Castillo v. ADT, LLC

Filing 48

ORDER signed by Senior Judge William B. Shubb on 10/31/16 GRANTING 44 Motion for Preliminary Approval of Settlement, Certifying Class, Directing Notice. ORDERING Motions for attorneys' fees should be filed by 12/29/2016; Parties briefs in support of final approval of settlement are due by 12/29/2016. ORDERING Final Fairness Hearing is SCHEDULED for 1/23/2017 at 01:30 PM in Courtroom 5 (WBS) before Senior Judge William B. Shubb. (Washington, S)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RICARDO CASTILLO,
individually and on behalf of
all others similarly
situated,

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MEMORANDUM AND ORDER RE: MOTION
FOR PRELIMINARY APPROVAL OF
CLASS ACTION SETTLEMENT

Plaintiff,

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CIV. NO. 2:15-383 WBS DAD

v.
ADT LLC and DOES 1 through
100 inclusive,

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Defendant.

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Plaintiff Ricardo Castillo brought this putative class

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action against defendant ADT LLC, alleging that defendant

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violated various California wage and hour laws.

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Compl. (“SAC”) (Docket No. 42).)

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plaintiff’s motion for preliminary approval of a class action

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settlement reached between the two parties.

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No. 44).)

(Second Am.

Presently before the court is

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(Pl.’s Mot. (Docket

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I.

Factual and Procedural Background
Defendant provides electronic security, alarm, and home

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and business automation services throughout the United States.

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(Pl.’s Mot., Mem. (“Pl.’s Mem.”) at 3.)

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twenty locations in California, each of which employs “non-exempt

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High Volume Installers” (“class members”).

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Defendant operates some

(Id. at 1-3.)

Plaintiff, a non-exempt high volume installer, contends

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that defendant violated California wage and hour laws by paying

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class members pursuant to a wage policy that fails to compensate

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them for off-the-clock work, such as traveling between customer

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sites and picking up supplies from warehouses.

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underpaying class members pursuant to that policy, plaintiff

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alleges, defendant also under-calculates their overtime rate,

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which must be “at least one and one-half times [their] regular

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rate of pay” under California law.

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that defendant failed to “reimburse [class members] for necessary

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business expenses and provide compliant itemized wage

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statements.”

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(Id.)

(Id. at 2-3.)

By

Plaintiff also alleges

(Id. at 1.)

Based on these allegations, plaintiff asserts the

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following claims against defendant: (1) failure to pay proper

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overtime and/or minimum wages, Cal. Lab. Code §§ 510 and 1194;

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(2) failure to timely pay earned wages, Cal. Lab. Code § 204; (3)

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failure to provide adequate pay stubs, Cal Lab. Code § 226; (4)

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continuing wages, Cal. Lab. Code § 203; (5) failure to reimburse

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expenses, Cal. Lab. Code § 2802; (6) unfair competition, Cal.

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Bus. and Prof. Code § 17200 et seq.; (7) civil penalties pursuant

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to the Labor Code Private Attorneys General Act (“LCPAGA”), Cal.

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Lab. Code § 2699.3(a)(2)(C); and (8) failure to provide or
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compensate for rest breaks, Cal. Lab. Code § 226.7 and Industrial

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Welfare Commission Order 4.

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(SAC at 14-21.)

Plaintiff seeks to certify a class of “non-exempt

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individuals employed by ADT in California as high volume

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installers who were paid for services performed at any time from

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April 18, 2013 to the date of preliminary approval of this

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Settlement Agreement” (“settlement class”).

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Claxton Ex. E., Settlement Agreement ¶ 2.23 (Docket No. 46-6).)

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Plaintiff seeks, on behalf of himself and the class, damages

(Decl. of Linda

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allegedly accrued during the “period between April 18, 2013 and

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the date of Preliminary Approval of this Settlement Agreement”

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(“class period”).

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(Id. ¶ 2.26.)

Plaintiff and defendant litigated this case for over a

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year before reaching a settlement agreement on April 24, 2016

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before a mediator.

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agreement, defendant agrees to pay a non-reversionary sum of

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$1,060,000 (“settlement amount”) in satisfaction of plaintiff’s

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class-wide claims.

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distributed as follows: (1) class counsel will apply for a fee of

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33% of the settlement amount--$349,800; (2) plaintiff will apply

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for an enhancement award not to exceed $5,000; (3) up to $16,000

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will be used for litigation expenses; (4) $8,000 will be paid to

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the class administrator; (5) $3,750 will be paid to the

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California Labor & Workforce Development Agency in satisfaction

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of defendant’s alleged penalties under LCPAGA; and (6) the

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remaining amount--approximately $677,450 (“class fund”)--will be

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distributed to the settlement class based on the number of weeks

(Pl.’s Mem. at 3-4.)

(Id. at 6.)

Under the terms of the

The settlement amount is to be

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each class member worked during the class period.1

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(Id. at 6-7.)

Plaintiff estimates that defendant will have employed

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some 362 class members, including himself, during the class

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period.

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forms, plaintiff estimates that each class member will receive an

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average recovery of $1,871, a sum which, according to plaintiff,

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“represents a recovery of a substantial percent of [each class

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member’s] actual damages.”

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all class members return their forms, the remaining amount will

(Id. at 1, 7.)

Assuming a 100% rate of return on claim

(Id. at 7.)

In the event that not

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be redistributed to those who do return their forms according to

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number of weeks worked during the class period.

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Plaintiff now seeks preliminary approval of the

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settlement agreement pursuant to Federal Rule of Civil Procedure

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23(e).

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II.

Discussion

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Rule 23(e) provides that “[t]he claims, issues, or
defenses of a certified class may be settled . . . only with the

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The parties agree that the class period is comprised of
two sub-periods: (1) a ‘piece rate’ period, during which
defendant allegedly paid class members pursuant to a piece rate
system; and (2) an ‘hourly rate’ period, during which defendant
allegedly paid class members pursuant to an hourly rate system.
(Pl.s’ Mem. at 1.) Ninety percent of class funds will go towards
compensating weeks worked during the ‘piece rate’ period, and ten
percent of class funds will go towards compensating weeks worked
during the ‘hourly rate’ period. (Id.) The implication of this
split is that defendant’s ‘piece rate’ system undercompensated
class members more severely than its ‘hourly rate’ system did.
(See Decl. of Alan Harris ¶ 10 (“The plan of allocation was
negotiated in such a way as to fairly allocate the recovery among
Class Members in accordance with Plaintiff‘s theories of
potential damages as well as the relative strengths and
weaknesses of the claims . . . .”) (Docket No. 45).) The court
finds no reason to doubt the fairness of this allocation.
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court’s approval.”

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involves a two-step process in which the Court first determines

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whether a proposed class action settlement deserves preliminary

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approval and then, after notice is given to class members,

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whether final approval is warranted.”

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Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004)

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(citing Manual for Complex Litig., Third, § 30.41 (1995)).

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This Order is the first step in that process and

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analyzes only whether the proposed class action settlement

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

“Approval under 23(e)

Nat’l Rural Telecomms.

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deserves preliminary approval.

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Co., 266 F.R.D. 468, 473 (E.D. Cal. 2010).

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authorizes the parties to give notice to putative class members

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of the settlement agreement and lays the groundwork for a future

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fairness hearing, at which the court will hear objections to (1)

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the treatment of this litigation as a class action and (2) the

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terms of the settlement.

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Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989) (stating that a

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district court’s obligation when considering dismissal or

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compromise of a class action includes holding a hearing to

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“inquire into the terms and circumstances of any dismissal or

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compromise to ensure that it is not collusive or prejudicial”).

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The court will reach a final determination as to whether the

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parties should be allowed to settle the class action on their

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proposed terms after that hearing.

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See Murillo v. Pac. Gas & Elec.
Preliminary approval

See id.; Diaz v. Trust Territory of

The Ninth Circuit has declared a strong judicial policy

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favoring settlement of class actions.

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of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992).

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where, as here, “the parties reach a settlement agreement prior
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Class Plaintiffs v. City
Nevertheless,

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to class certification, courts must peruse the proposed

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compromise to ratify both [1] the propriety of the certification

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and [2] the fairness of the settlement.”

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327 F.3d 938, 952 (9th Cir. 2003).

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Staton v. Boeing Co.,

The first part of this inquiry requires the court to

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“pay ‘undiluted, even heightened, attention’ to class

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certification requirements” because, unlike in a fully litigated

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class action suit, the court “will lack the opportunity . . . to

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adjust the class, informed by the proceedings as they unfold.”

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Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620 (1997); see

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

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The parties cannot “agree to certify a class that clearly leaves

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any one requirement unfulfilled,” and consequently the court

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cannot blindly rely on the fact that the parties have stipulated

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that a class exists for purposes of settlement.

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U.S. at 621-22 (stating that courts cannot fail to apply the

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requirements of Rule 23(a) and (b)).

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See Windsor, 521

The second part of this inquiry obliges the court to

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“carefully consider ‘whether a proposed settlement is

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fundamentally fair, adequate, and reasonable,’ recognizing that

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‘[i]t is the settlement taken as a whole, rather than the

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individual component parts, that must be examined for overall

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fairness . . . .’”

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F.3d at 1026); see also Fed. R. Civ. P. 23(e) (outlining class

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action settlement procedures).

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A.

Staton, 327 F.3d at 952 (quoting Hanlon, 150

Class Certification
A class action will be certified only if it meets the

four prerequisites identified in Rule 23(a) and additionally fits
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within one of the three subdivisions of Rule 23(b).

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P. 23(a)-(b).

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determining whether the moving party has satisfied each Rule 23

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requirement, the court must conduct a rigorous inquiry before

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certifying a class.

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(1979); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982).

Fed. R. Civ.

Although a district court has discretion in

See Califano v. Yamasaki, 442 U.S. 682, 701

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1.

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Rule 23(a) restricts class actions to cases where:

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Rule 23(a)

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

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

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to as numerosity, commonality, typicality, and adequacy of

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representation.

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a.

These requirements are commonly referred

Numerosity

Under the first requirement, “[a] proposed class of at

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least forty members presumptively satisfies the numerosity

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requirement.”

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456 (C.D. Cal. 2012); see also, e.g., Collins v. Cargill Meat

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Solutions Corp., 274 F.R.D. 294, 300 (E.D. Cal. 2011) (Wanger,

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J.) (“Courts have routinely found the numerosity requirement

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satisfied when the class comprises 40 or more members.”).

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plaintiff estimates that the settlement class will contain “some

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362 Class Members.”

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numerosity requirement.

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Avilez v. Pinkerton Gov’t Servs., 286 F.R.D. 450,

b.

(Pl.’s Mem. at 1.)

Here,

This satisfies Rule 23’s

Commonality

Commonality requires that the class members’ claims
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“depend upon a common contention” that is “capable of classwide

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resolution--which means that determination of its truth or

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

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each one of the claims in one stroke.”

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Dukes, 131 S. Ct. 2541, 2550 (2011).

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and law need not be common to satisfy the rule,” and the

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“existence of shared legal issues with divergent factual

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

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coupled with disparate legal remedies within the class.”

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Wal-Mart Stores, Inc. v.

“[A]ll questions of fact

Hanlon,

150 F.3d at 1019.

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Here, the settlement class is comprised of “current and

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former ADT High Volume Installers employed in California during

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the class period.”2

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plaintiff, would be alleging that defendant paid them pursuant to

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a wage policy that fails to compensate them for off-the-clock

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work, under-calculates overtime pay, fails to reimburse business

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expenses, and fails to provide compliant wage statements.

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id. at 2-3.)

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facts--payment pursuant to a single wage policy--which gives rise

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to the same legal contentions--violations of California wage and

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hours laws.

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commonality requirement.

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Such individuals, like

(See

Thus, the class shares a common core of salient

Accordingly, the settlement class meets Rule 23’s

c.

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(Pl.’s Mem. at 7.)

Typicality

Typicality requires that the named plaintiff have

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Plaintiff refers to the settlement class as “non-exempt
high volume installers” in some instances and just “high volume
installers” in others. (Compare Pl.’s Mem. at 1, with id. at 7.)
The court assumes that both refer to the same set of 362
individuals.
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claims “reasonably coextensive with those of absent class

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members,” but does not require their claims to be “substantially

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identical.”

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

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

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named plaintiff[], and whether other class members have been

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injured by the same course of conduct.”

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Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citation omitted).

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Hanlon, 150 F.3d at 1020.

The test for typicality

Hanon v. Dataproducts

As discussed above, plaintiff alleges that he suffers

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the same injury as the rest of the class--underpayment of wages--

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and that their injuries arise from the same conduct--defendant’s

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use of an unlawful wage policy.

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Accordingly, plaintiff has met Rule 23’s typicality requirement.3

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d.

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(Pl.’s Mem. at 2-3.)

Adequacy of Representation

Rule 23(a)(4) requires a showing that the proposed

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class representatives “will fairly and adequately protect the

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interests of the class.”

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whether plaintiff has met that requirement, the court must answer

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two questions: “(1) do the named plaintiff[] and [his] counsel

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have any conflicts of interest with other class members and (2)

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will the named plaintiff[] and [his] counsel prosecute the action

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vigorously on behalf of the class?”

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

In deciding

Hanlon, 150 F.3d at 1020.

With respect to the first question, plaintiff states
that he shares the class’s interest in receiving full
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Plaintiff’s allegation that he worked during both the
‘piece rate’ period and the ‘hourly rate’ period, (see SAC ¶ 6),
addresses any questions that may arise as to whether his claim is
typical of those of class members who may have worked only ‘piece
rate’ or ‘hourly rate’ periods.

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compensation for work he performed for defendant.

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5.)

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While plaintiff plans to apply for a $5,000 incentive award,4

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federal courts have generally held that such awards do not create

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conflicts of interest as to defeat class settlements.

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Staton, 327 F.3d at 977–78 (holding that “reasonable incentive

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payments” do not create conflicts of interest as to defeat class

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settlements); Hopson v. Hanesbrands Inc., Civ. No. 08-0844 EDL,

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2009 WL 928133, at *10 (N.D. Cal. Apr. 3, 2009) (“In general,

(Pl.’s Mem. at

The court finds no reason to doubt that representation.

See

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courts have found that $5,000 incentive payments are

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reasonable.”); Alberto v. GMRI, Inc., 252 F.R.D. 652, 669 (E.D.

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Cal. 2008) (holding the same).

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with respect to class counsel’s plans to apply for a 33%

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attorneys’ fee.

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AC, 2016 WL 3538354, at *4 (E.D. Cal. June 28, 2016) (counsel’s

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application for 33% fee does not defeat class certification).

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Accordingly, the court finds that plaintiff and his counsel do

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not have conflicts of interest that prevent them from

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representing the class.

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The courts have held the same

See Garnett v. ADT, LLC, No. CV 2:14-02851 WBS

“Although there are no fixed standards by which [the

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second question of Hanlon] can be assayed, considerations include

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competency of counsel and . . . an assessment of the rationale

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for not pursuing further litigation.”

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Here, plaintiff has provided evidence that “Class Counsel have

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Hanlon, 150 F.3d at 1021.

As justification for the award, plaintiff states that
he “expended considerable time conferring with Class Counsel and
their investigators, providing factual background and support,
and analyzing ADT provided data.” (Pl.’s Mem. at 8.) Plaintiff
“also travelled to San Francisco to participate in the two
mediation sessions.” (Id.)
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substantial experience in prosecuting class actions, including

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wage-and-hour matters.”

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counsel each have years of experience litigating multi-million

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dollar wage-and-hour matters) (Docket No. 45).)

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decided to forgo further litigation after engaging in

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“voluminous” discovery, “diligent[]” investigation, two “lengthy”

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mediation sessions, and assessment of the “risks of further

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litigation of this matter,” including “risks to maintenance of

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class certification, risk of loss on the merits at trial, and

(Decl. of Alan Harris ¶¶ 20-22 (class

Class counsel

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risk of an appeal.”

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no reason to doubt plaintiff or class counsel’s vigor in

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representing the class, it holds that they have satisfied Rule

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23(a)’s adequacy assessment for purposes of preliminary approval.

(Id. at 2-3, 15.)

Because the court finds

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2.

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An action that meets all the prerequisites of Rule

Rule 23(b)

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23(a) may be certified as a class action only if it also

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satisfies the requirements of one of the three subdivisions of

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Rule 23(b).

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

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Cir. 2013).

Plaintiff seeks certification under Rule 23(b)(3),

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

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“the court finds that questions of law or fact common to class

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members predominate over questions affecting only individual

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members” and (2) “that a class action is superior to other

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available methods for fairly and efficiently adjudicating the

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controversy.”

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

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

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

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balance between individual and common issues.”
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Murillo, 266

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

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Windsor, 521 U.S. at 623 (“The Rule 23(b)(3) predominance inquiry

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tests whether proposed classes are sufficiently cohesive to

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warrant adjudication by representation.”).

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As explained in the ‘commonality’ analysis, the claims

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of class members in this case appear to raise similar, if not

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identical questions of fact and law.

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worked during the class period will likely differ from class

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member to class member, the Ninth Circuit has held that

Though the amount of time

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differences in damage calculations do not defeat a finding of

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predominance.

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1087, 1089 (9th Cir. 2010) (“[T]he amount of damages is

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invariably an individual question and does not defeat class

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action treatment.” (internal quotation marks and citation

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omitted)).

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fact and law predominate over individual issues in this case.

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Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d

Accordingly, the court finds that common questions of

With respect to whether “a class action is superior to

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other available methods for fairly and efficiently adjudicating

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the [present] controversy,” Rule 23(b)(3) sets forth four non-

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exhaustive factors to consider:

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(A) the class members’ interests in individually
controlling the prosecution or defense of separate
actions; (B) the extent and nature of any litigation
concerning the controversy already begun by or against
class members; (C) the desirability or undesirability
of concentrating the litigation of the claims in the
particular forum; and (D) the likely difficulties in
managing a class action.

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

The parties settled this action prior

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to certification, making factors (C) and (D) inapplicable.

See

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Murillo, 266 F.R.D. at 477 (citing Windsor, 521 U.S. at 620).
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With respect to factor (A), class members’ interest in

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individually litigating this case is likely low in light of the

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significant time and financial cost that individual litigation

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would likely require.

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that “[w]ithout settlement, the duration of further litigation is

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very likely to be several more years”).)

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contends that “a number of defenses” it intends to assert in this

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litigation--such as failure to exhaust administrative remedies,

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failure to mitigate, time bar under various statutes of

(See Pl.’s Mem. at 16 (plaintiff estimates

Moreover, defendant

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limitations, and reimbursement of the allegedly unreimbursed

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business expenses--“present serious threats to the claims of

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Plaintiff and the other Class Members.”

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Answer at 6-10 (Docket No. 31).)

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plaintiff’s representation that the settlement amount constitutes

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at least 33% of the maximum possible recovery further counsels

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against individual litigation.

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No. CV05-3222 R (MCX), 2007 WL 2827379, at *9 (C.D. Cal. Sept.

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10, 2007) (a “settlement amount representing 33% of maximum

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possible recovery was well within a reasonable range” (quoting In

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re Warfarin Sodium Antitrust Litig., 212 F.R.D. 231, 257 (D. Del.

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2002))), rev’d on other grounds in Rodriguez v. W. Publ’g Corp.,

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563 F.3d 948 (9th Cir. 2009).

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(Id. at 15; see also

In light of these obstacles,

See Rodriguez v. W. Pub. Corp.,

With respect to (B), the court is unaware of any

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concurrent litigation already begun by class members regarding

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plaintiff’s claims.5

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Objectors at the final fairness hearing may

Defendant recently settled a similar case before this
court--Garnett v. ADT, LLC, No. CV 2:14-02851 WBS AC, 2016 WL
3538354 (E.D. Cal. June 28, 2016). Garnett, however, dealt with
defendant’s alleged failure to reimburse vehicle expenses of and
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reveal otherwise.

See Alberto, 252 F.R.D. at 664.

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Because common issues of fact and law predominate in

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this action, and because the class action device appears to be

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the superior method of adjudicating the claims in this case, the

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court finds that plaintiff has satisfied Rule 23(b)’s

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certification requirement for purposes of preliminary approval.

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3.

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

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Rule 23(c)(2) Notice Requirements

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

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under the circumstances, including individual notice to all

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members who can be identified through reasonable effort.”

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

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content of a proposed notice.

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651, 658 (N.D. Cal. 1997) (citing Eisen v. Carlisle & Jacquelin,

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417 U.S. 156, 172–77 (1974)).

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“reasonably certain to inform the absent members of the plaintiff

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class,” actual notice is not required.

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1449, 1454 (9th Cir. 1994) (citation omitted).

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Fed.

Rule 23(c)(2) governs both the form and
See Ravens v. Iftikar, 174 F.R.D.

Although that notice must be

Silber v. Mabon, 18 F.3d

The parties agree that Dahl Administration (“Dahl”)

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will provide notice to the class and administer the claims

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process.

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seeking out and reviewing bids from “five established providers

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of the required services.”

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(Pl.’s Mem. at 9.)

The parties settled on Dahl after

(Id. at 11.)

The parties agree that within fourteen calendar days

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provide compliant wage statements to its sales representatives
and sales managers. See id. at *6-7. As the court noted in the
July 28, 2015 Order in this case, this case deals with different
factual allegations and claims. (See July 28, 2015 Order at 2
(Docket No. 25).)
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after preliminary approval, defendant will provide Dahl with a

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list of the last-known names, addresses, telephone numbers,

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social security numbers, and estimated recovery of each class

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member.

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customary procedures.”

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Notice and Claim Form to Class Members via first-class mail

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within twenty days of the Court’s Order granting Preliminary

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Approval.”

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will then be re-mailed to the forwarding address provided by the

(Id. at 12.)

Dahl will update the addresses “using all
(Id.)

(Id. 11-12.)

Dahl will then “deliver the Class

“Any Notices returned as undeliverable

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U.S. Postal Service or to an address located by the Settlement

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Administrator using customary skip-tracing methods.”

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12.)

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(Id. at

The class notice will explain: (1) the nature of this

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action, (2) the definition of the class, (3) plaintiff’s claims,

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(4) the settlement amount and its contemplated deductions, (5)

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the number of weeks each class member worked during the class

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period and their estimated minimum settlement award; (6) the

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binding effect of participating in the settlement, (7) the class

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member’s right to enter an appearance through an attorney; (8)

20

the class member’s right to request exclusion from the class, (9)

21

the timing and procedure for requesting exclusion, and (10) the

22

time and place of the final approval hearing.

23

The content of this notice satisfies Rule 23(c)(2)(B).

24

R. Civ. P. 23(c)(2)(B); see also Churchill Vill., L.L.C. v. Gen.

25

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

26

if it ‘generally describes the terms of the settlement in

27

sufficient detail to alert those with adverse viewpoints to

28

investigate and to come forward and be heard.’” (quoting Mendoza
15

(Id. at 2, 11.)
See Fed.

1

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

2

1980))).

3

The court is also satisfied with the parties’ claim

4

form, which reports the number of weeks worked during the class

5

period, provides an estimated settlement amount, specifies that

6

submission of the form is necessary for receipt of payment, and

7

provides the deadline for submission.

8

A, Claim Form at 1-2.)

9

for a different settlement sum based on a different number of

(Settlement Agreement Ex.

Class members who want to make a claim

10

weeks worked may set forth the information he or she believes to

11

be correct on the claim form and submit supporting documentation.

12

(Id. at 2.)

13

The court is satisfied that this system is reasonably

14

calculated to provide notice to class members and is the best

15

form of notice available under the circumstances.

16

B.

17

Preliminary Settlement Approval
After determining that the proposed class satisfies the

18

requirements of Rule 23, the court must determine whether the

19

terms of the parties’ settlement appear fair, adequate, and

20

reasonable.

21

1026.

22

factors,” including:

23
24
25
26
27
28

See Fed. R. Civ. P. 23(e)(2); Hanlon, 150 F.3d at

This process requires the court to “balance a number of

the strength of the plaintiff’s case; the risk,
expense, complexity, and likely duration of further
litigation; the risk of maintaining class action
status throughout the trial; the amount offered in
settlement; the extent of discovery completed and the
stage of the proceedings; the experience and views of
counsel; the presence of a governmental participant;
and the reaction of the class members to the proposed
settlement.
Hanlon, 150 F.3d at 1026.

Many of these factors cannot be
16

1

considered until the final fairness hearing, so the court need

2

only conduct a preliminary review at this time to resolve any

3

“glaring deficiencies” in the settlement agreement before

4

authorizing notice to class members.

5

No. 2:08-567 WBS DAD, 2014 WL 3057506, at *12 (E.D. Cal. July 7,

6

2014) (citing Murillo, 266 F.R.D. at 478).

7

Ontiveros v. Zamora, Civ.

At the preliminary stage, “the court need only

8

‘determine whether the proposed settlement is within the range of

9

possible approval.’”

Murillo, 266 F.R.D. at 479 (quoting

10

Gautreaux v. Pierce, 690 F.2d 616, 621 n.3 (7th Cir. 1982)).

11

This generally requires consideration of “whether the proposed

12

settlement discloses grounds to doubt its fairness or other

13

obvious deficiencies, such as unduly preferential treatment of

14

class representatives or segments of the class, or excessive

15

compensation of attorneys.”

16

Inc., Civ. No. 04-0438 WBS GGH, 2006 WL 1652598, at *11-12 (E.D.

17

Cal. June 13, 2006)).

18

approved class settlements with minor defects while giving the

19

parties the opportunity to correct those defects.”

20

Dutch LLC, No. 314CV02418GPCJLB, 2016 WL 1644700, at *8 (S.D.

21

Cal. Apr. 26, 2016).

Id. (quoting W. v. Circle K Stores,

“District Courts have preliminarily

Hofmann v.

22

1.

23

Courts often begin by examining the process that led to

24

the settlement’s terms to ensure that those terms are “the result

25

of vigorous, arms-length bargaining” and then turn to the

26

substantive terms of the agreement.

27

1652598, at *11-12; In re Tableware Antitrust Litig., 484 F.

28

Supp. 2d 1078, 1080 (N.D. Cal. 2007) (“[P]reliminary approval of

Negotiation of the Settlement Agreement

17

See, e.g., W., 2006 WL

1

a settlement has both a procedural and a substantive

2

component.”).

3

Here, the parties reached the settlement agreement

4

after engaging in “voluminous” discovery, “diligent[]”

5

investigation, motion practice, assessment of the “risks of

6

further litigation,” and two “lengthy” mediation sessions at

7

which “they each aggressively advocated for their respective

8

positions.”

9

court finds no reason to doubt the parties’ representation that

(Id. at 2-3, 15.)

In light of these efforts, the

10

the settlement was the result of vigorous, arms-length

11

bargaining.

12

5:13-00398, 2014 WL 2967475, at *4 (N.D. Cal. June 25, 2014)

13

(“Settlements reached with the help of a mediator are likely non-

14

collusive.”)

15

2.

16

In determining whether a settlement agreement is

See La Fleur v. Med. Mgmt. Int’l, Inc., Civ. No.

Amount Recovered and Distribution

17

substantively fair to the class, the court must balance the value

18

of expected recovery against the value of the settlement offer.

19

See Tableware, 484 F. Supp. 2d at 1080.

20

consideration of the uncertainty class members would face if the

21

case were litigated to trial.

22

*14.

23

This inquiry may involve

See Ontiveros, 2014 WL 3057506, at

Here, plaintiff settled the case for $1,060,000, a sum

24

which represents at least 33% of the maximum possible recovery.

25

(See Pl.’s Mem. at 16.)

26

reasonable range when compared with recovery percentages in other

27

class action settlements.”

28

(quoting In re Warfarin Sodium Antitrust Litig., 212 F.R.D. at

That settlement amount is “well within a

Rodriguez, 2007 WL 2827379, at *9

18

1

257).

2

“payroll, time punch and commission earning data.”

3

at 4.)

The parties decided upon that amount after considering

4

(Pl.’s Mem.

The court notes that the settlement agreement requires

5

class members to take the affirmative step of opting in to

6

receive payment and opting out if they do not wish to be part of

7

the settlement class.

8

Class Action Settlement at 1-3.)

9

request to be excluded will release defendant from the claims

(See Settlement Agreement Ex. B, Notice of
Class members who do not

10

asserted in this action.

11

that some class members will opt into the judgment by default,

12

thus releasing defendant, but also receive no recovery because

13

they fail to timely return the claim form.

14

(Id. at 3.)

Therefore, there is a risk

While the settlement amount represents only a fraction

15

of the possible recovery and the agreement contains a potentially

16

unfair opt-in/opt-out requirement, there are many uncertainties

17

associated with further litigation that justify this settlement.

18

Specifically, defendant asserts some twenty-three defenses

19

against plaintiff’s claims, such as failure to exhaust

20

administrative remedies, failure to mitigate, time bar under

21

various statutes of limitations, and reimbursement of the

22

allegedly unreimbursed business expenses.

23

Defendant believes these and other defenses “present serious

24

threats to the claims of Plaintiff and the other Class Members.”

25

(Pl.’s Mem. at 15.)

26

“duration of [this] litigation is very likely to be several more

27

years.”

28

(See Answer at 6-10.)

Without settlement, plaintiff estimates that

(Id. at 16.)
In light of these uncertainties, the court will grant
19

1

preliminary approval to the settlement agreement because the

2

settlement amount is within the range of possible approval.

3

Murillo, 266 F.R.D. at 479 (quoting Gautreaux, 690 F.2d at 621

4

n.3).

5

3. Attorneys’ Fees

6

If a negotiated class action settlement includes an

7

award of attorneys’ fees, that fee award must be evaluated in the

8

overall context of the settlement.

9

312 F.3d 1123, 1126 (9th Cir. 2002); Monterrubio, 291 F.R.D. at

Knisley v. Network Assocs.,

10

455.

11

the award, like the settlement itself, is reasonable, even if the

12

parties have already agreed to an amount.”

13

Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011).

14

The court “ha[s] an independent obligation to ensure that

In re Bluetooth

The settlement agreement provides that class counsel

15

will apply to the court for a fee award of 33% of the gross

16

settlement amount, or $349,800.

17

Attorneys’ fees are to be paid from the settlement amount.

18

Defendant agrees not to oppose class counsel’s petition for the

19

fee award so long as the award does not exceed 33%.

20

parties agree that the settlement agreement is not contingent

21

upon court approval of the full amount of the requested

22

attorneys’ fees and that a court order granting a lesser fee will

23

not invalidate the settlement agreement.

24

(Settlement Agreement ¶ 5.1.)

(Id.)

(Id.)

The

(Id.)

In deciding the attorneys’ fees motion, the court will

25

have the opportunity to assess whether the requested fee award is

26

reasonable by multiplying a reasonable hourly rate by the number

27

of hours class counsel reasonably expended.

28

Gurantee Mut. Life. Co., 214 F.3d 1041, 1045 (9th Cir. 2000).
20

See Van Gerwen v.
As

1

part of this lodestar calculation, the court may take into

2

account factors such as the “degree of success” or “results

3

obtained” by class counsel.

4

Angeles, 879 F.2d 481, 488 (9th Cir. 1988).

5

ruling on the fees motion, finds that the amount of the

6

settlement warrants a fee award at a rate lower than what class

7

counsel requests, then it will reduce the award accordingly.

8

court will therefore not evaluate the fee award at length here in

9

considering whether the settlement is adequate.

10

See Cunningham v. County of Los
If the court, in

The

IT IS THEREFORE ORDERED that plaintiff’s motion for

11

preliminary certification of a conditional settlement class and

12

preliminary approval of the class action settlement be, and the

13

same hereby is, GRANTED.

14

IT IS FURTHER ORDERED THAT:

15

(1) The claims administrator shall notify class members

16

of the settlement agreement in the manner specified within the

17

settlement agreement (Docket No. 46-6);

18

(2) Class members who want to receive a settlement

19

payment under the settlement agreement must complete and postmark

20

the claim form for delivery to the address indicated on the claim

21

form no later than forty-five calendar days after the date the

22

class notices are mailed;

23

(3) Class members who want to object to the settlement

24

agreement must postmark a written objection for delivery to the

25

address indicated on the claim form no later than forty-five

26

calendar days after the date the class notices are mailed.

27

objection must include the objecting person’s full name, current

28

address, telephone number, signature, a statement that the person
21

The

1

qualifies as a class member, all objections and reasons for the

2

objections, and any supporting papers.

3

submits an objection remains eligible to submit a claim form and

4

receive monetary compensation;

5

Any class member who

(4) Class members who fail to object to the settlement

6

agreement in the manner specified above shall be deemed to have

7

waived their right to object to the settlement agreement and any

8

of its terms;

9

(5) Class members who want to be excluded from the

10

settlement must complete and postmark the claim form for delivery

11

to the address indicated on the claim form no later than forty-

12

five calendar days after the date the class notices are mailed.

13

Class members who opt out shall not receive any settlement

14

proceeds or be bound by any of the terms of the settlement,

15

including its release provisions;

16

(6) The settlement class is provisionally certified as

17

all non-exempt individuals employed by ADT in California as high

18

volume installers who were paid for services performed at any

19

time from April 18, 2013 to the date this Order is signed;

20

(7) plaintiff Ricardo Castillo is conditionally

21

certified as the class representative to implement the parties’

22

settlement in accordance with the settlement agreement.

23

Harris and Priya Mohan of Harris & Ruble, and David S. Harris of

24

North Bay Law Group, are conditionally appointed as class

25

counsel.

26

protect the class’s interests;

27
28

Alan

Plaintiff and counsel must fairly and adequately

(8) The parties agree that Dahl Administration will
serve as the claims administrator;
22

1

(9) If the settlement agreement terminates for any

2

reason, the following will occur: (a) class certification will be

3

automatically vacated; (b) plaintiff will stop functioning as

4

class representative; and (c) this action will revert to its

5

previous status in all respects as it existed immediately before

6

the parties executed the settlement agreement;

7

(10) All discovery and pretrial proceedings and

8

deadlines are stayed and suspended until further notice from the

9

court, except for such actions as are necessary to implement the

10

settlement agreement and this Order;

11

(11) The final fairness hearing is set for January 23,

12

2017 at 1:30 p.m., in Courtroom No. 5, to determine whether the

13

settlement agreement should be finally approved as fair,

14

reasonable, and adequate;

15
16

(12) The following are the certain associated dates in
this settlement:

17

(a) The claims administrator shall send notice of

18

the settlement to the settlement class pursuant to the parties’

19

notice plan by November 21, 2016;

20

(b) Class members shall complete and postmark

21

objections, requests for exclusion, and claim forms by January 5,

22

2017;

23
24

(c) Plaintiff shall file a motion for attorneys’
fees no later than December 29, 2016;

25

(13) The parties shall file briefs in support of the

26

final approval of the settlement no later than December 29, 2016.

27

Dated:

October 31, 2016

28
23