Ornelas v. Tapestry, Inc.

District Court, N.D. California·Decided April 29, 2022·No. 3:18-cv-06453·Unknown

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8

10 JOHN ORNELAS, 11 Plaintiff, No. C 18-06453 WHA

12 v.

13 TAPESTRY, INC., ORDER RE MOTION FOR FINAL SETTLEMENT APPROVAL AND 14 Defendant. MOTION FOR ATTORNEY’S FEES

15 16 INTRODUCTION 17 In this wage-and-hour action, the parties move for final approval of their class settlement 18 and class counsel move for attorney’s fees and costs. To the extent stated below, the motions 19 are GRANTED. 20 STATEMENT 21 Prior orders detailed our facts (Dkt. Nos. 65, 72). In brief, plaintiff worked as a sales 22 associate at defendant’s retail store, which required its employees to undergo a security check 23 prior to leaving the store. Plaintiff alleged that defendant did not pay him for time spent 24 undergoing the security checks and that the security checks interfered with meal and rest breaks. 25 A previous order granted defendant’s motion for partial summary judgment as to the meal and 26 rest breaks, leaving only plaintiff’s claims for unpaid wages and overtime (Dkt. No. 65). A 27 subsequent order then certified the wage and overtime claims for class treatment (Dkt. No. 72). 1 Specifically, the only issues certified for class treatment were the class’s “claims for unpaid 2 minimum wages and overtime incurred as a result of defendant’s security check policy” (ibid.). 3 The parties reached a class action settlement agreement in November 2021 that would 4 create a $342,500 fund to compensate the class (Dkt. No. 79). Since preliminary approval, 5 notice of the settlement has reached 188 of 190 class members (Dkt. 87-3, ¶ 9). 6 The parties now move for final approval of the settlement and class counsel moves for 7 fees and costs to be paid out of the common fund. There were no opt-outs or objections to the 8 settlement or the requested attorney’s fees and costs. This order follows a full fairness hearing. 9 ANALYSIS 10 “The class action device, while capable of the fair and efficient adjudication of a large 11 number of claims, is also susceptible to abuse and carries with it certain inherent structural 12 risks.” Officers for Just. v. Civ. Serv. Comm’n of City & Cnty. of S.F., 688 F.2d 615, 623 (9th 13 Cir. 1982). A settlement purporting to bind absent class members must be fair, reasonable, and 14 adequate. See FRCP 23(e). Rule 23(e)(2) requires district courts to employ a two-step process. 15 First, the parties must show the district court will likely be able to approve the proposed 16 settlement. Second, the district court must hold a hearing to make a final determination of 17 whether the settlement is fair, reasonable, and adequate. We have arrived at step two. 18 Our court of appeals recently explained that the final fairness assessment must analyze the 19 eight Churchill factors: (1) the strength of the plaintiff’s case; (2) the suit’s risk, expense, 20 complexity, and the likely duration of further litigation; (3) the risk of maintaining class action 21 status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery and 22 the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a 23 governmental participant (if any); and (8) the reaction of the class members to the proposed 24 settlement. Kim v. Allison, 8 F.4th 1170, 1178–79 (9th Cir. 2021) (quoting In re 25 Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011)); Churchill Vill. v. 26 Gen. Elec., 361 F.3d 566 (9th Cir. 2004). Additionally, Rule 23(e)(2) requires the district court 27 to consider an overlapping set of factors, including the adequacy of the notice procedure, “the 1 conflicts of interest, and any other relevant factors, before deeming the settlement fair. Kim, 8 2 F.4th at 1179; Briseño v. Henderson, 998 F.3d 1014, 1023–26 (9th Cir. 2021). Among the other 3 relevant factors that will be considered are those listed by this Court in its notice regarding 4 factors to be evaluated for any proposed class settlement, filed herein on November 7, 2018 5 (Dkt. No. 14). 6 In short, in consideration for the dismissal of this action with prejudice and a release of all 7 claims incurred as a result of the security check, the settlement creates a $342,500 fund to 8 compensate the class. The common fund will be distributed on a pro-rata basis based upon the 9 number of weeks worked by each class member. On average, each class member will receive a 10 settlement payment of approximately $1,227.50. 11 1. THE CHURCHILL FACTORS. 12 This order first turns to the eight Churchill factors. 13 First and second, the strength of plaintiff’s case and the risk, expense, and complexity of 14 the case supports settlement. While in a wholly separate case the California Supreme Court 15 recently held that employees must be compensated for time spent undergoing security checks, 16 Frlekin v. Apple, 8 Cal. 5th 1038 (2020), plaintiff still faced some risk. Defendant provided 17 several individual employee declarations suggesting that the security check policy was not 18 uniformly administered. Some employees went through the security checks on-the-clock, some 19 did not go through the security checks at all, and some managers at some store locations did not 20 require the checks. Even when the checks were done, the amount of time spent undergoing 21 them varied. Thus, assessing damages in this case would require litigating the issue of who 22 actually stood in line and for how long. Moreover, defendant has argued that, because some 23 employees only went through the security checks irregularly or very briefly, a de minimis rule, 24 which generally holds that employees cannot recover for otherwise compensable time if it is de 25 minimis, would preclude recovery for some portion of the class. See Troester v. Starbucks 26 Corp., 5 Cal. 5th 829, 848 (2018) (leaving “open whether there are wage claims involving 27 employee activities that are so irregular or brief in duration that employers may not be 1 have had to litigate that issue. Thus, while plaintiff’s case is strong in theory in light of the 2 Frlekin decision, plaintiff nonetheless faced risks at trial as to the scope and regularity of 3 defendant’s security check practices. 4 Third, the risk of maintaining class action status throughout the trial is a neutral factor. 5 An August 2021 order certified a Rule 23 class (Dkt. No. 72). However, for the reasons stated 6 above, the damages phase of the trial could still present individualized issues of proof that 7 might complicate a class-wide verdict. 8 Fourth, the total settlement amount modestly favors settlement. The settlement provides 9 for a non-reversionary class settlement amount of $342,500. Taking into account attorney’s 10 fees, costs, and other overhead, $307,693.69 is allocated to the class, which averages out to 11 approximately $1,227.50 per each of the 188 class members. The settlement represents about 12 forty percent of what plaintiff asserts is defendant’s total exposure (Kizirian Decl. ¶ 39). In 13 absolute terms, this is a low-end settlement. Moreover, the settlement does not provide for any 14 non-monetary relief addressing employees’ time spent undergoing security checks. However, 15 given the uncertainty about prospective damages and Frlekin’s unambiguous holding that such 16 time is compensable, the monetary relief qualifies as adequate. 17 Fifth, the stage of the proceedings somewhat supports settlement. The parties engaged in 18 some discovery.

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