Juvera et al v. Salcido et al

Filing 73

ORDER granting 56 parties' Stipulation of Settlement and Parties' Joint Motion for Court Approval. The parties' Settlement Agreement is hereby APPROVED in its entirety. Factor Sales shall promptly distribute all settlement checks as agreed in the parties' Settlement Agreement. Except for Plaintiffs' claim for an award of their attorneys' fees, court costs, and other litigation expenses authorized by law, all claims in this action are hereby dismissed with pr ejudice. The Clerk is kindly directed to enter a final stipulated Judgment in favor of Plaintiffs and against Defendants consistent with the parties' Settlement Agreement. See PDF document as to the award of attorney fees and costs. Signed by Magistrate Judge Lawrence O Anderson on 12/16/13. (LSP)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 Jose Pablo Rodriguez Juvera; Kenia V. ) Nunez; Ricardo Aguiar Romero; Yesenia ) Vazquez DeLabra; and a class of others ) similarly situated, ) ) ) Plaintiffs, ) ) v. ) Victor M. and Carmen Salcido, husband ) ) and wife; and Factor Sales, Inc., an ) Arizona corporation, ) ) Defendants. _________________________________ ) No. CV-11-2119-PHX-LOA ORDER 16 This Fair Labor Standards Act collective and class action arises after the parties 17 reached a settlement and this Magistrate Judge conducted a fairness hearing on October 29, 18 2013. On November 13, 2012, the Honorable James A. Teilborg, Senior United States 19 District Judge, referred this action to the undersigned to oversee the procedural and logistical 20 aspects of settling this case. (Docs. 35, 52 at 11-12) On October 31, 2013, and with the 21 approval of Judge Teilborg, the parties consented to proceed before this Magistrate Judge for 22 all further proceedings, pursuant to 28 U.S.C. § 636(c).1 23 24 25 26 27 28 1 A United States magistrate judge has jurisdiction to preside over class actions if the named parties expressly consent, even though the unnamed members of the class have not consented. See Williams v. General Electric Capital Auto Lease, Inc., 159 F.3d 266, 269 (7th Cir. 1998), cert. denied, Harper v. General Electric Capital Auto Lease, Inc., 527 U.S. 1035 (1999); Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 181 (3d Cir. 2012) (“We agree with the Seventh Circuit that unnamed class members are not ‘parties’ within the meaning of § 636(c)(1), and that their consent is not required for a magistrate judge to exercise jurisdiction over a case.”); Day v. Persels & Associates, LLC, 729 F.3d 1309, 131617 (11th Cir. 2013). 1 I. Background 2 This lawsuit alleges violations of federal and Arizona minimum-wage labor laws filed 3 by cashiers against their employer, an Arizona grocery store chain. On October 27, 2011, 4 four Plaintiffs, either current or former cashiers employed by Defendants, filed this 5 collective2 and class action lawsuit, alleging willful violations of the Plaintiffs’ and class 6 members’ statutory right to receive the requisite federal and state minimum wages for 7 nonexempt employees under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et 8 seq.; the Arizona Wage Act (“AWA”), Arizona Revised Statutes (“A.R.S.”) § 23-350, et 9 seq.; and the Arizona Minimum Wage Act (“AMWA”), A.R.S. § 23-363, et seq. (Doc. 1) 10 Defendant Factor Sales, Inc. is an Arizona corporation with its main office located in San 11 Luis, Arizona. (Id., ¶ 14 at 4; doc. 10, ¶ 14 at 3) Defendants Victor and Carmen Salcido, 12 husband and wife, served as Factor Sales’ corporate President and Secretary, respectively, 13 at all material times herein. According to the Complaint, the Salcidos exercised complete 14 control over, and responsibility for, the operation of Factor Sales, and are, or were, Plaintiffs’ 15 “employer” as defined in the FLSA, 29 U.S.C. § 203(d); the AWA, A.R.S. § 23-350(3); and 16 the AMWA, A.R.S. § 23-362(B). (Doc. 1, ¶¶ 12-13, 16 at 4) 17 Defendants (collectively “Factor Sales”) own and operate retail grocery stores, called 18 King Market, Factor Warehouse, and Del Sol, in southwestern Arizona in and around San 19 Luis, Yuma County, Arizona. (Doc. 52 at 1) At all relevant times, Factor Sales’ cashiers 20 were responsible for ensuring that each item purchased was charged correctly to, and paid 21 for by, the stores’ customers; checking customers out; bagging the customers’ groceries; and 22 guaranteeing that each cash register’s drawer balanced at the end of their shift. (Doc. 1, ¶ 23 23 24 25 26 27 28 2 The FLSA provides that an aggrieved employee may bring a collective action on behalf of “himself or themselves and other employees similarly situated” based on the employer’s failure to adequately pay minimum wages. 29 U.S.C. § 216(b). The FLSA, however, limits participation in a collective action to only those parties that “opt-in” to the suit. Id. (“[N]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. . . .”). -2- 1 at 6) The named Plaintiffs and class members are, or were, employed by Factor Sales as 2 cashiers, performing the same basic duties and subject to the same two policies at issue in 3 this lawsuit. (Id. at 4, 6) The two disputed policies are: 1) if a cashier’s cash-handling drawer 4 was short of the correct amount of money at the end of the cashier’s shift, Factor Sales 5 required the cashier to repay the missing funds to Factor Sales (the “shorts” policy); and 2) 6 Factor Sales initially paid for a cashier’s work uniform, name and security tag, but required 7 a cashier to repay Factor Sales for the replacement cost if a cashier’s uniform, name or 8 security tag was lost or a new one was needed (the “uniform” policy). (Doc. 72 at 2) 9 At least one named Plaintiff worked in each of Factor Sales’ stores between 2008 and 10 2012. In April 2013, it was believed there were approximately 200 current and former 11 cashiers who are potential members of the proposed class. (Doc. 52 at 6) By the time of the 12 October 2013 fairness hearing, there were 425 class members. Factor Sales’ cashiers were, 13 and are, paid at, or slightly above, the applicable minimum wage rates. Plaintiffs claim that, 14 when the cash drawer or till did not add up correctly, Factor Sales’ company policy required 15 the cashiers to reimburse Factor Sales for the shortage, but Factor Sales did not credit the 16 cashiers if there were any cash overages. (Id. at 1-2) Plaintiffs further allege that Factor 17 Sales had a policy of requiring its employees to pay Factor Sales for the cost of replacement 18 uniforms, employee name and security tags. Plaintiffs allege these policies had the effect of 19 reducing Plaintiffs’ and class members’ wages below the minimum wage required by federal 20 and Arizona law. 21 In the October 27, 2011 Complaint, Plaintiffs allege Defendants violated 29 U.S.C. 22 § 206(a) of the FLSA and the AMWA, A.R.S. §§ 23-363(A), and 23-351(c). After engaging 23 in some discovery, the parties stipulated the case be referred to a magistrate judge for a 24 settlement conference, and, if a settlement were reached, the magistrate judge would oversee 25 the procedural and logistical aspects of resolving the lawsuit. (Doc. 34) Thereafter, the 26 assigned District Judge granted the parties’ stipulation and the case was randomly assigned 27 to the undersigned Magistrate Judge for further proceedings consistent with the referral. 28 On January 31, 2013, this Magistrate Judge conducted a settlement conference at the -3- 1 Phoenix courthouse with all counsel, a Spanish-speaking interpreter, several corporate 2 representatives, and numerous Plaintiffs and family members physically present. (Doc. 44) 3 Shortly thereafter, Plaintiffs filed a Notice of Settlement, indicating the parties had reached 4 a settlement, but sought approval for pursuing a FLSA conditional collective action and 5 certification for a Rule 23 class action as part of the settlement. (Doc. 45) Without objection 6 by Factor Sales, Plaintiffs requested a collective action and class certification because the 7 parties were only in the discovery phase of the litigation and no depositions had been taken, 8 citing Lopez v. Arizona Public Service Co., 2010 WL 1403873 (D. Ariz. Jan. 27, 2010) and 9 Murillo v. Pacific Gas & Elec. Co., 266 F.R.D. 468 (E.D. Cal. 2010) as authority for their 10 requests. 11 II. Conditional Collective Action and Class Action 12 On February 25, 2013, Plaintiffs filed an Unopposed Motion to Certify Conditionally 13 Collective Action and Class Action, requesting an order, inter alia, certifying this action as: 14 1) a conditional collective action, and 2) authorizing the named Plaintiffs and the putative 15 class of similarly situated individuals to proceed as a class action pursuant to Rule 23, 16 Fed.R.Civ.P., on the state law claims. (Doc. 50 at 1) In a detailed April 4, 2013 Order, Judge 17 Teilborg concluded that Plaintiffs’ pleadings and declarations support their claims that the 18 named Plaintiffs and members of the potential collective action group are, or were, all 19 employed by Factor Sales as cashiers at the Factor Sales’ stores in Arizona and were subject 20 to the same policies requiring reimbursement or charge backs for cash shortages, replacement 21 uniforms, name and security tags, resulting in the reduction of the cashiers’ pay below the 22 required minimum wage. (Doc. 52 at 4) Judge Teilborg found that “the evidence that 23 Plaintiffs have proffered [was] sufficient [to] certify a collective action under the FLSA.” 24 (Id.) (citing, among others, Hipp v. Liberty Nat. Life Ins. Co., 252 F.3d 1208, 1217 (11th Cir. 25 2001), modified on other grounds, Anderson v. Cagle’s, Inc., 488 F.3d 945 (11th Cir. 2007); 26 Adams v. Inter-Con Sec. Sys., Inc., 242 F.R.D. 530, 536 (N.D. Cal. 2007) (internal citation 27 omitted)). 28 In that same order, and after conducting a thorough Rule 23(a), Fed.R.Civ.P., analysis, -4- 1 Judge Teilborg found that Plaintiffs met the requirements of Rule 23(a) and granted 2 Plaintiffs’ motion to conditionally certify this lawsuit as a collective FLSA action and class 3 action. (Doc. 52 at 10) Furthermore, Judge Teilborg also reviewed Plaintiffs’ proposed 4 notice and found that it met the requirements of Rule 23(c)(2)(B), Fed.R.Civ.P., as it 5 provided accurate and timely notice of the pendency of this collective action, so that potential 6 claimants could make informed decisions to participate in this class action or opt-out of it. 7 (Id.) He further authorized Plaintiffs to mail and post their proposed notice to potential 8 members of this collective and class action and ordered Factor Sales to produce the names 9 and last known addresses of such members in order to facilitate the notification process. (Id.) 10 In the April 4, 2013 Order, Judge Teilborg also appointed Plaintiffs’ counsel as class counsel 11 under Rule 23(g), Fed.R.Civ.P., and entered other orders to facilitate the settlement of this 12 lawsuit. (Id. at 10-12) 13 III. Settlement Procedure 14 Unlike most private settlements negotiated between parties in a civil action for 15 damages, in a FLSA case or class action, the parties must seek the district court’s approval 16 of the settlement’s terms to ensure that it is enforceable and fair. See Nall v. Mal-Motels, Inc., 17 723 F.3d 1304 (11th Cir. 2013) (affirming holding in Lynn’s Food Stores, Inc. v. United 18 States, 679 F.2d 1350 (11th Cir. 1982)); Lopez v. Arizona Public Service Co., 2010 WL 19 1403873, at *1 (D. Ariz. Jan. 27, 2010) (quoting Lynn’s Food, 679 F.2d at 1352–53); Rule 20 23(e), Fed.R.Civ.P.(“The claims, issues, or defenses of a certified class may be settled, . . . 21 or compromised only with the court’s approval[.]”); Hanlon v. Chrysler Corp., 150 F.3d 22 1011, 1026 (9th Cir. 1998) (“[Rule] 23(e) requires the district court to determine whether a 23 proposed settlement is fundamentally fair, adequate, and reasonable.”). 24 A. Class Action Settlements 25 Unless the Class Action Fairness Act of 2005 applies,3 “[p]rocedurally, the approval 26 27 28 3 The Class Action Fairness Act (“CAFA”) provides “[f]ederal district courts original jurisdiction in any civil action where: (1) ‘the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs,’ (2) the action is pled as a class action involving more than 100 putative class members, and (3) ‘any member of a class of plaintiffs -5- 1 of a class action settlement takes place in two stages. In the first stage of the approval 2 process, the court preliminarily approve[s] the Settlement pending a fairness hearing, 3 temporarily certifie[s] the Class . . . , and authorize[s] notice to be given to the Class.” 4 Alberto v. GMRI, Inc., 252 F.R.D. 652, 658-59 (E.D. Cal. 2008) (quoting West v. Circle K 5 Stores, Inc., 2006 WL 1652598, at *2 (E.D. Cal. June 13, 2006) (internal citations omitted). 6 Federal Rule of Civil Procedure 23(c)(2)(B) prescribes the “best notice that is practicable 7 under the circumstances” for any class certified under Rule 23(b)(3). “Notice is satisfactory 8 if it ‘generally describes the terms of the settlement in sufficient detail to alert those with 9 adverse viewpoints to investigate and to come forward and be heard.’” Churchill Village, 10 LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (quoting Mendoza v. Tucson Sch. Dist. 11 No. 1, 623 F.2d 1338, 1352 (9th Cir. 1980)). 12 At a subsequent fairness hearing, after notice is given to putative class members, the 13 district court entertains any of their objections to (1) the treatment of this litigation as a class 14 action and/or (2) the terms of the settlement. See Diaz v. Trust Territory of Pac. Islands, 876 15 F.2d 1401, 1408 (9th Cir. 1989) (holding that prior to approving the dismissal or compromise 16 of claims containing class allegations, a district court must, pursuant to Rule 23(e), hold a 17 hearing to “inquire into the terms and circumstances of any dismissal or compromise to 18 ensure that it is not collusive or prejudicial”). Following a fairness hearing, a district court 19 makes a final determination whether the parties should be allowed to settle the class action 20 pursuant to the terms their settlement agreement. See Nat’l Rural Telcomms. Coop. v. 21 DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). 22 Here, after preliminarily approving the parties’ Stipulation of Settlement pending the 23 fairness hearing, the undersigned Magistrate Judge conducted a fairness hearing in open 24 court on October 29, 2013 to determine whether the proposed settlement, on the terms and 25 26 27 28 is a citizen of a State different from any defendant.’” Bicek v. C & S Wholesale Grocers, Inc., 2013 WL 4009239, at *6 (E.D. Cal. Aug. 5, 2013) (quoting 28 U.S.C. § 1332(d)). According to one district court, it is a three-step inquiry if CAFA applies. Adoma v. University of Phoenix, Inc., 913 F.Supp.2d 964, (E.D.Cal. 2012). CAFA is inapplicable to the case sub judice because the amount in controversy does not exceed the sum or value of $5,000,000, exclusive of interest and costs. -6- 1 conditions set forth in the parties’ Stipulation of Settlement, was fair, reasonable, and should 2 be approved, and whether a final judgment should be entered approving the settlement. 3 (Docs. 65, 67) More than seven weeks before the fairness hearing, Factor Sales caused a 4 settlement notice in English and Spanish to be published in the Yuma Sun and Baja El Sol 5 newspapers in Yuma County, Arizona, once per week for three consecutive weeks, which 6 stated as follows: 7 8 9 10 11 To all current and former cashiers of Factor Sales, Inc. who were employed as such in the State of Arizona at any point from January 1, 2007 through the present date. Factor Sales, Inc. has reached an agreement to resolve a dispute filed under the Fair Labor Standards Act and Arizona Minimum Wage Act with the cashiers of Factor Sales, Inc. whom Factor Sales, Inc. employed at any point from January 1, 2007 through the present date. If you are or were employed by Factor Sales, Inc. as a cashier during this time period, you may be entitled to receive compensation as a result of a class action settlement. 12 13 Nicholas J. Enoch is counsel for the class, he can be reached at the following address: 14 15 16 17 18 19 20 21 22 Nicholas J. Enoch, LUBIN & ENOCH, P.C. 349 N. 4th Avenue Phoenix, Arizona 85003-1505 Nicholas J. Enoch can inform class members of amounts to which they may be entitled under the proposed settlement, and the process for being excluded from the class if the class member so desires. If you choose to be excluded from the class action portion of the lawsuit, and excluded from the settlement, you must contact Nicholas J. Enoch at the address listed above. A hearing will be held on Tuesday, October 29, 2013 at 2:00 p.m., United States District Courthouse, 325 W. 19th Street Yuma, Arizona where any person involved in the settlement may appear and be heard by the Court in support of, or in opposition to, the fairness of the settlement. You may also object to the settlement in writing so long as the objection is filed with the Clerk of the Court and served on all counsel by the close of the opt-out period. 23 24 It is a violation of law for Defendants to discharge or retaliate against any class member for the class member’s decision to take part in the case. 25 (Doc. 65, ¶ 5 at 2-3) (emphasis in original). Factor Sales complied with the notice 26 requirement by publishing the notice of settlement in the Yuma Sun and Baja El Sol 27 newspapers, each a daily newspaper of general circulation, on September 27, 2013, October 28 -7- 1 4, 2013, and October 11, 2013, in English and Spanish, per the Affidavits of Publication. 2 (Docs. 68, 68-1, Exhibit A) Any class member was authorized to object to the settlement so 3 long as a written objection was filed with the Clerk of the Court and served on all counsel 4 by the close of the opt-out period.4 No one objected to the parties’ settlement either in writing 5 or in person at or before the October 29, 2013 fairness hearing, which was simultaneously 6 conducted from two courtrooms, i.e., one in a courtroom at the federal courthouse in Phoenix 7 and the other by video teleconference from a courtroom at the Yuma federal courthouse. 8 Offering two courtrooms to conduct one recorded fairness hearing provided easier and less 9 expensive access for the Plaintiffs and class members living in the San Luis or Phoenix areas 10 to attend the fairness hearing at either courtroom and possibly object to the settlement and 11 benefitted the Phoenix lawyers and their clients by reducing the fees and costs associated 12 with traveling to the fairness hearing. See Rule 1, Fed.R.Civ.P. (“These rules . . . should be 13 construed and administered to secure the just, speedy, and inexpensive determination of 14 every action and proceeding.”). To assist any class member who appeared at the Yuma 15 courthouse, the parties retained Spanish-speaking interpreter, Gus Olavarria-Oliveras. Also 16 at the Yuma courthouse was Factor Sales’ Yuma corporate counsel, Barry L. Olsen. 17 At the fairness hearing, the parties’ Phoenix counsel explained that the size of the 18 class had swelled to 425 individuals and why the settlement is fair and should be approved 19 by the Court. As previously mentioned, no class member appeared at the fairness hearing at 20 either courtroom. Plaintiffs’ counsel represented, and the docket confirms, that nine (9) 21 individuals opted-out of this lawsuit.5 (Docs. 58-1, Exhibit (“Exh.”) A; 62-1, Exh. A at 7) 22 Subsequent to the fairness hearing, the parties filed separate post-hearing memoranda, 23 addressing the various factors to consider for a judicial finding that the parties’ settlement 24 25 26 27 4 The opt-out or bar date was one hundred and twenty (120) days after the Class Notice was first sent to the Settlement Class. The Class Notice was first sent to the Settlement Class at their last known address on May 10, 2013. (Doc. 56, ¶ 5 at 3) 5 28 Initially, there were 12 individuals who opted-out of this lawsuit. Three of these individuals, however, “inadvertently” opted-out, doc. 66, and have now opted back in. (Docs. 58-1, Exh. A; 62-1, Exh. A at 7; 66-1, Exh. A at 1-3) -8- 1 is fundamentally fair, adequate, and reasonable. (Docs. 71-72) 2 IV. The Fair Labor Standards Act 3 A. Generally 4 The FLSA was enacted “to protect all covered workers from substandard wages and 5 oppressive working hours.” Barrentine v. Arkansas-Best Freight System, 450 U.S. 728, 739 6 (1981). In view of the inequalities in bargaining power between employees and employers, 7 Congress made the provisions of the FLSA mandatory. Brooklyn Savings Bank v. O’Neil, 8 324 U.S. 697 (1945). 9 The FLSA regulates minimum wage, overtime pay, equal pay, and child labor, and 10 prohibits employers from retaliating against employees who exercise their rights under the 11 Act. See Dellinger v. Science Applications Intern. Corp., 649 F.3d 226, 227-229 (4th Cir. 12 2011). Under the FLSA, employers must pay employees the federal minimum wage for the 13 time spent “engaged in commerce or in the production of goods for commerce, or [] 14 employed in an enterprise engaged in commerce or in the production of goods for 15 commerce,” according to a statutory schedule of the minimum hourly wage.6 Jimenez v. 16 Servicios Agricolas Mex, Inc., 742 F.Supp.2d 1078, 1090 (D. Ariz. 2010) (quoting 29 U.S.C. 17 § 206(a) (requiring “[e]very employer” to pay the minimum wage to covered employees)). 18 The FLSA “[i]s designed to prevent various ways employers might undermine the 19 minimum wage provisions.” California Dairies Inc. v. RSUI Indem. Co., 617 F.Supp.2d 20 1023, 1045 (E.D. Cal. 2009). An employer does not comply with the minimum wage 21 requirement “[u]nless the compensation is ‘free and clear,’ meaning the employee has not 22 kicked back part of the compensation to the employer.” Rivera v. Peri & Sons Farms, Inc., 23 735 F.3d 892, 897 (9th Cir. 2013) (citing 29 C.F.R. § 531.35). “Thus, employers generally 24 may not issue paychecks at the minimum wage rate and then require employees to give some 25 of the money back.” Id. If there are deductions by the employer which lower an employee’s 26 wages below the minimum wage “[f]or items not qualifying as ‘board, lodging, or other 27 6 28 The FLSA minimum wage rates were $5.85 an hour, beginning on July 24, 2007; $6.55 an hour, beginning on July 24, 2008, and currently $7.25 an hour, effective July 24, 2009. See 29 U.S.C. § 206(a)(1)(A)-(C). -9- 1 facilities’- such as items primarily benefitting the employer - . . . , they are unlawful.” Id. 2 (citing 29 C.F.R. § 531.36(b)). 3 Title 29 U.S.C. § 207(e)(2) excludes from the calculation of an employee’s “regular 4 rate” any expenditure by an employee that is properly reimbursable by the employer, e.g., 5 the purchase of employee uniforms.7 See California Dairies, 617 F.Supp.2d at 1045. “The 6 FLSA only requires an employer to reimburse the employee for furnishing or maintaining 7 clean uniforms if failure to do so would reduce their wages below the minimum wage.” Id. 8 (citing Hodgson v. Newport Motel, Inc., dba Newport Beach Motel, 1979 WL 1975 (S.D. Fla. 9 1979); Marshall v. Root’s Restaurant, Inc., 667 F.2d 559 (6th Cir. 1982) (restaurant violated 10 the FLSA by requiring waitresses to purchase uniform as a condition of employment, 11 deducting cost of uniforms from first week’s wages, and thereby reducing wages below the 12 minimum wage rate). 13 For violations of the FLSA’s minimum wage provisions, employers “shall be liable 14 to the . . . employees affected in the amount of their unpaid minimum wages, . . . and in an 15 additional equal amount as liquidated damages. . . .” 29 U.S.C. § 216(b); see also Alvarez 16 v. IBP, Inc., 339 F.3d 894, 909 (9th Cir. 2003) (citing, inter alia, Overnight Motor Transp. 17 Co. v. Missel, 316 U.S. 572, 583-84 (1942) (observing that FLSA liquidated damages are not 18 penalties exacted by law, but, rather, compensation to the employee occasioned by the delay 19 in receiving wages due); aff’d, 546 U.S. 21 (2005). Liquidated or “[d]ouble damages are the 20 norm, single damages the exception.” Chao v. A-One Medical Services, Inc., 346 F.3d 908, 21 22 23 24 25 26 27 28 7 Title 29 U.S.C. § 207(e)(2) provides in pertinent part: As used in this section, the “regular rate” at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf of, the employee, but shall not be deemed to include . . . other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; .... 29 U.S.C. § 207(e)(2). - 10 - 1 920 (9th Cir. 2003) (citation and internal quotation marks omitted); Nellis v. G.R. Herberger 2 Rev. Trust, 360 F.Supp.2d 1033, 1044 (D. Ariz. 2005). District courts have the discretion to 3 deny an award of liquidated damages “if the employer shows that it acted in subjective ‘good 4 faith’ and had objectively ‘reasonable grounds’ for believing that its conduct did not violate 5 the FLSA.” Id. (quoting portions of 29 U.S.C. § 260). 6 The FLSA requires that in any action to enforce § 207, the district court “shall, in 7 addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s 8 fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b) (emphasis 9 added). 10 “The FLSA provides for a two-year statute of limitations unless there is a finding of 11 willfulness, in which case a three-year statute of limitations applies.” 29 U.S.C. § 255(a). 12 “This two-tiered statute of limitations[ ] makes it obvious that Congress intended to draw a 13 significant distinction between ordinary violations and willful violations.” Id. (quoting 14 McLaughlin v. Richland Shoe Co., 486 U.S. 128, 132 (1988) (internal quotation marks 15 omitted). The party claiming an exception to the normal period bears the burden of showing 16 the violation was willful. Nelson v. Waste Management of Alameda County, Inc., 33 17 Fed.Appx. 273, 274 (9th Cir. 2002) (citing 29 U.S.C. § 255(a)). The determination of 18 willfulness is a mixed question of law and fact. Alvarez, 339 F.3d at 908 (citation omitted). 19 Mere negligence by the employer in determining its legal obligation is not sufficient. Nelson, 20 33 Fed.Appx. at 274. Rather, a violation is willful if the employer either: (1) affirmatively 21 knew its conduct violated the FLSA; or (2) recklessly disregarded whether its conduct 22 violated the FLSA. Chao, 346 F.3d at 918 (citing McLaughlin, 486 U.S. at 133). “For § 255’s 23 extension to obtain, an employer need not knowingly have violated the FLSA; rather the 24 three-year term can apply where an employer disregarded the very ‘possibility’ that it was 25 violating the statute, Herman v. RSR Sec. Servs., Ltd., 172 F.3d 132, 141 (2nd Cir. 1999), 26 although [a court] will not presume that conduct was willful in the absence of evidence.” 27 Alvarez, 339 F.3d at 908 (finding evidence sufficient to support a finding that employer 28 recklessly disregarded the possibility that it was violating the FLSA because employer was - 11 - 1 on notice of the FLSA’s requirements, but took no action to assure compliance with them.) 2 Any assertion of an exemption from the FLSA is considered an affirmative defense 3 that must be pled and proved by the defendant. See Magana v. CNMI, 107 F.3d 1436, 1445- 4 46 (9th Cir. 1997) (exemption from requirement to pay overtime under the FLSA is an 5 affirmative defense that must be raised by the employer); Fed.R.Civ.P. 8(b); Corning Glass 6 Works v. Brennan, 417 U.S. 188, 196-97 (1974) (“an exemption under the [FLSA] is a matter 7 of affirmative defense on which the employer has the burden of proof.”). 8 B. FLSA Settlements 9 While the Ninth Circuit Court of Appeals has not specifically addressed the procedure 10 to settle FLSA claims, numerous district courts throughout the Ninth Circuit have followed 11 the lead in the seminal case of Lynn’s Food Stores. See McKeen-Chaplin v. Franklin 12 American Mortg. Co., 2012 WL 6629608, at *2 n. 4 (N.D. Cal. Dec. 19, 2012) (citations 13 omitted). In Lynn’s, the Eleventh Circuit held that: 14 15 16 There are only two ways in which back wage claims arising under the FLSA can be settled or compromised by employees. First, under section 216(c), the Secretary of Labor is authorized to supervise payment to employees of unpaid wages owed to them. An employee who accepts such a payment supervised by the Secretary thereby waives his right to bring suit for both the unpaid wages and for liquidated damages, provided the employer pays in full the back wages. 17 18 19 20 The only other route for compromise of FLSA claims is provided in the context of suits brought directly by employees against their employer under section 216(b) to recover back wages for FLSA violations. When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness. 21 Lynn’s, 679 F.2d at 1352-53. 22 When parties seek approval of a FLSA settlement, a district court may approve the 23 settlement if it reflects a “reasonable compromise over the issues.” Lopez v. Arizona Public 24 Service Co., 2010 WL 1403873, at *1 (D. Ariz. Jan. 27, 2010) (quoting Lynn’s Food, 679 25 F.2d at 1352-53). “If the settlement reflects a reasonable compromise over issues such as 26 FLSA coverage or computation of back wages . . . , the court may approve the settlement in 27 order to promote the policy of encouraging settlement of litigation.” Khanna v. Inter-Con 28 - 12 - 1 Sec. Systems, Inc., 2012 WL 4465558, at *10 (E.D. Cal. Sept. 25, 2012) (citations and 2 internal quotation marks omitted). 3 Conversely, district courts have also disapproved proposed FLSA settlement 4 agreements for varying reasons. See, e.g., McKeen-Chaplin v. Franklin American Mortg. 5 Co., 2012 WL 6629608 (N.D. Cal. Dec. 19, 2012) (rejecting the parties’ joint motion to 6 approve FLSA settlement and dismissal motion without prejudice due to the absence of 7 enough information and analysis to conclude that the settlement was a fair and reasonable 8 resolution of the action, the use of an overly broad general release, and the absence of time 9 records justifying the attorney’s fees requested); Khanna, 2012 WL 4465558, at *12 10 (denying without prejudice preliminary approval of FLSA settlement because counsel did 11 not provide “any estimate of the potential recovery should the case be resolved on summary 12 judgment or at trial, so the court does not have sufficient information to determine even 13 preliminarily whether the settlement is within the range of possible approval.”). 14 “There are, however, no agreed upon factors to consider in evaluating a proposed 15 FLSA settlement.” Almodova v. City and County of Honolulu, 2010 WL 1372298, at *4 (D. 16 Haw. March 31, 2010). “Some courts have applied the factors for approval of class action 17 settlements by analogy.” Id. (see Churchill factors discussed below). In reviewing a FLSA 18 settlement, the district court’s “[o]bligation is not to act as caretaker but as gatekeeper; it 19 must ensure that private FLSA settlements are appropriate given the FLSA’s purposes and 20 that such settlements do not undermine the Act’s purposes.” Goudie v. Cable 21 Communications, Inc., 2009 WL 88336, at *1 (D. Or. Jan. 12, 2009). “Thus, [i]n reviewing 22 the fairness of such a settlement, a court must determine whether the settlement is a fair and 23 reasonable resolution of a bona fide dispute.” Id. (quoting Yue Zhou v. Wang’s Rest., 2007 24 WL 2298046, at *1 (N.D. Cal. Aug. 8, 2007)). 25 V. Class Action Settlements 26 Before granting final approval of a class action settlement, a district court must 27 determine whether the settlement agreement meets the settlement requirements of Federal 28 Rule of Civil Procedure 23(e). Rule 23(e) requires a district court to determine whether a - 13 - 1 proposed class action settlement is “fundamentally fair, adequate, and reasonable.” Staton 2 v. Boeing Co., 327 F.3d 938, 959 (9th Cir. 2003). “The factors in a court’s fairness 3 assessment will naturally vary from case to case, but courts generally must weigh: 4 5 6 (1) the strength of the plaintiff’s 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 of the proposed settlement. 7 8 In re Bluetooth Headset Prods. Liability Litig., 654 F.3d 935, 946 (9th Cir. 2011) (quoting 9 Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004); Torrisi v. Tucson 10 Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993). Furthermore, district courts must ensure 11 the settlement is not the product of collusion among the negotiating parties. See In re Mego 12 Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000). Additionally, “[i]n order for a 13 settlement to be fair and adequate, ‘a district court must carefully assess the reasonableness 14 of a fee amount spelled out in a class action settlement agreement.’” Alberto v. GMRI, Inc., 15 252 F.R.D. 652, 667 (E.D. Cal. 2008) (quoting Staton, 327 F.3d at 963). The Ninth Circuit 16 has declared that a strong judicial policy favors settlement of class actions. Class Plaintiffs 17 v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). 18 In evaluating a proposed class-action settlement, “[i]t is the settlement taken as a 19 whole, rather than the individual component parts, that must be examined for overall 20 fairness.” Hanlon, 150 F.3d at 1026 (citation omitted). The district court “does not have the 21 ability to delete, modify, or substitute certain provisions.” Id. (citation omitted). “The 22 settlement must stand or fall in its entirety.” Id. The question is not whether the settlement 23 “could be prettier, smarter, or snazzier,” but only “whether it is fair, adequate, and free from 24 collusion.” Id. at 1027. 25 VI. The Settlement Agreement 26 Omitting its recitals and definitions, the parties’ Stipulation of Settlement and Parties’ 27 Joint Motion for Court Approval of Same (“Settlement Agreement”) makes clear that it is 28 subject to, and conditioned upon, the final approval of the settlement and issuance of the final - 14 - 1 order and judgment of dismissal by the District Court of Arizona. (Doc. 56, ¶ 21 at 6) The 2 material terms of the Settlement Agreement are as follows: 1. Upon the final order and judgment, the parties agree that, inter alia, District Court 3 4 will: 5 a. dismiss with prejudice all complaints in the action as to the released persons; 6 b. order that all “Settlement Class Members”8 (“SCM”) are enjoined from asserting 7 against any released person any and all claims that the SCMs have, had, or may have in the 8 future arising out of the facts alleged in the Complaint; 9 c. release each released person from the claims that any SCM has, had or may have 10 in the future, against such released person arising out of the facts alleged in the Complaint; 11 d. determine that the Settlement Agreement was entered into in good faith, is 12 reasonable, fair and adequate, and is in the best interest of the class; and 13 e. reserve the District Court of Arizona’s continuing and exclusive jurisdiction over 14 the parties to the Settlement Agreement, including Factor Sales and all SCMs, to administer, 15 supervise, construe and enforce the Settlement Agreement in accordance with the 16 settlement’s terms for the mutual benefit of all the parties. (Id., ¶ 21 at 6-7) 17 2. The parties agree that damages in specific amounts will be paid by, or on behalf of, 18 Factor Sales to resolve all claims of all SCMs as described in the Settlement Agreement, but 19 the total amount of all damages paid will not exceed $157,000, excluding the attorneys’ fees 20 and costs of Plaintiffs’ class counsel and the cost of administration of the Settlement 21 Agreement. (Id., ¶ 23, at 7) 22 3. Class counsel and the SCMs, by and through the named Plaintiffs, have determined 23 that the distribution of the sum of not more than $157,000, as set forth in a damages 24 calculation spreadsheet (Exh. A), is fair and appropriate. Factor Sales have acquiesced in this 25 settlement amount. Exhibit A itemizes 425 cashiers by individual name; the amount of wages 26 each cashier was paid below the minimum wage, if any, from 2007 through 2011; the 27 8 28 According to the Settlement Agreement, a “Settlement Class Member” means “any member of the Settlement Class, including representatives, successors and assigns.” (Doc. 56, ¶ 2 at 3) - 15 - 1 aggregated amount of the wages due each cashier, and the total amount of damages each 2 cashier will receive if the Settlement Agreement is approved. (Id., ¶ 24 at 7) 3 4. In reaching each settlement amount in the damages calculation spreadsheet, the 4 parties calculated the total minimum wage underpayment for each individual. They then took 5 the $157,000 settlement amount, subtracted the designated amounts that were to be provided 6 to the named Plaintiffs, and divided that figure by the minimum wage underpayment for all 7 class members except for the named Plaintiffs. This quotient yields a figure of 2.484617448. 8 Each individual’s minimum wage underpayment was multiplied by 2.484617448 to arrive 9 at the settlement amount for each listed individual. (Id., ¶ 25 at 7-8) 10 5. Under this settlement calculation formula, each SCM will receive nearly 11 two-and-one half times (2.5) the amount he or she was allegedly underpaid in minimum 12 wage. The FLSA essentially allows liquidated (double) damages going back two or three 13 years, depending upon whether the employer’s violation of the FLSA was willful, while the 14 Arizona Minimum Wage Act allows treble damages over the same period of time and the 15 damages calculation begins at an earlier date if there is a showing of a “continuous course 16 of employer conduct.” A.R.S. § 23-364(H). As previously mentioned, the FLSA requires 17 that employees earn a minimum wage “free and clear” of employer-imposed charges and 18 deductions, such as deductions for cash register shortage errors and the cost of replacement 19 uniforms. The parties disagree, however, whether the Arizona Minimum Wage Act should 20 be interpreted and applied in a manner identical to the FLSA, given the slight differences in 21 the statutory language and the absence of case law interpreting Arizona law. (Id., ¶ 26 at 7-8) 22 As a result of this bona fide disagreement, the parties have reached a compromise on this 23 disputed issue of Arizona law and agree that each SCM will receive roughly 24 two-and-one-half times the employee’s wage underpayments calculated back to January 1, 25 2007, which will result in a liquidated damages recovery for each named Plaintiff and SCM 26 that is greater than that allowed under the FLSA. (Id., ¶ 26 at 8) 27 28 6. The parties further agree the following payments will be made to the named Plaintiffs, in care of class counsel, within thirty (30) days of the Court’s final approval of the - 16 - 1 Settlement Agreement: Juan Pablo Rodriguez Juvera ($114.45); Kenia Nunez ($2,502.03); 2 Ricardo Aguiar Romero ($452.56); Yesenia Vazquez DeLabra ($637.89). (Id., ¶ 30 at 9) 3 7. The parties further agree that if the total amount of all settlement payments to the 4 named Plaintiffs and SCMs does not exceed one hundred fifty seven thousand dollars 5 ($157,000), the difference between the total value of all claims and one hundred fifty seven 6 thousand dollars ($157,000) will not be paid by Factor Sales. 7 8. The parties further agree that, except for the named Plaintiffs, Factor Sales will be 8 responsible for distributing all SCMs settlement checks, which will be included with the 9 regular paycheck for each SCM who is currently employed by Factor Sales, or mailed to the 10 last known address of each SCM not currently employed by Factor Sales. Factor Sales will 11 also provide to class counsel copies of all settlement checks and a certificate of mailing or 12 certificate of delivery for all settlement checks for all SCM’s who have not opted-out of the 13 Settlement Agreement. (Id., ¶ 32 at 9) 14 9. The parties further agree that Plaintiffs are eligible for, and are statutorily entitled 15 to receive, their reasonable attorneys’ fees, court costs, and costs of litigation pursuant to 29 16 U.S.C. § 216(b), and A.R.S. § 23-364(G). Within sixty (60) days after entry of the order 17 approving the parties’ Settlement Agreement, Plaintiffs will file: 1) a bill of costs pursuant 18 to LRCiv 54.1; and 2) an application for an award of attorneys’ fees and related non-taxable 19 expenses, and a memorandum in support thereof, pursuant to LRCiv 54.2. While Factor Sales 20 have reserved the right to contest Plaintiffs’ filings for attorneys’ fees and court costs, they 21 agree that, by settling this lawsuit, Plaintiffs are the successful and/or prevailing parties in 22 this litigation. (Id., ¶¶ 37-39 at 10-11) 23 VII. Settlement Factors 24 Federal Rule of Civil Procedure 23(e) mandates that a class action “may be settled . 25 . . or compromised only with the [district] court’s approval[]” to ensure any class action 26 settlement is “fundamentally fair, adequate, and reasonable.” Rule 23(e), Fed.R.Civ.P.; 27 Staton, 327 F.3d at 959. In Churchill Village, the Ninth Circuit Court of Appeals directed 28 that district courts weigh and evaluate the following non-exclusive settlement factors before - 17 - 1 approving or rejecting a class action settlement. 2 A. The Strength of Plaintiffs’ Case 3 Plaintiffs point to Factor Sales’ Answer, which “admits several key allegations set 4 forth in the Complaint” that Plaintiffs have “compelling factual and legal bases for their 5 claims[.]” (Doc. 71 at 4) For example, Plaintiffs indicate Factor Sales’ documents confirm 6 its policy that when a cash till did not add up correctly, Factor Sales required its cashiers, as 7 a matter of company policy, to reimburse Factor Sales for any shortages, typically on pay 8 days, but did not give any credit to cashiers for overages. (Id.) Additionally, Plaintiffs points 9 to Factor Sales’ other policy, “requiring Plaintiffs and other members of the proposed class 10 to pay Defendants twelve dollars ($12.00) for a second or more uniform (work shirt) and five 11 dollars ($5.00) for a replacement name (or security) tag.” (Id.) According to Plaintiffs, these 12 policies “reduced the pay of Plaintiffs and other cashiers who incurred such charges to below 13 the minimum wage at times.” (Id. at 1-2) Plaintiffs refer to several affidavits to factually 14 support these claims. 15 Plaintiffs also inform the Court that this lawsuit is not the first time FLSA violations 16 were brought to the attention of Factor Sales. (Id. at 5) “Records obtained from the U.S. 17 Department of Labor (see Motion to Certify, Doc. 50, Ex. B) show that, from 2002 to 2005, 18 the Department of Labor investigated whether Factor Sales was in compliance with the 19 FLSA.” (Id.) Plaintiffs contend that the Department of Labor’s “investigation revealed that 20 ‘[t]here were 413 employees who were found to have not been paid at least the statutory 21 minimum wage due to [Factor Sales] deducting employee wages for cash register shortages 22 and for uniforms. The shortages appeared on payroll registers for employees who primarily 23 worked as cashiers.’” (Id.) “The Department of Labor computed that back wages owed for 24 such violations totaled $34,659.37.” (Id.) According to Plaintiffs, Factor Sales was instructed 25 by the Department of Labor to raise any employee’s wage up to the federal minimum wage 26 when the employee was docked for uniforms or cash register shortages if such deductions 27 resulted in an employee receiving less than the minimum wage. (Id.) 28 As a result of the Department of Labor’s prior investigation, Plaintiffs believe they - 18 - 1 would be able to establish Factor Sales’ FLSA violations were willful, and, therefore, the 2 settlement permits damages for the three years prior to filing of the Complaint rather than the 3 damages during the default two-year statute of limitations. (Id.) 4 In their Post-Fairness Hearing Memorandum, Factor Sales concedes that “[f]or 5 purposes of settlement, Factor Sales does not contest that the ‘Uniform and Shorts’ policy 6 ha[d] the effect of reducing the cashier’s wages during the pay period where a payment was 7 made.” (Doc. 72 at 3) Factor Sales acknowledges that “[f]or the class members, from the 8 time period from 2007 through 2011, payments under the ‘uniform and shorts’ policy 9 resulted in a potential underpayment of minimum wage in the total amount of $62,277.25.” 10 Factor Sales candidly admits that “Plaintiffs case on liability is quite strong” and “[a]fter 11 assessing the risk of liability in the case, and the likelihood of success on the merits, Factor 12 Sales agreed to resolve this class action for a payment of $157,000 to the applicable class 13 members, plus payment of reasonable attorneys’ fees to be separately determined by the 14 Court.” (Id. at 5) A settlement at this time, which Factor Sales describes as “exceedingly 15 fair,” eliminates any concern Factor Sales may have about an award of exemplary damages. 16 (Id.) 17 B. The Risk, Expense, Complexity, and Likely Duration of Further Litigation 18 The parties agree that at the time of the January 31, 2013 settlement conference, 19 which, according to Plaintiffs, led to the parties’ settlement, the parties had exchanged initial 20 and several supplemental disclosure statements, but no depositions had been taken. (Doc. 71 21 at 6) Factor Sales believes that pursuing the case through litigation would have been an 22 expensive, lengthy process of one year to 18-months of time, which would substantially 23 delay each class member’s receipt of funds without substantially increasing – and potentially 24 decreasing – the funds the class members would receive. (Doc. 72 at 5-6) Absent the 25 settlement, Plaintiffs note that substantial discovery would be taken, motions and cross 26 motions for summary judgment would be filed, adding 12-15 months to this litigation, and, 27 failing a complete grant of summary judgment for either party, Plaintiffs estimate a trial 28 would last 3-10 days. (Doc. 71 at 7-8) Plaintiffs “conservatively” estimate that they would - 19 - 1 have incurred an additional $200,000 in fees and costs in reaching a verdict in this case, 2 excluding the fees and costs associated with moving to certify a collective and class action 3 in this matter. (Id. at 7) 4 Plaintiffs point to the risks and difficulties of 1) proving the existence and extent of 5 such allegedly widespread and long-running practices concerning deductions or 6 reimbursements for till shortages, uniforms, and replacement name tags in a trial setting, and 7 2) the application, and competing interpretations, of state law vis-à-vis the FLSA. (Id. at 8) 8 Factor Sales notes that, despite the strength of Plaintiffs’ case on liability, there is uncertainty 9 regarding Plaintiffs’ ability to extend the limitation period to 5 years, there is uncertainty 10 regarding whether the Court is required to award exemplary damages under the Arizona 11 Minimum Wage Law, and whether the Court would award exemplary damages under the 12 FLSA. (Doc. 72 at 5) Factor Sales represents that “[i]f the class members were awarded only 13 the minimum wage underpayment -- with no exemplary damages -- for a period of 3 years, 14 that sum would be $25,482.15.” (Id.) Thus, from Factor Sales’ viewpoint, “[t]he $157,000 15 settlement amount is fair and reasonable.” (Id.) 16 C. The Risk of Maintaining Class Action Status Throughout the Trial 17 This factor does not appear to a significant issue in this case as the parties do not fully 18 develop this factor in the post-hearing memoranda and the Court does not view this factor 19 as particularly relevant to this class action Settlement Agreement. 20 D. The Amount Offered In Settlement 21 The Court has already noted that, pursuant to the parties’ Settlement Agreement, each 22 named Plaintiff and SCM will receive nearly two-and-one half times (2.5) the amount he or 23 she was allegedly underpaid in minimum wage. Thus, every Factor Sales cashier will receive 24 full and fair compensation going back to 2007 if the settlement is approved. Significantly, 25 each named Plaintiff’s and SCM’s settlement amount will not be reduced to pay their 26 attorneys’ and litigation costs as the Settlement Agreement provides Factor Sales will pay 27 separately. Consequently, the award of attorney fees and costs will have no effect on the 28 settlement damages the class members receive. As Factor Sales correctly notes, “the - 20 - 1 agreement to resolve this case cannot be viewed at a circumstance where lawyers are 2 colluding to amass legal fees at the expense of class members, because the legal fee award 3 will not affect the class members’ recovery in any way.” (Doc. 72 at 6) 4 E. The Extent Of Discovery Completed And The Stage Of The Proceedings 5 As previously mentioned, the case settled during the exchange of paper discovery and 6 before any depositions were taken. Because this action settled before expensive deposition 7 discovery had taken place, the attorneys’ fees and costs are substantially less than had the 8 settlement occurred shortly before or during trial. 9 F. The Experience And Views Of Counsel 10 Plaintiffs’ and Factor Sales’ counsel are experienced in the litigation and FLSA 11 claims. (Doc.56, ¶ 2) According to class counsel, Nicholas J. Enoch has represented 12 plaintiffs in, at least, 14 actions involving the FLSA and/or Arizona wage and hour laws, and 13 Jarrett J. Haskovec has been involved in many of the same and other representations 14 involving state and federal wage and hour laws. (Docs. 71 at 9; 50, Exh. D, ¶¶ 8-9) 15 Moreover, Judge Teilborg has written in this case that Plaintiffs’ counsel “will fairly and 16 adequately protect the interests ofthe class.” (Doc. 52 at 7) Factor Sales’ lead counsel, 17 Georgia A. Staton, has had numerous cases and, at least, two jury trials to verdict before this 18 Magistrate Judge and she is as good an experienced trial lawyer in Arizona as there is. 19 In his post-hearing memorandum, Plaintiffs’ counsel “[e]xpresses his unqualified 20 belief and judgment that the agreed-upon settlement is fundamentally and absolutely fair, 21 adequate, and reasonable and unquestionably addresses and protects the interests of not only 22 the named Plaintiffs (and Defendants), but also those of the entire class.” (Doc. 71 at 9) As 23 previously noted, Factor Sales’ co-counsel, Gordon Lewis, has expressed his opinion that 24 the settlement “is fair and reasonable.” (Doc. 72 at 5) 25 G. The Presence Of A Governmental Participant 26 Neither the United States nor one of its agencies is a party to, or participant in, this 27 litigation. 28 - 21 - 1 H. The reaction of the class members of the proposed settlement 2 In addition to what has already been stated herein, Plaintiffs’ counsel writes that “the 3 overall reaction of the class members to the proposed settlement can only be viewed as 4 positive.” (Doc. 71 at 10) According to Factor Sales, the class members have been nearly 5 “universal in their approval of the settlement” as only 9 persons have elected to opt-out of 6 the settlement and no one appeared at the fairness hearing to object to the appropriateness 7 of the settlement. 8 VIII. Discussion 9 Upon review of the entire docket and the Settlement Agreement, the Court finds that 10 the parties’ Settlement Agreement reflects a fair and reasonable resolution of the issues in 11 this case. The FLSA essentially allows double damages going back two or three years, 12 depending on a defendant’s willfulness, while the Arizona Minimum Wage Act allows treble 13 damages over the same period of time and further allows for an award of damages going back 14 further than the FLSA allows provided a plaintiff proves a “continuous course of employer 15 conduct,” which is both fairly disputed by the parties and Arizona law in this area is not 16 entirely clear. See A.R.S. §23-364(H). Under this settlement, each settlement class member 17 will receive nearly two-and-one half times what he or she was underpaid in minimum wage, 18 which is more than FLSA allows, and each settlement amount is calculated from January 1, 19 2007, which is going back further than FLSA might allow. There is a genuine dispute 20 between the parties whether the Arizona Minimum Wage Act would be construed and 21 applied in a manner identical to the federal law, given slight differences in the statutes’ 22 language and the dearth of case law interpreting the Arizona law. This settlement is a “win- 23 win” for all parties, and, under the Settlement Agreement, this litigation should come to a 24 conclusion. 25 Based on the foregoing and pursuant to Rule 23(e), Fed.R.Civ.P., the Court finds the 26 parties’ Settlement Agreement is “fundamentally fair, adequate, and reasonable.” Staton, 327 27 F.3d at 959. 28 IT IS ORDERED that the parties’ Stipulation of Settlement and Parties’ Joint Motion - 22 - 1 for Court Approval of Same, doc. 56, is GRANTED. The parties’ Settlement Agreement is 2 hereby APPROVED in its entirety. Factor Sales shall promptly distribute all settlement 3 checks as agreed in the parties’ Settlement Agreement. Except for Plaintiffs’ claim for an 4 award of their attorneys’ fees, court costs, and other litigation expenses authorized by law, 5 all claims in this action are hereby dismissed with prejudice. 6 IT IS FURTHER ORDERED that the District Court of Arizona hereby retains 7 continuing and exclusive jurisdiction over the parties, their attorneys, and this action as may 8 be necessary or appropriate to implement and/or enforce the Settlement Agreement and 9 award Plaintiffs their attorneys’ fees, court costs, and other litigation expenses authorized by 10 law. 11 IT IS FURTHER ORDERED that the Clerk of Court is kindly directed to enter a 12 final stipulated Judgment in favor of Plaintiffs and against Defendants consistent with the 13 parties’ Settlement Agreement as required by the Fair Labor Standards Act. 14 IT IS FURTHER ORDERED that, unless the parties reach an agreement on 15 Plaintiffs’ award for their attorneys’ fees, court costs, and other litigation expenses 16 authorized by law, within sixty (60) days after entry of this Order, Plaintiffs must file a bill 17 of costs, pursuant to LRCiv 54.1; an application for an award of attorneys’ fees and related 18 non-taxable expenses; and a memorandum in support thereof, pursuant to LRCiv 54.2. 19 Dated this 16th day of December, 2013. 20 21 22 23 24 25 26 27 28 - 23 -

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