The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
ORDER: (1) PRELIMINARILY CERTIFYING CLASSES FOR SETTLEMENT PURPOSES; (2) PRELIMINARILY APPROVING SETTLEMENT; (3) APPOINTING CLASS COUNSEL; BECTON DICKINSON AND COMPANY; (4) APPROVING CLASS NOTICE; (5) SETTING A FINAL APPROVAL HEARING FOR APRIL 19, 2010.
Currently before the Court is Plaintiff Kirkland Singer's ("Singer") Motion for Preliminary Approval of a class settlement, filed on November 24, 2009. [Doc. No. 35]. For the reasons set forth below, the Court GRANTS Plaintiff's Motion.
The facts of this case are known to the Court and the parties and need not be repeated herein.
On March 27, 2008, Plaintiff filed a purported class action against Defendants on behalf of himself and other current and former employees in the Superior Court for the County of San Diego.
[Doc. No. 1]. Defendants removed the case to this Court on May 6, 2008. [Id.] On August 11, 2008, following the Court's Order on Defendants' Motion to Strike and Motion to Dismiss, Plaintiff filed a First Amended Complaint ("FAC"). [Doc. No. 16].
In his FAC, Plaintiff alleged wage and hour violations over a class period extending back to March 27, 2004 and sought various forms of relief such as unpaid wages, including statutory wages for meal periods and rest breaks, vacation wages, interest, waiting time penalties, PAGA penalties, restitution, damages, injunctive and other equitable relief, and attorneys' fees and costs under various provisions of the California Labor Code and the applicable wage orders of the Industrial Wage Commission. Primarily, Plaintiff alleged as class claims that: (1) Defendants had an illegal "use-it-or-lose-it" policy, whereby employees forfeited accrued vacation wages ("Vacation Claims"); and (2) Defendants did not pay non-exempt employees all wages due and owing, including meal and rest period premiums, overtime, reporting time, and minimum wages ("Non-Exempt Claims").*fn1
Subsequently, according to Plaintiff, parties engaged in "extensive informal and formal discovery, investigation and pre-trial motion practice concerning the facts and the law." (Hollis Decl., ¶¶ 7, 11-21.) As part of those efforts, Plaintiff was subjected to a two-day deposition, and Plaintiff's counsel conducted a two-day deposition of Defendant Med-Safe's person most knowledgeable (Nathan Miller) about policies and practices at its Oceanside facility relating to reporting time pay, meal and rest periods, vacation/paid-time off, timekeeping, and payroll. (Id. ¶ 11.)
Finally, in April 2009, the parties agreed to engage in settlement discussions, which culminated in a formal, full-day mediation session on May 21, 2009 before a respected neutral mediator, Joel M. Grossman, Esq., who is highly experienced in wage and hour matters such as the claims in this case. (Id. ¶ 13.) Although the May 21 mediation session resolved many of the differences, it did not result in a settlement. (Id. ¶ 14.) Mr. Grossman therefore made a mediator's proposal to resolve the parties' impasse, which the parties accepted on June 2, 2009. (Id.) Subsequently, the parties worked for five months to come up with and draft the present class settlement agreement, and a separate settlement agreement concerning Plaintiff's individual misclassification claim.(Id.)
II. The Proposed Settlement
Pursuant to the proposed settlement, Defendants agreed to pay up to One Million Dollars ("Gross Fund Value") to compensate the Vacation Settlement Group Members and Non-Exempt Settlement Group Members (collectively, "Settlement Group Members"), including Plaintiff, for their alleged unpaid wages, interest, and penalties, and to provide for the accompanying costs, penalty payments, and fees. Specifically, out of the Gross Fund Value: (1) $3,000.00 has been allocated to be paid to the California Labor Workforce Development Agency ("LWDA") for PAGA penalties pursuant to Labor Code Section 2699; (2) $8,000.00 will be paid to Simpluris, Inc. for the claim administration process; (3) Plaintiff Singer is entitled to recover a service enhancement award of up to $25,000.00 for his service to the Settlement Group Members; (4) the firm of GraceHollis LLP would recover an award of litigation costs up to $11,500.00 and attorneys' fees up to $333,333.00; and (5) Defendants will pay the employer's portion of payroll taxes attributable to the "wage" component of the individual settlement awards. (Stipulation and Settlement Agreement of Claims, attached to Hollis Decl., Ex. A, ¶¶ 4-8 [hereinafter Settl. Agr.].)
Thereafter, $548,775.00 will be allocated to the Non-Exempt Settlement Group Members ("Non-Exempt Settlement Fund") and $73,392.00 will be allocated to the Vacation Settlement Group Members ("Vacation Settlement Fund"), for a combined maximum of $622,167.00 to be paid out as Net Fund Value. (Id. ¶ 5.) Out of this, $3,000.00 will be paid to the LWDA for PAGA penalties, leaving $619,167.00 to be paid out to the Settlement Group Members ("Payout Fund"). (Id. ¶ 6.) Under the terms of the proposed settlement, all Settlement Group Members who do not opt-out of the settlement, including Plaintiff Singer, will be eligible to submit a Claim Form for a settlement award.*fn2
There are approximately 258 persons in the Vacation Settlement Group, and 98 of these are eligible to claim funds from the Vacation Settlement Fund. (Hollis Decl. ¶¶ 16, 20.) To be eligible, each purported class member's employment with Defendants must have ended between March 27, 2004 and December 31, 2006. (Settl. Agr. ¶ 6.B.) The Vacation Settlement Awards will be based on 110% of actual vacation wages purportedly owed, calculated by multiplying each Vacation Settlement Member's amount of accrued, unpaid vacation time by that person's final hourly rate of pay. For each Vacation Settlement Award, 50% shall be allocated to "wages," 40% shall be allocated to "penalties," and 10% shall be allocated to "interest." (Id.) Of the 50% allocated to "wages," payroll deductions will be made for state and federal withholding taxes and any other applicable payroll deductions owed by Defendants as a result of the payment. (Id.)
An estimated 251 persons in the Non-Exempt Settlement Group are eligible to claim funds from the Non-Exempt Settlement Fund. (Hollis Decl. ¶ 21.) The payment of Non-Exempt Settlement Awards will be calculated by assigning a certain dollar value to each week of work by each employee in a non-exempt position during the class period. (Settl. Agr. ¶ 6.B.) For each Non-Exempt Settlement Award, 50% shall be allocated to "wages," 40% shall be allocated to "penalties," and 10% shall be allocated to "interest." (Id.) Of the 50% allocated to "wages," payroll deductions will be made for state and federal withholding taxes and any other applicable payroll deductions owed by Defendants as a result of the payment. (Id.)
In exchange for these awards, both Vacation Settlement Group Members and Non-Exempt Settlement Group Members will release their respective claims against Defendants for the applicable class periods. (Id. ¶ 2.) Plaintiff Singer furthermore will release all claims against Defendants relating to his employment and separation therefrom, not just the non-exempt and vacation claims. (Id.; Hollis Decl. ¶ 24.) Moreover, the Settlement Agreement contemplates that Plaintiff's Second Amended Complaint ("SAC"), alleging federal/FLSA claims for overtime, will be deemed filed and dismissed as of final approval of the proposed settlement.*fn3 (Settl. Agr. ¶ II.)
Finally, the proposed settlement provides that it is a "claims made settlement," and therefore any unclaimed share of the Payout Fund shall not become part of the final payout to the class members, but rather will be retained by Defendants. (Settl. Agr. ¶ 6.B.) However, if the total payout to the class members is less than 50% of the Payout Fund, the claimed awards of all Settlement Group Members will be reapportioned so that at least 50% of the Payout Fund is paid out. (Id.)
When the parties reach a settlement agreement prior to class certification, the court is under an obligation to "peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement." Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). Thus, the court must first assess whether a class exists, and second, determine whether the proposed settlement is "'fundamentally fair, adequate, and reasonable.'" Id. (citations omitted). Accordingly, in the present case, the Court will first examine the propriety of class certification, followed by the fairness of the settlement agreement, and will then address the questions of class counsel and class notice.
A plaintiff seeking a Rule 23(b)(3) class certification must first satisfy the prerequisites of Rule 23(a). Once subsection (a) is satisfied, the purported class must then fulfill the requirements of Rule 23(b)(3). In the present case, Plaintiff Singer seeks to certify the following two classes. First, the Non-Exempt Settlement Group will consist of: all current and former non-exempt employees employed by Becton, Dickinson, and Company and Med-Safe Systems, Inc. (collectively, "the Company") at Med-Safe Systems, Inc. ("Med-Safe") facility in Oceanside, California, at any time between March 27, 2004, through ten (10) days after preliminary approval of the proposed settlement (the "Class Period"), who have not already settled any claims they may have had against the Company or pursued and recovered a remedy with the Division of Labor Standards Enforcement relating to their employment with the Company, and who claim they were not provided with rest and meal breaks or pay in lieu thereof, not paid overtime, not paid for all hours worked, not paid reporting time pay, and provided with inaccurate paycheck stubs and seek to recover overtime pay, pay for hours worked, expenses, premium pay, penalties, interest, attorney's fees and costs as well as restitution under California law. (Settl. Agr. ¶ I.) Second, the Vacation Settlement Group will consist of: all current and former exempt and/or non-exempt employees employed by the Company at the Med-Safe facility in Oceanside, California, at any time during the Class Period who have not already settled any claims they may have had against the Company or pursued and recovered a remedy with the Division of Labor Standards Enforcement relating to their employment with the Company, and who may not have been provided with all vacation wages and seek to recover vacation pay, penalties, interest, attorney's fees and costs as well as restitution under California law. (Id.)
A. Rule 23(a) requirements
Rule 23(a) establishes four prerequisites for class action litigation, which are: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. FED. R. CIV. P. 23(a); see also Staton, 327 F.3d at 953. The Court will examine each of these requirements in turn.
The numerosity prerequisite is met if "the class is so numerous that joinder of all members is impracticable." FED. R. CIV. P. 23(a)(1). In the present case, there are approximately 258 persons in the Vacation Settlement Group and an estimated 251 persons in the Non-Exempt Settlement Group. (Hollis Decl. ¶¶ 20-21.) They are far too numerous to be ...