Richard Terry v. Hoovestol, Inc.
Filing
65
ORDER GRANTING PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION by Judge Jon S. Tigar granting 62 Motion for Settlement. Fairness Hearing set for 5/9/2019 at 2:00 PM in Courtroom 9, 19th Floor, San Francisco. (wsn, COURT STAFF) (Filed on 12/7/2018)
1
2
3
4
UNITED STATES DISTRICT COURT
5
NORTHERN DISTRICT OF CALIFORNIA
6
RICHARD TERRY,
7
Plaintiff,
8
v.
9
HOOVESTOL, INC.,
10
Defendant.
11
United States District Court
Northern District of California
Case No. 16-cv-05183-JST
ORDER GRANTING PRELIMINARY
APPROVAL OF CLASS ACTION
SETTLEMENT AND PROVISIONAL
CLASS CERTIFICATION
Re: ECF No. 62
12
Before the Court is Plaintiff’s renewed motion for preliminary approval of a class action
13
14
settlement and provisional certification of the class. ECF No. 62. For the reasons below, the
15
Court will grant the motion in full.
16
I.
BACKGROUND
17
A.
The Parties and Claims
18
Plaintiff Richard Terry is a former truck driver for Defendant Hoovestol, Inc. ECF No. 1-1
19
¶ 27. Hoovestol hauls bulk mail for the United States Postal Service (“USPS”) and employs truck
20
drivers in California. Id. ¶¶ 36-37. Terry brings this putative wage and hour class action for
21
violations of California Labor Code Sections 226(b), 226.7, 510, 512, 515, 558, and 1194 as well
22
as California Code of Regulations Title 8 Section 11090. Id. ¶ 24. He alleges causes of action for:
23
failure to pay all straight time wages; failure to pay overtime; failure to provide meal periods;
24
failure to authorize and permit rest periods; knowing and intentional failure to comply with
25
itemized employee wage statement provisions; failure to pay all wages due at the time of
26
termination of employment; and violation of Unfair Competition Law. ECF No. 62 at 12.
27
B.
Procedural History
28
Terry filed the initial complaint in this action in the Alameda County Superior Court on
1
July 20, 2016. ECF No. 62 at 12. On September 8, 2016, Hoovestol removed the case to this
2
Court pursuant to the Class Action Fairness Act (“CAFA”). Id. On February 2, 2018, Terry filed
3
a motion for class certification, proposing seven subclasses. See ECF No. 41. After Hoovestol’s
4
opposition and Terry’s reply were filed, the Court ordered supplemental briefing regarding
5
whether the subclasses satisfied the numerosity requirement of Rule 23. ECF No. 46. On March
6
30, 2018, Terry filed a supplemental brief and a motion to strike. ECF Nos. 47, 49. Hoovestol
7
also provided supplemental briefing. See ECF Nos. 50, 51.
After the exchange of discovery, mediation, and continued negotiation following
8
9
mediation, the parties reached a proposed class action settlement. ECF No. 62 at 14. On June 14,
2018, Terry moved for preliminary approval of the proposed class action settlement including
11
United States District Court
Northern District of California
10
conditional certification of the settlement class. ECF No. 55. Terry’s motions for class
12
certification and to strike were terminated as moot on June 18, 2018 in light of this motion. ECF
13
No. 56. The Court denied Terry’s motion for preliminary approval and identified four obvious
14
deficiencies in the proposed class action settlement: lack of a driving nexus between the plaintiff
15
class and proposed cy pres beneficiaries; an overbroad release provision; a too-short opt-out
16
period; and lack of any provision for a second distribution of unredeemed checks. ECF No. 59.
Terry now renews his motion for preliminary settlement approval and provisional class
17
18
certification. ECF No. 62. Pursuant to CAFA, Hoovestol sent notice of the proposed settlement
19
to the United States Attorney General and the Attorney General of the State of California on
20
October 5, 2018. ECF No. 63. No Attorney General has submitted a statement of interest or
21
objection in response to these notices.
22
II.
CLASS CERTIFICATION
23
A.
Legal Standard
24
Class certification under Rule 23 of the Federal Rules of Civil Procedure is a two-step
25
process. First, a plaintiff must demonstrate that the four requirements of Rule 23(a) are met:
26
numerosity, commonality, typicality, and adequacy. “Class certification is proper only if the trial
27
court has concluded, after a ‘rigorous analysis,’ that Rule 23(a) has been satisfied.” Wang v.
28
Chinese Daily News, Inc., 709 F.3d 829, 833 (9th Cir. 2013) (quoting Wal-Mart Stores, Inc. v.
2
1
2
Dukes, 131 S. Ct. 2541, 2551 (2011)).
Second, a plaintiff must establish that the action meets one of the bases for certification in
3
Rule 23(b). Here, because he relies on Rule 23(b)(3), Plaintiff must establish that “questions of
4
law or fact common to class members predominate over any questions affecting only individual
5
members, and . . . [that] a class action is superior to other available methods for fairly and
6
efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). Plaintiff bears the burden of
7
demonstrating by a preponderance of the evidence that all four requirements of Rule 23(a) and at
8
least one of the three requirements under Rule 23(b) are met. See Wal-Mart, 131 S. Ct. at 2551.
9
10
B.
Proposed Class
Terry requests that the Court provisionally certify the class for settlement purposes, a
United States District Court
Northern District of California
11
request Hoovestol does not oppose. ECF No. 62 at 26. The Settlement Agreement defines the
12
class as follows:
13
14
15
All persons who are or have been employed by Defendant in the State of California as
hourly truck drivers at any time between July 20, 2012, to the date the Court issues an
order granting preliminary approval of the settlement and who did not execute an
individual release of the claims.
Settlement Agreement ¶ I.E. Terry explains that, because he did not sign an individual release, it
16
is unclear whether he would be considered an adequate and typical representative of those who
17
did; thus, those employees are excluded from the class. ECF No. 62 at 13 n.5.
18
C.
Analysis
19
For the reasons set forth below, the Court grants the request to provisionally certify the
20
settlement class.
21
1.
22
23
Rule 23(a)(1): Numerosity
To be properly certified a class must be “so numerous that joinder of all members is
impracticable.” Fed. R. Civ. P. 23(a)(1). Here, Plaintiff’s proposed class includes approximately
24
39 class members. ECF No. 62 at 35. While the case involved approximately 338 drivers at its
25
inception, individual settlement efforts by Hoovestol have whittled that number down to the 39
26
proposed class members remaining. Id.
27
There is no fixed numerical threshold class members must exceed to satisfy the numerosity
28
3
1
requirement. Rannis v. Recchia, 380 Fed. App’x 646, 651 (9th Cir. 2010). “A class or subclass
2
with more than 40 members raises a presumption of impracticability of joinder” on numbers alone.
3
West v. Cal. Servs. Bureau, Inc., 323 F.R.D. 295, 303 (N.D. Cal. 2017) (quotation and internal
4
alterations omitted). Meanwhile, a class with fewer “than 21 does not.” Ries v. Ariz. Beverages
5
USA LLC, 287 F.R.D. 523, 536 (N.D. Cal. 2012). Because Plaintiff’s proposed class contains 39
6
members, the Court finds that it is sufficiently numerous to render joinder impracticable.
7
8
9
2.
Rule 23(a)(2): Commonality
A Rule 23 class is certifiable only if “there are questions of law or fact common to the
class.” Fed. R. Civ. P. 23(a)(2). For the purposes of Rule 23(a)(2), “even a single common
question” is sufficient. Wal-Mart, 131 S. Ct. at 2556 (quotation and internal alterations omitted).
11
United States District Court
Northern District of California
10
The common contention, however, “must be of such a nature that it is capable of classwide
12
resolution – which means that determination of its truth or falsity will resolve an issue that is
13
central to the validity of each one of the claims in one stroke.” Id. at 2551.
14
As Terry explains, all members of the proposed class share common questions – for
15
instance, whether Hoovestol’s policies deprived them of compliant meal and rest periods. ECF
16
No. 62 at 27. This, along with the other shared legal questions as to Hoovestol’s liability in this
17
case, satisfies the commonality requirement.
18
19
3.
Rule 23(a)(3): Typicality
In certifying a class, courts must find that “the claims or defenses of the representative
20
parties are typical of the claims or defenses of the class.” Fed R. Civ. P. 23(a)(3). “The purpose
21
of the typicality requirement is to assure that the interest of the named representative aligns with
22
the interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). “The
23
test of typicality ‘is whether other members have the same or similar injury, whether the action is
24
based on conduct which is not unique to the named plaintiffs, and whether other class members
25
have been injured by the same course of conduct.’” Id. (quoting Schwartz v. Harp, 108 F.R.D.
26
279, 282 (C.D. Cal. 1985)).
27
28
Plaintiff Richard Terry is a former Hoovestol truck driver. ECF No. 1-1 ¶ 27. His claims
and those of the potential class members rely on the same policies of Hoovestol – for instance, the
4
1
claim that Hoovestol does not provide compliant meal and rest periods. ECF No. 62 at 27. This
2
satisfies the typicality requirement.
3
4
4.
Rule 23(a)(4): Adequacy
“The adequacy of representation requirement . . . requires that two questions be addressed:
5
(a) do the named plaintiffs and their counsel have any conflicts of interest with other class
6
members and (b) will the named plaintiffs and their counsel prosecute the action vigorously on
7
behalf of the class?” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir. 2000).
8
9
No party has suggested, and the Court has not found, any evidence in the record suggesting
that Terry has any conflict of interest with the other class members. Terry shares common claims
with the proposed class, seeks the same relief they do, and bases his claims on the same
11
United States District Court
Northern District of California
10
underlying facts and common injury. ECF No. 62 at 28. Further, Terry’s lead counsel has
12
submitted a declaration highlighting his experience litigating wage and hour class actions in the
13
transportation industry under California law. See ECF No. 62-1 ¶ 14. The Court concludes that
14
Terry and his counsel will adequately represent the proposed class.
15
16
5.
Rule 23(b)(3): Predominance and Superiority
To certify a Rule 23 damages class, the Court must find that “questions of law or fact
17
common to class members predominate over any questions affecting only individual members,
18
and [that] a class action is superior to other available methods for fairly and efficiently
19
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The predominance inquiry “tests whether
20
proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem
21
Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997). “When common questions present a
22
significant aspect of the case and they can be resolved for all members of the class in a single
23
adjudication, there is clear justification for handling the dispute on a representative rather than on
24
an individual basis.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998).
25
Again, the dominant legal issue here is whether Hoovestol provided timely and duty-free
26
meal and rest periods to Terry and the rest of the proposed class. Terry alleges that his claims are
27
based on uniform, class-wide policies. The Court finds that the various questions surrounding
28
those policies predominate over any questions that could affect only individual class members. A
5
1
class action is also a superior method for fairly and efficiently adjudicating those questions.
2
Resolving the proposed class members’ disputes in a single class action will be far more efficient
3
than requiring them each to proceed individually. The Court concludes that the proposed class
4
satisfies the requirements of Rule 23(b)(3).
Accordingly, the Court finds that provisional certification of the proposed class is
5
6
appropriate for the purposes of settlement.
7
III.
PRELIMINARY APPROVAL
8
A.
Legal Standard
9
The Ninth Circuit maintains a “strong judicial policy” that favors the settlement of class
actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). “The initial
11
United States District Court
Northern District of California
10
decision to approve or reject a settlement proposal is committed to the sound discretion of the trial
12
judge.” City of Seattle, 955 F.2d at 1276 (citation omitted). The court’s task at the preliminary
13
approval stage is to determine whether the settlement falls “within the range of possible approval.”
14
In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1080 (N.D. Cal. 2007). Then, courts must
15
hold a hearing pursuant to Rule 23(e)(2) to make a final determination of whether the settlement is
16
“fair, reasonable, and adequate.”
17
Preliminary approval of a settlement is appropriate if “the proposed settlement appears to
18
be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does
19
not improperly grant preferential treatment to class representatives or segments of the class, and
20
falls within the range of possible approval.” In re Tableware, 484 F. Supp. 2d at 1079 (quotations
21
omitted). The proposed settlement need not be ideal, but it must be fair and free of collusion,
22
consistent with counsel’s fiduciary obligations to the class. Hanlon v. Chrysler Corp., 150 F.3d
23
1011, 1027 (9th Cir. 1998) (“Settlement is the offspring of compromise; the question we address is
24
not whether the final product could be prettier, smarter or snazzier, but whether it is fair, adequate
25
and free from collusion.”). To assess a settlement proposal, courts must balance a number of
26
factors:
27
28
the strength of the plaintiffs’ case; the risk, expense, complexity, and likely
duration of further litigation; the risk of maintaining class action status throughout
6
1
2
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.
3
Id. at 1026 (citations omitted). The proposed settlement must be “taken as a whole, rather than the
4
individual component parts” in the examination for overall fairness. Id. Courts do not have the
5
ability to “delete, modify, or substitute certain provisions”; the settlement “must stand or fall in its
6
entirety.” Id.
7
8
9
B.
Terms of the Settlement
Under the terms of the agreement, Defendant agrees to pay no more than $100,000 as a
gross settlement amount, without admitting liability. ECF No. 62-2 (“Settlement Agreement”) ¶¶
III.A, III.L.1. This amount includes Plaintiff’s attorneys’ fees and costs, the cost of class notice
11
United States District Court
Northern District of California
10
and settlement administration, the class representative’s enhancement award, and
12
13
14
15
16
17
18
19
20
21
22
employer/employee payroll taxes on the portion of the settlement payments deemed wages. Id.
¶ I.V. Plaintiff’s counsel will seek $25,000 in attorneys’ fees and no more than $20,000 in
litigation costs. Id. ¶¶ I.D, I.M. The gross settlement amount includes $3,000 for settlement
administration costs. Id. ¶ I.B. In addition, Terry will be paid an enhancement award of $2,500 in
exchange for the general release of all his claims against Hoovestol. Id. ¶¶ I.L, III.K. After these
deductions from the gross settlement amount, approximately $49,500 will remain to be distributed
among the participating class members. ECF No. 62 at 23. Each participating class member will
receive a proportion of the amount “equal to (i) the number of weeks he or she worked for
[Hoovestol] in California . . . divided by (ii) the total number of weeks worked by all Participating
Class Members.” Settlement Agreement ¶ III.F.1.a. Sixty percent of each individual’s share is
intended to settle claims for unpaid wages and forty percent is intended to settle claims for interest
23
and penalties. Id. ¶¶ III.F.2.a, 2.b. The portion for unpaid wages will be “reduced by applicable
24
payroll tax withholdings and deductions.” Id.
25
26
27
Class members who wish to object must mail a written objection to the court no later than
sixty days after the settlement administrator mails the class notices. Id. ¶ III.I.4. Class members
may opt-out of the settlement by mailing a written request for exclusion to the settlement
28
7
1
administrator no later than sixty days after the settlement administrator mails the class notices. Id.
2
¶ III.I.5. The Settlement Agreement further provides that when checks mailed to participating
3
class members are not redeemed or deposited within ninety days, the settlement administrator will
4
mail a reminder postcard. Id. ¶ III.I.11. Ninety days after the reminder notice is mailed, funds
5
from any unredeemed checks will be paid to the United Way of California. Id.
6
In exchange for the settlement awards, participating class members will release Hoovestol
7
from liability as to “all known and unknown state law claims that both: (1) were alleged or that
8
could have been alleged based on the facts plead in the complaints filed in the matter; and ([2])
9
concern, arise out of, relate to, or are based upon Defendant’s failure to pay all wages, including
straight time and overtime wages; failure to provide meal and rest periods; knowing and
11
United States District Court
Northern District of California
10
intentional failure to comply with itemized employee wage statement provisions; failure to pay all
12
wages timely, including wages due at the time of termination; and violations of California’s Unfair
13
Competition Law.” Id. ¶ I.BB.
14
C.
Analysis
15
The Court’s order on Terry’s earlier motion preliminarily approved of the proposed
16
settlement in many respects. The Court concluded: that the negotiations and agreement were non-
17
collusive and likely to benefit the class; that resolution through settlement was appropriate in light
18
of the risks inherent in further litigation; that the gross settlement amount, attorneys’ fees, costs,
19
and enhancement award were all within the range of possible approval; that the parties conducted
20
sufficient discovery to make an informed decision about the settlement; that class counsel’s views
21
of the settlement agreement weighed in favor of approval; that the settlement agreement did not
22
provide improper preferential treatment to any class member; and that the proposed notice
23
procedure met the requirements of Federal Rule of Civil Procedure 23(c)(2)(B). ECF No. 59. The
24
provisions upon which the Court based these conclusions remain unchanged, as do the Court’s
25
corresponding conclusions. The Court now addresses only those portions of the proposed
26
settlement agreement that the parties have modified to remedy the deficiencies previously
27
identified by the Court. See ECF No. 59 at 8-10. The Court concludes those defects have been
28
corrected and accordingly, grants preliminary approval of the proposed settlement.
8
1
1.
Cy Pres Distribution of Unclaimed Funds
2
The prior agreement provided that funds from unredeemed checks would be paid to the
3
State Treasury for the Trial Court Improvement and Modernization Fund and the Equal Access
4
Fund of the Judicial Branch. ECF No. 55-2 ¶ III.I.11. The Settlement Agreement now names the
5
United Way of California as the cy pres recipient of these unclaimed funds. Settlement
6
Agreement ¶ III.I.11. As the Agreement explains, the United Way provides direct service
7
“programs aimed at promoting steady, gainful employment of Californians,” as well as advocating
8
for the interests of employees at a policy level. Id. Because this is a class action brought by
9
employees against their employer, the Court concludes that the parties have met their burden to
show “a driving nexus between the plaintiff class and the cy pres beneficiaries.” Dennis v.
11
United States District Court
Northern District of California
10
Kellogg Co., 697 F.3d 858, 865 (9th Cir. 2012) (citation omitted). An award to the United Way of
12
California is “guided by (1) the objectives of the underlying statute(s) and (2) the interests of the
13
silent class members.” Id. (citation omitted). Accordingly, the cy pres distribution plan described
14
in the revised Settlement Agreement poses no barrier to preliminary approval.
15
16
2.
Release of Class Members’ Claims
Under the former Settlement Agreement, participating class members would release
17
Hoovestol from liability as to “all known and unknown state law claims that were alleged or that
18
could have been alleged based on the facts of the complaints filed in the matter.” ECF No. 55-2 ¶
19
I.BB. Terry’s release – which ran “from the beginning of time” – was even broader. ECF No. 55
20
at 11. The Court rejected the proposed release in the former Settlement Agreement as overbroad
21
and “beyond the scope of the present litigation” because it released all state law claims based on
22
the facts of the complaint without regard to the breadth of Plaintiffs’ allegations in the complaint.
23
See Otey v. CrowdFlower, Inc., No. 12-CV-05524-JST, 2014 WL 1477630, at *7 (N.D. Cal. Apr.
24
15, 2014); see also McKeen-Chaplin v. Franklin Am. Mortg. Co., No. C 10-5243 SBA, 2012 WL
25
6629608, at *3 (N.D. Cal. Dec. 19, 2012). In the release now proposed by the parties,
26
participating class members will release Hoovestol from liability as to “all known and unknown
27
state law claims that both: (1) were alleged or that could have been alleged based on the facts
28
plead in the complaints filed in the matter; and ([2]) concern, arise out of, relate to, or are based
9
1
upon Defendant’s failure to pay all wages, including straight time and overtime wages; failure to
2
provide meal and rest periods; knowing and intentional failure to comply with itemized employee
3
wage statement provisions; failure to pay all wages timely, including wages due at the time of
4
termination; and violations of California’s Unfair Competition Law.” Settlement Agreement
5
¶ I.BB. Because this release is limited to the factual claims raised in the complaint, the Court
6
approves of the revised release provision. The Court observes with approval that Terry’s release
7
has also been narrowed, and now runs only “from the beginning of his employment with
8
Defendant.” ECF No. 62 at 15.
9
3.
10
Notice Procedure
The prior agreement set the deadline to opt-out or object to the settlement at 45 days after
United States District Court
Northern District of California
11
mailing of the initial notice. ECF No. 55-2 ¶¶ III.I.4, I.5. As the Court noted, “any period shorter
12
than 60 days is too short a time to allow class members to properly respond.” Thomas v.
13
Magnachip Semiconductor Inc., No. 14-CV-01160-JST, 2016 WL 1394278, at *8 (N.D. Cal. Apr.
14
7, 2016). The revised Settlement Agreement now sets the opt-out and objection deadlines at 60
15
days after the initial notice is mailed. Settlement Agreement ¶¶ III.I.4, I.5. With this deficiency
16
addressed, the Court preliminarily approves the parties’ proposed notice procedure.
17
4.
Second Distribution
18
Finally, the Court noted in its earlier order that the parties planned to pay funds from
19
unredeemed checks to the cy pres beneficiary after 180 days rather than attempting a second
20
distribution. See ECF No. 55-2 ¶ III.I.11. The Court instructed the parties to either include a
21
second distribution in their agreement or explain why attempting a second distribution would be
22
infeasible or inappropriate. ECF No. 59 at 10 n.3. In the renewed motion for settlement approval,
23
the parties explain that they feel a reminder postcard at the 90-day mark is an appropriate
24
substitute for a second distribution because otherwise, class members “may try to cash both checks
25
they receive – from the first and second distributions – thinking that they were entitled to both.”
26
ECF No. 62 at 24. Instead, the reminder postcard will prompt them to either cash their check or
27
obtain a new check if their original check was lost or misplaced. Id. The Court accepts the
28
parties’ explanation, and thus will preliminarily approve the settlement although it does not
10
1
provide for a second distribution.
CONCLUSION
2
3
Because Terry’s renewed motion for preliminary approval and provisional certification
4
corrects the deficiencies addressed in the Court’s earlier order, the Court GRANTS the motion.
5
The proposed class is hereby provisionally certified for the purposes of settlement. The Court
6
grants preliminary approval of the settlement and approves of the proposed notice procedure and
7
form. The Court will hold a final approval hearing on Thursday, May 9, 2019 at 2:00 p.m., as
8
requested by the parties.1
IT IS SO ORDERED.
9
10
Dated: December 7, 2018
______________________________________
JON S. TIGAR
United States District Judge
United States District Court
Northern District of California
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1
The parties must also add 49 days to each of the other deadlines leading up to the final approval
hearing, see ECF No. 62-6, including in the form of notice, ECF No. 62-2.
11
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?