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Acosta v. Evergreen Moneysource Mortgage Co.

United States District Court, E.D. California

November 14, 2019

JARED ACOSTA, Plaintiff,
EVERGREEN MONEYSOURCE MORTGAGE COMPANY, a Washington Corporation; and DOES 1 to 100, [1]inclusive, Defendant.


         In separate motions, plaintiff Jared Acosta moves for (1) final approval of the class action settlement, (2) an incentive award and (3) an award of attorneys' fees and costs. Mot. Fees, ECF No. 54; Mot. Approval, ECF No. 56. On February 8, 2019, the court held a hearing on the matter. ECF No. 58. Justin Rodriguez appeared for plaintiff; Tiffany Tran appeared for defendant Evergreen Moneysource Mortgage Company. For the reasons explained below, the court GRANTS both motions.

         I. BACKGROUND

         Plaintiff brings this wage and hour class action and representative action under the Private Attorneys General Act (“PAGA”). See Rodriguez Approval Decl., ECF No. 56-1, ¶ 2. Plaintiff, a Loan Originator for defendant Evergreen from September 2015 to October 2016, see First Am. Compl. (“FAC”), ECF No. 18, ¶ 14, alleges that defendant engaged in unfair competition; failed to provide paid rest periods and sick leave, pay contract wages, timely pay wages, timely pay final wages, and provide legally compliant paystubs; and required class members to enter into unlawful agreements. Rodriguez Approval Decl. ¶ 2. Plaintiff initiated this action on January 24, 2017, in Sacramento County Superior Court. See Notice of Removal, ECF No. 1, at 11. Defendant removed to this court on March 2, 2017. Id. at 1-5. Plaintiff filed an amended complaint on August 11, 2017, which serves as the operative complaint here. See generally FAC. Defendant “vigorously contested all aspects of the case, ” id. at 3; however, the parties were nonetheless able to reach a class and PAGA settlement of this matter, after extensive discovery, litigation, negotiations, and mediation. Mot. Approval at 2. On August 13, 2018, the court preliminarily certified the class, appointed class counsel and a claims administrator, preliminarily approved the class settlement agreement, and set forth a notice and administration schedule. See generally Prelim. Approval Order, ECF No. 43.

         A. Preliminary Settlement Approval

         As a functional matter, a review of a proposed class action settlement generally involves two hearings: (1) an initial hearing to determine whether certification and preliminary approval of the settlement is justified and, (2) after notice has been provided to the class, a final fairness hearing to determine whether final approval is appropriate. Manual for Complex Litig., Fourth § 21.632 (2004). The court held the preliminary approval hearing on May 18, 2018, and as noted issued the approval order thereafter. See ECF No. 39; Prelim. Approval Order. In so doing, the court preliminarily certified the following class, as stipulated by the parties:

All employees who have, or continue to work for Defendant within California, except for those classified as outside sales employees, who were paid by commissions only or commissions in conjunction with a draw against commissions from January 24, 2013 to the Court's entry of an order preliminarily approving the class action settlement.

         Prelim. Approval Order at 2. The court also preliminarily approved the following settlement terms: (1) defendant to pay $350, 000 to settle all claims, excluding tax obligations; (2) from that total, $20, 000 is designated for plaintiff's class representative enhancement award; (3) up to $10, 000 is reserved for claim administrator fees, with any remaining balance reverting to the settlement fund and divided as described in the settlement agreement; (4) after payment of costs, fees and awards, the remaining settlement sum will be allocated to the class members according to the distribution formula described in the parties' agreement. Id. at 10-11.

         B. Reservations in the Preliminary Approval Order

         Although the court preliminarily approved certification of the class, the court also expressed “five reservations, which must be addressed before final approval.” Id. at 11.

         First, the court noted that, comparatively, “plaintiff's $20, 000 enhancement award is unusually high.” Id. (collecting cases). Final approval of this amount would “require substantial justification detailing the basis for such a high award”; the court required the parties to address whether this amount, and the related fee discussed below, are “vestiges of the large demand plaintiff made going into mediation.” Id. at 12. Second, the court expressed concerns with the administrative fee, up to $10, 000, which “is particularly high considering the class is relatively small and geographically restricted to California.” Id. The court signaled further justification would be required for it to approve this expense. Third, the parties were required to provide more detail as to how the settlement sum relates to the merits of the case. Id. Fourth, prior to final approval, the court required the parties to explain the fairness of their proposal that members ultimately receiving no notice packet will not receive payment, yet will still release their claims. Id. Finally, in light of defendant's agreement to not oppose any motion for attorneys' fees within the twenty-five percent range, the court required additional information to allow it to assess any collusion concerns raised by this “clear sailing” provision and ensure the requested fee is reasonable. Id. at 12-13.

         With these reservations and observations in mind, the court proceeds to determine whether to grant final approval of the settlement on a class basis.


         The terms of the final settlement agreement are set forth in detail in the motion for final approval, see Mot. Approval at 4-6, and are largely reproduced here:

• Defendant agrees that the scope of the settlement class will include all employees who have, or continue to work for defendant within California, except for those classified as outside sales employees, who were paid by commissions only or commissions in conjunction with a draw against commissions from January 24, 2013 to the court's entry of an order preliminarily approving the class settlement. See Ex. A, ECF No. 56-3, §§ 1.5, 1.6, 4.1. The settlement class shall not include any person who submits a timely and valid request to opt-out as provided in the agreement. Id. at § 4.1.
• Defendant agrees to pay $350, 000.00 in addition to any monies necessary to satisfy defendant's tax obligations (e.g., employer FICA, FUTA and SDI contributions on wage payments) on any monies distributed to class members that are allocated as wages under the agreement. Id. at § 5.1. No. portion of this amount will revert to defendant for any reason. Id. at § 5.6.
• The parties agree that up to $20, 000.00 for plaintiff Jared Acosta will be paid as a class representative enhancement award in addition to any amount he may be entitled to under the terms of the settlement. Id. at § 5.3. Any monies not so awarded will be redistributed to the class pro rata. Id.
• The parties agree that the cost of administering this class action settlement shall be paid from the settlement proceeds. Id. at § 5.5.
• The parties agree that $10, 000.00 of the settlement proceeds will be allocated to PAGA claims. Id. at § 5.4. The settlement class will receive twenty-five percent of this amount (i.e., $2, 500), which will be included in the class payout, and the California Labor and Workforce Development Agency (“LWDA”) will receive seventy-five percent of this PAGA penalty (i.e., $7, 500). See id.
• The parties agree that up to twenty-five percent of the gross settlement payment, i.e., $87, 500.00, will be paid toward plaintiffs attorneys' fees and defendant will not oppose any application for attorneys' fees so long as the amount is within this threshold. Id. at § 5.2. Additionally, the parties agree plaintiff will also be entitled to litigation costs not to exceed $10, 000. Id. The difference between the attorneys' fees and costs the court actually awards and the maximum amounts allocated therefor under the agreement will be redistributed to class members pro rata. Id. at § 5.2.
• Any class action administrator fees, attorneys' fees and costs, class representative enhancements, and payment to the LWDA will be paid out from the gross settlement amount ($350, 000.00), not in addition to the gross settlement amount. Id. at § 5.1.
• A class member who fails to timely opt out of this settlement will waive any and all claims that were pled in the action for all periods of time the class member worked during the class period. Id. at §§ 1.27, 1.28, 6.1.
• For any residue from settlement checks not cashed within one hundred and eighty (180) days of issuance, this amount will be paid out as provided by Code of Civil Procedure section 384(b), in the following manner: (a) twenty-five percent to the State Treasury for deposit in the Trial Court Improvement and Modernization Fund; (b) twenty-five percent to the State Treasury for deposit into the Equal Access Fund of the Judicial Branch; and (c) fifty percent to the Sacramento Voluntary Legal Services Program Employment Law Clinic as the cy pres beneficiary. Id. at §§ 5.6, 7.9.

         Each class member's fund allocation is determined by the number of “Qualifying Workweeks” that class member worked. Mot. Approval at 6. Imprecise or fractional workweeks will also be included. Id. Each individual share is determined by “taking the Qualifying Workweeks for the individual and dividing that by the total Qualifying Workweeks for all class members and multiplying that fraction by the Net Settlement Amount.” Id. Claim forms are not required to receive payment, and payments will be characterized as half W-2 wages and half 1099 income. Id.

         The court next addresses the legal standard required for final certification of the class, followed by an application to the specific facts of this case.


         A party seeking to certify a class must demonstrate the class meets the requirements of Federal Rule of Civil Procedure 23(a) and at least one of the requirements of Rule 23(b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997). The court must undertake the Rule 23 inquiry independently. West v. Circle K Stores, No. 04-0438, 2006 WL 1652598, at *2 (E.D. Cal. June 12, 2006).

         Under Rule 23(a), before certifying a class, the court must be satisfied that: (1) the class is so numerous that joinder of all members is impracticable (the “numerosity” requirement); (2) there are questions of law or fact common to the class (the “commonality” requirement); (3) the claims or defenses of representative parties are typical of the claims or defenses of the class (the “typicality” requirement); and (4) the representative parties will fairly and adequately protect the interests of the class (the “adequacy of representation” inquiry). Collins v. Cargill Meat Solutions Corp., 274 F.R.D. 294, 300 (E.D. Cal. 2011); Fed.R.Civ.P. 23(a).

         Where, as here, plaintiff seeks certification under Rule 23(b)(3), the court must find also 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 effectively adjudicating the controversy.'” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 362 (2011) (quoting Fed.R.Civ.P. 23(b)(3)). The matters pertinent to these findings include: (A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing the class action. Fed.R.Civ.P. 23(b)(3)(A)-(D); see also Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1190-92 (9th Cir.), opinion amended on denial of reh'g, 273 F.3d 1266 (9th Cir. 2001).

         In its prior order, the court preliminarily certified the proposed class, finding it initially satisfied the numerosity, commonality, typicality, adequacy, predominance, and superiority requirements of Rule 23(a) and 23(b)(3), albeit with some reservations as stated above. See Prelim. Approval Order at 3-8. After the court preliminarily certified the class, a question arose regarding class plaintiff's continued role in this action; that question has been resolved as explained below, and there have been no objections to final certification. See Joint Statement, ECF No. 49; Status Order, ECF No. 52; Rodriguez Approval Decl. ¶ 20. Nothing before the court suggests the preliminary certification was improper.

         For purposes of final approval, the court determines whether the class ultimately satisfies Rule 23, especially in light of the court's prior reservations. The court first examines the four requirements of Rule 23(a) and then turns to the considerations relevant to certification under Rule 23(b)(3).

         A. Numerosity

         In its order granting preliminary approval, the court found the putative class met the numerosity requirement because the 59-member class, although small, fell within the acceptable range. Prelim. Approval Order at 4-5 (citing Rannis v. Recchia, 380 Fed.Appx. 646, 651 (9th Cir. 2010)); see also Vanwagoner v. Siemens Indus., Inc., No. 2:13-cv-01303-KJM-EFB, 2014 WL 1922731, * 4 (E.D. Cal. May 14, 2014) (citing cases approving 39, 51, 64 and 71-member classes). As the class size has since grown to approximately 75 members, see Mot. Approval at 9, there is no reason for the court to depart from its prior finding. The numerosity requirement is satisfied here.

         B. Commonality

         In preliminarily approving the class, the court found the class met the commonality requirement because plaintiff alleged five unlawful practices by which all class members were injured. Prelim. Approval Order at 5-6. This reasoning remains true, and the commonality requirement is satisfied for final approval.

         To satisfy the commonality requirement, however, plaintiff must do more than show class members “have all suffered a violation of the same provision of law.” Dukes, 564 U.S. at 350. A class claim must depend upon a common contention that “must be of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of those claims in one stroke.” Id. It is not so much that the class raises common questions; what is necessary is “the capacity of a class-wide proceeding to generate common answers . . . .” Id. (citation omitted). “[T]he merits of the class members' substantive claims are often highly relevant when determining whether to certify a class.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 981 (9th Cir. 2011).

         As plaintiff argues, “each of [his] theories of recovery are based on alleged common practices of Defendants or their alleged uniformly applied policies (or lack thereof).” Mot. Approval at 10. The court's preliminary approval order describes these “common practices” as: (1) unpaid rest periods; (2) unpaid wages owed at termination, which triggered waiting time penalties; (3) inaccurate wage statements that included neither the employer's full name nor the itemized rest period premiums owed; (4) no paid sick leave; and (5) delayed termination wages. See Prelim. Approval Order at 5. Commonality exists here because these practices “challenge[] a system-wide practice or policy that affects all of the putative class members.” Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir.2001), abrogated on other grounds by Johnson v. California, 543 U.S. 499, 504-05 (2005).

         For this reason, the commonality element is satisfied.

         C. Typicality

         Here, the typicality requirement also is satisfied. “[T]he commonality and typicality requirements of Rule 23(a) tend to merge” because both act “as guideposts for determining whether maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Dukes, 564 U.S. at 350 n.5 (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157-58 & n.13 (1982)). A court resolves the typicality inquiry by considering “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.” Ellis, 657 F.3d at 984.

         As explained in the preliminary approval order, “plaintiff's claims typify the class's claims [because] [p]laintiff and each class member allegedly held the same position at roughly the same time, and allegedly were subject to the same policies regarding wages, commissions, hours, rest periods, sick leave and vacation accruals.” Prelim. Approval Order at 5. Because of this, “the basis for [plaintiff's] claims and the types of remedies sought [are] similar amongst all class members.” Mot. Approval at 11. On these grounds the typicality requirement is satisfied. See Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (“The purpose of the typicality requirement is to assure that the interest of the named representative aligns with the interests of the class.”).

         D. Predominance

         “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem, 521 U.S. at 623. Although predominance is similar to Rule 23(a)'s commonality requirement, it is more demanding. Id. at 624. To determine whether common questions predominate, the court must consider “the relationship between the common and individual issues” by looking at the questions that pre-exist any settlement. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998), overruled on other grounds by Dukes, 564 U.S. 338. Additionally, the predominance inquiry focuses on the “notion that adjudication of common issues will help achieve judicial economy.” In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 958 (9th Cir. 2009).

         As explained in the preliminary approval order, the legality of defendant's standardized policies is central to the claims of all class members, and the only individual questions involve the degree to which each class member was harmed by those policies. Prelim. Approval Order at 6. Because “[t]he amount of damages is invariably an individual question and does not defeat class action treatment, ” there is no reason for the court to depart from its preliminary finding. Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010) (alteration in original). Indeed, the nature of the settlement agreement here “sufficiently demonstrates that ‘[a] common nucleus of facts and potential legal remedies dominates this litigation.'” Franco v. Ruiz Food Prod., Inc., No. 1:10-CV-02354-SKO, 2012 WL 5941801, at *8 (E.D. Cal. Nov. 27, 2012) (quoting Hanlon, 150 F.3d at 1022). Were class members to assert their claims individually, rather than together as here, the same allegations-unpaid rest periods, unpaid wages owed at termination, inaccurate wage statements, no paid sick leave and delayed termination wages-would remain consistent across all class members. The existence of slight factual distinctions, such as precise hours worked, does not diminish the predominance of the common legal claims amongst them. See Id. at *9 (holding that despite factual differences among class members, common issues predominate). Therefore, the predominance requirement is met.

         E. Adequacy

         To determine whether the named plaintiff will protect the interests of the class, the court must explore two factors: (1) whether the named plaintiff and counsel have any conflicts of interest with the class as a whole, and (2) whether the named plaintiff and counsel vigorously pursued the action on behalf of the class. Hanlon, 150 F.3d at 1020.

         The preliminary approval order found that “nothing before the court suggests a conflict of interest between class members and plaintiff or plaintiff's counsel.” Since that time, however, the court was called on to address a potential conflict involving plaintiff. On September 6, 2018, the parties advised the court that plaintiff no longer wished to fulfill his role as class representative and was contemplating a potential opt-out to negotiate a more favorable settlement for himself. See Joint Statement; Status Order; Rodriguez Approval Decl. ¶ 20. The court held a hearing on the matter and ordered class counsel to advise plaintiff of his rights as a class member and his right to seek independent counsel should he desire. See Status Hr'g Min., ECF No. 50; Status Order. Counsel complied with that order. See Confirmation Notice, ECF No. 51; Rodriguez Approval Decl. ¶ 20. Since then, “[p]laintiff has taken no actions . . . to pursue these matters and no actions have been taken that negatively affect the class or settlement.” Rodriguez Approval Decl. ¶ 20. Because it appears the potential conflict with plaintiff never materialized, the court is satisfied that the adequacy requirement is met.

         The parties have undergone “substantial litigation” in order to reach a settlement agreement, and the terms of the agreement “demonstrate it is the result of hard fought and vigorous representation by Plaintiff and his counsel.” Mot. Approval at 12-13. As explained in further detail below, plaintiff has been involved in all stages of the litigation, including investigation of claims, preparation of complaints, production of evidentiary documents, inclusion in the discovery and pleading process and involvement in negotiations. See Mot. Fees at 16. The settlement agreement establishes a single class with no subclasses, with a singular interest among the class members; all members are subject to the same distribution formula. Id. at 12. This structure provides no incentive for plaintiff to favor one subclass over another and the representative enhancement is not conditioned upon his approval of the settlement agreement. Id. Finally, the adequacy of plaintiff's representation of the class is further supported by class counsel's experience handling complex wage and hour class actions. Id. ...

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