United States District Court, C.D. California, Southern Division
TERRY P. BOYD, ET AL., Plaintiffs,
BANK OF AMERICA CORP., ET AL., Defendants.
ORDER GRANTING FINAL APPROVAL OF PARTIAL CLASS ACTION SETTLEMENT AND APPROVAL OF ATTORNEYS' FEES AND COSTS  
DAVID O. CARTER, District Judge.
Before this Court is Plaintiff Victor Galaz, on behalf of the California Review Appraiser Class and the Federal Fair Labor Standards Act ("FLSA") Opt-in Review Appraiser Class (collectively, "Settling Plaintiffs"), and his motion for an order granting final approval of the partial class action settlement ("Settlement") reached with Bank of America Corporation, LandSafe Inc., and LandSafe Appraisal Services, Inc. ("Defendants") in the above-captioned case ("Approval Motion") (Dkt. 259) and motion for attorneys' fees and costs ("Fees Motion") (Dkt. 253). Oral arguments were heard on November 17, 2014. After considering all relevant written submissions and oral argument, and for the reasons set forth below, the Court GRANTS the Approval Motion and GRANTS the Fees Motion in full.
A. Factual History
Plaintiff Terry Boyd filed this class and collective action on April 9, 2013, alleging overtime violations under the FLSA, 29 U.S.C. § 207; overtime violations under California Labor Code §§ 510, 1194, 1198, and California Industrial Welfare Commission Wage Order 4 (the "Wage Order"); itemized wage statement violations under California Labor Code § 226; meal and rest period violations under California Labor Code §§ 512 and 226.7, and the Wage Order; and violations of California Business and Professions Code § 17200 et seq. On May 16, 2013, Plaintiffs filed a First Amended Complaint, adding there Representative Plaintiffs and claim for Waiting Time Penalties under California Labor Code § 203. Dkt. 13. On June 6, 2013, Defendants filed an Answer to the First Amended Complaint. Dkt. 21. On June 26, 2013, Plaintiffs filed the Second Amended Complaint ("SAC"), which is the operative complaint, adding Representative Plaintiff Victor Galaz specifically to represent Review Appraisers, and adding a seventh cause of action for Civil Penalties under the Labor Code Private Attorneys General Act of 2004 ("PAGA"), Cal Lab. Code § 2698. Dkt 42.
The SAC asserted causes of action on behalf of two putative classes, (1) individuals that had worked for Defendants during the relevant time period as "Residential Appraisers and other similar positions" ("Residential Appraisers"), and (2) individuals that had worked for Defendants during the relevant time period as "Review Appraisers and other similar positions" ("Review Appraisers"). SAC ¶ 1, 20. Plaintiffs alleged Defendants maintained a uniform policy misclassifying hundreds of California-based real estate appraisers as exempt. Id. ¶ 24. As a result, Plaintiffs maintain, these employees were not paid overtime for long hours and were not provided meal and rest periods, in violation of the California labor code. Id. ¶ 2.
The SAC defines the Collective Class as: "All persons who are or have been employed by Defendants as Appraisers, including employees with the job title Staff Appraiser' or Residential Appraiser' and any other employee performing the same or similar duties for Defendants and Review Appraisers (Review Appraiser, ' Senior Review Appraiser;' or positions consisting of similar job duties) within the United States at any time from three years prior to the filing of this Complaint to the final disposition of this case." Id. ¶ 20. The SAC defines the California Class similarly, but with a four-year statute of limitations. Id . ¶ 36. The SAC also defines two sub-classes for the California penalty claims, based on the different statutes of limitations for those claims. Id. ¶¶ 37, 38.
In November 2013, after some discovery and after Plaintiffs' FLSA § 216(b) Motion had been taken under submission but before an Order issued, Plaintiffs and Defendants agreed to mediate their claims. After an initial failure to reach resolution, Parties sought to mediate again before a different skilled mediator. On February 25, 2014, the mediation yielded a Memorandum of Understanding to settle the Review Appraisers' claims only. On April 1, 2014 the Parties finalized the Settlement.
Because the Parties did not agree to settle the claims of Staff Appraisers, the Court-approved FLSA § 216(b) Notice was mailed to eligible Staff Appraisers nationwide on March 5, 2014. The Court also granted Plaintiffs' motion for Class Certification (now on behalf of California Staff Appraisers only, and not California Review Appraisers), on June 27, 2014 (Dkt. 232).
On June 26, 2014, the Court granted Plaintiffs' Unopposed Motion for Preliminary Approval of Partial Class Action Settlement (Dkt. 229). The Court also granted, for settlement purposes only, Class Certification to the California Review Appraisers. Id. at 1.
B. Terms of the Settlement
The Settlement includes a payment of $5, 800, 000, all of which will be distributed and none of which reverts to Defendants, plus the employers' share of payroll taxes on the portion of the settlement payments considered wages. Pl.'s Unopposed Mot. Prelim. Approval Partial Class Action Settlem. (Dkt. 166) at 4. The Settlement also includes a reclassification of the Review Appraiser position to non-exempt, which Plaintiffs expect to have significant financial benefits for all Review Appraisers going forward. Id. at 5, Decl. of Bryan Schwartz in Support of Pls' Unopp. Mot. for Preliminary Approval of Partial Class Action Settlement ("Schwartz Decl. I") (Dkt. 167). The Settlement pays on average more than $10, 200 each to approximately 370 Review Appraisers who worked for Defendants since 2009 (in California) or 2010 (nationwide). Id. at 15, Schwartz Decl. I ¶¶ 4, 17.
From the $5, 800, 000 common fund, Plaintiff is seeking:
the deduction of one-third of the Settlement Amount as attorneys' fees ($1, 933, 333.33);
reimbursement of actual litigation costs of $30, 000;
an enhancement payment to Mr. Galaz of $15, 000.;
a payment of $18, 750 to the California Labor Workforce Development Agency ("LWDA") for the PAGA claims;
claims administrator charges for printing and mailing the Notice of Settlement, processing opt-in forms, calculating payment amounts, and issuing and mailing settlement checks, along with related necessary tasks - to total not more than $20, 000.
Schwarz Decl. In Supp. Of Pls' Mot. for Approval of Att'ys Fees and Costs (Schwarz Decl. II) Exh. 1 (Settlement Agreement) ¶¶ 16-17, 48-51.
The remaining amount of the fund will be distributed to class members, with Settlement Class Members allocated a share of the Net Settlement Amount based on the number of workweeks that they worked for Defendants during the relevant Class periods. Id. at 5, 53. California Settlement Class members have claims for meal/rest period violations, PAGA penalties, waiting time violations, and wage statement violations, so they will receive 1.5 times as large a pro rata share per workweek as Non-California Settlement Class Members. Id. ¶ 5, Schwartz Decl. I ¶ 5.
This Settlement is non-reversionary. As such, if some eligible California Class Members had opted-out or decline to deposit their checks, or eligible Non-California Class Members do not submit an Opt-In form, participating Class Members will receive a second payment of their pro rata share of the unclaimed amount. Settlement Agreement ¶ 57. If the unclaimed amount is under $50, 000, however, the Parties have agreed that this amount will be distributed to a cy pres recipient, the Legal Aid Society - Employment Law Center. Id.
The Review Appraiser position will be reclassified in 2014 - as a result of this settlement - as nonexempt. Settlement Agreement ¶ 60. Due to this reclassification, going forward all Review Appraisers will be compensated for their overtime, missed meal/rest period (in California), and will receive wage statements with additional itemization in recognition of their non-exempt status, specifically, hours worked per pay period and overtime hours per pay period. Id.
C. Notice to Class Members
Consistent with the Court's order, the Parties retained claims administration firm KCC to execute the notice and claims administration procedures. Dkt. 229 ¶ 9; Approval Mot., Decl. of Stefanie Gardella ("Gardella Decl.") ¶ 3. The California and non-California Settlement Notices described the litigation, terms of the Settlement, and each Class Member's option with regard to the proposed settlement. Id. Exs. A, B. Each notice included the minimum Settlement amount that the recipient would receive if he or she opted into the case. Id.
On August 1, 2014, KCC mailed the Notice Package. Id. ¶¶ 7-9. The Package included a Settlement Notice and, for the non-California Appraisers, and Opt-in and Claim Form. Id. The Notice informed each recipient of the work week total, based upon Defendants' employment records, used to calculate the recipient's minimum settlement payment amount, and steps to take if they believed the total was inaccurate. Id. After efforts by KCC to obtain accurate address information for class members, all but two were contacted. Id. ¶¶ 13-14. In September 2014, KCC made telephone calls to all those who had not opted into the Settlement to ensure that they had received the Notice Package. Id. ¶ 17. Approximately two weeks before the October 6, 2014 deadline, KCC sent a final reminder letter, drafted by Plaintiffs' Counsel, to each Class Member who had not yet opted into the Settlement. Id. ¶ 16.
More than 95% of the Review Appraisers covered by the deal have chosen to accept it, and none have objected or affirmatively opted-out. Decl. of Bryan Schwartz in support of Approval Mot. (Schwarz Decl. III) ¶ 3; Gardella Decl. ¶¶ 18-20. Of the 308 Non-California Class Member, 291 affirmatively submitted opt-in forms. Schwartz Decl. III ¶ 3; Gardella Decl. ¶¶ 4, 20.
II. LEGAL STANDARD
"The claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval." Fed.R.Civ.P. 23(e). Court approval involves a two-step process: (1) preliminary approval of the settlement; and (2) following a notice period to the class, final approval of the settlement at a fairness hearing. See Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). The Court may issue final approval of a class settlement "only after a hearing and on finding that it is fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2); In re Bluetooth Headset prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011).
Rule 23(e)'s primary concern is "the protection of those class members, including the named plaintiffs, whose rights may not have been given due regard by the negotiating parties." Officers for Justice v. Civil Serv. Comm'n of the City and Cnty. of San Francisco, 688 F.2d 615, 624 (9th Cir. 1982). To determine if a settlement is fair, some or all of the following factors should be considered: (1) the strength of Plaintiffs' case; (2) the risk, expense, complexity, and duration of further litigation; (3) the risk of maintaining class certification; (4) the amount of settlement; (5) the amount of investigation and discovery that preceded the settlement; (6) the experience and views of counsel; and (7) the reaction of class members to the proposed settlement. See, e.g., Hanlon v. Chrysler Corp., 150 F.3d 1011, 1027 (9th Cir. 1998); Staton v. Boeing, 327 F.3d 938, 959 (9th Cir. 2003).
The relative degree of importance attached to any particular factor depends on the nature of the claims advanced, the types of relief sought, and the unique facts and circumstances of each case. Officers for Justice v. Civil Service Comm'n of City and County of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982). "This list is not exhaustive, and different factors may predominate in different factual contexts." Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993). In addition to these factors, the Court may consider the procedure by which the parties arrived at the settlement to determine whether the settlement is truly the product of arm's length bargaining, rather than the product of collusion or fraud. See Chun-Hoon v. McKee Foods Corp., 716 F.Supp.2d 848, 851 (N.D. Cal. 2010).
The Court's role in evaluating the proposed settlement "must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable, and adequate to all concerned." See Rodriguez v. West Publ'g Corp., 563 F.3d 948, 965 (9th Cir. 2009) (quoting Officers for Justice, 688 F.2d at 625). In evaluating a settlement agreement, it is not the Court's role to second-guess the agreement's terms. Officers for Justice, 688 F.2d at 625. "Rule 23(e) wisely requires court approval of the terms of any settlement of a class action, but the power to approve or reject a settlement negotiated by the parties before trial does not authorize the court to require the parties to accept a settlement to which they have not agreed. Evans v. Jeff D., 475 U.S. 717, 726 (1986); see also Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998) ("Neither the district court not this court ha[s] the ability to delete, modify or substitute certain provisions. The settlement must stand or ...