Sandoval v. Luxottica Retail North America

MOTION for Settlement and for Preliminary Approval Of Class Action Settlement

N.D. Cal.June 22, 2011

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION JAMES HAWKINS, APLC JAMES R. HAWKINS, SBN 192925 SEAN SASAN VAHDAT, SBN 239080 9880 Research Drive, Suite 200 Irvine, CA 92618 Tel: 949.387-7200 Fax: 949.387-6676 james@jameshawkinsaplc.com sean@vahdatlaw.com Attorneys for Plaintiff MICHAEL SANDOVAL UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION MICHAEL SANDOVAL, on behalf of himself and all others similarly situated, Plaintiffs, v. LUXOTTICA RETAIL NORTH AMERICA, an Ohio Corporation; doing business as (d.b.a.), LENSCRAFTERS, and DOES 1 through 100, inclusive, Defendants. Case No. 4:10-cv-05824-PJH The Honorable Phyllis J. Hamilton CLASS ACTION MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT OF CLASS ACTION CLAIMS ACCOMPANYING PLEADINGS: NOTICE OF MOTION; DECLARATION OF JAMES R. HAWKINS; [PROPOSED] ORDER GRANTING MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT OF CLASS ACTION CLAIMS; Date: July 27, 2011 Time: 9:00 a.m. Courtroom: 3 Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page1 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 2 TABLE OF CONTENTS I. INTRODUCTION…………………………………………….…….…….…5 II. BACKGROUND TO SETTLEMENT ..………………………………….…7 III. SUMMARY OF SETTLEMENT TERMS…………………..…………..….9 A. THE SETTLEMENT CLASS…………………………………………….....9 B. THE MAXIMUM SETTLEMENT AMOUNT……….……………………..9 C. ALLOCATION FORMULA FOR THE NET SETTLEMENT AMOUNT..10 D. THE RELEASE OF CLAIMS.……………………………………………..11 E. THE CLASS NOTICE.……………………………………………………..11 F. OBJECTIONS AND OPT-OUT PROCESS………………………….…… 12 IV. THE SETTLEMENT MERITS PRELIMINARY APPROVAL……….…..12 A. THE SETTLEMENT REACHED MERITS CLASS TREATMENT….…..14 1. NUMEROSITY……………………………………………………….……14 2. COMMONALITY…………………………………………………….……15 3. TYPICALITY……………………………………………………………...15 4. ADEQUATE REPRESENTATION.………………………………………15 5. PREDOMINANCE OF COMMON QUESTIONS.……………………….16 6. SUPERIORITY……………………………………………………………16 B. THE SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATE…...17 1. THE RISK INHERENT IN CONTINUED LITIGATION ARE GREAT..19 2. THE AMOUNT OFFERED IN SETTLEMENT SUPPORTS APPROVAL...........................................................................................................19 3. DISCOVERY SUPPORTS APPROVAL………………………….………20 4. EARLY PAYMENT SUPPORTS APPROVAL...………………….……..20 5. THE FAIRNESS OF THE DISTRIBUTION SUPPORTS APPROVAL...21 C. CLASS NOTICE/SETTLEMENT SHARE/ELECTION NOT TO PARTICIPATE ...............................................................................................…..21 Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page2 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 3 V. FINAL APPROVAL HEARING AND FURTHER SCHEDULING…….20 VI. CONCLUSION…………………………………………………………... 21 Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page3 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 4 TABLE OF AUTHORITIES Federal Cases Amchem prods. Inc. v. Woodward, 521 U.S. 591, 620 (1997) ............................... 17 Blackie v. Barrack, 524 F.2d 891, 901 (9th Circuit 1975) ...................................... 14 Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Circuit 1992) ............ 13 Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Circuit 1998) ...................... 13 Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913-14 (9th Circuit 1964) ........................................................................................................... 15 In re General Motors Corp., 55 F.3d 768, 806 (3d Cir. 1995) .............................. 17 In re Micahel Milken & Assocs. Sec. Litig., 150 F.R.D. 57, 60 (S.D.N.Y. 1993) ....................................................................................................................... 23 Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1242 (9th Circuit 1998) ............ 18 Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc. 244 F.3d 1152, 1162 (9th Circuit 2001) ........................................................... 16 Mendoza v. United States, 623 F.2d 1338, 1351 (9th Cir. 1980) ............................ 23 Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950) .............. 22 Officers for justice v. Civil Serv. Comm'n of San Francisco, 688 F.2d 615, 625 (9thCircuit)…. ................................................................................................... 18 Phillips Petroleum co. v. Shutts, 472 U.S. 797, 809 (1985) ................................... 17 Stanton v. Boeing Co., 327 F.3d 938, 952 (9th Circuit 2003)..………………….13, 17 Silber v. Mabon, 18 F. 3d 1449, 1454 (9th Cir. 1994) ............................................ 22 Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Circuit. 1993) ............ 14 Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950, (9th Circuit 1976) ................. 13 Zinser v. Accufix Research Inst., Inc., 253, F.3d 1188, 1189, amended, 273 F.3d 1266 (9th Circuit 2001) ........................................................................ 16 California Cases Acosta v. Trans Union LLC, 243 F.R.D. 377, 383 (C.D. CAL. 2007) .................... 14 Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page4 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 5 Baldwin & Flynn v. Nat'l Safety Assocs., 149 F.R.D. 598, 600 (N.D. Cal. 1993). ....................................................................................................................... 14 Boyd v. Bechtel Corp., 485 F. Supp. 610, 616-17 (N.D. Cal. 1979) ...................... 19 Errecas v. Superior Court, 19 Cal.App.4th 1475, 1487 ........................................... 13 Linney v. Cellular Alaska p'ship, supra 151 F.3d 1234, 1242 ................................ 14 Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page5 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 6 I. INTRODUCTION Plaintiff MICHAEL SANDOVAL, (“Named Plaintiff”) individually and on behalf of all persons similarly situated ("Plaintiffs"), and Defendant LUXOTTICA RETAIL NORTH AMERICA INC. , an Ohio corporation ("LRNA"), hereinafter refered to as "Defendant" have reached a full and final settlement of the above- captioned action, which is set forth in the Settlement Agreement filed herewith as Exhibit A to the Declaration of James R. Hawkins. By this motion, Plaintiffs and Defendant respectfully seek an order (1) conditionally certifying the Settlement Class and granting preliminary approval of the Settlement; (2) approving the Class Notice and Exclusion Form: (3) appointing Simpluris, Inc.to act as the Settlement Administrator; (4) appointing Michael Sandoval as the named representative; (5) appointing James Hawkins APLC as class counsel; and (6) scheduling a Final Approval Hearing. As consideration for this Settlement, Defendant shall pay a common fund equal to Seventy Thousand Dollars ($70,000.00), which shall include all payments to Settlement Class members, as well as Class Counsels' attorneys’ fees and costs, incentive awards for the Class Representative, PAGA payment, and the costs of class notice and claims administration. The Settlement is non- reversionary and any unclaimed amount will not revert to Defendant. This Settlement is an outstanding result for the Settlement Class Members in light of the serious issues regarding the merits of their claims, particulary the applicability of the administrative exemption. Moreover, this Settlement is consistent with the settlement approved by this Court in the nearly identical case, Martinez v. Lenscrafters, Inc., Case No. C-08-01699 PJH (“Martinez”). /// /// /// Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page6 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 7 II. BACKGROUND TO SETTLEMENT Named Plaintiff filed the present class action on October 6, 2010 in Alameda Superior Court against Defendant. The case was removed to the federal Northern District of California, and was assigned to Judge Phyllis Hamilton’s court. In the Complaint, Named Plaintiff alleges that because Defendant purportedly misclassified its Retail Managers, (1) it failed to pay them overtime in alleged violation of Labor Code sections 510 and 1194; (2) failed to timely pay wages due at termination in violation of Labor Code sections 201, 202 and 203; (3) failed to comply with itemized employee wage statement provisions in violation of Labor Code sections 226, 1174, and 1175; (4) failed to provide rest and meal breaks or compensation in lieu of in violation of Labor Code sections 226.7 and 512, and Wage Order 7; and (5) violated the Unfair Competition Law (“UCL”) set forth at California Business and Professions Code section 17200 et seq. (Hawkins Decl., ¶2). Plaintiff’s action follows this Court’s approval of class action settlement in Martinez. The settlement class in Martinez included Retail Managers through August 1, 2009. Identical to this action, plaintiff in Martinez alleged that Defendant misclassified its Retail Managers as exempt. As part of the Martinez settlement, settlement class members (which included all but three of Defendant’s Retail Managers who opted out of the settlement) released all claims related to plaintiff’s misclassification theory. Defendant denies that it engaged in any misconduct in connection with its wage-and-hour practices, and further denies that it has any liability or engaged in wrongdoing of any kind associated with the claims alleged in the Action by the Named Plaintiff or any Class Member. Defendant contends, among other things, that its California store managers were properly classified as exempt employees throughout the Class Period. Defendant further contends that it at all times Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page7 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 8 complied with all state wage-and-hour laws in connection with the employment of Named Plaintiff and the Class. (Hawkins Decl., ¶3). Class Counsel has engaged in a detailed review of this case, as well as various prior settlements affecting Class Members. Class Counsel is of the opinion that the Settlement documented by this Agreement is fair, reasonable, and adequate, and in the best interest of the Class in light of all known facts and circumstances, including the significant diminution of the potential liability in light of the fact that numerous potential Class Members, including the Named Plaintiff, signed release agreements as part of settlements of different class actions which arguably preclude their recovery in this action,1 the risk posed by current economic conditions, the risk of significant delay, the risk the Settlement Class will not be certified by the court or that it will later be decertified, the defenses asserted by Defendant, and the numerous potential appellate issues. (Hawkins Decl. ¶¶ 4-5.) Moreover, the amount of the Settlement (which covers a Class Period of approximately one year2) is proportionate to the portion of the settlement allocated to Retail Managers that was approved by this Court in Martinez (i.e., 60 percent of $400,000 settlement, which covered a period of 3.42 years). (Hawkins Decl., ¶5). While Defendant specifically denies any liability in the Action, Defendant has agreed to enter into this settlement to avoid the uncertainty, cost and business disruption associated with defending the Action. (Hawkins Decl., ¶ 5). Through the present motion, Plaintiff is seeking Preliminary Approval of the 1 In addition to releases arising from the settlement in Martinez, many putative class members are also subject to releases from the class action settlement in Danayan v,. LensCrafters, Inc. Los Angeles Superior Court Case No. BC409412. ("Danayan"), which included a release of claims for penalties. 2 The Class Period is limited to approximately one year because the Martinez settlement released all claims through August 1, 2009 and Defendant reclassified its Retail Managers as overtime eligible in August 2010. (Hawkins Decl. ¶ 5.) Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page8 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 9 Stipulation and Settlement Agreement of Class Action Claims. Preliminary Approval should be granted so long as the proposed settlement is within the range of possible approval. The final fairness hearing will provide the Court the opportunity to review the Settlement with the benefit of Class Member input. The parties here have made the showing necessary for preliminary approval as more fully detailed below. The proposed Settlement was reached through arms- length bargaining with the assistance and considerable involvement of both experienced counsel. The proposed Settlement will result in financial benefit to participating claimants, particularly in light of Defendant’s defenses to the claims asserted. The proposed notice to the Class is more than adequate under the relevant standards. Plaintiff Sandoval, now moves for preliminary approval of the Settlement pursuant to Federal Rule of Civil Procedure 23(e). III. SUMMARY OF SETTLEMENT TERMS A. The Settlement Class The "Class Members" (also referred to as the "Settlement Class") consist of the Named Plaintiff and all employees of Defendant who were employed in California as Retail Managers at any time during the Class Period. The "Class Period" is defined as the period beginning on August 2, 2009 and ending on August 31, 2010. All class members will be included in the class exempt those who properly exclude themselves from this settlements. The parties estimate that there are approximately 150 total Class Members. (Hawkins Decl., ¶ 6). B. The Maximum Settlement Amount The proposed settlement provides that Defendant will pay a Gross Settlement Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page9 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 10 Amount of Seventy Thousand Dollars ($70,000.) (Hawkins Decl. ¶7). This payment is the total amout that Defendant will pay in this Settlement and will cover all components of the Settlement, including Settlement Payments to to Plaintiff Class Members (i.e., Class Members who do not exclude themselves from this Action); a One Thousand Dollar ($1,000.00) payment to the California Labor and Workforce Development Agency (“LWDA”) for its share of the Settlement of civil penalties; the Settlement Administrator's reasonable fees and expenses of Eight Thousand Five Hundred Dollars ($8,500.00); and (subject to court approval) the Class Representative Payment to Named Plaintiff, in addition to his Settlement Payment, of Two Thousand Dollars ($2,000.00) in compensation of his services as Class Representative, and payments to Class Counsel of Twenty Five Percent (25%) or Seventeen Thousand Five Hundered Dollars ($17,500.00) for their reasonable attorneys' fees and for reasonable costs incurred in litigating this Action. There will be no reversion of the Gross Settlement Payment to Defendant. (Hawkins Decl., ¶8). C. Allocation Formula For The Net Settlement Amount After the above amounts for the the LWDA, Settlement Administrator’s reasonable fees and expenses, the Class Representative Enhancement, and attorneys’ fees and costs are deducted from the Gross Settlement Amount, the remainder (the "Net Settlement Amount" or “NSA”)will be distributed as Settlement Payments to all Plainitff Class Members based upon the following allocation formula: a. A per Eligible Week rate of pay will be determined by dividing the NSA by the total number of Eligible Weeks for all Settlement Class Members. Each Plaintiff Class Member’s Settlement Payment shall be calculated as the Eligible Week rate multiplied by his/her number of Eligible Weeks. (Settlement Agreement ¶41(e); Hawkins Decl., ¶9). Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page10 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 11 b. The remainder of the NSA after the payments, if any, shall revert to the OneSight Foundation. Any settlement check returned as undeliverable and those settlement checks remaining uncashed for more than 120 days after issuance will escheat to the State of California Controller's office for the benefit of the Plaintiff Class Member. Defendant will fully discharge its obligations to those Plaintiff Class Members to whom they will pay settlement checks regardless of whether the settlement checks are actually received and/or negotiated by Plaintiff Class Members. (Settlement Agreement ¶41(f); Hawkins Decl., ¶10). D. The Release of Claims In return for these payments, Plaintiff, Plaintiff Class Members and Class Counsel will grant Defendant and all their former, present and future parent companies, subsidiaries, divisions, concepts, related or affiliated companies, shareholders, officers, directors, employees, agents, attorneys, insurers, predecessors, successors and assigns, and any individual or entity which could be liable to any member of the Settlement Class for any of the Claims as defined in the Settlement (collectively, the “Released Parties”) a complete release of all “Released Claims” as defined in Paragraph 38 through 40 of the Settlement, which will be ordered by the Court by way of its judgment of dismissal. (Hawkins Decl., ¶11). In addition to the above, the Class Representative’s Released Claims include a General Release of all claims and unknown claims. (Settlement Agreement ¶39 (b); Hawkins Decl., ¶12). E. The Class Notice All Settlement Class Members will be given due notice of the Settlement and Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page11 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 12 the opportunity to be a class member, opt out or object to the Settlement. (Proposed Form of Notice, Exhibit 2 attached to Hawkins Decl.) Pursuant to the Settlement, all costs associated with providing notice and administering the Class Settlement will be paid out of the Gross Settlement Amount. The Parties agreed to use third party Settlement Administrator, Simpluris, Inc., to disseminate the Notice and handle all claims administration. Simpluris, Inc. is not expected to charge more than $8,500 for all of its services and costs. All other terms and conditions of the Settlement are set forth in the parties’ Settlement. (Settlement Agreement ¶44; Hawkins Decl., ¶ 13). F. Objections and Opt-Out Process Any Settlement Class Member who so wishes may object to or comment on the Settlement; or elect not to participate in the Settlement. Any such objection must be filed with the clerk of the court and served on all counsel by the close of the Opt-Out Period, not later than 45 days after the Settlement Adminstrator mails the Class Notice Packet. (Settlement Agreement ¶46; Hawkins Decl., ¶14). Settlement Class Members who wish to exclude themselves from the Settlement must mail to the Settlement Administrator not later than 45 days after the Settlement Administrator mails the Class Notice Packets a written and signed opt-out request. (Settlement Agreement ¶45; Hawkins Decl., ¶15). IV. THE SETTLEMENT MERITS PRELIMINARY APPROVAL Pursuant to Rule 23 of the Federal Rules of Civil Procedure,3 the Settlement 3 All statutory citations refer to the Federal Rules of Civil Procedure, unless otherwise noted. Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page12 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 13 Agreement outlines a sequence of events leading up to final approval of the settlement. If this Court grants preliminary approval of the settlement, notice will be given to Class Members by First Class U.S. Mail to their last known mailing address. (Settlement Agreement ¶ 44; Exhibit 2; Hawkins Decl. ¶16). After notice is mailed, potential Class Members will have forty five (45) to opt out of or object to the Settlement. (Hawkins Decl., ¶16). At the final approval hearing, the settling parties will ask the Court to approve the Settlement and dismiss this Action with prejudice. When, as here, the parties move for certification and request approval of a settlement at the same time, it is appropriate to combine the certification and settlement notice in order to save costs. (See Rule 23(e)(3).) The law favors settlement. This is particularly true in class actions where substantial resources can be conserved by avoiding the time, cost, and rigors of formal litigation. (Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976).) Indeed, strong judicial policy favors the settlement of actions in federal court, particularly where class action litigation is concerned. (Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); Rule 23(e).) California state courts likewise favor settlement of class actions. (Errecas v. Superior Court, 19 Cal.App.4th 1475, 1487 (1993).) In reviewing a class action settlement at the preliminary stage, a court undertakes two basic inquiries. “First, the district court must assess whether a class exists…” (Stanton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003).) Stated differently, the court must determine that the lawsuit qualifies as a class action under Rule 23. (See, e.g., Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998).) In addition, when 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.” (Acosta v. Trans Union LLC, 243 F.R.D. 377, 383 (C.D. Cal. 2007).) Second, the court must determine whether the settlement is “fair, adequate, and reasonable” under Rule Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page13 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 14 23(e). (Staton, 327 F.3d at 952.) This second stage of the approval process occurs after class members have had an opportunity to object to the settlement. Because the court must consider risk factors and the uncertainty of the outcome of the litigation as well as the potential recovery, a proposed class settlement may be fair, just, and reasonable even though it amounts to only a fraction of the potential recovery in a fully litigated case. (See Linney v. Cellular Alaska P'ship, supra, 151 F.3d 1234, 1242 (risk of going to trial would have been significant); Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993) (court found one factor - the financial condition of the defendant - predominated to make clear the district court acted within its discretion).) A. The Settlement Reached Merits Class Treatment In determining the propriety of class certification, a court shall not require plaintiffs to make a preliminary proof of their claims. Instead, plaintiffs need only show sufficient information to form a reasonable judgment. (Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975); Baldwin & Flynn v. Nat’l Safety Assocs., 149 F.R.D. 598, 600 (N.D. Cal. 1993).) Under this governing standard, the Settlement Class meets the requirements for certification under Rule 23(a) and Rule 23(b)(3) with respect to the settlement reached. 4 This Court has already considered and approved a settlement in the related Martinez case, which contained a similar class definition and allegations, and on which the Settlement in this Action was based. 1. Numerosity The first requirement of Rule 23(a) is that the class be so numerous that joinder of all members would be "impracticable." (FRCP 23(a)(1).) The Ninth Circuit has established that “‘impracticability’ does not mean ‘impossibility,’ but only the difficulty or inconvenience of joining all members of the class.” (Harris v. 4 Defendants do not oppose certification of a settlement class only for purposes of the Settlement. In the event that the Settlement is not finally approved, Defendants reserve all rights to contest Plaintiff’s right to class certification of his claims. Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page14 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 15 Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913-14 (9th Cir. 1964).) The total class size is approximately 150 retail managers, all of whom are readily identifiable from Defendant’s payroll records. Therefore, the numerosity requirement is satisfied. (Hawkins Decl., ¶6). 2. Commonality Rule 23(a)(2) requires that there be "questions of law or fact common to the class." Here, the Settlement Class shares sufficient commonality for settlement purposes in that each was a retail manager employee of Defendant employed in California during the class period and, according to Plaintiff’s allegations in the Complaint, share common questions of law and fact, including whether Defendant had a uniform practice of denying overtime, meal and rest breaks, of failing to pay for all hours work, and of failing to provide accurate itemized wage statements. (Hawkins Decl. ¶2). 3. Typicality Rule 23(a)(3) requires that the representative plaintiff have claims "typical of the claims . . . of the class." Here, Plaintiff Micahel Sandoval is one of the approximate 150 employees who worked for Defendant as a Retail Manager in California during the class period, and Plaintiff alleges that his claims are similar to the claims of absent class members. (Hawkins Decl. ¶17). 4. Adequate Representation Rule 23(a)(4) requires that "the representative parties will fairly and adequately protect the interests of the class." Adequate representation turns on whether the named plaintiff and his counsel "have any conflicts of interest with other class members," and whether the named plaintiff and his counsel will "prosecute the action vigorously on behalf of the class." (Hanlon, 150 F.3d at 1020.) For purposes of the Settlement being proposed as reached between the parties, there are no conflicts of interest between the named Plaintiff Micahel Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page15 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 16 Sandoval and the defined class members. (Hawkins Decl. ¶18). In addition, there are no known conflicts with Plaintiff's counsel. (Hawkins Decl., ¶19). Moreover, Plaintiff's counsel, who has represented numerous class members in numerous Class Actions, represents that they can and will adequately represent the class. (See, Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1162 (9th Cir. 2001) (adequacy established by mere fact that counsel were experienced practitioners).) (Hawkins Decl. ¶21). 5. Predominance of Common Questions The predominance inquiry focuses on whether the class is "'sufficiently cohesive to warrant adjudication by representation.'" (Culinary/Bartender Trust Fund, 244 F.3d at 1162.) Central to this question is '"the notion that the adjudication of common issues will help achieve judicial economy."' (Zinser v. Accufix Research Inst., Inc., 253 F.3d 1188, 1189 (9th Cir. 2001), amended, 273 F.3d 1266 (9th Cir. 2001).) Here, under Plaintiff’s theory of the case, common questions that can be resolved for all class members include whether they were denied overtime pay, meal and rest breaks, whether they were paid for all hours worked, and whether they were provided accurate itemized wage statements. Defendant disagree that these questions can be resolved on a class-wide basis, but does not oppose certification of a class solely for settlement purposes. (Hawkins Decl., ¶22). 6. Superiority To determine whether the superiority requirements of Rule 23(b)(3) are satisfied, a court must compare a class action with alternative methods for adjudicating the parties' claims. Here, as in Culinary/Bartender Trust Fund, Defendant denies liability. Additionally, this case, like Culinary/Bartender Trust Fund, "involves multiple claims for relatively small sums." Furthermore, for purposes of the Class Settlement only, Defendant does not dispute that a class action would be superior to individual lawsuits/settlements, because it allows the Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page16 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 17 class members "to pool claims which would be uneconomical to litigate individually." (See Culinary/Bartender Trust Fund, 244 F.3d at 1163; quoting Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985).) In deciding whether to certify a settlement class action, a district court "need not inquire whether the case, if tried, would present intractable management problems." (Amchem Prods. Inc. v. Woodward, 521 U.S. 591, 620 (1997).) Here, the factors set forth in Rule 23(b)(3)(A), (B) and (C) all favor class certification for settlement purposes: (1) class members who wish to pursue a separate action can opt out of the Settlement; (2) the parties are unaware of any competing litigation regarding the claims at issue, and (3) the parties agree that it would be desirable to resolve the Plaintiffs' claims in this forum. (Hawkins Decl., ¶ 23). B. The Settlement is Fair, Reasonable, and Adequate No single criterion determines whether a class action settlement meets the requirements of Rule 23(e). The Ninth Circuit has directed district courts to consider a variety of factors without providing an "exhaustive list" or suggesting which factors are most important. (See Staton v. Boeing Co., 327 F.3d 938, 959 (9th Cir 2003).) Such factors include: 1. The strength of the plaintiff’s case; 2. The risk, expense, complexity, and duration of further litigation; 3. The risk of maintaining class action status throughout the trial; 4. The amount offered in settlement; 5. The extent of discovery completed, and the stage of the proceedings; 6. The experience and views of counsel; 7. The presence of a government participant; and, 8. The reaction of the class members to the proposed settlement. (Id. at 959; Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1242 (9th Cir 1998); Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page17 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 18 see, e.g., National Rural Telecomms. Coop. v. DIRECTV, Inc., supra, 221 FRD at 526-529 (district court analysis of eight factors and approval of settlement as fair, just, reasonable, and adequate).) "The relative degree of importance to be attached to any particular factor will depend upon and be dictated by the nature of the claims advanced, the types of relief sought, and the unique facts and circumstances presented by each individual case," (Officers for Justice v. Civil Serv. Comm'n of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982).) Due to the impossibility of predicting any litigation result with certainty, a district court's evaluation of a settlement essentially amounts to "nothing more than 'an amalgam of delicate balancing, gross approximations, and rough justice.'" (Officers for Justice, 688 F.2d at 625.) The ultimate touchstone, however, is whether "class counsel adequately pursued the interests of the class as a whole." (Staton, 327 F.3d at 961.) As the Ninth Circuit explained in Officers for Justice, the district court's role in evaluating a class action settlement is therefore tailored to meet that narrow objective. Review under Rule 23(e) "must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties." (688 F.2d at 625.) The Ninth Circuit “will rarely overturn an approval of a class action [settlement] . . . unless the terms of the agreement contain convincing indications that the incentives favoring pursuit of self-interest rather than the class’s interests in fact influenced the outcome of the negotiations . . . .”(Staton, 327 F.3d at 960.) Here, the parties reached a non-collusive settlement after several months of negotiations, and after sufficient discovery enabled counsel to form educated assessments about the strength of Plaintiff’s claims, the validity of Defendant’s defenses, and the value of the case. Moreover, the Settlement in this case is proportionate and based on the settlement previously approved by this Court in the Martinez action. Because obtaining class certification and establishing liability Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page18 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 19 posed difficult hurdles for Plaintiff that justified compromise of his claims, the Settlement falls well within the range of reasonable outcomes and merits approval under Rule 23(e). (Hawkins Decl. ¶24). 1. The Risks Inherent in Continued Litigation are Great To assess the fairness, adequacy, and reasonableness of a class action settlement, the Court must weigh the immediacy and certainty of substantial settlement proceeds against the risks inherent in continued litigation. (See In re General Motors Corp., 55 F.3d 768, 806 (3d Cir. 1995) ("[T]he present value of the damages plaintiffs would likely recover if successful, appropriately discounted for the risk of not prevailing, should be compared with the amount of the proposed settlement.") (citation omitted and internal quotation marks); Boyd v. Bechtel Corp., 485 F. Supp. 610, 616-17 (N.D. Cal. 1979).) Here, this factor supports final approval. The Settlement affords the Class Members prompt and substantial relief, while avoiding significant legal and factual obstacles that otherwise may have prevented the Class from obtaining any recovery at all. Indeed, the outcome of class certification, trial and any attendant appeals, are inherently uncertain. In particular, Defendants deny liability for any of the claims asserted by Plaintiff. Moreover, class certification was also far from certain, especially given the current state of the law and the pendency of Mora v. Big Lots Stores, Inc., (2011), 194 Cal. App. 4th 496 and the California Supreme Court’s decision in Brinker Restaurant Corp. v. Superior Court (review granted October 22, 2008). Thus, the considerable risk that Defendant could defeat certification or that they could prevail on their defenses and defeat any and all recovery to the class warranted a compromise of the class claims. (Hawkins Decl. ¶25). 2. The Amount Offered in Settlement Supports Approval Defendants have agreed to pay up to a maximum amount of $70,000 to settle this lawsuit with the NSA being distributed to Plaintiff Class Members on a pro rata basis. (Hawkins Decl. ¶7). This amount is proportionate to the portion of the Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page19 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 20 Martinez settlement allocable to Retail Managers (the position at issue here) given the time period covered by this Action. (Hawkins Decl., ¶5). To the extent there is any remainder of the NSA, the remainder is donated and does not revert to Defendant. The Settlement's adequacy must be judged as "'a yielding to absolutes and an abandoning of highest hopes . . . .' Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with litigation . . .." (Officers for Justice, 688 F.2d at 624.) Therefore, considering the potential recovery, the probability of lengthy litigation in the absence of settlement, and the risks that the Class would not have been certified or been able to succeed at trial and that a jury could award lower damages, the amount of the Settlement is well within the range of reasonableness. (Hawkins Decl. ¶25). 3. Discovery Supports Approval The parties engaged in discovery. Through discovery, Defendants provided Plaintiff’s counsel with documents and information sufficient for class counsel to make an informed decision regarding settlement. (Hawkins Decl. ¶4). These documents and information provided Class Counsel with the facts necessary to effectuate the settlement of this purported class action. Based on this information, counsel formed educated assessments about the strengths of Plaintiff’s claims, the validity of Defendant’s defenses, and the value of the case. Defendant disagrees that these questions can be resolved on a class-wide basis, and also points out that the claims are limited to one year based on the Martinez settlement. (Hawkins Decl. ¶4). 4. Early Payment Supports Approval This Court also should consider that the Settlement provides for payment to the Class now, rather than a speculative payment, which may not be made until years from now, if at all. If the litigation were to continue and if Michael Sandoval Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page20 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 21 was to prevail, payment would occur at some indeterminate time in the future. Even if Plaintiff were to prevail at trial, Defendant might appeal after all issues are finally resolved in the trial court. An appeal, of course, might last another year or two, or even more. If the appellate court were to overturn the verdict, the case might be remanded to the trial court for further proceedings, which, again, could result in additional significant delays. This delay and the risks inherent in continued litigation led Plaintiff to conclude that fighting the lawsuit to the bitter end was not the prudent course. The Settlement calls for payment of settlement monies in the immediate future. If the litigation continues, the class members may receive nothing or may receive much less at some distant time in the future. (Hawkins Decl. ¶26). 5. The Fairness of the Distribution Supports Approval The parties not only believe that the total settlement is fair to the Class, but Micahel Sandoval contends and Defendants do not contest proposed awards not to exceed: $17,500 (25% of the settlement amount) in attorney's fees; $8,500 to the claims administrator, Simpluris, Inc.; $1,000.00 to the LWDA, and $2,000 to the Class Representative to reimburse him for the time, effort, general release and risk demanded by this litigation, are fair and reasonable. (Hawkins Decl. ¶27). The parties believe that the method for determining how much each member should receive possesses the dual advantages of efficiency and fairness. As discussed above, the plan for allocating and distributing the Settlement to the class members is set forth in detail in the Settlement Agreement. C. Class Notice/Settlement Share/Election Not To Participate If the Court conditionally certifies a settlement class and preliminarily approves the settlement, it must direct the "best notice practicable" under the circumstances to the class members. (FRCP 23(c)(2)(B), 23(e)(1)(B).) Rule 23(c)(2)(B) does not require "actual notice" or that a notice be "actually received." Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page21 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 22 (Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994).) Notice need only be given in a manner "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." (Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).) Here, the parties have agreed that notice will be provided by first-class mail to class members, whose last-known names, phone numbers, and addresses are available to Defendants and will be updated prior to mailing based on a National Change of Address search. (See Settlement Agreement ¶44 (c) (d); See also Exhibit 2 Proposed Class Notice attached to the Declaration of James R. Hawkins.) Apart from the manner of notice, Rule 23(c)(2)(B) also sets forth requirements regarding the content of the notice. The parties also understand that the notice must concisely and clearly state in plain, easily understood language: 1. The nature of the action; 2. The definition of the class certified; 3. The class claims, issues, or defenses; 4. The filing of a claim; 5. That class member may enter an appearance through counsel if the member so desires; 6. That the court will exclude from the class any member who requests exclusion, stating when and how members may elect to be excluded; and 7. The binding effect of a class judgment on class members under Rule 23(c)(3). Here, the proposed notice (Exhibit 2 to Hawkins Decl.) complies fully with Rule 23(c)(2)(B). Courts routinely approve class notices even when they provide only general information about a settlement. (See, e.g., Mendoza v. United States, 623 F.2d 1338, 1351 (9th Cir. 1980) ("very general description of the proposed settlement" sufficient); In re Michael Milken & Assocs. Sec. Litig., 150 F.R.D. 57, Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page22 of 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION 23 60 (S.D.N.Y. 1993) (notice "need only describe the terms of the settlement generally"). The class notice drafted by the parties provides more than adequate notice about the Settlement. Class Members thus will be provided with all of the information they need to make an informed choice whether to be part of the Settlement. (Hawkins Decl. ¶28). V. FINAL APPROVAL HEARING AND FURTHER SCHEDULING The last step in the settlement approval process is the final approval hearing, at which members of the Settlement Class who timely submit objections to the Settlement may be heard, and at which the Court makes a final determination about the propriety of the settlement. (FRCP 23(e)(1).) Based on the timetable for giving notice and submitting objections to the Settlement, the parties request that the fairness hearing in this case be scheduled for on or after December 19, 2011. VI. CONCLUSION Based on the above, Plaintiff Micahel Sandoval, individually and on behalf of all Class Members, respectfully requests that this Court grant preliminary approval of the proposed class action settlement reached. JAMES HAWKINS, APLC DATED: June 22, 2011 By:/s/ James R. Hawkins James Hawkins, Esq. Sean Sasan Vahdat, Esq. Attorneys for Plaintiff Michael Sandoval and the Proposed Class Case4:10-cv-05824-PJH Document23 Filed06/22/11 Page23 of 23