Emmons v. Quest Diagnostics Clinical Laboratories, Inc.

          ORDER GRANTING PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT (DOC. NO. 74)

         On May 16, 2016, Dorothea Emmons and Lisa Stapleton ("plaintiffs") filed a motion for preliminary approval of a class action settlement. (Doc. No. 74.) The court held a hearing on the motion on June 21, 2016. (Doc. No. 80.) Attorneys Bevin Pike and Eduardo Santes appeared telephonically on behalf of plaintiffs and attorney Aimee Mackay appeared telephonically on behalf of defendants. For the reasons discussed below, the court grants the motion.

         I. Introduction

         This action was removed from Stanislaus County Superior Court under the Class Action Fairness Act ("CAFA") on April 1, 2013. (Doc. No. 1.) The complaint alleges Quest Diagnostics Clinical Laboratories, Inc., Quest Diagnostics Incorporated, and Quest Diagnostics Nochols Institute ("defendants") violated California labor law by failing to (1) pay overtime wages, (2) pay minimum wages, (3) provide meal periods, (4) provide rest breaks, (5) pay all wages owed upon termination, (6) provide accurate wage statements, and (7) pay business-related expenses. Plaintiffs further allege violations of California Labor Code § 2698 and California Business and Professions Code § 17200. (Id. at 24-37.) Plaintiffs sought relief both on their own behalf and on behalf of a proposed main class and two proposed subclasses consisting of non-Floater and Floater Phlebotomists employed by defendants. (Id. at 16-17.)

         On May 16, 2016, plaintiffs filed the current motion seeking preliminary approval of a class action settlement. (Doc. No. 74.) The proposed settlement defines the class as "[a]ll persons who worked as ‘Floater' or ‘Non-Floater' Phlebotomists for Defendants in California at any time during the period from April 29, 2011 to the date of Preliminary Approval." (Id. at 9.)

         The proposed settlement seeks a gross settlement amount of $2, 350, 000.00. After deducting the requested attorney's fees and costs, settlement administration costs, payment to the California Labor and Workforce Development Agency ("LWDA"), and the class representative enhancement payments, the class members will net $1, 495, 667.00. (Id.) Plaintiffs estimate each class member will receive approximately $575.00. (Id. at 10.)

         In the motion, plaintiffs and the putative class seek an order: (1) granting preliminary approval of the proposed class action settlement; (2) conditionally certifying the settlement class; (3) approving distribution of notice to the settlement class; (4) approving plaintiffs as class representatives; (5) approving Capstone Law APC as class counsel; (6) approving Simpluris, Inc. as class administrator; and (7) setting a hearing date for final approval of the settlement.

         II. Legal Standard

         "Courts have long recognized that settlement class actions present unique due process concerns for absent class members." In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011) (citation and internal quotations omitted). To protect the rights of absent class members, Rule 23(e) of the Federal Rules of Civil Procedure requires the court approve all class action settlements "only after a hearing and on finding that it is fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2); Bluetooth, 654 F.3d at 946. However, it has been recognized when parties seek approval of a settlement agreement negotiated prior to formal class certification, "there is an even greater potential for a breach of fiduciary duty owed the class during settlement." Bluetooth, 654 F.3d at 946. Thus, the court must review such agreements with "a more probing inquiry" for evidence of collusion or other conflicts of interest than what is normally required under the Federal Rules. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998); see also Bluetooth, 654 F.3d at 946.

         When parties seek class certification for settlement purposes only, Rule 23 "demand[s] undiluted, even heightened, attention" to the requirements for certification. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997). The district court must examine the propriety of certification under Rule 23 both at this preliminary stage and at a later fairness hearing. See, e.g., Ogbuehi v. Comcast, No. 2:13-cv-00672-KJM-KJN (E.D. Cal. Oct. 2, 2014); West v. Circle K Stores, Inc., No. 04-cv-0438 WBS GGH, 2006 WL 1652598, at *2 (E.D. Cal. June 13, 2006).

         Review of a proposed class action settlement ordinarily proceeds in three stages. See Manual for Complex Litigation (4th) § 21.632. First, the court conducts a preliminary fairness evaluation and, if applicable, considers conditional class certification. Id. Second, if the court makes a preliminary determination on the fairness, reasonableness, and adequacy of the settlement terms, the parties are directed to prepare the notice of certification and proposed settlement to the class members. Id. Third, the court holds a final fairness hearing to determine whether to approve the settlement. Id.; see also Narouz v. Charter Commc'ns, Inc., 591 F.3d 1261, 1266-67 (9th Cir. 2010).

         III. Conditional Certification

         Plaintiffs request conditional certification of the settlement class under Rule 23(c)(1). The parties ask the court to certify the following settlement class:

All persons who worked as "Floater" or "Non-Floater" Phlebotomists for Defendants in California at any time during the period from April 29, 2011 to the date of Preliminary Approval.

(Doc. No. 74 at 9.)

         Rule 23(c)(1) permits a court to "make a conditional determination of whether an action should be maintained as a class action, subject to final approval at a later date." Fry v. Hayt, Hayt & Landau, 198 F.R.D. 461, 466 (E.D. Pa. 2000). Conditional certification requires satisfaction of the pre-requisites of Rule 23(a) and (b). Id.

         a. Rule 23(a) Requirements

         Federal Rule of Civil Procedure 23(a) states in pertinent part that "[o]ne or more members of a class may sue or be sued as representative parties on behalf of all." As a threshold matter, in order to certify a class, a court must be satisfied that:

(1) the class is so numerous that joinder of all members is impracticable (the "numerosity" requirement); (2) there are questions of law or fact common to the class (the "commonality" requirement); (3) the claims or defenses of representative parties are typical of the claims or defenses of the class (the "typicality" requirement); and (4) the representative parties will fairly and adequately protect the interests of the class (the "adequacy of representation" requirement).

In re Itel Secs. Litig., 89 F.R.D. 104, 112 (N.D. Cal. 1981) (citing Fed.R.Civ.P. 23(a)).

         i. Numerosity

         A proposed class must be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). The numerosity requirement demands "examination of the specific facts of each case and imposes no absolute limitations." Gen. Tel. Co. of the Nw., Inc. v. EEOC, 446 U.S. 318, 330 (1980).

         The parties stipulate there are 2, 600 potential class members. (Doc. No. 74 at 14.) Courts have routinely found the numerosity requirement satisfied when the class comprises 40 or more members. Ansari v. New York Univ., 179 F.R.D. 112, 114 (S.D.N.Y. 1998). Numerosity is also satisfied where joining all class members would serve only to impose financial burdens and clog the court's docket. In re Itel Litig., 89 F.R.D. at 112. Here, the joinder of approximately 2, 600 current and former, floater and non-floater phlebotomists to hear their several claims would only further clog this court's already overburdened docket. Numerosity is thus satisfied.

         ii. Commonality

         Rule 23(a) also demands "questions of law or fact common to the class." Fed.R.Civ.P. 23(a)(2). The rule does not require all questions of law or fact be common to every single class member. The raising of any common question, however, does not suffice. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349 (2011) ("[a]ny competently crafted class complaint literally raises common ‘questions.'") (quoting Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 131-132 (2009)); Ellis v. Costco Wholesale Corp., 657 F.3d 970, 981 (9th Cir. 2011) ("In other words, Plaintiffs must have a common question that will connect many individual promotional decisions to their claim for class relief.") Rather, class representatives must demonstrate common points of facts and law will drive or resolve the litigation. Dukes, 564 U.S. at 350 ("What matters to class certification . . . is not the raising of common ‘questions'-even in droves-but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.") (internal citations omitted). To satisfy Rule 23(a)'s commonality requirement, a class ...