Graham et al v. Overland Solutions, Inc. et al

Filing 97

ORDER Granting Joint Motion For Preliminary Approval Of Class Action Settlement, Conditional Certification, Approval Of Class Notice, And Setting Of Final Fairness Hearing (Re Doc. 92 ): The Court approves and appoints Plaintiffs Joyce Graham and Jo yce Lampkin as the Class Representatives. The Court approves and appoints Cohelan Khoury & Singer and Michael P. Sousa as Class Counsel. The Court approves and appoints Rust Consulting, Inc., as the Claims Administrator to administrate the settlement pursuant to the terms of the Settlement Agreement. Objections must be filed with the District Court as described in the Notice of Pendency of Class Action and Proposed Settlement on or before 12/14/2012. The Final Approval Hearing is set for 1/29/20 13 at 09:30 AM in Courtroom 03 before Judge Roger T. Benitez. All briefs in support of the proposed Settlement, Final Approval Hearing and attorneys' fees, litigation costs, class representative enhancements, and claims administration expenses, shall be filed with the Court on or before 1/14/2013. Any party to this case, including Class Members, may appear at the Final Approval Hearing in person or by counsel, and may be heard to the extent allowed by the Court. Pending further order of this Court, all proceedings in this matter except those contemplated herein and in the Settlement Agreement are stayed. Signed by Judge Roger T. Benitez on 9/12/2012. (mdc)

FILED'

1

2

[ SEP 12 2012 ]

3

CLERK, u.s. DI
T
SOUTHERN DISTRICT Uf/!JAII~IN
fIN

4

5
6

7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11

12

CASE NO. 1O-CV-0672 BEN (BLM)

JOYCE GRAHAM and JOYCE LAMPKIN,
on behalf of themselves and all others
similarly situated,

ORDER GRANTING JOINT
MOTION FOR PRELIMINARY
APPROVAL OF CLASS ACTION
SETTLEMENT, CONDITIONAL
CERTIFICATION, APPROVAL OF
CLASS NOTICE, AND SETTING OF
FINAL FAIRNESS HEARING

Plaintiffs,

13
vs.
14
15
16

OVERLAND SOLUTIONS, INC. and DOES
1-100, inclusive,

17

Res ondent.

[Docket No. 92]

18

19

This action arises from Plaintiffs Joyce Graham's and Joyce Lampkin's former employment

20

as field auditors for Defendant Overland Solutions, Inc. ("OSI"). Field auditors are non-exempt (i.e.,

21

hourly) employees who travel from site to site to audit policy premiums for Defendant's insurance-

22

company clients. There are 1,307 field auditors nationwide and 240 in California. Plaintiffs allege

23

that Defendant did not, and does not, pay for billable hours that cannot be charged to a client and that

24

this policy was never disclosed when the auditors were hired. Plaintiffs further allege that Defendant

25

uniformly underpaid, and continues to underpay, its field auditors by routinely cutting reported billable

26

hours and also pressuring auditors to under-report their hours. Auditors are often not aware of the

27

reductions until they receive their paychecks. Several declarations also state that reporting high

28

billable hours subjected time cards to excessive review and caused delays in receiving paychecks.

- 1-

IOcv0672

1 Plaintiffs contend that these employment practices constitute a breach of contract and violate federal
2

and California labor laws.

3

Plaintiffs initiated this action in California Superior Court. On March 29,2010, Defendant

4

removed the action to this Court. On November 30, 2010, Plaintiffs filed a Motion for Rule 23 Class

5

Certification, which sought to certify a nationwide class of field auditors under Federal Rule of Civil

6

Procedure 23, or in the alternative, a statewide class of field auditors for the same claims plus

7

additional claims that arise purely under California law. (Docket No. 23.) This Motion for Rule 23

8

Class Certification was denied on the basis that Plaintiffs' claims are not typical of the class and

9

Plaintiffs would not adequately protect the interests ofthe class. (Docket No. 74.) Also on November

10

30, 2010, Plaintiffs filed a Motion for Conditional Collective Action and Certification and Notice,

11

pursuant to 29 U.S.C. § 216(b), which sought conditional certification of two claims under the Fair

12

Labor Standards Act: (1) failure to pay overtime and minimum wage by pressuring auditors to not

13

report all hours worked; and (2) failure to pay all wages due by unilaterally cutting billed hours or

14

pressuring field auditors to not report all time worked. (Docket No. 24.) This Motion for Conditional

15

Collective Action and Certification was granted. (Docket No. 75.)

16

Presently before the Court is the parties' Joint Motion for Preliminary Approval of Class

17

Action Settlement, Conditional Certification, Approval of Class Notice, and Setting ofFinal Fairness

18

Hearing.

19

DISCUSSION

20

Once parties reach a settlement agreement prior to class certification, the court must "peruse

21

the proposed compromise to ratify both the propriety of the certification and the fairness of the

22

settlement." Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). The court must (1) assess

23

whether a class exists, and (2) determine whether the proposed settlement is "fundamentally fair,

24

adequate, and reasonable." Id. (internal quotation marks omitted). Here, the Court will first examine

25

the propriety of class certification, then the fairness of the settlement agreement, followed by the

26

questions of class counsel and class notice.

27

III

28

III

-2-

IOcv0672

1

I.

2

A plaintiff seeking a Rule 23(b)(3) class certification must: (1) satisfy the prerequisites ofRule

CLASS CERTIFICATION

3

23(a); and (2) satisfy the requirements of Rule 23(b)(3).

4

certification for settlement purposes only ofthe following two classes: (1) the "California Class": All

5

OSI Premium Audit Field Representatives employed in California at any time during the Class Period,

6

from February 16, 2006 through February 15, 2012; and (2) the "Nationwide Class": All OSIPremium

7

Audit Field Representatives employed in any office in the United States, other than California, at any

8

time during the Class Period, from February 16, 2006 through February 15,2012. (Khoury Decl., Exh.

9

1 [Settl. Agr.] ~ 5.)

10

11
12

13

A.

Here, the parties seek provisional

Rule 23(a) Requirements

Rule 23(a) establishes four prerequisites for class action litigation: (1) numerosity; (2)
commonality; (3) typicality; and (4) adequacy ofrepresentation. FED. R. CIV. P. 23(a); see also Staton,
327 F.3d at 953. The Court will examine each prerequisite in tum.

14

1.

15

Numerosity

16

The numerosity prerequisite is met if "the class is so numerous that joinder of all members is

17

impracticable." FED. R. CIV. P. 23(a)(1). In the present case, there are 255 California auditors and

18

1,149 Non-California Nationwide auditors employed by OSI during the Class Period. (Khoury Dec!.

19 ~ 9.) They are too numerous to be joined as plaintiffs in this action. Accordingly, the numerosity
20
21

requirement is met.

2.

Commonality

22

The commonality requirement is met if "there are questions of law or fact common to the

23

class." FED. R. CIV. P. 23(a)(2). The commonality requirement is construed "permissively." Hanlon

24

v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). Not all questions oflaw and fact need to be

25

common, but rather "[t]he existence of shared legal issues with divergent factual predicates is

26

sufficient, as is a common core ofsalient facts coupled with disparate legal remedies within the class."

27

Id In addition, commonality requires that class members "have suffered the same injury." Wal-Mart

28

Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011).

-3-

IOcv0672

1

Here, there are numerous common questions oflaw and fact, including: (l) whether OSI had

2

a practice ofreducing Billable Hours and pressuring auditors to under-report Billable and Time Card

3

Hours; (2) whether OSI improperly failed to pay supplemental minimum wage; (3) whether the

4

compensation scheme is an improper piece rate system; (4) whether reducing Billable Hours violates

5

the law and, if so, whether underpayment of overtime results; (5) whether a California piece rate

6

employee must also be paid a supplemental minimum wage for non-productive time; and (6) whether

7

excessive drive time should be compensated. In addition, whether Defendant is liable for damages,

8

penalties, and restitution pursuant to California Labor Code §§ 201-203,212,221,226,2699 and the

9

UCL are also issues which can be resolved on a class-wide basis. Alba v. Papa John's USA, Inc., No.

10

CV 05-7487 GAF (CTx), 2007 U.S. Dist. LEXIS 28079, at *19-21 (C.D. Cal. Feb. 7,2007); see also

11

Vizcaino v. U.S. Dist. Ct., 173 F.3d 713, 722 (9th Cir. 1999) (employees presented common question

12

that they were denied benefits to which they were entitled as common law employees). Accordingly,

13

the commonality requirement is met.

14

3.

Typicality

15

Typicality requires that "the claims or defenses ofthe representative parties [be] typical ofthe

16

claims or defenses of the class." FED. R. CIY. P. 23(a)(3). The Ninth Circuit interprets typicality

17

permissively. Hanlon, 150 F.3d at 1020.

18

"reasonably co-extensive with those ofabsent class members," though they "need not be substantially

19

identical." Id; see also Cal. Rural Legal Assistance, Inc. v. Legal Servs. Corp., 917 F.2d 1171, 1175

20

(9th Cir. 1990). The named plaintiffs must be members of the class they seek to represent and they

21

must "possess the same interest and suffer the same injury" as putative class members. Gen. Tel. Co.

22

ofSw. v. Falcon, 457 U.S. 147, 156 (1982)(internal quotation marks omitted). It is sufficient for the

23

plaintiffs claims to "arise from the same remedial and legal theories" as the class claims. Arnold v.

24

United Artists Theatre Cir., Inc., 158 F.R.D. 439,449 (N.D. Cal. 1994).

25

The representative claims are "typical" if they are

Here, Plaintiffs' claims arise from the same factual basis-including a failure to comply with

26

state and federal laws regarding minimum and overtime wages-as those applicable to all Class

27

Members. Wehner v. Syntex Corp., 117 F.R.D. 641, 644 (N.D. Cal. 1987); see also Hanlon, 150 F.3d

28

at 1020. Plaintiffs were field auditors during the class period. Each was allegedly subject to OS!' s
-4-

IOcv0672

practice of reducing Billable Hours and pressuring auditors to under-report Billable and Time Card
2
Hours. In addition, each was allegedly subject to OSI's uniform policies, including failure to pay
3
supplemental minimum wage, using what Plaintiffs allege is an improper piece rate system, using
4
RFCs resulting in untimely wage payments, failing to include post-commute time in aggregate Time
5

Card Time, and failing to pay wages drawn on a bank with a California address. Accordingly, the

6
typicality requirement is met.
In the May 9, 2011 Order, the Court previously denied Plaintiffs' motion for Rule 23 class

7

8
certification on the basis that Defendant has a defense of unclean hands that is unique to Graham and

9
Lampkin, which defeated typicality, Rodriguez v. Hayes, 591 F.3d 1105, 1124 (9th Cir. 2010).

10

(Docket No. 74). However, Defendant agrees that the typicality requirement is met, for the purposes

11
of settlement.

12

4.

13

Adequacy of Representation

Representative parties must be able to "fairly and adequately protect the interests ofthe class."

14
FED. R. CIv. P. 23(a)(4). Representation is adequate if the plaintiffs: (1) "do not have conflicts of
15

interest with the proposed class" and (2) are "represented by qualified and competent counsel." Dukes

16
v. Wal-Mart, Inc., 509 F.3d 1168, 1185 (9th Cir. 2007). At the heart of this requirement is the

17
"concern over settlement allocation decisions." Hanlon, 150 F.3d at 1020.

18

As explained above, the Court previously denied Plaintiffs' motion for Rule 23 class

19
certification on the basis that Defendant has a defense of unclean hands that is unique to Graham and
20

Lampkin, which defeated the adequacy requirement. However, Defendant has waived its objections

21
to Plaintiffs' adequacy to serve as class representatives, for the purposes ofsettlement. (Khoury Dec!.
22
~ 66.)
23

In addition, Plaintiffs' attorneys have experience prosecuting class actions. Plaintiffs and the

24
proposed class counsel have indicated that they are willing to pursue this action vigorously on behalf

25

of the class, have thoroughly investigated the class claims, served and responded to discovery, and

26
taken depositions of key employees and corporate representatives. (Id.

~ 4-6, 45-59.) Accordingly,

27
the adequacy requirement has been met.

28

For the reasons stated above, Plaintiffs have satisfied the prerequisites of Rule 23(a).
-5-

IOcv0672

1

B.

Rule 23(b)(3) Requirements

2

Rule 23(b)(3) requires the court to find that: (1) "the questions oflaw or fact common to class

3

members predominate over any questions affecting only individual members" ("predominance"); and

4

(2) "a class action is superior to other available methods for fairly and efficiently adjudicating the

5

controversy" ("superiority").

6

1.

Predominance

7

The predominance inquiry tests "whether proposed classes are sufficiently cohesive to warrant

8

adjudication by representation." Hanlon, 150 F .3d at 1022 (internal quotation marks omitted). This

9

analysis requires that common questions oflaw and fact "present a significant aspect ofthe case and

10

[that] they can be resolved for all members of the class in a single adjudication." Id. (internal

11

quotation marks omitted). The relevant inquiry is whether issues "subject to generalized proof

12

predominate over those issues that are subject only to individualized proof." Dilts v. Penske Logistics,

13

LLC, 267 F.R.D. 625, 634 (S.D. CaL 2010) (internal quotation marks and alteration omitted).

14

Here, Plaintiffs' claims present common questions of law and fact, as explained above.

15

Defendant stipulates for settlement purposes that these common questions of law and fact support a

16

finding of predominance. (Jt. Mot. at 24.) Accordingly, the predominance requirement is met.

17

2.

Superiority

18

The superiority requirement focuses on the determination of "whether the objectives of the

19

particular class action procedure will be achieved in the particular case." Hanlon, 150 F.3d at 1023.

20

The class-action method is considered to be superior if "classwide litigation of common issues will

21

reduce litigation costs and promote greater efficiency." Valentino v. Carter-Wallace, Inc., 97 F.3d

22

1227, 1234 (9th Cir. 1996).

23

Here, Defendant agrees, for purposes of settlement only, that class certification is superior to

24

other methods of adjudication because Plaintiffs' claims are based on common policies and practices

25

that would be most efficiently litigated on a class-wide basis. (Jt. Mot. at 24.) Concentration ofclass

26

members' claims for settlement purposes is desirable in order to avoid the possibility of duplicative

27

individual matters and inconsistent judicial determinations. Class treatment of the class members'

28

claims would be more manageable than many individual lawsuits brought by current or former

-6-

IOcv0672

1 Premium Audit Field Representatives. Moreover, litigation of this matter as a class action will be
2

manageable because damages may be determined through analysis of Defendant's employee and

3

payroll records. In addition, because of the relatively small individual claims of class members, it is

4

unlikely that individual actions to recover these unpaid wages will be filed. A Non-California

5 Nationwide Class Member could at most recover $1,892.79, less taxes. (Khoury Dec!.
6

California Class Member could at most recover $19,878.94, less taxes. (Id.

7

~ 32.)

~

31.) A

superiority requirement is met.

Accordingly, the

8

For the foregoing reasons, Plaintiffs have satisfied the requirements of Rule 23(b)(3). The

9

Court GRANTS preliminary certification ofboth classes for the purposes ofthe proposed settlement.

10

The Court, however, may review this finding at the Final Approval Hearing.
THE SETTLEMENT

11

II.

12

Rule 23(e) requires the Court to determine whether a proposed settlement is "fundamentally

13

fair, adequate, and reasonable." Staton, 327F.3dat 959 (internal quotation marks omitted). Inmaking

14

this determination, a court may consider: (1) the strength ofthe plaintiff sease; (2) "the risk, expense,

15

complexity, and likely duration of further litigation;" (3) "the risk of maintaining class action status

16

throughout the trial;" (4) "the amount offered in settlement;" (5) "the extent of discovery completed,

17

and the stage of the proceedings;" (6) "the experience and views of counsel;" (7) "the presence of a

18

governmental participant;" and (8) "the reaction of the class members to the proposed settlement."

19

See id (internal quotation marks omitted). Moreover, the settlement may not be the product of

20

collusion among the negotiating parties. Inre MegoFin. Corp. Sec. Litig., 213 F.3d454, 458 (9th Cir.

21

2000).

22

Because some of these factors cannot be fully assessed until the Court conducts the Final

23

Approval Hearing, "a full fairness analysis is unnecessary at this stage." See Alberto v. GMRI, Inc.,

24

252 F.R.D. 652, 665 (E.D. Cal. 2008) (internal quotation marks omitted). At the preliminary approval

25

stage, the Court need only review the parties' proposed settlement to determine whether it is within

26

the permissible "range of possible approval" and thus, whether the notice to the class and the

27

scheduling of the formal fairness hearing is appropriate. Id at 666.

28

III

-7-

IOcv0672

A.

The Strength of Plaintiffs' Case and the Risk, Expense, Complexity and

2

Likely Duration of Further Litigation, and the Risk of Maintaining Class

3

Action Status Throughout the Trial

4

Plaintiffs assert that the proposed settlement is fair and reasonable in light of Defendant's

5

available legal and factual grounds for defending against Plaintiffs' claims. Plaintiffs recognize that

6

there are significant risks to Plaintiffs' ability to maintain this as a class or collective action. (Khoury

7

Decl.' 41.) First, Defendant contends that it has presented significant defenses and good faith

8

objections to Plaintiffs' ability to obtain Rule 23 certification. Defendant asserts that the claims are

9

inappropriate for class treatment because there is a lack of commonality and a predominance of

10

individual inquiry. (Id.' 43.) Specifically, Defendant argues that Plaintiffs will not be able to

11

establish class-wide practices and that individual issues would predominate over common facts,

12

especially given the Supreme Court's recent ruling in Dukes, which disapproved ofthe use ofsampling

13

and surveys to determine class-wide practices. See 131 S. Ct. at 2561. Defendant argues that, as a

14

result, Rule 23 certification would likely be deemed inappropriate and that a motion to decertify the

15

collective action would be successful. (Khoury Decl. , 43.) In addition, Defendant contends that it

16

would be able to decertify the FLSA collective action, because the second step of FLSA collective

17

action certification is nearly identical to that under Rule 23.

18

Furthermore, Plaintiffs recognize the possibility that there may be an unfavorable result on the

19

merits on summary judgment, at trial, or on appeal. (fd., 40.) Litigation of this action is a process

20

that could take several years. (Id.) Taken together, these considerations weigh in favor ofpreliminary

21

approval of the proposed settlement.

22

B.

The Extent of Discovery and the Stage of the Proceedings

23

In regards to class action settlements, "formal discovery is not a necessary ticket to the

24

bargaining table where the parties have sufficient information to make an informed decision about

25

settlement." Linneyv. Cellular Alaska P 'ship, 151 F.3d 1234, 1239 (9thCir. I 998)(internal quotation

26

marks omitted).

27
28

Here, the parties appear to have engaged in substantial discovery. The parties have exchanged
substantial formal written discovery requests and taken depositions.

- 8 -

(Khoury Decl. , 44.)

IOcv0672

Specifically, Plaintiffs have served Defendant with four sets of Special Interrogatories, five sets of
~~

2

Requests for Production of Documents, and two sets of Requests for Admission. (Id

45,51,53­

3

54.) Moreover, Plaintiffs have conducted informal interviews ofan estimated 114 class members. (ld.

4

~ 48.)

5

In addition, Defendant has deposed Graham and Lampkin. (ld.

6

Defendant's persons most knowledgeable David Harris, Senior Vice President, and Kevin Kramer,

7

Senior Vice President of Quality Assurance Training and New Product Development, and, in their

8

individual capacities, employees Carol Lyman, Area Manager; Vicky Ross, former General Manager

9

of OSPs Los Angeles Branch Office; and David Goldschlag, former Vice President and General

Defendant has served each Plaintiff with its Requests for Production of Documents. (ld. ~ 46.)

~

~

50.) Plaintiffs have deposed

10

Manager of OS1's Los Angeles Branch Office. (ld.

11

investigated and evaluated the factual strengths and weaknesses of this case and engaged in sufficient

12

investigation and discovery to support the settlement. (Id.

13

and stage of the proceedings weigh in favor of preliminary approval.

c.

14

52.) The parties appear to have thoroughly

~ 57.)

Accordingly, the extent ofdiscovery

Experience of Class Counsel

15

Class counsel has experience litigating misclassification, overtime, expense reimbursement,

16

and rest/meal period actions, and have acted as class counsel in numerous employment law cases. (ld

17

~ 58.)

18

Kraemer, LLP, are experienced in wage and hour employment law and class actions. (ld. ~ 59.)

19

Counsel on both sides believe that this is a fair and reasonable settlement in light of the complexities

20

ofthe case, the state of the law, and the uncertainties ofcertification and litigation. Accordingly, this

21

factor weighs in favor ofpreliminary approval. See Ellis v. Naval Air Rework Facility, 87 F.R.D. 15,

22

18 (N.D. Cal. 1980); In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2008)

23

("The recommendations of plaintiffs' counsel should be given a presumption of reasonableness."

24

(internal quotation marks omitted)).

25

In addition, Defendant's counsel, Donna M. Rutter and Felicia R. Reid of Curiale Hirschfeld

D.

The Amount Offered in Settlement

26

A settlement is not judged against only the amount that might have been recovered had the

27

plaintiff prevailed at trial, nor must the settlement provide 100% ofthe damages sought to be fair and

28

reasonable. Linney, 151 F.3d at 1242. There is a "range of reasonableness" in determining whether

- 9-

IOcv0672

1

to approve settlement "which recognizes the uncertainties of law and fact in any particular case and

2

the concomitant risks and costs necessarily inherent in taking any litigation to completion." Frankv.

3

Eastman KodakCo., 228 F.R.D. 174, 186 (W.D.N.Y. 2005)(quotingNewman v. Stein, 464 F.2d 689,

4

693 (2d CiT. 1972)). The adequacy ofthe amount recovered must be judged as "a yielding ofabsolutes

5

... Naturally, the agreement reached normally embodies a compromise; in exchange for the saving

6

of cost and elimination of risk, the parties each give up something they might have won had they

7

proceeded with litigation." Officers for Justice v. Civil Servo Comm 'n, 688 F.2d 615,624 (9th CiT.

8

1982) (internal quotation marks omitted). "It is well-settled law that a cash settlement amounting to

9

only a fraction of the potential recovery will not per se render the settlement inadequate or unfair."

10

Id. at 628.

11

The three major claims presented by the Class include: (1) the Rule 23 California claims for

12

the unpaid supplemental minimum wage, which were calculated by Plaintiffs' consultant, based upon

13

the difference between the reported and billable hours, to be approximately $2,000,000 with an

14

additional potential interest assessment of $1,100,000; (2) the Nationwide Billable Time Under­

15

payment claims which were calculated based on records and survey data to be approximately

16

$11,480,000; and (3) based on similar data, the California Billable Time Under-payment claims which

17

were calculated at approximately $1,980,000. 1 (Khoury Decl. ~ 62.)

18

The parties have agreed to a Maximwn Settlement Amount ("MSA") of $3,750,000, which

19

includes, subject to the Court's approval: (1) attorneys' fees in an amount not to exceed 30% of the

20

MSA, or$I,125,000; (2) litigation costs estimated at $55,000; (3) Class Representative enhancements

21

in the sum of$25,000 for Graham and $25,000 for Lampkin; and (4) claims administrative expenses

22

by Rust Consulting, Inc., estimated at $52,500. (ld. ~ 26.) After any Court-approved deductions, the

23

remaining sum (or, the Net Settlement Amount ("NSA")) estimated at $2,320,066.90, will be available

24

for distribution to Class Members. (Id. ~ 27.) The NSA will be allocated between the classes as

25

follows: 66%, or an estimated $1,531,244.10, to the California Class on a non-reversionary basis; and

26
27
28

I These estimated values do not include the derivative California claims for waiting time
penalties or failure to provide itemized wages statements as these claims require willfulness and/or
injury, and penalties are discretionary with the Court, thereby making any assessment ofsuch damages
highly speculative. (Khoury Decl. ~ 62.)

- 10-

IOcv0672

34%, or an estimated $788,822.80, to the Non-California Nationwide Class on a reversionary basis.
~

2

(ld.

3

estimated $19,878.94, while a Non-California Nationwide Class member who has worked the entire

4

class period will recover an estimated $1,892.79. (Id.

29.) A California Class member who has worked the entire class period will recover an

~~

31-32.)

5

Defendant contends that the settlement must discount Plaintiffs' damages calculations to reflect

6

the risks Plaintiffs face in regards to both Rule 23 certification and a potential motion to decertify, as

7

well as the legal challenges Plaintiffs face in ultimately prevailing on their liability theories, as

8

explained above. In addition, the disparity in the allocation between the California Class and the Non-

9

California Nationwide Class appears to be justified by the comparative strengths of the claims. The

10

California Class Members potentially have stronger California claims for failing to pay minimum

11

wages and recalculated overtime wages, a greater likelihood of obtaining Rule 23 certification of the

12

California claims, and a greater likelihood ofproving liability and damages on Plaintiffs' supplemental

13

minimum wage and other California statutory claims. (Id. ~ 30.) In light of the uncertainties involved

14

with respect to litigating this action, the Court finds the amounts offered in settlement to be adequate,

15

at least at this stage of the proceedings. See, e.g., Glass v. UBS Fin. Servs., Inc., No. C-06-4068

16

MMC, 2007 WL 221862, at *4 (N.D. Cal. Jan. 26,2007) (finding settlement of a wage and hour class

17

action for 25 to 35% of the claimed damages to be reasonable in light of the uncertainties involved in

18

the litigation).

19

E.

Collusion Between the Parties

20

The collusion inquiry regards the possibility that the agreement is the result of either the

21

negotiators' overt misconduct or improper incentives for certain class members at the expense ofother

22

members of the class. Staton, 327 F.3d at 960. Here, there is no evidence of overt misconduct. The

23

Court will focus only on the aspects of the settlement that lend themselves to self-interested action.

24

First, the distribution between the two classes does not appear to be the result of collusion

25

between the parties. Rather, the disparity in the allocation between the California Class and the Non-

26

California Nationwide Class appears to be justified by the comparative strength of the claims, as

27

explained above.

28

The proposed class representative enhancements of $25,000 each to Graham and Lampkin

- 11 -

IOcv0672

1 likewise do not appear to be the result of collusion. The Court evaluates incentive awards using
2

"relevant factors including the actions the plaintiff has taken to protect the interests of the class, the

3

degree to which the class has benefitted from those actions, the amount oftime and effort the plaintiff

4

expended in pursuing the litigation and reasonable fears ofworkplace retaliation." Id at 977 (internal

5

quotation marks and alterations omitted). Here, Plaintiffs request $25,000 each for Graham and

6

Lampkin, for their time, effort, risks undertaken for the payment of costs in the event this action had

7

been unsuccessful, stigma upon future employment opportunities for having initiated an action against

8

a former employer, and a general release of all claims related to their employment.

9

Lastly, the attorneys' fees do not appear to be the result of collusion. It is permissible for

10

plaintiffs to simultaneously negotiate the merits of the action and attorneys' fees. Id at 971. Here,

11

the settlement agreement provides that Plaintiffs' counsel would recover an award of attorneys' fees

12

up to 30% of the MSA, or $1,125,00. (Khoury Decl., Exh. 1 [Settl. Agr.]

13

Plaintiffs' counsel will request reimbursement of their reasonable costs and expenses incurred in

14

connection with the investigation, prosecution, and settlement ofthis action. (Id) Plaintiffs' counsel

15

requests that any fees and costs awarded by the Court be paid from the MSA and encompass: (1) all

16

work performed, costs and expenses related to the investigation, prosecution and settlement of this

17

action incurred through the date ofthe Settlement Agreement; (2) all work to be performed and costs

18

to be incurred in connection with approval by the Court ofthe Class Settlement; and (3) all work, costs

19

and expenses incurred in connection with administering the Class Settlement through dismissal ofthis

20

action with prejudice. (ld)

~

7.C.) In addition,

21

"[T]he choice ofwhether to base an attorneys' fee award on either net or gross recovery should

22

not make a difference so long as the end result is reasonable." Powers v. Eichen, 229 F.3d 1249, 1258

23

(9th Cir. 2000). In addition, district courts must explain departures from the "benchmark" of 25%

24

recovery. Id at 1256-57. Accordingly, the Court has reservations about the substantial recovery of

25

attorneys' fees sought by Plaintiffs' counsel. However, the Court need not decide this issue at this

26

time. At this point, the Court merely notes that 30% recovery does not appear to be the result of

27

collusion.

28

For the above reasons, the Court GRANTS preliminary approval ofthe proposed settlement.

- 12 -

lOcv0672

1

However, the Court reserves judgment on the reasonableness of the attorneys' fees for the Final

2

Approval Hearing.

3

III.

4

The choice of counsel has traditionally been left to the parties, "whether they sue in their

5

individual capacities or as class representatives." In re Cavanaugh, 306 F.3d 726, 734 (9th Cir. 2002)

6

(internal quotation marks omitted). Here, Plaintiffs' counsel has extensive experience in employment

7

class actions, as discussed above. Accordingly, because Plaintiffs' counsel appears to be competent

8

to represent the classes, the Court GRANTS Plaintiffs' motion to appoint Cohelan Khoury & Singer

9

and Michael P. Sousa.

ApPOINTING CLASS COUNSEL

10

IV.

11

Class notice must be "reasonably calculated, under all the circumstances, to apprise interested

12

parties ofthe pendency of the action and afford them an opportunity to present their objections." See

13

Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306,314 (1950). Moreover, the class notice

14

must satisfy the content requirements ofRule 23(c)(2)(B), which provides that the notice must clearly

15

and concisely state in plain, easily understood language:

ApPROVING CLASS NOTICE

16
(i) the nature ofthe action; (ii) the definition ofthe class certified; (iii) the class claims,
issues, or defenses; (iv) that a class member may enter an appearance through an
attorney if the member so desires; (v) that the court will exclude from the class any
member who requests exclusion; (vi) the time and manner for requesting exclusion;
and (vii) the binding effect of a class judgment on members under Rule 23(c)(3).

17
18

19
20

Here, the content of the proposed notice is adequate. The proposed notice provides: (1)
21
information on the meaning and nature ofthe two classes; (2) the terms and provisions ofthe proposed
22
settlement; (3) the relief that settlement group members will be entitled to, including a specific
23
estimate ofthe amount to be paid to each eligible member; (4) the costs and fees to be paid out of the
24
MSA; (5) the procedures and deadlines for submitting claim forms, objections, andlor requests for
25
exclusion; and (6) the date, time, and place of the Final Approval Hearing. (See Khoury Decl., Exh.
26
27

A [Proposed Class Notice].) In addition, the method of notice, more fully set forth below, is
reasonable.

28
III
- 13 -

lOcv0672

CONCLUSION

2

3

ACCORDINGLY,

GOOD

CAUSE

APPEARING,

THE

JOINT

MOTION

FOR

PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT IS HEREBY GRANTED.

4

5

1.

As a part ofsaid preliminary approval, the Court hereby accepts and incorporates the

6

Parties' Settlement Agreement and hereby conditionally certifies the following

7

classes ofpersons for settlement purposes only pursuant to the terms and conditions

8

contained in said Settlement Agreement:
9

A.
10

OSI Premium Audit Field Representatives employed in California at

11

any time during the Class Period, from February 16, 2006 through

12

February 15,2012.

13

B.

14

in the United States, other than California, at any time during the Class

16

Period, from February 16,2006 through February 15,2012.

17

2.

3.

4.

The Court approves and appoints Rust Consulting, Inc., as the Claims Administrator
to administrate the settlement pursuant to the terms of the Settlement Agreement.

23

24

The Court approves and appoints Cohelan Khoury & Singer and Michael P. Sousa
as Class Counsel,

21

22

The Court approves and appoints Plaintiffs Joyce Graham and Joyce Lampkin as
the Class Representatives.

19

20

The "Nationwide Class" or "Nationwide Class Members" shall mean
all OSI Premium Audit Field Representatives employed in any office

15

18

The "California Class" or "California Class Members" shall mean all

5.

The Court finds that the Notice of Pendency of Class Action, Proposed Settlement

25

and the Claim FormlFLSA Consent Form advise ofthe pendency ofthe Class Action,

26

of the proposed settlement, of the preliminary Court approval of the proposed

27

Settlement, claim submission timing and procedures, objection time and procedures,

28

opt-out timing and procedures, and of the Final Approval Hearing date. The Court

- 14 -

lOcv0672

I

further finds that these documents fairly and adequately advise Class Members ofthe

2

terms of the proposed Settlement and the benefits available to Class Members

3

thereunder, as well as their right to opt-out and procedures for doing so, and of the

4

Final Approval Hearing and the right to file documentation in support or in

5
opposition to the Settlement and to appear in connection with said hearing. The
6

Court further finds that said class Notice and Claim FormlFLSA Consent Form

7

clearly comport with all constitutional requirements including those of due process.

8

9

10

11

ACCORDINGL Y, GOOD CAUSE APPEARING, THE COURT HEREBY APPROVES
THE PROPOSED NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED
SETTLEMENT AND THE PROPOSED CLAIM FORMIFLSA CONSENT FORM, ATTACHED TO

12
THE SETTLEMENT AGREEMENT;

13

14

15
16

17

6.

The Court finds that the mailing to the present and last known address of the
members of the above-named Classes constitutes an effective method of notifYing
Class Members of their rights with respect to the Class Action and Settlement.

ACCORDINGL Y, IT IS HEREBY ORDERED that
(a)

On or before October 12. 2012, Defendant shall forward to the appointed

18

Claims Administrator, Rust Consulting, Inc., a database (in an electronic

19

spreadsheet format) containing the names ofeach Class member, and for each

20

Class Member, hislher last known home address (street, city, and zip code),

21

last known home and/or cellular telephone numbers, last four digits ofhis/her

22

social security number, location of the OSI office where employed, and the

23

number of weeks worked during the period February 16, 2006 through

24

February 15,2012, ("Class Period");

25

(b)

On or before October 29. 2012, Rust Consulting, Inc., shall mail to each

26

Class Member, by first class, postage pre-paid, the Notice of Pendency of

27

Class Action and Proposed Settlement, Claim FormlFLSA Consent Form,

28

and pre-printed, postage paid return envelope, collectively "Notice Packet";

- 15 -

IOcv0672

1

(c)

2

The front of the envelope containing the Notice Packet addressed to a
California Class Member, below the return address, shall state the words:

3
"Important Legal Document. If you were employed by Overland Solutions,

4
Inc., as a Premium Audit Field Representative in California during the

5
relevant time period, you may be entitled to recover money from a Class

6
Action Settlement. Your Prompt Attention is Required";

7
(d)

The front of the envelope containing the Notice Packet addressed to a

8

Nationwide Class Member, below the return address, shall state the words:
9

"Important Legal Document. If you were employed by Overland Solutions,

10

Inc., as a Premium Audit Field Representative in the United States, other than

11

in California, during the relevant time period, you may be entitled to recover

12

money from a Class Action Settlement. Your Prompt Attention is Required";

13

14

(e)

All mailings shall be made to the present and/or last known mailing address

15

ofthe Class Members based on Defendant's records, as well as addresses that

16

may be updated and located by the Claims Administrator who will conduct

17

standard address searches in cases of returned mail as set forth in the

18

Settlement Agreement. The Court finds and so orders that the mailing of

19

notices to Class Members as set forth in this paragraph is the best means

20

practicable by which to reach Class Members and is reasonable and adequate

21

pursuant to all constitutional and statutory requirements including all due

22

process requirements; and

23

(f)

On or before November 29.2012, the Claims Administrator, shall mail a

24

"reminder" post-card to those Class Members who have not responded to the

25

Notice of Pendency of Class Action and Proposed Settlement with the return

26

of a Claim FormlFLSA Consent Form, or a request for exclusion (if a

27

California Class Member) reminding them ofthe deadline in which to act to

28

make a claim.

- 16-

IOcv0672

7.
2

IT IS FURTHER ORDERED that:
(a)

3

Requests for exclusion ("opt-out requests") must be mailed to the Claims
Administrator, Rust Consulting, Inc., postmarked on or before December 14,

4
2012.
5

(b)

Any Class Member who fails to submit a timely Claim FormlFLSA Consent

6
Form and who also fails to submit a Request for Exclusion from the Class
7
shall automatically be deemed a Class Member whose rights and claims with

8
respect to the Non-FLSA Released Claims (defined in Settlement Agreement,

9

IXA.2.) are determined by the Court's Final Order Approval of the Class

10

Action Settlement and the other rulings in the action, and said Class

11

Member's rights to pursue any Non-FLSA Released Claims will be

12

extinguished and said Class Member will not be permitted to recover from

13

the Maximum Settlement Amount.

14
(c)

15

Objections, which must include a written statement of the grounds of the

16

objection and all supporting papers, must be filed with the District Court as

17

described in the Notice ofPendency ofClass Action and Proposed Settlement

18

on or before December 14. 2012, and served on Counsel for the Plaintiffs

19

and on Counsel for Defendant.
(d)

20

Administrator, postmarked on or before December 14, 2012.

21
22

Claim FormslFLSA Consent Forms must be mailed to the Claims

8.

IT IS FURTHER ORDERED that the Final Approval Hearing shall be held before

23

the undersigned at 9:30 a.m. on January 29, 2013 at the above-entitled court located

24

at the 940 Front Street, Courtroom 3, San Diego, California 92101 to consider the

25

fairness, adequacy and reasonableness of the proposed Settlement preliminarily

26

approved by this Order of Preliminary Approval, and to consider the application of

27

Class Counsel Cohelan, Khoury & Singer and Michael P. Sousa for an award of

28

- 17 ­

lOcv0672

1

reasonable attorneys' fees, litigation expenses, class representative enhancements,

2
3

and for costs of claims administration incurred.
9.

IT IS FURTHER ORDERED that all briefs in support of the proposed Settlement,

4
Final Approval Hearing and attorneys' fees, litigation costs, class representative

5
enhancements, and claims administration expenses, shall be served and filed with the
6
Court on or before January 14,2013.

7
10.

IT IS FURTHER ORDERED that any party to this case, including Class Members,

8
may appear at the Final Approval Hearing in person or by counsel, and may be heard

9

to the extent allowed by the Court, in support of or in opposition to the Court's

10

determination of the good faith, fairness, reasonableness and adequacy of the

11

proposed Settlement, the requested attorneys' fees and litigation expenses and class

12

representative enhancement payments and any Order of Final Approval and

13

Judgment regarding such Settlement.

14
15

11.

IT IS FURTHER ORDERED that if, for any reason, the Court does not execute and

16

file an Order of Final Approval and Judgment, or ifthe Effective Date of Settlement

17

does not occur for any reason whatsoever, the Settlement Agreement and the

18

proposed Settlement subject of this Order and all evidence and proceedings had in

19

connection therewith, shall be null and void and without prejudice to the status quo

20

ante rights of the parties to the litigation as more specifically set forth in the

21

Settlement Agreement.

22

12.

IT IS FURTHER ORDERED that, pending further order of this Court, all

23

proceedings in this matter except those contemplated herein and in the Settlement

24

Agreement are stayed.

25

26
27

28

- 18 -

IOcv0672

The Court expressly reserves the right to adjourn or continue the Final Approval Hearing
2

from time-to-time without further notice to the Class Members.

3
4

DATED:

SePtembe~012

5
6

7
8
9

10

11
12
13

14
15
16

17
18
19
20
21
22

23
24

25
26
27

28
- 19 -

09CV2482