United States District Court, E.D. California
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
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.
Preliminary Settlement Approval
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
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.
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.
Reservations in the Preliminary Approval Order
the court preliminarily approved certification of the class,
the court also expressed “five reservations, which must
be addressed before final approval.” Id. at
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
these reservations and observations in mind, the court
proceeds to determine whether to grant final approval of the
settlement on a class basis.
THE SETTLEMENT AGREEMENT
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,
• 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.
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.
court next addresses the legal standard required for final
certification of the class, followed by an application to the
specific facts of this case.
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).
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);
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).
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.
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).
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.
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.
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).
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).
this reason, the commonality element is satisfied.
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.
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.”).
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.
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.
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
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.
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.