United States District Court, E.D. California
ORDER AND FINAL JUDGMENT GRANTING PLAINTIFF’S
MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT (ECF NO.
MICHAEL J. SENG UNITED STATES MAGISTRATE JUDGE.
11, 2016, Plaintiff Francisco Nieves Reyes, on behalf of
himself and others similarly situated (hereinafter
collectively referred to as “Plaintiffs”), moved
for final approval of a class action settlement. (ECF No.
42.) Defendants CVS Pharmacy, Inc. and Caremark Rx, LLC
(hereinafter collectively referred to as
“Defendants”) filed a statement of
non-opposition. (ECF No. 45.)
motion was heard on June 10, 2016. Counsel Gregory Karasik
appeared on behalf of Plaintiffs, and counsel Jennifer
Zargarof appeared telephonically on behalf of Defendants. The
matter is deemed submitted and stands ready for adjudication.
reasons set forth below, the motion will be granted.
action was filed in Stanislaus County Superior Court on
January 30, 2013. (ECF No. 1.) It initially was removed to
federal court on March 21, 2013 on grounds of federal
question jurisdiction, but remanded on February 12, 2014.
(Case No. 13-cv-00420-AWI-GSA, ECF Nos. 1 & 19.) The case
again was removed to federal court on June 19, 2014, this
time on grounds of diversity jurisdiction under the Class
Action Fairness Act (“CAFA”). (ECF No. 1.)
Plaintiffs’ motion for remand (ECF No. 5) was denied on
August 11, 2014 (ECF No. 22).
the parties engaged in discovery, including interrogatories,
document production, and the depositions of two of
Defendants’ human resources personnel most
knowledgeable about Defendants’ payroll practices. The
parties also engaged in informal discovery in which
Defendants provided Plaintiffs with payroll data for a
sampling of employees. Through discovery, Plaintiffs learned
that Defendants had a policy of requiring employees to
forfeit holiday pay upon termination. The parties agreed to
mediate with respect to these claims and, on July 30, 2015,
during mediation before Barry Winograd, Esq., the parties
reached agreement on material terms of a class action
October 30, 2015, Plaintiffs moved for preliminary approval
of the settlement. (ECF No. 35.) Defendants filed a statement
of non-opposition. (ECF No. 37.) The motion was granted. (ECF
No. 40). Pursuant to the settlement agreement and the
Court’s order granting preliminary approval, Plaintiffs
filed a first amended complaint. (ECF No. 41.)
First Amended Complaint
asserts claims for failure to pay vacation wages owed upon
termination, failure to pay all wages owed upon termination,
and failure to pay final wages timely upon termination, in
violation of the California Labor Code; unfair competition
under the California Business and Professions Code; and civil
penalties under the California Labor Code’s Private
Attorney General Act of 2004 (“PAGA”). These
claims arise from Plaintiffs’ allegations that
Defendants (1) calculate the amount of employees’
accrued vacation on a monthly basis and (2) do not pay
accrued but unused holiday pay timely upon termination.
Plaintiff Francisco Nieves Reyes alleges the following facts:
He worked for Defendants in Patterson, California from April
2008 to August 20, 2012. During that time, he earned vacation
benefits on a daily basis, at a rate of 6.67 hours per month.
Because Defendants only recorded Mr. Reyes’s vacation
hours as accrued or earned on a monthly basis, they did not
pay Plaintiff for vacation hours earned during his final,
partial-month pay period of August 4, 2012 to August 20,
2012. Additionally, Mr. Reyes earned one personal
“floating” holiday per year. Mr. Reyes did not
use his floating holiday during his last year of employment,
and therefore was due eight hours of pay upon his
termination. Despite being discharged on August 20, 2012, he
was not paid for the floating holiday until September 4,
Reyes seeks to represent similarly situated individuals
through a class action. The class is defined as “[a]ll
persons who worked for CVS at the La Habra or Patterson
Distribution Centers in the state of California, who were
subject to collective bargaining agreements (but not
including the La Habra Warehouse Agreement),  whose employment
with CVS ended at any time since January 30, 2009 (for the
unpaid vacation wages and late final wages classes) or
January 30, 2010 (for the unpaid final wages class), who
accrued vacation benefits and/or did not use all accrued
floating holiday benefits during their employment with CVS.
(ECF No. 41 at 32.) The class is made up of: the unpaid
vacation wages class (including all of Defendants’
California employees who earned vacation and whose employment
ended within the four years preceding filing of the
complaint); the unpaid final wages class (including all of
Defendants’ California employees who earned vacation
and whose employment ended within the three years preceding
filing of the complaint); and the late final wages class
(including all of Defendants’ California employees who
did not use all floating holidays accrued, and whose
employment ended within the three years preceding filing of
the terms of the settlement agreement, Defendants agree to
pay the gross settlement amount of $400, 000 to resolve the
claims of any participating class members. The Settlement
Class consists of all persons whose employment at CVS’s
La Habra, California or Patterson, California Distribution
Centers ended any time between January 30, 2009 and October
31, 2015, and who were subject to a collective bargaining
agreement, not including the La Habra, California Warehouse
Agreements. There are 447 class members. Class members are
not required to submit claim forms to receive benefits.
following deductions will be made from the gross settlement
• $1, 000 to the Labor Workforce Development Agency in
relation to Plaintiffs’ PAGA claim;
• Up to $5, 000 to named Plaintiff Mr. Reyes as an
incentive award for his services and participation as class
• Up to $100, 000 (25 percent of the gross settlement
fund) to class counsel for attorney fees;
• Up to $10, 000.00 in legal costs and expenses; and
• $6, 500 in claims administration costs.
subtracting these deductions from the gross settlement fund,
the net settlement fund is estimated to be approximately
$277, 500. It will be divided equally among participating
class members and also used to pay Defendants’ share of
payroll taxes associated therewith. Ninety percent of the
Settlement Award will be allocated to penalties and interest.
Ten percent of the Settlement Award will be allocated to
wages. Unclaimed settlement checks shall escheat to the State
of California’s Bureau of Unclaimed Property. No
settlement funds will revert to Defendants.
Preliminary Settlement Administration
to the settlement agreement and the Court’s preliminary
approval order, the settlement administrator mailed, on March
3, 2016, Court-approved Notices of Proposed Class Action
Settlement and Final Approval Hearing to the 447 class
members. Some notices were returned as undeliverable and 19
notices were re-sent. Ultimately, six notices remained
also mailed notices of the proposed settlement to the
following attorneys general on March 25, 2016: the United
States, California, Georgia, Nevada, Missouri, and Texas.
(ECF No. 49.) At least one member of the settlement class
resides in each of these states, according to
Defendants’ records of each class member’s last
deadline to submit requests for exclusion or objections to
the settlement was April 2, 2016. The settlement
administrator reported that there were no requests for
exclusion or objections to the settlement within the time
period specified in the notice. As of June 27, 2016, no
objections were received from any of the attorneys general.
Ninth Circuit maintains a “strong judicial
policy” that favors the settlement of class actions.
Class Plaintiffs v. City of Seattle, 955 F.2d 1268,
1276 (9th Cir. 1992). The settlement of a certified class
action must be fair, reasonable, and adequate. Fed.R.Civ.P.
23(e)(2). But, where the “parties reach a settlement
agreement prior to class certification, courts must peruse
the proposed compromise to ratify both the propriety of the
certification and the fairness of the settlement.”
Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir.
2003). In these situations, settlement approval
“requires a higher standard of fairness and a more
probing inquiry than may normally be required under Rule
23(e).” Dennis v. Kellogg Co., 697 F.3d 858,
864 (9th Cir. 2012) (citation and internal quotation marks
Court’s order granting preliminary settlement approval,
the Court provisionally certified the settlement class. (ECF
No. 40.) None of the information submitted with the motion
for final approval undermines the Court’s previous
determination. The Court will briefly review the factors
applicable to class certification and its determination that
certification of the settlement class is appropriate.
certify a class, a plaintiff must demonstrate that all of the
prerequisites of Rule 23(a), and at least one of the
requirements of Rule 23(b) of the Federal Rules of Civil
Procedure have been met. Wang v. Chinese Daily News,
Inc., 737 F.3d 538, 542 (9th Cir. 2013). When
determining whether to certify a class for settlement
purposes, a court must pay “heightened” attention
to the requirements of Rule 23. Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 620 (1997); Narouz v. Charter
Commc’ns., LLC, 591 F.3d 1261, 1266 (9th Cir.
2010). Indeed, “[s]uch attention is of vital
importance, for a court asked to certify a settlement class
will lack the opportunity, present when a case is litigated,
to adjust the class, informed by the proceedings as they
unfold.” Amchem Prods., Inc., 521 U.S. at 620.
order to depart from the usual rule that litigation is
conducted by individually named parties, “a class
representative must be part of the class and ‘possess
the same interest and suffer the same injury’ as the
class members.” Wal-Mart Stores, Inc. v. Dukes
(Wal-Mart), 131 S.Ct. 2541, 2550 (2011) (citation
omitted). Rule 23(a) provides that the named plaintiffs are
appropriate representatives where: “(1) the class is so
numerous that joinder of all members is impracticable; (2)
there are questions of law or fact common to the class; (3)
the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the
interests of the class.” These requirements ensure that
the class claims are limited to those fairly encompassed by
the named plaintiff’s claims. Wal-
Mart, 131 S.Ct. at 2550.
Plaintiffs seek certification of a class under Federal Rule
of Civil Procedure 23(b)(3), which requires that questions of
law or fact common to class members predominate over any
questions affecting only individual members, and that a class
action is superior to other available methods for fairly and
efficiently adjudicating the controversy.
it is noted:
Rule 23 does not set forth a mere pleading standard. A party
seeking class certification must affirmatively demonstrate
his compliance with the Rule - that is, he must be prepared
to prove that there are in fact sufficiently
numerous parties, common questions of law or fact, etc. We
recognized in [Gen. Tel. Co. of SW v. Falcon, 457
U.S. 147 (1982)] that “sometimes it may be necessary
for the court to probe behind the pleadings before coming to
rest on the certification question, ” and that
certification is proper only if “the trial court is
satisfied, after a rigorous analysis, that the prerequisites
of Rule 23(a) have been satisfied.”
Wal-Mart, 131 S.Ct. at 2551 (citations omitted)
(emphasis in original).
numerosity requirement is satisfied where “the class is
so numerous that joinder of all members is
impracticable.” Fed.R.Civ.P. 23(a)(1). Factors relevant
to this requirement include: (1) the number of individual
class members; (2) the ease of identifying and contacting
class members; (3) the geographical spread of class members;
and (4) the ability and willingness of individual members to
bring claims, as affected by their financial resources, the
size of the claims, and their fear of retaliation in light of
an ongoing relationship with the defendant. See,
e.g., Twegbe v. Pharmaca Integrative Pharm.,
Inc., 2013 U.S. Dist. LEXIS 100067, 2013 WL 3802807
(N.D. Cal. July 17, 2013), and sources cited therein.
the settlement class is comprised of 447
members and is therefore numerous and easily
identified. Additionally, only six Notices to class members
were ultimately undeliverable. (Id.) Accordingly, on
the whole, the class is easy to locate and contact. The value
of the individual claims makes individual actions unlikely
and inefficient. Based on these factors, the Court concludes
the numerosity requirement is satisfied.
commonality requirement is satisfied when a plaintiff shows
that “there are questions of law or fact common to the
class.” Fed.R.Civ.P. 23(a)(2). Plaintiffs’ claims
must depend upon a common contention that it is capable of
classwide resolution - “which means that determination
of its truth or falsity will resolve an issue that is central
to the validity of each one of the claims in one
stroke.” Wal-Mart, 131 S.Ct. at 2551.
questions abound in this action. Did Defendants record
vacation time on a monthly basis? Did they, as a result, fail
to pay class members all earned vacation time upon
termination? Did Defendants fail to pay class members all
wages owed upon termination? Answers to these common
questions will substantially drive the litigation and resolve
issues central to the validity of several of
Plaintiffs’ claims. See Wal-Mart, 131 S.Ct. at
is, however, one area in which class members do not appear to
be uniformly situated: the forfeiture of unused floating
holiday pay. Plaintiff alleges that Defendants had a policy
requiring forfeiture of unused floating holidays upon
termination. However, this policy apparently was not applied
uniformly to all class members. Plaintiff Reyes, for example,
was paid his floating holiday pay, although
belatedly. Thus, it appears the class may contain members who
were not paid floating holiday pay at all, those who were
paid late, and even those who used all of the floating
holiday pay they earned and thus are owed nothing. Therefore,
asking whether Defendants have a policy requiring forfeiture
of holiday pay, standing alone, will not resolve
Rule 23(a)(2) is to be construed permissively. Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).
“All questions of fact and law need not be common to
satisfy the rule. The existence of shared legal issues with
divergent factual predicates is sufficient, as is a common
core of salient facts coupled with disparate legal remedies
within the class.” Id. Here, class members
share common legal issue of unpaid vacation wages, unpaid
final wages, and late final wages. Unpaid floating holidays
are but one factual predicate upon which these claims rest.
The Court concludes that the factual variations are
insufficient to defeat commonality.
the Court concludes the commonality requirement is satisfied.
ensures that Plaintiff Reyes is the proper party to proceed
with the suit. The test is “whether other members have
the same or similar injury, whether the action is based on
conduct which is not unique to the named plaintiffs, and
whether other class members have been injured by the same
course of conduct.” Hanon v. Dataproducts
Corp., 976 F.2d 497, 508 (9th Cir. 1992). “Under
the rule's permissive standards, representative claims
are ‘typical’ if they are reasonably co-extensive
with those of absent class members; they need not be
substantially identical.” Hanlon, 150 F.3d at
the exception of claims concerning forfeited floating holiday
wages, the claims of Mr. Reyes are substantially identical to
those of the other class members. The claims for late and/or
forfeited floating holiday pay are reasonably co-extensive.
These claims involve similar legal issues and only minor
the typicality requirement is satisfied.