The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
ORDER: (1) PRELIMINARILY CERTIFYING CLASS FOR SETTLEMENT PURPOSES; (2) GRANTING PRELIMINARY APPROVAL TO CLASS ACTION SETTLEMENT; (3) APPOINTING CLASS COUNSEL; (4) APPROVING CLASS NOTICE; and (5) SETTING A FINAL APPROVAL HEARING
Currently before the Court is Plaintiff Scott M. Williams' ("Williams") Motion for Preliminary Approval of Class Action Settlement, filed on February 9, 2010. [Doc. No. 66.] For the reasons set forth below, the Court GRANTS Plaintiff's Motion.
Plaintiff filed suit on July 17, 2002 in San Diego County Superior Court alleging violations of California and federal overtime laws by Defendant Costco Wholesale Corporation ("Costco"). Plaintiff alleged that Costco misclassified him, and others similarly situated, as exempt from overtime pay and failed to pay appropriate overtime in violation of the Fair Labor Standards Act ("FLSA"), California Labor Code § 510, and California Code of Regulations § 11070. Plaintiff also alleged that Costco "is an employer engaged in commerce and subject to the provisions of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq." (Compl. ¶ 6.)
On October 9, 2002, Costco timely removed the case to this Court on federal question jurisdiction based upon the FLSA claim. See 28 U.S.C. § 1331; 28 U.S.C. § 1441. On January 8, 2003 Plaintiff filed a First Amended Complaint ("FAC") in which he eliminated any claims under FLSA, effectively terminating any federal claim presented in the Complaint. [Doc. No. 12.] On January 30, 2003, Plaintiff filed a motion to remand the case to state court. [Doc. No. 15.] This Court granted Plaintiff's motion to remand on June 10, 2003. [Doc. No. 22.] Costco filed a Notice of Appeal as to that decision on June 20, 2003. [Doc. No. 24.] The Court thereafter stayed the proceedings pending the appeal. [Doc. No. 41.]
On February 20, 2007, the 9th Circuit entered judgment reversing this Court's order granting the motion to remand. [Doc. No. 47.] However, the Court stayed the proceedings once again on the joint stipulation of the parties, due to a pending California state court action, Randall v. Costco Wholesale Corp., No. BC 296369 (Cal. Super. Ct. L.A. County, filed May 27, 2003) ("Randall Action"), which asserted certain overlapping claims with the present action. [Doc. No. 54.] The Court lifted the stay on September 11, 2009, upon receiving notice that the state court had approved settlement of the Randall Action, effectively resolving the overlapping claims. [Doc. No. 59.] Plaintiff Williams also filed a Notice of Settlement on September 11, 2009, [doc. no. 60], and filed the present Motion for Preliminary Approval of Class Action Settlement on February 9, 2010. [Doc. No. 66.]*fn1 Defendant has not opposed the Motion.
II. The Proposed Settlement
Pursuant to the proposed settlement, the class members include any person employed by Costco between July 17, 1998 and May 26, 1999 (the "Settlement Period") in California as a department manager in the bakery, deli, and meat departments. (Settlement Agreement and Release, Ex. 1 at 3 [hereinafter Settl. Agr.].) Costco has agreed to pay an aggregate sum of $440,000 (the "Gross Settlement Amount"), which includes all payments to class members, the payment of a service fee to the named plaintiff, attorneys' fees, all employer taxes except for the 6.2 percent Social Security tax, and administration costs, if any, up to $25,000. (Sett. Agr. at 5.) The Gross Settlement Amount is non-reversionary, except that Costco may retain funds based on uncashed checks. (Id.) The funds will be distributed to individual class members on a pro rata basis based on the number of weeks during the Settlement Period in which the class member had an active pay code ("Workweeks") and the last effective pay rate during the Settlement Period. at 4, 7.)
Costco has agreed not to oppose Class Counsel's request for an award of costs and attorneys' fees not to exceed $110,000 of the Gross Settlement Amount and a service fee for Plaintiff Scott Williams up to $5,000. (Id. at 10-11.) Costco has also agreed to exercise reasonable means to locate class members. (Id. at 9.) Within thirty days of the Court's preliminary approval of the settlement, the claims administrator will send class members notice of the settlement and an opportunity to opt out of the settlement class. (Id.) Settlement class members may opt out of the settlement within thirty days of the notice mailing; any class member who does not timely serve an objection within this time period shall be deemed to waive any objection to the settlement. (Id. at 9-10.)
In exchange for these awards, each final settlement class member will release Costco and its associates from all claims arising out of the facts alleged in this action relating to unpaid overtime wages, unlawful deductions, conversion, wage-statement violations, record-keeping violations, and "waiting time" penalties or other statutory penalties relating to the class member's work as a meat, bakery, or deli manager during the Settlement Period. (Id. at 11-12.)
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 seeks to certify the following class: "a person Costco has employed during the Settlement Period in California as a department manager in any of the following ancillary businesses: Bakery, Deli, and Meat." (Settl. Agr. at 3.) The Settlement Period is the period from July 17, 1998 through May 26, 1999. (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). "'[I]mpracticability does not mean 'impossibility,' but only the difficulty or inconvenience of joining all members of the class."
Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913-14 (9th Cir. 1964) (citing Advertising Specialty Nat. Ass'n v. FTC, 238 F.2d 108, 119 (1st Cir. 1956). In the present case, it is estimated that there are over 400 meat, bakery, and deli managers who were employed by Costco during the Settlement Period. (FAC ¶ 10(a).) The numerosity requirement does not impose a minimum numerical cut-off for class members. General Tel. Co. v. EEOC, 446 U.S. 318, 331 (1980). However, case law indicates that a class of 400 would satisfy the numerosity requirement based on the number of ascertained class members. See, e.g., Jordan v. Los Angeles County, 669 F.2d 1311, 1319-20 (9th Cir. 1982) (finding numerosity requirement ...