Morrison v. American National Red Cross

1

2

3

4 UNITED STATES DISTRICT COURT

5 NORTHERN DISTRICT OF CALIFORNIA

6

7 LA TOIYA MORRISON, Case No. 19-cv-02855-HSG

8 Plaintiff, ORDER GRANTING MOTION FOR

PRELIMINARY APPROVAL OF

9 v. CLASS ACTION SETTLEMENT

10 AMERICAN NATIONAL RED CROSS, Re: Dkt. No. 36

11 Defendant.

12

13 Pending before the Court is the unopposed motion for preliminary approval of class action

14 settlement filed by Plaintiff La Toiya Morrison. See Dkt. No. 36. The parties have reached a

15 settlement regarding Plaintiff’s claims and now seek the required court approval. For the reasons

16 set forth below, the Court GRANTS Plaintiff’s motion for preliminary approval of class action

17 settlement.

18 I. BACKGROUND

19 A. Factual Background

20 Plaintiff brings this wage and hour class action against Defendant American National Red

21 Cross on behalf of herself and a putative class of instructors who taught training courses to

22 Defendant’s clients in California. See generally Dkt. No. 39 (“SAC”). Plaintiff seeks to represent

23 a class defined as “all individuals who are or were employed by [Defendant] as Training Services

24 instructors (formerly known as Preparedness and Health and Safety Services instructors) and

25 Nurse Assistant Training instructors and who taught courses to Red Cross clients in California”

26 during the four years prior to the filing of this action. Id. at ¶ 1.

27 Plaintiff alleges that Defendant required its instructors to use their personal cell phones to

1 scheduling, but Defendant did not reimburse any portion of instructors’ cell phone expenses. See

2 id. at ¶¶ 3, 27–29, 44. Additionally, Defendant did not authorize and permit instructors to take

3 meal and rest breaks, nor did Defendant compensate instructors for missed breaks. Id. at ¶¶ 4–5,

4 30–33, 51–52, 59, 63. Instead, Defendant required instructors to be available to students during

5 all scheduled class time, which impeded instructors’ ability to take any meal or rest breaks. See id.

6 at ¶ 31. Plaintiff contends that as a result of these practices, Defendant also failed to comply with

7 numerous provisions of California’s Labor Code and with Wage Orders promulgated by

8 California’s Industrial Welfare Commission (“IWC”). See id. at ¶¶ 34–38. Plaintiff further argues

9 that Defendant’s conduct constitutes unfair business practices, intended to reduce instructors’

10 compensation and increase Defendant’s own profits. See id. at ¶¶ 39, 80.

11 In particular, Plaintiff alleges that Defendant failed to: (a) reimburse for instructors’

12 business expenses, in violation of California Labor Code § 2802; (b) authorize and permit paid

13 off-duty rest breaks, in violation of California Labor Code § 226.7 and the applicable IWC Wage

14 Order; (c) authorize and permit off-duty meal breaks, in violation of California Labor Code § 512

15 and the applicable IWC Wage Order; (d) compensate instructors for all hours worked, in violation

16 of California Labor Code §§ 510, 1194, 1197, 1198, and the applicable IWC Wage Order;

17 (d) issue accurate itemized wage statements and maintain payroll records, in violation of

18 California Labor Code §§ 226, 1174, 1174.5, and the applicable IWC Wage Order; and (e) pay all

19 compensation due upon termination, in violation of California Labor Code §§ 201–203. See id. at

20 ¶¶ 42–77. In addition to compensation and penalties for these violations, Plaintiff seeks restitution

21 and injunctive relief for unfair business practices under California’s Unfair Competition Law

22 (“UCL), California Business and Professions Code §§ 17200 et seq. See id. at ¶¶ 78–84. Plaintiff

23 also seeks civil penalties under the Private Attorneys General Act of 2004 (“PAGA”), California

24 Labor Code §§ 2698 et seq. Id. at ¶¶ 85–87.

25 B. Procedural History

26 Plaintiff initially filed this action in Alameda County Superior Court on April 24, 2019.

27 See Dkt. No. 1-1, Ex. A. At the time, Plaintiff only challenged Defendant’s failure to reimburse

1 Code § 2802 and the UCL. Id. Soon after, on May 23, 2019, Defendant removed this action to

2 federal court. See Dkt. No. 1. On July 8, 2019, Plaintiff filed an amended complaint, seeking

3 PAGA penalties on behalf of herself and other instructors from April 17, 2018, through the present

4 (“PAGA Period”), for the underlying violation of California Labor Code § 2802. See Dkt. No. 15.

5 The parties subsequently agreed to attend early mediation and engaged in informal discovery. See

6 Dkt. Nos. 20, 26. As part of this process, Plaintiff’s counsel sent surveys to and conducted

7 interviews of putative class members. See Dkt. No. 36-1 at ¶ 11. On January 27, 2020, the parties

8 participated in a full-day mediation with mediator Lisa Klerman. See Dkt. No. 36-1 at ¶ 14.

9 C. Settlement Agreement

10 Following the parties’ informal discovery, and with the assistance of a mediator, the parties

11 entered into a settlement agreement, fully executed on June 2, 2020. Dkt. No. 36-2, Ex. A (“SA”).

12 The key terms are as follows:

13 Class Definition: The Settlement Class is defined as:

14 [A]ll individuals who are or were employed by the American

National Red Cross as Training Services instructors (formerly

15 known as Preparedness and Health and Safety Services instructors)

and/or Nurse Assistant Training instructors and who have taught

16 courses to Red Cross clients in California at any time from April 24,

2015 through and including the date the Preliminary Approval Order

17 is entered by the Court.

18 SA ¶ 2.4.

19 Settlement Benefits: Defendant will make a $377,000 non-reversionary payment. Id.

20 ¶¶ 2.21, 3.1. The parties propose that ten percent of this gross settlement fund, or $37,700, be

21 allocated to the PAGA claim as civil penalties. See SA ¶¶ 2.35, 3.1(c). Of this PAGA Payment,

22 $28,275 will be paid to the California Labor and Workforce Development Agency (“LWDA”) and

23 $9,425 will be distributed pro rata to instructors who taught courses for Defendant in California

24 from April 17, 2018, through the date of this order (“PAGA Releasees”). Id.; see also Cal. Lab.

25 Code § 2699(i) (providing that penalties under PAGA are split 75% to LWDA and 25% to

26 aggrieved employees). The gross settlement fund also includes Court-approved attorneys’ fees

27 and costs, settlement administration fees, any additional payment to Plaintiff as class

1 based on the number of pay periods each class member worked during the relevant class period.

2 Id. at ¶ 3.1(e). The parties have estimated that after the deductions identified above, as well as

3 applicable taxes and required withholdings, individual class members will receive approximately

4 $557. Dkt. No. 36 at 4; Dkt. No. 36-1 at ¶ 60; see also SA ¶ 3.2.

5 Cy Pres Distribution: Settlement checks that are not cashed within 90 days of mailing will

6 be void and those funds will be donated to Bet Tzedek, a non-profit legal services organization

7 that offers free legal services to low-income residents in Southern California, where Defendant’s

8 headquarters are located and the region in which Plaintiff worked during the time she was

9 employed by Defendant. SA ¶ 6.8(b); Dkt. No. 36 at 5–6. Bet Tzedek’s Employment Rights

10 Project enforces minimum labor standards in the workplace by assisting low-wage workers

11 through a combination of individual representation before the Labor Commissioner, litigation in

12 state and federal court, legislative advocacy, and community education. See Dkt. No. 36-1 at ¶ 68.

13 Release: During the hearing on the motion for preliminary approval, the Court raised

14 concerns that the proposed release was potentially overly broad, requiring class members to

15 release claims that do not arise from the claims that were or could have been pled in the complaint

16 based on the facts alleged. The parties have since clarified this language, and filed an amended

17 Paragraph 4.3 of the Settlement Agreement. See Dkt. No. 43. Under this amendment, all

18 Settlement Class Members will release:

19 any and all claims pleaded or that could have been pleaded in the

Complaint based on the facts and/or allegations in the Complaint,

20 Plaintiff’s April 17, 2019 LWDA Letter and/or Plaintiff’s February

18, 2020 Supplemental LWDA Letter, including, but not

21 limited to, any and all underlying statutory provisions identified in the

Complaint, Plaintiff’s April 17, 2019 LWDA Letter and/or Plaintiff’s

22 February 18, 2020 Supplemental LWDA Letter, any and all penalties

and any and all of the following claims or forms of relief that arose at

23 any time during the Settlement Period to the maximum extent

permitted by law:

24

(a) Any claims for expense reimbursement, meal break

25 violations, rest break violations, unpaid wages (including

but not limited to minimum wages, regular wages and

26 overtime pay), improper itemized wage statements,

improper payroll records maintenance and failure to pay

27 all wages due at the time of termination;

through 203, 226, 226.7, 510, 512, 558, 1174, 1174.5,

1 1194, 1197, 1197.1, 1198, 2698 and 2802 et seq., and

related provisions contained in the California Wage

2 Orders and the California Code of Regulations; the

California Business and Professions Code predicated on

3 such Labor Code sections, California Wage Orders, and

California Code of Regulations, including but not limited

4 to California Business and Professions Code section

17200 et seq.; and any claims under the Fair Labor

5 Standards Act for unpaid wages (including but not limited

to minimum wages, regular wages and overtime pay),

6 improper meal breaks, improper rest breaks, improper

itemized wage statements, improper payroll records

7 maintenance, failure to pay all wages due at the time of

termination and failure to reimburse for expenses;

8

9 (c) Any claims for damages, penalties, interest, attorney’s

fees and costs, injunctive relief, declaratory relief,

10 restitution, fraudulent business practices, punitive

damages or any other damages which were alleged or

11 which could have been alleged based in whole or in part

on the factual or legal allegations and/or claims in the

12 Complaint, Plaintiff’s April 17, 2019 LWDA Letter and/or

Plaintiff’s February 18, 2020 Supplemental LWDA

13 Letter.

14

15 Id. PAGA Releasees also agree to release “any and all PAGA claims premised in whole or in part

16 on any of the claims set forth in Paragraph 4.3 above that arose at any time during the PAGA

17 Period.” See SA ¶ 4.4.

18 Class Notice: A third-party settlement administrator will send class notices via first-class

19 U.S. mail to each member of the class, using the most current known address. See SA ¶ 6.3. The

20 notice will include the nature of the action; a summary of the settlement terms; the formula to be

21 used in calculating the individual settlement payment as well as the share of the PAGA Payment;

22 instructions on how to object to and opt out of the settlement, including relevant deadlines; and the

23 released claims. Id. at ¶ 6.3(d); see also Dkt. No. 36-1, Ex. B.

24 Opt-Out Procedure: The deadline for a class member to submit a request for exclusion or

25 to object to the Settlement is 45 days after the initial mailing date of the notice. SA ¶¶ 6.3(e), 6.5,

26 6.7. Defendant retains the right to “rescind/void” the Settlement if twenty or more class members

27 opt out. See id. at ¶ 6.6. Class members cannot, however, opt out of or otherwise object to the

1 Incentive Award: The named Plaintiff may apply for an incentive award of no more than

2 $10,000. Id. at ¶ 3.1(b).

3 Attorneys’ Fees and Costs: Class Counsel will file an application for attorneys’ fees not to

4 exceed $125,666.67, as well as costs not to exceed $15,000. Id. at ¶ 3.1(a).

5 II. PROVISIAL CLASS CERTIFICATION

6 The plaintiff bears the burden of showing by a preponderance of the evidence that class

7 certification is appropriate under Federal Rule of Civil Procedure 23. Wal-Mart Stores, Inc. v.

8 Dukes, 564 U.S. 338, 350–51 (2011). Class certification is a two-step process. First, a plaintiff

9 must establish that each of the four requirements of Rule 23(a) is met: numerosity, commonality,

10 typicality, and adequacy of representation. Id. at 349. Second, she must establish that at least one

11 of the bases for certification under Rule 23(b) is met. Where, as here, a plaintiff seeks to certify a

12 class under Rule 23(b)(3), she must show that “questions of law or fact common to class members

13 predominate over any questions affecting only individual members, and that a class action is

14 superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.

15 R. Civ. P. 23(b)(3).

16 “The criteria for class certification are applied differently in litigation classes and

17 settlement classes.” In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 556 (9th Cir. 2019)

18 (“Hyundai II”). When deciding whether to certify a litigation class, a district court must consider

19 manageability at trial. Id. However, this concern is not present in certifying a settlement class.

20 Id. at 556–57. In deciding whether to certify a settlement class, a district court “must give

21 heightened attention to the definition of the class or subclasses.” Id. at 557.

22 A. Rule 23(a) Certification

23 i. Numerosity

24 Rule 23(a)(1) requires that the putative class be “so numerous that joinder of all members

25 is impracticable.” The Court finds that numerosity is satisfied here because joinder of the

26 estimated 377 class members would be impracticable. See Dkt. No. 36-1 ¶ 13(a).

27 ii. Commonality

1 contention is sufficiently common where “it is capable of classwide resolution — which means

2 that determination of its truth or falsity will resolve an issue that is central to the validity of each

3 one of the claims in one stroke.” Dukes, 564 U.S at 350. Commonality exists where “the

4 circumstances of each particular class member vary but retain a common core of factual or legal

5 issues with the rest of the class.” Parra v. Bashas’, Inc., 536 F.3d 975, 978–79 (9th Cir. 2008).

6 “What matters to class certification . . . is not the raising of common ‘questions’ ― even in droves

7 — but rather the capacity of a classwide proceeding to generate common answers apt to drive the

8 resolution of the litigation.” Dukes, 564 U.S at 350. Even a single common question is sufficient

9 to meet this requirement. Id. at 359.

10 Common questions of law and fact in this action include whether Defendant’s policies

11 violated California’s wage and hour laws by failing to compensate employees for all business-

12 related expenses. See SAC ¶¶ 3, 27–29, 44. Plaintiff further contends that Defendant did not

13 authorize requisite meal and rest breaks and failed to pay all wages upon the separation of

14 employment. Id. at ¶¶ 4–5, 30–33, 51–52, 59, 63. Far from a singular occurrence, Plaintiff’s

15 complaint asserts that these practices were specific policies. See, e.g., id. at ¶¶ 27–31.

16 Accordingly, the Court finds that the commonality requirement is met in this case.

17 iii. Typicality

18 Rule 23(a)(3) requires that “the claims or defenses of the representative parties are typical

19 of the claims or defenses of the class.” “The test of typicality is whether other members have the

20 same or similar injury, whether the action is based on conduct which is not unique to the named

21 plaintiffs, and whether other class members have been injured by the same course of conduct.”

22 Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (quotation omitted). That said,

23 under the “permissive standards” of Rule 23(a)(3), the claims “need not be substantially identical.”

24 Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998) (quotation omitted).

25 Plaintiff’s claims are both factually and legally similar to those of the putative class

26 because Defendant allegedly failed to reimburse and to provide requisite meal and rest breaks for

27 both Plaintiff and all class members. See SAC ¶¶ 23, 41(c). That is sufficient to satisfy the

1 iv. Adequacy of Representation

2 Rule 23(a)(4) requires that the “representative parties will fairly and adequately represent

3 the interests of the class.” The Court must address two legal questions: (1) whether the named

4 Plaintiff and her counsel have any conflicts of interest with other class members and (2) whether

5 the named Plaintiff and her counsel will prosecute the action vigorously on behalf of the class.

6 See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir. 2000). This inquiry “tend[s] to

7 merge” with the commonality and typicality criteria. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S.

8 147, 158 n.13 (1982). In part, these requirements determine whether “the named plaintiff’s claim

9 and the class claims are so interrelated that the interests of the class members will be fairly and

10 adequately protected in their absence.” Id.

11 The Court is unaware of any actual conflicts of interest in this matter and no evidence in

12 the record suggests that either Plaintiff or proposed class counsel have a conflict with other class

13 members. Plaintiff’s counsel has been appointed class counsel in numerous federal and state class

14 actions. Dkt. No. 36-1 at ¶ 7. The Court finds that proposed class counsel and Plaintiff have

15 prosecuted this action vigorously on behalf of the class to date, and will continue to do so. The

16 adequacy of representation requirement, therefore, is satisfied.

17 B. Rule 23(b)(3) Certification

18 To certify a class, a plaintiff must satisfy the two requirements of Rule 23(b)(3). First,

19 “questions of law or fact common to class members [must] predominate over any questions

20 affecting only individual members.” Fed. R. Civ. P. 23(b)(3). And second, “a class action [must

21 be] superior to other available methods for fairly and efficiently adjudicating the controversy.” Id.

22 i. Predominance

23 The “predominance inquiry tests whether proposed classes are sufficiently cohesive to

24 warrant adjudication by representation.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045

25 (2016) (quotations omitted). The Supreme Court has defined an individualized question as one

26 where “members of a proposed class will need to present evidence that varies from member to

27 member.” Id. (quotations omitted). A common question, on the other hand, is one where “the

1 susceptible to generalized, class-wide proof.” Id. (quotations omitted).

2 The Court concludes that for purposes of settlement, common questions predominate here,

3 because under Plaintiff’s allegations Defendant’s wage and hour policies were uniform and

4 violated California law. Although the class members will need to rely upon individual evidence to

5 some extent to calculate their individual damages, the “mere fact that there might be differences in

6 damage calculations is not sufficient to defeat class certification.” Hyundai II, 926 F.3d at 560

7 (quotations omitted).

8 ii. Superiority

9 The superiority requirement tests whether “a class action is superior to other available

10 methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The

11 Court considers four non-exclusive factors: (1) the interest of each class member in individually

12 controlling the prosecution or defense of separate actions; (2) the extent and nature of any

13 litigation concerning the controversy already commenced by or against the class; (3) the

14 desirability of concentrating the litigation of the claims in the particular forum; and (4) the

15 difficulties likely to be encountered in the management of a class action. Id.

16 The Court concludes that a class action enables the most efficient use of Court and attorney

17 resources and reduces costs to the class members by allocating costs among them. Further, this

18 forum is appropriate, and there are no obvious difficulties in managing this class action.

19 The Court finds that the predominance and superiority requirements of Rule 23(b)(3) are

20 met.

21 iii. Class Representative and Class Counsel

22 Because the Court finds that Plaintiff meets the commonality, typicality, and adequacy

23 requirements of Rule 23(a), the Court appoints the Named Plaintiff as class representative. When

24 a court certifies a class, it must also appoint class counsel. Fed. R. Civ. P. 23(c)(1)(B). Factors

25 that courts must consider when making that decision include:

26 (i) the work counsel has done in identifying or investigating potential

claims in the action;

27 (ii) counsel’s experience in handling class actions, other complex

(iv) the resources that counsel will commit to representing the class.

1

2 Fed. R. Civ. P. 23(g)(1)(A).

3 Counsel have investigated and litigated this case throughout its existence and have

4 submitted declarations detailing their expertise in representing plaintiffs in class action suits,

5 especially consumer class actions. See Dkt. No. 36-1 at ¶ 7. Accordingly, the Court appoints the

6 law firm of HammondLaw, P.C. as Class Counsel.

7 III. PRELIMINARY SETTLEMENT APPROVAL

8 Finding that provisional class certification is appropriate, the Court now considers whether

9 it should preliminarily approve the parties’ class action settlement.

10 A. Legal Standard

11 Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a

12 certified class—or a class proposed to be certified for purposes of settlement—may be settled . . .

13 only with the court’s approval.” Fed. R. Civ. P. 23(e). “The purpose of Rule 23(e) is to protect

14 the unnamed members of the class from unjust or unfair settlements affecting their rights.” In re

15 Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). Accordingly, before a district court

16 approves a class action settlement, it must conclude that the settlement is “fundamentally fair,

17 adequate and reasonable.” In re Heritage Bond Litig., 546 F.3d 667, 674–75 (9th Cir. 2008).

18 Where the parties reach a class action settlement prior to class certification, district courts

19 apply “‘a higher standard of fairness’ and ‘a more probing inquiry than may normally be required

20 under Rule 23(e).’” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012). Such settlement

21 agreements “must withstand an even higher level of scrutiny for evidence of collusion or other

22 conflicts of interest than is ordinarily required under Rule 23(e) before securing the court’s

23 approval as fair.” Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1048–49 (9th Cir. 2019)

24 (quoting In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011)). A more

25 “exacting review is warranted to ensure that class representatives and their counsel do not secure a

26 disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a duty to

27 represent.” Id. (quotations omitted).

1 settlement: (1) appears to be the product of serious, informed, non-collusive negotiations; (2) does

2 not grant improper preferential treatment to class representatives or other segments of the class;

3 (3) falls within the range of possible approval; and (4) has no obvious deficiencies. In re Lenovo

4 Adware Litig., No. 15-MD-02624-HSG, 2018 WL 6099948, at *7 (N.D. Cal. Nov. 21, 2018)

5 (citation omitted). Courts lack the authority, however, to “delete, modify or substitute certain

6 provisions. The settlement must stand or fall in its entirety.” Hanlon v. Chrysler Corp., 150 F.3d

7 1011, 1026 (9th Cir. 1998).

8 B. Analysis

9 i. Evidence of Conflicts and Signs of Collusion

10 The first factor the Court considers is whether there is evidence of collusion or other

11 conflicts of interest. See Roes, 944 F.3d at 1049. The Ninth Circuit has directed district courts to

12 look for “subtle signs of collusion,” which include whether counsel will receive a disproportionate

13 distribution of the settlement, whether the parties negotiate a “‘clear sailing’ arrangement (i.e., an

14 arrangement where defendant will not object to a certain fee request by class counsel),” and

15 whether the parties agree to a reverter that returns unclaimed funds to the defendant. Id.

16 As discussed above, the proposed settlement is non-reversionary with all unclaimed funds

17 awarded to a cy pres recipient. See SA ¶ 6.8(b). However, the Settlement Agreement contains a

18 clear sailing arrangement, which states that Defendant will not oppose Plaintiff’s motion for

19 attorneys’ fees and costs so long as the amount requested does not exceed $125,666.67 in fees and

20 $15,000 in costs. Id. at ¶ 3.19(a)–(b).

21 a. Clear Sailing Provision

22 Clear sailing provisions are not prohibited, though they “‘by [their] nature deprive[] the

23 court of the advantages of the adversary process’ in resolving fee determinations and are therefore

24 disfavored.” Id. at 1050 (quoting In re Bluetooth, 654 F.3d at 949) (alterations in original). The

25 Ninth Circuit has noted that clear sailing arrangements are “important warning signs of

26 collusion,” because “‘[t]he very existence of a clear sailing provision increases the likelihood that

27 class counsel will have bargained away something of value to the class.’” Id. at 1051 (quoting In

1 district court has a heightened duty to “scrutinize closely the relationship between attorneys’ fees

2 and benefit to the class, being careful to avoid awarding ‘unreasonably high’ fees simply because

3 they are uncontested.” Id. (quotations omitted).

4 Here, counsel will request fees of $94,250 and costs of $9,595.15. See Dkt. No. 36 at 20–

5 21. When deciding to award attorney’s fees and costs, the Court has discretion in a common fund

6 case to choose either (1) the lodestar method or (2) the percentage-of-the-fund. Vizcaino v.

7 Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). Under the percentage-of-recovery method,

8 twenty-five percent of a common fund is the benchmark for attorneys’ fees award. See, e.g., In re

9 Bluetooth Headset, 654 F.3d at 942 (“[C]ourts typically calculate 25% of the fund as the

10 ‘benchmark’ for a reasonable fee award, providing adequate explanation in the record of any

11 ‘special circumstances’ justifying a departure.”). Counsel asserts that they are requesting the

12 benchmark 25% of the settlement fund. See Dkt. No. 26 at 20. They have also performed a

13 lodestar cross-check on the requested sum and represent that counsel has incurred fees of $63,984

14 to date, for a preliminary lodestar multiplier of 1.47. Dkt. No. 36-1 at ¶ 72.

15 The Court recognizes that Class Counsel obtained significant results for the prospective

16 class members, as discussed below in Section III.B.iii. And Class Counsel assumed substantial

17 risk in litigating this action on a contingency fee basis, and incurring costs without the guarantee

18 of payment for its litigation efforts. Further, the agreement does not contemplate a

19 disproportionate cash allocation between counsel and the class. Cf. Roes, 944 F.3d at 1051

20 (“Here, more of the available $2 million in settlement cash ultimately went to attorneys’ fees

21 ($950,000) than would be distributed to class members ($864,115).”). Even if the Court were to

22 award 25% in attorneys’ fees, the majority of the monetary settlement will still be distributed to

23 class members. The Court is cognizant of its obligations to review class fee awards with particular

24 rigor, and at the final approval stage will carefully scrutinize the circumstances and determine

25 what attorneys’ fee awards is appropriate in this case. Accordingly, given that counsel will not

26 request a disproportionate amount of the settlement agreement and that the settlement is non-

27 reversionary, the Court does not find that the clear sailing provision weighs against preliminary

1 b. Cy Pres Distribution

2 The Court must also evaluate whether the parties’ proposed cy pres recipient is

3 appropriate. A cy pres award must qualify as “the next best distribution” to giving the funds to

4 class members. Dennis, 697 F.3d at 865. “Not just any worthy recipient can qualify as an

5 appropriate cy pres beneficiary,” and there must be a “driving nexus between the plaintiff class

6 and the cy pres beneficiaries.” Id. (quotation omitted). That is to say, a cy pres award must be

7 “guided by (1) the objectives of the underlying statute(s) and (2) the interests of the silent class

8 members, and must not benefit a group too remote from the plaintiff class.” Id. (quotation

9 omitted). A cy pres distribution is not appropriate if there is “no reasonable certainty that any

10 class member would benefit from it.” Id. (quotation omitted).

11 Here, the parties have selected Bet Tzedek, a non-profit legal services program that

12 provides free legal services to low-income residents of Southern California as its cy pres recipient.

13 See SA at ¶ 68. Bet Tzedek’s Employment Rights Project enforces minimum labor standards in

14 the workplace by assisting low-wage workers, such as class members, through a combination of

15 individual representation before the Labor Commissioner, litigation in state and federal court,

16 legislative advocacy, and community education. See id. Counsel are not associated with Bet

17 Tzedek. See Dkt. No. 36 at 26–27.

18 The Court preliminarily finds that Bet Tzedek shares the interests of the class members in

19 preventing consumer fraud, in the context of mislabeling of food products. Accordingly, the Court

20 preliminarily finds that there is a sufficient nexus between the cy pres recipient and the Settlement

21 Class.

22 ii. Preferential Treatment

23 The Court next considers whether the settlement agreement provides preferential treatment

24 to any class member. The Ninth Circuit has instructed that district courts must be “particularly

25 vigilant” for signs that counsel have allowed the “self-interests” of “certain class members to

26 infect negotiations.” In re Bluetooth, 654 F.3d at 947. For that reason, courts in this district have

27 consistently stated that preliminary approval of a class action settlement is inappropriate where the

1 2018 WL 6099948, at *8 (quotations omitted).

2 Although the Settlement Agreement authorizes the Named Plaintiff to seek an incentive

3 award of no more than $10,000 for her role in this lawsuit, see SA ¶ 3.1(b), the Court will

4 ultimately determine whether she is entitled to such an award and the reasonableness of the

5 amount requested. Incentive awards “are intended to compensate class representatives for work

6 done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the

7 action.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958–59 (9th Cir. 2009). Plaintiff must

8 provide sufficient evidence to allow the Court to evaluate her award “individually, using ‘relevant

9 factors includ[ing] the actions the plaintiff has taken to protect the interests of the class, the degree

10 to which the class has benefitted from those actions, . . . [and] the amount of time and effort the

11 plaintiff expended in pursuing the litigation . . . .’” Stanton v. Boeing Co., 327 F.3d 938, 977 (9th

12 Cir. 2003). The Court will consider the evidence presented at the final fairness hearing and

13 evaluate the reasonableness of any incentive award request. Nevertheless, because incentive

14 awards are not per se unreasonable, the Court finds that this factor weighs in favor of preliminary

15 approval. See Rodriguez, 563 F.3d at 958 (finding that “[i]ncentive awards are fairly typical in

16 class action cases” and “are discretionary” (emphasis omitted)).

17 iii. Settlement within Range of Possible Approval

18 The third factor the Court considers is whether the settlement is within the range of

19 possible approval. To evaluate whether the settlement amount is adequate, “courts primarily

20 consider plaintiffs’ expected recovery balanced against the value of the settlement offer.” Lenovo,

21 2018 WL 6099948, at *8. This requires the Court to evaluate the strength of Plaintiff’s case.

22 Here, the total settlement amount constitutes approximately 71% of what Class Counsel

23 estimates to be the realistic recovery at trial. See Dkt. No. 36-1 at ¶ 55. The average net recovery,

24 after deduction of administration costs, attorneys’ fees and costs, and any incentive award, will be

25 $557 per Settlement Class Member. Id. at ¶ 60. Plaintiff acknowledges that there is substantial

26 risk she would face in continuing to litigate this case, such as certifying the class and prevailing at

27 trial. See Dkt. No. 36 at 10–17. The Court finds that the settlement amount, given these risks,

1 iv. Obvious Deficiencies

2 The fourth and final factor that the Court considers is whether there are obvious

3 deficiencies in the settlement agreement. The Court finds no obvious deficiencies, and therefore

4 finds that this factor weighs in favor of preliminary approval.

5 * * *

6 Having weighed the relevant factors, the Court preliminarily finds that the settlement

7 agreement is fair, reasonable, and adequate, and GRANTS preliminary approval. The Court

8 DIRECTS the parties to include both a joint proposed order and a joint proposed judgment when

9 submitting their motion for final approval.

10 IV. PROPOSED CLASS NOTICE PLAN

11 For Rule 23(b)(3) class actions, “the court must direct notice to the class members the best

12 notice that is practicable under the circumstances, including individual notice to all members who

13 can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). Individual notice must

14 be sent to all class members “whose names and addresses may be ascertained through reasonable

15 effort.” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173 (1974). With respect to the content of

16 the notice itself, the notice must clearly and concisely state in plain, easily understood language:

17 (i) the nature of the action;

(ii) the definition of the class certified;

18 (iii) the class claims, issues, or defenses;

(iv) that a class member may enter an appearance through an attorney if

19 the member so desires;

(v) that the court will exclude from the class any member who requests

20 exclusion;

(vi) the time and manner for requesting exclusion; and

21 (vii) the binding effect of a class judgment on members[.]

22 Fed. R. Civ. P. 23(c)(2)(B).

23 The parties have agreed that a third-party settlement administrator will send class notice

24 via first-class U.S. mail to each absent class member at their last known address, as provided by

25 Defendant and updated by the administrator as appropriate. SA ¶ 6.3. Any letters returned as

26 undeliverable will be sent to any updated address provided with the returned mail. Id. If no

27 forwarding address is provided, the settlement administrator will attempt to determine the correct

1 process is “reasonably calculated, under all the circumstances, to apprise all class members of the

2 proposed settlement.” Roes, 944 F.3d at 1045 (quotation omitted).

3 As to the substance of the notice, the parties have attached a copy of their proposed class

4 notice to the Settlement Agreement. Dkt. No. 36-2, Ex. 1. The notice packets will include

5 individualized estimates of the number of pay periods for each class member and the estimate of

6 the amount a class member would receive from the settlement. See id. The notice will also

7 specify if the specific class member is a PAGA Releasee, and if so, the number of PAGA pay

8 periods and the estimate of the amount a class member would receive from the PAGA Payment.

9 Id. The notice also explains how to opt out of or object to the Settlement Agreement. Id.

10 The notice also informs class members that Class Counsel will file a motion with the Court

11 for attorneys’ fees, as well as reimbursement of litigation costs and expenses advanced by Class

12 Counsel. Id. It also provides that Plaintiff may request up to $8,000 for her services as Class

13 Representative. Id. To enable class members to review the motion for attorneys’ fees and the

14 motion for incentive award, Class Counsel shall include language in the settlement notice:

15 (1) indicating the deadline for filing the attorneys’ fees motion and request for Plaintiff’s incentive

16 award; (2) specifically stating the deadline for any class member objections to these motions; and

17 (3) informing class members that the motion and supporting materials will be available for

18 viewing on Class Counsel’s website. See In re Mercury Interactive Corp. Sec. Litig., 618 F.3d

19 988, 993–94 (9th Cir. 2010) (holding that under Rule 23(h), class members must be given a full

20 and fair opportunity to examine and object to attorneys’ fees motion). The Court therefore finds

21 that with these changes, the content of the proposed notice provides sufficient information about

22 the case and thus conforms with due process requirements. See Hyundai II, 926 F.3d at 567

23 (“Notice is satisfactory if it generally describes the terms of the settlement in sufficient detail to

24 alert those with adverse viewpoints to investigate and to come forward and be heard.” (quotation

25 omitted)).

26 V. CONCLUSION

27 For the foregoing reasons, the Court GRANTS Plaintiff’s motion for preliminary approval.

1 listed below, which shall be submitted to the Court within seven days of the date of this Order:

2

3

Deadline for Settlement Administrator to mail

4 notice to all putative Class Members

Filing deadline for attorneys’ fees and costs motion | ti(i‘;SsS~s*@™Y

5 Filing deadline for incentive payment motion PO

Deadline for Class Members to opt-out or object to

6 settlement and/or application for attorneys’ fees and

7 costs and incentive payment

Filing deadline for final approval motion PO

8 Final fairness hearing and hearing on motions PO

9 The parties are further DIRECTED to implement the proposed class notice plan with the edits

10 || identified above.

11 IT IS SO ORDERED.

12 || Dated: 7/27/2020

Aaprerd 3 hdl)

14 HAYWOOD S. GILLIAM, JR.

United States District Judge

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