JON S. TIGAR, District Judge.
Before the Court is Plaintiff's
Defendant Advantage Human Resourcing, Inc. is a temporary employment agency that places candidates with its clients. ECF No. 1 ¶ 14. Advantage interviews prospective workers, sends them to "new hire" orientation, has new hires sign a form that acknowledges that the parties are entering into an employment arrangement, and requires them to complete traditional employment paperwork, including W-4 and I-9 forms.
Plaintiff Juan Betancourt ("Plaintiff") completed Advantage's intake and orientation process and agreed to become an Advantage temporary employee in late 2011.
On April 17, 2014, Plaintiff brought this putative class action against Advantage, on behalf of former California-based temporary employees who were not compensated for the time they spent interviewing with Advantage's clients. Because Advantage maintained complete control over all aspects of the interview process, Plaintiff argues that Advantage's failure to compensate its employees for the time spent participating in interviews and orientation for Advantage's clients violates the California Labor Code and California Business & Professions Code. Plaintiff asserts the claims for violations of all of the following: (1) California Labor Code sections 1924(a) and 1198 for failure to pay wages; (2) California Labor Code section 226(a) for failure to provide accurate wage statements; (3) California Labor Code sections 201-203 for failure to pay timely wages at termination; (4) California Labor Code sections 222 and 223 for failure to pay Plaintiff's due hourly wage; and (5) California Business & Professions Code section 17200, et seq. for failure to pay for the interviews.
Advantage filed a motion to dismiss on May 14, 2014. ECF No. 12. The Court denied the motion on September 3, 2014, concluding that Plaintiff adequately alleged his employment status with Advantage and the compensable nature of the time spent interviewing with Advantage's clients. ECF No. 24.
The parties subsequently participated in a full-day mediation on November 11, 2014, with Susan Haldeman, Esq., a class action and wage-and-hour mediator. ECF No. 33-1 at 9. The parties agreed to material terms of the proposed settlement that is subject to the present motion.
On May 26, 2015, Plaintiff filed the present motion, asking the Court to grant preliminary approval of the settlement. ECF No. 33. The hearing on the motion for preliminary approval was held on July 9, 2015, at which the Court questioned the parties about the terms of the settlement agreement. ECF No. 37. On July 13, 2015, the Court ordered Plaintiff to provide supplemental briefing "addressing the total potential recovery if Plaintiff was to prevail on each of his claims." ECF No. 38. Plaintiff's counsel submitted a supplemental declaration on July 31, 2015. ECF No. 39.
The settlement agreement is attached as Exhibit 1 to the Declaration of Allison H. Goddard.
As part of the settlement agreement, Advantage will provide $320,000 as a gross settlement. ECF No. 33-1 at 5. Attorneys' fees, service payments to class representatives, and administrative costs will be paid from the gross settlement fund.
The settlement agreement defines the class as:
ECF No. 33-2, Ex. 1 at 1.
Class members' recoveries are weighted according to the number or interviews they attended with Advantage's clients during the class period. ECF No. 33-1 at 4-5. This will be determined distributing a responsive postcard on which class members will be asked to state the number of interviews they attended (although limited to a number between one and five).
This settlement provides for no reversion to Advantage; any settlement checks that are not cashed after 180 days will be distributed by the settlement administrator to the unclaimed property fund of the California State Controller's office.
To be excluded or opt out of the settlement, class members must send a written opt-out request to the settlement administrator within sixty days of mailing the class notice.
Finally, Plaintiff Betancourt, Mr. Minor, and Mr. Quesada will release all known and unknown claims they may have against Advantage, with a waiver of California Civil Code section 1542.
The Court has jurisdiction over this action under 28 U.S.C. § 1332(d).
Plaintiff asks the Court to conditionally certify the proposed class for the purposes of settlement pursuant to Federal Rule of Civil Procedure 23 subsections (a) and (b)(3).
Class certification under Federal Rule of Civil Procedure 23 is a two-step process. First, a plaintiff must demonstrate that the four requirements of Rule 23(a) are met: numerosity, commonality, typicality, and adequacy. "Class certification is proper only if the trial court has concluded, after a 2017rigorous analysis,' that Rule 23(a) has been satisfied."
The party seeking class certification bears the burden of demonstrating by a preponderance of the evidence that all four requirements of Rule 23(a) and at least one of the three requirements under Rule 23(b) are met.
When determining whether to certify a class for settlement purposes, a court must pay "heightened" attention to the requirements of Rule 23.
As discussed below, Plaintiff has shown that Rule 23's requirements for certification of the putative class for settlement purposes are met.
Rule 23(a)(1) requires that the class be "so numerous that joinder of all members is impracticable."
Plaintiff contends that this requirement is satisfied because the settlement class includes 8,401 members. ECF No. 33-1 at 17. The Court concludes that Plaintiff has satisfied his burden to show that the number of putative class members is sufficiently numerous that their joinder would be impracticable.
A Rule 23 class is certifiable only if "there are questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). For the purposes of Rule 23(a)(2), even a single common question is sufficient.
The Court finds that the proposed class satisfies the commonality requirement because the California Labor Code violation issues presented by Plaintiff's claims and Advantage's defenses apply to the class as a whole.
In certifying a class, courts must find that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). "The purpose of the typicality requirement is to assure that the interest of the named representative aligns with the interests of the class."
The Court finds that the proposed class representative, Plaintiff Juan Betancourt, is typical of the class he seeks to represent because he alleges he suffered the same injury, in the same manner, as the proposed class. ECF No. 33-1 at 18. Plaintiff alleges that he completed the new hire paperwork, which created an employment relationship. ECF No. 1 ¶ 31. He also alleges that because of this relationship, Advantage committed the same wage-and-hour violation by failing to compensate him for his time interviewing with Advantage's clients.
Plaintiff's motion states that like Plaintiff Juan Betancourt, Edgar Minor and Johnny Quesada completed Advantage's intake paperwork, became Advantage's employee, interviewed with Advantage's client, and were not compensated for their interview time. ECF No. 33-1 at 2. While Mr. Minor and Mr. Quesada may be appropriate class members, they are not currently named as Plaintiffs. The Court therefore declines to analyze the typicality of their claims to ensure that their interests align with the class's interests.
"The adequacy of representation requirement . . . requires that two questions be addressed: (a) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (b) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?"
No evidence in the record suggests the proposed class representative or proposed class counsel have a conflict of interest with other class members. Plaintiff's counsel is qualified and competent, and has extensive experience prosecuting wage and hour class actions, including wage actions similar to the present case.
To certify a Rule 23 damages class, the Court must find that "questions of law or fact common to class members predominate over any questions affecting only individual members, and . . . [that] a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). The predominance inquiry "tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation."
Here, the Court finds that the common questions raised by Plaintiff's claims predominate over any questions affecting only individual members of the proposed class. In particular, Plaintiff alleges that Advantage's failure to classify class members as employees and consequent failure to compensate them for their time spent interviewing violated the California Labor Code. ECF No. 33-1 at 19. All class members were subject to the same practices. The predominance requirement is therefore satisfied.
Next, "[t]he superiority inquiry under Rule 23(b)(3) requires determination of whether the objectives of the particular class action procedure will be achieved in the particular case."
Here, because common legal and factual questions predominate over individual ones, the Court finds that the judicial economy achieved through common adjudication makes a class action superior to any alternative procedures for adjudicating the claims of the members of the proposed class.
While not enumerated in Rule 23, "courts have recognized that 2017in order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.'"
The Court finds that the class definition contained in the settlement agreement satisfies this requirement. The class is defined as Advantage's California-based temporary employees during the time period of April 17, 2010 until the date of preliminary approval by the Court. ECF No. 33 at 16-17. Advantage is able to identify these class members through its electronic human resources database.
Because each element of Rules 23(a) and 23(b)(3) are satisfied, the Court finds that conditional certification of the proposed settlement class is appropriate.
Because the Court finds that named plaintiff Betancourt meets the commonality, typicality, and adequacy requirements of Rule 23(a), the Court appoints him to be class representative.
When a court certifies a class, the court must appoint class counsel and must consider:
Fed. R. Civ. P. 23(g)(1)(A). Additionally, a court "may consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class." Fed. R. Civ. P. 23(g)(1)(B).
Plaintiff's counsel have thus far vigorously prosecuted this action by: filing Plaintiff's complaint and successfully defending against a motion to dismiss; investigating class members' potential claims; propounding and reviewing discovery; analyzing the information provided in discovery to assess the value of Plaintiff's claims; participating in a mediation session at arms-length that lasted more than twelve hours; and briefing the instant motion for preliminary approval. In addition, Plaintiff's counsel has prior experience prosecuting wage and hour class actions. ECF No. 33-2, ¶ 12. For these reasons, the Court will appoint Plaintiff's counsel, Patterson Law Group, as Class Counsel pursuant to Federal Rule of Civil Procedure 23(g).
The Ninth Circuit maintains a "strong judicial policy" that favors the settlement of class actions.
At a preliminary approval stage, the Court's task is to determine whether the settlement falls "within the range of possible approval."
The Court considers the settlement as a whole, rather than its components, and lacks the authority to "delete, modify or substitute certain provision."
Because the settlement was reached prior to class certification, the Court will apply "a higher standard of fairness and a more probing inquiry than may normally be required under Rule 23(e)."
In examining the means by which the parties arrived at a settlement, the Court concludes that the negotiations and agreement were non-collusive. The stipulated settlement was reached after the parties engaged in motion practice, exchanged discovery, and participated in mediation. ECF 33-1 at 8-9. In response to formal and informal discovery requests, Advantage provided information necessary for Plaintiff to evaluate the strengths and weaknesses of claims and potential damages.
Other signs support the conclusion that the settlement was not the product of collusion. The settlement does not contain a reversionary clause. All of the net settlement award will be distributed to the class and settlement money that goes uncashed will be distributed to the unclaimed property fund of the California State Controller's Office. ECF No. 33-3 at 7.
The settlement has no obvious deficiencies. During the hearings, the Court questioned counsel for both parties about the process of distributing the settlement to class members. The Court inquired about the information Advantage possessed regarding the number of interviews class members attended and whether a response card process was necessary. The Court also inquired about the settlement agreement's cap on compensation at five interviews per class member. Based on counsel's responses, it is clear that gathering information about interviews from class members is appropriate in light of Defendant's lack of records and capping compensation at give interviews is an appropriate part of a settlement process in which all class members are guaranteed to receive at least some compensation and because the overwhelming number of class members participated in fewer than five interviews.
Under this factor, the Court looks at whether the settlement agreement provides preferential treatment to any class member. Here, the settlement agreement identifies only one class with no sub-classes. All class members will have an opportunity to claim a pro rata share of the settlement fund.
The settlement agreement also authorizes Plaintiff Juan Betancourt, and individual class members Edgar Minor and Johnny Quesada, to seek service awards of up to $3,000 each for their contributions to the case. ECF No. 33-1 at 2. The Ninth Circuit has recognized that service awards to named plaintiffs in a class action are permissible and do not necessarily render a settlement unfair or unreasonable.
Finally, the Court must consider whether the settlement agreement falls within the range of possible approval. The court primarily looks at the value to class members of the settlement compared to their potential recovery in a successful litigation.
Plaintiff has adequately explained why a gross settlement amount of $320,000 is fair when compared to the total potential damages in the case. Plaintiff states that class members will receive on average $15.60. ECF No. 33-1 at 11. Based on Advantage's records, class members have participated in approximately 22,310 interviews.
Although the class could recover substantial damages and penalties if the Court were to impose the maximum amount of potential labor penalties, Plaintiff makes a convincing case that such a result would be uncertain. For one thing, Defendant's records regarding the number of interviews class members participated in are exceedingly poor. For another, to be eligible for these penalties Plaintiff would have to prove willfulness, knowledge, and intentionality.
Under these circumstances, the Court finds that Plaintiff has adequately explained why a gross settlement amount of $320,000 is fair, adequate, and reasonable in light of the strength of Plaintiff's case, and the risk, expense, complexity, and likely duration of this litigation.
The Court also finds that the parties' agreement with respect to attorneys' fees and service enhancement award for named Plaintiff Juan Betancourt falls within the range of possible approval.
The settlement agreement authorizes Plaintiff's counsel to petition the court for up to $120,000 in attorneys' fees and costs. ECF No. 33-1 at 3. While the requested fee, if awarded in full, would represent 37.5% of the gross settlement amount. The Court expresses no view at this juncture regarding this percentage, except to say that it falls within the range of possible approval The Court will evaluate the request for attorneys' fees at the final approval hearing, after the motion for fees and costs, and the class has an opportunity to object. Plaintiff should be mindful of providing appropriate detail and documentation in connection with the motion for final approval and motion for attorneys' fees and service enhancement awards.
For the foregoing reasons, the Court will preliminarily approve the class action settlement.
The class notice in a Rule 23(b)(3) class action must comport with the requirements of due process. "[T]he plaintiff must receive notice plus an opportunity to be heard and participate in litigation, whether in person or through counsel." The notice must be "the best practicable," "reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections."
The notice must clearly and concisely state in plain, easily understood language: (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).
Additionally, "an absent plaintiff [must] be provided with an opportunity to remove himself from the class by executing and returning an 2017opt out' or 2017request for exclusion' form to the court."
The parties propose to use KCC, LLC as settlement administrator. ECF No. 33-1 at 6. KCC will: send notice of the settlement by first class mail; perform one skip-trace procedure to attempt to identify current address for class members whose notices are returned undeliverable; mail reminder post cards to class members twenty days after the mailing of class notice; calculate the amounts that each claimant is entitled to recover; and distribute to class members their recoveries under the settlement.
The parties' proposed notice plan includes a mailed long-form notice combined with a claim form, and a follow-up postcard reminder.
To effect notice, KCC will use known addresses of members of the settlement class that Advantage provides. ECF No. 33-1 at 6. If mailed notice is returned as undeliverable, KCC will resend the notice and claim form to any forwarding address provided, or if no forwarding address is provided, will run a skip-trace to identify a current forwarding address.
The Court finds the parties' notice plan comports with due process requirements. In addition, the Court will approve the form of the proposed notices, subject to the following alterations:
For the foregoing reasons, the Court hereby:
1. Grants preliminary approval of the settlement;
2. Conditionally certifies the proposed settlement class;
3. Appoints Juan Betancourt as class representative;
4. Appoints Patterson Law Group as class counsel; and
5. Approves the proposed notice program and the content of the notices, as well as the opt-out and objections procedures, with the modifications discussed above;
6. Adopts the following dates and deadlines:
7. Sets the final approval hearing for January 28, 2016 at 2:00 p.m., in Courtroom 9, 19th Floor, 450 Golden Gate Avenue, San Francisco, California. Class Counsel's memorandum of points and authorities in support of final approval, responses to any objections, and application for attorneys' fees, costs, expenses, and service awards shall be filed by December 23, 2015.