Pena et al v. Taylor Farms Pacific, Inc. et al

Filing 305

ORDER signed by District Judge Kimberly J. Mueller on 8/22/2019 DENYING without prejudice 287 Motion for Preliminary Approval of Class Action Settlement, to a renewed motion that adequately addresses the court's remaining concerns described above. Assuming plaintiffs wish to renew the motion, they may do so by filing a notice of renewal and reliance on prior briefing, with supplemental briefing focusing on only the issues called out by this order. (York, M)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MARIA DEL CARMEN PENA, et al.,

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Case No. 2:13-cv-01282-KJM-AC

Plaintiffs,

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v.

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ORDER

TAYLOR FARMS PACIFIC, INC., et al.,

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Defendants.

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Plaintiffs move for preliminary approval of a settlement reached with defendants in

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this long-pending class action. Mot., ECF No. 287. The motion is unopposed. With leave from

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the court, plaintiffs filed a supplemental brief and declaration to address several issues the court

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raised at hearing on the motion. Supp. Br., ECF No. 301; Supp. Decl., ECF No. 302; ECF Nos.

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303, 304 (statements of non-opposition to supplemental filings). After reviewing plaintiffs’

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supplemental brief in the context of the entire record on the pending motion, and as explained

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below, the court DENIES the motion without prejudice to renewal.

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I.

BACKGROUND

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Defendant Taylor Farms Pacific, Inc. operates two food production and processing

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plants in Tracy, California. Mot. at 8.1 Defendants Abel Mendoza, Inc., Manpower, Inc. and

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Quality Farm Labor, Inc. provide agricultural or manufacturing workers to third parties and, as

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The court cites to ECF page numbers, not the briefs’ internal pagination.
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relevant here, paid and acted as a joint or dual employer for employees who worked under Taylor’s

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control. Seventh Am. Compl., ECF No. 101 ¶¶ 9−11. Defendant Slingshot Connections LLC

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recruits, interviews and hires persons to work at Taylor’s Tracy facilities on behalf of Quality Farm

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Labor, Inc., and also acts as a joint or dual employer for those employees. Id. ¶ 12.2

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Plaintiffs Maria del Carmen Pena, Consuelo Hernandez, Leticia Suarez, Rosemary

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Dail and Wendell T. Morris were hourly employees at the Tracey plants. Plaintiffs filed this action

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seeking to represent a class of defendants’ current and former employees arising from the following

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core allegations: (1) defendants did not properly compensate plaintiffs for time spent “donning and

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doffing” equipment; (2) defendants did not provide plaintiffs with rest breaks and meal breaks

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required under California labor law; and (3) defendants did provide plaintiffs with paychecks in the

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form and timely manner required under California labor law. See Certification Order, ECF No.

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200, at 2−3 (summarizing plaintiffs’ class claims).

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On February 10, 2015, the court granted in part and denied in part plaintiffs’ motion

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for class certification. Specifically, the court: (1) denied certification of all classes and subclasses

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as to defendant SlingShot Connections, LLC; (2) denied certification of the donning and doffing

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subclass; (3) granted certification of two meal break subclasses and approved Pena, Hernandez and

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Morris as representatives of those subclasses, but denied certification of the rest break subclass;

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(4) granted certification of the waiting time subclass, insofar as that subclass is entirely derivative

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of the mixed hourly workers subclass, and appointed Pena and Hernandez as representatives of that

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subclass; (5) denied certification of the wage statement subclass; and (6) appointed plaintiffs’

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counsel as class counsel. Certification Order at 42−43. The court later clarified that its order on

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class certification did not certify any class as to defendant Manpower, but noted the court would

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entertain a renewed motion as to Manpower. ECF No. 210. No such motion was filed. Tyson and

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Abel Mendoza, Inc. appealed the court’s certification order, unsuccessfully. See ECF Nos. 217,

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228 (notices of appeal), 243, 244 (memorandum disposition affirming order and mandate). The

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court stayed the matter pending defendants’ filing a petition for writ of certiorari, and then lifted

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Because plaintiffs’ motion did not address the non-Taylor defendants’ roles in the suit or
settlement, the court draws on allegations in plaintiffs’ operative complaint.
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the stay when the petition was denied. ECF Nos. 254, 262. The parties then entered into settlement

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negotiations. See 273, 277, 280 (minute orders resetting status conference pending parties’

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settlement discussions).

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The parties attended two separate full-day mediation sessions, months apart, with “a

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highly experienced and respected class action mediator.” Mot. at 7, 13. Following the parties’

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“arm’s-length bargaining,” the mediator “recommended the settlement amount as fair and

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reasonable.” Id. at 9, 13. The parties propose a $5,300,000 gross settlement amount. Mot. at 9.

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From the gross settlement, plaintiffs seek: (1) attorneys’ fees not to exceed 35 percent of the gross

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settlement ($1,855,000), (2) costs not to exceed $250,000, (3) service awards of $7,500 for each

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named plaintiff, including plaintiffs not certified as class representatives, not to exceed a total of

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$37,500, and (4) settlement administrative costs not to exceed $23,000. Mot. at 9−10. Defendants

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Quality Farm Labor, Inc. and Abel Mendoza, Inc. filed notices of non-opposition, requesting the

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court grant the motion in its entirety. ECF No. 289 (Quality Farm Labor, Inc. statement of non-

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opposition); ECF No. 291 (Abel Mendoza, Inc. statement of non-opposition). While Taylor is the

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only defendant that signed the settlement agreement, that agreement would release all defendants

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and plaintiffs represent that “if the settlement is finally approved it will result in this litigation being

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dismissed in its entirety,” presumably with all defendants’ approval. Suppl. Br. at 2; see Fed. R.

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Civ. P. 41(a)(1)(A)(ii) (requiring, for plaintiff’s dismissal without court order, stipulation of

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dismissal signed by all parties who have appeared).

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II.

LEGAL STANDARD

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There is a “strong judicial policy” favoring settlement of class actions. Class

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Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nonetheless, to protect absent

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class members’ due process rights, Rule 23(e) of the Federal Rules of Civil Procedure permits the

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claims of a certified class to be “settled . . . only with the court’s approval” and “only after a hearing

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and only on a finding [that the agreement is] fair, reasonable, and adequate . . . .” Fed. R. Civ. P.

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23(e). To determine whether a proposed class action settlement is fair, reasonable and adequate,

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courts consider several factors, as relevant, including:

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(1) [T]he strength of the plaintiff’s case; (2) the risk, expense,
complexity, and likely duration of further litigation; (3) the risk of
maintaining class action status throughout the trial; (4) the amount
offered in settlement; (5) the extent of discovery completed and the
stage of the proceedings; (6) the experience and view of counsel; (7)
the presence of a governmental participant; and (8) the reaction of
the class members of the proposed settlement.

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In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 944 (9th Cir. 2015) (quoting Churchill

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Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)); In re Tableware Antitrust Litig., 484

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F. Supp. 2d 1078, 1080 (N.D. Cal. 2007) (noting, at preliminary approval stage, courts consider

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whether “the proposed settlement appears to be the product of serious, informed, non-collusive

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negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class

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representatives or segments of the class, and falls within the range of possible approval . . . .”).

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These factors substantively track those provided in 2018 amendments to Rule
23(e)(2), under which the court may approve a settlement only after considering whether:

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(A) the class representatives and class counsel have adequately
represented the class;

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(B) the proposal was negotiated at arm’s length;

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(C) the relief provided for the class is adequate, taking into account:

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(i) the costs, risks, and delay of trial and appeal;

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(ii) the effectiveness of any proposed method of distributing
relief to the class, including the method of processing classmember claims;

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(iii) the terms of any proposed award of attorney’s fees,
including timing of payment; and

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(iv) any agreement required to be identified under Rule
23(e)(3); and

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(D) the proposal treats class members equitably relative to each
other.

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Fed. R. Civ. P. 23(e)(2)(A)−(D).3 The Rule 23(e)(2) factors took effect on December 1, 2018 and,

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Plaintiffs did not acknowledge the Rule 23(e)(2) factors in their motion but cited them in their
supplemental brief. See Mot. at 10−11; Suppl. Br. at 5.
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as an advisory note to the Rule 23(e) amendment recognizes, “each circuit has developed its own

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vocabulary for expressing [] concerns” regarding whether a proposed settlement is fair, reasonable

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and adequate.

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Accordingly, the newly codified factors are not intended “to displace any factor, but rather to focus

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the court and the lawyers on the core concerns of procedure and substance that should guide the

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decision whether to approve the proposal.” Id.; see also 4 Newberg on Class Actions § 13:14 (5th

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ed.) (noting Rule 23(e) “essentially codified [federal courts’] prior practice”). Moreover, the

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Advisory Committee warned against allowing “[t]he sheer number of factors [to] distract both the

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court and the parties from the central concerns that bear on review under Rule 23(e)(2).” Fed. R.

Fed. R. Civ. P. 23(e)(2) advisory committee’s note to 2018 amendment.

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Civ. P. 23(e)(2) advisory committee’s note to 2018 amendment.

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longstanding precedent in applying these newly amended rules.

The court thus draws on

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As a functional matter, a “[r]eview of a proposed class action settlement generally

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involves two hearings.” Ann. Manual Complex Lit. (“MCL”) § 21.632 (4th ed. 2004). First, the

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court conducts a preliminary fairness analysis and, if necessary, a preliminary class certification

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analysis. Id. Second, after all absent class members are notified of the certification and proposed

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settlement, the court holds a final fairness hearing where it revisits class certification and

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determines whether to approve the settlement. Id. §§ 21.632–21.635. Here, the court undertakes

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the first, preliminary step only.

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III.

DISCUSSION

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Upon review of the plaintiffs’ filing, the court concludes that although plaintiffs

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have adequately addressed most outstanding issues the court identified at hearing, they still have

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not sufficiently explained the proposed class on whose behalf they wish to settle or the terms of

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their settlement, which precludes the court’s ability to exercise its proper role here. Accordingly,

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and as explained further below, the court is unable to grant the motion on the present record.

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A.

Plaintiffs Have Not Shown the Settlement Class Satisfies Rule 23

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“Even if the parties have agreed to settle a case on a class-wide basis, the court must

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determine whether the proposed class satisfies all the requirements of Rule 23(a) (numerosity,

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typicality, commonality, and adequacy of representation) and either Rule 23(b)(1), (2), or (3).”
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MCL § 22.921; see Fed. R. Civ. P. 23(e)(1)(B)(ii) (requiring court to direct notice of settlement “if

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giving notice is justified by the parties’ showing that the court will likely be able to . . . certify the

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class for purposes of judgment on the propos[ed] [settlement]”). “Settlement is relevant to a class

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certification” and, thus, conducting a class certification analysis in the settlement context, “a district

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court need not inquire whether the case, if tried, would present intractable management problems,

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. . . for the proposal is that there be no trial.” Amchem Products, Inc. v. Windsor, 521 U.S. 591,

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619−20 (1997) (citing Fed. Rule Civ. Proc. 23(b)(3)(D)). Even so, “other specifications of [] Rule

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[23]—those designed to protect absentees by blocking unwarranted or overbroad class

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definitions—demand undiluted, even heightened, attention in the settlement context.” Id.; In re

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Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 556–57 (9th Cir. 2019) (noting “manageability is

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not a concern in certifying a settlement class where, by definition, there will be no trial. On the

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other hand, in deciding whether to certify a settlement class, a district court must give heightened

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attention to the definition of the class or subclasses.”).

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While a previously certified class may be expanded for settlement purposes, the

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expansion must comport with Rule 23’s requirements. See, e.g., In re Charles Schwab Corp. Sec.

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Litig., No. C 08-01510 WHA, 2010 WL 4055594, at *2 (N.D. Cal. Oct. 14, 2010) (“[A] settlement

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class can end more claims than were certified for litigation so long as all the Rule 23 requirements

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are re-done . . . .”); Burnham v. Ruan Transportation, No. SACV120688AGANX, 2015 WL

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12646485, at *3 (C.D. Cal. Feb. 6, 2015) (denying preliminary approval motion where “the

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settlement class exceeds the scope of the certified class” but motion for preliminary approval “fails

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to apply the Rule 23 factors to the additional claims”).

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Here, the court previously certified several subclasses but denied certification of

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other subclasses. See Certification Order. The settlement agreement defines the “Settlement Class”

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as:

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[A]ll former and current non-exempt hourly employees who worked
at Taylor Farms Pacific, Inc.’s Tracy, California facilities during the
relevant time period. (For purposes of this Settlement Agreement,
‘non-exempt hourly employees’ includes employees and direct hires
of Taylor Farms Pacific, Inc. as well as temporary workers who
provided services to Taylor Farms, Pacific, Inc.).
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Settlement, Mot., Ex. 2, ECF No. 287-1, at 12−48, § 2.1. This “Settlement Class” is significantly

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broader than the certified subclasses and appears to include subclasses for which the court denied

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certification, though plaintiffs neglected to acknowledge the expansion in their motion.

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At hearing, plaintiffs’ counsel explained the broader class was warranted because

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the court had denied certification as to certain proposed classes without prejudice, leaving open the

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possibility of future certification, and because Taylor required assurances “a settlement for a certain

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amount is going to ultimately and finally resolve all potential claims that were or could be raised

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by any other action.” Tr., ECF No. 300, at 6:13−22. Plaintiffs’ counsel further explained he “hadn’t

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thought about” whether the broadened class must satisfy Rule 23’s requirements, but the parties

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agreed to supplemental briefing to address the issue. See id. at 7:1, 19:20−23. As noted above,

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plaintiffs’ supplemental brief and declaration are now before the court. See ECF Nos. 301, 302.

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While that brief addresses the Rule 23 factors, it does so in a cursory manner that prevents the court

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from conducting any meaningful Rule 23 analysis and thus prevents the court from approving this

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settlement.

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Plaintiffs’ sparse attempt to address Rule 23(a)(2)’s commonality requirement

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highlights the inadequacies of their supplemental brief. See Supp. Br. at 3. Plaintiffs appear to

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suggest that, because the settlement class is defined to include all “individuals who are or were

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employed as non-exempt hourly employees at Taylor Farms Pacific’s Tracy California production

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facilities during the relevant time[,]” class members “[b]y definition . . . have in common the fact

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that they worked in non-exempt positions at certain facilities.” Supp. Br. at 3.

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Plaintiffs do not explain how class members’ shared employment status presents “a

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common contention” that “is capable of classwide resolution” and will “resolve an issue that is

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central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 564

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U.S. 338, 350. This showing is what commonality requires. See id. Instead, perhaps tacitly

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acknowledging the shortcoming in their briefing on this certification prerequisite, plaintiffs argue

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“it is routine for courts to alter or expand previously certified classes for purposes of certifying a

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settlement class” and “[i]n order for Taylor Farms to finally conclude the claims made in the

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operative complaint, any settlement must necessarily include all such claims even though not

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covered by this Court’s certification order.” Id. (footnote omitted).

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In other words, plaintiffs do not make an argument for commonality, they make an

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argument for the court’s foregoing a commonality analysis in favor of approving their settlement.

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This argument is not persuasive, but it is emblematic of plaintiffs’ approach to the Rule 23 analysis

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here. See, e.g., id. at 4 (arguing without elaboration that Rule 23(b)(3)’s predominance and

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superiority requirements are satisfied because “those working at the subject facilities, as a whole,

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were not afforded legally compliant working conditions and payment” and this case “is better

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adjudicated as a class action”); cf. In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d at 558−60

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(discussing predominance requirement in settlement context).

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Moreover, the court has no way of knowing whether the parties’ proposed settlement

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class may be comprised of unique groups of class members with unique interests, but without

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necessary subclasses to recognize those differences; plaintiffs’ earlier class certification motion

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clearly suggested as much. See Certification Order (granting in part and denying in part motion to

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certify four subclasses). Plaintiffs offer no clarification on this point.

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It is certainly possible that the proposed settlement class satisfies Rule 23’s

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requirements, and this order should not be construed as finding otherwise. But plaintiffs provide

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no concrete explanation of the relevant details of the entire settlement class they seek to certify and

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they omit any cogent showing of how that class satisfies Rule 23. The court cannot approve their

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motion on this record.

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B.

Reasonableness

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While plaintiffs’ motion provides some explanation of the facts and circumstances

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that led them to believe the settlement amount reached is adequate, here as well they provide little

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detail. See Mot. at 12−13. Counsel’s supplemental declaration provides additional information,

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but appears to address only meal break violations and not all claims the expanded settlement class

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will release.

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at 7 (arguing settlement is particularly strong outcome in light of jury verdict in donning and doffing

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case); Settlement § 2.6 (settlement agreement’s proposed release language under which class

Supp. Decl. at 3−4 (calculating class’s potential meal break damages); but see Mot.

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members will release multiple claims arising under California Labor Code, “such as claims for off-

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the-clock work, minimum wages and overtime, meal period or rest break violations of any kind,

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unpaid wages, rounding of time entries, penalties for failure to provide accurate and itemized wage

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statements, and penalties for failure to timely pay wages at the separation of employment, and any

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other benefit claimed on account of the allegations asserted in the operative complaint”). Assuming

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plaintiffs choose to renew their motion, they must more completely explain how those additional

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claims are accounted for in the settlement, or, alternatively, why they need not be accounted for

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despite being released under the parties’ agreement.

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IV.

CONCLUSION

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While the court acknowledges and strives to further the strong judicial policy

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favoring settlement, it cannot simply rubber stamp a class action settlement because it promises

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recovery and follows years of hard-fought litigation. The motion is DENIED without prejudice to

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a renewed motion that adequately addresses the court’s remaining concerns described above.

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Assuming plaintiffs wish to renew the motion, they may do so by filing a notice of renewal and

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reliance on prior briefing, with supplemental briefing focusing on only the issues called out by this

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order.

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IT IS SO ORDERED.
DATED: August 22, 2019.

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UNITED STATES DISTRICT JUDGE

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