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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
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or THOMPSON LY, Case No.: 18CV334378
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Plaintiff,
ORDER AFTER HEARING ON
13 AUGUST 7, 2020
vs.
14 Motion for Preliminary Approval of
15
SAGE INTACCT, INC., et al., Class Action Settlement
16 Defendants.
17
18
19 The above-entitled matter came on regularly for hearing on Friday, August 7, 2020 at
20 9:00 a.m. in Department 1 (Complex Civil Litigation), the Honorable Brian C. Walsh
21 presiding. A tentative ruling was issued prior to the hearing. The appearances are as stated in
22 the record. Having reviewed and considered the written submissions of all parties and being
23 fully advised, the Court orders as follows:
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25 This is a putative class action on behalf of employees of defendant Sage Intacct, Inc.,
26 alleging misclassification of certain employees and resulting wage and hour violations. Before
27 the Court is plaintiff's motion for preliminary approval of a settlement, which is unopposed.
28 //1
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
1. Factual and Procedural Background
As alleged in the operative complaint, plaintiff worked for Sage as an Inbound Sales
Development Representative, also known as a Sales Development Representative, from October
2016 to May 2017. (Complaint, 4] 12-13.) His duties included calling on potential customers
and qualifying marketing-generated leads, discussing defendant’s cloud accounting and ERP
software with potential customers, generating new business opportunities, and selling cloud
accounting and ERP software to small to mid-size businesses. (/bid.) Plaintiff was paid a base
salary, plus variable commissions. (Ibid.) However, he alleges that he and other class members
were regularly scheduled to work overtime without receiving straight time or overtime
10 compensation, because they are properly classified as nonexempt employees. (/d., 14.) Asa
or result of defendant’s failure to pay these wages, class members also did not receive all wages
12 owed at the time of separation and are entitled to waiting time penalties. (/d., { 32.)
13 Based on these allegations, plaintiff brings putative class claims for (1) violation of Labor
14 Code sections 510 and 1194, (2) restitution pursuant to Business & Professions Code section
15 17203, and (3) waiting time penalties pursuant to Labor Code section 203.
16 The parties have now reached a settlement. Plaintiff moves for an order preliminarily
17 approving the settlement, provisionally certifying the settlement class, approving the form and
18 method for providing notice to the class, and scheduling a final fairness hearing.
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20 Il. Legal Standards for Approving a Class Action Settlement
21 Generally, “questions whether a settlement was fair and reasonable, whether notice to the
22 class was adequate, whether certification of the class was proper, and whether the attorney fee
23 award was proper are matters addressed to the trial court’s broad discretion.” (Wershba v. Apple
24 Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, citing Dunk v. Ford Motor Co. (1996) 48
25 Cal.App.4th 1794, disapproved of on other grounds by Hernandez v. Restoration Hardware, Inc.
26 (2018) 4 Cal.5th 260.)
27 In determining whether a class settlement is fair, adequate and reasonable, the
trial court should consider relevant factors, such as the strength of plaintiffs’ case,
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the risk, expense, complexity and likely duration of further litigation, the risk of
maintaining class action status through trial, the amount offered in settlement, the
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
extent of discovery completed and the stage of the proceedings, the experience
and views of counsel, the presence of a governmental participant, and the reaction
of the class members to the proposed settlement.
(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at pp. 244-245, internal citations and
quotations omitted.)
In general, the most important factor is the strength of plaintiffs’ case on the merits,
balanced against the amount offered in settlement. (See Kullar v. Foot Locker Retail, Inc. (2008)
168 Cal.App.4th 116, 130.) Still, the list of factors is not exclusive and the court is free to
engage in a balancing and weighing of factors depending on the circumstances of each case.
(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245.) The court must examine
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the “proposed settlement agreement to the extent necessary to reach a reasoned judgment that the!
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agreement is not the product of fraud or overreaching by, or collusion between, the negotiating
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parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all
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concerned.” (Jbid., quoting Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1801, internal
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quotation marks omitted.)
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The burden is on the proponent of the settlement to show that it is fair and
16 reasonable. However “a presumption of fairness exists where: (1) the settlement
is reached through arm’s-length bargaining; (2) investigation and discovery are
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sufficient to allow counsel and the court to act intelligently; (3) counsel is
18 experienced in similar litigation; and (4) the percentage of objectors is small.”
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(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245, citing Dunk v. Ford Motor
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Co., supra, 48 Cal.App.4th at p. 1802.) The presumption does not permit the Court to “give
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rubber-stamp approval” to a settlement; in all cases, it must “independently and objectively
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analyze the evidence and circumstances before it in order to determine whether the settlement is
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in the best interests of those whose claims will be extinguished,” based on a sufficiently
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developed factual record. (Kullar v. Foot Locker Retail, Inc., supra, 168 Cal.App.4th at p. 130.)
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26 IIL Settlement Process
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Plaintiff served initial discovery requests in March 2019, and multiple discovery disputes
28 developed. The parties participated in an informal discovery conference (“IDC”) with the Court
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
on August 14, 2019, and reached an agreement regarding some disputes, at which point
defendant produced approximately 1,200 documents. More disputes arose, and a second IDC
was held on November 4, 2019. Defendant produced approximately 11,000 additional
documents, and plaintiff agreed to delete confidential information he retained after his
termination and produce certain electronically stored information. During this period, both
plaintiff and defendant prepared and served numerous amended discovery responses. Defendant
deposed plaintiff on November 19, 2019, but did not complete the deposition.
In January 2020, the parties began to discuss mediation, and they stipulated to stay the
case and vacate case deadlines. On April 15, 2020, in light of the COVID-19 pandemic, they
10 conducted a virtual mediation with Francis “Tripper” Ortman III. Defendant provided
or substantial information about the claims alleged by plaintiff, including payroll data, Salesforce
12 data, and parking badge data. After mediating late into the evening, the parties were able to
13 reach the agreement before the Court.
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15 IV. Provisions of the Settlement
16 The non-reversionary gross settlement amount is $ 1,100,000. Attorney fees of up to $
17 366,666 (one-third of the gross settlement), litigation costs not to exceed $15,000, and
18 administration costs of $5,750 will be paid from the gross settlement. The named plaintiff will
19 also seek an enhancement award of $7,500.
20 The net settlement, approximately $705,084, will be distributed to individual class
21 members pro rata based on their weeks worked during the class period. Class members whose
22 employment was terminated during the class period will receive credit for an additional four
23 workweeks. The average settlement payment will be approximately $7,922.29 to each of the 89
24 class members, and class members will not be required to submit a claim to receive their
25 payments. Settlement awards will be allocated 1/3 to unpaid wages and 2/3 to interest and
26 penalties. Defendant will pay its share of payroll taxes in addition to the gross settlement
27 amount. Funds associated with checks uncashed after 180 days will be redistributed among
28 participating class members. Any redistribution checks that remain uncased after 90 days will be|
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
deposited with the State of California unclaimed property fund in the name of the class member
who received the redistribution.
Class members who do not opt out of the settlement will release claims (1) that were pled!
in the complaint; (2) “[t]hat could have been alleged by Plaintiff or any Settlement Class
Member under the facts pled in the Complaint including, but not limited to, any claims for
penalties (statutory, civil or otherwise) associated with the alleged failure to pay compensation
for all hours worked (including minimum wages and overtime wages), waiting time penalties,
and violation(s) of Business and Professions Code section 17200 et seq.”; or (3) that first arose
or existed during the class period with respect to “a) Any claims for failure to pay compensation
10 for all hours worked (including minimum wages and overtime wages) in accordance with the
or California Labor Code and/or applicable Wage Orders; b) Any claims for the failure to pay
12 waiting time penalties; c) Any claims for equitable relief, declaratory relief, liquidated damages,
13 restitution, or unfair business practices alleged or which could have been alleged in connection
14 with the alleged failure to pay for all wages owed (including minimum wages and overtime
15 wages) and waiting time penalties; and d) Any claims for attorneys’ fees, interest, or penalties in
16 connection with the failure to provide meal periods, failure to pay for all wages owed (including
17 minimum wages and overtime wages) and waiting time penalties.”
18 In a supplemental declaration, plaintiffs counsel confirmed that the reference to claims
19 for failure to provide meal periods in the last subsection of the release is in error. That aspect of
20 the release is not approved, but the remainder of the release is appropriate.
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22 V. Fairness of the Settlement
23 Plaintiff believes he has a strong case at class certification and on the merits based on
24 discovery regarding the application of the administrative exemption in this case. However,
25 defendant maintains that the class members were properly classified, and some or all of them
26 were not primarily engaged in sales but instead advised management, negotiated or represented
27 Sage, or conducted business research. It also asserts that its incentive plan is a bona fide
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Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
commission plan that would support its commissioned sales exemption defense, at least as to
some class members.
Plaintiff estimates that, after the deductions from the gross settlement described above,
class members will recover the value of approximately 2.1 hours of overtime per week. Based
on his investigation, he concluded that class members worked an average of 7.6 hours of
overtime, and submits that the settlement represents a fair and reasonable compromise of their
claims. At the Court’s direction, plaintiff's counsel submitted a supplemental declaration
explaining that the settlement represents approximately 27 percent of the potential exposure in
the case, including the value of the penalty claims. Plaintiff submits that this represents a fair
10 and reasonable outcome in the best interests of the putative class, and based on the analysis
or above, the Court agrees.
12 In addition, the Court retains an independent right and responsibility to review the
13 requested attorney fees and award only so much as it determines to be reasonable. (See
14 Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.)
15 While 1/3 of the common fund for attorney fees is generally considered reasonable, counsel
16 shall submit lodestar information prior to the final approval hearing in this matter so the Court
17 can compare the lodestar information with the requested fees. (See Laffitte v. Robert Half Intern.
18 Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of|
19 a percentage fee through a lodestar calculation].)
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21 VI. Proposed Settlement Class
22 Plaintiff requests that the following settlement class be provisionally certified:
23 all persons who are employed or have been employed as exempt by Sage Intacct, Inc. in
the State of California as a:
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25 Sales Development Representative from September 12, 2014 through July 31,
2018; and/or
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27 Corporate Account Manager from September 12, 2014 through July 15, 2020 or
the date the Court grants preliminary approval, whichever date is earlier.
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Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
1 A. Legal Standard for Certifying a Class for Settlement Purposes
2 Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order
3 approving or denying certification of a provisional settlement class after [a] preliminary
settlement hearing.” California Code of Civil Procedure Section 382 authorizes certification of a|
class “when the question is one of a common or general interest, of many persons, or when the
parties are numerous, and it is impracticable to bring them all before the court ....” As
interpreted by the California Supreme Court, Section 382 requires the plaintiff to demonstrate by
a preponderance of the evidence (1) an ascertainable class and (2) a well-defined community of
interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (Rocher) (2004)
10 34 Cal.4th 319, 326, 332.)
or The “community-of-interest” requirement encompasses three factors: (1) predominant
12 questions of law or fact, (2) class representatives with claims or defenses typical of the class, and|
13 (3) class representatives who can adequately represent the class. ([bid.) “Other relevant
14 onsiderations include the probability that each class member will come forward ultimately to
15 prove his or her separate claim to a portion of the total recovery and whether the class approach
16 would actually serve to deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil Co. (2000)
17 23 Cal.4th 429, 435.) The plaintiff has the burden of establishing that class treatment will yield
18 “substantial benefits” to both “the litigants and to the court.” (Blue Chip Stamps v. Superior
19 Court (Botney) (1976) 18 Cal.3d 381, 385.)
20 In the settlement context, “the court’s evaluation of the certification issues is somewhat
21 different from its consideration of certification issues when the class action has not yet settled.”
22 (Luckey v. Superior Court (Cotton On USA, Inc.) (2014) 228 Cal.App.4th 81, 93.) As no trial is
23 anticipated in the settlement-only context, the case management issues inherent in the
24 ascertainable class determination need not be confronted, and the court’s review is more lenient
25 in this respect. (/d. at pp. 93-94.) However, considerations designed to protect absentees by
26 blocking unwarranted or overbroad class definitions require heightened scrutiny in the
27 settlement-only class context, since the court will lack the usual opportunity to adjust the class as
28 proceedings unfold. (/d. at p. 94.)
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
B. Ascertainable Class
“The trial court must determine whether the class is ascertainable by examining (1) the
class definition, (2) the size of the class and (3) the means of identifying class members.”
(Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) “Class members are ‘ascertainable’ where
they may be readily identified without unreasonable expense or time by reference to official
records.” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.)
Here, the estimated 89 class members have already been identified based on defendant’s
records, and the settlement class is clearly defined. The Court finds that the settlement class is
numerous and ascertainable. The class is also appropriately defined: plaintiffs counsel explains
10 that after July 31, 2018, defendant reclassified all Sales Development Representatives as non-
or exempt.
12 C. Community of Interes
13 With respect to the first community of interest factor, “[i]n order to determine whether
14 ‘ommon questions of fact predominate the trial court must examine the issues framed by the
15 pleadings and the law applicable to the causes of action alleged.” (Hicks v. Kaufnan & Broad
16 Home Corp. (2001) 89 Cal.App.4th 908, 916.) The court must also give due weight to any
17 evidence of a conflict of interest among the proposed class members. (See J.P. Morgan & Co.,
18 Inc. v. Superior Court (Heliotrope General, Inc.) (2003) 113 Cal.App.4th 195, 215.) The
19 ultimate question is whether the issues which may be jointly tried, when compared with those
20 requiring separate adjudication, are so numerous or substantial that the maintenance of a class
21 action would be advantageous to the judicial process and to the litigants. (Lockheed Martin
22 Corp. v. Superior Court, supra, 29 Cal.4th at pp. 1104-1105.) “As a general rule if the
23 defendant’s liability can be determined by facts common to all members of the class, a class will
24 be certified even if the members must individually prove their damages.” (Hicks v. Kaufman &
25 Broad Home Corp., supra, 89 Cal.App.4th at p. 916.)
26 Here, common legal and factual issues predominate. Plaintiff's claims all arise from
27 defendants’ wage and hour practices applied to the similarly-situated class members.
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Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
As to the second factor,
The typicality requirement is meant to ensure that the class representative is able
to adequately represent the class and focus on common issues. It is only when a
defense unique to the class representative will be a major focus of the litigation,
or when the class representative’s interests are antagonistic to or in conflict with
the objectives of those she purports to represent that denial of class certification is
appropriate. But even then, the court should determine if it would be feasible to
divide the class into subclasses to eliminate the conflict and allow the class action
to be maintained.
(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations,
brackets, and quotation marks omitted.)
Like other members of the class, plaintiff was employed by defendant in one of the
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positions at issue and alleges he experienced the violations alleged. The anticipated defenses are
or
not unique to plaintiff, and there is no indication that his interests are otherwise in conflict with
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those of the class.
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Finally, adequacy of representation “depends on whether the plaintiff's attorney is
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qualified to conduct the proposed litigation and the plaintiff's interests are not antagonistic to the
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interests of the class.” (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.) The class
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representative does not necessarily have to incur all of the damages suffered by each different
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class member in order to provide adequate representation to the class. (Wershba v. Apple
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Computer, Inc. (2001) 91 Cal.App.4th 224, 238.) “Differences in individual class members’
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proof of damages [are] not fatal to class certification. Only a conflict that goes to the very
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subject matter of the litigation will defeat a party’s claim of representative status.” (Ibid.,
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internal citations and quotation marks omitted.)
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Plaintiff has the same interest in maintaining this action as any class member would
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have. Further, he has hired experienced counsel. Plaintiff has sufficiently demonstrated
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adequacy of representation.
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D. Substantial Benefits of Class Certification
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“TA] class action should not be certified unless substantial benefits accrue both to
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litigants and the courts. .. .” (Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120,
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internal quotation marks omitted.) The question is whether a class action would be superior to
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
individual lawsuits. (Jbid.) “Thus, even if questions of law or fact predominate, the lack of
superiority provides an alternative ground to deny class certification.” (/bid.) Generally, “a
class action is proper where it provides small claimants with a method of obtaining redress and
when numerous parties suffer injury of insufficient size to warrant individual action.” (/d. at
pp. 120-121, internal quotation marks omitted.)
Here, there are an estimated 89 members of the proposed class. It would be inefficient
for the Court to hear and decide the same issues separately and repeatedly for each class
member. Further, it would be cost prohibitive for each class member to file suit individually, as
each member would have the potential for little to no monetary recovery. It is clear that a class
10 action provides substantial benefits to both the litigants and the Court in this case.
or
12 VII. Notice
13 The content of a class notice is subject to court approval. (Cal. Rules of Court, rule
14 3.769(f).) “The notice must contain an explanation of the proposed settlement and procedures
15 for class members to follow in filing written objections to it and in arranging to appear at the
16 settlement hearing and state any objections to the proposed settlement.” (/bid.) In determining
17 the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of
18 relief requested; (3) The stake of the individual class members; (4) The cost of notifying class
19 members; (5) The resources of the parties; (6) The possible prejudice to class members who do
20 not receive notice; and (7) The res judicata effect on class members.” (Cal. Rules of Court, rule
21 3.766(e).)
22 Here, the notice describes the lawsuit, explains the settlement, and instructs class
23 members that they may opt out of the settlement or object. The gross settlement amount and
24 estimated deductions are provided, along with the estimated payment to each class member.
25 Class members are given 45 days to request exclusion from the class, submit a written objection,
26 or dispute their work week information. Class members are instructed that they may appear at
27 the final approval hearing to make an oral objection even if they do not submit a written
28 objection. The form of notice is generally adequate and is approved, with the modification that
Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
1 class members’ estimated payments and work week information shall be displayed in bold withi:
a box set off from the rest of the text on the first page of the notice.
With regard to appearances at the final fairness hearing, the notice shall be further
modified to instruct class members as follows:
Due to the COVID-19 pandemic, hearings before the judge overseeing this case
are currently being conducted remotely with the assistance of a third-party service
provider, CourtCall. If that remains the case at the time of the final fairness
hearing, class members who wish to appear at the final fairness hearing should
contact class counsel to arrange a telephonic appearance through CourtCall, at
least three days before the hearing if possible. Any CourtCall fees for an
appearance by an objecting class member shall be paid by class counsel.
10 Turning to the notice procedure, the parties have selected Phoenix Settlement
or Administrators as the settlement administrator. The administrator will mail the notice packet
12 within 15 days of preliminary approval, after updating class members’ addresses using the
13 National Change of Address Database. Any notice packets returned as undeliverable will be re-
14 mailed to any forwarding address provided or more recent address located through a skip trace or|
15 by calling the class member’s mobile telephone. Class members who receive a re-mailed notice]
16 will have an additional 20 days to respond. These notice procedures are appropriate are
17 approved.
18
19 VIII. Conclusion and Order
20 The motion for preliminary approval is GRANTED. The final approval hearing shall
21 take place on December 4, 2020 at 9:00 a.m. in Dept. 1. The following class is preliminarily
22 certified for settlement purposes:
23 all persons who are employed or have been employed as exempt by Sage Intacct, Inc. in
the State of California as a:
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25 Sales Development Representative from September 12, 2014 through July 31, 2018;
and/or
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Corporate Account Manager from September 12, 2014 through July 15, 2020 or the
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date the Court grants preliminary approval, whichever date is earlier.
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Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378 1]
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]
1 Prior to final approval, plaintiff shall lodge for the Court’s review any individual
2 settlement agreement he may have executed in connection with his employment with defendant.
IT IS SO ORDERED.
Dated: iS i ( J9d-
Honorable Brian C. Walsh
Judge of the Superior Court
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Ly v, Sage Intacet, Inc. et al, Superior Court of California, County of Santa Clara, Case No. 18CV334378 17
Order After Hearing on August 7, 2020 [Motion for Preliminary Approval of Class Action Settlement]