Brewer v. Salyer

Filing 233

ORDER Granting Final Approval of Class Action Settlement and Dismissal of Class Claims, signed by District Judge Dale A. Drozd on 6/29/17. CASE CLOSED. (Gonzalez, R)

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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.

ORDER GRANTING FINAL APPROVAL OF
CLASS ACTION SETTLEMENT AND
DISMISSAL OF CLASS CLAIMS

SCOTT SALYER,

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Defendant.

(Doc. No. 225.)

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This matter is before the court on June 26, 2017, for a hearing concerning final approval

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

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Attorney Matthew Galin appeared telephonically on behalf of plaintiff Robin Brewer, and

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

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

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the court will grant final approval of the proposed class action settlement.
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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On January 5, 2010, defendant Salyer was charged by way of criminal complaint with

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multiple counts of mail and wire fraud in violation of 18 U.S.C. §§ 1341, 1343. See United States

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v. Frederick Scott Salyer, Case No. 2:10-cr-00061 TLN (E.D. Cal.)). On February 18, 2010, the

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federal grand jury for this district indicted him on charges of engaging in racketeering activity

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through a pattern of mail and wire fraud as well as bribery in violation of 18 U.S.C. § 1962 along

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with other charges. (Id.) During this same period, SK Foods went into involuntary bankruptcy,

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with Bradley Sharp appointed as Trustee. (Id.) Because of the extensive litigation surrounding

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the bankruptcy and the criminal proceedings against defendant Salyer, the court stayed discovery

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in this action. (Doc. No. 173.)

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Defendant Salyer entered a guilty plea in his criminal case in March 2012 and was

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incarcerated between April 2013 and November 2016. (Doc. No. 210 at 3.) On January 20,

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2017, the court lifted the discovery stay in the present case, and required the parties to file a

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motion for settlement, voluntary dismissal, compromise or such other motion required to move

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the matter toward disposition within sixty days of the date of the order. (Doc. No. 224.)

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On March 14, 2017, plaintiff filed an unopposed motion for preliminary approval of class
action settlement and dismissal of claims. (Doc. No. 225.) Under the proposed settlement
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agreement, the class will dismiss all claims without prejudice, with each side to bear its own

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costs. (Doc. No. 226 at 5.) On April 18, 2017, this court granted preliminary approval of the

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settlement agreement and authorized the proposed form of notice to class members. (Doc. No.

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230.)

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After conducting the final fairness hearing and considering the terms of the settlement, the

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court now addresses whether the proposed settlement is fair, reasonable, and adequate. See

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Mitchinson v. Love’s Travel Stops & Country Stores, No. 1:15–cv–01474–DAD–BAM, 2017 WL

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2289342, at *2 (E.D. Cal. May 25, 2017).

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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
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Final Approval of Settlement

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A class action may be settled only with the court’s approval. Fed. R. Civ. P. 23(e).

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“Approval under 23(e) involves a two-step process in which the Court first determines whether a
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proposed class action settlement deserves preliminary approval and then, after notice is given to

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class members, whether final approval is warranted.” Nat’l Rural Telecomms. Coop. v.

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DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). At the final approval stage, the primary

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inquiry is whether the proposed settlement “is fundamentally fair, adequate, and reasonable.”

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Lane v. Facebook, Inc., 696 F.3d 811, 818 (9th Cir. 2012); Hanlon v. Chrysler Corp., 150 F.3d

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1011, 1026 (9th Cir. 1998). “It is the settlement taken as a whole, rather than the individual

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component parts, that must be examined for overall fairness.” Hanlon, 150 F.3d at 1026 (citing

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Officers for Justice v. Civil Serv. Comm’n of S.F., 688 F.2d 615, 628 (9th Cir. 1982)); see also

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Lane, 696 F.3d at 818–19. Having already completed a preliminary examination of the

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agreement, the court reviews it again, mindful that the law favors the compromise and settlement

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of class action suits. See, e.g., In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008);

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Churchill Village, LLC. v. Gen. Elec., 361 F.3d 566, 576 (9th Cir. 2004); Class Plaintiffs v. City

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of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); Officers for Justice v. Civil Serv. Comm’n, 688

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F.2d 615, 625 (9th Cir. 1982). Ultimately, “the decision to approve or reject a settlement is

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committed to the sound discretion of the trial judge because he [or she] is exposed to the litigants

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and their strategies, positions, and proof.” Staton v. Boeing Co., 327 F.3d 938, 953 (9th Cir.

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2003) (quoting Hanlon, 150 F.3d at 1026).

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To determine whether a settlement is “fair, reasonable, and adequate” under Federal Civil

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Procedure Rule 23(e), the court is to consider a number of factors, including (i) the strength of the

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plaintiffs’ case; (ii) the risk, expense, complexity, and likely duration of further litigation; (iii) the

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risk of maintaining class action status throughout the trial; (iv) the amount offered in settlement;

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(v) the extent of discovery completed and the stage of the proceedings; (vi) the experience and

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views of counsel; (vii) the presence of a governmental participant; and (viii) the reaction of class

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members to the proposed settlement. See Churchill Vill. v. Gen. Elec., 361 F.3d 566, 575 (9th

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Cir. 2004) (citing Hanlon, 150 F3d at 1026); see also Torrisi v. Tucson Elec. Power Co., 8 F.3d

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1370, 1376 (9th Cir. 1993) (noting that not all factors will apply to every class action settlement,

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and that certain factors may predominate depending on the nature of the case). The court will

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also consider the procedure by which the parties arrived at the settlement. See Manual for
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Complex Litigation (Fourth) § 21.6 (2004); see also In re Tableware Antitrust Litig., No. C-04-

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3514 VRW, 2007 WL 4219394, at *2 (N.D. Cal. Nov. 28, 2007).

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Strength of Plaintiff’s Case

When assessing the strength of plaintiff’s case, the court does not reach “any ultimate

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conclusions regarding the contested issues of fact and law that underlie the merits of this

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litigation.” In re Wash. Pub. Power Supply Sys. Sec. Litig., 720 F. Supp. 1379, 1388 (D. Ariz.

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1989). The court cannot reach such a conclusion because evidence has not been fully presented.

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Id. Instead, the court is to “evaluate objectively the strengths and weaknesses inherent in the

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litigation and the impact of those considerations on the parties’ decisions to reach these

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agreements.” Id.
Plaintiff asserted in his motion for preliminary approval of the class action settlement that

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there is no realistic potential for recovery in this action. (Doc. No. 226 at 5.) In particular,

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plaintiff emphasized that defendant Salyer does not have any appreciable assets, has a significant

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negative net worth due to multi-million dollar judgments already entered against him, and is

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currently unemployed with no future job prospects. (Id.) In light of these uncontested facts, the

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court finds that this factor favors approval of the settlement.

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2. Risk, Expense, Complexity, and Likely Duration of Further Litigation, and Risk of

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Maintaining Class Action Status Through Trial

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“[T]here is a strong judicial policy that favors settlements, particularly where complex

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class action litigation is concerned.” In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir.

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2008) (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)). As a result,

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“[a]pproval of settlement is preferable to lengthy and expensive litigation with uncertain results.”

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Johnson v. Shaffer, No. 2:12-cv-1059 KJM AC P, 2016 WL 3027744, at *4 (E.D. Cal. May 27,

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2016) (citing Morales v. Stevco, Inc., No. 09–00704, 2011 WL 5511767, at *10 (E.D. Cal. Nov.

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10, 2011)).

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In its prior order granting preliminary approval of settlement, the court noted that further

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litigation of this action presented various risks for both parties, including increased expenses,

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practical difficulties related to conducting discovery in a relatively old case, and uncertainties
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stemming from defendant’s criminal proceedings and the possibility of future criminal

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investigations by foreign states that could further stay or delay the resolution of this case. (Id. at

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4–5.) Based on the risks and expenses associated with litigating the claims at issue, consideration

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of this factor also weighs in favor of approval.

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3. Settlement Amount

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Generally, in evaluating the fairness of a settlement award, the court should “compare the

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terms of 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). However,

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“[i]t is well-settled law that a cash settlement amounting to only a fraction of the potential

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recovery does not per se render the settlement inadequate or unfair.” In re Mego Fin. Corp. Secs.

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Litig., 213 F.3d 454, 459 (9th Cir. 2000) (quoting Officers for Justice v. Civil Serv. Comm’n, 688

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F.2d 615, 628 (9th Cir. 1982). .

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Here, the proposed settlement agreement provides that the class members will dismiss all

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claims without prejudice, with each side to bear its own costs. Though the settlement agreement

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provides no recovery for class members, plaintiff emphasizes that continuing to pursue any

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recovery through this action is futile in light of the defendant’s lack of any financial resources.

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(Id. at 4–5.) The court concludes that the settlement amount in this case is reasonable under these

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unique circumstances.

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4. Extent of Discovery Completed and the Stage of the Proceedings
“In the context of class action settlement, ‘formal discovery is not a necessary ticket to the

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bargaining table’ where the parties have sufficient information to make an informed decision

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about settlement.” Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 1239 (9th Cir. 1998)

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(quoting In re Chicken Antitrust Litig., 669 F.2d 228, 241 (5th Cir. 1982)). Approval of a class

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action settlement thus “is proper as long as discovery allowed the parties to form a clear view of

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the strength and weaknesses of their case.” Monterrubio v. Best Buy Stores, L.P., 291 F.R.D.

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443, 454 (E.D. Cal. 2013).

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As the court observed in its order preliminarily approving the class action settlement, the
parties in this case arrived at the instant agreement after corresponding with each other and
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conferring with their clients. (Doc. No. 230.) It is also noteworthy that this action has been

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pending before the court for almost eleven years. The court concludes that consideration of this

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factor ultimately weighs in favor of approving the settlement agreement.

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5. Experience and Views of Counsel;
Plaintiff’s counsel argues that this settlement is beneficial for class members because there

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is no realistic chance of recovery from defendant, and dismissal of claims thus conserves

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resources of the parties and the court. (Doc. No. 226 at 7.) This factor favors approving the

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settlement. See Mitchinson, 2017 WL 2289342, at *5; Pointer v. Bank of Am., N.A., No. 2:14–

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CV–00525–KJM–CKD, 2016 WL 7404759, at *12 (E.D. Cal. Dec. 21, 2016).

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6. Presence of a Governmental Participant;

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Because there are no separate governmental participants involved in the action, this factor

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is neutral as to the court’s analysis of the settlement agreement. See Shaffer, 2016 WL 3027744,

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at *5.

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7. Reaction of Class to the Proposed Settlement
The absence of objections to a proposed class action settlement supports that the

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settlement is fair, reasonable, and adequate. See National Rural Telecommunications

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Cooperative v. DIRECTV, Inc., 221 F.R.D. 523, 529 (C.D. Cal. 2004) (“The absence of a single

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objection to the Proposed Settlement provides further support for final approval of the Proposed

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Settlement.”) (and cases cited therein); Barcia v. Contain-A-Way, Inc., 3:07-cv-00938-IEG-JMA,

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2009 WL 587844, at *4 (S.D. Cal. 2009).

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During the hearing for final approval of the class action settlement, class counsel

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represented that notice of settlement was sent to class members pursuant to the method approved

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by the court in its April 18, 2017 order (Doc. No. 230). This notice was sent to the last known

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address of all class members, and was posted on class counsel’s website, www.fosterpc.com. The

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notice advised class members of the factual and procedural background of the action, informed

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them of the date of the hearing for final approval of the settlement, and explained how class

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members could object to the settlement. Approximately nineteen notice packets were returned as

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undeliverable. Class counsel received zero objections to the settlement, no objections were
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received by the court, and no class member appeared at the final approving hearing despite

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having been advised of the hearing by the notice.

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The court concludes that consideration of this factor also weighs in favor of settlement.

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See, e.g., Sandoval v. Theraldson Emp. Mgmt., No. EDCV 08-482-VAP (OPx), 2010 WL

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2486346, at *3 (C.D. Cal. June 15, 2010) (granting final approval to a class action settlement

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when 190 of 988, or 19.23%, of the class notices were returned as undeliverable).

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Attorneys’ Fees and Costs and Class Representative Payment

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The proposed settlement agreement does not provide for an award of attorneys’ fees and
costs, or for payment to the named plaintiff.

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CONCLUSION
For all of the reasons set forth above, the court:
1. Finds the terms of the proposed settlement agreement to be fair, adequate, and reasonable
and to comply with Rule 23(e) of the Federal Rules of Civil Procedure;

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2. Grants final approval of the class action settlement;

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3. Enters this final judgment and orders that parties act in accordance with the terms in the

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settlement agreement;
4. Declines to maintain jurisdiction to enforce the terms of the parties’ settlement agreement.

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See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381 (1994)

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(“[E]nforcement of the settlement agreement is for state courts, unless there is some

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independent basis for federal jurisdiction.”); and

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5. Directs the Clerk of the Court to close this case.

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IT IS SO ORDERED.
Dated:

June 29, 2017
UNITED STATES DISTRICT JUDGE

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