Brewer v. Salyer

Filing 230

ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT AND DISMISSAL OF CLASS CLAIMS 225 , signed by District Judge Dale A. Drozd on 4/18/2017. (Thorp, J)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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ROBIN BREWER,

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Plaintiff,

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No. 1:06-cv-01324-DAD-MJS

v.
SCOTT SALYER,

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ORDER GRANTING PLAINTIFF’S MOTION
FOR PRELIMINARY APPROVAL OF
CLASS ACTION SETTLEMENT AND
DISMISSAL OF CLASS CLAIMS

Defendant.
(Doc. No. 225)

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This matter is before the court on April 18, 2017, for hearing of plaintiff’s unopposed

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motion for preliminary approval of class action settlement and dismissal of class claims. (Doc.

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No. 225.) Attorney Matthew Galin appeared telephonically on behalf of plaintiff Robin Brewer,

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and attorney Malcolm Segal appeared telephonically on behalf of defendant Scott Salyer. Oral

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argument was heard and the motion was taken under submission. For the reasons stated below,

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plaintiff’s motion will be granted.

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FACTUAL BACKGROUND

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On September 21, 2006, plaintiff Robin Brewer filed a class action complaint against

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defendant, president of a non-party company, SK Foods. (Doc. No. 1.) Plaintiff’s complaint is

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based on allegations that defendant knowingly hired undocumented immigrants at SK Foods for

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the purpose of depressing wage rates.

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Plaintiff filed a first amended complaint (“FAC”) on June 1, 2007. (Doc. No. 38.) In the

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FAC, plaintiff alleged violations of the Racketeer Influenced and Corrupt Organizations Act

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(“RICO”), 18 U.S.C. § 1961, based on the predicate offense of violating the Immigration and

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Nationality Act (“INA”). (Id.) The specific INA violation plaintiff alleged involved 8 U.S.C.

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§ 1324(a)(3), which prohibits importing undocumented aliens for employment purposes.

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On May 18, 2009, the court granted plaintiff’s motion for class certification. (Doc. No.

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101.) In granting the plaintiff’s motion, the court certified a class of “All Seasonal Hourly Wage

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Earners employed by SK Foods between June 1, 2003, and June 1, 2008.” (Id. at 18.) The court

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subsequently granted plaintiff’s motion to expand the class to include all seasonal workers

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employed by SK Foods from September 22, 2002, to the date of filing a second amended

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complaint.” (Doc. No. 112.) Plaintiff’s Second Amended Complaint (“SAC”) reflecting the

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expanded class was filed on July 21, 2009. (Doc. No. 113.)

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In 2009, defendant Salyer was charged by way of indictment in a federal criminal

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prosecution. (Doc. No. 173 at 2–3; 185.) During this same period, SK Foods went into

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involuntary bankruptcy, with Bradley Sharp appointed as Trustee. (Id.) Because of the extensive

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litigation surrounding the bankruptcy and the criminal proceedings brought against Salyer, the

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court stayed discovery in this action. (Id.)

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Defendant entered a guilty plea in the criminal case in March 2012 and was incarcerated

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between April 2013 and November 2016. (Doc. No. 210 at 3.)1 On January 20, 2017, the court

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lifted the discovery stay in this action, and required the parties to file a motion for settlement,

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voluntary dismissal, or compromise within sixty days of the date of that order. (Doc. No. 224.)

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On December 4, 2015, this case was reassigned to the undersigned. (Doc. No. 214.)
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On March 14, 2017, plaintiff filed the instant unopposed motion for preliminary approval

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of class action settlement and dismissal of claims. (Doc. No. 225.) Under the proposed

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settlement agreement, the class will dismiss all claims without prejudice, with each side to bear its

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own costs. (Doc. No. 226 at 5.) Plaintiff now seeks an order (i) approving the class settlement

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agreement; (ii) approving the form and method of service, and directing that class notice be sent

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to proposed class members; and (iii) setting a hearing date on final settlement approval. (Id. at 9.)

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LEGAL STANDARD
“Courts have long recognized that settlement class actions present unique due process

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concerns for absent class members.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935,

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946 (9th Cir. 2011) (citation and internal quotations omitted). To protect the rights of absent

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class members, Rule 23(e) of the Federal Rules of Civil Procedure requires that the court approve

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all class action settlements “only after a hearing and on finding that it is fair, reasonable, and

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adequate.” Fed. R. Civ. P. 23(e)(2); Bluetooth, 654 F.3d at 946.

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Review of a proposed class action settlement ordinarily involves two hearings. See

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Manual for Complex Litigation (4th) § 21.632. First, the court conducts a preliminary fairness

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evaluation. If the court makes a preliminary determination on the fairness, reasonableness, and

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adequacy of the settlement terms, the parties are directed to prepare the notice of proposed

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settlement to the class members. Id. (noting that if the parties move for both class certification

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and preliminary approval, the certification hearing and preliminary fairness evaluation can

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usually be combined). Second, the court holds a final fairness hearing to determine whether to

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approve the settlement. Id.; see also Narouz v. Charter Commc’ns, Inc., 591 F.3d 1261, 1266–67

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(9th Cir. 2010).

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ANALYSIS
I.

Proposed Settlement Agreement

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Plaintiff here seeks approval of their proposed settlement agreement. (Doc. No. 225.)

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Under Rule 23(e), a court may approve a class action settlement only if the settlement is fair,

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reasonable, and adequate. Bluetooth, 654 F.3d at 946. “[P]reliminary approval of a settlement

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has both a procedural and substantive component.” See, e.g., In re Tableware Antitrust
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Litigation, 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007) (citing Schwartz v. Dallas Cowboys

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Football Club, Ltd., 157 F. Supp. 2d 561, 570 n.12 (E.D. Pa. 2001)). In particular, preliminary

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approval of a settlement and notice to the proposed class is appropriate if: (i) the proposed

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settlement appears to be the product of serious, informed, non-collusive negotiations; and (ii) the

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settlement falls within the range of possible approval, has no obvious deficiencies, and does not

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improperly grant preferential treatment to class representatives or segments of the class. Id.; see

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also Ross v. Bar None Enterprises, Inc., No. 2:13–cv–00234–KJM–KJN, 2014 WL 4109592, at

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*9 (E.D. Cal. Aug. 19, 2014). However, a district court reviewing a proposed settlement is not to

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“reach any ultimate conclusions on the contested issues of fact and law which underlie the merits

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of the dispute.” Chem. Bank v. City of Seattle, 955 F.2d 1268, 1291 (9th Cir. 1992).

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A. Procedural Adequacy

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The first factor relevant to the court’s preliminary approval of settlement concerns

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procedural fairness. Pierce v. Rosetta Stone, Ltd., No. C 11–01283 SBA, 2013 WL 1878918, at

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*4 (N.D. Cal. 2013). In his motion, plaintiff states that the parties have discussed the possibility

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of settling the case over the past several years. (Doc. No. 226 at 4.) Plaintiff references a number

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of factors motivating the parties to settle, including: (i) the small size of the class, which consists

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of less than 200 class members; (ii) the expense and duration of protracted merits discovery;

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(iii) the difficulty of conducting discovery in connection with, at this point, a relatively old case;

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(iv) the need for experts and the time and costs associated with that process; (v) the reduced threat

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of any future wide-spread immigration-related violations by defendant involving hourly paid

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workers; and (vi) the uncertainty stemming from defendant’s criminal proceedings and the

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possibility of future criminal investigations by foreign states that could further stay or delay this

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case; and (vii) the futility of pursuing class recovery from defendant in light of his apparent lack

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of any financial resources.2 (Id. at 4–5.) At the oral argument on the pending motion, the parties

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also advised that they arrived at the settlement agreement after corresponding with each other and

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conferring with their clients. The court finds the parties have sufficiently shown the settlement

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These factors are noted in the joint status reports previously filed by the parties. (E.g., Doc. No.
223 at 3.)
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was the product of informed, non-collusive negotiations deserving of preliminary approval. See

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In re Tableware, 484 F.Supp.2d at 1079; Palacios v. Penny Newman Grain, Inc., No. 1:14–cv–

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01804–KJM, 2015 WL 4078135, at *8 (E.D. Cal. July 6, 2015).

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B. Substantive Adequacy

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In conducting the preliminary fairness determination, the court must also consider whether

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the settlement itself is substantively fair, reasonable, and adequate. See Bluetooth, 654 F.3d at

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945. Several factors bear on the inquiry, including the size of the settlement award, the nature of

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the claims released, the amount of attorneys’ fees awarded, and the size of the incentive payment

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to class representatives. See Hanlon, 150 F.3d at 1026; Villegas v. J.P. Morgan Chase & Co.,

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No. CV 09–00261 SBA (EMC), 2012 WL 5878390, at *6–7 (N.D. Cal. Nov. 21, 2012).

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i. Adequacy of the Settlement Amount
To evaluate the fairness of the settlement award, the court should “compare the terms of

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the compromise with the likely rewards of litigation.” See Protective Comm. for Indep.

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Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424–25 (1968). “It is well-

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settled law that a cash settlement amounting to only a fraction of the potential recovery does not

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per se render the settlement inadequate or unfair.” In re Mego Fin. Corp. Secs. Litig., 213 F.3d at

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459. Courts are also obliged to ensure that the attorneys’ fees awarded in a class action

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settlement are reasonable, even if the parties have already agreed on an amount. Bluetooth, 654

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F.3d at 941.

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As stated above, the proposed settlement agreement provides that each party will cover its

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own costs, and that neither plaintiff nor class counsel will receive any payment. (Doc. No. 226 at

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5.) Plaintiff argues that the settlement agreement is reasonable because there is no realistic

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potential for recovery in this case, since defendant does not have any appreciable assets, has a

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significant negative net worth due to multi-million dollar judgments having been entered against

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him, and is currently unemployed with no future job prospects.3 (Id.) In support of these facts,

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plaintiff references the joint status reports previously filed by the parties with the court, and a

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Plaintiff notes that defendant was not ordered to pay restitution as part of the sentence imposed
in his criminal proceedings. (Id. at 4.)
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declaration from the defendant confirming his negative net worth. (Id. at 4, 16–18.)

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Based on the information provided by plaintiff in his moving papers, and in light of the

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evidence supporting the unlikely nature of recovery, the court finds the proposed settlement

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amount to be adequate.

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II.

Proposed Class Notice
For proposed settlements under Rule 23, “the court must direct notice in a reasonable

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manner to all class members who would be bound by the proposal. Fed. R. Civ. P. 23(e)(1); see

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also Hanlon, 150 F.3d at 1025 (“Adequate notice is critical to court approval of a class settlement

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under Rule 23(e).”). A class action settlement notice “is satisfactory if it generally describes the

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terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate

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and to come forward and be heard.” Churchill Vill., LLC v. Gen. Elec., 561 F.3d 566, 575 (9th

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Cir. 2004) (internal quotations and citations omitted).

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Here, plaintiff’s proposed notice describes the terms of the settlement, informs the class of

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the attorneys’ fee amount, provides information concerning the time, place, and date of the final

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approval hearing, and informs absent class members that they may enter an appearance through

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counsel. (Doc. No. 226 at 13–14.) It also notifies absent class members about how they may

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object to the proposed settlement, provides for mail delivery, and requires any objections to be

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submitted by sixty days after the mailing of the notice. (Id.) The proposed notice does not

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provide an additional opportunity to opt out. (Id. at 8.)

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The court finds that the notice and the manner of notice proposed by plaintiff meets the

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requirements of Federal Civil Procedure Rule 23(c)(2)(B) and that the proposed mail delivery is

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appropriate in these circumstances. See Churchill Vill., LLC, 561 F.3d at 575. The court also

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finds that no additional opt-out opportunity is required, as class members were given an

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opportunity to opt-out during an earlier stage of this litigation, (Doc. No. 172). See Officers for

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Justice v. Civil Serv. Comm’n of City & Cty. of San Francisco, 688 F.2d 615, 635 (9th Cir. 1982);

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see also Low v. Trump Univ., LLC, Case No.: 3:10–cv–00940–GPC–WVG, Case No.: 3:13–cv–

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02519–GPC–WVG, 2017 WL 1275191, at *8 (S.D. Cal. Mar. 31, 2017).

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CONCLUSION

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For the reasons stated above:

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1. The proposed settlement is approved on a preliminary basis as fair and adequate;

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2. The proposed form of notice conforms with Federal Rule of Civil Procedure 23 and is

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approved;
3. The hearing for final approval of the proposed settlement is now scheduled for June

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26, 2017, at 3:30 p.m. in Courtroom 5 before District Judge Dale A. Drozd;
4. The proposed settlement implementation schedule is adopted.
IT IS SO ORDERED.
Dated:

April 18, 2017
UNITED STATES DISTRICT JUDGE

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