Denham v. Global Distribution Services, Inc.

District Court, S.D. California·Decided August 31, 2021·No. 3:18-cv-01495·Unknown

Opinion

1 2

8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA

10 RYAN GARY DENHAM, on behalf of Case No. 3:18-cv-01495-LAB-MDD himself and all others similarly 11 situated, ORDER GRANTING IN PART AND 12 DENYING IN PART MOTION FOR Plaintiff, FINAL APPROVAL OF FLSA 13 SETTLEMENT [Dkt. 100] v. 14 GLOBAL DISTRIBUTION 15 SERVICES, INC. d/b/a 16 AMERICA’S ALLIANCE d/b/a AMERICA’S CHOICE GARAGE 17 DOOR SERVICE; GLOBAL DEVELOPMENT 18 STRATEGIES, INC.; LEAD DRIVER, LLC; 19 EMPLOYEE RETENTION 20 SERVICES, LLC; NEIGHBORHOOD GARAGE DOOR 21 SERVICES, INC.; PETER JAMES STEPHENS, JR.; 22 JASON ROMSZEWSKI; and 23 KYOUNG LEE,

24 Defendants.

25 Plaintiffs filed an Unopposed Motion for Approval of the Fair Labor 26 Standards Act (“FLSA”) settlement in this case, (Dkt. 100), seeking approval of 27 the parties’ settlement in this collective action, as well as service awards, 28 attorneys’ fees, and costs to be drawn from the settlement fund. While the 1 settlement is fair, Plaintiffs and Collective Action Counsel Shellist Lazars Slobin 2 LLP (“Collective Action Counsel”) fail to fully justify the amounts they seek as 3 service awards, attorneys’ fees, and costs. Accordingly, the Motion is 4 GRANTED IN PART AND DENIED IN PART. 5 DISCUSSION 6 I. Fairness of the Settlement 7 FLSA claims can be settled only with the supervision and approval of the 8 United States Department of Labor or a federal district court. See Lynn’s Food 9 Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982); see also 10 Ambrosino v. Home Depot U.S.A., Inc., No. 11cv1319-L-MDD, 2014 WL 11 3924609, at *1 n.1 (S.D. Cal. Aug. 11, 2014) (noting that “district courts in the 12 Ninth Circuit have followed Lynn’s Food Stores” and collecting cases). A 13 settlement warrants approval if it “reflect[s] a reasonable compromise of 14 disputed issues.” Lynn’s Food Stores, 679 F.2d at 1354. 15 The first step in this analysis is determining whether there is a bona fide 16 dispute over the defendant’s liability to the plaintiffs under the FLSA. See id. 17 Plaintiffs point to several disputed factual and legal questions: (1) whether the 18 statute of limitations has run as to some Plaintiffs, including whether the longer 19 limitations period applicable to “willful” violations applies; (2) whether all 20 Plaintiffs worked overtime; (3) whether Plaintiffs’ compensation was sufficiently 21 clear of the federal minimum wage that any overtime worked didn’t reduce their 22 effective compensation below that wage; and (4) whether the California 23 Plaintiffs released their claims via class settlement in a related case. (Dkt. 100- 24 1 at 11, 20-21; Dkt. 100-3 ¶ 7); see also 29 U.S.C. § 255(a) (extending 25 limitations period for willful violations). Each of these appears to be genuinely 26 disputed. 27 The Court next considers whether the compromise is reasonable. 28 Plaintiffs estimate their total damages at approximately $728,238, not 1 accounting for any statutory award of fees and costs. (Dkt. 100-1 at 12.) The 2 gross settlement amount of $325,000 represents just under 45% of that 3 amount. Discovery proceeded sufficiently to inform each of the opt-in plaintiffs 4 of their likelihood of success at trial, and the Court finds that a settlement 5 amounting to 45% of Plaintiffs’ damages is reasonable and provides meaningful 6 relief given the risks inherent in continued litigation over the issues disputed in 7 this action. The Court finds, too, that the scope of Plaintiffs’ release of claims is 8 appropriately limited to claims that were asserted in the Complaint or 9 reasonably could have arisen out of the same facts alleged in the Complaint. 10 II. Attorneys’ Fees and Costs 11 Counsel nominally seeks a fee award of 34% of the total settlement 12 amount, or $110,500, plus costs of $90,000. However, $60,000 of the purported 13 costs are, in fact, attorneys’ fees incurred by a second firm in a related action. 14 Accounting for this misclassification, the requested fee amounts to 52.5% of the 15 common fund, with costs proposed to consume another 9.2%. The Court finds 16 the separate state court litigation not reasonably necessary to protect the 17 plaintiffs’ interests in this action, and so it declines to award any fees or costs 18 associated with the state action. But even after removing those fees and costs, 19 the remaining requested amounts are unreasonable. 20 A. Applicable Standard 21 “The court in [an FLSA] action shall, in addition to any judgment awarded 22 to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the 23 defendant, and costs of the action.” 29 U.S.C. § 216(b). Where “parties . . . 24 negotiate and agree to the value of a common fund . . . and provide that, 25 subsequently, class counsel will apply to the court for an award from the fund, . 26 . . common fund fee principles” apply. Staton, 327 F.3d at 972. Because the 27 parties have so agreed here, the Court applies those principles. (Dkt. 100-2 28 ¶¶ 3.1, 3.4, 3.5.) 1 In evaluating a request for fees and costs from a common fund, the Court 2 “ha[s] an independent obligation to ensure that the award, like the settlement 3 itself, is reasonable.” In re Bluetooth Headset Products Liability Litig., 654 F.3d 4 935, 941 (9th Cir. 2011), citing Staton, 327 F.3d at 963-64. The Court has 5 discretion to determine reasonableness in one of two ways: the lodestar 6 method, which multiplies a reasonable hourly rate by a reasonable number of 7 hours spent on the litigation, and the percentage-of-the-recovery method. In re 8 Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 942–43 (9th Cir. 2011). On 9 the other hand, costs are reasonable where they pay for something that “can 10 reasonably be considered a benefit to the [plaintiffs].” See Staton, 327 F.3d 11 at 975. 12 B. Fees and Costs for the State Court Litigation Aren’t Recoverable in 13 this Action 14 While this action was underway, a state-court class action led by the 15 former lead plaintiff in this litigation, Sean Delph, reached a settlement. 16 According to Collective Action Counsel, that settlement would have released 17 the California claims brought in this action. (Dkt. 102 at 6.) Collective Action 18 Counsel, on behalf of the California plaintiffs in this case, intervened first to 19 object to the settlement and then, when the trial court approved the settlement, 20 to appeal that approval. Counsel hired a second law firm, Robins Kaplan, to 21 represent the California plaintiffs in the appeal—that firm billed nearly $60,000 22 for its attorneys’ time (after significant discounts).1 The state litigation costs 23 amounted to another $9,335.39. (See Dkt. 110-1.) 24 There’s no indication that a class-wide release of California state law 25 claims would have harmed any Plaintiff here. To the extent Plaintiffs would 26

27 1 Counsel characterizes these fees as costs—they are not. Attorneys’ fees 28 remain fees whether the attorneys charging them are the firm’s principals, its employees, or its contractors. 1 have been members of that releasing class, they could have opted out—they all 2 opted into this action, after all—or the settlement would compensate them for 3 their released claims. See Carter v. City of Los Angeles, 224 Cal. App. 4th 808, 4 820-21 (2014) (noting class members’ rights to object or opt out of class 5 settlement, “render[ing] the scope of the release irrelevant as to [them]”).

Free access — add to your briefcase to read the full text and ask questions with AI

Denham v. Global Distribution Services, Inc., (S.D. Cal. 2021).

Denham v. Global Distribution Services, Inc. (Denham v. Global Distribution Services, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Amchem Products, Inc. v. Windsor
521 U.S. 591 (Supreme Court, 1997)
In Re Trans Union Corp. Privacy Litigation
629 F.3d 741 (Seventh Circuit, 2011)
Guzman v. Immigration & Naturalization Service
327 F.3d 11 (First Circuit, 2003)
United States v. Newton
327 F.3d 17 (First Circuit, 2003)
In Re Bluetooth Headset Products Liability
654 F.3d 935 (Ninth Circuit, 2011)
Carter v. City of Los Angeles
224 Cal. App. 4th 808 (California Court of Appeal, 2014)
Vizcaino v. Microsoft Corp.
290 F.3d 1043 (Ninth Circuit, 2002)
Ridgeway v. Wal-Mart Stores Inc.
269 F. Supp. 3d 975 (N.D. California, 2017)
Kerzich v. Cnty. of Tuolumne
335 F. Supp. 3d 1179 (E.D. California, 2018)
Bellinghausen v. Tractor Supply Co.
306 F.R.D. 245 (N.D. California, 2015)