Lewis, et al vs. Vision Value, LLC
Filing
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FINDINGS and RECOMMENDATIONS Approving Settlement Agreement; Dismissing Plaintiffs' Individual Claims with Prejudice; Dismissing Class Claims Without Prejudice 24 . Referred to Judge O'Neill; Objections to F&R due within 10 days of service of this recommendation. signed by Magistrate Judge Barbara A. McAuliffe on 7/18/2012. (Herman, H)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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ANNALISA LEWIS, MICHELLE
CATBAGAN, individually, and on behalf
of all others similarly situated,
CASE NO. 1:11-cv-01055-LJO-BAM
FINDINGS & RECOMMENDATIONS
APPROVING SETTLEMENT
AGREEMENT; DISMISSING PLAINTIFFS’
INDIVIDUAL CLAIMS WITH PREJUDICE;
DISMISSING CLASS CLAIMS WITHOUT
PREJUDICE
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Plaintiffs,
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vs.
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VISION VALUE, LLC,
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Defendant.
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/
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The matter before the Court is the parties’ Joint Motion to Approve Settlement Agreement,
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Dismiss Individual Claims With Prejudice and Dismiss Class Claims Without Prejudice (the “Parties
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Motion”) (Doc. 24.) The Court deemed the matter suitable for decision without oral argument pursuant
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to Local Rule 230(g), and vacated the hearing scheduled for June 15, 2012 (Doc. 26.) Having
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considered the Parties’ Motion, the declarations attached thereto, as well as the Court’s file, the Court
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issues the following Findings and Recommendations.
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I.
A.
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BACKGROUND
Plaintiffs’ Claims
On June 24, 2011, Plaintiffs Annalisa Lewis (“Lewis”) and Michelle Catbagan (“Catbagan”)
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(Catgaban and Lewis are collectively referred to as “Plaintiffs”), former employees of Defendant
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Vision Value, LLC (“Defendant”), brought this action against Defendant alleging improper overtime
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calculations. (Doc. 1.) Plaintiffs filed a First Amended Complaint (“FAC”) on September 6, 2011.
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(Doc. 12, 14.) The FAC presents claims under the Fair Labor Standards Act of 1938 (“FLSA”) and
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the California Labor Code, Sections 204, 510, 558, 1194 and 1198 (Plaintiffs’ “California Law
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Claims”) against Defendant. Plaintiffs brought these claims in their individual capacity, as a
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collective action under FLSA, and a class action under Federal Rule of Civil Procedure 23.
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The FAC alleges Defendant violated the FLSA and California Law because it incorrectly paid
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Plaintiffs at one-and-one-half times their hourly rates, instead of incorporating the commission rates
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in the hourly rates. FAC ¶¶ 19, 20. Additionally, Plaintiffs claimed they were required to work off
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the clock for at least 15 minutes each day and reported for meetings without receiving two hours of
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reporting pay. FAC ¶¶ 21, 30.
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B.
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Background of Individual Settlements
On March 14, 2012, the parties attended a mediation with Lisa Klerman in Los Angeles
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County. (Declaration of David P. Hall “Hall Decl.,” ¶ 10, Doc. 24 Attach. 2.) The parties agreed
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that Catbagan’s claims were worth approximately $6,000.00 to $16,000.00, and that Lewis’ claims
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were worth approximately $2,500.00 to $4,500.00. (Declaration of Michael Malk “Mark Decl.” ¶ 6,
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Doc. 24, Attach. 3; Hall Decl., ¶¶ 12-13, Doc. 24 Attach. 2.) After a full day of mediation and
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follow-up, the mediator issued a mediator’s compromise which both sides accepted. Hall Decl., ¶
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11. The mediator’s compromise was consistent with the range of Plaintiffs’ claim value. (Doc. 24,
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Attach 1, 8: 14-16.) As part of the settlement, in exchange for payment, Plaintiffs’ individual claims
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raised in the FAC would be dismissed with prejudice, and the class action and collective action
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claims would be dismissed without prejudice.
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II.
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DISCUSSION
The FAC alleges various claims under California law and the FLSA. The legal standards
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governing settlement of these claims differ, and the Court addresses the settlement and/or dismissal
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of these claims separately.
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A.
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Settlement of Plaintiffs’ FLSA Claims
The FLSA's purpose is to protect workers from substandard wages and oppressive working
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hours. Barrentine v. Arkansas–Best Freight System, 450 U.S. 728, 739, 101 S.Ct. 1437 (1981). An
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individual may not relinquish rights under the FLSA, even by private agreement, because this
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“would nullify the purposes of the Act.” Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707, 65
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S.Ct. 895 (1945). There are only two ways by which FLSA back wages claims may be settled by
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employees. Thornton v. Solutionone Cleaning Concepts, Inc., 2007 WL 210586 (E.D. Cal. 2007).
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One method requires the Secretary of Labor to supervise payment to employees of unpaid wages
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owed to them. 29 U.S.C. § 216(c); Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350,
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1353–54 (11th Cir.1982). Under the other method, an employee who brings a private action for back
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wages under the FLSA may “present to the district court a proposed settlement, [and] the district
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court may enter a stipulated judgment after scrutinizing the settlement for fairness.” Schulte, Inc.,
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Gangi, 328 U.S. 108, 113 n. 8, 66 S.Ct. 925 (1946); See also Yue Zhou v. Wang's Rest., 2007 WL
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2298046, (N.D. Cal. Aug. 8, 2007). Settlements that do not follow the two methods discussed above
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are unenforceable. Thornton v. Solutionone Cleaning Concepts, Inc., 2007 WL 210586 (E.D. Cal.
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2007)
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“In reviewing the fairness of such a settlement, a court must determine whether the settlement
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is a fair and reasonable resolution of a bona fide dispute.” Yue Zhou v. Wang’s Rest., 2007 WL
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2298046 (N.D. Cal. Aug. 8, 2007). “[S]everal courts have regularly applied the Rule 23 ‘fairness’
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factors when evaluating the fairness and reasonableness of a FLSA settlement.” Martinez v. Silveira,
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2011 U.SW. Dist. LEXIS 143865 (E.D. Cal. 2011). These factors include “(1) the strength of
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plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk
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of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the
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extent of discovery completed, and the stage of the proceedings; (6) the experience and views of
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counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to
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the proposed settlement. Torrisi v. Tuscan Electric Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993).
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While some of these factors do not apply because of the inherent differences between class actions
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and individual FLSA settlements, the majority of the factors are relevant and useful in eveluating the
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settlement in this case. See Almodova v. City and County of Honolulu, 2010 WL 1372298 (D.
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Hawaii, 2010).
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Upon consideration of the information regarding the parties' settlement, the facts and
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circumstances contained in the record, as well as the amounts offered in settlement, the Court
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determines that the terms of the settlement of this litigation are fair and reflect a reasonable
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compromise of Plaintiffs' FLSA claims. The amounts proposed as settlement are proportionate to
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the damages Plaintiffs could have obtained if they proceeded to trial. In approving the parties'
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settlement agreement, the court balanced relevant factors above, including the strength of Plaintiffs'
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case; the risk, expense, complexity, and likely duration of further litigation; the extent to which the
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parties had completed discovery and litigated discovery issues; the amount offered in settlement; and
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the experience and views of counsel. After balancing these factors, the Court approves the parties’
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settlement of Plaintiffs’ claims.
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B.
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Dismissal of the Pre-Certified Putative Class Claims Without Notice Is Proper
Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a
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certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.”
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Fed. R. Civ. P. 23(e). Where no class has been certified in this case, the requirements of Rule 23(e),
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do not apply to the Joint Motion to Dismiss the class claims without prejudice. See Fed. R. Civ. P.
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23(e), adv. comm. notes, 2003 amdts. (“The new rule requires approval only if the claims, issues, or
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defenses of a certified class are resolved by a settlement....”). Even though the procedures of Rule
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23(e) do not apply to the Joint Motion to Dismiss, the Court may consider whether to “require ...
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giving appropriate notice to some or all class members,” Fed. R. Civ. P. 23(d)(1)(B), and “whether
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the proposed settlement and dismissal are tainted by collusion or will prejudice absent putative
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members with a reasonable ‘reliance’ expectation of the maintenance of the action for the protection
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of their interests.” Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1407 n. 3 (9th Cir.1989).
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The Court also may “inquire into possible prejudice from ... lack of adequate time for class members
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to file other actions, because of a rapidly approaching statute of limitations.” Id. at 1408 (citation
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omitted). While the Court is not obligated to make this evaluation, it does so in an abundance of
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caution.
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1.
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With respect to the possibility of collusion, a district court should consider “the terms of the
Possibility of Collusion
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settlement, particularly the amount paid the plaintiff in purported compromise of his individual claim
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and the compensation to be received by plaintiff's counsel, in order to insure that, under the guise of
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compromising the plaintiff's individual claim, the parties have not compromised the class claim to
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the pecuniary advantage of the plaintiff and/or his attorney.” Del Rio v. CreditAnswers, LLC, 2011
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WL 1869881 (S.D. Cal. 2011), citing, Shelton v. Pargo, Inc., 582 F.2d 1298, 1315 (4th Cir. 1978).
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The parties agreed the value of Plaintiff Catbagan’s and Lewis’ claims to be between
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$6,000.00 to $16,000.00, and $2,500.00 to $4,500.00, respectively. (Malk Decl. ¶ 6, Doc. 24,
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Attach. 3; Hall Decl., ¶¶ 12-13, Doc. 24 Attach. 2.) After a full day of mediation and continued
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settlement discussions, the mediator issued a mediator’s compromise which both sides accepted.
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(Hall Decl., ¶ 11.) The mediator’s compromise was consistent with the range of Plaintiffs’ claim
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value. (Doc. 24, Attach 1, 8: 14-16.) Based on the involvement of an experienced mediator, as well
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as the parties representations that the value of Plaintiffs’ settlement is consistent with the range of
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potential damages, the Court finds that this evidence is sufficient to show that the proposed
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settlement is not tainted by collusion.
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2.
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With respect to “reliance” on the part of absent putative class members, “[t]he danger of
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reliance is ... generally limited to actions that would be considered of sufficient public interest to
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warrant news coverage of either the public or trade-oriented variety, and such reliance can occur only
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on the part of those persons learning of the action who are sophisticated enough in the ways of the
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law to understand the significance of the class action allegation.” Del Rio v. CreditAnswers, LLC,
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2011 WL 1869881 (S.D. Cal. 2011), citing, Shelton v. Pargo, Inc., 582 F.2d 1298, 1315 (4th Cir.
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1978) (quotation omitted).
Reliance
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This action has not been the subject of media coverage, or otherwise appears to be of
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significant public interest. Indeed, there were only twenty-one individuals falling within Plaintiff’s
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proposed class definition. (Declaration of Matther Zifrony (“Zifrony Decl.,” ¶ 4, Doc. 24, Attach. 4.)
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The Court finds that this evidence is sufficient to show that the proposed dismissal will not prejudice
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absent putative class members “with a reasonable reliance expectation of the maintenance of the
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action for the protection of their interests.” Diaz, 876 F.2d at 1407 n. 3 (quotation omitted).
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3.
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In considering whether the putative class members will be prejudiced by the dismissal, the
Prejudice
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Court considers “possible prejudice from ... lack of adequate time for class members to file other
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actions, because of a rapidly approaching statute of limitations.” Diaz, 876 F.2d at 1408 (citation
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omitted). “[T]he commencement of a class action suspends the applicable statute of limitations as to
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all asserted members of the class who would have been parties had the suit been permitted to
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continue as a class action.” Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554, 94 S.Ct. 756, 38
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L.Ed.2d 713 (1974).
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The class claims are being dismissed without prejudice to refiling, and the relevant statutes of
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limitations have been tolled during the pendency of this action. As such, “the putative class
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members will be in the exact same position upon dismissal of the class claims as when the suit was
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initially filed.” Hardman v. Tri-Financial, LLC, 2010 U.S. Dist. LEXIS 9996 (S.D. Cal. 2010).
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Accordingly, notice to the putative class is not required. Schwarm v. Craighead, 2011 U.S. Dist.
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LEXIS 35472 (E.D. Cal. 2011) (Generally, courts will excuse the notice requirement when doing do
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will not prejudice the class).
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FINDINGS AND RECOMMENDATIONS
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Having considered the Parties’ Joint Motion, the declarations attached thereto, as well as the
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Court’s file, the Court recommends as follows:
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1.
The parties’ Settlement Agreement with respect to Plaintiffs’ FLSA claims is approved;
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2.
Plaintiffs’ individual claims are dismissed WITH PREJUDICE;
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3.
The collective action claims and class action claims are DISMISSED WITHOUT
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PREJUDICE.
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These findings and recommendations are submitted to the district judge assigned to this
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action, pursuant to Title 28 of the United States Code section 636(b)(1)(B) and this Court’s Local
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Rule 304. Within ten (10) days of service of this recommendation, any party may file written
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objections to these findings and recommendations with the Court and serve a copy on all parties.
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Such a document should be captioned “Objections to Magistrate Judge’s Findings and
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Recommendations.” The district judge will review the magistrate judge’s findings and
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recommendations pursuant to Title 28 of the United States Code section 636(b)(1)(C). The parties
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are advised that failure to file objections within the specified time may waive the right to appeal the
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district judge’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
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IT IS SO ORDERED.
Dated:
10c20k
July 18, 2012
/s/ Barbara A. McAuliffe
UNITED STATES MAGISTRATE JUDGE
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