1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 JOSEPH OSEGUEDA, individually No. 18-cv-00835 WBS EFB and on behalf of all similarly 13 situated and/or aggrieved employees of Defendants in the 14 State of California, MEMORANDUM AND ORDER RE: MOTION FOR PRELIMINARY 15 Plaintiff, APPROVAL OF CLASS ACTION SETTLEMENT 16 v. 17 NORTHERN CALIFORNIA INALLIANCE; and DOES 1 through 50, 18 inclusive, 19 Defendants. 20 21 ----oo0oo---- 22 Plaintiff Joseph Osegueda, individually and on behalf 23 of all other similarly situated employees, brought this putative 24 class action against Defendant Northern California InAlliance 25 alleging violations of state and federal wage and hour laws. 26 (First Am. Compl. (“FAC”) (Docket No. 14).) Before the court is 27 plaintiff’s unopposed motion for preliminary approval of a class 28 action settlement reached by the parties. (Mot. for Prelim. 1 Approval (Docket No. 23).) 2 I. Factual and Procedural Background 3 Defendant InAlliance is a non-for-profit that provides 4 independent living services to adults with developmental 5 disabilities. (Decl. of Joseph Osegueda (“Osegueda Decl.”) ¶ 5 6 (Docket No. 23-3); Decl. of Graham Hollis (“Hollis Decl.”) ¶ 17 7 (Docket No. 23-2).) These services enable participants to live 8 independently in their own home, instead of living with family or 9 in communal housing. (Osegueda Decl. ¶ 5.) Plaintiff worked for 10 InAlliance as an Independent Living Facilitator (“Living 11 Facilitator”) in Sacramento and Yolo County in 2017. (Osegueda 12 Decl. ¶ 3-4.) 13 As a Living Facilitator, plaintiff assisted 14 participants with personal care and tasks around the home. 15 (Osegueda Decl. ¶ 6.) InAlliance classified plaintiff and other 16 Living Facilitators as “personal attendants” and did not pay them 17 for daily overtime. (Osegueda Decl. ¶ 4; Hollis Decl. ¶ 130.) 18 InAlliance also allegedly required Living Facilitators to use 19 their personal cell phones to communicate with their supervisors 20 and did not pay Living Facilitators for “sleep time” during 21 shifts of twenty-four hours or longer. (Osegueda Decl. ¶¶ 8, 22 11.) Plaintiff brought this action against defendant, alleging: 23 (1) failure to pay minimum and regular wages; (2) failure to pay 24 overtime wages; (3) failure to indemnify necessary business 25 expenses; (4) failure to provide accurate itemized wage 26 statements; (5) failure to timely pay all ages due upon 27 separation of employment; (6) violation of California’s Business 28 and Professions Code, Cal. § 17200, et seq.; (7) violation of 1 California’s Private Attorneys General Act of 2004 (“PAGA”), Cal. 2 Lab. Code § 2698, et seq.; and (8) violation of the Fair labor 3 Standards Act (“FLSA”), 29 U.S.C. §§ 207, 211(c), 216(b). (FAC 4 ¶¶ 67-158.) 5 Defendant removed the action to this court in April 6 2018 (Docket No. 1) and denied any liability or wrongdoing of any 7 kind. (See generally Def.’s Answer (Docket No. 16).) After 8 exchanging initial disclosures and completing an independent 9 investigation, the parties participated in a private mediation 10 and eventually reached a settlement agreement. (Memo. Supp. 11 Prelim. Approval (Docket No. 23-1) at 5.) 12 Under the terms of the agreement, InAlliance will pay a 13 non-reversionary sum of $225,000. (Joint Stipulation of 14 Settlement (“Settlement Agreement”) ¶ 1.19 (Docket No. 23-2, Ex. 15 1).) The total settlement amount would be distributed as 16 follows: (1) a maximum of $75,000 to class counsel for attorney’s 17 fees; (2) a maximum of $9,000 to class counsel for reimbursement 18 of out-of-pocket expenses; (3) an award of $5,000 to plaintiff 19 for serving as the class representative; (4) $11,250 to the 20 California Labor & Workforce Development Agency (“LWDA”) to cover 21 the cost of penalties, with 75 percent of the award going to LWDA 22 and the remaining 25 percent to the PAGA Aggrieved Employees1; 23 (5) a maximum of $10,500 to the settlement administrator, ILYM 24 Group, Inc., (“ILYM Group”) for reimbursement of settlement
25 1 “PAGA Aggrieved Employees” is defined as “all current and former employees of [d]efendant in the State of California in 26 the position of Independent Living Facilitator (“ILF”) during the 27 PAGA Period.” (Settlement Agreement ¶ 1.25.) The “PAGA Period” is confined from February 22, 2017 through January 15, 2020. 28 (Settlement Agreement ¶ 1.26.) 1 administration costs; and (7) the remaining amount, approximately 2 $122,526.50 (“class fund”) to the participating class members. 3 (Memo. Supp. Prelim. Approval at 6.) 4 The parties now seek the court’s preliminary approval 5 of the proposed settlement agreement. 6 II. Discussion 7 Federal Rule of Civil Procedure 23(e) provides that 8 “[t]he claims, issues, or defenses of a certified class may be 9 settled . . . only with the court’s approval.” Fed. R. Civ. P. 10 23(e). “To vindicate the settlement of such serious claims, 11 however, judges have the responsibility of ensuring fairness to 12 all members of the class presented for certification.” Staton v. 13 Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). “Where [] the 14 parties negotiate a settlement agreement before the class has 15 been certified, settlement approval requires a higher standard of 16 fairness and a more probing inquiry than may normally be required 17 under Rule 23(e).” Roes, 1-2 v. SFBSC Mgmt., LLC, --- F.3d ---, 18 2019 WL 6721190, at *10 (9th Cir. 2019). 19 The approval of a class action settlement takes place 20 in two stages. In the first stage, “the court preliminarily 21 approves the settlement pending a fairness hearing, temporarily 22 certifies a settlement class, and authorizes notice to the 23 class.” Ontiveros v. Zamora, No. 2:08-567 WBS DAD, 2014 WL 24 3057506, at *2 (E.D. Cal. July 7, 2014). In the second, the 25 court will entertain class members’ objections to (1) treating 26 the litigation as a class action and/or (2) the terms of the 27 settlement agreement at the fairness hearing. Id. The court 28 will then reach a final determination as to whether the parties 1 should be allowed to settle the class action following the 2 fairness hearing. Id. Consequently, this order “will only 3 determine whether the proposed class action settlement deserves 4 preliminary approval and lay the ground work for a future 5 fairness hearing.” See id. (citations omitted). 6 A. Class Certification 7 To be certified, the putative class must satisfy both 8 the requirements of Federal rule of Civil Procedure 23(a) and 9 (b). Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 10 2013). Each will be discussed in turn. 11 1. Rule 23(a) 12 In order to certify a class, Rule 23(a)’s four 13 threshold requirements must be met: numerosity, commonality, 14 typicality, and adequacy of representation. Fed. R. Civ. P. 15 23(a). “Class certification is proper only if the trial court 16 has concluded, after a ‘rigorous analysis,’ that Rule 23(a) has 17 been satisfied.” Wang v. Chinese Daily News, Inc., 737 F.3d 538, 18 542-43 (9th Cir. 2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 19 564 U.S. 338, 351 (2011)). 20 i. Numerosity 21 While Rule 23(a)(1) requires that the class be “so 22 numerous that joinder of all members is impracticable,” Fed. R. 23 Civ. P. 23(a)(1), it does not require “a strict numerical cut- 24 off.” McCurley v. Royal Seas Cruises, Inc., 331 F.R.D. 142, 167 25 (S.D. Cal. 2019) (Bashant, J.) (citations omitted). Generally, 26 “the numerosity factor is satisfied if the class compromises 40 27 or more members.” Id. (quoting Celano v. Marriott Int’l, Inc., 28 242 F.R.D. 544, 549 (N.D. Cal. 2007).) Here, defendant has 1 already identified over 350 potential class members that worked 2 for InAlliance from 2015 to 2018. (Hollis Decl. ¶ 128.) 3 Accordingly, the numerosity element is satisfied. 4 ii. Commonality 5 Next, Rule 23(a) requires that there be “questions of 6 law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). 7 Rule 23(a)(2) is satisfied when there is a “common contention . . 8 . of such a nature that it is capable of classwide resolution-- 9 which means that determination of its truth or falsity will 10 resolve an issue that is central to the validity of each one of 11 the claims in one stroke.” Wal-Mart Stores, 564 U.S. at 350. 12 “Plaintiffs need not show that every question in the case, or 13 even a preponderance of questions, is capable of classwide 14 resolution. So long as there is ‘even a single common question,’ 15 a would-be class can satisfy the commonality requirement of Rule 16 23(a)(2).” Wang, 737 F.3d at 544 (citing Wal-Mart Stores, 564 17 U.S. at 350). 18 Here, the “class” is defined as members of the 19 Independent Living Facilitator Class and the Waiting Time 20 Penalties Subclass. (Settlement Agreement ¶ 1.1.) “Independent 21 Living Facilitator Class Member” means “all current or former 22 employees of InAlliance who worked in the State of California in 23 the position of Independent Living Facilitator (“ILF”) at any 24 time from February 22, 2014 through the Preliminary Approval 25 Date.” (Id. ¶ 1.16.) Additionally, members of the “Waiting Time 26 Penalties Subclass” includes “any members of the Independent 27 Living Facilitator Class whose employment ended, according to 28 InAlliance records, between February 22, 2015 and the Preliminary 1 Approval Date and who does not timely opt-out of the Settlement 2 Class.” (Id. ¶ 1.42.) 3 Plaintiff contends that each class member was subjected 4 to the same overtime policy that resulted in their underpayment 5 and each class member was not informed that they were entitled to 6 reimbursement for the work-related use of their cell phones. 7 (Hollis Decl. ¶¶ 18-23.) Generally, “the fact that an employee 8 challenges a policy common to the class as a whole creates a 9 common question whose answer is apt to drive the resolution of 10 the litigation.” Ontiveros, 2014 WL 3057506, at *5. While 11 calculations of wages due might vary based on the individual,2 12 “the presence of individual damages cannot, by itself, defeat 13 class certification.” Leyva, 716 F.3d at 514 (quoting Wal-Mart 14 Stores, 564 U.S. at 362). Here, the claims implicate common 15 questions of law and fact because they are premised on a common 16 policy. Additionally, the claims can be substantiated by 17 examining common methods of proof, which weighs in favor of 18 finding commonality. See Ontiveros, 2014 WL 3057506, at *6 19 (collecting cases). Accordingly, the putative class satisfies 20 the commonality requirement. 21 iii. Typicality 22 Rule 23(a) further requires that the “claims or 23 defenses of the representative parties [be] typical of the claims 24 or defenses of the class.” Fed. R. Civ. P. 23(a)(3). The test 25
26 2 Class members shall receive a pro-rata portion of the class fund based upon their number of qualifying work weeks. 27 (Settlement Agreement ¶ 2.3.4.) The Waiting Time Penalties Subclass participants will receive an allotment of six additional 28 qualifying work weeks. (Id.) 1 for typicality is “whether other members have the same or similar 2 injury, whether the action is based on conduct which is not 3 unique to the named plaintiffs, and whether other class members 4 have been injured by the same course of conduct.” Sali v. Corona 5 Reg’l Medical Ctr., 909 F.3d 996, 1006 (9th Cir. 2018) (quoting 6 Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)). 7 As discussed above, all of the Living Facilitators were 8 classified as non-exempt and all allegedly suffered the same or 9 similar overtime violations and failures to reimburse for their 10 business expenses. (Osegueda Decl. ¶ 4; Hollis Decl. ¶¶ 18-23.) 11 Similarly, plaintiff’s waiting time penalties claim is typical of 12 the Waiting Time Penalties Subclass because they are derivative 13 of the same alleged failure to properly pay for all overtime 14 hours worked. (See FAC ¶¶ 103-110.) Furthermore, the claims of 15 plaintiff and the putative class are based on identical legal 16 theories. (See generally FAC.) Accordingly, plaintiff’s claims 17 appear to be reasonably coextensive with those of the proposed 18 class, and Rule 23(a)’s typicality requirement is satisfied. 19 iv. Adequacy of Representation 20 Finally, Rule 23(a) requires that “the representative 21 parties will fairly and adequately protect the interests of the 22 class.” Fed. R. Civ. P. 23(a)(4). Rule 23(a)(4) “serves to 23 uncover conflicts of interest between named parties and the class 24 they seek to represent” as well as the “competency and conflicts 25 of class counsel.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 26 625, 626 n.20 (1997). The court must consider two factors: (1) 27 whether the named plaintiffs and their counsel have any conflicts 28 of interest with other class members and (2) whether the named 1 plaintiffs and their counsel will vigorously prosecute the action 2 on behalf of the class. In re Hyundai and Kai Fuel Economy 3 Litig., 926 F.3d 539, 566 (9th Cir. 2019) (quoting Hanlon v. 4 Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)). 5 a. Conflicts of Interest 6 The first portion of the adequacy inquiry considers 7 whether plaintiff’s interests are aligned with those of the 8 class. “[A] class representative must be part of the class and 9 possess the same interest and suffer the same injury as the class 10 members.” Amchem, 521 U.S. at 625-26 (internal modifications 11 omitted). 12 In most respects, the named plaintiff’s interests 13 appear to be aligned with those of the class for the reasons set 14 forth above. (See generally FAC; Hollis Decl. ¶ 132 (noting 15 claims are based on identical legal theories).) Despite the many 16 similarities, plaintiff alone stands to benefit for his 17 participation in this litigation by receiving an incentive award 18 of $5,000. (Settlement Agreement ¶¶ 2.5.1-2.5.3.) While both 19 plaintiff and class counsel have certified that they are unaware 20 of any conflicts of interest between him and the class, (Hollis 21 Decl. ¶¶ 125, 133; Osegueda Decl. ¶ 34), the use of an incentive 22 award raises the possibility that a plaintiff’s interest in 23 receiving that award will cause his interests to diverge from the 24 class’s in a fair settlement. Staton, 327 F.3d at 977-78. 25 Consequently, the court must “scrutinize carefully the awards so 26 that they do not undermine the adequacy of the class 27 representatives.” Radcliffe v. Experian Info. Sys., Inc., 715 28 F.3d 1157, 1163 (9th Cir. 2013). 1 The parties estimate that if all of the 375 estimated 2 class members participate in the class action, the average 3 recovery per class member will be approximately $328.06. (Hollis 4 Decl. ¶ 80.) Plaintiff’s award of $5,000 represents considerably 5 more. However, plaintiff, like similar named plaintiffs in other 6 cases, has spent significant amounts of time and subjected 7 himself to reputational risk to act as the named plaintiff in 8 this case. (Osegueda Decl. ¶¶ 17-25; Hollis Decl. ¶ 124.) 9 Indeed, the Ninth Circuit has consistently recognized incentive 10 awards are “fairly typical” way to “compensate class 11 representatives for work done on behalf of the class” or “to make 12 up for financial or reputational risk undertaken in bringing the 13 action.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958-59 14 (9th Cir. 2009). Furthermore, many courts in the Ninth Circuit 15 have held that a $5,000 incentive award is “presumptively 16 reasonable.” Hawthorne v. Umpqua Bank, No. 11-cv-06700-JST, 2015 17 WL 1927342, at *8 (N.D. Cal. Apr. 28, 2015) (citations omitted). 18 Here, the $5,000 incentive payment represents .45 19 percent of the total settlement amount. The Ninth Circuit has 20 approved incentive awards of this amount under similar, if not 21 more extreme, circumstances. See In re Online DVD-Rental 22 Antitrust Litig., 779 F.3d 934, 947-48 (9th Cir. 2015) (finding 23 district court did not abuse its discretion by awarding nine 24 class representatives $5,000 each when class members stood to 25 recover $12 each). Accordingly, the $5,000 incentive award in 26 this case does not appear to create a conflict of interest, 27 although the court emphasizes this finding is only a preliminary 28 determination. On or before the date of the final fairness 1 hearing, the parties should present or be prepared to present 2 further evidence of plaintiff’s substantial efforts taken as a 3 class representative to better justify the discrepancy between 4 this award and those of the unnamed class members. 5 b. Vigorous Prosecution 6 The second portion of the adequacy inquiry examines the 7 vigor with which the named plaintiff and his counsel have pursued 8 the class’s claims. “Although there are no fixed standards by 9 which ‘vigor’ can be assayed, considerations include competency 10 of counsel and, in the context of a settlement-only class, an 11 assessment of the rationale for not pursuing further litigation.” 12 Hanlon, 150 F.3d at 1021. 13 Here, class counsel states they are experienced 14 employment and class action litigators who are fully qualified to 15 pursue the interests of the class. (Hollis Decl. ¶¶ 7-11.) Over 16 the past ten years, class counsel has settled over seventy class 17 action lawsuits in state and federal courts. (Hollis Decl. ¶ 8.) 18 Both parties represent that the settlement is a product of “an 19 ‘arms’ length,’ full-day mediation . . . which occurred after an 20 exchange of discovery and an extensive investigation of the 21 claims.” (Settlement Agreement at V.) Counsel has certified 22 that they have invested a significant amount of time, money, and 23 resources into reaching this compromise. (Hollis Decl. ¶¶ 113- 24 118.) In counsel’s informed opinion, the settlement is “fair, 25 reasonable, and adequate, and in the best interest of the 26 [c]lass.” (Hollis Decl. ¶ 135.) 27 Additionally, counsel has explained that defendant’s 28 non-for-profit status places it in a “precarious financial 1 situation” that makes settlement preferable. (Hollis Decl. ¶ 2 101.) Defendant receives most of its income from grants and 3 federal programs. (Hollis Decl. ¶ 63.) By settling, InAlliance 4 can avoid bankruptcy and the class can safeguard its recovery. 5 (Hollis Decl. ¶¶ 101-102.) Accordingly, the court finds that 6 plaintiff and plaintiff’s counsel are adequate representatives of 7 the class. 8 2. Rule 23(b) 9 After fulfilling the threshold requirements of Rule 10 23(a), the proposed class must satisfy the requirements of one of 11 the three subdivisions of Rule 23(b). Leyva, 716 F.3d at 512. 12 Plaintiff seeks provisional certification under Rule 23(b)(3), 13 which provides that a class action may be maintained only if “the 14 court finds that questions of law or fact common to class members 15 predominate over questions affecting only individual members” and 16 “that a class action is superior to other available methods for 17 fairly and efficiently adjudicating the controversy.” Fed. R. 18 Civ. P. 23(b)(3). The test of Rule 23(b)(3) is “far more 19 demanding,” than that of Rule 23(a). Wolin v. Jaguar Land Rover 20 N. Am., LLC, 617 F.3d 1168, 1172 (9th Cir. 2010) (quoting Amchem, 21 521 U.S. at 623-24). 22 i. Predominance 23 “The predominance analysis under Rule 23(b)(3) focuses 24 on ‘the relationship between the common and individual issues’ in 25 the case and ‘tests whether proposed classes are sufficiently 26 cohesive to warrant adjudication by representation.’” Wang, 737 27 F.3d at 545 (quoting Hanlon, 150 F.3d at 1022). However, 28 plaintiff is not required to prove that the predominating 1 question will be answered in his favor at the class certification 2 stage. Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 3 468 (2013). 4 For the reasons set forth above, plaintiff’s individual 5 claims and the class members’ claims rely upon common question of 6 law and fact. For example, all class members were classified as 7 personal attendants and covered under the same overtime policy. 8 (Hollis Decl., Ex. 5.) This policy serves as the common fact 9 uniting plaintiff’s individual claims and the class claims. (See 10 generally FAC.) 11 Common questions of law include, inter alia, whether 12 class members are entitled to overtime pay for hours worked after 13 the ninth hour of work under California’s Domestic Worker Bill of 14 Rights; whether defendant’s common written overtime policy 15 results in liability for overtime hours worked after the ninth 16 hour of work; and whether class members are entitled to 17 reimbursement of their cell phone expenses for their use of their 18 cell phone for work related purposes. (Hollis Decl. ¶¶ 18-23; 19 129-132.) The class claim thus demonstrates a “common nucleus of 20 facts and potential legal remedies” that can properly be resolved 21 in a single adjudication. See Hanlon, 150 F.3d at 1022. 22 Accordingly, the court finds common questions of law and fact 23 predominate over questions affecting only individual class 24 members. 25 ii. Superiority 26 Rule 23(b)(3) sets forth four non-exhaustive factors 27 that courts should consider when examining whether “a class 28 action is superior to other available methods for fairly and 1 efficiently adjudicating the controversy.” Fed. R. Civ. P. 2 23(b)(3). They are: “(A) the class members’ interests in 3 individually controlling the prosecution or defense of separate 4 actions; (B) the extent and nature of any litigation concerning 5 the controversy already begun by or against class members; (C) 6 the desirability or undesirability of concentrating the 7 litigation of the claims in the particular forum; and (D) the 8 likely difficulties in managing a class action.” Id. Factors 9 (C) and (D) are inapplicable because the parties settled this 10 action before class certification. See Syed v. M-I LLC, No. 11 1:14-cv-00742 WBS BAM, 2019 WL 1130469, at *6 (E.D. Cal. Mar. 12, 12 2019) (citation omitted). Therefore, the court will focus 13 primarily on facts (A) and (B). 14 Rule 23(b)(3) is concerned with the “vindication of the 15 rights of groups of people who individually would be without 16 effective strength to bring their opponents into court at all.” 17 Amchem, 521 U.S. at 617. When class members’ individual recovery 18 is relatively modest, the class members’ interests generally 19 favors certification. Zinser v. Accufix Res. Inst., Inc., 253 20 F.3d 1180, 1190 (9th Cir. 2001). Here, the parties estimate that 21 if all of the 375 estimated class members participate in the 22 class action, the average recovery per class member will be 23 approximately $328.06. (Hollis Decl. ¶ 80.) The modest amount 24 of recovery would likely discourage putative class members from 25 pursuing direct individual lawsuits on their own. Accordingly, 26 this factor favors certification. 27 Factor (B), concerning the “extent and nature of the 28 litigation,” is “intended to serve the purpose of assuring 1 judicial economy and reducing the possibility of multiple 2 lawsuits.” Zinser, 253 F.3d at 1191 (quoting 7A Charles Alan 3 Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and 4 Procedure § 1780 at 568-70 (2d ed. 1986)). Here, plaintiff’s 5 counsel is not aware of any other related litigation (Hollis 6 Decl. ¶ 6), nor do defendants assert any concerns about related 7 litigation. This factor, too, favors certification. 8 Accordingly, it appears a class action is the superior means to 9 resolve the common questions of law and fact that predominate 10 here. 11 3. Rule 23(c)(2) Notice Requirements 12 If the court certifies a class under Rule 23(b)(3), it 13 “must direct to class members the best notice that is practicable 14 under the circumstances, including individual notice to all 15 members who can be identified through reasonable effort.” Fed. 16 R. Civ. P. 23(c)(2)(B). Actual notice is not required, but the 17 notice provided must be “reasonably certain to inform the absent 18 members of the plaintiff class.” Silber v. Mabon, 18 F.3d 1449, 19 1454 (9th Cir. 1994) (citation omitted). 20 The parties have jointly selected ILYM Group, to serve 21 as the Settlement Administrator. (Settlement Agreement ¶ 1.37.) 22 The defendants will provide the ILYM Group with the information 23 necessary to contact members of the class within 10 business days 24 of the order granting preliminary approval. (Id. ¶ 4.1.) All 25 class members will be notified of the suit by first class mail 26 within fourteen business days following the receipt of the class 27 information. (Id. ¶ 4.4.) The notice summarizes the lawsuit, 28 including the contentions and denials of the parties, the 1 proceedings to date, and the terms and conditions of the 2 settlement. (Id. ¶¶ 4.4-4.6; Hollis Decl., Ex. 2.) It will 3 inform class members of where and how to get additional 4 information, and it will inform them of their right to object to 5 the adequacy of the class representatives and settlement. 6 (Settlement Agreement ¶ 4.6, Hollis Decl., Ex. 2.) Additionally, 7 it will notify class members of the procedure to request 8 exclusion from the class and how to opt in to the FLSA action. 9 (Settlement Agreement ¶¶ 4.7-4.9; Hollis Decl., Ex. 2.) ILYM 10 Group will update the parties’ counsel with weekly reports 11 reflecting the attempts to contact the class members, the number 12 of requests for exclusion, and the number of objections to the 13 class submitted, if any. (Settlement Agreement ¶ 4.13.) 14 The system set forth in the Settlement Agreement is 15 reasonably calculated to provide notice to class members and 16 inform class members of their options under the agreement. 17 Accordingly, the manner of notice and the content of notice is 18 sufficient to satisfy Rule 23(c)(2)(B). See Churchill Vill., LLC 19 v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (“Notice is 20 satisfactory if it ‘generally describes the terms of the 21 settlement in sufficient detail to alert those with adverse 22 viewpoints to investigate and to come forward and be heard.’”). 23 B. Rule 23(e): Fairness, Adequacy, and Reasonableness of Proposed Settlement 24 25 Because the proposed class preliminarily satisfies the 26 requirements of Rule 23, the court must consider whether the 27 terms of the parties’ settlement appear fair, adequate, and 28 reasonable. See Fed. R. Civ. P. 23(e)(2). To determine the 1 fairness, adequacy, and reasonableness of the agreement, the 2 court must consider “a number of factors,” including: 3 Strength of the plaintiff’s case; the risk, expense, complexity, and likely duration of further litigation; 4 the risk of maintaining class action status throughout the trial; the amount offered in settlement; the 5 extent of discovery completed and the stage of the 6 proceedings; the experience and views of counsel; the presence of a governmental participant; and the 7 reaction of the class members to the proposed settlement. 8 9 Hanlon, 150 F.3d at 1026. Many of these factors cannot be 10 considered until the final fairness hearing; accordingly, the 11 court’s review will be confined to resolving any “‘glaring 12 deficiencies’ in the settlement agreement.” Syed, 2019 WL 13 1130469, at *7 (citations omitted). 14 1. Negotiation of the Settlement Agreement 15 Counsel for both sides appear to have diligently 16 pursued settlement after thoughtfully considering the strength of 17 their arguments and potential defenses. (Memo. Supp. Prelim. 18 Approval at 15; Hollis Decl. ¶¶ 33-34.) Parties employed David 19 L. Perrault, a mediator well-versed in wage and hour class action 20 matters, to aid in the settlement negotiations. (Hollis Decl. ¶ 21 31.) Given the plaintiff’s sophisticated representation and the 22 parties’ joint agreement that the settlement reached was the 23 product of arms-length bargaining, (Settlement Agreement at V), 24 the court does not question that the proposed settlement is in 25 the best interest of the class. See Fraley v. Facebook, Inc., 26 966 F. Supp. 2d 939, 942 (N. D. Cal. 2013) (holding that a 27 settlement reached after informed negotiations “is entitled to a 28 1 degree of deference as the private consensual decision of the 2 parties” (citing Hanlon, 150 F.3d at 1027)). 3 2. Amount Recovered and Distribution 4 In determining whether a settlement agreement is 5 substantively fair to class members, the court must balance the 6 value of expected recovery against the value of the settlement 7 offer. See In re Tableware Antitrust Litig., 484 F. Supp. 2d 8 1078, 1080 (N.D. Cal. 2007). The parties estimate the average 9 recovery per class member will be approximately $328.06. (Hollis 10 Decl. ¶ 80.) While modest, “[t]he value of recovery is 11 especially significant in light of the ‘significant amount of 12 uncertainty’ class members would face if the case were litigated 13 to trial.” See Ontiveros, 2014 WL 3057506, at *14 (quoting 14 Murillo v. Pac. Gas & Elec. Co., 266 F.R.D. 468, 480 (E.D. Cal. 15 2010)). Defendant denies any liability for the claims alleged 16 and maintains plaintiff’s damages estimates were inflated. 17 (Hollis Decl. ¶¶ 54-57.) However, both parties recognize that, 18 absent a settlement, InAlliance would likely go bankrupt 19 defending individual actions because they are a non-for-profit 20 organization. (Memo. Supp. Prelim. Approval at 16.) While the 21 settlement amount represents “more than the defendants feel those 22 individuals are entitled to” and will potentially be “less than 23 what some class members feel they deserve,” the settlement offers 24 class members the prospect of some recovery, instead of none at 25 all. See Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 26 615, 628 (9th Cir. 1982). In light of the claims at issue and 27 the defendant’s potential exposure, the court finds that the 28 substance of the settlement is fair to class members and thereby 1 “falls within the range of possible approval.” See Tableware, 2 484 F. Supp. 2d at 1079. 3 3. Attorney’s Fees & Costs 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 attorney’s fee from the fund as a whole.’” Staton, 327 F.3d at 8 969 (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). 9 If a negotiated class action settlement includes an award of 10 attorney’s fees, then the court “ha[s] an independent obligation 11 to ensure that the award, like the settlement itself, is 12 reasonable, even if the parties have already agreed to an 13 amount.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 14 935, 941 (9th Cir. 2011). 15 The Ninth Circuit has recognized two different methods 16 for calculating reasonable attorney’s fees in common fund cases: 17 the lodestar method or the percentage-of-recovery method. Id. at 18 941-42. In the lodestar method, courts multiply the number of 19 hours the prevailing party expended on the litigation by a 20 reasonable hourly rate. Id. Under the percentage-of-recovery 21 method, courts typically delineate 25 percent of the total 22 settlement as the fee. Hanlon, 150 F.3d at 1029. However, 23 courts may adjust this figure if the record reflects “special 24 circumstances justifying a departure.” Bluetooth, 654 F.3d at 25 942. Where, as here, the settlement has produced a common fund 26 for the benefit of the entire class, courts have discretion to 27 use either method. Id. at 942 (citing In re Mercury Interactive 28 Corp., 618 F.3d 988, 992 (9th Cir. 2010)). 1 Class counsel requests $75,000 in attorney’s fees, 2 which constitutes 33.33 percent of the total settlement. 3 (Settlement Agreement ¶ 2.6.1.) “While some courts have approved 4 percentage awards as high as 33.3 [percent], awards of that size 5 are typically disfavored unless they are corroborated by the 6 lodestar or reflect exceptional circumstances.” Ontiveros, 2014 7 WL 3057506, at *15 (collecting cases). Class counsel justifies 8 their request by comparing it to their lodestar, which by their 9 calculations exceeds $175,000. (Hollis Decl. ¶ 114.) After 10 discussing the calculated fee with counsel at the preliminary 11 approval hearing and considering the additional time counsel will 12 have to spend on this matter to finalize the settlement, the 13 court is satisfied that the requested fee is reasonable. 14 IT IS THEREFORE ORDERED that plaintiff’s motion for 15 preliminary certification of a conditional settlement class and 16 preliminary approval of the class action settlement (Docket No. 17 23) be, and the same hereby is, GRANTED. 18 IT IS FURTHER ORDERED THAT: 19 (1) the following class be provisionally certified for the 20 purpose of settlement: all current or former employees of 21 InAlliance who worked in the State of California in the position 22 of Independent Living Facilitator (“ILF”) at any time from 23 February 22, 2014 through January 15, 2020. In the event that 24 the proposed settlement is not consummated for any reason, the 25 conditional certification shall be of no further force or effect 26 and shall be vacated without further action or order of this 27 court; 28 (2) the proposed settlement is preliminarily approved as 1 fair, just, reasonable, and adequate to the members of the 2 settlement class, subject to further consideration at the final 3 fairness hearing after distribution of notice to members of the 4 settlement class; 5 (3) for purposes of carrying out the terms of the settlement 6 only: 7 (a) Joseph Osegueda is appointed as the representative 8 of the settlement class and is provisionally found to be an 9 adequate representative within the meaning of Federal Rule of 10 Civil Procedure 23; 11 (b) the law firm of GrahamHollis APC is provisionally 12 found to be a fair and adequate representative of the settlement 13 class and is appointed as class counsel for the purposes of 14 representing the settlement class conditionally certified in this 15 Order; 16 (4) ILYM Group is appointed as the settlement administrator; 17 (5) the form and content of the proposed Notice of Class 18 Action Settlement (Hollis Decl., Ex 2) is approved, except to the 19 extent that it must be updated to reflect dates and deadlines 20 specified in this order; 21 (6) no later than ten (10) days from the date this order is 22 signed, defendant’s counsel shall provide the names and contact 23 information of all settlement class members to ILYM Group; 24 (7) no later than fourteen (14) days from the date defendant 25 submits the contact information to ILYM Group, ILYM shall mail a 26 Notice of Class Action Settlement to all members of the 27 settlement class; 28 (8) no later than sixty (60) days from the date this order 1 is signed, any member of the settlement class who intends to 2 object to, comment upon, or opt out of the settlement shall mail 3 written notice of that intent to ILYM Group pursuant to the 4 instructions in the Notice of Class Action Settlement; 5 (9) a final fairness hearing shall be held before this court 6 on Monday, May 18, 2020, at 1:30 p.m. in Courtroom 5 to determine 7 whether the proposed settlement is fair, reasonable, and adequate 8 and should be approved by this court; to determine whether the 9 settlement class’s claims should be dismissed with prejudice and 10 judgment entered upon final approval of the settlement; to 11 determine whether final class certification is appropriate; and 12 to consider class counsel’s applications for attorney’s fees, 13 costs, and an incentive award to plaintiff. The court may 14 continue the final fairness hearing without further notice to the 15 members of the class; 16 (10) no later than twenty-eight (28) days before the final 17 fairness hearing, class counsel shall file with this court a 18 petition for an award of attorney’s fees and costs. Any 19 objections or responses to the petition shall be filed no later 20 than fourteen (14) days before the final fairness hearing. Class 21 counsel may file a reply to any objections no later than seven 22 (7) days before the final fairness hearing; 23 (11) no later than twenty-eight (28) days before the final 24 fairness hearing, class counsel shall file and serve upon the 25 court and defendant’s counsel all papers in support of the 26 settlement, the incentive award for the class representative, and 27 any award for attorney’s fees and costs; 28 (12) no later than twenty-eight (28) days before the final 1 fairness hearing, ILYM Group shall prepare, and class counsel 2 shall file and serve upon the court and defendants’ counsel, a 3 declaration setting forth the services rendered, proof of 4 mailing, a list of all class members who have opted out of the 5 settlement, a list of all class members who have commented upon 6 or objected to the settlement; 7 (13) any person who has standing to object to the terms of 8 the proposed settlement may appear at the final fairness hearing 9 in person or by counsel and be heard to the extent allowed by the 10 court in support of, or in opposition to, (a) the fairness, 11 reasonableness, and adequacy of the proposed settlement, (b) the 12 requested award of attorney’s fees, reimbursement of costs, and 13 incentive award to the class representative, and/or (c) the 14 propriety of class certification. To be heard in opposition at 15 the final fairness hearing, a person must, no later than ninety 16 (90) days from the date this order is signed, (a) serve by hand 17 or through the mails written notice of his or her intention to 18 appear, stating the name and case number of this action and each 19 objection and the basis therefore, together with copies of any 20 papers and briefs, upon class counsel and counsel for defendants, 21 and (b) file said appearance, objections, papers, and briefs with 22 the court, together with proof of service of all such documents 23 upon counsel for the parties. 24 Responses to any such objections shall be served by hand or 25 through the mails on the objectors, or on the objector’s counsel 26 if there is any, and filed with the court no later than fourteen 27 (14) calendar days before the final fairness hearing. Objectors 28 may file optional replies no later than seven (7) calendar days 1 before the final fairness hearing in the same manner described 2 above. Any settlement class member who does not make his or her 3 objection in the manner provided herein shall be deemed to have 4 waived such objection and shall forever be foreclosed from 5 objecting to the fairness or adequacy of the proposed settlement, 6 the judgment entered, and the award of attorneys’ fees, costs, 7 and an incentive award to the class representative unless 8 otherwise ordered by the court; 9 (14) pending final determination of whether the settlement 10 should be ultimately approved, the court preliminarily enjoins 11 all class members (unless and until the class member has 12 submitted a timely and valid request for exclusion) from filing 13 or prosecuting any claims, suits, or administrative proceedings 14 regarding claims to be released by the settlement. 15 Dated: January 15, 2020 □ - ak. 16 WILLIAMB.SHUBB ==~=~S 17 UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 24