TERRELL JONES, a California resident; MICHAEL JOHNSON, a Florida resident; DERRICK PAIGE, a Texas resident; WILFREDO BETANCOURT, a Nevada Resident; YOLANDA McBRAYER, a former Colorado resident; and MICHAEL PIERSON, a North Carolina resident, individually, and on behalf of all others similarly situated, Plaintiffs,
AGILYSYS, INC., an Ohio corporation; AGILYSYS NV, LLC, a Delaware limited liability company; and DOES 1 through 100, inclusive, Defendants.
ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT, CONDITIONAL CERTIFICATION, APPROVAL OF CLASS NOTICE AND SETTING OF FINAL FAIRNESS HEARING
SAUNDRA BROWN ARMSTRONG, District Judge
Plaintiffs Terrell Jones, Michael Johnson, Derrick Paige, Wilfredo Betancourt, Yolanda McBrayer and Michael Pierson (collectively "Plaintiffs") are former employees of Agilysys, Inc., and Agilysys NV, LLC (collectively "Defendants") who allege that they were misclassified as nonexempt employees and not paid overtime wages in violation of state and federal wage and hour laws. The parties have entered into an Amended Settlement Agreement that resolves Plaintiffs' claim under section 16(b) the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 216(b).
The parties are presently before the Court on Plaintiffs' renewed Motion for Order Granting Preliminary Approval of Class Action Settlement, Conditional Certification, Approval of Class Notice, and Setting of Final Fairness Hearing. Dkt. 30. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS the motion. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).
On July 6, 2012, Plaintiffs filed suit against Defendants in this Court, and subsequently filed a First Amended Complaint ("Amended Complaint") on August 8, 2012. Dkt. 9. The Amended Complaint alleges violations of the FLSA on behalf of a nationwide class as well as violations of the California Labor Code on behalf of a California class. See First Am. Compl. ¶¶ 14-15. Plaintiffs seek to represent Installation Services ("IS") employees who were misclassified as exempt during the time period between July 5, 2009, and March 4, 2013 ("the Class Period").
Following mediation, the parties reached a settlement of their state and federal claims and filed a Motion for Order Granting Preliminary Approval of Class Action Settlement, Conditional Certification, Approval of Class Notice, and Setting of Final Fairness Hearing. Dkt. 26. The Court denied the motion. Dkt. 27. Though finding that Plaintiffs had sufficiently established a basis for conditional certification of a non-California FLSA class, the Court found that they had not satisfied the numerosity requirement for certification of a California class under Federal Rule of Civil Procedure 23 as to Plaintiffs' state law claims. See Jones v. Agilysys, Inc., No. C 12-3516 SBA, 2013 WL 4426504 (N.D. Cal. Aug. 15, 2013).
In response to the Court's order denying their request for preliminary approval, the parties amended their settlement to include only a single, nationwide FLSA class, thereby eliminating the need to certify a separate California class under Rule 23. Dkt. 30. The terms of the amended settlement call for Defendants to pay a Gross Settlement Amount ("GSA") of $1, 478, 819, which sum includes: (a) attorneys' fees in an amount not to exceed 25% of the GSA; (b) litigation costs estimated at $25, 000; (c) Class Representative Payments of up to $5, 000 for each of the six named Plaintiffs; and (d) claims administration expenses to Rust Consulting, Inc. ("Rust Consulting"), estimated at $16, 500. Khoury Decl. ¶ 35, Dkt. 30-2.
Plaintiffs now seek judicial approval of their amended settlement, provisional certification of a collective action under the FLSA for settlement purposes only, the appointment of Plaintiffs as the Class Representatives, the appointment of Plaintiffs' attorneys as Class Counsel, approval as to form and authorization to disseminate Notice to the proposed settlement Class, the appointment of Rust Consulting as the claims administrator, and to set a final approval hearing date.
A. JUDICIAL APPROVAL OF FLSA SETTLEMENTS
The FLSA requires employers to pay their employees at least a specified minimum hourly wage for work performed, 29 U.S.C. § 206, and to pay one and one-half times the employee's regular rate of pay for hours worked in excess of forty hours per week, 29 U.S.C. § 207(a). To redress violations of the FLSA, § 16(b) of the FLSA authorizes an employee to bring a collective action "on behalf of similarly situated employees, but requires that each employee opt-in to the suit by filing a consent to sue with the district court." Does I thru XXIII v. Advanced Textile Corp. , 214 F.3d 1058, 1064 (9th Cir. 2000) (citing 29 U.S.C. § 216(b)) (emphasis added). Only those claimants who affirmatively opt in by providing a written consent are bound by the results of the action. McElmurry v. U.S. Bank Nat. Ass'n , 495 F.3d 1136, 1139 (9th Cir. 2007).
Although the FLSA does not define "similarly situated, " most federal courts in this Circuit have adopted a two-tiered approach to make that determination on a case-by-case basis. Hill v. R&L Carriers, Inc. , 690 F.Supp.2d 1001, 1009 (N.D. Cal. 2010). The first step is the conditional certification or notice stage, at which time the district court assesses whether potential class members should be notified of the opportunity to opt-in to the action. Sanchez v. Sephora USA, Inc., No. C 11-3396 SBA , 2012 WL 2945753, at *2 (N.D. Cal. July 18, 2012). The purpose of conditional certification is to facilitate "accurate and timely notice concerning the pendency of the collective action, so that they can make informed decisions about whether to participate." Hoffman-La Roche Inc. v. Sperling , 493 U.S. 165, 171 (1989). The second step is the final certification stage, which typically occurs following the completion of discovery, and, barring a settlement, is initiated by a motion for decertification by the defendant. See Hipp v. National Life Ins. Co. , 252 F.3d 1208, 1218 (11th Cir. 2001). If the court finds that the opt-in claimants are similarly situated, the collective action may proceed to judgment. Id . If not, the class is decertified and the opt-in plaintiffs are dismissed without prejudice. Id.
Settlements of private FLSA collective action claims require court approval. See Lynn's Food Stores, Inc. v. United States , 679 F.2d 1350, 1353 (11th Cir. 1982). In reviewing an FLSA settlement, the district court's "[o]bligation is not to act as caretaker but as gatekeeper; [rather, ] it must ensure that private FLSA settlements are appropriate given the FLSA's purposes and that such settlements do not undermine the Act's purposes." Goudie v. Cable Commc'ns, Inc., No. CV 08-507-AC, 2009 WL 88336, *1 (D. Or. Jan. 12, 2009). Although judicial review of a proposed FLSA settlement is not subject to the same requirements as a class action under Rule 23, see Genesis Healthcare Corp. v. Symczyk , 133 S.Ct. 1523, 1529 (2013), some courts have applied Rule 23's procedural framework by analogy as a matter of sound judicial administration, see In re Bank of America Wage and Hour Employment Litig., No. 10-MD-2138-JWL, 2013 WL 6670602, *2 (D. Kan. ...