1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 LUIS LOPEZ YANEZ; KAYASONE Case No.: 20cv1789-MDD MUONGKHOT; and JULIO 11 RUBIO, on behalf of themselves and ORDER GRANTING UNOPPOSED 12 all others similarly situated, MOTION FOR FINAL APPROVAL OF CLASS ACTION, FLSA 13 Plaintiffs, COLLECTIVE ACTION, AND 14 v. PRIVATE ATTORNEYS’ GENERAL ACT SETTLEMENT 15 HL WELDING, INC.,
Defendant. 16 [ECF No. 32] 17 18 Before the Court is Plaintiffs Luis Lopez Yanez, Kayasone Muongkhot, 19 and Julio Rubio’s motion for final approval of a class and collective action and 20 Private Attorneys’ General Act (“PAGA”) settlement. (ECF Nos. 32, 34). 21 Plaintiffs also seek approval of an award for attorney’s fees, costs, and class 22 representative service awards. (ECF No. 341). The motion is unopposed. 23 (See Docket). The Court held a hearing on March 15, 2022. (See ECF No. 24 25 26 1 Plaintiffs filed the motion initially at ECF No. 32, but later filed a notice of errata with a corrected motion at ECF No. 34. (ECF No. 34). The Court refers to ECF No. 34 for the 1 41). For the reasons stated below, the Court GRANTS Plaintiff’s unopposed 2 motion. 3 I. INTRODUCTION 4 On June 2, 2021, Plaintiffs filed a First Amended Complaint (“FAC”), 5 which is the operative complaint in this case. (ECF No. 19). Plaintiffs allege: 6 (1) failure to pay overtime wages under California Labor Code §§ 510, 1194; 7 (2) failure to furnish accurate wage statements under California Labor Code 8 §§ 226, 226.3; (3) waiting time penalties under California Labor Code §§ 201- 9 2032; (4) unfair competition under California Business and Professions Code 10 § 17200, et seq.; (5) civil penalties under PAGA, California Labor Code § 2698, 11 et seq.; and (6) failure to pay overtime wages under Fair Labor Standards Act, 12 29 U.S.C. § 207 (“FLSA”). (Id.). 13 The gravamen of Plaintiffs’ complaint in this action and the Muongkhot 14 Action is that Defendant “has used a pay scheme to deprive Tradespeople of 15 wages by paying a ‘per diem’ in addition to hourly wages, but not including 16 the per diem rate in its calculation of overtime pay.” (Id.). As such, 17 Defendant has allegedly not paid overtime using the proper regular rate of 18 pay as required by the FLSA and California law. (Id.). Additionally, 19 Plaintiffs allege derivative claims that Defendant failed to provide accurate 20 wage statements, “and that certain Tradespeople . . . are due waiting time 21 and PAGA penalties.” (Id.). 22 Plaintiffs seek preliminary approval of an $858,000 non-reversionary 23 settlement with HL Welding to settle the California and federal overtime 24 pay, and related claims on behalf of a class of Tradespeople (“Settlement 25 Class Members”), as defined more specifically below. 26 // 1 II. BACKGROUND 2 A. Litigation History 3 On October 10, 2019, Plaintiff Muongkhot filed a class action complaint 4 against HL Welding in San Diego Superior Court (“Muongkhot Action”). The 5 initial complaint was filed on behalf of a putative class of Welders, Ship 6 Fitters, and other similarly situated employees employed in California on or 7 after October 10, 2015. Shortly after filing, Defendant disclosed that many 8 members of the putative class signed arbitration agreements with HL 9 Welding that included a class action waiver. 10 On February 13, 2020, Plaintiff Julio Rubio initiated the 65-day 11 administrative exhaustion requirements with the California Labor and 12 Workforce Development Agency (“LWDA”) that were required before Mr. 13 Rubio could join the Muongkhot Action as a representative plaintiff to assert 14 a claim under PAGA. Plaintiffs then filed an amended complaint in the 15 Muongkhot Action wherein Rubio is named as a plaintiff and proxy for the 16 state of California. 17 In July 2020, following initial discovery and meeting and conferring 18 with Defendant’s counsel, Plaintiff sought a stipulation to amend the 19 operative complaint in the Muongkhot Action. Defendant declined to 20 stipulate, requiring Plaintiffs to file a Motion for Leave to Amend in the 21 Muongkhot Action to add additional plaintiffs and provide an expanded class 22 definition explicitly including all potential class positions in addition to 23 Welders and Shipfitters. 24 On September 11, 2021, Plaintiff Yanez initiated this action. (ECF No. 25 1). Plaintiffs filed the First Amended Complaint on June 2, 2021, which 26 added claims on behalf of an expanded statewide class, a nationwide 1 The parties attended a mediation on March 24, 2021 with mediator 2 Scott Markus. The mediation involved discussion of settlement of both this 3 Action and the Muongkhot Action. The parties entered into a signed 4 Memorandum of Understanding (“MOU”) to settle all of the class and PAGA 5 claims in both cases. Prior to mediation, Defendant HL Welding shared with 6 Plaintiffs’ counsel detailed data regarding the class claims. HL Welding 7 provided supplemental data to Plaintiffs’ counsel on June 2, 2021 that 8 confirmed the relevant workweeks and pay periods that are the focus of the 9 disputes herein, and which also confirmed when class members worked 10 overtime hours that would be subject to additional compensation if Plaintiffs 11 prevailed on the merits. The parties spent the next two months negotiating 12 the terms of the full settlement agreement presented in the instant motion, 13 including the Settlement Notice to the class. 14 B. Settlement Agreement 15 In return for a release of all claims in this action, the Muongkhot 16 Action, and any related claims arising from the same facts averred in the 17 operative complaint, Defendant agreed to create a non-reversionary $858,000 18 Gross Settlement Amount (“GSA”). Defendant will separately pay the 19 “employer’s share” of employment taxes (FICA, FUTA, SDI) on any payments 20 classified as W-2 income or wages, over and above the GSA. (ECF No. 23 at 21 14). 22 The Settlement Class consists of: All current and former employees of 23 HL Welding who were employed as Welders, Ship Fitters, Pipefitters, Sheet 24 Metal workers, Electricians, Machinists, Riggers and Tackers at any time 25 from October 1, 2015 and June 30, 2021 and who have not signed arbitration 26 agreement with class/collective action waiver with HL Welding and who fall 1 California Subclass: All current and former employees of HL Welding 2 who were employed as Welders, Ship Fitters, Pipefitters, Sheet Metal 3 workers, Electricians, Machinists, Riggers and Tackers by Defendant in 4 California at any time between October 1, 2015 and June 30, 2021 (the 5 “California Subclass Period”) and who have not signed arbitration agreement 6 with class/collective action waiver with HL Welding. 7 FLSA Subclass: All current and former employees of HL Welding who 8 were employed as Welders, Ship Fitters, Pipefitters, Sheet Metal workers, 9 Electricians, Machinists, Riggers and Tackers by Defendant in states other 10 than California at any time between September 15, 2017 and June 30, 2021 11 (the “FLSA Subclass Period”) and who have not signed arbitration agreement 12 with class/collective action waiver with HL Welding. 13 There are 80 individuals in the Settlement Class. 14 The Settlement Agreement provides for a non-reversionary $858,000 15 gross settlement fund. Attorneys’ fees and costs, class representative service 16 awards, PAGA penalties to the California LWDA and PAGA Recipients, and 17 the Settlement Administrator’s fees and costs will be deducted from the gross 18 settlement fund before funds are distributed to Class Members. The 19 remaining Net Settlement Fund of approximately $436,000 will be 20 distributed to Class Members pro rata based on the number of weeks worked 21 during the settlement class period. The disbursements will be made 22 automatically to Class Members; they do not need to submit claims. Class 23 Members can expect to receive approximately $226.97 per workweek. The 24 average award will be $5,450 and the largest award will be over $19,500. 25 The Settlement Agreement also provides for $100,000 of the settlement 26 funds to be allocated to PAGA claims, with $75,000 payable to the LWDA and 1 $25,000 to 477 “PAGA Recipients”2 in consideration of a narrow release that 2 releases only relate to PAGA claims and preserves these employees’ rights to 3 bring claims in arbitration for alleged non-payment of overtime and other 4 Labor Code violations. 5 C. Updates Since Preliminary Approval 6 On December 9, 2021, the Settlement Administrator mailed notice of 7 the settlement to 557 Settlement Class Members and PAGA Recipient 8 individuals who were on the class/PAGA list provided by HL Welding. 79 of 9 the notice packets sent by first-class mail were returned as undeliverable. 10 The Settlement Administrator was able to locate new addresses for 74 of 11 those, and re-mail the notice. The Settlement Administrator set up a toll-free 12 number for telephone support, as set forth in the Notice Packet. The deadline 13 for Class Members to exclude themselves from the Settlement Class, and to 14 file objections to the Settlement Agreement, was January 24, 2022. No Class 15 Member has opted out or objected. 16 Class Members submitted one timely challenge and one untimely 17 challenge to the Settlement Administrator’s estimates based on Defendant’s 18 records. The Settlement Administrator worked with Defendant and 19 Plaintiffs’ counsel to resolve these disputes, and both disputes were rejected. 20 The Court held a hearing on March 15, 2022. (ECF No. 41). No 21 objectors appeared and the parties did not raise any new issues. (Id.). 22 III. DISCUSSION 23 Plaintiffs’ motion seeks final approval of a class action settlement, an 24
25 2 “PAGA Recipient(s)” means all current and former employees of Defendant who were 26 employed as Welders, Ship Fitters, Pipefitters, Sheet Metal workers, Electricians, Machinists, Riggers and Tackers by Defendant in California at any time between 1 FLSA collective action settlement, a PAGA settlement, attorneys’ fees and 2 costs, and class representative service awards. The Court addresses each in 3 turn. 4 A. Class Action Settlement 5 Courts require a higher standard of fairness when settlement takes 6 place prior to class certification to ensure class counsel and defendants have 7 not colluded in settling the case. Hanlon v. Chrysler Corp., 150 F.3d 1011, 8 1026 (9th Cir. 1998). Ultimately, “[t]he court’s intrusion upon what is 9 otherwise a private consensual agreement negotiated between the parties to 10 a lawsuit must be limited to the extent necessary to reach a reasoned 11 judgment that the agreement is not the product of fraud or overreaching by, 12 or collusion between, the negotiating parties, and that the settlement, taken 13 as a whole, is fair, reasonable and adequate to all concerned.” Officers for 14 Justice v. Civil Serv. Comm’n, 688 F.2d 615, 625 (9th Cir. 1982). Judicial 15 policy favors settlement in class actions and other forms of complex litigation 16 where substantial resources can be conserved by avoiding the time, cost, and 17 rigors of formal litigation. In re Wash. Pub. Power Supply Sys. Sec. Litig., 18 720 F. Supp. 1379, 1387 (D. Ariz. 1989). 19 1. Class Certification 20 Before granting final approval of a class action settlement agreement, 21 the Court must first determine whether the proposed class can be certified. 22 Amchem Prods. v. Windsor, 521 U.S. 591, 620 (1997) (indicating that a 23 district court must apply “undiluted, even heightened, attention [to class 24 certification] in the settlement context” in order to protect absentees). 25 Federal Rule of Civil Procedure 23 establishes four prerequisites for class 26 certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy 1 questions must predominate over individual questions and the class action 2 device must be “superior to other available methods for fairly and efficiently 3 adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). 4 In the Preliminary Approval Order, the Court found the proposed 5 Settlement Class proper and conditionally certified it for settlement 6 purposes. (ECF No. 27) (“Preliminary Approval Order”). There have been no 7 changes with respect to factors this Court considered in preliminarily 8 certifying the Settlement Class. Accordingly, the Court incorporates by 9 reference the reasons set forth in its Preliminary Approval Order and 10 reaffirms that the requirements of Federal Rule of Civil Procedure 23(a) and 11 (b) have been satisfied. 12 2. Adequacy of Notice 13 The Court must also determine whether the Class received adequate 14 notice of the settlement. Hanlon v. Chrysler Corp., 150 F.3d at 1025. The 15 Court approved the Notice Packet and notice plan and authorized Simpluris, 16 Inc. (“Simpluris”) to act as the Settlement Administrator. (Prelim. App. 17 Order). 18 In support of the Final Approval Motion, Plaintiffs attached the 19 Declaration of Meagan Brunner, a project manager for Simpluris. (Brunner 20 Decl. ¶ 1). Pursuant to the Preliminary Approval Order and Proposed 21 Settlement, Brunner mailed a Notice Packet on December 9, 2021, to 557 22 Settlement Class Members and PAGA Recipients. (Id. ¶ 5). As of February 23 14, 2022, 79 Notice Packets were returned by the post office. (Id. ¶ 6). 24 Simpluris performed an advanced address search, or skip trace, on all Notice 25 Packets returned without a forwarding address. (Id.). Of the 79 returned 26 Notice Packets, 74 Notice Packets were re-mailed to either a newfound 1 remaining 5 Notice Packets were undeliverable because Simpluris could not 2 find a better address. (Id.). Simpluris also established and maintains a toll- 3 free telephone number for the purpose of allowing Class Members to contact 4 Simpluris and make inquiries regarding the settlement. (Id. ¶ 7). The 5 system will remain in operation throughout the settlement administration 6 process. (Id.). 7 Class Members had until January 24, 2022 to opt-out of the class, object 8 to the settlement, or challenge Defendant’s records that were pre-printed in 9 their Notice Packet. (Id. ¶ 9). Simpluris received two challenges, both of 10 which were rejected as invalid. (Id.). Simpluris did not receive any requests 11 for exclusion or objections to the settlement. (Id. ¶¶ 10-11). 12 Having reviewed the Brunner Declaration, which provides that notice 13 was disseminated to potential Settlement Class Members in the manner 14 ordered by the Court in its Preliminary Approval Order, the Court finds that 15 the Settlement Class received adequate notice of the Settlement. 16 The Settlement Administrator further declares the settlement 17 administration costs are $11,000. (Brunner Decl. ¶ 17). The Settlement 18 Administrator’s duties include, but are not limited to establishing and 19 maintaining a list of potential class members, mailing the Notice Packet to 20 Class Members and PAGA Recipients, performing skip trace searches on 21 Class Members and PAGA Recipients whose Notice Packets were returned 22 undeliverable, establishing and maintaining a toll-free number to inquire 23 about the settlement, recording and maintaining exclusions and objections, 24 and processing and mailing settlement checks. (See generally, Brunner 25 Decl.). Accordingly, the Court APPROVES the Settlement Administration 26 costs in the amount of $11,000. 1 3. Fairness of the Settlement 2 The Court must next determine whether the proposed settlement is 3 “fair, reasonable, and adequate” pursuant to Federal Rule of Civil Procedure 4 23(e)(2)(C). Factors relevant to this determination include: 5 The strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining 6 class action status throughout the trial; the amount offered in 7 settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a 8 governmental participant; and the reaction of the class members to 9 the proposed settlement. 10 Hanlon, 150 F.3d at 1026. This fairness determination is committed to the 11 sound discretion of the district court. Id. 12 i. Strength of Plaintiffs’ Case and the Risk, Expense, 13 Complexity, and Likely Duration of Further Litigation 14 The Court must balance the continuing risks of litigation (including the 15 strengths and weaknesses of the plaintiff’s case),. with the benefits afforded 16 to members of the Class, and the immediacy and certainty of a substantial 17 recovery. See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 18 2000). In other words, the Court must “consider the vagaries of litigation and 19 compare the significance of immediate recovery by way of the compromise to 20 the mere possibility of relief in the future, after protracted and expensive 21 litigation.” Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 22 526 (C.D. Cal. 2004). 23 Plaintiffs acknowledge that if litigation were to continue in this case, 24 they would have to move for class certification, conditional certification of the 25 FLSA claims, and then prevail on summary judgment or at trial to succeed. 26 (ECF No. 34 at 21-22). Defendant would have opposed conditional 1 Civil Procedure 23. (Id.). 2 Defendant has at all times maintained that it has properly classified 3 the Tradespeople’s per diem payments as reimbursement of travel expenses 4 that are not subject to overtime premiums. In addition, Defendant maintains 5 that Plaintiffs’ claims are not amenable to class treatment, because (1) the 6 job position and skills of the employees are different; (2) different HL Welding 7 locations have different polices; (3) employees’ residences and their relation to 8 individual worksites vary greatly; (4) some Tradespeople signed arbitration 9 agreements; and (5) some putative Class Members did not work any 10 overtime. Defendant also contests many of the underlying wage and hour 11 violations, contending that its overtime pay practices were at all times lawful 12 and that per diem payments did not qualify as compensation on which 13 overtime is due. While Plaintiffs believe they could defeat these defenses, 14 there remains a risk that the Court would not certify the class action and 15 that the Court could agree with Defendant on the classification if its per diem 16 payments and the particulars of the wage and hour violations. 17 In addition, proving damages may be challenging, as HL Welding 18 argues that Class Members greatly exaggerate the number of overtime hours 19 worked. 20 Furthermore, the costs of litigating an action on behalf of 80 Class 21 Members and over 400 PAGA Recipients could have been significant, and 22 Class Counsel would incur these costs at the potential risk of recovering 23 nothing for any of them. The costs expended in litigating this case already 24 exceed $10,000. Significant additional costs would have been incurred 25 throughout the process of certifying the class, preparing for trial and 26 appellate process. 1 damages, not to mention the possibilities of appeal, would delay resolution of 2 this case by years. 3 Based on the foregoing, the Court finds that these factors weigh in favor 4 of approving the Settlement. See In re LinkedIn User Priv. Litig., 309 F.R.D. 5 573, 587 (N.D. Cal. 2015) (“Generally, unless the settlement is clearly 6 inadequate, its acceptance and approval are preferable to a lengthy and 7 expensive litigation with uncertain results.”). 8 ii. Risk of Maintaining Class Action Status Throughout Trial 9 Pursuant to Rule 23, the Court may revisit a prior order granting 10 certification of a class at any time before final judgment. See Fed. R. Civ. P. 11 23(c)(1)(C) (“An order that grants or denies class certification may be altered 12 or amended before final judgment.”). Where there is a risk of maintaining 13 class action status throughout the trial, this factor favors approving the 14 settlement. Adoma v. Univ. of Phoenix, Inc., 913 F. Supp. 2d 964, 976 (E.D. 15 Cal. 2012) (finding that the complexity of the case weighed in favor of 16 approving the settlement). 17 In the Final Approval Motion, Plaintiffs submit that the class was not 18 yet certified when the parties reached a settlement, and Defendants would 19 have opposed certification of the putative class. (ECF No. 34 at 22). 20 Additionally, “Defendant would like[ly] also file a motion for decertification of 21 any class.” (Id.). Accordingly, Plaintiffs’ risk of maintaining class action 22 status throughout trial supports final approval of the settlement. 23 iii. Amount Offered in Settlement 24 “In assessing the consideration obtained by the class members in a class 25 action settlement, it is the complete package taken as a whole, rather than 26 the individual component parts, that must be examined for overall fairness.” 1 omitted). 2 The gross settlement amount of $858,000 supports final approval of the 3 settlement. According to Simpluris, the average estimated payment for 4 California and FLSA Class Members is $5,450 if the Court approves the 5 $100,000 PAGA allocation, class representative service awards, and 6 attorneys’ fees and costs. (Brunner Decl. ¶ 15). The highest payout is 7 $19,519 and 21 Class Members will receive over $10,000. (Id.). Plaintiffs 8 note that “the settlement provides a total benefit to the class that represents 9 more than triple the core damages that could be recovered at trial on behalf 10 of the class.” (ECF No. 34 at 23). Accordingly, the Court finds that the 11 amount offered in settlement weighs in favor of approving the settlement. 12 iv. The Stage of Proceedings 13 “A settlement following sufficient discovery and genuine arms-length 14 negotiation is presumed fair.” DIRECTV, Inc., 221 F.R.D. at 528. In the 15 context of class action settlements, as long as the parties have sufficient 16 information to make an informed decision about settlement, “formal 17 discovery is not a necessary ticket to the bargaining table.” Linney v. 18 Cellular Alaska P’ship, 151 F.3d 1234, 1239 (9th Cir. 1998). 19 The parties have been litigating this case since October 2019, when the 20 Muongkhot Action was filed in State Court. Plaintiffs’ counsel extensively 21 researched and investigated the case and engaged in multiple negotiations 22 with Defendant’s counsel to mediate the case. The parties engaged in 23 “thorough written discovery; the exchange of hundreds of pages of documents; 24 interviews with Plaintiffs and class members; informal discovery as to class 25 data and company policies; [and] analysis of Defendant’s data and mediation 26 preparation.” (Id. at 20). 1 here was reached with the assistance of an experienced, neutral mediator 2 after substantial investigation was completed by experienced Class Counsel. 3 (ECF No. 34 at 20-21). The Court has already found, and again finds, that 4 the Settlement “appears to be the product of serious, informed, non-collusive 5 negotiations.” (Prelim. App. Order at 14). As a result, the stage of 6 proceedings in this case also supports final approval of the settlement. 7 v. Experience and Views of Counsel 8 “Great weight is accorded to the recommendation of counsel, who are 9 most closely acquainted with the facts of the underlying litigation. This is 10 because parties represented by competent counsel are better positioned than 11 courts to produce a settlement that fairly reflects each party’s expected 12 outcome in the litigation.” DIRECTV, Inc., 221 F.R.D. at 528 (internal 13 citation and quotation marks omitted). 14 Plaintiffs’ counsel “have extensive wage and hour class action 15 experience” and “are satisfied that the recovery for each Class Member is fair 16 and reasonable taking into consideration the potential recovery as compared 17 to the actual recovery, the stage of the litigation when the settlement was 18 reached, risks inherent in any litigation and the specific risks in this case, 19 and the reasonable tailoring of each Class Member’s claim to the amounts 20 received.” (Id. at 21). As indicated in its Preliminary Approval Order, 21 Plaintiffs’ counsel have “‘actively identified, investigated and prosecuted the 22 claims that are the subject of this Settlement; they have decades of extensive 23 experience in class action litigation, including wage-and-hour claims of the 24 type asserted here, have been appointed class counsel in numerous cases; 25 and have demonstrated that they have the ability and resources to vigorously 26 pursue the claims asserted in this litigation.’” (Prelim. App. Order at 9-10) 1 Given counsel’s experience with the case and expertise in wage and 2 hour class actions, the Court presumes counsel’s recommendation to approve 3 the settlement is reasonable. See Boyd v. Bechtel Corp., 485 F. Supp. 610, 4 622 (N.D. Cal. 1979) (“The recommendations of plaintiffs’ counsel should be 5 given a presumption of reasonableness. Attorneys, having intimate 6 familiarity with a lawsuit after spending years in litigation, are in the best 7 position to evaluate the action . . . .”). Accordingly, the Court finds that 8 Plaintiffs’ Counsel’s experience and opinion that the settlement is fair weighs 9 in favor of approving the settlement. 10 vii. Class Reaction to the Settlement 11 The Ninth Circuit has held that the number of class members who 12 object to a proposed settlement is a factor to be considered. Mandujano v. 13 Basic Vegetable Prods. Inc., 541 F.2d 832, 837 (9th Cir. 1976). The absence of 14 a large number of objectors supports the fairness, reasonableness, and 15 adequacy of the settlement. See In re Austrian & German Bank Holocaust 16 Litig., 80 F.Supp. 2d 164, 175 (S.D.N.Y. 2000) (“If only a small number of 17 objections are received, that fact can be viewed as indicative of the adequacy 18 of the settlement.”) (citations omitted); Boyd, 485 F. Supp. at 624 (finding 19 “persuasive” the fact that 84% of the class did not file an opposition). 20 As detailed above, the Settlement Administrator had not received any 21 requests for exclusion from the settlement or objections to the settlement and 22 the time to do so has passed. (Brunner Decl.). The Court finds that the 23 reaction of the Class Members to the settlement weighs in favor of approving 24 the settlement. 25 viii. Conclusion 26 Because the factors outlined above favor approving the settlement, the 1 finds that the settlement is “fair, reasonable, and adequate” under Rule 23(e). 2 B. FLSA Settlement 3 FLSA claims can be settled only with the supervision and approval of 4 the United States Department of Labor or a federal district court. See Lynn’s 5 Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982); 6 see also Ambrosino v. Home Depot U.S.A., Inc., No. 11cv1319-L-MDD, 2014 7 WL 3924609, at *1 n.1 (S.D. Cal. Aug. 11, 2014) (collecting cases indicating 8 that “district courts in the Ninth Circuit have followed Lynn’s Food Stores”). 9 A settlement warrants approval if it “reflect[s] a reasonable compromise of 10 disputed issues.” Lynn’s Food Stores, 679 F.2d at 1354. 11 The first step in this analysis is determining whether there is a bona 12 fide dispute over the defendant’s liability to the plaintiffs under the FLSA. 13 See id. Plaintiffs point to several disputed factual and legal questions 14 regarding class certification, arbitration, liability on the overtime claims, and 15 issues relating to damages. (ECF No. 34 at 22-23). Each of these appears to 16 be genuinely disputed. 17 Next, the Court considers whether the compromise is reasonable. As 18 explained above, “Class Members can expect to receive on average $5,450 19 with the highest Class Member receiving over $19,000,” representing “more 20 than triple the core damages that could be recovered at trial on behalf of the 21 class.” (Id. at 23). Further, the parties engaged in substantial discovery 22 prior to reaching a settlement. (See id. at 20). Based on these factors, the 23 Court finds that the settlement is reasonable and provides meaningful relief 24 given the risks inherent in continued litigation over the issues disputed in 25 this action. The Court also finds that the scope of Plaintiffs’ release of claims 26 is appropriately limited to claims that were asserted in the Complaint or 1 As such, the Court approves of the FLSA settlement. 2 C. PAGA Claims 3 Under PAGA, an “aggrieved employee” may bring an action for civil 4 penalties for labor code violations on behalf of himself and other current or 5 former employees. Cal. Lab. Code § 2699(a). A plaintiff suing under PAGA 6 “does so as the proxy or agent of the state’s labor law enforcement agencies.” 7 Arias v. Superior Ct., 46 Cal. 4th 969, 986 (2009). A PAGA plaintiff has “the 8 same legal right and interest as state labor law enforcement agencies” and 9 the action “functions as a substitute for an action brought by the government 10 itself.” Id. “[A] judgment in that action binds all those, including nonparty 11 aggrieved employees, who would be bound by a judgment in an action 12 brought by the government.” Id. A plaintiff bringing a PAGA action owes a 13 duty to their “fellow aggrieved workers” and “to the public at large.” 14 O’Connor v. Uber Techs., Inc., 201 F. Supp. 3d 1110, 1134 (N.D. Cal. 2016). 15 Civil penalties collected pursuant to PAGA are distributed between the 16 aggrieved employees (25%) and the LWDA (75%). Cal. Lab. Code § 2699(i). 17 Any settlement of PAGA claims must be approved by the Court. Cal. Lab. 18 Code § 2699(l)(2). The proposed settlement must also be sent to the agency at 19 the same time that it is submitted to the court. Id. 20 There are “‘fundamental[]’ differences between PAGA actions and class 21 actions.” Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 435 (9th Cir. 22 2015) (quoting Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1123 (9th 23 Cir. 2014)). One of those differences is that “class certification is not required 24 to pursue a PAGA representative claim.” Haralson v. U.S. Aviation Servs. 25 Corp., 383 F. Supp. 3d 959, 971 (N.D. Cal. 2019). 26 However, the California legislature, California Supreme Court, 1 approving PAGA settlements. Id. The LWDA has only stated that it is 2 important that “the relief provided for under the PAGA be genuine and 3 meaningful, consistent with the underlying purpose of the statute to benefit 4 the public and, in the context of a class action, the court evaluate whether the 5 settlement meets the standards of being ‘fundamentally fair, reasonable, and 6 adequate’ with reference to the public policies underlying the PAGA.” 7 O’Connor, 201 F. Supp. 3d at 1133 (quoting LWDA Response at 2-3). Based 8 on the LWDA’s Response, district courts have applied “a Rule 23-like 9 standard” asking whether the settlement of the PAGA claims is 10 fundamentally fair, reasonable, and adequate. Haralson, 383 F. Supp. 3d at 11 972. 12 Under PAGA, “the civil penalty is one hundred dollars ($100) for each 13 aggrieved employee per pay period for the initial violation and two hundred 14 dollars ($200) for each aggrieved employee per pay period for each 15 subsequent violation,” except for provisions in which a penalty is specifically 16 provided. Cal. Lab. Code § 2699(f)(2). A court may “award a lesser amount 17 than the maximum civil penalty amount specified by this part if, based on the 18 facts and circumstances of the particular case, to do otherwise would result in 19 an award that is unjust, arbitrary and oppressive, or confiscatory.” Cal. Lab. 20 Code § 2699(e)(2). 21 Plaintiffs’ motion confirms that a copy of the Settlement Agreement was 22 sent to the LWDA at the time Plaintiffs filed their motion for preliminary 23 approval. (ECF No. 34 at 27). With this procedural requirement satisfied, 24 the Court next discusses whether the Settlement Agreement’s $100,000 25 allocation to PAGA penalties is fundamentally fair, reasonable, and 26 adequate. 1 Period to be $443,000 for the overtime wage claims, calculated based on the 2 initial violation rates because Defendant may not be subject to the 3 heightened rates for the subsequent violations. (ECF No. 23-1 ¶ 38) (“Pogrel 4 Decl. ISO Prelim. Approval”). Plaintiffs explain that any penalties under 5 PAGA would depend on whether the PAGA Recipients’ arbitration 6 agreements would foreclose participation in a PAGA action in court and 7 whether the trier of fact in a bench trial would reduce PAGA damages. (Id.). 8 Additionally, Defendant “never agreed that Plaintiffs’ damages calculations 9 were accurate or reliable. On the contrary, Defendant always contended . . . 10 that Class Members estimates of their overtime hours were unreliable and 11 exaggerated.” (Id. ¶ 39). 12 “[I]n actions involving wage and hour class claims and PAGA claims 13 that settle, parties often minimize the total amount of the settlement that is 14 paid to PAGA penalties in order to maximize payments to class members.” 15 Mejia v. Walgreen Co., No. 2:19-cv-00218 WBS AC, 2021 WL 1122390, at *5 16 (E.D. Cal. Mar. 24, 2021). The public policies underlying PAGA are also 17 likely met here because the settlement more broadly provides a “robust” 18 remedy for possible violations of the California Labor Code and the FLSA. 19 (See Pogrel Decl. ISO Prelim. Approval ¶ 45) (“[T]he $435,000 fund that will 20 be paid to California Subclass and FLSA Subclass members upon final 21 approval of this settlement is more than 100% of Class Counsel’s best 22 estimate of the full value of the potential recovery for the California Subclass 23 and FLSA Subclass members if they had worked overtime every week they 24 were employed by HL Welding during the relevant periods.”); see O’Connor, 25 201 F. Supp. 3d at 1134 (“[I]f the settlement for the Rule 23 class is robust, 26 the purposes of PAGA may be concurrently fulfilled.”). 1 penalties amounts to roughly 22% of the maximum PAGA penalties, there 2 have been no objections and the Court confirms its preliminary approval that 3 the settlement for the Rule 23 class and FLSA collective action is robust 4 enough to fulfill PAGA’s purposes. 5 D. Class Representative Service Awards 6 “Incentive awards are appropriate only to compensate named plaintiffs 7 for work done in the interest of the class as well as to compensate named 8 plaintiffs for their reasonable fear of workplace retaliation.” Chun-Hoon v. 9 McKee Foods Corp., 716 F. Supp. 2d 848, 854 (N.D. Cal. 2010). Courts should 10 ensure that an incentive award is not based on fraud or collusion. Id. In 11 assessing the reasonableness of an incentive award, several district courts in 12 the Ninth Circuit have applied the five-factor test set forth in Van Vranken v. 13 Atlantic Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995), which 14 analyzes: (1) the risk to the class representative in commencing a class 15 action, both financial and otherwise; (2) the notoriety and personal 16 difficulties encountered by the class representative; (3) the amount of time 17 and effort spent by the class representative; (4) the duration of the litigation; 18 and (5) the personal benefit, or lack thereof, enjoyed by the class 19 representative as a result of the litigation. 20 Plaintiffs Yanez, Rubio, and Muongkhot ask for class representative 21 service awards of $5,000 each. Plaintiffs have provided declarations detailing 22 the activities engaged in to benefit the class, and the risks undertaken in 23 placing their names on the complaint and in actively participating in 24 assisting in the prosecution of this case. (ECF Nos. 32-2, 32-3, 32-4). 25 Plaintiffs devoted between five and 13 hours each assisting in the 26 preparation, prosecution and settlement of this case. They provided valuable 1 HL Welding’s classification of its per diem payment and the substantive wage 2 and hour violations that arose from that classification. This included 3 providing supporting documents and leads to other witnesses. At each 4 juncture of the lawsuit, they devoted time and effort, including assisting with 5 the pre-lawsuit investigation. They also participated in the settlement 6 process, helping counsel prepare for mediation, reviewing the proposed 7 settlement terms, and each signed the memorandum of understanding and 8 final settlement agreement. Their support for the settlement was not 9 contingent upon their receipt of a service award. 10 In addition to the time and service provided noted above, Plaintiffs 11 undertook significant risk and burden in coming forward and filing the 12 lawsuit on behalf of fellow HL Welding Tradespeople. Plaintiff Rubio was 13 employed by HL Welding when he joined as a Plaintiff. Plaintiffs took on the 14 risk that other companies would not employ or work with them because of 15 their participation in this action. Finally, Plaintiffs understood that bringing 16 this case as a class action would result in a delayed recovery, compared with 17 filing an individual claim. They forwent speedy resolution of their own 18 individual claims to serve their coworkers. 19 The service awards sought are within the range of awards approved by 20 other federal judges in class actions. See, e.g., Wellens v. Sankyo, No. C 13- 21 00581 WHO (DMR) 2016 WL 8115715, at *3 (N.D. Cal. Feb. 11, 2016) 22 (awarding $25,000 for named plaintiffs); Garner v. State Farm Mut. Auto. 23 Ins., No. CV 08 1365 CW (EMC), 2010 WL 1687832, at *17 n.8 (N.D. Cal. 24 Apr. 22, 2010) (“Numerous courts in the Ninth Circuit and elsewhere have 25 approved incentive awards of $20,000 or more . . . .”); Van Vranken, 901 26 F.Supp. at 299-300 (approving $50,000 to one named plaintiff); Alvarez v. 1 (N.D. Cal. Jan. 18, 2017) (service award of $10,000 each was “fair and 2 reasonable” where the aggregate amount of the service awards constituted 3 1.8% of the total settlement and the average payout to class members was 4 $956.18); Wannemacher v. Carrington Mortg. Servs., LLC, No. SACV 122016 5 FMO (ANx), 2014 WL 12586117 (C.D. Cal. Dec. 22, 2014) (granting final 6 approval and awarding enhancement 7.7 times greater than average class 7 member recovery of $259); In re Toys R Us-Delaware, Inc.--Fair & Accurate 8 Credit Transactions Act (FACTA) Litig., 295 F.R.D. 438, 472 (C.D. Cal. 2014) 9 (final approval granted and awarding enhancements 166 to 1,000 times 10 greater than value of $5, $15, and $30 vouchers). 11 Having considered the relevant factors, Plaintiffs’ counsel’s arguments, 12 and the supporting declarations, the Court APPROVES the class 13 representative service awards as reasonable. 14 E. Attorneys’ Fees 15 Rule 23(h) of the Federal Rules of Civil Procedure provides that, “[i]n a 16 certified class action, the court may award reasonable attorney’s fees and 17 non-taxable costs that are authorized by law or by the parties’ agreement.” 18 Fed. R. Civ. P. 23(h). Under Ninth Circuit precedent, a court has discretion 19 to calculate and award attorneys’ fees using either the lodestar method or the 20 percentage-of-the-fund method. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 21 1047-48 (9th Cir. 2002). Despite the discretion afforded to the court, the 22 Ninth Circuit recommends that district courts cross-check the award by 23 applying a second method. In re Bluetooth Headset Prods. Liab. Litig., 654, 24 F.3d 935, 944-45 (9th Cir. 2011). 25 The Ninth Circuit has held that 25% of the gross settlement amount is 26 the benchmark for attorneys’ fees awarded under the percentage-of-the-fund 1 adjusted, or replaced by a lodestar calculation, when special circumstances 2 indicate that the percentage of recovery would be either too small or too large 3 in light of the hours devoted to the case or other relevant factors.” Six (6) 4 Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). 5 With respect to the percentage-of-the-fund method, case law surveys 6 suggest that 50% is the upper limit, with 30-50% commonly being awarded in 7 cases in which the common fund is relatively small. See Rubenstein, Conte 8 and Newberg, Newberg on Class Actions at § 15:83. California cases in which 9 the common fund is small tend to award attorneys’ fees above the 25% 10 benchmark. See Craft v. Cnty. of San Bernadino, 624 F. Supp. 2d 1113, 1127 11 (C.D. Cal. 2008) (holding attorneys’ fees for large fund cases are typically 12 under 25% and cases below $10 million are often more than the 25% 13 benchmark). 14 Regardless of whether the Court uses the percentage-of-the-fund 15 approach or the lodestar method, the ultimate inquiry is whether the end 16 result is reasonable. Powers v. Eichen, 229 F.3d 1249, 1258 (9th Cir. 2000). 17 The Ninth Circuit has identified a number of factors that may be relevant in 18 determining if the award is reasonable: (1) the results achieved; (2) the risks 19 of litigation; (3) the skill required and the quality of work; (4) the contingent 20 nature of the fee; (5) the burdens carried by class counsel; and (6) the awards 21 made in similar cases. See Vizcaino, 290 F.3d at 1048-50. 22 “While attorneys’ fees and costs may be awarded in a certified class 23 action where so authorized by law or the parties’ agreement, courts have an 24 independent obligation to ensure that the award, like the settlement itself, is 25 reasonable, even if the parties have already agreed to an amount.” In re 26 Bluetooth, 654 F.3d at 941 (internal citation omitted). The Ninth Circuit has 1 for the protection of the class, a district court must carefully assess the 2 reasonableness of a fee amount spelled out in a class action settlement 3 agreement.” Staton v. Boeing, 327 F.3d 938, 963 (9th Cir. 2003). 4 Plaintiffs’ counsel seek $286,000 in attorneys’ fees. (ECF No. 34 at 28). 5 This amounts to one-third of the gross settlement amount. In its Preliminary 6 Approval Order, the Court found “no reason to award fees that exceed the 7 Ninth Circuit’s 25% benchmark” and instructed counsel to “show what 8 special circumstances exist warranting a higher percentage in their motion 9 for attorneys’ fees and costs.” (Prelim. Approval Order at 20). The Court first 10 assesses the reasonableness of the requested fees by considering the factors 11 set forth above. Then, the Court conducts a lodestar cross-check. 12 1. Reasonableness 13 First, the Court considers the results achieved for the Class Members. 14 See In re Bluetooth, 654 F.3d at 942 (“Foremost among these considerations, 15 however, is the benefit obtained by the class.”). The Gross Settlement 16 Amount is $858,000 and the total average recovery is approximately $5,450 17 with the highest recovery amounting to more than $19,000. (ECF No. 34 at 18 23); (Brunner Decl. ¶15). Specifically, Class Counsel contend that a 19 departure from the twenty-five percent benchmark under the percentage-of- 20 the-fund approach is warranted given the “exemplary” recovery of more than 21 “triple the full value of [Class Members’] overtime.” (ECF No. 34 at 31). 22 Further, no objections to the settlement have been made and no members 23 opted out. (Brunner Decl. ¶¶ 10-11). This favors reasonableness. 24 Second, the Court considers the risks of the litigation. Vizcaino, 290 25 F.3d at 1048-49. Based on Plaintiffs’ representations, if the case had 26 proceeded through litigation, there would be a substantial risk that the Class 1 legal uncertainties with respect to class certification, arbitration, liability on 2 overtime claims, and issues relating to damages. (ECF No. 34 at 22). 3 Accordingly, the second factor favors the reasonableness of the requested 4 fees. 5 The third through fifth factors ask the Court to consider the skill 6 required and the quality of work, the contingent nature of the fee, and the 7 burdens carried by class counsel. See Vizcaino, 290 F.3d at 1049-50. 8 Plaintiffs assert these factors support the requested fees. (ECF No. 34 at 33). 9 Class Counsel contends they “employed their years of class action experience 10 to streamline the litigation and optimize results.” (Id.). For example, they 11 “considered several other potential claims, but determined that focusing on 12 the claims for those who did not sign arbitration agreements (and PAGA 13 claim[s] only for those who did) greatly increased the odds of winning class 14 certification and prevailing on the merits.” (Id.). Also, Class Counsel was 15 retained on a contingency basis, risking investment of “hundreds of hours 16 with no guarantee of payment.” (Id.). According to Class Counsel’s briefing, 17 the lodestar amount for the work performed is $353,426. (Id. at 35-36). 18 Thus, Class Counsel is seeking roughly 80% of their lodestar figure. This 19 indicates that Class Counsel carried a moderate burden on a contingent fee 20 basis, requiring both skill and quality of work. As such, these factors weigh 21 in favor of finding the requested fees reasonable. 22 Finally, the Court considers awards made in similar cases. See 23 Vizcaino, 290 F.3d at 1048-50. The 33.33% award requested in this case is 24 commensurate with percentage-of-the-fund awards made in other wage and 25 hour class actions. See Garcia v. Lift, No.1:18-cv-01261-DAD JLT, 2020 U.S. 26 Dist. LEXIS 220762, at *43-58 (E.D. Cal. Nov. 24, 2020) (approving attorneys’ 1 v. Workforce Res., No. 18-CV-27 JLS (NLS), 2020 U.S. Dist. LEXIS 2074902, 2 at *11-12 (S.D. Cal. Nov. 5, 2020); Howell v. Advantage RN, LLC, No. 17-CV- 3 883-JLS (BLM), 2020 U.S. Dist. LEXIS 182505, at *14-15 (S.D. Cal. Oct. 1, 4 2020); Deaver v. Compass Bank, No. 13-cv-00222-JSC, 2015 WL 8526982, at 5 *9-14 (N.D. Cal. Dec. 11, 2015) (approving attorneys’ fees of one-third of the 6 settlement fund); Barbosa v. Cargill Meat Sols. Corp., 297 F.R.D. 431, 450 7 (E.D. Cal. 2013) (awarding 33% of the common fund and collecting cases 8 regarding the same); Burden v. SelectQuote Ins. Servs., No. C 10-5966 LB, 9 2013 WL 3988771, at *5 (N.D. Cal. Aug. 2, 2013) (awarding 33% of the 10 settlement fund); Franco v. Ruiz Food Products, Inc., No. 1:10-cv-02354-SKO, 11 2012 WL 5941801, at *18 (E.D. Cal. Nov. 27, 2012) (awarding 33 percent of 12 the common fund); Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491- 13 92 (E.D. Cal. 2010) (awarding 33.33% of the common fund). Accordingly, 14 Plaintiffs’ request for an award of one-third of the gross settlement amount is 15 a reasonable amount of attorneys’ fees. 16 2. Lodestar Cross-Check 17 District courts often conduct a lodestar cross-check to ensure that the 18 percentage based fee is reasonable. Yamada v. Nobel Biocare Holding AG, 19 825 F.3d 536, 546 (9th Cir. 2016); Crawford v. Astrue, 586 F.3d 1142, 1151 20 (9th Cir. 2009). The lodestar method multiplies the number of hours 21 reasonably expended by a reasonable hourly rate. Gonzalez v. City of 22 Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). “The lodestar ‘cross-check’ 23 need not be as exhaustive as a pure lodestar calculation” because it only 24 “serves as a point of comparison by which to assess the reasonableness of a 25 percentage award.” Fernandez v. Victoria Secret Stores, LLC, No. CV 06- 26 04149 MMM (SHx), 2008 WL 8150856, at *14 (C.D. Cal. July 21, 2008). 1 Accordingly, “the lodestar can be approximate and still serve its purpose.”3 2 Id. 3 Class Counsel have worked 615 hours on this matter and their hourly 4 rates range from $320 to $890. (ECF No. 32-1 ¶46) (“Pogrel Dec. ISO Final 5 Approval”). This amounts to $353,426. (Id. ¶ 47). Class Counsel declares 6 that “[t]he hours reflected . . . do not include . . . . time overseeing the 7 prepar[ation of] this motion, and additional time that will be required to 8 finalize the settlement.” (Id. ¶ 45). Class Counsel anticipates the final 9 lodestar amount to be roughly $370,000. (Id. ¶ 47). Based on the lodestar 10 cross-check, Class Counsel’s requested award is less than what they may be 11 entitled to under the lodestar method. Accordingly, this factor favors 12 approval of the requested fee. 13 3. Conclusion 14 Because Class Counsel seeks one-third of the settlement fund, and 15 because that amount is reasonable based on the factors outlined above and 16 after conducting a lodestar cross-check, the Court finds the requested 17 attorneys’ fees are reasonable. Accordingly, the Court APPROVES the 18 requested amount of attorneys’ fees in the amount of $286,000. 19 F. Litigation Expenses 20 Class Counsel seeks reimbursement of their costs in the amount of 21 $10,000. (ECF No. 34 at 36). Federal Rule of Civil Procedure 23(h) provides 22 that, “[i]n a certified class action, the court may award . . . nontaxable costs 23 that are authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 24
25 3 Class Counsel did not provide full billing records for the Court’s review. (ECF No. 34 at 26 35n.10). The Court is dissatisfied with Class Counsel’s decision to prevent the Court from conducting a more thorough and accurate lodestar calculation. Nonetheless, the Court 1 23(h). Class Counsel are entitled to reimbursement of the out-of-pocket costs 2 they reasonably incurred investigating and prosecuting this case. See In re 3 Media Vision Tech. Sec. Litig., 913 F. Supp. 1362, 1366 (N.D. Cal. 1995) 4 (citing Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391-92 (1970)); Staton, 5 327 F.3d at 974. 6 Class Counsel’s expenses include costs for filing, courier charges, 7 mediation, in house copies, postage, legal research, pacer fees, PAGA filing 8 fees, expert fees, CourtCall, and Vendor Copy Costs. (Pogrel Decl. ISO Final 9 Approval, Exhibit 5). A review of Class Counsel’s declaration and chart of 10 costs is reasonable. (Id.). Accordingly, the Court APPROVES Class 11 Counsel’s litigation expenses of $10,000. 12 IV. CONCLUSION 13 The Court GRANTS Plaintiffs’ Motion for Final Approval of Class 14 Action, FLSA Collective Action, and Private Attorneys’ General Act 15 Settlement, including Plaintiffs’ request for attorneys’ fees, costs and 16 expenses, and Class Representative Service Awards. (ECF No. 32). The 17 Court finds the proposed settlement of this class action appropriate for final 18 approval pursuant to Federal Rule of Civil Procedure 23(e), and the law 19 governing FLSA and PAGA actions. The Court ORDERS the parties to 20 implement the Settlement Agreement according to its terms and conditions 21 and this Court’s final order. 22 Specifically, the Court APPROVES settlement administration costs of 23 $11,000, attorneys’ fees of $286,000 to Class Counsel, litigation costs of 24 $10,000 to Class Counsel, and $5,000 each to named Plaintiffs Luis Lopez 25 Yanez, Kayasone Muongkhot, and Julio Rubio for class representative service 26 awards. 1 || Clerk of Court is instructed to enter final judgment in accordance with this 9 || Order. 3 IT IS SO ORDERED. Dated: March 15, 2022 Mitel » : [> Hon. Mitchell D. Dembin 6 United States Magistrate Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27