United States District Court, E.D. California
JESSICA DEARAUJO, individually and on behalf of others similarly situated, Plaintiffs,
REGIS CORPORATION, a Minnesota corporation; SUPERCUTS CORPORATE SHOPS, INC., a Minnesota corporation; and DOES 1 through 99, inclusive, Defendants.
matter is before the court on named plaintiffs' unopposed
motion for final approval of class action settlement, an
incentive award and an award of attorneys' fees and
costs. Mot., ECF No. 42-1; Mot. Attorneys' Fees, ECF No.
43. The court held a hearing on November 18, 2016, at which
Sean Vahdat and James Hawkins appeared for plaintiffs and
Catherine Dacre appeared for defendants. ECF No. 47. As
explained below, the court GRANTS the motion.
Factual and Procedural Background
Supercuts Corporate Shops, Inc. (Supercuts) is a wholly owned
subsidiary of defendant Regis Corporation (Regis)
(collectively, defendants). Preliminary Approval Order 2
(Prelim. Order) 2, ECF No. 37. Supercuts is authorized to do
business in California in cosmetology and hair care.
Amymarie Kaelan worked for defendants as a stylist beginning
in 2008, was promoted to District Leader from on or about
December 2010 through September 2012, and then served as the
Regional Human Resources Manager from September 2012 until
about 2014. Id. She asserts five claims: (1) failure
to indemnify necessary expenditures; (2) failure to provide
accurate wage statements; (3) failure to timely pay wages,
(4) violations of the California Unfair Competition Law
(UCL), Cal. Bus. & Prof. Code §§ 17200 et
seq.; and (5) penalties under the Private Attorneys
General Act of 2004 (PAGA), Cal. Labor Code §§ 2698
et seq. Prelim. Order at 2.
Jessica Dearaujo worked for defendants as a stylist beginning
on July 23, 2008, and was promoted to Salon Manager on or
about March 1, 2009. Id. at 2-3. She is currently
employed with defendants as a Salon Manager in Modesto,
California. Id. She asserts six claims: (1) failure
to provide meal periods; (2) failure to authorize and permit
rest periods; (3) failure to provide accurate wage
statements; (4) failure to reimburse necessary expenditures;
(5) violations of the UCL; and (6) penalties under
PAGA. Id. at 3.
support their claims, plaintiffs alleged defendants required
them to use their car for bank runs and errands, and to use
their personal cell phones for defendants' benefit
without reimbursement. Hawkins Settlement Decl. ¶ 26,
ECF No. 42-3; First Amended Compl. (FAC) ¶¶ 65-66,
ECF No. 22. Plaintiffs also alleged they were often required
to work “off the clock” during a scheduled meal
or rest period. FAC ¶ 23(a).
filed their original class action complaints in Stanislaus
County Superior Court against Regis on May 8, 2014, and Regis
removed the actions to this court on June 11, 2014, ECF No.
1. On April 15, 2015, by joint stipulation, plaintiffs filed
the operative first amended complaints, which added Supercuts
as a defendant. See FAC. On May 11, 2015, defendants
filed answers to the first amended complaints. See
ECF No. 23. On December 2, 2015, the court granted the
parties' request to consolidate the two actions. ECF No.
meantime, the court had set a hearing on a motion for class
certification, ECF Nos. 11, 25, 28, but the parties first
reached preliminary settlement after a full day of private
mediation on June 15, 2015, Hawkins Attorneys' Fees Decl.
¶ 16, ECF No. 43-1. Before the mediation, the parties
engaged in formal discovery, which included the production of
documents and responses to interrogatories and document
requests, and the taking of depositions of plaintiffs Kaelan
and Dearaujo. Id. ¶ 12. The parties also
engaged in informal discovery, exchanging documents,
including a sample of defendants' time records and pay
records. Id. No other pretrial litigation has
Preliminary Class Settlement Approval
filed a motion for preliminary approval of class settlement
on May 5, 2016, ECF No. 31, and defendants filed a statement
of non-opposition to the motion on June 3, 2016, ECF No. 33.
The court preliminary approved the settlement on June 19,
2016 and conditionally certified the following classes:
[A]ll persons employed by defendants as an Area Supervisor,
District Leader, or Senior District Leader in California at
any time from May 8, 2010 through the date of preliminary
approval of the settlement (“Settlement Class
Period”), and who do not opt out of the Class Action
Settlement Agreement (“Settlement” or
[A]ll hourly non-exempt persons employed by defendants as a
Shift Manager or Salon Manager in California at any time
during the same Settlement Class Period, and who do not opt
out of the Settlement.
Prelim. Order at 3-4.
court's preliminary approval identified five concerns
that the court noted would need to be addressed prior to
final approval. First, the court noted while the parties
reached settlement after participating in a full-day of
mediation with an experienced third party neutral, the
parties presented little information to evaluate “the
strength of plaintiffs' case, ” “the risk,
expense, complexity, and likely duration” of this
litigation as compared to any class action; “the risk
of maintaining class action status throughout the trial,
” and “the amount offered in settlement.”
Id. at 17-18 (quoting Hanlon v. Chrysler
Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). To assess
the merits of the case, the parties would need to submit
information exchanged during the mediation for the
court's in camera review. Id. (citing
Bowling v. Pfizer, Inc., 143 F.R.D. 138, 140 (S.D.
Ohio 1992) (ordering “an in camera
disclosure” of confidential information concerning
“all past settlements made by the Defendants involving
the [device in question]”); Manual for Complex
Litigation (MCL) § 21.631 (“A common practice is
to receive information . . . in camera.”).
the court noted while the parties reached settlement only
after participating in significant formal and informal
discovery, final approval would be granted only after the
court reviewed a “more detailed description of the
parties' discovery efforts in this case and why those
efforts contributed to a fair, reasonable, and adequate
settlement.” Id. at 19.
the court was concerned with the “clear sailing”
provision of the agreement because defendants and their
attorneys agreed not to oppose class counsel's
application for attorneys' fees or costs. Id. at
20. Before final approval, the court noted it would closely
scrutinize fees requested. Id.
named plaintiffs' requests for incentive awards raised a
potential concern because such awards “are not to be
given routinely.” Id. (citing Morales v.
Stevco, Inc., No. 00704, 2011 WL 5511767, at *12 (E.D.
Cal. Nov. 10, 2011)). Before granting final approval, the
court noted it would assess whether the requested incentive
awards are excessive. Id.
the parties' chosen mechanism for distributing settlement
funds to class members, which calls for allotting the
settlement funds proportionally based on the total number of
weeks worked, appeared reasonable. Id. at 21. The
court nonetheless cautioned counsel final approval would be
granted only after the court received a more detailed
explanation of the mechanism's reasonableness and
concerns are addressed below.
Key Terms of Settlement Agreement
the parties' settlement agreement, defendants agree to
pay a gross settlement amount (“GSA”) of $1, 950,
000. Settlement Terms at 11. The GSA is inclusive of all
individual class settlement payments, enhancement awards,
settlement class counsel's fees and costs, PAGA penalty
payments, and all administration costs. Id. The
settlement amount does not include defendants' share of
applicable payroll taxes for wage payments made to Settlement
Class Members under the settlement; defendants bear that cost
separately. Id. Upon approval, the GSA of $1, 950,
000 will be distributed as follows:
1. The total enhancement amount paid to named plaintiffs will
be $30, 000, with $15, 000 for each named plaintiff;
2. The class administrator will receive $17, 000;
3. The PAGA payment is $10, 000, $7, 500 of which will go to
the California Labor Workforce Development Agency as its
seventy-five percent share of PAGA penalties, with $2, 500
distributed to the class on a pro rata basis;
4. Class counsel will receive $650, 000.00, or 33 percent of
the GSA; and
5. The amount paid to class counsel for litigation expenses
will be $18, 036.70.
Id. at 11-12; Hawkins Attorneys' Fees Decl.
¶18. After deducting these distributions from the GSA,
the settlement amount available to putative class members
will be $1, 227, 463.30 ($1, 950, 000.00 - $722, 536.70).
Salinas Decl. ¶ 11, ECF No. 43-9.
Notice to and Response from Class Members
putative class consists of 1, 230 members. Salinas Decl.
¶ 7. On August 16, 2016, the class administrator sent
notice packets to all members listed. Id. If a
member's notice was returned as undeliverable and without
a forwarding address, the administrator performed an advanced
address search, known as a “skip trace, ” on
Accurint, a reputable Lexis-Nexis research tool. Id.
¶ 8. Through the advanced searches, the administrator
located ninety-two updated addresses, to which it sent notice
packets. Id. Ultimately, eleven members' notices
were undeliverable because the class administrator was unable
to locate a current address. Id. The class
administrator received one opt-out from the settlement, but
no objections to the settlement. Salinas Decl. ¶¶
seeking to certify a class must demonstrate the class meets
the requirements of Federal Rule of Civil Procedure 23(a) and
at least one of the requirements of Rule 23(b). Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997). The
court must undertake the Rule 23 inquiry independently.
West v. Circle K Stores, No. 04-0438, 2006 WL
1652598, at *2 (E.D. Cal. June 12, 2006).
Rule 23(a), before certifying a class, the 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” inquiry). Collins v. Cargill Meat
Solutions Corp., 274 F.R.D. 294, 300 (E.D. Cal. 2011);
as here, named plaintiffs seek certification under Rule
23(b)(3), the court must find also 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 effectively
adjudicating the controversy.'” Wal-Mart
Stores, Inc. v. Dukes (“Dukes”),
564 U.S. 338, 362 (2011) (quoting Fed.R.Civ.P. 23(b)(3)). The
matters pertinent to these findings include: (A) the class
members' interests in individually controlling the
prosecution or defense of separate actions; and (B) the
extent and nature of any litigation concerning the
controversy already begun by or against class members; (C)
the desirability or undesirability of concentrating the
litigation of the claims in the particular forum; and (D) the
likely difficulties in managing the class action.
Fed.R.Civ.P. 23(b)(3)(A)-(D); see also Zinser v. Accufix
Research Inst., Inc., 253 F.3d 1180, 1190 (9th Cir.
the named plaintiffs seek final certification of the same
class identified preliminarily, made up of two subgroups:
[T]he “Kaelan Settlement Class[, ]” [which] shall
refer to all persons employed by any of the Defendants as an
Area Supervisor, District Leader, or Senior District Leader
in California at any time during the settlement class period.
[T]he “Dearaujo Settlement Class[, ]” [which]
shall refer to all hourly non-exempt persons employed by any
of the Defendants as a Shift Manager or Salon Manager in
California at any time during the Settlement Class Period.
Mot. at 10. The class consists of the following:
Settlement Class Members shall refer to the Kaelan Settlement
Class and the Dearaujo Settlement Class. Settlement Class
Period shall include the period from May 8, 2010 through the
date of Preliminary Approval of the Settlement . . . June
Id. For purposes of final approval, the court
determines whether the class ultimately satisfies Rules 23(a)
order granting preliminary approval, the court found the
numerosity requirement met because the parties agreed the
putative class had 1, 752 potential plaintiffs. Prelim. Order
at 12. For final approval, the parties now agree the class
has 1, 230 members. Salinas Decl. ¶ 7. At hearing, the
parties explained a payroll error caused the change in
numbers; the error has been corrected now prior to this
request for final approval.
there is no absolute numerical threshold for numerosity,
courts have approved classes as small as, for example,
thirty-nine, sixty-four, and seventy-one plaintiffs.
Murillo v. Pac. Gas & Elec. Co., 266 F.R.D. 468,
474 (E.D. Cal. 2010) (citing Jordan v. L.A. Cnty.,
669 F.2d 1311, 1319 (9th Cir. 1982), vacated on other
grounds, 459 U.S. 810 (1982)). While the class size has
decreased to 1, 230 members, it still far surpasses the
number of members approved in past cases. The class remains
large enough to satisfy the numerosity requirement.
preliminarily approving the class, the court found the
commonality requirement met because there were common class