1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 FRANCISCO LOPEZ, individually and on Case No.: 22-cv-1414-RSH-KSC behalf of all others similarly situated, 12 ORDER ON FINAL APPROVAL OF Plaintiff, 13 CLASS ACTION SETTLEMENT AND v. MOTION FOR ATTORNEYS’ FEES, 14 COSTS, INCENTIVE AWARD, AND VELOCITY TRANSPORT LLC, et al., 15 SETTLEMENT ADMINISTRATION Defendants. EXPENSES 16
17 [ECF Nos. 49, 50]
18 19 20 Before the Court is an unopposed motion for final approval of class action 21 settlement [ECF No. 49] and motion for attorneys’ fees, costs, an incentive award, and 22 settlement administration expenses [ECF No. 50], filed by Plaintiff Francisco Lopez (the 23 “Motions”). A final approval hearing was held on September 19, 2024. ECF No. 53. For 24 the reasons below, the Court grants as modified Plaintiff’s Motions. 25 I. BACKGROUND 26 A. Factual Background 27 The instant case is a wage and hour class action and California Private Attorneys 28 General Act (“PAGA”), Cal. Lab. Code § 2698 et seq., representative action filed against 1 Defendants Velocity Transport, LLC (“Velocity”), Amazon.com, LLC, and Amazon 2 Logistics, Inc. (the “Amazon Defendants”). 3 Defendant Velocity is a former delivery service partner to the Amazon Defendants 4 and “provided local transportation and delivery services for packages” from Amazon 5 warehouses to Amazon customers. Declaration of David A. Huch (“Huch Decl.,” ECF 6 No. 49-2) ¶ 5. Plaintiff was employed by Velocity in San Diego County as a non-exempt 7 Delivery Associate from November 2019 to November 2021. Id.; ECF No. 42 ¶ 8. The 8 Second Amended Complaint (“SAC”), the operative complaint, sets forth two main 9 theories of liability: (1) that Defendants failed to pay Plaintiff and other similarly situated 10 employees for the actual number of hours worked, regular and overtime; and (2) that 11 Defendants required employees to work during meal and rest periods during the Class 12 Period. ECF No. 42 ¶¶ 2–3; 49-1 at 22.1 13 B. Procedural History 14 On March 17, 2022, Plaintiff initiated the instant putative class action against 15 Defendants in California Superior Court. ECF No. 1-3 at 35–60. On March 24, 2022, 16 Plaintiff filed a First Amended Complaint (“FAC”) adding a claim under PAGA. Id. at 17 1–34. Velocity subsequently removed the action to this Court under the Class Action 18 Fairness Act (“CAFA”). ECF No. 1 at 7. 19 Following extensive informal and formal discovery, the Parties attended a full day 20 mediation via videoconference with mediator Scott S. Markus, Esq., and ultimately 21 accepted a mediator’s proposal. Huch Decl. ¶¶ 15–19. On November 13, 2023, the 22 Parties filed a notice of settlement with the Court. ECF No. 35. On February 2, 2024, the 23 Parties filed a joint motion for leave to file a Second Amended Complaint (“SAC”) to 24 further the Parties’ proposed settlement, seeking to add a claim pursuant to California 25 Labor Code § 2810.3, alleging that the Amazon Defendants are “client employers” liable 26
27 1 All citations to electronic case filing (“ECF”) entries refer to the ECF-generated 28 1 for “labor contractor” Velocity’s failure to pay wages to Plaintiff and the proposed class. 2 ECF No. 40 at 4. The Court granted the Parties’ motion for leave and Plaintiff 3 subsequently filed the SAC. ECF Nos. 41, 42. 4 The SAC asserts claims for: (1) failure to pay overtime (Cal. Lab. Code §§ 510, 5 1194); (2) failure to pay regular pay/minimum wages (Cal. Lab. Code §§ 1182.11, 6 1182.12, 1194, 1194.2, 1197, 1197.1; Cal. Code Regs. tit. 8, § 11090); (3) failure to 7 provide meal periods, or compensation in lieu thereof (Cal. Lab. Code §§ 226.7, 512); (4) 8 failure to authorize and permit rest periods, or compensation in lieu thereof (Cal. Lab. 9 Code § 226.7); (5) failure to provide accurate itemized wage statements (Cal. Lab. Code 10 §§ 226, 226.3); (6) failure to pay compensation when due at time of separation of 11 employment (Cal. Lab. Code §§ 201–203); (7) sharing of liability with a labor contractor 12 (Cal. Lab. Code § 2810.3); (8) unlawful and unfair business practices (Cal. Bus. & Prof. 13 Code § 17200 et seq.); and (9) civil penalties under PAGA (Cal. Lab. Code § 2698 et 14 seq.). FAC ¶¶ 81–172. 15 On April 18, 2024, the Court granted Plaintiff’s unopposed preliminary approval 16 motion. ECF No. 48. The Court determined that, for settlement purposes, the 17 prerequisites for a class action under Federal Rule of Civil Procedure 23(a) were satisfied 18 and this action was maintainable as a class action under Federal Rule of Civil Procedure 19 23(b)(3). Id. at 5–12. The Court further preliminarily concluded the proposed settlement 20 was fair, reasonable, and adequate under the Rule 23(e) factors, the settlement complied 21 with PAGA, and the Parties’ proposed notice plan as the “best notice practicable under 22 the circumstances[.]” Id. at 12–22, 24–25. 23 On August 22, 2024, Plaintiff filed the instant unopposed motion for final approval 24 of class action settlement [ECF No. 49] and motion for attorneys’ fees, costs, incentive 25 award, and settlement administration expenses [ECF No. 50]. A final approval hearing 26 was held on September 19, 2024. ECF No. 53. On September 26, 2024, Class Counsel 27 filed a supplemental brief attaching their timesheets in this matter. ECF No. 54. 28 /// 1 II. SETTLEMENT AGREEMENT TERMS 2 A. Proposed Settlement Class 3 The “Joint Stipulation of Class and PAGA Action Settlement and Release of 4 Claims” (“Settlement Agreement,” ECF No. 49-2 at 19–68) defines “Class Members” or 5 “Settlement Class Members” as “all individuals who previously were employed by 6 [Velocity] in California as non-exempt employees at any time during the Class Period.” 7 Settlement Agreement ¶ I.6. The “Class Period” is defined as the period from March 17, 8 2018 through the preliminary approval date of April 18, 2024. Id. ¶ I.7; ECF No. 48. 9 B. Proposed Monetary Relief 10 Under the Settlement Agreement, Defendants have agreed to pay a maximum gross 11 settlement totaling $602,058. Settlement Agreement ¶ I.18. The following will be 12 deducted from the gross settlement: (1) Settlement Administration Costs, not to exceed 13 $9,260; (2) a Class Representative Service Award of up to $25,000; (3) attorneys’ fees, 14 not to exceed one-third of the maximum settlement amount, or $200,686; (4) Class 15 Counsel costs, not to exceed $9,450; and (5) $20,000 as PAGA penalties, of which 16 $15,000 (75%) will be paid to the Labor and Workforce Development Agency 17 (“LWDA”), and $5,000 (25%) will be distributed on a pro rata basis to Class Members 18 who worked during the PAGA Period. Id. ¶¶ III.15, 20–22, 25.2 Velocity’s share of 19 payroll taxes will be paid separately from and in addition to the gross settlement amount. 20 Id. ¶ III.15. 21 After deductions, the Settlement Agreement anticipates the net settlement amount 22 to be $337,302. Id. Each of the 484 Class Members will receive a portion of the net 23 settlement, calculated by dividing the net settlement amount by the total number of 24 workweeks worked by all Class Members during the Class Period and then multiplying 25 the workweek value worked by each Class Member. Id. ¶ III.17. Class Members who 26
27 2 The “PAGA Period” is defined as “the period from March 17, 2021” through the 28 1 worked during the PAGA period will receive a pro rata share of the PAGA payment 2 calculated using a similar formula. Id. Class Members who do not opt out will be mailed 3 a settlement payout. Id. ¶¶ III.16–III.17. 4 Class Counsel estimates that the settlement will yield an “average payout” of 5 approximately $700 per Class Member. Huch Decl. ¶ 4. Class Members who worked the 6 highest number of workweeks will receive over $2,000 each, with a maximum individual 7 settlement award of $3,882.12 to an employee who worked throughout the entire class 8 period. Id. There are 188 PAGA members who will be paid a portion of the PAGA 9 settlement, with an average payout of $26.60. Declaration of Gillian McCreedy 10 (“McCreedy Decl.,” ECF No. 49-4) ¶ 17. 11 None of the settlement amount will revert to Defendants. Settlement Agreement 12 ¶ III.15. If any settlement checks remain uncashed after 180 days of mailing, the amount 13 will be paid to the California State Controller Unclaimed Property Fund. Id. ¶ III.19. 14 C. Release 15 Under the Settlement Agreement, Class Members agree to release their claims for: 16 [A]ny and all causes of action, claims, demands, rights, and liability, 17 alleged or that could have been alleged in the Complaint and letters previously submitted by Plaintiff to the LWDA on March 17, 2022 18 and August 1, 2022 based on the facts and allegations alleged therein 19 including claims for violations of the California Labor Code and any other local, state, or federal law, statute, regulation or ordinance, 20 including the Fair Labor Standards Act, through the Class Period. This 21 Release specifically includes claims for any wages, statutory penalties, civil penalties, liquidated damages, interest, restitution, 22 attorneys’ fees or costs for the claims alleged in the Complaint 23 including but not limited to claims for failure to pay minimum or overtime wages, failure to provide meal and rest periods or to pay 24 meal and rest period premiums, failure to pay all wages due to 25 discharged or quitting employees, failure to provide accurate itemized wage statements; claims under California Labor Code sections 201 to 26 204, 210, 218.5, 218.6, 226, 226.3, 226.7, 227.3, 246, 510, 512, 558, 27 1174, 1174.5, 1194, 1194.2, 1197, 1197.1, 1198, 2698 et seq, 2802, 2810.3, and the Wage Orders promulgated thereunder, California 28 1 Business and Professions Code section 17200, et seq.; and claims for injunctive relief, punitive damages, penalties of any nature (including 2 PAGA civil penalties and statutory penalties), interest, fees, and costs. 3 4 Id. ¶ III.1.a. 5 III. FINAL APPROVAL OF CLASS ACTION SETTLEMENT 6 A. Class Certification 7 The Court’s “threshold task” prior to granting final approval “is to ascertain 8 whether the proposed settlement class satisfies the requirements of Rule 23(a) of the 9 Federal Rules of Civil Procedure applicable to class actions, “namely: (1) numerosity, 10 (2) commonality, (3) typicality, and (4) adequacy of representation.” Hanlon v. Chrysler 11 Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). The Court must also determine whether “the 12 action is maintainable under Rule 23(b)(1), (2), or (3).” Dunleavy v. Nadler (In re Mego 13 Fin. Corp. Sec. Litig.), 213 F.3d 454, 462 (9th Cir. 2000) (internal quotation marks 14 omitted). 15 At the preliminary approval stage, the Court certified the following class under 16 Rule 23(b)(3) for settlement purposes: 17 [A]ll individuals who were employed by Defendant Velocity 18 Transport LLC in California as non-exempt employees at any time during the period from March 17, 2018 through to the preliminary 19 approval date. 20 21 ECF No. 48 at 25. The Parties have not set forth any new facts that would alter the 22 Court’s analysis. Accordingly, for the reasons stated in its preliminary approval order, the 23 Court reaffirms its prior certification of the above class under Rule 23(b)(3) for 24 settlement purposes only. Id. at 6–12. 25 B. Adequacy of Notice 26 “Adequate notice is critical to court approval of a class settlement[.]” Hanlon, 150 27 F.3d at 1025. Under Federal Rule of Civil Procedure 23(c)(2)(B), “[f]or any class 28 certified under Rule 23(b)(3) . . . the court must direct to class members the best notice 1 that is practicable under the circumstances, including individual notice to all members 2 who can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). 3 The Court previously appointed Simpluris, Inc. (“Simpluris”) to act as the class 4 administrator. ECF No. 48 at 25. In support of final approval, Plaintiff submits the 5 declaration of Gillian McCreedy, a Project Manager at Simpluris. McCreedy Decl. ¶ 1. 6 According to Mr. McCreedy, on April 26, 2024, Velocity’s counsel provided Simpluris 7 with a mailing list containing the names, most recent mailing addresses, social security 8 numbers, and dates of employment for each Class Member during the Class Period. 9 Id. ¶ 6. The list contained 484 Class Members. Id. The list was processed and updated 10 utilizing the National Change of Address Database maintained by the U.S. Postal Service. 11 Id. ¶ 7. 12 On May 30, 2024, the Court-approved Class Notice was mailed to all 484 Class 13 Members. Id. ¶ 8. Of the notices mailed, 107 were returned. Id. ¶ 9. Of these, 13 were 14 returned with a forwarding address. Id. An advanced skip trace was performed using 15 Accurint on the remainder. Id. Simpluris was able to locate 90 updated addresses using 16 these advanced address searches. Id. After Class Notices were mailed to these updated 17 addresses, 14 were ultimately undeliverable. Id. 18 Having reviewed Mr. McCreedy’s declaration, the Court concludes the notice 19 provided in this case was the best practicable under the circumstances and adequate to 20 satisfy the requirements of Rule 23. 21 C. Required Notices 22 1. CAFA Notice 23 Under CAFA, “[n]ot later than 10 days after a proposed settlement of a class action 24 is filed in court, each defendant that is participating in the proposed settlement shall serve 25 upon the appropriate State official of each State in which a class member resides and the 26 appropriate Federal official, a notice of the proposed settlement[.]” 28 U.S.C. § 1715(b). 27 “An order giving final approval of a proposed settlement may not be issued earlier than 28 90 days after the later of the dates on which the appropriate Federal official and the 1 appropriate State official are served [with notice].” Id. § 1715(d); see California v. 2 IntelliGender, LLC, 771 F.3d 1169, 1173 (9th Cir. 2014) (“§ 1715 prohibits a court from 3 ordering final approval of a proposed settlement until 90 days after the appropriate 4 government officials were notified.”). 5 Velocity provided a notice of settlement pursuant to CAFA on September 4, 2024. 6 ECF No. 51. Although untimely under 28 U.S.C. § 1715(b), the Parties’ late notice is not 7 fatal to final approval. See Adoma v. Univ. of Phoenix, Inc., 913 F. Supp. 2d 964, 973 8 (E.D. Cal. 2012) (“[N]umerous courts [have found] that late mailing of notices to state 9 and federal officials under CAFA is not fatal to approval of settlements.”) (collecting 10 cases). “Instead, the critical question is whether state and federal government officials are 11 allowed ninety days to object to the settlement or request to be heard.” Cavazos v. Salas 12 Concrete Inc., No. 1:19-cv-00062-DAD-EPG, 2022 U.S. Dist. LEXIS 74367, at *3 n.1 13 (E.D. Cal. Apr. 22, 2022). Here, the Court finds the substance of the requirements—to 14 provide federal and state officials sufficient notice and opportunity to be heard before the 15 final approval order issues—has been satisfied here. 16 2. PAGA Notice 17 Under PAGA, Class Counsel is required to provide notice of a proposed settlement 18 to the LWDA “at the same time that it is submitted to the court.” Cal. Lab. Code § 19 2699(s)(2). Class Counsel submitted the proposed Settlement Agreement to the LWDA 20 on August 5, 2024. Huch Decl. ¶ 21. 21 D. Final Fairness Determination 22 1. Fairness Factors 23 Federal Rule of Civil Procedure 23(e) provides “[t]he claims, issues, or defenses of 24 a certified class—or a class proposed to be certified for purposes of settlement—may be 25 settled, voluntarily dismissed, or compromised only with the court’s approval.” Fed. R. 26 Civ. P. 23(e). The Rule “requires the district court to determine whether a proposed 27 settlement is fundamentally fair, adequate and reasonable.” Hanlon, 150 F.3d at 1026. In 28 making this determination, the Court is required to “evaluate the fairness of a settlement 1 as a whole, rather than assessing its individual components.” Lane v. Facebook, Inc., 696 2 F.3d 811, 818–19 (9th Cir. 2012). 3 The Ninth Circuit has instructed that “[a]ssessing a settlement proposal requires the 4 district court to balance a number of factors” including: 5 [T]he strength of the plaintiffs’ case; the risk, expense, complexity, 6 and likely duration of further litigation; the risk of maintaining class 7 action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; 8 the experience and views of counsel; the presence of a governmental 9 participant; and the reaction of the class members to the proposed settlement. 10 11 Hanlon, 150 F.3d at 1026. The list is not intended to be exhaustive. Officers for Justice v. 12 Civil Serv. Com., 688 F.2d 615, 625 (9th Cir. 1982). “The relative degree of importance 13 to be attached to any particular factor will depend upon and be dictated by the nature of 14 the claims advanced, the types of relief sought, and the unique facts and circumstances 15 presented by each individual case.” Id. 16 The 2018 amendments to Rule 23 provide further guidance as to what factors 17 courts should consider when determining whether a settlement is fair, reasonable, and 18 adequate: 19 (A) the class representatives and class counsel have adequately 20 represented the class; 21 (B) the proposal was negotiated at arm’s length; 22 (C) the relief provided for the class is adequate, taking into account: 23 (i) the costs, risks, and delay of trial and appeal; 24 (ii) the effectiveness of any proposed method of 25 distributing relief to the class, including the 26 method of processing class-member claims; 27 (iii) the terms of any proposed award of attorney's 28 fees, including timing of payment; and 1 (iv) any agreement required to be identified under Rule 23(e)(3); and 2
3 (D) the proposal treats class members equitably relative to each other. 4 5 Fed. R. Civ. P. 23(e)(2). “The factors set forth in Fed. R. Civ. P. 23(e) distill the 6 considerations historically used by federal courts to evaluate class action settlements.” 7 Thompson v. NSC Techs., LLC, No. 3:20-CV-00371-JO-MSB, 2023 U.S. Dist. LEXIS 8 56684, at *12 (S.D. Cal. Mar. 30, 2023). Nevertheless, the Advisory Committee Notes to 9 Rule 23 explain that “[t]he goal of [the] amendment [was] not to displace any factor” that 10 would have been relevant prior to the amendment. Fed. R. Civ. P. 23, Advisory Comm. 11 Notes. Rather, the “goal” was to “focus the court and the lawyers on the core concerns of 12 procedure and substance that should guide the decision whether to approve the proposal.” 13 Id. “Consideration of the factors the Ninth Circuit has customarily employed remains 14 appropriate after the recent Rule 23 amendments.” Shay v. Apple Inc., No. 3:20-cv-1629- 15 JO-BLM, 2024 U.S. Dist. LEXIS 48702, at *11 (S.D. Cal. Mar. 18, 2024). Where, as 16 here, “the [P]arties negotiate a settlement agreement before the class has been certified, 17 settlement approval requires a higher standard of fairness[.]” Roes v. SFBSC Mgmt., LLC, 18 944 F.3d 1035, 1048 (9th Cir. 2019). 19 The Court begins with the Rule 23(e)(2) factors and then addresses the Hanlon 20 factors. 21 2. Adequate Representation (Rule 23(e)(2)(A)) 22 The Court first considers whether “the class representatives and class counsel have 23 adequately represented the class.” Fed. R. Civ. P. 23(e)(2)(A). Representation of a class 24 is adequate under Rule 23(e)(2)(A) where named plaintiffs and class counsel have no 25 conflicts of interest with other class members and have prosecuted the action vigorously 26 on the class’s behalf. See Kim v. Allison, 87 F.4th 994, 1000 (9th Cir. 2023). 27 Here, there is no evidence of any conflict between Plaintiff, Class Counsel, and the 28 rest of the class. Plaintiff was represented by Blanchard, Krasner & French and the Law 1 Office of David A. Huch, both of whom have extensive experience litigating class action 2 matters. Huch Decl. ¶¶ 41–46; Declaration of David C. Hawkes (“Hawkes Decl.,” ECF 3 No. 49-3) ¶ 2. The case was actively litigated for over two years, where Class Counsel 4 engaged in, among other things, responsive motion practice, informal and formal 5 discovery, and extensive settlement negotiations. Huch. Decl. ¶ 48; Hawkes Decl. ¶ 4. 6 Plaintiff suffered the same injuries as other Class Members resulting from Defendants’ 7 alleged conduct and his interests therefore align with the class. See Uschold v. NSMG 8 Shared Servs., LLC, 333 F.R.D. 157, 167 (N.D. Cal. 2019) (“The named Plaintiffs were 9 employed by Defendant during the class period and allegedly injured by the same course 10 of conduct common to all class members; thus, Plaintiffs’ interest in this litigation is 11 aligned with that of the class.”). Plaintiff was further actively engaged in this lawsuit, 12 regularly communicating with counsel, attending the Early Neutral Evaluation on 13 December 13, 2022, the full-day mediation on November 7, 2023, and reviewing the 14 proposed settlement. Declaration of Francisco Lopez (“Lopez Decl.,” ECF No. 50-2) 15 ¶¶ 6–13. 16 For purposes of final approval, the Court concludes the class was adequately 17 represented by Plaintiff and Class Counsel. 18 3. Arms Length Negotiation (Rule 23(e)(2)(B)) 19 The Court next considers whether “the proposal was negotiated at arm’s length.” 20 Fed. R. Civ. P. 23(e)(2)(B). Here, the settlement is the product of a full day negotiation 21 between the Parties, guided by the neutral perspective of an experienced mediator. Huch 22 Decl. ¶ 19. Settlement was reached after extensive formal and informal discovery had 23 already been completed. Id. ¶¶ 15–18. Negotiations between the Parties were 24 “contentious” and the case ultimately only resolved via the acceptance of a mediator’s 25 proposal. Id. ¶ 19. 26 The Court is satisfied the settlement “appears to be the product of serious, 27 informed, non-collusive negotiations[.]” In re Tableware Antitrust Litig., 484 F. Supp. 2d 28 1078, 1079 (N.D. Cal. 2007) (internal quotation marks omitted); see also Lusk v. Five 1 Guys Enters. LLC, No. 1:17-cv-00762-AWI-EPG, 2022 U.S. Dist. LEXIS 180722, at 2 *23–24 (E.D. Cal. Sep. 30, 2022) (“The fact that the parties engaged in mediation 3 and that the Settlement is based on a mediator’s proposal further supports a finding that 4 the settlement agreement is not the product of collusion.”); Loreto v. Gen. Dynamics Info. 5 Tech., Inc., No. 3:19-cv-01366-GPC-MSB, 2021 U.S. Dist. LEXIS 138831, at *12 (S.D. 6 Cal. July 26, 2021) (Rule 23(e)(2)(B) likely satisfied where settlement was “the result of 7 an arm’s length negotiation facilitated by an experienced mediator after the exchange of 8 sufficient discovery[.]”). 9 4. Adequate Relief (Rule 23(e)(2)(C)) 10 a. Amount Offered 11 “The amount offered in the proposed settlement agreement is generally considered 12 to be the most important consideration of any class settlement.” Loreto, 2021 U.S. Dist. 13 LEXIS 87745, at *19; see Fed. R. Civ. P. 23, Advisory Comm. Notes (“The relief that the 14 settlement is expected to provide to class members is a central concern.”). “To evaluate 15 adequacy, courts primarily consider plaintiffs’ expected recovery balanced against the 16 value of the settlement offer.” In re Tableware, 484 F. Supp. 2d at 1080. 17 Here, the settlement amount is reasonable when viewed in light of the potential 18 recovery. Plaintiffs divide damages in this case into three categories: (1) failure to pay 19 proper overtime rates of pay; (2) failure to provide meal and rest breaks; and (3) a 20 derivative claim for waiting time penalties pursuant to Cal. Lab. Code §§ 201–203. ECF 21 No. 49-1 at 22–24. Based on the analysis conducted by Class Counsel and Plaintiff’s 22 damages expert, Plaintiff estimated a maximum potential class-wide recovery of $2.4 23 million in this case, comprising: (1) $25,000 in projected overtime damages; (2) 24 $544,645 in projected meal and rest break damages; and (3) $1.79 million in waiting time 25 penalties. Huch Decl. ¶¶ 26–30. The Court has reviewed the methodology employed by 26 Class Counsel and Plaintiff’s damages expert in reaching these projected damages and 27 determines they are reasonable. 28 /// 1 The $602,058 settlement amount reached in this case represents approximately 2 25% of Plaintiff’s estimated maximum potential recovery, before any deductions for fees, 3 costs, or an incentive award. Id. ¶ 30. This percentage is within the range found 4 reasonable by courts in other wage and hour class actions. See Gagnier v. Siteone 5 Landscape Supply LLC, No. SACV 21-01834-CJC (DFMx), 2023 U.S. Dist. LEXIS 6 209911, at *22 (C.D. Cal. June 6, 2023) (finding settlement amount equaling 13% of 7 maximum potential recovery to be reasonable); Greko v. Diesel U.S.A., Inc., No. 10-cv- 8 02576 NC, 2013 U.S. Dist. LEXIS 60114, at *14 (N.D. Cal. Apr. 26, 2013) (approving 9 settlement amount representing 24% of modeled damage amount in wage and hour class 10 action); Glass v. UBS Fin. Servs., No. C-06-4068 MMC, 2007 U.S. Dist. LEXIS 8476, at 11 *13 (N.D. Cal. Jan. 26, 2007) (settlement of wage and hour class action for 12 approximately 25% to 35% of amount of damages plaintiffs “could have hoped to prove 13 at trial” held to be “reasonable in light of the uncertainties involved in litigation”). 14 b. Costs, Risks, and Delay of Trial and Appeal (Fed. R. Civ. P. 15 23(e)(2)(C)(i)) 16 The Court also considers “the costs, risks, and delay of trial and appeal.” Fed. R. 17 Civ. P. 23(e)(2)(C)(i). Here, settlement in this case was reached only after over two years 18 of litigation. See Docket. Defendants continue to “adamantly deny” all material 19 allegations set forth in the SAC. Huch Decl. ¶ 13. In addition, Defendants raised 20 numerous defenses to liability and class certification. Id. ¶¶ 32–37. As examples, 21 Velocity produced evidence challenging liability, including written meal and rest break 22 policies that arguably complied with California law and information demonstrating its 23 employees had been provided devices requiring them to clock out and take breaks. 24 Id. ¶ 34. In addition, the Amazon Defendants consistently contended throughout this 25 litigation that they were not Plaintiff’s joint employer and that the type of evidence 26 Plaintiff was relying upon to establish this connection was insufficient. Id. ¶ 36. Despite 27 this hurdle, Class Counsel acknowledges that because Velocity ceased doing business, it 28 1 would have been “critical” to prove the Amazon Defendants’ joint employer status to 2 prosecute the class-wide claims successfully. Id. ¶ 37. 3 Plaintiff also notes other litigation risks. Defendants maintained throughout the 4 litigation that Plaintiffs and members of the proposed Class should be compelled to 5 individual arbitration. Huch. Decl. ¶ 13. Indeed, Velocity filed an amended motion to 6 compel arbitration before the Parties reached their settlement. ECF No. 29. Plaintiff states 7 that at the time the mediator’s proposal was accepted, state law on the issue of whether 8 Plaintiff would have been subject to binding arbitration was “very much in doubt.” ECF 9 No. 49-1 at 21. 10 For these reasons, proceeding with this case would have presented very real risks 11 for both Parties as to arbitrability and an unfavorable decision on the merits. In contrast, 12 the Settlement offers the Parties and the class immediate and certain relief. This factor 13 weighs in favor of approval. See Fernandez v. Vict. Secret Stores, LLC, No. CV 06-04149 14 MMM (SHx), 2008 U.S. Dist. LEXIS 123546, at *18–19 (C.D. Cal. July 21, 2008) 15 (“Because both parties faced extended, expensive future litigation, and because both 16 faced the very real possibility that they would not prevail, this factor supports approval of 17 the settlement.”). 18 c. Method of Distributing Relief (Fed. R. Civ. P. 23(e)(2)(C)(ii)) 19 “[T]he goal of any distribution method is to get as much of the available damages 20 remedy to class members as possible and in as simple and expedient a manner as 21 possible.” Hilsley v. Ocean Spray Cranberries, Inc., No. 3:17-CV-2335-GPC-MDD, 22 2020 U.S. Dist. LEXIS 16195, at *19 (S.D. Cal. Jan. 31, 2020) (internal quotation marks 23 omitted). 24 Here, Class Members do not need to submit claims to be compensated. Instead, 25 Class Members were identified through Velocity’s employment records. McCreedy Decl. 26 ¶ 6. Any Class Member who received a Class Notice and did not opt out will be mailed a 27 settlement payout. Settlement Agreement ¶¶ III.16–III.17. The settlement is non- 28 reversionary. Id. ¶ III.15. Uncashed checks (if any) will be paid to the California State 1 Controller Unclaimed Property Fund in the name of the Class Member. Id. ¶ III.19. Each 2 Class Member has 180 days to cash his/her check. Id. “This method of distributing relief 3 is ‘simple and effective’” and weighs in favor of final approval. Ranger v. Shared 4 Imaging, LLC, No. 2:20-cv-401-KJN, 2023 U.S. Dist. LEXIS 218813, at *20 (E.D. Cal. 5 Dec. 8, 2023) (approving similar distribution plan); Loreto, 2021 U.S. Dist. LEXIS 6 87745, at *26–27 (same). 7 d. Terms of Proposed Attorneys’ Fee Award (Fed. R. Civ. P. 8 23(e)(2)(C)(iii))/Signs of Collusion 9 Under Federal Rule of Civil Procedure 23(e)(2)(C)(iii), “a court must examine 10 whether the attorneys’ fees arrangement shortchanges the class.” Briseño v. Henderson, 11 998 F.3d 1014, 1024 (9th Cir. 2021). In so doing, “courts must balance the ‘proposed 12 award of attorney’s fees’ vis-à-vis the ‘relief provided for the class’ in determining 13 whether the settlement is ‘adequate’ for class members.” Id. 14 One “inherent risk” of a class action settlement “is that class counsel may collude 15 with the defendants, tacitly reducing the overall settlement in return for a higher 16 attorney’s fee.” Jones v. GN Netcom, Inc. (In re Bluetooth Headset Prods. Liab. Litig.), 17 654 F.3d 935, 946 (9th Cir. 2011) (internal quotation marks omitted). For these reasons, 18 the Ninth Circuit has cautioned courts to be “particularly vigilant not only for explicit 19 collusion, but also for more subtle signs that class counsel have allowed pursuit of their 20 own self-interests and that of certain class members to infect the negotiations.” Id. at 947. 21 In Bluetooth, the Ninth Circuit identified three possible signs of collusion: (1) “when 22 counsel receives a disproportionate distribution of the settlement, or when the class 23 receives no monetary distribution but class counsel are amply rewarded”; (2) “when the 24 parties negotiate a ‘clear sailing’ arrangement providing for the payment of attorneys’ 25 fees separate and apart from class funds”; and (3) “when the parties arrange for fees not 26 awarded to revert to defendants rather than be added to the class fund[.]” Id. 27 Based on the record before the Court, nothing suggests that the instant settlement 28 was the product of collusion. The Settlement Agreement provides Class Counsel will not 1 seek fees greater than 33.33% of the gross settlement amount. Settlement Agreement ¶ 2 III.21. Although a 33.33% award is higher than the 25% benchmark typically used by the 3 Ninth Circuit, the amount requested is considerably lower than the 83.2% that was at 4 issue in Bluetooth. See Bluetooth, 654 F.3d at 945 (“[W]e are concerned that the amount 5 awarded was 83.2% of the total amount defendants were willing to spend to settle the 6 case.”). The Court further retains its discretion to award less than the 33.33% award 7 requested.3 Settlement Agreement ¶ III.21 (“This Settlement is not contingent upon the 8 Court awarding Class Counsel any particular amount in attorneys’ fees and costs.”). 9 The Court does not see any other signs of collusion. The Settlement Agreement 10 does not contain a “clear sailing” provision. Settlement Agreement ¶ III.21. The 11 Settlement Agreement is also non-reversionary. Id. ¶ III.15. No portion of the settlement 12 amount will revert to Defendants. This factor weighs in favor of approval. 13 e. Other Agreements (Fed. R. Civ. P. 23(e)(2)(C)(iv)) 14 The Parties have not identified any other agreements made in connection with their 15 settlement apart from the Settlement Agreement. This factor is neutral. 16 5. Equitable Treatment (Rule 23(e)(2)(D)) 17 Under Federal Rule of Civil Procedure Rule 23(e)(2)(D), the Court considers 18 whether “the proposal treats class members equitably relative to each other.” Fed. R. Civ. 19 P. 23(e)(2)(D). “Matters of concern could include whether the apportionment of relief 20 among class members takes appropriate account of differences among their claims, and 21 whether the scope of the release may affect class members in different ways that bear on 22 the apportionment of relief.” Fed. R. Civ. Proc. 23, Advisory Comm. Notes. 23 The Settlement Agreement provides that payments will be distributed to Class 24 Members on a pro rata basis accounting for the number of workweeks worked by each 25 Class Member. Settlement Agreement ¶ III.16. The Court concludes this apportionment 26 takes appropriate account of the differences between Class Members. See Carlino v. 27 28 3 1 CHG Med. Staffing, Inc., No. 1:17-cv-01323-LHR-CDB, 2024 U.S. Dist. LEXIS 71473, 2 at *33 (E.D. Cal. Apr. 18, 2024) (distributing net settlement amount, pro rata, based on 3 number of workweeks is a “reasonable and impartial basis for allocating funds in a 4 class wage and hour settlement”); Grant v. T-Mobile United States, Inc., No. CV 21- 5 2268-GW-JEMx, 2023 U.S. Dist. LEXIS 201217, at *19 (C.D. Cal. Oct. 3, 2023) 6 (distributing “payments to the number of Work Weeks, pro rata, for purposes of the 7 Wage & Hour Class’s claims is an equitable method for treating the members of that 8 Class.”); Gagnier, 2023 U.S. Dist. LEXIS 209911, at *27 (“Individual settlement 9 amounts are based on the pro rata share of workweeks that each individual class member 10 was employed by Defendant, which is an appropriate proxy for the degree of harm that 11 the individuals likely suffered due to Defendant’s purported misconduct.”). 12 As to the equities between Plaintiff, as the class representative, and the remainder 13 of the class, for purposes of fairness, the Court retains its discretion to award less than the 14 $25,000 requested.4 Any amount requested by Plaintiff as an incentive award that is not 15 granted returns to the net settlement amount and will be distributed to participating Class 16 Members. Settlement Agreement ¶ III.20. For the above reasons, this factor weighs in 17 favor of approval. 18 6. Remaining Hanlon Factors5 19 a. Experience and Views of Counsel 20 Class Counsel—Mr. Huch and Mr. Hawkes—submitted declarations detailing their 21 extensive experience litigating class actions. Huch Decl. ¶¶ 41–46; Hawkes Decl. ¶ 2. In 22
23 4 The Court incorporates its discussion between regarding the incentive award 24 below. 25 5 The Court has already addressed many of the Hanlon factors in its analysis of the Rule 23(e) factors above. See Andrade-Heymsfield v. Nextfoods, Inc., No. 3:21-cv-01446- 26 BTM-MSB, 2024 U.S. Dist. LEXIS 151063, at *8 (S.D. Cal. Apr. 8, 2024) (noting 27 overlap between Rule 23 and Hanlon factors); In re Extreme Networks, Inc. Sec. Litig., No. 15-cv-04883-BLF, 2019 U.S. Dist. LEXIS 121886, at *21–22 (N.D. Cal. July 22, 28 1 Mr. Huch and Mr. Hawke’s view, the settlement reached is fair, reasonable, and 2 adequate. Huch. Decl. ¶ 55; Hawkes Decl. ¶ 13. This factor weighs in favor of the 3 settlement. 4 b. Governmental Participant 5 No government entity participated in this case. This factor is neutral. 6 c. Reaction of Class Members 7 As of the date of the final approval hearing, no Class Member has objected or 8 requested exclusion from the class. The lack of any objection or request for exclusion 9 strongly favors approval. See Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 967 (9th Cir. 10 2009) (district court had discretion to find a “favorable reaction” to settlement where only 11 54 objections were received out of 376,301 putative class members); Churchill Vill., 12 L.L.C. v. GE, 361 F.3d 566, 577 (9th Cir. 2004) (affirming class action settlement where 13 45 out of approximately 90,000 notified class members objected); Nat’l Rural 14 Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 529 (C.D. Cal. 2004) (“It is 15 established that the absence of a large number of objections to a proposed class action 16 settlement raises a strong presumption that the terms of a proposed class settlement action 17 are favorable to the class members.”). 18 7. Balancing the Factors 19 “Ultimately, the district court’s determination is nothing more than ‘an amalgam of 20 delicate balancing, gross approximations and rough justice.’” Officers for Justice, 688 21 F.2d at 625 (quoting Detroit v. Grinnell Corp., 495 F.2d 448, 468 (2d Cir. 1974)). The 22 court’s inquiry is ultimately “limited to the extent necessary to reach a reasoned judgment 23 that the agreement is not the product of fraud or overreaching by, or collusion between, 24 the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and 25 adequate to all concerned.” Id.; see also Hanlon, 150 F.3d at 1027 (because a 26 “[s]ettlement is the offspring of compromise, the question we address is not whether the 27 final product could be prettier, smarter or snazzier, but whether it is fair, adequate and 28 free from collusion”). 1 Having considered and balanced the relevant factors, the Court concludes the 2 settlement is fair, adequate, and reasonable. 3 IV. FINAL APPROVAL OF PAGA PENALTIES 4 A. PAGA Generally 5 A PAGA representative action is “a type of qui tam action in which a private 6 plaintiff pursues a dispute between an employer and the [LWDA] on behalf of the state.” 7 Haralson v. U.S. Aviation Servs. Corp., 383 F. Supp. 3d 959, 971 (N.D. Cal. 2019) 8 (internal quotation marks omitted). “PAGA authorizes an aggrieved employee to recover 9 a ‘civil penalty’ that could have otherwise been ‘assessed and collected by’ [the 10 LWDA].” Magadia v. Wal-Mart Assocs., 999 F.3d 668, 675 (9th Cir. 2021) (citing Cal. 11 Lab. Code § 2699(a)). “If successful, twenty-five percent of the civil penalties are 12 distributed to the aggrieved employees, and the remaining seventy-five percent of the 13 penalties go to [the] LWDA.” Porter v. Nabors Drilling USA, Ltd. P’ship, 854 F.3d 1057, 14 1061 (9th Cir. 2017). 15 “[B]ecause a settlement of PAGA claims compromises a claim that could 16 otherwise be brought by the state,” courts must “review and approve any settlement of 17 any civil action filed pursuant to [PAGA].” Ramirez v. Benito Valley Farms, LLC, No. 18 16-CV-04708-LHK, 2017 U.S. Dist. LEXIS 137272, at *7 (N.D. Cal. Aug. 25, 2017). 19 “No binding authority sets forth the proper standard of review for PAGA settlements; 20 however, California district courts often apply a Rule 23-like standard, asking whether 21 the settlement of the PAGA claims is fundamentally fair, adequate, and reasonable in 22 light of PAGA’s policies and purposes.” Hernandez v. Arthur J. Gallagher Serv. Co., Ltd. 23 Liab. Co., No. 22-cv-01910-H-DEB, 2024 U.S. Dist. LEXIS 153062, at *24 (S.D. Cal. 24 Aug. 26, 2024) (internal quotation marks omitted); see Heid v. Cyracom Int'l, Inc., No. 25 22-cv-1445-MMA (KSC), 2024 U.S. Dist. LEXIS 156801, at *25 (S.D. Cal. Aug. 30, 26 2024) (“While PAGA requires a trial court to approve a PAGA settlement, district courts 27 have noted there is no governing standard to review PAGA settlements.”) (collecting 28 cases). 1 B. Analysis 2 The Settlement Agreement allocates $20,000 of the gross settlement to be paid as 3 civil PAGA penalties. Settlement Agreement ¶ III.25. Pursuant to the California Labor, 4 75% or $15,000 will be paid to the LWDA, and 25% or $5,000 will be included in the net 5 settlement amount and distributed to class members who worked during the PAGA 6 period on a pro rata basis. Id. 7 Plaintiff estimates the maximum civil penalty potentially recoverable on Plaintiff’s 8 PAGA claim to range from $280,000 to $300,000. Huch Decl. ¶ 31. Class Counsel 9 arrived at this estimate “after examining the sample of [payroll and time] records” 10 Velocity provided “to determine the frequency of instances in which employees [earned] 11 bonuses and incurred overtime hours during the same pay period, as well as rates of 12 allegedly late, missed or short breaks.” Id. The $20,000 allocated to PAGA penalties 13 represents approximately 6-7% of the total estimated value of Plaintiff’s PAGA claim. 14 This is within the range of reasonableness accepted by courts. See Almanzar v. Home 15 Depot U.S.A., Inc., No. 2:20-cv-0699-KJN, 2023 U.S. Dist. LEXIS 115974, at *18 (E.D. 16 Cal. July 6, 2023) (“Courts are generally skeptical of PAGA settlements that fall under 17 1% of the total value of a PAGA claim.”); Medina v. Evolve Mortg. Servs., LLC, No. 18 SACV 21-01338-CJC (JDEx), 2023 U.S. Dist. LEXIS 241627, at *30 (C.D. Cal. Apr. 3, 19 2023) (approving PAGA penalty representing about 4.7% of estimated recovery on 20 PAGA claim); McShan v. Hotel Valencia Corp., No. 19-cv-03316-LHK, 2021 U.S. Dist. 21 LEXIS 69558, at *9 (N.D. Cal. Apr. 9, 2021) (approving PAGA penalty representing 22 about 5% of estimated recovery on PAGA claim). 23 The Parties’ PAGA allocation also represents approximately 3% of the gross 24 settlement amount, which is also within the range of penalties approved by courts. See 25 Scott v. Blackstone Consulting, Inc., No. 21-cv-1470-MMA-KSC, 2024 U.S. Dist. LEXIS 26 13025, at *20–21 (S.D. Cal. Jan. 24, 2024) (approving PAGA penalty representing 5% of 27 gross settlement amount); Alcala v. Meyer Logistics, Inc., No. CV 17-7211 PSG (AGRx), 28 1 2019 U.S. Dist. LEXIS 166879, at *26 (C.D. Cal. June 17, 2019) (collecting cases where 2 courts approved PAGA penalties within the zero to two percent range). 3 Finally, the proposed Settlement was further submitted to the LWDA on August 5, 4 2024. Huch Decl. ¶ 21. To date, no comment or objection has been received. This fact 5 weighs in favor of approval. Heid v. Cyracom Int’l, Inc., No. 22-cv-1445-MMA (KSC), 6 2024 U.S. Dist. LEXIS 156801, at *26 (S.D. Cal. Aug. 30, 2024) (“The Court finds it 7 persuasive that the LWDA was permitted to file a response to the proposed Settlement 8 and no comment or objection has been received.”). 9 Considering the above, the Court concludes the Settlement Agreement’s $20,000 10 PAGA penalty is fair, reasonable, and adequate in view of PAGA’s public policy goals. 11 V. MOTION FOR ATTORNEY’S FEES, COSTS, AND INCENTIVE AWARD 12 A. Attorney’s Fees and Costs 13 1. Legal Standard 14 Federal Rule of Civil Procedure 23(h) permits a court to award reasonable 15 attorney’s fees “authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). 16 “[C]ourts have an independent obligation to ensure that the award, like the settlement 17 itself, is reasonable, even if the parties have already agreed to an amount.” Bluetooth, 654 18 F.3d at 941. 19 In a diversity action under CAFA, federal courts apply state law when determining 20 both the right to fees and the method of calculating them. See Exxon Mobil Corp. v. 21 Allapattah Servs., 545 U.S. 546, 571 (2005) (“CAFA confers federal diversity 22 jurisdiction over class actions.”); Mangold v. Cal. Pub. Utilities Comm’n, 67 F.3d 1470, 23 1478 (9th Cir. 1995) (“Existing Ninth Circuit precedent has applied state law in 24 determining not only the right to fees, but also in the method of calculating fees.”); 25 Petersen v. CJ Am., Inc., No. 14-CV-2570 DMS JLB, 2016 U.S. Dist. LEXIS 140188, at 26 *1 (S.D. Cal. Sep. 30, 2016) (“In diversity actions, ‘state law governs both the right to 27 recover attorney's fees and the computation of their amount.’”) (internal quotation marks 28 1 omitted). Because California law governs Plaintiff’s claims, it also governs the award of 2 fees. See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). 3 California courts recognize “[t]wo primary methods of determining a reasonable 4 attorney fee in class action litigation.” Laffitte v. Robert Half Internat. Inc., 1 Cal. 5th 5 480, 489 (2016). “The percentage method calculates the fee as a percentage share of a 6 recovered common fund or the monetary value of plaintiffs’ recovery.” Id. “The lodestar 7 method, or more accurately the lodestar-multiplier method, calculates the fee by 8 multiplying the number of hours reasonably expended by counsel by a reasonable hourly 9 rate.” Id. (internal quotation marks omitted). 10 In common fund cases, like this one, “the district court has discretion . . . to choose 11 either the percentage-of-the-fund or the lodestar method.” Vizcaino, 290 F.3d at 1047.6 12 Courts review fee awards in common fund cases with special rigor: 13 Because in common fund cases the relationship between plaintiffs and 14 their attorneys turns adversarial at the fee setting stage, courts have stressed that when awarding attorneys’ fees from a common fund, the 15 district court must assume the role of fiduciary for the class plaintiffs. 16 Accordingly, fee applications must be closely scrutinized. Rubber stamp approval, even in the absence of objections, is improper. 17 18 Id. at 1052 (internal quotation marks and citation omitted). 19 Ultimately, “[r]easonableness is the goal, and mechanical or formulaic application 20 of either method, where it yields an unreasonable result, can be an abuse of discretion.” 21 Fla. ex rel. Butterworth v. Exxon Corp. (In re Coordinated Pretrial Proceedings in 22 Petroleum Prods. Antitrust Litig.), 109 F.3d 602, 607 (9th Cir. 1997). 23 /// 24
25 6 “Under the common fund doctrine, a litigant or a lawyer who recovers a common 26 fund for the benefit of persons other than himself or his client is entitled to a reasonable 27 attorney’s fee from the fund as a whole.” Staton v. Boeing Co., 327 F.3d 938, 967 (9th Cir. 2003) (internal quotation marks omitted). Plaintiff does not dispute this is a common 28 1 2. Percentage of Fund Analysis 2 The Court begins with a percentage of fund analysis. Under Ninth Circuit 3 precedent, “[t]wenty-five percent is the ‘benchmark’ that district courts should award in 4 common fund cases.” Principe v. Ukropina, 47 F.3d 373, 379 (9th Cir. 1995). Here, Class 5 Counsel seeks one-third of the $602,058 gross settlement amount, totaling $200,686, in 6 fees. ECF No. 50-1 at 7. The Court must, therefore, determine whether it would be 7 appropriate to depart from the Ninth Circuit’s 25% benchmark. 8 A court “may adjust the benchmark when special circumstances indicate a higher 9 or lower percentage would be appropriate.” Principe, 47 F.3d at 379. The Ninth Circuit 10 has identified several factors relevant in determining if the award is reasonable, 11 including: (1) the results achieved; (2) the risks of litigation; (3) the skill required and the 12 quality of work; (4) the contingent nature of the fee; (5) the burdens carried by class 13 counsel; and (6) the awards made in similar cases. See Vizcaino, 290 F.3d at 1048–50. 14 Here, while the results achieved by Class Counsel are certainly favorable, they are 15 not “exceptional.” Class Counsel achieved a settlement representing approximately 25% 16 of Plaintiff’s estimated maximum potential recovery. ECF No. 50-1 at 15–18. The 17 settlement will yield an “average payout” of approximately $700 per class member, with 18 Class Members who worked the highest number of workweeks receiving over $2,000 19 each, and a maximum individual settlement award of $3,882.12 to an employee who 20 worked throughout the entire class period. Huch Decl. ¶ 4. Although the recovery to class 21 members is positive, the recovery is not so remarkable to itself justify an upward 22 departure. See Adoma v. Univ. of Phx., Inc., 913 F. Supp. 2d 964, 983 (E.D. Cal. 2012) 23 (recovery of $2,000 per class member in wage and hour class action was “not so 24 exceptional” in it of itself to “justify an increase in the 25% benchmark.”). There is also 25 no indication that this case was particularly complicated or involved novel legal or 26 factual issues. See Vigil v. Hyatt Corp., No. 22-cv-00693-HSG, 2024 U.S. Dist. LEXIS 27 86110, at *20 (N.D. Cal. May 13, 2024) (risk of litigation factor did not justify upward 28 departure where class counsel failed to show how risks plaintiffs would face “were 1 significant or unique as compared to those in similar straightforward wage and hour 2 cases.”); Pedraza v. Pier 1 Imps. U.S. Inc., No. 8:16-cv-01447-JLS-DFM, 2018 U.S. 3 Dist. LEXIS 103490, at *15 (C.D. Cal. June 19, 2018) (“In the absence of any identified 4 novel or complex legal or factual issues, the Court does not find that Counsel’s 5 experience and discovery efforts justify an upward departure from the 25% 6 benchmark.”). 7 The Court acknowledges Class Counsel took this case on a pure contingency basis, 8 devoting significant time and resources to a matter with no guarantee of compensation. 9 Huch Decl. ¶ 40; Hawkes Decl. ¶ 8. Because of the resources invested, Class Counsel 10 also had to forego other representation. Id. However, this risk of nonpayment is present in 11 every case litigated on a contingency basis. See Adoma, 913 F. Supp. 2d at 983 (risk of 12 nonpayment factor did not favor increase in fee award where the court could not 13 “conclude that the risks exceeded those ordinarily faced by counsel who take cases on 14 contingency.”). Again, the fact that Class Counsel took the case on a contingency basis, 15 standing alone, does not justify an upward departure from the benchmark. See Rodriguez 16 v. El Toro Med. Inv’rs Ltd. P’ship, No. 8:16-cv-00059-JLS-KES, 2018 U.S. Dist. LEXIS 17 106850, at *17 (C.D. Cal. June 26, 2018) (collecting cases). 18 Nevertheless, the Court finds that the relatively small size of the common fund in 19 this case supports an upward adjustment. Cases with relatively small funds, i.e. under $10 20 million, will “often result in fees above 25%.” Craft v. Cty. of San Bernardino, 624 F. 21 Supp. 2d 1113, 1127 (C.D. Cal. 2008); see also Heid v. Cyracom Int’l, Inc., No. 22-cv- 22 1445-MMA (KSC), 2024 U.S. Dist. LEXIS 156801, at *30 (S.D. Cal. Aug. 30, 2024) 23 (“[O]ne-third the common fund is in line with California precedent and similar wage and 24 hour cases.”); Yanez v. HL Welding, Inc., No. 20cv1789-MDD, 2022 U.S. Dist. LEXIS 25 46169, at *34 (S.D. Cal. Mar. 15, 2022) (“The 33.33% award requested in this case is 26 commensurate with percentage-of-the-fund awards made in other wage and hour class 27 actions.”) (collecting cases); Cicero v. DirecTV, Inc., No. EDCV 07-1182, 2010 U.S. 28 Dist. LEXIS 86920, at *17 (C.D. Cal. July 27, 2010) (“[A] review of California cases in 1 other districts reveals that courts usually award attorneys’ fees in the 30-40% range in 2 wage and hour class actions that result in recovery of a common fund under $10 3 million.”) (collecting cases). Here, the common fund is even smaller—just over 4 $600,000. 5 3. Lodestar Cross Check 6 The Court next turns to a calculation of the lodestar. “Calculation of the lodestar, 7 which measures the lawyers’ investment of time in the litigation, provides a check on the 8 reasonableness of the percentage award.” Vizcaino, 290 F.3d at 1050. Class Counsel 9 submitted a lodestar calculation of $325,793 based on 529.4 hours of work: 10 Timekeeper Rate Requested Total Hours Lodestar 11 David C. Hawkes $585 281.8 $164,853 12 David A. Huch $650 247.6 $160,940 13 Totals 529.4 $325,793 14 ECF No. 54 at 2; 54-1 ¶ 4; 54-2 ¶ 2. 15 “In determining a reasonable hourly rate, the district court should be guided by the 16 rate prevailing in the community for similar work performed by attorneys of comparable 17 skill, experience, and reputation.” Chalmers v. Los Angeles, 796 F.2d 1205, 1210–11 (9th 18 Cir. 1986). “Generally, when determining a reasonable hourly rate, the relevant 19 community is the forum in which the district court sits.” Camacho v. Bridgeport Fin., 20 Inc., 523 F.3d 973, 979 (9th Cir. 2008). “Affidavits of the plaintiffs’ attorney and other 21 attorneys regarding prevailing fees in the community, and rate determinations in other 22 cases, particularly those setting a rate for the plaintiffs’ attorney, are satisfactory evidence 23 of the prevailing market rate.” United Steelworkers of Am. v. Phelps Dodge Corp., 896 24 F.2d 403, 407 (9th Cir. 1990). 25 Here, Mr. Huch’s and Mr. Hawkes’s hourly rates are commensurate with rates 26 found to be reasonable in this District for attorneys of similar experience levels. Dexter’s 27 LLC v. Gruma Corp., No. 23-cv-212-MMA-AHG, 2023 U.S. Dist. LEXIS 226093, at 28 *25 (S.D. Cal. Dec. 19, 2023) (“[C]ourts in this District have awarded hourly rates for 1 work performed in civil cases by attorneys with significant experience anywhere in range 2 of $550 per hour to more than $1000 per hour.”) (collecting cases); see also Scott v. 3 Blackstone Consulting, Inc., No. 21-cv-1470-MMA-KSC, 2024 U.S. Dist. LEXIS 13025, 4 at *23 (S.D. Cal. Jan. 24, 2024) (approving requested hourly rates ranging from $500 to 5 $925 in wage and hour class action). 6 Class Counsel represents they have expended 529.4 hours litigating this action 7 since the original action was filed on March 17, 2022. ECF No. 54 at 2. In support of 8 their request, Class Counsel additionally submitted supplemental briefing that included 9 billing timesheets. ECF Nos. 54-1 at 4–6; 54-2 at 4–41. The Court has reviewed the 10 timesheets and determines that, in general, they show reasonably billed time for the 11 purposes of the lodestar cross-check. 12 Finally, because Class Counsel is requesting attorneys’ fees lower than their 13 lodestar, Class Counsel’s request translates essentially to a negative multiplier. “This 14 negative multiplier suggests that the fee request is reasonable.” Smith v. Keurig Green 15 Mt., Inc., No. 18-cv-06690-HSG, 2023 U.S. Dist. LEXIS 32327, at *28–29 (N.D. Cal. 16 Feb. 27, 2023); see also Wong v. Arlo Techs., No. 5:19-cv-00372-BLF, 2021 U.S. Dist. 17 LEXIS 58514, at *35 (N.D. Cal. Mar. 25, 2021) (“[A] multiplier below 1.0 is below the 18 range typically awarded by courts and is presumptively reasonable.”); Covillo v. 19 Specialty’s Café, No. C-11-00594 DMR, 2014 U.S. Dist. LEXIS 29837, at *24 (N.D. 20 Cal. Mar. 6, 2014) (“Plaintiffs’ requested fee award is approximately 65% of the lodestar, 21 which means that the requested fee award results in a so-called negative multiplier, 22 suggesting that the percentage of the fund is reasonable and fair.”). 23 In light of the size of the common fund in this case, the timesheets submitted, and 24 Class Counsel’s fees request being lower than the lodestar, the Court does not find this to 25 be a case where Class Counsel’s requested award would “yield windfall profits for class 26 counsel in light of the hours spent on the case[.]” Bluetooth, 654 F.3d at 942. The amount 27 of fees requested is reasonable. 28 /// 1 B. Costs 2 Attorneys are entitled to recover “those out-of-pocket expenses that would 3 normally be charged to a fee paying client.” Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 4 1994) (internal quotation marks omitted). Here, Class Counsel requests costs in the 5 amount of $8,215.55 for “filing fees, mediation fees, service costs, expert expenses, and 6 other necessary litigation expenses.” Hawks Decl. ⁋ 8. The Court determines that the 7 request for costs is reasonable in this case. 8 C. Incentive Award 9 The Court turns to named Plaintiff’s request for an incentive award in the amount 10 of $25,000. ECF No. 50-1 at 20; Settlement Agreement ¶¶ III.15, III.20. Although 11 “incentive awards are fairly typical in class action cases,” they are discretionary. 12 Rodriguez, 563 F.3d at 958. “Generally, when a person joins in bringing an action as a 13 class action he has disclaimed any right to a preferred position in the settlement.” Staton, 14 327 F.3d at 967 (internal quotation marks omitted). The purpose of incentive awards, 15 therefore, is “to compensate class representatives for work done on behalf of the class, to 16 make up for financial or reputational risk undertaken in bringing the action, and, 17 sometimes, to recognize their willingness to act as a private attorney general.” Rodriguez, 18 563 F.3d at 958–59. Nevertheless, “district courts must be vigilant in scrutinizing all 19 incentive awards to determine whether they destroy the adequacy of the class 20 representatives.” Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157, 1164 (9th Cir. 21 2013). 22 Named Plaintiff Mr. Lopez attests he has spent at least 73.5 hours prosecuting this 23 case, performing tasks that include: (1) gathering documentation and otherwise assisting 24 in investigating the claims; (2) participating in meetings with his attorneys; (3) assisting 25 with formal and informal discovery; (4) attending the Early Neutral Evaluation on 26 December 13, 2022; (4) attending the full-day mediation on November 7, 2023; and (5) 27 carefully reviewing the proposed settlement. Lopez Decl. ¶¶ 7–12. Mr. Lopez further 28 declares he believes he undertook a “significant risk” to himself and his career by suing 1 his former employer. Id. ¶ 19. Since filing suit, Mr. Lopez states that he has had 2 “significant difficulties finding employment in the delivery industry.” Id. 3 While the Court acknowledges that Mr. Lopez invested significant time and energy 4 in this lawsuit and took on risks to his professional reputation, the proposed award is still 5 on the high end of incentive awards. See Charalambous v. Liberty Mut. Ins. Co., No. 22- 6 cv-00216-EMC (EMC), 2024 U.S. Dist. LEXIS 46383, at *6 (N.D. Cal. Mar. 15, 2024) 7 (“[A]wards of $10,000 to $25,000 are considered high.”). Class Counsel estimates the 8 average recovery for each class member to be approximately $700. Huch Decl. ¶ 4. The 9 proposed incentive award here would be approximately 35 times that amount. This is 10 “disproportionate to the average class member’s recovery[.]” Dyer v. Wells Fargo Bank, 11 N.A., 303 F.R.D. 326, 335 (N.D. Cal. 2014) (holding that $15,000 incentive award was 12 unwarranted where it was “far greater than the average payment to a class member”); see 13 also Nangle v. Penske Logistics, LLC, No. 3:11-CV-00807-CAB-(BLM), 2017 U.S. Dist. 14 LEXIS 93315, at *22 (S.D. Cal. June 16, 2017) (awarding class representative over 15 twenty times more than what average class member would receive was excessive). 16 Plaintiff’s proposed incentive award of $25,000 for 73.5 hours of work is also equivalent 17 to approximately $340 per hour for his assistance in litigating this case. This is a high 18 hourly rate. See Diaz v. UPS, No. 1:22-cv-00246-CDB, 2023 U.S. Dist. LEXIS 221935, 19 at *59–60 (E.D. Cal. Dec. 12, 2023) (holding that hourly rate of $162.50 as an incentive 20 award “appear[s] excessive”). 21 For these reasons, the Court determines it is appropriate to reduce Plaintiff’s 22 incentive award to $10,000. 23 D. Settlement Administration Expenses 24 Finally, the Court turns to Class Counsel’s request to approve $9,620 in settlement 25 administration costs. ECF No. 50-1 at 23. The request is supported by Mr. McCreedy’s 26 declaration, which details the work Simpluris has undertaken so far and the work it 27 expects to perform in the future. McCreedy Decl. ¶¶ 3–9, 18. No objections have been 28 made to these expenses. The Court concludes the request is reasonable. 1 || VI. CONCLUSION 2 In accordance with the foregoing, the court GRANTS Plaintiffs final approval 3 ||motion [ECF No. 49] and GRANTS AS MODIFIED Plaintiffs motion for attorneys’ 4 costs, an incentive award, and settlement administration expenses [ECF No. 50]. 5 l. The Parties are DIRECTED to implement the Settlement Agreement 6 || according to its terms and conditions. 7 2. The Court APPROVES Class Counsel’s request for an award of attorneys’ 8 || fees in the amount of $200,686 and costs in the amount of $8,215.55. 9 3. The Court APPROVES AS MODIFIED an incentive award to Plaintiff 10 || Francisco Lopez in the amount of $10,000. 11 4. The Court APPROVES the Settlement Administration costs in the amount 12 || of $9,620. 13 5. The Court retains continuing jurisdiction over this settlement solely for the 14 || purposes of enforcing the agreement, addressing settlement administration matters, and 15 ||}addressing such post-judgment matters as may be appropriate under Court rules and 16 || applicable law. 17 6. Judgment is entered on the terms set forth above. The Clerk of Court is 18 || DIRECTED to close the case. 19 IT IS SO ORDERED. Jebut c Eh 20 || Dated: December 3, 2024 Hon. Robert S. Huie United States District Judge 22 23 24 25 26 27 28