1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 RICHARD RODRIGUEZ, Case No. 22-cv-02071-VKD
9 Plaintiff, ORDER GRANTING MOTION FOR 10 v. PRELIMINARY APPROVAL OF SETTLEMENT 11 BELFOR USA GROUP, INC., et al., Re: Dkt. No. 75 Defendants. 12
13 14 Plaintiff Richard Rodriguez asserts claims under the Fair Labor Standards Act, 29 U.S.C. 15 § 201, et seq. (“FLSA”), the California Private Attorneys’ General Act, California Labor Code 16 § 2698, et seq. (“PAGA”), and other California state labor laws on behalf of himself and others 17 similarly situated against his former employers, defendants Belfor USA Group, Inc., Belfor 18 Environmental, Inc., Oakwood Construction and Restoration Services, Inc., and 1 800 Water 19 Damage North America, LLC (collectively “defendants”). See Dkt. No. 27. On December 19, 20 2023, Mr. Rodriguez moved for preliminary approval of a class, collective, and representative 21 action settlement agreement. Dkt. No. 39. After receiving supplemental briefing on the motion, 22 the Court denied Mr. Rodriguez’s motion without prejudice. Dkt. No. 48. 23 The parties conducted additional negotiations and entered into an amended settlement 24 agreement. Mr. Rodriguez now moves for preliminary approval of that agreement. Dkt. No. 75. 25 Defendants do not oppose this motion. See Dkt. No. 79.1 The Court held a hearing on the motion 26 1 All parties have expressly consented that all proceedings in this matter may be heard and finally 27 adjudicated by a magistrate judge. Dkt. Nos. 7, 8; 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Mr. 1 on May 6, 2025. Dkt. No. 80. Upon consideration of the moving papers and the arguments 2 presented at the hearing, the Court grants Mr. Rodriguez’s motion for preliminary approval. 3 I. AMENDED SETTLEMENT AGREEMENT 4 A. Structure of the Settlement 5 The structure of the amended settlement agreement is largely the same as the parties’ 6 original settlement agreement. The principal differences concern the total amount of the 7 settlement and the allocation of the amount among the proposed classes. As before, the amended 8 settlement agreement encompasses claims relating to three categories of employees. 9 First, the settlement defines a “settlement class” consisting of “all persons who were 10 employed by Defendants in the State of California in non-exempt positions at any time during the 11 period from February 25, 2018 to the date of Preliminary Approval.” Dkt. No. 75-2 at ECF 31 12 (¶ 5). The Court will refer to this as the “California class” in this order. Mr. Rodriguez estimates 13 that there are 1,034 members in the California class. Dkt. No. 75 at ECF 14. 14 Second, the settlement identifies an FLSA collective consisting of “all persons who were 15 employed by Defendants in the United States of America in non-exempt positions at any time 16 during the period from February 25, 2019 to the date of Preliminary Approval.” Dkt. No. 75-2 at 17 ECF 32 (¶ 14). Mr. Rodriguez estimates that there are 4,349 members in the FLSA collective. 18 Dkt. No. 75 at ECF 14. 19 Third, the settlement includes a PAGA settlement amount for members consisting of “all 20 persons who were employed by Defendants in the State of California in non-exempt positions at 21 any time during the period from March 8, 2021 to the date of Preliminary Approval.” Dkt. No. 22 75-2 at ECF 34 (¶ 25). Mr. Rodriguez estimates that there are 697 PAGA members, all of whom 23 are—by definition—also members of the California class. Dkt. No. 75 at ECF 14. 24 The settlement provides that defendants will pay a non-reverting “gross settlement 25
26 complete consent of all parties to magistrate judge jurisdiction. Geppert v. Doe 1, No. 23-cv- 03257-SVK, 2023 WL 5804156, at *1 n.2 (N.D. Cal. Sept. 7, 2023); RingCentral, Inc. v. Nextiva, 27 Inc., No. 19-cv-02626-NC, 2020 WL 978667, at *1 n.1 (N.D. Cal. Feb. 28, 2020); see also 1 amount” of $1,622,000 to be distributed amongst the members of the three employee categories, 2 their attorneys, the settlement administrator, and Mr. Rodriguez. Dkt. No. 75-2 at ECF 33 (¶ 21). 3 1. California Class 4 The largest share of the monetary relief, referred to as the “net settlement fund,” will be 5 distributed to the members of the California class. It is defined as “the portion of the [g]ross 6 [s]ettlement [a]mount remaining after deducting the Attorneys’ Fees and Costs, Class 7 Representative Enhancement Payment, PAGA Settlement Amount, FLSA Settlement Fund, and 8 Settlement Administration Costs.” Id. at ECF 33-34 (¶ 23). The parties expect the value of the net 9 settlement fund to be approximately $799,500. Dkt. No. 75 at ECF 10. This amount will be 10 distributed to the members of the California class who do not affirmatively opt out of the 11 settlement agreement, in proportion to the number of weeks each member worked for defendants 12 during the class period. Dkt. No. 75-2 at ECF 31, 33-34 (¶¶ 5, 23). If some members of the 13 California class opt out, then the remaining members’ distributions will be proportionally 14 increased, so that 100% of the net settlement fund will be distributed to the California class. Id. at 15 ECF 34 (¶ 23). The settlement administrator will deduct any applicable employee-side payroll 16 taxes from the class members’ payments and ensure they are paid to the appropriate authorities. 17 Id. at ECF 48-49 (¶ 75). Additionally, if any class members’ settlement checks remain uncashed 18 180 days after being issued, the remaining funds will be donated to Worksafe, a workplace safety 19 non-profit organization. Id. at ECF 48 (¶ 72); see also https://worksafe.org/. 20 In return for this relief, California class members who do not opt out will release 21 defendants from “any and all claims, rights, demands, liabilities, and causes of action, that were 22 asserted or could have been asserted in the operative complaint or that otherwise reasonably arise 23 from, or are reasonably related to, the same or substantially similar set of operative facts as those 24 set forth in the operative complaint during the Class Period, including but not limited to: (1) 25 California Labor Code sections 510 and 1198 (unpaid overtime); 2) California Labor Code 26 sections 1182.12, 1194, 1197, 1197.1, and 1198 (unpaid minimum wages); (3) California Labor 27 Code sections 226.7, 512(a), 516, and 1198 (failure to provide meal periods); (4) California Labor 1 Labor Code sections 226(a), 1174(d), and 1198 (non-compliant wage statements and failure to 2 maintain payroll records); (6) California Labor Code sections 201 and 202 (wages not timely paid 3 upon termination); (7) California Labor Code section 204 (failure to timely pay wages during 4 employment); (8) California Labor Code section 1198 and California Code of Regulations Title 8, 5 section 11160 Subdivision 5(B) (failure to provide reporting time pay); (9) California Labor Code 6 section 2802 (unreimbursed business expenses); (10) California Business & Professions Code 7 sections 17200, et seq. (unlawful business practices); and (11) California Business & Professions 8 Code sections 17200, et seq. (unfair business practices) (including, without limitation, any claims 9 relating to Plaintiff’s alleged regular rate of pay allegations and reporting time pay allegations 10 including to the extent applicable to any or all of the above causes of action).” Id. at ECF 35 11 (¶ 33). 12 2. FLSA Collective Action 13 The settlement agreement also creates an “FLSA settlement fund” of $250,000. Id. at ECF 14 33 (¶ 19). This amount will be distributed to members of the nationwide FLSA collective who 15 affirmatively opt in to the settlement. Id. at ECF 32-33 (¶¶ 14, 16, 19). As with the net settlement 16 fund for the California class, the FLSA settlement fund will be distributed among the participating 17 members in proportion to the number of weeks they worked during the class period, so that 100% 18 of the FLSA settlement fund will be distributed. Id. at ECF 42 (¶ 52(c)). 19 In return for this relief, the members of the FLSA collective who participate in the 20 settlement will release defendants from “any and all claims, rights, demands, liabilities, and causes 21 of action arising under the Fair Labor Standards Act, both known and unknown, which were 22 asserted or could reasonably have been asserted in the Action or that otherwise reasonably arise 23 from, or are reasonably related to the facts alleged or substantially similar set of operative facts, 24 including, but not limited to, any claim for failure to pay overtime wages, minimum wages, unpaid 25 wages, . . . at the regular rate of pay during the FLSA Period.” Id. at ECF 36 (¶ 34). If any FLSA 26 collective members’ settlement checks remain uncashed 180 days after being issued, the 27 remaining funds will be donated to Worksafe. Id. at ECF 48 (¶ 72). 1 3. PAGA Settlement 2 The settlement agreement provides for $200,000 to be allocated to a settlement of the 3 PAGA claims. Id. at ECF 34-35 (¶ 27). Of that amount, 75% or $150,000 will be paid to the 4 California Labor and Workforce and Development Agency (“LWDA”). Id. The remaining 25% 5 or $50,000 will be distributed to the PAGA members in proportion to the number of weeks each 6 member worked during the PAGA period. Id. at ECF 34-35, 41-42 (¶¶ 27, 52(b)). However, 7 unlike the California class, PAGA members are not permitted to exclude themselves from this part 8 of the settlement or to object to it. Id. at ECF 40 (¶ 48). 9 If approved, the PAGA settlement will release defendants from “any and all claims for 10 civil penalties under California Labor Code [§] 2698, et seq., that were asserted or could 11 reasonably have been asserted in Plaintiff’s LWDA letter or in the operative complaint or that 12 otherwise reasonably arise from, or are reasonably related to, the same or substantially similar set 13 of operative facts as those set forth in Plaintiff’s LWDA letter or operative complaint, during the 14 PAGA Period, including but not limited to claims for violation of: (1) California Labor Code 15 sections 510 and 1198 (unpaid overtime); (2) California Labor Code sections 1182.12, 1194, 1197, 16 1197.1, and 1198 (unpaid minimum wages); (3) California Labor Code sections 226.7, 512(a), 17 516, and 1198 (failure to provide meal periods); (4) California Labor Code sections 226.7, 516, 18 and 1198 (failure to authorize and permit rest periods); (5) California Labor Code sections 226(a), 19 1174(d), and 1198 (non-compliant wage statements and failure to maintain payroll records); (6) 20 California Labor Code sections 201 and 202 (wages not timely paid upon termination); (7) 21 California Labor Code section 204 (failure to timely pay wages during employment); (8) 22 California Labor Code section 1198 and California Code of Regulations Title 8, section 11160 23 Subdivision 5(B) (failure to provide reporting time pay); (9) California Labor Code section 2802 24 (unreimbursed business expenses); and (10) California Labor Code sections 2698, et seq. based on 25 the foregoing.” Id. at ECF 36 (¶ 35). If any PAGA members’ settlement checks remain uncashed 26 180 days after being issued, the remaining funds will be donated to Worksafe. Id. at ECF 48 27 (¶ 72). 4. Attorneys’ Fees, Settlement Administration, and Class Representative 1 Enhancement Payment 2 In addition to the payments associated with the three employee categories described above, 3 the settlement agreement provides for payment to class counsel, the settlement administrator, and 4 Mr. Rodriguez. 5 The agreement allows Capstone Law APC, the law firm that represents Mr. Rodriguez in 6 this action and that now requests appointment as class counsel, to move for an award attorneys’ 7 fees not in excess of $300,000 or 18% of the gross settlement amount. Id. at ECF 30 (¶ 2). The 8 agreement provides that counsel may also seek to recover costs of up to $30,000. Id. 9 Additionally, the settlement agreement provides for payment of an estimated $32,500 in 10 “Settlement Administration Costs” to the settlement administrator. Id. at ECF 37 (¶ 39). After 11 soliciting bids from three candidates, the parties selected CPT Group, Inc. to administer the 12 settlement. Dkt. No. 75-2 ¶¶ 13-14 (Declaration of Raul Perez). 13 Finally, the settlement agreement allows for Mr. Rodriguez to apply to the Court for a class 14 representative enhancement or incentive payment of $10,000, in addition to the amount he will 15 otherwise receive as a member of the California class, the FLSA collective, and the PAGA 16 settlement. Dkt. No. 75-2 at ECF 39 (¶ 45). 17 B. Notice to Members 18 The settlement agreement requires defendants to compile a list, including the names, 19 contact information, dates of employment, and number of weeks worked for each member of each 20 employee category, within 30 calendar days of preliminary approval by the Court. Id. at ECF 31, 21 43 (¶¶ 4, 55). Within 10 calendar days of receiving the list, the settlement administrator must mail 22 notices to all members of the California class and FLSA notices to all members of the FLSA 23 collective. Id. at ECF 43 (¶ 56). Draft notices are attached to the settlement agreement as 24 exhibits. Id. at ECF 60 (California class notice), ECF 67 (FLSA notice). The California class 25 notice also describes the PAGA settlement. See id. at ECF 60-65. 26 The members of the California class will have 45 days from the date of mailing to exclude 27 themselves from the settlement or object to it in writing, while members of the FLSA collective 1 email or by U.S. mail, in which case the letter must be postmarked by the deadline. Id. Members 2 of both groups will also be able to challenge the accuracy of their dates of employment or weeks 3 worked by the same deadline. Id. at ECF 44 (¶ 60). 4 The settlement administrator will be responsible both for checking the accuracy of the 5 address information in the list provided by defendants and for taking additional steps to determine 6 the addresses of any members whose notice is returned as undeliverable. Id. at ECF 43 (¶ 57). If 7 the administrator sends the notice to a second address, then the member will be able to respond by 8 either the original response deadline or shall have an additional 15 days from the second mailing, 9 whichever is later. Id. Additionally, if a member’s request for exclusion or to opt in is defective, 10 then the settlement administrator is required to mail the member a letter explaining the defects. Id. 11 at ECF 44-45 (¶ 61). Members will receive extra time to respond to these letters. Id. 12 The agreement provides that no earlier than 30 days after the deadline to respond to the 13 notices, the Court will hold a final fairness hearing on the settlement agreement. Id. at ECF 51 14 (¶ 81). Members of the California class who object to the settlement may appear in person at the 15 hearing, and the Court may also consider written objections submitted prior to the response 16 deadline. Id. at ECF 47 (¶ 69). 17 II. LEGAL STANDARD 18 A. Rule 23 Class Action Settlements 19 Court approval is required for the settlement of Rule 23 class actions. See Fed. R. Civ. P. 20 23(e) (“The claims, issues, or defenses of a certified class—or a class proposed to be certified for 21 purposes of settlement—may be settled, voluntarily dismissed, or compromised only with the 22 court’s approval.”). The Ninth Circuit has declared that a strong judicial policy favors settlement 23 of Rule 23 class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). 24 However, no presumption of fairness applies to such settlements. Roes v. SFBSC Mgmt., LLC, 25 944 F.3d 1035, 1049 (9th Cir. 2019). And where the parties reach a settlement before class 26 certification, courts must “employ[] extra caution and more rigorous scrutiny,” id., and “peruse the 27 proposed compromise to ratify both the propriety of the certification and the fairness of the 1 Headset Products Liability Litig., 654 F.3d 935, 946 (9th Cir. 2011) (“Prior to formal class 2 certification, there is an even greater potential for a breach of fiduciary duty owed the class during 3 settlement. Accordingly, such agreements must withstand an even higher level of scrutiny for 4 evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) 5 before securing the court’s approval as fair.”). 6 In considering Mr. Rodriguez’s motion for preliminary approval, the Court must first 7 assess whether a class exists. Staton, 327 F.3d at 952. Second, the Court must assess whether the 8 proposed settlement is “fundamentally fair, adequate, and reasonable,” considering “the settlement 9 taken as a whole, rather than the individual component parts, that must be examined.” Id. (cleaned 10 up). 11 B. FLSA Collective Action Settlements 12 Court approval is also required for settlements of private collective actions under the 13 FLSA. Johnson v. Serenity Transportation, Inc., No. 15-cv-02004-JSC, 2020 WL 7260059, at *2 14 (N.D. Cal. Dec. 10, 2020); see also Nall v. Mal-Motels, Inc., 723 F.3d 1304, 1306 (11th Cir. 15 2013). Although “[c]ollective actions [under the FLSA] and class actions [under Rule 23] are 16 creatures of distinct texts . . . that impose distinct requirements,” Campbell v. City of Los Angeles, 17 903 F.3d 1090, 1101 (9th Cir. 2018), district courts assess FLSA settlements using a two-step 18 process that is similar to what is required for review of class action settlements under Rule 23. See 19 Kulik v. NMCI Med. Clinic Inc., No. 21-cv-03495-BLF, 2023 WL 2503539, at *3 (N.D. Cal. Mar. 20 13, 2023). 21 First, the Court must assess whether the members of proposed collective are “similarly 22 situated” and may proceed in a collective action. Id.; see also Campbell, 903 F.3d at 1117. 23 Second, the Court must assess whether the proposed settlement is “a fair and reasonable resolution 24 of a bona fide dispute over FLSA provisions.” Otey v. CrowdFlower, Inc., No. 12-cv-05524-JST, 25 2014 WL 1477630, at *3 (N.D. Cal. Apr. 15, 2014) (quoting Lynn’s Food Stores, Inc. v. United 26 States, 679 F.2d 1350, 1355 (11th Cir. 1982)). 27 C. PAGA Settlements 1 § 2699(l)(2). The proposed settlement must also be submitted simultaneously to LWDA. Id. “An 2 employee bringing a PAGA action does so as the proxy or agent of the state’s labor law 3 enforcement agencies, . . . who are the real parties in interest.” Sakkab v. Luxottica Retail N. Am. 4 Inc., 803 F.3d 425, 435 (9th Cir. 2015) (cleaned up). “Accordingly, a judgment in a PAGA action 5 binds not only the plaintiff, but also the government and nonparty aggrieved employees.” 6 Eisenacher v. VITAS Hospice Servs. LLC, No. 20-cv-04948-RS, 2021 WL 1846574, at *2 (N.D. 7 Cal. Apr. 2, 2021). Even so, PAGA settlements “[do] not require class action procedures, such as 8 notice and opt-out rights.” O’Connor v. Uber Techs., 201 F. Supp. 3d 1110, 1134 (N.D. Cal. 9 2016). 10 While court approval of PAGA settlements is statutorily required, PAGA does not provide 11 express guidance about the scope or nature of judicial review. In the absence of binding guidance, 12 federal district courts reviewing PAGA settlements have drawn on factors utilized by the Ninth 13 Circuit to evaluate whether a class action settlement is fundamentally fair, adequate, and 14 reasonable. See id at 1133-34 (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 15 1998)); see also Moniz v. Adecco USA, Inc., 72 Cal. App. 5th 56, 77 (2021) (“[A] trial court 16 should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in 17 view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to 18 maximize enforcement of state labor laws.”). “These factors are evaluated in light of PAGA’s 19 public policy goals of ‘benefit[ing] the public by augmenting the state’s enforcement capabilities, 20 encouraging compliance with Labor Code provisions, and deterring noncompliance.’” 21 Eisenacher, 2021 WL 1846574, at *2 (quoting O’Connor, 201 F. Supp. 3d at 1132-33). 22 III. DISCUSSION 23 The Court previously found that certification of a California class and FLSA collective for 24 the purposes of this settlement was warranted under the applicable law. Dkt. No. 48 at 16-17. As 25 the claims at issue and proposed classes remain the same, the Court finds that its prior reasoning is 26 applicable and determines both classes are properly certified. The Court will therefore turn 27 directly to whether the proposed settlement is fair, reasonable, and adequate under Rule 23, FLSA, 1 A. Rule 23 2 Under Rule 23(e), review of a proposed settlement of a class action proceeds in two steps. 3 Fed. R. Civ. P. 23(e); Lusby v. Gamestop, Inc., 297 F.R.D. 400, 412 (N.D. Cal. 2013). First, the 4 Court conducts a preliminary fairness evaluation. If the Court preliminarily approves the 5 settlement, then notice to the class is disseminated and the Court sets a final hearing for approval 6 of the settlement. Lusby, 297 F.R.D. at 412. Ultimately, a settlement should only be approved if it 7 is “fair, reasonable and adequate.” Fed. R. Civ. P. 23(e)(2). In determining whether a proposed 8 settlement meets this standard, the Court does not have “the ability to delete, modify, or substitute 9 certain provisions,” and “[t]he settlement must stand or fall in its entirety.” Staton, 327 F.3d at 10 969 (cleaned up). The Court’s evaluation of a settlement reached prior to class certification 11 “requires a higher standard of fairness and a more probing inquiry than may normally be required 12 under Rule 23(e).” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (cleaned up). 13 The Ninth Circuit has described several factors a court may consider in evaluating the 14 fairness of a proposed settlement: 15 [1] the strength of the plaintiffs’ case; [2] the risk, expense, complexity, and likely duration of further litigation; [3] the risk of 16 maintaining class action status throughout trial; [4] the amount offered in settlement; [5] the extent of discovery completed and the 17 stage of the proceedings; [6] the experience and views of counsel; [7] the presence of a governmental participant; and [8] the reaction 18 of the class members to the proposed settlement. 19 Campbell v. Facebook, Inc., 951 F.3d 1106, 1121 (9th Cir. 2020) (quoting Hanlon, 150 F.3d at 20 1011). Rule 23(e)(2) requires a court to consider a similar list of factors before approving a 21 settlement, including whether:
22 (A) the class representatives and class counsel have adequately 23 represented the class; (B) the proposal was negotiated at arm’s length; 24 (C) the relief provided for the class is adequate, taking into account: the costs, risks, 25 (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of distributing 26 relief to the class, including the method of processing class-member claims; 27 (iii) the terms of any proposed award of attorney’s fees, including timing of payment; and 23(e)(3); and 1 (D) the proposal treats class members equitably relative to each other. 2 3 Fed. R. Civ. P. 23(e). This list of factors is not intended to displace any factors identified by 4 courts, “but rather to focus the court and the lawyers on the core concerns of procedure and 5 substance that should guide the decision whether to approve the proposal.” Fed. R. Civ. P. 23(e) 6 advisory committee note to 2018 amendment; see also McKinney-Drobnis v. Oreshack, 16 F.4th 7 594, 609 (9th Cir. 2021) (“The amended Rule 23(e) did not ‘displace’ this court’s previous 8 articulation of the relevant factors, and it is still appropriate for district courts to consider these 9 factors in their holistic assessment of settlement fairness.”); Kim v. Allison, 8 F.4th 1170, 1178-79 10 (9th Cir. 2021) (directing district courts to consider both the factors previously identified by the 11 Ninth Circuit and Rule 23(e)(2) when determining whether to approve a settlement). However, 12 “the district court must show it has explored comprehensively all Rule 23(e)(2) factors.” In re 13 Apple Inc. Device Performance Litig., 50 F.4th 769, 782 (9th Cir. 2022) (cleaned up). 14 Additionally, the Northern District of California has published procedural guidance for 15 class action settlements, which includes guidelines for parties seeking preliminary approval of 16 class action settlements (“Guidelines”). See https://www.cand.uscourts.gov/forms/procedural- 17 guidance-for-class-action-settlements/. These guidelines identify information that is often helpful 18 to district court in when assessing whether a class action settlement satisfies the standards 19 identified above. 20 1. Strength of plaintiff’s case and the risk, expense, complexity, and likely duration of further litigation 21 22 In its prior order, the Court found that Mr. Rodriguez had identified “considerations 23 suggest[ing] that the California class would face meaningful litigation risk—on the merits and on 24 class certification—if the case were to proceed.” Dkt. No. 48 at 20. The Court determined that 25 this factor weighed in favor of preliminary approval. Id. at 21. 26 The Court finds that this factor continues to weigh in favor of preliminary approval of the 27 amended settlement agreement. Mr. Rodriguez again identifies with specificity the challenges 1 thwart both the merits of the claims and the ability to achieve class certification. See Dkt. No. 72- 2 5 ¶¶ 26-46 (Perez Decl.). In view of these challenges, the Court finds that early resolution through 3 settlement would likely be beneficial to the California class. See Burgos v. Sunvalleytek Int’l, Inc., 4 No. 18-cv-06910-HSG, 2020 WL 7319354, at *7 (N.D. Cal. Dec. 11, 2020) (settlement is 5 preferable when “additional litigation would have, in the best-case scenario, been expensive and 6 time-consuming—and in the worst-case scenario, could have led to Plaintiff and the class going 7 home empty-handed”); Ching v. Siemens Indus., Inc., No. 11-cv-04838-MEJ, 2014 WL 2926210, 8 at *4 (N.D. Cal. June 27, 2014) (same when “Plaintiff [had] identified several meritorious 9 arguments that Defendants could raise to class certification in the event this lawsuit was to 10 proceed”). 11 2. Amount offered in settlement 12 In its prior order, the Court found it could not “conclude that the amount allocated to 13 resolve the claims of the California class as part of the ‘whole package’ favors preliminary 14 approval of the settlement.” Dkt. No. 48 at 22. The Court noted in particular that: (1) “Mr. 15 Rodriguez d[id] not indicate the range of payments that the class members could expect to receive 16 under the amended settlement”; and (2) the net settlement amount for the California class 17 represented only 9% of the maximum possible recovery for the class, a figure that might be 18 acceptable given the identified litigation risks but that was “lower than other approved settlements 19 in similar cases.” Id. at 22. 20 In the amended settlement agreement, the proposed net settlement amount for the 21 California class ($799,500) remains approximately 9% of the estimated maximum possible 22 damages. In his declaration, Mr. Rodriguez’s counsel breaks down the maximum amount of 23 damages possible and the probability of recovering that amount to demonstrate the “realistic” 24 exposure for defendants:
25 Probability of Realistic Class Claim Alleged Maximum Damages Recovering Alleged 26 and Penalties Maximum Exposure at Damages & 27 Trial Penalties Minimum Wage / OT $1,538,817.08 6.25% $96,176.07 1 Claims Meal Period Claim $1,212,607.10 25% $303,151.78 2 Rest Period Claim $1,212,607.10 25% $303,151.78 3 Business Expense $135,942.50 25% $33,985.63 Claim 4 Reporting Time Claim $606,303.55 25% $151,575.89 Wage Statement Claim $1,406,850.00 6.25% $87,928.13 5 Final Pay Claim $2,916,840.00 6.25% $182,302.50 Total $1,158,271.78 6 7 Dkt. No. 75-2 ¶ 49 (Perez Decl.). Based on this calculation, the net settlement amount is closer to 8 70% of the class’s maximum “realistic” recovery. Id. ¶ 50. Furthermore, Mr. Rodriguez provides 9 an estimated recovery amount of $773.21 per individual for the California class, assuming the net 10 settlement amount of $799,500 and 1,034 class members. Dkt. No. 75 at ECF 15. Mr. Rodriguez 11 also notes several other wage and hour settlements which he asserts reflects circumstances and 12 considerations similar to this case. Id. at ECF 27-28 (citing Rivas v. BG Retail, LLC, No. 5:16-cv- 13 06458-BLF (N.D. Cal.); Ford v. CEC Entertainment, Inc., No. 3:14-cv-01420-RS (N.D. Cal.), 14 Berry v. Urban Outfitters Wholesale, Inc., No. 4:13-cv-02628-JSW (N.D. Cal.); Moore v. 15 Anthropologie, No. 4:13-cv-02628-JSW (N.D. Cal.)). 16 Having considered this additional information, the Court finds that Mr. Rodriguez has 17 provided sufficient justification for the Court to conclude at this time that the amount allocated to 18 the California class is fair and reasonable. See Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 19 1242 (9th Cir. 1998) (“The fact that a proposed settlement may only amount to a fraction of the 20 potential recovery does not, in and of itself, mean that the proposed settlement is grossly 21 inadequate and should be disapproved.”) (cleaned up). The Court determines that this factor 22 weighs in favor of preliminary approval. 23 3. Extent of discovery completed and the stage of the proceedings 24 The Court previously found that this factor weighed in favor of preliminary approval. As 25 there has been no change since the Court’s prior order, the Court reaffirms that conclusion. See 26 Dkt. No. 48 at 22. 27 4. Adequate representation and equitable treatment 1 Rodriguez’s representation of the class and the equitable treatment of the different employee 2 categories.” Id. at 22-23. Specifically, the Court identified concerns relating to the amount of the 3 proposed class representative enhancement award relative to the projected recovery of the 4 individual class members as well as the way the funds had been allocated between the California 5 class, FLSA collective, and PAGA class. Id. at 22-24. 6 Incentive award. As before, the $10,000 incentive award proposed for Mr. Rodriguez as 7 the class representative is significantly higher than the amounts each individual class member is 8 expected to receive from the settlement. See id. at 23; Dkt. No. 75 at ECF 15, 31. However, as 9 Mr. Rodriguez observes, he “will file a formal motion for the negotiated Class Representative 10 Enhancement Payment once preliminary approval of the Settlement is granted.” Dkt. No. 75 at 11 ECF 32. Once that motion is filed, the Court will have an opportunity to evaluate Mr. Rodriguez’s 12 contributions on behalf of the class and to determine whether the award he requests is reasonable. 13 See Dkt. No. 48 at 23 (citing Jarrell v. Amerigas Propane, Inc., No. 16-cv-01481-JST, 2018 WL 14 1640055, at *4 (N.D. Cal. Apr. 5, 2018)). At this time, however, the Court does not find this 15 aspect a barrier to preliminary approval. 16 Allocation of funds. In its prior order, the Court noted that in determining the estimated 17 value of the California class, FLSA, and PAGA claims, Mr. Rodriguez appeared to be relying on 18 two key assumptions: (1) “25% of the total FLSA collective would opt into the settlement 19 agreement”; and (2) “the Court would award only 25% of the total possible PAGA penalties.” 20 Dkt. No. 48 at 24. The Court found that these assumptions required further explanation. 21 As discussed further in sections B and C, the Court finds that Mr. Rodriguez has provided 22 adequate explanation for the calculation of the value of the FLSA and PAGA claims. The Court 23 thus finds that these concerns have been addressed and that this factor weighs in favor of 24 preliminary approval. 25 5. Potential for collusion and attorneys’ fees award 26 In its prior order, the Court determined that there was “no indicia of collusion” and that 27 this factor thus weighed in favor of preliminary approval. Dkt. No. 48 at 26. However, the Court 1 generally found appropriate by the Ninth Circuit. Dkt. No. 48 at 25 (citing In re Bluetooth, 654 2 F.3d at 942). The Court found that because the award of fees would be ultimately decided by a 3 separately filed motion after preliminary approval, this discrepancy did not provide a barrier to 4 preliminary approval of the amended settlement. Id. 5 In the amended settlement agreement, the parties have reduced the potential attorneys’ fees 6 request to $300,000 while increasing the overall value of the settlement to $1,622,000. Dkt. No. 7 75-2 at ECF 30, 33, 38-39 (¶¶ 2, 21, 44). Thus, the attorneys’ fees request, when made, would be 8 a maximum of 18% of the total settlement fund. While the Court again reserves any formal 9 finding for when it receives the application or motion for attorneys’ fees, this reduction in fees 10 falls well within the benchmark, and the Court reaffirms its prior decision that this factor does not 11 bar preliminary approval. 12 6. Adequacy of notice and plan for distribution 13 In its prior order, the Court found the settlement agreement’s plan for distribution and 14 settlement administration to be adequate. Dkt. No. 48 at 27-28. However, while the Court 15 generally found the proposed notice for the California class contained the required information, 16 the Court provided two points of additional guidance: (1) that the notice should be revised to 17 inform class members that they may also be part of the FLSA collective and that there are 18 additional steps to opt in to this settlement; and (2) that the notice should advise potential class 19 members that a version is available in Spanish as well. Id. at 26-27. The revised California class 20 notice adopts both of these suggested additions, and is otherwise acceptable. See Dkt. No. 75-2 at 21 ECF 60. 22 *** 23 Accordingly, the Court grants preliminary approval of the California class settlement. 24 B. FLSA Collective 25 1. Fair and reasonable resolution 26 In its prior order, the Court identified two major concerns bearing on whether the FLSA 27 settlement was fair and reasonable. First, the Court observed that Mr. Rodriguez did not provide 1 individual collective members” nor “explain why the settlement of the FLSA claim discounts the 2 collective members’ expected recovery.” Dkt. No. 48 at 28-29. Second, the Court noted that Mr. 3 Rodriguez “d[id] not include liquidated damages in his calculations of the estimated value of the 4 FLSA claim.” Id. at 29. 5 In his motion for preliminary approval of the amended settlement agreement, Mr. 6 Rodriguez calculates the total exposure for defendants at $6,062,506.43. Dkt. No. 75 at ECF 32. 7 He clarifies, however, that this number assumes a 100% opt-in rate for the FLSA collective, 8 whereas the typical opt-in rate in FLSA collective actions is in the range of 14% to 25%. Id. at 9 ECF 32-33 (citing Gutierrez-Bejar v. SOS Int'l, LLC, No. LA CV16-09000 JAK (JEMx), 2019 10 WL 5683901, at *9 (C.D. Cal. Nov. 1, 2019) and Bautista v. Harvest Mgmt. Sub LLC, No. CV 12- 11 10004 FMO (CWx), 2013 WL 12125768, at *15 (C.D. Cal. Oct. 16, 2013)). Thus, at a 14% opt-in 12 rate,2 the total potential recovery would be $848,750.90. Id. at ECF 33. In his declaration, Mr. 13 Rodriguez’s counsel further explains that after calculating the more “realistic” number based on a 14 14% opt-in rate, he applied a further discount to the potential recovery based on the litigation risk 15 if the case were to proceed. Dkt. No. 75-2 ¶¶ 62-64 (Perez. Decl.). The declaration highlights 16 how defendants could have challenged the FLSA claim and class certification, including by 17 arguing “that [defendants’] labor policies prohibit off-the-clock work, that employees were 18 properly compensated for all time worked, and any time worked off-the-clock would not be 19 reflected in the time records, making it practically impossible to determine whether any Class 20 Member worked off-the-clock without engaging in thousands of individualized inquiries.” Id. 21 ¶ 63. Because of the availability of such defenses and other factors, Mr. Rodriguez’s counsel 22 estimates the probability of recovering the maximum damages on behalf of the FLSA collective at 23 25%. Id. ¶ 64. The settlement amount of $250,000 is 29% of the estimated “realistic” maximum 24 of $848,750.90 (assuming a 14% opt-in rate). 25 The Court agrees that, for the purposes of preliminary approval, this percentage difference 26 2 Mr. Rodriguez appears to use a 14% opt-in rate for the basis of his calculations rather than the 27 25% rate used in the prior motion. See Dkt. No. 47-2 ¶ 39 (Perez Decl.) (“At the high end of the 1 appears to be within the range approved by other courts in the Ninth Circuit. See Chalmers v. 2 DSSV, Inc., No. 22-cv-08863-HSG, 2024 WL 4844376, at *3 (N.D. Cal. Nov. 19, 2024) (quoting 3 Estorga v. Santa Clara Valley Transportation Auth., No. 16-cv-02668-BLF, 2020 WL 7319356, at 4 *4 (N.D. Cal. Dec. 11, 2020)) (“[C]ourts in the Ninth Circuit have found FLSA cases settling for 5 approximately 25%–35% of the total possible recovery to be reasonable.”) (alteration in original). 6 However, as Mr. Rodriguez’s counsel notes in his declaration, the calculation of 7 defendants’ maximum exposure still does not include potential liquidated damages. Dkt. No. 75-2 8 ¶ 60. “[C]ourts retain discretion to withhold a liquidated damages award, or to award less than the 9 statutory liquidated damages total, where an employer shows that, ‘despite the failure to pay 10 appropriate wages, the employer acted in subjective ‘good faith’ and had objectively ‘reasonable 11 grounds’ for believing that the acts or omissions giving rise to the failure did not violate the 12 FLSA.’” Alvarez v. IBP, Inc., 339 F.3d 894, 909 (9th Cir. 2003) (quoting Herman v. RSR Sec. 13 Servs. Ltd., 172 F.3d 132 (2d Cir. 1999)). This is a difficult standard to meet, and an award of 14 liquidated damages is generally “the norm” under FLSA. See Haro v. City of Los Angeles, 745 15 F.3d 1249, 1259 (9th Cir. 2014). 16 Mr. Rodriguez’s counsel attests that he did not uncover any evidence that defendants’ 17 actions were willful or intentional and thus determined that it would be unlikely the FLSA 18 collective would obtain an award of liquidated damages. Dkt. No. 75-2 ¶ 60 (Perez Decl.) (citing 19 Selk v. Pioneers Mem’l Healthcare Dist., 159 F. Supp. 3d 1164, 1174-75 (S.D. Cal. 2016)). For 20 this reason, he did not factor those damages into the calculation of the maximum recovery. The 21 Court notes that, in Selk, the case on which Mr. Rodriguez relies, the parties had “engaged in 22 meaningful discovery,” including depositions and the production of over 23,000 documents by the 23 defendant. 159 F. Supp. 3d at 1177. Here, the parties have not engaged in extensive discovery, 24 although Mr. Rodriguez has received defendants’ “policy manuals, and timesheet and earnings 25 data for all potential class members.” Dkt. No. 48 at 22. For the purpose of preliminary approval, 26 the Court determines that Mr. Rodriguez has provided an adequate explanation for exclusion of 27 liquidated damages from the calculation. 1 and reasonable. 2 2. Notice and consent to magistrate judge jurisdiction 3 In its prior order, the Court also instructed that the FLSA collective members be directed to 4 consent or decline magistrate judge jurisdiction at the same time as they chose to opt into the 5 settlement. Dkt. No. 48 at 31. The revised version of the FLSA opt-in form submitted with the 6 amended settlement agreement now contains a sentence indicating that the individual opting in 7 also consents to magistrate judge jurisdiction. Dkt. No. 75-2 at ECF 71 (“In accordance with the 8 provisions of 28 U.S.C. § 636(c), I voluntarily consent to have a United States magistrate judge 9 conduct all further proceedings in this case.”). The Court finds that this is sufficient to cure the 10 previous defect. Further, at the hearing, the parties indicated they would offer a version of the 11 notice in Spanish and that information would be added to the English-language notice alerting 12 recipients to the availability of the Spanish translation. The Court approves the notice with this 13 addition. 14 *** 15 As the parties have addressed the Court’s concerns as described above, the Court grants 16 preliminary approval of the FLSA collective portion of the settlement. 17 C. PAGA Settlement 18 A reviewing court must ensure that a PAGA settlement “(1) meet[s] the statutory 19 requirements set forth by PAGA, and (2) [is] fundamentally fair, reasonable, and adequate in view 20 of PAGA’s public policy goals.” Kulik v. NMCI Med. Clinic Inc., No. 21-cv-03495-BLF, 2023 21 WL 2503539, at *4 (N.D. Cal. Mar. 13, 2023). In its prior order, the Court identified two 22 principal concerns with the proposed PAGA settlement.3 First, the Court expressed concern that 23 Mr. Rodriguez had not offered a justification as to why the Court would, in these circumstances, 24 “exercise its discretion to award only 25% of the maximum total penalties.” Dkt. No. 48 at 33. 25
26 3 The Court additionally expressed concern that the parties had not provided the Court with proof of the submission of the settlement to the California Labor and Workforce Development Agency 27 (LWDA) as required by the statute. See Cal. Lab. Code § 2699(l)(2). Here, the parties have 1 Second, the Court expressed concern with the fact that the PAGA settlement was only 2.5% of the 2 total estimated maximum penalties.4 Id. at 34. 3 As to the first concern, in his declaration, Mr. Rodriguez’s counsel again offers examples 4 of cases in which the court significantly reduced the amount of penalties, including because of the 5 good faith behavior of defendants. Dkt. No. 75-2 ¶¶ 55-56 (Perez Decl.) (collecting cases). He 6 does not clearly explain how the circumstances in those cases compare to the circumstances in this 7 case, but relies instead on a discussion of the “strength of the factual and legal defenses likely to 8 be asserted by the Defendants at trial and the availability of good faith defenses” to support his 9 assessment regarding an award of PAGA penalties. Id. ¶ 57. Mr. Rodriguez provides a revised 10 table outlining the calculation of defendants’ “realistic” exposure under PAGA: 11 Odds of
Total Potential Recovering Realistic Exposure PAGA Claim 12 Penalties Maximum PAGA at Trial Penalties 13 Minimum Wage Claim5 $2,813,700.00 6.25% $175,856.25 14 Overtime Claim6 $2,813,700.00 6.25% $175,856.25 Meal Period Claim7 $2,813,700.00 12.5% $351,712.50 15 Rest Period Claim8 $2,813,700.00 12.5% $351,712.50 Business Expense 16 Reimbursement Claim9 $2,813,700.00 12.5% $351,712.50 Reporting Time Claim10 $2,813,700.00 12.5% $351,712.50 17 Wage Statement Claim11 $2,813,700.00 6.25% $175,856.25 18 Final Pay Claim12 $54,500.00 6.25% $3,406.25 Total $1,937,825.00 19 20 Id. Mr. Rodriguez’s counsel explains that the odds of recovery were calculated by “multiplying 21 the anticipated probabilities of prevailing on the merits of the claims . . . by the odds of the Court 22 awarding maximum penalties under PAGA . . ., which Plaintiff roughly estimated at 25%.” Id. 23 ¶ 57 n.4 (emphasis added). The Court infers that this estimate reflects counsel’s assessment of the 24 strength of defendants’ defenses, and in particular, the lack of evidence of bad faith on the part of 25 the defendants. The Court finds such reasoning is persuasive for the purposes of the preliminary 26
27 4 The Court observed that Mr. Rodriguez appeared to have made some miscalculations in 1 approval analysis. 2 Similarly, regarding the amount of the proposed PAGA settlement, the Court finds that Mr. 3 Rodriguez and his counsel have adequately addressed the Court’s concerns at this stage. While 4 the amount of the PAGA settlement is now closer to 1% of the total calculated exposure, it is 10% 5 of the “realistic” exposure calculation, a calculation for which Mr. Rodriguez has provided a 6 logical rationale. Furthermore, the Court must consider the adequacy of the PAGA settlement in 7 conjunction with the Rule 23 class settlement. O'Connor v. Uber Techs., Inc., 201 F. Supp. 3d 8 1110, 1134 (N.D. Cal. 2016). As the Court has found that the California class settlement is fair 9 and reasonable for the purposes of this preliminary analysis, the goals of PAGA may be fulfilled 10 through this settlement as well. See id. (“[I]f the settlement for the Rule 23 class is robust, the 11 purposes of PAGA may be concurrently fulfilled.”). 12 Accordingly, the Court grants Mr. Rodriguez’s motion for preliminary approval of the 13 PAGA settlement. 14 IV. PRELIMINARY APPROVAL 15 For the reasons explained above, the Court grants Mr. Rodriguez’s motion for preliminary 16 approval and adopts his proposed order as follows: 17 1. The California class is conditionally certified for settlement purposes only and shall 18 consist of all persons who were employed by defendants in the State of California in 19 non-exempt positions at any time during the period from February 25, 2018 to the date 20 of Preliminary Approval. 21 2. The proposed FLSA collective is conditionally certified for settlement purposes only 22 and shall consist of all persons who were employed by defendants in the United States 23 of America in non-exempt positions at any time during the period from February 25, 24 2019 to the date of Preliminary Approval. 25 3. The PAGA Members encompassed by the Settlement and this Order are all persons 26 who were employed by defendants in the State of California in non-exempt positions at 27 any time during the period from March 8, 2021 to the date of Preliminary Approval. 1 conditions set forth therein and the Gross Settlement Amount and allocation of 2 payments. 3 5. The Court approves, as to form and content, the proposed Notice of Class Action 4 Settlement. The Court also approves, as to form and content, the proposed FLSA 5 Notice with the agreed-upon modification including the availability of Spanish 6 translation. 7 6. The Court directs the mailing, by First-Class U.S. mail, of the Class Notices and FLSA 8 Notices to Class Members and FLSA Collective Action Members in accordance with 9 the schedule set forth below and the other procedures described in the Settlement 10 Agreement. 11 7. The Court appoints plaintiff Richard Rodriguez as the representative for the Settlement 12 Class conditionally certified by this Order. 13 8. The Court appoints Capstone Law APC as Class Counsel. 14 9. The Court approves and appoints CPT Group, Inc. as the Settlement Administrator. 15 10. The following deadlines shall apply for the remainder of the settlement process: 16 Date Event 17 June 20, 2025 Last day for defendants to produce the Class 18 List to the Settlement Administrator. 19 June 30, 2025 Last day for the Settlement Administrator to mail a Class Notice to all Class Members, and a 20 FLSA Notice to all FLSA Collective Action 21 Members, via regular First-Class U.S. Mail. 22 July 31, 2025 Last day for Plaintiff to file the Motion for Attorneys’ Fees, Costs, and a Class 23 Representative Enhancement Payment. 24 August 14, 2025 Last day for: (a) Class Members to postmark or email to the Settlement Administrator Requests 25 for Exclusion, postmark or email disputes concerning the calculation of Individual 26 Settlement Payments, or postmark Notices of 27 Objection to the Settlement Administrator; and (b) FLSA Collective Action Members to ] August 29, 2025 Last day for Plaintiff to file and serve the Motion for Final Approval of Class Action 2 Settlement. 3 October 7, 2025 at 10:00 a.m. Hearing on Motion for Final Approval of Class Action Settlement and Motion for Attorneys’ 4 Fees, Costs, and a Class Representative 5 Enhancement Payment. 6 V. CONCLUSION 4 For the reasons described above, the Court grants Mr. Rodriguez’s motion for preliminary 8 approval in its entirety. 9 IT IS SO ORDERED. 10 Dated: May 21, 2025 11 12 UL ny é . Maree: Virginia K. DeMarchi 13 United States Magistrate Judge
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