Preview
I BLUMENTHAL NORDREHAUG BHOWMIK
DE BLOUW L L P
FILED/ENDORSED
2 Norman B. Blumenthal (State Bar #068687)
Kyle R. Nordrehaug (State Bar #205975)
3 Aparajit Bhowmik (State Bar #248066) FEB 1 'I 2022
2255 Calle Clara
4 By: E. Macdnnald
La Jolla, CA 92037 Ucputy Clerk
Telephone:(858)551-1223
5 Facsimile: (858) 551-1232
Email: normfSlbamlawca.com
6 Website: www.bamlawca.com
7 Attomeys for Plaintiff Spears
[Additional Attomeys listed on following page]
8
9
10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 IN AND FOR THE COUNTY OF SACRAMENTO
12
13
ANDREA SPEARS, an individual, on Consolidated Case No. 34-2017-00210560-
behalf of herself and on behalf of all CU-OE-GDS
14 persons similarly situated.
MEMORANDUM OF POINTS AND
15 Plaintiff, AUTHORITIES IN SUPPORT OF
PLAINTIFFS' UNOPPOSED MOTION FOR
16 vs. PRELIMINARY APPROVAL OF CLASS
SETTLEMENT
17 HEALTH NET OF CALIFORNIA, INC., a
Califomia Corporation; and Does 1 through
18
50, inclusive. Hearing Date: March 10, 2022
19 Hearing Time: 9:00 a.m.
Defendants. Reservation ID: 2617934
20
THOMAS R. ARANA, on behalfof Dept.: 54
21 himself, all others similarly situated.
Judge: Hon. Christopher E. Kmeger
22 Lead Action Filed: April 5, 2017
Plaintiff,
23
vs.
24
HEALTH NET OF CALIFORNIA, INC.; a
25 Califomia Corporation; Does I through 50,
inclusive.
26
Defendants.
27
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MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
Case No. 34-2017-00210560
1 SHAUN SETAREH (SBN 204514)
shaun(gsetarehlaw.com
2 WILLIAM M. PAO (SBN 219846)
william@setarehlaw.com
3 SETAREH LAW GROUP
9665 Wilshire Blvd., Suite 430
4 Beverly Hills, Califomia 90212
Telephone: (310) 888-7771
5 Fax: (310) 888-0109
6 Attomeys for Plaintiff Arena
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MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
Case No. 34-2017-00210560
TABLE OF CONTENTS
2 I. INTRODUCTION
3 II. DESCRIPTION OF THE SETTLEMENT 2
4 III. CASE BACKGROUND 4
5 IV. THE SETTLEMENT MEETS THE CRITERIA NECESSARY FOR THIS COURT
TO GRANT PRELIMFNARY APPROVAL 5
6
A. The Role Of The Court In Preliminary Approval Of A
7 Class Action Settlement 6
8 B. Factors To Be Considered In Granting Preliminarily Approval 7
9 I. The Settlement is the Product of Serious, Informed and
Arm's Length Negotiations by Experienced Counsel 7
10
2. The Settlement Has No "Obvious Deficiencies" and Falls Within
the Range for Approval 10
12 3. The Settlement Does Not Improperly Grant Preferential
Treatment To Class Representatives or Segments Of The
13 Class 12
/
14 4. The Stage Of The Proceedings Are Sufficiently Advanced
To Permit Preliminary Approval Of The Settlement 13
15 V. THE CLASS IS PROPERLY CERTIFIED FOR SETTLEMENT PURPOSES 15
16 VI. THE PROPOSED METHOD OF CLASS NOTICE IS APPROPRIATE 16
17 VIL CONCLUSION 17
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MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 TABLE OF AUTHORITIES
2 Cases; Page:
3 Brinker v. Superior Court,
53 Cal. 4th 1004(2012) 11
4
Boyd v. Bechtel Corp.,
5 485 F.Supp. 610 (N.D. Cal. 1979) 7
6 Cacho V. Eurostar, Inc. ,
43Cal. App. 5th 885, 256 Cal. Rptr. 3d 547 (2019) 12
7
Cellphone Termination Fee Cases,
8 180 Cal.App.4th 1110 (2009) 5
9 Cho V. Seagate Tech. Holdings, Inc.,
177 Cal. App. 4th 734 (2009) 6
10
Clayton v. Knight Transp.,
11 2013 WL 5877213, 2013 U.S. Dist. LEXIS 156647 (E.D. Cal. 2013) 15
12 Dunk V. Ford Motor Co.,
48 Cal.App.4th 1794 (1996) 5, 6, 8
13
Dunleavy v. Nadler (In re Mego Fin. Corp. Sec. Litig.),
14 213 F.3d 454 (9* Cir. 2000) 11, 12, 15
15 Duran v. U.S. Bank National Assn.,
59 Cal. 4th I (2014) 12
16
Frazier v. City of Richmond,
17 184Cal.App.3d 1491 (1986) 5
18 Gautreaux v. Pierce,
690 F.2d 616 (7th Cir. 1982) 5
19
Glass V. UBS Fin. Servs.,
20 2007 U.S. Dist. LEXIS 8476 (N.D.Cal. 2007) 12,13,15
21 Green v. Obledo,
29Cal.3d 126(1981) 5
22
Hanlon v. Chrysler Corp.,
23 150 F.3d 1011 (9"^ Cir. 1998) 11
24 Holman v. Experian Info. Solutions, Inc.,
2014U.S. Dist. LEXIS 173698 (N.D. Cal. 2014) 13
25
In re Tableware Antitrust Litig,
26 484 F.Supp. 2d 1078 (N.D. Cal. 2007) 7
27 In re Wash. Public Power Supply System Sec. Litig.,
720 F. Supp. 1379 (D. Ariz. 1989) 7, 9
28
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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Kirkorian v. Borelli,
695 F. Supp. 446 (N.D. Cal. 1988) 7
2
Kullar V. Foot Locker,
3 168Cal. App. 4th 116(2008) 8
4 Ling V. P.F. Chang's China Bistor, Inc.,
245 Cal. App. 4th 1242(2016) 10
5
Louie V. Kaiser Foundation Health Plan, Inc.,
6 2008 WL 4473183 (S.D.Cal. 2008) 13
7 Maldonado v. Epsilon Plastics, Inc.,
22Cal. App. 5th 1308 (2018) 10
8
Mathein v. Pier 1 Imps. (U.S.), Inc.,
9 2018U.S. Dist. LEXIS 71386 (E.D. Cal. 2018) 13
10 Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc.,
221 F.R.D. 523 (CD. Cal. 2004) 7
11
Nordstrom Comm'n Cases,
12 186 Cal. App. 4th 576 (2010) 5,10
13 Officers for Justice v. Civil Service Com'n, etc.,
688 F.2d. 615 (9th Cir. 1982) 5, 6, 7
14
Sayaman v. Baxter Healthcare Corp.,
15 2010 U.S. Dist. LEXIS 151997 (CD. Cal. 2010) 5
16 Stovall-Gusman v. W.W. Granger, Inc.,
2015 U.S. Dist. LEXIS 78671 (N.D. Cal. 2015) 10
17
Vasquez v. Superior Court,
18 4Cal.3d800 (1971) 5
19 Weinberger v. Kendrick,
698 F.2d 61 (2d Cir. 1982), cert, denied 464 U.S. 818 (1983) 6, 7
20
Wershba v. Apple Computer, Inc.,
21 91 Cal.App.4th224(2001) 5,6
22
23 Statutes. Rules and Regulations:
24 Califomia Labor Code §203 10
25 Califomia Labor Code §226 10
26 Califomia Rules of Court, rule 3.766 17
27 California Rules of Court, rule 3.769 5, 17
28
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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Secondary Sources:
2 2 H. Newberg & A. Conte, Newberg on Class Actions (3d ed. 1992) 4, 5
3 Manual For Complex Litigation, (Second), §30.44, 41.43 (1993) 5
4 3B J. Moore, Moore's Federal Practice §§23.80 - 23.85 (2003) 6
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MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 I. INTRODUCTION
2 Plaintiffs Andrea Spears and Tomas R. Arana ("Plaintiffs") respectftilly submit this
3 memorandum in support of the unopposed motion for preliminary approval of the proposed class action
4 settlement with Defendant Health Net of California, Inc. ("Defendant"), and seek entry of an order:
5 (1) preliminarily approving the proposed settlement of this class action with Defendant; (2) for
6 settlement purposes only, maintaining certification of the certified Class, which is comprised of "all
7 individuals who are or previously were employed by Defendant in Califomia and who were classified
8 as non-exempt employees at any time during the Class Period and who did not previously opt out of
9 the Class post-Class Certification"; (3) maintaining the appointment of Plaintiffs as the representatives
10 ofthe Class; (4) maintaining the appointment of Norman B. Blumenthal, Kyle R. Nordrehaug, Aparajit
11 Bhowmik, Piya Mukherjee, Victoria Rivapalacio, and Charlotte James of Blumenthal Nordrehaug
12 Bhowmik De Blouw LLP and Shaun Setareh and William M. Pao of Setareh Law Group as Class
13 Counsel; (5) approving the form and method for providing class-wide notice; (6) directing that notice
14 of the proposed settlement be given to the class; (7) appointing ILYM as Settlement Administrator, and
15 (8) scheduling a final approval hearing date to consider Plaintiffs' motion for final approval of the
16 settlement and entry of the Judgment, and Plaintiffs' motion for approval of attomeys' fees and
17 expenses.
18 Plaintiffs and Defendant (collectively the "Parties") have litigated the underlying actions for
19 almost five years since April 5, 2017 and have reached a fiill and final settlement of the
20 above-captioned action, which is embodied in the Class Action Settlement Agreement ("Agreement")
21 filed concurrently with the Court.' A copy of the fully executed Agreement is attached as Exhibit # I
22 to the Declaration of Kyle Nordrehaug ("Decl. Nordrehaug"), served and filed herewith.
23 As consideration for this Settlement, the Gross Settlement Amount is Five Million Dollars
24 ($5,000,000) to be paid by Defendant, as set forth in the Agreement. The Gross Settlement Amount
25 will settle all issues pending in the Actions between the Parties and will be made in full and final
26 settlement ofthe Released Class Claims. The Gross Settlement Amount includes all payments of
27
' Capitalized terms shall have the same meaning as defined in the Agreement.
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 Settlement Shares to the Participating Class Members, Settlement Administration Expenses, Class
2 Counsel Fees Payment, Class Counsel Litigation Expenses Payment, Class Representative Service
3 Payments, and the PAGA Payment. The Gross Settlement Amount does not include the employer's
4 share of payroll taxes which will be separately paid by Defendant. The Settlement is all-in with no
5 reversion to Defendant and no need to submit a claim form. Decl. Nordrehaug at T[3.
6 On June 8, 2021, the Parties participated in an all-day mediation presided over by Tripper
7 Ortman, a respected mediator of wage and hour representative and class actions. Following the
8 mediation, each side, represented by its respective counsel, were able to agree to settle the Action based
9 upon a mediator's proposal. Decl. Nordrehaug at ^5. The Settlement is fair, reasonable and adequate,
10 and should be preliminarily approved because there is a substantial monetary payment, and there are
11 substantial litigation and class-certification risks. Therefore, Plaintiffs respectftilly request that this
12 Court grant preliminary approval of the Agreement and enter the proposed order submitted herewith.
13 IL DESCRIPTION OF THE SETTLEMENT
14 The Gross Settlement Amount is Five Million Dollars ($5,000,000). (Agreement at t I(S).)
15 Under the Settlement, the Gross Settlement Amount consists of the following elements: (I) payment
16 of the Settlement Shares to the Class; (2) Class Counsel Fees Payment and Class Counsel Litigation
17 Expenses Payment; (3) Settlement Administration Expenses; (4) Class Representative Service Payment
18 to Plaintiffs; and (5) the PAGA Payment. (Agreement at ^ I(S).) The Gross Settlement Amount does
19 - not include Defendant's share of payroll taxes. (Agreement at ^ I(S).) The Gross Settlement Amount
20 shall be all-in with no reversion to Defendant. (Agreement at H I(S).) Decl. Nordrehaug at ^ 19.
21 Defendant shall fund the Gross Settlement Amount and the amount necessary to pay
22 Defendant's share of payroll taxes within fifteen days ofthe Effective Date. (Agreement at 111(E)(7).)
23 The Settlement Shares to Participating Class Members will be mailed by the Settlement Administrator
24 within fifteen (15) calendar days after the funding of the Gross Settlement Amount. (Agreement at H
25 111(E)(7).) Decl. Nordrehaug at TI20.
26 The Net Settlement Amount shall equal the net amount available for payment to the Class after
27 deducting the Court-approved amounts for the Class Representative Service Payments, the Class
28 Counsel Fees Payment, Class Counsel Litigation Expenses Payment, the PAGA Payment, and the
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 Settlement Administration Expenses. (Agreement at ^ I(U).) The Net Settlement Amount will be
2 distributed as the Settlement Shares to the Class Members who do not timely request exclusion
3 ("Participating Class Members"). (Agreement at I(X) and 111(C)(1).) The Settlement Share will be
4 calculated as follows: (i) Defendant shall provide the Settlement Administrator with the workweeks for
5 all Participating Class Members during the Class Period; (ii) the Settlement Administrator shall then
6 divide the Net Settlement Amount by the total number of workweeks to determine a dollar amount per
7 week ("Weekly Rate"); and (iii) the Settlement Administrator shall then take the number of weeks
8 worked by each Participating Class Member and multiply it by the Weekly Rate to calculate their
9 Settlement Share.(Agreement at ^ III(44)(a-b).) Workweeks will be based on Defendants' records,
10 however Class Members will have the right to challenge the number of workweeks. Any dispute by
11 Class Members challenging the number of workweeks shall be decided by the Settlement
12 Administrator. Decl. Nordrehaug at 1121.
13 Class Members may choose to opt-out of the Settlement by following the directions in the Class
14 Notice. (Agreement at f 111(E)(3)(c).) All Class Members who do not "opt out" will be deemed
15 Participating Class Members who will be bound by the Settlement and will be entitled to receive a
16 Settlement Share. Aggrieved Employee who opt out the Settlement will still be paid their allocation
17 of the PAGA Payment, respectively, and will remain bound by the release of the Released PAGA
18 Claims, regardless of their request for exclusion. (Agreement at ^ 111(E)(3)(c)).) Finally, the Class
19 Notice will also advise the Class Members of their right to object to the Settlement and/or dispute their
20 workweeks. (Agreement at H III(E)(3)(a)-(b)), Ex. A.) Decl. Nordrehaug at 122.
21 A Participating Class Member must cash his or her Settlement Share check within 180 days
22 after it is mailed. (Agreement at |III(E)(8).) The Settlement Administrator will send a reminder to
23 Participating Class Members who have not cashed their checks within 120 days after its last mailing
24 to the affected individual. (Agreement at ^ 111(E)(8).) Any settlement checks not cashed within 180
25 days will be voided and any fijnds from such uncashed checks will be paid to the Califomia State
26 Controller's Unclaimed Property Fund in the name of the Participating Class Member. (Agreement at
27 1111(E)(8).) Decl. Nordrehaug at 1123.
28 Based upon the lowest bid received from qualified vendors, the Parties have agreed to use
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 ILYM as the Settlement Administrator. (Agreement at H 111(D).) From the Gross Settlement Amount,
2 the Settlement Administrator shall be paid for the expenses of administering the Settlement in an
3 amount not to exceed $55,000. (Agreement at H 111(B)(4)).) Decl. Nordrehaug at 1124.
4 Subject to Court approval, the Agreement provides for Class Counsel to be awarded a sum not
5 to exceed one-third of the Gross Settlement Amount, as the Class Counsel Fees Payment. (Agreement
6 at H 111(B)(2).) Class Counsel will also be allowed to apply separately for an award of Class Counsel
7 Litigation Expenses Payment in an amount not to exceed $140,000. (Agreement at IJ 111(B)(2).)
8 Subject to Court approval, the Agreement provides for a payment of no more than $10,000 to each
9 Plaintiff as the Class Representative Service Payment. (Agreement at H 111(B)(1).) Decl. Nordrehaug
10 at 1125.
11 The Parties will seek approval from the Court for the PAGA Payment of $ 150,000 out of the
12 Gross Settlement Amount, which shall be allocated 75% ($ 112,500) to the LWDA as the LWDA's share
13 of the PAGA Payment pursuant to PAGA and 25% ($37,500) will be distributed to the Aggrieved
14 Employees based on their respective pay periods worked during the PAGA Period. (Agreement at H
15 111(B)(3).) All Aggrieved Employees will be sent their share of the PAGA Payment and will be subject
16 to the release of the Released PAGA Claims, whether or not they opt out of the Settlement. (Agreement
17 at 1111(B)(3).) As set forth in the accompany proof of service, the LWDA has been served with this
18 motion and the Agreement. Decl. Nordrehaug at 1126.
19 in. CASE BACKGROUND
20 The description of the case and claims, along with the procedural history is set forth in the
21 Declaration of Kyle Nordrehaug at HH 7-18. The Parties engaged in thorough investigation and the
22 exchange of documents and information in connection with the Action close to five (5) years of heavy
23 litigation which permitted Class Counsel to perform a thorough analysis of the claims through formal
24 discovery motion practice, substantive motion practice and class certification. Decl. Nordrehaug, HH
25 10-15. The Parties participated in mediation on June 8, 2021 with Tripper Ortman, Esq., which after
26 arm's length negotiations, resulted in this Settlement. Decl. Nordrehaug, 1|16.
27
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MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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IV. THE SETTLEMENT MEETS THE CRITERIA NECESSARY FOR THIS COURT TO
GRANT PRELIMINARY APPROVAL
2
When a proposed class-wide settlement is reached, the settlement must be submitted to the court
3
for approval. 2 H. Newberg & A. Conte, Newberg on Class Actions (3d ed. 1992) at § 11.41, p. 11 -87.
4
Califomia "[pjublic policy generally favors the compromise of complex class action litigation."
5
Nordstrom Comm'n Cases, 186 Cal. App. 4th 576, 581 (2010) quoting Cellphone Termination Fee
6
Cases, 180 Cal.App.4th 1110, 1117-18 (2009). Class action settlements are approved where the
7
proposed settlement is "fair, adequate and reasonable." Dunkv. Ford Motor Co., 48 Cal.App.4th 1794,
8
1801 (1996) (citing Officers for Justice v. Civil Serv. Comm'«, 688 F.2d 615, 625 (9th Cir. 1982), cert,
9
denied, 459 U.S. 1217(1983)).
10
Preliminary approval is the first of three steps that comprise the approval procedure for
11
settlements of class actions. The second step is the dissemination of notice ofthe settlement to all class
12
members. The third step is a final settlement approval hearing, at which evidence and argument
13
concerning the faimess, adequacy, and reasonableness of the settlement may be presented, and class
14
members may be heard regarding the settlement. See Dunk v. Ford Motor Co., 48 Cal.App.4th 1794,
15
1801 (1996); Manual for Complex Litigation, Second §30.44 (1993); Cal. Rules of Court, rule 3.769.
16
The primary question presented on an application for preliminary approval of a proposed class
17
action settlement is whether the proposed settlement is "within the range of possible approval."
18
Manualfor Complex Litigation, Second §30.44 at 229; Gautreaux v. Pierce, 690 F.2d 616,621 n.3 (7th
19
Cir. 1982).^ Preliminary approval is merely the prerequisite to giving notice so that "the proposed
20
settlement... may be submitted to members of the prospective Class for their acceptance or rejection."
21
Sayaman v. Baxter Healthcare Corp., 2010 U.S. Dist. LEXIS 151997, '*3 (CD. Cal. 2010). There is
22
"a presumption of fairness .. . where ... [a] settlement is reached through arms-length bargaining."
23
Wershba v. Apple Computer, Inc., 91 Cal.App.4th 224, 245 (2001) (citation omitted); see also Cho v.
24
25
25 ^ Califomia courts look to federal authority on class actions. Vasquez v. Superior Court, 4 Cal.3d
800, 821 (1971). "It is well established that in the absence of relevant state precedents trial courts are
27 urged to follow the procedures prescribed in Rule 23 of the Federal Rules of Civil Procedure for
conducting class actions." Frazier v. City of Richmond, 184 Cal. App.3d 1491, 1499 (1986), citing
28 Green v. Obledo, 29 Cal.3d 126, 145-146 (1981).
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 Seagate Tech. Holdings, Inc., 177 Cal. App. 4th 734, 742-45 (2009) (upholding trial court's
2 determination that settlement was "fair, reasonable and adequate" where the settlement "provided
3 valuable benefits to the class ... that were'particularly valuable in light ofthe risks plaintiff would have
4 faced if she proceeded to litigate her case.'"); Newberg, 3d Ed., § 11.41, p. 11 -88. However, the ultimate
5 question of whether the proposed settlement is fair, reasonable and adequate is made after notice of the
6 settlement is given to the class members and a final settlement hearing is held by the Court.
7 A. The Role Of The Court In Preliminary Approval Of A Class Action Settlement
8 The approval of a proposed settlement of a class action suit is a matter within the broad
9 discretion of the trial court. Wershba, supra, 9\Ca\.A\>p.4i\\a\.2?,4-2'i5; Dunk, 4% Ca\.\^p.4i\\ 1794.
10 Preliminary approval does not require the trial court to answer the ultimate question of whether a
11 proposed settlement is fair, reasonable and adequate. That final determination is made only after notice
12 ofthe settlement has been given to the class members and after they have been given an opportunity
13 to voice their views of the settlement or to be excluded from the settlement. 3B J. Moore, Moore's
14 Federal Practice §§23.80 - 23.85 (2003).
15 In considering a potential settlement for preliminary approval purposes, the trial court does not
16 have to reach any ultimate conclusions on the issues of fact and law which underlie the merits of the
17 dispute, and need not engage in a trial on the merits. Wershba, supra, 91 Cal.App.4th at 239-40; Dunk,
18 supra, 48 Cal.App. 4th at 1807. The Ninth Circuit explains, "the very essence of a settlement is
19 compromise, 'a yielding of absolutes and an abandoning of highest hopes.'" Officers for Justice, 6%%
20 F.2d at 624. The question whether a proposed settlement is fair, reasonable and adequate necessarily
21 requires a judgment and evaluation by the attomeys for the parties based upon a comparison of "'the
22 terms of the compromise with the likely rewards of litigation.'" Weinberger v. Kendrick, 69% V .2A6\,
23 73 (2d Cir. 1982), cert, denied464 U.S. 818 (1983) (quoting Protective Comm. forIndep. Stockholders
24 ofTMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968)). Thus, when analyzing the
25 settlement, the amount is "not to be judged against a hypothetical or speculative measure of what might
26 have been achieved by the negotiators." Officers for Justice, 688 F.2d at 625, 628.
27 With regard to class action settlements, the opinions of counsel should be given considerable
28 weight both because of counsel's familiarity with this litigation and previous experience with cases
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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such as these. Officers for Justice, 688 F.2d at 625; In re Wash. Public Power Supply System Sec.
2 Litig, 720 F. Supp. 1379, 1392 (D. Ariz. 1989); Kirkorian v. Borelli, 695 F. Supp. 446,451 (N.D. Cal.
3 1988); Weinberger, 698 F.2d at 74. "The recommendations of plaintiffs' counsel should be given a
4 presumption of reasonableness." Boyd v. Bechtel Corp., 485 F.Supp. 610, 622 (N.D. Cal. 1979). As
5 a result, courts hold that the recommendation of counsel is entitled to significant weight. Nat'l Rural
6 Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 528 (CD. Cal. 2004).
7 B. Factors To Be Considered In Granting Preliminarily Approval
8 A number of factors are to be considered in evaluating a settlement for purposes of preliminary
9 approval. In determining whether to grant preliminary approval, the court considers whether the "(1)
10 the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, (2)
11 has no obvious deficiencies, (3) does not improperly grant preferential treatment to class representatives
12 or segments of the class, and (4) falls within the range of possible approval." In re Tableware Antitrust
13 Litig., 484 F.Supp. 2d 1078, 1079 (N.D. Cal. 2007). No one factor should be determinative, but rather
14 all factors should be considered. The analysis has been summarized as follows:
15 If the proposed settlement appears to be the product of serious, informed, noncollusive
negotiations, has no obvious deficiencies, does not improperly grant preferential
16 treatment to class representatives or segments of the class, and falls within the range of
possible approval, then the court should direct that notice be given to the class members
17 of a formal faimess hearing, at which evidence may be presented in support of and in
opposition to the settlement.
18
Manual of Complex Litigation, Second § 30.44, at 229.
19
Here, the Settlement meets all of these criteria for preliminary approval.
20 ..
1. The Settlement is the Product of Serious, Informed and
21 Arm's Length Negotiations by Experienced Counsel
22 This settlement is the result of extensive and hard-fought litigation as well as negotiations
23 before an experienced and well-respected mediator. The parties engaged in significant written
24 discovery including multiple sets of written discovery, reviewing several thousand pages of documents,
25 along with the depositions of both class representatives and four corporate representatives. Defendant
26 has expressly denied and continues to deny any wrongdoing or legal liability arising out of the conduct
27 alleged in the Action. Plaintiffs and Class Counsel have determined that it is desirable and beneficial
28
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 to the Class to resolve the Released Class Claims of the Class in accordance with this Settlement.^
2 Class Counsel are experienced and qualified to evaluate the class claims, the defenses asserted,
3 and the risks and benefits of trial and settlement, and Class Counsel are particularly experienced in
4 wage and hour employment class actions, as Class Counsel has previously litigated and certified similar
5 claims against other employers. Decl. Nordrehaug at 1135; Declaration of Shaun Setareh at 1I1I3-5. The
6 view of qualified and well-informed counsel that a class action settlement is fair, adequate, and
7 reasonable is entitled to significant weight. See Kullar v. Foot Locker, 168 Cal. App. 4th 116, 133
8 (2008) (the trial court "undoubtedly should continue to place reliance on the competence and integrity
9 of counsel, the involvement of a qualified mediator, and the paucity of objectors to the settlement.");
10 Dunk, 48 Cal. App. 4th at 1802.
11 The Parties attended an arms-length mediation session with Tripper Ortman, Esq., a respected
12 and experienced mediator of wage and hour class actions, in order to reach this Settlement. In
13 preparation for the mediation. Defendant provided Class Counsel with necessary infonnation for the
14 members ofthe Class, including time data, payroll data and data concerning the composition of the
15 Class that supplemented this kind of information Plaintiffs had already obtained through years of hard
16 fought litigation. Plaintiffs had previously analyze data received in connection with litigation with the
17 assistance of damages experts DM&A and James Toney and then analyzed the data received in
18 connection with the mediation with the assistance of damages expert, Berger Consulting, and prepared
19 and submitted a mediation brief and damage valuation to the Mediator. At the conclusion of the all-day
20 mediation, the mediator issued a mediator's proposal that was accepted by the parties. The final
21
22 The release applicable to the Class is tethered to allegations in the Action and the "Released Class
Claims" are "all class claims which were pled or could have been pled based on the factual allegations
23 contained in the operative complaint or any amendments thereto which occurred during the Class
Period, and expressly excluding all other claims, including all claims alleged in Carranza v. Health Net
24 of California, Inc. (Los Angeles Superior Court, Case No. 20STCV14774) {"Carranza Action") and
Alvarez v. Health Net of California, Inc. (Sacramento Superior Court, Case No. 34-2020- 00289192)
25
{"Alvarez Action'''), claims for vested benefits, wrongful termination, unemployment insurance,
25 disability, social security, and workers' compensation, and class claims outside of the Class Period. The
Released Class Claims include any claims, demands, lawsuits, administrative actions, arbitrations, and
27 participation to any extent in any pending or future class, collective, or representative actions, or other
action of any kind based on the Released Class Claims. Participating Class Member releases include
28 known and unknown claims as described in this paragraph.." (Agreement at H 111(F)(1).)
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 settlement terms were negotiated and set forth in the Agreement now presented for this Court's
2 approval. Decl. Nordrehaug at H 5. Importantly, Plaintiffs and Class Counsel believe that this
3 Settlement is fair, reasonable and adequate.
4 As consideration for this Settlement, the Gross Settlement Amount to be paid by Defendant is
5 Five Million Dollars ($5,000,000). The Settlement is all-in with no reversion to Defendant and no
6 need to submit a claim form. Decl. Nordrehaug at H 3.
7 Class Counsel has conducted a thorough investigation into the facts of the class action. Over
8 the course of five years. Class Counsel has diligently evaluated the Class Members' claims against
9 Defendant. Prior to the settlement negotiations, counsel for Defendant provided Class Counsel with
10 access to necessary information for the Class. In addition. Class Counsel previously negotiated
11 settlements with other employers in actions involving nearly identical issues and analogous defenses.
12 Based on the foregoing data and their own independent investigation, evaluation and experience. Class
13 Counsel believes that the settlement with Defendant on the terms set forth in the Agreement is fair,
14 reasonable, and adequate and is in the best interest of the Class in light of all known facts and
15 circumstances, including the risk of significant delay, defenses asserted by Defendant, and potential
16 appellate issues. Decl. Nordrehaug at H 18.
17 Plaintiffs and Class Counsel recognize the expense and length of continuing to litigate and
18 trying these Action against Defendant through possible appeals which could take several years. Class
19 Counsel has also taken into account the uncertain outcome and risk of litigation, especially in complex
20 class actions such as these Action. Class Counsel is also mindful of and recognize the inherent
21 problems of proof under, and alleged defenses to, the claims asserted in the Action. Based upon their
22 evaluation. Plaintiffs and Class Counsel have determined that the Settlement set forth in the Agreement
23 is in the best interest of the Class Members. Decl. Nordrehaug, H 27.
24 Here, there can be no dispute that the litigation has been hard-fought with aggressive and
25 capable advocacy on both sides. The Parties were represented by experienced and capable counsel who
26 zealously advocated their positions. Accordingly, "[t]here is likewise every reason to conclude that
27 settlement negotiations were vigorously conducted at arms' length and without any suggestion of undue
28 influence." In re Wash. Public Power Supply System Sec. Litig., 720 F. Supp. at 1392.
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
-9- Case No. 34-2017-00210560
2. The Settlement Has No "Obvious Deficiencies" and Falls Well Within
the Range for Approval
2
The proposed Settlement herein has no "obvious deficiencies" and is well within the range of
3
possible approval. All Class Members will receive an opportunity to participate in the Settlement and
4
receive payment according to the same formula. (Agreement at 1| 111(C).) The Gross Settlement
5
Amount provides an average value of $969 per Class Member and $6.92 per workweek, and after
6
deductions, the Net Settlement Amount provides an average recovery of $575 per Class Member and
7
$4.11 per work week. Decl. Nordrehaug, 116.
8
The calculations to compensate for the amount due to the Class Members at the time this
9
Settlement was negotiated were calculated by Plaintiffs' experts DM&A, James Toney and Berger
10
Consulting, in advance of mediation. For the individuals whose claims are at issue in this Actions,
11
Plaintiffs analyzed the data for putative class members and determined the potential maximum damages
12
for the class claims. For the Class, Plaintiffs determined that the unpaid wages due to the alleged
13
miscalculation of the regular rate was $280,445, the potential off-the-clock damages were $5,792,882,
14
and the maximum potential meal and rest period damages were estimated to be $8,718,769.32. In total,
15
the damages for the Class were calculated to have a maximum total value of $14,792,096.32. In
16
addition. Plaintiffs calculated that the maximum value of the waiting time penalties were $6,895,983
17
and the maximum value of the wage statement penalties were $14,071,700.'' Decl. Nordrehaug, 116.
18
Consequently, the Gross Settlement Amount represents more than 33% of the value of the
19
potential maximum damages at issue for the Class in this case, assuming these amounts could all be
20
21
22
While Plaintiffs alleged claims for statutory penalties pursuant to Labor Code Sections 203 and
23 226, Plaintiffs recognized that these claims were subject to various defenses asserted by Defendant,
including, but not limited to, a good faith dispute defense as to whether any premium wages for meal
24 or rest periods or other wages were owed given Defendant's position that Plaintiffs were properly
25 compensated. See Nordstrom Commission Cases, 186 Cal. App. 4th 576, 584 (2010) ("There is no
willftil failure to pay wages if the employer and employee have a good faith dispute as to whether and
25 when the wages were due."). Additionally, Courts have held that violations of the meal and rest period
regulations, which require payment of a "premium wage" for each improper meal period, do not give
27 rise to claims under sections 203 and 226. See Ling v. P.F. Chang's China Bisto, Inc., 245 Cal. App.
4th 1242, 1261 (2016) and Maldonado v. Epsilon Plastics, Inc., 22 Cal. App. 5th 1308, 1336 (2018).
2^ As a result, the viability of Plaintiffs' claims on these theories is uncertain.
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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proven in full at trial.' The above maximum calculations should then be adjusted in consideration for
2 both the risk of maintaining class certification through potential motions for decertification and the risk
3 of establishing class-wide liability on all claims. Given the amount of the Settlement as compared to
4 the potential value ofthe claims, the Settlement is most certainly fair and reasonable.* Clearly, the goal
5 of this litigation has been met. Decl. Nordrehaug, 116.
6 Where both sides face significant uncertainty, the attendant risks favor settlement. Hanlon v.
7 Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Here, a number of defenses asserted by
8 Defendant present serious threats to the claims of the Plaintiffs and the other Class Members.
9 Defendant asserted that Defendant's practices complied with all applicable Labor laws. Defendant
10 argued that all work time was paid for and that the regular rate calculation was lawful. Finally,
11 Defendant successfully argued that the Supreme Court decision in Brinker v. Superior Court, 53 Cal.
12 4th 1004 (2012) precluded class certification as to the meal and rest period claims and, as a result,
13 deprived Plaintiffs ofthe ability to litigate the claims on liability and obtain any value for these claims
14 at all in Court. Defendant also argues that based on their facially lawful practices, they acted in good
15 faith and without willfulness, which if accepted would negate the claims for waiting time penalties
16 and/or inaccurate wage statements. In fact, given the flux in law pertaining to regular rate and off the
17 clock claims, it is questionable whether these penalties could be awarded at all based upon the alleged
18 unpaid wage violations. If successftil. Defendant's defenses could eliminate or substantially reduce any
19 recovery to the Class. While Plaintiffs believe that these defenses could be overcome. Defendant
20 maintains these defenses have merit and therefore present a serious risk to recovery by the Class. Decl.
21 Nordrehaug, 1 28.
22 There was also a significant risk that, if the Actions were not settled. Plaintiffs would be unable
23
24 ^ Because the PAGA claim does not provide a recovery to the Class, Plaintiffs have not included
2^ the PAGA claim in this discussion. The PAGA claim is addressed in the Decl. Nordrehaug at H 37.
25 * See Dunleavy v. Nadler (In re Mego Fin. Corp. Sec. Litig.), 213 F.3d 454, 459 (9th Cir. 2000)
approving settlement which represented "roughly one-sixth of the potential recovery"); Stovall-Gusman
27 V. W.W. G r a / i g e r , 2 0 1 5 U.S. Dist. LEXIS 78671, at M 2 (N.D. Cal. 2015) (granting final approval
where "the proposed Total Settlement Amount represents approximately 10% of what class might have
28 been awarded had they succeeded at trial.")
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
-1 1 - Case No. 34-2017-00210560
to maintain class certification and thereby not recover on behalf of any employees other than
2 themselves. Defendant argued that the individual experience of each putative class member varied with
3 respect to the claims. Defendant could always relitigate class certification by filing a motion to
4 decertify the class arguing that damages determinations for off the clock claims would be too
5 unmanageable to maintain as a class action. See e.g. Cacho v. Eurostar, Inc., 43 Cal. App. 5th 885,
6 256 Cal. Rptr. 3d 547 (2019) (denying certification of meal and rest break claims). In this way.
7 Defendant contended that individual differences in work experiences not only impacted damages but
8 would also impact the ability to maintain certification through trial. Finally, even if class certificafion
9 was successfiilly preserved through a motion for decertification, as demonstrated by the California
10 Supreme Court decision in Duran v. U.S. Bank National Assn., 59 Cal. 4th 1 (2014), there are
11 significant hurdles to overcome for a class wide recovery even where the class has been certified. Decl.
12 Nordrehaug, H 29.
13 After arm's length negotiations between experienced and informed counsel, the Parties
14 recognized the potential risks and agreed on the Settlement with a Gross Settlement Amount of
15 $5,000,000. As the Court held in Glass, where the parties faced uncertainties similar to those here:
16 In light of the above-referenced uncertainty in the law, the risk, expense, complexity,
and likely duration of ftjrther litigation likewise favors the settlement. Regardless of
17 how this Court might have ruled on the merits of the legal issues, the losing party likely
would have appealed, and the parties would have faced the expense and uncertainty of
18 litigating an appeal. 'The expense and possible duration of the litigation should be
considered in evaluating the reasonableness of [a] settlement.'"
19
2007 WL 221862, at *4 (quoting In re Mego Financial Corp. Securities Litigation, 213 F.3d 454,458
20
(9th Cir. 2000)).
21
3. The Settlement Does Not Improperly Grant Preferential Treatment To
22 Class Representatives or Segments Of The Class
23 The relief provided in the Settlement will benefit all members of the Class. The Settlement does
24 not grant preferential treatment to Plaintiffs or segments of the Class in any way. Payments to the Class
25 Members are all determined under a neutral methodology. Each Participating Class Member will
26 receive the same opportunity to participate in and receive payment through a neutral formula that is
27 based upon the weeks worked by that individual. Decl. Nordrehaug, 114.
28 Plaintiffs will apply to the Court for a Class Representative Service Payment in consideration
MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT
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1 for the service and for the risks undertaken on behalf of the class. (Agreement at 11111(B)(1).) Plaintiffs
2 performed their duty admirably by working with Class Counsel and have already been approved as
3 adequate class representatives. At this stage, the requested service award of $ 10,000 is well within the
4 accepted range of awards for purposes of preliminary approval. See e.g. Mathein v. Pier I Imps. (U.S.),
5 Inc., 2018 U.S. Dist. LEXIS 71386 (E.D. Cal. 2018) (awarding $12,500 where average class member
6 payment was $351); Holman v. Experian Info. Solutions, Inc., 2014 U.S. Dist. LEXIS 173698 (N.D.
7 Cal. 2014) (approving $ 10,000 service award where class member recovery was $375); Louie v. Kaiser
8 Foundation Health Plan, Inc., 2008 WL 4473183, *7 (S.D.Cal. 2008) (awarding $25,000 service
9 award to each of six plaintiffs in overtime class action); Glass v. UBS Fin. Servs., 2007 WL 221862,
10 "'16-17 (N.D.Cal. 2007) (awarding $25,000 service award in overtime class action and a pool of
11 $100,000 in enhancements ). As explained in Glass, service awards are routinely awarded to class
12 representatives to compensate the employees for the time and effort expended on the case, for the risk
13 of litigation, for the fear of suing an employer and retaliation there from, and to serve as an incentive
14 to vindicate the statutory rights of all employees. 2007 WL 221862 at * 16-17.
15 4. The Stage Of The Proceedings Are Sufficiently Advanced To Permit
Preliminary Approval Of The Settlement
16
The stage of the proceedings at which this Settlement was reached also militates in favor of
17
preliminary approval and ultimately, final approval of the Settlement. Class Counsel has conducted
18
a thorough investigation into the facts of the class action. Class Counsel began investigating the Class
19
Members' claims before the Action was filed. Class Counsel engaged in formal discovery, which
20
required the filing of: (i) a Motion for an Opt Out Privacy Notice to be sent to the Class Members on
21
November 16, 2017 [Doc. No. 34]; (ii) a Motion to compel Defendant to produce documents on
22
December 1,2017 [Doc. No. 40], and, (iii) a Motion to compel Defendant to respond to interrogatories
23
on December 6, 2017 [Doc. No. 49]. Decl. Nordrehaug, 1112.
24
The Opposition to the Motion to Sequence Discovery was filed by P
Preview
I BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW L L P FILED/ENDORSED 2 Norman B. Blumenthal (State Bar #068687) Kyle R. Nordrehaug (State Bar #205975) 3 Aparajit Bhowmik (State Bar #248066) FEB 1 'I 2022 2255 Calle Clara 4 By: E. Macdnnald La Jolla, CA 92037 Ucputy Clerk Telephone:(858)551-1223 5 Facsimile: (858) 551-1232 Email: normfSlbamlawca.com 6 Website: www.bamlawca.com 7 Attomeys for Plaintiff Spears [Additional Attomeys listed on following page] 8 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 IN AND FOR THE COUNTY OF SACRAMENTO 12 13 ANDREA SPEARS, an individual, on Consolidated Case No. 34-2017-00210560- behalf of herself and on behalf of all CU-OE-GDS 14 persons similarly situated. MEMORANDUM OF POINTS AND 15 Plaintiff, AUTHORITIES IN SUPPORT OF PLAINTIFFS' UNOPPOSED MOTION FOR 16 vs. PRELIMINARY APPROVAL OF CLASS SETTLEMENT 17 HEALTH NET OF CALIFORNIA, INC., a Califomia Corporation; and Does 1 through 18 50, inclusive. Hearing Date: March 10, 2022 19 Hearing Time: 9:00 a.m. Defendants. Reservation ID: 2617934 20 THOMAS R. ARANA, on behalfof Dept.: 54 21 himself, all others similarly situated. Judge: Hon. Christopher E. Kmeger 22 Lead Action Filed: April 5, 2017 Plaintiff, 23 vs. 24 HEALTH NET OF CALIFORNIA, INC.; a 25 Califomia Corporation; Does I through 50, inclusive. 26 Defendants. 27 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT Case No. 34-2017-00210560 1 SHAUN SETAREH (SBN 204514) shaun(gsetarehlaw.com 2 WILLIAM M. PAO (SBN 219846) william@setarehlaw.com 3 SETAREH LAW GROUP 9665 Wilshire Blvd., Suite 430 4 Beverly Hills, Califomia 90212 Telephone: (310) 888-7771 5 Fax: (310) 888-0109 6 Attomeys for Plaintiff Arena 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT Case No. 34-2017-00210560 TABLE OF CONTENTS 2 I. INTRODUCTION 3 II. DESCRIPTION OF THE SETTLEMENT 2 4 III. CASE BACKGROUND 4 5 IV. THE SETTLEMENT MEETS THE CRITERIA NECESSARY FOR THIS COURT TO GRANT PRELIMFNARY APPROVAL 5 6 A. The Role Of The Court In Preliminary Approval Of A 7 Class Action Settlement 6 8 B. Factors To Be Considered In Granting Preliminarily Approval 7 9 I. The Settlement is the Product of Serious, Informed and Arm's Length Negotiations by Experienced Counsel 7 10 2. The Settlement Has No "Obvious Deficiencies" and Falls Within the Range for Approval 10 12 3. The Settlement Does Not Improperly Grant Preferential Treatment To Class Representatives or Segments Of The 13 Class 12 / 14 4. The Stage Of The Proceedings Are Sufficiently Advanced To Permit Preliminary Approval Of The Settlement 13 15 V. THE CLASS IS PROPERLY CERTIFIED FOR SETTLEMENT PURPOSES 15 16 VI. THE PROPOSED METHOD OF CLASS NOTICE IS APPROPRIATE 16 17 VIL CONCLUSION 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -i- Case No. 34-2017-00210560 1 TABLE OF AUTHORITIES 2 Cases; Page: 3 Brinker v. Superior Court, 53 Cal. 4th 1004(2012) 11 4 Boyd v. Bechtel Corp., 5 485 F.Supp. 610 (N.D. Cal. 1979) 7 6 Cacho V. Eurostar, Inc. , 43Cal. App. 5th 885, 256 Cal. Rptr. 3d 547 (2019) 12 7 Cellphone Termination Fee Cases, 8 180 Cal.App.4th 1110 (2009) 5 9 Cho V. Seagate Tech. Holdings, Inc., 177 Cal. App. 4th 734 (2009) 6 10 Clayton v. Knight Transp., 11 2013 WL 5877213, 2013 U.S. Dist. LEXIS 156647 (E.D. Cal. 2013) 15 12 Dunk V. Ford Motor Co., 48 Cal.App.4th 1794 (1996) 5, 6, 8 13 Dunleavy v. Nadler (In re Mego Fin. Corp. Sec. Litig.), 14 213 F.3d 454 (9* Cir. 2000) 11, 12, 15 15 Duran v. U.S. Bank National Assn., 59 Cal. 4th I (2014) 12 16 Frazier v. City of Richmond, 17 184Cal.App.3d 1491 (1986) 5 18 Gautreaux v. Pierce, 690 F.2d 616 (7th Cir. 1982) 5 19 Glass V. UBS Fin. Servs., 20 2007 U.S. Dist. LEXIS 8476 (N.D.Cal. 2007) 12,13,15 21 Green v. Obledo, 29Cal.3d 126(1981) 5 22 Hanlon v. Chrysler Corp., 23 150 F.3d 1011 (9"^ Cir. 1998) 11 24 Holman v. Experian Info. Solutions, Inc., 2014U.S. Dist. LEXIS 173698 (N.D. Cal. 2014) 13 25 In re Tableware Antitrust Litig, 26 484 F.Supp. 2d 1078 (N.D. Cal. 2007) 7 27 In re Wash. Public Power Supply System Sec. Litig., 720 F. Supp. 1379 (D. Ariz. 1989) 7, 9 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -ii- CaseNo. 34-2017-00210560 Kirkorian v. Borelli, 695 F. Supp. 446 (N.D. Cal. 1988) 7 2 Kullar V. Foot Locker, 3 168Cal. App. 4th 116(2008) 8 4 Ling V. P.F. Chang's China Bistor, Inc., 245 Cal. App. 4th 1242(2016) 10 5 Louie V. Kaiser Foundation Health Plan, Inc., 6 2008 WL 4473183 (S.D.Cal. 2008) 13 7 Maldonado v. Epsilon Plastics, Inc., 22Cal. App. 5th 1308 (2018) 10 8 Mathein v. Pier 1 Imps. (U.S.), Inc., 9 2018U.S. Dist. LEXIS 71386 (E.D. Cal. 2018) 13 10 Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523 (CD. Cal. 2004) 7 11 Nordstrom Comm'n Cases, 12 186 Cal. App. 4th 576 (2010) 5,10 13 Officers for Justice v. Civil Service Com'n, etc., 688 F.2d. 615 (9th Cir. 1982) 5, 6, 7 14 Sayaman v. Baxter Healthcare Corp., 15 2010 U.S. Dist. LEXIS 151997 (CD. Cal. 2010) 5 16 Stovall-Gusman v. W.W. Granger, Inc., 2015 U.S. Dist. LEXIS 78671 (N.D. Cal. 2015) 10 17 Vasquez v. Superior Court, 18 4Cal.3d800 (1971) 5 19 Weinberger v. Kendrick, 698 F.2d 61 (2d Cir. 1982), cert, denied 464 U.S. 818 (1983) 6, 7 20 Wershba v. Apple Computer, Inc., 21 91 Cal.App.4th224(2001) 5,6 22 23 Statutes. Rules and Regulations: 24 Califomia Labor Code §203 10 25 Califomia Labor Code §226 10 26 Califomia Rules of Court, rule 3.766 17 27 California Rules of Court, rule 3.769 5, 17 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -iii- Case No. 34-2017-00210560 Secondary Sources: 2 2 H. Newberg & A. Conte, Newberg on Class Actions (3d ed. 1992) 4, 5 3 Manual For Complex Litigation, (Second), §30.44, 41.43 (1993) 5 4 3B J. Moore, Moore's Federal Practice §§23.80 - 23.85 (2003) 6 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 ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -iV- Case No. 34-2017-00210560 1 I. INTRODUCTION 2 Plaintiffs Andrea Spears and Tomas R. Arana ("Plaintiffs") respectftilly submit this 3 memorandum in support of the unopposed motion for preliminary approval of the proposed class action 4 settlement with Defendant Health Net of California, Inc. ("Defendant"), and seek entry of an order: 5 (1) preliminarily approving the proposed settlement of this class action with Defendant; (2) for 6 settlement purposes only, maintaining certification of the certified Class, which is comprised of "all 7 individuals who are or previously were employed by Defendant in Califomia and who were classified 8 as non-exempt employees at any time during the Class Period and who did not previously opt out of 9 the Class post-Class Certification"; (3) maintaining the appointment of Plaintiffs as the representatives 10 ofthe Class; (4) maintaining the appointment of Norman B. Blumenthal, Kyle R. Nordrehaug, Aparajit 11 Bhowmik, Piya Mukherjee, Victoria Rivapalacio, and Charlotte James of Blumenthal Nordrehaug 12 Bhowmik De Blouw LLP and Shaun Setareh and William M. Pao of Setareh Law Group as Class 13 Counsel; (5) approving the form and method for providing class-wide notice; (6) directing that notice 14 of the proposed settlement be given to the class; (7) appointing ILYM as Settlement Administrator, and 15 (8) scheduling a final approval hearing date to consider Plaintiffs' motion for final approval of the 16 settlement and entry of the Judgment, and Plaintiffs' motion for approval of attomeys' fees and 17 expenses. 18 Plaintiffs and Defendant (collectively the "Parties") have litigated the underlying actions for 19 almost five years since April 5, 2017 and have reached a fiill and final settlement of the 20 above-captioned action, which is embodied in the Class Action Settlement Agreement ("Agreement") 21 filed concurrently with the Court.' A copy of the fully executed Agreement is attached as Exhibit # I 22 to the Declaration of Kyle Nordrehaug ("Decl. Nordrehaug"), served and filed herewith. 23 As consideration for this Settlement, the Gross Settlement Amount is Five Million Dollars 24 ($5,000,000) to be paid by Defendant, as set forth in the Agreement. The Gross Settlement Amount 25 will settle all issues pending in the Actions between the Parties and will be made in full and final 26 settlement ofthe Released Class Claims. The Gross Settlement Amount includes all payments of 27 ' Capitalized terms shall have the same meaning as defined in the Agreement. MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -1- CaseNo. 34-2017-00210560 1 Settlement Shares to the Participating Class Members, Settlement Administration Expenses, Class 2 Counsel Fees Payment, Class Counsel Litigation Expenses Payment, Class Representative Service 3 Payments, and the PAGA Payment. The Gross Settlement Amount does not include the employer's 4 share of payroll taxes which will be separately paid by Defendant. The Settlement is all-in with no 5 reversion to Defendant and no need to submit a claim form. Decl. Nordrehaug at T[3. 6 On June 8, 2021, the Parties participated in an all-day mediation presided over by Tripper 7 Ortman, a respected mediator of wage and hour representative and class actions. Following the 8 mediation, each side, represented by its respective counsel, were able to agree to settle the Action based 9 upon a mediator's proposal. Decl. Nordrehaug at ^5. The Settlement is fair, reasonable and adequate, 10 and should be preliminarily approved because there is a substantial monetary payment, and there are 11 substantial litigation and class-certification risks. Therefore, Plaintiffs respectftilly request that this 12 Court grant preliminary approval of the Agreement and enter the proposed order submitted herewith. 13 IL DESCRIPTION OF THE SETTLEMENT 14 The Gross Settlement Amount is Five Million Dollars ($5,000,000). (Agreement at t I(S).) 15 Under the Settlement, the Gross Settlement Amount consists of the following elements: (I) payment 16 of the Settlement Shares to the Class; (2) Class Counsel Fees Payment and Class Counsel Litigation 17 Expenses Payment; (3) Settlement Administration Expenses; (4) Class Representative Service Payment 18 to Plaintiffs; and (5) the PAGA Payment. (Agreement at ^ I(S).) The Gross Settlement Amount does 19 - not include Defendant's share of payroll taxes. (Agreement at ^ I(S).) The Gross Settlement Amount 20 shall be all-in with no reversion to Defendant. (Agreement at H I(S).) Decl. Nordrehaug at ^ 19. 21 Defendant shall fund the Gross Settlement Amount and the amount necessary to pay 22 Defendant's share of payroll taxes within fifteen days ofthe Effective Date. (Agreement at 111(E)(7).) 23 The Settlement Shares to Participating Class Members will be mailed by the Settlement Administrator 24 within fifteen (15) calendar days after the funding of the Gross Settlement Amount. (Agreement at H 25 111(E)(7).) Decl. Nordrehaug at TI20. 26 The Net Settlement Amount shall equal the net amount available for payment to the Class after 27 deducting the Court-approved amounts for the Class Representative Service Payments, the Class 28 Counsel Fees Payment, Class Counsel Litigation Expenses Payment, the PAGA Payment, and the MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -2- Case No. 34-2017-00210560 1 Settlement Administration Expenses. (Agreement at ^ I(U).) The Net Settlement Amount will be 2 distributed as the Settlement Shares to the Class Members who do not timely request exclusion 3 ("Participating Class Members"). (Agreement at I(X) and 111(C)(1).) The Settlement Share will be 4 calculated as follows: (i) Defendant shall provide the Settlement Administrator with the workweeks for 5 all Participating Class Members during the Class Period; (ii) the Settlement Administrator shall then 6 divide the Net Settlement Amount by the total number of workweeks to determine a dollar amount per 7 week ("Weekly Rate"); and (iii) the Settlement Administrator shall then take the number of weeks 8 worked by each Participating Class Member and multiply it by the Weekly Rate to calculate their 9 Settlement Share.(Agreement at ^ III(44)(a-b).) Workweeks will be based on Defendants' records, 10 however Class Members will have the right to challenge the number of workweeks. Any dispute by 11 Class Members challenging the number of workweeks shall be decided by the Settlement 12 Administrator. Decl. Nordrehaug at 1121. 13 Class Members may choose to opt-out of the Settlement by following the directions in the Class 14 Notice. (Agreement at f 111(E)(3)(c).) All Class Members who do not "opt out" will be deemed 15 Participating Class Members who will be bound by the Settlement and will be entitled to receive a 16 Settlement Share. Aggrieved Employee who opt out the Settlement will still be paid their allocation 17 of the PAGA Payment, respectively, and will remain bound by the release of the Released PAGA 18 Claims, regardless of their request for exclusion. (Agreement at ^ 111(E)(3)(c)).) Finally, the Class 19 Notice will also advise the Class Members of their right to object to the Settlement and/or dispute their 20 workweeks. (Agreement at H III(E)(3)(a)-(b)), Ex. A.) Decl. Nordrehaug at 122. 21 A Participating Class Member must cash his or her Settlement Share check within 180 days 22 after it is mailed. (Agreement at |III(E)(8).) The Settlement Administrator will send a reminder to 23 Participating Class Members who have not cashed their checks within 120 days after its last mailing 24 to the affected individual. (Agreement at ^ 111(E)(8).) Any settlement checks not cashed within 180 25 days will be voided and any fijnds from such uncashed checks will be paid to the Califomia State 26 Controller's Unclaimed Property Fund in the name of the Participating Class Member. (Agreement at 27 1111(E)(8).) Decl. Nordrehaug at 1123. 28 Based upon the lowest bid received from qualified vendors, the Parties have agreed to use MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -3- Case No. 34-2017-00210560 1 ILYM as the Settlement Administrator. (Agreement at H 111(D).) From the Gross Settlement Amount, 2 the Settlement Administrator shall be paid for the expenses of administering the Settlement in an 3 amount not to exceed $55,000. (Agreement at H 111(B)(4)).) Decl. Nordrehaug at 1124. 4 Subject to Court approval, the Agreement provides for Class Counsel to be awarded a sum not 5 to exceed one-third of the Gross Settlement Amount, as the Class Counsel Fees Payment. (Agreement 6 at H 111(B)(2).) Class Counsel will also be allowed to apply separately for an award of Class Counsel 7 Litigation Expenses Payment in an amount not to exceed $140,000. (Agreement at IJ 111(B)(2).) 8 Subject to Court approval, the Agreement provides for a payment of no more than $10,000 to each 9 Plaintiff as the Class Representative Service Payment. (Agreement at H 111(B)(1).) Decl. Nordrehaug 10 at 1125. 11 The Parties will seek approval from the Court for the PAGA Payment of $ 150,000 out of the 12 Gross Settlement Amount, which shall be allocated 75% ($ 112,500) to the LWDA as the LWDA's share 13 of the PAGA Payment pursuant to PAGA and 25% ($37,500) will be distributed to the Aggrieved 14 Employees based on their respective pay periods worked during the PAGA Period. (Agreement at H 15 111(B)(3).) All Aggrieved Employees will be sent their share of the PAGA Payment and will be subject 16 to the release of the Released PAGA Claims, whether or not they opt out of the Settlement. (Agreement 17 at 1111(B)(3).) As set forth in the accompany proof of service, the LWDA has been served with this 18 motion and the Agreement. Decl. Nordrehaug at 1126. 19 in. CASE BACKGROUND 20 The description of the case and claims, along with the procedural history is set forth in the 21 Declaration of Kyle Nordrehaug at HH 7-18. The Parties engaged in thorough investigation and the 22 exchange of documents and information in connection with the Action close to five (5) years of heavy 23 litigation which permitted Class Counsel to perform a thorough analysis of the claims through formal 24 discovery motion practice, substantive motion practice and class certification. Decl. Nordrehaug, HH 25 10-15. The Parties participated in mediation on June 8, 2021 with Tripper Ortman, Esq., which after 26 arm's length negotiations, resulted in this Settlement. Decl. Nordrehaug, 1|16. 27 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -4- Case No. 34-2017-00210560 IV. THE SETTLEMENT MEETS THE CRITERIA NECESSARY FOR THIS COURT TO GRANT PRELIMINARY APPROVAL 2 When a proposed class-wide settlement is reached, the settlement must be submitted to the court 3 for approval. 2 H. Newberg & A. Conte, Newberg on Class Actions (3d ed. 1992) at § 11.41, p. 11 -87. 4 Califomia "[pjublic policy generally favors the compromise of complex class action litigation." 5 Nordstrom Comm'n Cases, 186 Cal. App. 4th 576, 581 (2010) quoting Cellphone Termination Fee 6 Cases, 180 Cal.App.4th 1110, 1117-18 (2009). Class action settlements are approved where the 7 proposed settlement is "fair, adequate and reasonable." Dunkv. Ford Motor Co., 48 Cal.App.4th 1794, 8 1801 (1996) (citing Officers for Justice v. Civil Serv. Comm'«, 688 F.2d 615, 625 (9th Cir. 1982), cert, 9 denied, 459 U.S. 1217(1983)). 10 Preliminary approval is the first of three steps that comprise the approval procedure for 11 settlements of class actions. The second step is the dissemination of notice ofthe settlement to all class 12 members. The third step is a final settlement approval hearing, at which evidence and argument 13 concerning the faimess, adequacy, and reasonableness of the settlement may be presented, and class 14 members may be heard regarding the settlement. See Dunk v. Ford Motor Co., 48 Cal.App.4th 1794, 15 1801 (1996); Manual for Complex Litigation, Second §30.44 (1993); Cal. Rules of Court, rule 3.769. 16 The primary question presented on an application for preliminary approval of a proposed class 17 action settlement is whether the proposed settlement is "within the range of possible approval." 18 Manualfor Complex Litigation, Second §30.44 at 229; Gautreaux v. Pierce, 690 F.2d 616,621 n.3 (7th 19 Cir. 1982).^ Preliminary approval is merely the prerequisite to giving notice so that "the proposed 20 settlement... may be submitted to members of the prospective Class for their acceptance or rejection." 21 Sayaman v. Baxter Healthcare Corp., 2010 U.S. Dist. LEXIS 151997, '*3 (CD. Cal. 2010). There is 22 "a presumption of fairness .. . where ... [a] settlement is reached through arms-length bargaining." 23 Wershba v. Apple Computer, Inc., 91 Cal.App.4th 224, 245 (2001) (citation omitted); see also Cho v. 24 25 25 ^ Califomia courts look to federal authority on class actions. Vasquez v. Superior Court, 4 Cal.3d 800, 821 (1971). "It is well established that in the absence of relevant state precedents trial courts are 27 urged to follow the procedures prescribed in Rule 23 of the Federal Rules of Civil Procedure for conducting class actions." Frazier v. City of Richmond, 184 Cal. App.3d 1491, 1499 (1986), citing 28 Green v. Obledo, 29 Cal.3d 126, 145-146 (1981). MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -5- CaseNo. 34-2017-00210560 1 Seagate Tech. Holdings, Inc., 177 Cal. App. 4th 734, 742-45 (2009) (upholding trial court's 2 determination that settlement was "fair, reasonable and adequate" where the settlement "provided 3 valuable benefits to the class ... that were'particularly valuable in light ofthe risks plaintiff would have 4 faced if she proceeded to litigate her case.'"); Newberg, 3d Ed., § 11.41, p. 11 -88. However, the ultimate 5 question of whether the proposed settlement is fair, reasonable and adequate is made after notice of the 6 settlement is given to the class members and a final settlement hearing is held by the Court. 7 A. The Role Of The Court In Preliminary Approval Of A Class Action Settlement 8 The approval of a proposed settlement of a class action suit is a matter within the broad 9 discretion of the trial court. Wershba, supra, 9\Ca\.A\>p.4i\\a\.2?,4-2'i5; Dunk, 4% Ca\.\^p.4i\\ 1794. 10 Preliminary approval does not require the trial court to answer the ultimate question of whether a 11 proposed settlement is fair, reasonable and adequate. That final determination is made only after notice 12 ofthe settlement has been given to the class members and after they have been given an opportunity 13 to voice their views of the settlement or to be excluded from the settlement. 3B J. Moore, Moore's 14 Federal Practice §§23.80 - 23.85 (2003). 15 In considering a potential settlement for preliminary approval purposes, the trial court does not 16 have to reach any ultimate conclusions on the issues of fact and law which underlie the merits of the 17 dispute, and need not engage in a trial on the merits. Wershba, supra, 91 Cal.App.4th at 239-40; Dunk, 18 supra, 48 Cal.App. 4th at 1807. The Ninth Circuit explains, "the very essence of a settlement is 19 compromise, 'a yielding of absolutes and an abandoning of highest hopes.'" Officers for Justice, 6%% 20 F.2d at 624. The question whether a proposed settlement is fair, reasonable and adequate necessarily 21 requires a judgment and evaluation by the attomeys for the parties based upon a comparison of "'the 22 terms of the compromise with the likely rewards of litigation.'" Weinberger v. Kendrick, 69% V .2A6\, 23 73 (2d Cir. 1982), cert, denied464 U.S. 818 (1983) (quoting Protective Comm. forIndep. Stockholders 24 ofTMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968)). Thus, when analyzing the 25 settlement, the amount is "not to be judged against a hypothetical or speculative measure of what might 26 have been achieved by the negotiators." Officers for Justice, 688 F.2d at 625, 628. 27 With regard to class action settlements, the opinions of counsel should be given considerable 28 weight both because of counsel's familiarity with this litigation and previous experience with cases MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -6- Case No. 34-2017-00210560 such as these. Officers for Justice, 688 F.2d at 625; In re Wash. Public Power Supply System Sec. 2 Litig, 720 F. Supp. 1379, 1392 (D. Ariz. 1989); Kirkorian v. Borelli, 695 F. Supp. 446,451 (N.D. Cal. 3 1988); Weinberger, 698 F.2d at 74. "The recommendations of plaintiffs' counsel should be given a 4 presumption of reasonableness." Boyd v. Bechtel Corp., 485 F.Supp. 610, 622 (N.D. Cal. 1979). As 5 a result, courts hold that the recommendation of counsel is entitled to significant weight. Nat'l Rural 6 Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 528 (CD. Cal. 2004). 7 B. Factors To Be Considered In Granting Preliminarily Approval 8 A number of factors are to be considered in evaluating a settlement for purposes of preliminary 9 approval. In determining whether to grant preliminary approval, the court considers whether the "(1) 10 the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, (2) 11 has no obvious deficiencies, (3) does not improperly grant preferential treatment to class representatives 12 or segments of the class, and (4) falls within the range of possible approval." In re Tableware Antitrust 13 Litig., 484 F.Supp. 2d 1078, 1079 (N.D. Cal. 2007). No one factor should be determinative, but rather 14 all factors should be considered. The analysis has been summarized as follows: 15 If the proposed settlement appears to be the product of serious, informed, noncollusive negotiations, has no obvious deficiencies, does not improperly grant preferential 16 treatment to class representatives or segments of the class, and falls within the range of possible approval, then the court should direct that notice be given to the class members 17 of a formal faimess hearing, at which evidence may be presented in support of and in opposition to the settlement. 18 Manual of Complex Litigation, Second § 30.44, at 229. 19 Here, the Settlement meets all of these criteria for preliminary approval. 20 .. 1. The Settlement is the Product of Serious, Informed and 21 Arm's Length Negotiations by Experienced Counsel 22 This settlement is the result of extensive and hard-fought litigation as well as negotiations 23 before an experienced and well-respected mediator. The parties engaged in significant written 24 discovery including multiple sets of written discovery, reviewing several thousand pages of documents, 25 along with the depositions of both class representatives and four corporate representatives. Defendant 26 has expressly denied and continues to deny any wrongdoing or legal liability arising out of the conduct 27 alleged in the Action. Plaintiffs and Class Counsel have determined that it is desirable and beneficial 28 MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -7- Case No. 34-2017-00210560 1 to the Class to resolve the Released Class Claims of the Class in accordance with this Settlement.^ 2 Class Counsel are experienced and qualified to evaluate the class claims, the defenses asserted, 3 and the risks and benefits of trial and settlement, and Class Counsel are particularly experienced in 4 wage and hour employment class actions, as Class Counsel has previously litigated and certified similar 5 claims against other employers. Decl. Nordrehaug at 1135; Declaration of Shaun Setareh at 1I1I3-5. The 6 view of qualified and well-informed counsel that a class action settlement is fair, adequate, and 7 reasonable is entitled to significant weight. See Kullar v. Foot Locker, 168 Cal. App. 4th 116, 133 8 (2008) (the trial court "undoubtedly should continue to place reliance on the competence and integrity 9 of counsel, the involvement of a qualified mediator, and the paucity of objectors to the settlement."); 10 Dunk, 48 Cal. App. 4th at 1802. 11 The Parties attended an arms-length mediation session with Tripper Ortman, Esq., a respected 12 and experienced mediator of wage and hour class actions, in order to reach this Settlement. In 13 preparation for the mediation. Defendant provided Class Counsel with necessary infonnation for the 14 members ofthe Class, including time data, payroll data and data concerning the composition of the 15 Class that supplemented this kind of information Plaintiffs had already obtained through years of hard 16 fought litigation. Plaintiffs had previously analyze data received in connection with litigation with the 17 assistance of damages experts DM&A and James Toney and then analyzed the data received in 18 connection with the mediation with the assistance of damages expert, Berger Consulting, and prepared 19 and submitted a mediation brief and damage valuation to the Mediator. At the conclusion of the all-day 20 mediation, the mediator issued a mediator's proposal that was accepted by the parties. The final 21 22 The release applicable to the Class is tethered to allegations in the Action and the "Released Class Claims" are "all class claims which were pled or could have been pled based on the factual allegations 23 contained in the operative complaint or any amendments thereto which occurred during the Class Period, and expressly excluding all other claims, including all claims alleged in Carranza v. Health Net 24 of California, Inc. (Los Angeles Superior Court, Case No. 20STCV14774) {"Carranza Action") and Alvarez v. Health Net of California, Inc. (Sacramento Superior Court, Case No. 34-2020- 00289192) 25 {"Alvarez Action'''), claims for vested benefits, wrongful termination, unemployment insurance, 25 disability, social security, and workers' compensation, and class claims outside of the Class Period. The Released Class Claims include any claims, demands, lawsuits, administrative actions, arbitrations, and 27 participation to any extent in any pending or future class, collective, or representative actions, or other action of any kind based on the Released Class Claims. Participating Class Member releases include 28 known and unknown claims as described in this paragraph.." (Agreement at H 111(F)(1).) MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -8- Case No. 34-2017-00210560 1 settlement terms were negotiated and set forth in the Agreement now presented for this Court's 2 approval. Decl. Nordrehaug at H 5. Importantly, Plaintiffs and Class Counsel believe that this 3 Settlement is fair, reasonable and adequate. 4 As consideration for this Settlement, the Gross Settlement Amount to be paid by Defendant is 5 Five Million Dollars ($5,000,000). The Settlement is all-in with no reversion to Defendant and no 6 need to submit a claim form. Decl. Nordrehaug at H 3. 7 Class Counsel has conducted a thorough investigation into the facts of the class action. Over 8 the course of five years. Class Counsel has diligently evaluated the Class Members' claims against 9 Defendant. Prior to the settlement negotiations, counsel for Defendant provided Class Counsel with 10 access to necessary information for the Class. In addition. Class Counsel previously negotiated 11 settlements with other employers in actions involving nearly identical issues and analogous defenses. 12 Based on the foregoing data and their own independent investigation, evaluation and experience. Class 13 Counsel believes that the settlement with Defendant on the terms set forth in the Agreement is fair, 14 reasonable, and adequate and is in the best interest of the Class in light of all known facts and 15 circumstances, including the risk of significant delay, defenses asserted by Defendant, and potential 16 appellate issues. Decl. Nordrehaug at H 18. 17 Plaintiffs and Class Counsel recognize the expense and length of continuing to litigate and 18 trying these Action against Defendant through possible appeals which could take several years. Class 19 Counsel has also taken into account the uncertain outcome and risk of litigation, especially in complex 20 class actions such as these Action. Class Counsel is also mindful of and recognize the inherent 21 problems of proof under, and alleged defenses to, the claims asserted in the Action. Based upon their 22 evaluation. Plaintiffs and Class Counsel have determined that the Settlement set forth in the Agreement 23 is in the best interest of the Class Members. Decl. Nordrehaug, H 27. 24 Here, there can be no dispute that the litigation has been hard-fought with aggressive and 25 capable advocacy on both sides. The Parties were represented by experienced and capable counsel who 26 zealously advocated their positions. Accordingly, "[t]here is likewise every reason to conclude that 27 settlement negotiations were vigorously conducted at arms' length and without any suggestion of undue 28 influence." In re Wash. Public Power Supply System Sec. Litig., 720 F. Supp. at 1392. MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -9- Case No. 34-2017-00210560 2. The Settlement Has No "Obvious Deficiencies" and Falls Well Within the Range for Approval 2 The proposed Settlement herein has no "obvious deficiencies" and is well within the range of 3 possible approval. All Class Members will receive an opportunity to participate in the Settlement and 4 receive payment according to the same formula. (Agreement at 1| 111(C).) The Gross Settlement 5 Amount provides an average value of $969 per Class Member and $6.92 per workweek, and after 6 deductions, the Net Settlement Amount provides an average recovery of $575 per Class Member and 7 $4.11 per work week. Decl. Nordrehaug, 116. 8 The calculations to compensate for the amount due to the Class Members at the time this 9 Settlement was negotiated were calculated by Plaintiffs' experts DM&A, James Toney and Berger 10 Consulting, in advance of mediation. For the individuals whose claims are at issue in this Actions, 11 Plaintiffs analyzed the data for putative class members and determined the potential maximum damages 12 for the class claims. For the Class, Plaintiffs determined that the unpaid wages due to the alleged 13 miscalculation of the regular rate was $280,445, the potential off-the-clock damages were $5,792,882, 14 and the maximum potential meal and rest period damages were estimated to be $8,718,769.32. In total, 15 the damages for the Class were calculated to have a maximum total value of $14,792,096.32. In 16 addition. Plaintiffs calculated that the maximum value of the waiting time penalties were $6,895,983 17 and the maximum value of the wage statement penalties were $14,071,700.'' Decl. Nordrehaug, 116. 18 Consequently, the Gross Settlement Amount represents more than 33% of the value of the 19 potential maximum damages at issue for the Class in this case, assuming these amounts could all be 20 21 22 While Plaintiffs alleged claims for statutory penalties pursuant to Labor Code Sections 203 and 23 226, Plaintiffs recognized that these claims were subject to various defenses asserted by Defendant, including, but not limited to, a good faith dispute defense as to whether any premium wages for meal 24 or rest periods or other wages were owed given Defendant's position that Plaintiffs were properly 25 compensated. See Nordstrom Commission Cases, 186 Cal. App. 4th 576, 584 (2010) ("There is no willftil failure to pay wages if the employer and employee have a good faith dispute as to whether and 25 when the wages were due."). Additionally, Courts have held that violations of the meal and rest period regulations, which require payment of a "premium wage" for each improper meal period, do not give 27 rise to claims under sections 203 and 226. See Ling v. P.F. Chang's China Bisto, Inc., 245 Cal. App. 4th 1242, 1261 (2016) and Maldonado v. Epsilon Plastics, Inc., 22 Cal. App. 5th 1308, 1336 (2018). 2^ As a result, the viability of Plaintiffs' claims on these theories is uncertain. MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -10- CaseNo. 34-2017-00210560 proven in full at trial.' The above maximum calculations should then be adjusted in consideration for 2 both the risk of maintaining class certification through potential motions for decertification and the risk 3 of establishing class-wide liability on all claims. Given the amount of the Settlement as compared to 4 the potential value ofthe claims, the Settlement is most certainly fair and reasonable.* Clearly, the goal 5 of this litigation has been met. Decl. Nordrehaug, 116. 6 Where both sides face significant uncertainty, the attendant risks favor settlement. Hanlon v. 7 Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Here, a number of defenses asserted by 8 Defendant present serious threats to the claims of the Plaintiffs and the other Class Members. 9 Defendant asserted that Defendant's practices complied with all applicable Labor laws. Defendant 10 argued that all work time was paid for and that the regular rate calculation was lawful. Finally, 11 Defendant successfully argued that the Supreme Court decision in Brinker v. Superior Court, 53 Cal. 12 4th 1004 (2012) precluded class certification as to the meal and rest period claims and, as a result, 13 deprived Plaintiffs ofthe ability to litigate the claims on liability and obtain any value for these claims 14 at all in Court. Defendant also argues that based on their facially lawful practices, they acted in good 15 faith and without willfulness, which if accepted would negate the claims for waiting time penalties 16 and/or inaccurate wage statements. In fact, given the flux in law pertaining to regular rate and off the 17 clock claims, it is questionable whether these penalties could be awarded at all based upon the alleged 18 unpaid wage violations. If successftil. Defendant's defenses could eliminate or substantially reduce any 19 recovery to the Class. While Plaintiffs believe that these defenses could be overcome. Defendant 20 maintains these defenses have merit and therefore present a serious risk to recovery by the Class. Decl. 21 Nordrehaug, 1 28. 22 There was also a significant risk that, if the Actions were not settled. Plaintiffs would be unable 23 24 ^ Because the PAGA claim does not provide a recovery to the Class, Plaintiffs have not included 2^ the PAGA claim in this discussion. The PAGA claim is addressed in the Decl. Nordrehaug at H 37. 25 * See Dunleavy v. Nadler (In re Mego Fin. Corp. Sec. Litig.), 213 F.3d 454, 459 (9th Cir. 2000) approving settlement which represented "roughly one-sixth of the potential recovery"); Stovall-Gusman 27 V. W.W. G r a / i g e r , 2 0 1 5 U.S. Dist. LEXIS 78671, at M 2 (N.D. Cal. 2015) (granting final approval where "the proposed Total Settlement Amount represents approximately 10% of what class might have 28 been awarded had they succeeded at trial.") MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -1 1 - Case No. 34-2017-00210560 to maintain class certification and thereby not recover on behalf of any employees other than 2 themselves. Defendant argued that the individual experience of each putative class member varied with 3 respect to the claims. Defendant could always relitigate class certification by filing a motion to 4 decertify the class arguing that damages determinations for off the clock claims would be too 5 unmanageable to maintain as a class action. See e.g. Cacho v. Eurostar, Inc., 43 Cal. App. 5th 885, 6 256 Cal. Rptr. 3d 547 (2019) (denying certification of meal and rest break claims). In this way. 7 Defendant contended that individual differences in work experiences not only impacted damages but 8 would also impact the ability to maintain certification through trial. Finally, even if class certificafion 9 was successfiilly preserved through a motion for decertification, as demonstrated by the California 10 Supreme Court decision in Duran v. U.S. Bank National Assn., 59 Cal. 4th 1 (2014), there are 11 significant hurdles to overcome for a class wide recovery even where the class has been certified. Decl. 12 Nordrehaug, H 29. 13 After arm's length negotiations between experienced and informed counsel, the Parties 14 recognized the potential risks and agreed on the Settlement with a Gross Settlement Amount of 15 $5,000,000. As the Court held in Glass, where the parties faced uncertainties similar to those here: 16 In light of the above-referenced uncertainty in the law, the risk, expense, complexity, and likely duration of ftjrther litigation likewise favors the settlement. Regardless of 17 how this Court might have ruled on the merits of the legal issues, the losing party likely would have appealed, and the parties would have faced the expense and uncertainty of 18 litigating an appeal. 'The expense and possible duration of the litigation should be considered in evaluating the reasonableness of [a] settlement.'" 19 2007 WL 221862, at *4 (quoting In re Mego Financial Corp. Securities Litigation, 213 F.3d 454,458 20 (9th Cir. 2000)). 21 3. The Settlement Does Not Improperly Grant Preferential Treatment To 22 Class Representatives or Segments Of The Class 23 The relief provided in the Settlement will benefit all members of the Class. The Settlement does 24 not grant preferential treatment to Plaintiffs or segments of the Class in any way. Payments to the Class 25 Members are all determined under a neutral methodology. Each Participating Class Member will 26 receive the same opportunity to participate in and receive payment through a neutral formula that is 27 based upon the weeks worked by that individual. Decl. Nordrehaug, 114. 28 Plaintiffs will apply to the Court for a Class Representative Service Payment in consideration MEMORANDUM ISO MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT -12- CaseNo. 34-2017-00210560 1 for the service and for the risks undertaken on behalf of the class. (Agreement at 11111(B)(1).) Plaintiffs 2 performed their duty admirably by working with Class Counsel and have already been approved as 3 adequate class representatives. At this stage, the requested service award of $ 10,000 is well within the 4 accepted range of awards for purposes of preliminary approval. See e.g. Mathein v. Pier I Imps. (U.S.), 5 Inc., 2018 U.S. Dist. LEXIS 71386 (E.D. Cal. 2018) (awarding $12,500 where average class member 6 payment was $351); Holman v. Experian Info. Solutions, Inc., 2014 U.S. Dist. LEXIS 173698 (N.D. 7 Cal. 2014) (approving $ 10,000 service award where class member recovery was $375); Louie v. Kaiser 8 Foundation Health Plan, Inc., 2008 WL 4473183, *7 (S.D.Cal. 2008) (awarding $25,000 service 9 award to each of six plaintiffs in overtime class action); Glass v. UBS Fin. Servs., 2007 WL 221862, 10 "'16-17 (N.D.Cal. 2007) (awarding $25,000 service award in overtime class action and a pool of 11 $100,000 in enhancements ). As explained in Glass, service awards are routinely awarded to class 12 representatives to compensate the employees for the time and effort expended on the case, for the risk 13 of litigation, for the fear of suing an employer and retaliation there from, and to serve as an incentive 14 to vindicate the statutory rights of all employees. 2007 WL 221862 at * 16-17. 15 4. The Stage Of The Proceedings Are Sufficiently Advanced To Permit Preliminary Approval Of The Settlement 16 The stage of the proceedings at which this Settlement was reached also militates in favor of 17 preliminary approval and ultimately, final approval of the Settlement. Class Counsel has conducted 18 a thorough investigation into the facts of the class action. Class Counsel began investigating the Class 19 Members' claims before the Action was filed. Class Counsel engaged in formal discovery, which 20 required the filing of: (i) a Motion for an Opt Out Privacy Notice to be sent to the Class Members on 21 November 16, 2017 [Doc. No. 34]; (ii) a Motion to compel Defendant to produce documents on 22 December 1,2017 [Doc. No. 40], and, (iii) a Motion to compel Defendant to respond to interrogatories 23 on December 6, 2017 [Doc. No. 49]. Decl. Nordrehaug, 1112. 24 The Opposition to the Motion to Sequence Discovery was filed by P