1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 LUCAS MEJIA, on behalf of No. 2:19-cv-00218 WBS AC himself and all others similarly 13 situated, 14 Plaintiff, MEMORANDUM AND ORDER RE: MOTION FOR FINAL APPROVAL OF 15 v. CLASS ACTION SETTLEMENT AND MOTION FOR ATTORNEYS’ FEES, 16 WALGREEN CO., an Illinois COSTS, AND REPRESENTATIVE Corporation; WALGREEN CO./ILL., SERVICE PAYMENT 17 a business entity unknown; and DOES 1 to 100, inclusive, 18 Defendants. 19
20 ----oo0oo---- 21 Plaintiff Lucas Mejia, individually and on behalf of 22 all other similarly situated employees, brought this putative 23 class action against defendants Walgreen Co. and Walgreen 24 Co./Ill. (collectively, “defendants”), alleging violations of the 25 California Labor Code, Cal. Lab. Code §§ 201-203, 226.7, 510, 26 1194, 1997, 1198, the California Business and Professions Code, 27 Cal. Bus. Prof. Code § 17200, and the California Private 28 1 Attorneys General Act of 2004 (“PAGA”), Cal. Lab. Code § 2698, et 2 seq. (See First Am. Compl. (“FAC”) (Docket No. 1-6).) Plaintiff 3 now moves unopposed for final approval of the parties’ class 4 action settlement and attorneys’ fees, costs, and a class 5 representative service payment. (See Mot. for Final Approval 6 (Docket No. 28).) 7 I. Discussion1 8 The Ninth Circuit has declared a strong judicial policy 9 favoring settlement of class actions. Class Plaintiffs v. City 10 of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); see also 11 Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009) 12 (“We put a good deal of stock in the product of an arms-length, 13 non-collusive, negotiated resolution[.]”) (citation omitted). 14 Rule 23(e) provides that “[t]he claims, issues, or defenses of a 15 certified class may be settled . . . only with the court’s 16 approval.” Fed. R. Civ. P. 23(e). 17 “Approval under 23(e) involves a two-step process in 18 which the Court first determines whether a proposed class action 19 settlement deserves preliminary approval and then, after notice 20 is given to class members, whether final approval is warranted.” 21 Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 22 525 (C.D. Cal. 2004) (citing Manual for Complex Litig. (Third), 23 § 30.41 (1995)). This court satisfied step one by granting 24 plaintiff’s unopposed motion for preliminary approval of class 25
26 1 The court already recited the factual and procedural background in its order granting plaintiff’s unopposed motion for 27 preliminary approval of the class action settlement. (See Order Granting Preliminary Approval at 2-3 (Docket No. 24).) 28 Accordingly, the court will refrain from doing so again. 1 action settlement on November 24, 2020. (Docket No. 24.) Now, 2 following notice to the class members, the court will consider 3 whether final approval is merited by evaluating: (1) the 4 treatment of this litigation as a class action and (2) the terms 5 of the settlement. See Diaz v. Tr. Territory of Pac. Islands, 6 876 F.2d 1401, 1408 (9th Cir. 1989). 7 A. Class Certification 8 A class action will be certified only if it meets the 9 requirements of Rule 23(a)’s four prerequisites and fits within 10 one of Rule 23(b)’s three subdivisions. Fed. R. Civ. P. 23(a)- 11 (b). Although a district court has discretion in determining 12 whether the moving party has satisfied each Rule 23 requirement, 13 the court must conduct a rigorous inquiry before certifying a 14 class. See Califano v. Yamasaki, 442 U.S. 682, 701 (1979); Gen. 15 Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982). 16 1. Rule 23(a)
17 Rule 23(a) restricts class actions to cases where: (1) the class is so numerous that joinder of all 18 members is impracticable; (2) there are questions 19 of law or fact common to the class; (3) the claims or defenses of the representative parties are 20 typical of the claims or defenses of the class; and (4) the representative parties will fairly and 21 adequately protect the interests of the class. 22 Fed. R. Civ. P. 23(a). These requirements are commonly referred 23 to as numerosity, commonality, typicality, and adequacy of 24 representation. In the court’s order granting preliminary 25 approval of the settlement, the court found that the putative 26 class satisfied the Rule 23(a) requirements. (See Order Granting 27 Preliminary Approval at 6-12.) The court is unaware of any 28 1 changes that would affect its conclusion that the putative class 2 satisfies the Rule 23(a) requirements, and the parties have not 3 indicated that they are aware of any such developments. (Mot. 4 for Final Approval at 1-17.) The court therefore finds that the 5 class definition proposed by plaintiff meets the requirements of 6 Rule 23(a). 7 2. Rule 23(b) 8 An action that meets all the prerequisites of Rule 9 23(a) may be certified as a class action only if it also 10 satisfies the requirements of one of the three subdivisions of 11 Rule 23(b). Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th 12 Cir. 2013). In its order granting preliminary approval of the 13 settlement, the court found that both the predominance and 14 superiority prerequisites of Rule 23(b)(3) were satisfied. 15 (Order Granting Preliminary Approval at 12-17.) The court is 16 unaware of any changes that would affect its conclusion that Rule 17 23(b)(3) is satisfied. Because the settlement class satisfies 18 both Rule 23(a) and 23(b)(3), the court will grant final class 19 certification of this action. 20 3. Rule 23(c)(2) Notice Requirements 21 If the court certifies a class under Rule 23(b)(3), it 22 “must direct to class members the best notice that is practicable 23 under the circumstances, including individual notice to all 24 members who can be identified through reasonable effort.” Fed. 25 R. Civ. P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and 26 content of a proposed notice. See Ravens v. Iftikar, 174 F.R.D. 27 651, 658 (N.D. Cal. 1997) (citing Eisen v. Carlisle & Jacquelin, 28 417 U.S. 156, 172–77 (1974)). Although that notice must be 1 “reasonably certain to inform the absent members of the plaintiff 2 class,” actual notice is not required. Silber v. Mabon, 18 F.3d 3 1449, 1454 (9th Cir. 1994) (citation omitted). 4 The parties selected CPT Group, Inc. (“CPT”) to serve 5 as the Settlement Administrator. (Decl. of Daniel P. La with 6 Respect to Notification and Settlement Administration (“La 7 Decl.”), Ex. 2 to Decl. of Jordan D. Bello in Supp. Of Final 8 Approval (“Bello Decl.”) ¶ 1 (Docket No. 28-2).) Defendants 9 timely provided CPT with the class list, including the class 10 members’ names, social security numbers, last known mailing 11 address, employee identification number, and total number of 12 applicable workweeks worked. (Id. at ¶ 5.) The class list 13 contained 2,672 class members.2 (Id.) 14 To update the address data contained within the class 15 list provided by defendants and ensure delivery of the notice 16 packets, CPT conducted a National Change of Address (“NCOA”) 17 search using the United States Postal Service’s NCOA Database. 18 (Id. at ¶ 6.) As a result of the search, CPT was able to locate 19 328 new addresses. (Id.) CPT mailed notice packets to twelve 20 additional class members by First Class Mail on November 19, 21 2020, upon receiving social security number data from the 22 parties. (Id.) CPT then mailed notice packets to the entire 23 class list. (Id.) 24 As of February 22, 2021, 267 class notices were 25 returned to CPT by the U.S. Post Office as undeliverable. (Id. 26
27 2 Plaintiff originally estimated that there would be 2,648 class members. (See Order Granting Preliminary Approval at 28 6-7.) 1 at ¶ 8.) Through skip traces and requests from counsel or class 2 members, CPT was able to re-mail 257 class notices, 32 of which 3 remain undeliverable. (Id. at ¶ 9.) CPT also attempted to call 4 each of these class members but were unable to make contact. 5 (Id.) 6 CPT has received three responses from class members: 7 one written request for exclusion, and two deficient workweek 8 disputes. (Id. at ¶ 10.) The two class members who submitted 9 deficient workweek disputes stated that their workweeks were 10 incorrect and provided payroll documents, but did not specify the 11 number of workweeks they were disputing. (Id.) CPT states that 12 it sent these two class members deficiency letters attempting to 13 clarify this information, but has not, as of February 22, 2021, 14 heard back from either class member. (Id.) 15 Because CPT has received one valid request for 16 exclusion from the settlement, CPT will issue 2,671 individual 17 settlement amounts to participating class members, representing a 18 99.96% participation rate. (Id. at ¶ 12.) 19 “Notice is satisfactory if it ‘generally describes the 20 terms of the settlement in sufficient detail to alert those with 21 adverse viewpoints to investigate and to come forward and be 22 heard.’” Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 23 575 (9th Cir. 2004) (quoting Mendoza v. Tucson Sch. Dist. No. 1, 24 623 F.2d 1338, 1352 (9th Cir. 1980)). The notice identifies the 25 parties, explains the nature of the proceedings, defines the 26 class, provides the terms of the settlement, and explains the 27 procedure for objecting or opting out of the class. (La Decl. 28 ¶ 9, Ex. A.) The notice also explains how class members’ 1 individual settlement awards will be calculated and the amount 2 that class members can expect to receive. (Id.) Accordingly, 3 the notice complies with Rule 23(c)(2)(B)’s requirements.
4 B. Rule 23(e): Fairness, Adequacy, and Reasonableness of Proposed Settlement 5 6 Having determined that class treatment is warranted, 7 the court must now address whether the terms of the parties’ 8 settlement appear fair, adequate, and reasonable. See Fed. R. 9 Civ. P. 23(e)(2). To determine the fairness, adequacy, and 10 reasonableness of the agreement, Rule 23(e) requires the court to 11 consider four factors: “(1) the class representatives and class 12 counsel have adequately represented the class; (2) the proposal 13 was negotiated at arm's length; (3) the relief provided for the 14 class is adequate; and (4) the proposal treats class members 15 equitably relative to each other.” Id. The Ninth Circuit has 16 also identified eight additional factors the court may consider, 17 many of which overlap substantially with Rule 23(e)’s four 18 factors: The strength of the plaintiff’s case; the risk, 19 expense, complexity, and likely duration of further litigation; the risk of maintaining class 20 action status throughout the trial; the amount offered in settlement; the extent of discovery 21 completed and the stage of the proceedings; the experience and views of counsel; the presence of 22 a governmental participant; and the reaction of the class members to the proposed settlement. 23 24 Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998).3
25 3 Because claims under PAGA are “a type of qui tam action” in which an employee brings a claim as an agent or proxy 26 of the state’s labor law enforcement agencies, the court must 27 also “review and approve” settlement of plaintiff’s and other class members’ PAGA claims along with their class claims. See 28 Cal. Lab. Code § 2669(k)(2); Sakkab v. Luxottica Retail N. Am., 1 1. Adequate Representation 2 The court must first consider whether “the class 3 representatives and class counsel have adequately represented the 4 class.” Fed. R. Civ. P. 23(e)(2)(A). This analysis is 5 “redundant of the requirements of Rule 23(a)(4) . . . .” Hudson 6 v. Libre Tech., Inc., No. 3:18-cv-1371-GPC-KSC, 2020 WL 2467060, 7 at *5 (S.D. Cal. May 13, 2020) (quoting Rubenstein, 4 Newberg on 8 Class Actions § 13:48 (5th ed.)) see also In re GSE Bonds Antitr. 9 Litig., 414 F. Supp. 3d 686, 701 (S.D.N.Y. 2019) (noting 10 similarity of inquiry under Rule 23(a)(4) and Rule 23(e)(2)(A)). 11 Because the Court has found that the proposed class 12 satisfies Rule 23(a)(4) for purposes of class certification, the 13 adequacy factor under Rule 23(e)(2)(A) is also met. See Hudson, 14 2020 WL 2467060, at *5. 15 2. Negotiation of the Settlement Agreement 16 Counsel for both sides appear to have diligently 17 pursued settlement after thoughtfully considering the strength of 18 their arguments and potential defenses. The parties participated 19 in an arms-length mediation before an experienced employment 20 Inc., 803 F.3d 425, 435-36 (9th Cir. 2015). 21 Though “PAGA does not establish a standard for evaluating 22 PAGA settlements,” Rodriguez, 2019 WL 331159 at *4 (citing Smith v. H.F.D. No. 55, Inc., No. 2:15-CV-01293 KJM KJN, 2018 WL 23 1899912, at *2 (E.D. Cal. Apr. 20, 2018)), a number of district courts have applied the eight Hanlon factors, listed above, to 24 evaluate PAGA settlements. See, e.g., Smith, 2018 WL 1899912, at *2; Ramirez, 2017 WL 3670794, at *3; O’Connor v. Uber Techs., 201 25 F. Supp. 3d 1110, 1134 (N.D. Cal. 2016). “Many of these factors are not unique to class action lawsuits and bear on whether a 26 settlement is fair and has been reached through an adequate 27 adversarial process.” See Ramirez, 2017 WL 3670794, at *3. Thus, the court finds that these factors will also govern its 28 review of the PAGA settlement. See id. 1 litigation mediator, Lynn Frank, on December 5, 2019. (Bello 2 Decl. ¶ 7.) Though the case did not settle by the close of 3 mediation, the parties continued further negotiations which 4 resulted in settlement in principle in March 2020 and ultimately 5 resulted in the long-form Settlement Agreement now before the 6 court. (Id.) Given the sophistication and experience of 7 plaintiff’s counsel and the parties’ representation that the 8 settlement reached was the product of arms-length bargaining, the 9 court does not question that the proposed settlement is in the 10 best interest of the class. See Fraley v. Facebook, Inc., 966 F. 11 Supp. 2d 939, 942 (N.D. Cal. 2013) (holding that a settlement 12 reached after informed negotiations “is entitled to a degree of 13 deference as the private consensual decision of the parties” 14 (citing Hanlon, 150 F.3d at 1027)). 15 3. Adequate Relief 16 In determining whether a settlement agreement provides 17 adequate relief for the class, the court must “take into account 18 (i) the costs, risks, and delay of trial and appeal; (ii) the 19 effectiveness of any proposed method of distributing relief to 20 the class, including the method of processing class-member 21 claims; (iii) the terms of any proposed award of attorney's fees, 22 including timing of payment; and (iv) any [other] agreement[s]” 23 made in connection with the proposal. See Fed. R. Civ. P. 24 23(e)(2)(C); Baker v. SeaWorld Entm’t, Inc., No. 14-cv-02129-MMA- 25 AGS, 2020 WL 4260712, at *6-8 (S.D. Cal. Jul. 24, 2020). 26 The court notes that, in evaluating whether the 27 settlement provides adequate relief, it must consider 28 several of the same factors as outlined in Hanlon, 1 including the strength of the plaintiff’s case, the risk, 2 expense, complexity, and likely duration of further 3 litigation, the risk of maintaining class action status 4 throughout the trial, and the amount offered in settlement. 5 See Hanlon, 150 F.3d at 1026. 6 In determining whether a settlement agreement is 7 substantively fair to class members, the court must balance 8 the value of expected recovery against the value of the 9 settlement offer. See In re Tableware Antitrust Litig., 484 10 F. Supp. 2d 1078, 1080 (N.D. Cal. 2007). Here, plaintiff’s 11 counsel estimates that defendants’ potential exposure without 12 including PAGA penalties would be approximately $20,109,580. 13 (See Bello Decl. ¶ 32.) The case settled for $4,500,000, 14 which is approximately 22.37% of the potential damages. (See 15 id.) Plaintiff’s counsel stresses that, although the 16 settlement does not amount to defendants’ total potential 17 exposure, defendants would have put forward several 18 meritorious defenses that could have resulted in the class 19 receiving nothing. (See id.) 20 For instance, in response to plaintiff’s allegations 21 that defendants failed to pay wages at the applicable minimum 22 wage or overtime rate because they (1) improperly rounded off 23 hours worked on employee paychecks, and (2) conducted 24 mandatory off-the-clock security checks, defendants argue that 25 their quarter-hour rounding policy was neutral on its face, 26 such that employees were underpaid when the time was rounded 27 down to the nearest quarter-hour, but overpaid when the time 28 was rounded up to the nearest quarter-hour, and that they 1 ceased using rounding in January 2020. (See id. at ¶ 13.) 2 Defendants also argue that their security check policy was not 3 in effect throughout the entire class period, and only 4 required employees to briefly show their bags to security, 5 such that employees often were not even required to stop 6 working and, therefore, the policy resulted in a de minimus 7 amount of off-the-clock time. (See id.) Defendants would 8 have asserted essentially the same security-check defense in 9 response to plaintiff’s allegations that defendants failed to 10 provide legally-compliant meal and rest breaks due to the time 11 spent going through security checks, (see id. at ¶¶ 18-23), 12 as well as in response to plaintiff’s derivative wage 13 statement claims (see id. at ¶¶ 24-26). 14 In response to plaintiff’s allegations that 15 defendants incorrectly identified their identity on 16 employee wage statements, defendants argue that listing a 17 variant of their name (i.e., “Walgreen Co./Ill” instead of 18 “Walgreen Co.”) satisfies the requirements of Labor Code 19 § 226. (See id. at ¶ 28 (citing Elliot v. Spherion Pac. 20 Work, LLC, 572 F. Supp.2d. 1169, 1179-80 (C.D. Cal. 21 2008)).) Additionally, in response to plaintiffs’ waiting 22 time penalties claim, defendants would have argued that 23 plaintiff could not have proven defendants’ failure to pay 24 unpaid wages was willful, and that meal and rest period 25 wages do not give rise to Labor Code § 203 derivative 26 penalties. (See id. at ¶ 30.) 27 Because PAGA penalties arise from underlying 28 violations of the California Labor Code, all of these 1 defenses would apply to plaintiff’s PAGA claim as well. 2 Plaintiff’s counsel estimates that, considering these 3 defenses, plaintiff could have collected an additional 4 $16,059,468 in PAGA penalties. (See id. at ¶ 32.) 5 However, in actions involving wage and hour class claims 6 and PAGA claims that settle, parties often minimize the 7 total amount of the settlement that is paid to PAGA 8 penalties in order to maximize payments to class members. 9 See, e.g., Garcia v. Gordon Trucking, Inc., Case No. 1:10- 10 cv-0324 AWI SKO, 2012 WL 5364575, at *7 (E.D. Cal. Oct. 31, 11 2012) (granting final approval of $10,000 in PAGA penalties 12 out of a total settlement amount of $3,700,000); Chu v. 13 Wells Fargo Invs., LLC, Case Nos. C 06-4526 MHP, C 06-7924 14 MHP, 2011 WL 672645, at *4 (N.D. Cal. Feb. 16, 2011) 15 (granting final approval of $10,000 in PAGA penalties out 16 of a total settlement amount of $6,900,000). 17 In light of the risks associated with further 18 litigation, the relative strength of defendants’ arguments, 19 and the amount which comparably-sized settlements tend to 20 attribute to PAGA penalties, the court finds that the 21 settlement’s overall recovery of $4,500,000, with $150,000 22 allocated to PAGA penalties, counsels in favor of granting 23 final approval. 24 The court further finds the method of processing 25 class member claims to be adequate. Each class member’s 26 individual share of the settlement is proportional to the 27 number of weeks the class member worked for defendants during 28 the time period covered by the Settlement Agreement. (See 1 Bello Decl., Ex. 1 (“Settlement Agreement”) ¶ M(1) (Docket No. 2 28-2).) Plaintiff’s counsel estimates that the Settlement 3 Agreement will result in an average payment of approximately 4 $1,064.79 per employee. 5 The Settlement Agreement further authorizes 6 plaintiff’s counsel to seek attorney’s fees totaling 33% of 7 the $4,500,000 Gross Settlement Amount (“GSA”), or 8 $1,500,000. (See Settlement Agreement ¶ M(3).) 9 Plaintiff’s counsel now seeks less than that: 25% of the 10 GSA, or $1,125,000. (See Mot. for Final Approval at 18.) 11 If a negotiated class action settlement includes an award 12 of attorney’s fees, then the court “ha[s] an independent 13 obligation to ensure that the award, like the settlement 14 itself, is reasonable, even if the parties have already 15 agreed to an amount.” In re Bluetooth Headset Prods. Liab. 16 Litig., 654 F.3d 935, 941 (9th Cir. 2011). 17 Plaintiff’s counsel has filed a motion for attorneys’ 18 fees and costs pursuant to Federal Rule 23(h). Though the court 19 will address the reasonableness of counsel’s fees in additional 20 detail below, in Section C, the court is satisfied that counsel’s 21 fees are reasonable and support approval of the settlement. 22 In light of the claims at issue, defendants’ potential 23 exposure, the risk to plaintiff and to the class of proceeding to 24 trial, and the fact that the court finds counsel’s request for 25 attorneys’ fees to be reasonable (as discussed below), the court 26 finds that the substance of the settlement is fair to class 27 members and thereby “falls within the range of possible 28 approval,” both for plaintiff’s California Labor Code claims and 1 his PAGA claim. See Tableware, 484 F. Supp. 2d at 1079; Ramirez, 2 2017 WL 3670794, at *3. Counsel has not directed the court to 3 any other relevant agreements that would alter this analysis. 4 The court therefore finds that Rule 23(e)’s third factor is 5 satisfied. See Fed. R. Civ. P. 23(e)(C). 6 4. Equitable Treatment of Class Members 7 Finally, the court must consider whether the Settlement 8 Agreement “treats class members equitably relative to each 9 other.” See Fed. R. Civ. P. 23(e)(2)(D). In doing so, the Court 10 determines whether the settlement “improperly grant[s] 11 preferential treatment to class representatives or segments of 12 the class.” Hudson, 2020 WL 2467060, at *9 (quoting Tableware, 13 484 F. Supp. at 1079. 14 Here, the Settlement Agreement does not improperly 15 discriminate between any segments of the class, as all class 16 members are entitled to monetary relief based on the number of 17 compensable workweeks they spent working for defendants. (See 18 Settlement Agreement ¶ M(1); Bello Decl. ¶ 34.) Though two class 19 members disputed CPT’s calculation of the number of weeks they 20 worked for defendants, they did not object to the underlying formula 21 used to calculate the number of compensable workweeks or to 22 determine how much money they are entitled to under the Agreement. 23 (See La Decl. ¶ 10.) 24 While the Settlement Agreement allows plaintiff to seek 25 an incentive award of $7,500, plaintiff has submitted additional 26 evidence documenting his time and effort spent on this case, 27 which, as discussed further below, in Section E, has satisfied 28 the court that his additional compensation above other class 1 members is justified. See Hudson, 2020 WL 2467060, at *9. The 2 court therefore finds that the Settlement Agreement treats class 3 members equitably. See Fed. R. Civ. P. 23(e)(D). 4 5. Remaining Staton Factors 5 In addition to the Staton factors already considered as 6 part of the court’s analysis under Rule 23(e)(A)-(D), the court 7 must also take into account “the extent of the discovery 8 completed . . . the presence of government participation, and the 9 reaction of class members to the proposed settlement.” Staton, 10 327 F.3d at 959. 11 Through initial disclosures and informal discovery, 12 defendants provided a substantial amount of information that 13 appears to have allowed the parties to adequately assess the 14 value of plaintiff’s and the class’ claims. (See Bello Decl. 15 ¶ 6. ) Defendants provided electronic timecard data for 2,088 16 class members during the class period, consisting of 17 approximately 242,000 workweeks. (Id.) Defendants further 18 provided data like number of class members, workweeks, pay 19 periods, and average rate of pay, as well as written company 20 policies relating to each of plaintiff’s claims. (Id.) This 21 factor weighs in favor of final approval of the settlement. 22 The seventh Staton factor, pertaining to government 23 participation, also weighs in favor of approval. Staton, 327 24 F.3d at 959. Under PAGA, “[t]he proposed settlement [must be] 25 submitted to the [LWDA] at the same time that it is submitted to 26 the court.” Cal. Lab. Code § 2669(k)(2). Here, plaintiff 27 provided a copy of the settlement agreement to the LWDA on 28 October 26, 2020, and February 22, 2021, and gave notice to the 1 agency of the date and time of the preliminary approval and final 2 approval hearings. (Bello Decl. ¶ 48.) As of the date of this 3 order, the LWDA has not sought to intervene or otherwise objected 4 to the PAGA settlement. This factor therefore weights in favor 5 of final approval of the settlement. 6 The eighth Staton factor, the reaction of the class 7 members to the proposed settlement, also weighs in favor of final 8 approval. See Staton, 327 F.3d at 959. No class members 9 objected to the settlement, and only one class member opted out. 10 See id. 11 The court therefore finds that the remaining Staton 12 factors weigh in favor of preliminary approval of the Settlement 13 Agreement. See Ramirez, 2017 WL 3670794, at *3. 14 In sum, the four factors that the court must evaluate 15 under Rule 23(e) and the eight Staton factors, taken as a whole, 16 appear to weigh in favor of the settlement. The court will 17 therefore grant final approval of the Settlement Agreement. 18 C. Attorneys’ Fees 19 Federal Rule of Civil Procedure 23(h) provides, “[i]n a 20 certified class action, the court may award reasonable attorney’s 21 fees and nontaxable costs that are authorized by law or by the 22 parties’ agreement.” Fed. R. Civ. P. 23(h). If a negotiated 23 class action settlement includes an award of attorneys’ fees, 24 that fee award must be evaluated in the overall context of the 25 settlement. Knisley v. Network Assocs., 312 F.3d 1123, 1126 (9th 26 Cir. 2002); Monterrubio v. Best Buy Stores, L.P., 291 F.R.D. 443, 27 455 (E.D. Cal. 2013) (England, J.). The court “ha[s] an 28 independent obligation to ensure that the award, like the 1 settlement itself, is reasonable, even if the parties have 2 already agreed to an amount.” Bluetooth Headset, 654 F.3d at 3 941. 4 “Under the ‘common fund’ doctrine, ‘a litigant or a 5 lawyer who recovers a common fund for the benefit of persons 6 other than himself or his client is entitled to a reasonable 7 [attorneys’] fee from the fund as a whole.’” Staton v. Boeing 8 Co., 327 F.3d 938, 969 (9th Cir. 2003) (quoting Boeing Co. v. Van 9 Gemert, 444 U.S. 472, 478 (1980)). In common fund cases, the 10 district court has discretion to determine the amount of 11 attorneys’ fees to be drawn from the fund by employing either the 12 percentage method or the lodestar method. Id. The court may 13 also use one method as a “cross-check[ ]” upon the other method. 14 See Bluetooth Headset, 654 F.3d at 944. 15 As part of the settlement, the parties authorized 16 plaintiff’s counsel to seek attorney’s fees totaling 33% of the 17 $4,500,000 Gross Settlement Amount (“GSA”), or $1,500,000. (See 18 Settlement Agreement ¶ M(3).) However, plaintiff’s counsel now 19 seeks only 25% of the GSA, or $1,125,000. (See Mot. for Final 20 Approval at 18.) Once attorneys’ fees and costs, the plaintiff’s 21 service award, the PAGA allocation, and the estimated costs of 22 settlement administration have been distributed, an estimated Net 23 Settlement Amount of approximately $3,221,637.23 will be 24 distributed to the members of the settlement class. (See Mot. 25 for Final Approval at 5.) This works out to an average net share 26 of approximately $1,064.79 per class member. (See Bello Decl. ¶ 27 34.) Counsel represents that this award represents a favorable 28 result for the class that will bring meaningful relief. (Id.) A 1 review of wage and hour class action settlements in this district 2 confirms that this appears to be a favorable recovery for class 3 members that will be available without further delay. See, e.g., 4 Cooley v. Indian River Transp. Co., No. 1:18-cv-00491 WBS, 2019 5 WL 2077029 (E.D. Cal. May 10, 2019) (finding that $450.14 6 recovery per truck driver class member was a “favorable” result); 7 Ontiveros v. Zamora, No. 2:08-cv-00567 WBS DAD, 2014 WL 3057506 8 (E.D. Cal. July 7, 2014) (observing that an average recovery of 9 $6,000 was “a generous amount” and citing cases approving lower 10 per-class-member averages $601.91 and $1,000.00). 11 Like other complex employment class actions, this case 12 presented both counsel and the class with a risk of no recovery 13 at all. (Bello Decl. ¶ 33.) Plaintiff here faced a risk that he 14 would not prevail on a contested motion for class certification, 15 that he would not be able to prove up damages across the class, 16 and that defendants would prevail on one or more of their 17 affirmative defenses, including defenses that their security 18 checks merely deprived class members of de minimus amounts of 19 wages or that their rounding policy did not, on the whole, result 20 in class members being underpaid. (Id.) Plaintiff’s counsel 21 represents that his firm purely works on contingency. (See id. 22 at ¶ 40.) The nature of contingency work inherently carries 23 risks that counsel will sometimes recovers very little to nothing 24 at all, even for cases that may be meritorious. See Kimbo v. MXD 25 Group, Inc., Case No. 2:19-cv-00166 WBS KNJ, 2021 WL 492493, at 26 *7 (E.D. Cal. Feb. 10, 2021). Where counsel do succeed in 27 vindicating statutory and employment rights on behalf of a class 28 of employees, they depend on recovering a reasonable percentage- 1 of-the-fund fee award to enable them to take on similar risks in 2 future cases. See id. Plaintiff’s counsel argues that, in light 3 of the strong result and substantial risk taken in this case, a 4 25% fee, as requested here, is reasonable. 5 The Ninth Circuit has established 25% of the fund as 6 the “benchmark” award that should be given in common fund cases. 7 Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 8 1311 (9th Cir. 1990). As this court recently noted, “a review of 9 California cases . . . reveals that courts usually award 10 attorneys’ fees in the 30-40% range in wage and hour class 11 actions that result in recovery of a common fun[d] under $10 12 million.” Watson v. Tennant Co., No. 2:18-cv-02462 WBS DB, 2020 13 WL 5502318, at *7 (E.D. Cal. Sep. 11, 2020) (awarding 33.33% of 14 settlement fund); see also Osegueda v. N. Cal. Inalliance, No. 15 18-cv-00835 WBS EFB, 2020 WL 4194055, at *16 (E.D. Cal. July 21, 16 2020) (same); Cooley, 2019 WL 2077029, at *20 (fee award of 33% 17 of the common fund in class action alleging missed meal and rest 18 breaks for class of truck drivers). Given that the requested fee 19 is in line with the Ninth Circuit’s benchmark for reasonable fee 20 requests in common fund cases, and, if anything, seems to be 21 lower than the percentage that is routinely awarded in cases of 22 this type, the court agrees that plaintiff’s counsel’s requested 23 percentage of the common fund is reasonable, especially when 24 viewed in light of the substantial recovery obtained on behalf of 25 class members and the risks undertaken by plaintiff’s counsel in 26 this case. 27 A “lodestar-multiplier” cross-check confirms the 28 reasonableness of the requested award. Plaintiff’s counsel has 1 calculated a lodestar figure in this case of $346,305.00. (See 2 Bello Decl. ¶¶ 41-43, 46.) Plaintiff’s counsel maintains 3 contemporaneous billing logs which reflect time billed in one- 4 tenth of an hour increments. (Id. at Ex. 12; Decl. of Sahag 5 Majarian (“Majarian Decl.”), Ex. A.) Attorneys at the two firms 6 representing plaintiff represent that they have dedicated 7 approximately 491.17 hours of work to this case.4 (Id. ¶¶ 47.) 8 The firms are highly specialized in wage and hour matters and 9 class action cases, and their hourly rates have been approved by 10 a number of federal and state courts in California. (Bello Decl. 11 ¶¶ 39-45; Majarian Decl. ¶ 4.) 12 In his accompanying declaration, Mr. Bello states that 13 one of the attorneys at his firm, Mr. Lavi, did “not record[] 14 many hours which he estimates to be 40 hours expended on phone 15 calls with co-counsel, the client, Defendant’s Counsel, and the 16 mediator, and expended in research and review/drafting of 17 documents.” Accordingly, the court will deduct 40 hours from Mr. 18 Lavi’s lodestar estimate. Instead of $138,075 (184.1 hours x 19 $750/hour), the court will use a lodestar estimate of $108,075 20 for Mr. Lavi. 21 Plaintiff’s counsel’s calculated lodestar figure 22 results in an overall lodestar multiplier of approximately 3.25. 23 After adjusting Mr. Lavi’s lodestar estimate, the overall 24 lodestar multiplier plaintiff seeks is 3.56 ($1,125,000 divided 25 by lodestar of $316,305). In class actions, “[m]ultipliers can 26 4 The hourly rates of the three attorneys who worked on 27 this matter are $650 per hour, $750 per hour, and $700 per hour, respectively. (Bello Decl. ¶¶ 43, 46.) 28 1 range from 2 to 4 or even higher.” Wershba v. Apple Computer, 2 Inc., 91 Cal. App. 4th 224, 255 (2001).5 “Indeed, ‘courts have 3 routinely enhanced the lodestar to reflect the risk of non- 4 payment in common fund cases.’” Vizcaino, 290 F.3d at 1051 5 (approving fee award where lodestar cross-check resulted in 6 multiplier of 3.65); see also id. at 1052 n.6, appx. (collecting 7 cases and finding that risk multiplier fell between 1.0 and 4.0 8 in 83% of cases); In re NASDAQ Market-Makers Antitrust Litig., 9 187 F.R.D. 465, 489 (S.D.N.Y. 1998) (awarding 3.97 multiplier and 10 observing that “[i]n recent years multipliers of between 3 and 11 4.5 have become more common”). 12 Factors considered in determining the appropriate 13 lodestar multiplier generally include: (1) the risks presented by 14 the contingent nature of the case; (2) the difficulty of the 15 questions involved and the skill requisite to perform the legal 16 service properly; (3) the nature of the opposition; (4) the 17 preclusion of other employment by the attorney from accepting the 18 case; and (5) the result obtained. Ketchum v. Moses, 24 Cal. 4th 19 1122, 1132 (Cal. 2001); Graham v. DaimlerChrysler Corp., 34 Cal. 20 4th 553, 582 (Cal. 2004); Serrano v. Priest, 20 Cal.3d 25, 48-49 21 (Cal. 1977). Given the risks undertaken by plaintiff’s counsel, 22 the defenses likely to be raised by defendant, the strong result 23 for the class, as well as plaintiff’s counsel’s representation 24 that their firms had to forego requests other opportunities for 25 employment to ensure that they would be able to adequately and 26 5 Federal courts incorporate California state law on 27 deciding an appropriate multiplier when the claims are brought under California state law. Vizcaino v. Microsoft Corp., 290 28 F.3d 1043, 1047 (9th Cir. 2002). 1 successfully represent plaintiff and the class in this matter 2 (Mot. for Final Approval at 22), the court finds that these 3 factors support a multiplier of 3.56 in this case. See Johnson 4 v. Fujitsu Tech. & Bus. of Am., Inc., No. 16-cv-03698-NC, 2018 5 U.S. Dist. LEXIS 80219, at *20 (N.D. Cal. May 11, 2018) (finding 6 multiplier of 4.37 to be reasonable); In re NCAA Ath. Grant-In- 7 Aid Cap Antitrust Litig., 2017 U.S. Dist. LEXIS 201108, at *21 8 (N.D. Cal. Dec. 6, 2017) (finding multiplier of 3.66 to be “well 9 within the range of awards in other cases”); Kimbo v. MXD Group, 10 Inc., No. 2:19-cv-00166 WBS KJN, 2021 WL 492493, at *8 (E.D. Cal. 11 Feb. 10, 2021) (granting final approval where lodestar crosscheck 12 yielded multiplier of 3.7). 13 Accordingly, the court finds the requested fees to be 14 reasonable and will approve counsel’s motion for attorneys’ fees. 15 D. Costs 16 “There is no doubt that an attorney who has created a 17 common fund for the benefit of the class is entitled to 18 reimbursement of reasonable litigation expenses from that fund.” 19 In re Heritage Bond Litig., Civ. No. 02-1475, 2005 WL 1594403, at 20 *23 (C.D. Cal. June 10, 2005). Here, the parties agreed that 21 plaintiff’s counsel shall be entitled to recover reasonable 22 litigation costs, not to exceed $15,000. (Settlement Agreement 23 ¶ M(3).) Counsel’s litigation expenses and costs are $11,362.77. 24 (Bello Decl. ¶ 47.) These expenses include filing fees, court 25 fees, mediation fees, legal research, and data analysis. (Id.) 26 The court finds these are reasonable litigation expenses. 27 Therefore, the court will grant class counsel’s request for costs 28 in the amount of $11,362.77. 1 E. Representative Service Award 2 “Incentive awards are fairly typical in class action 3 cases.” Rodriguez, 563 F.3d at 958. “[They] are intended to 4 compensate class representatives for work done on behalf of the 5 class, to make up for financial or reputational risk undertaken 6 in bringing the action, and, sometimes, to recognize their 7 willingness to act as a private attorney general.” Id. at 958- 8 59. 9 Nevertheless, the Ninth Circuit has cautioned that 10 “district courts must be vigilant in scrutinizing all incentive 11 awards to determine whether they destroy the adequacy of the 12 class representatives . . . .” Radcliffe v. Experian Info. 13 Solutions, Inc., 715 F.3d 1157, 1164 (9th Cir. 2013). In 14 assessing the reasonableness of incentive payments, the court 15 should consider “the actions the plaintiff has taken to protect 16 the interests of the class, the degree to which the class has 17 benefitted from those actions” and “the amount of time and effort 18 the plaintiff expended in pursuing the litigation.” Staton, 327 19 F.3d at 977 (citation omitted). The court must balance “the 20 number of named plaintiffs receiving incentive payments, the 21 proportion of the payments relative to the settlement amount, and 22 the size of each payment.” Id. 23 In the Ninth Circuit, an incentive award of $5,000 is 24 presumptively reasonable. Davis v. Brown Shoe Co., Inc., No. 25 1:13-01211 LJO BAM, 2015 WL 6697929, at *11 (E.D. Cal. Nov. 3, 26 2015) (citing Harris v. Vector Marketing Corp., No. C-08-5198 27 EMC, 2012 WL 381202, at *7 (N.D. Cal. Feb. 6, 2012) (collecting 28 cases). The single named plaintiff, Lucas Mejia, seeks an 1 incentive payment of $7,500. (Mot. for Final Approval at 22-24.) 2 Mejia represents that he has devoted significant time and 3 resources to the case for over two years, risking both his 4 finances and his reputation. (Decl. of Lucas Mejia (“Mejia 5 Decl.”) ¶ 5 (Docket No. 28-4).) As set forth in his declaration, 6 Mejia sought out an attorney for his employment claims in fall 7 2018. (See id.) He provided his attorneys with information 8 regarding his experiences at Walgreens, spent time searching for 9 policies and other documents spanning his seven-year employment 10 with Walgreens, and spoke with and located some of his former 11 coworkers to see if they would be willing to provide additional 12 evidence or come forward as witnesses. (Id.) Mejia traveled 13 from Woodland, California, to Irvine, California, to attend and 14 participate in mediation. (Id.) Mejia participated in 15 negotiations and, once the Settlement Agreement was finalized, he 16 spent time reviewing it and discussing it with his attorneys 17 before signing it on behalf of himself and the class. (See id. 18 at ¶¶ 3-5.) These efforts by Mejia appear to be significant, and 19 support awarding him with an incentive payment. See Staton, 327 20 F.3d at 977. 21 In addition, Mejia’s contributions to the litigation 22 will significantly benefit the class. Mejia appears to have 23 played a key role in bringing this case to the attention of class 24 counsel to challenge what he viewed as unfair business practices 25 that resulted in employees being paid less than they were owed 26 under California labor laws. (See id. at ¶ 4.) Mejia’s efforts 27 in bringing the case, along with the professional risk he exposed 28 himself to by volunteering to act as a class representative, have 1 resulted in a strong result for the class. (See Bello Decl. 2 ¶ 34.) 3 In light of Mejia’s efforts and risks incurred in 4 bringing this action, the court finds his requested incentive 5 award of $7,500 to be reasonable and will approve the award. 6 II. Conclusion 7 Based on the foregoing, the court will grant final 8 certification of the settlement class and will approve the 9 settlement set forth in the settlement agreement as fair, 10 reasonable, and adequate. The Settlement Agreement shall be 11 binding upon all participating class members who did not exclude 12 themselves. 13 IT IS THEREFORE ORDERED that plaintiff’s unopposed 14 motion for final approval of the parties’ class action settlement 15 and attorneys’ fees, costs, and a class representative service 16 payment (Docket No. 28) be, and the same hereby is, GRANTED. 17 IT IS FURTHER ORDERED THAT: 18 (1) Solely for the purpose of this settlement, and 19 pursuant to Federal Rule of Civil Procedure 23, the court hereby 20 certifies the following class: all current and former non-exempt 21 employees who worked at any of defendants’ California distribution 22 centers at any time between November 6, 2014, and June 2, 2020. 23 (2) The court appoints the named plaintiff Lucas Mejia 24 as class representative and finds that he meets the requirements 25 of Rule 23; 26 (3) The court appoints law firm of Lavi & Ebrahimian, 27 LLP and the Law Offices of Sahag Majarian II as class counsel and 28 finds that they meet the requirements of Rule 23; 1 (4) The settlement agreement’s plan for class notice is 2 the best notice practicable under the circumstances and satisfies 3 the requirements of due process and Rule 23. The plan is 4 approved and adopted. The notice to the class complies with Rule 5 23(c)(2) and Rule 23(e) and is approved and adopted; 6 (5) The court finds that the parties and their counsel 7 took appropriate efforts to locate and inform all class members 8 of the settlement. The Settlement Administrator has identified 9 Wesley Bishop as an employee who has timely requested exclusion 10 from the settlement and thus has been excluded from the class, is 11 not a class member, and is not bound by the judgment or release 12 in this action. Given that no class member filed an objection to 13 the settlement, the court finds that no additional notice to the 14 class is necessary; 15 (6) As of the date of the entry of this order, 16 plaintiff and all class members who have not timely opted out of 17 this settlement herby do and shall be deemed to have fully, 18 finally, and forever released, settled, compromised, 19 relinquished, and discharged defendants of and from any and all 20 settled claims, pursuant to the release provisions stated in the 21 parties’ settlement agreement; 22 (7) Plaintiff’s counsel is entitled to fees in the 23 amount of $1,125,000, and litigation costs in the amount of 24 $11,362.77; 25 (8) CPT Group, Inc. is entitled to administration costs 26 in the amount of $22,000; 27 (9) Plaintiff Lucas Mejia is entitled to an inventive 28 award in the amount of $7,500; ee IE III I EI EIEIO EE IE NO mE
1 (10) $112,500 from the gross settlement amount shall be 2 paid to the California Labor and Workforce Development Agency in 3 satisfaction of defendants’ alleged penalties under the Labor 4 Code Private Attorneys General Act; 5 (11) The remaining settlement funds shall be paid to 6 | participating class members in accordance with the terms of the 7 Settlement Agreement; and 8 (12) This action is dismissed with prejudice. However, 9 | without affecting the finality of this Order, the court shall 10 retain continuing jurisdiction over the interpretation, 11 implementation, and enforcement of the Settlement Agreement with 12 respect to all parties to this action and their counsel of 13 record. 14 The clerk is instructed to enter judgment accordingly. 15 | Dated: March 23, 2021 Jed ak. 2 16 WILLIAM B. SHUBB 17 UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 27