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Lopez v. Management and Training Corp.

United States District Court, S.D. California

December 13, 2019

CARLOS LOPEZ and ANGEL ALEJO, individually, and on behalf of all others similarly situated, Plaintiffs,
v.
MANAGEMENT AND TRAINING CORPORATION, a Delaware corporation, Defendant.

          ORDER ON PLAINTIFFS' UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

          HON. JEFFREY T. MILLER UNITED STATES DISTRICT JUDGE.

         Presently before the court is Plaintiffs' Unopposed Motion for Preliminary Approval of Class Action Settlement. A hearing on the motion was held on December 9, 2019. For the reasons set forth on the record and as explained in more detail below, the motion is GRANTED.

         I. Background

         Defendant Management and Training Corporation (“MTC”) maintains contracts with various state governments and the federal government for the purpose of managing prisons throughout the United States. At the time of the filing of the complaint, Plaintiffs were employed by MTC at Imperial Regional Detention facilities in California.[1] This lawsuit arises out of MTC's alleged failure to not properly compensate all Sergeants, Detention Officers, and Correction Officers for all work performed.

         On June 21, 2017, Plaintiffs filed suit in Imperial County Superior Court asserting three claims: failure to pay straight time and overtime wages; violation California's Unfair Competition Law, Cal. Bus & Prof. Code §17200, et seq.; and failure to provide accurate wage statements. (Doc. No. 1-2.)

         On June 22, 2017, Plaintiffs provided notice to the Labor and Workforce Development Agency (“LWDA”) of similar allegations against Defendant. (Doc. No. 40-2, Declarations of Alexander Dychter (“Dychter Decl.”), ¶ 6). MTC removed the case to federal court on August 11, 2017. (Doc. No. 1.)

         On April 10, 2018, the complaint was amended to include a Private Attorney General Act (“PAGA”) violation. (Doc. No. 15.) On May 17, 2019, Plaintiffs provided an Amended Notice to the LWDA. (Dychter Decl. at ¶ 6.)

         Since the initiation of this lawsuit the parties have participated in two private mediations, one before Mr. Joel M. Grossman, Esq. on December 11, 2018, and the second before Mr. Steven W. Paul, Esq. on August 27, 2019. The second led to the proposed settlement currently before the court.

         II. Settlement Agreement Terms

         On October 25, 2019, Plaintiffs filed the instant motion for preliminary approval of the class action settlement. (Doc. No. 40.) The motion contained a proposed notice to potential class members. (Doc. No. 40-2, Exhibit 1, at 51-56.)

         At the hearing, the court voiced its concerns regarding the guidance provided to individuals wishing to opt-out of the class in the initial notice. Class counsel has subsequently revised the notice and submitted it to the court. (Doc. No. 43, Exhibit 1, “Notice” at 4-9.) The Notice has allayed the court's earlier concerns.

         The class is defined as follows:

all of Defendant's hourly, non-exempt Sergeants, Detention Officers, Correction Officers and other similarly titled officers, if any, who were employed in the State of California at any time between June 21, 2013 through the date of Preliminary Approval, but in no event later than November 30, 2019.

(Doc. No. 40-2, Exhibit 1, “Agreement” at ¶1.6.)

         The Settlement Agreement requires MTC to pay a gross settlement amount of $3, 500, 000, allocated as follows: $2, 123, 334[2] to the settlement members for their claims; $10, 000 as an incentive award for Lopez; $10, 000 as an incentive award for Alejo; $1, 166, 666 to Plaintiffs' counsel; $25, 000 in costs; $100, 000 to settlement of the PAGA claim, $75, 000 of which is to be paid to the LWDA; and $15, 000 to the CPT Group, Inc., the Class Administrator for administration costs. (See Agreement, pgs. 19-25.) The Agreement estimates 570 class members, and Plaintiffs' counsel attests that the average amount of gross settlement benefits each class member will recover is a $3, 856.00. (Dychter Decl., ¶ 15.) In addition, the Agreement calls for the payment of $750.00 to each eligible member of Section 203 Sub-class for penalties allegedly owed under California Labor Code Section 203, which will be deducted from the Class Settlement Amount prior to determining the Net Settlement Amount. (Agreement, ¶ 4.2.1). The parties anticipate approximately 100 Section 203 Sub-class members.

         In exchange for these payments, the settlement agreement defined the Released Claims as including:

any claims, causes of action, damages, wages, benefits, expenses, penalties, debts, liabilities, demands, obligations, attorney's fees, costs, and any other form of relief or remedy in law or equity, whether premised on statute, contract, tort or other theory of liability under federal, state, or local law, regulation, or ordinance, arising from the claims asserted in the First and Proposed Second Amended Complaints or that reasonably could have been asserted in the First and Proposed Second Amended Complaints, including waiting time penalty claims under California Labor Code Section 203, against the Released Parties based on the factual allegations of the First and Proposed Second Amended Complaints, that accrued or accrue during the Settlement Class Period, including, but not limited to, claims for failure to pay wages for all hours worked (both straight-time and overtime wages); failure to provide compliant meal breaks; failure to provide compliant rest breaks; failure to pay all wages owed upon separation; failure to provide accurate and itemized wage statements; unfair competition or unfair business practices under Cal. Bus. & Prof. Code section 17200 et seq.; claims under California Labor Code sections 201, 202, 203, 204, 226, 226.7, 510, 512, 1194, 1194.2, 1197, 1198, the applicable Industrial Welfare Commission Wage Orders, the California Business and Professions Code section 17200 et seq., the PAGA; and claims for restitution and other equitable relief, liquidated damages, waiting time penalties, other compensation or benefits (collectively, the “Released Claims”). This Release and Released Claims also cover all claims for interest, attorneys' fees and costs related to the Action and the claims alleged or that could have been alleged based on the factual allegations in the First and Proposed Second Amended Complaints, including claims under California Labor Code Section 203. The Settlement Class Members will be deemed to have specifically acknowledged that this Release reflects a compromise of disputed claims.
Settlement Class Members shall be deemed to have acknowledged and agreed that California Labor section 206.5 is not applicable to the Parties hereto. That section provides in pertinent part:
“An employer shall not require the execution of any release of a claim or right on account of wages due, or become due, or made as an advance on wages to be earned unless payment of those wages has been made.”
The Released Claims do not include claims for workers' compensation benefits or any of the claims that may not be released by law.
7.1.1 Settlement Class Members' Waiver of Rights under California Civil Code Section 1542: With respect to Released Claims only, each Settlement Class Member shall be deemed to have expressly waived and relinquished, to the fullest extent permitted by law, the provisions, rights, and benefits they may have had pursuant to 1542 of the California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THIS RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

(Agreement at 32-33.) The Agreement has substantially similar release provisions applicable to the named Plaintiffs. (Agreement, ¶¶ 7.2., 7.2.1)

         III. Preliminary Certification of Rule 23 Class

         Before approving the Settlement the court's “threshold task is to ascertain whether the proposed settlement class satisfies the requirements of Rule 23(a) of the Federal Rules of Civil Procedure applicable to class actions, namely: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.” Hanlon v. Chrysler Corp.,150 F.3d 1011, 1019 (9th Cir. 1998). In the settlement context, the court “must pay undiluted, even heightened, attention to class certification requirements.” Id. In addition, the court must determine whether class counsel is adequate (Fed. R. Civ. P. 23(g)), and whether “the action is maintainable ...


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