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granting final approval where lodestar crosscheck yielded multiplier of 3.7
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No. 2:19-cv-00166 WBS KJN
02-10-2021
JOSEPH KIMBO, an individual; on behalf of himself and all others similarly situated, Plaintiff, v. MXD GROUP, INC., a California corporation; RYDER SYSTEM, INC., a Florida Corporation; and DOES 1-10, inclusive, Defendants.
MEMORANDUM AND ORDER RE: MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND MOTION FOR ATTORNEYS' FEES, COSTS, AND REPRESENTATIVE SERVICE PAYMENT
Plaintiff Joseph Kimbo, individually and on behalf of all other similarly situated employees, brought this putative class action against defendants MXD Group, Inc. and Ryder System, Inc. (collectively, "defendants"), alleging various violations of the California Labor Code. (Compl. (Docket No. 1-2).) On August 6, 2020, the court granted plaintiff's unopposed motion for preliminary approval of class action settlement. (See Order Granting Preliminary Approval (Docket No. 30).) Plaintiff now moves unopposed for final approval of the parties' class action settlement and attorneys' fees, costs, and a class representative service payment. (See Docket Nos. 35-38.) I. Discussion
The court already recited the factual and procedural background in its order granting plaintiff's unopposed motion for preliminary approval of the class action settlement. (See Order Granting Preliminary Approval at 2-3.) Accordingly, the court will refrain from doing so again.
The Ninth Circuit has declared a strong judicial policy favoring settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); see also Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 965 (9th Cir. 2009) ("We put a good deal of stock in the product of an arms-length, non-collusive, negotiated resolution[.]") (citation omitted). Rule 23(e) provides that "[t]he claims, issues, or defenses of a certified class may be settled . . . only with the court's approval." Fed. R. Civ. P. 23(e).
"Approval under 23(e) involves a two-step process in which the Court first determines whether a proposed class action settlement deserves preliminary approval and then, after notice is given to class members, whether final approval is warranted." Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004) (citing Manual for Complex Litig. (Third), § 30.41 (1995)). This court satisfied step one by granting plaintiff's unopposed motion for preliminary approval of class action settlement on August 6, 2020. (Docket No. 30.) Now, following notice to the class members, the court will consider whether final approval is merited by evaluating: (1) the treatment of this litigation as a class action and (2) the terms of the settlement. See Diaz v. Tr. Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989).
A. Class Certification
A class action will be certified only if it meets the requirements of Rule 23(a)'s four prerequisites and fits within one of Rule 23(b)'s three subdivisions. Fed. R. Civ. P. 23(a)-(b). Although a district court has discretion in determining whether the moving party has satisfied each Rule 23 requirement, the court must conduct a rigorous inquiry before certifying a class. See Califano v. Yamasaki, 442 U.S. 682, 701 (1979); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982).
1. Rule 23(a)
Rule 23(a) restricts class actions to cases where: (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). These requirements are commonly referred to as numerosity, commonality, typicality, and adequacy of representation. In the court's order granting preliminary approval of the settlement, the court found that the putative class satisfied the Rule 23(a) requirements. (See Order Granting Preliminary Approval at 5-12.) Since granting preliminary approval, the court has learned that plaintiff, and plaintiff alone, has submitted a Proof of Costs for approximately $19,000 to the Settlement Administrator, as contemplated by the Settlement Agreement. (See Konecky PA Decl., Ex. 1 ("Settlement Agreement") ¶¶ 81(c) (Docket No. 26-2).) As discussed more fully below, in Section I.E., though this information will affect the court's analysis of Kimbo's request for a service award, it does not alter the court's conclusion that Kimbo is an adequate representative of the class under Rule 23(a)(4).
The court is unaware of any other changes that would affect its conclusion that the putative class satisfies the Rule 23(a) requirements, and the parties have not indicated that they are aware of any such developments. (Mot. for Final Approval at 5-8 (Docket No. 38).) The court therefore finds that the class definition proposed by plaintiff meets the requirements of Rule 23(a).
2. Rule 23(b)
An action that meets all the prerequisites of Rule 23(a) may be certified as a class action only if it also satisfies the requirements of one of the three subdivisions of Rule 23(b). Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 2013). In its order granting preliminary approval of the settlement, the court found that both the predominance and superiority prerequisites of Rule 23(b)(3) were satisfied, but requested that plaintiff address why a substantially similar case pending before the Los Angeles Superior Court, Espinoza v. Williams-Sonoma, Inc., Case No. BC69245 does not detract from judicial economy. (Order Granting Preliminary Approval at 12-15.) Plaintiff represents in its motion for final approval that members of the class represented in Espinoza have been expressly carved out of the Settlement Agreement here. (See Pl.'s Mot. for Final Approval at 4 n.1 (Docket No. 38-2).) Espinoza brings analogous claims on behalf of individuals who currently and formerly provided transportation services to defendants out of the warehouse located at 21508 Baker Parkway, City of Industry, CA any time since February 13, 2014. (See id.) The Settlement Agreement here expressly excludes individuals who worked at or out of the 21508 Baker Parkway warehouse. Accordingly, the court is satisfied that the risk of class certification here "creat[ing] one more action" that subjects defendants to a multiplicity of litigation or inconsistent judgments is low. See Zinser v. Accufix Res. Inst., Inc., 253 F.3d 1180, 1191 (9th Cir. 2001). The court is unaware of any other changes that would affect its conclusion that Rule 23(b)(3) is satisfied. Because the settlement class satisfies both Rule 23(a) and 23(b)(3), the court will grant final class certification of this action.
3. Rule 23(c)(2) Notice Requirements
If the court certifies a class under Rule 23(b)(3), it "must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and content of a proposed notice. See Ravens v. Iftikar, 174 F.R.D. 651, 658 (N.D. Cal. 1997) (citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 172-77 (1974)). Although that notice must be "reasonably certain to inform the absent members of the plaintiff class," actual notice is not required. Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994) (citation omitted).
The parties selected Heffler Claims Group LLC ("Heffler") to serve as the Settlement Administrator. (Decl. of Scott M. Fenwick in Supp. of Final Approval ("Fenwick Decl.") ¶ 3 (Docket No. 38-1).) Defendants timely provided Heffler with the class list, including the class members' names, social security numbers, last known addresses, and total number of applicable workweeks worked. (Id. ¶¶ 3-5.)
Plaintiff originally anticipated there would be "more than 900" class members identifiable from defendants' records. (See Order Granting Preliminary Approval at 5.) Following the preliminary approval motion, defendants confirmed 922 class members after a diligent record search, 910 of which they were able to provide Heffler with a social security number. (Fenwick Decl. ¶ 10.)
To ensure delivery of the notice packets, Heffler requested and obtained updated class list data sets through an iterative process with defense counsel to ensure that class member information was aligned and de-duplicated, and ran the data through the United States Postal Service's National Change of Address Database. (Id. ¶¶ 5, 10.) Notice packets were mailed to the 898 class members for whom Heffler received social security number data by First Class Mail on November 13, 2020. (Id. ¶ 10.) Heffler mailed notice packets to twelve additional class members by First Class Mail on November 19, 2020, upon receiving social security number data from the parties. (Id.) Heffler has calculated the settlement shares pertaining to the twelve class members for whom a social security number has not been identified and has set them aside in a "Reserve Fund." (Id.) Heffler represents that it is working with Plaintiffs' counsel to notify these Class Members of the Settlement and their settlement awards, and the need to obtain their Social Security Numbers in a secure manner before payment can be made. (See id.)
As of January 11, 2021, Heffler has received nine notices returned by the USPS with a forwarding address and 103 notices returned by the USPS as undeliverable as addressed. (Id. at ¶¶ 11-12.) Heffler has re-mailed the nine notices with provided forwarding addresses to those addresses, and sent 87 records through a skip trace process with LexisNexis. (Id.) Heffler obtained 77 updated addresses through the skip trace process and remailed notices to those addresses. (Id.) The deadline to request exclusion from the settlement has passed without any class member opting out, objecting, or disputing his or her calculated number of workweeks. (Id. at ¶¶ 13-16.) Heffler has received one "Proof of Costs" from a class member. (See id.)
"Notice is satisfactory if it 'generally describes the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard.'" Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (quoting Mendoza v. Tucson Sch. Dist. No. 1, 623 F.2d 1338, 1352 (9th Cir. 1980)). The notice identifies the parties, explains the nature of the proceedings, defines the class, provides the terms of the settlement, and explains the procedure for objecting or opting out of the class. (Fenwick Decl. ¶ 9, Ex. B.) The notice also explains how class members' individual settlement awards will be calculated, the amount that class members can expect to receive, and how members of the Motor Carrier Class could submit Proofs of Costs to the Settlement Administrator. (Id.) Accordingly, the notice complies with Rule 23(c)(2)(B)'s requirements.
B. Rule 23(e): Fairness, Adequacy, and Reasonableness of Proposed Settlement
Having determined that class treatment is warranted, the court must now address whether the terms of the parties' settlement appear fair, adequate, and reasonable. See Fed. R. Civ. P. 23(e)(2). To determine the fairness, adequacy, and reasonableness of the agreement, Rule 23(e) requires the court to consider four factors: "(1) the class representatives and class counsel have adequately represented the class; (2) the proposal was negotiated at arm's length; (3) the relief provided for the class is adequate; and (4) the proposal treats class members equitably relative to each other." Id. The Ninth Circuit has also identified eight additional factors the court may consider, many of which overlap substantially with Rule 23(e)'s four factors:
The strength of the plaintiff's 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.Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998).
Because claims under PAGA are "a type of qui tam action" in which an employee brings a claim as an agent or proxy of the state's labor law enforcement agencies, the court must also "review and approve" settlement of plaintiff's and other class members' PAGA claims along with their class claims. See Cal. Lab. Code § 2669(k)(2); Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 435-36 (9th Cir. 2015).
Though "[the] PAGA does not establish a standard for evaluating PAGA settlements," Rodriguez, 2019 WL 331159 at *4 (citing Smith v. H.F.D. No. 55, Inc., No. 2:15CV01293 KJM KJN, 2018 WL 1899912, at *2 (E.D. Cal. Apr. 20, 2018)), a number of district courts have applied the eight Hanlon factors, listed above, to evaluate PAGA settlements. See, e.g., Smith, 2018 WL 1899912, at *2; Ramirez, 2017 WL 3670794, at *3; O'Connor v. Uber Techs., 201 F. Supp. 3d 1110, 1134 (N.D. Cal. 2016). "Many of these factors are not unique to class action lawsuits and bear on whether a settlement is fair and has been reached through an adequate adversarial process." See Ramirez, 2017 WL 3670794, at *3. Thus, the court finds that these factors will also govern its review of the PAGA settlement. See id.
1. Adequate Representation
The court must first consider whether "the class representatives and class counsel have adequately represented the class." Fed. R. Civ. P. 23(e)(2)(A). This analysis is "redundant of the requirements of Rule 23(a)(4) . . . ." Hudson v. Libre Tech., Inc., No. 3:18-cv-1371-GPC-KSC, 2020 WL 2467060, at *5 (S.D. Cal. May 13, 2020) (quoting Rubenstein, 4 Newberg on Class Actions § 13:48 (5th ed.)) see also In re GSE Bonds Antitr. Litig., 414 F. Supp. 3d 686, 701 (S.D.N.Y. 2019) (noting similarity of inquiry under Rule 23(a)(4) and Rule 23(e)(2)(A)).
Because the Court has found that the proposed class satisfies Rule 23(a)(4) for purposes of class certification, the adequacy factor under Rule 23(e)(2)(A) is also met. See Hudson, 2020 WL 2467060, at *5.
2. Negotiation of the Settlement Agreement
Counsel for both sides appear to have diligently pursued settlement after thoughtfully considering the strength of their arguments and potential defenses. The parties participated in an arms-length mediation before an experienced employment litigation mediator, Antonio Piazza, on December 19, 2019, ultimately agreeing to the principal terms of a settlement and executing a Memorandum of Understanding to memorialize the agreement at the close of mediation. (Decl. of Joshua Konecky in Support of Motion for Preliminary Approval ("Konecky PA Decl.") ¶¶ 14-15 (Docket No. 26-2).) Given the sophistication and experience of plaintiff's counsel and the parties' representation that the settlement reached was the product of arms-length bargaining, the court does not question that the proposed settlement is in the best interest of the class. See Fraley v. Facebook, Inc., 966 F. Supp. 2d 939, 942 (N.D. Cal. 2013) (holding that a settlement reached after informed negotiations "is entitled to a degree of deference as the private consensual decision of the parties" (citing Hanlon, 150 F.3d at 1027)).
3. Adequate Relief
In determining whether a settlement agreement provides adequate relief for the class, the court must "take into account (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims; (iii) the terms of any proposed award of attorney's fees, including timing of payment; and (iv) any [other] agreement[s]" made in connection with the proposal. See Fed. R. Civ. P. 23(e)(2)(C); Baker v. SeaWorld Entm't, Inc., No. 14-cv-02129-MMA-AGS, 2020 WL 4260712, at *6-8 (S.D. Cal. Jul. 24, 2020).
The court notes that, in evaluating whether the settlement provides adequate relief, it must consider several of the same factors as outlined in Hanlon, including the strength of the plaintiff's case, the risk, expense, complexity, and likely duration of further litigation, the risk of maintaining class action status throughout the trial, and the amount offered in settlement. See Hanlon, 150 F.3d at 1026.
In determining whether a settlement agreement is substantively fair to class members, the court must balance the value of expected recovery against the value of the settlement offer. See In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1080 (N.D. Cal. 2007). Here, plaintiff's counsel estimates that motor carrier class members will receive an average of approximately $8,871, while non-carrier class members will receive an average of approximately $1,074. (Konecky PA Decl. ¶ 29.) Each class member's individual share of the settlement is proportional to the number of weeks the class member worked for defendants during the time period covered by the Settlement Agreement. (See Konecky PA Decl., Ex. 1 ("Settlement Agreement") ¶¶ 68, 81 (Docket No. 26-2); Konecky PA Decl. ¶ 22; Order Granting Stipulation to Amend the Class Action Settlement Agreement ("Amendment to Settlement Agreement") (Docket No. 34).) Additionally, the workweeks for Motor Carrier Class Members will be calculated at 4 times the workweek payment rate for class members whereas the workweeks for Non-Carrier Class Members shall be calculated at the single workweek payment rate for class members. (Settlement Agreement ¶ 81(d); Konecky PA Decl. ¶ 23; Amendment to Settlement Agreement.) The parties state that they have allocated the workweeks in this fashion to account for the relative strength and value of the Motor Carrier Class Members' and Non-Carrier Class Members' claims, given that the Motor Class Carrier Members have claims for unreimbursed expenses and unlawful deductions that are of significantly higher value than the claims of the Non-Carrier Class Members. Because the amount class members receive is based on the number of workweeks each class member worked for defendants during the period covered by the Settlement Agreement and accounts for the relative strength of each class member's claim, the court finds that it is an effective method of distributing relief to the class.
The Settlement Agreement also sets aside $150,000 of the common fund for civil penalties under PAGA, $37,500 of which will be distributed evenly to the PAGA Group, the subset of class members who worked for defendants during the PAGA period. (See Settlement Agreement ¶ 19.) While plaintiff's counsel remained confident and committed to the merits of plaintiffs' case throughout litigation, counsel recognizes that defendants had legitimate defenses to these claims that risked reducing the amount plaintiff and the class could recover at trial, including that (1) plaintiff's meal and rest period claims were preempted by the Federal Motor Carrier Safety Administration's hours of service regulations; (2) that drivers traveling in the stream of interstate commerce cannot recover for overtime violations under the Motor Carrier Act exemption, and (3) that even if plaintiff were to prevail on the issues of liability, that he would not be entitled to the amount of damages claimed in his complaint. (See Konecky PA Decl. ¶¶ 40-47.) Because the amount of penalties plaintiff would be entitled to under the PAGA depends on how many violations of the California Labor Code defendants committed, these defenses also potentially apply to plaintiff's PAGA claim. (See id.)
Plaintiff's counsel also represents that, absent settlement, the parties most likely would have had to litigate class certification and summary judgment, both of which would cause additional expense and substantially reduce, delay, or eliminate class members' recovery. (See id. ¶¶ 41, 45.) Furthermore, defendant would have been likely to appeal a favorable judgment for plaintiff, resulting in further expense and exacerbating defendant's potential bankruptcy. (Id. ¶¶ 64-65.) Given the strength of plaintiff's claims and defendants' potential exposure, as well as the risk, expense, and complexity involved in further litigation, the court is satisfied that the settlement and resulting distribution provides a strong result for the class. (Id.) While the settlement amount represents "more than the defendants feel those individuals are entitled to" and will potentially be "less than what some class members feel they deserve," the settlement offers class members the prospect of some recovery, instead of none at all. See Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 628 (9th Cir. 1982). In light of the claims at issue and the defendants' potential exposure, the court finds that the substance of the settlement is fair to class members and thereby "falls within the range of possible approval." See Tableware, 484 F. Supp. 2d at 1079.
The Settlement Agreement further provides for an award of attorney's fees totaling 25% of the $5,000,000 Gross Settlement Amount. (See Settlement Agreement ¶ 94.) If a negotiated class action settlement includes an award of attorney's fees, then the court "ha[s] an independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount." In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011).
Plaintiff's counsel has filed a separate motion for attorneys' fees and costs pursuant to Federal Rule 23(h). (See Settlement Agreement ¶ 21.) Though the court will address the reasonableness of counsel's fees in additional detail below, in Section C, the court is satisfied that counsel's fees are reasonable and support approval of the settlement.
In light of the claims at issue, defendants' potential exposure, the risk to plaintiff and to the class of proceeding to trial, and the fact that the court finds counsel's request for attorneys' fees to be reasonable (as discussed below), the court finds that the substance of the settlement is fair to class members and thereby "falls within the range of possible approval," both for plaintiff's California Labor Code claims and his PAGA claim. See Tableware, 484 F. Supp. 2d at 1079; Ramirez, 2017 WL 3670794, at *3. Counsel has not directed the court to any other relevant agreements that would alter this analysis. The court therefore finds that Rule 23(e)'s third factor is satisfied. See Fed. R. Civ. P. 23(e)(C).
4. Equitable Treatment of Class Members
Finally, the court must consider whether the Settlement Agreement "treats class members equitably relative to each other." See Fed. R. Civ. P. 23(e)(2)(D). In doing so, the Court determines whether the settlement "improperly grant[s] preferential treatment to class representatives or segments of the class." Hudson, 2020 WL 2467060, at *9 (quoting Tableware, 484 F. Supp. at 1079.
Here, the Settlement Agreement does not improperly discriminate between any segments of the class, as all class members are entitled to monetary relief based on the number of compensable workweeks they spent working for defendants, the relative strength of their claims, and whether they incurred any costs or had judgments entered against them as a result of defendants' misclassification. (See Settlement Agreement ¶ 81(d); Konecky PA Decl. ¶ 23; Amendment to Settlement Agreement.) The distribution formula reflects the reality that the Motor Class Carrier Members have claims for unreimbursed expenses and unlawful deductions that are of significantly higher value than the claims of the Non-Carrier Class Members. (See Konecky PA Decl. ¶ 23.) No class members have objected to the parties' workweek calculations or to the use of multipliers in calculating the amount of individual recovery for each class member. (See Fenwick Decl. ¶¶ 13-16.)
While the Settlement Agreement allows plaintiff to seek an incentive award of $15,000, plaintiff has submitted additional evidence documenting his time and effort spent on this case, which, as discussed further below, in Section E, has satisfied the court that his additional compensation above other class members is justified. See Hudson, 2020 WL 2467060, at *9. The court therefore finds that the Settlement Agreement treats class members equitably. See Fed. R. Civ. P. 23(e)(D).
5. Remaining Staton Factors
In addition to the Staton factors already considered as part of the court's analysis under Rule 23(e)(A)-(D), the court must also take into account "the extent of the discovery completed . . . the presence of government participation, and the reaction of class members to the proposed settlement." Staton, 327 F.3d at 959.
Through initial disclosures and informal discovery, defendants provided a substantial amount of information that appears to have allowed the parties to adequately assess the value of plaintiff's and the class' claims. (See Konecky PA Decl. ¶¶ 11-13.) Defendants provided plaintiffs with data that showed the approximate number of workweeks and routes driven during the liability period. (Id.) Plaintiff's counsel was also able to review extensive documentation that had already been obtained from an analogous case against defendants' previous iteration, Exel Direct, Inc., Villalpando v. Exel Direct, Inc., No. 3:12-cv-04137-JCS (N.D. Cal.), which further allowed them to evaluate the strength of plaintiffs' and the class' case. (See id. ¶¶ 5, 8, 13.) This factor weighs in favor of final approval of the settlement.
The seventh Staton factor, pertaining to government participation, also weighs in favor of approval. Staton, 327 F.3d at 959. Under PAGA, "[t]he proposed settlement [must be] submitted to the [LWDA] at the same time that it is submitted to the court." Cal. Lab. Code § 2669(k)(2). Here, plaintiff provided a copy of the proposed settlement agreement to the LWDA on January 6, 2021. (Decl. of Leslie Joyner ¶ 3 (Docket No. 39.) As of the date of this order, the LWDA has not sought to intervene or otherwise objected to the PAGA settlement. This factor therefore weights in favor of final approval of the settlement.
The eighth Staton factor, the reaction of the class members to the proposed settlement, also weighs in favor of final approval. See Staton, 327 F.3d at 959. No class members have objected to or sought to opt out of the settlement. See id.
The court therefore finds that the remaining Staton factors weigh in favor of preliminary approval of the Settlement Agreement. See Ramirez, 2017 WL 3670794, at *3.
In sum, the four factors that the court must evaluate under Rule 23(e) and the eight Staton factors, taken as a whole, appear to weigh in favor of the settlement. The court will therefore grant final approval of the Settlement Agreement.
C. Attorneys' Fees
Federal Rule of Civil Procedure 23(h) provides, "[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." Fed. R. Civ. P. 23(h). If a negotiated class action settlement includes an award of attorneys' fees, that fee award must be evaluated in the overall context of the settlement. Knisley v. Network Assocs., 312 F.3d 1123, 1126 (9th Cir. 2002); Monterrubio v. Best Buy Stores, L.P., 291 F.R.D. 443, 455 (E.D. Cal. 2013) (England, J.). The court "ha[s] an independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount." Bluetooth Headset, 654 F.3d at 941.
"Under the 'common fund' doctrine, 'a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable [attorneys'] fee from the fund as a whole.'" Staton v. Boeing Co., 327 F.3d 938, 969 (9th Cir. 2003) (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). In common fund cases, the district court has discretion to determine the amount of attorneys' fees to be drawn from the fund by employing either the percentage method or the lodestar method. Id. The court may also use one method as a "cross-check[ ]" upon the other method. See Bluetooth Headset, 654 F.3d at 944.
As part of the settlement, the parties agreed to an award of attorneys' fees of $1,250,000, which constitutes 25% of the gross settlement fund. (Konecky Decl. in Supp. of Mot. for Attorneys' Fees ("Konecky AF Decl.") ¶ 28 (Docket No. 36).) Once attorneys' fees and costs, the plaintiff's service award, the PAGA allocation, the estimated costs of settlement administration, and the money set aside for the Reserve Fund (to pay any late or anticipated claims) have been distributed, an estimated Net Settlement Amount of approximately $3,437,669 will be distributed to the members of the settlement classes. This works out to an average net share of approximately $8,871 per individual for members of the Motor Carrier Class and an average share of approximately $1,074 per individual for members of the Non-Carrier Class. (See Konecky PA Decl. ¶ 29.) Counsel represents that this award represents a "substantial" result for the class that will bring meaningful relief. (Mot. for Attorneys' Fees and Costs at 9-10 (Docket No. 35).) A review of wage and hour class action settlements in this district confirms that this appears to be a favorable recovery for class members that will be available without further delay. See, e.g., Cooley v. Indian River Transp. Co., No. 1:18-cv-00491 WBS, 2019 WL 2077029 (E.D. Cal. May 10, 2019) (finding that $450.14 recovery per truck driver class member was a "favorable" result); Ontiveros v. Zamora, No. 2:08-cv-00567 WBS DAD, 2014 WL 3057506 (E.D. Cal. July 7, 2014) (observing that an average recovery of $6,000 was "a generous amount" and citing cases approving lower per-class-member averages $601.91 and $1,000.00).
Like other complex employment class actions, this case presented both counsel and the class with a risk of no recovery at all. (Konecky AF Decl. ¶ 55.) Plaintiff here faced a risk that he would not prevail on a contested motion for class certification, that he would not be able to prove that all class members were misclassified as independent contractors, that he would not be able to prove up damages across the class, and that defendants would prevail on one or more of their affirmative defenses, including the asserted preemption defenses under the California Motor Carrier Act and/or the Federal Motor Carrier Safety Administration. (Id.) Plaintiff's counsel represents that, because his firm works on contingency, it sometimes recovers very little to nothing at all, even for cases that may be meritorious. (See id.) Where counsel do succeed in vindicating statutory and employment rights on behalf of a class of employees, they depend on recovering a reasonable percentage-of-the-fund fee award to enable them to take on similar risks in future cases. (See id. ¶ 54.) Plaintiff's counsel argues that, in light of the strong result and substantial risk taken in this case, a 25% fee, as requested here, is reasonable.
The Ninth Circuit has established 25% of the fund as the "benchmark" award that should be given in common fund cases. Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). As this court recently noted, "a review of California cases . . . reveals that courts usually award attorneys' fees in the 30-40% range in wage and hour class actions that result in recovery of a common fun[d] under $10 million." Watson v. Tennant Co., No. 2:18-cv-02462 WBS DB, 2020 WL 5502318, at *7 (E.D. Cal. Sep. 11, 2020) (awarding 33.33% of settlement fund); see also Osegueda v. N. Cal. Inalliance, No. 18-cv-00835 WBS EFB, 2020 WL 4194055, at *16 (E.D. Cal. July 21, 2020) (same); Cooley, 2019 WL 2077029, at *20 (fee award of 33% of the common fund in class action alleging missed meal and rest breaks for class of truck drivers). Given that the requested fee is in line with the Ninth Circuit's benchmark for reasonable fee requests in common fund cases, and, if anything, seems to be lower than the percentage that is routinely awarded in cases of this type, the court agrees that plaintiff's counsel's requested percentage of the common fund is reasonable, especially when viewed in light of the substantial recovery obtained on behalf of class members and the risks undertaken by plaintiff's counsel in this case.
A "lodestar-multiplier" cross-check confirms the reasonableness of the requested award. Plaintiff's counsel has calculated a lodestar figure in this case of $334,692.00. (See Konecky AF Decl. ¶ 29.) Plaintiff's counsel maintains contemporaneous billing logs which reflect time billed in one-tenth of an hour increments. (Id. ¶ 46.) Over the span of a year and a half, partners, associates, paralegals, and law clerks at the firm have dedicated 468.00 hours of work to this case. (Id. ¶¶ 47.) The firm is highly specialized in wage and hour matters and class action cases, and the firm's hourly rates have been approved by a number of federal and state courts in California. (Id. ¶¶ 33-45.)
The court expresses no opinion as to the proper lodestar amount in this case.
The firm's hourly rate for partners is $925 per hour; associates, between $680 and $775 per hour; paralegals and law clerks, between $250 and $350 per hour. (Konecky AF Decl. ¶ 47.)
Based on plaintiff's counsel's calculated lodestar figure, plaintiff seeks a lodestar multiplier of approximately 3.7. In class actions, "[m]ultipliers can range from 2 to 4 or even higher." Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 255 (2001). "Indeed, 'courts have routinely enhanced the lodestar to reflect the risk of non-payment in common fund cases.'" Vizcaino, 290 F.3d at 1051 (approving fee award where lodestar cross-check resulted in multiplier of 3.65); see also id. at 1052 n.6, appx. (collecting cases and finding that risk multiplier fell between 1.0 and 4.0 in 83% of cases); In re NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465, 489 (S.D.N.Y. 1998) (awarding 3.97 multiplier and observing that "[i]n recent years multipliers of between 3 and 4.5 have become more common").
Federal courts incorporate California state law on deciding an appropriate multiplier when the claims are brought under California state law. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). --------
Factors considered in determining the appropriate lodestar multiplier generally include: (1) the risks presented by the contingent nature of the case; (2) the difficulty of the questions involved and the skill requisite to perform the legal service properly; (3) the nature of the opposition; (4) the preclusion of other employment by the attorney from accepting the case; and (5) the result obtained. Ketchum v. Moses, 24 Cal. 4th 1122, 1132 (Cal. 2001); Graham v. DaimlerChrysler Corp., 34 Cal. 4th 553, 582 (Cal. 2004); Serrano v. Priest, 20 Cal.3d 25, 48-49 (Cal. 1977). Given the risks undertaken by plaintiff's counsel, the defenses likely to be raised by defendant, the strong result for the class, as well as plaintiff's counsel's representation that his firm had to forego requests by other prospective clients to bring other cases with merit to ensure that it would be able to adequately and successfully represent plaintiff and the class in this matter (Konecky AF Decl. ¶ 49), the court finds that these factors support a multiplier of 3.7 in this case. See Johnson v. Fujitsu Tech. & Bus. of Am., Inc., No. 16-cv-03698-NC, 2018 U.S. Dist. LEXIS 80219, at *20 (N.D. Cal. May 11, 2018) (finding multiplier of 4.37 to be reasonable); In re NCAA Ath. Grant-In-Aid Cap Antitrust Litig., 2017 U.S. Dist. LEXIS 201108, at *21 (N.D. Cal. Dec. 6, 2017) (finding multiplier of 3.66 to be "well within the range of awards in other cases.").
Accordingly, the court finds the requested fees to be reasonable and will approve counsel's motion for attorneys' fees.
D. Costs
"There is no doubt that an attorney who has created a common fund for the benefit of the class is entitled to reimbursement of reasonable litigation expenses from that fund." In re Heritage Bond Litig., Civ. No. 02-1475, 2005 WL 1594403, at *23 (C.D. Cal. June 10, 2005). Here, the parties agreed that plaintiff's counsel shall be entitled to recover reasonable litigation costs, not to exceed $20,000. (Konecky PA Decl. ¶ 19.) Counsel's litigation expenses and costs are $15,525.10. (Konecky AF Decl. ¶ 61.) These expenses include filing fees, court fees, service of process, mediation fees, legal research, overnight and bulk mail, and copies and postage. (Id. at ¶ 62.) The legal research charges correspond to the actual costs incurred in conducting legal research specific to this case, rather than a pro-rata or other share of plaintiff's counsel's firm's generalized legal research costs. (Id. at ¶ 63.) The court finds these are reasonable litigation expenses. Therefore, the court will grant class counsel's request for costs in the amount of $15,525.10.
E. Representative Service Award
"Incentive awards are fairly typical in class action cases." Rodriguez, 563 F.3d at 958. "[They] are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general." Id. at 958-59.
Nevertheless, the Ninth Circuit has cautioned that "district courts must be vigilant in scrutinizing all incentive awards to determine whether they destroy the adequacy of the class representatives . . . ." Radcliffe v. Experian Info. Solutions, Inc., 715 F.3d 1157, 1164 (9th Cir. 2013). In assessing the reasonableness of incentive payments, the court should consider "the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefitted from those actions" and "the amount of time and effort the plaintiff expended in pursuing the litigation." Staton, 327 F.3d at 977 (citation omitted). The court must balance "the number of named plaintiffs receiving incentive payments, the proportion of the payments relative to the settlement amount, and the size of each payment." Id.
In the Ninth Circuit, an incentive award of $5,000 is presumptively reasonable. Davis v. Brown Shoe Co., Inc., No. 1:13-01211 LJO BAM, 2015 WL 6697929, at *11 (E.D. Cal. Nov. 3, 2015) (citing Harris v. Vector Marketing Corp., No. C-08-5198 EMC, 2012 WL 381202, at *7 (N.D. Cal. Feb. 6, 2012) (collecting cases). The single named plaintiff, Joseph Kimbo, seeks an incentive payment of $15,000, an amount that is significantly higher. (Konecky AF Decl. ¶ 67.) Kimbo represents that he has devoted significant time and resources to the case over a period of three years, risking both his finances and his reputation. (Decl. of Joseph Kimbo ("Kimbo Decl.") ¶¶ 6-15 (Docket No. 37-1).) As set forth in his declaration, Kimbo provided information and engaged in lengthy interviews with his counsel, some of which were in person. (Kimbo Decl. ¶¶ 4-6, 9-10.) Kimbo also assisted in the drafting of pleadings, reviewed the PAGA notice and the Complaint before they were filed, conducted a close review of his bank records over a period of three years to assist in the calculation of damages for unreimbursed expenses, produced 331 pages of documents in mediation discovery, traveled to and participated in a full day of mediation in San Francisco, participated actively in the mediation and provided a first-hand account of his experience to the mediator, communicated regularly with his counsel following the mediation, during the drafting of the long-form settlement agreement, and reviewed and approved the final settlement papers. (Id. at ¶¶ 3-13, 17.) These efforts by Kimbo appear to be significant, and support awarding him with an incentive payment. See Staton, 327 F.3d at 977.
In addition, Kimbo's contributions to the litigation will significantly benefit the class. Kimbo appears to have played a key role in coordinating with other drivers to bring this case to the attention of class counsel. (See Kimbo Decl. ¶ 3.) Kimbo's efforts in bringing the case, along with the professional risk he exposed himself to by volunteering to act as a class representative, have resulted in a strong result for the class--Motor Carrier Class Members are estimated to receive an average settlement share of approximately $8,871 per person, and Non-Carrier Class Members are estimated to receive an average share of approximately $1,074 per person. (See Konecky PA Decl. ¶ 29.)
Kimbo further represents that he had potential individual discrimination claims against defendants, but personally agreed to release all claims he may have had against defendants--not just those related to this case--when he accepted the proposed settlement on behalf of the class (Id.) This release was therefore broader than that which applies to other class members. (Id. at ¶ 16; Konecky AF Decl. ¶ 65.) The substantial benefit plaintiff's efforts have secured for the class, as well as the professional risks he has taken and the broader release he has signed, further weigh in favor of granting a service award. See Staton, 327 F.3d at 977.
However, concerns raised by the court at oral argument regarding Kimbo's ability to recover approximately $19,000 in costs from the common fund weigh against authorizing the full service award he has requested. The Settlement Agreement permits Motor Carrier class members who have had to personally pay "costs, charges, fees, or expenses and/or have an enforceable judgment against them on claims made against them arising out of providing transportation and delivery services for Defendants in California during the Class Period" to receive compensation from a "Claims Compensation Fund" totaling $100,000, as long as the class member submits sufficient proof of those costs or the existence of an enforceable judgment to the Settlement Administrator ("Proof of Costs"). (See Settlement Agreement ¶ 81(c).) If the total amount of costs on claims submitted by class members to the Settlement Administrator is less than $100,000, the Settlement Agreement provides that the remainder of the Claims Compensation Fund will be distributed to class members as part of the Net Settlement Amount. (See id.)
Here, the Settlement Administrator represents that it only received a Proof of Costs from one Motor Carrier class member. (See Fenwick Decl. ¶ 15.) Neither the Settlement Administrator's declaration nor plaintiff's moving papers indicated which class member submitted the Proof of Costs, or how much it was for. (See id.; see also generally Pl.'s Mot. for Final Approval.) Only once the court asked plaintiff's counsel for additional details at oral argument did counsel reveal that the Proof of Costs had been submitted by Kimbo himself, for approximately $19,000. In a "Statement of Clarification Regarding Proof of Costs," filed with the court following oral argument, plaintiff's counsel now represents that Kimbo's request for costs stems from an approximately $19,000 judgment entered against him in connection with a wage claim made against him by his "helper" while he was working for defendants and that, had Kimbo not been misclassified by defendants, the helper's claims would have been properly made against defendants instead of him. (See Docket No. 41.) Counsel argues that this claim should not affect the court's analysis regarding Kimbo's requested service payment because the claim, if approved by the court as part of the overall Settlement Agreement, would be paid directly to the worker who obtained the judgment against Kimbo, rather than to Kimbo himself. (See id.)
However, given the size of Kimbo's submitted claim (more than double what he will recover as a member of the Motor Carrier class, and more than the amount of his requested service payment), the fact that Kimbo was the only class member to submit a Proof of Claim, and the fact that neither Kimbo nor his counsel were forthcoming with details regarding the claim until pressed by the court at oral argument, the court cannot help but note the possibility that Kimbo used his position as class representative to tailor the Settlement Agreement such that his obligation would be satisfied out of the common fund. Kimbo therefore stands to benefit from his ability to shape the ultimate structure of the class settlement, regardless of whether his claim will be paid to him or directly to the judgment payee. (See Docket No. 41.)
Because district courts must "be vigilant in scrutinizing all incentive awards to determine whether they destroy the adequacy of the class representatives," especially where "the proposed service fees greatly exceed the payments to absent class members," the court retains the discretion to reduce the amount of Kimbo's requested service award if it finds that the award would be excessive when compared to the expected recovery of absent class members. See Esomonu v. Omnicare, Inc., No. 15-cv-02003-HSG, 2019 WL 499750, at *8 (N.D. Cal. Feb. 8, 2019) (reducing $20,000 incentive payment to $5,000 because it was disproportionate to the average recovery projected for absent class members). The court may even deny approval of the class action settlement entirely if it finds that the requested service award would give rise to a conflict of interest that would render Kimbo an inadequate representative of the class. See Radcliffe, 715 F.3d at 1166 (reversing district court's approval of class settlement because the interests of class representatives who would get incentive awards diverged from the interests of absent class members).
Kimbo's role in approving the Settlement Agreement does not go so far as to suggest a conflict of interest that would preclude him from adequately representing the class, given that all members of the Motor Carrier class were eligible to file similar claims with the Settlement Administrator under the terms Settlement Agreement. (See Settlement Agreement ¶ 81(c).) However, the court finds that the presumptively reasonable service award amount of $5,000 more appropriately captures the value Kimbo added to the class action while accounting for the benefit that Kimbo has already gained from shaping the form of the settlement via his role as class representative. See Esomonu, 2019 WL 499750, at *8. In light of this benefit, the court is not convinced that it is necessary or appropriate to authorize a service award that, on its own, would be disproportionately larger than the projected recovery for absent class members. See id. The court will therefore authorize payment of a $5,000 service award.
II. Conclusion
Based on the foregoing, the court will grant final certification of the settlement class and will approve the settlement set forth in the settlement agreement as fair, reasonable, and adequate. The settlement agreement shall be binding upon all participating class members who did not exclude themselves.
IT IS THEREFORE ORDERED that plaintiff's unopposed motions for final approval of the parties' class action settlement and attorneys' fees, costs, and a class representative service payment (Docket Nos. 35-38) be, and the same hereby are, GRANTED.
IT IS FURTHER ORDERED THAT:
(1) Solely for the purpose of this settlement, and pursuant to Federal Rule of Civil Procedure 23, the court hereby certifies the following class:
(a) all motor carrier owners who directly contracted with defendants in his or her individual capacity or through a business entity and provided transportation services to defendants in California at any time from December 12, 2014 through the earlier of July 26, 2020 or the date of this Order ("motor carrier class"); and
(b) all individuals who did not contract with defendants and are non-owner drivers and helpers authorized to provide transportation services for defendants in California at any time from December 12, 2014 through the earlier of July 26, 2020 or the date of this Order ("non-carrier class").
(2) The court appoints the named plaintiff Joseph Kimbo as class representative and finds that he meets the requirements of Rule 23;
(3) The court appoints law firm of Schneider Wallace Cottrell Konecky LLP as class counsel and finds that it meets the requirements of Rule 23;
(4) The settlement agreement's plan for class notice is the best notice practicable under the circumstances and satisfies the requirements of due process and Rule 23. The plan is approved and adopted. The notice to the class complies with Rule 23(c)(2) and Rule 23(e) and is approved and adopted;
(5) The court finds that the parties and their counsel took appropriate efforts to locate and inform all class members of the settlement. Given that no class member filed an objection to the settlement, the court finds that no additional notice to the class is necessary;
(6) As of the date of the entry of this order, plaintiff and all class members who have not timely opted out of this settlement herby do and shall be deemed to have fully, finally, and forever released, settled, compromised, relinquished, and discharged defendants of and from any and all settled claims, pursuant to the release provisions stated in the parties' settlement agreement;
(7) Plaintiff's counsel is entitled to fees in the amount of $1,250,000, and litigation costs in the amount of $15,525.10;
(8) Heffler Claims Group LLC is entitled to administration costs in the amount of $49,701.50;
(9) Plaintiff Joseph Kimbo is entitled to an inventive award in the amount of $5,000;
(10) $112,500 from the gross settlement amount shall be paid to the California Labor and Workforce Development Agency in satisfaction of defendants' alleged penalties under the Labor Code Private Attorneys General Act;
(11) $125,000 from the gross settlement amount shall be set aside in a reserve fund in the event there are settlement class members who are not identified until after the initial mailing of settlement checks, but who are eligible to participate in the settlement. The reserve fund will also include the amount of any checks that are sent but remain uncashed after 60 days. After expiration of the 60-day period, the reserve fund will be used to pay unanticipated or late claims. Any residual still remaining will then be donated to the parties' designated cy pres beneficiary, St. Christopher's Fund. The court finds that St. Christopher's Fund is an appropriate selection because its mission of providing financial assistance to truck drivers who have been injured on the job or are ill aligns with the remedial aims of this case and the California Labor Code, and addresses similar harms for a similar group of workers. (See Konecky PA Decl. ¶ 32, Ex. 3.) This mission also directly addresses the particular harms facing drivers during the COVID-19 pandemic. (See id.)
(12) The remaining settlement funds shall be paid to participating class members in accordance with the terms of the settlement agreement; and
(13) This action is dismissed with prejudice. However, without affecting the finality of this Order, the court shall retain continuing jurisdiction over the interpretation, implementation, and enforcement of the Settlement Agreement with respect to all parties to this action and their counsel of record.
The clerk is instructed to enter judgment accordingly. Dated: February 10, 2021
/s/_________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE