Mohamed v. Uber Technologies, Inc. et al

Filing 296

ORDER by Judge Edward M. Chen Granting 264 Plaintiffs' Motion for Final Approval of Settlement; Granting in Part and Denying in Part 257 Plaintiffs' Motion for Service Awards; and Granting in Part and Denying in Part 258 Plaintiffs' Motion for Attorney's Fees. (emcsec, COURT STAFF) (Filed on 5/2/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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Case No. 14-cv-05200-EMC
IN RE UBER FCRA LITIGATION

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ORDER GRANTING PLAINTIFFS’
MOTION FOR FINAL APPROVAL OF
SETTLEMENT; GRANTING IN PART
AND DENYING IN PART PLAINTIFFS’
MOTION FOR SERVICE AWARDS;
AND GRANTING IN PART AND
DENYING IN PART PLAINTIFFS’
MOTION FOR ATTORNEY’S FEES

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Docket Nos. 257, 258, 264

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United States District Court
Northern District of California

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I.

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INTRODUCTION

Plaintiffs brought putative class actions alleging they were denied employment or were

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terminated on the basis of information contained in background checks that Uber procured in

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violation of the Fair Credit Reporting Act (―FCRA‖) and related state laws. See Docket No. 171

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(―Amend. MAC‖) ¶¶ 1–2, 56–62. Now pending before this Court are Plaintiffs‘ motion for final

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approval of class settlement, see Docket No. 264, motion for service awards, see Docket No. 257,

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and motion for attorney‘s fees. See Docket No. 258. Having reviewed the parties‘ submissions,

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the Court hereby GRANTS Plaintiffs‘ motion for final approval of class settlement, and

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GRANTS IN PART and DENIES IN PART Plaintiffs‘ motions for service awards and

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attorney‘s fees.

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II.

FACTUAL AND PROCEDURAL BACKGROUND

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On June 29, 2017, this Court granted Plaintiffs‘ motion for preliminary approval of class

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action, and described the procedural history, history of negotiations, and discovery that preceded

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that motion, which will not be repeated here. See Docket No. 242 (―Prelim. App. Order‖) at 1–5.

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Following entry of the Preliminary Approval Order, Class Counsel worked closely with the Court-

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appointed Settlement Administrator, the Angeion Group, LLC, and with counsel for Uber to

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implement the notice program approved by this Court. See Docket No. 264 (―Mtn. for Final

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App.‖) at 14; see also Docket No. 264-1 (―Wolfson Decl.‖) ¶ 5.
Notice of the settlement was given to the class via email, mail or online (through the

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Settlement Website). See Mtn. for Final App. at 20. With respect to the email notice, the claim

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administrator sent 1,024,270 emails to potential members included on the class list, of which

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111,920 email were returned as undeliverable, 120,314 emails were confirms opened, and 793,197

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emails were delivered but there was no confirmation whether they were opened, as of September

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25, 2017. See Docket No. 264-3 (―Ferrara Decl.‖) ¶ 6. On December 6, 2017, in accordance with

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Northern District of California

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the Stipulation of Settlement, the claim administrator sent 977,313 reminder email notices to class

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members included in the list who did not submit a claim form to reminder of the claims

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submission deadline. Id. at ¶ 11.
Taking into consideration the number of emails that were returned undeliverable, the

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number of emails that were unopened, duplicative records, and records without a mailing address,

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the claim administrator identified 843,696 class members whom a mailed notice would be (and

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was) sent. Id. at ¶ 7–10. As of January 23, 2018, the claim administrator had received 135,209

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claim form submissions, of which 99,243 appear to be valid. Id. at ¶ 16. The total number of

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99,243 valid claim forms represent approximately 10% of all Class Members. See Wolfson Decl.

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¶ 17. The deadline for requests for exclusion and objections to the settlement was December 14,

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2017. As of January 23, 2018, there have been 216 opt outs.1 See Docket Nos. 259–263; see also

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Ferrara Decl. 26.
Plaintiffs moved for final approval of class settlement on January 25, 2018.

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On February

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8, 2018, the Court held a hearing on Plaintiffs‘ motion for final approval of class action settlement,

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Plaintiffs‘ motion for service awards, and Plaintiffs‘ motion for attorney fees and expenses. See

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Class Counsel shall provide the finalized list and number of opt outs along with the modified
proposed Final Order Approving Class Action Settlement and proposed Final Judgment. See
Docket Nos. 222-1, 222-2.
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Docket Nos. 264, 257, 258. The Court expressed concerns regarding: (1) the wording of the

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release included in the settlement; and (2) an objection based on a single request for exclusion

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filed by Audet & Partners LLP (―Audet‖) on behalf of Thomas Abeyta and 548 individuals

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(―Abeyta Objection I‖). See Docket No. 277; see also Docket Nos. 263, 270 (―Abeyta Obj. I‖).

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The Court issued a minute order the same day requiring the parties to meet and confer regarding

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the first issue and, with respect to the second issue, requiring that additional notice be provided

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certain Class Members on whose behalf Audet filed an objection and request for exclusion. See

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Docket No. 275 (―Feb. 8 Order‖). With regards to the scope of the release, the Court found that

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the settlement‘s release should be clarified without requiring additional notice to Class members.
See Docket No. 277 at 7; see also Feb 8 Order at 1. The parties have filed and revised a

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Northern District of California

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stipulation and proposed order, and the Court entered that revised order on April 19, 2018.2 See

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Docket No. 284.
With regards to the second issue, Audet claimed to represent each of the 548 individuals

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individually and argued that the prohibition on counsel filing opt outs on behalf of clients is a

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violation of due process. Id. at 2. However, only 245 of the 548 individuals are actually Class

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Members. See Ferrara Decl. ¶ 20. As some of the 245 Class Members have already (a) submitted

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claim, (b) requested for an exclusion, (c) submitted a claim and submitted a request for exclusion,

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or (d) did not respond, the Court ordered the parties to re-issue a class notice to only 108 Class

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Members, who have either (i) submitted a claim and an individual request for exclusion, or (ii) did

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not submit a claim and did not submit an individual request for exclusion. See Feb. 8 Order; see

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also Docket No. 264-3 ¶ 19, 20, 24, 25. The 108 Class Members were given a period of 45 days

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to respond and the deadline to respond was April 14, 2018. See Docket No. 285 (―Ferrara Decl.

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II‖). Of the 108 Class Members, 25 submitted claims and 17 submitted requests for exclusion. Id.

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at ¶ 6.

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As such, the Court OVERRULES the objections raised by Ms. Mora, see Docket No. 261
(―Mora Obj.‖), which primarily include concerns about the nature of the release. The settlement
does not release Ms. Mora‘s wage and hour claims, and the settlement does not bar Ms. Mora
from bringing other claims under the Private Attorneys General Act (―PAGA‖).
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III.

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A.

DISCUSSION

Plaintiffs‘ Motion for Final Approval of Class Settlement

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1.

Legal Standard

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Public policy ―strong[ly] ... favors settlements, particularly where complex class action

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litigation is concerned.‖ In re Syncor ERISA Litigation, 516 F.3d 1095, 1101 (9th Cir. 2008). In

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weighing final approval of a class settlement, the Court‘s role is to determine whether the

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settlement, taken as a whole, is fair, reasonable, and adequate. Staton v. Boeing Co., 327 F.3d

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938, 952 (9th Cir. 2003) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998).

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As noted in the Court‘s Preliminary Approval Order, the Ninth Circuit has established a list of
factors to consider when assessing whether a proposed settlement is fair, reasonable and adequate:

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Northern District of California

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(1) the strength of the plaintiffs‘ case; (2) the risk, expense, complexity, and likely duration of

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further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the benefits

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offered in the settlement; (5) the extent of discovery completed and the stage of the proceedings;

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(6) the experience and views of counsel; (7) the presence of a governmental participant; and (8)

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the reaction of the class members to the proposed settlement. See Churchill Village, L.L.C. v.

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Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004); see also Hanlon, 150 F.3d at 1026.

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2.

The Settlement

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The settlement class consists of all persons who were subject to a background check and/or

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consumer report requested by Uber before January 3, 2015. See Docket No. 222 (―Stip. Of Sett.‖)

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at ¶ 37. The Class is divided into two subgroups: those who are subject to an arbitration provision

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that was the subject of the Ninth Circuit enforceability ruling (―the ADR Group‖), and those who

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are not subject to such a provision (―the Court Group‖). There are 424,125 members of the ADR

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Group, and 601,829 members of the Court Group. See Docket No. 221-6, ¶ 70(a)(ii)-(iii). Under

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the Settlement, the gross settlement fund for the class is $7.5 million. See Stip. Of Sett. ¶ 42.

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There will be deductions (which include service awards, attorneys‘ fees and expenses, and Private

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Attorneys General Act (―PAGA‖) Payment to the California Labor and Workforce Development

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Agency (―LWDA‖)) from the gross settlement fund before there is distribution to the class. See

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generally Stip. of Sett. ¶ 20, 43; see also Docket No. 222-5 (―Settlement Agreement‖), Exh. E
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(―Settlement Notice) § 20. The net settlement funds will be distributed to the class under a

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―Settlement Share Calculation.‖ See Stip. of Sett. at 64. Class members will have to submit a

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claim form by January 15, 2018 to get money. Based on the formula stated in the Settlement

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Share Calculation, class members who are not subject to the arbitration agreements (the ―Court

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Group‖) will receive approximately twice the amount paid to those who are subject to the

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arbitration agreements (the ―ADR Group‖). Id. ¶ 62-63. Class Counsel submits that class

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members in the Court Group will receive a Settlement Share of approximately $73.99, while the

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class members in the ADR Group will receive a Settlement Share of approximately $32.15.3 See

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Wolfson Decl. at ¶ 16.
In exchange for the consideration provided in the settlement, class members agree to

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United States District Court
Northern District of California

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release all claims actually brought in this suit, as well as ―all background check claims that could

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have been asserted based on the allegations included in the Amended Master Complaint.‖ See

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Docket No. 264 at 19. Specifically, class members release all claims:

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arising out of or relating to any allegations made in the Action, any
legal theories that could have been raised based on the allegations in
the Action, and all claims of any kind relating in any way to, or
arising out of, background checks and/or consumer reports of any
kind presented in the Action based on the facts alleged in the
Complaint, including but not limited to claims under the Fair Credit
Reporting Act (―FCRA‖), California Consumer Reporting Agencies
Act, California Investigative Consumer Reporting Agencies Act,
California Private Attorney General Act claims pursuant to Cal.
Labor Code § 2699, based on alleged violations of California Labor
Code §1024.5, California Business and Professions Code section
17200, and Massachusetts CORI related claims. ―Settlement Class
Members‘ Released Claims‖ includes claims for actual, statutory,
liquidated, punitive or any other form of damages, as well as for
attorneys‘ fees and costs. ―Settlement Class Members‘ Released
Claims‖ shall be construed as broadly as possible to affect complete
finality over this Action. Provided, however, that no PAGA claims
or any other labor law claims are released except those asserted in
the Eleventh Cause of Action in the Amended Master Consolidated
Complaint, i.e. claims based on the impermissible use of consumer
credit reports for employment purposes, in violation of Labor Code
§ 1024.5. See In re Uber FCRA Litig., Docket No. 171 at 28-29.

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See Docket No. 284 at 2.

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This amount is subject to change, especially since the Court will be granting a smaller amount of
Attorneys‘ Fees and Service Awards.
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Separate and apart from the Settlement Fund, Uber will pay all settlement administration

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expenses. See Stip. of Sett. ¶ 53(a). These costs do not come out of the Settlement Fund, unless

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there are Residual Funds (i.e., un-deposited checks) remaining after payment of Settlement Shares

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to Class Members. Id. ¶ 64. Settlement Administration Expenses currently amount to

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$546,260.86, and are expected to rise by another $190,000.4 See Docket No. 264-3 (―Ferrara

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Decl.‖) at ¶ 27.
Predominance under Rule 23(b)(3) – Abeyta Objection II

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3.

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In opposing final approval, the class settlement objectors Thomas Abeyta, et. al.,

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subsequently filed an untimely objection,5 invoking the Ninth Circuit‘s opinion in In re Hyundai
& Kia Fuel Economy Litig., 881 F.3d 696 (9th Cir. 2018). See Docket No. 287 (―Abeyta Obj. II‖).

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United States District Court
Northern District of California

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Abeyta argues that this Court has not considered the impact of variations of state laws, and that

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predominance under Rule 23(b)(3) is not satisfied and thus the Settlement cannot be approved.

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See Abeyta Obj. II at 4. While the Ninth Circuit in In re Hyundai reiterated the importance of

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finding predominance under Rule 23(b)(3), particularly where numerous variation in applicable

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state law are extended, it cautioned that ―[v]ariations in state law do not necessarily preclude a

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23(b)(3) action.‖ In re Kyundai Kia Fuel Economy Litig., 881 F.3d 696, 691 (9th Cir. 2018)(citing

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Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998)). ―Even when some class

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members ‗possess slightly differing remedies based on state statute or common law‘, there may

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still be ‗sufficient common issues to warrant a class action.‘‖ Id. (citing Hanlon, at 1022–23).

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Here, Plaintiffs have alleged that Uber has violated the federal Fair Credit Reporting Act

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(―FCRA‖), 15 U.S.C. § 1681 et seq.; the California Investigative Consumer Reporting Agencies

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Act (―ICRAA‖), California Civil Code § 1786 et seq.; California Consumer Credit Reporting

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At the hearing for this motion on April 26, 2018, Class Counsel has submitted that these
expenses have risen even further due to the re-issuance of class notice to the 108 individuals.

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The Court has previously ordered that the deadline for Class Members to submit objections to
the proposed settlement or request exclusion was December 14, 2017. See Docket No. 252.
Further, notwithstanding the fact that Abeyta ignored the scope of the Court‘s Order re
Supplemental Briefing, which stated that supplemental briefs to be limited to the ―status and
results of the re-issuance of the class notice 108 Class Members‖, Abeyta also ignored the
deadline, which called for the filing of supplemental briefs by ―5:00 p.m. on April 20, 2018‖, and
filed his objection on April 24, 2018 instead. See Docket No. 282.
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Agencies Act (―CCRAA‖), California Civil Code § 1785.1 et seq.; the Private Attorneys General

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Act of 2004 (―PAGA‖); the California Unfair Competition Law (―UCL‖), Cal. Bus. & Prof. Code

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§§ 17200 et seq.; the Massachusetts Credit Reporting Act (―MCRA‖) M.G.L c. 93 §§ 50 et seq.;

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and the Criminal Offender Record Information (―CORI‖) requirements, M.G.L. c. 6 §§ 171A et

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seq. See Amend. MAC ¶¶ 1–2, 56–62. Abeyta points to no variation in state laws which would

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defeat a finding of predominance under Rule 23(b)(3). While the remedies under FCRA,

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California and Massachusetts Law might differ slightly, the statutes are substantially similar in all

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material respects, and there are common questions of fact and law which exist to all class

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members; these include whether Uber failed to (i) provide ―clear and conspicuous‖ notice in a
written document that consist solely of the disclosure that consumer background reports may be

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procured, (ii) obtain written authorization from consumers prior to obtaining consumer

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background reports, (iii) provide a summary of rights under applicable law prior to taking adverse

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actions against consumers, and (iv) provide copies of the consumer background reports prior to

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taking adverse actions against consumers. Id. As the Court previously explained in its Order

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Granting Plaintiffs‘ Motion for Preliminary Approval of Class Action Settlement (―Prelim. App.

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Order‖), see Docket No. 242 at 6–7, predominance is satisfied because all of Plaintiffs‘ claims

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arise from allegations of Uber‘s systemic practices and policies regarding consumer reports, and

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that liability may be determined on a class-wide basis. The Court thus finds that the complaint

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arises from a common nucleus of fact and law, and various state law such as ICRAA, MCRA and

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Massachusetts CORI are not materially different to defeat predominance under Rule 23(b)(3). See

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In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d 679, 691 (9th Cir. 2018) (citing Castano v. Am.

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Tobacco Co., 84 F.3d 734, 741 (5th Cir. 1996)).6

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Therefore, the Court OVERRULES Abeyta‘s objection. See Abeyta Obj. II.

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4.

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The Court has already assessed the relevant factors in determining the settlement appeared

Fair, Reasonable and Adequate Settlement

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Contrary to Abeyta‘s argument, predominance does not concern which law is most important to
the case, but whether the common issues predominate over individualized issues so as to render
class-based adjudication inefficient.
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to be fair, reasonable and adequate, given the risks involved in continued litigation. See Docket

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No. 242 (―Prelim. App. Order‖) at 9–11.

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Nothing has been presented to the Court which would alter that assessment. The only new

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material fact is the response of the class to the settlement. While the response rate is only around

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10% of all Class Members, see Wolfson Decl. ¶ 17, the response has been positive. Only 235

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Class Members (or so) have opted out in comparison with more than 99,243 who submitted valid

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claims. See Ferrara Decl. ¶ 16. Furthermore, of Abeyta‘s putative clients who purportedly opted

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out via a simple collective notice by Abeyta, the majority who responded to the second notice

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submitted claims rather than opting out. If anything, this underscores the adequacy of the

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Northern District of California

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settlement. See Ferrara Decl. II ¶ 6.
Abeyta also contests the settlement on the ground that the scope of releases is overbroad,

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encompassing claims not asserted in this case, such as individual claims under ICRAA which

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permits a statutory recovery of up to $10,000 if not part of a class. Courts can approve the release

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of claims that are beyond their jurisdiction. See, e.g., Matsushita Elec. Indus. Co. v. Epstein, 516

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U.S. 367, 369 (1996) (holding that release included in class settlement approved by state court

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precluded federal litigation, although claims at issue were ―within the exclusive jurisdiction of the

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federal courts.‖); see also Williams v. Boeing Co., 517 F.3d 1120, 1133-34 (9th Cir. 2008) (―‗It is

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well-settled that in order to achieve a comprehensive settlement . . . a court may permit the release

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of a claim based on the identical factual predicate as that underlying the claims in the settled class

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action even though the claim was not presented and might not have been presentable in the class

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action.‘‖).

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To be sure, the adequacy of a settlement must take into account not only the potential

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verdict value of the claims brought in the suit, but the potential value of claims released. Cf.

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O’Connor v. Uber Techs., Inc., No. 13-cv-3826-EMC, 201 F. Supp. 3d 1110 (N.D. Cal. 2016).

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Here, the Court already considered the verdict value of the FCRA claims, concluding the

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settlement amount here could be less than 1% of the $100 million to $1 billion verdict value in

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view of the substantial risks, including the risk that Plaintiffs would not be able to establish any

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violations were willful. See Prelim. App. Order at 9, 11.7 The added value of ICRAA and other

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claims released does not materially change the calculus. A claim under ICRAA under Cal. Civ.

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Code § 1786.50(a)(1) is not recoverable through class actions. A Class Member who wishes to

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recover the $10,000 statutory penalty under § 1786.50(a)(1) may opt out and pursue that claim on an

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individual basis and must bring his or her own individual action. Apart from the low likelihood of a

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significant number of individuals actually asserting such claim, any such claim faces substantial risks,

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risks described in this Court‘s earlier order. See Prelim. App. Order at 9–12. Moreover, those who

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want to preserve their individual ICRAA claim may opt out of this class settlement.

Accordingly, the Court reaffirms its finding that the settlement is fair, reasonable, and

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adequate. 8 See Churchill Village, 361 F.3d 566, 575. Thus, the Court GRANTS Plaintiffs‘

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Motion for Final Approval of Class Action Settlement.9

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B.

Motion for Service Awards

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Plaintiffs Wise, Farmer, and Christenson seek to be granted $5,000 as incentive awards

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each. See Docket No. 257 at 7. Plaintiffs Gillette and Mohamed, who have participated in the

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litigation since its initiation in November 2014, and have both agreed to give up valuable wage

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and hour claims against Uber, seek awards of $7,500. Id. However, the amount of time spent is

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disproportionate to the incentive awards — the three lead Plaintiffs Wise, Farmer and Christenson

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who seek $5,000, spent 29 hours, 19 hours, and 15.5 hours, respectively, in assisting their

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The California Supreme Court‘s decision in Dynamex Operations West, Inc. v. Superior Court
(Cal. S. Ct. No. S222732, Apr. 30, 2018) does not change the risk of, e.g., Plaintiffs‘ inability to
establish willfulness and, enforceable arbitration provisions.
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The Court also authorizes the PAGA payment in the amount of $7,500, of which 75% or
$5,625.00, will be paid to the California Labor and Workforce Development Agency (―LWDA‖)
as civil penalties, and 25% or $1,875.00 will be distributed to the settlement class members. See
Stip. of Sett. ¶ 20.
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The Court also OVERRULES the following objections as they are either groundless or
meritless: (1) Objection to Class Action Settlement by Christine Gussoin (―Gussoin Obj.‖), see
Docket No. 262; (2) Thomas Abeyta, et al.‘s Objection to Class Action Settlement filed by Audet
& Partners, LLP (―Abeyta Obj.‖), see Docket Nos. 263, 270; (3) Letter dated 12/9/17 from Olga
Ortmann re settlement rejection (―Ortmann Obj.‖), see Docket No. 260; (4) Letter dated
11/13/2017 from Korie Schmidt re settlement objection (―Schmidt Obj.‖), see Docket No. 259, (6)
the email dated 12/13/2017 from Scott Kahler re settlement objection, attached as Exhibit F to the
Declaration of Charles Ferrara (―Ferrara Decl.‖).
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attorneys. See Docket No. 257 at 14–18. Thus, the Court finds reasonable the Service awards for

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Plaintiffs Wise, Farmer and Christenson in the amounts of $4,500, $3,200 and $3000 respectively.

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With regards to the lead Plaintiffs Gillette and Mohamed who seek $7,500, Gillette delayed his

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bankruptcy filing indefinitely in order to safeguard his ability to serve as a Class Representative.

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See Docket 257-1 (―Gillette Decl.‖) at ¶ 21. Plaintiffs Gillette and Mohamed only spent 34 and 18

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hours assisting their attorneys respectively. The Court finds reasonable the Service Awards for

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Plaintiff Gillette and Mohamed in the amount of $7,500 and $5,000 respectively. See Docket No.

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257 at 14–18. As aforementioned, Plaintiffs‘ motion for service awards are GRANTED IN

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PART and DENIED IN PART.

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C.

Class counsel is asking for an award of $2,500,000 in attorneys‘ fees (which amounts to

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Northern District of California

Motion for Attorney‘s Fees

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one-third of the $7,500,000 Settlement Fund or 30.86% of the Settlement‘s total of approximately

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$8,102,00010 common fund), plus expenses of $47,512.18. See Docket No. 258 at 15. Class

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counsel submits that the lodestar has amounted to $3,166,410, on the basis of 4,757.6 hours. Id. at

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9. Class counsel thus contends that its fee request represents a negative multiplier of 0.7895. Id.

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at 29. While $2.5 million renders a negative multiplier, it is an upward departure from the Ninth

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Circuit‘s benchmark of 25% of the settlement fund. The Court must take into account results

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obtained. See Vizcaino v. Microsoft Corp., 142 F. Supp. 2d 1299, 1304 (W.D. Wash. 2001), aff‘d,

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290 F.3d 1043 (9th Cir. 2002); see also Hensley v. Eckerhart, 461 U.S. 424 (1983).

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Here, the settlement produced a very modest result. Recovery was less than 1% of the

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potential verdict value; even less when the broad scope of the waiver is considered. While the

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settlement also provided for non-monetary relief in the form of policy change, that agreement

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remained in effect for only one year. While the Court recognizes the risk inherent in this litigation

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and the caliber of counsel, factors which might otherwise warrant enhanced compensation,

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exceeding the 25% benchmark in this case in view of the very modest results obtained is not

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justified. Taking the settlement‘s total of $8,102,000, 25% fee award, consistent with the

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Class Counsel submits during the April 26, 2018 hearing that this amount is closer to $8.2-3
million due to the increased administrative expenses.
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benchmark, amounts to $2,025,500 in fees. The Court finds reasonable an award of $2,025,000 in

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attorneys‘ fees.
Plaintiffs‘ motion for attorney‘s fees is thus GRANTED IN PART and DENIED IN

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PART.
This order disposes of Docket Nos. 257, 258, and 264.

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IT IS SO ORDERED.

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Dated: May 2, 2018

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United States District Court
Northern District of California

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______________________________________
EDWARD M. CHEN
United States District Judge

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