The opinion of the court was delivered by: Sheila K. ObertoUNITED States Magistrate Judge
ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT (Docket No. 38)
On July 5, 2012, Plaintiffs Patricia Franco ("Franco") and Lilia Castro ("Castro," collectively "Plaintiffs") filed a motion requesting final approval of a class action settlement, including an award of attorneys' fees and costs and enhancement awards for the named Plaintiffs as Class Representatives. (Doc. 38.) No opposition to the motion was filed, and no objection was submitted by any member of the class ("Class Member"). The matter was initially heard by the Court on August 1, 2012. Mr. Philip Downey, Esq., of The Downey Law Firm, LLC, and Ms. Rose Luzon, Esq., of Shepherd Finkelman Miller & Shah, LLP, appeared on behalf of Plaintiffs, and Mr. Mitchell Boomer, Esq., and Ms. Cynthia Sandoval, Esq., of Jackson Lewis LLP appeared on behalf of Defendant Ruiz Food Products, Inc. ("Defendant"). No Class Member appeared at the hearing. The Court ordered Plaintiffs to provide supplemental information, which was filed on October 15, 2012. (Docs. 41, 51.) A second hearing concerning Plaintiffs' motion was held on November 14, 2012, during which Ms. Luzon and Mr. Boomer appeared; no Class Member was present.
For the reasons set forth below, the Court GRANTS FINAL APPROVAL of the parties' class action settlement, (2) GRANTS an award of attorneys' fees and costs, and (3) GRANTS enhancement awards to Plaintiffs as Class Representatives.*fn1
On December 15, 2010, Plaintiffs filed a putative collective class action complaint against Defendant pursuant to the federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), and Rule 23 of the Federal Rules of Civil Procedure for violations of California Labor Code and Wage Orders and California Business and Professions Code § 17200, et seq. Plaintiffs' operative pleading, the First Amended Complaint, was filed on May 4, 2011, and alleges claims for (1) violation of the FLSA; (2) violation of the California Labor Code -- failure to compensate for all hours worked; (3) violation of the California Labor Code -- failure to pay overtime; (4) violation of the California Labor Code -- failure to provide meal and rest periods; (5) unpaid wages and waiting time penalties; (6) failure to properly itemize pay stubs; and (7) violation of California Business & Professions Code § 17200, et seq.
On September 28, 2011, the parties mediated their dispute with Michael J. Loeb, Esq., and after an all-day mediation, the parties reached a class-wide settlement. (Doc. 29, Young Decl. in Support of Preliminary Approval, ¶ 7.) The parties memorialized the terms of their proposed settlement in a "Joint Stipulation of Settlement and Release Between Plaintiffs and Defendant" ("Settlement Agreement") (Doc. 29-1), and on December 22, 2011, filed a request for preliminary approval of the class settlement. (Docs. 27-30.) On February 10, 2012, the Court granted preliminary approval of the settlement, authorized the notice process, and scheduled a hearing to consider final approval of the settlement. (Doc. 35.)
On July 5, 2012, Plaintiffs filed a Motion for Final Approval of Class Action Settlement, including a request for attorneys' fees and costs and a request for an enhancement award for the named Plaintiffs. (Doc. 38.) No opposition was filed. A hearing was held on August 1, 2012, and the Court issued an order requiring Plaintiffs to submit supplemental information in support of the motion. (Doc. 41.) Additionally, the Court was notified by Defendant that, on August 7, 2012, Defendant served notice of the proposed settlement on the appropriate Offices of the Attorney General pursuant to 28 U.S.C. § 1715. (See Docs. 42-44.) On October 15, 2012, Plaintiffs filed a Supplemental Submission Regarding Plaintiffs' Motion for Final Approval of Class Action Settlement pursuant to the Court's August 1, 2012, Order. (Doc. 51.) A second hearing was held on November 14, 2012, and Plaintiffs' motion was submitted for decision. (Doc. 52.)
III. THE PARTIES' SETTLEMENT
On October 19, 2011, Plaintiffs filed a Notice of Settlement and on December 22, 2011, filed a request for preliminary approval of the class-action settlement, indicating that the parties had negotiated a resolution of their dispute. (Docs. 25, 27-30.) The terms of the parties' Settlement Agreement is summarized below.
A. The Composition of the Settlement Class
The Settlement Agreement provides for the certification, for settlement purposes only, of a class comprised of all persons currently or formerly employed as non-exempt production line employees at the Ruiz Food processing facility in Dinuba, California, between December 15, 2006, and the date of the preliminary approval of the Settlement Agreement (approved by the Court on February 10, 2012 (Doc. 35)) (the "Settlement Class"). (Doc.29-1, Settlement Agreement, ¶¶ 6-7.)
B. The Material Terms of the Settlement Agreement
1. The Class Settlement Amount
Plaintiffs and Defendant have agreed to settle the underlying class claims in exchange for a Class Settlement (the "Settlement") in the maximum amount of $2,500,000 (the "Settlement Amount"). All amounts paid to the Class Members, all attorneys' fees, costs, enhancement awards for the Class Representatives, fees and expenses for the Settlement Administrator, and any other payments provided by the Settlement Agreement shall be paid out of the Settlement Amount. The net settlement amount shall be calculated by deducting from the Settlement Amount all attorneys' fees and costs, the enhancement awards for the Class Representatives, a payment to the State of California pursuant to the California Private General Attorney Act ("PAGA"), codified at California Labor Code § 2699, et seq., in the amount of $10,000, and the actual fees and expenses of the Settlement Administrator (the "Net Settlement Amount"). The entire Net Settlement Amount shall be paid to the Class Members as Settlement Awards ("Settlement Awards"). To the extent any funds remain after satisfying all payments to Class Members, such funds will be paid to the cy pres beneficiaries: Ruiz 4 Kids (50%) and Chicana Latina Foundation (50%). No portion of the Net Settlement Amount will revert to Defendant or be refunded. Defendant shall be responsible to pay separately the employer payroll taxes related to the Settlement Agreement. (Doc. 29-1, Settlement Agreement, ¶ 14(c).)
Settlement Awards will be distributed as follows: (1) Class Members whose Notice of Settlement ("Notice") is returned as undeliverable with no forwarding address will be excluded from the Settlement Class, will not be bound by the Settlement, will be deemed to have "opted out" from Class membership, and will not receive any Settlement Awards; (2) Settlement Awards will be calculated according to the number of weeks worked by a Class Member, each to receive a share of the Net Settlement Amount in proportion to the number of weeks he or she worked during the class period compared to the number of weeks worked by other Class Members. (Doc. 29-1, Settlement Agreement, ¶ 14(d).)
3. The Labor Workforce and Development Agency Payment
In satisfaction of the claims arising under the PAGA, the parties have agreed that Defendant will pay $10,000 -- 75% ($7,500) of which will be paid to the California Labor and Workforce Development Agency and the balance ($2,500) will become part of the Net Settlement Amount. (Doc. 29-1, Settlement Agreement, ¶ 14(e).)
4. Claims Administration Costs
The parties have agreed that the Heffler, Radetich & Saitta LLP, the Settlement Administrator, will be paid costs not to exceed $30,000 associated with the administration of this Settlement.(Doc. 29-1, Settlement Agreement, ¶ 14(j), ¶ 15; see also Doc. 38-1, 7:24-26; Doc. 38-3 (Hamer Decl.), ¶ 14.)
5. Class Counsel Award of Attorneys' Fees and Costs *fn2 The parties have agreed that Class Counsel shall be awarded $825,000 in attorneys' fees and $30,000 in costs. (Doc. 29-1, Settlement Agreement, ¶ 16.)
6. Class Representative Enhancement Awards
The parties have agreed that Class Representatives Franco and Castro will each be paid $7,000 as Class Representative Enhancement Awards. (Doc. 29-1, Settlement Agreement, ¶ 14(I), ¶ 15, see also Doc. 38-1, 7:19-21.)
C. The Scope of the Release in the Settlement Agreement
The parties' Settlement Agreement sets forth the following release by the Class Members: 19. Upon final approval by the Court of this Stipulation of Settlement, and except as to such rights or claims as may be created by this Stipulation of Settlement, each Class Member fully releases and discharges Defendant, its present and former parent companies, subsidiaries, related or affiliated companies, shareholders, owners, officers, directors, employees, agents, attorneys, insurers, successors and assigns, and any individual or entity which could be jointly liable with Defendant ("Released Parties"), from any and all claims, debts, liabilities, demand, obligations, guarantees, costs, expenses, attorneys' fees, damages, action or causes of action, known or unknown, of any nature under state, federal or local law arising out of Plaintiffs' causes of action for alleged: (1) Violation of the Fair Labor Standards Act, 29 USC § 201, et seq.; (2) Violation of the California Labor Code Failure to Compensate For All Hours Worked, California Labor Code §§ 201-204, et seq.; (3) Violation of the California Labor Code Failure to Pay Over Time Wages; (4) Violation of the California Labor Code Failure to Provide Meal and Rest Breaks (Cal. Lab. Code § 226.7 et seq., Cal Lab. Code § 512 and California Industrial Welfare Commission Wage Order(s); (5) Unpaid Wages and Waiting Time Penalties; (6) Failure to Properly Itemize Pay Stubs (Cal. Lab. Code §§ 226(a) and 226(e); and, (7) Violation of California's Business and Professions Code §§ 17200, et seq., and any other claims whatsoever alleged in this Action, including, without limitation, all claims for unpaid wages and overtime, unpaid minimum wages, failure to pay wages timely, during employment and at the termination of employment, failure to maintain payroll records as required by law, class claims, collective claims, representative claims, restitution, injunctive relief, declaratory relief and other equitable relief, liquidated damages, waiting-time penalties, penalties of any nature, unfair competition, unlawful business practices, unfair business practices, fraudulent business practices, other compensation or benefits including 401K benefits or matching benefits, retirement or deferred compensation benefits claimed on account of alleged unpaid wages, interest, attorneys' fees and costs, from December 15, 2006, through and including the date of final approval of the Settlement, along with Plaintiffs' prayer for damages including unpaid wages and overtime wages, prejudgment interest on unpaid wages and overtime wages, penalties (including, but not limited to penalties under the California Private Attorney's General Act), liquidated damages, restitution, injunctive relief, post judgment interest, attorneys' fees and costs ("Released Claims"). The Released Claims do not include workers' compensation claims or any claims arising out of the employment relationship that are not enumerated as Released Claims, such as wrongful termination, discrimination, harassment, or retaliation. By and through this Settlement, each Class Member forever agrees he/she shall not be entitled to pursue, accept or recover damages for any Released Claims against the Released Parties from December 15, 2006 through and including the date of final approval of the Settlement.
(Doc. 29-1, Settlement Agreement, ¶ 19.)
D. Notice to the Class Members
The procedures for giving notice to the Class Members, as set forth in the parties' Settlement Agreement (see Doc. 29-1, Settlement Agreement, ¶ 17) and ordered in the Court's Preliminary Approval Order (Doc. 35), have been carried out by the Settlement Administrator, Heffler Claims Administration, a division of Heffler, Radetich & Saitta, LLP, Certified Public Accountants ("Heffler"). (Doc. 38-3, Hamer Decl.) On March 7, 2012, Heffler received the Notice, which was approved by the parties prior to mailing. (Doc. 38-3, Hamer Decl., ¶¶ 6-7.) The Notice summarized the Settlement Agreement's principal terms, provided Class Members with an estimate of how much they would be paid if the Settlement Agreement received final approval, and advised Class Members how to submit claims for payment, opt out of the Settlement, or object to the Settlement. (See Doc. 29-2.) The Notice was approved by the Court in its February 10, 2012, Preliminary Approval Order. (Doc. 35.)
On March 7, 2012, counsel for Defendant provided Heffler with a list ("Class List") of all Class Members' names, their last known mailing addresses and telephone numbers, Social Security Numbers, and other information necessary to calculate estimated Settlement payments. (Doc. 38-3, Hamer Decl., ¶ 7.) The Class List contained data for 2,055 potential Class Members. (Doc. 38-3, Hamer Decl., ¶ 7.)
On March 28, 2012, Notices were mailed to 2,055 Class Members contained in the Class List via first class mail. (Doc. 38-3, Hamer Decl., ¶ 9.) The Notice advised Class Members that they could submit a Request for Exclusion or a Dispute to be post-marked by May 14, 2012. (Doc. 38-3, Hamer Decl., ¶ 9.) Heffler received 119 undeliverable Notices, five of which were returned with forwarding addresses and were promptly re-mailed. (Doc. 38-3, Hamer Decl., ¶ 10.) Of the remaining 114 Notices, Heffler performed address traces on each of them and the Notices were re-mailed. (Doc. 38-3, Hamer Decl., ¶ 10.) Of the total 114 Notices mailed to the traced addresses, a total of 17 were returned as undeliverable a second time and no further processing was performed. (Doc. 38-3, Hamer Decl., ¶ 10.)
No Class Members wrote to dispute the number of weeks he or she worked or the approximate total Settlement Award. (Doc. 38-3, Hamer Decl., ¶ 11.) Heffler received two Opt-Out requests, and no Objections to the Settlement were received. (Doc. 38-3, Hamer Decl., ¶¶ 12-13.) At the August 1, 2012, and November 14, 2012, hearings on this motion, counsel for both parties stated that the information provided by Heffler was current and had not changed.
A. Final Approval of the Class-Action Settlement is Granted
1. The Rule 23(a) Class-Certification Requirements Are Satisfied
Federal Rule of Civil Procedure 23(e) requires court approval of class action settlements. "[I]n the context of a case in which the parties reach a settlement agreement prior to class certification, courts must 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). In confirming the propriety of class certification, courts assess the following prerequisites pursuant to Rule 23(a): "(1) numerosity of plaintiffs; (2) common questions of law or fact predominate; (3) the named plaintiff's claims and defenses are typical; and (4) the named plaintiff can adequately protect the interests of the class." Hanlon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citing Fed. R. Civ. P. 23(a)).
Numerosity requires that the class be so numerous that the joinder of individual class members would be impracticable. Fed. R. Civ. P. 23(a)(1). Across the Settlement Class, 2,055 Class Members were ultimately identified. The number of Class Members in this case indicates that the numerosity factor has been satisfied. See, e.g., Jordan v. L.A. Cnty., 669 F.2d 1311, 1319 (9th Cir. 1982) (indicating that class sizes of 39, 64, and 74 are sufficient to satisfy the numerosity requirement), vacated on other grounds, 459 U.S. 810 (1982).
Rule 23(a) also requires "questions of law or fact common to the class." Commonality exists when there is either a common legal issue stemming from divergent factual predicates or a common nucleus of facts resulting in divergent legal theories. Hanlon v. Chrysler Corp. ("Chrysler Corp."), 150 F.3d 1011, 1019 (9th Cir. 1998). In other words, commonality is generally satisfied where, as in this case, "the lawsuit challenges a system-wide practice or policy that affects all of the putative class members." Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir. 2001), abrogated on other grounds by Johnson v. California, 543 U.S. 499, 504-05 (2005). As clarified in Wal-Mart Stores, Inc. v. Dukes ("Dukes"), a plaintiff must demonstrate that the class members "have suffered the same injury" and that their claims "depend upon a common contention . . . of such a nature that is capable of classwide resolution -- which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." __ U.S. __, 131 S. Ct. 2541, 2551 (2011) (internal citation omitted).
The Class Members' claims arising from Defendant's alleged uniform employment policies asserted here differ from those found insufficient to establish commonality in Dukes,131 S. Ct. at 2554. In Dukes, the purported commonality was a lack of common control over a business practice. Id. at 2554-55. The Supreme Court determined that the "only corporate policy that the plaintiffs' evidence convincingly establishes is Wal-Mart's 'policy' of allowing discretion by local supervisors over employment matters." Id. at 2554. The Court noted that, "[o]n its face, of course that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices." Id. The Court concluded that there was no specific employment practice that tied all of the putative class members together and that "[m]erely showing that Wal-Mart's policy of discretion has produced an overall sex-based disparity does not suffice." Id. at 2556.
Here, there is no evidence before the Court that the pay practices alleged to violate the FLSA and the California Labor Code were applied inconsistently, such that the complained-of employment practices do not "touch and concern all members of the class." Id. at 2557 n. 10 (internal citations omitted).
The parties have agreed for purposes of settlement only that the Class Members share common questions of law and fact as to whether Defendant violated the FLSA and multiple California Labor Code provisions, including, but not limited to, the requirement to pay overtime and to provide meal and rest periods, proper wage statements, and payment of all wages upon termination. These common questions of law or fact are sufficient to satisfy the commonality requirement.
Typicality exists when "the claims or defenses of the representative are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). "Typicality . . . is said . . . to be satisfied when each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability." Armstrong, 275 F.3d at 868. Under the Rule's "permissive standards," representative claims are typical if they are "reasonably co-extensive with those of absent class members; they need not be substantially identical." Chrysler Corp., 150 F.3d at 1020.
Plaintiffs' claims are "co-extensive" with the other Class Members, as Plaintiffs and the absent Class Members were all Defendant's employees who were paid under the same pay practices and worked under the same company-wide employment policies. The typicality requirement is satisfied.
d. Adequacy of Representation
The final Rule 23(a) prerequisite, adequacy of representation, is satisfied if "the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). The satisfaction of constitutional due process concerns requires that absent class members be afforded adequate representation prior to an entry of judgment, which binds them. Chrysler Corp., 150 F.3d at 1020. Determining the adequacy of representation requires consideration of two questions: "(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" Id.
The adequacy-of-representation requirement is met here because Plaintiffs have the same interests as the absent Class Members, e.g., obtaining payment for wages unlawfully withheld. Further, there is no apparent conflict of interest between the named Plaintiffs' claims and those of the other Class Members, particularly because the named Plaintiffs have no separate and individual claims apart from the Class.
Moreover, here there are no allocation dilemmas among the Settlement Class similar to those observed as issues in Amchen Products, Inc. v. Windsor, 521 U.S. 591 (1997). In Amchen, the settlement agreement eliminated all present and future claims against asbestos manufacturers, and the class counsel was attempting to represent both groups of plaintiffs, i.e., those who had present claims and those who had future claims. The conflict between the two groups of plaintiffs was that "the present plaintiffs had a clear interest in a settlement that maximized current funds, while future plaintiffs had a strong interest in preserving funds for their future needs and protecting the total fund against inflation." Chrysler Corp., 150 F.3d at 1020-21 (discussing Amchen, 521 U.S. 591 (1997)). Here, the case does not involve sub-classes or classes with diverging interests with respect to allocation of the settlement funds in the same manner as Amchen. The Court does not perceive any conflicts of interest between Plaintiffs, Class Counsel, and other Class Members.
In considering the adequacy requirement, the Court also evaluates whether Plaintiffs and Class Counsel will pursue the Class' claims with vigor. The Ninth Circuit has held that, "[a]lthough there are no fixed standards by which 'vigor' can be assayed, considerations include competency of counsel and, in the context of a settlement-only class, an assessment of the rationale for not pursuing further litigation." Chrysler Corp., 150 F.3d at 1021. There is no challenge to the competency of the Class Counsel, and the Court finds that Plaintiffs are represented by experienced and competent counsel who have litigated numerous class action cases, including 24 wage and hour and other employment law class actions. (Supp. Submission., Doc. 51, 3:22-5:18.) Further, this is not a case where the Class Members receive no monetary distribution while the Class Counsel are rewarded amply. Chrysler Corp., 150 F.3d at 1021.
The apparent rationale to settle this case was supported, in part, by the impossibility of predicting any litigation result with certainty and by the pendency of Brinker Restaurant Corp. v. Superior Court, 165 Cal. App. 4th 25 (2008), aff'd in part, 53 Cal. 4th 1004 (2012) ("Brinker") before the California Supreme Court at the time the matter was settled. (Doc. 38-1, 20:2-19.) California law, as it related to certain Class' claims, was in potential flux, and settlement, rather than continued litigation, was perceived as more beneficial to the Class Members. Brinker was pending during most of the instant litigation and during the time the parties entered into their Settlement Agreement; the parties mediated the issues in this action and reached a settlement on September 28, 2011, whereas Brinker was decided on April 12, 2012. (See Doc. 29, Young Decl. in Support of Preliminary Approval, ¶ 7; Brinker, 53 Cal. 4th at 1004 .) In other words, it appears that the settlement was reached for strategic reasons that benefitted the Class, rather than Class Counsel's inability or unwillingness to pursue further litigation. See Chrysler Corp., 150 F.3d at 1021 (class counsel inadequate by definition where counsel demonstrates an inability or unwillingness to try the case). In sum, the Court finds that the adequacy factor is satisfied.
As initially determined in the Court's preliminary approval order (Doc. 35) and as set forth above, the Rule 23(a) requirements for class certification have been satisfied.
2. The Rule 23(b)(3) Requirements are Satisfied
In addition to meeting the requirements of Rule 23(a), to be certified, a class must also meet at least one of the requirements of Rule 23(b). Plaintiffs assert that class resolution is superior to other available methods for the fair and efficient adjudication of the controversy and the requirements of Rule 23(b) are met. (Doc. 38-1, 16:15-17:24.) Pursuant to Rule 23(b)(3), a class action may be maintained if:
(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods of fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by ...