Lusby v. Gamestop, Inc et al
Filing
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INTERIM ORDER re 33 AMENDED MOTION for Order Granting Preliminary Approval of the Class Action Settlement Agreement. Signed by Magistrate Judge Howard R. Lloyd on 4/28/2014. (hrllc1, COURT STAFF) (Filed on 4/28/2014)
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*E-Filed: April 28, 2014*
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California
NOT FOR CITATION
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United States District Court
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SAN JOSE DIVISION
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THOMAS LUSBY, ET AL., individually
and on behalf of all others similarly situated,
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Plaintiffs,
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v.
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GAMESTOP INC., ET AL.,
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Defendants.
____________________________________/
No. C12-03783 HRL
INTERIM ORDER RE PLAINTIFFS’
AMENDED MOTION FOR
PRELIMINARY APPROVAL OF
CLASS ACTION SETTLEMENT
AGREEMENT
[Re: Docket No. 33]
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Plaintiffs, representing a putative class, sue Gamestop Inc. and Gamestop Corporation
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(collectively, “Gamestop”) asserting various wage and hour claims. In March 2013, the Court
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denied a motion for preliminary approval of class action settlement. A First Amended Complaint
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was filed in October adding a few new plaintiffs, and in November they filed the instant Amended
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Motion for Order: (1) Granting Preliminary Approval of Class Action Settlement Agreement; (2)
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Granting Conditional Certification of the Settlement Class; (3) Appointing Class Counsel; (4)
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Appointing Class Representative; (5) Appointing Claims Administrator; and (6) Approving Class
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Notice and Claim Form and Timeline for Administration. See Dkt. No. 33. A hearing on the
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motion was held in December in which the Court expressed several concerns, most of which were
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addressed in the Second Supplemental Declaration of Molly A. DeSario filed in January 2014.
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However, the Court still has some concerns that were not alleviated by counsel’s declaration,
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particularly with respect to the calculation of settlement amounts.
LEGAL STANDARD
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Settlement of a class action requires judicial review and approval. See Fed. R. Civ. P. 23(e).
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At the preliminary fairness stage, the court must assess the validity of the settlement class pursuant
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to Rule 23(a) and (b), as well as evaluate the fairness, reasonableness and adequacy of the settlement
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agreement pursuant to Rule 23(e). Although the court’s role in reviewing a proposed settlement, is
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critical, it is also a limited one. The court does not have the ability to “delete, modify or substitute
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certain provisions. The settlement must stand or fall in its entirety.” Hanlon v. Chrysler Corp., 150
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F.3d 1011, 1026 (9th Cir. 1998) (citations omitted) (internal quotation marks omitted). The court
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may, however, voice its reservations about the proposed settlement and set conditions that, if
For the Northern District of California
United States District Court
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satisfied, might lead the court to approve it. See Fed. Judicial Ctr., Manual for Complex Litigation §
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21.61 (4th ed. 2004).
DISCUSSION
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A. Settlement Calculation
As is relevant here, the class is divided into four subclasses corresponding to four positions
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or job titles: Game Advisor (GA), Senior Game Advisor (SGA), Assistant Store Manager (ASM)
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and Store Manager (SM). Before any payments are made to individual claimants, the Net
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Settlement Amount is first distributed among the four subclasses. This distribution is initially
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calculated based on the total number of weeks worked by employees in each subclass. Thus,
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because more class members were employed as GAs than any other position, more weeks were
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worked by GAs, and the GA subclass is initially apportioned the largest share. However, GAs
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typically earn the lowest hourly wage and work the fewest hours. To account for these differences
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among the subclasses, as well as the fact that the claims may not apply to each subclass with equal
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force, the settlement agreement provides that a multiplier is to be applied to the initial workweek-
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based distribution. “The parties agree that the average hourly rate for members of each Subclass
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will serve as a reasonable proxy of differences in hourly rates, average hours worked, and claims,
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and will serve as a multiplier to allocate additional settlement funds to certain Subclasses.” See
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DeSario Decl., Ex. A, at ¶ 57(B).
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The Court is concerned that the average hourly rate of each subclass may not be a reasonable
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proxy for all three factors. Certainly, the average hourly rate is a reasonably proxy of differences in
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hourly rates. But, to be a reasonable proxy for all three factors taken together, the second and third
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factors, average hours worked and claims, must then offset one another to some extent. The parties
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have represented that, in addition to earning a higher hourly wage, the more senior positions also
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work progressively more hours per week. Thus, to balance out, the senior positions must have
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progressively fewer or weaker claims if the average hourly rate is to remain a reasonable proxy.
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However, that does not appear to be the case. For example, that the more senior positions
work longer hours would tend to increase the likelihood that they suffered violations related to
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overtime and meal or rest breaks. Additionally, it appears that GAs were less likely to have
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performed bank runs or interstoring, responsibilities which form the basis of the failure to reimburse
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claims. Accordingly, it seems that, in addition to earning a higher hourly wage and working more
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hours per week, class members in the more senior positions also have more claims to assert, in
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which case the average hourly wage would not be a very reasonable proxy for all three factors.
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On the other hand, it is possible that the junior positions have stronger claims. Or it could
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certainly be that the applicability of claims to subclasses is too uncertain or inconsistent across the
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subclasses to be quantifiable. Regardless, though, the average hours per week for each subclass is
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easily quantifiable. At the hearing, counsel represented that SMs typically work five full shifts per
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week, ASMs four, and GAs/SGAs between one and three. The Court thinks that incorporating the
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average hours per week into the multiplier would more fairly account for the differences among
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subclasses. Particularly since the parties are using workweeks to determine the settlement amount,
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it seems more equitable to incorporate into the multiplier both the average hourly wage and average
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hours per week, effectively the average weekly wage.
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The parties may have good reason to believe that average hourly rate alone is a more
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reasonable proxy and that incorporating the average hours worked would unfairly skew the
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distribution. Whatever the case may be, the parties shall explain why “the average hourly rate for
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members of each Subclass [is] a reasonable proxy of differences in hourly rates, average hours
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worked, and claims, and will serve as a multiplier to allocate additional settlement funds to certain
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Subclasses.” While the differences between the subclasses with respect to hourly rates and average
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hours worked are understood, the parties shall specifically address how the claims apply to the
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subclasses and are factored into the multiplier. Moreover, they are invited to consider the Court’s
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suggestion to incorporate average hours per week into the multiplier and opine as to whether doing
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so would make for a more equitable distribution.
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B. Additional Information
At the hearing, the parties estimated that claimants would receive between $7.75 and $8.38
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per workweek based on 30% participation. The Court would like the parties to provide the specific
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figures for each subclass as well as a revised estimate based on any proposed amendment.
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Additionally, the Court requests an estimate based on 100% participation and an estimate of the
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potential recovery if the class members were to prevail on each of their claims.
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Finally, the Court previously requested but did not receive an estimate of Gamestop’s share
of payroll taxes that would be deducted from the Net Settlement Amount.
CONCLUSION
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The parties shall file a response to the issues discussed above within 14 days of the date of
this order.
IT IS SO ORDERED.
Dated: April 28, 2014
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE
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C12-03783 HRL Notice will be electronically mailed to:
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Carrie Anne Gonell
cgonell@morganlewis.com, pmartin@morganlewis.com
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John David Hayashi
jhayashi@morganlewis.com, dghani@morganlewis.com
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Molly Ann DeSario mdesario@scalaw.com, grafal@scalaw.com, jmusgrave@scalaw.com,
kweekes@scalaw.com, mbainer@scalaw.com, mkim@scalaw.com, mmedrano@scalaw.com,
scole@scalaw.com
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Scott Edward Cole scole@scalaw.com, cdavis@scalaw.com, jcampbell@scalaw.com,
jmusgrave@scalaw.com, Mbainer@scalaw.com, mdesario@scalaw.com, mkim@scalaw.com,
mmedrano@scalaw.com
Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.
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For the Northern District of California
United States District Court
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