Clemens et al v. Hair Club for Men, LLC

Filing 82

ORDER GRANTING FINAL APPROVAL OF CLASS SETTLEMENT by Hon. William Alsup granting in part and denying in part 79 Motion for Settlement.(whalc1, COURT STAFF) (Filed on 9/22/2016)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 12 TERESA CLEMENS, JORDAN SIMENSEN, and ADRIA DESPRES, individuals, for themselves and all members of the putative class and on behalf of aggrieved employees pursuant to the Private Attorneys General Act (“PAGA”), Plaintiffs, 13 14 15 16 17 No. C 15-01431 WHA v. HAIR CLUB FOR MEN, LLC, a Delaware corporation, and DOES 1 through 100, inclusive, ORDER GRANTING FINAL APPROVAL OF CLASS SETTLEMENT Defendants. / 18 INTRODUCTION 19 20 In this wage-and-hour class action, plaintiff moves for final approval of a class 21 settlement agreement, approval of an incentive award for the lead plaintiff, and an award of 22 attorney’s fees and costs to class counsel. For the reasons stated below, final approval of the 23 settlement is GRANTED, the request for the incentive awards is DENIED, the request for 24 attorney’s fees and costs is GRANTED IN PART AND DENIED IN PART, and approval of the 25 administration costs is GRANTED. 26 STATEMENT 27 The background of this action has been set forth in a prior order and needs not be 28 discussed in detail herein (Dkt. No. 60). In brief, plaintiffs Teresa Clemens, Jordan Simensen, and Adria Despres, bring claims against their former employer, defendant Hair Club for Men, LLC, alleging various claims arising out of Hair Club’s meal-period and rest-break practices 1 and for penalties for alleged inaccuracies on wage statements under Section 226 of the 2 California Labor Code. An order certified a class only as to plaintiffs’ wage-statement claims 3 and appointed Clemens and Simensen (but not Despres) as lead plaintiffs. The class includes 4 197 employees and former employees of Hair Club. 5 Throughout the case, both before and after certification of the class, the parties engaged 6 in extensive classwide discovery, including thousands of pages of written discovery, significant 7 research, interviews of class members, and thirty-eight depositions (fifteen taken by plaintiffs, 8 twenty-three by defendant, all lasting at least an hour and averaging more than three hours). 9 Following class certification, the parties attended a four-and-one-half-hour settlement conference before Magistrate Judge Joseph C. Spero at which they negotiated the instant 11 For the Northern District of California United States District Court 10 classwide settlement agreement. 12 Briefly, the settlement requires Hair Club to establish a non-reversionary settlement 13 fund of $500,000, from which shall be deducted $47,500 to settle the individual plaintiffs’ non- 14 certified claims, any incentive award to our lead plaintiffs, Clemens and Simensen, any award 15 of attorney’s fees and costs, a payment of $3,750 to the California Labor & Workforce 16 Development Agency pursuant to the Private Attorneys General Act (with $1,250 to be paid to 17 PAGA-eligible class members), and administrative costs. The remaining funds are to be 18 distributed to class members based on their pro rata shares, with each class member’s 19 individual share determined based on of the number of pay periods worked by that class 20 member during the class period as a proportion of the total number of pay periods worked by all 21 class members during the class period. 22 The claims administrator will mail settlement checks and tax documents to each class 23 member on a list provided by counsel, with the amount owed to be calculated based on Hair 24 Club’s payroll records. There will be no claims process. 25 After proper notice, no objections to the settlement have been filed or received by 26 counsel, the Court, or the class administrator. No members of the class opted out of the 27 settlement agreement (Salinas Decl. ¶¶ 9–10). The settlement agreement provides for an 28 average cash payment of nearly one thousand dollars to each class member after all of the deductions above. The classwide release is limited to the certified claims. 2 1 Plaintiffs now move for final approval of the settlement agreement. Class counsel also 2 moves for an award of (1) $175,000 in attorney’s fees, (2) $80,000 in costs, and (3) a $1250 3 incentive award to each class representatives (for a total of $2500). Finally, class counsel seeks 4 approval of a payment of $5100 in administration costs to the class administrator. This order 5 follows a brief from plaintiffs, a statement of non-opposition from defendant, and oral 6 argument. 7 8 9 ANALYSIS “A settlement should be approved if it is fundamentally fair, adequate and reasonable.” Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993) (internal quotations omitted). 11 For the Northern District of California United States District Court 10 1. 12 To win final approval, a class settlement must be fair, reasonable, and adequate. 13 14 THE SETTLEMENT AGREEMENT IS FAIR, REASONABLE, AND ADEQUATE. FRCP 23(e)(2); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). This settlement is grounded in a $500,000 cash payout, to be allocated among class 15 members after certain deductions. As stated in the order granting preliminary approval of the 16 settlement, Section 226(e)(1) of the California Labor Code, which provides for statutory 17 damages for the only claim certified (allegedly improper wage statements), caps an individual’s 18 recovery at $4,000 without accounting for attorney’s fees and costs, and the class faced 19 significant risk that it would recover zero (Dkt. No. 75 at 7). The discount on the total available 20 recovery is fair, reasonable, and adequate in light of that risk. 21 None of the class members opted out of the settlement, and no one objected following 22 preliminary approval of the settlement. At the hearing on the instant motion for final approval, 23 the Court gave an opportunity for any class member to raise any issue relating to the settlement, 24 even though no class members filed objections. No class member appeared. 25 This order finds the settlement is fair, reasonable, and adequate. 26 2. 27 Despite the settlement agreement and defendant’s acquiescence to the attorney’s fees 28 ATTORNEY’S FEES AND COSTS. sought, a court must still ensure that the attorney’s fees and costs awarded are “fair, reasonable, and adequate.” See Staton v. Boeing, Co., 327 F.3d 938, 963–64 (9th Cir. 2003). Common 3 1 fund fees, as we have here, are consistent with the “American Rule” (i.e., that each party pays 2 for its own litigation expenses), and “a litigant or lawyer who recovers from the common fund 3 for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s 4 fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). 5 District courts in this circuit may use two different approaches to gauge the 6 reasonableness of a requested fee award under the traditional common-fund approach. The first 7 is the lodestar method, whereby a reasonable number of hours is multiplied by a reasonable 8 hourly rate. The lodestar may include a risk multiplier to enhance the fees under certain 9 circumstances, in which a court considers “the quality of the representation, the benefit obtained for the class, the complexity and novelty of the issues presented, and the risk of nonpayment.” 11 For the Northern District of California United States District Court 10 Hanlon, 150 F.3d at 1026. Our court of appeals, however, also allows a calculation based upon 12 a percentage of the common fund. See Staton, 327 F.3d at 967–68. The benchmark percentage 13 is 25 percent. See Hanlon, 150 F.3d at 1026. Here, the requested $175,000 in attorney’s fees 14 equals approximately 35 percent of the total settlement fund. It also represents 52 percent of 15 class counsel’s claimed lodestar of $338,622.50 (Bickford Decl. ¶ 13). 16 Counsel also requests an award of costs of $80,000, to be paid from the settlement fund. 17 Class counsel John Bickford filed a declaration detailing the expenses he and his firm incurred 18 for a total of $80,226.85. The descriptions of the costs incurred are too bare bones to properly 19 vet, though several expenses for overnight services and the significant cost of deposition 20 services suggest that counsel seeks reimbursement for certain expenses incurred solely for the 21 sake of convenience, to which they are not entitled. 22 More critically, class counsel’s calculations of their lodestar and costs is plagued by a 23 glaring omission. They seek fees and costs for the entirety of the preparation of this case, 24 although only one of plaintiffs’ five claims won certification. Indeed, the claims that the Court 25 declined to certify constituted the heart of the motion for class certification and concerned more 26 substantive issues (workplace conditions as opposed to wage-statement formatting). Tellingly, 27 the individual plaintiffs are set to recover nearly ten times more from the settlement of their 28 individual claims than they will from the settlement of their certified claim. 4 1 Counsel failed to reduce their lodestar and costs calculations to account for the fact that 2 our class did not benefit from the vast majority of that work — work that will need to be 3 performed again if our class members pursue the claims that were not certified. This order will 4 not require the class to pay for all of counsel’s unsuccessful pre-certification work, particularly 5 where that work resulted in significant recovery for the individual plaintiffs. Nevertheless, in 6 light of the reasonable recovery actually realized, this order finds a fee award of $125,000 7 (25% of the settlement fund) and costs totaling $50,000 reasonable and fair to both counsel and 8 the class. 9 As stated at the hearing, class counsel may file supplemental materials explaining why the class should bear the full brunt of the costs and providing greater detail for each line item so 11 For the Northern District of California United States District Court 10 that the class does not pay for enhanced costs incurred solely for counsel’s convenience. Any 12 factual material must be supported by a sworn declaration and submitted by THURSDAY, 13 OCTOBER 6 AT NOON. 14 3. 15 Plaintiffs seek approval of an incentive award of $1250 for each lead plaintiff to be paid INCENTIVE AWARD. 16 from the settlement fund (for a total of $2500). True, plaintiffs spearheaded this lawsuit and 17 committed time to the litigation both in working with counsel and in sitting for extensive 18 depositions. Nevertheless, as stated, the settlement of their individual claims dwarfs the 19 recovery of any individual class member. Specifically, $47,500 is to be allocated among class 20 representatives Clemens and Simensen as well as Despres (who was not certified as a class 21 representative), while each class member will receive an average of one thousand dollars. 22 Moreover, while class counsel’s calculation of their lodestar does not facilitate thorough 23 analysis, it appears substantially likely that even after the reduction of the fee award to 25% of 24 the settlement fund, our individual plaintiffs are still effectively sticking the class as a whole 25 with a hefty portion of the bill for the prosecution of their individual claims. This order finds no 26 incentive award is appropriate. ADMINISTRATION COSTS. 27 4. 28 Plaintiffs seek approval for a payment of $5100 to the claims administrator, Simpluris, Inc. The Court preliminarily approved the settlement with the understanding that 5 1 administration costs would not exceed $5677. The final cost came in under budget. The claims 2 administration costs are hereby APPROVED. 3 4 CONCLUSION For the reasons stated above, final approval of the settlement is GRANTED, the request 5 for the incentive awards is DENIED, and approval of the administration costs is GRANTED. 6 Attorney’s fees in the amount of $125,000 and costs in the amount of $50,000 shall be awarded 7 to class counsel. If class counsel wish to file supplemental materials in an effort to support a 8 greater award of costs, they may do so by OCTOBER 6 AT NOON. 9 they are entitled to receive, and there is no further work to be done. 11 For the Northern District of California United States District Court 10 The disbursement for fees shall not be paid until all class members have received what By OCTOBER 6 AT NOON, the parties shall submit a stipulated form of judgment that 12 specifically identifies the individuals who are subject to the judgment herein as well as those 13 class members who are not subject to the judgment because notice could not be delivered. By 14 DECEMBER 1 AT NOON, counsel shall certify to the Court that all class members have received 15 their checks or explain why not and how the snafu will be cured. 16 17 IT IS SO ORDERED. 18 19 Dated: September 22, 2016. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 6

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