1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 JOSEPH KIMBO, an individual; on No. 2:19-cv-00166 WBS KJN behalf of himself and all others 13 similarly situated, 14 Plaintiff, MEMORANDUM AND ORDER RE: MOTION FOR PRELIMINARY 15 v. APPROVAL OF CLASS ACTION SETTLEMENT 16 MXD GROUP, INC., a California corporation; RYDER SYSTEM, INC., 17 a Florida Corporation; and DOES 1-10, inclusive, 18 Defendants. 19
20 ----oo0oo---- 21 Plaintiff Joseph Kimbo, individually and on behalf of 22 all other similarly situated employees, brought this putative 23 class action against defendants MXD Group, Inc. and Ryder System, 24 Inc. (collectively, “defendants”) alleging various violations of 25 the California Labor Code. (Compl. (Docket No. 1-2).) Before 26 the court is plaintiff’s unopposed motion for preliminary 27 approval of a class action settlement. (Mot. for Prelim. 28 1 Approval (Docket No. 26).) 2 I. Factual and Procedural Background 3 Defendants operate a local delivery service, which 4 makes deliveries of furniture, appliances, and other items on 5 behalf of defendants’ retail clients. (Decl. of Joshua Konecky 6 (“Konecky Decl.”) ¶ 7 (Docket No. 26-2).) Defendants relied upon 7 two different kinds of drivers to make deliveries: (1) 8 individuals who contracted directly with defendants (“motor 9 carriers”) and (2) individuals who were engaged by other 10 companies to operate their commercial motor vehicles and perform 11 discrete delivery services for defendants (“non-carriers”). (Id. 12 ¶ 20.) 13 Plaintiff worked as a motor carrier delivery driver for 14 defendants until March 2018. (Compl. ¶ 22.) Defendants retained 15 extensive control over the way the drivers performed their 16 duties, controlling the drivers’ schedules, routes, customers, 17 and equipment. (Id. ¶ 6.) Defendants tracked and monitored the 18 drivers’ movements throughout the day to ensure they were 19 adhering to the delivery schedule, and while making deliveries, 20 drivers had to wear defendants’ uniforms or the uniforms of 21 defendants’ clients. (Id. ¶ 8.) If the drivers failed to abide 22 by the provided delivery schedule, defendants reserved the right 23 to discipline the drivers by reducing their work assignment 24 and/or terminating them from service. (Id.) Drivers were paid a 25 flat rate for each delivery and were forced to sign a non-compete 26 agreement prohibiting them from directly or indirectly soliciting 27 business from any of defendants’ customers for three years 28 following their employment with defendants. (Id. ¶¶ 9, 45.) 1 In spring of 2018, plaintiff and other motor carriers 2 met with plaintiff’s counsel regarding complaints they had about 3 the terms of their compensation and work arrangements with 4 defendants. (Mot. for Preliminary Approval at 3.) Plaintiff 5 initially brought this action against defendants in Sacramento 6 Superior Court challenging defendants’ policies of: (1) 7 misclassifying drivers as independent contractors, instead of 8 employees; (2) failing to reimburse plaintiff and the class for 9 necessary and reasonable business expenses; (3) making unlawful 10 deductions from plaintiff’s and the class’ wages; (4) failing to 11 provide, authorize, permit and/or make available meal and rest 12 periods to plaintiff and the class as required by California law; 13 (5) denying plaintiff and the class full compensation for all 14 hours worked; (6) failing to pay plaintiff and the class minimum 15 wage; (7) failing to pay plaintiff and the class overtime and 16 double time; (8) failing to provide plaintiff and the class with 17 accurate, itemized wage statements; and (9) failing to timely pay 18 plaintiff and the class full wages upon termination or 19 resignation. (Compl. ¶ 13.) Defendants timely removed the case 20 to this court in January 2019. (Docket No. 1.) Following 21 removal, the parties engaged in mediation proceedings, producing 22 the settlement agreement before the court today. 23 II. Discussion 24 Federal Rule of Civil Procedure 23(e) provides that 25 “[t]he claims, issues, or defenses of a certified class may be 26 settled . . . only with the court’s approval.” Fed. R. Civ. P. 27 23(e). “To vindicate the settlement of such serious claims, 28 however, judges have the responsibility of ensuring fairness to 1 all members of the class presented for certification.” Staton v. 2 Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). “Where [] the 3 parties negotiate a settlement agreement before the class has 4 been certified, settlement approval requires a higher standard of 5 fairness and a more probing inquiry than may normally be required 6 under Rule 23(e).” Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 7 1048 (9th Cir. 2019) (citation and internal quotations omitted). 8 The approval of a class action settlement takes place 9 in two stages. In the first stage, “the court preliminarily 10 approves the settlement pending a fairness hearing, temporarily 11 certifies a settlement class, and authorizes notice to the 12 class.” Ontiveros v. Zamora, No. 2:08-567 WBS DAD, 2014 WL 13 3057506, at *2 (E.D. Cal. July 7, 2014). In the second, the 14 court will entertain class members’ objections to (1) treating 15 the litigation as a class action and/or (2) the terms of the 16 settlement agreement at the fairness hearing. Id. The court 17 will then reach a final determination as to whether the parties 18 should be allowed to settle the class action following the 19 fairness hearing. Id. Consequently, this order “will only 20 determine whether the proposed class action settlement deserves 21 preliminary approval and lay the groundwork for a future fairness 22 hearing.” See id. (citations omitted). 23 A. Class Certification 24 To be certified, the putative class must satisfy both 25 the requirements of Federal Rule of Civil Procedure 23(a) and 26 (b). Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 27 2013). Each will be discussed in turn. 28 1. Rule 23(a) 1 In order to certify a class, Rule 23(a)’s four 2 threshold requirements must be met: numerosity, commonality, 3 typicality, and adequacy of representation. Fed. R. Civ. P. 4 23(a). “Class certification is proper only if the trial court 5 has concluded, after a ‘rigorous analysis,’ that Rule 23(a) has 6 been satisfied.” Wang v. Chinese Daily News, Inc., 737 F.3d 538, 7 542-43 (9th Cir. 2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 8 564 U.S. 338, 351 (2011)). 9 i. Numerosity 10 While Rule 23(a)(1) requires that the class be “so 11 numerous that joinder of all members is impracticable,” Fed. R. 12 Civ. P. 23(a)(1), it does not require “a strict numerical cut- 13 off.” McCurley v. Royal Seas Cruises, Inc., 331 F.R.D. 142, 167 14 (S.D. Cal. 2019) (Bashant, J.) (citations omitted). Generally, 15 “the numerosity factor is satisfied if the class compromises 40 16 or more members.” Id. (quoting Celano v. Marriott Int’l, Inc., 17 242 F.R.D. 544, 549 (N.D. Cal. 2007)). Here, there are more than 18 900 class members, all of whom are identifiable from defendants’ 19 records. (Mot. for Preliminary Approval at 8.) Accordingly, the 20 numerosity element is satisfied. 21 ii. Commonality 22 Next, Rule 23(a) requires that there be “questions of 23 law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). 24 Rule 23(a)(2) is satisfied when there is a “common contention . . 25 . of such a nature that it is capable of classwide resolution -- 26 which means that determination of its truth or falsity will 27 resolve an issue that is central to the validity of each one of 28 the claims in one stroke.” Wal-Mart Stores, 564 U.S. at 350. 1 “Plaintiffs need not show that every question in the case, or 2 even a preponderance of questions, is capable of classwide 3 resolution. So long as there is ‘even a single common question,’ 4 a would-be class can satisfy the commonality requirement of Rule 5 23(a)(2).” Wang, 737 F.3d at 544 (citing id.). 6 The settlement class consists of two subclasses, 7 reflective of the two types of drivers defendants used to carry 8 out deliveries: (1) a “motor carrier” subclass consisting of 9 individuals under contract with the defendant directly and (2) a 10 “non-carrier” subclass consisting of individuals under contract 11 with other entities who were tasked with performing services for 12 defendants. (Konecky Decl. ¶ 20.) Plaintiff’s counsel estimates 13 that motor carrier class members will receive an average of 14 approximately $8,871, while non-carrier class members will 15 recover approximately $1,074. (Id. ¶ 29.) The actual recovery 16 each class members will receive, however, will be distributed on 17 a pro rata basis in proportion to the number of calendar 18 workweeks during which they were authorized to provide 19 transportation services to defendants during the class period. 20 (Mot. for Preliminary Approval at 1.) 21 Despite the difference in recovery between the two 22 classes, “the presence of individual damages cannot, by itself, 23 defeat class certification.” Leyva, 716 F.3d at 514 (quoting 24 Wal-Mart Stores, 564 U.S. at 362). Here, the claims implicate 25 common questions of law and fact because they were all premised 26 on the defendants’ same policies, regardless of subclass. 27 Generally, “challeng[ing] a policy common to the class as a whole 28 creates a common question whose answer is apt to drive the 1 resolution of the litigation.” Ontiveros, 2014 WL 3057506, at 2 *5. Accordingly, these common questions of law and fact satisfy 3 Rule 23(a)’s commonality requirement. 4 iii. Typicality 5 Rule 23(a) further requires that the “claims or 6 defenses of the representative parties [be] typical of the claims 7 or defenses of the class.” Fed. R. Civ. P. 23(a)(3). The test 8 for typicality is “whether other members have the same or similar 9 injury, whether the action is based on conduct which is not 10 unique to the named plaintiffs, and whether other class members 11 have been injured by the same course of conduct.” Sali v. Corona 12 Reg’l Medical Ctr., 909 F.3d 996, 1006 (9th Cir. 2018) (quoting 13 Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)). 14 Here, the named plaintiff satisfies the typicality requirement. 15 The work performed by the class members and the work performed by 16 plaintiff is the same, and they share the same injuries from 17 being misclassified as independent contractors rather than 18 employees. Accordingly, the typicality requirement is satisfied. 19 iv. Adequacy of Representation 20 Finally, Rule 23(a) requires that “the representative 21 parties will fairly and adequately protect the interests of the 22 class.” Fed. R. Civ. P. 23(a)(4). Rule 23(a)(4) “serves to 23 uncover conflicts of interest between named parties and the class 24 they seek to represent” as well as the “competency and conflicts 25 of class counsel.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 26 625, 626 n.20 (1997). The court must consider two factors: (1) 27 whether the named plaintiff and his counsel have any conflicts of 28 interest with other class members and (2) whether the named 1 plaintiff and his counsel will vigorously prosecute the action on 2 behalf of the class. In re Hyundai and Kai Fuel Economy Litig., 3 926 F.3d 539, 566 (9th Cir. 2019) (quoting Hanlon v. Chrysler 4 Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)). 5 a. Conflicts of Interest 6 The first portion of the adequacy inquiry considers 7 whether plaintiff’s interests are aligned with those of the 8 class. “[A] class representative must be part of the class and 9 possess the same interest and suffer the same injury as the class 10 members.” Amchem, 521 U.S. at 625-26 (internal modifications 11 omitted). 12 In most respects, the named plaintiff’s interests 13 appear to be aligned with those of the class for the reasons set 14 forth above. (See generally Compl.) Plaintiff served as a 15 driver for defendants and was classified as an independent 16 contractor rather than an employee during his tenure. (Id. ¶ 17 22.) Despite the many similarities, plaintiff alone stands to 18 benefit for his participation in this litigation by receiving an 19 incentive award of $15,000. (Mot. for Preliminary Approval at 20 22.) The use of an incentive award raises the possibility that a 21 plaintiff’s interest in receiving that award will cause his 22 interests to diverge from the class’s in a fair settlement. 23 Staton, 327 F.3d at 977-78. Consequently, the court must 24 “scrutinize carefully the awards so that they do not undermine 25 the adequacy of the class representatives.” Radcliffe v. 26 Experian Info. Sys., Inc., 715 F.3d 1157, 1163 (9th Cir. 2013). 27 Plaintiff’s counsel estimates that motor carrier class 28 members will receive an average of approximately $8,871, while 1 non-carrier class members will receive approximately $1,074. 2 (Konecky Decl. ¶ 29.) Plaintiff’s proposed award of $15,000 3 represents substantially more. However, incentive awards “are 4 intended to compensate class representatives for work done on 5 behalf of the class, to make up for financial or reputational 6 risk undertaken in bringing the action, and, sometimes, to 7 recognize their willingness to act as a private attorney 8 general.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958-59 9 (9th Cir. 2009). Indeed, the Ninth Circuit has consistently 10 recognized incentive awards are “fairly typical” way to 11 “compensate class representatives for work done on behalf of the 12 class” or “to make up for financial or reputational risk 13 undertaken in bringing the action.” Id. 14 Here, a $15,000 incentive payment appears appropriate 15 at this stage. The payment represents 0.3% of the total 16 settlement amount. Plaintiff’s counsel represents that the named 17 plaintiff has spent significant amounts of time to bring this 18 case, providing counsel with important documents, information, 19 and insight regarding defendants’ policies and practices. 20 (Konecky Decl. ¶ 48.) Other courts have awarded similar 21 incentive awards in analogous cases. See, e.g., Villalpando v. 22 Exel Direct Inc., No. 3:12-cv-04137-JCS, 2016 WL 7785852, at *2 23 (N.D. Cal. Dec. 9, 2016) (awarding each named plaintiff $15,000 24 following misclassification suit). While the incentive award 25 does not appear to create a conflict of interest, the court 26 emphasizes this finding is only a preliminary determination. 27 Plaintiff represents he will formally seek the incentive award 28 through a separate motion, to be heard at the final approval 1 hearing. (Mot. for Preliminary Approval at 22.) At that time, 2 plaintiff should be prepared to present further evidence of 3 plaintiff’s substantial efforts taken as a class representative 4 to better justify the discrepancy between the award and those of 5 the unnamed class members. 6 b. Vigorous Prosecution 7 The second portion of the adequacy inquiry examines the 8 vigor with which the named plaintiff and his counsel have pursued 9 the class’s claims. “Although there are no fixed standards by 10 which ‘vigor’ can be assayed, considerations include competency 11 of counsel and, in the context of a settlement-only class, an 12 assessment of the rationale for not pursuing further litigation.” 13 Hanlon, 150 F.3d at 1021. 14 Here, class counsel states he is an experienced 15 employment and class action litigator fully qualified to pursue 16 the interests of the class. (Konecky Decl. ¶¶ 3-6.) Class 17 counsel represents that he has litigated several wage and hour 18 class actions on the specific issue of independent contractor 19 misclassification and was the lead counsel in an analogous class 20 action against the same defendants in the Northern District of 21 California. (Id. ¶ 5 (citing Villalpando, 2016 WL 7740832, at 22 *2-3.) 23 Furthermore, before participating in an arms-length 24 mediation, class counsel prepared mediation briefs and vetted his 25 clients’ claims through rigorous legal analysis. (Id. ¶¶ 13-15.) 26 Following a full day of negotiations, the parties executed a 27 Memorandum of Understanding memorializing their agreement. (Id. 28 ¶ 15.) Counsel’s experience, coupled with the careful vetting of 1 his client’s claims, suggest that he is well-equipped to handle 2 this case. Accordingly, the court finds that plaintiff and 3 plaintiff’s counsel are adequate representatives of the class. 4 2. Rule 23(b) 5 After fulfilling the threshold requirements of Rule 6 23(a), the proposed class must satisfy the requirements of one of 7 the three subdivisions of Rule 23(b). Leyva, 716 F.3d at 512. 8 Plaintiff seeks provisional certification under Rule 23(b)(3), 9 which provides that a class action may be maintained only if “the 10 court finds that questions of law or fact common to class members 11 predominate over questions affecting only individual members” and 12 “that a class action is superior to other available methods for 13 fairly and efficiently adjudicating the controversy.” Fed. R. 14 Civ. P. 23(b)(3). The test of Rule 23(b)(3) is “far more 15 demanding,” than that of Rule 23(a). Wolin v. Jaguar Land Rover 16 N. Am., LLC, 617 F.3d 1168, 1172 (9th Cir. 2010) (quoting Amchem, 17 521 U.S. at 623-24). 18 i. Predominance 19 “The predominance analysis under Rule 23(b)(3) focuses 20 on ‘the relationship between the common and individual issues’ in 21 the case and ‘tests whether proposed classes are sufficiently 22 cohesive to warrant adjudication by representation.’” Wang, 737 23 F.3d at 545 (quoting Hanlon, 150 F.3d at 1022). However, 24 plaintiff is not required to prove that the predominating 25 question will be answered in his favor at the class certification 26 stage. Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 27 468 (2013). 28 Here, the claims brought by the proposed settlement 1 class all arise from defendants’ same conduct. For example, all 2 class members were erroneously classified as independent 3 contractors rather than employees. (Konecky Decl. ¶ 9.) This 4 policy serves as a common fact uniting plaintiff’s individual 5 claims and the class claims. Common questions of law include, 6 inter alia, whether defendants’ policies and practices are in 7 violation of California Business and Professions Code § 17200; 8 whether, as employees, drivers were entitled to minimum wage and 9 overtime payments; and whether, as employees, drivers were 10 entitled to reimbursement for expenses, meal breaks and rest 11 periods, or premiums if those meal and rest periods were not 12 provided. (See generally Compl. ¶ 81.) The class claims thus 13 demonstrate a “common nucleus of facts and potential legal 14 remedies” that can properly be resolved in a single adjudication. 15 See Hanlon, 150 F.3d at 1022. Accordingly, the court finds 16 common questions of law and fact predominate over questions 17 affecting only individual class members. 18 ii. Superiority 19 Rule 23(b)(3) sets forth four non-exhaustive factors 20 that courts should consider when examining whether “a class 21 action is superior to other available methods for fairly and 22 efficiently adjudicating the controversy.” Fed. R. Civ. P. 23 23(b)(3). They are: “(A) the class members’ interests in 24 individually controlling the prosecution or defense of separate 25 actions; (B) the extent and nature of any litigation concerning 26 the controversy already begun by or against class members; (C) 27 the desirability or undesirability of concentrating the 28 litigation of the claims in the particular forum; and (D) the 1 likely difficulties in managing a class action.” Id. Factors 2 (C) and (D) are inapplicable because the parties settled this 3 action before class certification. See Syed v. M-I LLC, No. 4 1:14-cv-00742 WBS BAM, 2019 WL 1130469, at *6 (E.D. Cal. Mar. 12, 5 2019) (citation omitted). Therefore, the court will focus 6 primarily on facts (A) and (B). 7 Rule 23(b)(3) is concerned with the “vindication of the 8 rights of groups of people who individually would be without 9 effective strength to bring their opponents into court at all.” 10 Amchem, 521 U.S. at 617. When class members’ individual recovery 11 is relatively modest, the class members’ interests generally 12 favors certification. Zinser v. Accufix Res. Inst., Inc., 253 13 F.3d 1180, 1190 (9th Cir. 2001). Again, plaintiff’s counsel 14 estimates that motor carrier class members will receive 15 approximately $8,871, while non-carrier class members will 16 receive approximately $1,074. (Konecky Decl. ¶ 29.) These 17 anticipated sums, while modest in light of the $5,000,000 18 recovery, represent a strong result for the class given the 19 strength of the claims, the risks of litigation and delay, and 20 the defendants’ potential exposure. (Id. ¶ 30.) The amount of 21 recovery represents more than individual class members would 22 likely receive if they were to bring the case on their own. 23 Accordingly, this factor weighs in favor of certification. 24 Factor (B), concerning the “extent and nature of the 25 litigation,” is “intended to serve the purpose of assuring 26 judicial economy and reducing the possibility of multiple 27 lawsuits.” Zinser, 253 F.3d at 1191 (quoting 7A Charles Alan 28 Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and 1 Procedure § 1780 at 568-70 (2d ed. 1986)). Here, defendants 2 submitted a notice that they are involved in a substantially 3 similar case pending before the Los Angeles Superior Court. (See 4 Notice of Related Case (Docket No. 2).) Plaintiff did not 5 discuss this case in his motion for preliminary approval. (See 6 Mot. for Preliminary Approval at 12.) While the court finds the 7 number of potential plaintiffs makes individual resolution of 8 these claims untenable, plaintiff is advised to address why the 9 case before the Los Angeles Superior Court does not detract from 10 judicial economy in its motion for final approval. 11 3. Rule 23(c)(2) Notice Requirements 12 If the court certifies a class under Rule 23(b)(3), it 13 “must direct to class members the best notice that is practicable 14 under the circumstances, including individual notice to all 15 members who can be identified through reasonable effort.” Fed. 16 R. Civ. P. 23(c)(2)(B). Actual notice is not required, but the 17 notice provided must be “reasonably certain to inform the absent 18 members of the plaintiff class.” Silber v. Mabon, 18 F.3d 1449, 19 1454 (9th Cir. 1994) (citation omitted). 20 The parties have jointly agreed to use Heffler Claims 21 Group LLC (“Heffler”) to serve as the Settlement Administrator. 22 (Decl. of Mark Rapazzini (“Rapazzini Decl.”) ¶¶ 1-2 (Docket No. 23 26-1).) Heffler has extensive experience in class action 24 matters, providing administration services in more than 1,000 25 cases. (Id. ¶ 2.) Pursuant to the notice plan, Heffler will 26 receive and process the class list data within thirty days of the 27 court’s order granting preliminary approval. (Id. ¶ 3.) 28 “Notice is satisfactory if it ‘generally describes the 1 terms of the settlement in sufficient detail to alert those with 2 adverse viewpoints to investigate and to come forward and be 3 heard.’” See Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 4 575 (9th Cir. 2004). The notice will provide, among other 5 things, a description of the case; the total settlement amount 6 and how it will be allocated (including information about 7 plaintiff’s motion for attorney’s fees); the procedures for 8 opting out or objecting to the settlement; and the individual 9 class member’s share. (Konecky Decl. ¶ 38.) Heffler will 10 translate the notice from English to Spanish and will provide 11 both translations in its notice to class members. (Id. ¶¶ 4, 7.) 12 All class members will receive individual notice by first class 13 mail and/or through email, if class members’ email addresses are 14 available. (Id. ¶¶ 6-7.) Heffler will also create a settlement 15 website and a toll-free number for class members to ask questions 16 and learn more about the settlement. (Id. ¶¶ 8-9.) 17 The system set forth in the Settlement Agreement is 18 reasonably calculated to provide notice to class members and 19 inform class members of their options under the agreement. 20 Accordingly, the manner of notice and the content of notice is 21 sufficient to satisfy Rule 23(c)(2)(B). 22 B. Rule 23(e): Fairness, Adequacy, and Reasonableness of Proposed Settlement 23 24 Because the proposed class preliminarily satisfies the 25 requirements of Rule 23, the court must consider whether the 26 terms of the parties’ settlement appear fair, adequate, and 27 reasonable. See Fed. R. Civ. P. 23(e)(2). To determine the 28 fairness, adequacy, and reasonableness of the agreement, the 1 court must consider “a number of factors,” including:
2 Strength of the plaintiff’s case; the risk, expense, complexity, and likely duration of further litigation; 3 the risk of maintaining class action status throughout the trial; the amount offered in settlement; the 4 extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the 5 presence of a governmental participant; and the reaction of the class members to the proposed 6 settlement. 7 Hanlon, 150 F.3d at 1026. Many of these factors cannot be 8 considered until the final fairness hearing; accordingly, the 9 court’s review will be confined to resolving any “‘glaring 10 deficiencies’ in the settlement agreement.” Syed, 2019 WL 11 1130469, at *7 (citations omitted). 12 1. Negotiations of the Settlement Agreement 13 Counsel for both sides appear to have diligently 14 pursued settlement after thoughtfully considering the strength of 15 their arguments and potential defenses. As previously discussed, 16 the parties participated in an arms-length mediation before an 17 experienced mediator, Antonio Piazza, on December 9, 2019. 18 (Konecky Decl. ¶¶ 13-15.) Following a full day of negotiations, 19 the parties executed a Memorandum of Understanding memorializing 20 their agreement. (Id. ¶ 15.) Given the plaintiff’s 21 sophisticated representation and the parties’ representation that 22 the settlement reached was the product of arms-length bargaining, 23 the court does not question that the proposed settlement is in 24 the best interest of the class. See Fraley v. Facebook, Inc., 25 966 F. Supp. 2d 939, 942 (N.D. Cal. 2013) (holding that a 26 settlement reached after informed negotiations “is entitled to a 27 degree of deference as the private consensual decision of the 28 parties” (citing Hanlon, 150 F.3d at 1027)). 1 2. Amount Recovered and its Distribution 2 In determining whether a settlement agreement is 3 substantively fair to class members, the court must balance the 4 value of expected recovery against the value of the settlement 5 offer. See In re Tableware Antitrust Litig., 484 F. Supp. 2d 6 1078, 1080 (N.D. Cal. 2007). Here, plaintiff’s counsel estimates 7 that motor carrier class members will receive an average of 8 approximately $8,871, while non-carrier class members will 9 receive an average of approximately $1,074. (Konecky Decl. ¶ 10 29.) Plaintiff’s counsel represents that, given the strength of 11 plaintiff’s claims and defendants’ potential exposure, the 12 settlement and resulting distribution provides a strong result 13 for the class. (Id. ¶ 30.) While the settlement amount 14 represents “more than the defendants feel those individuals are 15 entitled to” and will potentially be “less than what some class 16 members feel they deserve,” the settlement offers class members 17 the prospect of some recovery, instead of none at all. See 18 Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 628 19 (9th Cir. 1982). In light of the claims at issue and the 20 defendants’ potential exposure, the court finds that the 21 substance of the settlement is fair to class members and thereby 22 “falls within the range of possible approval.” See Tableware, 23 484 F. Supp. 2d at 1079. 24 3. Attorney’s Fees and Costs 25 “Under the ‘common fund’ doctrine, ‘a litigant or a 26 lawyer who recovers a common fund for the benefit of persons 27 other than himself or his client is entitled to a reasonable 28 attorney’s fee from the fund as a whole.’” Staton, 327 F.3d at 1 969 (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). 2 If a negotiated class action settlement includes an award of 3 attorney’s fees, then the court “ha[s] an independent obligation 4 to ensure that the award, like the settlement itself, is 5 reasonable, even if the parties have already agreed to an 6 amount.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 7 935, 941 (9th Cir. 2011). 8 The Ninth Circuit has recognized two different methods 9 for calculating reasonable attorney’s fees in common fund cases: 10 the lodestar method or the percentage-of-recovery method. Id. at 11 941-42. In the lodestar method, courts multiply the number of 12 hours the prevailing party expended on the litigation by a 13 reasonable hourly rate. Id. Under the percentage-of-recovery 14 method, courts typically delineate 25% of the total settlement as 15 the fee. Hanlon, 150 F.3d at 1029. However, courts may adjust 16 this figure if the record reflects “special circumstances 17 justifying a departure.” Bluetooth, 654 F.3d at 942. Where, as 18 here, the settlement has produced a common fund for the benefit 19 of the entire class, courts have discretion to use either method. 20 Id. at 942 (citing In re Mercury Interactive Corp., 618 F.3d 988, 21 992 (9th Cir. 2010)). 22 Plaintiff’s counsel has represented that they will be 23 filing a separate motion for attorney’s fees and costs pursuant 24 to Federal Rule 23(h) for $1,250,000 in fees and $20,000 in 25 costs. (Mot. for Preliminary Approval at 23.) This amount 26 represents 25% of the $5,000,000 gross settlement amount. (Id.) 27 The court will defer consideration of the reasonableness of 28 counsel’s fees until the fee motion is filed. Class counsel is 1 cautioned that the reasons for the attorney’s fees should be 2 explained further in that motion. Factors considered in 3 examining the reasonableness of the fee may include: (1) whether 4 the results achieved were exceptional; (2) risks of litigation; 5 (3) non-monetary benefits conferred by the litigation; (4) 6 customary fees for similar cases; (5) the contingent nature of 7 the fee and financial burden carried by counsel; and (6) the 8 lawyer’s “reasonable expectations, which are based on the 9 circumstances of the case and the range of fee awards out of 10 common funds of comparable size.” See Vizcaino v. Microsoft 11 Corp., 290 F.3d 1043, 1048-50 (9th Cir. 2002). A lodestar cross- 12 check, including the hours worked by each attorney, paralegal, 13 and case manager multiplied by their hourly rate, is also a 14 valuable means by which to check the reasonableness of requested 15 fees. In the event that class counsel cannot demonstrate the 16 reasonableness of the requested attorney’s fee, the court will be 17 required to reduce the fee to a reasonable amount or deny final 18 approval of the settlement. See id. at 1047. 19 IT IS THEREFORE ORDERED that plaintiff’s motion for 20 preliminary certification of a conditional settlement class and 21 preliminary approval of the class action settlement (Docket No. 22 23) be, and the same hereby is, GRANTED. 23 IT IS FURTHER ORDERED THAT: 24 (1) the following class be provisionally certified for the 25 purpose of settlement: 26 (a) all motor carrier owners who directly contracted 27 with defendants in his or her individual capacity or through a 28 business entity and provided transportation services to 1 Defendants in California at any time from December 12, 2014 2 through the earlier of July 26, 2020 or the date of this Order 3 (“motor carrier class”) and 4 (b) all individuals who did not contract with 5 defendants and are non-owner drivers and helpers authorized to 6 provide transportation services for defendants in California at 7 any time from December 12, 2014 through the earlier of July 26, 8 2020 or the date of this Order (“non-carrier class”). 9 In the event that the proposed settlement is not consummated for 10 any reason, the conditional certification shall be of no further 11 force or effect and shall be vacated without further action or 12 order of this court; 13 (2) the proposed settlement is preliminarily approved as 14 fair, just, reasonable, and adequate to the members of the 15 settlement class, subject to further consideration at the final 16 fairness hearing after distribution of notice to members of the 17 settlement class; 18 (3) for purposes of carrying out the terms of the settlement 19 only: 20 (a) Joseph Kimbo is appointed as the representative of 21 the settlement class and is provisionally found to be an adequate 22 representative within the meaning of Federal Rule of Civil 23 Procedure 23; 24 (b) the law firm of Schneider Wallace Cottrell Konecky 25 LLP is provisionally found to be a fair and adequate 26 representative of the settlement class and is appointed as class 27 counsel for the purposes of representing the settlement class 28 conditionally certified in this Order; 1 (4) Heffler Claims Group, LLC is appointed as the settlement 2 administrator; 3 (5) the form and content of the proposed Notice of Class 4 Action Settlement (Konecky Decl., Ex. 1) is approved, except to 5 the extent that it must be updated to reflect dates and deadlines 6 specified in this Order; 7 (6) no later than thirty (30) days from the date this Order 8 is signed, defendants’ counsel shall provide the names and 9 contact information of all settlement class members to Heffler 10 Claims Group, LLC; 11 (7) no later than twenty-one (21) days from the date 12 defendants submit the contact information to Heffler Claims 13 Group, LLC, it shall mail a Notice of Class Action Settlement to 14 all members of the settlement class; 15 (8) no later than forty-five (45) days from the date this 16 Order is signed, any member of the settlement class who intends 17 to object to, comment upon, or opt out of the settlement shall 18 mail written notice of that intent to Heffler Claims Group, LLC 19 pursuant to the instructions in the Notice of Class Action 20 Settlement; 21 (9) a final fairness hearing shall be held before this court 22 on Monday, December 14, 2020, at 1:30 p.m. in Courtroom 5 to 23 determine whether the proposed settlement is fair, reasonable, 24 and adequate and should be approved by this court; to determine 25 whether the settlement class’s claims should be dismissed with 26 prejudice and judgment entered upon final approval of the 27 settlement; to determine whether final class certification is 28 appropriate; and to consider class counsel’s applications for 1 attorney’s fees, costs, and an incentive award to plaintiff. The 2 court may continue the final fairness hearing without further 3 notice to the members of the class; 4 (10) no later than twenty-eight (28) days before the final 5 fairness hearing, class counsel shall file with this court a 6 petition for an award of attorney’s fees and costs. Any 7 objections or responses to the petition shall be filed no later 8 than fourteen (14) days before the final fairness hearing. Class 9 counsel may file a reply to any objections no later than seven 10 (7) days before the final fairness hearing; 11 (11) no later than twenty-eight (28) days before the final 12 fairness hearing, class counsel shall file and serve upon the 13 court and defendants’ counsel all papers in support of the 14 settlement, the incentive award for the class representative, and 15 any award for attorney’s fees and costs; 16 (12) no later than twenty-eight (28) days before the final 17 fairness hearing, Heffler Claims Group, LLC shall prepare, and 18 class counsel shall file and serve upon the court and defendants’ 19 counsel, a declaration setting forth the services rendered, proof 20 of mailing, a list of all class members who have opted out of the 21 settlement, a list of all class members who have commented upon 22 or objected to the settlement; 23 (13) any person who has standing to object to the terms of 24 the proposed settlement may appear at the final fairness hearing 25 in person or by counsel and be heard to the extent allowed by the 26 court in support of, or in opposition to, (a) the fairness, 27 reasonableness, and adequacy of the proposed settlement, (b) the 28 requested award of attorney’s fees, reimbursement of costs, and 1 incentive award to the class representative, and/or (c) the 2 propriety of class certification. To be heard in opposition at 3 the final fairness hearing, a person must, no later than ninety 4 (90) days from the date this Order is signed, (a) serve by hand 5 or through the mails written notice of his or her intention to 6 appear, stating the name and case number of this action and each 7 objection and the basis therefore, together with copies of any 8 papers and briefs, upon class counsel and counsel for defendants, 9 and (b) file said appearance, objections, papers, and briefs with 10 the court, together with proof of service of all such documents 11 upon counsel for the parties. 12 Responses to any such objections shall be served by 13 hand or through the mails on the objectors, or on the objector’s 14 counsel if there is any, and filed with the court no later than 15 fourteen (14) calendar days before the final fairness hearing. 16 Objectors may file optional replies no later than seven (7) 17 calendar days before the final fairness hearing in the same 18 manner described above. Any settlement class member who does not 19 make his or her objection in the manner provided herein shall be 20 deemed to have waived such objection and shall forever be 21 foreclosed from objecting to the fairness or adequacy of the 22 proposed settlement, the judgment entered, and the award of 23 attorney’s fees, costs, and an incentive award to the class 24 representative unless otherwise ordered by the court; 25 (14) pending final determination of whether the settlement 26 should be ultimately approved, the court preliminarily enjoins 27 all class members (unless and until the class member has 28 submitted a timely and valid request for exclusion) from filing WAS EUV IN VEU OI Oe PY Ot VI Ot
1 or prosecuting any claims, suits, or administrative proceedings 2 regarding claims to be released by the settlement. 3 Dated: August 6, 2020 he ble 7H. (LA. 4 □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 5 UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24