Milburn v. Petsmart, Inc.

          ORDER GRANTING MOTIONS FOR FINAL APPROVAL OF CLASS AND COLLECTIVE ACTION SETTLEMENT AND AWARD OF ATTORNEYS' FEES (DOC. NOS. 16, 17)

         This matter came before the court on October 1, 2019, for hearing on plaintiff's motion for final approval of a class action settlement and motion for attorneys' fees. (Doc. Nos. 16, 17.) Attorney Nathan Reese appeared telephonically for plaintiff and the class, and attorney Carrie Gonell appeared telephonically for defendants. For the reasons that follow, the court will grant final approval of the class action settlement and will award attorneys' fees and costs as requested.

         BACKGROUND

         The court previously granted preliminary approval of a class action settlement in this action on April 18, 2019. (Doc. No. 15.) Pertinent factual details may be found in that order. Following the granting of preliminary approval, on May 17, 2019, Rust Consulting, the settlement administrator, mailed the notice packets to 2, 987 class members. (Doc. 17-1 at 6.) Of those mailed notices, eighty-seven were returned undeliverable. (Id. at 16-17.) Thus far, no member has filed an objection to the settlement, three members of the class have requested exclusion, and fifty-one FLSA opt-in forms have been received. (Id. at 13, 17.) Plaintiff declares that this represents 60.7 percent of the class members eligible to participate in the FLSA collective action and 99.9 percent overall participation. No class members appeared at the final approval hearing.

         FINAL CERTIFICATION OF CLASS ACTION

         The court conducted an examination of the class action factors in the order granting preliminary approval of the settlement and found certification warranted. (See Doc. No. 15 at 11- 16.) Since no additional issues concerning whether certification is warranted have been raised, the court will not repeat its prior analysis here, but instead reaffirms it and finds final certification appropriate. The following class is certified: all persons who are members of the PetsHotel Manager Class, PetsHotel Leader Class, PetsHotel Seating Class, and Waiting Time Penalties Subclass. (Id. at 3-4.) Each of those classes are defined as follows:

(1) PetsHotel Manager Class: any individual employed by PetSmart in an exempt PetsHotel Manager position in California during the period four years back from the date the original complaint was filed, October 27, 2012, through April 13, 2015.

(2) PetsHotel Leader Class: any individual employed by PetSmart in a non-exempt PetsHotel Leader position in California at any time from and after April 13, 2015 through the date of preliminary approval.

(3) PetsHotel Seating Class: all members of the PetsHotel Manager Class and PetsHotel Leader Class, as well as any individual employed in a PetsHotel in California from October 27, 2015 through the date of preliminary approval as an Assistant Manager and/or Assistant Leader, Store Lead and/or Seniors, Overnight PetCare Specialist, or Guest Services Associate.

(4) Waiting Time Penalties Subclass: all members of the PetsHotel Manager Class and/or PetsHotel Leader Class whose employment with PetSmart ended at any time from and after October 27, 2013 through the date of preliminary approval.

(Id.) In addition, and for the reasons stated in the order granting preliminary approval, plaintiff William L. Milburn is confirmed as class representative, attorneys Graham Hollis, Vilmarie Cordero, and Nathan Reese are confirmed as class counsel, and Rust Consulting is confirmed as the settlement administrator.

         FINAL APPROVAL OF CLASS ACTION SETTLEMENT

         Class actions require the approval of the district court prior to settlement. Fed.R.Civ.P. 23(e) (“The claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.”). This requires that: (i) notice be sent to all class members; (ii) the court hold a hearing and make a finding that the settlement is fair, reasonable, and adequate; (iii) the parties seeking approval file a statement identifying the settlement agreement; and (iv) class members be given an opportunity to object. Fed.R.Civ.P. 23(e)(1)-(5). The settlement agreement was previously filed on the court docket (Doc. No. 9-2, Ex. 1), and class members have been given an opportunity to object. The court now turns to the adequacy of notice and its review of the settlement following the final fairness hearing.

         A. Notice

         “Adequate notice is critical to court approval of a class settlement under Rule 23(e).” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). “Notice is satisfactory if it ‘generally describes the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard.'” Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (quoting Mendoza v. Tucson Sch. Dist. No. 1, 623 F.2d 1338, 1352 (9th Cir. 1980)). Any notice of the settlement sent to the class should alert class members of “the opportunity to opt-out and individually pursue any state law remedies that might provide a better opportunity for recovery.” Hanlon, 150 F.3d at 1025. It is important for class notice to include information concerning the attorneys' fees to be awarded from the settlement, because it serves as “adequate notice of class counsel's interest in the settlement.” Staton v. Boeing Co., 327 F.3d 938, 963 n.15 (9th Cir. 2003) (quoting Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993)) (noting that where notice references attorneys' fees only indirectly, “the courts must be all the more vigilant in protecting the interests of class members with regard to the fee award”).

         Here, the court reviewed the class notice that was proposed when the parties sought preliminary approval of the settlement and found it to be sufficient. (Doc. No. 15 at 21-25.) Notice was sent by the settlement administrator to 2, 987 class members on May 17, 2019 via first-class mail. (Doc. No. 16-3 at ¶ 9.) Of those notices, Rust performed 256 address traces on notices returned as undeliverable, obtained 224 more current addresses, and re-mailed to those class members. (Doc. 17-3 at ¶ 4.) Fifty-five class notices were returned a second time. (Id.) Thus, eighty-seven class notices remain undeliverable. (Id.) It therefore appears that approximately 97 percent of the class members received notice of this settlement. Rust also received fifty-one FLSA opt-in forms. (Id. at ¶ 6.) Although one opt-in form was untimely, the individual provided a letter informing Rust that it was timely but never received, and counsel for the parties directed Rust to consider the opt-in form timely. (Id. at ¶ 6.) Since there are eighty-four individuals who are eligible to submit a claim under the FLSA settlement fund, this represents 60.7 percent participation in the FLSA settlement.

         Of the class members receiving notice of the settlement, the settlement administrator reports that no written objections were filed and only three requests for exclusion were received. (Id. at ¶¶ 8-9.) One class member disputed working in a covered job title. (Id. at ¶ 7.) Defense counsel verified that the class member worked in a covered position and provided instructions on how to opt out of the settlement if the class member chose to do so. (Id.) The class member has not submitted a request for exclusion. In total, there are 2, 984 class members in this settlement, representing a 99.9 percent participation rate. (Id. at ¶ 8.) No class members or their representatives appeared at the final fairness hearing to object to the settlement.

         Given the above, the court concludes adequate notice was provided to the vast majority of the class here. Silber v. Mabon, 18 F.3d 1449, 1453-54 (9th Cir. 1994) (noting the court need not ensure all class members receive actual notice, only that “best practicable notice” is given); Winans v. Emeritus Corp., No. 13-cv-03962-HSG, 2016 WL 107574, at *3 (N.D. Cal. Jan. 11, 2016) (“While Rule 23 requires that ‘reasonable effort' be made to reach all class members, it does not require that each individual actually receive notice.”). The court accepts the reports of the settlement administrator and finds sufficient notice has been provided so as to satisfy Federal Rule of Civil Procedure 23(e)(1).

         B. Final Fairness Hearing

         On October 1, 2019, the court held a final fairness hearing, at which class counsel and defense counsel appeared telephonically. As noted, no class members, objectors, or counsel representing class members or objectors appeared at the hearing. Below, the court will determine whether the settlement is fair, adequate, and reasonable. See Fed. R. Civ. P. 23(e)(2).

         In assessing the fairness of a class action settlement, courts balance the following factors:

(1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement.

Churchill Vill., L.L.C., 361 F.3d at 575; see also In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 944 (9th Cir. 2015); Rodriguez v. West Publ'g Corp., 563 F.3d 948, 964-67 (9th Cir. 2009). These settlement factors are non-exclusive, and each need not be discussed if they are irrelevant to a particular case. Churchill Vill., L.L.C., 361 F.3d at 576 n.7. While the Ninth Circuit has observed that “strong judicial policy . . . favors settlements, ” id. at 576 (quoting Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)), where the parties reached a settlement agreement prior to class certification, the court has an independent duty on behalf of absent class members to be vigilant for any sign of collusion among the negotiating parties. See In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011) (noting “settlement class actions present unique due process concerns for absent class members” because the “inherent risk is that class counsel may collude with the defendants, tacitly reducing the overall settlement in return for a higher attorney's fee”) (internal quotation marks and citations omitted).

         In particular, where a class action settlement agreement is reached prior to a class being certified by the court, “consideration of these eight Churchill factors alone is not enough to survive appellate review.” Id. at 946-47. District courts must be watchful “not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.” Id. at 947. These more subtle signs include: (i) “when counsel receive a disproportionate distribution of the settlement, or when the class receives no monetary distribution but class counsel are amply rewarded”; (ii) the existence of a “clear sailing” arrangement, which provides “for the payment of attorneys' fees separate and apart from class funds, ” and therefore carries “the potential of enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel accepting an unfair settlement on behalf of the class”; and (iii) “when the parties arrange for fees not awarded to revert to defendants rather than be added to the class fund.” Id. (internal citations and quotation marks omitted). The Ninth Circuit has also recognized that a version of a “clear sailing” arrangement exists when a defendant expressly agrees not to oppose an award of attorneys' fees up to a certain amount. Lane v. Facebook, Inc., 696 F.3d 811, 832 (9th Cir. 2012); In re Bluetooth, 654 F.3d at 947; In re Toys R Us-Delaware, Inc.-Fair and Accurate Credit Transactions Act (FACTA) Litig., 295 F.R.D. 438, 458 (C.D. Cal. 2014) (“In general, a clear sailing agreement is one where the party paying the fee agrees not to contest the amount to be awarded by the fee-setting court so long as the award falls beneath a negotiated ceiling.”) (quoting Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 520 n.1 (1st Cir. 1991)).

         While this court has wide latitude to determine whether a settlement is substantively fair, it is held to a higher procedural standard and “must show it has explored comprehensively all factors, and must give a reasoned response to all non-frivolous objections.” Allen v. Bedolla, 787 F.3d 1218, 1223-24 (9th Cir. 2015) (quoting Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012)). Thus, while the court should examine any relevant Churchill factors, the failure to review a pre-class certification settlement for those subtle signs of collusion identified above may constitute error. Id. at 1224-25.

         1. Strength of ...