United States District Court, E.D. California
For Margarita Rosales, Angelica Rosales, Plaintiffs: Jeff S. Westerman, Westerman Law Corp., Los Angeles, CA; Joseph Donald Sutton, Marco A. Palau, Stanley S. Mallison, Mallison and Martinez, Oakland, CA; William A. Sokol, Weinberg Roger and Rosenfeld, Alameda, CA.
For El Rancho Farms, Defendant: William L. Alexander, LEAD ATTORNEY, Alexander & Associates, PLC.
For Garza Contracting, Inc., Neutral: Thomas P. Feher, LEAD ATTORNEY, LeBeau - Thelen, LLP, Bakersfield, CA.
ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT (Doc. 164)
Jennifer L. Thurston, UNITED STATES MAGISTRATE JUDGE.
Plaintiffs Margarita Rosales and Angelica Rosales request preliminary approval of a class settlement. (Doc. 164.) By and through this motion, Plaintiffs seek: (1) conditional certification of the settlement class; (2) preliminary approval of the settlement; (3) appointment of Margarita Rosales, Lorena Corza, Angel Lopez Cruz, and Angelica Alvarez as the class representatives; (4) appointment of Stan Mallison and Hector Martinez as Class Counsel; (5) approval of the class notice and related materials; (6) appointment of Gilardi & Co., LLC, as the Settlement Administrator; and (7) scheduling for final approval of the settlement. (Doc. 164 at 2.) Defendant does not oppose the motion for preliminary approval of the class settlement. However, the parties request the Court resolve their remaining disputes regarding the distribution plan and the identity of the cy pres beneficiary. ( See id .)
The Court has considered the proposed settlement between the parties, and the proposed Notice, Claim Form, and Elusion Form. On November 24, 2014, the Court heard the oral arguments of counsel. For the following reasons, Plaintiffs' motion for preliminary approval of class settlement is GRANTED.
FACTUAL AND PROCEDURAL HISTORY
On November 9, 2005, Plaintiffs' counsel initiated an action against table grape growers based in Kern County, including D.M. Camp & Sons; Marko Zaninovich, Inc.; Sunview Vineyards of California, Inc.; and Giumarra Vineyards Corporation.  ( Doe v. D.M. Camp & Sons, Case No. 1:05-cv-1417-AWI-SMS, Doc. 2.) At the time the complaint was filed, the plaintiffs were unnamed former and current employees of the defendants. ( See id .) On December 6, 2005, the plaintiffs filed a First Amended Complaint, identifying additional defendants, including El Rancho Farms. ( Doe, Doc. 9). The Court acknowledged the Doe matter was related to several other cases initiated against grape growers. See Doe v. D.M. Camp & Sons, 624 F.Supp.2d 1153 (E.D. Cal. 2008).
Defendants in Doe, including El Rancho Farms, filed motions to dismiss, which were granted by the Court on March 31, 2008. ( Doe, Docs. 81, 168.) In addition, the Court granted motions to sever the action, and the Court ordered the plaintiffs to file amended pleadings against each defendant. (Id.) On May 29, 2008, " Angelica Rosales" and Margarita Rosales were identified as plaintiffs in the Third Amended Complaint against El Rancho Farms. ( Doe, Doc. 173.) On March 31, 2009, the Court ordered Plaintiffs to re-file in a new action within twenty days to finalize severance. (Doe, Doc. 241.)
On April 20, 2009, Plaintiffs filed their complaint against El Rancho Farms, alleging: violations of the Agricultural Workers Protection Act, 29 U.S.C. § 1801; failure to pay wages; failure to pay reporting time wages; failure to provide meal and rest periods; failure to pay wages of terminated or resigned employees; knowing and intentional failure to comply with itemized employee wage statement provisions; penalties under Labor Code § 2699, et seq .; breach of contract; and violation of unfair competition law. (Doc. 1.) Plaintiffs brought the action " on behalf of Plaintiffs and members of the Plaintiff Class comprising all non-exempt agricultural, packing shed, and storage cooler employees employed, or formerly employed, by each of the Defendants within the State of California." (Id. at 4.)
In compliance with the Court's deadline for seeking class certification, Rosales and Corza filed a motion on September 9, 2011. (Doc. 33.) Rosales and Corza sought certification of classes for unpaid rest breaks, untimely rest and meal breaks, off-the-clock work, and tool reimbursement. Each class included " fieldworkers employed or jointly employed by El Rancho." (Id.) However, Rosales and Corza failed to show El Rancho was a joint employer of the fieldworkers, as required by the class definitions. Further, they failed to demonstrate they worked a pure piece rate basis, and the Court found Rosales and Corza lacked standing to represent the unpaid rest break class. Finally, conflicting evidence defeated certification of the remaining classes. The recommendations were adopted in full on January 31, 2012, and the motion for class certification was denied. (Doc. 56.)
Rosales and Corza filed a motion for reconsideration based upon new evidence, seeking to demonstrate El Rancho was a joint employer and narrowed class definitions satisfied the requirements of class certification. (Doc. 60.) On July 6, 2012, the Court granted leave " to file a second motion for class certification with respect to meal periods of Garza employees who worked at El Rancho facilities." (Doc. 95 at 9.) Accordingly, Rosales and Corza filed a second motion for class certification on July 26, 2012. (Doc. 96.)
The Court found the requirements of Rule 23 of the Federal Rules of Civil Procedure were satisfied, and recommended a class be certified for only for the meal break claim. (Doc. 106.) These recommendations were adopted in full, and the class defined as: " All employees of Garza Contracting, Inc. who worked at El Rancho Farms facilities from 11/9/2001 through 12/31/2008 and who were provided a 12:00 noon meal break on shifts starting before 7:00 a.m." (Doc. 112.) Rosales and Corza were appointed as class representatives, and the law firm of Mallison & Martinez was appointed as Class Counsel. (Id. at 6.)
Following the Court's determination that Rosales and Corza lacked standing to represent a class for rest break violations, Angel Lopez Cruz and Angelica Alvarez initiated an action against El Rancho Farms and Garza for failure to provide rest periods on November 28, 2012. (Case No. 1:12-cv-1934-AWI-JLT (" Cruz") Doc. 1.) In addition, Cruz and Alvarez asserted El Rancho and Garza were liable for violations of the Agricultural Workers Protection Act, failure to pay wages, failure to pay wages of terminated or resigned employees, knowing and intentional failure to comply with itemized employee wage statement provisions; penalties under Labor Code § 2699, and violation of unfair competition law--similar to the claims presented by Rosales and Corza. ( See id .) El Rancho and Garza filed motions to dismiss, arguing the action was duplicative in nature and " an attempt by plaintiffs to certify a subclass that was previously denied certification." ( See Cruz, Doc. 13 at 2.) Although the motions were taken under submission, the Court did not have the opportunity to issue a ruling.
On June 20, 2014, the parties filed a Notice of Settlement, reporting they " participated in a private mediation session on June 11, 2014 with a private mediator, David Rudy, " and were " in the final stages of negotiating a Proposed Settlement Agreement." (Doc. 159 at 1-2.) Given the similarities between the claims presented in Rosales v. El Rancho Farms (Case No. 1:09-cv-00707-AWI-JLT) and Cruz v. El Rancho Farms (Case No. 1:12-cv-1934-AWI-JLT), the parties mediated the actions together. (Doc. 161 at 4.) The plaintiffs filed the motion for preliminary approval of class settlement on October 20, 2014, which is now pending before the Court. (Doc. 164; Cruz, Doc. 38.)
THE PROPOSED SETTLEMENT
Pursuant to the proposed settlement (" the Settlement"), the parties agree to a gross settlement totaling $2, 300, 000. (Doc. 165 at 5; Doc. 166-1 at 3, Settlement § I.S.) Defendants El Rancho and Garza agree to fund the Settlement for a class including " all persons who have been employed or jointly employed by Garza Contracting at El Rancho Farms facilities between November 9, 2001 and June 11, 2014." (Doc. 165 at 16; Settlement § I.D.) Defendants will pay $100, 000 to the Claims Administrator within ten days of preliminary approval of the class settlement, and pay the remainder no later than January 31, 2015. (Doc. 165 at 9; Doc. 166-1 at 13, Settlement § III.I.6.)
I. Payment Terms
The settlement fund will cover payments to class members with additional compensation to the Class Representatives. (Doc. 165 at 9; Doc. 166-1 at 5.) In addition, the Settlement provides for payments to Class Counsel for attorneys' fees and expenses, to the Settlement Administrator, and the California Labor & Workforce Development Agency. (Id.; Settlement § III.B.) Specifically, the settlement provides for the following payments from the gross settlement amount:
o The Class Representatives will receive up to $10, 000 each;
o Class counsel will receive no more than $766, 667 for attorneys' fees, which equals 33.33% of the gross settlement amount, and $50, 000 for expenses;
o The California Labor and Workforce Development Agency shall receive $30, 000 from the award pursuant to PAGA; and
o The Settlement Administrator will receive up to $30, 000 for fees and expenses.
(Id.) After these payments have been made, the remaining money (" Net Settlement Amount") will be distributed as settlement shares to Class Members. (Doc. 165 at 9, Settlement § III.F.1.)
To receive a settlement share from the Net Settlement Amount, a class member must submit a timely and valid claim form. Settlement shares will be calculated based upon:
(a) that Claimant's total pay periods (or if necessary, the number of Months of Employment) during the Class Period (b) divided by the aggregate number of pay periods (or if necessary, the number of Months of Employment) of all Participating Class Members (all class member claims) during the Class Period (with the division rounded to four decimal places) (c) multiplied by the value of the Net Settlement Amount.
(Doc. 166-1 at 7, Settlement § III.F.1.) Consequently, the exact amount each receives depends upon how many class members submit timely and valid claim forms.
The Settlement provides that Rosales, Corza, Cruz, and Alvarez (collectively, " Plaintiffs") and Class Members, other than those who elect not to participate in the Settlement, at the time final judgment is entered, shall release Defendants El Rancho and Garza from the claims arising in the class period. Specifically, the release for class members provides:
As of the date of the Judgment, all Participating Class Members hereby fully and finally release Defendants, and their partners, owners, subsidiaries, employees, officers, directors, agents, attorneys, stockholders, fiduciaries, other service providers, and assigns, from any and all claims, known and unknown, for or related to all claims based on or arising from the allegations that they were or are improperly compensated under federal, California, or local law (the " Class's Released Claims"). The Class's Released Claims are limited to the time period November 9, 2001 to June 11, 2014 for claims for alleged unpaid wages, overtime compensation, missed meal-period and rest-break wages or penalties, and interest; related penalties, recordkeeping penalties, pay-stub penalties, minimum-wage penalties, missed meal-period and restbreak penalties, and waiting-time penalties; and costs and attorneys' fees and expenses. The Class Member's Released Claims include all claims arising from or related to the matters alleged in the Actions, or that could have been alleged in the Actions.
(Doc. 166-1 at 15, Settlement § III.J.2.) The release for Plaintiffs encompasses more claims than the release of Class Members, which releases any claims that could have arisen during the course of their employment with Defendants. (Doc. 166-1 at 5, Settlement § III.J.1.) Specifically, Plaintiffs' release provides:
As of the date of the Judgment, Plaintiffs and their Counsel hereby fully and finally release Defendants, and their partners, owners, subsidiaries, employees, officers, directors, agents, attorneys, stockholders, fiduciaries, other service providers, and assigns, from any and all claims, known and unknown, including but not limited to claims arising from or related to their employment or claimed employment with Defendants, their compensation while employed as Defendants' employee, under federal, state and/or local law, statute, ordinance, regulation, common law, or other source of law (the " Plaintiffs' Released Claims"). The Plaintiffs' Released Claims include, but are not limited to, all claims arising from or related to the matters alleged, or that could have been alleged in the Actions. The Plaintiffs' Released Claims include all such claims covering the time period November 9, 2001 to June 11, 2014 for unpaid wages, including overtime compensation, missed meal-period and rest-break wages, and interest; penalties, including but not limited to, recordkeeping penalties, pay-stub penalties, minimum-wage penalties, missed meal-period and rest-break penalties, and waiting-time penalties; and attorneys' fees and expenses. The Plaintiffs' Released Claims include all claims arising from or related to the matters alleged in the Actions, or that could have been alleged in the Actions.
(Id.) Thus, claims released by Plaintiffs, but not Class Members, include any claims arising under the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, and the Employee Retirement Income Security Act.
III. Objections and Opt-Out Procedure
Any class member who wishes may file objections or elect not to participate in the Settlement. The Notice of Proposed Settlement (" the Notice") explains the procedures to claim a share of the settlement, object to the settlement, or elect not to participate in the Settlement. (Doc. 165 at 12; Doc. 166-2.) The Notice explains the claims that are released as part of the Settlement. (Doc. 166-2 at 9.) With the Notice, each class member will receive the Claim Form, which will include the number of months each the class member was employed at El Rancho facilities and an estimate of the amount the class member will receive under the Settlement. (Doc. 166-3 at 1.)
IV. The Cy Pres Beneficiaries
Since many class action settlements result in unclaimed funds, parties should have a plan for distributing unclaimed funds. Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1305 (9th Cir. 1990). The options for such distribution include cy pres distribution, escheat to the government, and reversion to the defendants. Id., 904 F.2d at 1307. Here, Plaintiffs and Defendants have agreed that a cy pres recipient should be designated for funds under the Settlement, but seek the Court's intervention related to their dispute concerning the identity of the beneficiary, and what funds should be directed to the cy pres beneficiary. Defendants assert: " The identity of the cy pres recipient is a material term to El Rancho Farms, and is the reason that El Rancho agreed to such a large settlement amount. . . . El Rancho Farms agreed to pay 2/3 of $2.3 million because it had the option of selecting the cy pres recipient." (Doc. 171-1 at 2, Estrada Decl. ¶ 6.) Plaintiffs dispute this and argue that the execution of the settlement agreement which excludes this provision belies this claim. Indeed, the willingness of Defendants to proceed in the settlement process without assurance that their proposed beneficiary would be selected undercuts their position. In any event, the parties agree that the Court should select the beneficiary.
The Ninth Circuit has determined any proposed cy pres recipient should be " tethered to the nature of the lawsuit and the interest of the silent class members." Nachshin v. AOL, LLC, 663 F.3d 1034, 1039 (9th Cir. 2011). In other words, the Ninth Circuit " require[s] that there be a driving nexus between the plaintiff class and the cy pres beneficiaries." Dennis v. Kellogg Co., 697 F.3d 858, 865 (9th Cir. 2012) (citing Nachshin, 663 F.3d at 1038). The Court explained that without such tethering, the distribution of funds " may create the appearance of impropriety" by catering " to the whims and self interests of the parties, their counsel, or the court." Nachshin, 663 F.3d at 1038. Thus, a cy pres award should not benefit a group that is " too remote from the plaintiff class." Six Mexican Workers, 904 F.2d at 1308.
In identifying a cy pres beneficiary, the Ninth Circuit directs courts to consider whether awards to the beneficiary " (1) address the objectives of the underlying statutes, (2) target the plaintiff class, or (3) provide reasonable certainty that any member will be benefitted." Nachshin, 663 F.3d at 1040. Further, the Court must consider whether the cy pres distribution is appropriate given the " size and geographic diversity" of the class members. Id. at 1040-41 (citing, e.g., In re Airline Ticket Comm'n Antitrust Litig., 307 F.3d 679, 683 (8th Cir. 2002); Houck on Behalf of U.S. v. Folding Carton Admin. Comm., 881 F.2d 494, 502 (7th Cir. 1989)).
Notably, the Ninth Circuit has determined also that issues related to the identity of a cy pres beneficiary are not generally ripe until there are funds that remain unclaimed. See Rodriguez v. West Publ'g Corp., 563 F.3d 948, 966 (9th Cir. 2009) (finding cy pres distribution " becomes ripe only if entire settlement fund is not distributed to class members" and declining to determine propriety of cy pres at that time). The Court explained that where a cy pres distribution is contingent on the outcome of the claims process for a cash distribution, issues regarding the identification of recipients " will not be ripe until it is determined that available cash remains in th[e] fund after the claims process has concluded." Dennis v. Kellogg Co., 697 F.3d 858, 865 (9th Cir. 2012). At this time, there is no way to know whether there will be funds remaining and, therefore, the Court declines to make the selection at this time. The Court encourages the parties to continue to work to resolve this matter. Toward this end, the Court offers some general observations.
First, it does not appear the Juvenile Diabetes Research Fund (" JDRF"), though clearly worthy, is an ideal cy pres beneficiary in this action. Because the claims presented by Plaintiffs primarily deal with wage and hour violations, the objectives of the underlying statutes are not served by the JDRF. Further, there is no evidence that any member of the Settlement Class would benefit by the donation to the JDRF given the national scope of the organization. See Cordy v. USS-Posco Indus., 2013 WL 4028627 at *3-4 (N.D. Cal. July 31, 2013) (declining to approve a cy pres award to the JDRF in wage and hour action because the parties did not explain how the proposed distribution was relevant to the settlement class).
The other two proposed beneficiaries provided a greater likelihood of benefit to the class. First, the CRLA is " an organization dedicated to enforcing farmworkers' labor rights in California." (Doc. 170 at 3) Jeffrey Ponting, the Pro Bono Coordinator for the group, reports that the mission of the CRLA " is to fight for injustice and individual rights alongside the most exploited communities of our society." (Doc. 170-4 at 2, Ponting Decl. ¶ ¶ 1-2) (emphasis omitted.) According to Mr. Ponting, the CRLA has a division called the " Fresno Migrant Unit, " which " represents Migrant farmworkers in six Central California counties ranging from southern Kern County in the south to Merced County in the north." (Id., ¶ 3.) He asserts, " Over the past ten years CRLA's Fresno, Salinas and Oxnard Migrant and Arvin/Lamont offices have filed suits on behalf of 250 Central Valley farmworkers in matters involving violations of the AWPA and, or California's wage and hour laws." (Id. at 2, ¶ 5.) Mr. Ponting declares that if the CRLA is designated as a ...