Wehlage v. EmpRes Healthcare Inc et al

Filing 113

ORDER by Judge Claudia Wilken Granting 107 Motion for Settlement (ndr, COURT STAFF) (Filed on 6/25/2012)

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION
Phyllis Wehlage, et al., on behalf of
themselves and all others similarly situated,
Plaintiffs,

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v.
Evergreen at Arvin LLC; Evergreen at
Bakersfield LLC; Evergreen at Lakeport
LLC; Evergreen at Heartwood LLC;
Evergreen at Springs Road LLC; Evergreen
at Tracy LLC; Evergreen at Oroville LLC;
Evergreen at Petaluma LLC; Evergreen at
Gridley (SNF) LLC; Evergreen at Chico
LLC; Evergreen at Salinas LLC; Evergreen
at Fullerton LLC,

Case No. 4:10-cv-05839-CW
ORDER PRELIMINARILY APPROVING
CLASS ACTION SETTLEMENT,
CERTIFYING SETTLEMENT CLASS,
APPROVING PROPOSED NOTICE, AND
SCHEDULING
FINAL FAIRNESS HEARING

Defendants.

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Upon review and consideration of the Settlement Agreement and its exhibits

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(“Settlement”), which have been filed with the Court, it is hereby ORDERED and ADJUDGED

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as follows:

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1.

The parties have agreed to settle the above-referenced action upon the

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terms and conditions set forth in the Settlement. The definitions in the Settlement are hereby

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incorporated as though fully set forth in this Order. This Court has jurisdiction over the subject

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matter and parties to this action pursuant to 28 U.S.C. § 1332(d)(2) and 28 U.S.C. § 1453.
[PROPOSED] ORDER
Case No. 4:10-cv-05839-CW

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2.

The Settlement, including all exhibits thereto, is preliminarily approved as

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fair, reasonable, and adequate. The Plaintiffs, by and through their counsel, have investigated the

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facts and law related to the matters alleged in their Complaint, have engaged in extensive motion

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practice, and have evaluated the risks associated with continued litigation, trial, and/or appeal.

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The Court finds that the Settlement was reached in the absence of collusion, is the product of

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informed, good-faith, arms-length negotiations between the parties and their capable and

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experienced counsel, and was reached with the assistance of a well-qualified and experienced

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mediator, Catherine A. Yanni. The Court further finds that the proposed Settlement Class meets

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the requirements of Federal Rules of Civil Procedure 23(a) and 23(b)(2) and should be certified

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for settlement purposes only; that the Named Plaintiffs should be appointed class representatives

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and the attorneys identified below should be appointed as Class Counsel; and that it is appropriate

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to effectuate notice to the Settlement Class and to schedule a Final Approval Hearing to assist the

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Court in determining whether to grant Final Approval to the Settlement and enter Final Judgment.

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3.

The Court finds that the Settlement confers substantial benefits upon the

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Settlement Class, particularly in light of the damages that Plaintiffs and Class Counsel believe are

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recoverable at trial, without the costs, uncertainty, delays, and other risks associated with

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continued litigation, trial, and/or appeal. Under the Settlement, Defendants have agreed to a

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stipulated Injunction that requires them to consistently utilize staffing practices at their skilled

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nursing facilities which will ensure that they comply with applicable California law. The record

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before the Court shows that this injunction carries a substantial value and obtains fair and

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adequate relief for the Class defined below.

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4.

Although the Settlement does not provide for cash payments to the

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unnamed Class members, the record demonstrates that such payments are not realistically

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possible because they would likely result in the Defendants and/or their corporate affiliates

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entering bankruptcy proceedings. See 4 Newberg on Class Actions § 11:50 (noting that

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“[c]ollectibility of a judgment . . . bear[s] on the reasonableness of a settlement in relation to the

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defendants’ ability to withstand a greater one.”). Given Defendants’ demonstrated financial

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condition, continued litigation is unlikely to yield a recovery greater than that provided for under
[PROPOSED] ORDER
Case No. 4:10-cv-05839-CW

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the Settlement. Moreover, the claims are expressly not being released by the Settlement. Thus,

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the Class members retain the ability to pursue separate claims for damages. Under these

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circumstances, the Court finds that the absence of cash compensation to the Class is reasonable.

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5.

The Settlement Class (the “Class”) consists of all persons who resided at

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any of Evergreen’s skilled nursing facilities in California (the “Facilities”) from November 15,

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2006 through the date of class certification (the “Class Period”). Each Settlement Subclass (the

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“Subclasses”) consists of all persons who currently reside or previously resided at a specific one

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of the Facilities during the Class Period. The Facilities include Evergreen Lakeport Healthcare,

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Evergreen Bakersfield Post Acute Care, Evergreen Arvin Healthcare, Springs Road Healthcare,

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Heartwood Avenue Healthcare, Petaluma Health and Rehabilitation, Katherine Healthcare

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Center, Olive Ridge Post Acute Care, Evergreen Gridley Healthcare, Fullerton Post Acute Care,

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Twin Oaks Post Acute Rehab, and New Hope Post Acute Care. Excluded from the Class and

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Subclasses are: (a) Defendants; any entity in which Defendants have a controlling interest; the

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officers, directors, and employees of any Defendant; and the legal representatives, heirs,

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successors, and assigns of Defendants; and (b) the Judge to whom this case is assigned and any

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member of the Judge’s immediate family.

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6.

The Court finds that the prerequisites for a class action under Rules 23(a)

and (b)(2) of the Federal Rules of Civil Procedure have been satisfied:
a.

The members of the Class and the Subclasses are so numerous that

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joinder of all members is impractical. Fed. R. Civ. P. 23(a). In addition, the Class and Subclasses

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are composed of readily ascertainable persons who resided at one or more of Defendants’

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Facilities during the Class Period.

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b.

This litigation involves common class-wide issues that, absent the

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Settlement, would drive the resolution of the claims. Fed. R. Civ. P. 23(b); Wal-Mart Stores, Inc.

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v. Dukes, 131 S. Ct. 2541, 2551 (2011). Several disputed issues are common to Plaintiffs, the

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Class, and the Subclasses, including whether Defendants violated and continue to violate

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California Health and Safety Code section 1430(b) by, among other things, failing to comply with

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California Health and Safety Code section 1276.5.
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c.

The claims of the named Plaintiffs are typical of the claims of the

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Class and of every Subclass. Fed. R. Civ. P. 23(c). Typicality is satisfied because the conduct at

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issue is alleged to have caused similar harm to all Class members.

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d.

The named Plaintiffs are adequate Class representatives and possess

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the same interests in the outcome of this case as the other Class and Subclass members. Fed. R.

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Civ. P. 23(d). The named Plaintiffs—like all Class and Subclass members—resided at one or

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more of the Facilities during the Class period. The Court designates the Plaintiffs as

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representatives of the Settlement Class. The Court also finds Class Counsel adequate, based on

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their prosecution of this case and their experience litigating complex class actions, including

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cases involving understaffing at skilled nursing homes. Accordingly, the Court appoints, as Class

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Counsel to effectuate the Settlement: Lieff Cabraser Heimann & Bernstein, LLP (attorneys

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Robert J. Nelson and Lexi Hazam); Michael D. Thamer; Kathryn A. Stebner; Christopher J.

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Healey; W. Timothy Needham; Robert S. Arns; C. Brooks Cutter; and Edward P. Dudensing. For

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purposes of these Settlement approval proceedings, the Court finds that these attorneys and their

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law firms are well-qualified to serve as Class Counsel.

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e.

Every Class member is entitled to pursue a claim for injunctive

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relief under Health and Safety Code section 1430(b) as a result of the asserted inadequate levels

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of qualified nursing staff at Defendants’ Facilities. Plaintiffs allege that Defendants have acted

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and/or refused to act on grounds that apply generally to the Class and Subclasses of residents at

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those Facilities, such that final injunctive relief of the nature obtained under the Settlement “is

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appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). Accordingly, the Court

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hereby certifies the injunctive-relief class under Rules 23(a) and 23(b)(2).

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7.

The Court approves, as to form and content, the Notice attached as Exhibit

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B to Plaintiffs’ Motion for Preliminary Approval. The Court finds that the Notice is reasonable

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and constitutes due, adequate and sufficient notice to all persons entitled to receive notice, and

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meets the requirements of due process and Rule 23. The Court further finds that the Notice

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complies with Rule 23(c)(2)(A) because it is appropriate under the circumstances, provides

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individual notice to all Class Members who can be identified through a reasonable effort, and is
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reasonably calculated under all the circumstances to apprise the Class members of the pendency

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of this action, the terms of the Settlement, and the right to object to the Settlement.

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8.

No later than 30 days from today, the Settlement Administrator shall

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disseminate notice to the Class and Subclasses. Class members shall receive individualized

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notice via U.S. Mail as described in the Settlement. In addition, the Notice shall be published as a

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one-time paid advertisement in USA Today. All costs associated with this notice program shall be

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paid as provided for in the Settlement Agreement.

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9.

Under the Settlement, Class Counsel shall file their application for

attorneys’ fees no later than 30 days from today. Any Class member may object to the Settlement

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and/or to Class Counsel’s request for attorneys’ fees and costs; any such objection must be

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received by the Court and by Counsel no later than 55 days from today. Class Counsel shall file

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their motion for final Settlement approval (and responses to any objections) no later than 85 days

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from today.

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10.

The dates of performance contained herein may be extended by Order of

the Court, for good cause shown, without further notice to the Class.

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11.

The Fairness Hearing shall be held before this Court on Thursday,

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October 4, 2012, at 2:00 p.m., to determine whether the Settlement is fair, reasonable, and

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adequate and should receive final approval, and whether Class Counsel’s application for an award

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of attorneys’ fees and costs, and for service awards for the Named Plaintiffs, should be granted.

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The Court’s determination of whether to approve the Settlement is separate from any award of

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attorneys’ fees and costs and/or service awards. The Fairness Hearing may be postponed,

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adjourned, or continued by Order of the Court without further notice to the Class. After the

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Fairness Hearing, the Court may enter a Final Order and Judgment in accordance with the

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Settlement.

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12.

Pending the Fairness Hearing, other than proceedings necessary to carry

out or to enforce the terms and conditions of the Settlement, this matter is stayed.

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[PROPOSED] ORDER
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13.

If the Settlement does not receive Final Approval, then the Settlement shall

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become null and void. Plaintiffs, the Class members, and the Defendants shall be restored to their

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respective positions prior to the entry of this Preliminary Approval Order.

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14.

The parties shall select a Settlement Administrator that shall perform all the

duties assigned to it by this Order and the Settlement.

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15.

Class Counsel and Counsel for Defendants are hereby authorized to

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employ all reasonable procedures in connection with approval and administration of the

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Settlement that are not materially inconsistent with this Order or the Settlement, including

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making, without further approval of the Court, non-material changes to the form or content of the

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Notice.

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June
IT IS SO ORDERED this 25th day of ______, 2012
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_____________________________________
The Honorable Claudia Wilken
United States District Judge

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[PROPOSED] ORDER
Case No. 4:10-cv-05839-CW