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Acosta v. Frito-Lay, Inc.

United States District Court, N.D. California

May 4, 2018

DANIEL ACOSTA, et al., Plaintiffs,
FRITO-LAY, INC., et al., Defendants.



         Truck drivers employed by Defendants Frito-Lay, Inc., FL Transportation Inc., and PepsiCo Inc. allege Defendants failed to pay minimum wages or provide meal and rest breaks. Approximately two years after litigation commenced, the parties agreed to settle the action on a class-wide basis. The Court granted preliminary approval of the $6, 500, 000 settlement. Now pending before the Court are two motions: (1) Plaintiffs' motion for final approval of class and collective action settlement, and (2) Plaintiffs' motion for attorneys' fees, litigation costs, and enhancements awards. (Dkt. Nos. 79, 80.) Having carefully reviewed the briefs and having had the benefit of oral argument on May 3, 2018, the Court GRANTS Plaintiffs' motion for final approval and GRANTS IN PART Plaintiffs' motion for attorneys' fees.


         Plaintiffs were and are truck drivers employed by Defendants. (Dkt. No. 1-2 at 10-11 ¶ 7.) Plaintiffs work in San Francisco as well as other various counties in California. (Id.) Defendants pay Plaintiffs on a piece rate system based on activities such as mileage and number of cases at predetermined rates. (Id. at 13 ¶ 20.) When Plaintiffs report to work they are frequently required to wait, sometimes for two hours or more, for their loads to be ready. (Id.) Defendants do not compensate Plaintiffs for this time waiting for loads to be dispatched. (Id.) Further, Defendants do not compensate Plaintiffs for time spent performing necessary job duties, including but not limited to pre-trip and post-trip inspections on the tractor and trailer, fueling and washing the tractor and trailer, and filling out mandatory paperwork including hours of service logs and daily vehicle inspection reports. (Id.)

         Defendants set Plaintiffs' work schedule, including where to report, when to show up, what loads to deliver, routes to follow, and delivery times. (Id.) Defendants do not schedule a time where Plaintiffs are provided an off-duty meal break or rest break. (Id.) Defendants have a systematic business policy and practice of scheduling Plaintiffs to work more than five hours per day without the provision of an off-duty 30 minute meal period and more than three and one half hours per day without a ten minute rest period. (Id. at 20 ¶¶ 46, 53.)

         Some Plaintiffs were involuntarily discharged by Defendants. (Id. at 15 ¶ 27.) Others were constructively terminated or voluntarily terminated their employment. (Id.) These drivers did not receive all pay due and owing at the time of their discharge or termination. (Id.) Defendants had a consistent uniform policy, practice, and procedure of willfully failing to pay the earned wages of all such former employees. (Id.) Defendants willfully failed to pay the earned and unpaid wages related to hours worked, meal time, break time, and timely payment of accrued vacation. (Id. at 15 ¶ 28.)

         Defendants failed to maintain records required by Labor Code § 226. (Id. at 28 ¶ 84.) Defendants' pay records issued to Plaintiffs and class members do not contain the information required by the California Labor Code § 226(a)(1) through (9).[1] (Id.) Additionally, Plaintiffs and class members cannot easily and readily ascertain the information required by Labor Code § 226(a)(1) without reference to other documents and information. (Id.)


         A. General Terms

         The Settlement Agreement establishes a common fund of $6.5 million dollars inclusive of attorneys' fees, costs and expenses, service payments to the named Plaintiffs, payment to the Labor Workforce Development Agency (“LWDA”), employee-owed taxes, and administration costs including settlement administration fees. (Id. at 20 ¶ 5.) The common fund shall be allocated in the following manner:

(1) $1.625 million, or 25% to Plaintiffs' counsel as a “Fee Award, ”
(2) $60, 000 to Plaintiffs' counsel as a “Costs Award, ”
(3) $20, 000 to each named Plaintiff for a total of $80, 000 as a “Service Award”
(4) $50, 000 representative of penalties recoverable under PAGA and payable to the LWDA, 75% or $37, 500 of which will be paid to the LWDA and the remaining 25% or $12, 500 will remain in the payout fund, and
(5) $15, 000 for administration expenses.

(Id. at 21 ¶ 6.) Plaintiffs' counsel has incurred $36, 854.74 in expenses to date. (Dkt. No. 79-2 at 12 ¶ 41.) The firm will incur additional costs associated with travel to and attendance of the final approval hearing of approximately $3000. (Id.)

         B. Class Members

         The class consists of 254 members. (Dkt. No. 80-3 at 3 ¶ 8.) No class member has objected to the terms of the settlement agreement. (Dkt. No. 80-2 at 3 ¶ 11.) Class members are entitled to a state law award and federal law award. (Id. at 3 ¶¶ 11, 12.) Class members will automatically receive a state law award and were required to submit a consent form to opt into the federal law award. (Id.) 254 class members will be paid their portion of the state law award. (Dk. No. 80-3 at 4 ¶ 14.) Of those, 224 class members returned their FLSA consent form and will receive their portion of the federal law award. (Dkt. No. 80-2 at 3 ¶¶ 12.) This represents approximately 88% of the settlement class. (Dkt. No. 80-3 at 4¶ 13.) The work weeks claimed by the submitted consent forms constitute 97% of the total work weeks of all the class members. (Id.)

         Originally, the Settlement Agreement stated that the FLSA consent form must be submitted no later than 45 days after the date the form is mailed. (Dkt. No. 68-3 at 32 ¶ IX(12)(e).) At the preliminary approval hearing, the Court advised the parties that 60 days would be a more reasonable window for class members to return the form given most people do not check their mail on a daily basis. The parties agreed and submitted a revised notice and an errata to the Settlement Agreement. (Dkt. Nos. 76, 77 at 3.)

         C. Notice

         On February 1, 2018, Simpluris, Inc., the claims administrator, received the Court approved notice and claim form (“Notice Packet”) from Plaintiffs' counsel. (Dkt. No. 80-3 ¶ 5.) Simpluris obtained the class list from Plaintiffs' counsel and processed and updated the mailing addresses via the National Change of Addresses Database (“NCOA”) maintained by the U.S. Postal Service. (Id. at 3 ¶¶ 6, 7.) In the event that any class member filed a change of address request with the postal services, that address was used for the mailing of the Notice Packet. (Id.) After updating the addresses via NCOA, Simpluris mailed the Notice Packets via First Class Mail to the 254 members on the class list. (Id. at 3 ¶ 8.)

         Five notices were initially returned undeliverable. (Id. at 3 ¶ 9.) Simpluris attempted to find a forwarding address via Accurint, “a reputable research tool owned by Lexis-Nexis.” (Id.) Simpluris used the previous address and the class member's name to locate current addresses. (Id.) At the end of the process there were no undeliverable class notices. (Id.)

         The Notice Packet advised class members of the applicable deadlines and the date of the final approval hearing, as well as how members could obtain additional information about the settlement. (Id. at 2 ¶ 5.) Class members were provided a Simpluris toll-free number that was accessible 24 hours a day, seven (7) days a week to make inquiries about the settlement. (Id. at 2 ¶ 4.) Simpluris is also maintaining a website regarding the settlement where it made available Plaintiffs' motion for attorneys' fees and costs. (Id. at 4 ¶ 12.)

         D. Release

         Class members, including the named Plaintiffs, agree to release Defendants from all state and federal claims based on the facts pled in the SAC of “every nature and description whatsoever, known or unknown, asserted or that might have been asserted” that have arisen during the class period, February 25, 2011 to July 31, 2017. (Dkt. No. 68-3 at 14-18 ¶¶ IX(4)(a)(1), 4(a)(4), 4(b)(1), 4(b)(4).) In addition to the state and federal releases by the class members, the named Plaintiffs also agree to an additional general release of all claims, known or unknown, prior to the execution of the Settlement Agreement. (Id. at 19 ¶ IX(4)(c).) The general release by named the Plaintiffs does not include: (1) claims that as a matter of law cannot be released, and (2) reporting any suspected whistleblower claims or participating in any proceeding before the Equal Employment Opportunity Commission, Security and Exchange Commission, or other governmental authorities. (Id. at 19 ¶ IX(4)(c).)

         E. Payments

         Within ten days of the Settlement Agreement's effective date Defendants shall wire the settlement administrator the entire common fund amount of $6.5 million plus employer-owed taxes into a qualified settlement account set up by the settlement administrator for distribution. (Id. at 22 ¶ 7.) After deducting the fees award, costs award, service awards, payment to LWDA, and administration fees, the remaining amount will be labeled the “Payout Fund, ” or approximately $4, 686, 114, Dkt. No. 80-3 at 5 ¶ 14, the entirety of which will be distributed to the class members. (Id. at 22 ¶ IX(7)(b)(i).) Eighty percent of the Payout Fund will be allocated to the payment of the state law awards. (Id. at 22 ¶ IX(7)(b)(ii).) All class members will receive a state award on a pro-rata basis based on the number of weeks worked compared to the number of weeks worked by all class members. (Id.) Twenty percent of the Payout Fund will be allocated to the payment of federal funds. (Id. at 23 ¶ IX(7)(b)(iii).) Payment for federal claims shall be determined by the same pro-rata formula used for state funds. (Id.)

         Twenty-five percent of all award payments to class members will be called the “Wage Portion” where payroll deductions will be made for state and federal withholding taxes and other payroll deductions. (Id. at 24 ¶ IX(7)(b)(v).) Seventy-five percent of all award payments will represent the “Non-Wage Portion” and include interest and penalties sought in the action. (Id.)

         The settlement administrator has the authority to make payments of all the awards set out in the Settlement Agreement. (Id. at 27 ¶ IX(10)(c).) The Fees, Costs, and Service Awards shall also be paid by the settlement administrator within 20 days of the effective date. (Id. at 24 ¶ IX(8).) “Effective Date” is defined as the date by which the Settlement Agreement is finally approved and the Court's judgment becomes final. (Id. at 12 ¶ IX(1).)

         The settlement administrator will also calculate the individual awards for the class members and shall be responsible for issuing the payments and calculating and withholding all the state and federal taxes owed by the class members. (Id. at 27 ¶ IX(10)(a)(b).) Checks paid to class members shall remain valid for 120 days from the date of their issuance and may thereafter be automatically canceled if not cashed. (Id. at 34 ¶ IX(12)(e).) The funds from voided checks shall be distributed cy pres to the United Way Bay Area Matchbridge Program, an organization that supports Bay Area youth in gaining employment skills to break the cycle of poverty. (Id.) The total average recovery for each class member is $18, 376.92 and the total highest recovery is estimated at $33, 273.54. (Dkt. No. 80-3 at 5 ¶ 14.)


         Plaintiffs Daniel Acosta, Jose Hernandez, Dennis Easley, Orlando Castillo, and Greg Frye filed this action in the Superior Court of the State of California for the County of San Francisco on February 25, 2015 alleging failure to provide meal rest periods, failure to pay minimum wages for all time worked, associated pay check stub and waiting time penalties, and unfair business practices. (Dkt. No. 68-2 ¶ 7.) Plaintiffs brought six claims: (1) Labor Code Sections 226.7 and 512; (2) Labor Code Section 226.7 and Section 12 of the IWC Wage Orders; (3) Failure to Pay Minimum Wage; (4) Labor Code Section 203; (5) Labor Code Section 226; and (6) California Business and Professions Code 17200 et seq. - Unfair Business Practices. (Dkt. No. 68 at 8 ¶ III. “Background and Procedural History”.) On March 5, 2015, Plaintiffs filed a First Amended Complaint (“FAC”) alleging the same claims. (Dkt. No. 1-2 at 8.) Defendants answered the FAC on May 8, 2015 and removed the case to this District on May 11, 2015. (Dkt. No. 1, 1-2 at 59.)

         The Court granted Plaintiffs' counsel's motion to withdraw as counsel for named Plaintiff Greg Frye on November 23, 2015. (Dkt. No. 24.) On June 7, 2016, the parties attended a full-day mediation with court-appointed mediator Arthur Siegel but were unable to reach a settlement. (Dkt. No. 68-2 ¶ 10.) The parties returned for a second mediation on April 25, 2017 with Michael Dickstein. (Id. ¶ 11.) After a full day of negotiations the parties reached a settlement whose terms are memorialized in the “Stipulation and Settlement of Class Action Claims” (the “Settlement Agreement”). (Dkt. No. 68-3.)

         Thereafter Plaintiffs filed two motions:: (1) Plaintiffs' motion for preliminary approval of class and collective action settlement, and (2) Plaintiffs' motion to dismiss Greg Frye as a class representative and named plaintiff. (Dkt. Nos. 68, 69.) The Court granted both motions and instructed Plaintiffs' counsel to add the following two items to the Notice: (1) March 15, 2018 as the deadline for filing its attorneys' fees motion, and (2) the website link where the fee motion will be available. Plaintiffs included the attorneys' fee motion filing deadline and the website link in the Notice Packet that was mailed to all of the class members. (Dkt. No. 80-3 at 12.) Plaintiffs filed their attorneys' fee motion on March 15, 2018. (Dkt. No. 79.) One month later Plaintiffs filed the motion for final approval of class and collective action settlement. (Dkt. Nos. 79, 80.)

         After conducting the final fairness hearing and carefully considering the terms of the settlement, the court now addresses whether this collective and class action should receive final certification; whether the proposed settlement is fair, reasonable, and adequate; and whether class counsel's request for attorneys' fees and costs, as well as an enhancement award, should be granted.


         Judicial policy strongly favors settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). “To vindicate the settlement of such serious claims, however, judges have the responsibility of ensuring fairness to all members of the class presented for certification.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). 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.” Id.

         The approval of a class action settlement takes place in two stages. In the first stage of the approval process, as it did here, the Court preliminarily approves the settlement pending a fairness hearing, temporarily certifies a settlement class, and authorizes notice to the class. See Villegas v. J.P. Morgan Chase & Co., No. CV 09-00261 SBA (EMC), 2012 WL 5878390, at *5 (N.D.Cal. Nov. 21, 2012). “At the [final] fairness hearing, presently before the Court, after notice is given to putative class members, the Court entertains any of their objections to (1) the treatment of the litigation as a class action and/or (2) the terms of the settlement.” Ontiveros v. Zamora, 303 F.R.D. 356, 363 (E.D. Cal. Oct. 8, 2014) (citing Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989)). Following the final fairness hearing, the Court must reach a final determination as to whether the parties should be allowed to settle the class action pursuant to their agreed upon terms. See id.; Telecommc'ns Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004).


         I. Motion for Final Approval

         A. Final Class Certification of the Settlement Class

         1. Rule ...

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