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Thompson v. Costco Wholesale Corp.

United States District Court, S.D. California

September 1, 2017

DOUGLAS THOMPSON on behalf of himself, others similarly situated, and the general public, Plaintiff,
v.
COSTCO WHOLESALE CORPORATION and DOES 1 through 100, Defendant.

          FINAL APPROVAL OF CLASS SETTLEMENT [DOC. NO. 70]

          Hon. Cathy Ann Bencivengo United States District Judge.

         SETTLEMENT

         This matter is before the Court on Plaintiff's unopposed motion for Final Approval of Class/Collective Action Settlement; Award of Attorneys' Fees, Costs, Class/Collective Representative Service Award, Claims Administration Expenses, LWDA Payment; and Entering Judgment. [Doc. No. 70.] The Court held a hearing on this motion on September 1, 2017. As discussed below, the motion for final approval is granted, the motion for attorneys' fees, costs and class representative enhancement awards and LWDA payment is granted in part, and judgment is entered.

         I. Background

         Plaintiff, a former truck driver for Defendant Costco (“Costco”), initiated this class action lawsuit in the Superior Court of San Diego County on October 17, 2014, asserting eleven claims under California's Labor Code and unfair competition laws. Plaintiff alleged that Costco failed to provide meal and rest periods and to properly compensate its truck drivers. Defendant removed the case to this Court on November 20, 2014.

         On June 27, 2016, the parties entered in a settlement agreement. [Doc. No. 59-2.] Following the terms of the Settlement Agreement, Plaintiff's counsel sought and was granted leave to file a third amended complaint (“TAC”) to added claims for unpaid wages and liquidated damages under the Fair Labor Standards Act (“FLSA”), a claim for penalties under California Labor Code section 226, and a claim under the Private Attorney General Act of 2004 (“PAGA”). [Doc. Nos. 55, 57.]

         On December 2, 2016, Plaintiff filed a motion for preliminary approval of June 27, 2016 settlement agreement. [Doc. No. 59.] On February 22, 2017, the Court issued an order that held that all of the requirements for certification of a Rule 23 class and FLSA collective for settlement purposes, except for the adequacy of Plaintiff's counsel, had been satisfied but denied Plaintiff's motion for preliminary approve of the first settlement because of a number of deficiencies.[1] [Doc. No. 60.] The Court required that each of the deficiencies be remedied in any renewed motion for preliminary approval.

         On March 30, 2017, Plaintiff filed a renewed motion for preliminary approval of a new settlement agreement signed on or about March 23, 2017, that according to Class/Collective Counsel (“Counsel”), fixed the deficiencies noted by the Court. [Doc. No. 64.] On April 26, 2017, the Court denied the renewed motion, noting that although the revised settlement agreement corrected some of the deficiencies reported by the Court, the release language remained inadequate. [Doc. No. 66.]

         On May 10, 2017, Plaintiff filed his third motion for preliminary approval of settlement. [Doc. No. 67.] The Court found that the settlement agreement signed on or about May 8, 2017, remedied all of the deficiencies it had identified in previous orders and therefore granted preliminary approval. [Doc. No. 68.]

         The agreement provides for settlement of claims for meal periods under the FLSA, California Labor Code, the Unfair Competition Law (UCL) and derivative claims for wage statement and waiting time penalties. It authorizes: (1) a gross settlement fund in the amount of $2, 000, 000; (2) a class representative award of $5, 000 to Thompson; (3) $10, 000 to settlement of PAGA claims; (4) $21, 000 in class administrator fees; (5) $500, 000 to Counsel for fees and $20, 000 in costs; 90% of the remainder, after the aforementioned payments, as the net Rule 23 class settlement fund (estimated to be $1, 320, 750); and 10% of the remainder as the net FLSA collective settlement fund (estimated to be $146, 750). [Doc. No. 64-1 at 5-7.] Additionally, Counsel estimates that 924 participating class members will receive an average payment of $1, 397.73, and the 459 class members who have opted-in to the FLSA collective will receive a settlement payment of $312.64 based on the agreed upon allocation.

         The settlement defines the Rule 23 class as “all current and former fleet drivers employed at a Costco business center or depot in California at any time during the period of October 17, 2010, through October 4, 2016. The settlement also seeks certification of the FLSA collective comprised of “all current and former drivers employed at a Costco business center or depot in California at any time during the period of October 17, 2011 and October 4, 2016. [Doc. No. 373 at 4.]

         The preliminary approval order set a final approval hearing for September 1, 2017. The final approval hearing took place as scheduled. Both parties were represented by counsel. No class members filed objections to the settlement, and no class members attended the hearing. However, one class member requested exclusion from the settlement.

         II. Final Approval of Settlement

         A. Certification of the Settlement Classes.

         The settlement here envisions certification of the Rule 23 class as “all current and former fleet drivers employed at a Costco business center or depot in California at any time during the period of October 17, 2010, through October 4, 2016.” [Doc. No. 70-8 at 5.] The settlement also seeks certification of the FLSA collective comprised of “all current and former drivers employed at a Costco business center or depot in California at any time during the period of October 17, 2011 and October 4, 2016.” [Id. at 6.]

         When considering a motion for approval of either a Rule 23 class action or an FLSA collective action the Court must perform the threshold task of certifying the class or collective. See generally Millan v. Cascade Water Servs. Inc., 310 F.R.D. 593, 602-607 (E.D. Cal. 2015). The Court must “ascertain whether the proposed settlement class satisfies the requirements of Rule 23(a) of the Federal Rules of Civil Procedure applicable to all class actions, namely: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). Additionally, the Court must determine whether class counsel is adequate and whether “the action is maintainable under Rule 23(b)(1), (2), or (3).” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir. 2000) (quoting Amchen Prod. v. Windsor, 521 U.S. 591, 614 (1997)). However, “a Court has a considerably less stringent obligation to ensure fairness of the settlement in an FLSA collective action than a Rule 23 action because parties who do not opt in are not bound the settlement.” Millan, 310 F.R.D. at 607 (internal quotation marks omitted).

         1. Numerosity

         This requirement is satisfied if the class is “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). “A class greater than forty members often satisfies this requirement. . . .” Waller v. Hewlett-Packard Co., 295 F.R.D. 472, 482 (S.D. Cal. 2013) (citing Californians for Disability Rights, Inc. v. Cal. Dep't of Transp., 249 F.R.D. 334, 346 (N.D. Cal. 2008)). Here, notice packets were mailed to 925 potential class members. Joinder of all these potential plaintiffs would be impracticable. Accordingly, this requirement has been met.

         2. Commonality

         This requirement is satisfied if “there are questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). “To satisfy this commonality requirement, plaintiffs need only point to a single issue common to the class.” Vasquez v. Coast Valley Roofing, Inc., 670 F.Supp.2d 1114, 1121 (E.D. Cal. 2009). Here, the commonality requirement is satisfied because all of the class claims involve common questions of law and fact surrounding Defendant's meal and rest period policies, payment of overtime, and payment for all time worked.

         3. Typicality

         This requirement is satisfied if “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Fed.R.Civ.P. 23(a)(3). “The test of typicality 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) (internal quotations and citation omitted). Here, the typicality requirement is satisfied because the claims of named Plaintiff and the class are the same. The wrongful conduct alleged in the complaint is not unique to the class representative, and the damages to the class members, if any, are similar insofar as they relate to unpaid wages and Labor Code violations.

         4. Adequacy of Class Representative and Class Counsel

         The final Rule 23(a) requirement is that “the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a)(4). This requires the Court address two questions: “(a) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (b) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 462. A court certifying a class must consider: “(i) the work counsel has done in identifying or investigating potential claims in the action; (ii) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (iii) counsel's knowledge of the applicable law; and (iv) the resources that counsel will commit to representing the class.” Fed.R.Civ.P. 23(g)(1)(A). The Court may also consider “any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class.” Id. at 23(g)(1)(B). Ultimately, when only one applicant seeks appointment as class counsel, the court must determine that “[c]lass counsel . . . fairly and adequately represent the interests of the class.” Id. at 23(g)(4).

         Here, while there is no obvious conflict between Thompson's interests and those of the class members, the Court has expressed its concern that Thompson may have favored his own interests at the expense of the class members in achieving the settlement. Similarly, the question of Counsel's adequacy has been an ongoing concern of the Court's. While Counsel has provided evidence of his firm's experience litigating overtime and rest/meal period cases, along with other wage and hour class cases, the Court has expressed its concerns regarding their “failure to recognize this action as a hybrid action raises question as to counsel's understanding of the procedural rules applicable to the FLSA claims it proposes that the class release without compensation.” [Doc. No. 60 at 8:13-16.] Moreover, upon consideration of the revised settlement the Court noted that it did “little to satisfy the Court that class counsel have prosecuted the action vigorously on behalf of the class.” [Doc. No. 68 at 7:21-23.] In the present motion, Counsel admits that they “did not key in on the cases to which the Court cited that indicate the need for a separate fund when settling FLSA claims along with Rule 23 claims” but assert that they have addressed the Court's concerns “by creating two net settlement funds out of the gross settlement amount of $2, 000, 000 and reducing their attorney fee request from 33 1/3 % to 25%.” [Doc. No. 70 at 23:5-11.] But, the Court does not consider Counsel's reduction of their fee request in order to fund/finance/subsidize the separate collective action settlement fund as evidence of them putting the Collective Members' interests above their own or of them vigorously prosecuting the case vigorously on their behalf.

         Notwithstanding the Court's concerns, no Class/Collective Member has filed an objection challenging the adequacy of the representative parties. Accordingly, the Court finds this element satisfied for the purposes of certification of the settlement class.

         5. Predominance and Superiority

         “In addition to meeting the conditions imposed by Rule 23(a), the parties seeking class certification must show that the action is maintainable under Fed.R.Civ.P. 23(b)(1), (2) or (3).” Hanlon, 150 F.3d at 1022. “Rule 23 (b)(3) permits a party to maintain a class action if . . . the court finds 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. Conn. Ret. Plans & Trust Funds v. Amgen Inc., 660 F.3d 1170, 1173 (9th Cir. 2011), aff'd, 133 S.Ct. 1184 (2013) (citing Fed.R.Civ.P. 23(b)(3)). The “predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Hanlon, 150 F.3d at 1022-23 (quoting Amchen Prods, Inc., 521 U.S. at 623). It requires an examination into whether there are “legal or factual questions that qualify each class member's case as a genuine controversy.” Id. The superiority inquiry “requires determination of whether the objectives of the particular class action procedure will be achieved in the particular case. Id. at 123.

         Here, all of the class members were allegedly subject to Defendant's purported illegal labor policies. The legal and factual questions common to each class member's claim predominate over any questions affecting individual class members. The relatively limited potential recovery for the class members as compared with the costs litigating the claims also support the conclusion that a class action is superior to other methods for ...


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