Adoma v. The University of Phoenix, Inc. et al

Filing 147

ORDER signed by Judge Lawrence K. Karlton on 12/18/12 ORDERING that the Settlement is APPROVED in its entirety. Plaintiffs' Application for Attorneys' fees and costs is granted in the amount of $1,160,000.00 in fees and $25,000 in costs. The Court APPROVES Defendants' LWDA payment of $50,000 in accordance with the terms of the Joint Stipulation of Settlement and Release. The Court APPROVES an award of $19,000 to Simpluris, Inc., the Claims Administrator, f or settlement administration costs. The Court enters Judgment approving the terms of the Settlement. This Order shall constitute a Final Judgment for purposes of FRCP Rule 58.This case is DISMISSED WITH PREJUDICE, with each party to bear his, her or its own costs, except as setforth herein, and with this Court retaining exclusive jurisdiction to enforce the Settlement Agreement, including over disbursement of the Settlement Fund. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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10

DIANE ADOMA,

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NO. CIV. S-10-0059 LKK/GGH
Plaintiff,

12
v.
13
14

O R D E R
THE UNIVERSITY OF PHOENIX,
INC., et al.,

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Defendants.
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/

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This class-action wage and hour case was filed by

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enrollment

counselors

against

their

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University of Phoenix, Inc., a wholly-owned subsidiary of defendant

20

Apollo Group, Inc. Presently before the court is a joint motion for

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final approval of the settlement (ECF No. 139), and class counsel’s

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motion for attorneys’ fees and costs. (ECF No. 138.) This matter

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came on for hearing on December 17, 2012. Having considered the

24

matter, the court will approve the settlement and award attorneys’

25

fees to class counsel in the amount of 29% of the common fund, for

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the reasons set forth below.
1

employer,

defendant

The

1

I. Background

2

A. Summary of the Litigation to Date

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The lawsuit alleges violations of state and federal labor laws

4

by the University of Phoenix. Plaintiffs’ original claims were made

5

under both the California Labor Code and the federal Fair Labor

6

Standards Act (“FLSA”). On August 13, 2010, this court declined to

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exercise jurisdiction over plaintiffs’ FLSA claims under the first-

8

to-file rule, and transferred the FLSA claims to the Eastern

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District of Pennsylvania, where a complaint involving the same

10

plaintiffs

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University of Phoenix, No. CV 09-03439-JCJ (E.D. Pa.)), and where

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a nationwide collective action was certified. (Order, August 13,

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2010, ECF No. 70.) After supplemental briefing from the parties on

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the issue of the court’s jurisdiction over the state law claims,

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this court concluded that jurisdiction over class claims under

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state

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supplemental jurisdiction over individual claims was proper under

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28 U.S.C. § 1367. (Order, August 31, 2010, ECF No. 83.)

law

and

was

issues

had

proper

already

under

28

been

U.S.C.

filed

§

(Sabol

1332(d),

v.

and

The

that

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Plaintiffs allege the following violations of state law: that

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they worked unpaid “off-the-clock” overtime, that defendants paid

21

the

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employees to miss meal periods, that defendants provided inaccurate

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pay stubs, and that the plaintiffs are entitled to waiting-time

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penalties.

wrong

hourly

25

In

its

26

certification

rate

August
under

for

31,
Fed.

2010
R.

overtime,

order,
Civ.
2

P.

that

the

defendants

court

23(b)(3),

caused

granted
holding

class
that

1

questions of law or fact common to the class predominated over

2

questions affecting individual members, and further, that class

3

treatment was the superior method for handling plaintiffs’ state

4

law claims. The court certified the following classes:

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1. All current or former Enrollment Counselors1 who

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worked at least one week in the State of California

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for either The University of Phoenix, Inc. or Apollo

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Group, Inc. at any time between April 5, 2005 and

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August 13, 2010. (“California Overtime Class”) and

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(“California Meal Break Class”);

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2. All current or former Enrollment Counselors who

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received at least one paycheck statement for work

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performed in the State of California for either The

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University of Phoenix, Inc. or Apollo Group, Inc. at

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any time between April 5, 2008 and August 13, 2010.

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(“California Paystub Class”); and

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3. All current or former Enrollment Counselors who

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worked at least one week in the State of California

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for either The University of Phoenix, Inc. or Apollo

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Group, Inc. at any time between April 5, 2006 and

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August 13, 2010 whose employment ended at least once

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during that same time period. This class includes

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1

The court defined the term “Enrollment Counselors” to
include employees with the job title of “enrollment counselor,” as
well as any other nonexempt employee who utilized the Avaya phone
system’s Automatic Call Distribution system to receive calls
relating to enrollment. (ECF No. 83.)
3

1

current employees who worked during the covered time

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period, ceased working, and then began employment

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again. (“California Waiting Time Class.”)

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Defendants sought permission to appeal the class certification

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order; the Ninth Circuit denied the petition to appeal. (ECF No.

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110.)

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The parties ultimately reached a settlement, and on April 16,

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2012, filed a joint motion for certification of settlement classes

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and for preliminary approval of a settlement. Because the parties

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sought

certification

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definitions than the classes previously certified, the court

12

ordered

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consequences of the change in definitions. (Order, May 14, 2012,

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ECF No. 134.) The parties filed their joint response on June 4,

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2012 (ECF No. 135), and after reviewing it, the court granted

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preliminary approval of the proposed class settlement on June 18,

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2012. (ECF No. 137.)

additional

of

settlement

briefing

from

the

classes

parties

with

on

different

the

legal

18

The instant motions for final approval of the settlement and

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for attorneys’ fees and costs were originally set for hearing on

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November 5, 2012. After examining the parties’ filings in support

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of these motions, the court was unable to find evidence that the

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parties had complied with notice requirements under the Class

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Action Fairness Act of 2005, Pub. L. 109-2, 199 Stat. 4-14

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(“CAFA”), and therefore continued the fairness hearing while

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ordering briefing on this topic. (ECF No. 140.) The parties filed

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their joint response on November 5, 2012. (ECF No. 141.)
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B. Material Terms of the Settlement Agreement.

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The material terms of the Settlement Agreement are as

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follows:

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1. Composition of Settlement Class

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The settlement class is defined as, for the period from

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April 5, 2005 through June 19, 2012,

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(a) all current and former Enrollment Counselors in

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California who were previously sent a class notice in this

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action, but who did not opt out of the class;

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(b) all Enrollment Counselors in California hired from

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August 13, 2010 to and including June 19, 2012 who were not

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previously sent a class notice, and who do not opt out of

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this settlement;

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(c) all Enrollment Counselors in California who originally

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opted into the action entitled Sabol, et al., v. Apollo

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Group, Inc., et al., United States District Court, Eastern

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District of Pennsylvania, No. 2:09-cv-03439-JCJ (“Sabol”),

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and who subsequently excluded themselves from the Sabol

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settlement;2 and

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(d) one individual (Angelica Michelle Lee) who previously

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communicated to class counsel her intent to opt in to the

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2

According to the parties’ Joint Brief Addressing Questions
Raised in Court’s May 14, 2012 Order Concerning Motion for
Preliminary Approval of Class Action Settlement (ECF No. 135), this
portion of the settlement class is empty, as the single Enrollment
Counselor in California who opted out of the
Sabol settlement
subsequently filed an individual wage-and-hour lawsuit and entered
into an individual settlement with defendants.
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severed FLSA action transferred to the U.S. District Court

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for the Eastern District of Pennsylvania, which will be

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dismissed with prejudice if the court approves the

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settlement herein. (See Settlement Agmt. ¶¶ 2.6, 2.25,

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7.3.1, ECF No. 129-3.)

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The

settlement

class

excludes

all

Enrollment

Counselors

in

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California who opted into Sabol but who did not exclude themselves

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from the settlement therein. (Id. ¶ 2.6.)

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2. Settlement Amount

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Defendants have agreed to a maximum settlement amount of

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$4,000,000, which includes the cost of administration of the

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settlement, reasonable attorneys’ fees not to exceed one-third of

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the maximum settlement amount, attorneys’ costs not to exceed

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$25,000, service payments to the class representatives not to

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exceed $5,000 per class representative, an individual settlement

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payment of $20,000 to class representative Diane Adoma, and a

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payment

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Development Agency. The remainder of the $4,000,000 will comprise

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a settlement pool to be divided among qualified claimants based on

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the number of weeks they worked during the relevant period.

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(Settlement Agmt. ¶¶ 2.22, 6.2.1.) If the qualified claimants do

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not claim at least 50% of the settlement pool, then the amounts

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paid to each qualified claimant will increase pro rata until 50%

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is paid out. (Settlement Agmt. ¶ 6.2.1.)

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3. Scope of Release

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of

$50,000

to

the

California

Labor

and

Workforce

Upon final approval of the settlement agreement, those class
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1

members who have not validly objected to or opted out of the

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settlement will be barred from bringing any causes of action or

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claims against defendants based on facts and allegations set forth

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in plaintiffs’ Second Amended Class Complaint. (Settlement Agmt.

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¶ 2.11, § 6.8.) The named class representatives have consented to

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a more comprehensive release of any and all “claims, obligations,

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demands, actions, rights, causes of action, and liabilities,” known

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or unknown, against defendants. (Id.)

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C. Performance of the Settlement Agreement.

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The procedures for giving notice to the class members were the

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responsibility of the class settlement administrator, Simpluris,

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Inc. (“Simpluris”). (Settlement Agmt. § 7.2.)

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On June 25, 2012, The University of Phoenix provided Simpluris

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with names, addresses, social security numbers, and number of weeks

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worked for 1,725 potential class members. (Butler Dec. ¶ 6.) On

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August 7, 2012, class notices were mailed to these individuals via

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first-class mail. (Butler Dec. ¶ 8.)

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As of October 9, 2012, 393 notices had been returned to

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Simpluris as undeliverable. (Butler Dec. ¶ 9.) Simpluris performed

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address traces and mailed out new class notices; ultimately, only

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45 notices proved undeliverable. (Id.)

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As of October 9, 2012, Simpluris had received claims from 557

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class members, representing 31.76% of the individuals and 43.68%

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of the total work weeks in the settlement class. (Butler Dec.

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¶ 10.) Simpluris received no requests for exclusion from the

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settlement, nor any objections to the settlement. (Butler Dec. ¶¶
7

1

11, 12.)

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II. Standard re: Final Approval of Class Action Settlements

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Whether to approve a class action settlement is “committed to

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the sound discretion of the trial judge.” Class Plaintiffs v.

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Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). A strong judicial

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policy favors settlement of class actions. Id.

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Nevertheless, the court must examine the settlement as a whole

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for overall fairness. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026

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(9th Cir. 1998) Neither district courts nor appellate courts have

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the power to delete, modify, or substitute provisions in the

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negotiated settlement agreement. Id. “The settlement must stand or

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fall in its entirety.” Id.

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In order to approve the class action settlement herein, the

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court must conduct a three-step inquiry. First, it will assess

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whether defendants have met notice requirements under the Class

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Action Fairness Act. Next, it will determine whether the notice

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requirements of Federal Rule of Civil Procedure 23(c)(2)(B)3 have

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been satisfied. Finally, the court must find that the proposed

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settlement is fair, reasonable, and adequate under Rule 23(e)(3).

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III. Analysis re: Final Approval of Class Action Settlement

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A. Class Action Fairness Act

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The parties agree that this action is subject to notice

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requirements under the federal Class Action Fairness Act (“CAFA”).

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(Joint Brief, 2:22-27, ECF No. 142.) When settlement is reached in

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3

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Hereinafter, the term “Rule” means the applicable Federal
Rule of Civil Procedure.
8

1
2

certain class action cases, CAFA requires as follows:

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Not later than 10 days after a proposed settlement of
a class action is filed in court, each defendant that
is participating in the proposed settlement shall
serve [notice of the proposed settlement] upon the
appropriate State official of each State in which a
class member resides and the appropriate Federal
official....

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28 U.S.C. § 1715(b).4 The statute provides detailed requirements

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for the contents of such a notice. Id.

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4

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9
10
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12
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The court is precluded from granting final approval of a class
action

settlement

until

the

notice

requirement

is

met.

Specifically:
An order giving final approval of a proposed
settlement may not be issued earlier than 90 days
after the later of the dates on which the appropriate
Federal official and the appropriate State official
are served with the notice required under [28 U.S.C.
§ 1715(b)].

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15

28 U.S.C. § 1715(d).

16

On April 16, 2012, the parties filed their proposed settlement

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with the court. (ECF No. 129.) On June 19, 2012, the court entered

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its order granting preliminary approval of the settlement and

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conditionally certifying the settlement class. (ECF No. 137.) On

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June 29, 2012, defendants sent notice of the settlement via

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overnight mail to the U.S. Attorney General and 30 state Attorneys

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General. (Gao Dec. ¶ 3, Ex. A, ECF No. 142-1.) Under 28 U.S.C.

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§ 1715(b), defendants were required to serve this notice within 10

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25
26

4

“Appropriate Federal official” and “appropriate State
official” are respectively defined by 28 U.S.C. § 1715(a),
subdivisions (1) and (2).
9

1

days of filing of the proposed settlement with the court, rather

2

than 10 days of the court’s approval of the settlement. But the

3

notices were sent 129 days before November 5, 2012, the date

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originally scheduled for final approval of the settlement, thereby

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complying with 28 U.S.C. § 1715(d)’s requirement of a 90-day notice

6

period.

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The parties received no objections to the settlement from

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state and federal officials, except a letter from the Office of the

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Attorney General of Texas (Gao Dec. Ex. B) asserting that, by

10

failing to provide notice within 10 days of filing the proposed

11

settlement, defendants had triggered the penalties set forth in 28

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U.S.C. § 1715(e)(1), which provides: “A class member may refuse to

13

comply with and may choose not to be bound by a settlement

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agreement...in a class action if the class member demonstrates that

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the notice required under subsection (b) has not been provided.”

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The Texas Attorney General’s letter does not address or object to

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any substantive aspects of the settlement.

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The court respectfully disagrees with the Texas Attorney

19

General that class members can refuse to be bound by the settlement

20

agreement simply because defendants were late in serving CAFA

21

notices. The paragraph, titled “Limitation,” that immediately

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follows the CAFA section cited by the Texas Attorney General’s

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office provides: “A class member may not refuse to comply with or

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to be bound by a settlement agreement...under paragraph (1) if the

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notice

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appropriate

required

under

Federal

subsection

[and

state]
10

(b)

was

directed

official[s]....”

28

to

the

U.S.C.

1

§ 1715(e)(2). Research has failed to find a case interpreting this

2

paragraph. The court reads it to mean that even if defendants are

3

late in serving notice to state and federal officials, class

4

members may not exempt themselves from a settlement so long as at

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least 90 days elapse between service of the notice and entry of an

6

order granting final approval of the settlement, as required by 28

7

U.S.C. § 1715(d). To hold otherwise and allow class members to opt

8

out of the class settlement based on late notice would result in

9

the voiding of the settlement herein; this seems an unduly harsh

10

result

for

failing

to

comply

with

a

technical

requirement,

11

especially given that state and federal officials have had the

12

statutory period to file objections with the court.

13

In reaching this conclusion, the court is guided by the

14

decisions of numerous courts that late mailing of notices to state

15

and federal officials under CAFA is not fatal to approval of

16

settlements. See In re Processed Egg Products Antitrust Litigation,

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284 F.R.D. 249, 258 n.12 (E.D.Pa. 2012) ("Over ninety days have

18

elapsed since [defendant] served the appropriate state or federal

19

officials with the CAFA notice, and there have been no requests for

20

hearings or objections to the settlement made. It follows that,

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although the notice requirements under CAFA have not been fully met

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on a technical basis, the substance of the requirements have been

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satisfied insofar as giving federal and state officials sufficient

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notice and opportunity to be heard concerning the [s]ettlement.");

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Kay Co. v. Equitable Prod. Co., No. 06 Civ. 00612, 2010 WL 1734869

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at *4, 2010 U.S. Dist. LEXIS 41892 at *14 (S.D.W.Va. Apr. 28, 2010)
11

1

(“Although [defendant] sent notice packets to the appropriate State

2

and Federal officials, it did not provide such notice promptly

3

after the Agreement was filed, as required by CAFA.... Since more

4

than 100 days have passed since service was perfected and since

5

there have been no adverse comments from any of the aforesaid State

6

or Federal officials, the Court FINDS that compliance with CAFA is

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satisfactory.”); Beaty v. Continental Automotive Systems U.S.,

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Inc., Nos. CV–11–S–890–NE, CV–10–S–2440–NE, 2012 WL 1886134, 2012

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U.S. Dist. LEXIS 70391 (N.D.Ala. May 21, 2012) (granting final

10

approval of class action settlement even though defendant provided

11

notice

12

preliminary approval of the settlement, rather than ten days after

13

filing of the proposed settlement with the court).

to

the

relevant

attorneys

general

eleven

days

after

14

In sum, defendants served proper notice under CAFA. As more

15

than 90 days have passed since this date, class members may not

16

refuse to be bound by the settlement agreement simply because

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defendants were late in providing notice.

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19

B. Rule 23
1. Rule 23(a) and (b)

20

The court previously certified classes in this matter under

21

Rule 23(b)(3) (ECF No. 70), so need not find anew that the

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settlement class meets the certification requirements of Rule 23(a)

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and (b). See, e.g., Harris v. Vector Marketing, No. C–08–5198, 2012

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WL 381202 at *3, 2012 U.S. Dist. LEXIS 13797 at *7 (N.D.Cal. Feb.

25

6, 2012) (Chen, J.) (“As a preliminary matter, the Court notes that

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it previously certified...a Rule 23(b)(3) class...[and thus] need
12

1

not analyze whether the requirements for certification have been

2

met and may focus instead on whether the proposed settlement is

3

fair,

4

Securities Litigation, Nos. CV 04–2147–PHX–JAT, CV 04–2204–PHX–JAT,

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CV 04–2334–PHX–JAT, 2012 WL 1378677 at *4 (D.Ariz. Apr. 20, 2012)

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(Teilborg, J.) (“The Court has previously certified, pursuant to

7

Rule 23 of the Federal Rules of Civil Procedure, and hereby

8

reconfirms its order certifying a class”).

adequate,

9

and

reasonable”);

In

re

Apollo

Group

Inc.

2. Rule 23(c)(2) Notice Requirements

10

Class actions brought under Rule 23(b)(3) must satisfy the

11

notice provisions of Rule 23(c)(2). In its order of June 20, 2012

12

(ECF No. 137), the court approved the form of class notice sent to

13

members

14

initially sent class members a notice listing an erroneous class

15

start date of April 5, 2012, rather than April 5, 2005. (Butler

16

Dec. ¶ 9, ECF No. 139-2.) But a correction letter was sent to class

17

members within eight days of the erroneous mailing. In addition to

18

explaining the error, the correction letter provided an address and

19

toll-free number for Simpluris, and directed recipients to contact

20

Simpluris with any questions. (Butler Dec. Ex. B.) In light of the

21

steps taken to mitigate the error, the court finds no reason to

22

revisit its earlier determination that notice to the settlement

23

class was proper.

24

of

the

settlement

class.

According

to

Simpluris,

it

C. Assessing whether the Class Settlement is Fair,
Reasonable, and Adequate under Rule 23(e)

25
26

Under Rule 23(e), “the claims, issues, or defenses of a
13

1

certified class may be settled...only with the court’s approval.”

2

This requirement of court approval for settlement is in contrast

3

to the procedures for settlement in most other civil actions. “The

4

primary concern of [Rule 23(e)] is the protection of those class

5

members, including the named plaintiffs, whose rights may not have

6

been given due regard by the negotiating parties.” Officers for

7

Justice v. Civil Service Com., 688 F.2d 615, 624 (9th Cir. 1982).

8

The court’s inquiry is procedural in nature. Id.

9

Under

Rule

23(e)(2),

“If

the

proposal

would

bind

class

10

members, the court may approve it only after a hearing and on

11

finding that it is fair, reasonable, and adequate.” The parties are

12

before the court on such a hearing.

13

In

determining

whether

a

settlement

agreement

is

fair,

14

adequate, and reasonable to all concerned, the court may consider

15

some or all of the following factors:

16

(1) the strength of the plaintiff's case;

17

(2) the risk, expense, complexity, and likely duration of

18
19
20

further litigation;
(3) the risk of maintaining class action status throughout
the trial;

21

(4) the amount offered in settlement;

22

(5) the extent of discovery completed, and the stage of the

23

proceedings;

24

(6) the experience and views of counsel;

25

(7) the presence of a governmental participant; and

26

(8) any opposition by class members.
14

1

Linney v. Cellular Alaska Partnership, 151 F.3d 1234, 1242 (9th

2

Cir. 1998). This list of factors is not exclusive and the court may

3

balance and weigh different factors depending on the circumstances

4

of each case. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376

5

(9th Cir. 1993).

6

1. The Strength of Plaintiff’s Case

7

When assessing the strength of plaintiff’s case, the court

8

does not reach “any ultimate conclusions regarding the contested

9

issues

of

fact

and

law

that

underlie

the

merits

of

this

10

litigation.” In re Wash. Pub. Power Supply Sys. Sec. Litig., 720

11

F.Supp 1379, 1388 (D.Arizona 1989). The court cannot reach such a

12

conclusion, because evidence has not been fully presented. Id.

13

Instead, the court is to “evaluate objectively the strengths and

14

weaknesses inherent in the litigation and the impact of those

15

considerations

16

agreements.” Id.

on

the

parties’

decisions

to

reach

these

17

Both federal and California law regarding class actions is in

18

flux, particularly in the area of employment law. Lower courts are

19

still sorting out the meaning of recent decisions like Wal-Mart

20

Stores, Inc., __ U.S. __, 131 S.Ct. 2541 (2011), and Brinker

21

Restaurant Corp. v. Sup. Ct., 53 Cal.4th 1004 (2012) (holding that

22

employers need not ensure that employees do no work during off-duty

23

meal periods). But there is little doubt that, as a result of these

24

decisions, plaintiffs face increased difficulties in winning wage-

25

and-hour class action lawsuits.

26

Plaintiffs alleged that defendants failed to provide meal
15

1

breaks in violation of California law. In conducting discovery,

2

plaintiffs

3

employees. They concluded that these records “provided evidence of

4

numerous missed meal breaks,” but that “there were far more days

5

when meals were taken by the employees.” (Mot. for Final Approval

6

9:7-16, ECF No. 139.) They also note that the University of Phoenix

7

had a company policy of permitting employees to take meal breaks

8

and of routing calls to other employees during these breaks. (Id.)

9

The parties conclude – correctly, in the court’s view – that given

10

these facts and the holding in Brinker, “any damages for missed

11

meals would be highly speculative.” (Id.)

obtained

and

analyzed

telephone

records

for

58

12

Turning to plaintiffs’ claims that the defendants failed to

13

pay employees wages due upon termination, the parties point to the

14

difficulties in proving that this withholding was willful, as

15

required by Cal. Lab. Code § 203. (Mot. for Final Approval 9:21-

16

25.)

17

Finally, in claiming unpaid overtime, plaintiffs would have

18

been confronted with the fact that any employee “who reported

19

overtime into the payroll system was paid for that overtime.” (Mot.

20

for Final Approval 9:25-10:3.) Class members were among those who

21

reported and were paid for overtime work. As a result, class

22

members would have been required to prove that defendants prevented

23

or discouraged them from reporting some, but not all, of their

24

overtime.

25
26

The legal and factual hurdles outlined herein weigh in favor
of settlement approval.
16

1

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

2
3

In

assessing

the

risk,

expense,

complexity,

and

likely

4

duration of further litigation, the court evaluates the time and

5

cost required. “[U]nless the settlement is clearly inadequate, its

6

acceptance and approval are preferable to lengthy and expensive

7

litigation with uncertain results.” Nat'l Rural Telecomms. Coop.

8

v. DIRECTV, Inc., 221 F.R.D. 523, 526 (C.D.Cal. 2004) (Baird, J.)

9

(quoting 3 Newberg on Class Actions § 11:50 (4th ed.2012)).

10

This would have been a complex and expensive case to take to

11

trial. Plaintiffs were relying on voluminous telephone records that

12

would have required expert testimony to present to the jury. (Mot.

13

for Final Approval 10:18-22.) The parties estimate that the experts

14

would have charged in excess of $100,000 simply to evaluate the

15

phone records. (Id.)

16

On the other hand, by the time the parties notified the court

17

that they had reached a settlement (ECF No. 123), the plaintiff

18

classes had been certified, the parties had concluded discovery and

19

motion

20

judgment), and trial was less than four months away. Settlement

21

therefore

22

litigation.

23

practice

did

(including

not

shorten

arguing

the

cross-motions

likely

duration

for

of

summary

further

Accordingly, the court finds that this factor weighs only

24

slightly in favor of settlement approval.

25

////

26

////
17

1

3. The Risk of Maintaining Class Action Status
Throughout the Trial

2
3

Under Rule 23, the court may revisit its prior grant of

4

certification

5

Fed.R.Civ.P. 23(c)(1)(c) (“An order under that grants or denies

6

class

7

judgment”). So it is possible that the class could have been

8

decertified

9

Fed.R.Civ.P. 23(d) (“In conducting an action under this rule, the

10

court may issue orders that...(D) require that the pleadings be

11

amended to eliminate therefrom allegations as to representation of

12

absent persons, and that the action proceed accordingly.”) Given

13

the complexity of this case, particularly plaintiffs’ reliance on

14

voluminous telephone records as evidence of defendants’ acts and

15

omissions,

16

decertification. Accordingly, this factor weighs in favor of

17

approving the settlement

18

at

certification

or

any

may

modified

circumstances

time

be

before

altered

before

could

or

the

arise

final

amended

before

conclusion

at

trial

judgment.

of

to

final

trial.

justify

4. The Amount Offered in Settlement

19

The parties negotiated a $4,000,000 settlement. According to

20

class counsel, his analysis of defendants’ telephone records led

21

him to calculate a potential range of damages from $933,729 to

22

$4,429,042. (Tracy Dec. in Supp. of Mot. for Final Approval ¶ 3,

23

ECF No. 139-1.) His overall best case damages calculation was

24

$10,281,497. (Mot. for Final Approval 16:4-5.)

25

“The fact that a proposed settlement may only amount to a

26

fraction of the potential recovery does not, in and of itself, mean
18

1

that the proposed settlement is grossly inadequate and should be

2

disapproved.” Linney, 151 F.3d at 1242 (quoting City of Detroit v.

3

Grinnell Corp., 495 F.2d 448, 455 (2nd Cir. 1974)). And, as the

4

Ninth Circuit has pointed out, “parties, counsel, mediators, and

5

district

6

settlement by considering the likelihood of a plaintiffs’ or

7

defense

8

obtaining it, discounted to present value.” Rodriguez v. West

9

Publishing Corp., 563 F.3d 948, 965 (9th Cir. 2009).

judges

naturally

verdict,

the

arrive

potential

at

a

reasonable

recovery,

and

the

range

for

chances

of

Both sides engaged in significant discovery, including taking

10
11

five

12

defendants’

13

settlement with the help of an experienced mediator. (Mot. for

14

Final Approval, 5:20-28, 6:1-9.) The negotiated settlement amount

15

lies within class counsel’s estimate of damages.

16
17
18

depositions.
phone

Plaintiffs
records.

conducted

The

parties

extensive

analysis

ultimately

reached

of
a

The court therefore finds that the negotiated settlement
amount is a factor in favor of settlement approval.
5. The Extent of Discovery Completed, and the Stage of
the Proceedings

19
20

“A settlement following sufficient discovery and genuine

21

arms-length negotiation is presumed fair.” DIRECTV, Inc., 221

22

F.R.D. at 528.

23

most of the discovery is completed because it suggests that the

24

parties arrived at a compromise based on a full understanding of

25

the legal and factual issues surrounding the case.” Id. at 527

26

(quoting 5 Moore's Federal Practice, § 23.85[2][e] (Matthew Bender

“A court is more likely to approve a settlement if

19

1

3d ed)).

2

Here,

the

parties

engaged

in

formal

written

discovery,

3

exchanging requests for production of documents. Defendants deposed

4

both

5

defendants’ representatives. The settlement was largely the result

6

of arms-length negotiations conducted by an experienced mediator.

7

(Mot. for Final Approval 5:20-28, 6:1-9.)

8

class

representatives,

and

plaintiffs

deposed

three

of

This factor weighs in favor of settlement approval.

9

6. The Experience and Views of Counsel

10

“Great weight is accorded to the recommendation of counsel,

11

who are most closely acquainted with the facts of the underlying

12

litigation. This is because parties represented by competent

13

counsel are better positioned than courts to produce a settlement

14

that

15

litigation.”

16

and quotations omitted).

fairly

reflects

each

party’s

expected

outcome

in

the

DIRECTV, Inc., 221 F.R.D. at 528 (internal citations

17

Class counsel states that he has served as lead counsel or co-

18

counsel in numerous class action cases. (Tracy Dec. in Supp. of

19

Mot. for Atty. Fees. ¶¶ 7-8, ECF No. 138-1.) Several of these cases

20

address highly technical issues regarding additional payments that

21

need to be included in the regular rate of pay, such as the tuition

22

benefit provided to employment counselors herein. (Mot. for Final

23

Approval 11:5-10.) He concludes that, based on his “extensive

24

experience...in litigating overtime issues regarding the regular

25

rate of pay and other technical issues with the pay due to hourly

26

employees,” he is of the view that the settlement represents a fair
20

1
2
3

result for the class. (Id. 5:11-14.)
Based on class counsel’s statements, this factor does not
weigh against settlement approval.

4

7. The Presence of a Governmental Participant

5

Plaintiffs sought to enforce claims under California’s Private

6

Attorney General Act of 2004, Cal. Labor Code § 2698, et seq.

7

(“PAGA”) on behalf of the state and affected employees. The

8

settlement will result in a $50,000 payment to the California Labor

9

and Workforce Development Agency. This factor weighs in favor of

10

approval.
8. Opposition by Class Members

11
12

The class administrator did not receive any requests for

13

exclusion from the settlement class, nor any objections to the

14

settlement.

15

The court has received one set of objections, in the form of

16

a letter, dated November 17, 2012, from class representative Diane

17

Adoma.(ECF No. 143.)

18

Adoma’s objections to the proposed settlement are as follows.

19

First, Adoma objects to being paid only $25,000 in settlement of

20

her claims: $5000 as payment for serving as a named representative,

21

and $20,000 in settlement of her individual claims. According to

22

Adoma, this amount is inadeqate because she “initially filed an

23

individual lawsuit for $475,000....”5 Adoma also claims she has

24
5

25
26

This objection appears to misconstrue the penalties sought
in the initial complaint, which includes a prayer for “Civil
penalties under the Private Attorney General Act in an amount in
excess of $400,000 and subject to proof at trial.” (Complaint 19,
21

1

“extensive future employment damages relating to the lawsuit,”

2

which she apparently feels are not adequately compensated for by

3

the $25,000 she is receiving.

4

Adoma then raises several objections regarding the inadequacy

5

of the settlement payment relative to her current circumstances:

6

•

“My economic status and future employability has

7

dramatically decreased and when you factor in the over

8

age 50 and the baby boomer stigma it gets even worse.

9

As of today, I am unemployed and severely

10

underemployed with a $100,000 plus in student loan

11

debt not counting other debt and many, many unpaid

12

medical bills for health and dental.” [sic.]

13

•

“I have called the DV hotline several times because by

14

definition I have been told that I am a victim of

15

financial abuse.... I need to be fairly compensated

16

and I am of the opinion that $25,000 is robbery and

17

puts me in harm’s way.”

18

While the court is quite sympathetic to the financial straits

19
20
21
22
23
24
25
26

ECF No. 2.) The complaint alleges civil penalties of $100,000 or
more, respectively, for violations of California statutes governing
overtime (Cal. Lab. Code § 510) (Complaint ¶ 133), meal and rest
periods (Cal. Lab. Code § 226.7) (Complaint ¶ 138), pay stub
requirements (Cal. Lab. Code § 226(a)) (Complaint ¶ 146), and
issuance of paychecks payable within California (Cal. Lab. Code §
212) (Complaint ¶ 159). These amounts, when summed, appear to be
the source of the $400,000 sought under PAGA. But under Cal. Labor
Code § 2699(i), any civil penalties under PAGA must be divided,
with 75% paid to the California Labor and Workforce Development
Agency and 25% paid to the plaintiff. Therefore, even assuming that
Adoma had prevailed at trial and obtained the full amount she was
seeking, she would have obtained closer to $175,000 than $475,000.
22

1

in which Adoma finds herself, as a legal matter, it would be

2

entirely

3

circumstances in deciding whether to approve the settlement.

4
5
6

inappropriate

to

take

into

account

her

current

Finally, Adoma asserts that her attorneys failed to keep her
informed and/or failed to adequately represent her interests:
•

“I...was told that requesting certification for class

7

action [sic] would not impact the amount of that award

8

to me as one of the two leading plaintiffs.”

9

•

“I requested copies of negotiation documents and

10

transcripts from [the] mediation hearing from my

11

attorney several months ago to review and consider

12

getting additional legal counsel and as of today have

13

not received any even though I agreed to pay for those

14

documents.”

15

•

“My attorney did not argue on my behalf at the

16

mediation and I was discouraged or should I say I was

17

told that it was not necessary for me to attend this

18

mediation.”

19

•

20
21

“My attorney Michael Tracy has not kept me reasonably
informed....”

•

“I was told the following by my lawyer. ‘...the

22

University of Phoenix will only settle this case if

23

you only get ONLY $25,000....’” (emphasis in original)

24

•

“I am officially disputing my attorney fees and any

25

other third party fees because I have not received

26

reasonable legal counseling and representation.”
23

1

•

“I am seriously considering filing a lawsuit against

2

Michael Tracy and filing a formal complaint with the

3

California bar against both he and his staff for not

4

fairly representing my best interest.”

5

A class representative’s objections are usually insufficient,

6

in and of themselves, to derail a settlement. As noted in the

7

Manual for Complex Litigation, “a class representative cannot alone

8

veto a settlement, especially one that has been presented to and

9

approved by the court.” Federal Judicial Center, Manual for Complex

10

Litigation § 21.642 (4th ed.). In support of this position, the

11

Manual cites Maywalt v. Parker & Parsley Petroleum Co., 864 F.Supp

12

1422, 1430 (S.D.N.Y. 1994), which provides in pertinent part:

13
14
15
16
17
18
19

To empower the Class Representatives with what would
amount to an automatic veto over the Proposed
Settlement does not appear to serve the best interests
of Rule 23 and would merely encourage strategic
behavior designed to maximize the value of the veto
rather than the settlement value of their claims. The
courts have recognized that the duty owed by class
counsel is to the entire class and not dependent on
the special desires of the named plaintiffs.... The
rationale implicit in these decisions is sound: the
named plaintiffs should not be permitted to hold the
absentee class hostage by refusing to assent to an
otherwise fair and adequate settlement in order to
secure their individual demands.

20
21

Id. (internal citations and quotations omitted). Similarly, the

22

Ninth Circuit has held that class representatives such as Adoma

23

“should not now be allowed to play the role of spoilers for a

24

[large settlement class] when they could have chosen to not be

25

bound by the settlement.” Marshall v. Holiday Magic, Inc., 550 F.2d

26

1173, 1177 (9th Cir. 1977) (upholding approval of settlement of a
24

1

complicated Rule 23(b)(3) securities and antitrust class action).

2

That said, in at least one instance, the Ninth Circuit has

3

found that a district court erred in approving a class action

4

settlement

5

objections to the proposed settlement, arguing, inter alia, that

6

the settlement was not substantively fair to the plaintiff class

7

and that the attorney for [the] plaintiff class did not adequately

8

represent

9

Ficalora v. Lockheed California Co., 751 F.2d 995, 996 (9th Cir.

10

1985). The court remanded, instructing the district court to

11

consider the class representative’s objections in detail and to

12

examine the settlement for possible conflicts of interest by

13

counsel or overreaching by defendant. Id.

where

the

the

class

[class

representative

representative’s]

“presented

personal

written

interests.”

14

Ficalora’s central holding appears to be that, “[b]efore

15

approving a class action settlement, the district court must reach

16

a reasoned judgment that the proposed agreement is not the product

17

of fraud or overreaching by, or collusion among, the negotiating

18

parties and that the settlement, taken as a whole, is fair,

19

reasonable and adequate to all concerned parties.” Id. at 997

20

(citing Officers for Justice v. Civil Service Commission, 688 F.2d.

21

615, 624 (9th Cir. 1982)). While rarely invoked, this holding

22

appears to remain good law in the Circuit. See, e.g., Wiley v.

23

Delta Airlines, 930 F.2d 921 (9th Cir. 1991) (upholding settlement

24

approval where the district court had inquired into the questioned

25

activities of class counsel and came to a reasoned judgment that

26

the

settlement

was

not

the

product
25

of

fraud,

collusion,

or

1

overreaching).

2

One challenge in considering Adoma’s objections is that she

3

appears not to have complied with the procedures for filing

4

objections with the court set forth in the settlement agreement and

5

in the notice of class action settlement. The latter provides:

6
7
8
9
10
11
12
13
14

IF YOU ARE SATISFIED WITH THE PROPOSED SETTLEMENT
TERMS, YOU DO NOT NEED TO OBJECT OR APPEAR AT THE
HEARING. IF YOU WOULD LIKE TO OBJECT OR APPEAR AT THE
HEARING, YOU MUST COMPLY WITH THE PROCEDURE SET OUT IN
THIS NOTICE.
Any settling Class Member may appear in person or
through counsel (at his or her own expense) at the
Final Approval Hearing and be heard on whether the
settlement should be approved as fair, reasonable, and
adequate to the Class. Absent leave of the Court,
however, no Settlement Class Member shall be heard at
the Final Approval Hearing unless by the Claims Period
Deadline he or she filed with the Court and postmarks
and sends to the Parties, via First-Class mail, his or
her written objection(s) stating any and all
objections to the settlement agreement, including any
supporting documents, and notice of intent to appear
at the Final Approval Hearing.

15
16

(ECF No. 139-3) (emphasis in original). It is unclear whether

17

Adoma, as a class representative, would have received this notice,

18

so she may not have been aware of the procedures for filing an

19

objection. Further, Adoma’s letter states that she had purchased

20

airline tickets to attend the fairness hearing on its originally-

21

scheduled date of November 5, 2012, at which the court could have

22

granted her leave to voice objections. Finally, Adoma’s letter

23

makes reference to a “first letter,” which is not before the court,

24

but which may have indicated her intent to be present at the

25

November 5 hearing. Adoma concludes her letter by writing, “I am

26

of the opinion that we can have further discussion so that my side
26

1

can be heard or this documentation should be produced during the

2

hearing if appropriate. Please re-evaluate this case for fairness

3

and help me at least feel like I was heard.”

4

In light of these circumstances and of Ficalora, the court

5

conducted an inquiry into Adoma’s objections at the fairness

6

hearing held on December 17, 2012. Class counsel Michael Tracy

7

informed the court that after he sent Adoma the parties’ Joint

8

Stipulation of Class Action Settlement and Release for review and

9

signature, she told him that she was retaining independent counsel

10

to review the agreement, which she ultimately signed.

11

(See ECF

No. 129-3.)

12

The signed settlement agreement provides, first, that Adoma

13

is to receive a total of $25,000 in payments, and second, that

14

class counsel will seek up to 1/3 of the $4,000,000 settlement

15

amount in attorneys’ fees.

16

The agreement also makes clear that by signing, Adoma was

17

consenting to be bound by its terms. It provides that “[t]he Class

18

Representatives will not object to the Settlement,” and that “[t]he

19

Class Representatives, by signing this Stipulation, are bound by

20

the terms herein and further agree and [sic] not to object to any

21

terms of this Stipulation. Any such objection shall therefore be

22

void and of no force or effect.” (Id. ¶¶ 7.2.7, 8.6.) If Adoma

23

believed, as she now claims, that class counsel had failed to keep

24

her properly informed about the proceedings or had barred her from

25

participating in settlement negotiations, she could have simply

26

declined to sign the agreement until her misgivings had been
27

1

assuaged.

2

Ultimately, there is nothing before the court to suggest that

3

the settlement agreement is anything but “fair, reasonable and

4

adequate to all concerned parties,” Ficalora, 751 F.2d at 997.

5

Accordingly, the court will approve the settlement herein.

6

D. Attorneys’ Fees and Costs

7

Class counsel also moves for approval of its fees and costs.

8

“In order to obtain fees justified on a common fund basis, the

9

class’s lawyers must ordinarily petition the court for an award of

10

fees separate from and subsequent to settlement.” Staton v. Boeing,

11

327 F.3d 938, 945 (9th.Cir. 2003).

12

Courts are obliged to ensure that the attorneys’ fees awarded

13

in a class action settlement are reasonable, even if the parties

14

have already agreed on an amount. In re Bluetooth Headset Products

15

Liability Litigation, 654 F.3d 935, 941 (9th.Cir. 2011). When

16

attorneys’ fees are to be paid from a common fund, as here, the

17

relationship between plaintiffs and their attorneys is deemed to

18

turn adversarial, and so “the district court must assume the role

19

of fiduciary for the class plaintiffs.” In re Wash. Pub. Power

20

Supply Sys. Sec. Litig., 19 F.3d 1291, 1302 (9th Cir. 1994).

21

In awarding attorneys’ fees from a common fund, courts have

22

discretion to employ either the percentage-of-recovery method or

23

the

24

percentage-of-recovery method, the prevailing attorneys are awarded

25

a percentage of the common fund recovered for the class. Id. In

26

applying this method, courts typically set a benchmark of 25% of

lodestar

method.

Bluetooth,

28

654

F.3d

at

942.

Under

the

1

the fund as a reasonable fee award, and justify any increase or

2

decrease from this amount based on circumstances in the record. Six

3

(6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311

4

(9th

5

attorneys are awarded an amount calculated by multiplying the hours

6

they reasonably expended on the litigation times their reasonable

7

hourly rates. Staton v. Boeing Co., 327 F.3d 938, 965 (9th Cir.

8

2003). This amount may be increased or decreased by a multiplier

9

that reflects any factors not subsumed within the calculation, such

10

as “the quality of representation, the benefit obtained for the

11

class, the complexity and novelty of the issues presented, and the

12

risk of nonpayment.” Bluetooth, 654 F.3d at 942.

Cir.

1990).

Under

the

lodestar

method,

the

prevailing

13

Even if the court chooses to apply the percentage-of-recovery

14

method, calculation of the lodestar amount may be used as a

15

cross-check to assess the reasonableness of the percentage award.

16

Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1050–51 (9th Cir.

17

2002).

18

Class counsel seek attorneys’ fees of $1,333,333, justifying

19

this amount as 33.33% of the negotiated maximum settlement amount

20

(the “common fund”) of $4,000,000,6 or (ii) a lodestar of $801,445

21
6

22
23
24
25
26

The fact that only 50% of the maximum possible settlement
will be paid out to claimants will not affect the court’s inquiry
as to the appropriate percentage to award. Ninth Circuit precedent
focuses on the total award negotiated, rather than the amount
actually collected by the class. See, e.g., Hanlon v. Chrysler
Corp., 150 F.3d at 1029. Here, the parties have stipulated that if
the court reduces any of the negotiated litigation expenses, the
amount of the reduction will go to the settlement pool rather than
reverting to defendant, thereby increasing the fund available to
class members. (Settlement Agmt. ¶¶ 6.4.1, 7.3.2.)
29

1

multiplied by a 1.66 multiplier. Defendants have not objected to

2

the fees sought. Class counsel’s justifications for seeking a fee

3

award in excess of the 25% benchmark or a lodestar multiplier of

4

1.66 are discussed below.

5

1. Quality of representation

6

Class counsel is correct in describing this as a heavily-

7

litigated case, as it involved a motion to dismiss or transfer the

8

action to the Central District of California; an order to show

9

cause

as

to

the

state

court’s
law

subject

claims;

a

matter

contested

jurisdiction
motion

for

over

10

plaintiffs’

class

11

certification; a petition to the Ninth Circuit seeking permission

12

to appeal class certification; cross-motions for summary judgment;

13

and extensive discovery. (Mot. for Atty. Fees 1:7-12, 2:1-17, 2:24-

14

3:5.) The matter was litigated in multiple forums, as the court

15

transferred plaintiffs’ FLSA claims to the Eastern District of

16

Pennsylvania, where they were subject to defendants’ motion for

17

partial summary judgment. (Mot. for Atty Fees 4:17-23.)

18

This factor weighs in favor of some increase in the fee award,

19

as the typical wage and hour action does not involve multi-forum

20

litigation over the course of years. Moreover, plaintiffs prevailed

21

in nearly every motion.

22

2. Benefit obtained for the class

23

Class counsel has obtained positive results for the class, as

24

the court estimates that qualified claimants will receive average

25

payments of more than $2000 apiece. Nevertheless, while these

26

results

are

favorable,

they

are
30

in

no

way

remarkable

or

1

extraordinary. By way of comparison, the plaintiffs in Vizcaino,

2

290 F.3d at 1043, secured a modification in the classification of

3

certain Microsoft temporary employees nationwide that yielded

4

benefits to those employees valued at over $100 million, obtained

5

a cash settlement of $96,885,000 for class members, and set an

6

important precedent in employment law. Class counsel was ultimately

7

awarded 28 percent of the common fund in fees. Vizcaino of course

8

involves an extraordinarily large settlement fund. A more apt

9

comparison may be McKenzie v. Federal Express Corp., No. CV

10

10–02420 GAF, 2012 WL 2930201, 2012 U.S. Dist. LEXIS 103666

11

(C.D.Cal. Jul. 2, 2012) (Feess, J.), where class counsel secured

12

both an $8.25 million non-reversionary settlement on behalf of

13

hourly employees of Federal Express in California, and injunctive

14

relief that improved the clarity of pay stubs issued to all Federal

15

Express hourly employees nationally. Despite these impressive

16

results, the court refused to increase the benchmark rate of 25

17

percent in awarding attorney fees.

18

Class counsel cites several cases in which courts were willing

19

to

grant

common

fund

percentages

20

describing them as wage and hour cases, he does not apply the

21

reasoning in these cases to the facts in the present matter. His

22

first citation, to Williams v. MGM-Pathe Communs. Co., 129 F.3d

23

1026 (9th Cir. 1997), is inapt. Williams merely holds that it is

24

an abuse of discretion to calculate class counsel’s fees as a

25

percentage of the total claimed funds rather than the entire

26

settlement fund; the court did not reach the propriety of the
31

of

33.33%,

but

other

than

1

33.33% figure. His next two citations are to cases from the

2

Southern District of New York, i.e., district courts which do not

3

apply Ninth Circuit standards for attorney fee awards. The final

4

cases

5

08–CV–821–IEG,

6

(S.D.Cal. June 1, 2010) (Gonzalez, J.) (awarding 33.33% of $1

7

million settlement fund) and Vasquez v. Coast Valley Roofing, Inc.,

8

266 F.R.D. 482, 492 (E.D.Cal. 2010) (Wanger, J.) (awarding 33.33%

9

of $300,000 settlement fund) involve smaller settlement funds,

10

though admittedly, the litigation appears to have been far less

11

complex in these cases than in the present matter.

he

cites,

Singer

2010

WL

v.

Becton

2196104,

2010

Dickinson
U.S.

Dist.

&

Co.,

LEXIS

No.
53416

Ultimately, the results for the class are not so exceptional

12
13

as

to

in

14

and

of

themselves

justify

an

increase

in

the

25%

benchmark.

15

3. Complexity and novelty of the issues presented

16

Class counsel states that he “has handled many class action

17

cases, some [of which] have been much larger than this one and

18

settled for large dollar amounts. However, none of them have come

19

close to the complexity of this case in terms of the issues

20

involved and the procedural hurdles.” (Tracy Dec. in Supp. of Mot.

21

for Atty. Fees ¶ 24.) He points to the novel issues in this matter,

22

particularly the contention that the value of tuition benefits

23

awarded to hourly employees should be included in the regular rate

24

of pay on which overtime is computed. Plaintiffs were able to

25

survive motions for partial summary judgment. (Mot. for Atty Fees

26

6:7-13.) The court also recognizes the complexities involved in
32

1

deciphering voluminous telephone records in order to determine

2

whether

3

payments.

4
5

class

members

had

received

meal

breaks

and

overtime

Accordingly, this factor weighs in favor of an increase in
the fee award.

6

4. Risk of nonpayment

7

Class counsel does not discuss the risk of nonpayment in his

8

motion, except to note that his firm has invested a substantial

9

number of hours in this case. For example, his billing records show

10

that he has put more than 1760 hours into this case. (Tracy Dec.

11

in Supp. of Mot. for Atty. Fees ¶ 18.) But there are no facts

12

before the court regarding the financial risks to the firm if this

13

case had been lost. As such, the court cannot conclude that the

14

risks exceeded those ordinarily faced by counsel who take cases on

15

contingency.

16

In light of the foregoing, the court believes that an award

17

of 29% of the common fund, or $1,160,000, is appropriate. It is

18

important that labor and employment attorneys be rewarded for

19

pursuing novel claims (so long as they are meritorious) and for

20

litigating these claims with tenacity, rather than cherry-picking

21

simple cases or settling difficult cases for small amounts.

22
23

5. Lodestar cross-check
Turning to the lodestar cross-check, the court must first

24

determine

whether

the

hourly

rates

25

reasonable. “[T]he district court must determine a reasonable

26

hourly rate considering the experience, skill, and reputation of
33

sought

by

counsel

are

1

the attorney requesting fees.” Chalmers v. City of Los Angeles, 796

2

F.2d 1205, 1210 (9th Cir. 1986). This determination “is not made

3

by reference to rates actually charged by the prevailing party.”

4

Id. Instead, the court should use the prevailing market rate in the

5

community for similar services of lawyers “of reasonably comparable

6

skill, experience, and reputation.” Id. at 1210–11. The “relevant

7

legal community” in the lodestar calculation is generally the forum

8

in which the district court sits. “Affidavits of the plaintiff[’s]

9

attorney and other attorneys regarding prevailing fees in the

10

community, and rate determinations in other cases, particularly

11

those

12

satisfactory evidence of the prevailing market rate.” United

13

Steelworkers of America v. Phelps Dodge Corp., 896 F.2d 403, 407

14

(9th Cir. 1990).

setting

a

rate

for

the

plaintiff[’s]

attorney,

are

15

Class counsel has not filed affidavits from other attorneys

16

regarding prevailing fees in the Eastern District of California.

17

He has identified one case in the Eastern District, Murillo v.

18

Pacific Gas & Electric, No. 08-cv-01974-WBS-GGH, in which he was

19

awarded an hourly rate of $300/hour. Inspection of the docket in

20

that matter shows that this award was made on June 21, 2010.

21

(Murillo, ECF No. 47.)

22

Class counsel has also identified a case in which the Santa

23

Clara Superior Court awarded him fees of $425/hour, a case in which

24

the Los Angeles Superior Court awarded fees of $450/hour, and a

25

case in which the U.S. District Court for the Central District of

26

California awarded him fees of $450/hour. (Tracy Dec. in Support
34

1

of Mot. for Atty. Fees ¶¶ 14-16.) All of these matters were wage

2

and hour cases. (Id.) Class counsel also states that he has

3

represented defendants in wage and hour cases, billing them at a

4

rate of $425/hour, and that this rate is typical of what other

5

attorneys with equivalent experience charge for handling such

6

matters. (Id. ¶¶ 11, 12.)

7

Given that some two-and-a-half years have passed since the fee

8

award in Murillo and the hourly rate that he has subsequently

9

received in other cases in California, the court finds that

10

$425/hour is a reasonable hourly rate for class counsel’s services.

11

To insist on awarding significantly-lower hourly rates in the

12

Eastern District than those in the other judicial districts in

13

California would discourage attorneys from bringing meritorious

14

lawsuits in this district.

15

The court has also examined the billing records submitted by

16

class counsel, and finds them to be reasonable. The lodestar amount

17

of $801,445 is therefore reasonable as well.

18

The $1,160,000 fee award calls for a 1.45 multiplier of the

19

lodestar amount. This is well within the range approved by the

20

Ninth Circuit. See Vizcaino, 290 F.3d at 1051 n.6 (finding that

21

multiples ranging from 1.0 - 4.0 are frequently awarded in common

22

fund cases, with slightly over half of the cases surveyed awarding

23

multiples in the 1.5 - 3.0 range).

24

6. Reasonableness of fee arrangement

25

The court concludes by evaluating the reasonableness of the

26

parties’ fee arrangement in light of the Ninth Circuit’s decision
35

1

in Bluetooth, 654 F.3d at 935. The Bluetooth court identified three

2

factors which may indicate that an attorneys’ fee settlement is not

3

fair, adequate, and reasonable:

4

(1) when class counsel receives a disproportionate

5

distribution of the settlement;

6

(2) when the parties negotiate a “clear sailing”

7

arrangement providing for the payment of attorneys’ fees

8

separate and apart from class funds without objection by

9

the defendant (which carries the potential of enabling a

10

defendant to pay class counsel excessive fees and costs in

11

exchange for counsel accepting an unfair settlement); and

12

(3) when the parties arrange for fees not awarded to revert

13

to defendants rather than be added to the class fund.

14

Id. at 947.

15

Class counsel is not receiving a disproportionate distribution

16

of the settlement, whether in percentage terms or in absolute

17

terms. The Ninth Circuit benchmark in common fund cases is 25%;

18

here, class counsel is receiving 29%. The court estimates that the

19

settlement pool, particularly with the reduction in the fee award

20

to class counsel, will exceed the fee award of $1,160,000. These

21

small disparities are in sharp contrast to those in recent cases

22

like Bluetooth, where there was no monetary award to the class, but

23

the class counsel negotiated $800,000 in attorney fees, or Harris

24

v. Vector Marketing Corp., No. C–08–5198, 2011 WL 4831157, 2011

25

U.S. Dist. LEXIS 117927 (N.D.Cal. Oct. 12, 2011) (Chen, J.), where

26

the court disapproved an agreement that awarded class counsel $4
36

1

million, while the expected payout to the class was approximately

2

$1 million.

3

Turning

to

the

second

Bluetooth

factor,

the

court,

in

4

approving the settlement agreement, did approve a “clear sailing”

5

arrangement, as defendant agreed not to object to class counsel’s

6

application for up to $1,333,333 in attorneys’ fees. (Settlement

7

Agmt. ¶ 6.2.1.)

8

Nevertheless, the settlement agreement does not run afoul of

9

the third factor, as any fees disallowed by the court are allocated

10

to the settlement fund, rather than being retained by defendant.

11

(Settlement Agmt. ¶¶ 6.4.1, 7.3.2.) Given that qualified claimants

12

are eligible for 50% of the settlement fund, half of any reduction

13

in class counsel’s fees will go to class members.

14

Accordingly, the court concludes that the negotiated agreement

15

as to attorneys’ fees is fair, adequate, and reasonable.

16

IV. Conclusion

17

1.

Out of the identified Class Members who were notified,

18

none

19

settlement. The reaction of the Class to the proposed

20

settlement strongly supports the conclusion that the

21

proposed Settlement is fair, reasonable, and adequate.

have

objected

to

any

aspect

of

the

proposed

22

2.

The Settlement is HEREBY APPROVED in its entirety.

23

3.

The Settlement Fund shall be dispersed in accordance

24

with the Settlement Agreement as detailed in the Motion

25

for Certification of Settlement Class and Preliminary

26

Approval of Settlement, and Approval of Class Notice and
37

1
2

Settlement Administrator, granted on June 19, 2012.
4.

Representative

Plaintiffs

Diane

Adoma

and

Michelle

3

Abbaszadeh are hereby awarded $5,000 each for their time

4

and effort in pursuing this litigation, and Ms. Adoma is

5

awarded an additional settlement payment of $20,000 for

6

her individual claims.

7

5.

Plaintiffs' application for attorneys' fees and costs

8

is granted in the amount of $1,160,000.00 in fees and

9

$25,000 in costs.

10

6.

As provided in the Joint Stipulation of Settlement and

11

Release, and except as to any rights that are created

12

by the settlement or this Order, all Settlement Class

13

Members who did not opt out of the Settlement have

14

released all Released Claims against the Company

15

Releasees as defined in the Joint Stipulation of

16

Settlement and Release.

17

7.

The Court hereby approves Defendants' LWDA payment of

18

$50,000 in accordance with the terms of the Joint

19

Stipulation of Settlement and Release.

20

8.

The Court hereby approves an award of $19,000 to

21

Simpluris, Inc., the Claims Administrator, for

22

settlement administration costs.

23

9.

The Court hereby enters Judgment approving the terms

24

of the Settlement.

25

Final Judgment for purposes of FRCP Rule 58.

26

10.

This Order shall constitute a

This case is hereby DISMISSED WITH PREJUDICE, with
38

1

each party to bear his, her, or its own costs, except

2

as set forth herein, and with this Court retaining

3

exclusive jurisdiction to enforce the Settlement

4

Agreement, including over disbursement of the

5

Settlement Fund.

6

IT IS SO ORDERED.

7

DATED:

December 18, 2012.

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