Frieri v. Sysco Corp.

          ORDER GRANTING PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT (ECF NO. 76)

          Hon. Janis L. Sammartino United States District Judge.

         Presently before the Court is Plaintiff's Motion for Preliminary Approval of Class Action Settlement (“Mot., ” ECF No. 76). Defendants have filed a Notice of Non-Opposition to Plaintiff's Motion (ECF No. 77). Because the settlement is fundamentally fair, reasonable, and adequate, the Court GRANTS Plaintiff's Motion.

         BACKGROUND

         I. Factual and Procedural Background

         On April 11, 2016, Plaintiff filed a putative class action suit alleging violations of California's Labor and Business and Professions Codes on behalf of non-exempt truck drivers working for Defendants Sysco Corporation and Sysco San Diego, Inc. Mot. at 10.^[1]Defendants own and operate trucks, other industrial vehicles, and industrial work sites in California. First Amended Complaint (“FAC”) ¶ 2, ECF No. 15. The Settlement Class includes “all non-exempt, hourly truck workers, truck drivers, or similar job designations who are presently or formerly employed by [Defendants] within the state of California.” Id. ¶ 1.

         Plaintiff alleges four claims for relief under various provisions of California law:

1. Failure to pay for all hours worked, violating California Labor Code § 218, FAC ¶¶ 74-86;

2. Failure to authorize and permit rest periods every four hours, violating California Labor Code § 226.7, FAC ¶¶ 87-101;

3. Failure to pay all wages due at the time of termination from employment, violating California Labor Code §§ 201-203, FAC ¶¶ 102-11; and

4. Unfair competition violations of California Business & Professions Code §§ 17200 et seq., FAC ¶¶ 112-19.

         Specifically, Plaintiff alleges that Defendants required Settlement Class Members to stay within eyesight of trucks, answer calls, respond to messages, and stay out of residential areas, even during their meal breaks. Mot. at 14-15. Because these requirements effectively controlled and commanded the Settlement Class Members during these meal break periods, Defendants did not provide a “duty free meal period” to the Settlement Class Members as required by California law, triggering additional compensation requirements. Id. Plaintiff also contends that Defendant Sysco San Diego, Inc.'s collective bargaining agreement, which sets forth Defendant Sysco San Diego Inc.'s rest period policy, does not provide for adequate rest periods under California law. Id. at 17.

         Defendants deny all these allegations and have asserted several affirmative defenses in response to Plaintiff's claims. See generally ECF No. 16.

         The Parties conducted extensive discovery and litigation over three years related to this matter. Mot. at 13-14. On December 19, 2018, the Parties attended a full-day mediation, which resulted in the proposed settlement agreement currently before the Court in this Motion. Id. at 18. In the unopposed Motion, Plaintiff requests an Order: (1) conditionally certifying the proposed Settlement Class, as defined below; (2) preliminarily approving the proposed settlement of $800, 000; (3) approving Plaintiff Rick Frieri as Class Representative; (4) appointing Plaintiff's counsel, the Mara Law Firm, PC, as class counsel; (5) approving ILYM Group, Inc. as the settlement administrator; (6) approving the proposed notice and directing distribution of the notice and related documents; and (7) setting a schedule for Final Approval. Mot. 19-22; 36.

         II. Settlement Terms

         Plaintiff has submitted a comprehensive settlement document with approximately twenty pages in terms, Joint Stipulation and Settlement Agreement (“Agreement”), Ex. 1, ECF No. 76-2, and a six-page proposed class notice, Notice of Class Action Settlement (“Notice”), Ex. A, ECF 76-2. The settlement provides monetary relief but no programmatic relief.

         Defendant agrees to pay a maximum Gross Settlement Amount of $800, 000. Mot. at 11. From this amount will be deducted: (1) payments to Participating Class Members; (2) settlement administration costs; (3) awards of attorneys' fees and costs; (4) the class representative enhanced payment; and (5) employee and employer payroll taxes on the portion of the settlement payments to Participating Class Members deemed as wages. Id. The Settlement Administrator will pay each Participating Class Member their share of the net settlement amount, calculated as follows:

Each Participating Class Member will receive a proportionate share of the Net Settlement Amount that is equal to (i) the number of weeks he or she worked for Defendant in California during the Class Period based on the Class data provided by Defendant, divided by (ii) the total number of weeks worked by all Participating Class Members based on the same Class data, which is then multiplied by the Net Settlement Amount. One day worked in a given week for Defendant during the Class Period will be credited as a week for purposes of this calculation. Therefore, the value of each Class Member's Individual Settlement Share ties directly to the amount of weeks that he or she worked for Defendant in California.

Each putative class member's gross settlement award will be apportioned as follows: 50% wages, 25% interest, and 25% penalties. The amounts paid as wages shall be subject to all tax withholdings customarily made from an employee's wages and all other authorized and required withholdings and shall be reported by W-2 forms. Payment of all amounts will be made subject to backup withholding unless a duly executed W-9 form is received from the payee(s). The amounts paid as penalties and interest shall be subject to all authorized and required withholdings other than the tax withholdings customarily made from employees' wages and shall be reported by IRS 1099 forms. Both the employer and employee share of payroll tax withholdings shall be from each persons' Individual Settlement Share.

Agreement ¶¶ III.F.1-2. If any settlement checks remain uncashed 180 days after issuance, the amount will be paid to the California State Controller Unclaimed Property Fund in accordance with California Unclaimed Property Law. Id. ¶ III.I.10.

         DISCUSSION

         I. Rule 23 Settlement Class Certification

         Before granting preliminary approval of a class action settlement agreement, the Court must first determine whether the proposed Settlement Class can be certified. Amchem Prods. v. Windsor, 521 U.S. 591, 620 (1997) (indicating that a district court must apply “undiluted, even heightened, attention [to class certification] in the settlement context” to protect absentees).

         Class actions are governed by Federal Rule of Civil Procedure 23. To certify a class, Plaintiff must meet the four requirements of Rule 23(a). See Senne v. Kan. City Royals Baseball Corp., 934 F.3d 918, 927 (9th Cir. 2019). Rule 23(a) allows class certification only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). “[A] proposed class must also meet the requirements of one or more of the ‘three different types of classes' set forth in Rule 23(b).” Senne, 934 F.3d. At 927 (quoting Leyva v. Medline Indus., Inc., 716 F.3d 510, 512 (9th Cir. 2013)). Here, Plaintiff seeks to certify the Settlement Class under subdivision Rule 23(b)(3), which permits certification if (1) “questions of law or fact common to class members predominate over any questions affecting only individual class members, ” and (2) “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”

         The Court addresses each of these requirements in turn.

         A. Rule 23(a)(1): Numerosity

         Federal Rule of Civil Procedure 23(a)(1) requires that a class must be “so numerous that joinder of all members is impracticable.” “‘[C]ourts generally find that the numerosity factor is satisfied if the class comprises 40 or more members and will find that it has not been satisfied when the class comprises 21 or fewer.'” Abdeljalil v. Gen. Elec. Capital Corp., 306 F.R.D. 303, 308 (S.D. Cal. 2015) (quoting Celano v. Marriott Int'l, Inc., 242 F.R.D. 544, 549 (N.D. Cal. 2007)). Here, the proposed Settlement Class consists of approximately 232 members. Mot. at 26. Accordingly, joinder of all members would be impracticable for purposes of Rule 23(a)(1), and the numerosity requirement is satisfied.

         B. Rule 23(a)(2): Commonality

         Federal Rule of Civil Procedure 23(a)(2) requires that there be “questions of law or fact common to the class.” Commonality requires that “the class members ‘have suffered the same injury.'” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349-50 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). The common injury may arise out of “shared legal issues with divergent factual predicates [or] a common core of salient facts coupled with disparate legal remedies.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998), overruled on other grounds by Dukes, 564 U.S. 338 (alteration in original).

         Here, Plaintiff has defined the Settlement Class to encompass the employees impacted by the allegedly illegal policies of Defendants. See Mot. at 27. Critically, Plaintiff's allegations center on the common questions of “whether Defendant Sysco San Diego's uniform policies deprived the Class of compliant rest periods and whether Defendant Sysco San Diego's uniform policies resulted in a failure to pay all wages owed to Settlement Class Members, ” which courts have held to be sufficient to establish commonality. Id. (citing Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 633 (S.D. Cal. 2010)) (additional citations omitted). All common questions revolve around whether Defendants' policies potentially harmed every member of the Settlement Class. Accordingly, it is appropriate for these issues to be adjudicated on a class-wide basis and Rule 23(a)(2) is satisfied.

         C. Rule 23(a)(3): Typicality

         To satisfy Federal Rule of Civil Procedure 23(a)(3), the named representative's claims must be typical of the claims of the Class. “Under the Rule's permissive standards, representative claims are ‘typical' if they are reasonably coextensive with those of absent class members; they need not be substantially identical.” Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir. 2014). The test of typicality is “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.” Hanon v. Dataprods. Corp., 976 F.2d 497, 508 (9th Cir. 1992). “A court should not certify a class if ‘there is a danger that ...