Acosta v. Evergreen Moneysource Mortgage Company

Filing 43

ORDER signed by District Judge Kimberly J. Mueller on 8/10/18, ORDERING that the court preliminarily CERTIFIES the class; preliminarily APPROVES the class settlement; APPOINTS Jared Acosta as class representative; APPOINTS Galen T. Shimoda and Just in P. Rodriguez of the Shimoda Law Corp. as class counsel; APPOINTS Simpluris, Inc., as claims administrator; APPROVES the notice, briefing and hearing schedule as described in this order and DIRECTS notice to the putative class members in the time and manner proposed. This order resolves 31 Motion for Preliminary Approval of Class Action Settlement. (Kastilahn, A)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11

JARED ACOSTA,

12

Plaintiff,

13
14
15
16

No. 2:17-CV-00466-KJM-DB

v.

ORDER

EVERGREEN MONEYSOURCE
MORTGAGE COMPANY, a Washington
Corporation; and DOES 1 to 100,
inclusive,
Defendants.

17

Plaintiff contends his former employer, defendant Evergreen, forbids its loan

18
19

originators from earning proper wages and accruing paid sick leave and vacation benefits. He

20

sues Evergreen for wage, hour and rest break violations on behalf of himself and all similarly

21

situated California employees. Plaintiff’s unopposed motion for preliminary approval of the

22

proposed class, proposed class counsel and claims administrator, proposed class settlement, and

23

proposed implementation schedule is before the court. Mot., ECF No. 31. The court held a

24

hearing on May 18, 2018. As explained below, the court GRANTS plaintiff’s motion.

25

I.

26

BACKGROUND
From September 2015 to October 2016, plaintiff worked for defendant as a Loan

27

Originator. See First Am. Compl. (“FAC”), ECF No. 18, ¶ 14. Plaintiff alleges he was denied

28

paid rest periods, sick days, and vacation time; that his wage and commissions were untimely;
1

1

and that he received inaccurate wage statements. See id. ¶¶ 14-46. Plaintiff contends these

2

unlawful practices affected all members of the putative class, which he defines as follows:

3

All employees who have, or continue to work for Defendant within
California, except for those classified as outside sales employees,
who were paid by commissions only or commissions in conjunction
with a draw against commissions from January 24, 2013 to the
Court’s entry of an order preliminarily approving the class action
settlement.

4
5
6
7

See Mot. at 12. The complaint proposed three subclasses, but plaintiff seeks now to certify only

8

the broader class described above. See Stipulated Class Action Settlement and Release

9

Agreement, Ex. A, ECF No. 34 (“Agreement”) § 1.5; see also see FAC ¶ 10(1)-(3). On behalf of

10

the putative class, plaintiff asserts the following five causes of action: (1) Failure to provide paid

11

rest periods, Cal. Lab. Code § 226.7; (2) failure to pay wages at termination, id. §§ 201-03;

12

(3) failure to provide accurate wage statements, id. § 226(a); (4) violations of the Private

13

Attorneys General Act (“PAGA”), Cal. Lab. Code §§ 2698, et seq.; (5) violations of the Unfair

14

Competition Law, Cal. Bus. & Prof. Code §§ 17200-08. FAC ¶¶ 21-46.

15

Plaintiff filed this action in state court in January 2017. Ex. A, ECF No. 1.

16

Defendant removed the case to federal court based on diversity jurisdiction, and the court denied

17

plaintiff’s motion to remand. See ECF Nos. 1, 9, 17. On March 2, 2018, after a year of informal

18

discovery and a full day of mediation, the parties notified the court of a class settlement. ECF

19

No. 29; Decl. of Pl.’s Counsel Justin P. Rodriguez, ECF No. 32, ¶¶ 8-13. A month later, plaintiff

20

filed this unopposed motion to preliminarily approve the class and settlement.

21

II.

LEGAL STANDARD

22

Rule 23 permits class action settlements “only with the court’s approval” “after a

23

hearing and on a finding” that the agreement is “fair, reasonable, and adequate.” Fed. R. Civ. P

24

23(e). Courts certify proposed class-settlement actions in two phases. First, the court holds a

25

preliminary fairness hearing to determine whether provisional class certification is appropriate

26

and whether the proposed settlement is fair. Then, after all absent class members are notified

27

about the litigation and given a chance to opt-out or object, the court holds a final fairness

28

hearing. See In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011).
2

1

Here, the court performs the preliminary step only. Although there is a strong

2

judicial policy favoring class action settlements, Adoma v. Univ. of Phoenix, Inc., 913 F. Supp. 2d

3

964, 972 (E.D. Cal. 2012) (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir.

4

1992)), when a settlement is reached before class certification, the court pays close attention to

5

any “evidence of collusion or other conflicts.” See Bluetooth, 654 F.3d at 946 (citation omitted).

6

This independent judicial review protects the due process rights of absent class members who

7

have not yet appeared; this protection is particularly crucial where, as here, the settlement

8

agreement is negotiated in their absence. Id. (describing fairness assessment and its motivations);

9

Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157, 1168 (9th Cir. 2013).

10

The burden is on plaintiff to persuade the court that the class certification and

11

fairness requirements are satisfied. See Mantolete v. Bolger, 767 F.2d 1416, 1424 (9th Cir. 1985),

12

as amended (Aug. 27, 1985) (“the plaintiff bears the burden of advancing a prima facie showing

13

that the class action requirements of Fed. R. Civ. P. 23 are satisfied”); Mitchinson v. Love’s

14

Travel Stops & Country Stores, Inc., No. 115-CV-01474-DAD-BAM, 2016 WL 7426115, at *4

15

(E.D. Cal. Dec. 22, 2016) (same).

16

III.

17

CLASS CERTIFICATION
The parties have stipulated to conditional class certification. Nonetheless, the

18

court must independently scrutinize the proposed class to ensure it is provisionally appropriate for

19

certification. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 622 (1997).

20

First, the court asks if the proposed class is “precise, objective, and presently

21

ascertainable.” Williams v. Oberon Media, Inc., No. 09-8764, 2010 WL 8453723, at *2 (C.D.

22

Cal. Apr. 19, 2010). These criteria are designed to ensure each class member is properly

23

identified and notified about the class action. See In re TFT-LCD (Flat Panel) Antitrust Litig.,

24

267 F.R.D. 583, 592-93 (N.D. Cal. 2010). Here, the putative class consists of “[a]ll employees

25

who have, or continue to work for Defendant within California, except for those classified as

26

outside sales employees, who were paid by commissions only or commissions in conjunction

27

with a draw against commissions.” Mot. at 12. The class is also time-constrained, spanning from

28

January 24, 2013 until the preliminary approval date. Id. Plaintiff estimates the class
3

1

encompasses 59 California employees. Id. Their proposed definition is ascertainable, precise and

2

objective.

3

Next, the putative class must meet Rule 23’s threshold requirements. See Fed. R.

4

Civ. P. 23(a)(1)-(4), (b)(3). Rule 23 requires that the class contain enough members to warrant

5

litigating the issues as a class rather than individually; the suit involves questions common to all

6

class members; the proposed class representative’s claims typify the class members’ claims; and

7

the proposed class representative and his counsel fairly and adequately protect class interests.

8

Fed. R. Civ. P. 23(a)(1)-(4). Plaintiff must also show that the common class questions

9

“predominate” over any individual member questions and that a class action is the superior

10

method of vindicating the rights at issue. Fed. R. Civ. P. 23(b)(3).

11

This preliminary Rule 23 examination helps to avoid unnecessarily notifying class

12

members of a class action later deemed improper. See Fed. R. Civ. P. 23(e)(1) (court must direct

13

class member notification soon after certification). Again, plaintiff has the burden to show the

14

putative class meets each requirement. Mantolete, 767 F.2d at 1424.

15
16

A.

Numerosity
The class must be “so numerous that joinder of all members is impracticable.”

17

Fed. R. Civ. P. 23(a)(1). Generally, plaintiff need only show that joining all members of the class

18

would be “difficult” or “inconvenient.” Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d

19

909, 913 (9th Cir. 1964) (citation omitted); Johnson v. Serenity Transp. Inc., No. 15-CV-02004-

20

JSC, 2018 WL 3646540, at *6 (N.D. Cal. Aug. 1, 2018) (citing Harris).

21

Here, the proposed class is 59 members. Mot. at 16. There is no numerical

22

threshold, but courts presume classes of 40 plus members are sufficiently numerous. See Rannis

23

v. Recchia, 380 F. App’x 646, 651 (9th Cir. 2010) (citation omitted). Although 59 is on the

24

smaller side, courts have frequently approved similar class sizes. See Vanwagoner v. Siemens

25

Industry, Inc., No. 2:13-cv-01303-KJM-EFB, 2014 WL 1922731, * 4 (E.D. Cal. May 14, 2014)

26

(citing cases approving 39, 51, 64, and 71-member classes); Murillo v. Pac. Gas & Elec. Co., 266

27

F.R.D. 468, 474 (E.D. Cal. 2010) (collecting cases certifying classes of fewer than one hundred

28

members); Leyva v. Buley, 125 F.R.D. 512, 515 (E.D. Wash. 1989) (certifying 50-member class);
4

1

cf. Gen. Tel. Co. Nw., 446 U.S. at 330 (class of fifteen would be too small). Plaintiff’s 59-

2

member putative class satisfies the numerosity requirement.

3
4

B.

Commonality, Typicality and Predominance
Plaintiff’s claims must be typical of the class, and there must be “questions of law

5

or fact common to the class” that “predominate” over individual questions. Fed. R. Civ. P.

6

23(a)(2), (b)(3). In essence, class litigation must, “in one stroke,” resolve an issue that is central

7

to each plaintiff’s claim. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Although

8

individual differences within a proposed class may impede common class answers, id., “some

9

variation” between individual employees and their respective damages is permissible. Alba v.

10

Papa John’s USA, No. CV 05-7487 GAF (CTX), 2007 WL 953849, at *10 (C.D. Cal. Feb. 7,

11

2007) (citations omitted) (“individual questions about the number of hours worked, wages earned,

12

and compensation paid . . . will not defeat certification.”); see also Leyva v. Medline Indus., Inc.,

13

716 F.3d 510, 513-14 (9th Cir. 2013) (individual damages determinations do not warrant

14

certification denial) (citations omitted).

15

Here, plaintiff has shown typicality, commonality and predominance. First,

16

plaintiff’s claims typify the class’s claims: Plaintiff and each class member allegedly held the

17

same position at roughly the same time, and allegedly were subjected to the same policies

18

regarding wages, commissions, hours, rest periods, sick leave and vacation accruals. See Acosta

19

Decl., ECF No. 33, ¶¶ 2-3; see also Ellis v. Costco Wholesale Corp., 657 F.3d 970, 984 (9th Cir.

20

2011) (courts ask “whether other members have the same or similar injury, whether the action is

21

based on conduct which is not unique to the named plaintiffs, and whether other class members

22

have been injured by the same course of conduct”) (citation and quotations omitted).

23

Second, the litigation poses common class questions. Plaintiff alleges five

24

common, allegedly unlawful practices that affected every class member: (1) Unpaid rest periods;

25

(2) unpaid wages owed at termination, which triggered waiting time penalties; (3) inaccurate

26

wage statements that included neither the employer’s full name nor the itemized rest period

27

premiums owed; (4) no paid sick leave; and (5) delayed termination wages. See generally FAC.

28
5

1

Whether each policy violates state law is a common class question with a common class answer.

2

See Rica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 810 (2011) (explaining answers to

3

common class questions should prove the elements of the underlying claims); Lilly v. Jamba

4

Juice Co., 308 F.R.D. 231, 241 (N.D. Cal. 2014).

5

Third, the common class questions “predominate” over individual questions. See

6

Fed. R. Civ. P. 23(b)(3). Each theory of recovery is based on defendants’ alleged common

7

practices and uniformly applied policies. Mot. at 17. The central issue is whether these

8

standardized policies, which affected every class member, are unlawful. See Wang v. Chinese

9

Daily News, Inc., 737 F.3d 538, 545 (9th Cir. 2013) (explaining predominance factor assesses

10

whether proposed class is cohesive enough to warrant representative adjudication) (citation

11

omitted); Brinker Restaurant Corp. v. Sup. Ct., 53 Cal. 4th 1004, 1033 (2012) (finding similar

12

wage and hour policy issues to be “the sort routinely, and properly, found suitable for class

13

treatment”) (citations omitted). The only individual question is how much each policy damaged a

14

particular employee, which is “invariably an individual question and does not defeat class action

15

treatment.” Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087, 1089 (9th Cir. 2010)

16

(quoting Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975)); see also Leyva, 716 F.3d at 513-

17

514 (reversing certification denial that was based on individual damages issues).

18
19
20

Plaintiff has established commonality, typicality and predominance.
C.

Adequacy
Plaintiff and plaintiff’s counsel must adequately represent the class interests. See

21

Fed. R. Civ. P. 23(a)(4). This factor depends on whether the named plaintiff and his counsel have

22

vigorously pursued the action on behalf of the class, and whether they have any conflicts of

23

interest with the class. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998).

24

Here, nothing before the court suggests a conflict of interest between class

25

members and plaintiff or plaintiff’s counsel. First, plaintiff and his counsel have sworn under

26

penalty of perjury they have no such conflicts. See Acosta Decl. ¶¶ 4-7; Rodriguez Decl. ¶¶ 8-13.

27

Second, as explained above, plaintiff shares common questions and injuries with the class, which

28

ensures a common goal. Third, plaintiff has proposed a single settlement class with all members
6

1

receiving a distribution based on the same formula, which eliminates any possible incentive to

2

favor one subclass over another. See Agreement § 1.5. Fourth, plaintiff’s class representative

3

enhancement award is not conditioned on the class representatives’ accepting the settlement

4

agreement. Id. § 5.3. These factors together reduce the potential for any conflicts. See Resnick v.

5

Frank, 779 F.3d 934, 943 (9th Cir. 2015) (finding no conflict where no structural differences in

6

claims of representative and other class members under settlement agreement and enhancement

7

awards not conditioned on representative’s approving settlement).

8

Additionally, during the time this action has been pending, the court finds no

9

reason to doubt plaintiff’s vigorous representation. Plaintiff and his counsel have remained active

10

in pursuing informal discovery and negotiations, and plaintiff’s nexus and common goal with the

11

class members described above likely will continue to motivate him. See Lodging

12

Acknowledgement, ECF No. 41 (acknowledging court’s receipt of both parties’ mediation briefs

13

detailing negotiations to date); see also Resnick, 779 F.3d at 943 (relevant inquiry” is whether

14

plaintiff maintains “sufficient interest in, and nexus with, the class” to ensure he vigorously

15

represents them). Lastly, plaintiff’s counsel are experienced in class litigation, and several courts

16

have previously deemed them “adequate” as class counsel in complex wage and hour class

17

actions. See Rodriguez Decl. ¶¶ 14-18.

18
19
20

Plaintiff has established adequacy.
D.

Superiority
A class action must also be the “superior” method of vindicating the rights at issue.

21

Fed. R. Civ. P. 23(b)(3). This factor warrants heightened attention because class action litigation

22

binds absent class members who may wish to adjudicate their rights in other ways. Windsor, 521

23

U.S. at 620 (citing Fed. R. Civ. P. 23(b)(3)(D)). A class action may be inferior to other

24

adjudication methods where, for instance, class members are already involved in similar litigation

25

or otherwise have a strong interest in individually controlling the litigation, or if the class action

26

would be difficult to manage at trial. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1190-

27

92 (9th Cir. 2001). A class action may be superior, however, if it allows class members to litigate

28
7

1

in a beneficial forum or if it potentially earns members a larger payout than would be available

2

individually. See Leyva, 716 F.3d 510.

3

Here, based on the record currently before the court, the class action method

4

appears superior to other potential adjudication methods. Difficulties in managing the class

5

action at trial are irrelevant here because this settlement class will not proceed to trial if it obtains

6

final approval. See Windsor, 521 U.S. at 620. There is no indication putative class members are

7

involved in separate litigation against the same defendant regarding similar issues. See Rodriguez

8

Decl. ¶10. If left to individual litigation or adjudication, class members may reap smaller rewards

9

than they would as part of this settlement class. See Leyva, 716 F.3d 510. Finally, the Eastern

10

District appears to be the proper forum: The class is composed California workers and the claims

11

are based on the California-based defendant’s alleged violations of California law. See Acosta

12

Decl. ¶2; Ex. B; Ex. A §§ 1.5, 1.6, 4.1. The superiority factor is satisfied.

13

E.

14

Class Certification Conclusion
Having satisfied Rule 23’s requirements, the motion to preliminarily certify the

15

class is GRANTED.

16

IV.

17
18

CLASS SETTLEMENT
A.

Legal Standard
The court next considers whether the proposed settlement appears “fair,

19

reasonable, and adequate.” Fed. R. Civ. P. 23(e); see also Hanlon, 150 F.3d at 1026. In doing so,

20

the court must examine the settlement as a whole, not each individual component. Hanlon, 150

21

F.3d at 1026 (noting settlement “must stand or fall in its entirety” and court may not “delete,

22

modify or substitute certain provisions”) (citations and quotations omitted). The court balances

23

“the strength of the plaintiffs’ case” against the risk, expense, complexity, and longevity of the

24

further litigation; the sum offered in settlement; the stage of proceedings and extent of discovery

25

to date; and counsels’ experience and opinions. Id. (citing Torrisi v. Tucson Elec. Power Co., 8

26

F.3d 1370, 1375 (9th Cir. 1993)).

27
28

When, as here, this analysis is performed before class certification, the “dangers of
collusion” and consequently “the need for additional protections” favor a “more probing inquiry
8

1

than may normally be required under Rule 23(e).” Id.; see also Cotter v. Lyft, Inc., 193 F. Supp.

2

3d 1030, 1035 (N.D. Cal. 2016). Specifically, the court assesses whether the settlement

3

agreement is the product of informed negotiations, free of collusion, favoritism or obvious

4

deficiencies. Lounibos v. Keypoint Gov’t Solutions Inc., No. 12-00636, 2014 WL 558675, at *5

5

(N.D. Cal. Feb. 10, 2014) (citation omitted).

6
7

B.

Discussion
The proposed agreement here satisfies the requirement for preliminary approval.

8

Save for the reservations noted below, the court finds the record contains no indication of

9

collusion, preferential treatment or obvious deficiencies, and the Agreement appears to be the

10
11

product of informed negotiations.
The Agreement, which contemplates a $350,000.00 settlement, occurred after a

12

year of informal discovery, contentious arm’s length discussions, and a full day of mediation

13

before an experienced, retired state judge. Rodriguez Decl. ¶¶ 8-9; see also Gribble v. Cool

14

Transports Inc., No. CV 06-04863 GAF SHX, 2008 WL 5281665, *9 (C.D. Cal. Dec. 15, 2008)

15

(settlements negotiated at arm’s length are presumed fair). Plaintiff’s counsel Rodriguez declares

16

he performed “substantial investigations concerning the scope of the class, their workweeks, class

17

member employment data”; obtained pertinent documents on defendant’s wage and hour policies;

18

“create[d] an accurate damages model”; and “perform[ed] reliable calculations to determine

19

defendant’s potential exposure.” Rodriguez Decl. ¶¶ 10-13.

20

Plaintiff and Rodriguez further declare “the proposed settlement is in the best

21

interest of the class.” Id. ¶¶ 7-13; Acosta Decl. ¶ 8. While acknowledging these declarations, the

22

court notes with concern the wide discrepancy between the sum plaintiff sought going into

23

mediation, almost $2.8 million, and the resulting settlement sum of $350,000.00. See Lodging

24

Notice and noting demand made in plaintiff’s mediation brief); cf. Acosta v. Trans Union, LLC,

25

243 F.R.D. 377, 389 (C.D. Cal. 2007) (denying motion for preliminary class settlement approval

26

in part because value of plaintiffs’ claims far exceeded value of settlement). In explaining how

27

the parties reached their settlement figure, Rodriguez states there are “risks and uncertainty” in

28

proving both “the alleged claims on the merits” and “in proving damages.” Rodriguez Decl. ¶ 9.
9

1

He further declares the settlement sum is fair in light of “the expected testimony from . . .

2

Defendant’s management personnel” as well as information revealed upon reviewing

3

“commission reports, paystubs, Defendant’s insurance policies, standard commission agreements,

4

documents reflecting commission paid upon separation or termination . . . and other documents

5

relating to the alleged claims.” Id. Finally, Rodriguez declares the proposed sum was informed

6

by the “length and risks of trial and other normal perils of litigation that impact the value of the

7

claims” as well as “the uncertainty of class certification, the difficulties of complex litigation, and

8

the lengthy process of establishing specific damages and various possible delays and appeals.”

9

Id.

10

Considering “[g]reat weight is accorded to the recommendation of counsel, who

11

are most closely acquainted with the facts of the underlying litigation,” these assurances are

12

sufficient to grant the pending motion at this preliminary stage. Nat’l Rural Telecomms. Coop. v.

13

DIRECTV, Inc., 221 F.R.D. 523, 528 (C.D. Cal. 2004). But the court will further scrutinize this

14

discrepancy before any final approval. Cf. Beidleman v. City of Modesto, No. 1:16-CV-01100-

15

DAD-SKO, 2018 WL 1305713, at *3 (E.D. Cal. Mar. 13, 2018) (scrutinizing discrepancy

16

between demand and settlement at final approval; ultimately noting demand was overstated and

17

finding settlement fair in light of “the complexity of this case and the difficulty the parties face in

18

estimating the likely value of plaintiffs’ claim without conducting an exact calculation”).

19

Again, at this early stage, the court finds the proposed class settlement to be fair

20

and reasonable. This approval, however, is not without reservation. The court reviews the core

21

settlement terms and notes five specific concerns.

22

1.

23

The proposed class settlement includes the following material terms. Defendant

Proposed Settlement Terms

24

agrees to pay a gross amount of $350,000 to settle all claims, excluding tax obligations.

25

Agreement § 5.1. Of this total, $20,000 is for plaintiff’s class representative enhancement award.

26

Id. § 5.3. The Agreement reserves up to $10,000 for claim administrator fees, with the remainder

27

reverting to the settlement fund to be divided as follows. Id. § 5.5. Up to $10,000.00 will go

28

towards the PAGA claims, three quarters of which are $7,500 will be paid to the State with the
10

1

remaining quarter of $2,500 paid to class. Id. § 5.4. Up to 25 percent of the total settlement

2

award is for plaintiff’s attorneys’ fees, and defendant will not oppose any fee request within this

3

threshold. Id. § 5.2. Up to $10,000.00 is for plaintiff’s litigation costs. Id.

4

After these costs, fees and awards are paid, the remaining settlement sum, or the

5

“net settlement” will be allocated to the class members using the following distribution formula:

6

Each class member’s number of qualifying workweeks is divided by the class’s total qualifying

7

workweeks, then that fraction is multiplied by the net settlement sum. See id. §§ 1.2, 1.17, 1.25,

8

1.26. A class member does not have to submit an individual claim to receive his or her payment.

9

Id. § 5.9. Any class member that does not timely opt out will waive his or her claims for the

10

entire class period. Id. §§ 1.27, 1.28, 6.1. If class members do not cash their settlement checks

11

within 180 days of receiving them, half of those sums will be distributed to the State Treasury and

12

half will go to the Sacramento Voluntary Legal Services Program Employment Law Clinic as the

13

cy pres beneficiary. Id. §§ 5.6, 7.9; see Nachshin v. AOL, LLC, 663 F.3d 1034, 1036 (9th Cir.

14

2011) (“The cy pres doctrine allows a court to distribute unclaimed or non-distributable portions

15

of a class action settlement fund to the ‘next best’ class of beneficiaries.”) (citation omitted).

16

2.

17

As discussed at hearing, the court has the following five reservations, which must

18

The Court’s Reservations

be addressed before final approval.

19

First, plaintiff’s $20,000 enhancement award is unusually high. See, e.g., Ross v.

20

Bar None Enterp. Inc., No. 2:13-CV-00234-KJM-KJ, 2014 WL 4109592, at *10 (E.D. Cal. Aug.

21

19, 2014) (noting concerns over $5,000 award where the settlement sum was $300,000); Castillo

22

v. Cox Commc'ns, Inc., No. 3:10-CV-01622-H, 2013 WL 12205193, at *7 (S.D. Cal. Jan. 7, 2013)

23

(citing similar cases and noting “$2,500 incentive award is . . . well within the acceptable range”).

24

Final approval will require a detailed explanation of how this sum is reasonable in light of the

25

total settlement sum and class size. See Staton v. Boeing Co., 327 F.3d 938, 975 (9th Cir. 2003)

26

(class representative enhancement payment much higher than payments unnamed class members

27

stand to receive can be evidence of collusion). The court recognizes the Agreement is not

28

contingent on the award, but final approval if granted will require substantial justification
11

1

detailing the basis for such a high award. Prior to final approval, the parties also should address

2

whether this high award, and the relatively high fees discussed below, are in some way vestiges

3

of the large demand plaintiff made going into mediation.

4

Second, the class administration fee, which could reach up to $10,000, is

5

particularly high considering the class is relatively small and geographically restricted to

6

California. See Martinez v. Realogy Corp., No. 3:10-CV-00755-RCJ, 2013 WL 5883618, at *7

7

(D. Nev. Oct. 30, 2013) (comparing administrative fees to other cases, noting size and scope of

8

proposed class as relevant factors); see also Wert v. U.S. Bancorp, No. 13-CV-3130-BAS-AGS,

9

2017 WL 5167397, at *4 (S.D. Cal. Nov. 7, 2017) (noting court may uphold agreement while

10

lowering excessive fees). Final approval will require a more detailed justification for this

11

expense.

12

Third, the motion for preliminary approval omits any discussion of the critical

13

question of how the settlement amount relates to the merits of the class members’ individual

14

claims. As noted above, the court has received and examined the parties’ mediation statements

15

and is preliminarily satisfied that the agreement is reasonable and fair. See Lodging

16

Acknowledgment. But final approval will require a more detailed explanation of how the parties’

17

settlement sum relates to the merits of the case.

18

Fourth, the Agreement contemplates that if certain class members receive no

19

notice packet because, for instance they are returned as undeliverable, those members will not

20

receive a payment, yet they still will release their claims. Agreement §§ 1.27, 1.28, 6.1. This

21

provision may not satisfy absent members’ due process guarantees. See Ross, 2014 WL 4109592,

22

at *10 (deciding same); Lusby v. Gamestop Inc., 297 F.R.D. 400, 2013 WL 1210283, at *11

23

(N.D. Cal. Mar.25, 2013) (same). Before final approval, the parties should be prepared to explain

24

how their plans comply with the fairness requirement.

25

Fifth, although the court preliminarily approves the 25 percent attorneys’ fee

26

provision as within the Ninth Circuit’s accepted range, defendant’s agreement not to oppose any

27

motion for attorneys’ fees within this range raises a red flag. Clear sailing provisions such as this

28

can be evidence of collusion. See Bluetooth, 654 F.3d at 942, 947; Ross, 2014 WL 4109592, at
12

1

*10. Before approving any final request for attorneys’ fees, the court must have enough

2

information to determine if the requested fee is reasonable.

3

The court discussed the above concerns with counsel at hearing, each of which

4

must be addressed in more detail before final approval. For now, the motion for preliminary

5

approval is GRANTED.

6

V.

7

NOTICE
Having certified the class and preliminarily approved the settlement, the court

8

must now “direct to class members the best notice that is practicable under the circumstances.”

9

Fed. R. Civ. P. 23(c)(2)(B). The notice must, in plain language, state the nature of the action,

10

define the certified class, and list the class claims, issues, or defenses. Id. The notice must also

11

inform members that they may appear at the final hearing with counsel; that they may request to

12

be excluded from the class, including how and when to request exclusion; and the details as to

13

how the class judgment may bind each member. Id.; see also Mendoza v. United States, 623 F.2d

14

1338, 1351-52 (9th Cir. 1980).

15

Here, the court has reviewed the proposed notice packet and finds it conforms with

16

due process and Rule 23(c)(2)(B). See Exs. 1 & 2, ECF No. 34. The content of the proposed

17

notice is adequate, as it describes the settlement terms, informs the class about the allocation of

18

attorneys’ fees, estimates the share each class member will receive and, once completed, will

19

specify the date, time and place of the final approval hearing. See Vasquez v. Coast Valley

20

Roofing, Inc., 670 F. Supp. 2d 1114, 1126-27 (E.D. Cal. 2009). The notice procedure also

21

appears reasonable and it fully explains to recipients how they may object or opt out of the

22

proposed settlement. See Agreement §§ 1.11, 1.18-1.20, 4.2.1-4.2.3, 7.2-7.5.4. The proposed

23

delivery method, by mail, is likewise appropriate. Mendoza, 623 F.2d at 1351-52 (noting court’s

24

“wide discretion” as to whether notice is adequate); Ross, 2014 WL 4109592, at *13 (finding mail

25

was appropriate delivery method).

26
27

The court APPROVES the proposed notice packet and procedures and DIRECTS
notice to be administered according to the schedule described below.

28
13

1

VI.

SCHEDULE

2

The court adopts the parties’ stipulated schedule, ECF No. 35, as follows:

3

(1) Within two weeks of this order, defendant must submit class member

4
5

information to the claims administrator;
(2) Within two weeks of receiving this information from defendants, the claims

6

administrator must complete all class member address searches, update all mailing information,

7

and mail all notice packets;

8
9
10

(3) Class members must postmark their opt-out, disputes, objections, and data
requests (a) within 90 days after receiving timely notice; or (b) within 15 days of the notice period
ending if notice was untimely;

11

(4) Within two weeks of the members’ opt-out, dispute and objection deadline,

12

plaintiffs must file their anticipated motion to approve attorneys’ fees and costs, representative

13

enhancements, and claims administrator costs;

14

(5) Within three weeks of the end of the notice period, the claims administrator

15

must provide parties with both (a) a list of all class members who have timely requested to opt-

16

out and (b) a signed declaration reporting on settlement administration;

17
18
19

(6) Within two weeks of the final approval hearing, plaintiffs must file all
documents supporting final approval of the class action settlement;
(7) Within a week of the final approval hearing, the claims administrator must

20

calculate and report to the parties the amounts owed to fund the settlement, employer tax

21

payments, net settlement amount, and claim amounts for qualified claimants;

22
23
24

(8) After the final approval hearing and within two weeks of the claims
administrator’s calculation, defendant must fund the settlement and employer tax payments;
(9) Within one week of receiving defendant’s funds, the claims administrator must

25

deliver payment of class counsel’s attorneys’ fees and costs, enhancement payments, PAGA

26

Payment, settlement administration costs and payment to qualified claimants;

27

(10) Qualified members must cash settlement checks within 180 days of receipt;

28
14

1

(11) Should checks not be cashed on time, the claims administrator will have two

2

weeks from the 180-day deadline to deliver the value of uncashed settlement checks to the named

3

cy pres beneficiary;

4

(12) The final approval hearing is set for November 2, 2018, at 10:00 AM in

5

Courtroom 3, with briefs and supporting documentation due by October 19, 2018. Class

6

members that timely object using the procedures detailed above may present their objections in

7

person at the fairness hearing, with counsel if so desired.

8

VII.

CONCLUSION

9

As explained above, the court preliminarily CERTIFIES the class; preliminarily

10

APPROVES the class settlement; APPOINTS Jared Acosta as class representative; APPOINTS

11

Galen T. Shimoda and Justin P. Rodriguez of the Shimoda Law Corp. as class counsel; APPOINTS

12

Simpluris, Inc., as claims administrator; APPROVES the notice, briefing and hearing schedule as

13

described above; and DIRECTS notice to the putative class members in the time and manner

14

proposed.

15

IT IS SO ORDERED.

16

This order resolves ECF No. 31.

17

DATED: August 10, 2018.

18
19

UNITED STATES DISTRICT JUDGE

20
21
22
23
24
25
26
27
28
15