer, J., has stated "the commonality requirement is interpreted to require very little." In re Paxil Litigation, 212 F.R.D. 539, 549 (C.D. Cal. 2003). "[F]or the commonality requirement to be met, there must only be one single issue common to the proposed class." Haley, 169 F.R.D. at 648.
Here, Plaintiff lists nine "common questions." (Mot. at 10-11.) Plaintiff's Declaration and Matern's Supplemental Declaration substantiate Plaintiff's allegations. Matern's Supplemental Declaration discusses time record sampling analysis and other evidence indicating that "Defendant routinely required employees to work through meal and rest periods." (Matern Supplemental Decl. ¶¶ 8-9.) Plaintiff's Declaration states that she personally observed other employees who did not receive meal or rest breaks. (Sandoval Decl. ¶ 8.) This establishes an issue common to the proposed class. See Haley, 169 F.R.D. at 648. Accordingly, Plaintiff has met her burden of establishing "commonality" as required by Rule 23.
The Ninth Circuit in Hanlon explained that "representative claims are 'typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical." 150 F.3d at 1020. Thus, to find typicality, a "court does not need to find that the claims of the purported class representative are identical to the claims of the other class members." Haley, 169 F.R.D. at 649. The class representatives "must be able to pursue [their] claims under the same legal or remedial theories as the unrepresented class members." Paxil, 21 F.R.D. at 549.
Plaintiff provides evidence that her claims are typical of Class Members. Plaintiff's counsel analyzed a one-month-per-quarter sampling of Defendant's employee punch cards. (Matern Supplemental Decl. ¶ 10.) The average violation rate for the analyzed sample was 56.52 percent for Class Members for missed, short, or late meal breaks. (Id.) An analysis of Plaintiff's time cards during the entire period reflects a violation rate of 59.66 percent, which is similar to the Class Member violation rate. (Id.) This analysis indicates the claims for Plaintiff and the unrepresented Class Members arise from a similar factual basis, and according give rise to the same legal and remedial theories. See Paxil, 21 F.R.D. at 549. Accordingly, Plaintiff has established "typicality" under Rule 23.
4. Adequacy of Representation
Traditionally, courts have engaged in a two-part analysis to determine if the plaintiff has met the requirements of Rule 23(a)(4): (1) the class representative must not have interests antagonistic to the unnamed class members, and (2) the representative must be able to prosecute the action "vigorously through qualified counsel." Lerwill v. In-flight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978).
As explained above, class representative Sandoval shares the interests of the class members in obtaining compensation allegedly owed for missed meal breaks. Moreover, Sandoval personally participated in this lawsuit and has participated in all necessary proceedings. Accordingly, Sandoval is an adequate representative of the class.
Adequate representation also "'depends on the qualifications of counsel for the representatives, an absence of antagonism, a sharing of interests between representatives and absentees, and the unlikelihood that the suit is collusive.'" Paxil, 212 F.R.D. at 550. Courts determine the adequacy of counsel under Rule 23(g). See Fed. R. Civ. P. 23(g) (the court "must consider: (i) the work counsel has done in identifying or investigating potential claims in the action; (ii) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (iii) counsel's knowledge of the applicable law; and (iv) the resources that counsel will commit to representing the class."); see, e.g., Hill v. Merrill Gardens, L.L.C., No. 1:04CV-248, 1:05-CV-4, 2005 WL 2465250, at *3 (N.D. Ind. Oct. 6, 2005); Fed. R. Civ. P. 23 Advisory Committee Notes.
Here, Plaintiff's counsel investigated potential claims of the class by: (1) deposing Plaintiff; (2) deposing Todd Troyer, Defendant's then Director of Human Resources; (3) reviewing documents produced by Defendant; (4) reviewing and analyzing Defendant's representative sample timekeeping and payroll data; and (5) consulting with experts regarding Defendant's data. (See Matern Decl. ¶¶ 16-21.) Furthermore, Plaintiff provides evidence sufficient to demonstrate the qualifications of purported class counsel. (See Matern Decl. ¶¶ 4-15, 32 (discussing the resources and collective experience of purported class's law firm and the individual education and experience of purported class counsel).) Plaintiff, therefore, has established her counsel's "ability to fairly and adequately represent the interests of the class." Fed. R. Civ. P. 23(g)(1)(B).
Plaintiff also establishes an absence of collusion. The collusion inquiry "addresses the possibility the agreement is the result of either overt misconduct by the negotiators or improper incentives for certain class members at the expense of other members of the class." In re M.L. Stern Overtime Litigation, No. 07-CV-0118-BTM, 2009 W.L. 995864, at *5 (S.D. Cal. Apr. 13, 2009), citing Staton v. Boeing Co., 327 F.3d 938, 960 (9th Cir. 2003). Here, the settlement was reached with the supervision and assistance of an experienced independent mediator, Christine Masters. (Mot. at 4.) Thus, there is no appearance of collusion. (See Matern Supplemental Decl. ¶¶ 2, 7-10.)
Accordingly, Plaintiff establishes "adequacy of representation" under Rule 23.
5. Predominance of Common Questions of Law or Fact and Superiority of a Class Action
Plaintiff's Complaint alleges that a class action is superior to other available means for adjudicating Class Members' claims. As noted above, Plaintiff's counsel analyzed a sampling of Class Members' time cards and compared the violation rate to Plaintiff's violation rate. (Matern Supplemental Decl. ¶ 10.) This analysis illustrates that resolution of the Class Members' claims and Plaintiff's claim involve common issues -- namely, whether Defendant failed to permit employees to take meal and rest breaks and to compensate employees for all hours worked. This question of fact predominates over individual questions and is common to all class members. Accordingly, Plaintiff meets her burden of showing "predominance of common questions of fact or law" and the "superiority of a class action" under Rule 23.
Based on the foregoing, the Court GRANTS Plaintiff's Motion as to conditional class certification.
B. Fairness and Adequacy of Settlement Agreement
The Court now turns to Rule 23(e) factors to determine whether the Settlement Agreement is adequate and reasonable. In determining whether a settlement is fair, reasonable, and adequate, courts balance several factors, including: the strength of plaintiffs' case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed, and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant;*fn2 and the reaction of the class members to the proposed settlement.
Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1291 (9th Cir. 1992), citing Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 625 (9th Cir. 1982).
Here, the proposed settlement calls for a total maximum settlement consideration of $750,000 (Settlement Stip. § 1.19), from which the parties propose to deduct the following: (1) 30% of the maximum settlement consideration for attorneys' fees and actual litigation expenses, which collectively will not exceed 35%, or $262,500 (Settlement Stip. § 7.1); (2) $15,000 for the class representative; and (3) claims administrations costs not to exceed $35,000 (Settlement Stip. § 8.1). By the Court's own calculation, after these deductions, the estimated remaining settlement amount ("Net Settlement Amount") will be approximately $437,500.
The Settlement Agreement proposes to divide the Net Settlement Amount among all Class Members in proportion to the gross wages earned by the Class Member during the specified period. (Settlement Stip. § 6.2.1.) The Class Members will receive a share of the Net Settlement Amount equal to his or her gross pay divided by the aggregate gross pay for all Class Members, multiplied by the Net Settlement Amount. (Id.) Within 21 days of the date of preliminary approval by the Court, Defendant will provide to the Claims Administrator, a database containing the name, last known address, and Social Security number of each Class Member. (Settlement Stip. § 9.1.) Defendant will also provide personnel and payroll records for determining Class Members' gross compensation during the class period. (Settlement Stip. § 9.3.3.) These records will be presumed determinative with respect to whether each employee is a Class Member and the data regarding gross pay. (Id.)
1. Arms-length negotiations
The parties engaged in negotiations, including a 12-hour mediation session presided over by an experienced mediator, Christine Masters, after which the parties reached an agreement. (Mot. at 4-5; Matern Decl. ¶¶ 22- 23; Matern Supplemental Decl. ¶ 4.) The Court is satisfied the Settlement Agreement is the product of arms-length negotiation. (Id.)
2. Strength of Plaintiff's Case and the Risk, Expense, Complexity, and Likely Duration of Further Litigation
Plaintiff states the primary strength of the case is the time record sampling showing a violation rate of 56.52 percent for the Class Members. (Matern Decl. ¶ 10.) Plaintiff argues that the Settlement Agreement provides Class Members with "the benefit of removing the risks, delay and uncertainties of litigation." (Matern Decl. ¶ 26.)
Plaintiff, although confident in her position, notes several risks and weaknesses in her case. Plaintiff contends that Defendants have contested liability and class certification vigorously in this case. (Matern Supplemental Decl. ¶ 4; Settlement Stip. ¶¶ 3.3-3.4.) Moreover, Plaintiff argues that proof of rest period and meal break violations is particularly difficult because it requires production of significant facts. (Matern Supplemental Decl. ¶¶ 25-26.) Plaintiff also points to risks inherent in litigation, acknowledging the challenges of obtaining class certification and of proving liability and damages, as well as the possibility that Defendant will raise meritorious defenses to Plaintiff's claims. (Stipulation ¶ 3.4.) Settling the case, Plaintiff reasons, would "avoid many more documents being requested, reviewed and analyzed with more expense in having [Plaintiff's] expert analyze the documents[,]... obtain[ing] the contact information of the absent class members, contact[ing] them and obtain[ing] numerous declarations[,]... [and] send[ing] out questionnaires to absent members at great expense." (Matern Supplemental Decl. ¶ 11.) For the foregoing reasons, the Court finds this factor weighs in favor of preliminary approval.
3. The Amount Offered in Settlement
The amount offered in settlement is $750,000. (Mot. at 1, 5-8; Stipulation § 1.19.) In exchange for the settlement, Plaintiff and the putative class agree to release all of their claims against Defendant. (Stipulation §§ 1.27, 1.28.) The amount offered in settlement supports preliminary approval. Considering the present value of the settlement amount, the probability of lengthy litigation in the absence of a settlement, the risk that Plaintiff and the Class Members would not have been able to succeed at trial, and the risk that a jury could award damages less than $750,000, the settlement amount is within the range of reasonableness. Accordingly, the Court finds this factor weighs in favor of preliminary approval.
4. The Extent of Discovery Completed, and the Stage of the Proceedings
This factor requires the Court to evaluate whether "the parties have sufficient information to make an informed decision about settlement." Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1239 (9th Cir. 1998).
Here, Plaintiff demonstrates that class counsel conducted the following discovery: (1) deposing Plaintiff; (2) deposing Todd Troyer, Defendant's then Director of Human Resources; (3) reviewing documents produced by Defendant; (4) reviewing and analyzing Defendant's representative sample timekeeping and payroll data; and (5) consulting with experts regarding Defendant's data. (See Matern Decl. ¶¶ 16-21.) Accordingly, the Court finds that the parties possessed sufficient information to make an informed decision about the settlement.
No trial date has yet been set in this case, and it appears the action has reached a settlement at an early phase of the litigation. In other words, this is not a case where dozens of depositions have been taken and thousands of pages of documents reviewed before the parties reached a settlement. The parties have not litigated the issue of class certification, nor have they filed any Motions with the Court, save the present one.
Thus, this factor weighs in favor of finding the Settlement Agreement reasonable. Plaintiff has demonstrated that the parties have spent sufficient time on the action to allow an informed decision about settlement, but not so much time as to deplete the common fund. Accordingly, this factor supports preliminarily approving the settlement.
5. Experience and Views of Counsel
Plaintiff submits a detailed declaration by her counsel demonstrating his extensive experience litigating wage and hour class actions. (See Matern Decl. ¶¶ 4-15, 32.) In the declaration, Plaintiff's counsel states his opinion that the Settlement is reasonable and fair. (Id. at ¶ 32.) This factor weighs in favor of the reasonableness of the Settlement Agreement.
6. Reaction of Class Members to the Proposed Settlement
Plaintiff provides no evidence regarding Class Members' reactions to the proposed settlement. Plaintiff submits a supplemental declaration from her counsel stating that counsel has not received Class Members' contact information and thus cannot determine Class Members' reactions to the Settlement at this time. (See Matern Supplemental Decl. ¶ 12.) While the Motion does not mention this factor, the situation described by Plaintiff is not unusual. Thus, this factor neither weighs in favor of nor against reasonableness.
7. Attorneys' Fees and Incentive Payment for Named Plaintiff
The Motion and Stipulation indicate Plaintiff will seek allocation of settlement funds for attorneys' fees and for an incentive payment. For a settlement to be fair and adequate, "a district court must carefully assess the reasonableness of a fee amount spelled out in a class action settlement agreement." Staton, 327 F.3d at 963.
a) Attorneys' Fees
At this preliminary stage, the plan for distributing the settlement appears sufficiently fair for conditional approval. The attorneys' fees distribution, however, does not pass muster yet. This will not prevent the Court from preliminarily approving the settlement, but Plaintiff must make a further showing for final approval.
Plaintiff asserted a claim under California law, and California law governs the award of attorneys' fees. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). California recognizes the common fund doctrine for the award of attorneys' fees to prevailing plaintiffs whose efforts result in creation of a fund benefitting others. Serrano v. Priest, 20 Cal. 3d 25, 35 (1977). Under both California and Ninth Circuit precedent, a court may exercise discretion to award attorneys' fees from a common fund by applying either the lodestar method*fn3 or the percentage-of-the-fund method.*fn4 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 253 (2001); Fischel v. Equitable Life Assurance Soc'y of U.S., 307 F.3d 997, 1006 (9th Cir. 2002), citing Vizcaino, 290 F.3d at 1047. "Irrespective of the chosen method, 'the district court should be guided by the fundamental principle that fee awards out of common funds be 'reasonable under the circumstances.'" Alberto v. GMRI. Inc., 252 F.R.D. 652, 667 (E.D. Cal. 2008), citing In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1295 (9th Cir. 1990).
Plaintiff seeks to employ the latter procedure, whereby Plaintiff's counsel would recover 30% of the up to $750,000 settlement fund ($225,000) for attorneys' fees, plus costs, the total of which will not exceed 35% of the total settlement fund, or $262,500, for attorneys' fees and costs. (Stipulation § 7.1.) Plaintiff argues this amount is reasonable because it is "consistent with the Ninth Circuit's standard." (Mot. at 8.)
The Court, however, disagrees with Plaintiff's assertion that 30% is reasonable. The Ninth Circuit's benchmark is 25%, not 30%. See Hanlon, 150 F.3d at 1029 ("This circuit has established 25% of the common fund as a benchmark award for attorney fees."); Paul, Johnson, Alston & Hunt v. Graulty, 866 F.2d 268, 272 (9th Cir. 1989) (the 25% benchmark can be adjusted upward or downward "to account for any unusual circumstances[,]" but the justification for adjustment must be clear). Plaintiff has not presented unusual circumstances that justify a departure from the Ninth Circuit benchmark. Thus, the attorneys' fees request appears unreasonable.
As the other terms of the proposed settlement appears reasonable, however, the attorneys' fees will not prevent preliminary approval. See Acosta v. Trans Union, 243 F.R.D. 377, 386 (C.D. Cal. 2007) ("To determine whether preliminary approval is appropriate, the settlement need only be potentially fair, as the Court will make a final determination of its adequacy at the hearing on Final Approval, after such time as any party has had a chance to object and/or opt out."). If Plaintiff's counsel seeks more than 25%, counsel must advise what unusual circumstance justify adjusting the benchmark upward in this case, as there is currently no such justification on the record.
b) Incentive Payment for Plaintiff
The Motion indicates Plaintiff will seek up to $15,000 as an incentive award, in addition to any recovery to which she may be entitled under the Settlement Agreement. (See Mot. at 7-8; Stipulation § 6.3.) The criteria courts may consider in determining whether to make an incentive award include:
1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation.
Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995).
Plaintiff bases her proposed incentive award on the following: (1) the amount of time and effort she expended during the course of the litigation, including being deposed, reviewing documents, and having regular discussions with counsel; (2) the risks she incurred during the course of litigation (e.g., being liable for opposing parties' fees and costs); (3) providing a full general release that is "much broader" than the general "Released Claims" in the Settlement; (4) risking potential stigma of being a Class Representative in a class action labor dispute, which could affect her future employability; and (5) the value of the individual claim she is settling, which her counsel values at more than $15,000. (See Mot. at 7-8; Settlement Stip. § 3.5; Matern Supplemental Decl. ¶ 13.)
Plaintiff submits declarations detailing the amount of time she has spent on this case, including: (1) attending mediation (16 total hours, including 12 hours at the mediation and 4 hours traveling to the mediation); participating in her deposition (15.5 hours total, including 5 hours preparing for the deposition, 6.5 hours at the deposition, and 4 hours traveling to the deposition); (3) meeting with counsel's investigators (2 hours); and (4) regularly communicating with counsel. (Sandoval Decl. ¶¶ 3-4, 12; Matern Decl. ¶¶ 5-6.) The total number of hours Plaintiff accounts for is 33.5 hours. Plaintiff also alleges she bore individual risks in her capacity as class representative, including: (1) subjecting herself to liability for Defendant's costs and attorney's fees (Matern Decl. ¶ 4), and (2) "by filing this lawsuit against [Defendant]... [Plaintiff] may need to disclose this fact to potential future employers and it will be a public record[, which] may adversely effect (sic) [Plaintiff's] ability to be hired." (Sandoval Decl. ¶ 11.)
An award of $15,000 is unreasonable, considering the limited time Plaintiff expended and the awards other Class Members will receive. The Court determines that $7,500 is an appropriate incentive award for Plaintiff. See, e.g., In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000) (approving incentive award of $5,000 to two plaintiff representatives of 5,400 potential class members in $1.75 million settlement, but constituting only 0.56% of the settlement); In re SmithKline Beckman Corp., 751 F. Supp. 525, 535 (E.D. Pa. 1990) (approving incentive payments of $5,000 for one named representative of each of nine plaintiff classes involving more than 22,000 claimants and a settlement of $22 million, constituting 0.18% of the settlement amount); Alberto v. GMRI, Inc.,252 F.R.D. 652 667-670 (E.D. Cal. 2008) (requiring parties to present evidence showing the named plaintiff's substantial efforts taken as class representative to justify the discrepancy between her $5,000 award, constituting 0.71% of the settlement, and the $24.17 that each class member was expected to receive).
Here, Plaintiff has not stated how much the parties anticipate class members will receive. However, an award of $7,500 would constitute 1.00% of the gross settlement, or 1.83% of the net settlement. This payment represents a higher percentage than the cited cases, and Plaintiff has not argued persuasively that an even higher incentive award is justified. Thus, a payment of $15,000 is excessive under the circumstances of this case, and the Court determines an incentive award of $7,500 is fair and reasonable.
8. Release of Claims
The factors above favor approval of the settlement. The Stipulation proposes to release Defendants from: any and all known and unknown claims, causes of action, debts, liabilities, demands, obligations, guarantees or damages, in law or equity, tort or in contract, by statute, pursuant to case law or otherwise which have been or could have been alleged in the Lawsuit or in any other state or federal court, administrative tribunal, or in arbitration or similar proceedings, based upon, arising from, or related to the claims or causes of action asserted in the Lawsuit including but not limited to violations of California Labor Code Sections 203, 204.3, 221, 226.7, 512, 1174, 1198, and 2802 and applicable Industrial Welfare Commission Wage Orders, based upon Theraldson's alleged: Nonpayment of compensation for meal and rest period violations; nonpayment of wages, including claims for overtime wages and "off-the-clock" work; failure to indemnify employees for expenditures incurred in the discharge of their duties; failure to pay all wages due at termination; inaccurate wage statements; unfair or unlawful business practices (including under Business & Professions Code Sections 17200 et seq.); and any related premiums, penalties, interest, punitive damages, costs, attorneys' fees, injunctive relief, declaratory relief, or accounting. (Settlement Stip. § 127) (emphasis added).)
The settlement compensates Class Members for Defendants' alleged failure "to provide lawful duty free rest periods and meal periods, or pay compensation in lieu thereof; failing to indemnify employees for expenses incurred in the discharge of their duties; failing to pay wages (including overtime and for off-the-clock work); failing to pay all wages due at termination; and failing to comply with itemized employee wage statement provisions. [Plaintiff] further alleges that [Defendants's] conduct violated California's Unfair Competition Law set forth in California Business & Professions Code Section 1700, et seq." (Proposed Settlement at 2.)
The settlement, therefore, is fair and reasonable because it includes only those claims "based upon, arising from, or related to the claims or causes of action asserted in the Lawsuit." In other words, it does not prevent Class Members from pursuing claims unrelated to the settlement.
Based on the balance of the foregoing factors, the Court finds Plaintiff has met her burden of demonstrating the fairness, reasonableness, and adequacy of the Settlement Agreement. However, Plaintiff must amend the attorneys' fees and class representative incentive award before final approval.
C. Notice Procedure
Under Rule 23(e), the Court must "direct notice in a reasonable manner to all class members who would be bound" by the proposed settlement. Fed. R. Civ. P. 23(c)(2)(B). Plaintiff must provide notice to potential opt-in class members that is "timely, accurate, and informative." See Hoffmann-La Rouche Inc. v. Sperling, 493 U.S. 165, 172 (1989). Likewise, claims forms must be informative and accurate. Id. at 172; Churchhill Village, L.L.C. v. General Electric, 361 F.3d 566, 575 (9th Cir. 2004) (notice is satisfactory if it "generally describes the terms of the settlement in sufficient detail to alter those with adverse viewpoints to investigate and to come forward and be heard."). The proposed form and manner of class notice have been agreed upon by all counsel and are adequate.
1. Administration Procedures
The parties have agreed to retain Rust Consulting, Inc. as the settlement administrator ("Settlement Administrator") over the claim proceedings. (Settlement Stip. § 1.2; Mot. at 16.) The Claims Administration costs may not exceed $35,000. (Id.) The parties propose that twenty-one (21) days after the entry of an order granting this Motion, Defendant will provide the Settlement Administrator a database containing the necessary information for producing claim forms and mailing class notice. (Mot. at 16; Settlement Stip. § 9.1.) No later than thirty-five (35) days after this Motion is granted, the Settlement Administrator will send by first class mail the class notice and claim forms with a pre-paid, self-addressed return envelope to the last known address of each Class Member or the updated address from the National Change of Address database. (Id.)
2. Claims Procedure
Class members shall have forty-five (45) days after the notice is mailed to consider the proposed Settlement and object to the Settlement or request not to participate in the Settlement. (Settlement Stip. § 9.3.1.) Defendant's employees during the period of August 1, 2008 through the date the Court approves the settlement shall be deemed to have submitted claim forms. (Id.) The date of mailing of the Claim Form is deemed to be the date the form is deposited in the U.S. Mail, postage prepaid, as evidenced by the post-mark. (Id.) Class Members who do not properly or timely submit the Claim Form shall not become a Participating Claimant, and shall not be entitled to any settlement payment. (Id.)
Within five (5) business days after the expiration of the Notice Period the Claims Administrator shall notify class counsel of (i) the number of Class Members who have opted out of the Class, and (ii) the number of Class Members who have submitted Qualifying Claim Forms. (Settlement Stip. § 9.3.4.) Within ten (10) business days after the expiration of the Notice period, the Claims Administrator shall provide a list of Participating Claimants to Defendant. (Id.) Within thirty-five (35) days after the expiration of the Notice Period, the Claims Administrator shall provide an update listing of claims data and an update list of Participating Claimants reflecting Class Members who receive a re-mailed Notice. (Id.)
In the event that ten percent (10%) or more of all Class Members timely request exclusion (opt-out) from the Settlement Class by submitting a request for exclusion, or the Court fails to approve a material term of this Settlement, Defendant shall have the right to revoke and terminate the agreement. (Settlement Stip. § 9.3.5.)
If a notice is returned by the U.S. Postal Service to the Claims Administrator with a forwarding address for the recipient, the Claims administrator shall re-mail the notice to that address no later than the last day of the Notice Period. (Settlement Stip. § 9.3.4.) If a notice is returned by the U.S. Postal Service without a forwarding address, the Claims Administrator shall perform a Social Security number search in an effort to determine the current address of the Class Member, and will resend the Notice no later than the last day of the Notice Period. (Id.) If no updated address is determined, the Claims Administrator will resend the Notice to the Last Known Address no later than the last day of the Notice Period. (Id.) For Class Members who are re-sent the Notice, the Notice Period shall be extend by twenty-five (25) days beyond the initial Notice Period. (Id.) They will be sent a modified claim notifying them of the time in which they have to file a claim. (Id.)
3. Notice of Settlement
The notice will inform Class members of: "(1) the nature of this action, the Settlement Class, Class Counsel, and the essential terms of the Settlement; (2) the allocation of the Settlement fund, including the method by which each Class Member's settlement share will be calculated, the requests for the Class Representative Payments and the Class Counsel Attorneys' Fees and Costs Payment, and the Settlement Administration costs that will be deducted from the Settlement fund; (3) how to participate in the Settlement; (4) how to comment on, opt-out of, or object to the Settlement; (5) this Court's procedures for final approval of the settlement; and (6) how to obtain additional information regarding this action and the Settlement." (Mot. at 16.)
4. Scheduling Order
The Court sets hearing date for final approval hearing and related dates as set forth below.
Deadline for Defendant to provide Class databaseWithin 21 days after Preliminary ApprovalDecember 8, 2009
Deadline to mail Class Notice to Class MembersWithin 35 days after Preliminary ApprovalDecember 22, 2009
Deadline for submission of opt-out requestsMust be postmarked within 45 days after Class NotificationFebruary 6, 2010
Deadline for comments or objectionsMust be postmarked within 45 days after Class NotificationFebruary 6, 2010
Deadline for submission for claim formsMust be postmarked within 45 days after Class NotificationFebruary 6, 2010
Deadline to file Motion for Final Approval24 days prior to Final Approval HearingMarch 12, 2010
Deadline to file rely brief responding to objections1 week prior to hearingMarch 29, 2010
Final Approval Hearing April 5, 2010
For the foregoing reasons, the Court:
(1) conditionally certifies the proposed settlement class;
(2) grants preliminary approval of the parties' Settlement;
(3) directs dissemination of the class notice and claim form to the class; and
(4) sets hearing date for final approval hearing and related dates as set forth above.