WILLIAM B. SHUBB, District Judge.
Plaintiff Shirley Garnett brought this putative class action against defendant ADT LLC, asserting claims arising out of defendant's alleged failure to reimburse for work-related vehicle expenses and failure to provide accurate wage statements as required by California law. Presently before the court is plaintiff's motion for preliminary approval of the class action settlement. (Docket No. 80.)
To avoid repetition, the court will refrain from reciting the factual and procedural background, which remains the same as in its October 6, 2015 Order granting plaintiff's partial motion for summary judgment on plaintiff's itemized wage statement claim and denying defendant's cross-motion for summary judgment. (Oct. 6, 2015 Order (Docket No. 33).)
Rule 23(e) provides that "[t]he claims, issues, or defenses of a certified class may be settled . . . only with the court's approval." Fed. R. Civ. P. 23(e). "Approval under 23(e) involves a two-step process in which the Court first determines whether a proposed class action settlement deserves preliminary approval and then, after notice is given to class members, whether final approval is warranted."
The Ninth Circuit has declared a strong judicial policy favoring settlement of class actions.
A class action will be certified only if it meets the four prerequisites identified in Rule 23(a) and additionally fits within one of the three subdivisions of Rule 23(b). Fed. R. Civ. P. 23(a)-(b). Although a district court has discretion in determining whether the moving party has satisfied each Rule 23 requirement, the court must conduct a rigorous inquiry before certifying a class.
Rule 23(a) restricts class actions to cases where:
Fed. R. Civ. P. 23(a). These requirements are more commonly referred to as numerosity, commonality, typicality, and adequacy of representation.
"A proposed class of at least forty members presumptively satisfies the numerosity requirement."
Commonality requires that the class members' claims "depend upon a common contention" that is "capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke."
The proposed class has two subclasses: the "Wage Statement Settlement Class" and the "Vehicle Expense Reimbursement Class." (Pl.'s Mot. at 16.) The Wage Statement Settlement Class includes all employees who worked as sales representatives for defendant from October 1, 2010 to the date this Order is signed. (Suppl. Workman Decl. Ex. A, Joint Stipulation and Agreement of Compromise and Settlement of Class Action ("Settlement Agreement") ¶ 2.23 (Docket No. 81).) The Vehicle Expense Reimbursement Class includes all employees who worked as sales representatives for defendant from October 1, 2010 to the date this Order is signed and employees who worked for defendant as sales managers from July 1, 2013 to the date this Order is signed. (
Typicality requires that the named plaintiff have claims "reasonably coextensive with those of absent class members," but their claims do not have to be "substantially identical."
The putative class members allege a simple set of facts that is essentially identical to that alleged by the named plaintiff. Both the class members and the named plaintiff were allegedly injured by being inadequately reimbursed for driving their personal vehicles and unable to ascertain their total hours worked from their wage statements. While each class member worked for defendant for different amounts of time during the relevant period and, as a result, is owed different amounts, class members' claims appear to be reasonably coextensive with those of the named plaintiff. Moreover, the differences in the amounts owed are taken into account by the settlement agreement, which allots payments based on the number of work weeks each class member was employed by defendant during the class period. (Pl.'s Mot. at 9.) The proposed class therefore meets the typicality requirement.
To resolve the question of adequacy, the court must make two inquiries: "(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?"
There do not appear to be any conflicts of interest. The named plaintiff's interests are generally aligned with the putative class members. As discussed above, the class members suffered a similar injury as the named plaintiff and the definition of the class is narrowly tailored.
While the provision of an incentive award raises the possibility that the named plaintiff's interest in receiving that award will cause its interests to diverge from the class's interest in a fair settlement, the Ninth Circuit has specifically approved the award of "reasonable incentive payments."
In this case, the settlement agreement provides an incentive award of $7,500 to the named plaintiff. (Pl.'s Mot. at 9.) While the incentive award for the named plaintiff is relatively high, it does not, on its face appear to create a conflict of interest given that it is proportionate to the settlement awards the class members stand to receive. The gross settlement amount in this case is $2.7 million. Subtracting the $7,500 incentive award, $891,500 proposed attorney's fees, $90,000 proposed costs, and $18,750 proposed Private Attorneys General Act allocation to be paid to the California Labor & Workforce Development Agency, the total available funds for class members is $1,692,250. Assuming all 2,100 class members submit claim forms, the average recovery per class member will be about $805.83 (not taking into account the number of work weeks each class member was employed). Class members could recover an even higher amount if all 2,100 class members do not submit claim forms.
In addition, plaintiff provides important justification for the incentive award by explaining that she has dedicated at least forty hours to this case—consulting with her attorney; traveling from Stockton to Sacramento for her deposition; assisting in answering document requests, interrogatories, and requests for admissions; searching for documents and requested information; and making herself available to answer any potential questions during the depositions and mediation sessions. (Garnett Decl. ¶ 10 (Docket No. 80-2).) Accordingly, the court preliminarily finds that the proposed incentive award does not render plaintiff an inadequate representative of the class.
In addition, the named plaintiff and her counsel seem to have vigorously prosecuted the action on behalf of the class. "Although there are no fixed standards by which `vigor' can be assayed, considerations include competency of counsel and, in the context of a settlement-only class, an assessment of the rationale for not pursuing further litigation."
The court also finds no reason to doubt that plaintiff's counsel is qualified to serve as class counsel and assess the value of the settlement. Plaintiff's counsel, Robin Workman, states that she and the Workman Law Firm have "extensive experience in wage and hour class action litigation." (Workman Decl. ¶ 31 (Docket No. 80-3).) Plaintiff's counsel specializes in employment law, particularly wage and hour enforcement on a class action basis, and has been lead counsel on a number of such cases. (
Plaintiff seeks certification under Rule 23(b)(3), which provides that a class action may be maintained only if (1) "the court finds that questions of law or fact common to class members predominate over questions affecting only individual members" and (2) "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3).
"Because Rule 23(a)(3) already considers commonality, the focus of the Rule 23(b)(3) predominance inquiry is on the balance between individual and common issues."
Rule 23(b)(3) also sets forth four non-exhaustive factors to consider in determining whether "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy":
Fed. R. Civ. P. 23(b) (3). The parties settled this action prior to certification, making factors (C) and (D) inapplicable.
The damage calculation experts hired by plaintiff estimated that the range of potential recovery for this case ranges anywhere from $2.5 million to $11.7 million—predicting plaintiff's wage statement claim is worth between $1 million and $2.4 million, the standard roundtrip commute mileage claim $1.5 million, and the reimbursement rate claim between $0 and $7.8 million. (Pl.'s Mot. at 13.) Class members might have an interest in individually controlling prosecution given that the $2.7 million settlement is on the lower end of this range. However, defendant strongly disputes the worth of plaintiff's reimbursement rate claim and, as will be discussed below, there are significant risks associated with going to trial in this case. Moreover, the costs of individually pursuing this litigation would be significant. As a result, class members' interest in pursuing individual suits is likely low.
The court is also unaware of any concurrent litigation already begun by class members regarding the wage statements and reimbursements provided by defendant. Objectors at the fairness hearing may reveal otherwise.
If the court certifies a class under Rule 23(b)(3), it "must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and content of a proposed notice.
The settlement agreement provides that the claims administrator, ILYM, will provide notice to the class via bulk first class mail. (Settlement Agreement ¶ 9.2.4.) Defendant will provide the claims administrator with each class member's name, last known address, social security number, and number of weeks worked. (
The notice explains the proceedings; defines the scope of the class; informs the class member of the claim form requirement and the binding effect of the class action; describes the procedure for opting out and objecting; and provides the time and date of the fairness hearing. (Settlement Agreement Ex. B, Notice.) The court is concerned, however, with the text box on page two of the notice entitled, "YOUR LEGAL RIGHTS AND OPTIONS IN THIS LAWSUIT." The box summarizes two options: (1) do nothing or (2) ask to be excluded. (
The court is also satisfied with the claim form, which reports the number of weeks worked by the class member during the class period, based on defendant's records, and provides an estimated settlement payment amount. (Settlement Agreement Ex. A at 1.) Class members who want to make a claim for a different settlement sum based on a different number of weeks worked may set forth the information he or she believes correct in the claim form, explain the basis for such belief, and submit supporting written documentation within seven days of the claim deadline. (
The court is satisfied that this system is reasonably calculated to provide notice to class members and is the best form of notice available under the circumstances.
After determining that the proposed class satisfies the requirements of Rule 23, the court must determine whether the terms of the parties' settlement appear fair, adequate, and reasonable.
At the preliminary stage, "the court need only `determine whether the proposed settlement is within the range of possible approval.'"
Courts often begin by examining the process that led to the settlement's terms to ensure that the agreement is "the result of vigorous, arms-length bargaining."
Plaintiff's counsel states that the settlement was reached after formal and informal discovery, plaintiff's own independent investigation and evaluation, extensive motions briefing, and two mediations. (Workman Decl. ¶ 21.) She declares that, in ultimately deciding to accept the mediator's proposal, she took into account the uncertain outcome and risks of litigation and the uncertainty associated with class certification. (
In determining whether a settlement agreement is substantively fair to the class, the court must balance the value of expected recovery against the value of the settlement offer.
As discussed above, the damage calculation experts hired by plaintiff estimated that the range of potential recovery for this case is between $2.5 million and $11.7 million. (Pl.'s Mot. at 13.) The $2.7 million settlement is within, but on the lower end, of this estimated value range. Further, the court notes that the settlement agreement requires class members to take the affirmative step of
While the settlement amount is on the low-end of the expected recovery range and the agreement contains a potentially unfair opt-in/opt-out requirement, there are many uncertainties associated with pursuing litigation that justify this recovery. Defendant contends that it reimbursed class members for all expenses incurred and plaintiff would not have been able to certify its reimbursement claims. (Pl.'s Mot. at 14.) Further, there were risks of significant delay if defendant challenged plaintiff's motion for class certification or any final judgment in favor of plaintiff. Defendant disagreed with this court's October 6, 2015 Order granting plaintiff partial summary judgment on her wage statement claim, as was evidenced by defendant's unsuccessful motion for reconsideration and motion for certification of the Order for interlocutory appeal, (Docket Nos. 48-49), and made clear it intended to appeal any final judgment in plaintiff's favor. (Pl.'s Mot. at 14.)
In light of the uncertainties associated with pursuing litigation, the court will grant preliminary approval to the settlement because it is within the range of possible approval.
If a negotiated class action settlement includes an award of attorney's fees, that fee award must be evaluated in the overall context of the settlement.
The settlement agreement provides that plaintiff's counsel will apply to the court for a fee award of up to 33% of the gross settlement amount, or $891,000, for the 1,306 hours spent on the case. (Settlement Agreement ¶ 5.1; Workman Decl. ¶ 34.) Defendant agrees not to oppose plaintiff's petition for the fee award so long as it does not exceed 33%. (Settlement Agreement ¶ 5.1.) If the court does not approve, in whole or in part, the fee award, it will not prevent the settlement agreement from becoming effective or be grounds for termination. (
In deciding the attorney's fees motion, the court will have the opportunity to assess whether the requested fee award is reasonable, by multiplying a reasonable hourly rate by the number of hours counsel reasonably expended.
IT IS THEREFORE ORDERED that plaintiff's motion for preliminary certification of a conditional settlement class and preliminary approval of the class action settlement be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that:
(1) The claims administrator shall notify class members of the settlement in the manner specified under section nine of the settlement agreement, with the slight adjustment to the text of the notice discussed above;
(2) Class members who want to receive a settlement payment under the settlement agreement must accurately complete and deliver the claim form to the claims administrator no later than thirty calendar days after the date the class notices are mailed. Class members who want to make a claim for a different settlement sum must set forth the information he or she believes is correct in the claim form, explain the basis for such belief, and submit supporting written documentation within seven days of the claim deadline. Within five days of receiving the claim form, the claims administrator will send a deficiency notice to any class member whose claim form contains irregularities and provide the class member with fifteen days to mail a written response curing the deficiencies;
(3) Class members who want to object to the settlement agreement must either deliver written objections to the claims administrator postmarked no later than thirty calendar days after the notice date or appear in person at the final fairness hearing. The objection must include the objecting person's full name, current address, all objections and reasons for the objections, and any supporting papers. Any class member who submits an objection remains eligible to submit a claim form and receive monetary compensation;
(4) Class members who fail to object to the settlement agreement in the manner specified above shall be deemed to have waived their right to object to the settlement agreement and any of its terms;
(5) Class members who want to be excluded from the settlement must, within thirty days from the date class notices are mailed, submit the request for exclusion form to the claims administrator. Class members who opt out shall not receive any settlement proceeds or be bound by any of the terms of the settlement, including the release provisions;
(6) The Wage Statement Settlement Class is provisionally certified as all employees working as sales representatives for defendant from October 1, 2010 to the date this Order is signed. The Vehicle Expense Reimbursement Class is provisionally certified as all employees working as sales representatives for defendant from October 1, 2010 to the date this Order is signed and employees working as sales managers for defendant from July 1, 2013 to the date this Order is signed;
(7) Plaintiff Shirley Garnett is conditionally certified as the class representative to implement the parties' settlement in accordance with the settlement agreement. The law firm of Workman Law Firm, through Robin Workman and Aviva Roller, is conditionally appointed as class counsel. Plaintiff and Workman Law Firm must fairly and adequately protect the class's interests;
(8) The parties agree that ILYM will serve as the claims administrator;
(9) If the settlement agreement terminates for any reason, the following will occur: (a) class certification will be automatically vacated; (b) plaintiff will stop functioning as class representative; and (c) this action will revert to its previous status in all respects as it existed immediately before the parties executed the settlement agreement;
(10) All discovery and pretrial proceedings and deadlines are stayed and suspended until further notice from the court, except for such actions as are necessary to implement the settlement agreement and this Order;
(11) The fairness hearing is set for June 27, 2016 at 1:30 p.m., in Courtroom No. 5, to determine whether the settlement agreement should be finally approved as fair, reasonable, and adequate;
(12) Based on the date this Order is signed and the date of the fairness hearing, the following are the certain associated dates in this settlement:
(b) Class members shall file objections, requests for exclusion, and claim forms by June 8, 2016;
(c) Pursuant to Local Rule 293, plaintiff shall file a motion for attorney's fees no later than 28 days prior to the final fairness hearing;
(13) The parties shall file briefs in support of the final approval of the settlement no later than June 13, 2016.