The opinion of the court was delivered by: Jeffrey T. Miller United States District Judge
ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND GRANTING MOTION FOR ATTORNEY'S FEES AND CLASS REPRESENTATIVE ENHANCEMENTS
In the fall of 2009, Plaintiffs filed a class action complaint in California state court against Defendants based on purported violations of various state laws relating to class members' Janitorial Franchise Agreements ("JFAs") with Defendant Coverall North America, Inc. ("Coverall"). The parties now move for final approval of a settlement reached in the summer of 2011 and for approval of Plaintiffs' request for attorney's fees and class representative enhancements. For the reasons stated below, the court GRANTS both motions.
The facts alleged in Plaintiffs' complaint have been discussed at length in the court's prior orders and need not be repeated here.
On September 12, 2011, the parties moved for preliminary approval of the Class Action Settlement Agreement and Release ("Settlement" or "Agreement"). After a hearing, the court granted preliminary approval. On November 14, 2011, class member Amrit Singh ("Singh" or "Objector") filed an objection to the proposed settlement. Though the objection was filed beyond the date required by the court's preliminary approval order, the court accepted the filing in the interest of determining the issues on the merits. On November 21, the court held a hearing regarding final approval that was attended by all parties and Singh. Subsequent to the hearing, the court sent a letter to the parties and to Singh requesting clarification on two issues. The letter instigated a flurry of responses from the parties and from Singh. After reviewing all of the submissions,1 the court has determined that final approval is appropriate.
II. LEGAL STANDARD AND DISCUSSION
The federal rules require a district court's approval in order for any "claims, issues, or defenses of a certified class" to be "settled, voluntarily dismissed, or compromised." Fed. R. Civ. P. 23(e). "The initial decision to approve or reject a settlement proposal is committed to the sound discretion of the trial judge." Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 625 (9th Cir. 1982). However, in making its decision, the court must look at "whether the settlement is fundamentally fair, adequate and reasonable." Id. This includes an examination and balancing of multiple factors, including but not limited to:
Several of the documents filed were duplicative and several were not filed in compliance with local rules or the court's instructions. For that reason, the court rejected several documents. The failures to comply notwithstanding, the court has considered all substantive arguments put forth by the parties.
the strength of the 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; and the reaction of the class members to the proposed settlement.
Id. Rule 23(e)(1) requires the court to take certain steps to ensure proper administration of the settlement, including "direct[ing] notice in a reasonable manner to all class members who would be bound by the proposal."
A. Terms of the Settlement Agreement
The Agreement provides separate benefits for current and former franchisees. Principally, Coverall pledges to assign customer accounts to current franchisees. Settlement ¶
7.1. Certain accounts are excepted, and assignments are conditional until franchisees have paid their franchise fees in full. Coverall represents that the gross billing of all customer accounts in California was $20 million in 2010.
Former franchise owners will receive $475 each and will receive a $750 purchase credit toward a new Coverall franchise. ¶¶ 7.2-7.3.
The Settlement provides new franchisees with a 30-day right to rescind their JFAs. If a franchisee rescinds within that period, he or she will be refunded all of the money paid under the JFA except for the $75 background investigation. ¶ 7.4. Coverall also has agreed to guarantee repurchase of accounts from franchisees according to a specified price formula set forth in the Agreement. ¶ 7.5.
The Agreement also provides franchisees with the right to stop servicing an account for nonpayment and reduces the current non-competition period from eighteen months to twelve months. ¶¶ 7.6-7.7. Further, Coverall has promised to replace accounts that are lost as long as the loss of the account is not the fault of the franchisee and the account is lost within the JFA's guarantee period. Coverall must replace the account within a reasonable amount of time, not to exceed 120 days. ¶ 7.8.
The Agreement also states that Coverall "shall offer Franchise Owners accounts that are located within a reasonable proximity of each other" subject to availability.2 ¶ 7.9. Coverall has also promised to provide training for all new franchisees with training materials in both English and Spanish. This training will inform franchisees of their ability to incorporate and form partnerships. ¶ 7.10.
Defendants have also agreed to pay the named Plaintiffs a total amount of $15,000. Class counsel has sought, and Defendants have agreed to pay, $994,800 in attorney's fees. ¶¶ As a part of the Settlement, the class will release its claims against Defendants arising out of or related to claims asserted in this case, but will not release claims relating ...