ORDER DENYING WITHOUT PREJUDICE PLAINTIFF'S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Re: ECF No. 48
JON S. TIGAR, District Judge.
In this wage-and-hour proposed class action, Plaintiff Carl Cordy moves for preliminary approval of a proposed settlement. ECF No. 48 ("Motion"). Pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-1(b), the Court determines that the matter is suitable for disposition without oral argument and hereby VACATES the hearing currently scheduled for August 6, 2013. For the reasons set for below, the motion is DENIED WITHOUT PREJUDICE.
A. Cordy's Claims
Plaintiff Carl Cordy is a former employee of Defendant USS-Posco Industries ("Posco") who worked at Posco's Pittsburg, California, steel manufacturing and production facilities. Complaint, ECF No. 1, at ¶¶ 10-12; Amended Answer, ECF No. 19, at ¶ 10. Cordy alleges that Posco had a policy and practice of denying legally required compensation to its hourly production and maintenance ("P&M") employees. Complaint, at ¶¶ 1-6. Specifically, Cordy alleges that Posco denied workers compensation for time spent donning protective order and clocking in before their shifts began, denied employees meal and rest periods, failed to provide itemized wage statements, and failed to timely pay wages upon termination or resignation. Id.
B. Procedural History
Cordy brought a proposed class action complaint in against Defendants Posco, United States Steel Corporation, Posco-California Corporation, Pitcal, Inc., and Does 1-50 in February 2012. Complaint. He brought causes of action for failure to compensate for all hours worked pursuant to California Labor Code §§ 204 & 1194, for failure to provide meal and rest periods in violation of California Labor Code §§226.7 & 512, for unpaid wages and waiting time penalties pursuant to California Labor Code §§ 201-203, for failure to provide itemized wage statements pursuant to California Labor Code § 226, for violation of California's Unfair Competition Law, California Business & Professional Code § 17200, et seq., and for penalties pursuant to the Private Attorneys General Act, California Labor Code §§ 2699(a) & 2699(f). Id., at ¶¶ 33-92.
Counsel for Cordy and Posco engaged in formal and informal discovery, exchanging documents related to the claims at issue and deposing twenty individuals, including Cordy, Posco executives, and proposed class members. Declaration of Carolyn Cottrell ("Cottrell Decl."), at ¶ 8. On the basis of interviews with proposed class members, time and pay records, and other information from Posco, Cordy's counsel developed a rough estimate of the damages that would result if Cordy were to prevail at trial. Id., at ¶ 9. The parties then mediated the dispute before Jeffrey Kravis, after which the parties eventually reached a class-wide settlement subject to the Court's approval. Id.
Pursuant to a June 2013 Settlement Agreement and Release of Claims, Posco agreed to pay a gross settlement amount of $3, 500, 000. Exh. A to Motion, ECF No. 48-1. In addition to providing settlement awards to the Class Members, the gross settlement award would be used to satisfy: (1) attorney's fees and costs not to exceed $1, 155, 000 (33% of the gross settlement fund); (2) claims administration fees estimated at $16, 342; (3) an enhancement award to Cordy of up to $8, 000; (4) a $25, 000 payment to the Labor Workforce Development Agency; and (5) a $125, 000 "Hold-Back Fund" which would be used to resolve disputed late claims and undisputed expenses, and, if any portion is not distributed within 120 days following the mailing of settlement award distributions, would then be used to reimburse Posco for employer-side payroll taxes incurred in the settlement process. Motion, at 6:10-18, n. 8; Exh. A to Motion.
After these deductions, the remaining amount would be distributed to the Proposed Class, defined as:
all individuals employed as non-exempt, production and maintenance ("P&M") employees by Defendant at Defendants' steel-manufacturing plant and facilities in Pittsburg, California at any time from four years prior to the filing of the February 2, 2012 Complaint ("Complaint") to the date of entry of preliminary approval of the Settlement Agreement except that it will not include any member who files a timely request for exclusion as provided in the Settlement Agreement. The individuals who do not request exclusion will be "Eligible Class Members."
The net distribution amount would be divided among those class members who submitted a timely claim. Each of those class members' settlement share "will be determined based on the total number of weeks" that the employee worked with Posco. Exh. A to Motion, at ¶ 8-F-i-a. The Heffler Claims Group would, subject to Court approval, administer the settlement, contact potential class members, and provide them with notice of the settlement and their right to opt out. Id., at ¶¶11, 13-15; see also Exh. B to Motion. As part of the settlement, Cordy and all class members who do not opt out of the settlement would release all claims that could have been brought on the basis of the facts alleged in the Complaint, including but not limited to the claims listed in the Complaint. Exh. A to Motion, at ¶ 16.
Settlement award checks that remain uncashed after 180 days would be distributed in equal amounts to the Legal Aid Society's Employment Law Center and the Juvenile Diabetes Research Foundation as cy pres recipients. Motion, at 8:20-22; Exh. A to Motion, at ¶ 14-G.
Cordy now seeks preliminary approval of the Settlement Agreement, appointment of Heffler Claims Group as claims administrator, provisional certification of the Proposed Class, appointment of Carl Cordy as class representative, appointment of Attorneys Todd M. Schneider, Carolyn H. Cottrell, Schneider Wallace Cottrell Konecky LLP, Scott Brown and Brown | Poore LLP as class counsel, and approval of the form of Class Notice, terms of the request for a permanent injunction, the proposed schedule and procedure for ...