Guttmann v. Ole Mexican Foods, Inc.
Filing
61
ORDER by Judge Haywood S. Gilliam, Jr. GRANTING 54 MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND GRANTING 55 MOTION FOR ATTORNEYS' FEES AND COSTS.(ndrS, COURT STAFF) (Filed on 8/1/2016)
1
2
3
4
UNITED STATES DISTRICT COURT
5
NORTHERN DISTRICT OF CALIFORNIA
6
7
VICTOR GUTTMANN,
Plaintiff,
8
v.
9
10
OLE MEXICAN FOODS, INC.,
Defendant.
United States District Court
Northern District of California
11
Case No. 14-cv-04845-HSG
ORDER GRANTING MOTION FOR
FINAL APPROVAL OF CLASS
ACTION SETTLEMENT AND
GRANTING MOTION FOR
ATTORNEYS' FEES AND COSTS
Re: Dkt. Nos. 54, 55
12
Before the Court are Plaintiff Victor Guttman’s (“Plaintiff”) motions for final approval of
13
14
class action settlement, Dkt. No. 54 (“Mot.”), and for attorneys’ fees and costs, Dkt. No. 55 (“Fees
15
Mot.”). Defendant Ole Mexican Foods, Inc. (“Defendant”) does not oppose either motion.
For the reasons set forth below, the Court GRANTS Plaintiff’s motions for final approval
16
17
of class action settlement and for attorneys’ fees and costs.
18
I.
19
BACKGROUND
Plaintiff filed this food-labeling class action on October 31, 2014. Dkt. No. 1 (“Compl.”).
20
Plaintiff alleges that Defendant failed to properly disclose that its “Xtreme Wellness” line of
21
tortillas contain partially-hydrogenated oil, an artificial trans-fat food additive. Id. ¶¶ 5, 9, 11. On
22
that basis, Plaintiff asserts six causes of action against Defendant for violating California’s unfair
23
competition law (Cal. Bus. & Prof. Code § 17200, et seq.) (“UCL”), False Advertising Law, (Cal.
24
Bus. & Prof. Code § 17500, et seq.) (“FAL”), and Consumer Legal Remedies Act (Cal. Civ. Code
25
§ 1750, et seq.) (“CLRA”), and for breaching express warranties. Id. ¶¶ 123-76.
26
Defendant filed a motion to dismiss on federal preemption grounds, Dkt. No. 12, and a
27
motion to stay discovery pending resolution of that motion, Dkt. No. 24. But Defendant withdrew
28
both after new case law emerged from the Ninth Circuit addressing the preemption issue. Dkt.
1
No. 37. The parties agreed to settle the case on a classwide basis shortly thereafter. Dkt. No. 41.
2
Before the parties ceased active litigation, Plaintiff served some written discovery on Defendant,
3
to which Defendant served objections and responses. Mot. at 10.
Plaintiff filed a motion for preliminary approval of the class action settlement on July 2,
5
2015. Dkt. No. 48. The proposed settlement would enjoin Defendant from using any partially-
6
hydrogenated oils in their Xtreme Wellness line of tortillas for a period of ten years. Id. at 2. In
7
exchange, the putative class would release their claims against Defendant regarding, among other
8
things, the manufacturing, advertising, sale, labeling, and the ingredients of these tortilla products,
9
excepting personal injury claims. Id. Defendant agreed to pay for class notice, which included:
10
(1) publishing a long-form class notice in USA Today; (2) displaying banner advertisements on
11
United States District Court
Northern District of California
4
Facebook (at least 25,000 times); and (3) creating a bilingual website that provided the settlement
12
agreement and other case-related documents. Id. And, upon final approval, the parties agreed that
13
Plaintiff could seek up to $1,800 as an incentive and Plaintiff’s counsel could seek up to $85,000
14
in fees and costs without opposition from Defendant. Id. The Court granted preliminary approval,
15
provisionally certifying the proposed nationwide injunctive-relief class under Federal Rule of
16
Civil Procedure 23(b)(2) and directing class notice as agreed by the parties. Dkt. No. 52.
17
On December 31, 2016, Plaintiff filed the instant motions for final approval of class action
18
settlement and for attorneys’ fees and costs. In his final approval motion, Plaintiff represents that
19
the class notice program was implemented as the Court directed. Mot. at 5-6. The settlement
20
administrator received no objections to the proposed settlement from class members. Dkt. No. 56.
21
The Court held a final fairness hearing on February 11, 2016. Dkt. No. 58. At the hearing,
22
no class members objected, commented, or otherwise appeared. The Court took the matter under
23
submission, but also ordered that: (1) Defendant file a declaration confirming that the Facebook
24
component of the notice plan was performed, which was not apparent from the moving papers;
25
and (2) Plaintiff file a declaration setting forth what Plaintiff did to assist this case and the hours
26
he spent doing so. Id. Both declarations were timely filed as requested. Dkt. Nos. 59 & 60.
27
///
28
///
2
1
II.
DISCUSSION
2
A.
3
The Court now considers whether final approval of the proposed class action settlement is
4
appropriate. Finding that the parties performed the class notice program as directed and that there
5
were no objections to the proposed settlement, the Court grants final approval.
6
7
Motion for Final Approval of Class Action Settlement
1.
Adequacy of Class Notice
Federal Rule of Civil Procedure 23(e) governs class action settlements, including notice.
8
When any certified class settles its claims, courts “must direct notice in a reasonable manner to all
9
class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1); see also William
B. Rubenstein, Newberg on Class Actions § 4:36 (5th ed. rev. June 2016) (“Rule 23(c) makes
11
United States District Court
Northern District of California
10
notice of a class certification decision discretionary [for Rule 23(b)(2) class actions], but Rule
12
23(e) requires that (b)(2) class members receive notice of any proposed settlement[.]”) (emphasis
13
original). Additionally, Rule 23(h) requires that class members receive notice of any claim for an
14
award of attorneys’ fees and costs. Fed. R. Civ. P. 23(h)(1); see also Rubenstein, supra, § 4:36.
15
In its order granting preliminary approval, the Court directed a three-part notice plan. That
16
plan included: (1) publishing a long-form, one-time class notice in USA Today; (2) displaying
17
banner advertisements on Facebook at least 25,000 times; and (3) creating a bilingual website that
18
provided the settlement agreement and other case-related documents to interested persons. Id.
19
Plaintiff’s counsel has submitted a declaration attesting that the newspaper notice was published
20
and that the settlement website was properly created. Dkt. No. 54-1 ¶¶ 3, 5-8. Rust Consulting,
21
the settlement administrator, has also submitted a declaration, attesting that the Facebook notice
22
was published in the manner and frequency directed. Dkt. No. 60. The Court finds that the class
23
notice delivered complied with the preliminary approval order, Rule 23(e), and Rule 23(h).
24
2.
Fairness, Reasonableness, and Adequacy of Settlement
25
Federal Rule of Civil Procedure 23(e) requires that “[t]he claims, issues, or defenses of a
26
certified class may be settled . . . only with the court’s approval.” Courts may approve of a class
27
action settlement “only after a hearing and on finding that it is fair, reasonable, and adequate.”
28
Fed. R. Civ. P. 23(e)(2); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). In
3
1
making this decision, courts consider the following factors:
5
“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.”
6
Id. (hereinafter, the “Hanlon factors”). At the end of the day, however, “the decision to approve
7
or reject a settlement is committed to the sound discretion of the trial judge.” Id.
2
3
4
8
In its order granting preliminary approval, the Court set forth its reasoning as to why the
9
proposed settlement was negotiated in good faith, lacked any obvious deficiencies, did not treat
any class member in an improperly preferential manner, and fell within the range of approval. See
11
United States District Court
Northern District of California
10
Dkt. No. 52 at 6-10. Nothing has happened since then that would change this analysis, but the
12
Court proceeds to briefly discuss each of the approval factors set forth above.
a)
13
14
Plaintiff’s Case and the Risk of Continued Class Action Litigation
Under the first three Hanlon factors, the Court “must balance against the risks of continued
15
litigation, including the strengths and weaknesses of Plaintiff’s case, the benefits afforded to class
16
members, and the immediacy and certainty of a recovery.” Ching v. Siemens Indus., Inc., No. 11-
17
CV-04838, 2014 WL 2926210, at *3 (N.D. Cal. Jun. 27, 2014). Where a plaintiff must overcome
18
“significant barriers” to prove his claims, this factor weighs in favor of settlement approval. See
19
Chun-Hoon v. McKee Foods Corp., 716 F. Supp. 2d 848, 851 (N.D. Cal. 2010).
20
Plaintiff argues that both sides would face serious risks in continued litigation. Mot. at 8-
21
11. In support of this proposition, Plaintiff cites to cases that highlight the difficulties of litigating
22
class actions alleging misleading food labels. See, e.g., Ries v. Ariz. Beverages USA LLC, No. 10-
23
01139, 2013 WL 1287416, at *16 (N.D. Cal. Mar. 28, 2013) (decertifying Rule 23(b)(2) food-
24
labeling class action asserting claims about misleading labels and granting summary judgment for
25
the defendant). The Court agrees that these types of food labeling claims are difficult to maintain.
26
For example, Plaintiff would need to prove that Defendant’s labels, including “Xtreme Wellness,”
27
were misleading entirely by virtue of the product containing a small amount of trans-fat. See
28
Compl. ¶ 69-71.
4
1
2
Accordingly, the first three Hanlon factors weigh in favor of final settlement approval.
b)
Settlement Amount
3
The fourth Hanlon factor, which considers the amount offered in settlement, “is generally
4
considered the most important, because the critical component of any settlement is the amount of
5
relief obtained by the class.” Bayat v. Bank of the West, No. 13-cv-02376, 2015 WL 1744342, at
6
*4 (N.D. Cal. Apr. 15, 2015). Because “the interests of class members and class counsel nearly
7
always diverge, courts must remain alert to the possibility that some class counsel may urge a
8
class settlement at a low figure or on a less-than-optimal basis in exchange for red-carpet
9
treatment on fees.” In re HP Inkjet Printer Litig., 716 F.3d 1173, 1178 (9th Cir. 2013).
10
As a Rule 23(b)(2) class action, the proposed settlement agreement provides no monetary
United States District Court
Northern District of California
11
relief for the class members, but instead provides injunctive relief in the form of a ten-year ban on
12
Defendant’s use of partially-hydrogenated oils in its Xtreme Wellness line of tortillas. As the
13
Court explained in its order granting preliminary approval, the proposed settlement provides
14
substantial health benefits to all purchasers of Defendant’s Xtreme Wellness tortillas in light of the
15
evidence offered by Plaintiff about the health effects of partially-hydrogenated oils. Dkt. No. 52 at
16
9-10. Despite the fact that the Food and Drug Administration has already proposed a ban on some
17
of these same food additives, the proposed settlement would go into effect years earlier, it bars the
18
use of all types of these food additives, unlike the FDA regulation, and the FDA regulation would
19
still permit carve-outs. Id. Accordingly, the Court finds that the proposed relief is adequate.
20
c)
Stage of Proceedings
21
The fifth Hanlon factor considers the extent of discovery completed and the stage of the
22
proceedings. “This factor evaluates whether the parties have sufficient information to make an
23
informed decision about settlement.” Larsen v. Trader Joe’s Co., No 11-cv-05188, 2014 WL
24
3404531, at *5 (N.D. Cal. Jul. 11, 2014) (quotation marks omitted). “[A]s long as the parties have
25
sufficient information to make an informed decision about settlement, formal discovery is not a
26
necessary ticket to the bargaining table.” Bellinghausen v. Tractor Supply Co., 306 F.R.D. 245,
27
257 (N.D. Cal. 2015). “Rather, the court’s focus is on whether the parties carefully investigated
28
the claims before reaching a resolution.” Id. (quotation marks and citation omitted).
5
1
While this case settled before class certification and before significant discovery was
taken, the parties briefed the merits of Plaintiff’s case in connection with Defendant’s motion to
3
dismiss in some detail. See Dkt. Nos. 12, 19 & 23. The parties debated whether Plaintiff’s claims
4
were preempted, had extraterritorial scope outside of California, were based on labels constituting
5
actionable non-puffery, and whether Plaintiff could state a California unfair competition claim
6
under its unlawfulness prong. See id. Most importantly, Defendant argued that the FDA requires
7
any product with less than .5 grams of trans fat to disclose the content as “zero” and, therefore, the
8
“Trans Fat free” statement on the front of the Xtreme Wellness packages was legal. Dkt. No. 12 at
9
3-7. While the Ninth Circuit ultimately rejected this argument, the parties were left with sufficient
10
information to make an informed decision about settlement. Accordingly, this factor also weighs
11
United States District Court
Northern District of California
2
in favor of approving the settlement agreement.
12
d)
13
Experience and Views of Counsel
“Parties represented by competent counsel are better positioned than courts to produce a
14
settlement that fairly reflects each party’s expected outcome in litigation.” In re Pac. Enters. Sec.
15
Litig., 47 F.3d 373, 378 (9th Cir. 1995). The Court already found class counsel’s qualifications
16
and experience sufficient to represent the class’ interests in this action. Dkt. No. 52 at 6. Nothing
17
has changed since that time. Accordingly, this factor weighs in favor of settlement approval.
18
19
e)
Class Member Reaction
“It is established that the absence of a large number of objections to a proposed class
20
action settlement raises a strong presumption that the terms of a proposed class settlement action
21
are favorable to the class members.” In re Omnivision, 559 F. Supp. 2d 1036, 1043 (N.D. Cal.
22
2008). A small number of objections to and opt-outs from a settlement “presents at least some
23
objective positive commentary as to its fairness.” Hanlon, 150 F.3d at 1027. Here, none of the
24
class members objected to the settlement agreement or opted out. Dkt. No. 56 at 1. The Court
25
therefore finds that this final factor also weighs in favor of approval.
26
f)
Summary
27
After considering and weighing all of the above Hanlon factors, the Court finds that the
28
settlement class members received adequate notice and that the settlement is fair, adequate, and
6
1
reasonable. Accordingly, Plaintiffs’ motion for final approval of class action settlement is granted.
Motion for Attorneys’ Fees and Costs
2
B.
3
Having approved the settlement agreement, the Court now turns to Plaintiff’s motion for
4
attorneys’ fees and costs. The Court finds that Plaintiff’s request for attorneys’ fees and costs is
5
proper and reasonable, as is Plaintiff’s request for a class representative incentive award.
1.
6
Attorneys’ Fees
Under the terms of the settlement agreement, Plaintiff was permitted to request 85,000 in
7
8
attorneys’ fees and costs without opposition from Defendant. Fees Mot. at 7. Plaintiff requests
9
$82,837.15 in attorneys’ fees, in line with the parties’ agreement.
“In a certified class action, the court may award reasonable attorney’s fees and nontaxable
11
United States District Court
Northern District of California
10
costs that are authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). Even where
12
an award is authorized by the parties’ agreement, “courts have an independent obligation to ensure
13
that the award, like the settlement itself, is reasonable[.]” In re Bluetooth Headset Prods. Liab.
14
Litig., 654 F.3d 935, 943 (9th Cir. 2011). The reasonableness of a fees agreement is determined
15
by state law when state law provides the basis for the claims asserted. See Vizcaino v. Microsoft
16
Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). In this case, California law controls the analysis of
17
the parties’ fees’ agreement because Plaintiff seeks to recover under California’s UCL, FAL,
18
CLRA, and express warranty law. See Compl. ¶¶ 123-76.1
“The two primary methods for determining reasonable fees in the class action settlement
19
20
context are the ‘lodestar/multiplier’ method and the ‘percentage of recovery’ method. Wershba v.
21
Apple Computers, Inc., 91 Cal. App. 4th 224, 254 (2001). “Because the settlement [here] resulted
22
in injunctive relief, the lodestar method is the appropriate measure for calculating attorneys’ fees.”
23
Lilly v. Jamba Juice Co., No. 13-cv-02998, 2015 WL 2062858, at *5 (N.D. Cal. May 4, 2015).
The first step in the lodestar analysis is to multiply the number of hours counsel reasonably
24
25
1
26
27
28
The CLRA itself contains a mandatory fee-shifting provision that awards attorneys’ fees to a
prevailing plaintiff. Cal. Civ. Code § 1780(e). When the basis for an attorneys’ fees motion is
both a class action settlement agreement and a fee-shifting statute, the analysis remains the same.
See, e.g., Tadepalli v. Uber Techs., Inc., No. 15-cv-04348, 2016 WL 1622881, at *10 (N.D. Cal.
Apr. 25, 2016) (applying California’s lodestar test where a class action settlement agreement and
CLRA both provided the basis for the plaintiff’s attorneys fees’ motion).
7
1
expended on the litigation by a reasonable hourly billing rate. See Graham v. DaimlerChrsyler
2
Corp., 34 Cal. 4th 553, 579 (2004); Hanlon v. Chrysler Group, Inc., 150 F.3d 1011, 1029 (9th Cir.
3
1998). Once this raw lodestar figure is determined, courts may apply a multiplier depending on
4
several factors, including: (1) the results obtained; (2) the novelty and difficulty of the questions
5
involved; (3) the requisite legal skill necessary to litigate the case; (4) the preclusion of other
6
employment due to acceptance of the case; and (5) whether the fee is fixed or contingent. See
7
Serrano, 20 Cal. 3d at 48.
8
9
Class counsel declares that they have expended 448.5 hours of work on this case as of
December 30, 2015. Fees Mot. at 8. This time includes 171 attorney hours and 277.5 paralegal
hours. Id. Counsel has not provided detailed timesheets documenting the amount of time spent on
11
United States District Court
Northern District of California
10
each task, but instead has submitted a summary of time and rates of each firm member, Mot. for
12
Fees, Appx. 1, and a description of the tasks performed, Dkt. No. 55-1 (“Weston Decl.”) at 10.
13
That summary shows that Plaintiff’s attorneys and paralegals expended 39.7 hours investigating
14
and drafting the complaint, 77.8 hours opposing Defendant’s motion to dismiss, 69.3 hours
15
working on discovery-related matters, 25.6 hours negotiating the settlement, 18.1 hours drafting
16
an unfiled motion for class certification, 174.6 hours drafting the motions for preliminary and final
17
approval of class action settlement, and 43.4 hours on administrative tasks. Weston Decl. at 10.
18
The Court finds that the time class counsel expended was reasonable.
19
With the total amount of time established, class counsel seeks to apply the following
20
billing rates: $605 for Mr. Weston, $525 for Mr. Elliot, $340 for Ms. Persinger, and $305 for Mr.
21
Joseph, as well as rates of $215 and $135 for senior and junior paralegals. Id. at 16-17. To
22
support these rates, class counsel cites several similar cases from this circuit in which counsel was
23
awarded equal or slightly lower fee rates. See, e.g., In re Quaker Oats Labeling Litig., 2014 U.S.
24
Dist. LEXIS 104941, at *4 (N.D. Cal. Jul. 29, 2014) (awarding Mr. Weston a rate of $580, Ms.
25
Persinger $340, and Mr. Joseph $305); Bruno v. Quten Research Inst., LLC, 2013 U.S. Dist.
26
LEXIS 35066, at *9-10 (C.D. Cal. Mar. 13, 2013) (awarding Mr. Weston a rate of $550 and Ms.
27
Persinger $315). Moreover, class counsel’s rates are in line with the prevailing rates in this
28
district for consumer class actions. See, e.g., In re Magsafe Apple Power Adapter Litig., No. 098
1
CV-01911, 2015 WL 428105, at *12 (N.D. Cal. Jan. 30, 2015) (“In the Bay Area, reasonable
2
hourly rates for partners range from $560 to $800, for associates from $285 to $510, and for
3
paralegals and litigation support staff from $150 to $240.). Accordingly, the Court finds that the
4
billing rates requested by class counsel are reasonable.
5
Multiplying the time expended by the rates approved, Plaintiff’s lodestar is $144,779.
6
Fees Mot. at 16 & Appx. 1. Plaintiff requests, however, only $85,000 in attorneys’ fees. This
7
translates to a multiplier of .59, essentially a negative multiplier. When determining a reasonable
8
fee in a class action, the lodestar figure is “presumptively reasonable.” In re Bluetooth, 654 F.3d
9
at 941. Although Plaintiff did not secure any monetary relief for the class and the questions
litigated in this case were not particularly novel or difficult, the Court finds that Plaintiff’s fees’
11
United States District Court
Northern District of California
10
request is reasonable, especially when given a ‘negative’ multiple. See Serrano, 20 Cal. 3d at 48.
12
For that reason, the Court grants Plaintiff’s request for attorneys’ fees.
13
2.
Costs
14
Plaintiff’s counsel is entitled to “recover as part of the award of attorneys’ fees those out-
15
of-pocket expenses that would normally be charged to a fee paying client.” Harris v. Marhoefer,
16
24 F.3d 16, 19 (9th Cir. 1994). Class counsel has provided an itemized list of the costs incurred
17
during this litigation. Fees Mot., Appx. 2. Class counsel incurred a total of $2,162.85 in costs,
18
broken down into $400.00 in filing fees, $70.00 in costs for service of process, $220.56 in costs
19
for FedEx and certified mail, $781.77 in transportation costs, and $700.00 in expert witness costs.
20
Id. The Court finds these costs reasonable and, accordingly, grants the request.
21
22
23
24
3.
Incentive Award
Plaintiff requests an incentive award of $1,800.00 for his service as class representative in
this action. Dkt. No. 55 at 16. Defendant does not oppose this request, as agreed.
“[N]amed plaintiffs . . . are eligible for reasonable incentive payments.” Staton v. Boeing
25
Co., 327 F.3d 938, 977 (9th Cir. 2003). Courts evaluate whether a proposed incentive award is
26
reasonable by considering “the actions the plaintiff has taken to protect the interests of the class,
27
the degree to which the class has benefitted from those actions,” and “the amount of time and
28
effort the plaintiff expended in pursuing the litigation[.]” Id. at 977. Many courts in this circuit
9
1
have held that a $5,000 incentive award is “presumptively reasonable.” See, e.g., Harris v. Vector
2
Marketing Corp., No. 08-cv-5198, 2012 WL 381202, at *7 (N.D. Cal. Feb. 6, 2012) (“Several
3
courts in this District have indicated that incentive payments of $10,000 or $25,000 are quite high
4
and/or that, as a general matter, $5,000 is a reasonable amount.”) (collecting cases).
In his declaration, Plaintiff avers that he spent approximately five hours working on this
5
case, reviewing the complaint, preserving relevant documents, and participating in the settlement
7
negotiation process. Dkt. No. 59 ¶¶ 1-2. Courts in this district have granted incentive awards in
8
food-labeling cases where the named plaintiffs stayed “actively involved” in the litigation. See
9
e.g., Miller, 2015 WL 758094, at *7. Plaintiff appears to have done so. In light of Plaintiff’s
10
service to the class, the Court finds that the requested incentive award is fair and reasonable.
11
United States District Court
Northern District of California
6
III.
CONCLUSION
12
For the foregoing reasons, the Court GRANTS Plaintiff’s motion for final approval of the
13
proposed class action settlement agreement. Additionally, the Court GRANTS Plaintiff’s motion
14
for attorneys’ fees and costs and Plaintiff’s class representative incentive award. The parties are
15
instructed to file a proposed judgment within three days of this Order.
16
17
18
IT IS SO ORDERED.
Dated: 8/1/2016
19
20
HAYWOOD S. GILLIAM, JR.
United States District Judge
21
22
23
24
25
26
27
28
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?