ORDER GRANTING MOTION FOR PRELIMINARY APPROVAL OF AMENDED SETTLEMENT
Re: ECF No. 156
JON S. TIGAR, District Judge.
Before the Court is Plaintiff's unopposed Motion for Preliminary Approval of Amended Settlement and Modification of End-Date of Settlement Class. ECF No. 156.
Plaintiff previously filed a Motion for Conditional Class Certification and Preliminary Approval of Settlement. ECF No. 152. The Court granted conditional class certification but denied the motion for preliminary approval, identifying two deficiencies in the proposed settlement. ECF No. 155. Having reviewed the changes made by the parties in response to the Court's order, the Court now grants the motion for preliminary approval.
A. The Parties and Claims
Named Plaintiff Michael Deatrick represents a class of individuals who are current and former employes of Defendant Securitas Services USA, Inc. ("Securitas"), a national provider of security services. Deatrick worked for Securitas as a security guard for several years before he was laid off. Plaintiff alleges that Securitas failed to pay Deatrick and other security guards the full overtime compensation they were owed, because Securitas failed to take into account in the overtime calculation the payments that security guards received in connection with Securitas' "Vacation Pay Plan" ("the Plan"). Third Am. Compl. ("TAC"), ECF No. 129, ¶¶ 8-16. Plaintiff alleges that Securitas improperly treated these payments as vacation payments under the FLSA, even though such payments were, in practice, retention or productivity bonuses.
The TAC asserts a claim under the Fair Labor Standards Act ("FLSA") for failure to pay overtime wages against Securitas on his own behalf and on behalf of a putative class of Securitas employees who were subject to the Plan. Additionally, it asserts the following claims: (1) a claim for failure to pay overtime wages in violation of California Labor Code sections 510 and 1198; (2) a claim for inaccurate wage statements in violation of California Labor Code sections 226 and 1174; (3) a claim for waiting time penalties under California Labor Code section 203 for failure to pay the wages owed upon termination; (4) a claim under California's Unfair Competition Law ("UCL"); (5) violation of overtime and wage premium laws in eight other states besides California; and (6) a claim under California's Private Attorneys General Act. TAC, ¶¶ 46-105.
Plaintiff's claims revolve around Securitas's policy for vacation pay.
One result of this, Plaintiff asserts, is that if an employee ends his employment before his anniversary date for any reason (including termination by the employer), he will not receive his vacation benefits for that year.
B. Procedural Background
On May 9, 2014, Securitas filed a Motion for Summary Judgment or in the alternative, for Partial Summary Judgment, ECF No. 31, which the Court denied on June 23, 2014, ECF No. 38. In its motion, Securitas advanced three arguments:
Deatrick filed a motion for conditional class certification on July 24, 2014, ECF No. 45. On November 4, 2014, the Court certified the following FLSA class:
ECF No. 65 at 2. It also approved the proposed notices and consent forms and ordered them distributed to the putative class.
On November 9, 2015, Plaintiff moved for preliminary approval of a class settlement reached by the parties, and for conditional certification of an additional California opt-out class defined as:
ECF No. 152 at 14. Defendant submitted a statement of non-opposition. ECF No. 153.
On February 24, 2016, the Court granted the motion for conditional class certification but denied the motion for preliminary approval. ECF No. 155. The Court noted two deficiencies in the proposed settlement: (1) insufficient explanation of the "reasonable steps" to be taken if settlement notices are returned as undeliverable; and (2) a separate claims form procedure for the California class, with no explanation why such a procedure was necessary.
On March 8, 2016, Plaintiff filed a Motion for Preliminary Approval of Amended Settlement and Modification of End-Date Settlement Class. ECF No. 156. The motion identifies changes made to the stipulated settlement agreement in response to the Court's order, as well as a small increase to the settlement amount and a proposed modification of the definition of the conditionally certified class.
II. CLASS CERTIFICATION
A. Legal Standard
Class certification under Rule 23 of the Federal Rules of Civil Procedure is a two-step process. First, a plaintiff must demonstrate that the four requirements of Rule 23(a) are met: numerosity, commonality, typicality, and adequacy. "Class certification is proper only if the trial court has concluded, after a `rigorous analysis,' that Rule 23(a) has been satisfied."
Second, a plaintiff must establish that the action meets one of the bases for certification in Rule 23(b). Here, because they rely on Rule 23(b)(3), Plaintiffs must establish that "questions of law or fact common to class members predominate over any questions affecting only individual members, and . . . [that] a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3).
The party seeking class certification bears the burden of demonstrating by a preponderance of the evidence that all four requirements of Rule 23(a) and at least one of the three requirements under Rule 23(b) are met. See
B. Proposed Class Modification
The Court has previously conditionally certified a second California class in addition to the nationwide FLSA class, which is defined as follows:
ECF No. 155 at 4.
Plaintiff now requests that the class be modified to establish an end date of December 31, 2015, rather than "the date the Court grants preliminary approval of this Settlement." ECF No. 156 at 20. Plaintiff explains that it used the original definition of the California class because at the time, it was possible that preliminary approval would have been granted prior to December 31.
The Court concludes that this modification is appropriate and does not affect the class's sufficiency under Rule 23. The modification is approved.
III. PRELIMINARY APPROVAL
A. Legal Standard
The Ninth Circuit maintains a "strong judicial policy" that favors the settlement of class actions.
The Court's task at the preliminary approval stage is to determine whether the settlement falls "within the range of possible approval."
Preliminary approval of a settlement is appropriate if "the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval."
B. Terms of the Settlement
The Court previously described the terms of the proposed settlement,
The proposed settlement provides for a total payment of $2,550,000 by Securitas. Motion, ECF No. 156 at 11. Plaintiff notes that this amount has been increased by $50,000, and that some other apportions of the settlement have been adjusted to allow for a total increase of $85,000 to the settlement award for class members.
As discussed further below, the parties have agreed to remove the claims form procedure for the California class in response to this Court's prior order. Thus, Plaintiff asserts that the changes to the settlement amounts were made to account for the assumed increase in the California class due to removing this procedure.
In exchange, class members will release "all disputes and claims arising from or related to facts alleged in the Action and which are based on facts, events and/or actions during the Class Period. These include all claims that have been or could have been made, including claims not known or suspected to exist, against Defendant under federal, state or local law or regulation . . . arising during the Class Period, arising out of allegations that Defendant mislabeled annual nondiscretionary bonuses paid to security guards as vacation pay and, as a result, failed to include the payment in the regular rate of pay for purposes of calculating overtime or other premium pay." In addition, they will also release "derivative claims arising from the alleged failure to properly calculate overtime or other premium pay, including (but not limited to) claims that Defendant failed to provide accurate pay statements, that Defendant failed to pay all wages when due and/or on termination, and claims made under the California Private Attorneys General Act (PAGA), whether in an individual or representative capacity." ECF No. 156-1 ("Amended Joint Stipulation and Settlement of Class Action Claims") at ¶ 21.
Though the Court identified two deficiencies in its previous order, it noted that the proposed settlement amount fell within the range of possible approval, and that there were several risks to pursuing further litigation rather than settling, such as that Securitas could show a good faith defense or could successfully enforce class action waiver and arbitration clauses. ECF No. 155 at 10-11. The Court again concludes that the proposed settlement amount, taking into account the increases proposed in the parties' amended settlement, falls "within the range of possible approval."
As also previously noted, the Court will evaluate attorneys' fees and incentive awards at the final approval hearing. The Court noted that Plaintiff's prior request for $748,000, or 29.9% of the total settlement award, fell within the range of approval — this remains true following Plaintiff's amended request for $730,000, or 28.6% of the amended total settlement award. As for the proposed incentive award for named plaintiff Deatrick, the Court noted that the Plaintiff's prior request of $12,000 was unlikely to be approved given the discrepancy between that request and the far smaller amounts being awarded to class members.
The Court now turns to the two discrepancies identified in its previous order.
1. Notice Procedure
The parties propose to provide notice of settlement through first class mail to addresses provided by Defendant's employee records. ECF No. 156 at 19. As noted in the Court's prior order, the parties had previously stated merely that "reasonable steps" will be taken if the notices were returned as undeliverable, which was not sufficiently specific. ECF No. 155 at 11.
The amended motion now states that "Names and mailing addresses will be provided from Defendant's employment records, which will then be updated against the National Change of Address Database maintained by the United States Postal Service. For Notices returned as undeliverable, the Claims Administrator shall conduct an advanced skip trace to locate most recent addresses, and Notice will be resent to those addresses." ECF No. 156 at 19. A description of the specific procedures that will be taken for undeliverable notices remedies the deficiency identified by the Court.
The Court further concludes that the proposed notice procedure should be approved. The notice describes the nature of the action, the certified classes, the class claims, and the terms and effects of the settlement. ECF No. 156-2 ("Proposed Class Notice"). It provides instructions for how to participate in the settlement, opt out, or object to it, and provides a contact number and website should recipients have additional questions.
2. Claim Form Procedure
The parties' prior proposed settlement provided that members of the opt-in FLSA class would not need to submit any paperwork to automatically receive their share of the settlement payment, but that members of the California class would need to submit a claims form within 30 days. ECF No. 155 at 12. The claims form required only a signature and also included an option to submit a different address.
The parties' amended proposed settlement removes the claims form procedure for the California class. ECF No. 156 at 14-15. Both the FLSA class and the California class will receive their settlement shares without the need to submit any kind of paperwork. Accordingly, the parties have addressed the Court's concerns with regards to this procedure.
The Motion for Preliminary Approval of Amended Settlement is granted. The Court therefore orders as follows:
5. The Court sets the Final Approval Hearing for September 22, 2016 at 2:00 p.m. Counsel's memorandum of points and authorities in support of final approval, responses to any objections, and application for attorneys' fees, costs, expenses, and service awards shall be filed by September 1, 2016.