Saechao v. Landry's, Inc., et al, No. 3:2015cv00815 - Document 149 (N.D. Cal. 2016)

Court Description: ORDER GRANTING FINAL APPROVAL OF CLASS SETTLEMENT AND AWARDING ATTORNEYS FEES by Hon. William Alsup granting in part and denying in part 140 Motion for Settlement.(whalc1, COURT STAFF) (Filed on 8/19/2016)
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Saechao v. Landry's, Inc., et al Doc. 149 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 MOUANG SAECHAO, individually and on behalf of all others similarly situated, Plaintiff, 12 13 No. C 15-00815 WHA v. 15 LANDRYS, INC., a Delaware corporation, and McCORMICK & SCHMICK RESTAURANT CORP., a Delaware corporation, 16 Defendants. 14 17 18 19 ORDER GRANTING FINAL APPROVAL OF CLASS SETTLEMENT AND AWARDING ATTORNEY’S FEES / INTRODUCTION In this wage-and-hour class action, plaintiff moves for final approval of a class 20 settlement agreement, approval of an incentive award for the lead plaintiff, and an award of 21 attorney’s fees and costs to class counsel. For the reasons stated below, final approval of the 22 settlement is GRANTED, the incentive award is GRANTED, the request for attorney’s fees and 23 costs is GRANTED IN PART AND DENIED IN PART. Additionally a dispute relating to fees and 24 costs is referred to a magistrate judge for mediation. 25 26 STATEMENT The background of this action is set forth in prior orders (Dkt. Nos. 98, 139). Plaintiff 27 Mouang Saechao asserts various claims for wage-and-hour violations against defendant 28 McCormick & Schmick Restaurant Corp., which operated Spenger’s Fresh Fish Grotto, a 1 restaurant in Berkeley. An order certified five classes, each with a different claim against 2 McCormick & Schmick. 3 After a full and contentious discovery period, including the retention of an economics 4 expert to conduct an extensive damages study, the parties attended three settlement conferences 5 before Magistrate Judge Joseph C. Spero and reached a classwide settlement agreement. An 6 order granted preliminary approval of the settlement. 7 Briefly, the settlement requires McCormick & Schmick to establish a non-reversionary 8 settlement fund of $500,000 dollars, from which shall be deducted attorney’s fees, costs, an 9 incentive award to Saechao, a payment of $9,000 to the California Labor & Workforce Development Agency pursuant to the Private Attorneys General Act (with $3,000 to be paid to 11 For the Northern District of California United States District Court 10 PAGA-eligible class members), and payroll taxes. The remaining funds are to be distributed to 12 class members based on their pro rata shares of three categories of alleged injuries. 13 No objections to the settlement have been filed or received by counsel, the Court, or the 14 class administrator. Two class members opted out of the settlement (Simpluris Decl. ¶¶ 11–12). 15 The settlement agreement provides for an average cash payment of more than one thousand 16 dollars per class member (with a range from three dollars to more than six thousand dollars and 17 a median of almost six hundred fifty dollars) after all of the deductions identified above (id. 18 ¶ 13). The classwide release is limited to the certified claims. 19 Saechao now moves for final approval of the class settlement. Class counsel also moves 20 for (1) $150,000 in attorney’s fees, (2) $50,000 in costs, and (3) $500 as an incentive payment 21 for Saechao. 22 Any award of attorney’s fees and costs is subject to a dispute between class counsel and 23 her former law firm, Phillips, Erlewine, Given & Carlin LLP, which all agree holds a lien 24 covering a portion of the attorney’s fees. PEG&C filed a notice of this lien in September 2015 25 (Dkt. No. 48). When Saechao moved for class certification in January 2016 and sought to name 26 Attorneys Cari Cohorn (formerly of PEG&C) and Katharine Chao (who had no relationship to 27 PEG&C) as class counsel, neither she nor her counsel made any mention of the lien or of 28 2 1 PEG&C. The order certifying the class named Attorneys Cohorn and Chao as class counsel, 2 with Cohorn to serve as lead counsel. 3 PEG&C commenced the initial investigation into Saechao’s claims and represented 4 Saechao when she initially filed the action. Our class counsel, Attorney Cari Cohorn, then a 5 partner at PEG&C, began working on the instant case, but left her position at the firm soon after 6 it was filed. Attorney Cohorn entered into a joint prosecution agreement with PEG&C that 7 allocated the work and any award of attorney’s fees and costs between Attorney Cohorn and 8 PEG&C. Attorney Cohorn and PEG&C had a falling out relating to her disassociation as a 9 partner, and in September 2015, Saechao discharged PEG&C as counsel. When Saechao moved for class certification, Attorney Cohorn (and another sole practitioner Attorney 11 For the Northern District of California United States District Court 10 Katharine Chao) sought to be appointed class counsel. No mention was made of PEG&C. 12 PEG&C contends that Attorney Cohorn breached the joint prosecution agreement, and contends 13 it is entitled to damages from that breach as well as quantum meruit as to the award of fees and 14 costs herein. 15 Attorney Cohorn asks the Court to exercise ancillary jurisdiction over the fee dispute, 16 while PEG&C argues the dispute belongs in state court. This order follows full briefing and 17 oral argument. ANALYSIS 18 19 1. 20 To win final approval, a class settlement must be fair, reasonable, and adequate. FRCP 21 22 THE SETTLEMENT AGREEMENT IS FAIR, REASONABLE, AND ADEQUATE. 23(e)(2); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). This settlement is grounded in a $500,000 cash payout, to be allocated among class 23 members after certain deductions. That cash payment represents approximately one third of the 24 total available recovery if the case proceeded to trial (before the deductions for any fees or 25 costs). As stated in the order granting preliminary approval of the settlement, the class faced 26 significant uncertainty in the strength of its claims, and the discount on the total available 27 recovery is reasonable in light of that risk. 28 3 1 Two members of the class opted out, and no class member filed any objections 2 following preliminary approval of the settlement, further underscoring the fairness of this 3 settlement agreement. At the hearing on the instant motion for final approval, the Court gave an 4 opportunity for any class member to raise any issue relating to the settlement, even though no 5 class members filed objections. No class member appeared. 6 This order finds the settlement is fair, reasonable, and adequate. 7 2. 8 Saechao seeks an incentive award of $500 to be paid from the settlement agreement. 9 INCENTIVE AWARD. Saechao dedicated more than forty hours to this litigation, including preparing for and attending a two-day deposition and several lengthy settlement conferences. Additionally, she incurred 11 For the Northern District of California United States District Court 10 more than three hundred dollars in costs in connection with her participation in this action. 12 Even after receiving the incentive award, Saechao will not receive the largest award among the 13 class members. This order holds that an incentive award of $500 for Saechao is appropriate. 14 3. 15 Despite the settlement agreement and defendant’s acquiescence to the attorney’s fees ATTORNEY’S FEES AND COSTS. 16 sought, a court must still ensure that the attorney's fees and costs awarded are “fair, reasonable, 17 and adequate.” See Staton v. Boeing, Co., 327 F.3d 938, 963–64 (9th Cir. 2003). Common 18 fund fees, as we have here, are consistent with the “American Rule” (i.e., that each party pays 19 for its own litigation expenses), and “a litigant or lawyer who recovers from the common fund 20 for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee 21 from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). 22 District courts in this circuit may use two different approaches to gauge the 23 reasonableness of a requested fee award under the traditional common-fund approach. The first 24 is the lodestar method, whereby a reasonable number of hours is multiplied by a reasonable 25 hourly rate. The lodestar may include a risk multiplier to enhance the fees under certain 26 circumstances, in which a court considers “the quality of the representation, the benefit obtained 27 for the class, the complexity and novelty of the issues presented, and the risk of nonpayment.” 28 Hanlon, 150 F.3d at 1026. Our court of appeals, however, also allows a calculation based upon 4 1 a percentage of the common fund. See Staton, 327 F.3d at 967–68. The benchmark percentage 2 is 25 percent. See Hanlon, 150 F.3d at 1026. Here, the requested $150,000 in attorney’s fees 3 equals approximately 30 percent of the total settlement fund. It also represents 32 percent of 4 class counsel’s claimed lodestar (without including the lodestar for work performed by 5 PEG&C) (Cohorn Decl. ¶ 21). 6 Counsel also requests an award of costs of $50,000, to be paid from the settlement fund. 7 Attorneys Cohorn and Chao each filed declarations detailing their expenses, for a total of 8 $60,408.61 (again, not including costs incurred by PEG&C). The bulk of counsel’s expenses 9 constituted fees for the class expert, whose report was relied upon both in class certification and in settlement. After expert fees, the next greatest expense was the cost of a court reporter and 11 For the Northern District of California United States District Court 10 expedited transcripts for depositions. Class counsel is not entitled to recover costs for expedited 12 transcripts or other costs incurred solely for their convenience, but even after deducting such 13 expenses, the total costs still exceed the recovery requested. 14 This case did not go to trial, it did not concern exceptionally complex issues, and the 15 results obtained herein, while reasonable in light of the litigation risk, are not exceptional. 16 Notably, the settlement agreement recovered approximately one third of the best-case scenario 17 recovery at trial, but it also did not win any injunctive relief concerning McCormick & 18 Schmick’s meal-period and rest-break policies. Moreover, as the details of the dispute between 19 Attorney Cohorn and PEG&C demonstrate, it appears there was some duplication of efforts in 20 the prosecution of this case. 21 Nevertheless, the Court acknowledges that counsel undertook significant work and 22 costs, in excess of the amount sought to be recovered. Thus, although this order finds that no 23 departure from the benchmark of 25 percent of the fund is warranted, it finds that an award of 24 $125,000 in fees and $50,000 in costs is reasonable. The class settlement administrator shall 25 not, however, distribute any funds on account of fees or costs until all other disbursements have 26 been made as required by the settlement agreement and this order. 27 28 5 1 4. 2 Class counsel does not dispute that PEG&C is entitled to a share of the fees and costs 3 recovered herein, they simply disagree with PEG&C about the amount. Both sides agree that 4 the lien dispute and the claim for breach of the joint prosecution agreement are intertwined and 5 should be adjudicated together. They disagree as to whether the dispute should be heard here or 6 in state court — class counsel wants the issues heard here in federal court, while PEG&C wants 7 to pursue them separately in state court. 8 9 11 For the Northern District of California United States District Court 10 DISPUTE WITH PLAINTIFF’S PRIOR COUNSEL. At oral argument on this motion, class counsel and PEG&C both agreed to be referred to mediation by a magistrate judge here in federal court. A separate order will refer class counsel and PEG&C to a magistrate judge for mediation. PEG&C asks that the award of fees and costs be paid into a trust to be maintained until 12 the amount of the lien can be resolved. By SEPTEMBER 1, PEG&C should make a formal 13 motion, noticed on the normal 35-day calendar addressing that issue. 14 The Court will retain jurisdiction over the fee dispute until mediation has concluded and 15 PEG&C’s motion to have the fees and costs paid into trust is resolved, but it declines to 16 exercise ancillary jurisdiction beyond that point. Although adjudication of this fee dispute will 17 depend in part on the facts herein, nothing about the resolution of this class action depends on 18 the resolution of the fee dispute. That is, the amount of the award of attorney’s fees has already 19 been determined (above), and nothing about this dispute will inhibit the class members from 20 receiving their respective portions of the settlement fund. 21 When class counsel (Cari Cohorn) sought her appointment, she should have informed 22 the Court of the full extent of her encumbrance with this potential fee dispute, for such an 23 encumbrance might reasonably have been expected to moderate her willingness to invest time 24 on behalf of the class. PEG&C’s filing the notice of lien on the docket herein was insufficient 25 to alert the Court to the full extent of the issue. This was a major oversight on Attorney 26 Cohorn’s part. Nevertheless, it does not appear that the class suffered prejudice as a result. 27 28 6 1 2 CONCLUSION For the reasons stated above, the motion for final approval of the class settlement is 3 GRANTED. An incentive award of $500 for Saechao is GRANTED. Attorney’s fees in the 4 amount of $125,000 and costs in the amount of $50,000 shall be awarded to class counsel. The 5 disbursement for fees and costs shall not be paid until all class members have received what 6 they are entitled to receive, and there is no further work to be done. An order referring the 7 dispute over attorney’s fees to a magistrate judge will follow. 8 9 seeking to have the award of fees and costs held in trust pending resolution of the lien. Also by SEPTEMBER 1, the parties shall submit a stipulated form of judgment that 11 For the Northern District of California United States District Court 10 By SEPTEMBER 1, PEG&C shall file a formal motion, noticed on the 35-day calendar, specifically identifies the individuals who are subject to the judgment herein as well as those 12 class members that are not subject to the judgment because notice could not be delivered. 13 14 IT IS SO ORDERED. 15 16 Dated: August 19, 2016. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 17 18 19 20 21 22 23 24 25 26 27 28 7