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Cervantez v. Celestica Corp.

July 6, 2010

JOSE CERVANTEZ, ET AL., PLAINTIFF,
v.
CELESTICA CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge

[Motion filed on May 24, 2010]

ORDER PRELIMINARILY APPROVING CLASS SETTLEMENT

I. BACKGROUND

Defendant Celestica Corporation, a manufacturer and repairer of electronic and computer parts, operated facilities at 13473 Santa Ana Avenue, Fontana, California (the "Fontana Facility") and 1392 North Sarah Place, Ontario, California (the "Ontario Facility"). The Fontana Facility is a shipping and receiving hub.

Defendant Adecco USA, Inc. ("Adecco") is a temporary staffing agency that provided employees at Celestica's Fontana Facility.

A. Plaintiffs' Allegations

Plaintiffs Jose Cervantez, Rusty Reyes, George Santos, Maria Nguyen, and Marina Flores ("Plaintiffs"), employees of Celestica and Adecco ("Defendants"), and other similarly situated employees, worked for Defendants either at the Fontana or Ontario Facilities. Defendants required Plaintiffs and other similarly situated employees to pass through security checkpoints at the beginning and end of their shifts, but did not pay them for their time spent waiting in line to pass through security. Defendants further required Plaintiffs and similarly situated employees to work shifts longer than eight hours, yet failed to pay them for their overtime hours. Defendants failed to provide Plaintiffs and similarly situated employees with a thirty minute, uninterrupted meal period, and failed to provide a second thirty minute meal period for employees who worked in excess of ten hours. Finally, Defendants did not provide Plaintiffs and other similarly situated employees with two paid ten minute rest breaks each day, and did not pay an additional hour of pay to compensate for the denial of meal and rest breaks.

B. Procedural History

Plaintiffs filed their Complaint on June 15, 2007. Plaintiffs filed a First Amended Complaint on July 25, 2007, and a Second Amended Complaint on March 4, 2008.

In the Second Amended Complaint, Plaintiffs assert claims for (1) failure to pay overtime compensation in violation of California law; (2) waiting time penalties; (3) failure to provide accurate itemized wage statements; (4) failure to provide rest breaks and meal periods; and (5) violations of California Business and Professions Code section 17200.

On July 30, 2008, the Court granted Plaintiffs' motion for class certification, and certified two classes as follows:

Security Line Class: All current and former non-exempt employees of Defendants, paid by Defendant Adecco USA, Inc., who passed through security screening before, during or after their work shift, in Celestica's facility at 13473 Santa Ana Avenue, Fontana, California, since June 14, 2003.

Meal and Rest Period Class: All current and former non-exempt employees of Defendants, paid by Adecco USA, Inc. who worked at Celestica's facilities at 13473 Santa Ana Avenue, Fontana, California and 1392 North Sarah Place, Ontario, California, and who, at any time since June 14, 2003 were not provided a meal or rest period to which they were entitled.*fn1

On May 6, 2009, the Court granted in part and denied in part Plaintiffs' motion for summary judgment, finding that Plaintiffs were entitled to summary adjudication as to whether or not Celestica was a joint employer of Plaintiffs.

On May 24, 2010, the parties jointly filed this Motion for Preliminary Approval of Settlement Agreement ("Motion").

II. LEGAL STANDARD

Rule 23(e) states: "[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval." The court must hold a hearing and find that the settlement "is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). 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 notice should be sent to class members. In re Corrugated Container Antitrust Litig., 643 F.2d 195, 205 (5th Cir. 1981); see also Gautreaux v. Pierce, 690 F.2d 616, 621 n. 3 (7th Cir. 1982) (stating that 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.

III. DISCUSSION

A. Fairness, Reasonableness, and Adequacy of the Proposed Settlement

In determining whether or not the settlement is fair, reasonable, and adequate, courts balance several factors, including: (1) the strength of plaintiffs' case;

(2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed, and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant*fn2 ; (8) 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).

Here, the proposed settlement calls for a total settlement consideration of $2,500,000, from which the parties propose to deduct the following: (1) an amount not to exceed 25% for attorney's fees; (2) an amount not to exceed $170,000 for Plaintiffs' litigation expenses; (3) an amount not to exceed $10,000 for the Plaintiffs; and (4) claims administration costs in an amount estimated at $75,000. (Settlement Agreement ¶ III.A.1.) After these deductions, the estimated remaining settlement amount ("Net Settlement Amount") will be approximately $1,620,000.

The Settlement Agreement proposes to divide the Net Settlement Amount as follows: 85% of the Net Settlement Amount shall be allocated to the Security Line Class, and 15% shall be allocated to the Meal and Rest Period Class. (Settlement Agreement ¶ III.F.4.)

Within the Security Line Class, class members will receive compensation based on the number of qualified shifts worked. Per-shift payments will be determined by dividing the Net Settlement Amount allocated to the Security Line Class by the total shifts worked by Security Line Class. Shifts worked from the beginning of the class period through August 31, 2007 will be counted as full shifts, while those worked after August 31, 2007 through the end of the class period will be counted as half shifts.*fn3 These payments are intended to compensate members of the Security Line Class both for overtime claims and "generalized meal and rest period claims." (Mot. at 6:19--21.)

Within the Meal and Rest Period Class, 25% of the allocated Net Settlement Amount will be allocated to class members who worked at the Ontario Facility and who were not provided a first meal or rest period. (Settlement Agreement ¶ III.F.4.) Such class members will receive per-shift payments determined by dividing the money allocated to these class members by the number of total shifts worked by the Meal and Rest Period Class at the Ontario Facility during the class period. (Id.) The remainder of the Net Settlement Amount allocated to the Meal and Rest Period Class will be distributed to class members who worked shifts exceeding ten hours, but whose time records show no second meal period deduction.

(Id.) The per-shift payments to these class members will be determined by dividing the amount of the Net Settlement Amount allocated to the Meal and Rest Period Class by the total number of shifts worked by the class which exceeded ten hours and for which there is no record of a second meal period. (Id.)

In the event that any portion of the Net Settlement Amount remains unclaimed, the unclaimed portion shall be distributed to class members who have submitted valid claim forms on a pro rata basis, subject to a maximum of three times the amount to which they were entitled as described above. Any remaining portion of the Net Settlement Agreement remaining after this further pro rata distribution will be donated to a charity mutually agreed-upon by the parties, subject to Court approval. (Id. at III.F.6.)

As set forth below, all but one of the Class Plaintiffs either favors the proposed ...


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