Preview
1 SHANNON LISS-RIORDAN (SBN 310719)
sliss@llrlaw.com
2
ANNE KRAMER (SBN 315131) ELECTRONICALLY
3 akramer@llrlaw.com F I L E D
LICHTEN & LISS-RIORDAN, P.C. Superior Court of California,
County of San Francisco
4 729 Boylston Street, Suite 2000
Boston, MA 02116 04/28/2020
5 Clerk of the Court
Telephone: (617) 994-5800 BY: ERNALYN BURA
Facsimile: (617) 994-5801 Deputy Clerk
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Attorneys for Plaintiffs
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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FOR THE COUNTY OF SAN FRANCISCO
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JACOB RIMLER and GIOVANNI JONES, Case No. CGC-18-567868
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on behalf of themselves and others similarly
situated and in their capacities as Private PLAINTIFFS’ FURTHER
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Attorney General Representatives,
SUPPLEMENTAL BRIEFING IN
SUPPORT OF MOTION FOR
14 Plaintiffs, PRELIMINARY APPROVAL OF CLASS
v. ACTION SETTLEMENT
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16 POSTMATES, INC.,
Department 304
17 Hon. Anne-Christine Massullo
Defendant.
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Hearing Date: April 29, 2020
19 Hearing Time: 10:30 a.m.
20 Complaint Filed: July 5, 2018
TRIAL DATE: NONE SET
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PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF
MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO. CGC-18-567868
1 Table of Contents
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I. Class Certification ................................................................................................................... 1
3 A. Estimated Verdict Value of Minimum Wage Damages Under Local Ordinances ........... 1
4 B. Consideration for Release of Individualized Claims ........................................................ 2
II. The Settlement Calculation...................................................................................................... 3
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A. Maximum Value of the Claims ........................................................................................ 3
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1. Class Claims ................................................................................................................ 3
7 2. PAGA Claims .............................................................................................................. 6
8 B. Settlement Discount.......................................................................................................... 9
9 III. Dispute Resolution Fund ....................................................................................................... 10
IV. Notice ........................................................................................................................ 10
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A. LWDA .................................................................................................................... 10
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B. Process .................................................................................................................... 11
12 C. Substance .................................................................................................................... 12
13 V. Allocation and Distribution of Funds .................................................................................... 13
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A. Double Points ................................................................................................................. 13
B. Redistribution ................................................................................................................. 15
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C. Opt-in Class .................................................................................................................... 15
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VI. Release ........................................................................................................................ 18
17 A. FLSA .................................................................................................................... 18
18 B. The Rimler, Lee, and Albert complaints ........................................................................ 18
19 VII. Miscellaneous Issues ............................................................................................................. 18
20 CONCLUSION ........................................................................................................................ 19
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1 Table of Authorities
2
Cases
3 7-Eleven Owners for Fair Franchising v. Southland Corp.
(2000) 85 Cal. App. 4th 1135 ................................................................................................ 14
4
Ahmed v. Beverly Health & Rehab. Servs., Inc.
5
(E.D. Cal. Feb. 7, 2018) 2018 WL 746393.............................................................................. 9
6
Amaral v. Cintas Corp. No. 2
7 (2008) 163 Cal. App. 4th 1157 ................................................................................................ 8
8 Barnhill v. Robert Saunders & Co.
(1981) 125 Cal. App. 3d 1 ....................................................................................................... 8
9
Cotter v. Lyft
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(N.D. Cal.) Civ. A. No. 3:13-cv-04065-VC ...................................................................... 4, 15
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Cotter v. Lyft, Inc.
12 (N.D. Cal. 2016) 176 F. Supp. 3d 930 ..................................................................................... 6
13 Cotter v. Lyft, Inc.
(N.D. Cal. 2016) 193 F.Supp.3d 1030 ................................................................................... 16
14
Custom LED, LLC v. eBay, Inc.
15 (N.D. Cal., June 24, 2014) 2014 WL 2916871 ...................................................................... 14
16
del Toro Lopez v. Uber Techs., Inc.
17 (N.D. Cal. Nov. 14, 2018) 2018 WL 5982506 ........................................................................ 9
18 Doe v. D.M. Camp & Sons
(E.D.Cal.2008) 624 F.Supp.2d 1153 ....................................................................................... 8
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Dynamex Operations W. v. Superior Court
20 (2018) 4 Cal. 5th 903, 416 P.3d 1 ............................................................................................ 7
21 Fleming v. Covidien Inc.
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(C.D. Cal. Aug. 12, 2011) 2011 WL 7563047 ........................................................................ 8
23 Groves v. Maplebear Inc.
(Los Angeles Super. Ct.) Case No. BC695401 ..................................................................... 14
24
Harris v. Radioshack Corp.
25 (N.D. Cal. Aug. 9, 2010) 2010 3155645 ................................................................................. 8
26 Holak v. K Mart Corp.
(E.D. Cal. Sept. 30, 2014) 2014 WL 4930762 ........................................................................ 3
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1 In re Apple iPhone 4 Products Liab. Litig.
(N.D. Cal. Aug. 10, 2012) 2012 WL 3283432 ...................................................................... 17
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In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Products Liab.
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Litig.
4 (C.D. Cal. June 17, 2013) 2013 WL 3224585 ....................................................................... 17
5 Keller v. Nat'l Collegiate Athletic Ass’n (NCAA)
(N.D. Cal. Aug. 19, 2015) 2015 WL 5005901 ...................................................................... 17
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Makabi v. Gedalia
7 (Cal. Ct. App. Mar. 2, 2016) 2016 WL 815937....................................................................... 8
8
Marciano v. DoorDash
9 (Cal. Sup. Ct.) CGC-15-548102 ...................................................................................... 15, 16
10 Martin v. Legacy Supply Chain Servs. II, Inc.
(S.D. Cal. Feb. 12, 2018) 2018 WL 828131 ............................................................................ 9
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Miller v. Ghirardelli Chocolate Co.
12 (N.D. Cal. Oct. 2, 2014) 2014 WL 4978433 ......................................................................... 17
13 National Super Spuds, Inc. v. New York Mercantile Exchange
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(2d Cir. 1981) 660 F.2d 9 ...................................................................................................... 14
15 Nguyen v. Baxter Healthcare Corp.
(C.D.Cal. Nov.28, 2011) 2011 WL 6018284 .......................................................................... 4
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O’Connor v. Uber Techs., Inc.
17 (N.D. Cal. Mar. 29, 2019, No. 13-CV-03826-EMC) 2019 WL 1437101 ......................... 4, 16
18 O’Connor v. Uber Techs., Inc.
(N.D. Cal.) Civ. A. No. 13-3826 ....................................................................................... 9, 15
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20 O'Connor v. Uber Technologies, Inc.
(N.D. Cal., Sept. 13, 2019, No. 13-CV-03826-EMC) 2019 WL 4394401, aff'd (9th Cir., Dec.
21 20, 2019, No. 19-17073) 2019 WL 7602362........................................................................... 4
22 O'Connor v. Uber Technologies, Inc.
(N.D. Cal. 2016) 201 F.Supp.3d 1110 ................................................................................... 14
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Price v. Starbucks Corp.
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(2nd Dist. 2011) 192 Cal. App. 4th 1136 ................................................................................ 4
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Price v. Uber Techs., Inc.
26 (Los Angeles Super. Ct.) Case No. BC554512 ....................................................................... 9
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1 Singer v. Postmates
(N.D. Cal.) 4:15-cv-01284-JSW ...................................................................................... 15, 16
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Tan v. GrubHub, Inc.
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(N.D. Cal. 2016) 171 F. Supp. 3d 998 ..................................................................................... 1
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Turrieta v. Lyft. Inc.
5 (Los Angeles Super. Ct.) Case No. BC714153 ....................................................................... 9
6 Viceral v. Mistras Group, Inc.
(N.D. Cal., Oct. 11, 2016) 2016 WL 5907869 ........................................................................ 9
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Vincent v. Postmates Inc.
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(Alameda Super. Ct.) Case No. RG19018205 ....................................................................... 1
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Wang v. Chinese Daily News, Inc.
10 (C.D. Cal. 2006) 435 F. Supp. 2d 1042 .................................................................................. 4
11 Winns v. Postmates Inc.
(San Francisco Super. Ct.) Case No. CGC-17-562282 ........................................................... 1
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Yadira v. Fernandez
13 (N.D. Cal. Sept. 8, 2011) 2011 WL 4101266 .......................................................................... 8
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Yucesoy v. Uber Techs., Inc.
15 (N.D. Cal. Feb. 9, 2016) 2016 WL 493189 ............................................................................. 2
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Statutes
17 Cal. Lab. Code § 2699 ................................................................................................................ 8, 9
18 Cal. Labor Code § 1194 .................................................................................................................. 3
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Cal. Labor Code § 226 .................................................................................................................... 3
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Cal. Labor Code § 246 .................................................................................................................... 5
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1 In advance of the April 29, 2020, hearing on Plaintiffs’ Motion for Preliminary
2 Approval of Class Action Settlement, Plaintiffs respectfully submit the below response to the
3 Court’s request for additional information regarding the settlement that has been reached in this
4 case. See Tentative Ruling, April 24, 2020. The parties are also working on a revised version
5 of the proposed Settlement Agreement and proposed Notice. The revised proposed Settlement
6 Agreement will include the claims of the named plaintiffs in two additional cases against
7 Postmates that have been filed in the California Superior Court by other couriers challenging
8 Postmates’ classification of its couriers as independent contractors: (1) Winns v. Postmates Inc.,
9 (San Francisco Super. Ct.) Case No. CGC-17-562282 and Vincent v. Postmates Inc.,
10 (Alameda Super. Ct.) Case No. RG19018205. In recognition of the excellent settlement the
11 Rimler plaintiffs have achieved in this case, these Winns and Vincent plaintiffs have elected to
12 join the Rimler plaintiffs in this settlement.
13 Plaintiffs believe the settlement reached in this case is significant. Nonetheless,
14 Plaintiffs understand that the Court has questions regarding the Settlement. As discussed herein,
15 those concerns and comments have resulted in further modifications to the Settlement or, as
16 appropriate, further explanation. In light of the strengths and weaknesses of the case and the
17 modifications made to the Settlement, the parties believe the Settlement as now proposed is fair,
18 adequate, reasonable, and should be approved.
19 I. Class Certification
A. Estimated Verdict Value of Minimum Wage Damages Under Local Ordinances
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The Court asked Plaintiffs to calculate the estimated verdict value of class minimum
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wage claims under the local ordinances of various municipalities in California. As Plaintiffs
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have explained in their prior briefing, Plaintiffs do not believe these claims are strong and
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valuable, due to the difficulty of determining compensable time and the fact that minimum
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wage claims have not been successful in numerous courts in gig economy class action cases.
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See, e.g. Tan v. GrubHub, Inc., (N.D. Cal. 2016) 171 F. Supp. 3d 998, 1010 (dismissing
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overtime and minimum wage claims under California state law due to difficulties in alleging
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1 facts to show why waiting time is compensable for driver who could log on and off of app at
2 will); Yucesoy v. Uber Techs., Inc., (N.D. Cal. Feb. 9, 2016) 2016 WL 493189, *6 (same,
3 under Massachusetts law).
4 Moreover, calculating these damages presents enormous difficultly. Plaintiffs are not in
5 possession of the data that would be necessary in order to value these claims. In order to even
6 attempt to make these calculations, Postmates would need to provide Plaintiffs with extensive
7 daily pay and other records for each of the 411,000 class members, showing the municipality in
8 which each delivery (or portion of a delivery) was made, so that Plaintiffs could calculate the
9 applicable penalties for each courier on any given day and in each jurisdiction with a local
10 ordinance regarding minimum wage. These calculations would require significant additional
11 time and expense. If the Court believes such calculations are required, Postmates will need to
12 provide the necessary information in order for Plaintiffs to make these calculations. Indeed, the
13 onerous nature of these calculations also highlights why these claims would not be susceptible
14 to class-wide treatment; indeed, couriers might pass in and out of different localities over the
15 course of a single hour or even in the course of a single delivery, creating serious
16 administrability issues in establishing liability, much less calculating damages stemming from
17 local ordinance penalties.
B. Consideration for Release of Individualized Claims
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The parties recognize that the Court understands Roes, 1-2 v. SFBSC Mgmt., LLC, 944
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F.3d 1035, 1060 (9th Cir. 2019) to prohibit the payment of service awards as consideration for a
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general release. The issue the Ninth Circuit found concerning in Roes, however, was not the
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concept of a service award (indeed the court had no issue with a $5000 incentive award, as will
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be requested here) but rather the $20,000 enhancements in exchange for the general release.
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That is not the case here, where the $5000 service award would constitute the complete award to
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the named Plaintiffs, beyond their settlement share.
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1 II. The Settlement Calculation
2 A. Maximum Value of the Claims
3 1. Class Claims
4 • Overtime:
5 The Court inquired as to how Plaintiffs arrived at the $1.5 million valuation of class-
6 wide overtime claims. Based on class-wide data provided by Postmates, this number was
7 calculated by determining the couriers’ average hourly rate, dividing this number in half to
8 determine the overtime premium, and multiplying the overtime premium by the total number of
9 hours over 40 per week that couriers worked. If overtime damages are calculated using the total
10 number of hours over 8 in a day that couriers worked, rather than the total number of hours over
11 40 per week, the estimated damages are $1.8 million. See Liss-Riordan Decl. ¶ 2.
12 • Minimum Wage Claim:
13 Plaintiffs continue to believe that there would be numerous obstacles to successfully
14 prosecuting a minimum wage claim under Cal. Labor Code § 1194. Nevertheless, at the Court’s
15 request, Plaintiffs have calculated class-wide damages by determining the couriers’ average
16 hourly rate and comparing this rate to the average of the California minimum wage rate from
17 2017 through 2019. The unpaid minimum wage amount was then calculated by subtracting the
18 couriers’ average rate from the statewide average rate and multiplying this number by the total
19 hours worked. This yielded an estimate of $38 million in minimum wage damages. See Liss-
20 Riordan Decl. ¶ 3.
21 • Itemized Wage Statement claim
22 As the Court notes, Plaintiffs believe they could establish a technical violation of Labor
23 Code § 226(a)(2)-(4),(6)-(7). However, courts have made clear that a technical violation is not
24 sufficient in order to establish a right to recovery for this claim. To the contrary, the plaintiff
25 needs to establish injury. “In order for a Plaintiff to have suffered an injury cognizable under
26 section 226 the Plaintiff must have been unable to quickly verify earnings when looking at the
27 wage statements.” Holak v. K Mart Corp., (E.D. Cal. Sept. 30, 2014) 2014 WL 4930762, at *7
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(citing Nguyen v. Baxter Healthcare Corp., (C.D.Cal. Nov.28, 2011) 2011 WL 6018284,
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*9); see also Price v. Starbucks Corp., (2nd Dist. 2011) 192 Cal. App. 4th 1136, 1142; Wang v.
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Chinese Daily News, Inc., (C.D. Cal. 2006) 435 F. Supp. 2d 1042, 1050–1051 (injury requires
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at least “default and expense ... in reconstructing time,” “confusion over whether they received
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wages owed to them,” or “forcing employees to make mathematical computations.”). Here,
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counsel’s investigation showed that the statements that Postmates provides clearly show the
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amount that couriers are paid for their work during a given week. Counsel thus believe that it
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would be difficult to establish any injury.
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• The Rest Break claim:
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The Court asked for additional explanation as to why the fact that couriers can sign off
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the app when they choose relieves Postmates of its obligation to provide a 10-minute rest break
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when a driver works more than 4 hours. Judge Chhabria of the Northern District of California
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found that these types of claims had little to no value in granting settlement approval in Cotter
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v. Lyft, (N.D. Cal. June 23, 2016) Civ. A. No. 3:13-cv-04065-VC Dkt. 246 (approving
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settlement that valued meal and rest break claims as having no value), and Judge Chen of the
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Northern District of California agreed with this assessment in preliminarily approving a
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settlement of misclassification-related claims against Uber. See O’Connor v. Uber Techs., Inc.
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(N.D. Cal. Mar. 29, 2019, No. 13-CV-03826-EMC) 2019 WL 1437101, at *11 (noting that
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Plaintiffs’ “meal and rest break claims were blunted by Uber’s argument that its entire system
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can be understood to constitute a policy of ‘permitting’ or ‘authorizing’ breaks whenever a
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driver wants” such that “it was reasonable for Plaintiffs’ counsel to assign no or little value to
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these claims when considering the overall full-verdict value.”) (internal quotations omitted); see
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also O'Connor v. Uber Technologies, Inc. (N.D. Cal., Sept. 13, 2019, No. 13-CV-03826-EMC)
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2019 WL 4394401, at *1, aff'd (9th Cir., Dec. 20, 2019, No. 19-17073) 2019 WL 7602362
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(granting final approval).
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1 • Sick leave claim:
2 The Court asked Plaintiffs to provide a valuation of the sick leave claim. Plaintiffs do
3 not have data sufficient to value this claim for the entire class, but Plaintiffs’ counsel were
4 provided with more detailed data for approximately 400 class members whom Plaintiffs’
5 counsel also represents individually in arbitration against Postmates. Assuming that couriers
6 drove 3 days per week (which is merely an assumption), the data showed that approximately
7 57% of the hours worked by these clients were worked beyond the requisite 90 days required in
8 order to be entitled to accrue sick time. See Cal. Labor Code § 246. Counsel then calculated
9 57% of the total hours worked by the entire class, and divided this number by 30, as the Labor
10 Code provides that 1 hour of sick time is earned per 30 hours worked. This calculation revealed
11 the number of unpaid sick leave hours owed to the class. This number was multiplied by the
12 average hourly rate for the class, yielding an estimate of $2.8 million. See Liss-Riordan Decl.
13 ¶ 4.
14 • Reporting time claim
15 The Court noted that Plaintiffs have explained they do not believe this claim has value
16 because drivers are not required to report to work. This claim was included in the Proposed
17 Second Amended Complaint, in which Plaintiffs allege that “Plaintiffs and members of the
18 putative class, have periodically been required to report for work but have either not been put to
19 work or have been furnished with less than half of his or her usual or scheduled days’ work.”
20 (Proposed Second Amended Complaint ¶ 61), solely in order to give “global peace” to
21 Postmates, which this Court appeared to recognize in its tentative ruling was appropriate.
22 Tentative at 15.
23 • UCL
24 Pursuant to the Court’s order, based on Plaintiffs’ explanation that UCL claims for
25 restitution are already accounted for in the wage claim valuations.
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1 • Expense Reimbursement Claim
2 Plaintiffs calculated their expense reimbursement valuation of $88 million in advance of
3 the July 2019 mediation, based on data for approximately 380,000 class members that was
4 provided by Postmates. In recognition of the fact that the class size would continue to grow
5 prior to preliminary approval, the parties agreed that the cut-off date for the class in this case
6 would be October 17, 2019, approximately three months after the mediation session. This was
7 done expressly in order to ensure that the mileage claims retained their value.
8 In Cotter v. Lyft, Inc. (N.D. Cal. 2016) 176 F. Supp. 3d 930, 940, cited by the Court,
9 preliminary approval was initially denied because the settlement class period extended almost a
10 year after the mileage calculations were made. Here, by contrast, the parties explicitly
11 addressed the very issue raised in Cotter by limiting the release period to only a few months
12 after the mediation session. The fact that the class size increased, by less than 10% to
13 approximately 411,000, in the intervening period is not at all surprising and was, in fact,
14 anticipated when the parties agreed to the release date of October 17, 2019. By contrast, in
15 Cotter, so much time elapsed that the damages had roughly doubled since the settlement amount
16 was agreed upon. Id. at 940. In sum, this case plainly does not represent the type of situation
17 that occurred in Cotter, and it is to be expected that some amount of additional damages will
18 accrue from the time of the mediation until the date of preliminary approval of the settlement.1
19 2. PAGA Claims
20 In advance of mediation, Plaintiffs calculated that the maximum recovery under PAGA
21 was $2.7 billion. This amount was calculated by multiplying the maximum penalty for
22 overtime, minimum wage, and expense reimbursement claims by the number of pay periods
23 worked within the PAGA limitations period. Because Postmates pays its couriers weekly,
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Indeed, many settlement releases are open-ended and run through the date of
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preliminary or even final approval, risking the possibility that delays could result in substantial
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damages accruing which are not accounted for in the negotiated settlement amount. Here, the
parties acted diligently to protect the class from this very eventuality by setting a cut-off for
27 liability that was no later than a few months after the mediation.
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1 Plaintiffs calculated each week to be a PAGA pay period. See Liss-Riordan Decl. ¶ 5.
2 Based on the data that Postmates provided for Plaintiffs’ counsel’s arbitration clients,
3 Plaintiffs’ counsel estimated that overtime violations occurred in approximately 34% of pay
4 periods and that approximately 20% of the class suffered an overtime violation. Penalties were
5 calculated at $100 per courier for the first violation and $200 per courier for each subsequent
6 violation. Plaintiffs’ PAGA overtime penalties estimate was $179 million. See Liss-Riordan
7 Decl. ¶ 6.
8 Plaintiffs’ counsel similarly estimated that minimum wage violations occurred in
9 approximately 17% of pay periods and that approximately 20% of the class suffered minimum
10 wage damages. Penalties were calculated at $100 per courier for the first violation and $250 per
11 courier for each subsequent violation. Plaintiffs’ PAGA minimum wage penalties estimate was
12 $105 million. See Liss-Riordan Decl. ¶ 7.
13 The expense reimbursement calculation was made with the assumption that every class
14 member suffered an expense reimbursement violation in every pay period (as couriers were
15 required to use their vehicle and/or phone for every delivery). Penalties were calculated at $100
16 per courier for the first violation and $200 per courier for each subsequent violation. Plaintiffs’
17 PAGA expense reimbursement penalties were estimated at $511 million. See Liss-Riordan
18 Decl. ¶ 8.
19 The willful misclassification claim was calculated by multiplying the number of class
20 members by $5000, the statutory penalty amount. This led to an estimate of $1.88 billion. This
21 estimate is likely significantly overstated, however, as Plaintiffs were not provided with data
22 indicating which class members worked before the California Supreme Court issued its decision
23 in Dynamex Operations W. v. Superior Court, (2018) 4 Cal. 5th 903, 416 P.3d 1 on April 30,
24 2018, and which class members worked after the Dynamex decision. If this case were to
25 proceed to trial, Plaintiffs would likely not seek to hold Postmates liable for willful
26 misclassification of couriers prior to the issuance of the Dynamex decision. See Liss-Riordan
27 Decl. ¶ 9.
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1 It is also quite likely that Plaintiffs would not be able to establish any willfulness on the
2 part of Postmates in classifying its workers as independent contractors. Indeed, in connection
3 with other Labor Code statutes that impose a “willfulness” requirement, the Court of Appeal has
4 held that, where an employer presents a defense “based in law,” or even where there is
5 “uncertainty in the law,” the willfulness element cannot be satisfied. See Amaral v. Cintas Corp.
6 No. 2 (2008) 163 Cal. App. 4th 1157, 1201, 1204 (citing Barnhill v. Robert Saunders & Co.
7 (1981) 125 Cal. App. 3d 1, 7-8); see also Berstein v. Virgin America, (N.D. Cal. 2019) 365 F.
8 Supp. 3d 980, 992-93 (reducing PAGA penalties based on uncertainty in the law). Postmates
9 would argue vehemently against any finding of willfulness given the continued uncertainty
10 around Dynamex’s application to gig economy workers and there is a very real possibility that
11 Plaintiffs would not recover any PAGA penalties based on willful misclassification.
12 Moreover, in order to calculate the maximum possible figure for PAGA exposure,
13 Plaintiffs assumed that “stacking” of penalties for multiple Labor Code violations would be
14 available, even though some case law suggests the contrary. See Yadira v. Fernandez, (N.D.
15 Cal. Sept. 8, 2011) 2011 WL 4101266, *3 citing Doe v. D.M. Camp & Sons, (E.D.Cal.2008)
16 624 F.Supp.2d 1153, 1174. Moreover, calculation of an exact exposure for the PAGA claim is
17 of limited utility and is inherently speculative because of the Court’s discretion to reduce a
18 PAGA penalty on grounds that it is “unjust” or “oppressive.” Cal. Lab. Code § 2699 (e)(2). See
19 also Fleming v. Covidien Inc. (C.D. Cal. Aug. 12, 2011) 2011 WL 7563047, at *3-4 (reducing
20 PAGA penalty award from $2.8 million to $500,000); Makabi v. Gedalia (Cal. Ct. App. Mar. 2,
21 2016) 2016 WL 815937, at *2 & n.3 (finding defendant violated PAGA but declining to apply
22 any penalties). Plaintiffs recognize the reality that these penalties, if recovered, could be
23 severely discounted.
24 As Plaintiffs obtained such a substantial class settlement, a more nominal PAGA
25 settlement is in line with substantial California case law. See Harris v. Radioshack Corp. (N.D.
26 Cal. Aug. 9, 2010) 2010 3155645, *3-4 (granting final approval and finding that although
27 Plaintiffs “could arguably get more . . . because they [were] entitled to penalties under the
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1 PAGA, it [was] not clear that they could get a significant amount” more because of §2699(e));
2 Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016) 2016 WL 5907869, *9 (“[W]here a
3 settlement for a Rule 23 class is robust, the statutory purposes of PAGA may be fulfilled even
4 with a relatively small award on the PAGA claim itself”); see also O’Connor v. Uber Techs.,
5 Inc., (N.D. Cal. July 29, 2016) Civ. A. No. 13-3826, Dkt. No. 736 at p. 4 (“The LWDA
6 recognizes that this Court does not review the PAGA allocation in isolation, but rather reviews
7 the settlement as a whole, to determine whether it is fundamentally fair, reasonable and
8 adequate, with primary consideration for the interests of absent class members.”).
B. Settlement Discount
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As Plaintiffs have explained previously, the $250,000 PAGA allocation is in line with
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PAGA allocations that California courts have approved as part of significant class action
11
settlements. See, e.g., del Toro Lopez v. Uber Techs., Inc., (N.D. Cal. Nov. 14, 2018) 2018 WL
12
5982506, *8 (approving $50,000 PAGA payment from $10 million fund); Ahmed v. Beverly
13
Health & Rehab. Servs., Inc., (E.D. Cal. Feb. 7, 2018) 2018 WL 746393, *10 (approving $4,500
14
PAGA payment from $450,000 fund); Martin v. Legacy Supply Chain Servs. II, Inc., (S.D. Cal.
15
Feb. 12, 2018) 2018 WL 828131, *2 (approving $10,000 PAGA payment from $625,000 fund).
16
Even in PAGA-only cases, court have approved miniscule allocations compared to estimated
17
total PAGA recoveries. In Price v. Uber Techs., which was a PAGA-only case in which the
18
court was evaluating the settlement amount against the maximum PAGA penalty, the court
19
approved a $7.75 million settlement where the PAGA penalties were valued at over $3 billion.
20
Price v. Uber Techs., Inc., (Los Angeles Super. Ct.) Case No. BC554512. Similarly, the court
21
approved a $15 million PAGA-only settlement where the plaintiffs’ counsel had estimated the
22
PAGA penalties to be at least $7.6 billion (representing approximately 0.2% of the PAGA
23
penalties) (over strenuous objection). Turrieta v. Lyft. Inc. (Los Angeles Super. Ct.) Case No.
24
BC714153.
25
26
27
28
9
PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF
MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO. CGC-18-567868
1 Thus, while the parties believe that the PAGA allocation is justified and in line with the
2 case law, the parties are willing to revise the PAGA allocation if the Court believes additional
3 money needs to be allocated to the PAGA.
4 III. Dispute Resolution Fund
5 Plaintiffs’ counsel have found that the use of a Dispute Resolution Fund is useful in
6 class action settlements for a number of reasons. First, as the Court noted, Plaintiffs’ counsel
7 prefers to allow class members (both those who are on the original notice list and those who
8 have been mistakenly excluded) to submit claim forms past the claim deadline as long as
9 practicable. See infra IV.B. Particularly if the Court is requiring the Notice form to estimate
10 each class member’s share, then it will be important to hold a certain amount back from these
11 initial calculations, in order to allow late claims from mistakenly excluded individuals to be
12 honored without impacting the expected share of the remainder of the class.
13 Moreover, the parties have agreed that couriers will have an opportunity to dispute the
14 mileage numbers on which their settlement shares are based. Again, it is highly preferable to
15 use the Dispute Fund to resolve these disputes, rather than requiring that any funds used to
16 adjust a challenging class member’s share come out of funds that has already been allocated to
17 other members of the class. The Dispute Fund can also be used to ensure that there are
18 sufficient funds remaining for the second distribution to those class members who are entitled to
19 a second distribution.
20 Notwithstanding these very good reasons for maintaining a Dispute Fund, if the Court
21 continues to believe that the Dispute Fund is not warranted, the parties are willing to modify the
22 agreement accordingly.
23 IV. Notice
A. LWDA
24
Plaintiffs’ counsel generally submits proposed settlements to the LWDA after
25
preliminary approval has been granted, in order to avoid burdening the LWDA with proposed
26
settlement agreements that have not yet been preliminarily approved. Pursuant to the Court’s
27
28
10
PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF
MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
CASE NO. CGC-18-56786
Preview
1 SHANNON LISS-RIORDAN (SBN 310719) sliss@llrlaw.com 2 ANNE KRAMER (SBN 315131) ELECTRONICALLY 3 akramer@llrlaw.com F I L E D LICHTEN & LISS-RIORDAN, P.C. Superior Court of California, County of San Francisco 4 729 Boylston Street, Suite 2000 Boston, MA 02116 04/28/2020 5 Clerk of the Court Telephone: (617) 994-5800 BY: ERNALYN BURA Facsimile: (617) 994-5801 Deputy Clerk 6 7 Attorneys for Plaintiffs 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF SAN FRANCISCO 10 11 JACOB RIMLER and GIOVANNI JONES, Case No. CGC-18-567868 12 on behalf of themselves and others similarly situated and in their capacities as Private PLAINTIFFS’ FURTHER 13 Attorney General Representatives, SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR 14 Plaintiffs, PRELIMINARY APPROVAL OF CLASS v. ACTION SETTLEMENT 15 16 POSTMATES, INC., Department 304 17 Hon. Anne-Christine Massullo Defendant. 18 Hearing Date: April 29, 2020 19 Hearing Time: 10:30 a.m. 20 Complaint Filed: July 5, 2018 TRIAL DATE: NONE SET 21 22 23 24 25 26 27 28 1 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 Table of Contents 2 I. Class Certification ................................................................................................................... 1 3 A. Estimated Verdict Value of Minimum Wage Damages Under Local Ordinances ........... 1 4 B. Consideration for Release of Individualized Claims ........................................................ 2 II. The Settlement Calculation...................................................................................................... 3 5 A. Maximum Value of the Claims ........................................................................................ 3 6 1. Class Claims ................................................................................................................ 3 7 2. PAGA Claims .............................................................................................................. 6 8 B. Settlement Discount.......................................................................................................... 9 9 III. Dispute Resolution Fund ....................................................................................................... 10 IV. Notice ........................................................................................................................ 10 10 A. LWDA .................................................................................................................... 10 11 B. Process .................................................................................................................... 11 12 C. Substance .................................................................................................................... 12 13 V. Allocation and Distribution of Funds .................................................................................... 13 14 A. Double Points ................................................................................................................. 13 B. Redistribution ................................................................................................................. 15 15 C. Opt-in Class .................................................................................................................... 15 16 VI. Release ........................................................................................................................ 18 17 A. FLSA .................................................................................................................... 18 18 B. The Rimler, Lee, and Albert complaints ........................................................................ 18 19 VII. Miscellaneous Issues ............................................................................................................. 18 20 CONCLUSION ........................................................................................................................ 19 21 22 23 24 25 26 27 28 i PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 Table of Authorities 2 Cases 3 7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal. App. 4th 1135 ................................................................................................ 14 4 Ahmed v. Beverly Health & Rehab. Servs., Inc. 5 (E.D. Cal. Feb. 7, 2018) 2018 WL 746393.............................................................................. 9 6 Amaral v. Cintas Corp. No. 2 7 (2008) 163 Cal. App. 4th 1157 ................................................................................................ 8 8 Barnhill v. Robert Saunders & Co. (1981) 125 Cal. App. 3d 1 ....................................................................................................... 8 9 Cotter v. Lyft 10 (N.D. Cal.) Civ. A. No. 3:13-cv-04065-VC ...................................................................... 4, 15 11 Cotter v. Lyft, Inc. 12 (N.D. Cal. 2016) 176 F. Supp. 3d 930 ..................................................................................... 6 13 Cotter v. Lyft, Inc. (N.D. Cal. 2016) 193 F.Supp.3d 1030 ................................................................................... 16 14 Custom LED, LLC v. eBay, Inc. 15 (N.D. Cal., June 24, 2014) 2014 WL 2916871 ...................................................................... 14 16 del Toro Lopez v. Uber Techs., Inc. 17 (N.D. Cal. Nov. 14, 2018) 2018 WL 5982506 ........................................................................ 9 18 Doe v. D.M. Camp & Sons (E.D.Cal.2008) 624 F.Supp.2d 1153 ....................................................................................... 8 19 Dynamex Operations W. v. Superior Court 20 (2018) 4 Cal. 5th 903, 416 P.3d 1 ............................................................................................ 7 21 Fleming v. Covidien Inc. 22 (C.D. Cal. Aug. 12, 2011) 2011 WL 7563047 ........................................................................ 8 23 Groves v. Maplebear Inc. (Los Angeles Super. Ct.) Case No. BC695401 ..................................................................... 14 24 Harris v. Radioshack Corp. 25 (N.D. Cal. Aug. 9, 2010) 2010 3155645 ................................................................................. 8 26 Holak v. K Mart Corp. (E.D. Cal. Sept. 30, 2014) 2014 WL 4930762 ........................................................................ 3 27 28 ii PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 In re Apple iPhone 4 Products Liab. Litig. (N.D. Cal. Aug. 10, 2012) 2012 WL 3283432 ...................................................................... 17 2 In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, & Products Liab. 3 Litig. 4 (C.D. Cal. June 17, 2013) 2013 WL 3224585 ....................................................................... 17 5 Keller v. Nat'l Collegiate Athletic Ass’n (NCAA) (N.D. Cal. Aug. 19, 2015) 2015 WL 5005901 ...................................................................... 17 6 Makabi v. Gedalia 7 (Cal. Ct. App. Mar. 2, 2016) 2016 WL 815937....................................................................... 8 8 Marciano v. DoorDash 9 (Cal. Sup. Ct.) CGC-15-548102 ...................................................................................... 15, 16 10 Martin v. Legacy Supply Chain Servs. II, Inc. (S.D. Cal. Feb. 12, 2018) 2018 WL 828131 ............................................................................ 9 11 Miller v. Ghirardelli Chocolate Co. 12 (N.D. Cal. Oct. 2, 2014) 2014 WL 4978433 ......................................................................... 17 13 National Super Spuds, Inc. v. New York Mercantile Exchange 14 (2d Cir. 1981) 660 F.2d 9 ...................................................................................................... 14 15 Nguyen v. Baxter Healthcare Corp. (C.D.Cal. Nov.28, 2011) 2011 WL 6018284 .......................................................................... 4 16 O’Connor v. Uber Techs., Inc. 17 (N.D. Cal. Mar. 29, 2019, No. 13-CV-03826-EMC) 2019 WL 1437101 ......................... 4, 16 18 O’Connor v. Uber Techs., Inc. (N.D. Cal.) Civ. A. No. 13-3826 ....................................................................................... 9, 15 19 20 O'Connor v. Uber Technologies, Inc. (N.D. Cal., Sept. 13, 2019, No. 13-CV-03826-EMC) 2019 WL 4394401, aff'd (9th Cir., Dec. 21 20, 2019, No. 19-17073) 2019 WL 7602362........................................................................... 4 22 O'Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 ................................................................................... 14 23 Price v. Starbucks Corp. 24 (2nd Dist. 2011) 192 Cal. App. 4th 1136 ................................................................................ 4 25 Price v. Uber Techs., Inc. 26 (Los Angeles Super. Ct.) Case No. BC554512 ....................................................................... 9 27 28 iii PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 Singer v. Postmates (N.D. Cal.) 4:15-cv-01284-JSW ...................................................................................... 15, 16 2 Tan v. GrubHub, Inc. 3 (N.D. Cal. 2016) 171 F. Supp. 3d 998 ..................................................................................... 1 4 Turrieta v. Lyft. Inc. 5 (Los Angeles Super. Ct.) Case No. BC714153 ....................................................................... 9 6 Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016) 2016 WL 5907869 ........................................................................ 9 7 Vincent v. Postmates Inc. 8 (Alameda Super. Ct.) Case No. RG19018205 ....................................................................... 1 9 Wang v. Chinese Daily News, Inc. 10 (C.D. Cal. 2006) 435 F. Supp. 2d 1042 .................................................................................. 4 11 Winns v. Postmates Inc. (San Francisco Super. Ct.) Case No. CGC-17-562282 ........................................................... 1 12 Yadira v. Fernandez 13 (N.D. Cal. Sept. 8, 2011) 2011 WL 4101266 .......................................................................... 8 14 Yucesoy v. Uber Techs., Inc. 15 (N.D. Cal. Feb. 9, 2016) 2016 WL 493189 ............................................................................. 2 16 Statutes 17 Cal. Lab. Code § 2699 ................................................................................................................ 8, 9 18 Cal. Labor Code § 1194 .................................................................................................................. 3 19 Cal. Labor Code § 226 .................................................................................................................... 3 20 Cal. Labor Code § 246 .................................................................................................................... 5 21 22 23 24 25 26 27 28 iv PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 In advance of the April 29, 2020, hearing on Plaintiffs’ Motion for Preliminary 2 Approval of Class Action Settlement, Plaintiffs respectfully submit the below response to the 3 Court’s request for additional information regarding the settlement that has been reached in this 4 case. See Tentative Ruling, April 24, 2020. The parties are also working on a revised version 5 of the proposed Settlement Agreement and proposed Notice. The revised proposed Settlement 6 Agreement will include the claims of the named plaintiffs in two additional cases against 7 Postmates that have been filed in the California Superior Court by other couriers challenging 8 Postmates’ classification of its couriers as independent contractors: (1) Winns v. Postmates Inc., 9 (San Francisco Super. Ct.) Case No. CGC-17-562282 and Vincent v. Postmates Inc., 10 (Alameda Super. Ct.) Case No. RG19018205. In recognition of the excellent settlement the 11 Rimler plaintiffs have achieved in this case, these Winns and Vincent plaintiffs have elected to 12 join the Rimler plaintiffs in this settlement. 13 Plaintiffs believe the settlement reached in this case is significant. Nonetheless, 14 Plaintiffs understand that the Court has questions regarding the Settlement. As discussed herein, 15 those concerns and comments have resulted in further modifications to the Settlement or, as 16 appropriate, further explanation. In light of the strengths and weaknesses of the case and the 17 modifications made to the Settlement, the parties believe the Settlement as now proposed is fair, 18 adequate, reasonable, and should be approved. 19 I. Class Certification A. Estimated Verdict Value of Minimum Wage Damages Under Local Ordinances 20 The Court asked Plaintiffs to calculate the estimated verdict value of class minimum 21 wage claims under the local ordinances of various municipalities in California. As Plaintiffs 22 have explained in their prior briefing, Plaintiffs do not believe these claims are strong and 23 valuable, due to the difficulty of determining compensable time and the fact that minimum 24 wage claims have not been successful in numerous courts in gig economy class action cases. 25 See, e.g. Tan v. GrubHub, Inc., (N.D. Cal. 2016) 171 F. Supp. 3d 998, 1010 (dismissing 26 overtime and minimum wage claims under California state law due to difficulties in alleging 27 28 1 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 facts to show why waiting time is compensable for driver who could log on and off of app at 2 will); Yucesoy v. Uber Techs., Inc., (N.D. Cal. Feb. 9, 2016) 2016 WL 493189, *6 (same, 3 under Massachusetts law). 4 Moreover, calculating these damages presents enormous difficultly. Plaintiffs are not in 5 possession of the data that would be necessary in order to value these claims. In order to even 6 attempt to make these calculations, Postmates would need to provide Plaintiffs with extensive 7 daily pay and other records for each of the 411,000 class members, showing the municipality in 8 which each delivery (or portion of a delivery) was made, so that Plaintiffs could calculate the 9 applicable penalties for each courier on any given day and in each jurisdiction with a local 10 ordinance regarding minimum wage. These calculations would require significant additional 11 time and expense. If the Court believes such calculations are required, Postmates will need to 12 provide the necessary information in order for Plaintiffs to make these calculations. Indeed, the 13 onerous nature of these calculations also highlights why these claims would not be susceptible 14 to class-wide treatment; indeed, couriers might pass in and out of different localities over the 15 course of a single hour or even in the course of a single delivery, creating serious 16 administrability issues in establishing liability, much less calculating damages stemming from 17 local ordinance penalties. B. Consideration for Release of Individualized Claims 18 The parties recognize that the Court understands Roes, 1-2 v. SFBSC Mgmt., LLC, 944 19 F.3d 1035, 1060 (9th Cir. 2019) to prohibit the payment of service awards as consideration for a 20 general release. The issue the Ninth Circuit found concerning in Roes, however, was not the 21 concept of a service award (indeed the court had no issue with a $5000 incentive award, as will 22 be requested here) but rather the $20,000 enhancements in exchange for the general release. 23 That is not the case here, where the $5000 service award would constitute the complete award to 24 the named Plaintiffs, beyond their settlement share. 25 26 27 28 2 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 II. The Settlement Calculation 2 A. Maximum Value of the Claims 3 1. Class Claims 4 • Overtime: 5 The Court inquired as to how Plaintiffs arrived at the $1.5 million valuation of class- 6 wide overtime claims. Based on class-wide data provided by Postmates, this number was 7 calculated by determining the couriers’ average hourly rate, dividing this number in half to 8 determine the overtime premium, and multiplying the overtime premium by the total number of 9 hours over 40 per week that couriers worked. If overtime damages are calculated using the total 10 number of hours over 8 in a day that couriers worked, rather than the total number of hours over 11 40 per week, the estimated damages are $1.8 million. See Liss-Riordan Decl. ¶ 2. 12 • Minimum Wage Claim: 13 Plaintiffs continue to believe that there would be numerous obstacles to successfully 14 prosecuting a minimum wage claim under Cal. Labor Code § 1194. Nevertheless, at the Court’s 15 request, Plaintiffs have calculated class-wide damages by determining the couriers’ average 16 hourly rate and comparing this rate to the average of the California minimum wage rate from 17 2017 through 2019. The unpaid minimum wage amount was then calculated by subtracting the 18 couriers’ average rate from the statewide average rate and multiplying this number by the total 19 hours worked. This yielded an estimate of $38 million in minimum wage damages. See Liss- 20 Riordan Decl. ¶ 3. 21 • Itemized Wage Statement claim 22 As the Court notes, Plaintiffs believe they could establish a technical violation of Labor 23 Code § 226(a)(2)-(4),(6)-(7). However, courts have made clear that a technical violation is not 24 sufficient in order to establish a right to recovery for this claim. To the contrary, the plaintiff 25 needs to establish injury. “In order for a Plaintiff to have suffered an injury cognizable under 26 section 226 the Plaintiff must have been unable to quickly verify earnings when looking at the 27 wage statements.” Holak v. K Mart Corp., (E.D. Cal. Sept. 30, 2014) 2014 WL 4930762, at *7 28 3 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 (citing Nguyen v. Baxter Healthcare Corp., (C.D.Cal. Nov.28, 2011) 2011 WL 6018284, 2 *9); see also Price v. Starbucks Corp., (2nd Dist. 2011) 192 Cal. App. 4th 1136, 1142; Wang v. 3 Chinese Daily News, Inc., (C.D. Cal. 2006) 435 F. Supp. 2d 1042, 1050–1051 (injury requires 4 at least “default and expense ... in reconstructing time,” “confusion over whether they received 5 wages owed to them,” or “forcing employees to make mathematical computations.”). Here, 6 counsel’s investigation showed that the statements that Postmates provides clearly show the 7 amount that couriers are paid for their work during a given week. Counsel thus believe that it 8 would be difficult to establish any injury. 9 • The Rest Break claim: 10 The Court asked for additional explanation as to why the fact that couriers can sign off 11 the app when they choose relieves Postmates of its obligation to provide a 10-minute rest break 12 when a driver works more than 4 hours. Judge Chhabria of the Northern District of California 13 found that these types of claims had little to no value in granting settlement approval in Cotter 14 v. Lyft, (N.D. Cal. June 23, 2016) Civ. A. No. 3:13-cv-04065-VC Dkt. 246 (approving 15 settlement that valued meal and rest break claims as having no value), and Judge Chen of the 16 Northern District of California agreed with this assessment in preliminarily approving a 17 settlement of misclassification-related claims against Uber. See O’Connor v. Uber Techs., Inc. 18 (N.D. Cal. Mar. 29, 2019, No. 13-CV-03826-EMC) 2019 WL 1437101, at *11 (noting that 19 Plaintiffs’ “meal and rest break claims were blunted by Uber’s argument that its entire system 20 can be understood to constitute a policy of ‘permitting’ or ‘authorizing’ breaks whenever a 21 driver wants” such that “it was reasonable for Plaintiffs’ counsel to assign no or little value to 22 these claims when considering the overall full-verdict value.”) (internal quotations omitted); see 23 also O'Connor v. Uber Technologies, Inc. (N.D. Cal., Sept. 13, 2019, No. 13-CV-03826-EMC) 24 2019 WL 4394401, at *1, aff'd (9th Cir., Dec. 20, 2019, No. 19-17073) 2019 WL 7602362 25 (granting final approval). 26 27 28 4 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 • Sick leave claim: 2 The Court asked Plaintiffs to provide a valuation of the sick leave claim. Plaintiffs do 3 not have data sufficient to value this claim for the entire class, but Plaintiffs’ counsel were 4 provided with more detailed data for approximately 400 class members whom Plaintiffs’ 5 counsel also represents individually in arbitration against Postmates. Assuming that couriers 6 drove 3 days per week (which is merely an assumption), the data showed that approximately 7 57% of the hours worked by these clients were worked beyond the requisite 90 days required in 8 order to be entitled to accrue sick time. See Cal. Labor Code § 246. Counsel then calculated 9 57% of the total hours worked by the entire class, and divided this number by 30, as the Labor 10 Code provides that 1 hour of sick time is earned per 30 hours worked. This calculation revealed 11 the number of unpaid sick leave hours owed to the class. This number was multiplied by the 12 average hourly rate for the class, yielding an estimate of $2.8 million. See Liss-Riordan Decl. 13 ¶ 4. 14 • Reporting time claim 15 The Court noted that Plaintiffs have explained they do not believe this claim has value 16 because drivers are not required to report to work. This claim was included in the Proposed 17 Second Amended Complaint, in which Plaintiffs allege that “Plaintiffs and members of the 18 putative class, have periodically been required to report for work but have either not been put to 19 work or have been furnished with less than half of his or her usual or scheduled days’ work.” 20 (Proposed Second Amended Complaint ¶ 61), solely in order to give “global peace” to 21 Postmates, which this Court appeared to recognize in its tentative ruling was appropriate. 22 Tentative at 15. 23 • UCL 24 Pursuant to the Court’s order, based on Plaintiffs’ explanation that UCL claims for 25 restitution are already accounted for in the wage claim valuations. 26 27 28 5 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 • Expense Reimbursement Claim 2 Plaintiffs calculated their expense reimbursement valuation of $88 million in advance of 3 the July 2019 mediation, based on data for approximately 380,000 class members that was 4 provided by Postmates. In recognition of the fact that the class size would continue to grow 5 prior to preliminary approval, the parties agreed that the cut-off date for the class in this case 6 would be October 17, 2019, approximately three months after the mediation session. This was 7 done expressly in order to ensure that the mileage claims retained their value. 8 In Cotter v. Lyft, Inc. (N.D. Cal. 2016) 176 F. Supp. 3d 930, 940, cited by the Court, 9 preliminary approval was initially denied because the settlement class period extended almost a 10 year after the mileage calculations were made. Here, by contrast, the parties explicitly 11 addressed the very issue raised in Cotter by limiting the release period to only a few months 12 after the mediation session. The fact that the class size increased, by less than 10% to 13 approximately 411,000, in the intervening period is not at all surprising and was, in fact, 14 anticipated when the parties agreed to the release date of October 17, 2019. By contrast, in 15 Cotter, so much time elapsed that the damages had roughly doubled since the settlement amount 16 was agreed upon. Id. at 940. In sum, this case plainly does not represent the type of situation 17 that occurred in Cotter, and it is to be expected that some amount of additional damages will 18 accrue from the time of the mediation until the date of preliminary approval of the settlement.1 19 2. PAGA Claims 20 In advance of mediation, Plaintiffs calculated that the maximum recovery under PAGA 21 was $2.7 billion. This amount was calculated by multiplying the maximum penalty for 22 overtime, minimum wage, and expense reimbursement claims by the number of pay periods 23 worked within the PAGA limitations period. Because Postmates pays its couriers weekly, 24 1 Indeed, many settlement releases are open-ended and run through the date of 25 preliminary or even final approval, risking the possibility that delays could result in substantial 26 damages accruing which are not accounted for in the negotiated settlement amount. Here, the parties acted diligently to protect the class from this very eventuality by setting a cut-off for 27 liability that was no later than a few months after the mediation. 28 6 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 Plaintiffs calculated each week to be a PAGA pay period. See Liss-Riordan Decl. ¶ 5. 2 Based on the data that Postmates provided for Plaintiffs’ counsel’s arbitration clients, 3 Plaintiffs’ counsel estimated that overtime violations occurred in approximately 34% of pay 4 periods and that approximately 20% of the class suffered an overtime violation. Penalties were 5 calculated at $100 per courier for the first violation and $200 per courier for each subsequent 6 violation. Plaintiffs’ PAGA overtime penalties estimate was $179 million. See Liss-Riordan 7 Decl. ¶ 6. 8 Plaintiffs’ counsel similarly estimated that minimum wage violations occurred in 9 approximately 17% of pay periods and that approximately 20% of the class suffered minimum 10 wage damages. Penalties were calculated at $100 per courier for the first violation and $250 per 11 courier for each subsequent violation. Plaintiffs’ PAGA minimum wage penalties estimate was 12 $105 million. See Liss-Riordan Decl. ¶ 7. 13 The expense reimbursement calculation was made with the assumption that every class 14 member suffered an expense reimbursement violation in every pay period (as couriers were 15 required to use their vehicle and/or phone for every delivery). Penalties were calculated at $100 16 per courier for the first violation and $200 per courier for each subsequent violation. Plaintiffs’ 17 PAGA expense reimbursement penalties were estimated at $511 million. See Liss-Riordan 18 Decl. ¶ 8. 19 The willful misclassification claim was calculated by multiplying the number of class 20 members by $5000, the statutory penalty amount. This led to an estimate of $1.88 billion. This 21 estimate is likely significantly overstated, however, as Plaintiffs were not provided with data 22 indicating which class members worked before the California Supreme Court issued its decision 23 in Dynamex Operations W. v. Superior Court, (2018) 4 Cal. 5th 903, 416 P.3d 1 on April 30, 24 2018, and which class members worked after the Dynamex decision. If this case were to 25 proceed to trial, Plaintiffs would likely not seek to hold Postmates liable for willful 26 misclassification of couriers prior to the issuance of the Dynamex decision. See Liss-Riordan 27 Decl. ¶ 9. 28 7 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 It is also quite likely that Plaintiffs would not be able to establish any willfulness on the 2 part of Postmates in classifying its workers as independent contractors. Indeed, in connection 3 with other Labor Code statutes that impose a “willfulness” requirement, the Court of Appeal has 4 held that, where an employer presents a defense “based in law,” or even where there is 5 “uncertainty in the law,” the willfulness element cannot be satisfied. See Amaral v. Cintas Corp. 6 No. 2 (2008) 163 Cal. App. 4th 1157, 1201, 1204 (citing Barnhill v. Robert Saunders & Co. 7 (1981) 125 Cal. App. 3d 1, 7-8); see also Berstein v. Virgin America, (N.D. Cal. 2019) 365 F. 8 Supp. 3d 980, 992-93 (reducing PAGA penalties based on uncertainty in the law). Postmates 9 would argue vehemently against any finding of willfulness given the continued uncertainty 10 around Dynamex’s application to gig economy workers and there is a very real possibility that 11 Plaintiffs would not recover any PAGA penalties based on willful misclassification. 12 Moreover, in order to calculate the maximum possible figure for PAGA exposure, 13 Plaintiffs assumed that “stacking” of penalties for multiple Labor Code violations would be 14 available, even though some case law suggests the contrary. See Yadira v. Fernandez, (N.D. 15 Cal. Sept. 8, 2011) 2011 WL 4101266, *3 citing Doe v. D.M. Camp & Sons, (E.D.Cal.2008) 16 624 F.Supp.2d 1153, 1174. Moreover, calculation of an exact exposure for the PAGA claim is 17 of limited utility and is inherently speculative because of the Court’s discretion to reduce a 18 PAGA penalty on grounds that it is “unjust” or “oppressive.” Cal. Lab. Code § 2699 (e)(2). See 19 also Fleming v. Covidien Inc. (C.D. Cal. Aug. 12, 2011) 2011 WL 7563047, at *3-4 (reducing 20 PAGA penalty award from $2.8 million to $500,000); Makabi v. Gedalia (Cal. Ct. App. Mar. 2, 21 2016) 2016 WL 815937, at *2 & n.3 (finding defendant violated PAGA but declining to apply 22 any penalties). Plaintiffs recognize the reality that these penalties, if recovered, could be 23 severely discounted. 24 As Plaintiffs obtained such a substantial class settlement, a more nominal PAGA 25 settlement is in line with substantial California case law. See Harris v. Radioshack Corp. (N.D. 26 Cal. Aug. 9, 2010) 2010 3155645, *3-4 (granting final approval and finding that although 27 Plaintiffs “could arguably get more . . . because they [were] entitled to penalties under the 28 8 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 PAGA, it [was] not clear that they could get a significant amount” more because of §2699(e)); 2 Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016) 2016 WL 5907869, *9 (“[W]here a 3 settlement for a Rule 23 class is robust, the statutory purposes of PAGA may be fulfilled even 4 with a relatively small award on the PAGA claim itself”); see also O’Connor v. Uber Techs., 5 Inc., (N.D. Cal. July 29, 2016) Civ. A. No. 13-3826, Dkt. No. 736 at p. 4 (“The LWDA 6 recognizes that this Court does not review the PAGA allocation in isolation, but rather reviews 7 the settlement as a whole, to determine whether it is fundamentally fair, reasonable and 8 adequate, with primary consideration for the interests of absent class members.”). B. Settlement Discount 9 As Plaintiffs have explained previously, the $250,000 PAGA allocation is in line with 10 PAGA allocations that California courts have approved as part of significant class action 11 settlements. See, e.g., del Toro Lopez v. Uber Techs., Inc., (N.D. Cal. Nov. 14, 2018) 2018 WL 12 5982506, *8 (approving $50,000 PAGA payment from $10 million fund); Ahmed v. Beverly 13 Health & Rehab. Servs., Inc., (E.D. Cal. Feb. 7, 2018) 2018 WL 746393, *10 (approving $4,500 14 PAGA payment from $450,000 fund); Martin v. Legacy Supply Chain Servs. II, Inc., (S.D. Cal. 15 Feb. 12, 2018) 2018 WL 828131, *2 (approving $10,000 PAGA payment from $625,000 fund). 16 Even in PAGA-only cases, court have approved miniscule allocations compared to estimated 17 total PAGA recoveries. In Price v. Uber Techs., which was a PAGA-only case in which the 18 court was evaluating the settlement amount against the maximum PAGA penalty, the court 19 approved a $7.75 million settlement where the PAGA penalties were valued at over $3 billion. 20 Price v. Uber Techs., Inc., (Los Angeles Super. Ct.) Case No. BC554512. Similarly, the court 21 approved a $15 million PAGA-only settlement where the plaintiffs’ counsel had estimated the 22 PAGA penalties to be at least $7.6 billion (representing approximately 0.2% of the PAGA 23 penalties) (over strenuous objection). Turrieta v. Lyft. Inc. (Los Angeles Super. Ct.) Case No. 24 BC714153. 25 26 27 28 9 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-567868 1 Thus, while the parties believe that the PAGA allocation is justified and in line with the 2 case law, the parties are willing to revise the PAGA allocation if the Court believes additional 3 money needs to be allocated to the PAGA. 4 III. Dispute Resolution Fund 5 Plaintiffs’ counsel have found that the use of a Dispute Resolution Fund is useful in 6 class action settlements for a number of reasons. First, as the Court noted, Plaintiffs’ counsel 7 prefers to allow class members (both those who are on the original notice list and those who 8 have been mistakenly excluded) to submit claim forms past the claim deadline as long as 9 practicable. See infra IV.B. Particularly if the Court is requiring the Notice form to estimate 10 each class member’s share, then it will be important to hold a certain amount back from these 11 initial calculations, in order to allow late claims from mistakenly excluded individuals to be 12 honored without impacting the expected share of the remainder of the class. 13 Moreover, the parties have agreed that couriers will have an opportunity to dispute the 14 mileage numbers on which their settlement shares are based. Again, it is highly preferable to 15 use the Dispute Fund to resolve these disputes, rather than requiring that any funds used to 16 adjust a challenging class member’s share come out of funds that has already been allocated to 17 other members of the class. The Dispute Fund can also be used to ensure that there are 18 sufficient funds remaining for the second distribution to those class members who are entitled to 19 a second distribution. 20 Notwithstanding these very good reasons for maintaining a Dispute Fund, if the Court 21 continues to believe that the Dispute Fund is not warranted, the parties are willing to modify the 22 agreement accordingly. 23 IV. Notice A. LWDA 24 Plaintiffs’ counsel generally submits proposed settlements to the LWDA after 25 preliminary approval has been granted, in order to avoid burdening the LWDA with proposed 26 settlement agreements that have not yet been preliminarily approved. Pursuant to the Court’s 27 28 10 PLAINTIFFS’ FURTHER SUPPLEMENTAL BRIEFING IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT CASE NO. CGC-18-56786