Kerzich v County of Tuolumne

Filing 62

ORDER Directing Further Briefing, signed by District Judge Dale A. Drozd on 3/6/2018. (Plaintiffs are granted 28 days from the date of service of this order to file and serve a supplemental memorandum in support of its motion for approval addressing the court's questions as well as any other matters that may aid the court in resolution of the pending motion.)(Gaumnitz, R)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11
12

MARK KERZICH and TIMOTHY
WERTZ,
Plaintiffs,

13

ORDER DIRECTING FURTHER BRIEFING
v.

14
15

No. 1:16-cv-01116-DAD-SAB

COUNTY OF TUOLUMNE,
Defendant.

16

On February 2, 2018, plaintiffs filed a motion for approval of a settlement under the Fair

17
18

Labor Standards Act (“FLSA”), requesting that the settlement be approved, the matter be

19

dismissed with prejudice, and that attorneys’ fees be awarded in the manner agreed to by the

20

parties. (Doc. No. 58.) The court heard argument on the motion on March 6, 2018. During the

21

hearing on this matter, plaintiffs requested that they be allowed to supplement their motion, in

22

response to court’s questions posed at the hearing.1 Defendant did not object to this request, and

23
24
25
26
27
28

1

Settlement of collective action claims under the FLSA requires court approval. See Jones v.
Agilysys, Inc., No. C 12–03516 SBA, 2014 WL 108420, at *2 (N.D. Cal. Jan. 10, 2014). The
Ninth Circuit has not established criteria for district courts to consider in determining whether a
FLSA settlement should be approved. Dunn v. Teachers Ins. & Annuity Ass’n of Am., No. 13CV-05456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016). However, district courts in
this circuit have normally applied a widely-used standard adopted by the Eleventh Circuit,
looking to whether the settlement is a fair and reasonable resolution of a bona fide dispute. Id.;
see also Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1352–53 (11th Cir. 1982); Selk
v. Pioneers Memorial Healthcare District, 159 F. Supp. 3d 1164, 1172 (S.D. Cal. 2016); Yue
1

1

the court therefore grants plaintiffs 28 days from the date of service of this order to file and serve

2

a supplemental memorandum in support of its motion for approval addressing the following

3

questions as well as any other matters that may aid the court in resolution of the pending motion:

4
5

1. At Docket Number 58-4, plaintiffs provided what appear to be calculations concerning the
value of their various claims and which were relied upon in reaching the settlement.

6

a. Who generated this document and performed the calculations set forth therein?

7

b. Do the numbers in columns three and four of the sheet at Docket Number 58-4

8

depict the maximum value of any unpaid overtime wages for the class member

9

indicated?

10

c. Do the numbers in column three and four of the sheet at Docket Number 58-4

11

include any liquidated damages which might have been available, or do they

12

simply reflect the unpaid wages?

13
14
15
16
17

d. Were the figures in columns three and four of the sheet at Docket Number 58-4
calculated using a two-year or three-year statute of limitations?
e. Why was the cash-in-lieu claim discounted by 25 percent, as appears to be
reflected in column six of the document?
2. The motion for approval of the settlement indicates that $25,000 of the settlement amount

18

will be allocated to officers who were underpaid overtime wages because payment

19

enhancements for their service as canine officers were not included in their base rate of

20

pay (referred to by the parties as the “canine claim”). A declaration supplied by plaintiff’s

21

counsel explains that the damages for this class were “calculated by paying a half-hour at

22
23
24
25
26
27
28

Zhou, 2007 WL 2298046, at *1. “A bona fide dispute exists when there are legitimate questions
about the existence and extent of Defendant’s FLSA liability.” Selk, 159 F. Supp. 3d at 1172
(internal quotation marks and citation omitted). A court will not approve a settlement of an action
in which there is certainty that the FLSA entitles plaintiffs to the compensation they seek, because
it would shield employers from the full cost of complying with the statute. Id. Once it is
established that there is a bona fide dispute, courts often apply the Rule 23 factors for assessing
proposed class action settlements when evaluating the fairness of an FLSA settlement, while
recognizing that some of those factors do not apply because of the inherent differences between
class actions and FLSA actions. Khanna v. Inter-Con Sec. Sys., Inc., No. CIV S-09-2214 KJM,
2013 WL 1193485, at *2 (E.D. Cal. Mar. 22, 2013).
2

1

the overtime rate for each day in each pay period in which the employee performed

2

canine-related duties and received canine pay, during the two years prior to January 8,

3

2017, when canine pay began to be included by the County in the base rate of pay.” (Doc.

4

No. 58-2 at ¶ 19.)

5

a. Why were the damages for the canine claim calculated in this manner?

6

b. Do the figures included at Docket Number 58-5 reflect the full amount of damages

7
8
9
10

calculated for the canine claim, using the above metric?
3. The settlement agreement calls for the award of $150,000 in attorneys’ fees and costs, as
well as an additional 20% of the settlement amount allocated to the plaintiffs’ damages.
a. The settlement agreement indicates that $195,000 of the settlement will be

11

allocated to the Flores claim and that amount will be reduced by 20% due to the

12

additional attorneys’ fees. (Doc. No. 58-3 at ¶¶ 1(a)–(b).) Twenty percent of

13

$195,000 is $39,000. The settlement agreement also indicates that $25,000 of the

14

settlement will be allocated to the canine claim. (Id.) Twenty percent of $25,000

15

is $5,000. Combining these two, it would seem that plaintiffs’ counsel seeks an

16

additional award of $44,000 in attorneys’ fees from the allocated damages under

17

the settlement agreement. However, other documents provided by counsel

18

indicate they may be seeking $45,000 in additional attorneys’ fees to be awarded

19

from the allocated as damages. (See Doc. No. 58-4 at 1) (indicating the “Actual

20

Awarded Damages” for the Flores claim equal $155,000). Please clarify which

21

amount of additional attorneys’ fees is sought.

22

b. The total amount of attorneys’ fees plaintiffs’ counsel seeks in this matter is

23

$195,000, which includes $150,000 designated as attorneys’ fees and costs by the

24

settlement agreement, plus approximately 20% of the allocated for damages under

25

the settlement agreement. (Doc. No. 58 at 20) (indicating the “cumulative total” is

26

$195,000). A $195,000 award of attorneys’ fees from a $375,000 settlement

27

would mean that 52% of the total settlement fund will be paid out as attorneys’

28

fees. Explain why such an award of attorneys’ fees is reasonable, and why the
3

1

settlement here remains fair and reasonable despite the high percentage of the total

2

settlement to be awarded as attorneys’ fees.

3

4. The motion for attorneys’ fees indicates that $2,500 is sought as incentive payments to be

4

awarded to each of the named plaintiffs in this action. (Doc. No. 58 at 16.) However, no

5

explanation regarding why incentive payments should be awarded in this case has been

6

provided to the court. For instance, no declarations have been submitted from the named

7

plaintiffs explaining what actions they took in forwarding this litigation have been

8

submitted. Incentive payments such as those sought here are discretionary and must be

9

supported by evidence. See, e.g., Selk v. Pioneers Mem’l Healthcare Dist., 159 F. Supp.

10

3d 1164,1181 (S.D. Cal. 2016) (noting incentive payments are discretionary); see also

11

Goodwin v. Winn Mgmt. Grp. LLC, No. 1:15-cv-000606-DAD-EPG, 2017 WL 3173006,

12

at *12 (E.D. Cal. July 26, 2017); Khanna v. Intercon Sec. Sys., Inc., No. 2:09-cv-2214-

13

KJM-EFB, 2014 WL 1379861, at *10–11 (E.D. Cal. Apr. 8, 2014). Please provide

14

evidence in support of and an explanation as to why $2,500 incentive payments are

15

warranted for each of the named plaintiffs in this action.

16
17

IT IS SO ORDERED.
Dated:

March 6, 2018
UNITED STATES DISTRICT JUDGE

18
19
20
21
22
23
24
25
26
27
28
4