Cifuentes v. Ceva Logistics U.S., Inc.
Filing
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ORDER: (1) Certifying Class for Settlement Purposes; (2) Preliminarily Approving Class Settlement; (3) Approving Class Notice; and (4) Scheduling Final Approval Hearing. A Final Approval Hearing is set for 10/23/2017 at 10:30 AM before Judge Marilyn L. Huff. Plaintiff must file any motions for fee awards and incentive awards on or before 7/6/2017. Plaintiff must file a motion for final approval of the settlement on or before 9/25/2017. Signed by Judge Marilyn L. Huff on 6/12/2017. (ag)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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WILLIAM CIFUENTES, individually
and on behalf of all others similarly
situated,
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Case No.: 16-CV-01957-H-DHB
ORDER:
Plaintiff,
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v.
(1) CERTIFYING CLASS FOR
SETTLEMENT PURPOSES;
(2) PRELIMINARILY APPROVING
CLASS SETTLEMENT;
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(3) APPROVING CLASS NOTICE;
and
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CEVA LOGISTICS U.S., INC.,
Defendant.
(4) SCHEDULING FINAL
APPROVAL HEARING
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[Doc. No. 16]
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On May 5, 2017, Plaintiff William Cifuentes filed an unopposed motion seeking
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provisional class certification, preliminary approval of a proposed class settlement,
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approval of a proposed dissemination of class notice, and a final approval schedule. (Doc
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No. 16.) The Court held a hearing on the matter on June 12, 2017. Joshua Konecky
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appeared for Plaintiff. Nicole E. Forde appeared for Defendant. For the following reasons
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the Court grants Plaintiff’s motion and sets a schedule for further proceedings.
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Background
A.
Factual and Procedural Background
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This is a wage and hour class action filed on behalf of all individuals who have
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performed one or more deliveries in California for Defendant CEVA Logistics U.S., Inc.,
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while being classified as an independent contractor, no more than four years prior to the
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filing of the Complaint. (Doc. No. 1.) Defendant is a delivery company headquartered in
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Jacksonville, Florida, and engages in delivery services in California. (Id. ¶ 10.) Plaintiff
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claims that Defendant improperly categorized class members as independent contractors,
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rather than as employees, and as a result denied them the rights and protections afforded
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by the California Labor Code. (Id. ¶ 2.) Additionally, Plaintiff claims that Defendant failed
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to make meal and rest periods available to class members; did not provide accurate,
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itemized wage statements; and failed to reimburse class members for reasonable business
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expenses. (Id.) Lastly, Plaintiff claims Defendant failed to compensate class members for
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all hours worked, overtime, and full wages upon departure from the company as required
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by California Labor Code §§ 201, 202, and 203. (Id.) Plaintiff seeks compensation,
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attorneys’ fees, and costs. (Id. ¶¶ 3, 5.)
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On August 3, 2016, Plaintiff filed a class action complaint against Defendant. (Doc.
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No. 1.) On October 5, 2016, the Magistrate Judge held an Early Neutral Evaluation (ENE).
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(Doc. No. 8.) Although a settlement was not reached at the ENE, parameters were set for
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a private mediation. (Id.) On February 14, 2017, the parties participated in an in-person
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mediation, at the conclusion of which a mediator’s proposal was issued. (Doc. No. 16-4,
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Konecky Decl. ¶¶ 12-14.)
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significant deliberation, both sides had accepted the mediator’s proposal. (Id. ¶ 15.) By
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the present motion, Plaintiff now seeks approval of the settlement class; preliminary
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approval of the settlement agreement and class notice; and a scheduling order for further
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proceedings. (Doc. No. 16.)
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On March 13, 2017, the mediator confirmed that, after
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B.
Proposed Settlement
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Under the proposed settlement, Defendant will pay $1,750,000 to establish a
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settlement fund to resolve the litigation. (See Doc. No. 16-5, Konecky Decl. Ex. 1
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(“Proposed Settlement”).) That amount does not include the employer’s share of payroll
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taxes on any wage payments. (Id. ¶ 51) The settlement will be divided proportionally
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according to the number of weeks each class member worked. (Id. ¶ 56.) The class
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members will receive payment from the settlement fund less administrative costs;
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payments required under the Private Attorney General Act of 2004 (“PAGA”); a reserve
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fund; Plaintiff’s service award; and attorneys’ fees and expenses. (Id. ¶¶ 57-61); Cal. Lab.
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Code § 2699(i). Class members will not have to file claims to receive their payment.
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(Proposed Settlement ¶ 53(a)-(b).) The PAGA payment will take $87,500 from the
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settlement fund and set aside 75% of it for the California Labor Workforce Development
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Agency (LWDA). (Id. ¶ 60.) The reserve fund will consist of 2% of the settlement fund,
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and will pay for any late or unexpected claims. (Id. ¶ 57.) Additionally, any remaining
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finances in the reserve fund will be donated to the parties’ agreed upon cy pres beneficiary,
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Legal Aid at Work (LAAW). (Id. ¶ 55.) The class representative’s service award is $7,500.
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(Id. ¶ 58.) The parties agreed to a maximum attorney fee award of $583,333. (Id. ¶ 59.)
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Class members need not submit claims to obtain their settlement check, and notice of the
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plain terms of the settlement will be sent to class members by first class mail. (Id. ¶ 53(a)-
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(b).) Class members reserve the right to object to the settlement, or to opt out. (Id. ¶ 53(f)-
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(g).) None of the fund will revert back to Defendant. (Id. ¶ 54.)
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Discussion
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When the parties reach a settlement agreement prior to class certification, the Court
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is under an obligation to “peruse the proposed compromise to ratify both the propriety of
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the certification and the fairness of the settlement.” Staton v. Boeing Co., 327 F.3d 938,
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952 (9th Cir. 2003). Thus, the Court must first assess whether a class exists, and second,
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determine whether the proposed settlement is “‘fundamentally fair, adequate, and
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reasonable.’” Id.
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I.
Class Certification
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In the present case, Plaintiff seeks to certify a class pursuant to Federal Rule of Civil
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Procedure 23(b)(3) for purposes of settlement only (Doc. No. 16-1 at 7.) The class includes
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all individuals who have made at least one delivery in California for Defendant while being
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classified as an independent contractor, within four years prior to the filing of the
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Complaint. (Doc. No. 1 ¶ 1.) A plaintiff seeking to certify a class under Rule 23(b)(3)
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must first satisfy the requirements of Rule 23(a). Fed. R. Civ. P. 23(b); see Wal-Mart
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Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2548 (2011). Once subsection (a) is satisfied, the
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purported class must then fulfill the requirements of Rule 23(b)(3). Id.
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A.
Rule 23(a) Requirements
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Rule 23(a) establishes that one or more plaintiffs may sue on behalf of class members
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if all of the following requirements are met: (1) numerosity; (2) commonality; (3)
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typicality; and (4) adequacy of representation. Fed. R. Civ. P. 23(a).
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The numerosity prerequisite is met if “the class is so numerous that joinder of all
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members is impracticable.” Fed. R. Civ. P. 23(a)(1). Plaintiff estimates that the settlement
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class totals 89 class members. (Doc. No. 16-1 at 7.) Accordingly, the proposed class meets
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the numerosity prerequisite in this case. See, e.g., Rannis v. Recchia, 380 F. App'x 646,
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651 (9th Cir. 2010) (“In general, courts find the numerosity requirement satisfied when a
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class includes at least 40 members.”).
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The commonality prerequisite is met if there are “questions of law or fact common
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to the class.” Fed. R. Civ. P. 23(a)(2). Rule 23(a)(2) is construed permissively. Hanlon v.
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Chrysler Corp.,150 F.3d 1011, 1019 (9th Cir. 1998). “[T]he key inquiry is not whether the
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plaintiffs have raised common questions, ‘even in droves,’ but rather whether class
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treatment will ‘generate common answers apt to drive the resolution of the litigation.’”
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Abdullah v. U.S. Sec. Assoc., Inc., 731 F.3d 952, 957 (9th Cir. 2013) (quoting Wal-Mart
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Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011)). Here, there are many questions of
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law and fact that are common to the class. (See Doc. No. 1 ¶ 2.) Specifically, “whether
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workers are properly classified as employees or independent contractors is, by itself, a
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factual and legal issue that satisfies [the commonality requirement of] Rule 23(a).” Norris-
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Wilson v. Delta-T Group, Inc., 270 F.R.D. 596, 604 (S.D. Cal. 2010). Accordingly, the
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commonality prerequisite is met.
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Typicality requires that “the claims or defenses of the representative parties [be]
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typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). A plaintiff’s claims
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are “‘typical’ if they are reasonably co-extensive with those of absent class members.”
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Hanlon, 150 F.3d at 1020. Typicality requires that a representative plaintiff “possess the
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same interest and suffer the same injury as the class members.” Gen. Tel. Co. of the Sw.
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v. Falcon, 457 U.S. 147, 156 (1982). Here, both Plaintiff and the purported class members
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held the same position and claim the same injury – misclassification as an independent
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contractor resulting in nonpayment for hours worked, working without rest breaks and meal
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periods as required by law, and a lack of reimbursements for out-of-pocket expenses. As
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Plaintiff’s claims are reasonably co-extensive with the claims of the absent class members,
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the typicality prerequisite is met.
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Adequacy of representation under Rule 23(a)(4) requires that the class representative
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be able to “fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).
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Representation is adequate if the plaintiff and class counsel (1) do not have any conflicts
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of interest with other class members and (2) will prosecute the action vigorously on behalf
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of the class. Hanlon, 150 F.3d 1020. Here, there does not appear to be any conflicts of
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interest between Plaintiff and the absent class members. Plaintiff and his counsel have
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vigorously prosecuted the interests of the class, and class counsel has extensive experience
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in wage and hour class action litigation. (See Doc. No. 16-4, Konecky Decl. ¶¶ 3-6.)
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Accordingly, Plaintiff and his counsel are adequate representatives of the proposed class.
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For the foregoing reasons, Plaintiff has met all of the requirements of Rule 23(a).
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B.
Rule 23(b)(3) Requirements
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Rule 23(b)(3) requires the Court to find that: (1) “the questions of law or fact
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common to class members predominate over any questions affecting only individual
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members;” and (2) “that a class action is superior to other available methods for fairly and
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efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). These factors are
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referred to as the “predominance” and “superiority” tests. See Hanlon, 150 F.3d at 1022-
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23. Rule 23(b)(3)’s requirements are designed “to cover cases ‘in which a class action
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would achieve economies of time, effort, and expense, and promote . . . uniformity of
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decision as to persons similarly situated, without sacrificing procedural fairness or bringing
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about other undesirable results.’” Amchem Products, Inc. v. Windsor, 521 U.S. 591, 615
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(1997) (quoting Advisory Committee’s Notes on Fed. R. Civ. P. 23, 28 U.S.C. App., pp.
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696-97). If the parties seek to certify a class for settlement purposes, “a district court need
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not inquire whether the case, if tried, would present intractable management problems for
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the proposal is that there be no trial.” Id. at 620 (internal citations omitted).
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1.
Predominance
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The predominance inquiry tests whether the proposed class is “sufficiently cohesive
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to warrant adjudication by representation.’” Hanlon, 150 F.3d at 1022 (quoting Amchem,
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521 U.S. at 623). This analysis requires more than proof of common issues of law and fact.
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Id. Rather, the common questions should “present a significant aspect of the case and . . .
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be resolved for all members of the class in a single adjudication.” Id. (internal quotation
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omitted). An employer’s policy that uniformly applies to class members is a permissible
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factor for consideration under Rule 23(b)(3). Mevorah v. Wells Fargo Home Mortg. (In re
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Wells Fargo Home Mortg.), 571 F.3d 953, 957 (9th Cir. 2009).
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Here, the significant common issue in this case is whether Defendant misclassified
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class members as independent contractors instead of employees, which gives rise to other
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issues of rights for employees under the California Labor Code. (Doc. No. 1 ¶ 2.)
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Moreover, the legal remedies for the class members are the same. (See generally id.)
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Accordingly, the Court concludes that the issues common to the proposed class are
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significant and predominate over individual issues. See Villalpando v. Exel Direct Inc.,
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303 F.R.D. 588, 608 (N.D. Cal. 2014). As such, the predominance requirement is met.
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2.
Superiority
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The superiority inquiry requires determination of “whether objectives of the
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particular class action procedure will be achieved in the particular case.” Hanlon, 150 F.3d
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at 1023 (citation omitted). Notably, the class-action method is considered to be superior if
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“classwide litigation of common issues will reduce litigation costs and promote greater
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efficiency.” Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996) (citation
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omitted). Here, there is no evidence that absent class members wish to pursue their claims
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individually. Moreover, any class member who wants to pursue an individual claim may
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elect not to participate in the settlement agreement.
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(Proposed Settlement ¶ 53.)
Accordingly, the superiority requirement is met here.
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For the foregoing reasons, Plaintiff has satisfied the requirements of Rule 23(b)(3).
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Thus, the Court grants preliminary certification to the proposed class. The Court, however,
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may review this finding at the final approval hearing.
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II.
The Settlement
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Rule 23(e) requires the Court to determine whether a proposed settlement is
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“‘fundamentally fair, adequate, and reasonable.’” Staton, 327 F.3d at 959 (quoting Hanlon,
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150 F.3d at 1026). To make this determination, the Court must consider a number of
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factors, including: (1) the strength of plaintiff’s case; (2) the risk, expense, complexity, and
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likely duration of further litigation; (3) the risk of maintaining class action status
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throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery
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completed, and the stage of the proceedings; (6) the experience and views of counsel; (7)
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the presence of a governmental participant; and (8) the reaction of class members to the
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proposed settlement. Id. In addition, the settlement may not be the product of collusion
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among the negotiating parties. In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th
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Cir. 2000) (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1290 (9th Cir. 1992)).
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Given that some of these factors cannot be fully assessed until the Court conducts
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the final approval hearing, “‘a full fairness analysis is unnecessary at this stage.’” Alberto
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v. GMRI, Inc., 252 F.R.D. 652, 665 (E.D. Cal. 2008) (citation omitted). Rather, at the
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preliminary approval stage, the Court need only review the parties’ proposed settlement to
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determine whether it is within the permissible “range of possible judicial approval” and
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thus, whether the notice to the class and the scheduling of a fairness hearing is appropriate.
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See 4 William B. Rubenstein et al., Newberg on Class Actions § 11:25 (4th ed. 2002)
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(citations omitted); see also Alberto, 252 F.R.D. at 666 (citation omitted). In determining
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whether a proposed settlement should be approved, the Ninth Circuit has a “strong judicial
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policy that favors settlements, particularly where complex class action litigation is
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concerned.” Seattle, 955 F.2d at 1276. Additionally, the Ninth Circuit favors deference to
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the “private consensual decision of the [settling] parties,” particularly where the parties are
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represented by experienced counsel and negotiation has been facilitated by a neutral party.
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See Rodriguez v. West Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009).
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After reviewing the proposed settlement in light of the above factors and the current
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stage of the litigation, the Court concludes that preliminary approval is appropriate. The
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proposed settlement appears to be the result of serious, informed, and non-collusive
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negotiations. See, e.g., Tijero v. Aaron Bros., Inc., C 10-01089-SBA, 2013 WL 6700102,
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AT *8 (N.D. Cal. Dec. 19, 2013). After conducting discovery, the parties participated in
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an ENE, but were unable to reach a settlement agreement. (Doc. Nos. 8, 16-4, Konecky
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Decl. ¶ 11.) After settlement negotiations, an experienced mediator supervised a day-long
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mediation session, in which he proposed a settlement. (Doc. No. 16-4, Konecky Decl. ¶
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14.) Subsequently, the parties agreed to the proposal in light of the information gleaned
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from discovery that exposed the strengths and risks of continued litigation. (Id.) Class
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counsel has extensive experience in wage and hour class actions and represents that the
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settlement provides meaningful relief to the class. (Id. ¶ 3-6.) The estimated total value of
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benefits to the class is estimated to be $1,034,541, with each class member receiving a
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share proportional to the amount of weeks they worked. (Id. ¶ 18.) With an estimated 89
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class members, the average settlement award is approximately $12,000. (Id.) Additionally
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members may opt out if they believe the settlement does not adequately compensate them,
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(Id. ¶ 53(f)), or dispute Defendant’s records regarding the number of weeks each member
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worked and provide contrary documentation. (Id. ¶ 53(d).)
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The request for attorney’s fees and costs of up to $583,333, is within the permissible
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range of acceptable attorneys’ fees in Ninth Circuit cases. (Proposed Settlement ¶59); see
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also Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (noting
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that “[t]he typical range of acceptable attorneys’ fees in the Ninth Circuit is 20% to 33
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1/3% of the total settlement value, with 25% considered the benchmark”). Additionally,
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the proposed incentive awards for the named Plaintiff of $7,500 appears reasonable given
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his efforts in this litigation. (Proposed Settlement ¶ 58); see In re Mego Fin. Corp. Sec.
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Litig., 213 F.3d 454, 457, 463 (9th Cir. 2000) (approving incentive award of $5,000 to two
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plaintiff representatives of 5,400 potential class members in $1.75 million settlement,
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where incentive payment constituted only 0.57% of the settlement fund).
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The parties may designate a cy pres recipient for this endowment so long as it
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qualifies as “the next best distribution” to giving the funds to class members. Dennis v.
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Kellogg Co., 697 F.3d 858, 865 (9th Cir. 2012). “There must be a driving nexus between
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the plaintiff class and the cy pres beneficiaries.” Id. (citation omitted). As such, a cy pres
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award must be “guided by (1) the objectives of the underlying statute(s) and (2) the interests
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of the silent class members, and must not benefit a group too remote from the plaintiff
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class[.]” Id. (quotation marks and citations omitted). Here, the parties have selected Legal
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Aid at Work (LAAW) as a cy pres recipient of any residual remaining in the reserve fund.
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(Proposed Settlement ¶ 55.) This entity shares the objectives of the California Labor Code
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in protecting and providing legal representation for workers like the class members here.
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(Doc. No. 16-1 at 17.); see, e.g., Kempen v. Matheson Tri-Gas, Inc., No. 15-CV-00660-
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HSG, 2017 WL 475095, at *6 (N.D. Cal. Feb. 6, 2017) (approving of cy pres recipients
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because their respective roles in advocating for employee rights and researching employee
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issues were sufficiently connected to the goals of the plaintiff class of workers).
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Accordingly, there is an appropriate nexus between the designated cy pres and the plaintiff
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class.
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For the foregoing reasons, the Court grants preliminary approval of the proposed
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settlement. The Court, however, reserves judgment on the reasonableness of the attorneys’
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fees for the final approval hearing.
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III.
Approving Class Notice
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The class notice must be “reasonably calculated, under all the circumstances, to
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apprise interested parties of the pendency of the action and afford them an opportunity to
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present their objections.” See Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306,
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314 (1950). In addition, the class notice must satisfy the content requirements of Rule
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23(c)(2)(B), that provides the notice must clearly and concisely state in plain, easily
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understood language:
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(i) the nature of the action; (ii) the definition of the 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). Fed. R. Civ. P. 23(c)(2)(B).
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A.
In the present case, the content of the notice is adequate. In clearly understandable
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Content of the Notice
language, it provides the following: a description of the lawsuit; a description of the
settlement class; an explanation of the material elements of the settlement, a statement
declaring that class members may exclude themselves from or object to the settlement; a
description that explains how class members may exclude themselves from or object to the
terms of the settlement; and a description of the fairness hearing. (See Doc. No. 16-5,
Konecky Decl. Ex. 1 at Ex. A.)
B.
Method of Notice
The proposed method of notice is reasonable. Class members will receive individual
notice by first class mail. (Proposed Settlement ¶ 53(a).) Additionally, any returned, nondelivered class notice will be re-mailed or delivered to the correct address if determinable.
(Id. ¶ 53(b).) Class members who receive a re-mailed notice will have a ten-day extension
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from the original response deadline.
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instructions on how to object to or opt out of the settlement. (Id. ¶ 53(c).)
(Id.) Moreover, the class notice will include
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After reviewing the content and the proposed method of providing notice, the Court
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determines that the notice is adequate and sufficient to inform the class members of their
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rights. Accordingly, the Court approves the form and manner of giving notice of the
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proposed settlement.
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IV.
Scheduling Fairness Hearing
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The Court schedules the final approval hearing for Monday, October 23, 2017, at
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10:30 a.m. Defendant must provide an updated class list to the settlement administrator
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by June 22, 2017. Plaintiff must file a motion for attorneys’ fees on or before July 6,
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2017. The settlement administrator must mail class notices by July 6, 2017. Potential
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class members must return their claims or other responses by August 21, 2017. Plaintiff
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must file a motion for service awards on or before September 25, 2017. Plaintiff must file
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a motion for final approval of the settlement on or before September 25, 2017.
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Conclusion
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The Court approves Plaintiff’s request for provisional certification of the class for
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purposes of settlement, Plaintiff’s request for preliminary approval of the proposed
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settlement, and the form and manner of the notice of the proposed settlement to the class
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members. Additionally, the Court sets the final approval hearing for October 23, 2017, at
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10:30 a.m. Plaintiff must file any motions for fee awards and incentive awards on or before
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July 6, 2017. Plaintiff must file a motion for final approval of the settlement on or before
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September 25, 2017.
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IT IS SO ORDERED.
DATED: June 12, 2017
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MARILYN L. HUFF, District Judge
UNITED STATES DISTRICT COURT
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