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ORICINAL 0
CHRISTIAN J. PETRONELLI, SBN [email protected]_ULIA M. DAMRON, SBN [email protected] & HO LLP295 Redondo Ave., Suite 201Long Beach, California 90803Telephone: (888) 855-3670Facsimile: (888) 449-9675
ABRAHAM MATHEW, SBN [email protected] GEORGE, SBN [email protected] J PARK, SBN [email protected] & GEORGE500 South Grand Avenue, Suite 1490Los Angeles, California 90071Telephone: (310) 478-4349Fax: (310) 478-9580
(Additional Counsel Below)
SufOrniaP@PioC 0 u n S S
ShePri R. C
OCT 8 0 2017artet, E.-
BY CC 16e ()i-t---A ~A' '_ % "er1clerkAlaria A g, 9 Deputy
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
Coordination Proceeding
Special Title (Rule 3.550)
COSTCO WAGE AND HOUR CASES.
LOREN CASH and ARRIANEHENRYHAND, on behalf of themselves andall others similarly situated,
Plaintiffs,
vs.
SMART-PROFESSIONALS, LLC, a Utahlimited liability corporation; COSTCOWHOLESALE CORPORATION, aWashington corporation; and DOES Ithrough 50, inclusive,
Defendants.
Case No.: JCCP487 I ?1al(p6065j~5-
Assigned for all purposes to:Hon. Elihu M. BerleDept. 323
CLASS ACTION
MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OF MOTIONFOR PRELIMINARY APPROVAL OFCLASS ACTION SETTLEMENT
Date: December 15, 2017Time: 10:00 a.m.Dept.: 323
BY FAX
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS
ACTION SETTLEMENT
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SHAUN SETAREH, SBN [email protected] SEGAL, SBN [email protected] LAW GROUP9454 Wilshire Boulevard, Suite 907Beverly Hills, California 90212Telephone: (310) 888-7771Fax: (310) 888-0109
Attorneys for Plaintiffs
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS
ACTION SETTLEMENT
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TABLE OF CONTENTS
1. INTRODUCTION I
11. KEY TERMS OF CLASS SETTLEMENT 2
111. FACTS AND PROCEDURE 3
A. Plaintiffs filed a putative class action alleging Labor Code violations 3
B. Plaintiffs' Counsel thoroughly investigated the factual and legal issues 4
C. Plaintiffs' Counsel realistically assessed the settlement value of claims 5
1 . Overtime and doubletime claims 5
2. Meal period and rest break claims 6
3. Wage statement claim 7
4. Waiting-time and PAGA penalties 8
5. Failure to reimburse business expenses 9
D. Parties settled after a full day mediation 10
E. Proposed settlement fully resolves Plaintiffs' claims 10
I . Composition of the Settlement Class 10
2. - Settlement consideration 10
3. Release by the Settlement Class 12
IV. ARGUMENT 13
A. Court should preliminarily approve the Class Action Settlement 13
1 . Courts review class action settlements to ensure that the terms are fair,
adequate, and reasonable 13
2. Plaintiff Counsel's thorough investigation led to settlement 14
3. Settlement was reached through arm's-length bargaining by Parties
represented by experienced counsel 15
4. Settlement is reasonable given the strengths of Plaintiffs' claims and
the risks and expense of litigation 16
B. Class Notice properly informs the Class about the case and settlement 18
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASSACTION SETTLEMENT
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C. The proposed PAGA settlement is reasonable 20
D. The Class Representative Enhancement Payment is reasonable 21
E. The negotiated Attorney's Fees and Costs are reasonable 23
F. California law authorizes provisional certification for settlement purposes 23
1 . California standard for class certification 23
2. Proposed Settlement Class is ascertainable 24
3. The Class Members share a well-defined community of interest 24
V. CONCLUSION 27
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASSACTION SETTLEMENT
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TABLE OF AUTHORITIES
STATE CASES
7-Eleven Ownersfor Fair Franchising v. Southland Corp., 85 Cal. App. 4th
1135(2000) 16
Ali v. US.A. Cab Ltd., 176 Cal. App. 4th 1333, 1341 (2009) 7
Bell v. Farmers Ins. Exchange, 115 Cal. App. 4th 715 (2004) 25
Brinker Restaurant Corp. v. Super. Ct., 53 Cal. 4th 1004 (2012) 7,29,30
Bufil v. Dollar Financial Group, Inc., 162 Cal. App. 4th H 93 (2008) 28
Capitol People First v. Dept. of Developmental Services, 155 Cal.AppAth 676
(2007) 31
Cartt v. Super. Cl., 50 Cal. App. 3d 960 (1975) 22
Cellphone Termination Fee Cases, 180 Cal. App. 4th I 110 (2009) 15, 16
Cellphone Termination Fee Cases, 186 Cal. App. 4th 1380 (2010) 16,25
Chance v. Super. Ct., 58 Cal. 2d 275 (1962) 22
Chavez v. Neoix, Inc., 162 Cal. App. 4th 43 (2008) 27
Classen v. Weller, 145 Cal.App.3d 27 (1983) 31
Contreras v. UnifedFood Group, LLC, Case No. BC389253 I
Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794 (1996) 15
Duran v. U.S. Bank National Assn., 59 Cal. 4th 1 (2014) 21
Fukuchi v. Pizza Hut, Case No. BC302589 I
Ghazaryan v. Diva Limousine, Ltd, 169 Cal.App.4th 1524 (2008) 32
Gomez v. Amadeus Salon, Inc., Case No. BC392297 2
Kass v. Young, 67 Cal. App. 3d 100 (1977) 21,22
Kullar v. FootLocker Retail, Inc., 168 Cal. App. 4th H 6 (2008) 18
Lee v. Dynamex, Inc., 166 Cal. App. 4th 1325 (2008) 27,28
Linder v. Thrifty Oil Co., 23 CalAth 429 (2000) 31
Munoz v. BCI Coca-Cola Bottling Co. ofLos Angeles, 186 Cal. App. 4th 399
Page iii
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASSACTION SETTLEMENT
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(2010)
Nordstrom Com. Cases, 186 Cal. App. 4th 576 (2010)
North Count Contractor's Assn., Inc. v. Touchstone Ins. Services, 27 Cal. App.y
4th 1085 (1994)
18
24
15
Ressler v. Federated Department Stores, Inc., Case No. BC3350.18 I
Richard Barajas et al v. MarLu Investment Group et al, Case No. BC63 0452 1
Sav-On Drug Stores, Inc. v. Super. Ct., 34 Cal. 4th 319 (2004) 28
Skulnick v. Roberts Express, Inc., 2 Cal. App. 4th 884 (1992) 16
Stambaugh v. Super. Ct., 62 Cal. App. 3d 231 (1976) 15
State of Cal. v. Levi Strauss & Co., 41 Cal. 3d 460 (1986) 17,23
Sutter Health Unins. Pricing Cases, 171 Cal. App. 4th 495 (2009) 19
Trotsky v. Los Angeles Fed. Savings & Loan Assn., 48 Cal. App. 3d 143 (1975) 21
Wershba v. Apple Computer, Inc., 89 Cal. App. 4th 324 (2001) 18
STATUTES
29 U.S.C. § 201, et seq. 4,29
Cal. Business & Professions Code § 17200 4, 14
Cal. Civ. Code § 1542 26
Cal. Civ. Proc. Code § 382 27:29
Cal. Lab. Code § 98.6 13
Cal. Lab. Code § 201-204 13
Cal. Lab. Code § 203 9, 10
Cal. Lab. Code § 218 13
Cal. Lab. Code § 218.5 13
Cal. Lab. Code § 221-223 13
Cal. Lab. Code § 223 29
Cal. Lab. Code § 226 13
Cal. Lab. Code § 226(a) 8
Page iv MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS
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Cal. Lab. Code § 226(e) 8,9
.Cal. Lab. Code § 226.3 13
Cal. Lab. Code § 226.7 13
Cal. Lab. Code § 226.8 13
Cal. Lab. Code § 5 10 14,29
Cal. Lab. Code § 512 14,30
Cal. Lab. Code § 558 14,24
Cal. Lab. Code § H 02.5 14
Cal. Lab. Code § 1174 14
Cal. Lab. Code § 1194 14.29
Cal. Lab. Code § 1194.2 14,29
Cal. Lab. Code § 1197 14,29
Cal. Lab. Code § 1197.1 29
Cal. Lab. Code § 1198 10, 14,29
Cal. Lab. Code § 2698 et seq. 4,14
Cal. Lab. Code § 2699(e)(1) 10
Cal. Lab. Code § 2699(f)(2) 9
Cal. Lab. Code § 2699(1) 24
Cal. Lab. Code § 2699.5 9
Cal. Lab. Code § 2800 14
Cal. Lab. Code § 2802 10, 14
OTHER AUTHORITIES
7/29/04 Letter from Sen. Dunn to Sen. Burton re SB 1809
RULES
Cal. Rules of Court, Rule 3.769 13
Cal. Rules of Court, Rule 3.776(e)-(o 20
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Cal. Rules of Court, Rules 3.769(c)-(g) 13
TREATISES
Conte & Newberg, Newberg on Class Actions, § 11.26 (4th ed. 2002) 13, 15
Theodore Eisenberg & Geoffrey P. Miller, Attorney Fees in Class Action
Settlements: An Empirical Study, J. of Empirical Legal Studies, Vol. 1, Issue
1, 27-78, March 2004 23
William B. Rubenstein et al., Newberg on Class Actions § 11:38 (4th ed. 2008) 22
Wright, A. Miller & M Kane, Federal Practice and Procedure § 1. 7 89 (2d ed.
1986) 19
REGULATIONS
Cal. Code Regs., tit. 8, § 13520 9
FEDERAL CASES
Blackwell v. Skywest Airlines, Inc., 245 F.R.D. 453 (S.D. Cal. 2007) 8, 19
Brown v. Fed Express Corp., 249 F.R.D. 580 (C.D. Cal. 2008) 7, 19
Campbell v. Best Buy Stores, L.P., 2013 U.S. Dist. LEXIS 137792 (C.D. Cal.
Sept. 20, 2013) 7
Chaaban v. Wet Seal, Inc., 2012 Cal. App. Unpub. LEXIS 2560 (Cal. Ct. App.
Apr. 4, 2012) 20
D'Amato v. Deutsche Bank, 236 F.3d 78 (2d Cir. 2001) 17
Doty v. Costco Wholesale Corp., Case No. CV05-3241 FMC-JWJx (USDC
Central District) 2
Fleming v. Covidien, Inc., No. ED CV10-01487,2011 U.S. Dist. LEXIS 154590
(C.D. Cal. Aug. 12, 2011) 10,25
Frank v. Eastman Kodak Co., 228 F.R.D. 174 (W.D.N.Y. 2005) 19
Gonzalez v. Officemax N. Am., 2012 U.S. Dist. LEXIS 163853 (C.D. Cal. Nov.
Page vi MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS
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5,2012) 7
Guippone v. BHS&B Holdings LLC, No. 09 Civ. 1029,2011 U.S. Dist. LEXIS
126026 (S.D.N.Y. Oct. 28, 2011) 26
Hopson v. Hanesbrands Inc., Case No. 08-00844, 20.09 U.S. Dist. LEXIS 33900
(N.D. Cal. Apr. 3, 2009) 24
In re Apple Computer, Inc. Derivative Litig., No. C 06-4128 JF (HRL), 2008
U.S. Dist. LEXIS 108195 (N.D. Cal. Nov. 5, 2008) 17
In re Atmel Corp. Derivative Litig., No. C 06-4592 JF (HRL), 2010 U.S. Dist.
LEXIS 145551 (N.D. Cal. June 25, 2008) 17
In re Global Crossing Sec. and ERISA Litig., 225 F.R.D. 436 (S.D.N.Y. 2004) 19
In re IKON Office Solutions, Inc. Sec. Litig., 194 F.R.D. 166 (E.D. Pa. 2000) 19
In re Mego Fin. Corp. Sec. Lilig., 213 F.3d 454 (9th Cir. 2000) 25
In re Michael Milken andAssoc. See. Litig., 150 F.R.D. 57 (S.D.N.Y. 1993) 19
In re Omnivision Tech., Inc., 559 F. Supp. 2d 1036 (N.D. Cal. 2008) 1.9
Jimenez v. Allstate Ins. Co., 2012 U.S.- Dist. LEXIS 65328 (C.D. Cal. Apr. 18,
2012) 7
Kenny v. Supercuts, Inc., 252 F.R.D.641 (N.D. Cal. 2008) 8,19
Laguna v. Coverall N. Am., No. 12-55479, 2014 U.S. App. LEXIS 10259 (9th
Cir. 2014) 21
Lanzarone v. Guardsmark Holdings, Inc., 2006 U.S. Dist. LEXIS 95785 (C.D.
Cal. 2006) 20
Lim v. Victoria's Secret Stores, Inc., Case No. 04CCO0213 2
Loud v. Eden Med Ctr., 2013 U.S. Dist. LEXIS 122873 (N.D. Cal. Aug. 28,
2013) 9
Nat'l Rural Telecomm. Coop. v. Direciv, Inc., 221 F.R.D. 523 (C.D. Cal. 2004) 19
Newman v. Stein, 464 F. 2d 689 (2d Cir. 1972) 19
Nunez v. BAE Systems San Diego Ship Repair Inc., Case No. 3:16-cv-02162
(USDC Southern District) I
Page vii MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASs
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Officersfor Justice v. Civil Serv. Comm., 688 F. 2d 615 (C.A. Cal. 1982) 19
Ordonez v. Radio Shack, Inc., 2013 U.S. Dist. LEXIS 7868 (C.D. Cal. Jan. 17,
2013) 20
Rodriguez v. West Publ'g Corp., 563 F.3d 948 (9th Cir. 2009) 25
Schaffer v. Litton Loan Servicing, LP, No. 05-07673-MMM, 2012 U.S. Dist.
LEXIS 189830 (C.D. Cal. Nov. 13, 2012) 26
Sorenson v. PetSmart, Inc., Case No. 2:06-CV-02674-JAM-DAD (USDC
Eastern District) 2
Wal-mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) 21
Walsh v. CorePower Yoga LLC, Case No. 16-cv-0561 0 (USDC Northern
District) I
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MEMORANDUM OF POINTS AND AUTHORITIES
INTRODUCTION
The Plaintiffs seek preliminary approval of a $1,500,000 class action settlement for 566
Class Members (working in California) and 2,252 Collective Members (working in the United
States) that provides an average net recovery of $355 per class member, each of whom did part-
time, sporadic work. This average compares favorably with 2017 approved wage and hour class
action settlements in both California State and Federal courts:
• Richard Barajas et al v. MarLu Investment Group et al, Case No. BC630452, $2.5M
settlement approved on February 9, 2017 for 8,500 employees (average net recovery of
approximately $200 per class member);
• Nunez v. BAE Systems San Diego Ship Repair Inc., Case No. 3:16-cv-02162 (USDC
Southern District), $2.9M settlement approved on February 14, 2017 for 2,000
employees for unpaid wages and missed meal periods (average net recovery of
approximately $1,000 per class member); and,
• Walsh v. CorePower Yoga LLC, Case No. 16-cv-0561 0 (USDC Northern District),
$1.65M settlement approved on February 15, 2017 for 4,900 employees for unpaid
wages (average net recovery of approximately $250 per class member)
Further, the average net recovery well exceeds recent settlements in other wage and hour
cases. [See, e.g., Fukuchi v. Pizza Hut, Case No. BC302589 (average recovery of $120);
Contreras v. UnitedFood Group, LLC, Case No. BC389253 (average recovery of $120); Ressler
v. Federated Department Stores, Inc., Case No. BC335018 (average recovery of $90); Doty v.
Costco Wholesale Corp., Case No. CV05-3241 FMC-JWJx (USDC Central District) (average
recovery of $65); Sorenson v. PetSmart, Inc., Case No. 2:06-CV-02674-JA M -DAD (USDC
Eastern District) (average recovery of $60); Lim v. Victoria's Secret Stores, Inc., Case No.
04CCO0213 (average recovery of $35); and Gomez v. Amadeus Salon, Inc., Case No. BC392297
(average recovery of $20)]
Page IMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS
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The Settlement is fair, reasonable, and adequate—and merits approval under California
law. Accordingly the Plaintiffs respectfully request that this Court arant preliminary approval of
the Class and Collective Action Settlement Agreement. (Exhibit 1.)
11. KEY TERMS OF CLASS SETTLEMENT
Below are key terms of the Class and Collective Action Settlement Agreement I:
1) Settlement Class Members: All persons whom Defendant Smart Professionals
retained to work as a roadshow representative in a Costco warehouse at any time
since January 19, 2012.
2) A Class Settlement Amount of $1,500,000 that includes:
a) The Net Settlement Proceeds (i.e., the Class Settlement Amount minus
Attorneys' Fees and Costs, Claims Administration Fee, the LWDA Payment, and
the Class Representative Enhancement Payments) fully allocated to participating
Class Members.
i) The Net Settlement Proceeds will be go to Class Members, with no retention
by any Defendant.
b) Distribution of the Net Settlement Proceeds based on the number of daily shifts
worked by each individual Class Member or Collective Member compared to the
total number of shifts attributed to all Class Members or all Collective Members.
c) $495,000.00 Attorneys' Fees and litigation costs actually incurred to Class
Counsel.
d) Estimated to be not more than $30,000 Claims Administration Fee to Settlement
Administrator, Atticus Administration.
e) $56,250 Payment to the LWDA pursuant to Private Attorneys General Act.
$12,500 Enhancement Payments to Plaintiffs Loren Cash and Arriane Henryhand
for their efforts in obtaining the settlement.
"Settlement Agreement" or "Settlement." Unless indicated otherwise, capitalized terms used here have the sameC,
meaning as those defined by the Settlement Agreement.
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As discussed below, the proposed Settlement satisfies all criteria for preliminary
approval under California law and falls well within the range of reasonableness. The Settlement
was reached through informed, arms-length bargaining between experienced attorneys after
sufficient discovery and motion work to adequately assess the value of the claims and risks of
future litigation. Indeed, the Settlement was the product of hard-fought negotiations with the
assistance of an experienced mediator. Accordingly, Plaintiffs respectfully request that the Court
grant preliminary approval of the Settlement, conditionally certify the proposed Class for
settlement purposes, appoint Plaintiffs as the Class Representatives and Plaintiffs' Counsel as
Class Counsel, authorize the Settlement Administrator to send the Notice Packet to the Class
Members, and set a final approval hearing date.
111. FACTS AND PROCEDURE
A. Plaintiffs filed a putative class action alleging Labor Code violations
On January 19, 2016 Plaintiffs Loren Cash and Arriane Henryhand filed a Class Action
Complaint alleging Defendants Costco Wholesale Corporation and Smart Professionals, LLC's
failure to: (1) pay all wages., including overtime; (2) provide required meal periods and rest
breaks; (3) pay final wages; and (4) provide accurate wage statements. Plaintiffs sought to
recover back wages, premiums, and civil penalties for Class Members. The complaint also
included causes of action for unfair competition (B&P Code § 17200), enforcement of PAGA
(Cal. Lab. Code § 2698 et seq.), and failure to pay all wages (29 U.S.C. § 201, et seq.). On
February 23, 2016, Plaintiffs filed a First Amended Complaint. (See Declaration of Christian J.
Petronelli [Petronelli Decl.] ~ 3)
Plaintiffs are filing a Second Amended Complaint to incorporate a claim for failure to
reimburse business expenses and additional claims that Class Counsel previously asserted on
behalf of Plaintiff Roseline Andre in the coordinated action. Ms. Andre's own claims are not a
part of this Settlement. (Petronelli Decl. T 4)
Plaintiffs posited several theories of Class liability against Defendants in support of their
alleged claims, including: (1) Defendants were joint employers of Class Members; (2)
Defendants failed to record meal periods; (3) Defendants enforced a scheduling policy and
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practice that made it difficult for Class Members to take uninterrupted duty free meal periods
and rest breaks; (4) Defendants failed to pay all wages due and owing to Class Members at
termination. (Petronelli Decl. ~ 5)
B. Plaintiffs' Counsel thoroughly investigated the factual and legal issues
Plaintiffs' Counsel thoroughly investigated and researched Class claims and their
theories of liability, their defenses, and the developing body of law before the Settlement. The
comprehensive investigation included the exchange of informal and formal discovery with
Defendants; taking of depositions; multiple fact-finding sessions with Plaintiffs; and several
conferences with Defense counsel. (Petronelli Decl. T 6)
Plaintiffs received, among others, the following information, data and documents
relevant to Class-wide liability ("Class Data") in support of their investigation and evaluation of
Class claims: (1) employee handbooks, procedure manuals, procedure handouts, and operations
manuals addressing Defendants' wage and hour practices, e.g., (i) timekeeping and payroll
policies, (ii) meal and rest periods; (2) employee time and payroll records; and (3) employee
schedules. (Petronelli Decl. 17)
Plaintiffs' Counsel also worked to determine: (i) average hourly rate of pay for Class
Members; (ii) total number of former and current employees in the Class Period; (iii) total
number of Class Members in the PAGA period; and (iv) total number of shifts worked by all
Class Members during the Class Period. Plaintiffs' Counsel then applied the Class Data to the
Class to determine damages for unpaid overtime, unpaid wages, waiting time penalties, missed
meal breaks, missed rest breaks, and PAGA penalties. (Petronelli Decl. ~ 8)
Plaintiffs' Counsel made an informed decision about the strengths and weaknesses of
Plaintiffs' theories of liability, Defendants' affirmative defenses, Class-wide damages, and
benefits of Settlement based on the receipt, analysis, and application of the Class Data.
(Petronelli Decl. T 9)
Further, Plaintiffs' Counsel (1) determined Plaintiffs' suitability as Class representatives,
through interviews, background investigations, and analyses of their files and related records;
(2) researched wage-and-hour class actions involving similar claims; (3) engaged in the
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discovery process; (4) obtained and analyzed Defendants' wage-and-hour policies and
procedures; (5) researched the latest case law bearing on the theories of liability; (6) researched
settlements in similar cases; (7) analyzed the value of Plaintiffs' claims; (8) drafted a mediation
brief-, (9) negotiated the terms of the Settlement; (10) finalized the Class and Collective Action
Settlement Agreement; (11) finalized the Notice of Settlement; and (12) drafted preliminary
approval papers. (Petronelli Decl. ~ 10)
C. Plaintiffs' Counsel realistically assessed the settlement value of claims
As shown below, Plaintiffs roughly valued the Class claims at $897,906.63 to
$1,795,813.25 for settlement purposes based on their investigation and Class Data. Plaintiffs'
total valuation involved the aggregate value of claims and discounting for risks of continued
litigation. (Petronefli Decl. T 11)
1. Overtime and doubletime claims
Plaintiffs alleged that Defendants failed to pay Class Members for all hours worked and
failed to pay California premium wages for daily and weekly overtime and doubletime hours,
and failed to pay overtime under the Fair Labor Standards Act (FLSA).
Plaintiffs calculated Defendants' maximum exposure for the unpaid California overtime
by taking the product of the total number of qualifying overtime hours worked by Class
Members during the Class Period (approximately 31,942) and estimated average hourly rate of
overtime pay ($24.00, or $16.00 x 1.5). Plaintiffs calculated Defendants' maximum exposure for
th e unpaid California doubletime by taking the product of the total number of qualifying
doubletime hours worked by Class Members during the Class Period (approximately 2,596) and
estimated average hourly rate of overtime pay ($32.00, or $16.00 x 2). Plaintiffs calculated
Defendants' maximum exposure for the unpaid FLSA overtime by taking the product of the
total number of qualifying overtime hours worked by Collective Members during the Class
Period (approximately 36,645) and estimated average hourly rate of overtime pay ($24.00, or
$16.00 x 1.5).
Defendants' maximum theoretical exposure had to be offset by the strength of their
defenses (e.g., no obligation to pay overtime as Defendant Costco denied it was the Class
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Members'joint employer,' and no evidence of widespread violations), and the likelihood of the
following events: Class certification; winning on liability; and prevailing on appeal.
Realistically, and considering the real risks of continued litigation, Plaintiffs valued the
California overtime, California doubletime, and FLSA overtime claims for settlement purposes
between $150,925.95 and $301,851.90, $16,354.80 and $32,709.60, and $173,147.63 and
$346,295.25, respectively. (Petronelli Decl. J~ 12-17)
2. Meal period and rest break claims
Plaintiffs alleged that Defendant Costco enforced a scheduling policy and practice that
made it difficult for Class Members to take uninterrupted duty free meal periods and rest breaks.
Plaintiffs calculated Defendants' maximum exposure for the meal periods and rest breaks by
taking the product of the total number of qualifying shifts worked by Class Members during the
Class Period (approximately 25,127) and estimated average hourly rate of pay ($16.00).
Defendants' maximum theoretical exposure had to be offset by the strength of its
defenses (e.g., no widespread meal period and rest break violations, and Defendants authorized
and permitted meal periods and rest breaks), and the likelihood of the following events: Class
certification; winning on liability; and prevailing on appeal.
Plaintiffs provided a deeper discount for the rest break claim because employers do not
have an obligation to record rest periods (rest periods are paid breaks). The relative lack of
written proof—except for anecdotal Class Member testimony—would have reduced the
likelihood of certifying the claim.
Plaintiffs especially recognized the risks of Class certification presented by the following
recent decisions: See, e.g., Ali v. U.S.A. Cab Ltd., 176 Cal. App. 4th 1333, 1341 (2009) (denying
certification because employees' declarations attesting to having taken meal periods and rest
' A key analytical point here is that Costco claims that only Defendant Smart Professionals had "retained" theClass Members to work, and Smart Professionals has gone defunct, leaving the other Defendants holding thealleged liability bag. Proving liability against these other Defendants would require proof of joint-employerstatus, which the Parties hotly dispute.
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breaks demonstrated that individualized inquiries were required to show harm); Campbell v.
Best Buy Stores, L.P., 2013 U.S. Dist. LEXIS 137792, at *30-41 (C.D. Cal. Sept. 20, 2013)
(following Brinker and denying certification of proposed meal period and rest break class due to
lack of uniform policy); Jimenez v. Allstate Ins. Co., 2012 U.S. Dist. LEXIS 65328 (C.D. Cal.
Apr. 18, 2012) (denying motion to certify meal period and rest break class based on employer's
practice of understaffing and overworking employees); Gonzalez v. Officemax N. Am., 2012
U.S. Dist. LEXIS 163 853 (C.D. Cal. Nov. 5, 2012) (same); Brown v. Fed Express Corp., 249
F.R.D. 580, 587-88 (C.D. Cal. 2008) (denying certification of driver meal period and rest break
claims based on the predominance of individual issues); Kenny v. Supercuts, Inc., 252
F.R.D.641, 645 (N.D. Cal. 2008) (denying certification on meal periods claim); Blackwell v.
Skywest Airlines, Inc., 245 F.R.D. 453, 467-68 (S.D. Cal. 2007) (declining to certify class action
because individual issues predominated when different employee stations provided different
practices with respect to meal periods).
Realistically, and considering the real risks of continued litigation, Plaintiffs valued the
meal period and rest break claims for settlement purposes between $35,177.80 and $70,355.60,
and $8,794-45 and $17,588.90, respectively. (Petronelli Decl. T~ 18-22)
3. Wage statement claim
Plaintiffs alleged that Defendant failed to properly itemize Class Members'wage
statements in violation of Labor Code § 226(a). Penalties for violations of section 226(a) are
assessed at the rate of $50 for the initial pay period in which a violation occurs and $100 per
employee for each violation in a subsequent pay period, not to exceed an aggregate of $4,000
dollars per employee. [Cal. Lab. Code § 226(e)]
Plaintiffs calculated Defendants' maximum exposure for the wage statement claim by
taking the product of the approximate total statutory pay periods worked by Class Members
(approximately 1,959) and the statutory penalty. Plaintiffs then offset Defendants' maximum
exposure by the strength of its affirmative defenses and the risks of continued litigation.
Defendants commonly argue that Class Members are not han-ned by non-compliant wage
statements, and courts should not penalize employers for purported unintentional errors on wage
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statements. Before Section 226(e) was amended, the dispositive issue was whether "suffering
injury" was satisfied by the deprivation of a legal right or by consequential damages caused by
the non-compliant wage statements. Employers had frequently prevailed in arguing for the latter
interpretation. Even after the enactment of section 226(e), some courts have held that this
amendment merely clarified existing law and held that Plaintiffs must demonstrate actual injury.
[See Loud v. Eden Med. Or., 2013 U.S. Dist. LEXIS 122873, **36-53 (N.D. Cal. Aug. 28,
2013) (granting summary judgment on wage statement claim because plaintiff could not show
injury due to defects and that incorrect wage information is not willful)] Even if wage statement
claims survive summary judgment, the strength of the claim is inextricably tied to the strength
of the underlying predicate claims (i.e., liability for any wage statement claim is completely
derivative).
Hence, and considering the risks of continued litigation, Plaintiffs valued the wage
statement claim for settlement purposes between $14,665.00 and $29,330.00. (Petronelli Decl.
~~ 23-26)
4. Waiting-time and PAGA penalties
Plaintiffs alleged waiting-time 3 and PAGA penaltieS4 for Defendants' purported
violations of underlying Labor code violations. Although the formulae for calculating maximum
penalties under Labor Code §§ 203 and 2699(0(2) are fairly straightforward, the analysis
becomes more difficult for settlement purposes because waiting time and PAGA claims are only
as strong as the underlying predicate claims.
I Under California law, if an employer discharges an employee, all wages earned and unpaid at the time ofdischarges are due and payable immediately to the employee. Failure to pay an employee all wages and premiumpay owed, including overtime premiums, reporting time pay, meal period/rest period premiums, and split shiftpremium pay, may entitle an employee to waiting time penalties. These penalties continue for up to 30 calendardays. Waiting time penalties are computed by multiplying the employee's daily wage rate by the specified numberof days since the payment of the wages became due, not to exceed 30 calendar days. See Lab. Code § 203.
' Under PAGA, the civil penalty for violations of any of the code provisions enumerated by Lab. Code § 2699.5 isone hundred dollars ($ 100) for each aggrieved employee per pay period for the initial violation and two hundreddollars ($200) for each aggrieved employee per pay period for each subsequent violation. See Lab. Code §2699(l)(2).
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First, Defendants could have argued that waiting-time penalties are applicable only when
the failure to pay wages at tennination is "willful." (See Lab. Code § 203; Cal. Code Regs., tit.
8, § 13520)5 Second PAGA penalties are discretionary, i.e., a judge may order a defendant to
pay all penalties, or none at all--even if the plaintiff proves liabi I ity.' Further, one of Plaintiffs'
stronger PAGA penalty was premised on Defendants' alleged failure to record meal periods in
violation of Labor Code § 1198 and IWC Wage Orders. However, Defendants could have
argued that recording of meal periods is not "conditions of labor" contemplated by Labor Code
§ 1198.
Hence, and considering the risks of continued litigation, Plaintiffs valued waiting time
and PAGA penalty claims at between $427,896.00 and $855,792.00, and $65,992.50 and
$131,985.00, respectively. (Petronelli Decl. % 27-29)
5. Failure to reimburse business expenses
Plaintiffs alleged that Defendants failed to reimburse Class Members' out-of-pocket
business expenses under Labor Code § 2802, as Defendants allegedly required Class Members
to use their cell phones for work at their own personal expense. Plaintiffs calculated Defendants'
maximum exposure for the wage statement claim by taking the product of the estimated
business expenses incurred by each Class Member (approximately $100) and the number of
Class Members. Plaintiffs then offset Defendants' maximum exposure by the strength of its
affirmative defenses and the risks of continued litigation.
Hence, and considering the risks of continued litigation, Plaintiffs valued the failure to
reimburse business expenses claim at between $4,952.50 and $9,905.00. (Petronelli Decl. % 30-
31)
5 Defendant would also have argued a good faith dispute as to whether wages are due precludes the imposition ofwaiting time penalties. Cal. Code Regs., tit. 8, § 13520.
' "For purposes of this part, whenever the Labor and Workforce Development Agency, or any of its departments,divisions, commissions, boards, agencies, or employees, has discretion to assess a civil penalty, a court isauthorized to exercise the same discretion, subject to the same limitations and conditions, to assess a civil penalty."Lab. Code § 2699(e)(1). Courts have not hesitated in exercising this discretionary authority. See, e.g., Fleming v.Covidien, Inc., No. ED CV] 0-01487,2011 U.S. Dist. LEXIS 154590, at *8-9 (C.D. Cal. Aug. 12, 2011) (slashingPAGA penalties for wage statement violations by over 500%, from $2.8 million to $500,000).
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D. Parties settled after a full day mediation
The Parties agreed to private mediation to attempt to resolve the Class claims. On July
25, 2017 the Parties attended an all-day mediation with Mark Rudy—a well-regarded mediator
with extensive experience in resolving wage and hour class actions. The Parties agreed to the
principal terms for a settlement under Mark Rudy's guidance, and that compromise is
memorialized in the Settlement Agreement. After another two months of negotiating, the parties
finalized a long-form Settlement Agreement. At all times the Parties' negotiations were
adversarial and non-collusive. (Petronelli Decl. ~ 32)
E. Proposed settlement fully resolves Plaintiffs' claims
1. Composition of the Settlement Class
The proposed Settlement Class Members consist of all persons whom Defendant Smart
Professional retained to work as a roadshow representative at any Costco warehouse in
California at any time from January 19, 2012 through preliminary approval, estimated to include
566 Class Members. [Settlement Agreement §§ 1.7, 1.10, 3.2.] The proposed Settlement
Collective Members consist of all persons whom Defendant Smart Professionals retained to
work as a roadshow representative at any Costco warehouse in the United States at any time
from January 19, 2013 through preliminary approval, estimated to include 2,252 Class
Members. [Id.] There are 32 persons who were retained to work as roadshow representatives at
Costco warehouse locations both within and outside of California. [Id.]
2. Settlement consideration
Plaintiffs and Defendant have agreed to fully resolve the Class claims for $1,500,000.
The Class Settlement Amount includes: (1) settlement payments to participating Class Members
("Net Settlement Proceeds"); (2) attorneys' fees of $495,000.00 and litigation costs actually
incurred; (3) Claims Administration Fee of estimated to be not more than $30,000; (4) LWDA
Payment of $56,250; and (5) Class Representative Enhancement Payments of $12,500 and
$12,500 to Plaintiffs Loren Cash and Arriane Henryhand, respectively. (Settlement Agreement
§§ 3-4, 7.3-7.6.)
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Seventy-five percent (75%) of the net Class Settlement Amount will be allocated to the
settlement of California released claims and twenty-five percent (25%) will be allocated to the
settlement of FLSA released claims. The distribution of the Net Settlement Proceeds to Class
Members is straightforward: Each Class Member's share of the settlement will be proportional
to the total number of daily work shifts worked during the Class Period. (Settlement Agreement
§§ 7.6.3-7.6.4) Defendant Smart Professionals' records will determine Class Members' number
of work shifts, and Class Members will have an opportunity to challenge those records.
(Settlement Agreement § 7.6. 1; see Notice of Settlement [Class Notice], p. 9.)
The Individual Settlement Payments will be apportioned for tax purposes as 35% wages,
60% penalties and interest, and 5% (unreported) for nontaxable amounts representing
reimbursement of employee business expenses. (Settlement Agreement § 7.8.) For the 35% of
Class Members' settlement proceeds considered "wages," the Settlement Administrator will
make required tax withholdings from each individual settlement payment and remit the
withholdings and Defendants' share of payroll taxes to the appropriate tax authorities.
(Settlement Agreement § 7.8.)
If any Class Members opt out, the Settlement Administrator will proportionately
increase the individual Settlement payment for each Participating Class Member to ensure that
100% of the Net Settlement Proceeds is distributed to participating Class Members. (Settlement
Agreement § 7.6.7.)
If any Class Member fails to cash his or her Settlement check after 180 days, the check
will become void and the funds intended for that Class Member will be tendered to the
California Industrial Relations Department, Unclaimed Wages Fund, in the name of the Class
Member. (Settlement Agreement § 7.8.3.) If any Collective Member fails to cash his or her
Settlement check after 180 days, the Settlement Administrator will direct 20% of the associated
funds to Class Members on a pro rata basis and 80% of the associated funds to participating
Collective Members on a pro rate basis. (Settlement Agreement § 7.6.6.)
No portion of the Class Settlement Amount will revert to Defendants.
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3. Release by the Settlement Class
Plaintiffs and Class and Collective Members agreed to the Released Claims in exchange
for the Class Settlement. (Settlement Agreement § 8)
For Class Members, the Released Claims include the following claims: any claim of
liability or cause of action that was or could have been asserted in this Action or that is based on
or arises out of the facts alleged in this Action, including, without limitation, claims or causes of
action for:
0 unpaid overtime
missed meal or rest breaks
meal or rest break penalties
unreimbursed employee business expensesliquidated damages
unlawful deductions from wages
conversion of wages
record -keep i ng violations
wage statement penalties
&Cwaiting time" penalties0 any claim or cause of action under Wage Order and Labor Code section 98.6,
201-204, 218, 218.5, 221-223, 226, 226.3, 226.7, 226.8, 510, 512, 558, 1102.5,1174, 1174.5, 1194, 1194.2, 1197, 1198, 2800, 2802Cal ifornia Business and Professions Code sections 17200, et seq.,California Labor Code sections 2698, et seq.
(Settlement Agreement § 8. 1)
For Collective Members, the Released Claims include all claims under the Fair Labor
Standards Act that Collective members will release if they opt in to the collective by accepting
payment under the Settlement Agreement. (Settlement Agreement § § 1. 19, 7.6.5-7.6.6.)
The Released Parties include "Defendant [Costco Wholesale Corporation] and each and all of its
current or former subsidiaries, parents, affiliates, predecessors, insurers, agents, employees,
successors, assigns, officers, officials, directors, attorneys, personal representatives, executors,
and shareholders, including their respective pension, profit sharing, savings, health, and other
employee benefits plans of any nature, the successors of such plans, and those plans' respective
current or former trustees and administrators, agents, employees, and fiduciaries. "Released
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Parties" also includes Costco's Special Event vendors, Smart Professionals, LLC, Morgan &
Sampson, Inc., and as to each of the foregoing, all of their present and foriner subsidiaries,
affiliates, and joint ventures, and all of their shareholders, officers, directors, employees, agents,
servants, registered representatives, attorneys, insurers, successors and assigns, and any other
persons acting by through. under or in concert with any of them." (Settlement Agreement §
1.35.)
Plaintiffs also agreed to an additional general release of their individual claims in
exchange for their Enhancement Awards. (Settlement Agreement § 8.2)
IV. ARGUMENT
A. Court should preliminarily approve the Class Action Settlement
1. Courts review class action settlements to ensure that the terms are
fair, adequate, and reasonable
California Rule of Court ("Rule"), Rule 3.769 requires litigants to obtain court approval
of class action settlements. Approval occurs in two steps: (1) an early "preliminary" review by
the trialcourt; and (2) a subsequent "final" review after notice of the settlement has been
distributed to class members for their comments and objections. Cal. Rules of Court, Rule
3.769(c)-(g); Cellphone Termination Fee Cases, 180 Cal. App. 4th I 110, H 18 (2009) (the court
first "preliminarily approves the settlement" and later "conducts a final approval hearing to
inquire into the fairness of the proposed settlement").
Preliminary approval is warranted if the settlement falls within a "reasonable range." See
North County Contractor's Assn., Inc. v. Touchstone Ins. Services, 27 Cal. App. 4th 1085, 1089-
90 (1994); Conte & Newberg, Newberg on Class Actions, § 11.26 (4th ed. 2002) ("Newberg").
Reasonableness and fairness are presumed where: (1) the settlement is reached through "arms-
length bargaining," (2) investigation and discovery are "sufficient to allow counsel and the court
to act intelligently," (3) counsel is "experienced in similar litigation," and (4) the percentage of
objectors "is small." Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794, 1802 (1996). The
presumption of fairness is consistent with California's public policy goal of favoring
settlements. Stambaugh v. Super. Ct., 62 Cal. App. 3d 231, 236 (1976) ("the law wisely favors
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settlements"); Cellphone Termination Fee Cases, 180 Cal. App. 4th at 1118 ("public policy
generally favors the compromise of complex class action litigation"); 7-Eleven Ownersfor Fair
Franchising v. Southland Corp., 85 Cal. App. 4th 1135, 1151 (2000) ("voluntary conciliation
and settlement are the preferred means of dispute resolution ... [t]his is especially true in
complex class action litigation"); Skulnick v. Roberts Express, Inc., 2 Cal. App. 4th 884, 891
(1992) ("public policy strongly discourages litigation and encourages settlement [because
settlements] can produce peace and goodwill in the community while reducing the expense and
persistency of litigation").
In reviewing the fairness of a class action settlement, due regard should be given to what
is "otherwise a private consensual agreement between the parties." Cellphone Termination Fee
Cases, 186 Cal. App. 4th 1380, 1389 (201 O~ ("Cellphone Termination Fee Cases 11"). The
Court's inquiry "must be limited to the extent necessary to reach a reasoned judgment that the
agreement is not the product of fraud or overreaching by, or collusion between, the negotiating
parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all
concerned." Id.
2. Plaintiff Counsel's thorough investigation led to settlement
As detailed above, Plaintiffs' Counsel made an informed decision about the strengths
and weaknesses of Plaintiffs' theories of liability, Defendants' affirmative defenses, Class-wide
damages, and benefits of Settlement based on the receipt, analysis, and application of the Class
Data. (Petronelli Decl. T 33)
Plaintiffs' Counsel realistically assessed the value of Plaintiffs' claims and intelligently
engaged Defendants' counsel in discussions that culminated in the Settlement. Plaintiffs'
Counsel can now opine with confidence that the Settlement is fair, reasonable, and adequate,
and is in the best interests of Class Members in light of all known facts and circumstances,
including: the risk of significant delay and uncertainty associated with litigation; viability of
Defendants' defenses; adversejudgment on certification and liability; and potential appellate
issues. (Petronelli Decl. T 34)
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3. Settlement was reached through arm's-length bargaining by Parties
represented by experienced counsel
"[W]hat transpires in settlement negotiations is highly relevant to the assessment of a
proposed settlement's fairness." [State of Cal. v. Levi Strauss & Co., 41 Cal. 3d 460, 482
(1986)] Courts presume the absence of fraud or collusion in the negotiation of a settlement,
unless evidence to the contrary is offered; thus, there is a presumption that settlement
negotiations are conducted in good faith. (Newberg, § 11.5 1) Courts presume the absence of
fraud or collusion in the negotiation of a settlement, unless evidence to the contrary is offered;
thus, there is a presumption that settlement negotiations are conducted in good faith.
The Parties participated in an all-day mediation session with Mark Rudy. (Petronelli
Decl. T 35) Mr. Rudy helped manage Party expectations, and he provided a neutral analysis of
the factual and legal issues and risks to both sides. (Id.) See In re Apple Computer, Inc.
Derivative Lilig., No. C 06-4128 JF (HPL), 2008 U.S. Dist. LEXIS 108195 (N.D. Cal. Nov. 5,
2008) (mediator's participation weighs considerably against any inference of a collusive
settlement); In re Atmel Corp. Derivative Litig., No. C 06-4592 JF (HRL), 2010 U.S. Dist.
LEXIS 145551 (N.D. Cal. June 25, 2008) (same); DAmato v. Deutsche Bank, 236 F.3d 78, 85
(2d Cir. 2001) (a mediator's involvement in pre-certification settlement negotiations helps to
ensure that the proceedings were free of collusion and undue pressure)] At all times the Parties'
negotiations were adversarial and non-collusive; and, the Parties reached Settlement through
Mr. Rudy's efforts and guidance. (Id.)
Further, experienced class action counsel represented the Parties in negotiations resulting
in Settlement. Plaintiffs' Counsel regularly litigates wage and hour class actions through
certification and on the merits. (Petrone Ili Decl. TT 51-58; Declaration of Sang J Park, TT 3-16;
Declaration of Shaun Setareh, % 3-10.) Defendant Costco is represented by Seyfarth Shaw
LLP—a multi-national law firm with a sophisticated class action litigation practice.
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4. Settlement is reasonable given the strengths of Plaintiffs' claims and
the risks and expense of litigation
An important factor in approving a class action settlement is "the strength of the case for
Plaintiffs on the merits, balanced against the amount offered in settlement." [Kullar v.
FootLocker Retail, Inc., 168 Cal. App. 4th 116, 130 (2008); see also Munoz v. BCI Coca-Cola
Bottling Co. ofLos Angeles, 186 Cal. App. 4th 399, 407-8 (2010)]
As detailed above, the Settlement is fair and reasonable given the strengths of Plaintiffs'
claims and the various impediments to recovery. Plaintiffs determined the settlement value of
their claims—that is, a value that takes into account the probability of losing at appeal, on
certification, or on the merits—at between $897,906.63 to $1,795,813.25. The actual settlement
value of $1,500,000 thus falls squarely within "the ballpark of reasonableness" and is thus fair,
adequate and reasonable. (Petronelli Decl. 136)
It should be noted that the reasonableness of a settlement is not dependent upon the
potential recovery plaintiffs might have received if they had succeeded at trial. [See Wershba v.
Apple Computer, Inc., 89 Cal. App. 4th 324,346 (2001) ("The proposed settlement is not to be
judged against a hypothetical or speculative measure of what might have been achieved had
plaintiffs prevailed at trial."); Sutter Health Unins. Pricing Cases, 171 Cal. App. 4th 495, 511
(2009) (emphasizing that the court must be mindful that "[flhe ... class case could have gone to
an incredibly lengthy and expensive jury trial, -and the class could have lost the case" and must
account for that likelihood in discounting the value of the claims for settlement purposes
[emphasis in original])f (Petronelli Decl. T 37)
' Federal district courts recognize that there is an inherent "range of reasonableness" in determining whether toapprove a settlement "which recognizes the uncertainties of law and fact in any particular case and the concomitantrisks and costs necessarily inherent in taking any litigation to completion." Frank v. Eastman Kodak Co., 228F.R.D. 174, 188 (W.D.N.Y. 2005) (quoting Neivinan v. Stein, 464 F. 2d 689, 693 (2d Cir. 1972)). Therefore, "fflhedetermination whether a settlement is reasonable does not involve the use of a 'mathematical equation yielding aparticularized sum."' Id. at 186, quoting In re Michael Milken andAssoc. Sec. Litig., 150 F.R.D. 57, 66 (S.D.N.Y.1993). See In re Omnivision Tech., Inc., 559 F. Supp. 2d 1036 (N.D. Cal. 2008); see also Na17 Rural Telecomm.Coop. v. Direciv, Inc., 221 F.R.D. 523, 527 (C.D. Cal. 2004) ("well settled law that a proposed settlement may beacceptable even though it amounts to only a fraction of the potential recovery"); In re Global Crossing Sec. andERISA Lifig., 225 F.R.D. 436, 460 (S.D.N.Y. 2004) ("settlement amount's ratio to the maximum potential recovery
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Further, and generally speaking on the risks of continued litigation, a number of cases
with the same claims as here were not suitable for class adjudication because they raised too
many individualized issues. [See Brown v. Fed Express Corp., 249 F.R.D. 580, 587-88 (C.D.
Cal. 2008) (denying certification of driver meal and rest period claims based on the
predominance of individual issues); Kenny v. Supercuts, Inc., 252 F.R.D. 641, 645 (N.D. Cal.
2008) (denying certification on meal periods claim); Blackwell v. Skywest Airlines, Inc., 245
F.R.D. 453, 467-68 (S.D. Cal. 2007) (declining to certify class action because individual issues
predominated when different employee stations provided different practices with respect to meal
periods); Chaaban v. Wet Seal, Inc., 2012 Cal. App. Unpub. LEXIS 2560 (Cal. Ct. App. Apr. 4,
2012) (trial court denied certification of rest break claims where the plaintiffs offered no
common method of distinguishing between instances when employees were not permitted to
take breaks); and Lanzarone v. Guardsmark Holdings, Inc., 2006 U.S. Dist. LEXIS 95785 * I I -
13 (C.D. Cal. 2006) (denying motion for class certification when common questions did not
predominate because varied meal and rest periods policies varied from shift to shift)] (Petronelli
Decl. ~ 38)
Some courts have denied certification even when an employer's policies are unlawful on
their face. For instance, in Ordonez v. Radio Shack, Inc., 2013 U.S. Dist. LEXIS 7868 (C.D.
Cal. Jan. 17, 2013), the court rejected plaintiff s evidence of a facially unlawful policy and
denied certification. The Ordonez court credited anecdotal evidence of compliance
notwithstanding the unlawful policy. The Ordonez and other similar cases demonstrate that
certification of wage and hour claims are inherently risky. Thus the risk of continued litigation
militated in favor of settlement. (Petronelli Decl. T 39)
Here Defendants have posited that the instant claims are not amenable to Class
Certification, and heavily disputes that Plaintiffs and Class would ultimately succeed on the
need not be the sole, or even dominant, consideration when assessing settlement's fairness"); In re NON OfficeSolutions, Inc. Sec. Litig., 194 F.R.D. 166, 184 (E.D. Pa. 2000) ("the fact that a proposed settlement constitutes arelatively small percentage of the most optimistic estimate does not, in itself, weigh against the settlement; ratherthe percentage should be considered in light of strength of the claims"); Officersfor Justice v. Civil Serv. Comm.,688 F. 2d 615, 628 (C.A. Cal. 1982) (it is "tile complete package, taken as a whole rather than the individualcomponent parts, that must be examined for overall fairness").
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merits. Consequently Plaintiffs face numerous risks in continued litigation, including: (1) the
risk of losing certification and, even if the Class is certified, losing on liability; (2) the risk of
obtaining a lesser amount than the Settlement after years of litigation and a lengthy and costly
class-action trial; and/or (3) the risk a class certification order orjudgement will be held in
abeyance by the appellate process. Hence Plaintiff Counsel's analysis and investigation in
valuing the case included the real possibility that Class Members would not recover anything
after years of litigation. (Petronelli Decl. ~ 40)
The Settlement here guarantees that Defendant Costco will pay $1,500,000 to Class
Members for their alleged damages. Therefore this Settlement easily falls.within the range of
reasonableness because it provides a significant and timely recovery to Class and Collective
Members. (Petronelli Decl. ~ 41)
Further the risks of continued litigation is particular high since "California employment
law would likely make obtaining class certification particularly difficult [flollowing the
Supreme court's decision in Wal-marl Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011)." Laguna v.
Coverall N. Am., No. 12-55479,2014 U.S. App. LEXIS 10259, * I I (9th Cir. 2014) (affirming
an order approving a class action settlement that discounts heavily for legal risk). The risk has
been exacerbated by the enhanced proof requirements for class actions set forth in the recent
Duran v. US. Bank National Assn., 59 Cal. 4th 1 (2014) decision—providing Plaintiffs yet
another obstacle.
In short—and given the substantial risks in continued litigation, including the
uncertainty of success—the Settlement represents a reasonable compromise of Plaintiffs' claims
and ensures that Class Members will receive a fair and adequate recovery.
B. Class Notice properly informs the Class about the case and settlement
Class members are entitled to the best practical notice under the circumstances. Kass v.
Young, 67 Cal. App. 3d 100, 106 (1977). The purpose of the notice is to give class members
sufficient information to decide whether they should accept the benefits offered, opt out and
pursue their own remedies, or object to the settlement. Trotsky v. Los Angeles Fed Savings &
Loan Assn., 48 Cal. App. 3d 143, 151-52 (1975). The notice must advise class members "that
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they may be excluded from the class if they so request and that they will be bound by the
judgment, whether favorable or not, if they do not request exclusion." Kass, 67 Cal. App. 3d at
106. California authorities generally require service of the class notice by mail or similar
reliable means. Chance v. Super. Ct., 58 Cal. 2d 275, 290 (1962); Cant v. Super. Ct., 50 Cal.
App. 3d 960, 972 (1975). Due process does not require that each class member actually receive
a notice, but rather that a procedure reasonably certain to reach class members is used. Wright,
A. Miller & M Kane, Federal Practice and Procedure § 1789, at 253 (2d ed. 1986).
The Parties have jointly drafted the Notice of Settlement that fairly and neutrally inform
Class Members of their rights and remedies in this action. The Notice of Settlement will be
mailed to all Class Members by First Class mail and will include, among others, the following
information: the nature of the lawsuit; Settlement terms; class definition; deadlines to opt out or
object; the final approval hearing date; the formula used to calculate settlement payments
(including the individual Class Member's dates ofernployment and number of workweeks
during the Class Period); instructions for disputing the dates of employment or number of
workweeks; and the terms and scope of the Released Claims. (Petronelli Decl. % 42-43; Exhibit
2)
The Notice Packet will be sent to the Class Members using Defendants' records of the
Class Members' full name; last known address and last known home telephone number; Social
Security number (where available); 8 dates of employment in California during the Class Period;
and any other relevant information needed to calculate settlement payments. In the event Notice
Packets are returned as undeliverable, the Settlement Administrator will attempt to locate a
current address using, among other resources, a skip-trace. (Settlement Agreement § 5.4.) This
method will maximize Class Member response rates while ensuring cost effective Settlement
8 Smart Professionals' business records are incomplete and do not contain Social Security numbers for all classmembers. The Settlement Administrator will collect Social Security numbers from Class Members in aconfidential manner and, for each Class Member with a missing Social Security number, will transmit proceedsto the California Industrial Relations Department, Unclaimed Wages Fund, in the name of the Class Member.(Petronelli Decl. ~ 45)
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administration. Similar notice methods to class members in the past have resulted in strong
response rates. (Petronelli Deci. ~ 44)
Class Members will have 45 calendar days after the Notice Packet is mailed to opt-out
from this Settlement. In order to opt-out Class members must sign and postmark a written
request for exclusion which must: (1) be signed and dated by the Class Member; (2) provide the
Class member's full name and former names if applicable, address, telephone number and the
last four digits of his or.her Social Security number; (3) include an express statement that the
Class Member wishes to be excluded from the terms of the Settlement Agreement, (4) be
returned by mail to the Settlement Administrator at the specified address; and (5) be postmarked
on or before the deadline. (Settlement Agreement §§ 6.2, 6. 1.)
Class Members wishing to object to the settlement must send a written objection to the
Settlement Administrator, not later than 45 calendar days after the Notice Packet is first mailed.
Only Class Members who have not opted-out may object to the Settlement. Class Members
submitting objections must state the basis of their objections and include any papers and briefs
in support o f their position. All objections must be signed and must state the Class Member's
current address and telephone number (or that of his or her counsel). Any Class Member may
also appear at the Final Fairness and Approval Hearing, if permitted by the Court. (Settlement
Agreement § 6.3.1; see Notice Packet.)
Accordingly, both the method of disseminating and the content of Notice Packet satisfy
due process requirements of California law. (Petronelli Decl. ~ 46) See Cal. Rules of Court, Rule
3.776(e)-(f); State of Cal. v. Levi Strauss, 41 Cal. 3d 460, 485 (1986) (the class notice must
"fairly apprise the class members of the terms of the proposed compromise and of the options
open to dissenting class members.").
IC. The proposed PAGA settlement is reasonable
Labor Code § 2699(l) requires the Court to "review and approve any penalties sought as
part of a proposed settlement agreement pursuant to [PAGA]." "The purpose of court review of
the penalties in subdivision (1) is to ensure that settlements involving penalties arising under
Labor Code Section 2699 do not undercut the dual statutory purposes of punishment and
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deterrence, or result in unjust, arbitrary, and oppressive, or confiscatory settlements." 7,129/04
Letter from Sen. Dunn to Sen. Burton re SB 1809.
Seventy-five thousand dollars ($75,000) from the Net Settlement Proceeds are allocated
to the resolution of Plaintiffs' PAGA claims-75% of which, or $56,250, will be paid directly to
the LWDA. [Settlement Agreement §§ 1.29, 7.5.] The agreement was reached after good-faith
negotiation between the Parties. Where PAGA penalties are negotiated in good faith and "there
is no indication that [the] amount was the result of self-interest at the expense of other Class
Members," such amounts are generally considered reasonable. (Hopson v. Hanesbrands Inc.,
Case No. 08-00844, 2009 U.S. Dist. LEXIS 33900, at *24 (N.D. Cal. Apr. 3, 2009); see, e.g.,
Nordstrom Com. Cases, 186 Cal. App. 4th 576, 579 (2010) ("[T]rial court did not abuse its
discretion in approving a settlement which does not allocate any damages to the PAGA
claims.")).
As for the legislative intent of PAGA, the allocation for PAGA penalties is sufficient to
satisfy the dual purpose of deterrence and punishment, given that Defendant will also be
required to pay such a large amount in unpaid wages through the class settlement, which would
also be recoverable under PAGA through Labor Code § 558. A larger allocation could rise to
the level of an "unjust, arbitrary, and oppressive, or confiscatory" amount, given that it would
provide double punishment in light of the class settlement payments already being awarded to
Class Members. Moreover, this allocation takes into account the fact that the Court has
discretion to reduce the PAGA award if Plaintiff prevailed on this claim at trial. See, e.g.,
Fleming v. Covidien, Inc., No. ED CV10-01487,2011 U.S. Dist. LEXIS 154590, at *8-9 (C.D.
Cal. Aug. 12, 2011) (slashing PAGA penalties for wage statement violations by over 500%,
from $2.8 million to $500,000).
D. The Class Representative Enhancement Payment is reasonable
Plaintiffs seek Enhancement Awards for accepting the responsibilities of representing
the interests of all Class Members and assuming risks and potential costs that were not borne by
any other Class Members. Named Plaintiffs are eligible for payments that reasonably
compensate them for undertaking and fulfilling a fiduciary duty to represent absent class
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members. Cellphone Termination Fee Cases 11, 186 Cal. App. 4th at 1393; Bell v. Farmers Ins.
Exchange, 115 Cal. App. 4th 715, 726 (2004) (upholding "service payments" to named
Plaintiffs for their efforts in bringing the case). "Incentive awards are fairly typical in class
action cases. Such awards are intended to compensate class representatives for work done on
behalf of the class. . . ." Rodriguez v. West Publ'g Corp., 563 F.3d 948, 958 (9th Cir. 2009)
(citing William B. Rubenstein et al., Newberg on Class Actions § 11:38 (4th ed. 2008). These
payments work both as an inducement to participate in the suit and as compensation for time
spent in litigation activities. See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir.
2000) (describe the service award as an incentive to the class representatives).
Here, the Parties have negotiated $12,500 for Plaintiff Loren Cash's Enhancement
Award and $12,500 for Plaintiff Arriane Henryhand's Enhancement Award in recognition of
their following efforts: originating the action; providing relevant documents to Class Counsel;
serving as a private attorney general under PAGA; appearing for their depositions and being
deposed at length concerning the merits of the Class Claims; regularly conferring with Class
Counsel on case status and strategies for prosecuting the claims; traveling to and attending an
all-day mediations with Mark Rudy in San Francisco; and reviewing the Settlement to ensure its
fairness and adequacy for the Class. Further, other Class Members would not have recovered at
all, but for Plaintiffs' actions. (Petronefli Decl. ~ 47)
Courts have also recognized that individuals face a particular set of challenges when
bringing class action suits. Both current and former employees place their future employment
prospects in peril by becoming class representatives, as "the fact that a plaintiff has filed a
federal lawsuit is searchable on the internet and may become known to prospective employers
when evaluating the person." (Guippone v. BH S&B Holdings LLC, No. 09 Civ. 1029, 2011
U.S. Dist. LEXIS 126026, at *4 (S.D.N.Y. Oct. 28,2011))
Plaintiffs have assumed considerable reputational risk that may impact their
employability in the near and distant future. Long after this action is forgotten by Class
Members, Plaintiffs will have to endure the risk of being branded "litigious" by prospective
employers, and may have employment applications rejected on that basis. (Petronefli Decl. T 48)
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Last, Plaintiffs released their personal damages as part of the Cal. Civ. Code § 1542
general release that is considerably broader than the separate narrower release of the Settlement
Class. (Settlement Agreement § 8.2.) Plaintiffs' execution of a general release—entailing an
additional detriment for Plaintiffs that does not apply to other Class Members—further supports
their request for an enhancement award. (Petronelli Decl. 149) See Schaffer v. Litton Loan
Servicing, LP, No. 05-07673-MMM, 2012 U.S. Dist. LEXIS 189830, *64 (C.D. Cal. Nov. 13,
2012) ("[C]Iass representatives released their actual damages claims as part of the Settlement.
This ["personal benefit"] factor, therefore, weighs in favor of approving the incentive awards"))
E. The negotiated Attorney's Fees and Costs are reasonable
The purpose of an attorney's fee award in class action litigation is to reward counsel who
took the risk of non-payment and invested in a case that achieved a substantial positive result for
the class. California courts routinely award attorney's fees equaling one-third or more of the
potential value of the common fund. See Chavez v. Neoix, Inc., 162 Cal. App. 4th 43, 66 n. 11
(2008) ("Empirical studies show that, regardless whether the percentage method or the lodestar
method is used, fee awards in class actions average around one-third of the recovery"); see also
Theodore Eisenberg & Geoffrey P. Miller, Attorney Fees in Class Action Settlements: An
Empirical Study, J. of Empirical Legal Studies, Vol. 1, Issue 1, 27-78, March 2004, at 35
(independent studies of class action litigation nationwide have come to a similar conclusion that
a one-third fee is consistent with market rates)
At final approval Plaintiffs will seek Court-approval of Attorney's Fees and Costs of
$495,000.00 (approximately one-third of the Class Settlement Amount) and litigation costs
actually incurred. (Settlement Agreement § 7.3; Petronefli Decl. ~ 50)
F. California law authorizes provisional certification for settlement purposes
1. California standard for class certification
Class actions are statutorily authorized "when the question is one of common or general
interest, of many persons, or when the parties are numerous, and it is impracticable to bring
them all before the court." [Cal. Civ. Proc. Code § 382; Lee v. Dynamex, Inc., 166 Cal. App. 4th
1325, 1332 (2008)] Class certification is appropriate when there is an "ascertainable class and a
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well-defined community of interest among class members." [Sav-On Drug Stores, Inc. v. Super.
Ct., 34 Cal. 4th 319, 326 (2004)] Class treatment is appropriate even if class members at some
point may be required to make an individual showing as to eligibility for recovery. [Bz~fil v.
Dollar Financial Group, Inc., 162 Cal. App. 4th 1193, 1207 (2008); Sav-0n, 34 Cal. 4th at 33 3]
2. Proposed Settlement Class is ascertainable
Whether a class is "ascertainable" within the meaning of Section 382 is "determined by
examining (1) the class definition, (2) the size of the class, and (3) the means available for
identifying class members." [Lee v. Dynamex, 166 Cal. App. 4th 1325, 1334 (2008)] Class
members are ascertainable where they may be readily identified without unreasonable expense
or time by reference to official records. (Id.)
Here, the proposed Settlement Class Members consist of all persons whom Defendant
Smart Professional retained to work as a roadshow representative at any Costco warehouse in
California at any time frorn January 19, 2012 through preliminary approval, estimated to include
566 Class Members. [Settlement Agreement §§ 1.7, 1.10, 3.2.] The proposed Settlement
Collective Members consist of all persons whom Defendant Smart Professionals retained to
work as a roadshow representative at any Costco warehouse in the United States at any time
from January 19, 2013 through preliminary approval, estimated to include 2,252 Class
Members. [Id.] There are 32 persons who were retained to work as roadshow representatives at
Costco warehouse locations both within and outside of California. [Id.]
Smart Professionals' business records show that the Class consists of approximately 566
Individuals and the Collective consists of approximately 2,252 individuals—making joinder of
all Class Members impracticable. Further the Class is readily ascertainable from Smart
Professionals' records because all Class Members were retained to work as roadshow
representatives at Costco warehouses by Smart Professionals.
3. The Class Members share a well-defined community of interest
The community of interest requirement embodies three factors: (1) predominant
common questions of law or fact; (2) class representative with claims or defenses typical of the
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class; and (3) class representative and counsel who can adequately represent the class. Cal. Civ.
Proc. Code § 382. All three factors are satisfied in this case.
(a) Common Questions Predominate
The California Supreme Court has explained the element of predominance as follows:
The "ultimate question" the element of predominance presents is whether
"the issues which may be jointly tried, when compared with those
requiring separate adjudication, are so numerous or substantial that the
maintenance of a class action would be advantageous to the judicial
process and to the litigants."
Brinker Restaurant Corp. v. Super. Ct., 53 Cal. 4th 1004, 1021-1022 (2012). To assess whether
common questions predominate, courts focus on whether the theories of recovery advanced are
likely to prove amenable to class treatment. Sav-0n, 34 CalAth at 327. In other words, courts
determine whether the elements necessary to establish liability are susceptible to common proof,
even if the class inernbers I11LISt individUally prove their darnages. Brinker, 53 CalAth at 1024.
Here, Plaintiffs present a common claim that all class members were subject to Defendants'
uniform pay timekeeping and meal and rest break policies and lack of work-related expense
reimbursements.
First, Plaintiffs alleged Defendants failed to pay Plaintiffs and other class members
overtime pursuant to California Labor Code §§ 223, 510, 1194, 1194.2, 1197, 1197.1, and 1198
and the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq., when Defendants required Plaintiffs
to work in excess of eight hours in one day or forty hours in a workweek and/or had to work
through their meal periods. Second, Plaintiffs alleged Defendants failed to provide proper meal
periods for both Plaintiffs and other class members. California Labor Code § 512(a) states that
Ccan employer may not require, cause or permit an employee to work for a period of more than
five (5) hours per day without providing the em'ployee with an uninterrupted meal period of not
less than thirty (30) minutes," furthermore § 5 12(a) also states "an employer may not employ an
employee for a work period of more than ten (10) hours per day without providing the employee
with a second meal period of not less than thirty (30) minutes." Plaintiffs planned to prove that
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late, short, and other missed meal period violations occurred during the relevant time period by
using Defendants' time records and testimony of Class Members and other witnesses.
Additionally, Plaintiffs argued Defendants never properly relieved them for their legally
mandated rest breaks. Plaintiffs and class members were constantly under pressure to remain at
the vendor booths at all times and as such Plaintiffs' and class members' schedules were always
dictated by the hours that Costco warehouses were open. This often resulted in Plaintiff and
class members missing or taking shortened rest breaks. See Brinker, 53 CalAth at 1025
("Presented with a class certification motion, a trial court must examine the plaintiffs theory of
recovery, assess the nature of the legal and factual disputes likely to be presented, and decide
whether individual or common issues predominate.") Plaintiffs argued Defendants never
properly relieved them or other class members for the legally mandated rest breaks, and thus, fit
within the Brinker scenario for class certification.
These common issues provide a sufficient basis for finding predominance of common
issues. See Brinker, 53 CalAth at p. 1033 ("The theory of liability — that [the employer] has a
uniform policy, and that that policy, measured against wage order requirements, allegedly
violates the law—is by its nature a common question eminently suited for class treatment.")
Plaintiffs argued Defendants' violations uniformly affected all Class Members. Accordingly,
common questions of law and fact predominate over questions affecting only individual
members.
(b) Plaintiffs' Claims are Typical of the Class Claims
Typical claims rely on legal theories and facts that are substantially similar to other class
members. See Classen v. Weller, 145 Cal.App.3d 27, 46 (1983). Here, Plaintiffs' claims are
typical of the proposed Settlement Class because they arise from the same facts and are based
on the same legal theories applicable to Class Members. Plaintiffs and Settlement Class
Members were injured by the same company-wide practices and seek the same relief.
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(c) Plaintiffs and their Counsel will Adequately Represent the Interests of
the Proposed Class
Certification requires adequacy of both the proposed class representative and proposed
class counsel. With respect to the class representative, a plaintiff must adequately represent and
protect the interests of other members of the class and demonstrate that his or her claim is not
inconsistent with the claims of other members of the class. See Capitol People First v. Dept. of
Developmental Services, 155 Cal.AppAth 676, 696-697 (2007). In the present case, Plaintiffs'
interests are coextensive with the interests of the Class. Plaintiffs have already demonstrated
their ability to advocate for the interests of the Class by initiating this litigation and obtaining a
fair settlement on behalf of himself and Class Members.
Additionally, Plaintiffs' Counsel are well qualified to represent the interests of this Class
because they have extensive experience in litigating wage and hour class action cases.
(Petronelli Decl. 1151-58; Park Decl. 113-16.) Plaintiffs' Counsel have successfully certified
state and federal classes, and gained state and federal court settlement approval of the same
class-wide causes of action that are at issue in this case. (Setareh Deel. IT 3-10)
(d) A Class Action is Superior to a Multitude of Individual Lawsuits
Class treatment is superior to other methods of adjudication when the probability is
small that each class member will come forward to prove his or her claim and when the class
approach would deter and redress the alleged wrongdoing. Linder v. Thrifty Oil Co., 23 CalAth
429, 435, 446 (2000); Ghazaryan v. Diva Limousine, Ltd, 169 Cal.AppAth 1524, 1537-1538
(2008). Here, given the size and amount of each individual claim, Class Members likely have
little incentive to litigate their claims on an individual basis because the out-of-pocket expense
and personal commitment necessary to litigate each claim outweighs any potential recovery. In
sum class treatment is superior to individual case-by-case adjudication.
V. CONCLUSION
As detailed above, the Parties have negotiated a Settlement that is fair, reasonable, and
adequate—and meets approval under California law. Accordingly, the Parties respectfully
request that this Court grant preliminary approval of the Settlement Agreement.
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Dated: October 30, 2017
Respectfully submitted,
PETRONELLI & HO LLP
By:
Christian J. PetronelliJulia M. Damron
MATHEW & GEORGESang J Park
SETAREH LAW GROUPShaun SetarehThomas Segal
Attorneys for Plaintiffs A rriane Henryhandand Loren Cash
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