D'Angelo v. iTOK, Inc. et al

Filing 78

ORDER Approving Settlement of FLSA Claims 76 . It is ordered that the parties' settlement, on a collective basis, of the FLSA claims asserted in the SAC is approved; The Court finally certifies the conditionally certified collective action f or settlement purposes; The settlement notice is approved; The Court appoints the law firms of AMartin Law, PC and San Diego County Law Offices as collective counsel; The Court approves attorneys' fees in the amount of $9,500.00 and costs in the amount of $1,352.82; and A notice of dismissal of the remaining non-FLSA claims in the SAC shall be filed on or before 1/3/2017. Signed by Judge Cathy Ann Bencivengo on 12/28/2016. (dxj)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8
9
10

SOUTHERN DISTRICT OF CALIFORNIA
D’ANGELO FERRERI, on behalf of
himself and all others similarly situated,

13
14
15

ORDER APPROVING
SETTLEMENT OF FLSA CLAIMS

Plaintiff,

11
12

Case No.: 15-CV-1899-CAB-MDD

v.
BASK TECHNOLOGY, INC. (formerly
named iTOK, INC.), a corporation; and
FIELD NATION, LLC, a limited liability
company,,

[Doc. Nos. 76]

Defendants.

16
17
18

This matter is before the Court on the parties’ Joint Motion for FLSA Collective

19

Action Settlement Approval. For the reasons stated below, and because the instant motion

20

and revised settlement agreement adequately address the deficiencies identified by the

21

Court in its order denying approval of the parties’ first attempt at settlement, the motion is

22

granted.

23

I.

24

Defendant Bask Technology, Inc. provides remote technical support for homes and

25

businesses. According to the SAC, the specific individuals who provided this support for

26

Bask’s customers are called Remote Technical Advisors (“RTAs”). In September 2013,

27

Plaintiff D’Angelo Ferreri contacted Bask about becoming a RTA. Bask allegedly told

28

Ferreri that he could become an RTA, but that he had to go through Defendant Field Nation,

Background

1
15-CV-1899-CAB-MDD

1

LLC. Field Nation is one of several third-parties that Bask used to obtain RTAs to perform

2

the support work for Bask’s customers. Ferreri proceeded to apply with Field Nation and

3

eventually became an RTA for Bask, which entailed logging into his computer and

4

responding to Bask customers’ calls for technical support, referred to as “tickets.” Bask

5

paid Field Nation $18 per completed ticket, and Field Nation would pay Ferreri on a per

6

ticket basis after deducting certain fees from the amount received from Bask. Ferreri was

7

classified as independent contractor and paid on a 1099 basis.

8

The Second Amended Complaint (“SAC”) alleges that Ferreri and all RTAs who

9

performed work for Bask customers were improperly classified as independent contractors

10

instead of employees and as a result not paid a minimum wage or overtime. To that end,

11

the SAC asserts two FLSA claims and various claims under California’s labor laws on

12

behalf of Ferreri and one putative FLSA collective and two putative Federal Rule of Civil

13

Procedure 23 classes. In addition to Bask, the complaint named Field Nation, LLC, as a

14

defendant. The SAC estimated the existence of “at least a few hundred RTAs” as class

15

members and alleged that the amount in controversy exceeded $5 million. [Doc. No. 34 at

16

¶¶ 5, 22.] In or around February 2016, Ferreri settled with Field Nation for a payment of

17

$6,000.

18

On February 24, 2016, Plaintiff filed a motion for conditional certification of a

19

collective action for the two FLSA claims consisting of all RTAs who performed worked

20

for Bask through any third party contractor (not limited to Field Nation) and were classified

21

as independent contractors. The motion contained a proposed notice to potential collective

22

members which specified that “Plaintiff also asserts claims under California law, but those

23

claims are not subject to this notice.” [Doc. No. 32-2 at 2.] The Court granted the motion

24

in part, conditionally certifying a significantly narrower collective than the one sought by

25

Plaintiff. The collective included:

26
27
28

All persons who contracted with Field Nation, LLC, to perform work for Bask
Technology, Inc. (formerly named iTOK, Inc.), or Bask/iTOK’s customers,
as a Technical Advisor, Technical Support Representative, Support
2
15-CV-1899-CAB-MDD

1

Technician or in any other similar position that provided remote technical
services and were classified as an independent contractor within three years
preceding the date of their decision to opt-in to this action.

2
3
4

After conditional certification, notice was provided to the 152 potential members of the

5

collective, and 34 individuals opted into the collective.

6

Also on October 14, 2016, Ferreri filed the motions seeking approval of a

7

“Collective Action Settlement Agreement and Release” and attorneys’ fees. The Court

8

denied the motions on account of numerous deficiencies that precluded a finding that the

9

settlement was a fair and reasonable resolution of a bona fide dispute over FLSA

10

requirements. [Doc. No. 71.] That order gave the parties until December 19, 2016, to file

11

a new motion for approval of a settlement that addressed the deficiencies identified in the

12

Court’s opinion.

13

Consistent with the Court’s order, on December 19, 2016, the parties filed the instant

14

motion seeking approval of the “Collective Action Settlement Agreement and Release”

15

and attorneys’ fees and costs. The settlement agreement purports to be between Bask and

16

Ferreri, “on behalf of himself and all those who opted-in to the conditionally certified

17

collective action by executing a Consent to Join Form.” [Doc. No. 76-3 at 1.] With the

18

motion, Ferreri also filed executed Consent to Join forms by 34 individuals. [Doc. No. 76-

19

5.]

20

According to the settlement agreement, Bask has agreed to pay $32,855.27 to the

21

settlement members for their claims, $9,500 to Plaintiff’s counsel for fees, and $1,352.82

22

to Plaintiff’s counsel in costs. The agreement includes an exhibit specifying the amount

23

each settlement member would receive under the settlement for potential unpaid training

24

hours, potential unpaid minimum wage, potential unpaid overtime, and liquidated

25

damages. The motion and Declaration of Alisa A. Martin specifies how those amounts

26

were calculated. [Doc. No. 76-2 at 11-13; Doc. No. 76-3 at ¶¶ 12-15.] In exchange for

27

these payments, the settlement agreement contains the following release and covenant not

28

to sue:
3
15-CV-1899-CAB-MDD

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Release. Conditioned upon Court approval of the settlement and dismissal of
the case with prejudice, Plaintiff and Opt-In Members, individually and in
their representative collective capacity, for themselves and their heirs,
successors, assigns, personal representatives, executors, legal representatives,
spouses, agents, insurers, and attorneys, do hereby release and discharge
Defendant and its current and former parents, subsidiaries, affiliates,
successors, predecessors, assigns, officers, directors, shareholders, associates,
employees, agents, insurers, attorneys, and representatives (collectively, “the
Released Parties”), of and from any and all claims asserted, or which could
have been asserted, in the Action under FLSA, including all rights, demands,
charges, complaints, causes of action, obligations, or liability of any and every
kind (including any and all claims or demands for attorneys’ fees and costs),
whether known or unknown, whether anticipated or unanticipated, that arose
or accrued arose or accrued [sic] at any time during the period from June 1,
2012, through the date of this Agreement, for any type of wages, overtime,
hours worked, misclassification as independent contractors, premium pay,
damages, statutory damages, liquidated damages, unpaid costs, statutory
penalties, civil penalties, punitive damages, interest, attorneys’ fees, litigation
costs, restitution, or equitable relief (“Released Claims”).
Exclusion. Any and all claims under California law, including California
Business and Professions Code, California Labor Code, including PAGA, are
excluded from the Released Claims.
Covenant Not to Sue. Plaintiff and Opt-In Members further covenant not to
sue Defendant or the Released Parties for any of the Released Claims.
[Doc. No. 76-3 at 5.]

20

II.

Legal Standard

21

“The FLSA, 29 U.S.C. § 201 et seq., was enacted ‘to protect all covered workers

22

from substandard wages and oppressive working hours.’” Adair v. City of Kirkland, 185

23

F.3d 1055, 1059 (9th Cir. 1999) (quoting Barrentine v. Arkansas–Best Freight Sys., Inc.,

24

450 U.S. 728, 739 (1981). “The FLSA’s minimum wage and overtime provisions are

25

central among the protections the Act affords to workers. Section 6 of the FLSA mandates

26

payment of a minimum wage and section 7 sets maximum hours (‘the overtime limit’),

27

which, when exceeded, requires the payment of overtime wages.” Id. (citing 29 U.S.C. §§

28

206, 207)). “An employer who violates the FLSA ‘shall be liable to the employee or
4
15-CV-1899-CAB-MDD

1

employees affected in the amount of their unpaid minimum wages, or their unpaid overtime

2

compensation, as the case may be, and in an additional equal amount as liquidated

3

damages.’” Flores v. City of San Gabriel, 824 F.3d 890, 904–05 (9th Cir. 2016) (quoting

4

29 U.S.C. § 216(b)).

5

“Settlement of an FLSA claim, including a collective action claim, requires court

6

approval.” Kempen v. Matheson Tri-Gas, Inc., No. 15-cv660-HSG, 2016 WL 4073336, at

7

*4 (N.D. Cal. Aug. 1, 2016); see also Dunn v. Teachers Ins. & Annuity Assoc. of Am., No.

8

13-cv-5456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016) (“Most courts hold

9

that an employee’s overtime claim under FLSA is non-waivable and, therefore, cannot be

10

settled without supervision of either the Secretary of Labor or a district court.”). Because

11

the Ninth Circuit has not established a standard for district courts to follow when evaluating

12

an FLSA settlement, California district courts frequently apply the standard established by

13

the Eleventh Circuit in Lynn’s Food Stores, Inc. v. U.S. By and Through U.S. Dep’t of

14

Labor, 679 F.2d 1350, 1352 (11th Cir. 1982). Dunn, 2016 WL 153266, at *3. Under that

15

standard, the relevant considerations are whether the named plaintiff is “similarly situated”

16

to the collective members and whether the settlement constitutes “a fair and reasonable

17

resolution of a bona fide dispute over FLSA provisions.” 29 U.S.C. § 216(b); Lynn’s Food

18

Stores, 679 F.2d at 1355; see also Ambrosino v. Home Depot U.S.A., Inc., No. 11cv1319

19

L(MDD), 2014 WL 3924609, at *1 (S.D. Cal. Aug. 11, 2014) (“A district court may

20

approve an FLSA settlement if the proposed settlement reflects ‘a reasonable compromise

21

over [disputed] issues.’”) (quoting Lynn’s Food Stores, 679 F.2d at 1354).

22

Although the standard for approving FLSA collective actions may be nominally

23

different from the standard for approving class actions under Federal Rule of Civil

24

Procedure 23, “many courts begin with the well-established criteria for assessing whether

25

a class action settlement is fair, reasonable and adequate under [Rule] 23(e) and reason by

26

analogy to the FLSA context.” Millan v. Cascade Water Servs., Inc., No. 1:12-cv-1821-

27

AWI-EPG, 2016 WL 3077710, at *3 (E.D. Cal. Jun. 2, 2016) (internal quotation marks

28

omitted); see also Otey v. Crowdflower, Inc., No. 12-cv5524-JST, 2014 WL 1477630, at
5
15-CV-1899-CAB-MDD

1

*11 (N.D. Cal. Apr. 15, 2014) (“[T]he factors that courts consider when evaluating a

2

collective action settlement are essentially the same as those that courts consider when

3

evaluating a Rule 23 settlement.”).1 Those Rule 23 criteria include:

4

8

the strength of the plaintiffs’ case; the risk, expense, complexity, and likely
duration of further litigation; the risk of maintaining class action status
throughout 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.

9

Otey, 2014 WL 1477630, at *4 (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026

5
6
7

10

(9th Cir. 1998)).

11

III.

12

The revised proposed settlement submitted by the parties here adequately remedies

13

all of the deficiencies identified in the Court’s order denying approval of the prior

14

settlement. To that end, the settlement reflects a reasonable compromise over disputed

15

FLSA issues.

Discussion

A.

16

Bona Fide Dispute

17

The settlement agreement resolves a “bona fide dispute” concerning potential

18

liability under the FLSA. Lynn’s Food Stores, 679 F.2d at 1355. As illustrated in the

19

pleadings and various briefings submitted to the Court in the course of this litigation, (Doc.

20

Nos. 1, 30, 34, 44, 49), the case involves genuinely disputed issues, including, for example,

21

whether RTAs were employees or independent contractors.
B.

22

Fair and Reasonable Settlement Agreement

In evaluating a proposed FLSA settlement, the Court finds that the settlement is fair

23
24
25
26
27
28

1

But see Selk v. Pioneers Mem. Healthcare Dist., 159 F.Supp. 3d 1164, 1173 (S.D. Cal.
2016) (evaluating an FLSA settlement using a totality of the circumstances approach “that
replicates the factors relevant to Rule 23 class actions where appropriate, but adjusts or
departs from those factors when necessary to account for the labor rights at issue.”)
6
15-CV-1899-CAB-MDD

1

and reasonable considering: the discovery the parties conducted to assess potential

2

damages if liability could have been established; the relief provided to the Settlement

3

Members; the advantage of obtaining immediate results rather than waiting, possibly for

4

years, for an uncertain result; the conservation of resources through the avoidance of

5

further costly litigation; the risk of no recovery if Ferreri and the collective lost at trial or

6

won an uncollectable judgment; and counsel’s experience and opinion that the settlement

7

is fair and reasonable.

8

C.

Attorney’s Fees and Costs

9

Pursuant to the FLSA, the court “shall, in addition to any judgment awarded to the

10

plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and

11

costs of the action.” 29 U.S.C. § 216(b). “The ‘case law construing what is a “reasonable”

12

fee applies uniformly’ to all federal fee-shifting statutes.” Haworth v. State of Nevada, 56

13

F.3d 1048, 1051 (9th Cir. 1995) (quoting City of Burlington v. Dague, 505 U.S. 557, 562

14

(1992)). “Under Ninth Circuit law, the district court has discretion in common fund cases

15

to choose either the percentage-of-the-fund or the lodestar method” to determine a

16

reasonable attorney’s fee. Vizcaino v. Microsoft Corp., 290 F.3d 1042, 1047 (9th Cir.

17

2002); see also In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 942 (9th Cir.

18

2011) (“Where a settlement produces a common fund for the benefit of the entire class,

19

courts have discretion to employ either the lodestar method or the percentage-of-recovery

20

method.”). Thus, courts frequently use the percentage-of-recovery method either by itself

21

or in conjunction with confirming that the lodestar is consistent with the 25% percentage-

22

of-recovery benchmark to determine the reasonableness of fees for FLSA common fund

23

settlements. See, e.g., Selk, 159 F.Supp. 3d at 1180 (evaluating FLSA settlement fee award

24

using percentage-of-recovery method); Jones v. Agilysis, Inc., No. C 12-03516 SBA, 2014

25

WL 2090034, at *2 (N.D. Cal. May 19, 2014) (approving fee award as consistent with the

26

25% “benchmark”); Otey, 2014 WL 1477630, at *7-8 (analyzing fees using lodestar and

27

percentage of recovery methods).

28
7
15-CV-1899-CAB-MDD

1

Here, the settlement agreement provides for a payment of $9,500.00 in attorneys’

2

fees and $1,352.82 in costs, which amounts equal approximately 25% of the total amount

3

to be paid by Bask. As this amount is consistent with the Ninth Circuit benchmark for

4

common fund settlements and is well below what Plaintiff’s counsel have claimed is their

5

lodestar, the Court approves of this aspect of the settlement as well.

6

D.

Settlement Notice and Check Distribution

7

The Court finds that the proposed notice, Doc. No. 76-3 at 14-15, Martin Decl., Ex.

8

A (Ex. 2), and the process for distributing the notice and settlement checks are fair and

9

adequate. [Doc. No. 76-3 at 6.]

10

IV.

11

For the foregoing reasons, it is hereby ORDERED as follows:

12

1.

13
14

Conclusion
The parties’ settlement, on a collective basis, of the FLSA claims asserted in
the SAC is approved;

2.

15

The Court finally certifies the conditionally certified collective action for
settlement purposes;

16

3.

The settlement notice is approved;

17

4.

The Court appoints the law firms of AMartin Law, PC and San Diego County

18
19

Law Offices as collective counsel;
5.

20
21
22

The Court approves attorneys’ fees in the amount of $9,500.00 and costs in
the amount of $1,352.82; and

6.

A notice of dismissal of the remaining non-FLSA claims in the SAC shall be
filed on or before January 3, 2017.

23

It is SO ORDERED.

24

Dated: December 28, 2016

25
26
27
28
8
15-CV-1899-CAB-MDD