Opinion
No. Civ. S-04-0438 WBS GGH.
October 19, 2006
Plaintiffs Vicki West and Wendy Fagundes sought to bring a class action suit against defendant Circle K Stores, Inc. for alleged violations of the California Labor Code sections 226.7, 227.3, and California's Unfair Competition Law ("UCL"), Cal. Bus. Prof. Code §§ 17200- 17210. On June 13, 2006, this court entered an order preliminarily approving the settlement reached by the parties. Presently before the court are plaintiffs' applications for final approval of the class action settlement, attorneys' fees and costs, and additional compensation for named plaintiffs. For the following reasons, the court will grant final approval of the settlement, attorneys' fees and costs, and additional compensation.
In their brief in support of their motion to certify the class, plaintiffs corrected the spelling of "Fagundes," which had previously been spelled "Fegundes."
I. Factual and Procedural Background
On March 3, 2004, plaintiffs filed a class action complaint claiming that defendant failed to pay (1) overtime wages, (2) administrative leave wages, and (3) accrued but unused vacation wages, all in violation of state law. (Compl. ¶ 17.) On July 15, 2005, this court granted in part plaintiffs' motion to amend their complaint. (July 15, 2005 Order at 2-3.) The amendments dropped some of the claims of one proposed subclass (managers) and added Wendy Fagundes as a named plaintiff, representing an additional class of employees claiming that defendant failed to pay meal and break wages. (Id. at 3-4.)
On March 20, 2006, plaintiffs moved to certify two distinct classes based on their remaining claims: (1) a "meal period class" defined as "all hourly store employees employed by defendant in California since October 1, 2000, who did not receive off-duty meal periods" and (2) a "vacation class" defined as "all employees employed in California by defendant at any time since March 3, 2000, who forfeited accrued but unused vacation under defendant's vacation policy." (Pl.'s Mot. for Class Cert. 1.) However, before the court could hear that motion, the parties attended a day long mediation with Justice Richard Neal (retired) where they agreed to settlement terms.
The court preliminarily approved this settlement in an order issued on June 13, 2006, and provisionally certified the two classes for the purpose of settlement. The court additionally appointed Vicki West as the representative of the vacation class, Wendy Fagundes as the representative of the meal period class, the law firm of McInerney Jones as lead counsel, and Rosenthal Company, LLC as the claims administrator. The court also approved the class claim form, the exclusion form, and the notice of settlement with minor modifications as to scheduling, and directed the claims administrator to send copies of these three documents to all identifiable class members within thirty days of the order's issuance. The court is unaware of any relevant factual or legal developments that would alter its previous analysis, and plaintiffs' counsel represented at oral argument that he did not encounter any such change. Finally, the court set the Final Fairness Hearing on October 16, 2006, at 1:30 p.m. After conducting the fairness hearing and carefully considering the settlement terms, the court now addresses whether the proposed settlement is fair, reasonable, and adequate, such that it should be approved by the court; whether a judgment as provided in the stipulation should be entered for final approval of the settlement; and whether class counsel's applications for attorneys' fees and costs, as well as additional compensation for named plaintiffs, should be granted.
II. Discussion
A. Legal Standard
The Ninth Circuit has declared that a strong judicial policy favors settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). "There is an overriding public interest in settling and quieting litigation" that is "particularly true in class action suits." Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976). Nevertheless, where "parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement." Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). Having conducted the first inquiry regarding the propriety of certification, the "`court must carefully consider "whether a proposed settlement is fundamentally fair, adequate, and reasonable,' recognizing that `[i]t is the settlement taken as a whole, rather than the individual component parts, that must be examined for overall fairness. . . .'" Id. at 952 (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)); see also Fed.R.Civ.P. 23(e).
At the fairness hearing, the court should entertain any objections by putative class members to: (1) the treatment of this litigation as a class action and/or (2) the terms of the settlement. Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989) (holding that prior to approving the dismissal or compromise of claims containing class allegations, district courts must, pursuant to Rule 23(e), hold a hearing to "inquire into the terms and circumstances of any dismissal or compromise to ensure that it is not collusive or prejudicial"). Following the fairness hearing, the court will make a final determination as to whether the parties should be allowed to settle the class action pursuant to the terms agreed upon. Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004).
In determining whether the terms of the parties' settlement are fair, adequate, and reasonable, the court must balance several factors, including:
the strength of the plaintiffs' case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.Hanlon, 150 F.3d at 1026. But see Molski v. Gleich, 318 F.3d 937, 953-54 (9th Cir. 2003) (noting that a district court need only consider some of these factors — namely those designed to protect absentees).
A. Terms of the Settlement Agreement
The key terms of the stipulation and settlement are as follows:
1. Class Definitions: the meal period class is defined as "All hourly employees employed by Circle K Stores, Inc. in the state of California from October 1, 2000 through the date the Court grants preliminary approval of this Settlement." The vacation class is defined as "All employees employed by Circle K Stores, Inc. in the state of California from March 3, 2000 through the date the Court grants preliminary approval of this Settlement who did not have all their accrued but unused vacation carried forward from year to year." The agreement excludes from the class employees of franchises who do/did not actually work for defendant Circle K Stores, Inc. (June 1, 2006 Jones Decl. Ex. A (Joint Stip. of Settlement Release ("Settlement") ¶ 6).)
2. Settlement Amount: Defendant agrees to a "total payout" settlement of five million dollars ($5,000,000). Of this amount, three million eight hundred thousand dollars ($3,800,000) is allocated to the meal period class and one million two hundred thousand dollars ($1,200,000) is allocated to the vacation class. (Id. ¶ 16.)
3. Deductions: attorneys' fees (up to 30%), plaintiffs' costs (up to $25,000), "service payments" to the class representatives (up to $15,000 each), and claims administration costs (up to $150,000) will be deducted from defendant's total liability of $5,000,000. With the exception of the service payments, the meal period class will bear 76% of these costs and fees; the vacation class will bear the remainder. (Id. ¶ 15(d).)
4. Award Allocations: Meal period class members who file timely claims will receive a proportionate share of the $3,800,000 class settlement amount, minus costs, fees, and service payments. A member's share will be based on the number of weeks she worked for defendant during the class period and this number will be determined based on the total number of days worked divided by seven. (Id. ¶ 15(d)(i)(a).) The parties estimate that this approach will at a minimum yield an $8 per week payment for each class member, resulting in payments in excess of $2,600 for employees that worked throughout the entire class period. (P. A. in Supp. of Mot. for Prelim. Approv. 8.) Vacation class members who file timely claims will likewise receive a proportionate share of the $1,200,000 class settlement amount, minus costs, fees, and service payments. After all claims are filed, the vacation class award will be divided by the number of claimed vacation hours, yielding a per hour payment. (June 1, 2006 Jones Decl. Ex. A Settlement ¶ 15(d)(i)(b)).) The parties anticipate that this will result in at least a $13 per hour payment for employees who, on average, were making $7 per hour. (P. A. in Supp. of Mot. for Prelim. Approval 8-9.)
5. Claims Procedures: Members of each class will receive two forms sent out by the Claims Administrator, Rosenthal Company LLC. (June 1, 2006 Jones Decl. Ex. A Settlement ¶¶ 15(d)(ix), 22(h)).) One will be a preprinted Class Claims Form that, based on defendant's records, will establish either the number of weeks worked (for meal period class members) or the number of vacation days owed (for vacation class members). (Id. ¶ 15(d)(ix)(a)-(b).) Class members will also receive a Request for Exclusion Form that will advise them on how to opt out of the class action settlement. (Id.) These forms will be sent, along with a notice announcement detailing the history of this litigation and further explaining the terms of the settlement, no more than twenty (20) days from the date of this order. (Id. ¶ 18(c).) Class members will have sixty (60) days from the date that notice is mailed to submit a claim and forty-five (45) days to opt out. (June 1, 2006 Jones Decl. Ex. D (Proposed Notice).) Payments to class claimants will be mailed by the claims administrator within twenty (20) days of the final approval of the settlement. (Id. Ex. A (Settlement ¶ 20).)
6. Release: Class members who do not opt out of the class action, even if they do not file a claim, are forever barred from bringing claims for failure to provide meal or rest breaks from October 1, 2000, until this settlement is finally approved, and from bringing claims for failure to annually carry over accrued but unused vacation from March 3, 2000, until this settlement is finally approved. Id. Ex. D (Proposed Notice).) The release does not cover employees who did not actually work for defendant, but rather worked for a franchisee. Additionally, the release does not apply to claims arising after December 2003 against ConocoPhillips (which sold defendant Circle K Stores, Inc. through a stock sale in December 2003 and absorbed some of defendant's existing employees through "migration"). (Id.; Apr. 7, 2006 Jones Decl. Ex. F (Prince Dep. 74:8-75:3).)
B. Factor Analysis
1. Strength of the Plaintiff's Case
Counsel for both parties have been actively engaged in this litigation for over two years and have diligently pursued the necessary discovery. Certain aspects of plaintiffs' case were quite strong. From deposition testimony, it was clear that defendant had not carried forward accrued but unusued vacation from year to year for a large number of employees. (Application for Final Approval of Settlement 6.) Moreover, defendant acknowledged that it had a blanket policy of preventing employees from taking meal periods because of the "nature of the work" in the convenience store industry. (Id.) Defendant has since changed its policy and now allows off-duty meal periods when more than one employee works on a given shift. (Id.)
2. Risk, Expense, Complexity, and Likely Duration of Further Litigation
Despite having significantly developed the facts in the case, both sides faced significant uncertainty because the claims (in particular the meal period class claim) encompass unsettledlegal issues. The complexity and duration of further litigation was likely to be considerable. There were over 10,000 potential class members in this case. Completing discovery (in particular, depositions) in a case with such a large class would have been extremely costly. Additionally, plaintiffs were proceeding against a large and sophisticated defendant, who vigorously defended its position until settlement was reached. (See Apr. 3, 2006 Def.'s Opp'n to Mot. for Class Cert.; Def.'s Objections to Request for Judicial Notice; May 31, 2006 Stip. Proposed Order for Prelim. Approval of Settlement.) The hotly-contested nature of this case prior to settlement further indicates that plaintiffs' counsel assumed some degree of risk by proceeding with this litigation. These circumstances and attendant risks favor settlement. Hanlon, 150 F.3d at 1026.
3. Risk of Maintaining Class Action Status Throughout the Trial
Further, it was not clear that the classes would remain intact if trial proceeded. The California Supreme Court is currently resolving a split amongst California Courts of Appeal that would affect the outcome of the case — namely, whether the remedy provided by Labor Code § 226.7 should be considered a wage or a penalty. See Murphy v. Kenneth Cole Prods., Inc., 134 Cal. App. 4th 728, 751 (2005), review granted and opinion superceded by Murphy v. Kenneth Cole Prods., Inc., 40 Cal. Rptr. 3d 750 (2006). If the California Supreme Court determines that the remedy under this labor code section is appropriately considered a penalty, a one-year statute of limitations would apply to the meal break class, which would cut the length of the class period in half. It is additionally unclear whether the remedy provided by California Business Professions Code § 17203 provides a remedy that is a wage or a penalty. Cortez v. Purolator Air Filtration Prods. Co., 23 Cal.4th 163, 173 (2000). The resolution of this question would also affect what statute of limitations is applied to the claims in this case. (See Feb. 14, 2006 Order re: Motion for Summ. J. 4-7.) Further, the court has previously noted that defendant raised persuasive arguments regarding the commonality and typicality of the meal period class. (June 13, 2006 Order 7-12.) Thus, the settlement ensures that a more inclusive meal period class will obtain relief than may otherwise be the case, which counsels for settlement.
4. Amount Offered in Settlement
The total amount agreed to in the settlement is a "total payout" of $5,000,000, regardless of how many claims are ultimately received. Subtracting the attorneys' fees, litigation costs, enhancement awards, and administrative costs, the net result is that the meal period class would be compensated with $2,712,884.30 and the vacation class would be compensated with $846,437.20. (Charles A. Jones Decl. ¶ 6.) The meal period class members with timely and valid claims contend that they worked approximately 197,468.64 weeks without meal periods, which means that each claimant in this class stands to receive between $12.93 and $13.73 for omitted meal breaks per week of work. (Id. ¶ 8.) This means, in turn, that the average member of this class would receive between $3,845.64 and $4,083.58. (Id.) The members of the vacation class will receive between $15.00 and $17.74, depending on how the claim administrator resolves disputes regarding work weeks, for every hour of vacation forfeited. (Id. ¶ 9.) The net recovery for plaintiffs is greater than originally anticipated, and is therefore greater than the amount plaintiffs were informed they would receive in the notice. (Jones Decl. Ex. B (Class Notice); Application for Final Approval of Settlement 9; Application for Attorneys' Fees Costs 14.) Thus, because plaintiffs are ensured compensation for the injury they suffered, and the rate of compensation appears to be fair and reasonable, this factor weighs in favor of approving the settlement.
This number is somewhat in dispute, and may yet increase by approximately 12,296.09 weeks. (Jones Decl. Ex. G (John Keane Decl. ¶ 17).)
5. Extent of Discovery Completed and the Stage of theProceedings
The complaint in this case was filed in March, 2004, and has been actively litigated since that time. During discovery, plaintiffs served on defendant thirty-nine interrogatories, seventy-four requests for production of documents, and fifteen requests for admissions. (Pls.' Application for Final Approval of Settlement 4.) Defendant produced more than 2,000 pages of documents in response to these discovery requests. (Id.) Defendant served on plaintiffs eighty requests for production of documents and twenty-seven interrogatories. (Id.) Finally, eight depositions have been conducted to date — plaintiffs deposed several of defendant's employees and defendant's designated expert, while defendant deposed both of the proposed class representatives. (Id.) Thus, substantial discovery had been conducted at the time the parties agreed to settle the case; additionally, the court had ruled on a motion for partial summary judgment and was considering a motion to certify the class. The advanced stage of the proceedings suggests that the parties had carefully investigated the claims before reaching resolution. Thus, this factor weighs in favor of approving the settlement.
6. Experience and Views of Counsel
The law firm of McInerney Jones, counsel for plaintiffs in this action, has previously represented plaintiffs in more than thirty class actions over the past sixteen years, all of which involved labor and employment law. (June 1, 2006 Jones Decl. ¶ 4.)) Many of these class actions have involved interpretation of California's labor code. (Id.) In fact, McInerney Jones represent class action plaintiffs exclusively. (Application for Final Approval of Settlement 2.) McInerney Jones has also settled more than fifteen class actions related to wage and hour disputes. (June 1, 2006 Jones Decl. ¶ 4.) Additionally, counsel in this case have tried more than ten class actions involving overtime pay through certification, and have lost certification in a few instances. (Pls.' Application for Final Approval of Settlement 3.) Thus, counsel are familiar with the attendant risks of representing plaintiffs in class action suits. (Id.)
Moreover, plaintiffs' counsel have indicated that they are pleased with the result obtained in this settlement, and that they believe it is fair and reasonable. With regard to class action settlements, the opinions of counsel should be given considerable weight both because of counsel's familiarity with this litigation and previous experience with cases such as these.In re Wash. Public Power Supply System Sec. Litig., 720 F. Supp. 1379, 1392 (D. Ariz. 1989) (citing Officers for Justice v. Civil Service Com'n of City and County of S.F., 688 F.2d 615, 625 (9th Cir. 1982). The court has observed that the litigation has been appropriately characterized by aggressive and capable advocacy on both sides. As in the case of In re Washington, "[t]here is likewise every reason to conclude that settlement negotiations were vigorously conducted at arms' length and without any suggestion of undue influence." Id. at 1392. Thus, this factor supports approval of the settlement agreement.
7. Presence of a Governmental Participant
This factor is irrelevant to the court's analysis, as no governmental entity participated in this class action.
8. Reaction of the Class Members to the Proposed Settlement
Notice of the proposed settlement was mailed to each of the potential members of the settlement classes, along with a claim form and a request for exclusion form. (Oct. 2, 2006 Jones Decl. Ex. B, E, F.) The notice complied with Federal Rule of Civil Procedure 23(e). It informed potential class members what the minimum amount of money was that they could expect to receive under the settlement, how settlement awards would be calculated, how to dispute defendant's data regarding work week hours, the procedure for objecting more generally or excluding oneself altogether from the settlement, the amount of fees and costs that would be paid out of the settlement, and the date of the final approval hearing. (Id. Ex. B.)
The deadline for objecting to the settlement was August 21, 2006, and class members did not file any objections to the terms of the settlement, the amount of fees and costs sought, or the service payments to the named plaintiffs. (Oct. 2, 2006 Jones Decl. ¶ 3; Keane Decl. ¶ 15.) Moreover, the settlement underestimated the amount of relief plaintiffs would obtain and overestimated the amount of attorneys' fees that counsel ultimately sought. (Application for Final Approval of Settlement 9-10.) In particular, the notice informed plaintiffs of the upper bound of attorneys' fees, and plaintiffs' counsel are now requesting $250,000 less in attorneys' fees. (Jones Decl. Ex. B (Class Notice).) The lack of objections to the settlement is perhaps the most significant factor weighing in favor of settlement.
Although not one of the factors the court must consider, an additional consideration favoring settlement is that, after this lawsuit was filed, defendant changed some of its employment practices regarding the issues involved in this litigation. Notably, defendant has created a new policy allowing off-duty meal periods when multiple employees are working on a particular shift. (Pls.' Application for Final Approval of Settlement 6.) Defendant has also corrected its practices by allowing employees to carry forward their accrued but unused vacation from year to year. (Oct. 19, 2006 Charles A. Jones Decl. ¶ 8.)
C. Award of Attorneys' Fees
Federal Rule of Civil Procedure 23(h) provides that "[i]n an action certified as a class action, the court may award reasonable attorneys' fees and nontaxable costs authorized by law or by agreement of the parties. . . ." "In assessing attorneys' fees, courts typically apply either the percentage-of-recovery method or the lodestar method. The percentage-of-recovery method is generally favored in common fund cases because it allows courts to award fees from the fund in a manner that rewards counsel for success and penalizes it for failure." In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3rd Cir. 2005) (quotations and citation omitted).
The Ninth Circuit has noted that, in class actions, "fee awards range from 20 percent to 30 percent of the fund created." Paul, Johnson, Alston Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989). The court additionally noted with approval "that one court has concluded that the `bench mark' percentage for the fee award should be 25 percent." Id. That percentage may be adjusted in either direction "to account for any unusual circumstances involved in this case." Id. (emphasis added). "Courts may observe the following factors when determining whether the benchmark percentage should be adjusted: (1) the result obtained for the class; (2) the effort expended by counsel; (3) counsel's experience; (4) counsel's skill; (5) the complexity of the issues; (6) the risks of non-payment assumed by counsel; (7) the reaction of the class; and (8) comparison with counsel's loadstar." In re Heritage Bond Litig., No. 02-1475, 2005 WL 1594403, at *18 (C.D. Cal. 2005) (citations omitted).
The proposed settlement appropriately takes a percentage-of-recovery approach to calculate fees. Although the settlement allows for thirty percent of the settlement fund to be awarded as attorneys' fees, plaintiffs' counsel requests twenty-five percent of the fund. There are no unusual circumstances here that would justify a downward departure from this benchmark amount.
On the contrary, an application of the factors noted above demonstrates that the award is eminently reasonable. These factors overlap with the factors the court has already considered in evaluating the settlement itself, and the court has previously noted that factors one, three, five, six, and seven counsel in favor of approval of the settlement. With regard to the second factor, the effort expended by counsel in this case was considerable. Plaintiffs filed a motion to amend the complaint, which was opposed by defendants, and defendants filed a motion for summary judgment against the meal period claims, the resolution of which turned upon complex and divergent appellate opinions regarding state law. (See Feb. 14, 2006 Order re: Motion for Summ. J. 6-7.) Plaintiffs prevailed on both of these motions. Moreover, as to factor four, counsel's skill has been adequately demonstrated by their success in this litigation. Thus, these two factors suggest that the amount of attorneys' fees requested is appropriate.
The final factor is whether the amount counsel requests is consistent with what the lodestar amount would be. Plaintiffs' counsel has submitted a declaration indicating that he estimates he has spent 1,674 hours on this case over the course of two and a half years, and that he anticipates he will spend at least sixty more hours "resolving claim disputes, talking with class members and the claims administrator about pay outs, finalizing the claims administration process and the allocation of taxes, and providing a final accounting to the court." (Oct. 19, 2005 Jones Decl. ¶ 5.) Given that counsel seeks $1,225,000 in attorneys' fees, this means that the settlement compensates counsel at an hourly rate of approximately $706. There are three attorneys at the firm that has represented plaintiffs in this action. To date, Mr. Jones' rate has been approximately $450 an hour, and the same billing rate applies for another attorney at his firm, Kelly McInerney. (Id.) The billing rate for the lead attorney at the firm, Kevin J. McInerney, is in excess of $700 an hour. (Id.) Mr. Jones worked approximately seventy percent of the hours expended on this case, Ms. McInerney worked approximately twenty percent of those hours, and Mr. McInerney is responsible for the remainder of the work (ten percent of the total hours). Thus, the lodestar calculation indicates that counsel is being compensated at rate elevated from his normal rate of pay, but not to an egregiously high level. Additionally, to the extent the hours expended are attributable to Mr. McInerney, the lodestar calculation is consistent with Mr. McInerney's standard billing rate.
Significantly, counsel simply seeks the benchmark percentage rate set by the Ninth Circuit. Although the percentage calculation is not a perfect approximation of what a lodestar calculation would be, excess compensation to this degree is not an "unusual circumstance" that would justify a downward departure from the benchmark. Paul, Johnson, Alston, Hunt, 886 F.2d at 272. Additionally, not all of the factors must be met to justify a fee award, and the rest of the factors clearly weigh in favor of granting a fee award of this amount. In sum, the factor analysis weighs in favor of granting plaintiffs' counsel twenty-five percent of the common fund for their attorneys' fees, and the court will therefore allow the award in the amount requested.
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., 2005 WL 1594403, at *23 (quoting In re Gen. Instruments Sec. Litig., 209 F. Supp. 2d 423, 434 (E.D. Pa. 2001) (omitting citations and alterations)). Class counsel has submitted its itemized costs relating to travel, mailing expenses, mediation, depositions/transcriptions, legal research, photocopies, filings, court call, and facsimiles. (Oct. 2, 2006 Jones Decl. Ex. D.) The court finds that these are reasonable litigation expenses that warrant compensation. Additionally, the claims administrator, Rosenthal Company, LLC, applies for costs incurred in administering the settlement in the amount of $145,536.25. Rosenthal Company has incurred $96,836.25 in costs to date, and anticipates that it will yet incur an additional $48,700 in administrative costs pertaining to the settlement. (Jones Decl. Ex. G (Keane Decl. ¶ 18.) These additional costs will involve processing claims that are late, deficient, or disputed, sending denial letters, issuing checks, completing tax returns, and issuing tax documents. (Id.) Because this relief could not be dispersed to the class without the efforts of the class administrator, and the amount requested appears reasonable given the size of the class, the court will award reimbursement for expenses incurred to the claims administrator.
E. Enhancement Award for Class Representatives
The settlement proposes a $15,000 "enhancement award" for each named plaintiff. The court recognizes that "a class representative is entitled to some compensation for the expense he or she incurred on behalf of the class lest individuals find insufficient inducement to lend their names and services to the class action." In re Oracle Secs. Litig., No. C-90-0931, 1994 WL 502054, at *1 (N.D. Cal. June 18, 1994) (citing In re Continental Ill. Secs. Litig., 962 F.2d 566, 571 (7th Cir. 1992)). "Such payments, however, must be reasonable in light of applicable circumstances, and not `unfair' to other class members." Smith v. Tower Loan of Miss., Inc., 216 F.R.D. 338, 368 (S.D. Miss. 2003) (citation omitted); see also In re Oracle Secs. Litig., 1994 WL 502054 at *1 (reducing requested payment of $2,500 to $500 for spending "between two and five hours undergoing depositions and . . . respond[ing] to a few narrow document discovery requests").
The proposed payment is not particularly unfair to other class members, given that it will not significantly reduce the amount of settlement funds available to the rest of the class. None of the class members have objected to the amount of additional compensation sought by the named plaintiffs. Notably, Fagundes, who remains in the employ of defendant's franchisee, may have risked retaliation by her employer. The same, however, cannot be said for West, who left Circle K in 2003.
West and Fagundes have subordinated their individual claims to serve as named plaintiffs in this class action. Plaintiffs' counsel explains that Fagundes could have brought a claim against defendant for between $11,896.80 and $14,871, but is limited to recovery of between $3,800 and $4,000 under the terms of the settlement. (Application for Additional Compensation for Named Plaintiffs 3.) West has devoted over one hundred hours to assist counsel with this case, and Fagundes estimates that she has spent eighty hours assisting counsel. (Jones Decl. Ex I (West Decl. ¶ 2); Ex. H (Fagundes Decl. ¶ 2).)
Moreover, other courts have awarded comparable service payments to named plaintiffs. In re Domestic Air Transp., 148 F.R.D. 297, 357-58 (N.D. Ga. 1993) (awarding $142,500 total to class representatives out of $50 million fund); In re Dun Bradstreet, 130 F.R.D. 366, 373-74 (S.D. Ohio 1990) (awarding $215,000 to several class representatives out of an $18 million fund). Given the amount of time that named plaintiffs have invested in this case, and the fact that Fagundes risked retaliation from her employer, the court finds plaintiffs' enhancement payments of $15,000 each to be reasonable.
III. Conclusion
Based on the foregoing, the court approves the settlement set forth in the Settlement Agreement and finds that the settlement is fair, reasonable, adequate, and in the best interest of the settlement classes. In view of the diligent efforts of counsel in a complex area of law and the favorable outcome obtained for class members, the court finds an award of twenty-five percent (25%) of the $5,000,000 common fund, to be an appropriate amount for attorneys' fees. The court also finds that the costs requested by counsel are reasonable and fair. Consummation of the settlement in accordance with the terms and provisions of the Settlement Agreement is therefore approved, and the definitions provided in the Settlement Agreement shall apply to the terms used herein. The Settlement Agreement shall be binding upon all members of the class who did not timely elect to be excluded from the classes.
IT IS THEREFORE ORDERED that plaintiffs' motion for final approval of settlement be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that:
(1) for the purpose of this settlement, as described in the court's order of June 12, 2006, good cause exists to certify two settlement classes of plaintiffs: (a) All hourly employees employed by Circle K Stores, Inc. in the state of California from October 1, 2000 through the date the Court grants preliminary approval of this Settlement; and (b) All employees employed by Circle K Stores, Inc. in the state of California from March 3, 2000 through the date the Court grants preliminary approval of this Settlement who did not have all their accrued but unused vacation carried forward from year to year. The court reaffirms its order certifying the classes, including its findings that:
(a) the settlement classes are so numerous as to make joinder of all class members impracticable.
(b) there are common questions of law and fact as to each settlement class.
(c) named plaintiffs' claims are typical of the claims of the members of the settlement classes.
(c) plaintiffs and class counsel will fairly and adequately represent and protect the interests of settlement classes, and have done so by entering into this Settlement Agreement.
(d) questions of law and fact common to the members of each settlement class predominate over any questions affecting any individual member, and a class action is the superior method for pursuing the claims at issue here.
(2) the notice given to the classes of the settlement as described in the Settlement Agreement and the court's order of June 12, 2006, constituted the best notice practicable under the circumstances. The Notice program provided due and adequate notice of these proceedings and of the matters set forth in the notice, including the settlement set forth in the Settlement Agreement, to all persons and entities entitled to such notice, and said notice fully satisfied the requirements of due process and applicable law. The court further finds that the mailing of the notice of settlement to the putative class members was properly administered by Rosenthal Company, LLC, pursuant to court order.
(3) defendant shall pay the total sum of $5,000,000 to a gross settlement fund to be distributed in a manner more fully set forth below and as described in the court's June 12, 2006 order. This sum shall not be decreased or increased in any respect and shall represent the total consideration to be paid by defendant in connection with the settlement. Defendant shall have no further liability for costs, expenses, interest, attorney fees, or for any other charge, expense, or liability.
(4) as detailed below, the following payments shall be made from the settlement fund: payment of attorneys' fees and costs, payment of an enhancement award to the class representatives, and payment of costs and administrative fees to the claims administrator, Rosenthal Company. Once all of the above payments have been made, all amounts remaining in the settlement fund shall be distributed to the class members who timely filed valid claim forms as described in the Settlement Agreement at ¶ 15 and by the court's June 12, 2006 preliminary approval order.
(5) plaintiffs' applications for attorneys' fees in the amount of $1,225,000, litigation costs in the amount of $15,142.39, and administrative costs in the amount of $145,536.25 be, and the same hereby are, GRANTED, provided that seventy-six percent (76%) of the award for fees and costs shall be paid from the gross settlement fund for the meal period class, and twenty-four percent (24%) of the award shall be paid from the gross settlement fund for the vacation class.
(6) named plaintiffs Vicki West and Wendy Fagundes be, and the same hereby are, awarded additional compensation in the amount of $15,000 each, with the condition that West's compensation shall be paid from the gross settlement fund for the vacation class, and Fagundes' compensation shall be paid from the gross settlement fund for the meal period class.
(7) the claims administrator, Rosenthal Company, shall calculate the amount of each class members' settlement check within fifteen (15) days of the entry of this order and provide an accounting to both plaintiffs' and defendant's counsel. The distribution and mailing of settlement awards will take place as provided in the Settlement Agreement at ¶ 15. Specifically, the claims administrator shall cause the settlement awards to be mailed to the class members who timely submitted valid claim forms within twenty (20) calendar days following the court's final approval of the settlement. At the same time the claims administrator causes the settlement awards to be mailed to the class members, the claims administrator shall also cause the attorneys' fees and costs awarded by this court to be mailed to class counsel, the administrative costs awarded to the claims administrator to be paid to Rosenthal Company, and the enhancement awards ordered by the court to be mailed to the class representatives, Vicki West and Wendy Fagundes.
(8) proof of the payments outlined in the paragraphs above will be filed with the court by the claims administrator and provided to plaintiffs' and defendant's counsel. Within ten days after proof of payment has been filed with the court by the claims administrator, the parties shall execute and file a proposed final judgment and dismissal of this action.
(9) any settlement checks returned as undeliverable or not cashed after ninety (90) days will be voided. Undeliverable or uncashed checks will be governed by ¶ 20 of the Settlement Agreement. Any residue remaining after all payments have been made shall be governed by ¶ 15(h) of the Settlement Agreement.
(10) with respect to any class members who file untimely claims, the court hereby finds that those claims shall not be allowed and that the claims administrator may notify them accordingly.
(11) as detailed in the release set forth in the Settlement Agreement and accompanying the notice to the class, entry of this Final Approval Order does hereby and is deemed to dismiss this action on the merits and with prejudice and shall constitute a full release and discharge by the respective classes and each member of those classes on behalf of himself/herself, and each of his/her descendants, dependants, heirs, executors, administrators, assigns, successors, agents and attorneys, of defendants or their present and former affiliated companies, agents, servants, attorneys, subsidiaries, affiliates, stockholders, heirs, executors, representatives, successors, or assigns (the "Releasees"), as to any individual or class claim that was asserted in this action, as well as any meal period claims, rest period claims, claims pertaining to forfeited vacation time, or other claims arising out of the events, acts, facts, transactions, occurrences, representations, or omissions alleged in the First Amended Complaint in this action ("Released Claims"), from the beginning of the respective class periods through the date the court enters this Final Approval Order.
(12) upon satisfaction of all payments and obligations hereunder, the court finds that each and every class member, including the class representatives, and all successors in interest shall be permanently enjoined and forever barred from prosecuting any and all Released Claims against the Releasees or any related entity or individual. Thus, subject to and in accordance with the Settlement Agreement, even if plaintiffs and/or the class members, or any of them, may hereafter discover facts in addition to or different from those which they now know or believe to be true with respect to the subject matter of Released Claims, the plaintiffs and each class member shall be deemed to have, and by operation of the judgment in this case, shall have fully, finally, and forever settled and released any and all claims raised in this action, or any of the other Released Claims, whether known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, as set forth in the Settlement Agreement.
(13) neither the fact of settlement, nor the Settlement Agreement (or any other mediation or settlement-related documents or data), nor any of the negotiations or proceedings connected with the settlement, nor any act performed or document executed pursuant to or in furtherance of the settlement, shall be construed as an admission or evidence of the truth of the allegations in this action, or of any liability, fault, or wrongdoing of any kind.
(14) the court enjoins all class members (unless and until the class member has submitted a timely and valid Request for Exclusion Form) from filing or prosecuting any claims, suits or administrative proceedings (including but not limited to claims with the California DLSE) regarding claims to be released by the settlement.
(15) this order for final approval of the settlement agreement is intended to effectuate the settlement reached by the parties and more fully described in the Settlement Agreement.
(16) the court retains jurisdiction over this matter and over all parties to this litigation, including all members of the classes. The court will have continuing jurisdiction over this matter until all obligations outlined in the Settlement Agreement have been complied with and thereafter if any issues pertaining to this case and/or settlement arise.
(17) in the event the settlement does not become effective in accordance with the terms of the Settlement Agreement, this order shall be vacated.