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Cortez v. Vieira Custom Chopping, Inc.

United States District Court, E.D. California

September 20, 2019

VIEIRA CUSTOM CHOPPING, INC., a California Corporation; V. & S COMMODITY, INC., a California Corporation; CHRISTINA VIEIRA; and MATTHEW SEPEDA, Defendants.


         This matter came before the court on September 17, 2019, for hearing on plaintiffs’ unopposed motion for preliminary approval of a class action and collective action settlement. (Doc. No. 23.) Attorney Enrique Martínez appeared telephonically on behalf of plaintiffs, and attorney Steven Wainess appeared telephonically on behalf of defendants. For the reasons set forth below, plaintiffs’ motion will be granted.


         Defendants Vieira Custom Chopping, Inc., V & S Commodity, Inc., Christina Vieira, and Matthew Sepeda (collectively “defendants”) provide commercial services to dairy farms. (Doc. No. 23-1 at 3.) Defendants employed Mario Cortez, Maria Cisneros, Antonio Toscano, Francisco Javier Gonzalez, Jesus Rodriguez, Cecilia Garcia, Jose Luis Raygoza, and Jose Guzman (collectively “plaintiffs”) in their shop in Tulare and other areas of the Central Valley of California. (Id.) Defendants employ four groups of employees: shop workers, farm equipment operators, truck drivers, and weighers. (Id.) Defendants classified all employees as exempt “agricultural” employees under state and federal law, necessitating overtime compensation only when employees worked 10 hours per day or 60 hours per week. (Id. at 3-4.)

         Plaintiffs worked for defendants in different positions for varying lengths of time. (Id. at 3.) During the corn and wheat season, plaintiffs were required to work over 12 hours per day for at least 6 days per week. (Id.) Plaintiffs allege that because the duties of shop workers, truck drivers, and weighers did not fall within the Fair Labor Standards Act (FLS A) agricultural exemption, they were misclassified as agricultural employees and are therefore entitled to overtime compensation. (Id. at 3-4.) Plaintiffs further allege that all employees are owed meal and rest period premiums because they were provided either insufficient amounts of meal periods or late meal periods. (Id. at 4.) Plaintiffs also allege that operators, truck drivers, and weighers were not provided enough rest periods. (Id. at 4-5.) Defendants maintain that plaintiffs were provided legally sufficient meal and rest periods but chose not to take them. (Id. at 4-5.)

         On December 7, 2017, plaintiffs filed this class and collective action alleging the following causes of action: (1) violation of the FLSA, 29 U.S.C. § 201 et seq.; (2) failure to provide meal and rest periods, in violation of California Labor Code §§ 226.7, 512, and California Industrial Welfare Commission (IWC) Wage Orders; (3) failure to provide accurate itemized wage statements, in violation of Labor Code § 226(e); (4) failure to pay all wages due upon termination, in violation of Labor Code §§ 201, 202, and 203; (5) violation of Business and Professions Code § 17200 et seq.; and (6) violations of the Private Attorneys General Act (PAGA), Labor Code § 2698 et seq. (Id. at 5.)

         On May 30, 2018, the parties participated in an unsuccessful mediation before Justice Steven Vartabedian. (Id.) On May 3, 2019, the parties attended a second unsuccessful mediation before James M. Phillips. (Id. at 5–6.) Several weeks later, the parties reached an agreement through a mediator’s proposal. (Id. at 6.)

         On July 30, 2019, plaintiffs filed the present unopposed motion for conditional certification and for preliminary approval of the class action and collective action settlement. (See id.) Pursuant to the settlement agreement, plaintiffs seek to certify a settlement class defined as follows:

all persons who are or were employed in California by Defendants as non-exempt (i) shop workers, (ii) farm equipment operators, (iii) truck drivers, and (iv) weighers at any point during the Class Period [December 7, 2013 through May 3, 2019] and who do not properly and timely opt out of the Settlement Class by having requested exclusion.

(Id. at 6.) In contrast to the class action, the FLSA collective excludes operators and the limitations period is December 7, 2014 through May 3, 2019. (Id.)

         Under the proposed settlement agreement, defendants would pay a maximum settlement amount of $450, 000 in installments. (Id.) The agreement provides for the following allocation of that payment: (i) up to $18, 500 from the settlement amount to the claims administrator; (ii) $10, 000 from the net settlement fund to the settlement of PAGA claims, 75 percent of which will be paid to the California Labor and Workforce Development Agency (LWDA) pursuant to PAGA; (iii) $7, 500 to each named plaintiff as an incentive payment; (iv) 25 percent, or $112, 500, to be paid to class counsel in attorney’s fees; and (v) estimated litigation costs of up to $8, 900. (Id. 6–7.) After these deductions, each member of the settlement class and the FLSA collective action will be entitled to a pro rata share of the settlement proceeds in installment payments. (Id. at 7, 19.) Thirty-two percent of the remaining amount, or $78, 335, will be distributed to the FLSA class only. (Id. at 7.) Unclaimed FLSA wages will be redistributed among members of the collective action. (Id.) All further remaining unclaimed funds will be paid to Centro de los Derechos del Migrante, Inc., a nonprofit organization, as cy pres beneficiary. (Id.)

         Plaintiffs seek an order from this court: (i) preliminarily approving the proposed settlement reached with defendants; (ii) preliminarily certifying the settlement class and appointing the named plaintiffs to represent the settlement class; (iii) conditionally certifying the collective action; (iv) approving the proposed method and form of notice to the members of the class and collective action, including the opt-in procedures for the collection action; (v) approving the implementation schedule; (vi) approving CPT Group Class Action Administrators as the claims administrator; and (vii) scheduling a final fairness hearing. (Id at 1.)


         A. Rule 23 Settlements

         Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a certified class-or a class proposed to be certified for purposes of settlement-may be settled, voluntarily dismissed, or compromised only with the court’s approval.” “Courts have long recognized that settlement class actions present unique due process concerns for absent class members.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011) (internal quotation marks and citations omitted). To protect the rights of absent class members, Rule 23(e) requires that the court approve all class action settlements “only after a hearing and on finding that it is fair, reasonable, and adequate.” Fed.R.Civ.P. 23(e)(2); see also Bluetooth, 654 F.3d at 946. But when parties seek approval of a settlement agreement negotiated before formal class certification, “there is an even greater potential for a breach of fiduciary duty owed the class during settlement.” Bluetooth, 654 F.3d at 946. Thus, the court must review such agreements with “a more probing inquiry” for evidence of collusion or other conflicts of interest than what is normally required under the Federal Rules. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998) overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011); see also Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012).

         Review of a proposed class action settlement ordinarily proceeds in three stages. See Manual for Complex Litigation (4th) § 21.632. First, the court conducts a preliminary fairness evaluation and, if applicable, considers class certification. Id. (noting that if the parties move for both class certification and preliminary approval, the certification hearing and preliminary fairness evaluation can usually be combined). Second, if the court makes a preliminary determination on the fairness, reasonableness, and adequacy of the settlement terms, the parties are directed to prepare the notice of certification and proposed settlement to the class members. Id. Third, the court holds a final fairness hearing to determine whether to approve the settlement. Id; see also Narouz v. Charter Commc ’ns, LLC, 591 F.3d 1261, 1267 (9th Cir. 2010).

         Though Rule 23 does not explicitly provide for such a procedure, federal courts generally find preliminary approval of the settlement and notice to the proposed class appropriate if “the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval.” Lounibos v. Keypoint Gov’t Sols. Inc., No. 12-cv-00636-JST, 2014 WL 558675, at *5 (N.D. Cal. Feb. 10, 2014) (quoting In re Tableware Antitrust Litig., 484 F.Supp.2d 1078, 1079 (N.D. Cal. 2007)); see also Newberg on Class Actions § 13:13 (5th ed. 2011); Dearaujo v. Regis Corp., Nos. 2:14-cv-01408-KJM-AC, 2:14-cv-01411-KJM-AC, 2016 WL 3549473 (E.D. Cal. June 30, 2016) (“Rule 23 provides no guidance, and actually foresees no procedure, but federal courts have generally adopted [the process of preliminarily certifying a settlement class].”). “The court need not ‘reach any ultimate conclusions on the contested issues of fact and law which underlie the merits of the dispute.’” Chem. Bank v. City of Seattle, 955 F.2d 1268, 1291 (9th Cir. 1992) (quoting Officers for Justice v. Civil Serv. Comm ’n of City & Cty. of S.F., 688 F.2d 615, 625 (9th Cir. 1982)). Rather, the court should weigh, among other factors, the strength of a plaintiff s case; the risk, expense, complexity, and likely duration of further litigation; the extent of discovery completed; and the value of the settlement offer. Id.

         B. FLSA Settlements

         Under the FLSA, an employee may file a civil action against an employer that fails to adhere to the FLSA’s guarantees. 29 U.S.C. § 216(b); see also Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013) (“The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract.”). Employees may bring collective actions under the FLSA, representing all “similarly situated” employees, but “each employee [must] opt-in to the suit by filing a consent to sue with the district court.” Does I thru XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1064 (9th Cir. 2000); see also Jones v. Agilysys, Inc., No. C 12-03516 SBA, 2014 WL 108420, at *2 (N.D. Cal. Jan. 10, 2014). Because an employee cannot waive claims under the FLSA, the claims may not be settled without supervision of either the Secretary of Labor or a district court. See Barrentine v. Ark-Best Freight Sys., Inc., 450 U.S. 728, 740 (1981); Beidleman v. City of Modesto, No. 1:16-cv-01100-DAD-SKO, 2018 WL 1305713, at *1 (E.D. Cal. Mar. 13, 2018); Yue Zhou v. Wang’s Rest, No. 05-cv-0279 PVT, 2007 WL 2298046, at *1 n.1 (N.D. Cal. Aug. 8, 2007). The decision to certify an FLSA collective action is within the discretion of the district court. See Edwards v. City of Long Beach, 467 F.Supp.2d 986, 989 (CD. Cal. 2006).

         The Ninth Circuit has not established criteria for district courts to determine whether an FLSA settlement should be approved. Dunn v. Teachers Ins. & Annuity Ass ’n of Am., No. 13-cv-05456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016). Rather, district courts in this circuit routinely apply the Eleventh Circuit standard, which looks to whether the settlement is a fair and reasonable resolution of a bona fide dispute. Id; see also Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982); Milburn v. PetSmart, Inc., No. 1:18-cv-00535-DAD-SKO, 2019 WL 1746056, at *4 (E.D. Cal. Apr. 18, 2019); Selk v. Pioneers Mem'l Healthcare Dist, 159 F.Supp. 3d 1164, 1172 (S.D. Cal. 2016); Nen Thio v. Genji, LLC, 14 F.Supp. 3d 1324, 1333 (N.D. Cal. 2014). “A bona fide dispute exists when there are legitimate questions about the existence and extent of Defendant’s FLSA liability.” Selk, 159 F.Supp. 3d at 1172 (internal quotation marks and citations omitted). A court will not approve a settlement when there is certainty that the FLSA entitles plaintiffs to the compensation they seek, because doing so would shield employers from the full cost of complying with the statute. Id.

         If a bona fide dispute exists, “[c]ourts often apply the Rule 23 factors in evaluating the fairness of an FLSA settlement, while recognizing that some do not apply because of the inherent differences between class actions and FLSA actions.” Khanna v. Inter-Con Sec. Sys., Inc., No. civ S-09-2214 KJM, 2013 WL 1193485, at *2 (E.D. Cal. Mar. 22, 2013) (internal quotation marks and citations omitted). The balancing factors include

the strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.

Khanna v. Intercon Sec. Sys., Inc., No. 2:09-cv-2214 KJM EFB, 2014 WL 1379861, at *6 (E.D. Cal. Apr. 8, 2014), order corrected, 2015 WL 925707 (E.D. Cal. Mar. 3, 2015).

         Below, the court will apply these standards in considering the proposed settlement.


         A. Preliminary Certification of Class related to California Law Violations

         Plaintiffs seek preliminary certification of the proposed class under Rule 23 of the Federal Rules of Civil Procedure.

         1. Rule 23(a) Requirements

         “Rule 23(a) establishes four prerequisites for class action litigation: (i) numerosity, (ii) commonality, (iii) typicality, and (iv) adequacy of representation.” Staton v. Boeing Co., 327 F.3d 938, 953 (9th Cir. 2003). The court will address each requirement below.

         a. Numerosity

         A proposed class must be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). The numerosity requirement demands “examination of the specific facts of each case and imposes no absolute limitations.” Gen. Tel. Co. of Nw., Inc. v. EEOC,446 U.S. 318, 330 (1980). Courts have found the requirement satisfied when the class comprises as few as thirty-nine members, or where joining all class members would serve only to impose financial burdens and clog the court’s docket. See Murillo v. Pac. Gas & Elec. Co.,266 F.R.D. 468, 474 (E.D. Cal. 2010) (citing Jordan v. Los Angeles County,669 F.2d 1311, 1319 ...

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