Stanley A. Boone, UNITED STATES MAGISTRATE JUDGE.
Plaintiffs Francisco Rodriguez, Jesus Hernandez Infante, Marco Garcia, Juan Manuel Bravo, Estela Patino, Jose F. Orozco, and Antonio Ortiz ("Plaintiffs") on behalf of themselves and other members of the public similar situated, filed this action on December 7, 2016, against Defendants Danell Custom Harvesting, LLC; Rance Danell, Eric Danell, David Danell, and Justin Danell ("Defendants") alleging wage and hour claims in violation of federal and state law. (Compl. 1.) Currently before the Court is Plaintiffs' motion for preliminary approval of the class action settlement.
The Court heard oral arguments on December 13, 2017. Counsel Enrique Martinez appeared for Plaintiffs and counsel Ian Blade Wieland appeared for Defendants. No objectors appeared at the hearing. The Court provided the parties with the opportunity to file supplemental briefing. Having considered the moving papers, the declarations and exhibits attached thereto, arguments presented at the December 13, 2017 hearing, as well as the
Defendant Danell Custom Harvesting, LLC is a California company doing business in Kings County, State of California. (Compl. ¶ 14.) Defendant Danell Custom Harvesting LLC is a company that develops, manufactures, and sells specialized equipment and parts for harvesting purposes and provides machinery and personnel to client dairies at their premises to harvest, transport, and weigh wheat and corn that is used for animal feed ("silage"). (Compl. ¶ 21.) Defendant Danell Custom Harvesting, LLC is co-owned by Defendants Rance Danell, Eric Danell, David Danell, and Justin Danell. (Compl. ¶¶ 15-18.)
Defendant Danell Custom Harvesting LLC's day to day operations and wage and hour practices are managed by Defendants Rance Danell, Eric Danell, David Danell, and Justin Danell. (Compl. ¶ 21.) Defendants Rance Danell, Eric Danell, David Danell, and Justin Danell regularly visit and oversee operations at the Danell Custom Shop and at numerous customer sites where the putative class members worked. (Compl. ¶ 22.) These defendants make decisions regarding the scheduling, working conditions, and hiring and termination decisions. (Compl. ¶ 22.) They also exercise control over the wages, hours, or working conditions. (Compl. ¶ 22.)
Defendant Danell Custom Harvesting LLC employs five groups of workers: 1) mechanics who service cars and trucks and develop parts at their shop ("mechanics"); 2) maintenance workers who service and clean agricultural equipment at their shop ("maintenance workers"); 3) farm equipment operators who work in the fields harvesting ("operators"); 4) truck drivers who transport silage from the fields to the dairy ("drivers"); and 5) weighers who weigh the silage for billing purposes ("weighers"). (Compl. ¶ 23.)
Defendants employ a large team of mechanics who service trucks, forklifts, the defendants' personal race cars, and the defendants' family vehicles. (Compl. ¶ 24.) Some of the mechanics also do welding, painting, and machinist duties. (Compl. ¶ 24.) The mechanics are paid an overtime rate after working more than 10 hours per day or 60 hours per week. (Compl. ¶ 24.) A meal break is provided for mechanics after they have worked six hours in their shift. (Compl. ¶ 24.) Although the mechanics typically work more than a 10 hour day, they are not provided with a second meal period. (Compl. ¶ 24.) Sometimes the mechanics will work twelve or more hours per day and are not provided with a third rest break. (Compl. ¶ 24.) Mechanics must purchase and use their own tools to work for Defendants despite being paid less than double the California minimum wage. (Compl. ¶ 24.)
Defendants also employ maintenance workers who service and clean agricultural equipment, including choppers, swathers, and dozers at their shop. (Compl. ¶ 25.) Maintenance workers are subjected to the same conditions as the mechanics. (Compl. ¶ 25.)
Defendants also employ operators who handle farm machinery such as dozers and choppers to harvest corn or wheat at Defendants' clients' fields. (Compl. ¶ 26.) The operators typically work more than 12 hours per day without being provided meal and rest periods and must eat while operating their vehicles. (Compl. ¶ 26.)
The truck drivers transport silage from Defendants' clients' fields to their dairies. (Compl. ¶ 27.) Around mid-2016, Defendants began paying their truck drivers at an overtime rate when they worked more
Weighers work at the premises of Defendants' clients weighing and recording the silage brought by the truck drivers. (Compl. ¶ 28.) Weighers are paid an overtime rate after working 10 hours per day or 60 hours per week. (Compl. ¶ 28.) Although weighers typically work more than 12 hours per day, they are not provided with meal and rest periods and must eat while performing their work. (Compl. ¶ 28.) Weighers must also purchase and use their own equipment, such as tables and chairs, and are not fully reimbursed for using their own vehicles. (Compl. ¶ 28.)
Plaintiff Rodriguez was employed by Defendants as a maintenance worker at their shop from approximately May 2012 to May 2016. (Compl. ¶ 7.) Plaintiff Infante has been employed as a maintenance worker at their shop since approximately June 2012 to the present. (Compl. ¶ 8.) Plaintiff Garcia was employed as a shop mechanic and maintenance worker in Defendants' shop from approximately June 2015 to September 2016. (Compl. ¶ 9.) Plaintiff Bravo has been employed by Defendants as a maintenance worker and farm equipment operator from approximately 1998 to the present. (Compl. ¶ 10.) Plaintiff Patino was employed by Defendants as a weigher from approximately 2004 to September 2016. (Compl. ¶ 11.) Plaintiff Orozco was employed by Defendants as a truck driver from approximately November 2014 to June 2016. (Compl. ¶ 12.) Plaintiff Ortiz has been employed by Defendants as a truck driver from approximately July 2014 to the present. (Compl. ¶ 13.)
On December 7, 2016, Plaintiffs filed a class and collective action alleging failure to pay overtime wages in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq.; failure to pay overtime wages in violation of California Labor Code sections 510, 1194 and IWC wage orders; failure to provide meal and rest periods in violation of California Labor Code section 226.7 and IWC wage orders; failure to furnish accurate wage statements in violation of California Labor Code section 226; indemnification of work related expenses, California Labor Code section 2802; waiting time penalties, California Labor Code section 203; Unfair Business Practices in violation of California Business and Professions Code section 17200, et seq.; and civil penalties for violation of the California Labor Code section 2699. Plaintiffs brought this action proposing six classes of non-exempt employees who worked for Defendants during the limitations period:
(Compl. ¶ 30.)
On February 28, 2017, the scheduling order issued setting dates and deadlines in the action. (ECF No. 13.) On June 9, 2017, the action was stayed for the parties to engage in mediation. (ECF No. 24.) On October 16, 2017, the stay was lifted. (ECF No. 27.) Plaintiffs' filed a motion for preliminary approval of the class action settlement on November 22, 2017. (ECF No. 30.) A hearing on the motion for preliminary approval was held on December 13, 2017, after which Plaintiffs were granted the opportunity to file supplemental briefing. (ECF Nos. 31, 32.) On January 17, 2018, Plaintiffs filed supplemental briefing to address the issues raised at the December 13, 2017 hearing.
An informal teleconference was conducted on January 23, 2018, to address several issues the Court identified in the documents upon review. The parties agreed to continue the hearing set for January 24, 2018, until February 21, 2018, to continue to address the issues identified. An informal conference with the parties was set for February 7, 2018, and the parties submitted amended documents for the Court's review on February 1, 2018.
On February 5, 2018, an informal conference call was held to address the amended documents. (ECF No. 39.) On February 14, 2018, amended documents were filed in support of the motion for preliminary approval of the class action settlement. (ECF No. 40.)
The Ninth Circuit has declared that a strong judicial policy favors settlement of class actions.
To certify a class, a plaintiff must demonstrate that all of the prerequisites of Rule 23(a), and at least one of the requirements of Rule 23(b) of the Federal Rules of Civil Procedure have been met.
Federal Rule of Civil Procedure 23(e)(2) requires that any settlement in a class action be approved by the court which must find that the settlement is fair, reasonable, and adequate. The role of the district court in evaluating the fairness of the settlement is not to assess the individual components, but to assess the settlement as a whole.
Even where the certification of the class is unopposed, the court must examine whether the settlement class satisfies the requirements of Rule 23(a) of the Federal Rules of Civil Procedure of numerosity, commonality, typicality, and adequacy of representation.
The numerosity requirement is satisfied where "the class is so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). Records produced by Defendants show that there are 445 individuals who were employed as non-exempt mechanics, maintenance workers, operators, drivers, or weighers. (Decl. of Enrique Martinez ¶ 2, ECF No 30-3.) The number of individual class members in this instance exceeds the number that has been found to be so numerous that joinder of all members would be impracticable.
The commonality requirement is satisfied where "there are questions of law or fact that are common to the class." Fed. R. Civ. P. 23(a)(2). Courts construe Rule 23(a)(2)'s commonality requirement permissively.
Plaintiffs argue that all class members "were treated identically under Defendants' uniform policies and practices with regard to overtime pay, meal and rest periods, and reimbursement of work-related expenses." (ECF No. 30-2 at 16.) Plaintiffs contend that all class members were subject to the same level of control by all the defendants and the questions common to the class include:
(ECF No. 30-2 at 17.) Plaintiffs argue that the answer to these questions will resolve the claims of all class members in one stroke.
Plaintiffs contend that Defendants had a company-wide policy of requiring employees to work more than 10 hours per day or 60 hours per week without paying them overtime or providing them with rest and meal breaks as required under California law. Further, Plaintiffs allege that mechanics, maintenance workers, and weighers were required to purchase their own equipment to use on the job without being reimbursed by Defendants. Plaintiffs have sufficiently shown that they suffered a common injury which is capable of resolution on a class wide basis.
Rule 23(a)(3) requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class[.]" This does not require the claims to be substantially identical, but that the representatives claims be "reasonably co-extensive with those of the absent class members."
Plaintiffs allege that they and the unnamed class members worked under the same terms and conditions of employment as the other members of the proposed class. (Decl. of Enrique Martinez ¶ 5.) In each job category, the proposed class members were treated identically under Defendants' uniform policies and practices with regard to overtime pay, meal and rest beaks, and reimbursement for overtime expenses for mechanics and weighers. (
Plaintiffs have satisfied the typicality requirement.
The named plaintiffs must fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a)(4). In determining whether the named plaintiffs will adequately represent the class, the courts must resolve two questions: "(1) do the named plaintiffs and their counsel have
Plaintiffs argue that they share the same interests as the putative class members in seeking unpaid overtime compensation, penalties for missed meal and rest breaks, and other forms of relief that are identical due to Defendants' alleged misconduct. (ECF No. 30-2 at 18.) Further, Plaintiffs contend that their interests are representative of and consistent with the class and they have actively participated in this litigation which demonstrates they have and will continue to protect the interests of the proposed class. (
The interests of the named class members do not appear to differ from those of the class. Class counsel asserts that there are no actual, potential, or perceived conflicts between the named plaintiffs and any other class member. (Supp. Decl. of Enrique Martinez ¶ 6, ECF No. 35-1.) The named plaintiffs have actively participated in litigating this matter and have interests that are representative of and consistent with the unnamed class members. (Decl. of Enrique Martinez ¶ 16.) The threshold to be named as lead plaintiff representing the class is fairly low: "[t]he fact that plaintiffs are familiar with the basis for the suit and their responsibilities as lead plaintiffs is sufficient to establish their adequacy."
In addition, "class counsel must be qualified, experienced, and generally able to conduct the class action litigation."
To certify a class under Rule 23(b)(3), the Court must find that "the 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." Certification under Rule 23(b)(3) is appropriate "whenever the actual interests of the parties can be served best by settling their differences in a single action."
"[T]he focus of the Rule 23(b)(3) predominance inquiry is on the balance between individual and common issues."
As discussed above, Plaintiffs allege that the class members here have all been subjected to the same employment terms and conditions which caused them harm and the same damages are available. Plaintiff argues that there are few individual factual issues, other than the number of hours each employee worked which is reflected in time records and the calculation of individual damages. The applicable law governing the overtime pay requirements, meal and break periods, and the statutory basis for the remaining claims will be the same for each class member. Therefore, the predominance inquiry is satisfied.
Rule 23(b)(3) provides that courts should consider "(A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action." Where the parties have agreed to pre-certification settlement (D) and perhaps (C) are irrelevant.
The parties do not address any concurrent litigation regarding the issues raised in this action. Absent any competing lawsuits, it is unlikely that other employees have an interest in controlling the litigation. Moreover, the class members will be given the opportunity to object at the fairness hearing.
The purpose of Rule 23(b)(3) is "to allow integration of numerous small individual claims into a single powerful unit."
The Court finds that class certification should be granted for the purposes of settlement of this action.
Plaintiffs also request that this matter be certified as a collective action under the FLSA. The FLSA provides the right of an employee to represent similarly situated employees in a suit against their employer for the failure to pay minimum wage or overtime compensation. 29 U.S.C. § 216(b). Unlike a class action under Rule 23, to participate in the collective action an
Determining whether a collective action is appropriate is within the discretion of the district court.
Federally courts generally use a two-step approach to determine whether to allow a collective action to proceed.
As discussed above, the putative class members appear to be similarly situated because their alleged injuries arise from Defendants' uniform policies and practices with regard to overtime pay, meal and rest periods, and reimbursement of work-related expenses. Under the FLSA's lenient standard the first step has been met. As Defendants will not seek decertification of the class, the FLSA class is conditionally certified.
Having determined that class treatment appears to be warranted, the Court addresses Federal Rule of Civil Procedure 23(e)(2) which requires that any settlement in a class action be approved by the court which must find that the settlement is fair, reasonable, and adequate. Review of the proposed settlement of the parties proceeds in two phases.
The court considers a number of factors in making the fairness determination including: "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;
When the settlement takes place before formal class certification, as it has in this instance, settlement approval requires a "higher standard of fairness."
"[S]ettlements of collective action claims under the FLSA also require court approval."
The settlement agreement provides one million five hundred thousand dollars ($1,500,000) to resolve all claims of the settlement class for the alleged failure to provide meal and rest breaks and pay wages, penalties, reimbursement of work related expenses, and attorney fees and costs. (Amended Stipulation and Agreement to Settle Class and Collective Action p. 2, ECF No. 40-2.) The following class is certified for purposes of settlement only,
(
Prior to any settlement funds being paid to eligible class members, deductions to the common fund shall be made for service awards to the named plaintiffs, an award of attorney fees and costs to class counsel, all costs of settlement administration,
The net settlement funds are allocated as follows: twenty percent for unpaid wage claims; eighty percent less ten thousand dollars ($10,000) for statutory penalties and interest. (
Any unclaimed funds shall be sent to the State of California Unclaimed Property Fund to be held in the name of and for the benefit of the class member under California's escheatment laws. (
"To determine whether a settlement falls within the range of possible approval, a court must focus on substantive fairness and adequacy, and "consider plaintiffs' expected recovery balanced against the value of the settlement offer."
The parties have engaged in extensive correspondence regarding the case and Defendants have provided discovery on over 94 percent of the class which Plaintiffs' counsel has used to calculate class damages. (Decl. of Enrique Martinez at ¶ 10.) Plaintiffs' counsel has investigated and interviewed over 150 class members. (
The settlement agreement provides a settlement fund of $1,500,000. After the agreed upon deductions, the net settlement fund will be $1,021,000 to be distributed to the class members. Plaintiffs contend that the amount agreed to in settlement is approximately fifty-five percent of the primary claims. (Decl. of Enrique Martinez ¶ 13.) As many of the employees were seasonal and employed for only a short period of time, counsel has estimated that this will result in payments from $6 to $26,500, with the average class member recovering $2,300. (
The benefit that the class members will receive is not insubstantial. The Court finds that the settlement falls within the reasonable range.
The claims brought in this action include claims under California's Private Attorneys Generals Act ("PAGA"). Pursuant to PAGA, any provision of the California Labor Code that provides for the assessment and collection of a civil penalty by the California Labor and Workforce Development Agency ("LWDA") for a violation of the Labor Code may be recovered through a civil action brought by an aggrieved employee on behalf of herself and other current or former employees. Cal. Lab. Code § 2699(a). An aggrieved employee is "any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed." Cal. Lab. Code § 2699(c). In bringing a representative action under PAGA, the aggrieved employee is acting as the proxy or agent of the state's labor law enforcement agencies.
Civil penalties recovered under PAGA are distributed between the aggrieved employees (25%) and the California Labor and Workforce Development Agency ("LWDA") (75%). Cal. Labor Code § 2699(i). Any settlement of PAGA claims must be approved by the Court. Cal. Labor Code § 2699(l). The proposed settlement must also be sent to the agency at the same time that it is submitted to the court. Cal. Labor Code § 2699(l)(2).
The terms of the settlement involves a $1,500,000 payment from Defendants. Of this $1,500,000 sum, the parties apportion only $10,000 toward the PAGA claims, resulting in a $7,500 payment to the LWDA. Plaintiffs filed a copy of the motion for preliminary approval of the class action settlement with the California Labor and Workforce Development Agency. (ECF No. 35-1 at 40-41.) The Agency has not filed an objection to the terms of the settlement. Based on the Agency's lack of objection, the Court preliminarily approves the PAGA penalties.
The class representatives are each seeking an enhancement payment of
Here, the action was filed on December 7, 2016, and settlement was reached approximately 10 months later. (ECF No. 25.) Plaintiffs allege that they participated in numerous strategy meetings, assisted counsel in investigating the case, spoke with many other workers about the case and took a day off work without compensation to participate in the medication. (Decl. of Enrique Martinez ¶ 17.) Further, Plaintiffs contend that they took personal risks in serving as representatives in this lawsuit. (
However, the Court finds that this amount appears to be excessive in relation to the efforts and time the class representatives devoted to this action. In similar cases, this Court has found enhancement payments between $2,500 to $3,000 to be reasonable and fair to the putative class.
In this instance, the Court finds that $3,500.00 would be reasonable compensation for the time the services provided by the class representatives in this action given the risks that they took in representing the class and the time spent adjudicating this action. However, the named representatives may present additional evidence on final certification in support of a request for addition compensation.
Plaintiffs are seeking attorney fees in the amount of twenty-five percent of the common fund. In the Ninth Circuit, courts typically calculate twenty-five percent of the common fund as the "benchmark" for a reasonable fee award providing adequate explanation in the record for any special circumstances that justify departure.
Class counsel is seeking $375,000 in attorney fees which is 25% of the gross settlement amount. (Stipulation and Agreement to Settle Class and Collective Action ¶ 38.1.) Additionally, counsel seeks $31,000 in costs. (
"Adequate notice is critical to court approval of a class settlement under Rule 23(e)."
The settlement agreement provides that once the Court preliminarily approves the settlement, Defendants shall provide the claims administrator with a list of all members of the settlement class, their last known address, telephone number, and the last four digits of their Social Security number or individual taxpayer identification number. (Amended Stipulation and Agreement to Settle Class and Collective Action ¶ 49.3(a)). The claims administrator shall prepare print and mail to members the class notice. (
Upon review of the notice itself, the Court finds that it informs the purported class members of the material details of the settlement of this action. The notice states that federal FLSA and state employment law claims that are being settled, the total amount of the settlement, and the amount the class member is expected to receive under the settlement. The notice states the amount of attorney fees, costs, and enhancement payments that will be sought at final approval of the settlement.
The notice informs the purported class members of the FLSA claims and the
In response to the Court's concern regarding the mailing of notice, counsel submits that, due to the
The Court approves the proposed notice to the class members.
Plaintiff seeks appointment of John Hill and Enrique Martinez as class counsel. Under Rule 23 a court must appoint class counsel upon certifying the class. Fed. R. Civ. P. 23(g)(1). In appointing counsel the court must consider: "(i) the work counsel has done in identifying or investigating potential claims in the action; (ii) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (iii) counsel's knowledge of the applicable law; and (iv) the resources that counsel will commit to representing the class." Fed. R. Civ. P. 23(g)(1)(A).
Counsel has conducted an investigation which included interviewing the named plaintiffs and over 150 class members. (Decl. of Enrique Martinez ¶ 8.) There was extensive communication regarding the case between counsel for the parties. (
Mr. Martinez represents that his firm has decades of experience in handling class action, other complex litigation, and claims based on the same substantive law asserted in this action. (Decl. of Enrique Martinez ¶ 19.) The firm has represented thousands of other workers in lawsuits of similar size, scope, and complexity to the present action and has been appointed as
Mr. Martinez graduated from UCLA Law School in 1999 and began his legal career working primarily on civil rights and employment class actions. (
Mr. Hill is experienced in civil litigation with over 48 years of experience. (Suppl. Dec. of Enrique Martinez ¶ 6;
The Court finds that Mr. Martinez, Mr. Hill, and the Law Firm of John E. Hill have the requisite experience, knowledge, qualifications, and resources to represent the class members in this litigation. The Court shall appoint Mr. Martinez and Mr. Hill of the Law Firm of John E. Hill to serve as class counsel for the purpose of settlement of this action.
Last day for Defendants to provide claims No later than five (5) days of the date
administrator and class counsel with of entry of this order.
information pertaining to members of the
settlement class and FLSA collective action
Notice date No later than fourteen (14) days from
the date of entry of this order.
Consent to join/opt-in deadline Sixty (60) days from Notice Date.
Opt-out deadline Sixty (60) days from Notice Date.
Objection deadline Sixty (60) days from Notice Date.
Last day for (a) the Parties to file any motions May 21, 2018
in support of final approval of settlement; and
(b) class counsel to file their application for
attorneys' fees and costs
Fairness hearing June 20, 2018, at 10:00 a.m.
IT IS SO ORDERED.
