United States District Court, N.D. California
J. JASON REYNOLDS, Plaintiff,
DIRECT FLOW MEDICAL, INC., et al., Defendants.
ORDER GRANTING MOTION FOR FINAL APPROVAL,
ATTORNEY'S FEES AND COSTS, AND SERVICE AWARDS RE: DKT.
A. WESTMORE UNITED STATES MAGISTRATE JUDGE
J. Jason Reynolds filed the instant putative class action
against Defendants Direct Flow Medical, Inc.
(“DFM”), Dan Lemaitre, John David Boyle, Gordon
Bishop, Paul LaViolette, and Yuval Binur, alleging violations
of various federal and California labor laws. (See
First Amended Compl. (“FAC”), Dkt. No. 14.) The
parties subsequently settled the case, and on March 7, 2019,
the Court preliminarily approved the proposed settlement and
directed that notice be sent to the class members.
(Preliminary Approval Ord., Dkt. No. 75.) Pending before the
Court is Plaintiff's motion for final approval of the
settlement, attorney's fees and costs, and service award.
(Plf.'s Mot. for Final Approval, Dkt. No. 77.) No.
opposition was filed.
consideration of the parties' filings, as well as the
arguments presented at the August 29, 2019 motion hearing,
and for the reasons set forth below, Plaintiff's motion
for final approval is GRANTED.
DFM is a medical technology company, who employed
approximately 250 employees in California. (FAC ¶¶
13, 15.) The individual Defendants were officers and/or
members of the Board of Directors of Defendant DFM at the
relevant times. (FAC ¶¶ 8-12.) In 2016, Defendant
DFM began negotiating with Haisco, a Chinese company, for a
capital infusion of $100 million. (FAC ¶ 30.) On
November 16, 2018, the financing arrangements collapsed. (FAC
¶ 33.) On November 18, 2018, Defendants furloughed the
majority of their workforce, placing their employees on
involuntary leave without pay. (FAC ¶ 22.) Defendants
informed their employees that they were being furloughed due
to lack of funding, but that they might eventually receive
their unpaid wages. (FAC ¶ 24.) Defendants also told
their employees that Defendants were contemplating layoffs.
(FAC ¶ 24.)
November 30, 2016, Defendants terminated almost their entire
workforce by e-mail. (FAC ¶ 25.) At the time of
termination, terminated employees were still owed: (1) unpaid
wages, including personal time off (“PTO”), (2)
reimbursement for necessary business expenditures they had
incurred, and (3) salary increases that had begun accruing
but had been deferred. (FAC ¶¶ 26-27.) Defendants
acknowledged these amounts but stated that they could not
guarantee payment due to lack of funds. (FAC ¶¶
26-27.) Defendants did not pay the amounts owed. (FAC ¶
January 9, 2017, Defendant DFM entered into a General
Assignment for the Benefit of Creditors (“ABC”),
a judicially-unsupervised process for liquidating insolvent
debtors pursuant to California Code of Civil Procedure §
493.010. (FAC ¶ 35.) On February 7, 2017,
Defendants' employees were notified of the ABC, and given
a deadline to submit claims against Defendant DFM's
liquidated assets. (FAC ¶ 36.) Although Plaintiff and
other employees submitted claims, none received any payments.
(Mot. for Prelim. Approval at 4, Dkt. No. 71.)
January 13, 2017, Plaintiff filed the instant putative class
action. (Dkt. No. 1.) On March 27, 2017, Plaintiff filed the
operative complaint, alleging that the layoffs violated the
Federal Worker Adjustment and Retraining Notification Act
(“federal WARN Act”) and the California Worker
Adjustment and Retraining Notification Act (“California
WARN Act”). (FAC ¶¶ 53-67.) Plaintiff also
sought waiting time penalties for failure to pay back wages
and unused PTO, as well as reimbursement for the unpaid
business expenses. (FAC ¶¶ 68-82.) Finally,
Plaintiff brought a claim under the Private Attorneys General
Act (“PAGA”). (FAC ¶ 93.)
litigating the case, Plaintiff served written discovery
requests on Defendants, and deposed four individual
Defendants. (Tindall Decl. ¶¶ 3, 4, Dkt. No. 77-1.)
Plaintiff also obtained further information through a
subpoena on the ABC. (Tindall Decl. ¶ 5.) In March 2018,
the parties participated in mediation with Cynthia Remmers.
(Tindall Decl. ¶ 9.) In preparation for the mediation,
Defendant DFM provided information regarding Defendants'
liability for the WARN Act violations, unpaid PTO,
unreimbursed expenses, waiting time penalties, and
retroactive pay increases. (Tindall Decl. ¶ 7.)
parties did not resolve the case at mediation, and continued
to participate in multiple phone call sessions with Ms.
Remmers. (Tindall Decl. ¶ 9.) Plaintiff also filed his
motion for class certification. (See Dkt. No. 64.)
Before Defendants' opposition was due, the parties
reached an agreement to resolve the case. (Tindall Decl.
January 31, 2019, Plaintiff filed an unopposed motion for
preliminary approval. On February 5, 2019, the Court
requested supplemental briefing. (Dkt. No. 72.) On February
20, 2019, Plaintiff filed his supplemental brief. (Dkt. No.
73.) On March 7, 2019, the Court held a hearing on
Plaintiff's motion for preliminary approval. (Dkt. No.
76.) That same day, the Court granted Plaintiff's motion.
the terms of the settlement agreement
(“Settlement”), Defendants agree to pay a
“Gross Settlement Amount” of $911, 500. (Tindall
Decl., Exh. A (“Settlement Agreement”) ¶
1(m).) Defendants shall also separately pay the actual costs
of settlement administration. (Settlement Agreement ¶
6.) Of the Gross Settlement Amount, Plaintiff seeks an
attorney's fee award of 25%, or $230, 875, costs of $22,
486.44, and a service award for named Plaintiff of $12, 500.
(Settlement Agreement ¶¶ 20, 24; Plf.'s Mot.
for Final Approval at 17, 22.) The Gross Settlement Amount
also includes $13, 672 in PAGA penalties; $10, 254 shall be
paid to the California Labor and Workforce Development Agency
(“LWDA”) and $3, 418 will be part of the Net
Settlement Amount for distribution to participating class
members. (Settlement Agreement ¶ 25.) This leaves a Net
Settlement Amount of $635, 384.56. (Plf.'s Mot. for Final
Approval at 7.)
member's share of the Settlement is calculated as two
“Portions.” (Settlement Agreement ¶ 13.)
First, the settlement administrator calculates each class
member's “Annualized Compensation Ratio” by
dividing the individual class member's annual
compensation by the total annual compensation of all class
members. The settlement administrator then multiplies the
class member's “Annualized Compensation
Ratio” by a figure representing 20% of the Net
Settlement Amount to obtain “Portion 1” of the
class member's settlement payment. (Settlement Agreement
the settlement administrator will add: (1) the amount of the
class member's accrued but unpaid PTO, (2) the amount of
unreimbursed work expenses the class member incurred, and (3)
the amount of compensation the class member should have
received from approved but deferred pay raises. (Settlement
Agreement ¶ 14.) The settlement administrator then
divides this figure by the sum of these three amounts for all
class members to obtain the individual class member's
“Unpaid Compensation & Expenses Ratio.” The
class member's “Unpaid Compensation & Expenses
Ratio”) is multiplied by a figure representing 80% of
the Net Settlement Amount to obtain “Portion 2”
of the class ...