1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 BARBARA KULIK, et al., Case No. 21-cv-03495-BLF
8 Plaintiffs, ORDER GRANTING IN PART (1) 9 v. MOTION FOR FINAL APPROVAL OF CLASS ACTION/COLLECTIVE 10 NMCI MEDICAL CLINIC INC, SETTLEMENT AND (2) MOTION FOR ATTORNEYS’ FEES, LITIGATION 11 Defendant. EXPENSES, AND CLASS REPRESENTATIVE INCENTIVE 12 AWARDS 13 [Re: ECF Nos. 59, 56]
14 15 Before the Court are (1) Plaintiffs’ Motion for Final Approval of Class/Collective Action 16 Settlement (“Final Approval Motion”) and (2) Plaintiffs’ Motion for Attorneys’ Fees, Litigation 17 Expenses, and Class Representative Incentive Awards (“Fee Motion”). See ECF Nos. 59, 56. 18 One opt-out has been filed and there are no objectors. The Court held a hearing on the motions on 19 March 1, 2023. For the reasons stated on the record and explained below, the Court GRANTS IN 20 PART both motions. 21 I. BACKGROUND 22 On May 10, 2021, Plaintiffs filed this lawsuit. ECF No. 2. On July 13, 2021, Plaintiffs 23 filed a First Amended Complaint (“FAC”), adding a claim under the California Private Attorneys 24 General Act (“PAGA”). ECF No. 17 (“FAC”). Plaintiffs and Class Members are hourly, non- 25 exempt Medical Assistants, Physician Assistants, and Nurse Practitioners. Final Approval Motion 26 at 2. 27 In the FAC, Plaintiffs allege off-the-clock work, including time spent completing 1 were scheduled to see patients every twenty minutes during the workday, but the appointments 2 would often last longer, which left Plaintiffs little time to perform their medical charting duties. 3 Id. ¶ 24. Plaintiffs allege that “Defendant would always discourage or outright refuse to allow 4 Plaintiffs and other Class Members to log overtime hours.” Id. ¶ 27. Further, at the end of 2019, 5 Defendant informed Class Members that they were “exempt” employees under state and federal 6 labor laws, and thus would not receive overtime premium wages. Id. The FAC includes nine 7 claims: (1) violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq.; (2) 8 violation of the California Labor Code §§ 223, 1194, 1194.2, 1197, 1197.1 and IWC Wage Order 9 4; (3) violation of the California Labor Code §§ 510, 1194, 1198, and IWC Wage Order 4; (4) 10 violation of the California Labor Code §§226.7 and 512; (5) violation of the California Labor 11 Code §§ 226, 1174; (6) violation of the California Labor Code § 2802; (7) violation of the 12 California Labor Code §§ 201, 202, 203; (8) violation of the California Business and Professions 13 Code § 17200, et seq.; and (9) violation of PAGA, Labor Code § 2699, et seq. FAC ¶¶ 66-130. 14 Plaintiffs seek to certify a FLSA collective action and Rule 23 class action. Id. ¶¶ 45-65. 15 The parties stipulated to attending private mediation on September 16, 2021. ECF No. 30. 16 The parties then engaged in informal discovery in preparation for mediation and to assist in 17 preparing mediation briefs. Final Approval Motion, Ex. B (“Stoops App. Decl.”) ¶ 14. Defendant 18 produced complete payroll and time data for 21 Class Members. Final Approval Motion at 4. 19 Plaintiffs’ counsel enlisted the services of a damages expert and forensic accountant to create a 20 class-wide damages model using this data produced by Defendant. Stoops App. Decl. ¶ 14. 21 In January 2022, the parties attended a mediation, but it was unsuccessful. Stoops App. 22 Decl. ¶ 14. On February 10, 2022, Plaintiffs’ counsel filed a motion for conditional certification 23 under 29 U.S.C. § 216(b). ECF No. 35. But before any other briefing was filed, the parties agreed 24 to attend a second mediation. Stoops App. Decl. ¶ 15. On March 1, 2022, the parties attended a 25 second mediation with nationally respected wage and hour mediator Gig Kyriacou, and they 26 reached a class-wide settlement of all claims asserted in the FAC. Id. ¶ 16. The parties executed a 27 Memorandum of Understanding that day, and they continued to negotiate the terms of the 1 Settlement and Withdrawal of Pre-Discovery Motion for Conditional Certification. ECF No. 39. 2 Parties filed their Motion for Preliminary Approval on June 10, 2022. ECF No. 45. The 3 Court held a hearing on the Motion for Preliminary Approval on October 20, 2022. See ECF No. 4 49. It entered an order granting preliminary approval on October 26, 2022. ECF No. 55 5 (“Preliminary Approval Order”). The Settlement provides for a Rule 23 class, a FLSA collective, 6 and a PAGA class, which are defined as follows: 7 Participating Class Members:
8 All of Defendant’s current and former hourly employees in California holding the positions of Medical Assistants, Physician 9 Assistants, and Nurse Practitioners during the Class Period (between May 10, 2017 through May 10, 2022) and who did not submit a 10 valid and timely Request for Exclusion (or opt-out) from the Class. 11 Participating FLSA Collective Members:
12 All of Defendant’s current and former hourly employees in California holding the positions of Medical Assistants, Physician 13 Assistants, and Nurse Practitioners during the FLSA Period (between May 10, 2018 through May 10, 2022) and who submit a 14 valid opt-in form. 15 PAGA Group Members:
16 All of Defendant’s current and former hourly employees in California holding the positions of Medical Assistants, Physician 17 Assistants and Nurse Practitioners during the PAGA Period (between May 10, 2020 through May 10, 2022). A PAGA Group 18 Member may not request exclusion from the PAGA portion of the Settlement and will have released all PAGA Claims as set forth in 19 Paragraph 3b above [of the Settlement] as of the Effective Date of [the Settlement]. 20 Final Approval Motion, Ex. A (“Settlement”) ¶ 10(a). 21 The Settlement provides for a non-reversionary Gross Fund Value (“GFV”) of 22 $875,000.00. Settlement ¶ 2. The Settlement allocates $20,000 to resolving the FLSA claims. Id. 23 ¶ 2(c). And it allocates an additional $20,000 to the PAGA claims. Id. ¶ 2(d). Of this amount, 24 75% ($15,000) will be distributed to the LDWA, and the additional 25% ($5,000) will be 25 distributed to the PAGA Group Members. Id. 26 The Net GFV, which is determined by subtracting out from the GFV the enhancement 27 awards for the class representatives, the settlement administration fees, the FLSA Penalty Payment 1 fund, the PAGA Payment fund, attorneys’ fees, and litigation expenses, will be distributed to the 2 class members on a pro-rata basis. Final Approval Motion at 5-6. It will be based on the number 3 of workweeks they worked during the Class Period with an adjustment based on the Class 4 Member’s position and rate of pay. Id. The $20,000 FLSA allocation will be distributed to 5 Participating FLSA Collective Members on a pro-rata basis. Id. at 6. And the $20,000 PAGA 6 allocation will be distributed to PAGA Group Members who worked during the PAGA period on a 7 pro-rata basis. Id. 8 After preliminary approval, the parties provided Notice of the Settlement in accordance 9 with the Preliminary Approval Order. See Final Approval Motion, Ex. C (“Kline Decl.”) ¶¶ 5-9. 10 Notice was mailed to 100 Class Members. Id. ¶ 8. 11 The deadline to submit a request for exclusion, to object to the Settlement, to submit a 12 FLSA opt-in form, or to dispute workweeks was December 30, 2022. Kline. Decl. ¶ 10. As of 13 February 10, 2023, the Settlement Administrator had received one request for exclusion and zero 14 objections. Id. ¶¶ 11-12. It also received 19 valid and timely FLSA opt-in forms and three late 15 FLSA opt-in forms; the parties decided they would accept the late forms. Id. ¶ 13. The Settlement 16 Administrator did not receive any disputes regarding workweeks. Id. ¶ 14. 17 Plaintiffs moved for final approval on February 16, 2023. See Final Approval Motion. 18 Plaintiffs ask the Court to (1) certify a class for settlement purposes under Rule 23 and certify a 19 FLSA collective for settlement purposes under 29 U.S.C. § 201; (2) approve the Parties’ 20 Settlement; (3) appoint Plaintiffs Barbara Kulik, James Eskridge, and Mary Dunning Garofalo, as 21 well as Opt-in Plaintiff Yadira Gomez, as Class Representatives for the Class/Collective and 22 Plaintiffs’ counsel as Class Counsel; (4) award fees to the third-party Settlement Administrator 23 Simpluris, Inc.; (5) award attorney fees; (6) approve litigation expenses; and (7) approve class 24 representative awards. See Final Approval Motion at 1; Fee Motion at 1. The Court heard 25 Plaintiffs’ motions on March 1, 2023. 26 II. LEGAL STANDARDS 27 A. Rule 23 1 purposes of settlement—may be settled . . . only with the court’s approval.” Fed. R. Civ. P. 23(e). 2 “Adequate notice is critical to court approval of a class settlement under Rule 23(e).” Hanlon v. 3 Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998), overruled on other grounds by Wal-Mart 4 Stores, Inc. v. Dukes, 564 U.S. 338 (2011). In addition, Rule 23(e) “requires the district court to 5 determine whether a proposed settlement is fundamentally fair, adequate, and reasonable.” Id. at 6 1026. In order to assess a settlement proposal, the district court must balance a number of factors:
7 (1) the strength of the plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of 8 maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the 9 stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction 10 of the class members to the proposed settlement. 11 Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (citing Hanlon, 150 F.3d at 12 1026)). 13 Settlements that occur before formal class certification also require a higher standard of 14 fairness. In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000). In reviewing such 15 settlements, in addition to considering the above factors, the court also must ensure that “the 16 settlement is ‘not the product of collusion among the negotiating parties.’” In re Bluetooth 17 Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011) (quoting In re Mego, 213 F.3d at 18 458). 19 B. FLSA 20 Court approval also is required for settlement of an FLSA collective action. See De Leon 21 v. Ricoh USA, Inc., No. 18-CV-03725-JSC, 2020 WL 1531331, at *6-7 (N.D. Cal. Mar. 31, 2020). 22 “The Ninth Circuit has not established the criteria that a district court must consider in 23 determining whether an FLSA settlement warrants approval.” Otey v. CrowdFlower, Inc., No. 12- 24 CV-05524-JST, 2014 WL 1477630, at *3 (N.D. Cal. Apr. 15, 2014). Most courts in this circuit 25 first determine whether the named plaintiff is “similarly situated” to the individuals in the 26 collective and then determine whether the settlement constitutes “a fair and reasonable resolution 27 of a bona fide dispute.” De Leon, 2020 WL 1531331, at *7 (quotation marks and citation 1 essentially the same as those that courts consider when evaluating a [class action] settlement’ 2 under Rule 23(e).” Id. (quoting Otey, 2014 WL 1477630, at *11). 3 C. PAGA 4 Finally, court approval is required for settlement of a PAGA claim. See Hudson v. Libre 5 Tech. Inc., No. 3:18-CV-1371-GPC-KSC, 2020 WL 2467060, at *8 (S.D. Cal. May 13, 2020). 6 “While PAGA requires a trial court to approve a PAGA settlement, district courts have noted there 7 is no governing standard to review PAGA settlements.” Id. Some district courts have looked to 8 the factors governing Rule 23 class action settlements for guidance in evaluating PAGA 9 settlements. See, e.g., Wanderer v. Kiewit Infrastructure W. Co., No. 2:18-CV-02898 WBS-DB, 10 2020 WL 5107618, at *2 (E.D. Cal. Aug. 31, 2020). This Court does not find that approach to be 11 appropriate given the Ninth Circuit's recent emphasis on the differences between representative 12 actions under PAGA and class actions under Rule 23. See Canela v. Costco Wholesale Corp., 971 13 F.3d 845, 851 (9th Cir. 2020). In Canela, the Ninth Circuit observed that “in a PAGA suit, the 14 court does not inquire into the named plaintiff's and class counsel's ability to fairly and adequately 15 represent unnamed employees—critical requirements in federal class actions.” Id. (quotation 16 marks and citation omitted). The Ninth Circuit went on to make the point that “unlike Rule 23(a), 17 PAGA contains no requirements of numerosity, commonality, or typicality.” Id. (citation 18 omitted). 19 Other district courts have found it appropriate to approve a PAGA settlement where “the 20 settlement terms (1) meet the statutory requirements set forth by PAGA, and (2) are fundamentally 21 fair, reasonable, and adequate in view of PAGA's public policy goals.” Chamberlain v. Baker 22 Hughes, a GE Co., LLC, No. 1:19-cv-00831-DAD-JLT, 2020 WL 4350207, at *4 (E.D. Cal. July 23 29, 2020). The statute requires that 75% of civil penalties recovered be allocated to the California 24 Labor and Workforce Development Agency (“LWDA”) and 25% be allocated to aggrieved 25 employees. See id. PAGA's goals include “augmenting the state's enforcement capabilities, 26 encouraging compliance with Labor Code provisions, and deterring noncompliance.” Id. (quoting 27 O’Connor v. Uber Techs., Inc., 201 F. Supp. 3d 1110, 1132-33 (N.D. Cal. 2016)). The Court finds III. ANALYSIS 1 A. Class and Collective Claims 2 The Court will first address certification of a Rule 23 class and an FLSA collective. It will 3 then turn to the settlement itself. 4 1. Certification 5 a. Rule 23(a) and (b) Class Action 6 A class action is maintainable only if it meets the four Rule 23(a) prerequisites: 7 (1) the class is so numerous that joinder of all members is 8 impracticable;
9 (2) there are questions of law or fact common to the class;
10 (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and 11 (4) the representative parties will fairly and adequately protect the 12 interests of the class. 13 Fed. R. Civ. P. 23(a). In a settlement-only certification context, the “specifications of the Rule . . . 14 designed to protect absentees by blocking unwarranted or overbroad class definitions . . . demand 15 undiluted, even heightened, attention[.]” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 16 (1997). “Such attention is of vital importance, for a court asked to certify a settlement class will 17 lack the opportunity, present when a case is litigated, to adjust the class, informed by the 18 proceedings as they unfold.” Id. 19 In addition to the Rule 23(a) prerequisites, “parties seeking class certification must show 20 that the action is maintainable under Rule 23(b)(1), (2), or (3).” Amchem Prods., Inc., 521 U.S. at 21 614. Rule 23(b)(3), relevant here, requires that (1) “questions of law or fact common to class 22 members predominate over any questions affecting only individual members” and (2) “a class 23 action is superior to other available methods for fairly and efficiently adjudicating the 24 controversy.” Fed. R. Civ. P. 23(b)(3). The “pertinent” matters to these findings include:
25 (A) the class members’ interests in individually controlling the prosecution or defense of separate actions; 26 (B) the extent and nature of any litigation concerning the 27 controversy already begun by or against class members; the claims in the particular forum; and 1 (D) the likely difficulties in managing a class action. 2 Id. 3 First, the Settlement Class comprises approximately 100 employees potentially impacted 4 by the allegations raised in this case, and the individual joinder of that many persons would be 5 impracticable. See Litty v. Merrill Lynch & Co., No. CV 14-0425 PA (PJWx), 2015 WL 4698475, 6 at *3 (C.D. Cal. Apr. 27, 2015) (“[N]umerosity is presumed where the plaintiff class contains forty 7 or more members.”). Second, class members share common questions of law and fact pertaining 8 to whether Defendant violated wage and hour laws by, for example, requiring class members to 9 complete medical paperwork outside of work hours. Third, the claims of Kulik, Eskridge, 10 Garafolo, and Gomez as the class representatives are typical of the class, arising from Defendant’s 11 alleged actions regarding its policies as to off-the-clock work. The representation is also adequate 12 because there are no known conflicts of interest with proposed class members and Class Counsel 13 is experienced in wage and hour class action lawsuits such as this. Lastly, questions of law and 14 fact common to class members predominate over questions affecting only individuals, and 15 certification of a Rule 23(b)(3) opt-out settlement class action for purposes of settlement is 16 superior to other available means of adjudicating this dispute. 17 Accordingly, the Court concludes that the requirements of Rule 23 are met and thus that 18 certification of the class for settlement purposes is appropriate. 19 b. FLSA Collective 20 Plaintiffs also seek certification of an FLSA collective. As stated above, in deciding to 21 certify an FLSA collective, most courts in this circuit first determine whether the named plaintiff 22 is “similarly situated” to the individuals in the collective. De Leon, 2020 WL 1531331, at *7. 23 Here, the Court already preliminarily approved an FLSA collective. See Preliminary Approval 24 Order. Since that preliminary approval, the Settlement Administrator sent out notice regarding the 25 FLSA collective. Kline Decl. ¶¶ 5-9. And 22 individuals have opted into the FLSA collective. 26 Id. ¶ 15. The Court determines that Plaintiffs are similarly situated to the putative collective 27 members, for the reasons discussed above. 1 Accordingly, the Court grants certification of an FLSA collective for settlement purposes. 2 2. Settlement Approval 3 As discussed above, the Court must determine that the settlement is fair, reasonable, and 4 adequate. See Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). In addition, “[a]dequate 5 notice is critical to court approval of a class settlement under Rule 23(e).” Hanlon, 150 F.3d at 6 1025. And because settlement is prior to class certification, the Court must ensure that “the 7 settlement is ‘not the product of collusion among the negotiating parties.’” In re Bluetooth, 654 8 F.3d at 947 (quoting In re Mego, 213 F.3d at 458). The Court considers “essentially the same” 9 factors in evaluating settlement of an FLSA collective action as it considers in evaluating 10 settlement of a Rule 23 class action. De Leon, 2020 WL 1531331, at *7. Accordingly, the 11 settlement of the class and collective claims in this case are considered together. See 12 id. (evaluating settlement of class and collective actions together). 13 a. The Settlement is Fundamentally Fair, Adequate, and Reasonable 14 Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a 15 certified class . . . may be settled, voluntarily dismissed, or compromised only with the court’s 16 approval.” Fed. R. Civ. P. 23(e). “Adequate notice is critical to court approval of a class 17 settlement under Rule 23(e).” Hanlon, 150 F.3d at 1025. Moreover, “[a] district court’s approval 18 of a class-action settlement must be accompanied by a finding that the settlement is ‘fair, 19 reasonable, and adequate.’” Lane v. Facebook, Inc., 696 F.3d 811, 818 (9th Cir. 2012) (quoting 20 Fed. R. Civ. P. 23(e)). “[A] district court’s only role in reviewing the substance of that settlement 21 is to ensure that it is fair, adequate, and free from collusion.” Id. at 819 (internal quotation marks 22 and citation omitted). In making that determination, the district court is guided by an eight-factor 23 test articulated by the Ninth Circuit in Hanlon. Those factors include:
24 the strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout 25 the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a 26 governmental participant; and the reaction of the class members to the proposed settlement. 27 Hanlon, 150 F.3d at 1026; see also Lane, 696 F.3d at 819 (discussing Hanlon factors). 1. Notice Was Adequate 1 The Court previously approved Plaintiffs’ plan for providing notice to the class when it 2 granted preliminary approval of the class/collective action settlement. See Preliminary Approval 3 Order. Prior to granting preliminary approval, the Court carefully examined the proposed class 4 notice and notice plan, and it determined that the plan complied with Federal Rule of Civil 5 Procedure 23 and the constitutional requirements of Due Process. See id. Plaintiffs now provide a 6 declaration from a Senior Project Manager at the Settlement Administrator explaining the 7 implementation of the plan. See Kline. Decl. Based on that declaration, the Settlement 8 Administrator complied with the notice plan, and it provided notice by mail to all 100 class 9 members. See id. ¶¶ 5-9. Based on the implementation details of the notice plan, the Court is 10 satisfied that the class members have received the “best notice that is practicable under the 11 circumstances.” Fed. R. Civ. P. 23(c)(2)(B). 12 2. Hanlon Factors 13 The Court now turns to the Hanlon factors. Under the first and second factors, the court 14 considers (1) the strength of Plaintiffs’ case, weighing the likelihood of success on the merits and 15 the range of possible recovery; and (2) the risk, expense, complexity, and duration of further 16 litigation. See Hanlon, 150 F.3d at 1026. Plaintiffs recognize the inherent risks in going to trial, 17 especially because Defendant contests liability. Final Approval Motion at 16-17. Further, they 18 note that litigation would require substantial additional discovery and pre-trial motions, which 19 would be expensive and lengthy. Id. Accordingly, Plaintiffs’ success was not assured, and 20 significant risk, expense, complexity, and time likely lay ahead if the parties did not settle. 21 Therefore, the Court finds that the first and second Hanlon factors favor settlement. 22 Under the third factor—the risk of maintaining class action status throughout the trial—the 23 Court had not yet granted class certification, so there was some risk. See Hanlon, 150 F.3d at 24 1026. 25 Fourth, the settlement recovery for the class members is substantial given the 26 circumstances of the case. The average estimated payout is $5,636.41 and the highest estimated 27 payout is $43,742.17. Final Approval Motion at 1. The Court finds this to be a significant payout, 1 particularly considering the scale of the alleged harm. 2 Under the fifth Hanlon factor, courts consider “the extent of discovery completed and the 3 stage of the proceedings.” Hanlon, 150 F.3d at 1026. In this case, settlement was reached after 4 some discovery, including production of payroll and time data and the use of an expert to create a 5 damages model. Final Approval Motion at 3-4. The Court is satisfied that the parties were 6 sufficiently familiar with the issues in this case to have informed opinions regarding its strengths 7 and weaknesses under factor five. 8 The sixth Hanlon factor—the experience and views of counsel—favors approving the 9 settlement. See Hanlon, 150 F.3d at 1026. Class Counsel’s conclusion is that the Settlement is 10 fair and reasonable and in the best interest of the settlement class. Final Approval Motion at 14; 11 Stoops App. Decl. ¶ 28. Further, Class Counsel has demonstrated their thorough understanding of 12 the strengths and weaknesses of this case and their extensive experience litigating similar cases. 13 See In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2008) (finding class 14 counsel’s recommendation in favor of settlement presumptively reasonable because counsel 15 demonstrated knowledge about the case and the type of litigation in general). 16 The seventh Hanlon factor is neutral, since there was no government participant in the 17 case. See Hanlon, 150 F.3d at 1026. 18 Under the eighth Hanlon factor, the Court considers the “reaction of the class members to 19 the proposed settlement.” See Hanlon, 150 F.3d at 1026. While notice was given to 100 class 20 members, no objections have been filed and there has been only one opt-out from the class. See 21 Kline Decl. ¶¶ 10-14. 22 Based on those factors, and after considering the record as a whole guided by the Hanlon 23 factors, the Court finds that notice of the proposed settlement was adequate, the settlement is not 24 the result of collusion, and that the settlement is fair, adequate, and reasonable. 25 b. The Bluetooth Factors 26 In addition to the factors considered above, the Court must also take into account that this 27 settlement occurred before formal class certification. Thus, the settlement must meet a higher 1 “an even higher level of scrutiny for evidence of collusion or other conflicts of interest than is 2 ordinarily required under Rule 23(e) before securing the court's approval as fair.” In re Bluetooth, 3 654 F.3d at 946. “Collusion may not always be evident on the face of a settlement, and courts 4 therefore must be particularly vigilant not only for explicit collusion, but also for more subtle 5 signs that class counsel have allowed pursuit of their own self-interests and that of certain class 6 members to infect the negotiations.” Id. at 947. Signs of subtle collusion include:
7 (1) when counsel receive a disproportionate distribution of the settlement, or when the class receives no monetary distribution but 8 class counsel are amply rewarded;
9 (2) when the parties negotiate a “clear sailing” arrangement providing for the payment of attorneys’ fees separate and apart from 10 class funds, which carries the potential of enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel 11 accepting an unfair settlement on behalf of the class; and
12 (3) when the parties arrange for fees not awarded to revert to defendants rather than be added to the class fund. 13 Id. (internal quotations marks and citations omitted). 14 The Settlement Agreement in this case does not include any of these warning signs and 15 contains no indication of a collusive deal. The first factor is not present, as all class members are 16 entitled to monetary relief based on the number of hours worked during the Class Period. There is 17 also no “clear sailing” provision because the attorneys’ fees, discussed below, represent a 18 reasonable percentage of the common settlement fund and are also comparable to the lodestar. 19 The service awards, discussed below, are also not indicative of a collusive deal because a $5,000 20 award amount is “presumptively reasonable” in the Ninth Circuit. See, e.g., Smith v. Am. 21 Greetings Corp., No. 14-cv-02577-JST, 2016 WL 362395, at *10 (N.D. Cal. Jan. 29, 2016). In 22 regards to the third factor, the proposed settlement is non-reversionary. 23 Importantly, the parties reached the proposed settlement after an extensive arm’s-length, 24 non-collusive mediation with the assistance of an experienced mediator in the wage and hour class 25 action field, Gig Kyriacou. Stoops App. Decl. ¶ 16; see G. F. v. Contra Costa Cnty., No. 13- 26 03667-MEJ, 2015 WL 4606078, at *13 (N.D. Cal. July 30, 2015) (noting that “[t]he assistance of 27 an experienced mediator in the settlement process confirms that the settlement is non-collusive”). 1 Accordingly, the Court concludes that none of the Bluetooth factors are present and the proposed 2 settlement does not raise an inference of collusion. 3 B. PAGA Claims 4 As discussed above, the Court will approve settlement of a PAGA claim if “the settlement 5 terms (1) meet the statutory requirements set forth by PAGA, and (2) are fundamentally fair, 6 reasonable, and adequate in view of PAGA's public policy goals.” Chamberlain, 2020 WL 7 4350207, at *4. 8 With respect to the statutory requirements, PAGA provides that 75% of civil penalties 9 recovered must be allocated to the LWDA and 25% must be allocated to aggrieved employees. 10 See Chamberlain, 2020 WL 4350207, at *4. That requirement is met here, as the PAGA recovery 11 is $20,000, of which $15,000 is allocated to the LWDA and $5,000 to class members. 12 The Court finds the Settlement to be fair, reasonable, and adequate for the reasons 13 discussed above. Moreover, the Settlement will promote PAGA's public policy goals, which 14 include “augmenting the state's enforcement capabilities, encouraging compliance with Labor 15 Code provisions, and deterring noncompliance.” Chamberlain, 2020 WL 4350207, at *4 (quoting 16 O’Connor, 201 F. Supp. 3d at 1132-33). The PAGA claim reached conduct not directly addressed 17 by the state, and it resulted in the state's recovery of $15,000 in civil penalties. Imposition of those 18 penalties will encourage future compliance with the California Labor Code. 19 C. Attorney’s Fees and Costs 20 1. Legal Standard 21 “While attorneys’ fees and costs may be awarded in a certified class action where so 22 authorized by law or the parties’ agreement, Fed. R. Civ. P. 23(h), courts have an independent 23 obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have 24 already agreed to an amount.” In re Bluetooth, 654 F.3d at 941. “Where a settlement produces a 25 common fund for the benefit of the entire class,” as here, “courts have discretion to employ either 26 the lodestar method or the percentage-of-recovery method” to determine the reasonableness of 27 attorneys’ fees. Id. at 942. 1 a percentage of the common fund recovered for the class. Bluetooth, 654 F.3d at 942. Courts 2 applying this method “typically calculate 25% of the fund as the benchmark for a reasonable fee 3 award, providing adequate explanation in the record of any special circumstances justifying a 4 departure.” Id. (internal quotation marks omitted). However, “[t]he benchmark percentage should 5 be adjusted, or replaced by a lodestar calculation, when special circumstances indicate that the 6 percentage recovery would be either too small or too large in light of the hours devoted to the case 7 or other relevant factors.” Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 8 (9th Cir. 1990). Relevant factors to a determination of the percentage ultimately awarded include: 9 “(1) the results achieved; (2) the risk of litigation; (3) the skill required and quality of work; (4) the 10 contingent nature of the fee and the financial burden carried by the plaintiffs; and (5) awards made 11 in similar cases.” Tarlecki v. bebe Stores, Inc., No. C 05–1777 MHP, 2009 WL 3720872, at *4 12 (N.D. Cal. Nov. 3, 2009) (citing Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048-50 (9th Cir. 13 2002)). 14 Under the lodestar method, attorneys’ fees are “calculated by multiplying the number of 15 hours the prevailing party reasonably expended on the litigation (as supported by adequate 16 documentation) by a reasonable hourly rate for the region and for the experience of the lawyer.” 17 Bluetooth, 654 F.3d at 941. This amount may be increased or decreased by a multiplier that 18 reflects factors such as “the quality of representation, the benefit obtained for the class, the 19 complexity and novelty of the issues presented, and the risk of nonpayment.” Id. at 941-42 20 (quoting Hanlon, 150 F.3d at 1029). 21 In common fund cases, a lodestar calculation may provide a cross-check on the 22 reasonableness of a percentage award. Vizcaino, 290 F.3d at 1050. Where the attorneys’ 23 investment in the case “is minimal, as in the case of an early settlement, the lodestar calculation 24 may convince a court that a lower percentage is reasonable.” Id. “Similarly, the lodestar 25 calculation can be helpful in suggesting a higher percentage when litigation has been protracted.” 26 Id. Thus, even when the primary basis of the fee award is the percentage method, “the lodestar 27 may provide a useful perspective on the reasonableness of a given percentage award.” Id. “The 1 [courts] may rely on summaries submitted by the attorneys and need not review actual billing 2 records.” Covillo v. Specialtys Cafe, No. C–11–00594–DMR, 2014 WL 954516, at *6 (N.D. Cal. 3 Mar. 6, 2014) (quoting In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 306-07 (3d Cir. 2005)) 4 (alterations in original). 5 An attorney is also entitled to “recover as part of the award of attorney’s fees those out-of- 6 pocket expenses that would normally be charged to a fee paying client.” Harris v. Marhoefer, 7 24 F.3d 16, 19 (9th Cir. 1994) (internal quotation marks and citation omitted). 8 2. Discussion 9 Class Counsel seeks an award of attorneys’ fees of $262,500. Fee Motion at 1. This 10 award is 30% of the value of the settlement. Id. And they seek an award of $14,272.32 in 11 litigation expenses. Id. at 11. 12 The Court first approves the $14,272.32 in costs. The Court has reviewed Class Counsel’s 13 itemized lists of costs and finds that all of the expenses were necessary to the prosecution of this 14 litigation. See Fee Motion, Ex B (“Stoops Fee Decl.”) ¶ 51. 15 Counsel seeks attorneys’ fees in the amount of $262,500, which is 30% of the value of the 16 settlement and a 1.95 multiplier based on the $129,328 lodestar. Fee Motion at 1. Looking at the 17 lodestar crosscheck, the Court determines that the multiplier is too high for a fairly routine wage 18 and hour case with excellent results. 19 The Court will approve an attorneys’ fee award of $236,250 as reasonable and in line with 20 rates approved in this District for attorneys of similar skill and experience. The fee award is 27% 21 of the constructive fund, which is just above the 25% “benchmark” in this circuit. Bluetooth, 654 22 F.3d at 942. “[I]t is common practice to award attorneys’ fees at a higher percentage than the 25% 23 benchmark in cases that involve a relatively small—i.e., under $10 million—settlement fund.” 24 Thieriot v. Celtic Ins. Co., No. C 10-04462 LB, 2011 WL 1522385, at *6 (N.D. Cal. Apr. 21, 25 2011). The settlement fund here is under $1 million. Further, the Court notes that Plaintiffs’ 26 Counsel were working on a contingent fees basis, which carries a risk, and they achieved strong 27 results for the class. See Tarlecki, 2009 WL 3720872, at *4. As stated above, the lodestar is 1 approved by multiple courts in California. See Fee Motion at 9-10; Stoops Fee Decl. ¶ 33. 2 Further, the Court finds the number of hours expended to be reasonable. See Reply at 1; Stoops 3 Fee Decl. ¶¶ 34, 36; Reply, Ex. A (“Stoops Supp. Fee Decl.”) ¶ 3. Using $129,328 as the lodestar 4 results in a multiplier of approximately 1.83. The Ninth Circuit has recognized that multipliers 5 generally range from 1 to 4. See Vizcaino, 290 F.3d at 1051 n.6. District courts within the Ninth 6 Circuit commonly apply multipliers in that range in California wage and hour class actions. See, 7 e.g., Uschold v. NSMG Shared Servs., LLC, No. 18-cv-01039-JSC, 2020 WL 3035776, at *16 8 (N.D. Cal. June 5, 2020) (applying multiplier of 4); De Leon, 2020 WL 1531331, at *18 (applying 9 multiplier of 1.09); Ridgeway v. Wal-Mart Stores Inc., 269 F. Supp. 3d 975, 999 (N.D. Cal. 2017) 10 (applying multiplier of 2.0). The Court considers 1.83 to be a reasonable multiplier, particularly in 11 light of the significant effort Class Counsel expended litigating this case, and it adjusts the 12 percentage of the settlement fund accordingly. 13 Accordingly, the Court approves a fee award of $236,250. 14 D. Service Award 15 Named Plaintiffs Barbara Kulik, James Eskridge, Mary Dunning Garofalo, and Yadira 16 Gomez each seek a service award of $5,000. See Fee Motion at 2. Incentive awards “are 17 discretionary . . . and are intended to compensate class representatives for work done on behalf of 18 the class, to make up for financial or reputational risk undertaken in bringing the action, and, 19 sometimes, to recognize their willingness to act as a private attorney general.” Rodriguez v. W. 20 Publ’g Corp., 563 F.3d 948, 958-59 (9th Cir. 2009) (internal citation omitted). 21 “Incentive awards typically range from $2,000 to $10,000.” Bellinghausen v. Tractor 22 Supply Co., 306 F.R.D. 245, 267 (N.D. Cal. 2015). The Court typically awards an enhancement 23 award around $5,000. See Wong v. Arlo Techs., Inc., No. 5:19-cv-00372-BLF, 2021 WL 24 1531171, at *12 (N.D. Cal. Apr. 19, 2021) (“Service awards as high as $5,000 are presumptively 25 reasonable in this judicial district.”). 26 Each Plaintiff submitted a declaration indicating the work they did on the case. See Fee 27 Motion, Exs. C (“Kulik Decl.”), D (“Eskridge Decl.”), E (“Garofalo Decl.”), F (“Gomez Decl.”). 1 Court determines that an award of $5,000 is reasonable for Plaintiffs Kulik and Garofalo. Both 2 Plaintiffs filed the case on May 10, 2021; Kulik estimates she spent 40-72 hours on the case and 3 Garofalo estimates she spent 20-30 hours on the case. Kulik Decl. ¶¶ 2, 16; Garofalo Decl. ¶¶ 2, 4 16. And the Court determines that an award of $3,000 is reasonable for Plaintiffs Eskridge and 5 Gomez. Eskridge and Gomez estimate that they spent 10-12 hours and 6-7 hours on the case, 6 respectively. Eskridge Decl. ¶ 16; Gomez Decl. ¶ 15. They also took the reputational risk 7 inherent in bringing the action. See Rodriguez, 563 F.3d at 958-59. 8 Accordingly, the Court approves a $5,000 service award for both Kulik and Garofalo and a 9 $3,000 service award for both Eskridge and Gomez. 10 E. Administrative Costs 11 Plaintiffs also request settlement administration fees in the amount of $4,495 for the 12 settlement administrator, Simpluris. See Final Approval Motion at 1; Kline Decl. ¶ 18. The Court 13 finds this amount reasonable and approves the request. 14 // 15 // 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // IV. ORDER For the foregoing reasons, IT IS HEREBY ORDERED that: 2 (1) A class for settlement purposes under Rule 23 and a FLSA collective for settlement 3 purposes under 29 U.S.C. § 201 are CERTIFIED; 4 (2) The Settlement is APPROVED IN PART, as discussed in this Order; 5 (3) Plaintiffs Barbara Kulik, James Eskridge, and Mary Dunning Garofalo, as well as 6 Opt-in Plaintiff Yadira Gomez, are APPOINTED as Class Representatives; 4 (4) Plaintiffs’ counsel is APPOINTED as Class Counsel; 8 (5) $236,250 in attorneys’ fees for Class Counsel are APPROVED; 9 (6) $14,272.32 in costs for Class Counsel are APPROVED; 10 (7) Service awards for Kulik and Garofalo of $5,000 each are APPROVED; ll (8) Service awards for Eskridge and Gomez of $3,000 each are APPROVED; a 12 (9) Fees to the third-party Settlement Administrator of $4,495 are APPROVED; and 13 (10) The timely request for exclusion by Teresa Bonilla is APPROVED. i
15 Dated: March 13, 2023 OQ 16
= 17 BETH LABSON FREEMAN United States District Judge 18 19 20 21 22 23 24 25 26 27 28