Arredondo, et al. vs. Delano Farms Company, et al.

Filing 470

ORDER Regarding Plaintiffs' December 13, 2016 Status Report 469 , signed by Magistrate Judge Michael J. Seng on 12/14/2016. (Kusamura, W)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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1:09-cv-01247 MJS
SABAS ARREDONDO et al.,

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ORDER REGARDING PLAINTIFFS’
Plaintiffs, DECEMBER 13, 2016 STATUS REPORT
(Doc. 469)

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v.

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DELANO FARMS CO., et al.,
Defendants.

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The Court is in receipt of Plaintiffs’ December 13, 2016 status report. (ECF No.

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469.)

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As the Court advised during the December 2, 2016 telephonic conference in this

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case, the proposed settlement as originally presented to the Court appears fair and

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destined for approval by the Court if finalized. However, four of the six named class

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representatives seek to increase their enhanced awards from $7000 to $50,000 each

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and reportedly have declined to sign the settlement agreement unless they are heard on

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their request.

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The Court believes that the requests to increase the enhanced award creates a

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conflict between the interests of the requesters and the interests of the remaining
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members of the class. See Rodriguez v. West Publ’g Corp., 563 F.3d 948, 960 (9th Cir.

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2009); see also Staton v. Boeing Co., 327 F.3d 938, 977-78 (9th Cir. 2003) (declining to

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approve a class settlement when the class representatives were "more concerned with

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maximizing [their own] incentives than with judging the adequacy of the settlement as it

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applies to class members at large.")). The increased incentive awards, if allowed, would

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diminish the funds payable to the class by $172,000, or roughly 5% of the net settlement

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fund of approximately $3,455,000. That is not an insignificant amount. Excessive

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incentive awards may put the class representative in a conflict with the class and present

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a "considerable danger of individuals bringing cases as class actions principally to

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increase their own leverage to attain a remunerative settlement for themselves and then

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trading on that leverage in the course of negotiations." Rodriguez, 563 F.3d at 960 (citing

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Staton, 327 F.3d at 976-77). Aside from financial considerations, presenting such claims

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while declining to sign the settlement agreement necessarily delays and could very well

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jeopardize the proposed settlement.

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The Court is available to hear the contentions of the four class representatives

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either formally on noticed motion, or if all parties agree, informally. The four class

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representatives alternatively may reserve the right to seek an increased award at and in

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connection with the final class settlement approval. However, regardless of when or how

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they present their increased demands, it appears to the Court present counsel would

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have a conflict of interest in representing these four class representatives while also

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representing the entire class.

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The Court is aware that the Ninth Circuit has held that “district courts should have

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discretion to deal with the unique complexities and ethical concerns involved in class

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action lawsuits” and apply a pragmatic approach to protect the best interests of absent

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class members rather than apply an automatic disqualification rule. Radcliffe v.

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Hernandez, 818 F.3d 537, 545 (9th Cir. 2016) (citing Rodriguez v. Disner, 688 F.3d 645,

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655 (9th Cir. 2012)). Plaintiffs’ counsel argues that no conflict has yet arisen as the four

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class members have not made a final decision regarding whether to sign the settlement
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agreement. (See ECF No. 469 at 5.) Based on reduction of the net settlement fund

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available to the class, and the fact that the actions of the four class representatives is

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delaying and could jeopardize the settlement agreement, if the four representative class

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members insist on seeking increased enhancement awards of $50,000, they must obtain

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counsel independent of counsel for the class. If the four obtain independent counsel, the

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Court is not presently aware of any reason current class counsel could not continue to

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represent the class or any reason why the remaining class representatives, Jose Cuevas

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and Isidro Paniagua, could not continue to serve as adequate class representatives. See

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Rodriguez, 563 F.3d at 961.

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Plaintiffs are hereby ORDERED to notify the Court and all parties by Wednesday,
December 21, 2016 how they intend to proceed.

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IT IS SO ORDERED.
Dated:

December 14, 2016

/s/

Michael J. Seng

UNITED STATES MAGISTRATE JUDGE

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