Court: District Court, E.D. California; February 22, 2018; Federal District Court
Plaintiffs Francisco Rodriguez, Jesus Hernandez Infante, Marco Garcia, Juan Manuel Bravo, Estela Patino, Jose F. Orozco, and Antonio Ortiz filed a wage and hour class action lawsuit against Defendants Danell Custom Harvesting, LLC, and its co-owners, Rance, Eric, David, and Justin Danell, on December 7, 2016. The case alleges violations of federal and state wage laws. A motion for preliminary approval of a class action settlement was presented to the Court, with oral arguments heard on December 13, 2017, where no objections were raised.
Danell Custom Harvesting, LLC operates in Kings County, California, providing specialized harvesting equipment and personnel to dairies. The day-to-day operations and wage practices are overseen by the co-owners, who also make key decisions regarding scheduling, working conditions, and employee management. The company employs five groups of workers: mechanics, maintenance workers, farm equipment operators, truck drivers, and weighers.
Mechanics are required to provide their own tools and often work over 10 hours a day without a second meal period, despite being compensated at less than double the California minimum wage. They receive overtime pay after exceeding 10 hours per day or 60 hours per week, but may not receive adequate rest breaks. Maintenance workers face similar working conditions. Farm equipment operators typically work over 12 hours a day without proper meal or rest breaks, often eating while operating machinery.
Truck drivers transport silage from clients' fields to dairies and, starting mid-2016, began receiving overtime pay for hours worked over 8 in a day, a change from the previous threshold of over 10 hours or 60 hours per week. Despite typically working over 12 hours daily, truck drivers do not receive meal or rest breaks and must eat while driving. Weighers, who record the silage weight, are paid overtime after 10 hours daily or 60 hours weekly but also lack meal and rest breaks, working similarly long hours and having to eat while working. They must purchase their own equipment and are not fully reimbursed for vehicle use.
Plaintiff Rodriguez worked as a maintenance worker from May 2012 to May 2016, Infante has been employed since June 2012, Garcia from June 2015 to September 2016 as a mechanic and maintenance worker, Bravo has been with Defendants since 1998, Patino served as a weigher from 2004 to September 2016, Orozco was a truck driver from November 2014 to June 2016, and Ortiz has been a truck driver since July 2014.
On December 7, 2016, Plaintiffs filed a class and collective action against Defendants for failing to pay overtime wages in violation of the Fair Labor Standards Act (FLSA) and California Labor Code, not providing meal and rest periods, failing to furnish accurate wage statements, indemnifying work-related expenses, imposing waiting time penalties, and engaging in unfair business practices. They propose six classes of non-exempt employees based on various violations, including those related to overtime compensation, meal and rest breaks, wage statements, reimbursement of expenses, and waiting time penalties.
On February 28, 2017, a scheduling order established deadlines for the action. The case was stayed on June 9, 2017, for mediation, and the stay was lifted on October 16, 2017. Plaintiffs submitted a motion for preliminary approval of a class action settlement on November 22, 2017, followed by a hearing on December 13, 2017, which led to supplemental briefing filed by the Plaintiffs on January 17, 2018. An informal teleconference was held on January 23, 2018, to discuss identified issues, and the hearing set for January 24, 2018, was continued to February 21, 2018. An informal conference occurred on February 7, 2018, with amended documents submitted for review on February 1 and February 14, 2018.
The Ninth Circuit favors class action settlements, but courts must ensure the proposed settlement is fair and that class certification requirements under Rule 23 are met, including a rigorous analysis of prerequisites. Rule 23(e)(2) necessitates court approval for class action settlements, requiring findings that they are fair, reasonable, and adequate. The court represents non-participating class members in evaluating the settlement. Even in unopposed cases, the court must verify that all Rule 23(a) criteria—numerosity, commonality, typicality, and adequacy of representation—are satisfied, with heightened scrutiny in a settlement context. The numerosity requirement is met if the class is so large that individual joinder is impractical, supported by records indicating 445 individuals employed in relevant roles.
The class in question consists of 445 members, exceeding the threshold of 40 members typically required to satisfy the numerosity requirement for class action certification. Courts may find numerosity satisfied with as few as 39 members, as established in precedents such as Celano v. Marriott Int'l, Inc. and Cervantez v. Celestica Corp.
The commonality requirement is deemed satisfied when there are shared questions of law or fact among class members. It is not necessary for all claims to share commonality; having even one common issue suffices. In this case, plaintiffs assert that all members were uniformly treated under the defendants’ policies concerning overtime pay, meal and rest breaks, and reimbursement for work-related expenses. Key common questions include entitlement to overtime compensation under California law, provision of meal and rest breaks, statutory premium pay for missed breaks, reimbursement for expenses, and the accuracy of itemized wage statements.
Plaintiffs argue that a company-wide policy led to violations of labor laws, affecting all class members similarly, supporting their claim of common injury suitable for resolution on a class-wide basis. The court finds that the legal and factual issues are substantially identical for all class members, making class relief appropriate.
Regarding typicality, Rule 23(a)(3) requires that the claims of the representative parties be typical of the class claims. This does not demand identical claims but rather that they are reasonably co-extensive. Typicality is evaluated based on whether class representatives and other members have similar injuries and whether the claims stem from the same conduct by the defendants. The court will assess whether the nature of the claims aligns sufficiently among class members.
Plaintiffs claim that they and the unnamed class members were employed under identical terms and conditions and were uniformly treated regarding overtime pay, meal and rest breaks, and reimbursement for work-related expenses. Named plaintiffs, including mechanics and maintenance workers, assert they experienced the same issues of unpaid overtime and lack of meal and rest breaks. They have fulfilled the typicality requirement necessary for class certification.
For adequacy of representation under Rule 23(a)(4), the court will assess if there are conflicts of interest between named plaintiffs and class members and whether the named plaintiffs and their counsel will vigorously pursue the case. The plaintiffs argue they share common interests with the proposed class regarding claims for unpaid overtime and penalties, indicating no antagonism exists between them and the absent class members. Class counsel asserts there are no conflicts of interest among any class members.
The court finds that the named plaintiffs adequately represent the unnamed class members, as they understand the lawsuit's foundation and responsibilities as lead plaintiffs. Additionally, the qualifications and experience of plaintiffs' counsel in similar class actions support their ability to represent the class effectively.
For class certification under Rule 23(b)(3), the court must determine if common legal or factual questions prevail over individual issues and whether a class action is the superior method for resolving the dispute. The court concludes that the class has adequate representation and that the plaintiffs' interests align with those of the class.
Certification under Rule 23(b)(3) is warranted when a single action can best resolve the parties' interests. The predominance inquiry assesses the relationship between individual and common issues. Individual questions require varying evidence from class members, while common questions can be resolved using the same evidence for all. In this case, plaintiffs argue that class members faced uniform employment terms causing similar harm, with few individual factual issues primarily related to hours worked and damages calculation. The relevant laws governing overtime, meal breaks, and other claims apply uniformly to all class members, satisfying the predominance requirement.
The superiority aspect of Rule 23(b)(3) examines several factors, including the interests of class members in pursuing separate actions, the existence of other related litigation, and the management challenges of a class action. Since there is no concurrent litigation and the parties have agreed to a pre-certification settlement, managing the class action is deemed more efficient. The plaintiffs assert that the approximately 450 low-wage workers involved lack the financial means to pursue individual lawsuits, making class action the superior method for resolving their claims.
Additionally, the plaintiffs seek certification as a collective action under the Fair Labor Standards Act (FLSA), which allows employees to represent similarly situated individuals against employers for unpaid wages or overtime. Unlike Rule 23 class actions, participation in a collective action requires written consent from employees. The court supports the certification for settlement purposes under both Rule 23 and the FLSA.
Rights in a collective action under the Fair Labor Standards Act (FLSA) hinge on employees receiving accurate and timely notice of the action's status, enabling informed participation decisions. Employees who do not file a written consent are not bound by the action's outcome. The determination of a collective action's appropriateness is at the district court's discretion. While the FLSA and the Ninth Circuit have not defined "similarly situated" for collective action certification, courts have established that the standard for showing similarity is less stringent than under Rule 23 of the Federal Rules of Civil Procedure.
A two-step approach is typically employed by federal courts to assess collective action proceedings. Initially, courts decide whether potential class members should be notified, requiring plaintiffs to demonstrate that members are "similarly situated" based on substantial allegations supported by declarations or discovery. This initial determination usually results in conditional certification. The second step occurs at the discovery phase's conclusion, where a stricter standard applies to assess similarity, examining factors like the diversity of factual or employment situations among plaintiffs, unique defenses for each plaintiff, and fairness considerations.
The potential class members in this case are deemed similarly situated due to shared injuries stemming from the defendants' uniform policies regarding overtime pay, meal and rest periods, and work-related expense reimbursement, satisfying the lenient standard for the first certification step. As the defendants will not seek to decertify, the FLSA class is conditionally certified.
Regarding the proposed settlement, the court must approve it under Rule 23(e)(2) by finding it fair, reasonable, and adequate. The settlement review occurs in two phases: first, a preliminary approval stage to determine if the agreement is within the possible approval range and if notice should be sent to class members; and second, a final approval stage that considers objections and other developments for the final fairness assessment.
The court evaluates several factors to determine the fairness of a settlement, including the strength of the plaintiffs' case, risks and costs of litigation, likelihood of maintaining class action status, settlement amount, progress of discovery, counsel's experience, governmental participation, and class members' reactions. When a settlement occurs before formal class certification, it is subject to a higher standard of fairness to prevent class representatives from receiving disproportionate benefits at the expense of unnamed plaintiffs. Settlements involving collective action claims under the Fair Labor Standards Act (FLSA) require court approval, as the FLSA guarantees minimum wage and overtime rights that cannot be waived. The court must assess if the settlement fairly resolves a bona fide dispute in FLSA claims and may approve reasonable compromises on disputed issues to encourage settlements.
The proposed settlement agreement allocates $1,500,000 to resolve claims related to meal and rest breaks, unpaid wages, penalties, reimbursements, and attorney fees. The certified class includes current and former non-exempt employees in specific job roles in California, with a class period from December 7, 2012, to the preliminary approval order. Excluded are those who previously settled their claims with the California Labor Commissioner. Before disbursing settlement funds, deductions will be made for service awards, attorney fees (25% of gross settlement amount, totaling $375,000), litigation costs ($31,000), and a PAGA payment to the California Labor and Workforce Development Agency. Each named plaintiff will receive a $7,500 service award in addition to their settlement amount.
The net settlement fund, derived from the common fund, will be allocated as follows: 20% for unpaid wage claims and 80% minus $10,000 for statutory penalties and interest. Of the $10,000 allocated for penalties, $7,500 will be paid to the Labor Workforce Development Agency (LWDA) as its share of the PAGA penalties. Settlement distributions will be calculated based on each class member's worked dates from December 10, 2012, to May 2017, considering the number of pay periods worked and total pay periods for the class. Individual damages will be based on actual hours worked and hourly rates, determining each member's share from the net settlement amount, which totals $1,021,000 after deductions from the $1,500,000 settlement fund. The average payment for class members is estimated to be $2,300, with amounts ranging from $6 to $26,500. The settlement has been deemed the result of informed, non-collusive negotiations and falls within a reasonable range of approval. Extensive correspondence and discovery have taken place, with plaintiffs' counsel interviewing over 150 class members and participating in mediation with a professional mediator. Defendants, while denying liability, opted for settlement to avoid protracted litigation. The claims include those under California's PAGA, allowing employees to recover civil penalties for Labor Code violations. Unclaimed funds will be transferred to the California Unclaimed Property Fund for the benefit of class members.
An aggrieved employee, as defined by Cal. Lab. Code § 2699(c), is someone employed by the alleged violator against whom violations occurred. When bringing a representative action under the Private Attorneys General Act (PAGA), the employee acts as an agent for the state's labor law enforcement. Civil penalties under PAGA are allocated 25% to the aggrieved employees and 75% to the California Labor and Workforce Development Agency (LWDA) per Cal. Labor Code § 2699(i). Any settlement must receive court approval, with the proposed settlement also submitted to the agency simultaneously (Cal. Labor Code § 2699(l)).
In this case, the settlement involves a $1,500,000 payment from Defendants, of which only $10,000 is designated for PAGA claims, resulting in $7,500 allocated to the LWDA. The LWDA has not objected to the settlement terms, leading the Court to preliminarily approve the PAGA penalties.
Class representatives are seeking a $7,500 enhancement payment each, which raises concerns from the Court regarding its appropriateness. The Court must assess the representatives' actions, the benefits to the class, time and effort dedicated, and any personal challenges faced. The case was filed on December 7, 2016, with a settlement reached approximately 10 months later. Plaintiffs assert they participated in strategy meetings, assisted with case investigations, spoke with fellow workers, and invested 50 to 60 hours each in the litigation, while also taking unpaid time off to engage in mediation.
Despite these efforts, the Court finds the requested enhancement payment excessive compared to the contributions made. It has previously deemed enhancement payments between $2,500 and $3,000 as reasonable in similar cases.
A report and recommendation was partially adopted in the case No. 1:14-CV-00038-LJO, with an award of $2,500 to the class representative. In related cases, class representatives received similar awards; for example, Valdez v. Neil Jones Food Co. awarded $2,500 for a $400,000 settlement, yielding $65.79 per class member, while Wolph v. Acer America Corporation reduced an award to $2,000 due to minimal representative risk. Rigo v. Kason Industries, Inc. affirmed a $2,500 award for over two years of service, and Vinh Nguyen v. Radient Pharmaceuticals Corp. approved $2,000 post-discovery for a $2.5 million settlement. The Court found $3,500 reasonable for the current class representatives' time and risk, with allowance for additional evidence at final certification.
Regarding attorney fees, plaintiffs seek 25% of the common fund, which aligns with the Ninth Circuit's benchmark, typically ranging from 20% to 30%. Class counsel requests $375,000 in fees and $31,000 in costs, but the Court noted the absence of sufficient documentation to assess the reasonableness of these requests. At the final approval hearing, the Court will use the lodestar method to cross-check the percentage method for fee reasonableness. Counsel must submit a detailed fee petition and supporting documentation for costs. Adequate notice is emphasized as crucial for class settlement approval under Rule 23(e), requiring the best practicable notice, including individual notifications to identifiable class members.
Notice by mail is deemed sufficient for due process to known affected parties if it is reasonably calculated to inform them of the action and allow them to present objections. The settlement agreement stipulates that upon preliminary court approval, Defendants must provide the claims administrator with a list of all settlement class members, including their last known address, telephone number, and partial Social Security or taxpayer identification numbers. The claims administrator will then prepare and mail class notices, which will include Spanish translations. Notices will be sent to the most current addresses available, and the Court has found that the notice adequately informs class members about the settlement, including details on federal FLSA and state law claims, total settlement amount, expected individual payouts, attorney fees, and the process for opting into the FLSA collective action or opting out of the settlement class.
In response to concerns about mailing accuracy, the claims administrator has accurate addresses for all but 14 putative class members, with efforts being made to obtain contact information for those individuals. Any returned notices will be re-mailed after appropriate search efforts. The Court concludes that the proposed notice meets the necessary requirements and approves it.
Additionally, class counsel seeks the appointment of John Hill and Enrique Martinez. Under Rule 23, the court must appoint class counsel upon certifying the class, considering factors such as counsel's work in identifying claims, experience with class actions, knowledge of applicable law, and resources available for class representation.
Counsel conducted a comprehensive investigation, which included interviews with named plaintiffs and over 150 class members. Extensive communication occurred between the parties, and the defendants provided payroll and time records for over 173 class members before a Belaire notice was issued. Following the notice, most remaining records were submitted, covering pay records for over 94% of the class, with 11 employees opting for non-disclosure. Counsel gathered over 60 signed declarations from class members to support the claims and engaged in a full-day mediation with a professional mediator experienced in employment disputes.
Enrique Martinez, representing the plaintiffs, has significant experience in class action and complex litigation, specifically in labor and employment law, with a history of favorable settlements recouping millions in unpaid wages. He graduated from UCLA Law School in 1999 and has litigated over 35 similar wage and hour class actions. Martinez is an active member of the California Employment Lawyer's Association and has held leadership positions in related organizations. John Hill, with over 48 years of civil litigation experience, will also represent the class. The court finds that both attorneys possess the necessary qualifications and resources for this case.
The court provisionally certifies the action as a class and collective action for settlement purposes under Federal Rule of Civil Procedure 23 and the Fair Labor Standards Act (FLSA). The settlement class includes all non-exempt employees in California who worked as mechanics, maintenance workers, farm equipment operators, truck drivers, and weighers from December 7, 2012, until the Preliminary Approval Order, excluding those who have previously settled their claims with the California Labor Commissioner.
Certification of the settlement class is granted solely for settlement purposes, with no prejudice if the settlement is not ultimately approved. John E. Hill and Enrique Martínez are appointed as Class Counsel. The named plaintiffs—Francisco Rodriguez, Jesus Hernandez Infante, Marco Garcia, Juan Manuel Bravo, Estela Patino, Jose F. Orozco, and Antonio Ortiz—are designated as class representatives. CPT Group Class Action Administrators will serve as the settlement administrator. The Court approves the notice dissemination method for the settlement class and FLSA collective action members. A final fairness hearing is scheduled for June 20, 2018, at 10:00 a.m. The parties must file motions in support of the settlement's final approval by May 21, 2018. Key dates and deadlines include:
- Defendants must provide claim information within five days of the order.
- Notice must be sent within fourteen days of the order.
- Consent to join/opt-in, opt-out, and objection deadlines are all set for sixty days from the notice date.
- Class counsel must file their application for attorneys' fees and costs by May 21, 2018.
The parties consented to the jurisdiction of the magistrate judge, and there is no government participant in this action. CPT Group will charge $13,000 for administering the notice and claims. A Belaire notice will inform potential class members about the lawsuit and their option to keep their contact information confidential by returning a postcard.
