1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MARCO DIMERCURIO, et al., Case No. 3:19-cv-04029-JSC
8 Plaintiffs, ORDER RE: MOTION FOR FINAL APPROVAL; MOTION FOR 9 v. ATTORNEY’S FEES, COSTS, AND INCENTIVE AWARD 10 EQUILON ENTERPRISES LLC, Re: Dkt. Nos. 242, 244 Defendant. 11
12 13 Plaintiffs are operators at a Shell oil refinery owned by Equilon Enterprises, LLC 14 (“Defendant” or “Shell”). They allege Defendant’s standby practices violate California’s 15 wage-and-hour laws, Unfair Competition Law, and Private Attorneys General Act. Following 16 class certification, the parties reached a settlement, which the Court preliminarily approved. (Dkt. 17 Nos. 181, 191, 241.1) Plaintiffs’ motions for final approval and for an award of attorney’s fees, 18 costs, and an incentive award are now pending before the Court. (Dkt. Nos. 242, 244.) Having 19 considered Plaintiffs’ motions and the relevant authority and having had the benefit of oral 20 argument on May 9, 2024, the Court GRANTS the motion for final approval and GRANTS the 21 motion for attorney’s fees, costs, and incentive awards. 22 BACKGROUND 23 Defendant (“Shell”) owned and operated an oil refinery in Martinez, California. (Third 24 Amended Class Action Complaint, Dkt. No. 157 ¶ 2.) The four Class Representatives worked as 25 operators at the refinery until it was sold on January 31, 2020. (Id. ¶¶ 10–14.) Shell required 26 operators to be available for designated 12-hour standby shifts in addition to their regular 12-hour 27 1 shifts. (Id. ¶ 2.) There were two 1.5-hour standby periods each day. (Id. ¶¶ 3, 5.) During the 2 standby period, operators had to be reachable by phone in case Shell called the operator to cover 3 an unscheduled absence. (Id. ¶ 3.) If called in, the operator had to arrive at the refinery within two 4 hours. (Id.) If not called in, the operator was not paid. (Id. ¶¶ 3, 9.) 5 The operative complaint asserts claims for “Failure to Pay Reporting Time Pay” in 6 violation of California Industrial Welfare Commission Wage Order 1-2001; “Failure to Pay All 7 Wages Earned at Termination” in violation of California Labor Code §§ 200-203; “Failure to 8 Provide Accurate Wage Statements” in violation of Labor Code §§ 226, 226.3; “Unfair Business 9 Practices” in violation of California’s Unfair Competition Law, Business and Professions Code § 10 17200; and civil penalties under California’s Private Attorneys General Act (“PAGA”), Labor 11 Code § 2698. (Id. ¶¶ 38–64.) 12 In August 2021, the Court granted Plaintiffs’ motion for class certification. (Dkt. Nos. 13 116, 144.) The parties participated in three settlement conferences with Chief Magistrate Judge 14 Spero between May 2021 and June 2022. (Dkt. Nos. 98, 133, 161.) After the third settlement 15 conference, they agreed on major terms, executed a Memorandum of Understanding, and finalized 16 a Settlement Agreement. (Dkt. No. 171-1 at 2–3, 7–37.) Plaintiffs then filed their motion for 17 preliminary approval and proposed class notice. (Dkt. Nos. 171, 172, 175.) At oral argument on 18 October 20, 2022, the Court expressed some concerns with the notice. In response, the parties 19 submitted a first amended proposed class notice. (Dkt. No. 178.) The Court identified its 20 remaining concerns in a written order, (Dkt. No. 179), and the parties submitted a second amended 21 proposed class notice, (Dkt. No. 180 ) On December 14, 2022, the Court granted Plaintiffs’ 22 motion for preliminary approval. (Dkt. No. 181.) 23 Over the ensuing months and upon further investigation, the parties determined there were 24 additional Class Members who required notice and that it was necessary to reformulate how 25 certain class damages were calculated. (Dkt. No. 191.) The Court thus amended its prior 26 preliminary approval order to account for these matters. (Id.) Plaintiffs then discovered there 27 were additional issues with the class data regarding scheduled standby shifts and related pay 1 and September 7, 2023. (Dkt. Nos. 197, 214.) The parties then entered into a Revised Settlement 2 Agreement and sought preliminary approval of the revised settlement. (Dkt. No. 230.) The Court 3 issued a second amendment to the preliminary approval order preliminarily approving the revised 4 settlement and requiring notice. (Dkt. No. 241.) The underlying motions for final approval and 5 for attorney’s fees, costs, and incentive awards followed. (Dkt. Nos. 242, 244.) 6 SETTLEMENT TERMS 7 A. Class 8 The certified class is defined as “[a]ll Operators working at the [Shell] refinery . . . in 9 Martinez, California, who were scheduled for standby at any time from June 4, 2015, . . . up to and 10 continuing through January 31, 2020.” (Dkt. No. 230 at 7.) There are two certified sub-classes:
11 2016 to 2019 Waiting Time Penalties Sub-Class: All Class Members who have been employed and separated from employment 12 (either by involuntary termination or resignation) at the refinery of Equilon Enterprises LLC dba Shell Oil Products US in Martinez, 13 California, at any time from June 4, 2016 through June 3, 2019, and who, upon separation from employment, did not timely receive all 14 wages owed as a result of reporting obligations.
15 2019 to 2020 Waiting Time Penalties Sub-Class: All Class Members who have been employed and separated from employment 16 (either by involuntary termination or resignation) at the refinery of Equilon Enterprises LLC dba Shell Oil Products US in Martinez, 17 California, at any time from June 4, 2019 through January 31, 2020, and who, upon separation from employment, did not timely receive 18 all wages owed as a result of reporting obligations. 19 (Dkt. No. 230 at 7.) 20 B. Payment Terms 21 The Settlement Agreement requires Defendant pay $3,600,000 into an interest maximizing 22 Qualified Settlement Fund created by the Settlement Administrator within 30 days of final 23 approval. (Dkt. No. 230 at 9, 11-12.) This amount will be distributed to Class Members on a pro 24 rata basis based on the number of days they were assigned one or more standby shifts, after certain 25 deductions are made. The deductions, which are subject to Court approval, include attorney’s fees 26 and litigation expenses ($1,244,617.98), incentive awards ($30,000), payment to the California 27 Labor Workforce Development Agency for settlement of the PAGA penalties claim ($42,187.50), 1 The settlement is non-reversionary and any uncashed settlement checks will be distributed 2 to the cy pres recipient, the East Bay Community Law Center. (Dkt. No. 230 at 16, 19.) 3 C. Release 4 Class members who do not timely opt out of the settlement, release the following:
5 any and all claims against the Released Parties that were alleged in the complaint brought in this Lawsuit and all claims that could have 6 been brought based on the allegations in the operative Complaint, related to payment of wages, penalties, interest, fees, costs, and all 7 other claims and allegations made in the operative Complaint, from June 4, 2015 through January 31, 2020 . . . . 8 (Id. at 21.) The named Class Representatives release a broader set of claims arising out of their 9 employment. (Id. at 20–21.) 10 D. Notice 11 Following preliminary approval, the Settlement Administrator, CPT Group, mailed the 12 Notice packet to each Class Member, with instructions on how to opt-out, object, or challenge 13 their settlement allocation. (Dkt. No. 244-1 at ¶ 7, Ex. A.) The notice also informed Class 14 Members about the website and a toll-free telephone number established for Class Member 15 inquiries. (Dkt. No. 241-1 at ¶ 8; Ex. A.) On February 12, 2024, following the second amended 16 order granting preliminary approval of the revised Settlement Agreement, the Settlement 17 Administrator reissued notice to the class. (Dkt. No. 241.) One of the notice packets was 18 returned, but resent following skip tracing. (Dkt. No. 246 at ¶¶ 2-3.) 19 E. Objections and Requests for Exclusion 20 To date, no objections or requests for exclusion have been received. (Dkt. No. 246 at ¶¶ 4, 21 5.) 22 DISCUSSION 23 The approval of a settlement is a multi-step process. At the preliminary approval stage, the 24 court should grant such approval only if it is justified by the parties’ showing that the court will 25 likely be able to (1) “certify the class for purposes of judgment on the proposal” and (2) “approve 26 the proposal under Rule 23(e)(2).” Fed. R. Civ P. 23(e)(B). If the court preliminarily certifies the 27 class and finds the settlement appropriate after “a preliminary fairness evaluation,” then the class 1 will be notified, and a final fairness hearing scheduled to determine if the settlement is fair, 2 adequate, and reasonable pursuant to Rule 23. Villegas v. J.P. Morgan Chase & Co., No. CV 09- 3 00261 SBA (EMC), 2012 WL 5878390, at *5 (N.D. Cal. Nov. 21, 2012). 4 At the second stage, “after notice is given to putative class members, the Court entertains 5 any of their objections to (1) the treatment of the litigation as a class action and/or (2) the terms of 6 the settlement.” Ontiveros v. Zamora, 303 F.R.D. 356, 363 (E.D. Cal. Oct. 8, 2014) (citing Diaz v. 7 Tr. Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989)). Following the final fairness 8 hearing, the Court must finally determine whether the parties should be allowed to settle the class 9 action pursuant to their agreed upon terms. See Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 10 221 F.R.D. 523, 525 (C.D. Cal. 2004). 11 I. CLASS CERTIFICATION 12 The Court previously certified a class under Rule 23(b)(3). (Dkt. No. 116.) Thus, “the only 13 information ordinarily necessary is whether the proposed settlement calls for any change in the 14 class certified, or of the claims, defenses, or issues regarding which certification was granted.” 15 Fed. R. Civ. P. 23 Advisory Committee’s Note to 2018 Amendment. Nothing in the current 16 submission gives the Court reason to reconsider its prior certification order. 17 II. ADEQUACY OF NOTICE 18 Under Federal Rule of Civil Procedure 23(e), the Court “must direct notice in a reasonable 19 manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1). 20 Notice includes “[n]otice of the motion [for attorney’s fees] must be served on all parties and, for 21 motions by class counsel, directed to class members in a reasonable manner.” Fed. R. Civ. P. 22 23(h)(1). Notice of the motion for attorney’s fees is required in both common fund and statutory 23 fee cases. See Fed. R. Civ. P. 23 advisory committee’s note (2003) (“Because members of the 24 class have an interest in the arrangements for payment of class counsel whether that payment 25 comes from the class fund or is made directly by another party, notice is required in all 26 instances.”); see also 3 NEWBERG AND RUBENSTEIN ON CLASS ACTIONS § 8:22 (6th ed. 27 Nov. 2023 update) (“whether or not class members are paying counsel’s fee directly, fee notice 1 itself.”). 2 Rule 23(c)(2)(B) requires “the best notice that is practicable under the circumstances, 3 including individual notice to all members who can be identified through reasonable effort.” The 4 notice must “clearly and concisely state in plain, easily understood language” the nature of the 5 action, the class definition, and the class members’ right to exclude themselves from the class. 6 Fed. R. Civ. P. 23(c)(2)(B); see also Churchill Village, L.L.C. v. General Electric, 361 F.3d 566, 7 575 (9th Cir. 2004) (“Notice is satisfactory if it generally describes the terms of the settlement in 8 sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be 9 heard.”) (cleaned up). Although Rule 23 requires reasonable efforts be made to reach all class 10 members, it does not require that each class member actually receive notice. See Silber v. Mabon, 11 18 F.3d 1449, 1454 (9th Cir. 1994) (noting the standard for class notice is “best practicable” 12 notice, not “actually received” notice). 13 The Court finds the notice plan previously approved by the Court, as implemented by the 14 Settlement Administrator, CPT Group, complies with Rule 23(c)(2)(B). First, the content of the 15 first Notice and amended Notice was sufficient under Rule 23(c)(2)(A). (Dkt. No. 230 at 30.) 16 Second, all 341 Class Members were mailed notice packets and only one of these was returned. 17 (Dkt. No. 246 at ¶ 2.) Following skip-tracing, the packet was mailed to a new address and has not 18 been returned. (Id.) Third, six disputes were received regarding the number of stand-by shifts, but 19 after investigation, all disputes were denied. (Id. at ¶ 6.) Fourth, CPT created a website: 20 www.cptgroupcaseinfo.com/equilonenterprisesettlement, which contains all the required 21 documents. (Dkt. No. 244-1 at ¶ 8.) CPT also offered a toll-free phone number for Class Member 22 inquiries. (Id.) Finally, no objections or requests for exclusion were received. (Dkt. No. 246 at ¶¶ 23 4-5.) 24 III. CY PRES AWARD 25 A cy pres award is “a tool for ‘distributing unclaimed or non-distributable portions of a 26 class action settlement fund to the next best class of beneficiaries.’” In re Google Inc. St. View 27 Elec. Commc’ns Litig., 21 F.4th 1102, 1111 (9th Cir. Dec. 27, 2021) (quoting Nachsin v. AOL, 1 the plaintiffs’ lawsuit, the objectives of the underlying statutes, and the interests of the silent class 2 members, including their geographic diversity.” Nachshin, 663 F.3d at 1036. 3 The parties have selected the East Bay Community Law Center (EBCLC) as the cy pres 4 recipient. (Dkt. No. 230 at 19.) However, as discussed at oral argument, given this case involves 5 unpaid wages and class member recovery is considerable, it is more appropriate to deposit any 6 unclaimed funds with the California Unclaimed Properties Fund. The parties agreed to this 7 proposal. Accordingly, for any checks that remain uncashed after 120 days from mailing, the 8 Settlement Administrator shall mail the funds to the California Unclaimed Properties Fund to be 9 held in the Class Member’s name. 10 IV. FINAL APPROVAL OF THE SETTLEMENT AGREEMENT 11 To grant final approval, the Court must find the terms of the parties’ settlement are fair, 12 adequate, and reasonable under Rule 23(e). In making this determination, courts generally must 13 consider the following factors:
14 (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of 15 maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the 16 stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the 17 class members to the proposed settlement. 18 Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004). “This list is not exclusive 19 and different factors may predominate in different factual contexts.” Torrisi v. Tucson Elec. Power 20 Co., 8 F.3d 1370, 1376 (9th Cir. 1993). Under the revised Rule 23(e), the Court must also consider 21 whether the settlement resulted from collusion among the parties. See Briseno v. Henderson, 998 22 F.3d 1014, 1023 (9th Cir. 2021) (holding courts must apply the collusion factors set forth in In re 23 Bluetooth Headset Products Liability Litigation, 654 F.3d 935, 941 (9th Cir. 2011), to post-class 24 action settlements as well as those settled before certification.) When the settlement is reached 25 pre-certification, however, the court must apply “an even higher level of scrutiny” and 26 “substantively grapple with whether the Bluetooth warning signs created an unfair settlement.” 27 McKinney-Drobnis v. Oreshack, 16 F.4th 594, 608 (9th Cir. 2021) (cleaned up). A. The Fairness Factors 1 1. The Strength of Plaintiffs’ Case and Risk, Expense, Complexity, and 2 Likely Duration of Further Litigation 3 The Court first considers “the strength of [Plaintiffs’] case on the merits balanced against 4 the amount offered in the settlement.” See Nat’l Rural Telecommunications Coop. v. DIRECTV, 5 Inc., 221 F.R.D. 523, 526 (C.D. Cal. 2004) (internal quotation marks and citation omitted). 6 Although this action settled before the Court ruled on the merits of Plaintiffs’ claims, the Court 7 need not reach an ultimate conclusion about the merits of the dispute now, “for it is the very 8 uncertainty of outcome in litigation and avoidance of wasteful and expensive litigation that induce 9 consensual settlements.” Officers for Justice v. Civil Serv. Comm'n of City & Cty. of San 10 Francisco, 688 F.2d 615, 625 (9th Cir. 1982). To that end, there is no “particular formula by 11 which th[e] outcome must be tested.” Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 12 2009). Rather, the Court’s assessment of the likelihood of success is “nothing more than an 13 amalgam of delicate balancing, gross approximations and rough justice.” Id. (internal quotation 14 marks and citation omitted). “In reality, parties, counsel, mediators, and district judges naturally 15 arrive at a reasonable range for settlement by considering the likelihood of a plaintiffs’ or defense 16 verdict, the potential recovery, and the chances of obtaining it, discounted to a present value.” Id. 17 Here, although Plaintiffs believe they have a strong case, they recognize the expense, risk, 18 and length of continued proceedings necessary to prosecute the action through trial and potential 19 appeal. Defendant contests the merits of their claims as well as the appropriateness of class 20 certification. In addition, damages could be difficult to prove as Defendant did not have an 21 official mechanism to track which standby shifts were traded, activated, or otherwise not 22 compensable. (Dkt. No. 244 at 13.) Given the risks posed by continuing to litigate Plaintiffs’ 23 claims, the certainty of Class Member recovery under the settlement weighs in favor of granting 24 final approval. 25 2. Settlement Amount 26 When considering the fairness and adequacy of the amount offered in settlement, “it is the 27 complete package taken as a whole, rather than the individual component parts, that must be 1 proposed settlement may be acceptable even though it amounts to only a fraction of the potential 2 recovery that might be available to the class members at trial.” Id. (collecting cases). 3 Plaintiffs estimate Shell’s total exposure is $8,550,000. (Dkt. No. 244 at 14.) The gross 4 settlement fund of $3,600,000 is about 37 percent of the total exposure. (Id.) Continued litigation 5 brings a risk Plaintiffs will receive nothing, especially because Plaintiffs’ claims are inter- 6 connected and derivative of the same reporting time pay issue. (Dkt. No. 181 at 7.) In contrast, by 7 virtue of the settlement, Class Members can each expect to receive on average approximately 8 $6,661.86 with awards ranging between approximately $129.46 and $19,288.95; 75 people will 9 receive at least $10,000. (Dkt. No. 246 at ¶ 7.) 10 This factor thus weighs in favor of final approval. 11 3. Extent of Discovery Completed and Stage of Proceedings 12 In the context of class action settlements, as long as the parties have sufficient information 13 to make an informed decision about settlement, “formal discovery is not a necessary ticket to the 14 bargaining table.” Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1239 (9th Cir. 1998). Rather, a 15 court’s focus is on whether “the parties carefully investigated the claims before reaching a 16 resolution.” Ontiveros v. Zamora, 303 F.R.D. 356, 371 (E.D. Cal. 2014). 17 The Settlement Agreement is the result of multiple separate settlement conferences with 18 Chief Magistrate Judge Spero. See Satchell v. Fed. Exp. Corp., No. C 03–2659 SI, 2007 WL 19 1114010, at *4 (N.D. Cal. Apr. 13, 2007) (“The assistance of an experienced mediator in the 20 settlement process confirms that the settlement is non-collusive.”). Plaintiffs’ counsel went 21 through extensive document production, multiple depositions, and class certification prior to 22 settlement. 23 This factor thus likewise weighs in favor of final approval. 24 4. Experience and Views of Counsel 25 The experience and views of counsel also weigh in favor of approving the settlement. 26 Class Counsel has extensive experience in wage and hour class actions and strongly support 27 approval of the settlement given the risks and challenges involved. (Dkt. No. 242-5 at ¶ 9, Dkt. 5. Presence of a Government Participant 1 No government entity is a party to this action. However, because Defendant removed this 2 action pursuant to CAFA, the relevant state and federal officials had to be notified of the 3 settlement pursuant to 28 U.S.C. § 1715(b). See Chan Healthcare Grp., PS v. Liberty Mut. Fire 4 Ins. Co., 844 F.3d 1133, n.2 (“In addition to §§ 1332(d) and 1453, CAFA also includes §§ 1711- 5 1715, which relate to approval of settlements in class actions.”). Defendant provided notice to the 6 relevant agencies on May 8, 2024. (Dkt. No. 249.) Accordingly, the parties have stipulated this 7 final approval order shall be held in abeyance for 90 days to allow any objections to be heard. 8 (Dkt. No. 248.) 9 6. Reaction of Class Members 10 As previously discussed, the Settlement Administrator mailed the initial Notice and revised 11 Notice to all 341 Class Members and only one was returned, which was remailed following an 12 address update. (Dkt. No. 246 at ¶¶ 2-3.) No objections or requests for exclusion have been 13 received. (Id. at ¶¶ 4-5.) “[T]he absence of a large number of objections to a proposed class 14 action settlement raises a strong presumption that the terms of a proposed class settlement action 15 are favorable to the class members.” In re Omnivision Techs., Inc., 559 F.Supp.2d 1036, 1043 16 (N.D. Cal. 2008) (citation omitted); see also Churchill Vill., 361 F.3d at 577 (holding approval of 17 a settlement that received 45 objections (0.05%) and 500 opt-outs (0.56%) out of 90,000 class 18 members was proper). 19 *** 20 In sum, the fairness factors weigh in favor of granting Plaintiffs’ motion for final approval 21 of the class action settlement. 22 B. The Bluetooth Factors 23 Finally, the Court must determine whether the settlement was the result of good faith, 24 arms-length negotiations or fraud and collusion. In re Bluetooth Headset Prod. Liab. Litig., 654 25 F.3d 935, 947 (9th Cir. 2011). In determining whether the settlement is the result of collusion, 26 courts “must be particularly vigilant not only for explicit collusion, but also for more subtle signs 27 that class counsel have allowed pursuit of their own self-interest and that of certain class members 1 to infect the negotiations.” Id. The Ninth Circuit has identified three such signs:
2 (1) when counsel receive a disproportionate distribution of the settlement, or when the class receives no monetary distribution but 3 class counsel are amply rewarded;
4 (2) when the parties negotiate a ‘clear sailing’ arrangement providing for the payment of attorneys' fees separate and apart from class funds, 5 which carries the potential of enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel accepting an 6 unfair settlement on behalf of the class; and
7 (3) when the parties arrange for fees not awarded to revert to defendants rather than be added to the class fund. 8 Id. at 947 (internal quotation marks and citations omitted). 9 For the first Bluetooth factor, the Court compares the payout to the class to class counsel’s 10 claim for fees. See Harris v. Vector Mktg. Corp., No C-08-5198 EMC, 2011 WL 4831157, at *6 11 (N.D. Cal. Oct. 12, 2011) (examining “whether a disproportionate part of the settlement is being 12 awarded to class counsel” under the settlement agreement). Under the Settlement Agreement, 13 Class Counsel can apply to the Court for an award of attorney’s fees not to exceed one-third of the 14 gross settlement amount or $1,200,000. (Dkt. No. 230 at 13.) This percentage alone may be a 15 sign of collusion. See Bluetooth, 654 F.3d at 947. However, because Class Counsel’s lodestar is 16 $1,809,105, the fee requested equals a negative multiplier of approximately 34 percent. (Dkt. No. 17 242 at 16.) Thus, while the high percentage is a red flag, it does not raise a concern regarding 18 collusion. 19 The second warning sign—a “clear sailing” provision —is not present here. A clear 20 sailing provision refers to both an agreement for the payment of attorney’s fees separate and apart 21 from class funds, which carries the potential of enabling a defendant to pay class counsel 22 excessive fees and costs in exchange for counsel accepting an unfair settlement on behalf of the 23 class,” Bluetooth, 654 F.3d at 947 (cleaned up), and a provision whereby the defendant agrees “not 24 object to an attorneys’ fees-and-expense award of up to” a certain amount, Roes, 1-2 v. SFBSC 25 Mgmt., LLC, 944 F.3d 1035, 1050 (9th Cir. 2019). Here, the attorney’s fees come out of the 26 common fund and the Settlement Agreement does not include language wherein Defendant agrees 27 not to object to Plaintiffs’ request for fees. “There is thus no clear sailing provision. Even if the 1 Settlement Agreement’s silence on the issue could be construed as a clear sailing provision, given 2 that amount of fees sought is less than Class Counsel’s lodestar and the actual payout to Class 3 Members is significant, the Court finds Defendant is not agreeing to pay Class Counsel excessive 4 fees and costs in exchange for accepting an unfair settlement for the class. 5 The third warning sign—whether the parties have arranged for fees not awarded to the 6 class to revert to the defendant rather than be added to the settlement fund, see Bluetooth, 654 F.3d 7 at 948—is not present here. The Settlement Agreement is non-reversionary—all of the funds will 8 be distributed to the Class Members or the cy pres. 9 Accordingly, notwithstanding the existence of at least one Bluetooth red flag, the Court 10 finds that the Settlement Agreement did not result from, nor was it influenced by, collusion. 11 * * * 12 In sum, the Churchill fairness factors support approval, and the Bluetooth factors do not 13 indicate collusion. The Court is therefore satisfied the Settlement Agreement was not the result of 14 collusion between the parties and instead is the product of arms-length negotiations between 15 experienced and professional counsel. For each of these reasons, the Settlement Agreement passes 16 muster under Rule 23(e) and final approval is appropriate. 17 V. PAGA SETTLEMENT APPROVAL 18 “A PAGA representative action is . . . a type of qui tam action” in which a private plaintiff 19 pursues “a dispute between an employer and the state LWDA on behalf of the state.” Iskanian v. 20 CLS Transp. L.A., LLC, 327 P.3d 129, 148 (Cal. 2014), abrogated on other grounds, by Viking 21 River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022). “[B]ecause a settlement of PAGA claims 22 compromises a claim that could otherwise be brought by the state,” courts must “review and 23 approve any settlement.” Ramirez v. Benito Valley Farms, LLC, No. 16-cv-04708-LHK, 2017 WL 24 3670794, at *2 (N.D. Cal. Aug. 25, 2017) (quoting Cal. Lab. Code § 2699(l)(2)). The Court 25 previously analyzed the appropriateness of the PAGA settlement here and because no facts that 26 would affect this analysis have changed since the Court preliminarily approved the class on 27 December 14, 2023, this Order incorporates by reference the Court’s prior analysis and finally VI. MOTION FOR ATTORNEY’S FEES, COSTS, AND INCENTIVE AWARDS 1 The Settlement Agreement provides “Class Counsel will apply to the Court for an award of 2 not more than one third (1/3) of the Gross Settlement Amount as their Class Counsel Fees 3 Payment, or One Million Two Hundred Thousand Dollars and Zero Cents ($1,200,000). (Dkt. No. 4 230 at 13.) The Settlement Agreement further provides for reimbursement of Class Counsel’s 5 litigation expenses up to $45,000, and reimbursement to the Settlement Administrator for “its 6 reasonable fees and expenses related to administering this Settlement.” (Id. at 13-14.) Finally, the 7 Settlement Agreement provides the Class Representatives will each receive a $7,500 incentive 8 award subject to Court approval. (Id.) 9 A. Attorney’s Fees 10 “While attorneys’ fees and costs may be awarded in a certified class action where so 11 authorized by law or the parties’ agreement, Fed. R. Civ. Pro. 23(h), courts have an independent 12 obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have 13 already agreed to an amount.” Bluetooth, 654 F.3d at 941. In diversity actions such as this, state 14 law applies to determine the right to fees and the method for calculating them. See Mangold v. 15 California Pub. Utils. Comm’n, 67 F.3d 1470, 1478-79 (9th Cir. 1995). Because Plaintiffs’ 16 underlying class claims are state law claims, the Court must apply California law on attorneys’ 17 fees. See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). 18 The California Supreme Court has held that courts have discretion to choose among two 19 different methods for calculating a reasonable attorney’s fee award. See Laffitte v. Robert Half 20 Int’l Inc., 1 Cal. 5th 480, 504 (2016). The first is the “percentage method,” when the fee is 21 calculated “as a percentage share of a recovered common fund or the monetary value of [the] 22 plaintiffs’ recovery.” Id. at 489. The second approach is “[t]he lodestar method, or more accurately 23 the lodestar–multiplier method.” Id. at 489. Under the lodestar method, the fee is calculated “by 24 multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate,” 25 then “increas[ing] or decreas[ing]” the lodestar figure based on “a variety of ... factors, including 26 the quality of the representation, the novelty and complexity of the issues, the results obtained, and 27 the contingent risk presented.” Id. (citation omitted). “The choice of a fee calculation method is 1 generally one within the discretion of the trial court, the goal under either the percentage or 2 lodestar approach being the award of a reasonable fee to compensate counsel for their efforts.” Id. 3 at 504. This approach aligns with the Ninth Circuit. See Vizcaino, 290 F.3d at 1047 (“Under Ninth 4 Circuit law, the district court has discretion in common fund cases to choose either the percentage- 5 of-the-fund or the lodestar method.”). 6 Both the California Supreme Court and the Ninth Circuit recommend that whether a court 7 uses the lodestar or percentage-of-recovery method, the court should perform a cross-check using 8 the other method to confirm the reasonableness of the fee (e.g., if the percentage-of-recovery 9 method is applied, a cross-check with the lodestar method will reveal if the amount requested is 10 unreasonable in light of the amount of work done). See, e.g., Bluetooth, 654 F.3d at 944-45; 11 Laffitte, 1 Cal. 5th at 504 (“A lodestar cross-check ... provides a mechanism for bringing an 12 objective measure of the work performed into the calculation of a reasonable attorney fee.”). 13 1. Percentage-of-Recovery Method 14 Plaintiffs request one-third of the gross settlement amount or $1,200,000 in attorney’s fees. 15 The Ninth Circuit uses a 25 percent of the fund “benchmark” for awarding fees. Bluetooth, 654 16 F.3d at 942. “An adjustment, either up or down, must be accompanied by a reasonable explanation 17 of why the benchmark is unreasonable under the circumstances.” Reyes v. Experian Information 18 Services, Inc., 856 Fed. Appx. 108, 110 (9th Cir. 2021) (cleaned up). The Court finds that an 19 upward adjustment for a fee award of 33 percent of the common fund is appropriate for several 20 reasons. 21 First, cases with a relatively small fund of under $10 million will “often result in fees 22 above 25%.” Craft v. Cty. of San Bernardino, 624 F. Supp. 2d 1113, 1127 (C.D. Cal. 2008); see 23 also Alvarez v. Farmers Ins. Exch., No.14-cv-00574-WHO, 2017 WL 2214585, at *3 (N.D. Cal. 24 Jan. 18, 2017) (“Fee award percentages generally are higher in cases where the common fund is 25 below $10 million.”) (citing cases). 26 Second, as discussed above, there were no objections either to the settlement or the 27 attorney’s fee request, and no requests to opt-out were received. 1 will provide the Class Members with approximately 70 percentage recovery of their reporting pay 2 time claim”, which is “the gravamen of the litigation here.” (Dkt. No. 242 at 20.) This not a 3 claims-made settlement and 100% of Class Members will receive a payment with an average 4 individual settlement payment of $6,661.86, and 75 of the 341 Class Members will receive a 5 settlement payment in excess of $10,000.00. (Dkt. No. 246 at ¶ 7.) In addition, the state will 6 receive $37,500 in funds through the settlement of the PAGA claim, and the aggrieved employees 7 will collectively receive another $12,500. (Dkt. No. 242 at 21.) 8 Finally, as explained below, a 33 percent award is supported by the lodestar cross-check. 9 2. Lodestar Method 10 Class Counsel calculates their lodestar at $1,809,105 (after exercising billing judgment), 11 which is 67 percent of the fees sought here. This amount represents 3,579.6 hours of work 12 performed by two firms, which can be broken down as follows: 13 • 3,068.9 hours billed by nine attorneys and one paralegal at Weinberg, Roger & 14 Rosenfeld for a total lodestar of $1,365,632, and 15 • 510.7 hours by three attorneys at Leonard Carder for a total lodestar of $443,462. 16 (Dkt. No. 242-5 at ¶ 25; Dkt. No. 242-6 at ¶ 43.) Counsel has exercised billing judgment to 17 eliminate time billed by attorneys and paralegals who billed less than 20 hours for Weinberg, 18 Roger & Rosenfeld, and less than 10 hours for Leonard Cohen. (Dkt. No. 242-5 at ¶ 25; Dkt. No. 19 242-6 at ¶ 44.) Although Weinberg, Roger & Rosenfeld law clerks performed substantial legal 20 research and worked with Class Members, all law clerk time was excluded. (Dkt. No. 242-6 at ¶ 21 44.) These numbers also do not include any time billed after December 31, 2023 or “countless” 22 brief telephone calls with co-counsel and inter-office meetings. (Dkt. No. 242-5 at ¶ 25; Dkt. No. 23 242-6 at ¶ 44.) 24 “Affidavits of the plaintiff[’s] attorney and other attorneys regarding prevailing fees in the 25 community, and rate determinations in other cases, particularly those setting a rate for the 26 plaintiff[’s] attorney, are satisfactory evidence of the prevailing market rate.” United Steelworkers 27 of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990). Class Counsel’s hourly rates 1 declaration from a third-party attorney familiar with wage and hour class litigation and the firms 2 involved in this case. (Dkt. No. 242-5 at ¶¶ 11-12; Dkt. No. 242-6 at ¶ 40; Dkt. No. 242-7 at ¶¶ 5- 3 6.) Further, the rates requested in this case are within the range of rates approved in wage and 4 hour litigation in this District. See Joh v. Am. Income Life Ins. Co., No. 18-CV-06364-TSH, 2021 5 WL 66305, at *8 (N.D. Cal. Jan. 7, 2021) (collecting cases approving similar rates in wage and 6 hour class actions). While the Court need not and does not decide that the exact rates requested by 7 counsel are reasonable, they are at least within the range of reasonableness required to use the 8 lodestar figure as a cross check. Id. at *7 (“Where a lodestar is merely being used as a cross- 9 check, the court may use a rough calculation of the lodestar.” (internal quotation marks and 10 citation omitted)). 11 Class Counsel also submitted detailed declarations describing the myriad of work 12 performed in this action over the last five years and documenting “project-based tranches” of time 13 entries. (Dkt. No. 242-5 at ¶¶ 14-2, 26; Dkt. No. 242-6 at ¶¶ 20-38, 45.) Upon review, the 14 reported hours spent litigating this case are not plainly unreasonable. 15 Finally, the requested award of $1,200,000 is approximately 67 percent of the reported 16 $1,809,105 lodestar. “A negative multiple strongly suggests the reasonableness of a negotiated 17 fee.” Moreno v. Cap. Bldg. Maint. & Cleaning Servs., Inc., No. 19-CV-07087-DMR, 2021 WL 18 4133860, at *6 (N.D. Cal. Sept. 10, 2021) (cleaned up). The lodestar cross-check thus supports the 19 fee award here. 20 *** 21 In sum, both the percentage-of-recovery and the lodestar analyses support the requested fee 22 award of $1,200,000 here. 23 B. Costs 24 “There is no doubt that an attorney who has created a common fund for the benefit of the 25 class is entitled to reimbursement of reasonable litigation expenses from that fund.” Ontiveros v. 26 Zamora, 303 F.R.D. 356, 375 (E.D. Cal. 2014) (cleaned up). Plaintiffs request $44,617.98 in 27 litigation costs and $11,500 in settlement administration costs. (Dkt. No. 242-5 at ¶ 27; Dkt. No. 1 Accordingly, the Court awards $56,117.98 in combined litigation and settlement administration 2 costs. 3 C. Class Representative Incentive Awards 4 “Incentive awards are fairly typical in class action cases.” Rodriguez v. W. Publ’g Corp., 5 563 F.3d 948, 958 (9th Cir. 2009) (distinguishing incentive awards from incentive agreements, the 6 latter of which are “entered into as part of the initial retention of counsel” and “put class counsel 7 and the contracting class representatives into a conflict position from day one”). However, the 8 decision to approve such an award is a matter within the Court’s discretion. In re Mego Fin. Corp. 9 Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000). Incentive awards “are intended to compensate class 10 representatives for work done on behalf of the class, to make up for financial or reputation risk 11 undertaken in bringing the action, and, sometimes to recognize their willingness to act as a private 12 attorney general.” Rodriguez, 563 F.3d at 958-59. Although incentive awards are viewed more 13 favorably than incentive agreements, excessive awards “may put the class representative in a 14 conflict with the class and present a considerable danger of individuals bringing cases as class 15 actions principally to increase their own leverage to attain a remunerative settlement for 16 themselves and then trading on that leverage in the course of negotiations.” Id. at 960 (internal 17 quotation marks and citation omitted). Thus, “district courts must be vigilant in scrutinizing all 18 incentive awards to determine whether they destroy the adequacy of the class representatives.” 19 Radcliffe v. Experian Info. Sols. Inc., 715 F.3d 1157, 1164 (9th Cir. 2013). 20 In determining whether an incentive award is reasonable, courts generally consider:
21 (1) the risk to the class representative in commencing a suit, both financial and otherwise; (2) the notoriety and personal difficulties 22 encountered by the class representative; (3) the amount of time and effort spent by the class representative; (4) the duration of the 23 litigation; and (5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. 24 Covillo v. Specialtys Café, No. C–11–00594-DMR, 2014 WL 954516, at *8 (N.D. Cal. Mar. 6, 25 2014) (quoting Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995)). A 26 class representative must justify an incentive award through “evidence demonstrating the quality 27 of plaintiff’s representative service,” such as “substantial efforts taken as class representative to 1 justify the discrepancy between [his] award and those of the unnamed plaintiffs.” Alberto v. 2 GMRI, Inc., 252 F.R.D. 652, 669 (E.D. Cal. 2008). Further, district courts must evaluate each 3 incentive award individually. See Staton, 327 F.3d at 977. 4 Plaintiffs Marco DiMercurio, Charles Gaeth, John Langlitz, and Malcolm Synigal seek 5 incentive awards of $7,500 each for a total of $30,000. Plaintiffs have each spent approximately 6 60 hours working on this case which includes time spent providing documents, sitting for 7 deposition, preparing declarations in support of motions, and preparing for and attending three 8 settlement conferences. (Dkt. Nos. 242-1 at ¶¶ 6-13 (Mr. DiMercurio attesting he spent 63 hours 9 on this case); Dkt. No. 242-2 at ¶¶ 6-13 (Mr. Gaeth attesting he spent 57 hours on this case); Dkt. 10 No. 242-3 at ¶¶ 6-13 (Mr. Langlitz attesting he spent 58 hours on this case); Dkt. No. 242-4 at ¶¶ 11 6-13 (Mr. Synigal attesting he spent 59 hours on this case).) The Court is satisfied the class 12 representatives’ individual contributions to this case warrant an incentive award. The amount of 13 the award here is not excessive when compared either to the class representatives’ individual 14 contributions or the individual Class Member recovery which averages $6,661.98 with over 20 15 percent of the class receiving settlement payments in excess of $10,000. (Dkt. No. 246 at ¶ 7.) 16 Further, the named Plaintiffs agreed to a general release of any and all known and unknown claims 17 arising out of their employment or relationship with Defendant including all unknown claims 18 covered by California Civil Code § 1542. (Dkt. No. 230 at 20.) Under the circumstances here the 19 requested $7,500 incentive award is reasonable and does not “undermine the adequacy of the class 20 representatives.” Radcliffe v. Experian Info. Sols. Inc., 715 F.3d 1157, 1163 (9th Cir. 2013). 21 Accordingly, the Court awards Plaintiffs Marco DiMercurio, Charles Gaeth, John Langlitz, and 22 Malcolm Synigal $7,500 each. 23 CONCLUSION 24 For the reasons stated above, the Court GRANTS Plaintiffs’ motion for final approval of 25 the parties’ class action settlement. In addition, the Court GRANTS Plaintiffs’ motion for 26 attorney’s fees and costs; specifically, the Court awards the following: $1,200,000 in attorney’s 27 fees; $56,117.98 in combined litigation and settlement administration costs; and $30,000 for 1 The Court holds this Order in abeyance for 90 days to allow time for any state or federal 2 agencies to object to the settlement under CAFA. At the conclusion of this period, the parties 3 shall file a notice with the Court indicating whether any objections have been received. If not, this 4 |} Order will become final in accordance with the parties’ stipulation. (Dkt. No. 248.) 5 In accordance with the Northern District’s Procedural Guidance for Class Action 6 Settlements, “[w]ithin 21 days after the distribution of the settlement funds and payment of 7 attorneys’ fees,” Class Counsel shall file “a Post-Distribution Accounting” that provides the 8 following, to the extent applicable: 9 The total settlement fund, the total number of class members, the total number of class members to whom notice was sent and not returned 10 as undeliverable, the number and percentage of claim forms submitted, the number and percentage of opt-outs, the number and 11 percentage of objections, the average and median recovery per claimant, the largest and smallest amounts paid to class members, the 12 method(s) of notice and the method(s) of payment to class members, the number and value of checks not cashed, the amounts distributed 13 to each cy pres recipient, the administrative costs, the attorneys’ fees and costs, the attorneys’ fees in terms of percentage of the settlement v 14 fund, and the multiplier, if any.
15 https://www.cand.uscourts.gov/forms/procedural-guidance-for-class-action-settlements/. Class 16 || Counsel shall “summarize this information in an easy-to-read chart that allows for quick
= 17 comparisons with other cases,” and “post the Post-Distribution Accounting, including the easy-to-
18 read chart, on the settlement website.” See id. 19 This Order disposes of Docket Nos. 242, 244. 20 IT IS SO ORDERED. 21 Dated: May 9, 2024 22
JAQQUELINE SCOTT CORL 24 United States District Judge 25 26 27 28