Guglielmino et al v. McKee Foods Corporation, No. 3:2005cv00620 - Document 100 (N.D. Cal. 2009)
Court Description: ORDER granting preliminary approval of the proposed settlement. (vrwlc2, COURT STAFF) (Filed on 10/15/2009)
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Guglielmino et al v. McKee Foods Corporation Doc. 100 1 2 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 11 IN THE UNITED STATES DISTRICT COURT 12 FOR THE NORTHERN DISTRICT OF CALIFORNIA 13 14 15 ORDER 16 17 18 19 20 C 05-0620 VRW BRIANT CHUN-HOON and CARLO GUGLIELMINO, Plaintiffs, Class Action v MCKEE FOODS CORPORATION, a Tennessee corporation; and DOES 1 through 100, inclusive, Defendants. 21 _________________________________ 22 This Document Relates to: All Actions 23 24 / 25 26 This is a proposed class action against McKee Foods 27 Corporation (“McKee”) for violation of the overtime requirements of 28 the labor code of California, fraud, negligent misrepresentation, Dockets.Justia.com 1 breach of contract, unfair and fraudulent business practices and 2 declaratory relief. 3 Briant Chun-Hoon and Carlo Guglielmino and defendant McKee 4 (collectively the “parties”) seek approval of a settlement and 5 notice to the purported class. 6 Pursuant to FRCP 23(e), plaintiffs Doc # 93. McKee manufactures Little Debbie Snack Cakes and Sunbelt 7 snacks and cereals. 8 distributors, who then resell the products to supermarkets, mass 9 merchandisers and other retail outlets. 10 United States District Court For the Northern District of California Doc # 1. McKee sells its products to independent Id. Plaintiffs, who were distributors of McKee products in 11 the San Francisco Bay area, filed this case on behalf of themselves 12 and a putative class of distributors. 13 on the proposition that they were not treated as independent 14 contractors and that the court therefore should disregard the terms 15 of written distributorship agreements they signed with McKee. 16 McKee contends, among other things, that the evidence shows that 17 class members operated independent businesses. 18 Plaintiffs’ claims are based Id. On June 6, 2006, the court entered an order provisionally 19 certifying a damages class under Federal Rule of Civil Procedure 20 23(b)(3). 21 all distributors of McKee products in California who signed written 22 distributorship agreements with McKee after December 31, 2000. 23 # 93. 24 Doc # 59. The provisionally-certified class consists of Doc After unsuccessful settlement discussions, the parties 25 engaged former United States District Judge Eugene F Lynch to 26 mediate the case. 27 full-day mediation with the parties and their counsel. 28 mediation, the parties met together and separately with Judge Lynch On January 7, 2009, Judge Lynch conducted a 2 During the 1 and proposed settlement terms. 2 is the result of that mediation session. This proposed settlement agreement Id. 3 4 I 5 6 approval for the settlement of any class action. 7 approved, a settlement must be “fundamentally fair, adequate and 8 reasonable.” 9 Cir 1993), quoting Class Plaintiffs v Seattle, 955 F2d 1268, 1276 10 United States District Court For the Northern District of California Federal Rule of Civil Procedure 23(e) requires court In order to be Torrisi v Tucson Elec Power Co, 8 F3d 1370, 1375 (9th (9th Cir 1992). 11 Class action settlement approval that takes place prior 12 to the class certification stage requires “a higher standard of 13 fairness.” 14 1998). 15 protect the plaintiff class because there is a danger of collusion 16 between class counsel and the defendant. 17 explained in the stockholder derivative class action context, 18 “[o]nce a settlement is agreed, the attorneys for the plaintiff 19 stockholders link arms with their former adversaries to defend 20 joint handiwork.” 21 Cir 1964) (Friendly dissenting). 22 settlement seeks to avoid trial and wasteful litigation, “the court 23 must not turn the settlement hearing ‘into a trial or rehearsal of 24 the trial.’” Saylor v Lindsley, 456 F2d 896, 904 (2d Cir 1972). 25 Hanlon v Chrysler Corp, 150 F3d 1011, 1026 (9th Cir The judge must conduct a “more probing inquiry” in order to Id. As Judge Friendly Alleghany Corp v Kirby, 333 F.2d 327, 347 (2d Nevertheless, because a The question currently before the court is whether this 26 settlement should be preliminarily approved. 27 determination establishes an initial presumption of fairness * * 28 *.” “[The] preliminary In re General Motors Corp, 55 F3d 768, 784 (3d Cir 1995). 3 As United States District Court For the Northern District of California 1 noted in the Manual for Complex Litigation, Second, “[i]f the 2 proposed settlement appears to be the product of serious, informed, 3 non-collusive negotiations, has no obvious deficiencies, does not 4 improperly grant preferential treatment to class representatives or 5 segments of the class, and falls within the range of possible 6 approval, then the court should direct that the notice be given to 7 the class members of a formal fairness hearing * * *.” 8 Complex Litigation, Second § 30.44 (1985). 9 court may find that the settlement proposal contains some merit, is 10 within the range of reasonableness required for a settlement offer, 11 or is presumptively valid.” 12 Club, Ltd, 157 F Supp 2d 561, 570 n12 (ED Pa 2001) (quoting 13 Newberg on Class Actions § 11.25 (1992)). 14 preliminary approval of a settlement has both a procedural and a 15 substantive component. Manual for In addition, “[t]he Schwartz v Dallas Cowboys Football In other words, 16 17 II 18 The court is not convinced entirely that the settlement 19 confers a benefit to the class. 20 distributors with case cost credits of $250, which distributors may 21 use for the purpose of promoting sales of Little Debbie and Sunbelt 22 products. 23 opportunity to attend a marketing seminar, during which McKee 24 representatives will reemphasize the rights and freedoms that 25 distributors have and provide business models and practices that 26 other distributors have used to increase their sales. 27 clear that case cost credits confer any real benefit to the class. 28 In fact, the type and nature of the credits seem to benefit the The settlement provides current Additionally, current distributors will have an 4 It is not 1 manufacturer of Little Debbie and Sunbelt products just as much if 2 not more than the distributors. 3 other hand, may be of the type to confer benefits to the class — at 4 least with respect to educating distributors on how to increase 5 their sales. 6 objections that challenge the benefit of the seminars in its final 7 settlement determination. 8 United States District Court For the Northern District of California 9 The marketing seminars, on the However, the court will take into consideration any The settlement provides two options for former distributors. Under option one, a former distributor may attend 10 marketing seminars of the type described above. 11 former distributors who voluntarily terminated their 12 distributorship agreements with McKee in good standing may be 13 considered for reappointment as independent distributors in any 14 territories that are open and available. 15 is concerned that the seminars do not convey a benefit to the 16 class. 17 distributors that would be eligible for reinstatement under these 18 nebulous terms. 19 territories, as well as the number of independent distributors that 20 voluntarily terminated their agreements in good faith, are outside 21 of the court’s knowledge. 22 Additionally, As noted above, the court Further, the court is not aware of the number of former For instance, the number of open and available Under the second option, former distributors who elect 23 not to attend the marketing seminars or request reappointment will 24 receive a payment from McKee in the amount of $250. 25 purported benefits listed above, this type of payment clearly is 26 the most beneficial to the class. Of the 27 Despite these concerns, for the purposes of preliminary 28 approval, the court finds that the proposed settlement is “within 5 1 the range of possible approval.” 2 n12 (quoting Manual for Complex Litigation, Second § 30.44 (1985)). 3 While the purported benefits to the class are not obvious from the 4 language of the proposed settlement, the absence of objections may 5 indicate that the case credits and seminars are in fact valuable to 6 class members. 7 merits final approval, the court will consider seriously the number 8 and type of objections and requests for exclusion. Schwartz, 157 F Supp 2d at 570 Therefore, in determining whether the settlement 9 United States District Court For the Northern District of California 10 III 11 The court next considers the form of notice. Class 12 members are entitled to the “best notice that is practicable under 13 the circumstances.” 14 following notice plan: (1) McKee will mail notice along with a 15 claim form and request for exclusion to the last known address of 16 each class member as such appears in McKee’s records; (2) if any 17 mailing addressed to a current distributor is returned as 18 undeliverable, a McKee representative will attempt to deliver the 19 mailing to the current distributor by hand; (3) if any mailing 20 addressed to a former distributor is returned as undeliverable, 21 McKee will use the former distributor’s social security number and 22 last known address and last known telephone number in an effort to 23 locate the former distributor and will send an additional notice, 24 claim form and request for exclusion to any address so determined; 25 and (4) if any original or subsequent mailing to a class member is 26 not returned as undeliverable within thirty (30) days of the 27 mailing, it will be presumed that the class member received the 28 mailing. FRCP 23(c)(2)(B). The parties propose the Doc #93 at 18-19 (emphasis added). 6 Because the proposed 1 notice provides for detailed methods of contacting both former and 2 current distributors in the event that the original mailings are 3 returned as undeliverable, the court finds that such notice is 4 appropriate in this case. United States District Court For the Northern District of California 5 Further, the court finds the content of the proposed 6 notice to be appropriate. 7 the case; a summary of the settlement and of settlement 8 negotiations; what current and former distributors will receive as 9 result of the settlement; how to opt out, object or otherwise 10 comment on the settlement; attorneys fees; who to contact for 11 additional information; and a paragraph outlining the review and 12 approval process the court will implement to determine whether the 13 settlement warrants approval. 14 joint counsel on September 29, 2009 at 14. 15 proposed form of notice provides class members with information on 16 which to base their decision to remain in the class, opt out or 17 object to the settlement. 18 proposed form of notice, as to both form and content. The notice outlines: the background of Doc # 94 Exh B; letter provided by As a consequence, the Accordingly, the court APPROVES the 19 20 IV 21 In sum, the court GRANTS the parties’ motion for 22 preliminary approval of the proposed settlement and APPROVES the 23 forms and manner of notice described in the revised proposed 24 settlement agreement and forms of notice. 25 // 26 // 27 // 28 // 7 1 2 Additionally, the court ORDERS the following schedule for further proceedings: 3 4 Date 5 On or before October 28, 2009 6 Event Send Notice Deadline to postmark objections or December 30, 2009 7 opt out 8 Deadline for filing briefing in 9 January 6, 2010 settlement United States District Court For the Northern District of California 10 11 support of final approval of Hearing on final approval of January 14, 2010 settlement 12 13 14 At the final approval hearing on January 14, 2010, at 15 10:00 AM, the court will determine: (1) whether the proposed 16 settlement agreement and forms of notice should be approved as 17 fair, reasonable and adequate; (2) the merits of objections, if 18 any, made to the settlement or any of its terms; (3) the amount of 19 litigation costs, expenses and attorney fees, if any, that should 20 be awarded to class counsel; and (4) any other matter related to 21 the settlement. 22 23 IT IS SO ORDERED. 24 25 26 27 VAUGHN R WALKER 28 United States District Chief Judge 8
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