ORDER APPROVING CLASS-ACTION SETTLEMENT, DISMISSING CASE, AND ENTERING FINAL JUDGMENT

[RE: ECF Nos. 47 & 49]

LAUREL BEELER, Magistrate Judge.

INTRODUCTION

The plaintiff Thomas D. Taylor, Jr., worked as a truck driver for Meadowbrook Meat Company, and on behalf of himself and other employees, sued Meadowbrook for wage-and-hour violations. He also sued Meadowbrook for not allowing him medical leave and ultimately for terminating his employment.1 The court previously granted his unopposed motion for preliminary approval of the proposed class-action settlement.2 The plaintiff moved for final approval of the settlement.3 The court held a fairness hearing on September 15, 2016.4 The court finds the settlement fair, adequate, and reasonable, and approves the final settlement, including fees, costs, and the incentive award to the named plaintiff.

STATEMENT

1. The Lawsuit to Date

The plaintiff filed the lawsuit in state court, and Meadowbrook removed the case and filed a motion to dismiss.5 The plaintiff filed the First Amended Complaint as a matter of right.6 The parties engaged in discovery.7 After mediation with Michael Dickstein, a lecturer at Stanford Law School and an experienced mediator in class actions, the parties settled their case.8 The plaintiff then filed an unopposed motion for preliminary approval and sought leave to file a Second Amended Class Action and Individual Complaint ("SAC") for settlement purposes only. The SAC subsumes a second class action filed in the Central District of California.9 The court granted leave to file the SAC for settlement purposes only, found preliminarily that it related back to the filing date of the original complaint, and approved the settlement preliminarily.10

2. The Settlement

The parties agreed to the following class definitions for settlement purposes only:

The settlement class excludes any person who, as of the date of the court's preliminary approval of the settlement, has a pending separate lawsuit as a named plaintiff, either individually or as part of a putative class or representative action.12

In summary form, the settlement is as follows.

Meadowbrook will pay a total of $603,000, which is the "Gross Settlement Fund" or "GSF"; it will resolve all settlement class claims, fees, costs, incentive awards, administration fees, and the PAGA allocation.13 All monies will be paid out; there will be no reversion.14 The claims administrator will remit unclaimed funds to the State of California's unclaimed property fund.15 The Net Settlement Fund ("NSF") is the amount after fees, costs, the service award, administration costs, and the PAGA allocation are deducted.16 Class members did not need to submit a claims form; they received a notice with their estimated share of the NSF and had 45 days to opt out from or object to the settlement.17 The notice process allowed settlement members to dispute the amounts of their settlement payment and the number of pay periods implicated.18 The settlement agreement has the formula for calculating the settlement class members' shares based on pay periods worked and a points system.19

There also is a separate settlement amount (not from the GSF) of Mr. Taylor's individual non-wage-and-hours employment claims.20 The settlement agreement provides for an additional incentive award of $5,000 to Mr. Taylor.21 Class counsel asks for $150,750 (or 25% of the fund) in attorney's fees and $10,000 in costs.22

In return for the settlement relief, the settlement agreement has a release, which generally is that class members who do not opt out of the settlement will release Meadowbrook and its affiliates from all claims that are or could have been asserted in the SAC based on the facts and legal theories alleged in the SAC.23 The release includes a waiver of California Civil Code section 1542.

3. Notice to the Class

The independent claims administrator is Simpluris, Inc.;24 its responsibilities are in the settlement agreement and include publishing class notice, establishing a website, distributing funds to class members, preparing necessary tax forms, and otherwise administering the settlement.25 The administration costs were $19,000, which was the low bid by $9,500 from the multiple bids that the plaintiffs solicited.26 The court previously approved the form of notice and the notice plan and directed notice.27 The administrator complied with these procedures, including obtaining Meadowbrook's class list, updating the addresses, and mailing the notices.28 As of July 8, 2016, three packets were returned as undeliverable, one class member opted out, and no one objected to the settlement.29

ANALYSIS

1. Jurisdiction

This court has jurisdiction under 28 U.S.C. § 1332(d)(2).

2. Certification of Class

The court reviews the propriety of class certification under Federal Rule of Civil Procedure 23(a) and (b). When parties enter into a settlement before the court certifies a class, the court "must pay `undiluted, even heightened, attention' to class certification requirements" because the court will not have the opportunity to adjust the class based on information revealed at trial. Staton v. Boeing, 327 F.3d 938, 952-53 (9th Cir. 2003) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).

Class certification requires the following: (1) the class must be so numerous that joinder of all members individually is "impracticable;" (2) there are questions of law or fact common to the class; (3) the claims or defenses of the class representatives must be typical of the claims or defenses of the class; and (4) the person representing the class must be able to fairly and adequately protect the interests of all class members. Fed. R. Civ. P. 23(a); Staton, 327 F.3d at 953.

Here, the factors support class certification of the proposed classes for purposes of settlement. First, the class size makes joinder impracticable. Second, there are common issues regarding the wage-and-hour claims. Third, the plaintiff's claims are typical of other class members' claims. See Hanlon, 150 F.3d at 1020 (claims are typical if they are reasonably coextensive with those of absent class members; they need not be substantially identical). Fourth, the named plaintiff is able to fairly and adequately protect the interests of all class members. The factors relevant to a determination of adequacy are (1) the absence of potential conflict between the named plaintiff and the class members, and (2) counsel chosen by the representative party who is qualified, experienced, and able to vigorously conduct the litigation. Id. The court is satisfied that the factors exist here: the named plaintiff has shared claims and interests with the class, and he retained qualified and competent counsel. See Local Joint Exec. Bd. of Culinary/Bartender Tr. Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1162 (9th Cir. 2001); Brown v. Ticor Title Ins. Co., 982 F.2d 386, 390 (9th Cir. 1992).

Thus, the court finds (for settlement purposes only) that the proposed settlement class meets the Rule 23(a) prerequisites of numerosity, commonality, typicality, and adequacy: (1) the class is so numerous that joinder of all members is impracticable; (2) there are common questions of law and fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative party will fairly and adequately protect the interests of the class. See Fed. R. Civ. P. 23(a). The court also finds (for settlement purposes only) that questions of law or fact common to class members predominate over any questions affecting only individual members, and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. See Fed. R. Civ. P. 23(b)(3); Brown v. Hain Celestial Group, Inc., No. 11-CV-03082-LB, 2014 WL 6483216, at *15-20 (N.D. Cal. Nov. 18, 2014). The court certifies the proposed classes under Federal Rule of Civil Procedure 23(b)(3) for settlement purposes only.

3. Class Representative, Class Counsel, and Claims Administrator

The court confirms its prior appointment of Mr. Taylor as the class representative and the appointment of Simpluris, Inc., as the claims administrator.30 The court appoints Mayall Hurley P.C. as class counsel and Nicholas J. Scardigli and William J. Gorham III as lead class counsel for settlement purposes only. See Fed. R. Civ. P. 23(a) & (g)(1). The court finds that they have sufficient qualifications, experience, and expertise in prosecuting class actions.

4. Notice

As described above, the claims administrator provided notice to the members of the class in the form that the court had approved. The notice met all legal requisites: it was the best notice practicable, satisfied the notice requirements of Rule 23, adequately advised class members of their rights under the settlement agreement, met the requirements of due process, and complied with the court's order regarding notice.

5. Compliance with the Class Action Fairness Act

On February 29, 2016, Meadowbrook provided notice of the settlement and other information showing compliance with the Class Action Fairness Act of 2005, 28 U.S.C. § 1715, to the appropriate federal and state officials within ten days after the parties filed their settlement agreement with the court.31 The notice met the requirements of 28 U.S.C. § 1715 and was made more than 90 days before the final approval hearing as required by 28 U.S.C. § 1715.

6. Approval of Settlement

Settlement is a strongly favored method for resolving disputes, particularly "where complex class action litigation is concerned." Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); see, e.g., In re Pac. Enters. Sec. Litig., 47 F.3d 373, 378 (9th Cir. 1995). A court may approve a proposed class-action settlement only "after a hearing and on finding that it is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). The court need not ask whether the proposed settlement is ideal or the best possible; it determines only whether the settlement is fair, free of collusion, and consistent with the named plaintiffs' fiduciary obligations to the class. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026-27 (9th Cir. 1998). In Hanlon, the Ninth Circuit identified factors relevant to assessing a settlement proposal: (1) the strength of the plaintiff's case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class-action status throughout trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceeding; (6) the experience and views of counsel; (7) the presence of a government participant; and (8) the reaction of class members to the proposed settlement. Id. at 1026 (citation omitted).

"Where a settlement is the product of arms-length negotiations conducted by capable and experienced counsel, the court begins its analysis with a presumption that the settlement is fair and reasonable." Garner v. State Farm Mut. Auto Ins. Co., 2010 WL 1687832, *13 (N.D. Cal. Apr. 22, 2010); see Rodriguez v. West Publ'g Corp., 563 F.3d 948, 965 (9th Cir. 2009) ("We put a good deal of stock in the product of an arms-length, non-collusive, negotiated resolution . . . ."); Nat'l Rural Telecomm. Coop. v. DirecTV, Inc., 221 F.R.D. 523, 528 (C.D. Cal. 2004).

The court finds the settlement fair, reasonable, and adequate under the Hanlon factors.

First, the settlement is fair because each class member who does not opt out will receive payment according to a payment schedule that will depend on pay periods worked and a points system.32 This relief is adequate because "it is no less valuable than the economic relief" class members might obtain without using the class-action process, while avoiding the delay, risk, and expense of litigation.

Second, the settlement is reasonable considering the economic value to the class members contrasted with the risk of litigating, given preemption issues under the Federal Aviation Administration Authorization Act and other federal statutes and regulations.33 Moreover, the wage-statement claims required proof that the violations were a result of Meadowbrook's "knowing and intentional failure" and that the drivers suffered injury; Meadowbrook asserted defenses of good faith and lack of injury. Proof of the drivers-class claims involved proof that the drivers were on call, that Meadowbrook did not provide meal-and-rest breaks, and that Meadowbrook did not indemnify class members for expenses that they necessarily expended; Meadowbrook contested these issues factually and legally. The litigation would be expensive and protracted. The plaintiff represents that settlement and its points system address the risks so that the overall settlement is fair.34 The court reaches that conclusion.

Finally, the settlement is the product of serious, non-collusive, arm's-length negotiations and was reached after private mediation.

In sum, the court finds that viewed as a whole, the proposed settlement is sufficiently "fair, adequate, and reasonable" such that approval of the settlement is warranted. See Officers for Justice v. Civil Serv. Comm'n of the City and Cty. of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982). The court approves the settlement and finds that the SAC relates back to the filing date of the original complaint.

7. Attorney's Fees and Costs

Class counsel asks for $150,750 (or 25% of the fund) in attorney's fees and $10,000 in costs.35

Rule 23(h) of the Federal Rules of Civil Procedure provides: "In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." Fee provisions included in proposed class-action settlements must be reasonable. See In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011). The court is not bound by the parties' settlement agreement as to the amount of attorney's fees. See id. at 942-43. The Ninth Circuit has instructed district courts to review class fee awards with special rigor:

Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1052 (9th Cir. 2002) (quotation omitted).

When counsel recovers a common fund that confers a "substantial benefit" on a class of beneficiaries, counsel is "entitled to recover their attorney's fees from the fund." Fischel v. Equitable Life Assurance Soc'y of the U.S., 307 F.3d 997, 1006 (9th Cir. 2002). California fee-shifting statutes also authorize the award of fees. When a fee-shifting statute applies, courts may award fees on the lodestar method. See California Practice Guide: Federal Civil Procedure Before Trial § 10:870 (Rutter Group 2015) (collecting cases); see PLCM Grp. v. Drexler, 997 P.2d 511, 518 (Cal. 2000) (fee-setting inquiry under California law ordinarily begins with the lodestar); Serrano v. Priest, 569 P.2d 1303, 1316 n.23 (Cal. 1977). In common-fund cases, courts may calculate a fee award under either the "lodestar" or "percentage of the fund" method. Id.; Hanlon, 150 F.3d at 1029.

Where the settlement involves a common fund, courts typically award attorney's fees based on a percentage of the total settlement. The Ninth Circuit has established a "benchmark" that fees should equal 25% of the settlement, although courts diverge from the benchmark based on a variety of factors, including "the results obtained, risk undertaken by counsel, complexity of the issues, length of the professional relationship, the market rate, and awards in similar cases." Morales v. Stevco, Inc., 2013 WL 1222058, *2 (E.D. Cal. Mar. 25, 2013); see also Morris v. Lifescan, Inc., 54 F. App'x 663, 664 (9th Cir. 2003) (affirming 33% fee award); Pacific Enterprises, 47 F.3d at 379 (same); State of Fla. v. Dunne, 915 F.2d 542, 545 (9th Cir. 1990); Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990).

When determining the value of a settlement, courts consider the monetary and non-monetary benefits that the settlement confers. See, e.g., Staton v. Boeing Co., 327 F.3d 938, 972-74 (9th Cir. 2003); Pokorny v. Quixtar, Inc., 2013 WL 3790896, *1 (N.D. Cal. July 18, 2013) ("The court may properly consider the value of injunctive relief obtained as a result of settlement in determining the appropriate fee."); In re Netflix Privacy Litig., 2013 WL 1120801, *7 (N.D. Cal. Mar. 18, 2013) (settlement value "includes the size of the cash distribution, the cy pres method of distribution, and the injunctive relief").

Finally, Ninth Circuit precedent requires courts to award class counsel fees based on the total benefits being made available to class members rather than the actual amount that is ultimately claimed. Young v. Polo Retail, LLC, 2007 U.S. Dist. LEXIS 27269, *23 (N.D. Cal. Mar. 28, 2007) (citing Williams v. MGM-Pathe Commc'ns Co., 129 F.3d 1026 (9th Cir. 1997) ("district court abused its discretion in basing attorney fee award on actual distribution to class" instead of amount being made available) (quoted language from Young)).

If the court applies the percentage method, it then typically roughly calculates the lodestar as a "cross-check to assess the reasonableness of the percentage award." See, e.g., Weeks v. Kellogg Co., 2013 WL 6531177, *25 (C.D. Cal. Nov. 23, 2013); see also Serrano v. Priest, 20 Cal.3d 25, 48-49 (1977); Fed-Mart Corp. v. Pell Enters., 111 Cal.App.3d 215, 226-27 (1980); Melnyk v. Robledo, 64 Cal.App.3d 618, 624 (1976); Clejan v. Reisman, 5 Cal.App.3d 224, 241 (1970). "The lodestar . . . is produced by multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate." Lealao v. Beneficial California, Inc., 82 Cal.App.4th 19, 26 (2000). Once the court has fixed the lodestar, it may increase or decrease that amount by applying a positive or negative "multiplier to take into account a variety of other factors, including the quality of the representation, the novelty and complexity of the issues, the results obtained, and the contingent risk presented." Id.

Class counsel also are entitled to reimbursement of reasonable out-of-pocket expenses. Fed. R. Civ. P. 23(h); see Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994) (attorneys may recover reasonable expenses that would typically be billed to paying clients in non-contingency matters.); Van Vranken v. Atlantic Richfield Co., 901 F.Supp. 294, 299 (N.D. Cal. 1995) (approving reasonable costs in class action settlement). Costs compensable under Rule 23(h) include "nontaxable costs that are authorized by law or by the parties' agreement." Fed. R. Civ. P. 23(h).

Based on the declarations submitted by the plaintiff's counsel, the court finds that the lodestar is approximately $80,000 as of June, which was before the plaintiff filed the motion for final approval.36 The billing rates are within normal and customary ranges for timekeepers with similar qualifications and experience in the San Francisco market. The rates counsel used are appropriate given the deferred and contingent nature of counsel's compensation. See LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 764 (2nd Cir. 1998) ("[C]urrent rates, rather than historical rates, should be applied in order to compensate for the delay in payment . . . .") (citing Missouri v. Jenkins, 491 U.S. 274, 283-84 (1989)); In re Washington Pub. Power Supply Sys. Secs. Litig., 19 F.3d 1291, 1305 (9th Cir. 1994) ("The district court has discretion to compensate delay in payment in one of two ways: (1) by applying the attorneys' current rates to all hours billed during the course of litigation; or (2) by using the attorneys' historical rates and adding a prime rate enhancement."). Counsel also submitted a sufficient breakdown of the attorneys' billing efforts for the court to reach its conclusion about the lodestar.

The court concludes that a fee award at the 25% benchmark under the "percentage of the fund" approach is justified. See Hanlon, 150 F.3d at 1029. It is appropriate based on counsel's efforts and the substantial benefits to the class. It is similar to awards in other cases. It is supported by the lodestar cross-check, including a multiplier to reflect the results obtained, the efficiency of the litigation, the quality of the representation, and the contingent risk.

The court awards costs of $10,000 and $19,000 for the claims administration.

8. Service Award

District courts must evaluate proposed incentive awards individually, using relevant factors that include "the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefitted from those actions, . . . [and] the amount of time and effort the plaintiff expended in pursuing the litigation." Staton, 327 F.3d at 977. "Such awards are discretionary . . . and are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general." Rodriguez, 563 F.3d at 958-59 (citation omitted). The Ninth Circuit has "noted that in some cases incentive awards may be proper but [has] cautioned that awarding them should not become routine practice." Radcliffe v. Experian Info. Solutions, 715 F.3d 1157, 1163 (9th Cir. 2013) (discussing Staton, 327 F.3d at 975-78). The Ninth Circuit also has emphasized that district courts "must be vigilant in scrutinizing all incentive awards to determine whether they destroy the adequacy of the class representatives." Id. at 1164.

Counsel described sufficiently the efforts of the named plaintiff, including consulting with counsel, spending over 14 hours in mediation, being deposed, and otherwise participating in the litigation.37 The court approves the $5,000 award.

CONCLUSION

The court certifies the classes set forth in the Statement for settlement purposes only and approves the class-action settlement for a total settlement amount of $603,000, which is allocated as follows: (1) $410,750 to the class members, to be distributed according to the formula in the settlement agreement; (2) $7,500 to the California Labor and Workforce Development Agency ("CLWDA") for its share of the settlement of the PAGA civil penalties of $10,000; (3) $150,750 for attorney's fees; (4) $10,000 for costs; (5) $19,000 to Simpluris, Inc., for administration fees; and (6) $5,000 to Mr. Taylor as a service award for serving as the class representative.

Pursuant to Federal Rule of Civil Procedure 23(c)(3), all class members who satisfy the class definition except for those class members who timely opted out are class members bound by this judgment and by the terms of the settlement agreement set forth at ECF No. 37-2.

Based on this final approval of the settlement, each settlement class member, the LWDA, and the plaintiff/class representative have released Meadowbrook Meat Company, Inc., from the released claims as set forth in paragraphs 32 and 33 of the settlement agreement.38 They are enjoined from pursuing the released claims as set forth in paragraph 34 of the settlement agreement.39

The court dismisses the case with prejudice, and the defendant is hereby released from all further liability for the released claims.

The court finds that no reason exists for delay in ordering final judgment pursuant to Federal Rule of Civil Procedure 54(b) and thus directs the entry of judgment forthwith.

This disposes of ECF Nos. 47 and 49.

IT IS SO ORDERED.