Lorenzo Rivera v. Marriott International, Inc. et al, No. 2:2019cv05050 - Document 87 (C.D. Cal. 2023)
Court Description: ORDER DENYING MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION AND PAGA SETTLEMENT 85 by Judge Otis D. Wright, II: Based on the current record and absent any explanation for the parties' treatment of the class claims throughout this matter, t he Court cannot find that the settlement was the product of "serious, informed, non-collusive negotiations." The Court also finds the proposed Class Notice insufficient and directs the parties to amend the notice to address the Courts conce rns. For the reasons discussed above, the Court DENIES Plaintiff's Motion for Preliminary Approval of Class Action and PAGA Settlement WITHOUT PREJUDICE and WITH LEAVE TO REFILE within 30 days of the date of this Order. (lc). Modified on 6/1/2023 (lc).
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Lorenzo Rivera v. Marriott International, Inc. et al Doc. 87 O 1 2 3 4 5 6 7 8 United States District Court Central District of California 9 10 11 Case 2:19-cv-05050-ODW (KSx) LORENZO RIVERA, 12 Plaintiffs, 13 v. 14 15 16 MARRIOTT INTERNATIONAL, INC. et al., ORDER DENYING MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION AND PAGA SETTLEMENT [85] Defendants. 17 18 I. INTRODUCTION 19 Plaintiff Lorenzo Rivera brings this action seeking relief for alleged violations 20 of the California Labor Code and Business and Professions Code by Defendant 21 Marriott Hotel Services, Inc. on behalf of a putative class and under California’s 22 Private Attorneys General Act (“PAGA”). 23 No. 83.) The parties reached a settlement and, for a second time, Rivera moves 24 without opposition for preliminary approval of the parties’ Class and PAGA 25 Settlement Agreement. (Second Mot. Prelim. Approval Class Action and PAGA (Fourth Am. Compl. (“FAC”), ECF 26 27 28 Dockets.Justia.com 1 Settlement (“Motion” or “Mot.”), ECF No. 85-1.) For the following reasons, the 2 Court DENIES Rivera’s Motion.1 II. 3 PROCEDURAL BACKGROUND 4 On April 24, 2019, Rivera brought a putative class action against Defendant 5 Marriott International, Inc. in Los Angeles Superior Court, asserting seven causes of 6 action: (1) Failure to Pay All Wages; (2) Failure to Provide Meal Periods or 7 Compensation in Lieu Thereof; (3) Failure to Provide Rest Periods or Compensation 8 in Lieu Thereof; (4) Failure to Pay Wages of Terminated or Resigned Employees; 9 (5) Failure to Issue Itemized Wage Statements and Maintain Records; 10 (6) Indemnification for Expenditures or Losses in Discharge of Duties; and 11 (7) Unfair/Unlawful Business Practices. (See Notice of Removal, Ex. A (“Compl.”) 12 ¶¶ 33–87, ECF No. 1-1.) Rivera alleges that Marriott operates hotels and employed 13 him and the proposed class members. (Id. ¶¶ 7–9, 15, 22.) Rivera further alleges that 14 Marriott failed to provide the proposed class members with various statutory benefits 15 mandated by California’s wage and hour laws. (Id. ¶¶ 14–20.) 16 On June 10, 2019, Marriott removed this action to federal court. (Notice of 17 Removal.) Rivera moved to remand this action to state court, and the Court denied 18 that motion. (Mot. Remand, ECF No. 12; Order Den. Mot. Remand, ECF No. 21.) 19 Between December 2019 and August 2021, Rivera amended his complaint three 20 times, correcting the named Defendant to Marriott Hotel Services, Inc. (“Marriott”) 21 and adding an eighth cause of action for violation of PAGA. (First Am. Compl., ECF 22 No. 24; Second Am. Compl., ECF No. 31; Third Am. Compl. (“TAC”), ECF No. 43.) 23 Rivera also narrowed the scope of the class allegations to the hotel location at which 24 Rivera worked. (See generally TAC.) 25 Then, on October 5, 2021, Rivera’s counsel submitted a declaration stating that 26 Rivera “wishes to proceed on an individual basis and representative basis pursuant to 27 28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 2 1 PAGA.” (Decl. Janelle Carney Re: Dismissal Class Allegations ¶ 4, ECF No. 45.) In 2 that same declaration, Rivera “request[ed] that the Court allow the dismissal of [his] 3 proposed class allegations without prejudice.” (Id. ¶ 5.) The Court granted that 4 request on November 1, 2021, dismissing all class allegations in this case. (Order Re: 5 Dismissal Class Allegations, ECF No. 47.) On January 11, 2022, the parties participated in private mediation conducted by 6 7 the Honorable Ronald Prager (Ret.). (Decl. Janelle Carney ISO Mot. (“Carney 8 Decl.”)2 ¶ 7, Ex. 1 (“Settlement Agreement” or “SA”), ECF No. 85-2.) 9 January 24, 2022, the parties filed a Notice of Settlement. (Notice Settlement, ECF 10 No. 66.) On March 18, 2022, the parties stipulated to remanding this action to state 11 court for the sole purpose of obtaining approval of the parties’ settlement. (Stip. 12 Remand, ECF No. 70.) The parties noted that, in the event that the state court denied 13 settlement approval, they intended to again remove the action to this Court to continue 14 litigating. (Id. at 1–2.) The Court denied that stipulation, indicating that the parties 15 may either “stipulate to remand to state court with the intention of remaining there or, 16 alternatively, . . . seek settlement approval in this Court.” (Min. Order Den. Stip. 17 Remand 1–2, ECF No. 71.) On 18 On April 25, 2022, Rivera moved without opposition for preliminary approval 19 of the parties’ Class and PAGA Settlement Agreement. (First Mot. Prelim. Approval 20 Class Action and PAGA Settlement, ECF No. 76-1.) The Court denied that motion 21 because, pursuant to Rivera’s prior request for dismissal, there were no underlying 22 class allegations at issue. (Order Den. First Mot. Prelim. Approval Class Action and 23 PAGA Settlement 3–4, ECF No. 78.) The Court reasoned that, “[a]bsent any class 24 allegations, [it] cannot conditionally certify a class, nor can it preliminarily approve a 25 class action settlement.” (Id.) 26 27 28 2 The Carney Declaration is unsigned. (Carney Decl. 24.) This alone is reason to deny Rivera’s Motion. Rivera shall submit a signed declaration in support of any renewed motion for preliminary approval of the Settlement Agreement. 3 1 On October 25, 2022, the parties stipulated that Rivera be granted leave to file 2 the Fourth Amended Complaint to assert the class allegations that the Court 3 previously dismissed. (First Stip. Re: FAC 1, ECF No. 79.) However, as part of that 4 same stipulation, the parties agreed that, in the event that the parties’ settlement 5 agreement does not become final, “the Fourth Amended Complaint shall be null and 6 void and deemed dismissed, and the Third Amended Complaint shall be the operative 7 pleading and Plaintiff’s class allegations will be deemed dismissed.” (Id. at 1.) The 8 Court denied the parties’ request for a conditional order. (Order Den. First Stip. Re: 9 FAC, ECF No. 80.) 10 On November 8, 2022, the parties again stipulated that Rivera be granted leave 11 to file the Fourth Amended Complaint to assert the class allegations that the Court 12 previously dismissed. (Second Stip. Re: FAC 1, ECF No. 81.) In this stipulation, the 13 parties omitted the above-stated provision allowing for the reinstatement of the Third 14 Amended Complaint and dismissal of Rivera’s class allegations. (Id.) The Court 15 granted this stipulation. (Order Granting Second Stip. Re: FAC, ECF No. 82.) 16 On November 9, 2022, Rivera filed the Fourth Amended Complaint, reinstating 17 Rivera’s class allegations. (FAC.) By way of the Fourth Amended Complaint, Rivera 18 asserts eight causes of action on behalf of himself and similarly aggrieved employees: 19 (1) Failure to Pay All Wages; (2) Failure to Provide Meal Periods or Compensation in 20 Lieu Thereof; (3) Failure to Provide Rest Periods or Compensation in Lieu Thereof; 21 (4) Failure to Pay Wages of Terminated or Resigned Employees; (5) Failure to Issue 22 Itemized Wage Statements and Maintain Records; (6) Indemnification for 23 Expenditures or Losses in Discharge of Duties; (7) Unfair/Unlawful Business 24 Practices; and (8) Violation of PAGA. (Id. ¶¶ 38–107.) 25 Now, having reinstated his previously dismissed class allegations, Rivera again 26 seeks preliminary approval of the parties’ Class and PAGA Settlement Agreement. 27 (Mot.; see generally SA.) 28 4 III. 1 The proposed Settlement Agreement includes the following terms. 2 3 SETTLEMENT TERMS A. Relevant Definitions 4 The parties identify a class and a PAGA group in the proposed Settlement 5 Agreement. (SA §§ 1.18, 1.20.) The parties define the class as “all individuals who 6 are or who have been employed by Defendant at the Marina del Rey Marriott hotel in 7 California as hourly non-exempt employees during any portion of the Class Period” of 8 April 24, 2015, through the date on which the Court issues the Preliminary Approval 9 Order or through an earlier date pursuant to the Settlement Agreement’s escalator 10 clause (“Class”). (SA §§ 1.19, 1.20.) There are approximately 375 potential Class 11 members. (Carney Decl. ¶ 2.) 12 The parties define the PAGA group as “all individuals who are or who have 13 been employed by Defendant at the Marina del Rey Marriott hotel in California as 14 hourly non-exempt employees during any portion of the PAGA Period” of April 24, 15 2018, through the date on which the Court issues the Preliminary Approval Order or 16 through an earlier date pursuant to the Settlement Agreement’s escalator clause 17 (“PAGA Group”). (SA §§ 1.17, 1.18.) 18 B. Settlement Fund 19 The Settlement Agreement provides for a Maximum Settlement Amount of 20 $375,000, which is all-inclusive, encompassing the shares of all participating Class 21 members, as well as other costs and expenses. (SA §§ 1.8, 9.1.) However, the 22 Settlement Agreement also includes an escalator clause providing that, if the Court 23 issues the Preliminary Approval Order more than 51,939 workweeks after April 24, 24 2015 (which would be 10% more workweeks than the parties estimated would be 25 covered by the Settlement Agreement during mediation), “Defendant shall have the 26 option of either (1) paying an additional $8 per each additional workweek over 51,939 27 in the Class Period into the Maximum Settlement Amount, or (2) ending the Class 28 5 1 Period before the total Workweeks worked by Class Members during the Class Period 2 exceeds 51,939.” (Id. § 10.) The Settlement Administrator (“Administrator”) will pay the following costs 3 4 and expenses from the Maximum Settlement Amount: 5 Attorneys’ fees in the amount of $125,000; 6 Litigation costs and expenses, not to exceed $20,000; 7 Administrator’s costs, not to exceed $25,000; 8 Class Representative Enhancement of $7,500; and 9 A payment of $11,250 to the California Labor Workforce Development Agency (“LWDA”). 10 11 (See SA §§ 9.3, 9.4, 9.6, 9.7; see also Mot. 8.) The Net Settlement Amount is the 12 amount remaining after the above amounts have been deducted from the Maximum 13 Settlement Amount. (SA § 1.9.) 14 The payments to participating Class members will be calculated by multiplying 15 each participating Class member’s share of the total workweeks worked by all 16 participating Class members by “the Net Settlement Amount less the PAGA 17 Payment.”3 (SA § 9.2.) In addition, the payments to members of the PAGA Group 18 will be calculated by multiplying each PAGA Group member’s share of the total 19 workweeks worked by all PAGA Group members by the portion of the PAGA 20 Payment allocated to PAGA Group members ($3,750). (SA § 9.4 (explaining that, of 21 22 23 24 25 26 27 28 3 The Settlement Agreement defines “PAGA Payment” as “the payment made to the [LWDA] and PAGA Members for civil penalties pursuant to PAGA and the terms of [the Settlement Agreement].” (SA § 1.16.) Additionally, the Settlement Agreement defines the “Net Settlement Amount” as “the Maximum Settlement Amount” minus certain costs and expenses, including “the portion of the PAGA Payment paid to the LWDA.” (SA § 1.9.) To calculate the payment for a participating Class member, the Settlement Agreement provides for multiplying a particular Class member’s share of the total workweeks worked by all participating Class members by “the Net Settlement Amount less the PAGA Payment.” (SA § 9.2.) Based on these provisions, the portion of the PAGA Payment paid to the LWDA would be subtracted twice from the Maximum Settlement Amount in calculating a participating Class member’s payment. The Court understands this to be an inadvertent error and requests that the parties clarify this point in any amended motion for preliminary approval. 6 1 the $15,000 PAGA Payment, $11,250 will be paid to the LWDA and $3,750 will be 2 distributed to the PAGA Group members.) 3 Participating Class members and PAGA Group members may challenge the 4 number of workweeks credited to them by timely submitting a dispute in writing to 5 the Administrator. (SA § 8.) Under the Settlement Agreement, the Administrator will 6 issue an IRS Form 1099 to each participating Class member and PAGA Group 7 member, who will each be responsible for paying any taxes. (SA § 12.1.) 8 The Settlement Agreement also addresses how unclaimed funds will be 9 handled. (SA § 7.5.) If a settlement check remains uncashed after 180 days, the 10 unclaimed funds will be transmitted to the State Controller’s Unclaimed Property 11 Fund in the name of the Class member for whom they were intended. (Id.) 12 C. Notice to Settlement Class 13 The Settlement Agreement provides for the appointment of ILYM Group, Inc. 14 as the Administrator, responsible for providing notice to all potential Class members, 15 among other things. (SA § 1.2; Mot. 9.) After Preliminary Approval, Marriott will 16 provide the Administrator with the identities of the Class members and relevant Class 17 data: name, last-known mailing address, Social Security number, dates of 18 employment, and number of workweeks and PAGA workweeks. (SA § 7.2.) The 19 identities of the Class members and Class data will not be shared with Class counsel 20 unless a Class member makes such a request with regards to their information. (Id.) 21 The Settlement Agreement details the Administrator’s methods and timing for 22 updating addresses, mailing the Class Notice, and managing mail returned as 23 undeliverable. (Id.) 24 The parties’ proposed Class Notice defines the Class, explains the nature of the 25 action, and informs potential Class members that they do not need to do anything to 26 participate in the settlement and receive a settlement award. 27 Notice”) 1–4, ECF No. 85-2.) It describes the Maximum Settlement Amount and the 28 included costs and expenses. (Id. at 2.) The Class Notice also informs Class members 7 (SA Ex. 1 (“Class 1 how they may object to the settlement, dispute the number of workweeks attributed to 2 them, or request exclusion from the Class in writing. (Class Notice 4–5.) It will also 3 provide the deadlines for doing so. (Id.; see also SA § 7.2 (providing that Class 4 members will have 45 days from the mailing of the Class Notice to submit a request 5 for exclusion, dispute, or objection).) In addition, the Settlement Agreement informs 6 Class members of the effect of participating in the settlement on their rights to bring 7 certain claims against Marriott. 8 provides contact information for Class counsel and the Administrator in the event that 9 Class members need more information or have any questions. (Id. at 6.) 10 D. (Class Notice 5–6.) Finally, the Class Notice Released Claims 11 The Settlement Agreement and Class Notice define the claims that each 12 participating Class member, PAGA Group member, and Rivera will release through 13 the settlement. (SA § 6; Class Notice 5–6.) Participating Class members will release 14 all claims “arising from or related to the facts and claims alleged in the Action, or that 15 could have been raised in the Action based on the facts and claims alleged . . . .” (SA 16 § 6.1; Class Notice 5–6.) 17 E. Additional Terms 18 Should more than five percent of potential Class members request exclusion, 19 Marriott may cancel and void the Settlement. (SA § 7.7.) As discussed previously, as 20 part of the Settlement Agreement, the parties agreed to stipulate to remand the case to 21 the Superior Court of California solely for the purposes of seeking and obtaining court 22 approval of the Settlement Agreement. (SA § 13.4.) After the Court denied the 23 parties’ stipulation to remand the case for purposes of settlement only, (Min. Order 24 Den. Stip. 1–2), the parties executed an addendum to the Settlement Agreement, 25 which strikes Section 13.4 regarding remand and adds Section 14.17 regarding 26 Rivera’s filing of a Fourth Amended Complaint with class claims. 27 (“Addendum to Settlement Agreement”), ECF No. 85-2.) 28 8 (SA Ex. 2 IV. 1 ANALYSIS 2 The Court must consider whether the Class may be provisionally certified for 3 settlement purposes only, evaluate the fairness, adequacy, and reasonableness of the 4 proposed settlement, and review the adequacy of the proposed Class Notice. 5 A. Class Certification 6 Class certification is a prerequisite to preliminary settlement approval. Class 7 certification is appropriate only if each of the four requirements of Rule 23(a) and at 8 least one of the requirements of Rule 23(b) are met. Amchem Prods., Inc. v. Windsor, 9 521 U.S. 591, 614, 621 (1997). Under Rule 23(a), the plaintiff must show that: 10 11 12 13 14 (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). 15 Next, the proposed Class must meet at least one of the requirements of 16 Rule 23(b). Rule 23(b)(3) requires that “the questions of law or fact common to class 17 members predominate over any questions affecting only individual members, and that 18 a class action is superior to other available methods for fairly and efficiently 19 adjudicating the controversy.” 20 purposes only, the certification inquiry still “demand[s] undiluted, even heightened, 21 attention.” Amchem, 521 U.S. at 620. Where class certification is sought for settlement 22 1. Rule 23(a) Requirements 23 The Court finds that the proposed Class meets all four Rule 23(a) requirements. 24 First, the proposed Class is sufficiently numerous. While “[n]o exact numerical cut- 25 off is required,” “numerosity is presumed where the plaintiff class contains forty or 26 more members.” In re Cooper Cos. Inc. Sec. Litig., 254 F.R.D. 628, 634 (C.D. Cal. 27 2009). Here, the Class contains approximately 375 members. (Carney Decl. ¶ 2.) 28 Thus, the Class is sufficiently numerous. 9 1 Next, the claims of the potential Class members demonstrate common questions 2 of fact and law. See Mazza v. Am. Honda Motor Co., 666 F.3d 581, 589 (9th Cir. 3 2012) (“[C]ommonality only requires a single significant question of law or fact.”), 4 overruled on other grounds by Olean Wholesale Grocery Coop., Inc. v. Bumble Bee 5 Foods LLC, 31 F.4th 651 (9th Cir. 2022). Here, Rivera asserts all potential Class 6 members were subject to Marriott’s pay policies. (Mot. 12–13.) Thus, common 7 questions among the Class members include whether Marriott failed to pay regular 8 wages, minimum wages, overtime double time, or any other type of wage; failed to 9 provide meal or rest periods or compensation in lieu thereof; failed to issue accurate 10 itemized wage statements; and failed to timely pay wages to separated/terminated 11 employees. (Id. at 12.) At this juncture, no discernable individualized issues appear 12 to exist which might detract from the common questions of fact and law for the Class. 13 As such, the Class meets the commonality requirement. 14 Rivera also meets the typicality requirement. Typicality in this context means 15 that the representative claims are “reasonably co-extensive with those of absent class 16 members; they need not be substantially identical.” 17 150 F.3d 1011, 1020 (9th Cir. 1998). Here, Rivera’s claims arise out of the same 18 circumstances as those of the other Class members. (See generally FAC; Mot. 13.) 19 Rivera asserts that, like the potential Class members, he worked for Marriott in 20 California as an hourly, non-exempt employee during the Class Period. (Mot. 13.) 21 Rivera further asserts that Marriott’s uniform pay, meal, and rest policies applied to 22 him, as well as all hourly employees. (Id.) Thus, Rivera’s claims share material 23 common factual and legal issues with those of the potential Class, satisfying 24 typicality. 25 Hanlon v. Chrysler Corp., Finally, Rivera and his counsel satisfy the adequacy requirement for 26 representing absent Class members. This requirement is met where the named 27 plaintiff and their counsel do not have conflicts of interest with other class members 28 and will vigorously prosecute the interests of the class. Hanlon, 150 F.3d at 1020. 10 1 Rivera asserts that he has “no claim that [is] antagonistic to the class.” (Decl. Lorenzo 2 Rivera ISO Mot. (“Rivera Decl.”) ¶ 10, ECF No. 85-4.) In addition, Rivera was 3 involved in the negotiations to settle this action. (Id. ¶ 7.) Counsel also appears well- 4 qualified and experienced with wage-and-hour class action litigation. (Carney Decl. 5 ¶¶ 3–4.) In this action, counsel has engaged in investigation, discovery, analysis, and 6 mediation on behalf of the Class. (Id. ¶¶ 5–7.) These facts support Rivera’s and 7 counsel’s adequacy and vigorous representation of the putative Class. 8 9 For the foregoing reasons, the proposed Class and their representatives satisfy the Rule 23(a) requirements. 10 2. Rule 23(b)(3) Requirements 11 The Court finds that the proposed Class meets the requirements of 12 Rule 23(b)(3). Rule 23(b)(3) requires the Court to find “that the questions of law or 13 fact common to class members predominate over any questions affecting only 14 individual members, and that a class action is superior to other available methods for 15 fairly and efficiently adjudicating the controversy.” 16 As to the proposed Class, questions of law or fact common to Class members 17 predominate over individualized questions because the issues at stake—e.g., whether 18 Marriott’s uniform employment practices deprived Class members of overtime, meal 19 and rest periods, and accurate itemized wage statements—are common to the Class. 20 Further, a class action appears to be a far superior method of adjudicating the 21 Class members’ claims. The overarching claim that Marriott had uniform and 22 systematic employment policies applicable to non-exempt employees applies to all 23 potential Class members and makes individual actions prone to inefficiency. The 24 Class includes approximately 375 Class members. (Carney Decl. ¶ 2.) Individual 25 pursuit of these actions would be inefficient. Were each potential Class member to go 26 it alone, the costs of litigation for each plaintiff would dwarf any recovery. 27 Accordingly, the Class meets the requirements of Rule 23(b)(3). 28 11 1 Because each of the four requirements of Rule 23(a) and at least one 2 requirement of Rule 23(b) is met, the Class may be provisionally certified for 3 settlement purposes. 4 B. Fairness of Settlement Terms 5 Next, the Court must consider whether the proposed settlement warrants 6 preliminary approval. For preliminary approval, “the court evaluates the terms of the 7 settlement to determine whether they are within a range of possible judicial approval.” 8 Spann v. J.C. Penney Corp., 314 F.R.D. 312, 319 (C.D. Cal. 2016) (internal quotation 9 marks and alterations omitted). A court may preliminarily approve a settlement and 10 direct notice to the class if “the proposed settlement appears to be the product of 11 serious, informed, non-collusive negotiations, has no obvious deficiencies, does not 12 improperly grant preferential treatment to class representatives or segments of the 13 class, and falls within the range of possible approval.” In re Tableware Antitrust 14 Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007). “It is the settlement taken as a 15 whole, rather than the individual component parts, that must be examined for overall 16 fairness.” Hanlon, 150 F.3d at 1026. 17 1. Adequacy of Negotiations 18 The Court considers whether the settlement was the product of “serious, 19 informed, non-collusive negotiations.” Spann, 314 F.R.D. at 319. Here, the parties 20 investigated their claims and defenses before completing a full day of mediation with 21 the Honorable Ronald Prager (Ret.), whom the parties regard as an experienced 22 mediator. (Mot. 3, 7, 10.) Although the parties were unable to settle the case on the 23 day of the mediation, the parties resolved the case thereafter with the help of the 24 mediator’s proposal. (Id. at 7.) The parties contend that they reached the Settlement 25 Agreement after approximately 2.5 years of litigation, extensive factual and legal 26 research, formal discovery including propounding and responding to written 27 interrogatories, and the production of documents. (Id.) 28 12 1 In light of the above, Rivera argues that “there is a presumption that the 2 negotiations were conducted in good faith” and without fraud or collusion unless 3 evidence to the contrary is offered. (Id. at 6.) However, the Court finds that the 4 parties’ treatment of the class claims throughout this matter has been questionable, 5 including at the settlement stage. 6 First, Rivera requested that the Court dismiss all of the proposed class 7 allegations without prejudice, which the Court did. (See Decl. Janelle Carney Re: 8 Dismissal Class Allegations ¶ 4; Order Re: Dismissal Class Allegations.) 9 despite no live class claims remaining at issue in this case, the parties reached a 10 settlement agreement purportedly on a class-wide basis. (First Mot. Prelim. Approval 11 Class Action and PAGA Settlement.) After the Court denied Rivera’s motion for 12 preliminary approval of that settlement agreement because there were no underlying 13 class allegations at issue, the parties stipulated that Rivera be granted leave to re-assert 14 class allegations for the purposes of settlement only. (First Stip. Re: FAC 1 (agreeing 15 that, if the parties’ settlement agreement did not become final, “the Fourth Amended 16 Complaint shall be null and void and deemed dismissed, and the Third Amended 17 Complaint shall be the operative pleading and Plaintiff’s class allegations will be 18 deemed dismissed”).) After The Court denied the parties’ request for a conditional 19 order, (Order Den. First Stip. Re: FAC), and the parties again stipulated that Rivera be 20 granted leave to file an amended complaint asserting the previously dismissed class 21 allegations, which the Court granted. (Order Granting Second Stip. Re: FAC.) Rivera 22 now seeks preliminary approval of the Settlement Agreement, which covers both the 23 class and PAGA claims in this matter. (Mot.) Then, 24 Thus far, the parties offer no explanation for the agreement to settle class claims 25 where no class allegations were at issue. Likewise, the parties fail to explain why they 26 would agree to the reinstatement of Rivera’s class allegations for the purposes of 27 settlement only. The parties further fail to explain why they agreed to remand the case 28 for settlement purposes only and to remove the case back to federal court in the event 13 1 that the state court did not approve the parties’ settlement agreement. These 2 contradictory actions by the parties are indicative of collusion. 3 explanation, the Court is not satisfied that the settlement was the product of “serious, 4 informed, non-collusive negotiations.” Spann, 314 F.R.D. at 319 Absent any 5 2. Settlement Terms 6 After carefully reviewing the terms of the Settlement Agreement, the Court 7 finds that it does not unfairly give preferential treatment to any party and falls within 8 the range of possible approval. 14 Assessing a settlement proposal requires the district court to balance a number of factors: the strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement. 15 Hanlon, 150 F.3d at 1026. “Ultimately, the district court’s determination is nothing 16 more than an amalgam of delicate balancing, gross approximations, and rough 17 justice.” Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 526 18 (C.D. Cal. 2004) (internal quotation marks omitted). “The initial decision to approve 19 or reject a settlement proposal is committed to the sound discretion of the trial judge.” 20 Id. 9 10 11 12 13 21 Here, as with most class actions, there is risk to both parties in continuing 22 towards trial. The parties reached settlement only with the help of a mediator and 23 after thoroughly evaluating the strengths and risks to both sides. (SA §§ 2.2–2.4.) 24 The settlement treats all members of the Class equally, awarding shares based on 25 number of workweeks. Accordingly, the Settlement Agreement does not unfairly 26 favor any member, represents a compromise, and avoids uncertainty for all parties 27 involved. 28 14 1 3. Settlement Funds 2 With the possible exception of the PAGA allocation, the Court notes no obvious 3 deficiencies in the amount and allocations of settlement funds, discussed below. 4 However, the Court finds the upward departures in both the requested Class 5 representative service award and Class counsel fees unsupported on the record 6 presently before the Court, though within the range of possible approval. a. 7 PAGA Allocation 8 Under PAGA, “an ‘aggrieved employee’ may bring a civil action personally 9 and on behalf of other current or former employees to recover civil penalties for Labor 10 Code violations.” Villacres v. ABM Indus. Inc., 189 Cal. App. 4th 562, 578 (2010) 11 (quoting Arias v. Superior Court, 46 Cal. 4th 969, 980–81 (2009)). PAGA provides 12 that a plaintiff may seek penalties of one hundred dollars ($100) per aggrieved 13 employee, per pay period, for an initial Labor Code violation, and two hundred dollars 14 ($200) for each subsequent violation per aggrieved employee, per pay period. Cal. 15 Lab. Code § 2699(f)(2). 16 “[I]n evaluating the adequacy of a settlement of a PAGA claim, courts may 17 employ a sliding scale, taking into account the value of the settlement as a whole.” 18 Viceral v. Mistras Grp., Inc., No. 15-cv-02198-EMC, 2016 WL 5907869, at *9 19 (N.D. Cal. Oct. 11, 2016) (discussing that courts nonetheless should be “mindful of 20 the need to safeguard the statutory purposes of PAGA and to ensure that the parties do 21 not use a PAGA claim as a mere bargaining chip”). “[W]here a settlement for a 22 Rule 23 class is robust, the statutory purposes of PAGA may be fulfilled even with a 23 relatively small award on the PAGA claim itself.” Id.; cf. O’Connor v. Uber Techs., 24 Inc., 201 F. Supp. 3d 1110, 1135 (N.D. Cal. 2016) (finding the proposed PAGA 25 settlement allocation unjustified, either on its own or in light of the overall settlement 26 terms). 27 28 The Settlement Agreement allocates $15,000 for a PAGA Payment out of the Maximum Settlement Amount. (SA § 9.4.) 15 This is only four percent of the 1 Maximum Settlement Amount. Rivera offers no support for the low PAGA 2 allocation. While their PAGA claim is premised on their labor violation claims, and 3 thus similarly subject to the attendant risks, Rivera addresses these risks in only 4 conclusory terms. Nonetheless, it is plausible that the strengths and weaknesses of 5 Rivera’s claims may warrant such a reduction in the PAGA allocation, and the Court 6 cannot find that the PAGA allocation is outside the range of possible approval at this 7 time. 8 Accordingly, although the Court is highly skeptical of the proposed PAGA 9 allocation, the question at preliminary approval is whether the settlement falls within 10 the range of possible approval. 11 emphasizes that final approval is dependent on the parties’ adequate showing in 12 support of the low PAGA allocation. 13 b. At this time, the Court finds that it may, but Service Award 14 The Settlement Agreement provides that Rivera will seek approval of a Class 15 representative payment of up to $7,500. (SA § 9.3.) “[D]istrict courts [should] 16 scrutinize carefully [incentive] awards so that they do not undermine the adequacy of 17 the class representatives.” Radcliffe v. Experian Info. Sols. Inc., 715 F.3d 1157, 1163 18 (9th Cir. 2013). In evaluating such awards, courts should look to “the number of 19 named plaintiffs receiving incentive payments, the proportion of the payments relative 20 to the settlement amount, and the size of each payment.” In re Online DVD-Rental 21 Antitrust Litig., 779 F.3d 934, 947 (9th Cir. 2015) (quoting Staton v. Boeing, Co., 22 327 F.3d 938, 977 (9th Cir. 2003)). 23 incentive award is presumed reasonable.” Bravo v. Gale Triangle, Inc., No. 2:16-cv- 24 03347-BRO (GJSx), 2017 WL 708766, at *19 (C.D. Cal. Feb. 16, 2017) (citing Harris 25 v. Vector Mktg. Corp., No. C-08-5198 EMC, 2012 WL 381202, at *7 (N.D. Cal. 26 Feb. 6, 2012)). “Generally, in the Ninth Circuit, a $5,000 27 Rivera submits a declaration stating that he participated in the settlement 28 negotiations in this matter. (Rivera Decl. ¶ 7.) However, Rivera does not otherwise 16 1 appear to address his participation in this case. This record does not support the 2 requested upward departure of the Class representative payment. At the preliminary 3 approval stage, the question is whether the requested award falls within the range of 4 possible approval. At this time, the Court finds that it may, though final approval will 5 depend on adequate support for the requested award. c. 6 Attorneys’ Fees 7 The Settlement Agreement provides that Class counsel may seek attorneys’ fees 8 of up to one-third, or $125,000, of the Maximum Settlement Amount. (SA § 9.6.) 9 “While attorneys’ fees and costs may be awarded in a certified class action where so 10 authorized by law or the parties’ agreement . . . courts have an independent obligation 11 to ensure that the award, like the settlement itself, is reasonable, even if the parties 12 have already agreed to an amount.” In re Bluetooth Headset Prods. Liab. Litig., 13 654 F.3d 935, 941 (9th Cir. 2011). Twenty-five percent recovery is the benchmark for 14 attorneys’ fees, although courts in the Ninth Circuit have found upward departures to 15 fall within the acceptable range. See id. at 942 (noting 25% benchmark); Powers v. 16 Eichen, 229 F.3d 1249, 1256–57 (9th Cir. 2000) (upward departure acceptable when 17 expressly explained). Further, “[w]here a settlement produces a common fund for the 18 benefit of the entire class, courts have discretion to employ either the lodestar method 19 or the percentage-of-recovery method.” In re Bluetooth, 654 F.3d at 942. 20 Counsel is experienced in wage-and-hour class action litigation and the fee 21 request, while high, falls within the range identified as potentially acceptable in the 22 Ninth Circuit. Accordingly, preliminary approval is appropriate, though the final 23 approval will depend on counsel providing adequate support for the requested award. 24 4. Release of Claims 25 “Beyond the value of the settlement, potential recovery at trial, and inherent 26 risks in continued litigation, courts also consider whether a class action settlement 27 contains an overly broad release of liability.” Spann, 314 F.R.D. at 327. This is 28 because “[a] settlement agreement may preclude a party from bringing a related claim 17 1 in the future even though the claim was not presented and might not have been 2 presentable in the class action.” Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 3 2010) (internal quotation marks omitted)). However, this is only true “where the 4 released claim is based on the identical factual predicate as that underlying the claims 5 in the settled class action.” Id. 6 The Settlement Agreement indicates a release of all claims brought or that 7 could have been brought based on the factual predicate in the action. (SA § 6.) The 8 proposed Class is limited to individuals employed by Marriott at a particular hotel 9 located in California during the Class Period. (SA § 1.20.) Moreover, Rivera’s 10 claims arise solely under California law. (See generally FAC.) Thus, the released 11 claims are appropriately limited to the factual predicate of this action. 12 C. Sufficiency of Notice 13 To find notice to absent class members sufficient, the Court must analyze both 14 the type and content of the notice. After reviewing the Class Notice, the Court finds 15 the type and content of notice to be insufficient. 16 1. Type of Notice 17 “[T]he court must direct to class members the best notice that is practicable 18 under the circumstances, including individual notice to all members who can be 19 identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). For class action 20 settlements, “[t]he court must direct notice in a reasonable manner to all class 21 members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1)(B). Here, 22 Marriott will provide the Administrator with the contact information of all potential 23 Class members and the Administrator will then distribute the Class Notice via mail 24 and update the addresses where appropriate. (SA § 7.2.) The Administrator will 25 update addresses for any mail returned as undeliverable using forwarding addresses, if 26 provided, or using reasonable trace and updating methods, and re-mail notices using 27 the updated information. (Id.) Beyond the notice itself, potential Class members may 28 18 1 also request more information from Class counsel via email and telephone. (Class 2 Notice 6.) 3 In addition to the procedures outlined above, the Court directs the parties to 4 consider whether it would be appropriate based on the demographics of the proposed 5 Class to provide translations of the Class Notice in any other languages in addition to 6 English. This may not be necessary, but the parties have not indicated one way or the 7 other. The Court also directs the parties to consider whether it would be appropriate 8 to make key case documents available to potential Class members at a neutral website 9 or through other means (e.g., the complaint, answer, Settlement Agreement). As it 10 stands, the Class Notice states that Class members “can find a copy of the Settlement 11 Agreement attached as Exhibit 1 to the Declaration of Janelle Carney in Support of 12 Plaintiff’s Motion for Preliminary Approval of Class Settlement . . . at the United 13 States District Court – Central District of California.” (Id.) The Class Notice then 14 provides the physical address for the courthouse. (Id.) However, without further 15 direction, it is not clear how Class members would actually access and review the 16 Settlement Agreement. Until the parties address these concerns, the Court cannot find 17 the proposed type of notice to be sufficient. 18 2. 19 24 Class notice must state: (i) the nature of the action; (ii) the definition of the class certified; (iii) the class claims, issues, or defenses; (iv) that a class member may enter an appearance through an attorney if the member so desires; (v) that the court will exclude from the class any member who requests exclusion; (vi) the time and manner for requesting exclusion; and (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 25 Fed. R. Civ. P. 23(c)(2)(B)(i)–(vii). “Notice is satisfactory if it generally describes the 26 terms of the settlement in sufficient detail to alert those with adverse viewpoints to 27 investigate and to come forward and be heard.” Churchill Vill., L.L.C. v. Gen. Elec., 28 361 F.3d 566, 575 (9th Cir. 2004) (internal quotation marks omitted). The notice 20 21 22 23 Content of Notice 19 1 “does not require detailed analysis of the statutes or causes of action forming the basis 2 for the plaintiff class’s claims, and it does not require an estimate of the potential 3 value of those claims.” Lane v. Facebook, Inc., 696 F.3d 811, 826 (9th Cir. 2012). 4 Here, the Court finds that the Class Notice contains much of the information 5 required under Rule 23. For example, the Class Notice includes the basics of the case, 6 the Class definition, and the claims. (Class Notice 1–2.) It explains the terms of the 7 settlement and that Class members do not need to do anything to participate and 8 receive an award. (Id. at 2–4.) It describes the procedures for and will include the 9 deadlines for requesting exclusion, challenging a Class member’s workweeks, and 10 objecting to the settlement. (Id. at 4–5.) The Class Notice informs potential Class 11 members that remaining a member of the Class and receiving a payment will result in 12 the Class member giving up their claims and being bound by the settlement. (Id. at 5– 13 6.) 14 Nevertheless, the Court has some concerns with the Class Notice. First, the 15 Class Notice does not inform Class members that they may enter an appearance 16 through an attorney if they so desire. Fed. R. Civ. P. 23(c)(2)(B)(iv). In addition, the 17 Class Notice states that “[t]he Settlement Class is comprised of all persons employed 18 by Marriott Hotel Services, Inc., who worked in an hourly, non-exempt position at the 19 Marina Del Rey Marriott hotel . . . in the State of California between April 24, 2015 20 and [DATE].” (Class Notice 1.) However, the Class Notice does not explain to Class 21 members which positions are “exempt.” This information would be helpful to Class 22 members seeking to understand the Class definition. Likewise, the Class Notice refers 23 to “PAGA Member[s],” but does not explain what that means. (See id. at 4.) Further, 24 the Class Notice provides that it is the Class members’ “responsibility to keep a 25 current address on file with the Settlement Administrator to ensure receipt of [their] 26 payment under the Settlement,” but does not include instructions for how a Class 27 member should do so. (See id. at 3.) Finally, all too often class notices are discarded 28 by proposed class members because the notice cannot be quickly distinguished from 20 1 unsolicited “junk mail.” To avoid such an outcome, all postal notices sent to the 2 proposed Class members here shall bear a distinguishing mark (i.e., Marriott’s logo or 3 insignia) to ensure that the Class members do not discard the Class Notice as 4 unsolicited mail. 5 6 Accordingly, the Court finds the proposed Class Notice insufficient under the circumstances. V. 7 CONCLUSION 8 Based on the current record and absent any explanation for the parties’ 9 treatment of the class claims throughout this matter, the Court cannot find that the 10 settlement was the product of “serious, informed, non-collusive negotiations.” Spann, 11 314 F.R.D. at 319. The Court also finds the proposed Class Notice insufficient and 12 directs the parties to amend the notice to address the Court’s concerns. 13 For the reasons discussed above, the Court DENIES Plaintiff’s Motion for 14 Preliminary Approval of Class Action and PAGA Settlement WITHOUT 15 PREJUDICE and WITH LEAVE TO REFILE within 30 days of the date of this 16 Order. (ECF No. 85.) 17 18 IT IS SO ORDERED. 19 20 June 1, 2023 21 22 23 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 24 25 26 27 28 21
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