Terri Massoud et al v. Anderson Merchandisers LP, No. 5:2009cv00216 - Document 75 (C.D. Cal. 2010)
Court Description: ORDER GRANTING PLAINTIFFS' MOTION FOR FINAL SETTLEMENT APPROVAL AND DISMISSING ACTION by Judge Virginia A. Phillips: The Court GRANTS final certification of the Carter FLSA and Massoud classes, and final approval of the settlement of both action s. The actions are ordered DISMISSED with prejudice. The Courtshall retain jurisdiction for a period of sixty days to enforce the terms of the settlement. Plaintiffs applications for attorneys fees, costs, and recognition payments are addressed in a separate order. 66 (am)
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Terri Massoud et al v. Anderson Merchandisers LP Doc. 75 1 2 3 4 JS-6 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 ) KEVIN CARTER, JUSTINE ) 11 CLOUSE, and DEBORAH LANASA, individually, ) ) 12 and on behalf of all ) others similarly 13 situated, and on behalf ) of the general public, ) ) 14 Plaintiffs, ) ) 15 ) v. ) 16 ANDERSON MERCHANDISERS, ) 17 LP, and DOES 1 through ) ) 10, inclusive, ) 18 Defendants. ) 19 ________________________ ) 20 ) ) ) ) ) ) ) ) Plaintiffs, ) ) ) v. ) ANDERSON MERCHANDISERS, ) ) LP, ) Defendant. ) ________________________ ) TERRI MASSOUD, 21 JACQUELINE OUGEL, and JOYCE SPEARS, 22 individually, and on behalf of others 23 similarly situated, 24 25 26 27 28 Case No. EDCV 08-0025-VAP (OPx) ORDER GRANTING PLAINTIFFS' MOTION FOR FINAL SETTLEMENT APPROVAL AND DISMISSING ACTION Case No. EDCV 09-0216VAP (OPx) ORDER GRANTING PLAINTIFFS' MOTIONS (1)TO CERTIFY CONDITIONAL AND FINAL CLASS; and (2) FOR FINAL SETTLEMENT APPROVAL AND DISMISSING ACTION [Motions filed on March 22, 2010] Dockets.Justia.com 1 The Carter Plaintiffs’ Motion for Final Settlement 2 Approval, and the Massoud Plaintiffs’ Motions to Certify a 3 Conditional and Final Settlement Class and for Final 4 Settlement Approval came before the Court for a final 5 fairness hearing on April 19, 2010. After reviewing and 6 considering all papers filed in support of the Motions, as 7 well as the arguments advanced by counsel at the hearing, 8 the Court GRANTS all three motions, as set forth below. 9 10 Plaintiffs in these related wage and hour class 11 actions are current and former full-time, salaried sales 12 representatives 13 Defendant (or Anderson “representatives”) Merchandisers, LP who worked (“Anderson”), for in 14 connection with Anderson’s supply of various media products 15 to Wal-Mart retail stores nationwide. On January 7, 2010, 16 the Court granted the motions of Plaintiffs in both cases 17 and preliminarily approved the parties’ joint stipulations 18 of settlement and release. On March 22, Plaintiffs in both 19 cases final filed 20 stipulations motions of for settlement and approval release, of the as joint well as 21 applications for attorney’s fees and costs, which are 22 addressed in a separate order. 23 with the Court’s January 7, In addition, consistent 2010 Order, the Massoud 24 Plaintiffs filed a motion to certify a conditional and 25 final settlement class. On March 25, 2010, Defendant filed 26 notices of non-opposition to each of the pending motions 27 28 2 1 and applications. No potential class member has either 2 opted-out or objected to the terms of settlement. 3 4 I. BACKGROUND 5 A. The Carter Action 6 On January 10, 2008, Plaintiffs Kevin Carter, Justin 7 Clouse, Deborah Lanasa, and Michael Styles1 filed suit in 8 this Court, on behalf of themselves and others similarly 9 situated, against Anderson and ten unnamed Does. The 10 Complaint alleged violations of California, Oregon, and 11 federal law for failure to pay overtime wages and provide 12 appropriate meal and rest breaks to employees. 13 14 On July 10, 2008, the Court conditionally certified a 15 collective action under the Fair Labor Standards Act 16 (“FLSA”) on behalf of a class defined as: 17 18 19 All persons who Defendant employs or has employed as a Sales Representative, who Defendant misclassified as exempt since June 1, 2005, and who were therefore denied compensation required by federal wage and hour laws. 20 This class is the "FLSA class." There were 302 eligible 21 members of the FLSA class who opted-in to this action. 22 (Morgan Decl. in Support of Carter Mot. for Final Approval 23 of Settlement (“Morgan Carter Approval Decl.”) ¶ 2.) 24 25 26 1 Plaintiff Michael Styles was voluntarily dismissed as a plaintiff in this action on April 28, 2009. (Carter 28 Dkt. No. 91.) 27 3 1 On November 18, 2008, the Court certified a class for 2 Plaintiffs’ overtime claim brought under Cal. Labor Code § 3 510 and Industrial Wage Order No. 4 pursuant to Federal 4 Rule of Civil Procedure 23(a). 5 All current and former California sales representatives who Defendant classified as exempt between January 10, 2004 and August 27, 2006. 6 7 That class is defined as: This class is referred to as the “California class.”2 There 8 are one hundred seventy-three members of the California 9 class. (Morgan Carter Approval Decl. ¶ 3.) 10 11 The parties engaged in mediation and, on October 12, 12 2009, filed a stipulation to stay the case pending the 13 approval of the joint settlement in this case and Massoud. 14 15 B. The Massoud Action 16 On November 26, 2008, Plaintiffs Terri Massoud,3 17 Jacqueline Ougel, and Joyce Spears filed a complaint in the 18 United States District Court for the Northern District of 19 Texas, on behalf of themselves and others similarly 20 situated, against Anderson. The putative collective action 21 only included claims under the FLSA, 29 U.S.C. § 207(a)(1), 22 for a failure to pay overtime. (Massoud Compl. ¶ 13.) 23 24 2 Also on November 18, 2008, the Court denied Plaintiffs’ motion to certify a class for their rest 26 break claim under Cal. Labor Code § 226.7. 25 3 In the caption, Massoud’s first name is spelled “Terri.” In her declarations, she spells her first name 28 “Teri.” 27 4 1 Plaintiffs alleged a number of sales representatives had 2 missed the deadline to join the Carter action, and those 3 representatives were the plaintiffs in the second case. 4 (Massoud Compl. ¶¶ 10-11.) 5 6 Defendant moved to transfer the Massoud action to this 7 Court, and the motion was granted on January 28, 2009. The 8 parties engaged in mediation, and on October 12, 2009, the 9 parties filed a stipulation to stay the case pending the 10 approval of the joint settlement in this case and Carter. 11 12 C. The January 7, 2010 Order 13 In its 14 preliminary January approval 7, of 2010 the Order, the parties’ Court granted settlement, and 15 directed dissemination of the class notice and claim form. 16 In so doing, the Court noted that, prior to final approval 17 of the Carter Settlement, Plaintiffs would be required to 18 “produce additional evidence to justify final certification 19 of the FLSA class.” (Jan. 7, 2010 Order at 11.) 20 21 The Court also granted preliminary approval of the 22 Massoud class, defined as Plaintiffs/Claimants who have 23 worked for Defendant as salaried, exempt sales 24 representatives between November 26, 2005, and October 9, 25 2009; who have filed consent to join forms in the Massoud 26 action; and who did not successfully opt in to the Carter 27 FLSA class. (Id. at 11-12.) There are twenty-five members 28 5 1 of this class. (Morgan Decl. in Supp. of Mot. for Class 2 Cert. in Massoud (“Morgan Massoud Class Cert. Decl.”) Decl. 3 ¶ 2; Morgan Carter Approval Decl. ¶ 2.) Prior to final 4 approval of the Massoud Settlement, though, the Court noted 5 Plaintiffs 6 conditional 7 class.” 8 clerical would be required and final to certification (Jan. 7, 2010 Order at 12.) error, as the “properly Court’s of move the for [Massoud] This statement was a “preliminary” approval 9 served as the required conditional certification. Thus, 10 only the final certification of both FLSA classes remains. 11 12 13 II. LEGAL STANDARDS Where “the parties reach a settlement agreement prior 14 to class certification, courts must peruse the proposed 15 compromise to ratify both the propriety of the 16 certification and the fairness of the settlement.” Staton 17 v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). 18 19 A. 20 Class Certification The Carter settlement class is comprised of two 21 subclasses: 22 Rule 23 one collective class under the FLSA and one class. The Massoud settlement class is a 23 collective class under the FLSA. 24 25 1. 26 “To maintain an opt-in class under [FLSA] § 216(b), The FLSA Classes 27 plaintiffs must demonstrate 28 6 that they are 'similarly 1 situated.'" Hipp, 252 F.3d at 1217; 29 U.S.C. § 216(b). 2 Though "similarly situated" is not defined in § 216(b) and 3 the Ninth Circuit has not formulated a test for determining 4 when the standard has been met, many courts in this 5 district have used the two-tiered approach adopted by the 6 Fifth, Tenth, and Eleventh Circuits. See Pfohl v. Farmers 7 Ins. Group, No. CV03-3080 DT (RCx), 2004 WL 554834, *2-3 8 (C.D. Cal. Mar. 1, 2004); Wynn v. Nat'l Broadcasting Co., 9 Inc., 234 F. Supp. 2d 1067, 1081-82 (C.D. Cal. 2002) (both 10 citing Mooney v. Aramco Services Co., 54 F.3d 1207, 1212 11 (5th Cir. 1995)); Thiessen v. General Electric Capital 12 Corp., 267 F.3d 1095, 1102 (10th Cir. 2001); and Hipp v. 13 Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1216 (11th Cir. 14 2001)). Other Ninth Circuit district courts have also 15 followed this approach. See, e.g., Rodriguez v. SGLC, 16 Inc., No. 2:08-cv-01971-MCE, 2009 WL 454613, at *1 (E.D. 17 Cal. Feb. 5, 2009); Norman v. Dell, Inc., Civil No. 18 07-6028-TC, 2008 WL 2899722, at *1 (D. Or. July 10, 2008); 19 Adams v. Inter-Con Sec. Sys., 242 F.R.D. 530, 536 (N.D. 20 Cal. 2007) (“Adams I”). 21 22 Under the two-tiered approach, a court first 23 determines, "on an ad hoc case-by-case basis, whether 24 plaintiffs are 'similarly situated.'" 25 at 1102 (citing Mooney, 54 F.3d Thiessen, 267 F.3d at 1213). This is 26 typically referred to as the "notice stage" because the 27 court "makes a decision — usually 28 7 based only on the 1 pleadings and any affidavits which have been submitted — 2 whether notice of the action should be given to potential 3 class members." Mooney, 54 F.3d at 1213-14. 4 5 Because the court only has minimal evidence at this 6 stage, the determination of whether opt-in plaintiffs will 7 be similarly situated "is made using a fairly lenient 8 standard, and typically results in 'conditional 9 certification' of a representative class." Mooney, 54 F.3d 10 at 1214. Courts require "nothing more than substantial 11 allegations that the putative class members were together 12 the victims of a single decision, policy, or plan." 13 Thiessen, 267 F.3d at 1102-3 (internal quotations omitted). 14 It was based on such a showing that the Court conditionally 15 certified the Carter FLSA class in 2008 and the Massoud 16 class in its January 7, 2010 Order. 17 18 The second stage of the two-tiered approach usually is 19 precipitated by a motion for decertification by the 20 defendant and occurs "after discovery is largely complete 21 and the matter is ready for trial." Mooney, 54 F.3d at 22 1214. At this stage, the court has much more evidence on 23 which to base 24 determination on its decision, whether the and makes opt-in a factual plaintiffs are 25 similarly situated. Id. The court may weigh several 26 factors, "(1) the including: disparate factual and 27 employment settings of the individual plaintiffs, (2) the 28 8 1 various defenses available to the defendant which appear[] 2 to be individual to each plaintiff, and (3) fairness and 3 procedural considerations." Pfohl, 2004 WL 554834 at *2 4 (citing Thiessen, 267 F.3d at 1103). 5 Where the parties reach a settlement after a court has 6 conditionally certified a collective class, the court still 7 “must make some final class certification finding before 8 approving a collective action settlement.” Burton v. 9 Utility Design, Inc., No. 6:07-cv-1045-Orl-22KRS, 2008 WL 10 2856983, at *2 (M.D. Fla. July 22, 2008), citing Anderson 11 v. Cagle’s Inc., 488 F.3d 945, 953 (11th Cir. 2007). See 12 also Misra v. Decision One Mortg. Co., 2009 WL 4581276, No. 13 SACV 07-0994 DOC, at *4 (C.D. Cal. Apr. 13, 2009); Hopson 14 v. Hanesbrands Inc., No. CV 08-0844, 2008 WL 3385452, at 15 *1-*2 (N.D. Cal. Aug. 8, 2008). 16 17 2. Rule 23 Class 18 “A district court has a duty to assure that a class 19 once certified continues to be certifiable under Fed. R. 20 Civ. P. 23(a).” Petrovic v. Amoco Oil Co., 200 F.3d 1140, 21 1145 (8th Cir. 1999). Thus, when reviewing a proposed 22 settlement, a district court must reconsider its 23 certification of class “for instance, if a subsequent 24 development creates a conflict of interest that prevents 25 the representative party from fairly and adequately 26 protecting the interests of all of the class members.” Id. 27 Since a certification under Rule 23(a) is not conditional, 28 9 1 however, the Court is not required to revisit certification 2 absent any evidence suggesting reconsideration is 3 necessary. 4 5 B. Fairness of the Settlement 6 Before approving a settlement, the court must hold a 7 hearing and find that "the settlement . . . is fair, 8 reasonable, and adequate." Fed. R. Civ. P. 23(e)(1)(C). 9 Review of a proposed settlement generally proceeds in two 10 stages: a hearing on preliminary approval, followed by a 11 final fairness hearing. See Federal Judicial Center, 12 Manual for Complex Litigation, § 21.632 (4th ed. 2004). 13 14 At the preliminary approval stage, a court determines 15 whether a proposed settlement is "within the range of 16 possible approval" and whether or not notice should be sent 17 to class members. In re Corrugated Container Antitrust 18 Litig., 643 F.2d 195, 205 (5th Cir. 1981); see also Manual 19 for Complex Litigation § 21.632. At the final approval 20 stage, the Court takes a closer look at the proposed 21 settlement, taking into consideration objections and any 22 other further developments in order to make a final 23 fairness determination. 24 25 In determining whether a settlement is fair, 26 reasonable, and adequate, a court is to balance several 27 factors, including: 28 10 1 the strength of 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. 2 3 4 5 6 Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1291 7 (9th Cir. 1992), citing Officers for Justice v. Civil Serv. 8 Comm'n, 688 F.2d 615, 625 (9th Cir. 1982); see also In re 9 Heritage Bond Litigation, 546 F.3d 667, 674 (9th Cir. 10 2008). This is “by no means an exhaustive list of relevant 11 considerations,” though, and “[t]he relative degree of 12 importance to be attached to any particular factor will 13 depend on the unique circumstances of each case.” Officers 14 for Justice, 688 F.2d at 625. 15 16 In evaluating a proposed settlement, “[i]t is the 17 settlement taken as a whole, rather than the individual 18 component parts, that must be examined for overall 19 fairness.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 20 (9th Cir. 1998). The Court “does not have the ability to 21 delete, modify, or substitute certain provisions,” and 22 “[t]he settlement must stand or fall in its entirety.” Id. 23 The question is not whether the settlement “could be 24 prettier, smarter, or snazzier,” but solely “whether it is 25 fair, adequate, and free from collusion.” 26 1027. 27 28 11 Id., 150 F.3d at 1 III. DISCUSSION 2 A. Class Certification 3 1. 4 The Carter Joint Stipulation of Settlement and Release The Carter Classes 5 incorporates the class definitions approved by the Court in 6 its July 10, 2008 Order (Dkt. No. 57) and its November 18, 7 2008 Order (Dkt. No. 79), and defines the Settlement Class 8 as those Plaintiffs who have opted in to the conditionally9 certified FLSA and certified Rule 23 California classes. 10 (Morgan Carter Approval Decl. ¶ 17, Ex. 1 (“Carter 11 Stip.”).) 12 13 The Court’s certification of the Rule 23 California 14 class was a final certification, and thus the Court need 15 not revisit the certification of that class, absent any 16 evidence suggesting a change in the Rule 23 factors. The 17 Court must still grant final certification of the FLSA 18 class, though. As noted above, there are many factors the 19 Court may consider in conducting this inquiry, including 20 “(1) the disparate factual and employment settings of the 21 individual plaintiffs, (2) the various defenses available 22 to the defendant which appear[] to be individual to each 23 plaintiff, and (3) fairness and procedural considerations.” 24 Pfohl, 2004 WL 554834 at *2 (citing Thiessen, 267 F.3d at 25 1103). 26 27 28 12 1 The Court has reviewed the evidence submitted by 2 Plaintiffs, and concludes that the FLSA class members’ 3 claims arise from similar factual settings: all had the 4 same position as sales representatives, 5 classified as exempt from the FLSA. and all were While there may have 6 been minor differences in the tasks actually performed by 7 each class member, this will not preclude certification. 8 “Where . . . there is evidence that the duties of the job 9 are largely defined by comprehensive corporate procedures 10 and policies, district courts have routinely certified 11 classes of employees challenging their classification as 12 exempt, despite arguments about ‘individualized’ 13 differences in job responsibilities.” Damassia v. Duane 14 Reade, Inc., 250 F.R.D. 152, 160 (S.D.N.Y. 2008), quoted in 15 Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 946 16 (9th Cir. 2009). 17 18 Defendants have also asserted uniform defenses which 19 apply to all class members, namely the Motor Carrier Act, 20 49 U.S.C. §§ 13102, 13501, and “outside sales” exemptions 21 to the FLSA. Finally, “fairness and procedural 22 considerations, including the number of plaintiffs in this 23 case and the effectiveness of allowing them to pool their 24 resources for litigation, also weigh in favor of collective 25 treatment.” Valladon v. City of Oakland, No. C 06-07478 26 SI, 2009 WL 2591346, at *7 (N.D. Cal. Aug. 21, 2009). 27 28 13 The 1 Court thus concludes final certification of the Carter FLSA 2 class is appropriate. 3 4 2. The Massoud Class 5 The Massoud class is derivative of the Carter FLSA 6 class, and consists of twenty-five sales representatives 7 who filed late consent forms in the Carter action. (Morgan 8 Decl. in Supp. of Massoud Mot. for Final Approval of 9 Settlement (“Morgan Massoud Approval Decl.”) ¶¶ 2-3, 17, 10 Ex. 1 (“Massoud Stip.”). The only distinctions between the 11 Massoud class and the Carter FLSA Class are (1) the class 12 period; (2) the number of Plaintiffs; and (3) the named 13 Plaintiffs. 14 15 The Court has reviewed the evidence submitted by 16 Plaintiffs, including declarations and deposition testimony 17 of several class members and concludes that, as with the 18 Carter FLSA class, the FLSA class members’ claims arise 19 from similar factual settings, and uniform defenses are 20 implicated. Although the class is significantly smaller, 21 fairness and procedural considerations still weigh in favor 22 of collective treatment. The Court thus concludes final 23 certification of the Massoud class is appropriate. 24 25 B. Fairness and Adequacy of the Proposed Settlement 26 Although there is a separate proposed settlement 27 agreement for each of the Carter and Massoud actions, the 28 14 1 settlements involve a single award, to be administered 2 jointly and uniformly to the class members who filed valid 3 claims in both of those cases. Thus, all of the plaintiffs 4 from the two Carter and one Massoud classes collectively 5 comprise the relevant Settlement Class. Here, the proposed 6 settlement calls for a total payment of $3.625 million in 7 exchange for a release of all claims, from which the 8 parties propose to deduct the following: (1) attorneys' 9 fees, not to exceed 25% of the total Settlement Fund 10 ($906,250); (2) litigation costs, which currently total 11 $75,621.10 for both actions; (3) settlement administration 12 costs of $10,0004; (4) “recognition” or “service” payments 13 to two of the named Plaintiffs in Carter, if approved by 14 the Court, in the amounts of $2,500 each; (5) and a $10,000 15 “contingency fund” to be administered by Class Counsel for 16 use in addressing late or disputed claims or other 17 unanticipated costs.5 (Carter Stip. ¶¶ 9-10, 12(d); Massoud 18 Stip. ¶¶ 9-10, 12(d); Morgan Carter Approval Decl. ¶ 9; 19 Morgan Massoud Approval Decl. ¶ 9; Pls.’ Carter Approval 20 Mem. at 9.) By the Court's own calculation, after these 21 deductions, the estimated remaining settlement amount ("Net 22 Settlement Amount") will be approximately $2.617 million. 23 24 4 To the extent costs of administering the settlement 25 are less than $10,000, the remainder will be donated to a cy pres beneficiary, Legal Aid of Northwest Texas. Stip. ¶¶ 9, 24; Massoud Stip. ¶¶ 9, 24.) (Carter 26 5 $9,861.88 of this fund was used to address the claims of class members who returned late claim forms. 28 (Morgan Carter Approval Decl. ¶ 13.) 27 15 1 The Settlement Agreement proposes to divide the Net 2 Settlement Amount among all members of the Settlement Class 3 who have submitted valid and timely claim forms based on a 4 ratio of the number of weeks each Class Member worked as a 5 salary exempt sales representative during the Class Period 6 to the total number of weeks all Class Members worked as 7 salaried exempt sales representatives during the Class 8 Period. (Carter Stip. ¶ 12(d); Massoud Stip. ¶ 12(d).) 9 10 1. 11 The parties engaged in negotiations, including two Arms-Length Negotiations 12 full-day formal mediation sessions presided over by an 13 experienced mediator, Michael J. Loeb, after which the 14 parties reached an agreement. (Morgan Carter Approval 15 Decl. ¶ 7; Morgan Massoud Approval Decl. ¶ 7.) “The 16 assistance of an experienced mediator in the settlement 17 process confirms that the settlement is non-collusive.” 18 Satchell v. Federal Express Corp., Nos. C03-2659 SI, C 19 03-2878 SI, 2007 WL 1114010, at *4 (N.D. Cal. Apr. 13, 20 2007). See also Alexander Mfg., Inc. v. Illinois Union 21 Ins. Co., — F. Supp. 2d —, No. CV. 06-735-PK, 2009 WL 22 3335883, at *13 (D. Or. Oct. 15, 2009). The Court is thus 23 satisfied the Settlement Agreement is the product of arms24 length negotiation. 25 26 27 28 16 1 2. 2 Strength of Plaintiff's Case and the Risk, Expense, Complexity, and Likely Duration of Further Litigation 3 Plaintiffs state the primary strength of the case is 4 the uniform classification of the Class Members as exempt 5 and ineligible for overtime compensation until August 27, 6 2006, and Defendant’s subsequent reclassification of the 7 Class Members as nonexempt. (Carter Approval Mem. at 14; 8 Massoud Approval Mem. at 7.) 9 10 Plaintiffs acknowledge two main obstacles to success in 11 their case. The first is posed by Defendant’s assertion 12 that Plaintiffs were exempted from the coverage of the FLSA 13 under the statute’s “motor carrier” and “outside sales” 14 exceptions. (Carter Approval Mem. at 14; Massoud Approval 15 Mem. at 7-8.) Defendant moved for summary judgment in 16 Carter on these grounds, but the Court did not hear the 17 motion because of the parties' requested stay due to the 18 efforts to achieve a settlement. Had the Court ruled in 19 Defendant’s favor as to the applicability of either of 20 these exemptions, however, Plaintiffs’ entitlement to 21 relief would have been greatly reduced, or eliminated in 22 its entirety. (Id.) 23 24 Plaintiffs also note that Defendants moved to decertify 25 the FLSA collective class in Carter based on purported 26 variances in the 27 representatives. job duties of individual sales (Carter Approval Mem. at 14-15; Massoud 28 17 1 Approval Mem. at 8.) Hearing on this motion also was 2 stayed due to pending settlement efforts. If the motion 3 for decertification had been granted, though, Plaintiffs 4 would have borne the significant time and financial expense 5 of prosecuting their claims individually in district courts 6 throughout the country. (Id.) 7 8 Plaintiffs also contend that “each step of this case 9 has been marked by heavily contentious litigation.” 10 (Carter Approval Mem. at 15; Massoud Approval Mem. at 8.) 11 They argue that the potential appeals and the difficulties 12 of proving damages for overtime violations would increase 13 the cost, risk, and delay associated with trial. (Id.) 14 Settling the case, Plaintiffs contend, “provides Class 15 Members with the benefit of a definite recovery without 16 further delay.” (Id.) 17 18 In light of the foregoing, the Court finds this factor 19 weighs in favor of final approval. 20 21 3. 22 The amount offered in settlement is $3.625 million, The Amount Offered in Settlement 23 allocated to Class Members in proportion to the number of 24 weeks worked during the class period. 25 12d; Massoud Stip. ¶¶ 9, 12d.) (Carter Stip. ¶¶ 9, Class counsel indicates 26 this will yield an average recovery of approximately $5,818 27 for each class member, with actual recoveries ranging from 28 18 1 $71 to $12,681. (Morgan Carter Approval Decl. ¶ 12.) This 2 is a substantial, cash award for all class members. 3 4 In exchange for the settlement, all of the opt-in 5 Plaintiffs in both actions agree to release all of their 6 claims against Defendant. (Carter Stip. ¶¶ 12(a), 25; 7 Massoud Stip. ¶¶ 12(a), 25.) Considering the present value 8 of the settlement amount, the probability of lengthy 9 litigation in the absence of a settlement, the risk that 10 Plaintiffs and the Class Members would not have been able 11 to succeed at trial, and the risk that a jury could award 12 damages less than $3.625 million, the settlement amount is 13 within the range of reasonableness. Accordingly, the Court 14 finds this factor weighs in favor of approval. 15 16 4. The Extent of Discovery Completed, and the Stage of the Proceedings 17 This factor requires the Court to evaluate whether "the 18 parties have sufficient information to make an informed 19 decision about settlement." Linney v. Cellular Alaska 20 P'ship, 151 F.3d 1234, 1239 (9th Cir. 1998). Here, 21 Plaintiffs demonstrate that class counsel conducted the 22 following discovery: (1) depositions of several members of 23 Defendant’s managerial employees, including a deposition 24 pursuant to Fed. R. Civ. Pro. 30(b)(6); (2) depositions of 25 each party’s expert witnesses; (3) depositions of six 26 Plaintiffs; and (4) extensive document and written discovery. (Morgan Carter Approval Decl. ¶ 10; Morgan 27 28 19 1 Massoud Approval Decl. ¶ 10.) The Court thus finds that 2 the parties possessed sufficient information to make an 3 informed decision about the settlement. 4 5 Although the Carter case has progressed significantly 6 over the past two years since it was filed, and was 7 scheduled to go to trial in January 2010, numerous disputed 8 issues remain. 9 Massoud. There has been no motion practice in The parties in Massoud and Carter engaged in 10 good-faith settlement negotiations throughout the summer 11 and fall of 2009. Accordingly, the Court is satisfied that 12 the parties have spent sufficient time on the action to 13 allow an informed decision about settlement. In light of 14 the estimated $2.617 million to be distributed from the Net 15 Settlement Fund, the Court does not have any concern that 16 the parties have spent too much time litigating the case as 17 to deplete the common fund. Accordingly, this factor 18 supports preliminarily approving the settlement. 19 20 21 5. Experience and Views of Counsel Plaintiffs’ counsel do not address their experience in 22 connection with the motions for final approval, but the 23 Court has noted their experience in wage and hour class 24 actions in its previous orders. In their declarations, 25 Plaintiffs' counsel states his opinion that the Settlement 26 is reasonable and fair. (Morgan Carter Approval Decl. ¶ 27 16; Morgan Massoud Approval Decl. ¶ 16.) Counsel’s opinion 28 20 1 is accorded considerable weight. See, e.g., Alberto v. 2 GMRI, Inc., No. CIV. 07-1895 WBS, 2008 WL 4891201, at *10 3 (E.D. Cal. Nov. 12, 2008); Hughes v. Microsoft Corp., No. 4 C98-1646C, C93-0178C, 2001 WL 34089697, at *7 (W.D. Wash. 5 Mar. 26, 2001). This factor thus weighs in favor of the 6 reasonableness of the Settlement Agreement. 7 8 6. Reaction of Settlement Class Members to the Proposed 9 Of the 173 eligible Carter Rule 23 class members, 129 10 (Morgan Carter Approval Decl. returned valid claim forms. 11 ¶ 3.) Of the 302 Carter FLSA opt-in class members, 297 12 returned valid claim forms. (Id.) Of the twenty-five 13 members of the Massoud opt-in class, all twenty-five 14 returned valid claim forms. (Morgan Massoud Approval Decl. 15 ¶ 3.) As noted above, no class members objected to or 16 opted-out of either settlement. The lack of objections or 17 opt-outs, combined with a high claim rate, weighs strongly 18 in favor of settlement approval. See, e.g., Barcia v. 19 Contain-a-Way, Inc., No. 07cv938-IEG,2009 WL 587844, at *4 20 (S.D. Cal. Mar. 6, 2009). 21 22 In addition, in connection with their motions for 23 preliminary approval, Plaintiffs submitted declarations 24 from Kevin Carter and Deborah Lanasa, named Plaintiffs in 25 the Carter action, and Teri Massoud, a named Plaintiff in 26 the Massoud action. All three Plaintiffs demonstrated 27 involvement with the litigation 28 21 thus far and an 1 understanding of the proposed settlement, and stated that 2 they are “entirely satisfied” with the proposed settlement. 3 (See Carter Dkt. No. 121-7 (Carter Decl.) ¶¶ 2-5; Carter 4 Dkt. No. 121-8 (Lanasa Decl.) ¶¶ 2-5; Massoud Dkt. No. 60-9 5 (Second Massoud Decl.) ¶¶ 2-5.) This factor thus weighs in 6 favor of approval of the proposed settlement. 7 8 7. Attorneys' Fees and Recognition Payment for Named Plaintiffs 9 Plaintiffs have filed separate applications for 10 attorneys’ fees and costs in both cases, and, in Carter, 11 for the approval of a service payment to two named 12 plaintiffs, which are ruled upon in a separate order. The 13 payments requested are relevant to the Court's fairness and 14 adequacy inquiry, though. For a settlement to be fair and 15 adequate, "a district court must carefully assess the 16 reasonableness of a fee amount spelled out in a class 17 action settlement agreement." Staton, 327 F.3d at 963. 18 19 a) Attorneys' Fees 20 In their request for attorneys’ fees and costs, 21 Plaintiffs’ counsel seek attorneys’ fees equal to 25% of 22 the gross settlement amount, explicitly contemplated by the 23 Settlement Agreement. (Carter Stip. ¶¶ 10 12(d); Massoud 24 Approval Mem. at 3, n.2; Massoud Stip. ¶¶ 10, 12(d).) 25 26 Plaintiffs’ claims in this case arise under both 27 federal and California law. 28 22 Under both California and 1 Ninth Circuit precedent, a court may exercise discretion to 2 award attorneys' fees from a common fund by applying either 3 the lodestar method6 or the percentage-of-the-fund method.7 4 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 253 5 (2001); Fischel v. Equitable Life Assurance Soc'y of U.S., 6 307 F.3d 997, 1006 (9th Cir. 2002), citing Vizcaino v. 7 Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). 8 "Irrespective of the chosen method, 'the district court 9 should be guided by the fundamental principle that fee 10 awards out of 11 circumstances.'" common funds be 'reasonable under the Alberto, 252 F.R.D. at 667, citing In re 12 Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 13 1295 (9th Cir. 1990). 14 15 Plaintiff seeks to employ the latter procedure, whereby 16 Class Counsel would recover 25% of the $3.625 million 17 settlement fund ($906,250) for attorneys' fees. (Carter 18 Stip. ¶¶ 10, 12(d)(2); Massoud Stip. ¶¶ 10, 12(d)(2).) 19 Such an award corresponds to the benchmark 20 attorneys’ fees in the Ninth Circuit. award for See Hanlon v. 21 Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998). Thus, 22 6 Under the lodestar method, the court calculates the fee award by multiplying the number of hours reasonably 24 spent by a reasonable hour rate and then enhancing that figure, if necessary to account for the risks associated 25 with representation. Paul, John, Alston & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989). 26 7 Under the percentage-of-the-fund method, the court calculates the fee award by designating a percentage of 27 the total common fund. Six Mexican Workers v. Ariz. 28 Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). 23 23 1 the attorneys' fees set forth in the proposed Settlement 2 Agreements appears reasonable in that it is not indicative 3 of fraud or collusion. The merits of the fee request 4 itself is addressed in a separate order. 5 b) 6 7 Recognition Payments for Named Plaintiffs Plaintiffs seek $5,000 as recognition or “incentive” 8 payments for two of the Carter named Plaintiffs, in 9 addition to any recovery to which they may be entitled 10 under the Settlement Agreement. (Pls.’ Carter Approval 11 Mem. at 9; Pls.’ Carter Attorneys’ Fees Mem. at 11-12; 12 Carter Stip. at ¶ 12(d)(1); Massoud Stip. ¶ 12(d)(1).) 13 This consists of $2,500 to each of Plaintiffs Carter and 14 Lanasa.8 15 16 The Court must conduct an individualized analysis of 17 these proposed payments, in order to detect “excessive 18 payments to named class members” that may indicate “the 19 agreement was reached through fraud or collusion.” Staton, 20 327 F.3d at 977; Alberto, 252 F.R.D. at 669 (E.D. Cal. 21 2008); Hopson v. Hanesbrands Inc., No. CV-08-0844 EDL, 22 2009 WL 928133, at *10 (N.D. Cal. Apr. 3, 2009). The 23 payments represent a minute portion of the total settlement 24 amount, and recognize the significant role Carter and 25 26 8 Previously, Plaintiffs indicated they would seek an recognition payment for a third Carter Plaintiff. They 27 have now withdrawn this request. (Pls.’ Carter Approval 28 Mem. at 9 n. 19.) 24 1 Lanasa played in advancing these actions, and do not 2 suggest that the settlement was collusive or fraudulent by 3 any means. 4 5 8. Release of Claims 6 The Carter Joint Stipulation of Settlement and Release 7 proposes to release Defendant from: 8 9 10 11 12 13 14 15 any and all claims, debts, penalties, liabilities, demands, obligations, guarantees, costs, expenses, attorneys’ fees, damages, action or causes of action of whatever kind or nature, whether known or unknown, that were alleged or that reasonably arise out of the facts alleged in the Carter v. Anderson Merchandisers, LP, Complaint, including but not limited to all claims for failure to pay overtime compensation, claims for related penalties, waiting time penalties, penalties for failure to provide meal and rest periods, penalties for failure to provide accurate wage statements, and claims for unfair competition from January 10, 2004, up to an including October 9, 2009. 16 Class Members also knowingly waive “all rights and benefits 17 afforded by section 1542 of the Civil Code of the State of 18 California,” which states that general releases normally do 19 not apply to claims “which the creditor does not know or 20 suspect to exist in his or her favor at the time of 21 executing the release which if known by him or her must 22 have materially affected his or her settlement with the 23 debtor.” (Carter Stip. ¶ 26.) The Massoud Joint 24 Stipulation includes similar language, releasing Defendant 25 from claims related to the complaint in that case, and 26 covering the time period from November 26, 2005, through 27 October 9, 2009. (Massoud Stip. ¶ 25.) 28 25 Both Joint 1 Stipulations explicitly exclude from the release any claims 2 related to employee benefit plans or California workers’ 3 compensation law. 4 5 Since neither release prevents Class Members from 6 pursuing claims unrelated to the settlement, the release is 7 fair and reasonable. 8 9 Based on the balance of the foregoing factors, the 10 Court finds Plaintiffs have met their burden of 11 demonstrating the fairness, reasonableness, and adequacy of 12 the Settlement Agreements in both the Carter and Massoud 13 actions. 14 15 16 IV. CONCLUSION For the reasons explained above, the Court GRANTS final 17 certification of the Carter FLSA and Massoud classes, and 18 final approval of the settlement of both actions. 19 actions are ordered DISMISSED with prejudice. The The Court 20 shall retain jurisdiction for a period of sixty days to 21 enforce the terms of the settlement. Plaintiffs’ 22 applications for attorneys’ fees, costs, and recognition 23 payments are addressed in a separate order. 24 IT IS SO ORDERED. 25 26 Dated: May 11, 2010 27 VIRGINIA A. PHILLIPS United States District Judge 28 26
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