Villa v. United Site Services of California, Inc

Filing 175

ORDER by Judge Lucy H. Koh denying without prejudice 167 Motion for Settlement (lhklc3, COURT STAFF) (Filed on 11/27/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
For the Northern District of California

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SAN JOSE DIVISION

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NELSON GONZALEZ VILLA, on behalf of
himself and all others similarly situated,

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Plaintiff,
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v.
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UNITED SITE SERVICES OF CALIFORNIA, )
INC.,
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Defendant.
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Case No.: 12-CV-00318-LHK
ORDER DENYING WITHOUT
PREJUDICE MOTION FOR
PRELIMINARY APPROVAL OF
SETTLEMENT

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The Court held a hearing on the parties’ Joint Motion for Preliminary Approval of
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Settlement, ECF No. 167, on October 23, 2013, and November 26, 2013. Following the October 23
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Hearing date, the Court requested that the parties make a number of revisions to the Stipulation of
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Settlement, Notice Forms, and Opt-out/FLSA Release Forms and advised the parties that the Court
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is skeptical of attorney’s fees requests that are vastly greater than the class members’ recovery.
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(“Oct. 23 Order”) ECF No. 170. On November 15, 2013, the parties submitted revised settlement
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materials that addressed most of the concerns identified in the October 23 Order. ECF No. 174.
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In spite of the parties’ revisions, the Court remains concerned about several provisions of
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the settlement. First, the Court notes that, out of a total settlement fund of $349,676.30, Plaintiff’s
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attorney is requesting $220,000.00 in attorney’s fees and $51,176.30 in costs. ECF No. 174-1 at 4,
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12. This amounts to 78% of the total settlement fund, which is well above the 25% benchmark that
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Case No.: 12-CV-00318-LHK
ORDER DENYING WITHOUT PREJUDICE MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT

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the Ninth Circuit uses to evaluate the reasonableness of attorney’s fees awards. See, e.g., In re

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Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 944-945 (9th Cir. 2011). Second, the current

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wording of both the Stipulation of Settlement and the Notice Forms indicates that this attorney’s

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fees and costs award was calculated independently from the award to the class members, and that

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any reduction in attorney’s fees and costs would not accrue to the class members and would instead

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revert to Defendant. See ECF No. 174-1 at 4, 12; 174-2 (“Subject to Court approval, [Defendant]

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will separately pay to Class counsel $220,000 for attorneys’ fees and $51,176.30 for costs. This

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money will not reduce the award payments to any class member.”); 174-3 (same). The Court does

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not view a settlement structured in this manner as fair or reasonable. Third, the Stipulation of

United States District Court
For the Northern District of California

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Settlement indicates that settlement checks will be mailed to class members prior to this Court’s

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final approval of the settlement, ECF No. 174-1 at 14, which is improper. Fourth, the Court is

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concerned that the funds from checks that are not cashed by class members will revert back to

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Defendant. Id. at 13. Finally, the Stipulation of Settlement allows Defendant’s in-house counsel

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access to the identities of class members who have participated in the settlement. Id. at 10. In light

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of Defendant’s previous conduct in this litigation—which included holding mandatory, one-on-one

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meetings with potential class members during work hours in an effort to obtain declarations stating

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that the potential class members were not prevented from taking their required breaks, see ECF No.

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120 at 22-23—the Court is concerned that the privacy provisions in the Stipulation of Settlement

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may not sufficiently safeguard class members’ privacy or protect class members from possible

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coercion or retaliation by Defendant.

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In light of these concerns, the Court finds that it cannot grant preliminary approval of the

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settlement as it is currently structured. The Court therefore DENIES without prejudice the Joint

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Motion for Preliminary Approval of Settlement. The parties may submit a renewed motion for

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preliminary approval that addresses the above concerns and includes the following revisions:

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1) Revise the settlement materials to consistently refer to either “Service Technician” or
“Service Tech Non-CDL”;
2) Clarify in the Notice Forms that a class member need only “mail” a form within 60 days
of the Notice’s mailing date in order for the form to be timely submitted;
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Case No.: 12-CV-00318-LHK
ORDER DENYING WITHOUT PREJUDICE MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT

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3) Change Section I.C of the Stipulation of Settlement to state “Rule 23 class member” and
not “Rule 23 class”;
4) Replace the reference to the “San Jose class” on page 6 of the Stipulation of Settlement
with “Rule 23 class”;

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5) Ensure that Exhibit 1 is attached to any renewed motion for preliminary approval;

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6) Change “dived” on page 12 of the Stipulation of Settlement to “divided”;

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7) Include the named plaintiff’s name on the Notice Forms in the sections entitled

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United States District Court
For the Northern District of California

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“Proposed Settlement”;
8) Insert the phone number of the claims administrator on the Notice Forms;
9) Define “FLSA collective action” in the “Introduction” section of the FLSA class Notice
Form in a manner likely to be understood by the class members;
10) In Section VI of the FLSA class Notice Form, change the sentence that begins, “Even

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though you have not received payment . . . .” to, “Even if you have not received

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payment . . . .”;

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11) Add class counsel’s name and address to the “Do Nothing” portion of Section VI of the
FLSA class Notice Form;
12) Submit a revised proposed order that reflects these and the other changes to the
settlement.
In light of the foregoing, the Court VACATES the Final Pretrial Conference, currently set

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for December 12, 2013 at 1:30 p.m., and VACATES the Trial, currently set to begin January 6,

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2014, at 9:00 a.m. The Court schedules a Further Case Management Conference for January 15,

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2014, at 2:00 p.m.

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IT IS SO ORDERED.

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Dated: November 27, 2013

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_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 12-CV-00318-LHK
ORDER DENYING WITHOUT PREJUDICE MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT