Syed v. M-I, LLC et al

Filing 132

MEMORANDUM AND ORDER signed by Senior Judge William B. Shubb on 3/12/2019 GRANTING 127 Plaintiffs Motion for Preliminary Approval of the Class Action Settlement: A Final Fairness Hearing shall be held before this Court on Monday, 8/5/2019 at 01:30 PM in Courtroom 5 (WBS) before Senior Judge William B. Shubb. (See document for further details.) (Kirksey Smith, K)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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SARMAD SYED, an individual on
behalf of themselves and all
others similarly situated,
Plaintiffs

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No. 1:14-cv-00742 WBS BAM

MEMORANDUM AND ORDER RE:
PRELIMINARY APPROVAL OF CLASS
SETTLEMENT

v.
M-I LLC, a Delaware Limited
Liability Company, et al.,
Defendants.

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----oo0oo---Plaintiff Sarmad Syed brought this putative class
action lawsuit against M-I, LLC (“M-I”) and other parties
alleging M-I violated federal credit reporting laws while
conducting pre-employment background checks.
The parties have reached a settlement which would
resolve plaintiff’s claims against defendant M-I.

(See Dion-

Kindem Decl. Ex. 1, Joint Stipulation of Class Action Settlement
and Release (“Settlement Agreement”) (Docket No. 127-2).)

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Presently before the court is plaintiff’s unopposed motion for

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preliminary approval of the proposed class, proposed class

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settlement, proposed class counsels’ fee and settlement

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allocation, and proposed plan of notice.

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I.

(Docket No. 127.)

Factual and Procedural Background

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Plaintiff applied for a job with M-I on July 20, 2011.

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(FAC ¶ 14.) During the application process, plaintiff filled out

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and signed a one-page form entitled “Pre-Employment Disclosure

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and Release.” (Id.) That form included the following language:

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I understand that the information obtained will
be used as one basis for employment or denial of
employment. I hereby discharge, release, and
indemnify prospective employer [defendant M-I
LLC], PreCheck, Inc., their agents, servants, and
employees, and all parties that rely on this
release and/or the information obtained with this
release from any and all liability and claims
arising by reason of the use of this release and
dissemination of information that is false and
untrue if obtained by a third party without
verification.

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It is expressly understood that the information
obtained through the use of this release will not
be verified by PreCheck, Inc.

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(Id.)
Plaintiff alleges that M-I violated Section 1681(b)(2)

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of the Fair Credit Reporting Act by procuring or causing to be

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procured a consumer report for employment purposes via a

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disclosure form that contained not only language authorizing the

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procurement of a consumer report, but also an indemnity clause

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and release.

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class members could recover statutory damages between $100 and

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$1,000 as well as punitive damages under 15 U.S.C. § 1681n(a).

(Id. ¶ 17.)

Plaintiff alleges that as a result,

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(Id. ¶ 31.)1

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In September 2014, Defendant M-I moved this court for

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dismissal of plaintiff’s First Amended Complaint (Docket No. 39)

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and the court granted that motion (Docket No. 46).

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appealed the dismissal to the Ninth Circuit, which reversed this

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court’s ruling and remanded the case.

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F.3d 492, 495 (9th Cir.), cert. denied, 138 S. Ct. 447 (2017).

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Plaintiff

See Syed v. M-I, LLC, 853

In October 2018, the parties reached a settlement.
(See Docket No. 122.)

Their Settlement Agreement provides for a

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gross settlement amount of $556,000.

(Settlement Agreement ¶

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34.)

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agree not to oppose a motion by class counsel for attorney’s fees

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(up to $300,000) and attorney’s costs (up to $10,000) from this

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gross settlement amount.

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settlement administration costs of approximately $25,000 (Id. ¶

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36) and a class representative service award of up to $5,000 (Id.

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¶ 35), both of which will be deducted from the gross settlement

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amount.

The Settlement Agreement specifies that the defendants

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(Id. ¶¶ 37-38.)

It also estimates the

The Settlement Agreement provides that the amount

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remaining after these deductions (“Net Settlement Amount”) will

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be equally distributed among those class members who have not

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opted out of the settlement, with each one receiving a pro rata

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share of the Net Settlement Amount.

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(Id. 39.)

Plaintiff now seeks preliminary approval of the
parties’ stipulated class-wide settlement pursuant to Federal
The complaint also included related allegations against
PreCheck Inc., the company that provided the credit reports in
question. Plaintiff and defendant PreCheck reached a settlement
which this court approved in early 2016. (Docket No. 79.)
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Rule of Civil Procedure 23(e).

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II.

M-I has not opposed this motion.

Discussion

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Judicial policy strongly favors settlement of class

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actions.

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1276 (9th Cir. 1992).

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serious claims, however, judges have the responsibility of

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ensuring fairness to all members of the class presented for

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certification.”

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Cir. 2003).

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Class Plaintiffs v. City of Seattle, 955 F.2d 1268,
“To vindicate the settlement of such

Staton v. Boeing Co., 327 F.3d 938, 952 (9th

There are two stages to a court’s approval of a

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proposed class action settlement.

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temporarily certifies a class, authorizes notice to that class,

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and preliminarily approves the settlement, with final approval

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contingent on the outcome of a fairness hearing.

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Zamora, No. 2:08-567 WBS DAD, 2014 WL 3057506, at *2 (E.D. Cal.

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July 7, 2014.)

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action settlement does deserve preliminary approval, then notice

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of the action is given to the class members and a fairness

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hearing is held.

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In the first phase, the court

Ontiveros v.

If a court determines that a proposed class

At the fairness hearing, the court will entertain class

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members’ objections to both the suitability of the class action

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as a vehicle for this litigation and the terms of the settlement.

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See Murillo v. Pac. Gas & Elec. Co., 266 F.R.D. 468, 473 (E.D.

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Cal. 2010) (Shubb, J.).

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will make a final determination regarding whether the parties

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should be allowed to settle the class action pursuant to the

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agreed upon terms.

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CV-1490 LJO EPG, 2018 WL 3201764, at *3 (E.D. Cal. June 28,

After the fairness hearing, the court

See Mora v. Cal W. Ag Servs., Inc., No. 1:15-

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2018), report and recommendation adopted, No. 1:15-CV-1490 LJO

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EPG, 2018 WL 4027017 (E.D. Cal. Aug. 22, 2018)(“Following the

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fairness hearing, taking into account all of the information

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before the court, the court must confirm that class certification

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is appropriate, and that the settlement is fair, reasonable, and

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adequate.”).

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Here, the court performs only the preliminary step of

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class settlement approval.

Before turning to the propriety of

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the proposed settlement, however, the court must first determine

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whether certification of the settlement class is proper.

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Staton, 327 F.3d at 952 (stating that in cases where “parties

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reach a settlement agreement prior to class certification, courts

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must peruse the proposed compromise to ratify both the propriety

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of the certification and the fairness of the settlement.”).

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A.

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See

Class Certification
To be certified, the putative class must satisfy both

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the requirements of Federal Rule of Civil Procedure 23(a) (“Rule

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23(a)”) and Federal Rule of Civil Procedure 23(b)(“Rule 23(b)”).

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See Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir.

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2013).

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of the extent to which the putative class complies with the

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requirements of Rules 23(a) and 23(b) is especially important

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since the court will “lack the opportunity, present when a case

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is litigated, to adjust the class, informed by the proceedings as

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they unfold.”

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(1997).

In the settlement context, the court’s careful scrutiny

Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620

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1.

Rule 23(a) Requirements

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Rule 23(a) restricts class actions to cases where:
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(1) the class is so numerous that joinder of all
members is impracticable; (2) there are questions
of law or fact common to the class; (3) the
claims or defenses of the representative parties
are typical of the claims or defenses of the
class; and (4) the representative parties will
fairly and adequately protect the interests of
the class.

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Fed. R. Civ. P. 23(a).

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requirements in turn.
a.

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The court will address each of these four

Numerosity

A proposed class must be “so numerous that joinder of

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all members is impracticable.”

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there is no definite threshold for determining numerosity, the

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requirement is presumptively satisfied by a proposed class of at

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least forty members.

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274 F.R.D. 294, 300 (E.D. Cal. 2011) (Wanger, J.) (“Courts have

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routinely found the numerosity requirement satisfied when the

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class comprises 40 or more members.”).

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represent a class of approximately 4,500 members.

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Agreement ¶ 2.)

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by the proposed settlement class.

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b.

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Fed. R. Civ. P. 23(a)(1).

Though

See Collins v. Cargill Meat Sols. Corp.,

Here, plaintiff seeks to
(Settlement

The numerosity requirement is easily satisfied

Commonality

Commonality hinges on whether the class members’ claims

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“depend upon a common contention” that is “capable of classwide

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resolution –– which means that determination of its truth or

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falsity will resolve an issue that is central to the validity of

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each one of the claims in one stroke.”

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Dukes, 564 U.S. 338, 350 (2011).

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fact and law need not be common to satisfy the rule.” Hanlon v.

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Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).

Wal-Mart Stores, Inc. v.

Moreover, “[a]ll questions of

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Rather, the

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“existence of shared legal issues with divergent factual

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predicates is sufficient, as is a common core of salient facts

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coupled with disparate legal remedies within the class.”

Id.

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Here, the settlement class is comprised of:

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All persons residing in the United States
(including all territories and other political
subdivisions of the United States) as to whom M-I
L.L.C. may have procured or caused to be procured
a consumer report for employment purposes during
the period from May 19, 2009 through November 1,
2018, who M-I L.L.C. hired, and who have not
signed a severance agreement and release or
equivalent agreement releasing the claims
asserted in the Action.

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(Settlement Agreement ¶ 2.)

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The members of the putative class allege that defendant

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procured or caused to be procured consumer reports about them,

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for employment purposes, without making the disclosure required

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by the Fair Credit Reporting Act.

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class members all allege that the defendant used a disclosure

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form that also contained indemnifying language when obtaining

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their consent to obtain credit reports about them for employment

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purposes.

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Specifically, the proposed

These contentions arise out of a common core of salient

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facts and constitute a shared set of allegations regarding the

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legality of defendant’s conduct vis-à-vis the Fair Credit

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Reporting Act.

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class-wide basis.

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thus meets the commonality requirement.

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The statutory damages could also be resolved on a

c.

See 15 U.S.C. § 1681n(a).

The proposed class

Typicality

Rule 23(a) also requires that the “claims or defenses
of the representative parties [be] typical of the claims or
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defenses of the class.”

Fed. R. Civ. P. 23(a)(3).

The Ninth

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Circuit has held that to meet the typicality requirement, the

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named plaintiff’s claims must be “reasonably coextensive with

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those of absent class members.”

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evaluating the named plaintiff’s typicality, courts must look to

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“whether other members have the same or similar injury, whether

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the action is based on conduct which is not unique to the named

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plaintiffs, and whether other class members have been injured by

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the same course of conduct.”

Hanlon, 150 F.3d at 1020.

In

Hanon v. Dataprods. Corp., 976 F.2d

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497, 508 (9th Cir. 1992) (quoting Schwartz v. Harp, 108 F.R.D.

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279, 282 (C.D. Cal. 1985)).

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The putative class members allege a set of facts that

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is essentially identical to those alleged by the named plaintiff.

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Specifically, they allege that the defendant violated Section

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1681b(b)(2) of the Fair Credit Reporting Act by:

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procuring or causing to be procured consumer
reports for employment purposes regarding
Plaintiff and other class members without making
the required disclosure “in a document that
consists solely of the disclosure” by using the
disclosure and authorization form to obtain
indemnity and a release of claims[.]

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(FAC ¶ 17.)
Plaintiff and class members thus allege similar
injuries and class members would presumably seek the same remedy
that plaintiff does here: statutory and punitive damages under §
1681n(a).

(See FAC ¶ 31.)

Accordingly, plaintiff’s claims

appear to be reasonably coextensive with those of the proposed
class, and the proposed class thus meets the typicality
requirement.
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d.

Adequacy of Representation

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Finally, Rule 23(a) requires that “the representative

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parties will fairly and adequately protect the interests of the

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class.”

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determines legal adequacy: (1) do the named plaintiffs and their

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counsel have any conflicts of interest with other class members

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and (2) will the named plaintiffs and their counsel prosecute the

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action vigorously on behalf of the class?”

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1020.

Fed. R. Civ. P. 23(a)(4).

“Resolution of two questions

Hanlon, 150 F.3d at

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In most respects, for reasons discussed above in the

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“commonality” and “typicality” sections, the named plaintiffs’

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interests appear to be co-extensive with those of the class.

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However, the settlement provides for an incentive award of up to

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$5,000 for the named plaintiff.

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(See Settlement Agreement ¶ 35.)

Although the Ninth Circuit has specifically approved

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the award of “reasonable incentive payments” to named plaintiffs,

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the use of an incentive award nonetheless raises the possibility

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that a plaintiff’s interest in receiving that award will cause

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his interests to diverge from the class’s interest in a fair

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settlement.

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a settlement agreement where size of incentive award suggested

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that named plaintiffs were “more concerned with maximizing [their

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own] incentives than with judging the adequacy of the settlement

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as it applies to class members at large.”).

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district courts must “scrutinize carefully the awards so that

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they do not undermine the adequacy of the class representatives.”

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Radcliffe v. Experian Info. Sys., Inc., 715 F.3d 1157, 1163 (9th

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Cir. 2013).

See Staton, 327 F.3d at 977-78 (declining to approve

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As a result,

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The proposed $5,000 incentive award to plaintiff is

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very disproportionate to the anticipated $50 recovery of other

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class members.

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WL 183714, at *3 (S.D. Cal. 2008) (denying preliminary approval

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of class action settlement and requiring the parties to “address

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the issue of the named Plaintiff's proposed $2,000 cash award,”

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which the court felt was “disproportionately large in comparison

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to the class members’ $23 cash award.”).

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award must be justified by, for example, “the actions the

See e.g., Ybarrondo v. NCO Fin. Sys., Inc., 2008

Such a substantial fee

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plaintiff has taken to protect the interests of the class, the

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degree to which the class has benefitted from those actions, . .

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. and [plaintiff’s] reasonabl[e] fear[s of] workplace

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retaliation.”

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omitted).

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contributions to the class submitted alongside the instant motion

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is Peter Dion-Kindem’s declaration that absent plaintiff’s action

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“none of the [c]lass [m]embers would have reaped the rewards of

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this action.

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previously declared that in bringing this action he bore the risk

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that his future employers might learn about this lawsuit and be

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hesitant to hire him.

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relevant, these facts, taken together, do not provide strong

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support for a $5,000 incentive award in a settlement where the

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average class member will recover only $50.

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Staton, 327 F.3d at 977 (citation and quotation

In the instant case, the only evidence of plaintiff’s

(Dion-Kindem Decl. ¶ 22.)

The plaintiff has also

(Syed Decl. ¶ 2 (Docket No. 76-4.)

Though

At this stage, however, the court cannot determine that

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the proposed $5,000 incentive awards render the named plaintiff

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an inadequate representative of the class.

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however, that this is only a preliminary determination.
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It emphasizes,
On or

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before the date of the final fairness hearing, the parties should

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prepare evidence of the named plaintiff’s substantial efforts as

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class representative in order to better justify the discrepancy

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between this award and those of the unnamed class members.

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The second prong of the adequacy inquiry examines the

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vigor with which the named plaintiff and his counsel have pursued

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the common claims.

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which ‘vigor’ can be assayed, considerations include competency

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of counsel and, in the context of a settlement-only class, an

“Although there are no fixed standards by

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assessment of the rationale for not pursuing further litigation.”

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Hanlon, 150 F.3d at 1021.

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Plaintiff’s counsel state that they have substantial

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experience in prosecuting employment claims.

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¶ 2; Blanchard Decl. ¶ 2 (Docket No. 127-3).) Peter R. Dion-

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Kindem states that he currently is, or previously has been,

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counsel of record in more than two dozen class/PAGA proceedings.

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(Dion-Kindem Decl. ¶¶ 4-5.) Lonnie C. Blanchard, III makes the

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same declaration.

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some assurance that plaintiff’s counsel has the experience

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necessary to maximize the return on this matter and vindicate the

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injuries of the class.

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(Blanchard Decl. ¶¶ 4-5.)

(Dion-Kindem Decl.

The court thus has

Plaintiff’s counsel also indicate that the decision to

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settle plaintiff’s claim was made after taking into account the

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uncertainty and risk of further litigation and the difficulties

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and delays inherent in class action litigation.

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Decl. ¶ 7.)

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plaintiff’s counsel has vigorously sought to maximize the return

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on its labor and to vindicate the injuries of the entire class.”

(Dion-Kindem

As such, “the court can safely assume that

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Murillo, 266 F.R.D. at 476.

Accordingly, the court finds that

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plaintiff and plaintiff’s counsel are adequate representatives of

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the class, and therefore that plaintiff has satisfied all of the

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requirements for certification set forth in Rule 23(a).

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2.

Rule 23(b)

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To be certified as a class action, an action must not

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only meet all of the prerequisites of Rule 23(a), but also

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satisfy the requirements of one of the three subdivisions of Rule

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23(b).

Plaintiffs seek certification under Rule 23(b)(3), which

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provides that a class action may be maintained only if (1) “the

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court finds that questions of law or fact common to class members

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predominate over questions affecting only individual members” and

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(2) “that a class action is superior to other available methods

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for fairly and efficiently adjudicating the controversy.”

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R. Civ. P. 23(b)(3).

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a.

Fed.

Predominance

“Because Rule 23(a)(3) already considers commonality,

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the focus of the Rule 23(b)(3) predominance inquiry is on the

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balance between individual and common issues.”

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F.R.D. at 476 (citing Hanlon, 150 F.3d at 1022).

Murillo, 266

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Plaintiff’s and the class members’ claims turn on the

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legality of a common method used by M-I for providing notice when

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obtaining consumer reports for employment purposes.

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these claims are common questions regarding, for example, whether

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the notice M-I used to disclose its procurement of consumer

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reports violated the FCRA and, in the event that it did, whether

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that violation was willful.

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“common nucleus of facts and potential legal remedies,” Hanlon,

Central to

The class claim thus demonstrates a

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150 F.3d at 1022, for the class members that can be resolved in a

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single adjudication.

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questions of law and fact predominate over questions affecting

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only individual class members.

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b.

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Accordingly, the court finds that common

Superiority

In addition to the predominance requirement, Rule

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23(b)(3) permits class certification only upon a showing that “a

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class action is superior to other available methods for fairly

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and efficiently adjudicating the controversy.”

Fed. R. Civ. P.

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23(b)(3).

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should consider in making this determination.

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class members’ interests in individually controlling the

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prosecution or defense of separate actions; (B) the extent and

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nature of any litigation concerning the controversy already begun

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by or against class members; (C) the desirability or

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undesirability of concentrating the litigation of the claims in

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the particular forum; and (D) the likely difficulties in managing

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a class action.”

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prior to certification, factors (C) and (D) are inapplicable.

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See Murillo, 266 F.R.D. at 477 (“Some of these factors, namely

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(D) and perhaps (C), are irrelevant if the parties have agreed to

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a pre-certification settlement.”).

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It sets forth four non-exhaustive factors that courts

Id.

They are: “(A) the

Since the parties settled this action

If class members pursued individual litigation, they

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could possibly recover statutory damages between $100 and $1,000

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as well as punitive damages under the FCRA.

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1681n(a).

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pro rata share of the net settlement amount.

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members might have an interest in individually prosecuting their

See 15 U.S.C. §

This settlement would limit their recovery to their

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As such, class

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own separate actions.

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associated with litigating this case, class members’ interests in

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pursuing individual actions are likely relatively low, although

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objectors at the fairness hearing may reveal otherwise.

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However, given the substantial risks

Additionally, the court is unaware of any concurrent

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litigation already begun by class members regarding the FCRA

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issues presented here against M-I.

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appears to be the superior method for adjudicating this

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controversy.

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3.

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If the court certifies a class under Rule 23(b)(3), it

The class action device thus

Rule 23(c)(2) Notice Requirements

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“must direct to class members the best notice that is practicable

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under the circumstances, including individual notice to all

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members who can be identified through reasonable effort.”

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R. Civ. P. 23(c)(2)(B).

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v. Mabon, 18 F.3d 1449 (9th Cir. 1994).

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absent class members, however, must be “reasonably certain to

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inform the absent members of the plaintiff class”.

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(quoting In re Victor Techs. Sec. Litig., 792 F.2d 862, 865 (9th

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Cir. 1986).)

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Actual notice is not required.

Fed.
Silber

The notice provided to

Id. at 1454

The Settlement Agreement (¶ 31) indicates that

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Simpluris, Inc. will serve as the settlement administrator.

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Simpluris has substantial experience administering class action

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settlements (Dion-Kindem Decl. ¶ 23), and has previously served

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as settlement administrator in several cases in this district.

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See, e.g., Ontiveros v. Zamora, 303 F.R.D. 356 (E.D. Cal. 2014);

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Bond v. Ferguson Enters., No. 1:09-CV-1662 OWW MJS, 2011 WL

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2648879 (E.D. Cal. 2011); Vanwagoner v. Siemens Indus., Inc., No.
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2:13-CV-01303 KJM EFB, 2014 WL 7273642 (E.D. Cal. 2014).

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The Settlement Agreement provides that within 21 days

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of the settlement’s preliminary approval, M-I will provide

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Simpluris with a class list (Settlement Agreement ¶ 41) that

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shall contain, to the extent available in M-I’s records, each

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class member’s full name, last known address, and Social Security

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Number (id. ¶ 7).

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reasonable verification measures related to the class member’s

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addresses and, within 14 days of receiving the list, shall send,

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via First Class U.S. Mail, a notice packet to all class members.

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(Id. ¶ 41.)

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notice is reasonably calculated to provide notice to class

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members.

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It also provides that Simpluris shall conduct

The court is satisfied that this system of providing

The Settlement Agreement provides that if, on or before

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the response deadline, a notice packet is returned to the

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settlement administrator as non-delivered, the settlement

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administrator will send the notice packet to the forwarding

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addressed affixed to it.

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the following provisions for notice packets returned without a

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forwarding address:

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(Id.)

The Settlement Agreement makes

If no forwarding address is provided, the
Settlement Administrator shall promptly attempt
to determine a correct address using a skiptrace, or other search using the name, address
and/or Social Security number of the Class Member
involved, and shall re-mail the Notice Mailing.
If after performing a skip-trace search, the
Notice Mailing is returned to the Settlement
Administrator as non-deliverable, that individual
will be deemed a Participating Class Member, and
the Settlement Administrator will have no further
obligation to undertake efforts to obtain an
alternative address.

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(Id.)

The court is satisfied that this system of providing

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notice is reasonably calculated to provide notice to class

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members.
Likewise, the notice itself very clearly identifies the

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options available to putative class members in an easy to read

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chart.

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(127-2).)

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definition of the class, the terms of the settlement, and the

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procedure for objecting to, or opting out of, the settlement.

(Dion-Kindem Decl. Ex. A (“Notice of Settlement”) at 1
It also comprehensively explains the proceedings, the

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(Id. at 2-5.)

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to satisfy Rule 23(c)(2)(B).

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Elec., 361 F.3d 566, 575 (9th Cir. 2004) (“Notice is satisfactory

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if it ‘generally describes the terms of the settlement in

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sufficient detail to alert those with adverse viewpoints to

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investigate and to come forward and be heard.’”) (quoting Mendoza

16

v. Tucson Sch. Dist. No. 1, 623 F.2d 1338, 1352 (9th Cir. 1980)).

17
18

B.

The content of the notice is therefore sufficient
See Churchill Vill., LLC v. Gen.

Rule 23(e): Fairness, Adequacy, and Reasonableness of
Proposed Settlement

19

Having determined that the proposed class preliminarily

20

satisfies the requirements of Rule 23, the court will now examine

21

whether the terms of the parties’ settlement appear fair,

22

adequate, and reasonable.

23

process requires the court to “balance a number of factors,”

24

including:

25
26
27
28

See Fed. R. Civ. P. 23(e)(2).

This

the strength of the plaintiff’s case; the risk, expense,
complexity, and likely duration of further litigation; the
risk of maintaining class action status throughout the
trial; the amount offered in settlement; the extent of
discovery completed and the stage of the proceedings; the
experience and views of counsel; the presence of a
governmental participant; and the reaction of the class
16

1

members to the proposed settlement.

2

Hanlon, 150 F.3d at 1026.

Since many of these factors cannot be

3

considered until the final fairness hearing, “the court need only

4

conduct a preliminary review so as to resolve any ‘glaring

5

deficiencies’ in the settlement agreement before authorizing

6

notice to class members.”

7

(citing Murillo, 266 F.R.D. at 478).)

Ontiveros 2014 WL 3057506, at *12

8

1.

Negotiation of the Settlement Agreement

9

Plaintiff states that “[t]his action has been

10

vigorously litigated by the Parties and sufficient motion and

11

appellate practice has been conducted by Plaintiff to assess the

12

strengths of the parties’ respective claims and defenses.” (Mem.

13

in Supp. of Mot. for Preliminary Approval of Class Action

14

Settlement at 19 (Docket No. 127-1).)

15

matter and plaintiff’s representation, the court does not

16

question that the proposed settlement was the result of arms-

17

length bargaining.

18

939, 942 (N. D. Cal. 2013) (holding that a settlement reached

19

after informed negotiations “is entitled to a degree of deference

20

as the private consensual decision of the parties” (citing

21

Hanlon, 150 F.3d at 1027)).

Given the stage of this

See Fraley v. Facebook, Inc., 966 F.Supp.2d

22

2.

Amount Recovered and Distribution

23

In determining whether a settlement agreement is

24

substantively fair to class members, the court must balance the

25

value of expected recovery against the value of the settlement

26

offer.

27

1078, 1080 (N.D. Cal. 2007).

28

approximately $50 recovery under the proposed settlement is less

See In re Tableware Antitrust Litig., 484 F. Supp. 2d
Though each class member’s

17

1

than could potentially be secured if the case went to trial, it

2

is not plainly deficient.

3

Serv. Comm’n of City & Cty. of San Francisco, 688 F.2d 615, 628

4

(9th Cir. 1982) (“It is well-settled law that a cash settlement

5

amounting to only a fraction of the potential recovery will not

6

per se render the settlement inadequate or unfair.”)

7

district courts have approved similar recoveries in other FRCA

8

class action settlements.

9

WL 3446596, at *3 (E.D. Mich. 2017) (granting final approval for

10

FRCA class action settlement with $19 per-capita net recovery);

11

Moore v. Aerotek, Inc., No. 2:15-CV-2701, 2017 WL 2838148, at *4

12

(S.D. Ohio June 30, 2017) (recommending final approval of a FRCA

13

class action settlement providing between $13 and $80 payouts to

14

each class member), report and recommendation adopted, 2017 WL

15

3142403 (S.D. Ohio July 25, 2017).2

16

See Officers for Justice v. Civil

Numerous

See Hillson v. Kelly Servs. Inc., 2017

For reasons discussed elsewhere in this order, the

17

amount of the attorney’s fee award, see infra II.B.3, gives the

18

court pause.

19

stage that the award is excessive, let alone so grossly excessive

20

that it imperils the fairness or adequacy of this settlement.

21

Cf. Murillo, 266 F.R.D. at 480 (preliminarily approving

22

settlement in spite of concerns that attorney’s fee award was

23

excessive).

Nonetheless, the court cannot conclude at this

Accordingly, because the settlement appears “fair,

24
25
26
27
28

The court notes that though the plaintiff characterizes
Lagos v. Leland Stanford Junior University, No. 15-CV-04524-KAW,
2017 WL 1113302 (N.D. Cal. Mar. 24, 2017), as approving a net
payoff of approximately $14, the opinion actually denies
preliminary approval of a FRCA class action settlement with a net
payoff of $13.82 on the grounds that it is far less than the
minimum statutory penalty of $100 provided for by the FRCA.
18
2

1

reasonable, and adequate,” Fed. R. Civ. P. 23(e)(2), the court

2

will preliminarily approve the settlement agreement pending a

3

final fairness hearing.

4

3.

Attorney’s Fees

5

If a negotiated class action settlement includes an

6

award of attorney’s fees, then the court “ha[s] an independent

7

obligation to ensure that the award, like the settlement itself,

8

is reasonable, even if the parties have already agreed to an

9

amount.”

10
11

In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d

935, 941 (9th Cir. 2011).
“Under the ‘common fund’ doctrine, ‘a litigant or a

12

lawyer who recovers a common fund for the benefit of persons

13

other than himself or his client is entitled to a reasonable

14

attorney’s fee from the fund as a whole.’” Staton, 327 F.3d at

15

969 (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)).

16

In common fund cases, the district court has discretion to

17

determine the amount of attorney’s fees to be drawn from the fund

18

by employing either the percentage method or the lodestar method.

19

Id. at 968.

20

common fund cases where, as here, “the benefit to the class is

21

easily quantified.”

22

Circuit has permitted courts to award attorney’s fees using the

23

percentage method “in lieu of the often more time-consuming task

24

of calculating the lodestar.”

25

percentage method here.

26

The percentage method is particularly appropriate in

Bluetooth, 654 F.3d at 942.

Id.

The Ninth

The court will thus adopt the

Under the percentage method, the court may award class

27

counsel a percentage of the total settlement fund.

28

v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002).
19

See Vizcaino
The

1

Ninth Circuit “has established 25% of the common fund as a

2

benchmark award for attorney fees.”

3

Class counsel request $300,000 in attorney’s fees, which

4

constitutes a remarkable 53.95% of the gross class settlement.

5

Hanlon, 150 F.3d at 1029.

Class counsel attempts to justify the requested upward

6

departure from the Ninth Circuit’s 25% benchmark by comparing the

7

$300,000 in requested attorneys’ fees with a supposed $347,375

8

lodestar.

9

convinced by this attempted justification.

(Dion-Kindem Decl. ¶¶ 15-20.)

The court is not
Even in light of the

10

class counsel’s successful appeal from the dismissal of the First

11

Amended Complaint, this fee award is extraordinarily high.

12

Lodestar calculation is a two-step process.

Fischer v.

13

SJB-P.D. Inc., 214 F.3d 1115, 1119 (9th Cir. 2000).

14

court “tak[es] the number of hours reasonably expended on the

15

litigation and multipl[ies] it by a reasonable hourly rate.”

16

Second, the court may adjust the resulting figure upwards or

17

downwards based on a variety of factors.

18

problems with the first step of plaintiffs’ counsel’s lodestar

19

calculation process are so fundamental, that the court will not

20

even reach the second part of the analysis.

21

Id.

First, the

Id.

In this case, the

Plaintiffs’ counsel asks for $875 per hour for both

22

Lonnie Blanchard and Peter R. Dion-Kindem.

23

Decl. ¶ 18.)

24

assumption that the typical hourly rates of an experienced Los

25

Angeles lawyer are “reasonable” in this case.

26

(See Dion-Kindem

Plaintiffs’ counsel’s lodestar figure relies on the

They are not.

The definition of a “reasonable hourly rate” for

27

purposes of lodestar calculation is tethered to the “prevailing

28

market rate in the relevant community.”
20

BMO Harris Bank N.A. v.

1

CHD Transp. Inc., No. 1:17-CV-00625 DAD BAM, 2018 WL 4242355, at

2

*7 (E.D. Cal. Sept. 6, 2018).

3

“relevant community” is the forum in which the adjudicating

4

district court sits.

5

for purposes of lodestar calculation is the Fresno division of

6

the Eastern District of California.

7

hourly rate for an attorney with approximately 40 years of

8

experience is approximately $400 per hour. See Willis v. City of

9

Fresno, No. 1:09-CV-01766 BAM, 2018 WL 1071184, at *7 (E.D. Cal.

Id.

When calculating the lodestar, the

In this case, the “relevant community”

Here, a more appropriate

10

2018)(awarding rate of $400 to attorney with more than forty

11

years of experience); Verduzco v. Ford Motor Co., No. 1:13-CV-

12

01437 LJO, 2015 WL 4131384, at *4 (E.D. Cal. 2015), report and

13

recommendation adopted, No. 1:13-CV-01437 LJO, 2015 WL 4557419

14

(E.D. Cal. 2015)(awarding an hourly rate of $380 to an attorney

15

with more than forty years of experience).

16

rates in Fresno, the requested hourly rates are unreasonably

17

high.

18

Given the market

In spite of these reservations, the court need not

19

reduce the fee award at this point in the case. See Murillo, 266

20

F.R.D. at 480 (granting preliminary approval of the settlement

21

despite concerns that the proposed attorney’s fee award was

22

unreasonable).

23

the fee award on the understanding that class counsel must

24

demonstrate, on or before the date of the final fairness hearing,

25

that the extraordinarily high proposed award is reasonable in

26

light of the circumstances of the case.

27

class counsel is unable to do so, the court would then be

28

required to reduce class counsel’s fees to a reasonable amount or

Instead, the court only preliminarily approves

21

In the likely event that

1

to deny final approval of this settlement.

2

Accordingly, the court finds that preliminary approval

3

of the proposed class, proposed class settlement, proposed class

4

counsels’ fee and settlement allocation, and proposed plan of

5

notice is appropriate.

6

IT IS THEREFORE ORDERED that plaintiff’s motion for

7

preliminary certification of a conditional settlement class and

8

preliminary approval of the class action settlement (Docket No.

9

127) be, and the same hereby is, GRANTED.

10

IT IS FURTHER ORDERED THAT:

11

(1) the following class be provisionally certified for

12

the purpose of settlement in accordance with the terms of the

13

stipulation: All persons residing in the United States (including

14

all territories and other political subdivisions of the United

15

States) as to whom M-I L.L.C. may have procured or caused to be

16

procured a consumer report for employment purposes during the

17

period from May 19, 2009 through November 1, 2018, who M-I L.L.C.

18

hired, and who have not signed a severance agreement and release

19

or equivalent agreement releasing the claims asserted in the

20

Action;

21

(2) Sarmad Syed is appointed as the representatives of

22

the settlement class and is provisionally found to be an adequate

23

representative within the meaning of Federal Rule of Civil

24

Procedure 23;

25

(3) Peter R. Dion-Kindem, P.C., 21550 Oxnard St., Suite

26

900, Woodland Hills, CA 91367; and Blanchard Law Group, APC, 3311

27

East Pico Boulevard Los Angeles, CA 90023, are provisionally

28

found to be fair and adequate representatives of the settlement
22

1

class and are appointed as class counsel for the purposes of

2

representing the settlement class conditionally certified in this

3

order;

4
5
6

(4) Simpluris, Inc. is appointed as the settlement
administrator;
(5) the form and content of the proposed Notice of

7

Settlement (Dion-Kindem Decl., Ex. A) are approved, except to the

8

extent that they must be updated to reflect dates and deadlines

9

specified in this order;

10

(6) no later than twenty-one (21) days from the date

11

this order is signed, defendant shall provide the class list to

12

Simpluris, Inc.;

13

(7) no later than fourteen (14) days from the date it

14

receives the class list from defendant, Simpluris shall mail a

15

Notice of Settlement to all members of the settlement class in

16

the manner provided for in this order;

17

(8) no later than ninety (90) days from the date this

18

order is signed, any member of the settlement class who intends

19

to object to, comment upon, or opt out of the settlement shall

20

mail written notice of that intent to Simpluris, pursuant to the

21

instructions in the Notice of Settlement;

22

(9) a final fairness hearing shall be held before this

23

court on Monday, August 5, 2019, at 1:30 p.m. in Courtroom 5 to

24

determine whether the proposed settlement is fair, reasonable,

25

and adequate and should be approved by this court; to determine

26

whether the settlement class’s claims should be dismissed with

27

prejudice and judgment entered upon final approval of the

28

settlement; to determine whether final class certification is
23

1

appropriate; and to consider class counsel’s applications for

2

attorney’s fees, costs, and an incentive award to plaintiff. The

3

court may continue the final fairness hearing without further

4

notice to the members of the class;

5

(10) no later than twenty-eight (28) days before the

6

final fairness hearing, class counsel shall file with this court

7

a petition for an award of attorneys’ fees and costs.

8

objections or responses to the petition shall be filed no later

9

than fourteen (14) days before the final fairness hearing.

Any

Class

10

counsel may file a reply to any objections no later than seven

11

(7) days before the final fairness hearing;

12

(11) no later than twenty-eight (28) days before the

13

final fairness hearing, class counsel shall file and serve upon

14

the court and defendant’s counsel all papers in support of the

15

settlement, the incentive award for the class representative, and

16

any award for attorneys’ fees and costs;

17

(12) no later than twenty-eight (28) days before the

18

final fairness hearing, Simpluris, Inc. shall prepare, and class

19

counsel shall file and serve upon the court and defendant’s

20

counsel, a declaration setting forth the services rendered, proof

21

of mailing, a list of all class members who have opted out of the

22

settlement, and a list of all class members who have commented

23

upon or objected to the settlement;

24

(13) any person who has standing to object to the terms

25

of the proposed settlement may appear at the final fairness

26

hearing in person or by counsel and be heard to the extent

27

allowed by the court in support of, or in opposition to, (a) the

28

fairness, reasonableness, and adequacy of the proposed
24

1

settlement, (b) the requested award of attorneys’ fees,

2

reimbursement of costs, and incentive award to the class

3

representative, and/or (c) the propriety of class certification.

4

To be heard in opposition at the final fairness hearing, a person

5

must, no later than ninety (90) days from the date this order is

6

signed, (a) serve by hand or through the mails written notice of

7

his or her intention to appear, stating the name and case number

8

of this action and each objection and the basis therefore,

9

together with copies of any papers and briefs, upon class counsel

10

and counsel for defendants, and (b) file said appearance,

11

objections, papers, and briefs with the court, together with

12

proof of service of all such documents upon counsel for the

13

parties.

14

Responses to any such objections shall be served by

15

hand or through the mails on the objectors, or on the objector’s

16

counsel if there is any, and filed with the court no later than

17

fourteen (14) calendar days before the final fairness hearing.

18

Objectors may file optional replies no later than seven (7)

19

calendar days before the final fairness hearing in the same

20

manner described above.

21

make his or her objection in the manner provided herein shall be

22

deemed to have waived such objection and shall forever be

23

foreclosed from objecting to the fairness or adequacy of the

24

proposed settlement, the judgment entered, and the award of

25

attorneys’ fees, costs, and an incentive award to the class

26

representative unless otherwise ordered by the court.

27
28

Any settlement class member who does not

(14) pending final determination of whether the
settlement should be ultimately approved, the court preliminarily
25

1

enjoins all class members (unless and until the class member has

2

submitted a timely and valid request for exclusion) from filing

3

or prosecuting any claims, suits, or administrative proceedings

4

regarding claims to be released by the settlement.

5
6

Dated:

March 12, 2019

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