Stewart v. Quest Diagnostics Clinical Laboratories, Inc.

District Court, S.D. California·Decided May 21, 2025·No. 3:19-cv-02043·Unknown

Opinion

3 Pamela STEWART, et al., individually Case No.: 19-cv-2043-AGS-DDL and on behalf of all similarly situated 4 employees of Defendants in the State of ORDER GRANTING PLAINTIFFS’ 5 California, UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF 6 Plaintiffs, CLASS AND PAGA 7 v. REPRESENTATIVE ACTION SETTLEMENT (ECF 275)

LABORATORIES, INC., et al., 9 Defendants. 10

11 After more than five years of intense litigation, plaintiffs Pamela Stewart and 12 Zulekha Abdul seek preliminary approval of a settlement agreement regarding their 13 class-action lawsuit and Private Attorney General Act representative action against 14 defendant Quest Diagnostics Clinical Laboratories, Inc. (See generally ECF 275.) Plaintiffs 15 ask the Court to: “(1) preliminarily approv[e]” this class action settlement; 16 “(2) conditionally certify[] the class for settlement purposes; (3) approv[e] the . . . Notice 17 of Class and PAGA Action Settlement”; “(4) appoint[] Simpluris, Inc.” “to administer the 18 settlement and notice process”; and (5) schedule a final approval hearing. (Id. at 8.) 20 A. Class Action Settlement 21 There is a “strong judicial policy that favors settlements, particularly where complex 22 class action litigation is concerned.” Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 23 (9th Cir. 1992). Still, class actions “may be settled” “only with the court’s approval.” 24 Fed. R. Civ. P. 23(e). The approval process involves two steps: (1) preliminary court 25 approval, then, after notice to the proposed class members, (2) final approval. See Ali v. 26 Franklin Wireless Corp., No. 21-CV-00687-AJB-MSB, 2024 WL 270077, at *3 (S.D. Cal. 27 Jan. 24, 2024). At the preliminary stage, the parties need only make a “showing that the 28 court will likely be able to (i) approve the proposal under Rule 23(e)(2); and (ii) certify the 1 class for purposes of judgment on the proposal.” Fed. R. Civ. P. 23(e)(1)(B)(i)–(ii). If the 2 parties make that showing, then the “court must direct notice in a reasonable manner to all 3 class members who would be bound by the proposal.” Id. 4 1. Likely Approval Under Rule 23(e)(2) 5 Rule 23(e)(2) requires the Court to assess whether the parties’ proposal “is fair, 6 reasonable, and adequate after considering” whether: (1) the class representatives and 7 counsel “adequately represent[]” the class; (2) the parties negotiated the proposal “at arm’s 8 length”; (3) the proposed “relief provided for the class is adequate”; and (4) “the proposal 9 treats class members equitably relative to each other.” Fed. R. Civ. P. 23(e)(2)(A)–(D). 10 a. Adequate Representation 11 Determining whether the representation is “adequate” involves a two-part inquiry: 12 “(1) Do the representative plaintiffs and their counsel have any conflicts of interest with 13 other class members, and (2) will the representative plaintiffs and their counsel prosecute 14 the action vigorously on behalf of the class?” Staton v. Boeing Co., 327 F.3d 938, 957 15 (9th Cir. 2003). Adequacy is “usually presumed in the absence of contrary evidence.” 16 Tourgeman v. Collins Fin. Servs., Inc., No. 08-CV-1392 JLS (NLS), 2011 WL 5025152, 17 at *13 (S.D. Cal. Oct. 21, 2011). There is no evidence to overcome that presumption. 18 Neither the named plaintiffs nor their attorneys are “aware of any potential conflicts that 19 exist between themselves and the class.” (ECF 275-2, at 3, 19.) And the representative 20 plaintiffs and their counsel have “vigorously” prosecuted this action for more than five 21 years. See Staton, 327 F.3d at 957. So the representation is adequate. 22 b. Arm’s-Length Negotiation 23 The parties also engaged in an “arm’s length” negotiation. See Fed. R. Civ. 24 P. 23(e)(2)(B). Before drafting this settlement proposal in the aftermath of an all-day 25 mediation (ECF 275, at 8), the parties spent the better part of five years sparring at least at 26 an arm’s length from each other. 27 Nor is there evidence that the proposal is “the product of fraud or overreaching by, 28 or collusion among, the negotiating parties.” Class Plaintiffs, 955 F.2d at 1290. Three 1 “subtle signs” that suggest fraud or collusion are “(1) when counsel receives a 2 disproportionate distribution of the settlement; (2) when the parties negotiate a ‘clear 3 sailing arrangement,’ under which the defendant agrees not to challenge a request for an 4 agreed-upon attorney’s fee; and (3) when the agreement contains a ‘kicker’ or ‘reverter’ 5 clause that returns unawarded fees to the defendant, rather than the class.” In re Cal. Pizza 6 Kitchen Data Breach Litig., 129 F.4th 667, 674–75 (9th Cir. 2025). 7 First, there is no indication that plaintiffs’ counsel would receive a “disproportionate 8 distribution of the settlement.” See id. Plaintiffs’ counsel’s proposed fee is “not to exceed” 9 33.33%, or one-third of, the gross settlement amount. (ECF 275-2, at 33.) This is higher 10 than the Ninth Circuit’s 25% “benchmark award for attorney fees,” Staton, 327 F.3d at 968, 11 but it’s still “well within the range of percentages which courts [in this circuit] have upheld 12 as reasonable in other class action lawsuits,” see Stuart v. Radioshack Corp., 13 No. C-07-4499 EMC, 2010 WL 3155645, at *6 (N.D. Cal. Aug. 9, 2010) (approving fees 14 totaling “one-third of the settlement amount”); see, e.g., Singer v. Becton Dickinson & Co., 15 No. 08-CV-821-IEG (BLM), 2010 WL 2196104, at *8 (S.D. Cal. June 1, 2010) (approving 16 “fees in the amount of 33.33% of the common fund”). That said, the proposed agreement 17 also would allow plaintiffs’ counsel to request up to 25.44%, or roughly one-fourth, of the 18 gross settlement amount for litigation-expense reimbursement. (ECF 275-2, at 33.) But 19 plaintiffs can’t provide the full details of their out-of-pocket costs until the final approval 20 stage. (ECF 275, at 29). So, although attorneys “may recover . . . those out-of-pocket 21 expenses that would normally be charged to a fee paying client,” Harris v. Marhoefer, 22 24 F.3d 16, 19 (9th Cir. 1994) (cleaned up), it’s too early to evaluate plaintiffs’ counsel’s 23 costs request at this stage. 24 Next, there is no evidence of a “clear sailing arrangement” between the attorneys, 25 see In re Cal. Pizza Kitchen, 129 F.4th at 674–75, given that defense counsel reserves the 26 right to challenge “Class Counsel’s request for fees and costs” (ECF 275, at 29). So there 27 is nothing to suggest fraudulent settlement collusion in this case. Finally, there is no 28 “kicker” or “reverter” clause in the proposed settlement. See In re Cal. Pizza Kitchen, 1 129 F.4th at 674–75. Any uncashed settlement checks will be “held and disposed of” “in 2 accordance with California’s Unclaimed Property Law for the benefit of the” class 3 member. (ECF 275-2, at 47.) 4 So none of the subtle signs of collusion are present, and it would appear the parties 5 have negotiated this proposal at “arm’s length.” See Fed. R. Civ. P. 23(e)(2)(B). 6 c.

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Stewart v. Quest Diagnostics Clinical Laboratories, Inc., (S.D. Cal. 2025).

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