Flores v. Medifit Corporate Services, Inc.

          ORDER GRANTING MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Re: Dkt. No. 36

          WILLIAM H. ORRICK UNITED STATES DISTRICT JUDGE

         The Court, having carefully considered the briefs, argument of counsel, and all matters presented to the Court, and good cause appearing, hereby ORDERS THAT:

         1. The Court preliminarily approves the MediFit Corporate Services, Inc. “Wage and Hour” Class Action Settlement Agreement and Release of Claims (“Settlement Agreement”) attached as Exhibit A to the Notice of Errata filed at Docket Number 37. This is based on the Court’s determination that the Settlement is within the range of possible final approval. Per the parties’ Joint Response to Court’s Notes Regarding Hearing on Preliminary Approval of Class Action Settlement and their representations at the preliminary approval hearing on July 20, 2016, the Settlement Agreement is amended as follows (with additions underlined and deletions struckthrough):

a. Paragraph 45 of the Settlement Agreement is amended to read: Settlement Class Members who do not opt-out may object to the settlement. Settlement Class Members who do not opt-out may not object to the settlement. If an opt-out a Settlement Class Member who has not opted-out wishes to object, he/she must do so within forty-five (45) calendar days after the Class Notice is sent (or not more than twenty (20) calendar days after the date the Class Notice is re-mailed, in the circumstance described above). Objections to the Settlement must be submitted to the Court either by mailing them to the Class Action Clerk, United States District Court for the Northern District of California, Philip Burton Federal Building & United States Courthouse, 450 Golden Gate Avenue, San Francisco, CA 94102, or by filing them in person at any location of the United States District Court for the Northern District of California. A Settlement Class Member who has not opted-out may also object by appearing at the final approval hearing, even if he or she has not previously submitted a written objection.

b. Paragraph 46 of the Settlement Agreement is amended to read: Objections must describe why the objector believes the Settlement is unfair and whether the objector intends to appear at the final approval hearing. Deficient or untimely objections shall not be considered. Class Members who fail to file and serve timely written objections in the manner specified above shall be deemed to have waived any objections and shall be foreclosed from making any objection (whether by appeal or otherwise) to the Settlement, unless otherwise ordered by the Court. Class Counsel and Defendant’s Counsel may, at least ten (10) calendar days (or some other number of days as the Court shall specify) before the Final Approval Hearing, file responses to any written objections.

c. Paragraph 50 of the Settlement Agreement is amended to read: No challenge will be considered timely if it is postmarked more than the number of days set forth in the preceding paragraph of this Settlement Agreement. Absent an agreement between Class Counsel and Defendant’s Counsel regarding how to address the dispute, the Settlement Administrator shall have authority to resolve the challenge and make a final and binding determination without hearing or right of appeal. Defendant agrees to provide the Settlement Administrator with additional documents or other information associated with the challenge, if such exists. All disputes shall be resolved, either by agreement of Class Counsel and Defendant’s Counsel, or by decision of the Settlement Administrator as provided herein, prior to submitting the Settlement Administrator’s declaration to the Court for final approval. Responses to challenges shall be made within fourteen (14) days of receiving the challenge.

d. Paragraph 51 of the Settlement Agreement is amended to read: Settlement checks issued to the Class Representatives and Settlement Class Members shall remain valid for one-hundred and eighty (180) calendar days from the date of issuance. This expiration or cancellation date shall be clearly printed on the front of the check (“Void Date”). If the Class Representatives or any Settlement Class Members do not cash their settlement payment check(s) before the Void Date, the funds represented thereby will be tendered to the cy pres beneficiaries, to be selected by the parties, (the Legal Aid Society – Employment Law Center, The Eagle Fund, and Stand by the Wounded) within five (5) days of the close of the 180 day period. The Settlement Administrator will perform one skip trace on any undeliverable settlement check. Settlement checks can be reissued to Settlement Class Members upon request within this 180 day period but any reissued checks shall have the same Void Date as the original settlement check. Those Settlement Class Members who fail to cash their settlement checks will be deemed to have waived irrevocably any right in or claim to a settlement payment, but the Settlement Agreement and its waivers and releases shall remain binding upon them.

e. Paragraph 52 of the Settlement Agreement is amended to read: Upon the final approval by the Court of this Settlement Agreement, and except as to such rights or claims as may be created by this Settlement Agreement, the Settlement Class Members release Defendant, its current or former subsidiaries, affiliates, owners, parents, predecessors, insurers, agents, employees, successors, assigns, officers, officials, directors, employers, attorneys, personal representatives, executors, and shareholders, including their respective pension, profit sharing, savings, health, and other employee benefit plans of any nature, the successors of such plans, and those plans’ respective current or former trustees and administrators, agents, employees, and fiduciaries (“Releasees”), of and from any and all claims, rights, demands, charges, complaint, causes of action, obligations or liability of any and every kind that were, or could have been, asserted in any version of any complaint filed in the Action, or are based on or arise out of the facts or law alleged in any version of any complaint the Second Amended Complaint filed in the Action, including those under any state and federal law for minimum wage and overtime, failure to provide meal breaks, failure to authorize and permit rest breaks, failure to timely pay wages at termination, failure to pay a proper piece rate, failure to pay wages due, failure to reimburse necessary business expenses, failure to provide accurate and itemized wage statements, unfair business practices, and violations of the Labor Code Private Attorneys General Act of 2004.

         2. The Court conditionally certifies, for settlement purposes only, the proposed Plaintiff Classes, defined as follows:

California Class: All persons who worked in California for Defendant, or its entity, MediFit Community Services, LLC, at any point since June 16, 2011 as a group exercise instructor, personal trainer, or swim instructor.

FLSA Class: All persons who worked in California for Defendant, or its entity, MediFit Community Services, LLC, at any point since June 16, 2012 as a group exercise instructor, personal trainer, or swim instructor.

         3. The Court hereby conditionally certifies the proposed Plaintiff Classes contained therein and conditionally finds that, solely for the purposes of approving this settlement and for no other purpose and with no other effect on this litigation, the proposed Plaintiff Classes meet the requirements for certification under Federal Rules of Civil Procedure, Rules 23(a) and 23(b), including that: (a) the proposed classes are ascertainable and so numerous that joinder of all members of the classes is impractical; (b) there are predominant questions of law or fact common to the proposed classes, and there is a well-defined community of interest amongst the members of the proposed classes with respect to the subject matter of the litigation; (c) the claims of Representative Plaintiffs are typical of the claims of the members of the proposed classes; (d) Representative Plaintiffs and Class Counsel will fairly and adequately protect the interests of the members of the classes; (e) a class action is superior to other available methods for an efficient adjudication of this controversy; and (f) Class Counsel is qualified to act as counsel for the Representative Plaintiffs in their individual and representative capacities.

         4. The Court provisionally finds Scott Cole & Associates, APC to be sufficiently experienced and proficient in class action proceedings that they may act as Class Counsel and are, therefore, appointed as such.

         5. The Court provisionally appoints Francisco Flores and Giulia Ferraris as the representatives of the Plaintiff Classes (“Representative Plaintiffs, ” “Class Representatives, ” or “Plaintiffs”).

         6. The Court provisionally appoints Rust Consulting as the Settlement Administrator.

         7. The Court approves, as to form and content, the following: the Class Notice, attached as Exhibit A to this Order. The Class Notice shall be disseminated to the Plaintiff Class Members in the manner set forth in the Settlement Agreement.

         8. The Court approves, as to form and content, the following: the Second Amended Complaint, attached as Exhibit B to this Order. The Second Amended Complaint is deemed filed upon the entry of this Order.

         9. The final approval hearing shall be held on November 9, 2016, at 2 p.m., in Courtroom 2, 17th floor of this Court, to determine whether the proposed Settlement is fair, adequate, reasonable, and should be granted final approval. At that time, the Court will also consider Plaintiff’s application for attorneys’ fees, costs, and expenses, and any application for Enhancement Awards to the Representative Plaintiffs.

         10. Any Plaintiff Class member may choose to opt-out of and be excluded from the Settlement Classes by following the instructions for requesting exclusion from the Settlement that are set forth in the Class Notice. Any such person who chooses to op- out of and be excluded from the Settlement Classes will not be entitled to any recovery under the Settlement and will not be bound by the Settlement or have any right to object, appeal or comment thereon. Settlement Class members who have not requested exclusion shall be bound by the terms of the Settlement Agreement, including its Release, and the Court’s Judgment.

         11. Any Class Member who has not opted-out may object to the Settlement in writing as set forth in the Class Notice, and may also appear at the final approval hearing to object or to express his or her views regarding the Settlement. Class Counsel and Defendant’s Counsel may, at least ten (10) calendar days (or some other number of days as the Court shall specify) before the Final Approval Hearing, file responses to any written objections.

         12. In the event that the Settlement does not become effective in accordance with the terms of the Settlement Agreement, or the Settlement is not finally approved, or is terminated, cancelled or fails to become effective for any reason, this Order shall be rendered null and void and shall be vacated, and the Parties shall revert back to their respective positions as of before entering into the Settlement Agreement.

         13. The Court reserves the right to adjourn or continue the date of the final approval hearing and all dates provided for in the Settlement Agreement without further notice to Settlement Class members, and retains jurisdiction to consider all further applications arising out of or connected with the proposed Settlement.

         IT IS SO ORDERED.

         Exhibit A

         UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

         FRANCISCO FLORES and GIULIA FERRARIS, individually, and on behalf of all others similarly situated, Plaintiffs, vs.

         MEDIFIT CORPORATE SERVICES, INC., and DOES 1 through 100, inclusive, Defendant.

         NO. 3:15-cv-03423-WHO

         NOTICE OF PROPOSED CLASS ACTION SETTLEMENT AND SETTLEMENT APPROVAL HEARING

         To:All persons who worked for MediFit Corporate Services, Inc., or its entity MediFit Community Services, LLC, as a group exercise instructor, personal trainer, or swim instructor in California at any point since June 16, 2011.

         PLEASE READ THIS NOTICE CAREFULLY YOU MAY BE ENTITLED TO COMPENSATION FROM THIS SETTLEMENT

         This is a court approved notice. This is not an advertisement.

         You are NOT being sued. However, your legal rights are affected whether you act or not.

         I. INTRODUCTION

         You received this Notice because the records of MediFit Corporate Servies, Inc. and/or MediFit Community Services, LLC (hereafter “MediFit”) show that you were employed by MediFit as a group exercise instructor, personal trainer, or swim instructor in California at some time during the period of June 16, 2011 to______ (the “Class Period”). All individuals who fall within that description are considered “Class Members” under the terms of this Notice.

         We are providing this Notice to make you aware that a proposed class action settlement (the “Settlement”) of the above-captioned lawsuit (the “Action”) pending in the United States District Court, Northern District of California (the “Court”), has been reached by the parties and has been granted preliminary approval by the Court supervising the Action. A final settlement hearing will be held on ____, 2016 at___.m. to determine whether the Settlement should be granted final approval.

         MediFit’s records indicate that you are a Class Member and might be entitled to compensation under the Settlement. The Settlement affects your legal rights unless you ask to be excluded from the Action, also known as “opting out” of the Settlement. The purpose of this Notice is to: (1) describe the Action, (2) inform you of the terms of the Settlement, and (3) inform you of your rights and options in connection with the Settlement. The Court file has the full settlement documents with more information on the lawsuit. MediFit will not fire, punish, retaliate, or otherwise discriminate against any employee because he or she chooses to or does not choose to participate in this Settlement, or objects to the Settlement.

         II. SUMMARY OF THE ACTION

         Plaintiffs Francisco Flores and Giulia Ferraris (“Plaintiffs”) allege in their Complaint that, during the Class Period, MediFit required Class Members to work off-the-clock, failed to provide meal and rest breaks, failed to provide accurate itemized wage statements, failed to reimburse expenses, and failed to pay wages timely upon Class Members’ terminations. Plaintiffs allege that these violations resulted in underpayment of wages to Class Members. Plaintiffs seek to maintain a class action for their claims on behalf of themselves and all persons who have been employed or are currently employed within the Class Period as a MediFit group exercise instructor, personal trainer, or swim instructor. Plaintiffs seek damages and civil penalties related to these claims under California law and the federal Fair Labor Standards Act (“FLSA”).

         MediFit denies any liability or wrongdoing of any kind in connection with Plaintiffs’ claims, and contends that Class Members are and were provided with meal and rest breaks as required by California law, that Class Members are and have been provided with itemized wage statements that comply with California law, that Class Members were not denied reimbursement of expenses, and that Class Members are and were properly compensated for all time worked and upon termination. Consequently, MediFit does not believe that any liability to Plaintiffs or Class Members exists, or that Plaintiffs or Class Members are entitled to any recovery.

         The Court granted preliminary approval of the Settlement on [date of preliminary approval] on behalf of the following settlement classes defined as:

California Class: All persons who worked in California for MediFit at any point since June 16, 2011 as a group exercise instructor, personal trainer, or swim instructor.

FLSA Class: All persons who worked in California for MediFit at any point since June 16, 2012 as a group exercise instructor, personal trainer, or swim instructor.

         The Court also preliminarily approved Plaintiffs Francisco Flores and Giulia Ferraris to serve as Class Representatives, and the law firm Scott Cole & Associates, APC to serve as Class Counsel.

         The Court also scheduled a Final Approval Hearing on the Settlement at__ ._m. on__, 2016, in Courtroom 2 on the 17th Floor at the United States District Court, Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California, at which time the Court will decide whether to grant final approval of the Settlement.

         III. SUMMARY OF SETTLEMENT TERMS

         Settlement Amount. MediFit has agreed to pay $1, 300, 000 (the “Gross Settlement Fund”) to fully resolve this Action and obtain a release of claims as described below. From this Gross Settlement Fund, the following sums will be deducted if approved by the court:

• Settlement Administration. $20, 500 to the Settlement Administrator, Rust Consulting, for the expense of notifying the Class Members of the Settlement, processing opt-outs submitted by Class Members, and distributing Settlement Payments.

• Attorneys’ Fees and Expenses. Class Counsel’s attorneys’ fees not to exceed 25% of the Gross Settlement Fund ($325, 000) for the work Class Counsel performed in this Action, and for work to be performed through settlement finalization and Class Counsel’s litigation expenses, not to exceed $20, 000.

• Enhancement Awards to Representative Plaintiffs. Enhancement Awards not to exceed $4, 500 to Plaintiff Flores and $1, 500 Plaintiff Ferraris to compensate them for their service on behalf of the Class in initiating and prosecuting the action. These payments are in addition to whatever payments Plaintiffs are otherwise entitled to receive as Class Members.

• Payment to the LWDA. $5, 000 to the California Labor and Workforce Development Agency (“LWDA”) for settlement of claims brought under the Private Attorneys General Act (“PAGA”). The payment to the LWDA represents seventy-five percent (75%) of the total PAGA payment of $3, 750. The other twenty-five percent (25%) of the total PAGA payment, or $1, 250, shall be added to the Net Settlement Fund and distributed among Class Members as discussed below.

         Calculation of Class Member Awards. Each Class Member will be eligible to receive a gross (pre-tax) share of the Net Settlement Fund (i.e., the Gross Settlement Fund, minus approved Class Counsel fees and litigation costs, all settlement administration expenses, the Enhancement Awards, and payment to the LWDA). The share distributed to each Class Member is referred to as the “Individual Settlement Share” and will be calculated as follows:

1. Ninety-five percent of the Net Settlement Fund will be allocated to settle the claims of the California Class, with the remaining five percent being allocated to settle the claims of the FLSA Class.

2. Both the California and FLSA portions of the Net Settlement Amount will be divided by the total number of pay periods worked by all California or FLSA Class Members during either the California or FLSA Settlement Periods.

3.To calculate the Individual Settlement Share for each Class Member, the amount to be paid per pay period will be multiplied by the total number of pay periods that each Class Member worked during the respective Settlement Periods.

         Tax Withholding. Thirty-three percent of each Individual Settlement Share is treated as wages that are subject to the normal payroll taxes and withholdings and W-2 reporting. Thirty-three percent will be considered interest and the remaining thirty-four percent will be considered penalties. The interest and penalties are not subject to payroll taxes, but are subject to IRS Form 1099 reporting. Aside from any payroll taxes for which MediFit is responsible, any and all tax obligations arising from any payments to Class Member will be the sole responsibility of the individual receiving such payment(s).

         Releases. Upon Final Approval of the Settlement, each Class Member shall be deemed to have fully, finally, and forever released the Releasees, as defined in the Settlement, from any and all individual and class claims, debts, liabilities, demands, obligations, penalties, guarantees, costs, expenses, attorneys’ fees, damages, action or causes of action of whatever kind or nature, whether known or unknown, that are based on or arise out of the facts alleged in the Second Amended Complaint filed in the Action, including those under any state and federal law for minimum wage and overtime, failure to provide meal breaks, failure to authorize and permit rest breaks, failure to timely pay wages at termination, failure to pay a proper piece rate, failure to pay wages due, failure to reimburse necessary business expenses, failure to provide accurate and itemized wage statements, unfair business practices, and violations of the Labor Code Private Attorneys General Act of 2004, which arose between June 16, 2011 and the date the Court grants final approval to the Settlement or December 31, 2016, whichever is sooner.

         All Class Members shall be bound by this release unless they opt-out of the Settlement. However, only those Class Members who cash their settlement checks will be bound by the release of FLSA claims.

         Conditions of Settlement. This Settlement is conditioned upon the Court entering an Order after the Final Approval Hearing finally approving the Settlement.

         IV. COMPENSATION INFORMATION

         MediFit’s records indicate that you worked at one or more of its California locations from_____ to ______.

         MediFit’s records indicate that you worked a total of ____ pay periods during this time frame. Accordingly, your estimated Individual Settlement Share (before taxes and withholdings) is roughly $ ______.

         If you wish to challenge the accuracy of the above information, you must send a written, signed challenge along with supporting documents to the Settlement Administrator at the address given in Section IX below, via First Class Mail, postmarked no later than . Absent an agreement between Class Counsel and MediFit’s Counsel regarding how to address the dispute, the Settlement Administrator shall have authority to resolve the challenge and make a final and binding determination without hearing or right of appeal.

         Please note: The above amount is an estimate only and will change if the fees and costs awards are different than estimated (as described in Section III, above). All Settlement Awards are subject to tax withholdings and reporting to the IRS and state tax authorities. You will receive a W-2 for the wages and IRS Form 1099-MISC for interest and penalties.

         Settlement checks shall remain valid for 180 days from the date of issuance. If you do not cash your settlement payment check within this time period, or if your check is returned as undeliverable, your settlement check will be voided and a stop payment will be placed on it. Settlement checks can be reissued to Class Members upon request within this 180-day period, but any reissued checks shall have the same Void Date as the original settlement check. If you fail to cash your settlement check, or if your check is returned as undeliverable, the funds will be tendered to a charity selected by the parties, but the Settlement Agreement shall remain binding upon you.

         V. RIGHT TO OPT OUT

         If you do not wish to participate in the Settlement of your claims, you may exclude yourself from the Settlement or “opt out.” If you opt out, you will receive no compensation from the Settlement, and you will not be bound by its terms. To opt out, you must submit a signed, written request by first-class U.S. mail to the Settlement Administrator at the address below, postmarked no later than ____, 2016. The request to opt out must contain your full name and the last four digits of your Social Security Number, and must state in substance the following:

“I have read the Class Notice and I wish to opt-out of the class action and do not wish to participate in the settlement of the case Flores, et al. v. MediFit Corporate Services, Inc.”

         VI. RIGHT TO OBJECT

         If you are a Class Member, and you do not exclude yourself from the Settlement Class (opt out), you may object to the settlement before final approval of the settlement by the Court.

         You can ask the Court to deny approval by filing an objection. You cannot ask the Court to order a larger settlement; the Court can only approve or deny the settlement. If the Court denies approval, no settlement payments will be sent out and the lawsuit will continue. If that is what you want to happen, you must object.

         You may object to the proposed settlement in writing. You may also appear at the Final Approval Hearing, either in person or through your own attorney. If you appear through your own attorney, you are responsible for paying that attorney. All written objections and supporting papers must (a) clearly identify the case name and number (Flores, et al. v. MediFit Corporate Services, Inc., Case Number 3:15-cv-03423-WHO), (b) be submitted to the Court either by mailing them to the Class Action Clerk, United States District Court for the Northern District of California, located at the Philip Burton Federal Building & United States Court House, 450 Golden Gate Avenue, San Francisco, California, or by filing them in person at any location of the United states District Court for the Northern District of California, and (c) be filed or postmarked on or before ______.

         If you object to the Settlement, you will remain a member of the Class, and if the Court approves the Settlement, you will be bound by the terms of the Settlement in the same way as Class Members who do not object. Any Class Member who does not submit an objection in the manner described above shall have waived any objection to the Settlement. If the court enters an order finally approving the settlement, you will be bound by its terms even if you submit an objection.

         VII. HEARING ON THE SETTLEMENT

         The Final Approval Hearing on the adequacy, reasonableness, and fairness of the Settlement will be held at __._m. on ___, 2016 in Courtroom 2, 17th Floor of the United States District Court, Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California. This hearing date may change without further notice to the Settlement Class. Class Members should check the settlement website at www.___.com, or the Court’s PACER site (described in section IX, below), to confirm that the date has not changed. You are not required to attend the Final Approval Hearing, although any Class Member is welcome to attend the hearing.

         VIII. ADDITIONAL INFORMATION

         This Notice summarizes the proposed settlement. For the precise terms and conditions of the settlement, please see the Settlement Agreement and the Court’s Order Granting Preliminary Approval (“Court’s Order”), available at www.____.com. The Court’s Order contains the precise terms of the release of class members’ claims, as stated in this Notice. The release of class members’ claims in the Settlement Agreement contains different language from the release of class members’ claims in the Court’s Order and this Notice. The language in the Court’s Order and this Notice is the controlling language for the release of class members’ claims. You will also find other documents related to this matter at the website listed above, including the Second Amended Complaint.

         You may also obtain additional information regarding the settlement by contacting Class Counsel at the address provided below, by accessing the Court docket in this case through the Court’s Public Access to Court Electronic Records (PACER) system at https://ecf.cand.uscourts.gov, or by visiting the office of the Clerk of the Court for the United States District Court for the Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California, between 9:00 a.m. and 4:00 p.m., Monday through Friday, excluding Court holidays. Class Counsel may be contacted at:

Scott Edward Cole, Esq.

SCOTT COLE & ASSOCIATES, ...