Cabrales v. Bae Systems San Diego Ship Repair, Inc.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 FEDERICO CABRALES and Case No.: 21-cv-02122-AJB-DDL TYCHICUS STANISLAS, individually 12 ORDER GRANTING PLAINTIFFS’ and on behalf of others similarly situated, MOTION FOR PROVISIONAL 13 Plaintiffs, CERTIFICATION AND 14 v. PRELIMINARY APPROVAL OF CLASS ACTION & PAGA 15 BAE SYSTEMS SAN DIEGO SHIP SETTLEMENT REPAIR, INC., a California corporation; 16 and DOES 1 through 50, inclusive, (Doc. No. 179) 17 Defendant.

18 Presently before the Court is Plaintiffs Federico Cabrales and Tychicus Stanislas’ 19 unopposed motion to provisionally certify class, approve the proposed Notice of Class 20 Action Settlement, conditionally certify the FLSA collective action, and for preliminary 21 approval of class action and PAGA settlement. (Doc. No. 179.) The Court finds the matter 22 suitable for decision on the papers and without oral argument, pursuant to Local Civil Rule 23 7.1.d.1. Accordingly, the Court hereby VACATES the hearing currently set for 24 January 26, 2025, at 2:00 p.m. For the reasons stated herein, the Court GRANTS 25 Plaintiffs’ motion. 26 /// 27 /// 28 1 I. BACKGROUND 2 A. Procedural History 3 On October 26, 2021, Plaintiffs filed a putative class action complaint against 4 Defendant in the Superior Court of California, County of San Diego, which Defendant 5 removed to this Court on December 23, 2021, pursuant to 28 U.S.C. §§ 1331, 1441(a), and 6 1442(a)(1). (Doc. No. 1.) In their operative complaint, Plaintiffs allege claims under the 7 Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”), the California Private 8 Attorneys’ General Act, California Labor Code § 2698, et seq. (“PAGA”), and other 9 California state labor laws on behalf of themselves and other employees of Defendant. 10 (Second Amended Complaint (“SAC”), Doc. No. 21.) Specifically, Plaintiffs bring claims 11 for: (1) unpaid meal period premiums; (2) unpaid rest period premiums; (3) unpaid 12 overtime; (4) unpaid minimum wages; (5) final wages not timely paid; (6) failure to 13 provide accurate wage statements; (7) failure to reimburse expenses; (8) violation of 14 California Business and Professions Code § 17200, et seq., (“UCL”); and (9) failure to pay 15 straight and overtime compensation. (Id.) 16 On December 30, 2021, Defendant filed its first motion to dismiss Plaintiffs’ 17 Complaint. (Doc. No. 6.) On January 20, 2022, Plaintiffs filed the First Amended 18 Complaint (“FAC”), thereby mooting the motion to dismiss. (Doc. No. 9.) Thereafter, on 19 February 24, 2022, Defendant filed a motion to dismiss the FAC and to strike Plaintiffs’ 20 class and collective allegations. (Doc. No. 13.) The Court granted in part and denied in part 21 the motion to dismiss and denied the motion to strike. (Doc. No. 20.) On August 12, 2022, 22 Plaintiffs filed the operative SAC. (Doc. No. 21). On January 4, 2023, the Court granted 23 the parties’ joint motion to dismiss Named Plaintiff Steve Whidbee, (Doc. No. 36), and on 24 June 28, 2023, the Court granted in part Defendant’s motion to dismiss Named Plaintiff 25 Tony Fuga with prejudice, (Doc. No. 101). 26 On July 26, 2023, Plaintiffs filed a motion to certify class, (Doc. No. 113), and on 27 September 1, 2023, Defendant filed a motion for partial summary judgment, (Doc. No. 28 126). On December 6, 2023, the Court granted in part and denied in part Defendant’s 1 motion for partial summary judgment and granted in part and denied in part Plaintiffs’ 2 motion for class certification. (Doc. No. 142.) Specifically, the Court granted summary 3 judgment as to Plaintiffs’ state law claims as they applied to 32nd Street and North Island 4 due to the federal enclave doctrine, and as to Plaintiff Stanislaus’ FLSA claim, and denied 5 summary judgment of Plaintiffs’ collective FLSA claim. (Id. at 17.) The Court also granted 6 certification of the following subclasses: (1) Minimum Wage Security Subclass; 7 (2) Overtime Security Subclass; (3) Rounding Minimum Wage Subclass; (4) Rounding 8 Overtime Subclass; (5) Overtime Regular Rate of Pay Subclass; (6) Meal Break Subclass 9 (to the extent it is based upon whether Defendant provided late first meal breaks); 10 (7) Second Meal Break Subclass (to the extent it is based upon whether Defendant denied 11 second meal breaks altogether); and (8) Wage Statement Subclass. (Id. at 40.) The Court 12 denied class certification with leave to amend as to the following: (1) Meal Break Subclass 13 (to the extent it is based upon whether Defendant failed to provide employees with full 14 meal breaks due to time spent walking to and from break areas, U.S. Navy checks, 15 donning/doffing, and tending to equipment); (2) Rest Break Subclass (to the extent it is 16 based upon whether Defendant failed to provide employees with full rest breaks due to 17 time spent walking to and from break areas, U.S. Navy checks, donning/doffing, and 18 tending to equipment); (3) Reimbursement Cellphone Subclass; and (4) Reimbursement 19 Personal Protective Gear and Tools/Equipment Subclass. (Id. at 41.) 20 On November 17, 2023, Defendant mailed out a packet to putative class members 21 containing a cover letter, a copy of the SAC, Plaintiffs’ notice to the Labor and Workforce 22 Development Agency (“LWDA”), a Release of Claims, Frequently Asked Questions, a 23 self-addressed stamped envelope, and a settlement check (together, the “Direct Settlement 24 Campaign”). (Doc. No. 145 at 2.) On December 5, 2023, Plaintiffs filed an ex parte 25 application for an order (1) prohibiting Defendant from further communications with 26 putative class members regarding the claims at issue in the case, and (2) requiring 27 Defendant to provide Plaintiffs’ counsel with the identity and contact information for all 28 putative class members to whom Defendant sent settlement communications and who had 1 purportedly released their claims by signing the settlement check and/or release. (Doc. No. 2 141.) On December 12, 2023, the Court granted in part and denied in part the ex parte 3 application. (Doc. No. 145.) Specifically, the Court found moot Plaintiffs’ first request to 4 prevent Defendant from further communications with putative class members, as the Court 5 by then had granted the motion to certify class. (Id. at 7–8.) Moreover, the Court granted 6 the ex parte application as to Plaintiffs’ second request for the identity and contact 7 information for the putative class members contacted by Defendant. (Id. at 8.) On 8 January 24, 2024, a third-party administrator mailed the corrective letter to class members 9 who were sent the Direct Settlement Campaign. (Declaration of Matthew Matern (“Matern 10 Decl.”), Doc. No. 179-4, ¶ 14.) 11 Defendant paid a total gross amount of $1,502,955.87 in individual settlement 12 payments through the Direct Settlement Campaign. (Id. ¶ 15; Declaration of Gillian 13 McCreedy, Doc. No. 179-7, ¶ 3.) Approximately 1,379 individuals who were sent the 14 Direct Settlement Campaign cashed the settlement check and/or signed a release of the 15 claims at issue in this action, for an estimated average payment of $1,089.89 per Settlement 16 Class Member. (Matern Decl. ¶¶ 16–17.) 17 B. Settlement Negotiations 18 On December 1, 2022, the Parties attended an Early Neutral Evaluation (“ENE”) 19 conference, which was unsuccessful. The Parties also attended an unsuccessful private 20 mediation with Jeffrey Krivis on December 23, 2022. 21 After the Court granted class certification, the Parties attended private mediation 22 with Hunter Hughes on February 16, 2024. After the mediation, on February 19, 2024, Mr. 23 Hughes made a mediator’s proposal outlining the material terms of a proposed class action 24 settlement. The Parties did not accept the proposal but continued to negotiate the terms of 25 a proposed Memorandum of Understanding (“MOU”). On March 11, 2024, the Parties 26 fully executed the MOU, which called for the parties to enter into a long-form settlement 27 agreement. On October 21, 2024, the Parties fully executed the Settlement. The same day, 28 Plaintiffs’ counsel submitted the Settlement to the LWDA, pursuant to Labor Code 1 § 2699(s)(2). 2 II. SETTLEMENT AGREEMENT 3 Plaintiffs and Defendant have executed a Joint Stipulation of Class Action Settlement 4 (“Settlement Agreement” or “Settlement”). (Settlement, Doc. No. 179-8.) The primary 5 terms of Settlement are provided below. 6 A. Settlement Class Members 7 “Settlement Class Members” means (1) all current and former California based non- 8 exempt employees of BAE who worked at least one Workweek during the Class Period, 9 (2) all current and former California based non-exempt employees of Acro Service 10 Corporation (“Acro”) who were placed to work at BAE for at least one Workweek during 11 the Class Period, and (3) all current and former California based non-exempt employees of 12 NSC who were placed to work at BAE for at least one Workweek between August 9, 2021 13 and the end of the Class Period. (Settlement ¶ 34.) “Class Period” means the period from 14 October 26, 2017, through June 1, 2024.1 (Id. ¶ 6.) 15 “Participating Settlement Class Members” means all Settlement Class Members who 16 (1) do not submit a timely and valid Request for Exclusion and (2) did not previously settle 17 the alleged claims at issue in the Action through an individual settlement agreement with 18 Defendant, including but not limited to through the Direct Settlement Campaign. (Id. ¶ 23.) 19 There are approximately 2,582 Settlement Class Members through the end of the 20 Class Period, including the 1,379 Settlement Class Members who participated in the Direct 21 Settlement Campaign or otherwise directly settled the claims at issue in the lawsuit. 22 (Matern Decl. ¶ 19.) The potential total number of Participating Settlement Class Members 23 is approximately 1,203, including 424 BAE direct hire employees, 749 NSC employees, 24 and 30 Acro employees. (Id.) Those Settlement Class Members who previously settled the 25 26 27 1 The Class Period for employees placed to work at BAE by NSC starts on August 9, 2021 because of a prior settlement involving NSC employees in Thompson v. NSC Technologies, LLC, Case No. 3:20-cv- 28 1 claims at issue in the action will not be eligible to receive an additional Individual 2 Settlement Payment as part of this Settlement, but they will remain eligible for an 3 Individual FLSA Payment and an Individual PAGA Payment, if they qualify for those 4 payments.2 (Settlement ¶¶ 10, 20.) 5 B. FLSA Collective Members 6 “FLSA Collective Members” means (1) all current and former California based non- 7 exempt employees of BAE who worked at least one Workweek during the FLSA Period, 8 (2) all current and former California based non-exempt employees of Acro who were 9 placed to work at BAE for at least one Workweek during the FLSA Period, and (3) all 10 current and former California based non-exempt employees of NSC who were placed to 11 work at BAE for at least one Workweek between August 9, 2021 and the end of the FLSA 12 Period. (Id. ¶ 10.) “FLSA Period” means the period from January 20, 2019 through June 1, 13 2024. (Id. ¶ 12.) The definition of “FLSA Collective Members” includes those individuals 14 who previously entered into an individual settlement agreement with Defendant through 15 the Direct Settlement Campaign. (Id. ¶ 10.) 16 C. PAGA Members 17 “PAGA Members” means (1) all current and former California based non-exempt 18 employees of BAE who worked at least one Workweek during the PAGA Period, (2) all 19 current and former California based non-exempt employees of Acro who were placed to 20 work at BAE for at least one Workweek during the PAGA Period, and (3) all current and 21 former California based non-exempt employees of NSC who were placed to work at BAE 22 for at least one Workweek between August 9, 2021 and the end of the PAGA Period. (Id. 23 ¶ 20.) “PAGA Period” means the period from November 16, 2020 through June 1, 2024. 24 (Id. ¶ 21.) 25 26 27 2 The scope of the release entered into by Settlement Class Members who accepted an individual settlement with Defendant through the Direct Settlement Campaign excluded claims under PAGA and the 28 1 “PAGA Members” includes those individuals who previously entered into an 2 individual settlement agreement with Defendant through the Direct Settlement Campaign. 3 (Id. ¶ 48.) PAGA Members who submit a timely and valid Request for Exclusion will 4 nevertheless be entitled to an Individual PAGA Payment and remain subject to the release 5 of PAGA claims. (Id. ¶ 61.) 6 D. Settlement Terms 7 • Defendant will pay a non-reversionary Maximum Settlement Amount of 8 $6,364,467.87, which includes $4,500,000.00 in new funds, plus: 9 o The gross amount of $1,502,955.87, which Defendant previously paid to 10 Settlement Class Members through the Direct Settlement Campaign (“Direct 11 Settlement Amount”); and 12 o The gross amount of $361,512, which Defendant paid to Settlement Class 13 Members through retroactive “true-up” payments issued on March 16, 2023 14 for unpaid meal and rest period premiums (“Retroactive Payment Amount”).3 15 • Defendant shall receive a credit for the Direct Settlement Amount and the 16 Retroactive Payment Amount such that the total amount of additional funds 17 Defendant will be required to pay in connection with the Settlement is $4,500,000, 18 plus the employer’s portion of payroll taxes of that sum as allocated to wages for 19 Settlement Class Members and FLSA Collective Members. 20 • The Net Settlement Amount is the amount remaining from the Maximum Settlement 21 Amount after applying the credit Defendant has already paid to Settlement Class 22 Members for the Direct Settlement Amount and the Retroactive Payment Amount 23 and deducting the Class Representative Enhancement Payments, the Class Counsel 24 Award, the Settlement Administration Costs, the FLSA Amount, and the LWDA 25 Payment. The entire Net Settlement Amount will be distributed to Participating 26 27 3 On March 16, 2023, Defendant issued “true-up” payments to Settlement Class Members in the aggregate 28 1 Settlement Class Members with no reversion. If there are any timely submitted opt- 2 outs or reduction in the Class Representative Enhancement Payments, the Class 3 Counsel Award, the Settlement Administration Costs, and/or the LWDA Payment, 4 the Settlement Administrator will proportionately increase the Individual Settlement 5 Payments for each Participating Settlement Class Member so that the amount 6 actually distributed to Participating Settlement Class Members equals 100% of the 7 corresponding Net Settlement Amount. 8 • In addition to the Individual Settlement Payments to Participating Class Members, 9 the Net Settlement Amount will be used to pay: 10 1. Individual FLSA Payments: The FLSA Amount ($15,000) will be allocated 11 to the settlement of Released FLSA Claims and will be divided among FLSA 12 Collective Members of a pro rata basis according to the number of 13 Workweeks they worked for BAE during the FLSA Period; 14 2. LWDA Payment and Individual PAGA Payments: $100,000 of the Maximum 15 Settlement Amount will be allocated to the resolution of PAGA Members’ 16 claims as the LWDA Payment. Pursuant to PAGA, $75,000 of the LWDA 17 Payment will be paid to the LWDA, and $25,000 will be divided among 18 PAGA Members on a pro rata basis according to the number of Workweeks 19 they worked for BAE during the PAGA Period; 20 3. Class Representative Enhancement Payment: Plaintiffs Cabrales and Stanislas 21 will each be paid a Class Representative Enhancement Payment not to exceed 22 $20,000 (totaling $40,000.00); 23 4. Class Counsel’s Fees: Plaintiffs will seek attorneys’ fees in a separate 24 application prior to final approval in an amount up to one-third of the 25 Maximum Settlement Amount, including the Direct Settlement Amount and 26 the Retroactive Payment Amount, in the amount of $2,121,489.29, plus 27 litigation expenses not to exceed $200,000; 28 5. Settlement Administration Costs: Paid from the Maximum Settlement 1 Amount, the Settlement Administrator will be paid in an amount not to exceed 2 $35,000. 3 • After deducting the above fees and costs, the remaining balance available for 4 distribution (the Net Settlement Amount) shall be distributed to the Participating 5 Class Members. The Net Settlement Amount will be at approximately 6 $1,988,510.71, meaning the average Individual Settlement Payment to Participating 7 Class Members (assuming 1,203 Participating Class Members) is estimated to be 8 $1,652.96. 9 (See Settlement.) 10 E. Releases 11 In exchange for Defendant’s $4,500,000 payment, Participating Settlement Class 12 Members will release and discharge the Released Parties from the following claims against 13 Defendant: 14 [A]ny and all wage-and-hour claims, rights, demands, liabilities and causes of action of every nature and description, whether known or unknown, that arise 15 out of the allegations in the operative complaint, or any amendments thereto, 16 during the Class Period, including unpaid wages, overtime premium pay, meal and rest period premium pay, failure to reimburse business expenses, 17 statutory, constitutional, contractual or common law claims for wages, 18 damages, unpaid costs, penalties, liquidated damages, interest, attorneys’ fees, litigation costs, restitution, or equitable relief[.] 19 20 (Settlement ¶ 26; see id. ¶¶ 29, 58.) 21 Upon the funding of the $4,500,000, any Settlement Class Member who does not 22 affirmatively opt-out of the Settlement Agreement by submitting a timely and valid 23 Request for Exclusion will be bound by all of its terms. (Id. ¶ 59.) 24 By signing and cashing their settlement check, FLSA Collective Members will 25 consent to opt in to the collective action and will release and discharge the Released Parties 26 from the Released FLSA Claims during the FLSA Period. (Id. ¶¶ 27, 60.) 27 Upon funding of the $4,500,000, PAGA Members, including those who timely and 28 1 effectively exclude themselves from the Released Class Claims, will release and discharge 2 the Released Parties from the Released PAGA Claims during the PAGA Period. (Id. ¶¶ 28, 3 61.) 4 III. LEGAL STANDARD 5 A class action may not be settled without court approval. Fed. R. Civ. P. 23(e). 6 When the parties to a putative class action reach a settlement agreement prior to class 7 certification, “courts must peruse the proposed compromise to ratify both the propriety of 8 the certification and the fairness of the settlement.” Staton v. Boeing Co., 327 F.3d 938, 9 952 (9th Cir. 2003). At the preliminary stage, the Court must first assess whether a class 10 exists. Id. (citing Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620 (1997)). Second, the 11 court must determine whether the proposed settlement “is fundamentally fair, adequate, 12 and reasonable.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998), overruled 13 on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). 14 If the court preliminarily certifies the class and finds the proposed settlement fair to 15 its members, it then appoints a class representative and class counsel. Rule 23(e)(1) 16 requires the court to take certain steps to ensure proper administration of the settlement, 17 including “direct[ing] notice in a reasonable manner to all class members who would be 18 bound by the proposal.” 19 “[P]reliminary approval and notice of the settlement terms to the proposed class are 20 appropriate where ‘[1] the proposed settlement appears to be the product of serious, 21 informed, non-collusive negotiations, [2] has no obvious deficiencies, [3] does not 22 improperly grant preferential treatment to class representatives or segments of the class, 23 and [4] falls with[in] the range of possible approval[.]’” Eddings v. Health Net, Inc., No. 24 CV 10-1744-JST (RZx), 2013 WL 169895, *2 (C.D. Cal. Jan. 16, 2013) (quoting In re 25 Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007) (internal quotation 26 and citation omitted), and citing Acosta v. Trans Union, LLC, 243 F.R.D. 377, 386 (C.D. 27 Cal. 2007) (“[t]o determine whether preliminary approval is appropriate, the settlement 28 need only be potentially fair, as the Court will make a final determination of its adequacy 1 at the hearing on Final Approval, after such time as any party has had a chance to object 2 and/or opt out.”)). 3 IV. MOTION FOR CONDITIONAL CLASS CERTIFICATION 4 Before granting preliminary approval of a class action settlement agreement, the 5 Court must first determine whether the remaining proposed classes can be certified. 6 Amchem, 521 U.S. at 620 (indicating that a district court must apply “undiluted, even 7 heightened, attention [to class certification] in the settlement context” in order to protect 8 absentees). 9 A. Rule 23 Class Action Settlements 10 In order to obtain certification of a class action, the plaintiff must provide facts in 11 support of the four requirements of Rule 23(a): (1) numerosity; (2) commonality; 12 (3) typicality; and (4) adequacy of representation. Fed. R. Civ. P. 23(a). These requirements 13 effectively “limit the class claims to those fairly encompassed by the named plaintiff’s 14 claims.” Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 155 (1982) (quoting Califano v. 15 Yamasaki, 442 U.S. 682, 701 (1979)). The plaintiff “must prove the facts necessary to carry 16 the burden of establishing that the prerequisites of Rule 23 are satisfied by a preponderance 17 of the evidence.” Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 18 651, 665 (9th Cir. 2002). This burden requires the plaintiff to provide sufficient facts to 19 satisfy the four requirements of Rule 23(a) and at least one subsection of Rule 23(b) of the 20 Federal Rules of Civil Procedure. Zinser v. Accufix Res. Inst., Inc., 253 F.3d 1180, 1186 21 (9th Cir. 2001), opinion amended on denial of reh’g, 273 F.3d 1266 (9th Cir. 2001). 22 However, “whether a proposed class is sufficiently cohesive to satisfy Rule 23(b)(3) is 23 informed by whether certification is for litigation or settlement. A class that is certifiable 24 for settlement may not be certifiable for litigation if the settlement obviates the need to 25 litigate individualized issues that would make a trial unmanageable.” In re Hyundai & Kia 26 Fuel Econ. Litig., 926 F.3d 539, 558 (9th Cir. 2019) (citing 2 William B. Rubenstein, 27 Newberg on Class Actions § 4:63 (5th ed. 2018) (“Courts . . . regularly certify settlement 28 classes that might not have been certifiable for trial purposes because of manageability 1 concerns.”)). 2 1. Rule 23(a) Factors 3 i. Numerosity 4 Rule 23(a)(1) requires that the “the class is so numerous that joinder of all members 5 is impracticable.” Fed. R. Civ. P. 23(a)(1). The party seeking certification “do[es] not need 6 to state the exact number of potential class members, nor is a specific number of class 7 members required for numerosity.” In re Rubber Chemicals Antitrust Litig., 232 F.R.D. 8 346, 350 (N.D. Cal. 2005). However, courts generally find that numerosity is satisfied if 9 the class includes forty or more members. See Villalpando v. Exel Direct Inc., 303 F.R.D. 10 588, 605–06 (N.D. Cal. 2014); In re Facebook, Inc., PPC Adver. Litig., 282 F.R.D. 446, 11 452 (N.D. Cal. 2012). Here, the Participating Settlement Class Members includes an 12 estimated 1,203 members, a significant number that would make joinder impracticable. 13 (Doc. No. 179-1 at 13.) The numerosity prong has been met. 14 ii. Commonality 15 Rule 23(a)(2) requires that questions of law or fact be common to the class. “A class 16 has sufficient commonality ‘if there are questions of fact and law which are common to the 17 class.’” Fed. R. Civ. P. 23(a)(2). The commonality preconditions of Rule 23(a)(2) “are less 18 rigorous than the companion requirements of Rule 23(b)(3).” Hanlon, 150 F.3d at 1019. 19 In this action, all of the remaining claims asserted arise from common facts. 20 Plaintiffs and class members were allegedly subject to the various wage and hour policies 21 that are the subject of this litigation. “Claims alleging that a uniform policy consistently 22 applied to a group of employees is in violation of the wage and hour laws are of the sort 23 routinely, and properly, found suitable for class treatment.” Brinker Rest. Corp. v. Super. 24 Ct., 53 Cal. 4th 1004, 1033 (2012) (collecting cases). In addition, the claims of all Class 25 Members are based upon the same California and FLSA labor laws. Therefore, the Court 26 finds the commonality prong has been satisfied. 27 iii. Typicality 28 In order for a class representative to satisfy the typicality requirement of Rule 23(a), 1 they must show that their claims do “not differ significantly from the claims or defenses of 2 the class as a whole.” In re Computer Memories, 111 F.R.D. 675, 680 (N.D. Cal. 1986). 3 “The purpose of the typicality requirement is to assure that the interest of the named 4 representative aligns with the interests of the class.” Hanon v. Dataproducts Corp., 976 5 F.2d 497, 508 (9th Cir. 1992). The class representative’s claims and the claims of the class 6 must arise from the same events or course of conduct and must be based on the same legal 7 theory. In re United Energy Corp. Solar Power Modules Tax Shelter Invs. Sec. Litig., 122 8 F.R.D. 251, 256 (C.D. Cal. 1988). “The test of typicality ‘is whether other members have 9 the same or similar injury, whether the action is based on conduct which is not unique to 10 the named plaintiffs, and whether other class members have been injured by the same 11 course of conduct.’” Hanon, 976 F.2d at 508 (quoting Schwartz v. Harp, 108 F.R.D. 279, 12 282 (C.D. Cal. 1985)). 13 Here, Plaintiffs’ remaining claims are typical of the claims of the absent Class 14 Members because they arose from the same alleged conduct of Defendant, including failure 15 to compensate for missed breaks as well as failure to reimburse expenses. The Class 16 Representatives and the other Class Members suffered the same type of injury as a result 17 of this alleged conduct, and the Class Representatives’ claims are reasonably co-extensive 18 with those of absent Class Members. Plaintiffs have therefore satisfied the typicality prong. 19 iv. Adequate Representation 20 Rule 23(a) requires that “the representative parties will fairly and adequately protect 21 the interests of the class.” Fed. R. Civ. P. 23(a)(4). “To satisfy constitutional due process 22 concerns, absent class members must be afforded adequate representation before entry of 23 a judgment which binds them.” Hanlon, 150 F.3d at 1020 (citing Hansberry v. Lee, 311 24 U.S. 32, 42–43 (1940)). “Resolution of two questions determines legal adequacy: (1) do 25 the named plaintiffs and their counsel have any conflicts of interest with other class 26 members and (2) will the named plaintiffs and their counsel prosecute the action vigorously 27 on behalf of the class?” Id. 28 Plaintiffs asserts they are able to fairly and adequately protect the interests of the 1 members of the class because they “have no conflict of interest with the Settlement Class” 2 and “will continue to actively participate in the lawsuit as necessary.” (Declaration of 3 Federico Cabrales (“Cabrales Decl.”), Doc. No. 179-2, ¶ 10; Declaration of Tychicus 4 Stanislas (“Stanislas Decl.”), Doc. No. 179-3, ¶ 10.) Also, Plaintiffs retained Class Counsel 5 with extensive experience in the prosecution of wage and hour class actions and who has 6 been appointed previously as adequate class counsel. (See Matern Decl. ¶¶ 49–54.) 7 Therefore, Plaintiffs have satisfied the adequate representation prong. 8 Based on the foregoing, the Court finds Plaintiffs have met their burden of 9 demonstrating each of the four Rule 23(a) requirements. 10 2. Rule 23(b) Factors 11 Here, Plaintiffs seek conditional certification of the Settlement Class and the FLSA 12 Collective, see supra § II.A–B, under Federal Rule of Civil Procedure 23(b)(3). (Doc. No. 13 179-1 at 18.) Plaintiffs additionally seek certification, for settlement purposes only, of their 14 uncertified claims for failure to provide required rest periods and failure to indemnify 15 employees for necessary expenditures. (Id.) The Court previously denied certification of 16 these claims with leave to amend. (Doc. No. 142 at 41.) 17 Rule 23(b)(3) requires that questions of law or fact common to the members of the 18 class “predominate” over questions affecting only individual members, and that a class 19 action is “superior to other available methods for fairly and efficiently adjudicating the 20 controversy.” Fed. R. Civ. P. 23(b)(3). The legal and factual issues here are common to all 21 members of the proposed Class. As noted by Plaintiffs, the issues are common to all class 22 members as they allegedly were subjected to company policies in a way that gives rise to 23 consistent liability, or lack thereof. 24 The predominance standard of Rule 23(b)(3) requires a stronger showing by 25 plaintiffs than Rule 23(a)’s commonality standard. “The Rule 23(b)(3) predominance 26 inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by 27 representation.” Amchem, 521 U.S. at 623. “Rule 23(b)(3) focuses on the relationship 28 between the common and individual issues.” Hanlon, 150 F.3d at 1022. 1 Rule 23(b)(3) requires “that a class action [be] superior to other available methods 2 for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). Courts 3 consider four non-exclusive factors in determining whether the class action is a superior 4 device. These factors include: (1) the interest of class members individually controlling the 5 prosecution or defense of separate actions; (2) the extent and nature of any litigation 6 concerning the controversy already commenced by or against members of the class; (3) the 7 desirability of concentrating the litigation of the claims in this particular forum; and (4) the 8 manageability of the action as a class. Fed. R. Civ. P. 23(b)(3); Amchem, 521 U.S. at 615– 9 16. 10 Here, the proposed classes and claims are sufficiently cohesive to warrant 11 certification. For settlement purposes, common questions of fact and law affecting class 12 members predominate over any questions that may affect only individual members. For 13 example, Defendant’s alleged failure to properly pay its employees for all hours worked 14 and provide compliant meal and rest periods are alleged to arise from Defendant’s uniform 15 policies, practices, and procedures. As such, the questions of fact and law relating to these 16 issues predominate. Further, a class resolution is superior to other available means for the 17 fair and efficient adjudication of the controversy involving potentially 1,203 individual 18 lawsuits for damages. See Hanlon, 150 F.3d at 1022. The superiority requirement involves 19 a “comparative evaluation of alternative mechanisms of dispute resolution.” Id. Here, the 20 alternative method of resolution is individual claims, subject to proof, for relatively small 21 amounts of damages, which would be uneconomical for potential plaintiffs. Further, 22 Plaintiffs are not aware of any other similar pending actions, the claims arise from 23 employment in California, and Defendant does substantial business in San Diego County. 24 Because Plaintiffs have successfully demonstrated they have met each of the four 25 requirements of Rule 23(a) and at least one of the requirements of Rule 23(b), the Court 26 will provisionally certify the Settlement Class and Plaintiffs’ remaining claims for failure 27 to provide required meal and rest periods and failure to reimburse necessary expenditures. 28 /// 1 3. Rule 23(c)(2) Notice Requirements 2 Rules 23(c)(2)(B) and (e)(1) generally require that a Rule 23(b)(3) settlement class 3 should receive notice in a reasonable manner, and that the notice be “the best notice that is 4 practicable under the circumstances, including individual notice to all members who can 5 be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B); see also Amchem, 521 6 U.S. at 617. Regular mail, electronic mail, and other appropriate means should all be 7 considered. See Fed. R. Civ. P. 23(c)(2)(B). 8 Here, within twenty (20) calendar days of the entry of the Court’s Order granting 9 preliminary approval, Defendant will provide the Class List to the Settlement 10 Administrator, including the respective number of weeks worked by NSC and Acro 11 Settlement Class Members during the Class Period according to Defendant’s records. 12 (Settlement ¶ 48.) To implement this notice procedure, the Class List will include their 13 (1) full name; (2) last known mailing address; (3) last known telephone number; (4) social 14 security number; (5) total workweeks during the PAGA Period; and (6) total workweeks 15 during the FLSA Period. (Id.) Defendant will also provide the Settlement Administrator 16 with the names of those Settlement Class Members who have previously settled the alleged 17 claims in this action (except for FLSA and PAGA claims) through an individual settlement 18 agreement with Defendant, including but not limited to through the Direct Settlement 19 Campaign. (Id.) Plaintiffs will request the necessary information regarding the NSC and 20 Acro (1) Settlement Class Members, (2) FLSA Collective Members, and (3) PAGA 21 Members from each of those entities, which shall be sent simultaneously to the Settlement 22 Administrator and Defendant. (Id.) 23 Plaintiffs propose that within twenty-one (21) calendar days of receiving the Class 24 List information, notice to the Class will be sent, in English and Spanish, to all Settlement 25 Class Members by regular First-Class U.S. mail using the most current, known mailing 26 address identified in the Class List. (Id. ¶ 49.) Prior to mailing, the Settlement 27 Administrator will perform a search based on the National Change of Address Database to 28 update and correct for any identifiable address changes. (Id. ¶ 50.) Any Notice Packet 1 returned to the Settlement Administrator as non-deliverable on or before the Response 2 Deadline will be sent promptly via regular First-Class U.S. Mail to the forwarding address 3 affixed thereto. (Id.) If no forwarding address is provided, the Settlement Administrator 4 will promptly attempt to determine the correct address using a skip-trace, or other search 5 and will then perform a single re-mailing. (Id.) The Response Deadline will be extended 6 by ten days for any Settlement Class Member who is re-mailed a Notice Packet by the 7 Settlement Administrator. (Id.) 8 Having reviewed the proposed Class Notice Packet, the Court concludes the notice 9 complies with Federal Rule of Civil Procedure 23. The Court also appoints Phoenix 10 Settlement Administrators (“Phoenix”) as the third-party Settlement Administrator. 11 Phoenix Settlement Administrators must distribute the Class Notice Packet by regular mail 12 to all Class Members for whom such addresses are known within twenty (20) days of the 13 entry of this preliminary approval Order. Because the settlement class satisfies Rules 23(a) 14 and 23(b)(3), and notice was sufficient in accordance with Rule 23(c), the Court GRANTS 15 class certification for settlement purposes. 16 B. FLSA Collective Action Settlements 17 Court approval is also required for settlements of private collective actions under the 18 FLSA. Seminiano v. Xyris Enter., Inc., 602 Fed. App’x 682, 683 (9th Cir. 2015) (citing 19 Nall v. Mal-Motels, Inc., 723 F.3d 1304, 1306 (11th Cir. 2013)). Although “[c]ollective 20 actions [under the FLSA] and class actions [under Rule 23] are creatures of distinct texts . 21 . . that impose distinct requirements,” Campbell v. City of Los Angeles, 903 F.3d 1090, 22 1101 (9th Cir. 2018), district courts assess FLSA settlements using a two-step process that 23 is similar to what is required for review of class action settlements under Rule 23. See Kulik 24 v. NMCI Med. Clinic Inc., No. 21-cv-03495-BLF, 2023 WL 2503539, at *3 (N.D. Cal. 25 Mar. 13, 2023). 26 First, the Court must assess whether the members of the proposed collective are 27 “similarly situated” and may proceed in a collective action. Id.; see Campbell, 903 F.3d at 28 1117. Second, the Court must assess whether the proposed settlement is “a fair and 1 reasonable resolution of a bona fide dispute [over FLSA provisions].” Otey v. 2 CrowdFlower, Inc., No. 12-cv-05524-JST, 2014 WL 1477630, at *3 (N.D. Cal. Apr. 15, 3 2014) (quoting Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 4 1982)). 5 The FLSA allows employees to bring suit “for and in [sic] behalf of himself or 6 themselves and other employees similarly situated,” provided that the additional 7 employees “give[ ] consent in writing to become such a party and such consent is filed in 8 the court in which such action is brought.” 29 U.S.C. § 216(b). This statute “imposes a 9 lower bar [for certification] than Rule 23.” Campbell, 903 F.3d at 1112. “Party plaintiffs 10 are similarly situated, and may proceed in a collective, to the extent they share a similar 11 issue of law or fact material to the disposition of their FLSA claims.” Senne v. Kansas City 12 Royals Baseball Corp., 934 F.3d 918, 948 (9th Cir. 2019) (quoting Campbell, 903 F.3d at 13 1117). “[A]s long as the proposed collective’s ‘factual or legal similarities are material to 14 the resolution of their case, dissimilarities in other respects should not defeat collective 15 treatment.’” Id. (quoting Campbell, 903 F.3d at 1117). This standard will be met when 16 “plaintiffs allege a single, FLSA-violating policy . . . and argue a common theory of 17 defendants’ statutory violations.” Id. at 949. 18 The allegations supporting Plaintiffs’ FLSA claim are similar to those supporting 19 their California law claims. They allege Defendant “systematically failed to correctly pay, 20 calculate and record regular and overtime compensation for work by Plaintiffs and the other 21 members of the Collective Class, even though Defendant[] enjoyed the benefit of this work, 22 required employees to perform this work and permitted or suffered to permit the work.” 23 (SAC ¶ 23.) The Court concludes the contents and legality of Defendant’s policies and 24 practices present similar issues of law or fact material to the disposition of the FLSA claim. 25 See Senne, 934 F.3d at 948. Accordingly, the Court GRANTS conditional certification of 26 the FLSA collective for settlement purposes. 27 “If the collective action members are similarly situated, most courts then evaluate 28 the settlement under the standard established by the Eleventh Circuit, which requires the 1 settlement to constitute a fair and reasonable resolution of a bona fide dispute.” Otey, 2014 2 WL 1477630, at *3 n.5 (collecting cases) (internal quotation marks and citation omitted). 3 “[T]he factors that courts consider when evaluating a collective action settlement are 4 essentially the same as those that courts consider when evaluating a [class action] 5 settlement” under Rule 23(e). See id. at *11 (applying same fairness factors to settlement 6 involving FLSA collective and class action). Thus, the Court will address the fairness of 7 the settlement as it pertains to both the class and collective actions using the same factors. 8 V. MOTION FOR PRELIMINARY SETTLEMENT APPROVAL 9 Next, the Court must make a preliminary determination regarding whether the 10 proposed settlement is “fair, reasonable, and adequate” pursuant to Fed. R. Civ. P. 23(e)(2). 11 Traditionally, courts in this Circuit assess the fairness, reasonableness, and adequacy of a 12 proposed settlement by balancing the following factors: 13 (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action 14 status throughout the trial; (4) the amount offered in settlement; (5) the extent 15 of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and 16 (8) the reaction of the class members of the proposed settlement. 17 18 Kim v. Allison, 8 F.4th 1170, 1178 (9th Cir. 2021). “The district court’s approval order 19 must show not only that ‘it has explored [these] factors comprehensively,’ but also that the 20 settlement is ‘not[] the product of collusion among the negotiating parties.’” In re Bluetooth 21 Headset Prod. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011) (quoting In re Mego Fin. 22 Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000), as amended (June 19, 2000)). 23 In 2018, Rule 23(e)(2) was amended to require courts to consider whether: 24 (A) the class representatives and class counsel have adequately represented the class; 25 (B) the proposal was negotiated at arm’s length; 26 (C) the relief provided for the class is adequate, taking into account: (i) the costs, risks, and delay of trial and appeal; 27 28 1 (ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member 2 claims; 3 (iii) the terms of any proposed award of attorney’s fees, including timing of payment; and 4 (iv) any agreement required to be identified under Rule 23(e)(3); and 5 (D) the proposal treats class members equitably relative to each other.

6 Fed. R. Civ. P. 23(e)(2). With respect to the Rule 23(e)(2)(C)(iv) factor, the Court notes 7 there is no indication of an ancillary agreement made in connection with the proposed 8 settlement between Plaintiffs, Defendant, or their respective counsel of record. The Court 9 therefore turns to the remaining three considerations to determine whether the proposed 10 settlement provides adequate relief to the Class. 11 “At the preliminary approval stage, a full fairness analysis is unnecessary[.] Closer 12 scrutiny is reserved for the final approval hearing.” Hawkins v. Kroger Co., No. 15-cv- 13 2320, 2021 WL 2780647, at *3 (S.D. Cal. July 2, 2021) (internal quotations and citations 14 omitted); see also Alberto v. GMRI, Inc., 252 F.R.D. 652, 665 (E.D. Cal. 2008) (“Given 15 that some of these factors cannot be fully assessed until the court conducts its fairness 16 hearing, a full fairness analysis is unnecessary at this stage[.] The court, therefore, will 17 simply conduct a cursory review of the terms of the parties’ settlement for the purpose of 18 resolving any glaring deficiencies before ordering the parties to send the proposal to class 19 members.”) (internal quotations and citation omitted). 20 A. Rule 23(e)(2) Factors 21 1. Adequate Representation 22 First, the court considers whether “the class representatives and class counsel have 23 adequately represented the class[.]” Fed. R. Civ. P. 23(e)(2)(A). When analyzing the 24 adequacy of the representation, the court must address two questions: “(1) do the named 25 plaintiffs and their counsel have any conflicts of interest with other class members and 26 (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of 27 the class?” Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1031 (9th Cir. 2012) 28 1 (citation omitted). Certification will be denied in instances of “actual fraud, overreaching 2 or collusion.” In re Bluetooth, 654 F.3d at 948 (quoting Staton, 327 F.3d at 960). 3 i. Conflicts of Interest 4 Based on Plaintiffs’ declarations, it does not appear they have any interests that 5 conflict with the class other than the proposed incentive award. (See Stanislaus Decl. ¶ 10; 6 Cabrales Decl. ¶ 10); see Staton, 327 F.3d at 975–76 (discussing conflicting interests for 7 named plaintiff receiving incentive award). Incentive awards are designed to “compensate 8 class representatives for work done on behalf of the class, to make up for financial or 9 reputational risk undertaken in bringing the action, and, sometimes, to recognize their 10 willingness to act as a private attorney general.” Rodriguez v. West Publ’g Corp., 563 F.3d 11 948, 958–59 (9th Cir. 2009). “Incentive awards are fairly typical in class action cases,” but 12 are ultimately “discretionary.” Id. at 958. In deciding whether to approve an incentive 13 award, courts consider factors including: 14 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class 15 representative; 3) the amount of time and effort spent by the class 16 representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. 17 18 Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995). 19 Here, the Settlement Agreement proposes a $20,000 incentive award for each named 20 plaintiff in this action, Messrs. Cabrales and Stanislaus, for a total of $40,000. (Doc. No. 21 179-1 at 29.) The aggregate amount of the proposed service awards represents less than 22 one percent (1%) of the Maximum Service Amount. (Id.; Settlement ¶ 40.) 23 Plaintiff Cabrales has been a plaintiff in this case since October 2021, while Plaintiff 24 Stanislaus has been involved since January 2022. They have assisted litigation in this case 25 by responding to discovery requests, participating in depositions and an ENE, reviewing 26 motions and documents, attending mediations, and maintaining regular communication 27 with Class Counsel. (Stanislaus Decl. ¶ 4; Cabrales Decl. ¶ 4.) Cabrales states he has spent 28 1 over 100 hours on this case (Cabrales Decl. ¶ 5), while Stanislaus has spent approximately 2 80 hours on this case (Stanislaus Decl. ¶ 5). Moreover, courts in similar cases have held 3 similar service awards to be reasonable. See Low v. Trump Univ., LLC, 246 F. Supp. 3d 4 1295, 1299 (S.D. Cal. 2017) (awarding $15,000 for each of 5 plaintiffs, which combined 5 for 0.3% of $25 million settlement); Coates v. Farmers Grp., Inc., No. 15-CV-01913-LHK, 6 2016 WL 5791413, at *2 (N.D. Cal. Sept. 16, 2016) (approving service award of $25,000 7 to two named plaintiffs); In re: High-tech Employee Antitrust Litig., No. 11-CV-2509- 8 LHK, 2014 WL 10520478, at *2 (N.D. Cal. May 16, 2014) (awarding each class 9 representative $20,000 in employee case, amounting to just 0.4 percent of the total 10 recovery). 11 Under these circumstances, the service award totaling $20,000 to each Class 12 Representative is fair and reasonable in light of the extraordinary risks they accepted and 13 the time and effort they expended for the benefit of the Class. The Court grants Plaintiffs’ 14 request for class representative incentive awards. 15 ii. Vigorous Prosecution 16 As to the second aspect of the adequacy inquiry, Plaintiffs’ counsel are experienced 17 attorneys in employment litigation, including individual and class actions. (See Matern 18 Decl. ¶¶ 45–52.) Plaintiffs and Class Counsel have demonstrated their ability to vigorously 19 prosecute this action on behalf of the Class through conducting significant law-and-motion 20 practice. The facts and the Parties’ respective legal positions have been lengthily briefed 21 in this Court. Class Counsel extensively investigated Plaintiffs’ claims and Defendant’s 22 defenses, and conducted significant fact and expert discovery to enable them to fully 23 evaluate the strengths and weaknesses of the claims and defenses raised by both sides. (See 24 Doc. No. 179-1 at 25.) For example, Defendant produced over 4,000 pages of documents, 25 including all relevant wage and hour policies and Settlement Class Members’ timekeeping 26 and payroll records. (Id.) Plaintiffs’ counsel also retained three expert witnesses who 27 submitted reports in support of Plaintiffs’ motion for class certification. (Id.); see In re 28 Wireless Facilities, Inc. Secs. Litig. II, 253 F.R.D. 607, 610 (S.D. Cal. 2008) (“Settlements 1 that follow sufficient discovery and genuine arms-length negotiation are presumed fair.”). 2 Thus, pursuant to Rule 23(e), the court finds that Plaintiffs and their counsel will fairly and 3 adequately protect the interests of the settlement classes. See In re: Cathode Ray Tube 4 (CRT) AntiTrust Litig., No. 07-cv-05944-JST, 2020 WL 1873554, at *8 (N.D. Cal. Mar 11, 5 2020) (concluding Rule 23(e)(2)(A) satisfied where “Plaintiffs have demonstrated that the 6 representative parties and their counsel will fairly and adequately protect the interests of 7 the [] Classes.”). 8 2. Arm’s Length Negotiations 9 In reviewing the next Rule 23(e) factor, the Court must examine the Settlement for 10 additional indicia of collusion that would undermine a prima facie arm’s length negotiation. 11 Signs of collusion may include (a) disproportionate distributions of settlement funds to 12 counsel; (b) negotiation of attorney’s fees separate from the class fund (a “clear sailing” 13 provision); or (c) an arrangement for funds not awarded to revert to the defendants. See 14 Staton, 327 F.3d at 965. If multiple indicia of implicit collusion are present, the district 15 court has a heightened obligation to assure that fees are not unreasonably high. Id. 16 Here, that the settlement was reached with the assistance of experienced mediators 17 further suggests that the settlement is fair and reasonable. See Bellinghausen v. Tractor 18 Supply Co., 303 F.R.D. 611, 620 (N.D. Cal. 2014) (noting that discovery and the use of a 19 mediator “support the conclusion that the Plaintiff was appropriately informed in 20 negotiating a settlement” (citation omitted)). The use of a mediator on two separate 21 occasions to negotiate settlement and the exchange of discovery beforehand both support 22 a conclusion that Plaintiffs were appropriately informed in negotiating a settlement, and 23 that the settlement was not the result of collusion or bad faith by the parties or counsel. See 24 id, 303 F.R.D. at 619–20. 25 Moreover, there is neither a clear sailing provision nor a reverter clause. (See 26 Settlement ¶¶ 38, 39.) Moreover, settlement was achieved after extensive discovery, 27 months of preparation and investigation, comprehensive mediation preparation, and hard- 28 fought negotiations facilitated by two experienced mediators. (Doc. No. 179-1 at 12–13.) 1 There is no evidence or indication of collusion between the parties in reaching this 2 Settlement. This factor weighs in favor of approval. 3 3. Adequacy of Relief Provided to the Class 4 i. Strength of Plaintiffs’ Case and Costs, Risks, and Delay of 5 Trial and Appeal 6 When assessing “the costs, risks, and delay of trial and appeal[,]” Fed. R. Civ. P. 7 23(e)(2)(C)(i), courts in the Ninth Circuit evaluate “the strength of the plaintiffs’ case; the 8 risk, expense, complexity, and likely duration of further litigation; [and] the risk of 9 maintaining class action status throughout the trial[.]” Hanlon, 150 F.3d at 1026. “The 10 extent of discovery may be relevant in determining the adequacy of the parties’ knowledge 11 of the case.” Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 527 (C.D. 12 Cal. 2004) (citation omitted). 13 Significant time and resources have already been dedicated to litigating this action. 14 Motions for class certification and summary judgment have been ruled on by the Court, 15 with the case settling after extensive discovery. See Low, 246 F. Supp. 3d at 1302 (“Where 16 a case is near trial, and the parties have conducted extensive discovery and thoroughly 17 litigated the issues, the extent of discovery and the stage of the proceedings weigh in favor 18 of the proposed settlement.”) (internal quotations and citation omitted). Plaintiffs note that 19 while they “are confident in the merits of their claims, a legitimate controversy exists as to 20 each cause of action.” (Doc. No. 179-1 at 30.) Moreover, throughout this litigation, 21 Defendant has also vigorously defended against each of Plaintiffs’ claims “and can be 22 expected to continue to do so if the case is not settled.” (Id.) Thus, the risks of continuing 23 this litigation are known to all involved. Accordingly, for preliminary approval purposes, 24 this factor weighs in favor of settlement. 25 ii. Effectiveness of Any Proposed Distribution Method 26 The court must also consider “the effectiveness of any proposed method of 27 distributing relief to the class.” Fed. R. Civ. P. 23(e)(2)(C)(ii). “Basic to [the process of 28 deciding whether a proposed settlement is fair, reasonable, and adequate] . . . is the need 1 to compare the terms of the compromise with the likely rewards of litigation.” In re TD 2 Ameritrade Accountholder Litig., 266 F.R.D. 418, 422 (N.D. Cal. 2009) (quoting 3 Protective Comm. for Indep. Stockholders of TMT Trailer Ferry Inc. v. Anderson, 390 U.S. 4 414, 424–25 (1968)). “The fact that a proposed settlement may only amount to a fraction 5 of the potential recovery does not, in and of itself, mean that the proposed settlement is 6 grossly inadequate and should be disapproved.” Linney v. Cellular Alaska P’ship, 151 F.3d 7 1234, 1242 (9th Cir. 1998) (citation omitted). 8 The papers make clear that the $4,500,000 “new funds” settlement amount will only 9 be used to pay: (1) the submitted claims of the 1,203 Participating Settlement Class 10 Members; (2) Phoenix, the Settlement Administrators; (3) any amounts that may be 11 awarded as service representative fees; (4) the FLSA Amount; (5) the LWDA Payment; 12 and (6) Class Counsel for any award of attorneys’ fees, costs, and expenses incurred in this 13 action. After all the proposed payments are deducted from the Settlement Fund, the 14 remaining amount is estimated to be approximately $1,988,510.71. Each Participating 15 Settlement Class Member will receive a payout on a pro rata basis based on weeks worked 16 during the Class Period with an average gross Individual Settlement Payment of $1,652.96. 17 (Settlement ¶¶ 38, 43.) 18 The Parties selected Phoenix to administer the settlement, and Defendant will 19 provide Phoenix the names and addresses of the Class Members during the Class Period. 20 Phoenix will determine each Class Member’s share of the Net Settlement Amount on a pro 21 rata basis according to the number of weeks the employee worked for Defendant during 22 the Class Period. (Id.) Participating Settlement Class Members will not have to make a 23 claim to receive a settlement payment. (Doc. No. 179-1 at 26.) Checks payable to the 24 Settlement Class Members will remain negotiable for 120 days from the date of mailing, 25 after which the checks will be void and the funds will be transferred by the Settlement 26 Administrator to the Controller of the State of California Unclaimed Property Fund in the 27 name of the Settlement Class Member. (Id.) The Court finds that this proposed method of 28 distributing relief is effective for purposes of Rule 23(e). 1 iii. Proposed Award of Attorneys’ Fees 2 The Settlement Agreement provides that Class Counsel will request attorneys’ fees 3 in the amount of $2,121,489.29, or one-third of the Maximum Settlement Amount. 4 (Settlement ¶ 39.) Specifically, Class Counsel asserts the inclusion of the Direct Settlement 5 Amount and the Retroactive Payment Amount in the Maximum Settlement Amount is 6 justified for purposes of a fee award calculation based upon a “catalyst theory.” (Doc. No. 7 179-1 at 27.) 8 As part of evaluating the settlement terms, the court must also consider “the terms 9 of any proposed award of attorney’s fees” to determine “whether the attorneys’ fees 10 arrangement shortchanges the class.” Briseño v. Henderson, 998 F.3d 1014, 1024 (9th Cir. 11 2021) (quoting in part Fed. R. Civ. Pro. 23(e)(2)(C)(iii)). Courts “must balance the 12 proposed award of attorney’s fees vis-à-vis the relief provided for the class in determining 13 whether the settlement is adequate for class members.” Id. (internal quotation marks 14 omitted). 15 In settlements such as this one that produce a common fund, courts may use either 16 the lodestar method or percentage-of-recovery method to determine the reasonableness of 17 attorney’s fees. In re Bluetooth, 654 F.3d at 942. Under the percentage method, “courts 18 typically calculate 25% of the fund as the ‘benchmark’ for a reasonable fee award.” Id. 19 However, a departure may be justified based on “special circumstances.” Id. 20 Given that class counsel eventually will move separately for attorneys’ fees and costs 21 under Rule 23(h), the court need not determine at the preliminary approval stage whether 22 a 33% award is reasonable. However, the inclusion of the Direct Settlement Amount and 23 the Retroactive Payment Amount in the calculation of attorneys’ fees “call[s] into question 24 the fairness of the proposed settlement.” Pokorny v. Quixtar Inc., No. 07–0201 SC, 2011 25 WL 2912864, at *1 (N.D. Cal. July 20, 2011). 26 In the forthcoming Rule 23(h) motion, class counsel will be expected to fully 27 substantiate the justification for an attorneys’ fees award—especially a request exceeding 28 the 25% benchmark and applying the Maximum Settlement Amount—addressing factors 1 such as “(1) whether the results achieved were exceptional; (2) risks of litigation; (3) non- 2 monetary benefits conferred by the litigation; (4) customary fees for similar cases; (5) the 3 contingent nature of the fee and financial burden carried by counsel; and (6) the lawyer’s 4 reasonable expectations, which are based on the circumstances of the case and the range of 5 fee awards out of common funds of comparable size.” Mejia v. Walgreen Co., No. 2:19- 6 cv-00218 WBS AC, 2020 WL 6887749, at *10 (E.D. Cal. Nov. 24, 2020) (quotation 7 omitted). Moreover, Class Counsel is expected to provide all billing information relevant 8 to the motion. 9 In the motion for attorneys’ fees, class counsel is welcome to adjust the proposed 10 amount of attorneys’ fees or provide further explanation for awarding fees above the typical 11 25% benchmark. Further justification is not necessary for purposes of preliminary approval 12 of the settlement as any fees will be closely scrutinized as part of any future Rule 23(h) 13 motion. 14 4. Equitable Treatment of Class Members 15 As to the fourth and final Rule 23(e)(2) factor, the court examines whether “the 16 proposal treats class members equitably relative to each other.” Fed. R. Civ. P. 23(e)(2)(D). 17 This inquiry considers both (i) equity across sub-categories, or segments, of the class, and 18 (ii) equity between class representatives and unnamed class members. 19 The Settlement Agreement does not overtly discriminate between any segments of 20 the class, as it distributes monetary relief to all class members on a pro rata basis 21 accounting for the number of compensable workweeks each class member worked for 22 Defendant. (Settlement Agreement ¶ 43.) As summarized by counsel, and supported by the 23 Settlement Agreement, the following formula determines the individual payments: 24 [Workweeks worked by class member / Total Workweeks worked by all class members] × 25 [Net Settlement Amount] = Class Member’s Payment. (Id.) The Court finds this 26 apportionment takes appropriate account of the differences between class members. See 27 Lopez v. Velocity Transport LLC, No.: 22-cv-1414-RSH-KSC, 2024 WL 4957565, at *9 28 (S.D. Cal. Dec. 3, 2024) (approving distribution of net settlement amount “to Class 1 Members on a pro rata basis accounting for the number of workweeks worked by each 2 Class Member”); Carlino v. CHG Med. Staffing, Inc., No. 1:17-cv-01323-LHR-CDB, 2024 3 WL 1676461, at *12 (E.D. Cal. Apr. 18, 2024) (distributing net settlement amount, pro 4 rata, based on number of workweeks is a “reasonable and impartial basis for allocating 5 funds in a class wage and hour settlement”); Grant v. T-Mobile USA, Inc., No. CV 21- 6 2268-GW-JEMx, 2023 WL 7308311, at *7 (C.D. Cal. Oct. 3, 2023) (distributing 7 “payments to the number of Work Weeks, pro rata, for purposes of the Wage & Hour 8 Class's claims is an equitable method for treating the members of that Class”); Gagnier v. 9 Siteone Landscape Supply LLC, No.: SACV 21-01834-CJC (DFMx), 2023 WL 8116831, 10 at *9 (C.D. Cal. June 6, 2023) (“Individual settlement amounts are based on the pro rata 11 share of workweeks that each individual class member was employed by Defendant, which 12 is an appropriate proxy for the degree of harm that the individuals likely suffered due to 13 Defendant’s purported misconduct.”). 14 Accordingly, this factor weighs in favor of approval. 15 B. Additional Ninth Circuit Factors 16 As the amended Rule 23(e)(2) factors were not intended to replace the factors 17 developed by circuits, the Court now turns to analyze the remaining factors traditionally 18 considered by this Circuit.4 See Fed. R. Civ. P. 23(e)(2) advisory committee’s note to 2018 19 amendment. 20 1. Experience and Views of Counsel 21 “Parties represented by competent counsel are better positioned than courts to 22 produce a settlement that fairly reflects each party’s expected outcome in litigation.” In re 23 Pac. Enter. Sec. Litig., 47 F.3d 373, 378 (9th Cir. 1995). As such, “[g]reat weight is 24 accorded to the recommendation of counsel, who are most closely acquainted with the facts 25 26 4 There is no government actor present in the instant action. Thus, the Court finds that factor neutral and 27 foregoes further analysis. See Churchill Village, LLC v. General Electric, 361 F.3d 566, 576 n.7 (9th Cir. 2004) (“Because the settlement evaluation factors are non-exclusive, discussion of those factors not 28 1 of the underlying litigation.” Nat’l Rural Telecomm. Coop. v. DIRECTV, Inc., 221 F.R.D. 2 523, 529 (C.D. Cal. 2004) (citation and internal quotation marks omitted). 3 Here, “[b]oth Parties are represented by experienced counsel and their mutual desire 4 to adopt the terms of the proposed settlement, while not conclusive, is entitled to great deal 5 of weight.” In re Immune Response Sec. Litig., 497 F. Supp. 2d 1166, 1174 (S.D. Cal. 6 2007). In addition to being familiar with the present dispute, Class Counsel has significant 7 expertise in employment litigation. (See Matern Decl. ¶¶ 45–52.) This factor weighs in 8 favor of approval. 9 2. Reaction of Class Members 10 “It is established that the absence of a large number of objections to a proposed class 11 action settlement raises a strong presumption that the terms of a proposed class settlement 12 action are favorable to the class members.” In re Omnivision Techs., Inc., 559 F. Supp. 2d 13 1036, 1043 (N.D. Cal. 2008) (quoting Nat’l Rural Telecomm. Coop., 221 F.R.D. at 529). 14 At this preliminary approval stage, class members have yet to receive notice of 15 settlement. Accordingly, the Court will revisit this factor with the subsequent motion for 16 final approval of settlement. 17 For the above reasons, the court GRANTS the motion to preliminarily approve the 18 Settlement Agreement as to the class claims under Rule 23(e). 19 C. Request for Settlement Administrator Cost 20 In the Settlement Agreement, Plaintiffs and Defendant agree that within sixty-one 21 (61) calendar days of the Effective Date of the Settlement, Defendant will deposit the 22 unpaid portion ($4,500,000) of the Maximum Settlement Amount into a Qualified 23 Settlement Fund to be established by the Court-appointed Settlement Administrator. 24 (Settlement ¶¶ 13, 37.) The Parties propose to have Phoenix Settlement Administrators 25 serve as the Settlement Administrator. (Id. ¶ 33.) The Settlement Agreement states the 26 Settlement Administrator will be paid for the reasonable costs of administration of the 27 Settlement and distribution of payments from the Maximum Settlement Amount, not to 28 exceed $35,000.00. (Id. ¶ 41.) The Court finds the estimated $35,000.00 Settlement 1 Administrator Fee reasonable. 2 D. Settlement of PAGA Penalties Claim 3 The SAC’s Tenth Cause of Action asserts a claim for PAGA penalties, on behalf of 4 Plaintiffs and all aggrieved employees, for the Labor Code violations asserted in the 5 preceding class claims. (SAC ¶¶ 131–35.) As discussed at the outset, PAGA claims and 6 their settlement are fundamentally distinct from the class claims discussed above. See 7 Hamilton v. Wal-Mart Stores, 39 F.4th 575, 583 (9th Cir. 2022) (“Rule 23 class actions 8 and PAGA actions are so conceptually distinct that class action precepts generally have 9 little salience for PAGA actions.”); Canela v. Costco Wholesale Corp., 971 F.3d 845, 852 10 (9th Cir. 2020) (noting “the different remedial schemes that exist in Rule 23 class actions 11 and PAGA suits”). As explained below, the current Settlement Agreement does not 12 adequately account for the distinct nature and effect of the class claims versus the PAGA 13 claim. 14 Under PAGA, an “aggrieved employee” may bring an action for civil penalties for 15 labor code violations on behalf of themselves and other current or former employees. Cal. 16 Lab. Code § 2699(a). Indeed, “[p]laintiffs may bring a PAGA claim only as the state’s 17 designated proxy, suing on behalf of all affected employees.” Kim v. Reins Int’l Cal. Inc., 18 9 Cal. 5th 73, 87 (2020). Because a PAGA plaintiff serves “as the proxy or agent of the 19 state’s labor law enforcement agencies,” “a judgment in th[e] action binds all those, 20 including nonparty aggrieved employees, who would be bound by a judgment in an action 21 brought by the government.” Arias v. Superior Ct., 46 Cal. 4th 969, 986 (2009). “Unlike a 22 class action, there is no mechanism for opting out of a judgment entered on a PAGA claim.” 23 Amaro v. Anaheim Arena Mgmt., LLC, 69 Cal. App. 5th 521, 541 n.5 (2021) (cleaned up). 24 Thus, a PAGA plaintiff owes a duty both to their “fellow aggrieved workers,” who will be 25 inalterably bound by the judgment on the PAGA claim, and to the public at large because 26 “they act, as the statute’s name suggests, as a private attorney general.” O’Connor v. Uber 27 Techs., Inc., 201 F. Supp. 3d 1110, 1133–34 (N.D. Cal. 2016). Under PAGA’s remedial 28 scheme, civil penalties recovered are distributed between “the aggrieved employees” 1 (25%) and the LWDA (75%). Cal. Lab. Code § 2699(i). Any settlement of PAGA claims 2 must be approved by the court, and the proposed settlement must also be sent to the LWDA 3 at the same time it is submitted to the court. Id. § 2699(l)(2). 4 While PAGA requires a trial court to approve a PAGA settlement, district courts 5 have noted there is no governing standard to review PAGA settlements. Sanchez v. Frito- 6 Lay, Inc., No. 1:14cv797-DAD-BAM, 2019 WL 4828775, at *12 (E.D. Cal. Sept. 30, 2019) 7 (acknowledging the “absence of authority governing the standard of review of PAGA 8 settlements”). “‘[N]either the California legislature, nor the California Supreme Court, nor 9 the California Courts of Appeal, nor the [LWDA] has provided any definitive answer’ as 10 to what the appropriate standard is for approval of a PAGA settlement.” Jordan v. NCI 11 Grp., Inc., No. EDCV 161701 JVS (SPx), 2018 WL 1409590, at *2 (C.D. Cal. Jan. 5, 2018) 12 (quoting Flores v. Starwood Hotels & Resorts Worldwide, Inc., 253 F. Supp. 3d 1074, 1075 13 (C.D. Cal. 2017)). Consequently, some district courts have used the guidance provided by 14 the LWDA in O’Connor in assessing the proposed settlement of the PAGA claims. See 15 Haralson v. U.S. Aviation Servs. Corp., 383 F. Supp. 3d 959, 971 (N.D. Cal. 2019); 16 Sanchez, 2019 WL 4828775, at *12. In O’Connor, the LWDA commented, 17 It is thus important that when a PAGA claim is settled, the relief provided for under the PAGA be genuine and meaningful, consistent with the underlying 18 purpose of the statute to benefit the public and, in the context of a class action, 19 the court evaluate whether the settlement meets the standards of being “fundamentally fair, reasonable, and adequate” with reference to the public 20 policies underlying the PAGA. 21 22 O’Connor, 201 F. Supp. 3d at 1133. Based on LWDA’s response in O’Connor, district 23 courts have applied “a Rule 23-like standard” asking whether the settlement of the PAGA 24 claims is “fundamentally fair, reasonable, and adequate.” Haralson, 383 F. Supp. 3d at 25 972. 26 First, in accordance with the statutory requirements, Plaintiffs submitted the 27 Settlement Agreement to the LWDA. (Matern Decl. ¶ 60; Doc. No. 179-9.) 28 Next, the Settlement Agreement provides for a $100,000.00 PAGA Penalty. 1 (Settlement ¶ 42.) This represents approximately 1% of the Maximum Settlement Amount. 2 Further, the Settlement Agreement provides that 75% of the PAGA Penalty ($75,000.00) 3 will be paid to the LWDA and 25% will be paid to the PAGA Representative Group 4 ($25,000.00), in accordance with California Labor Code § 2699(i). Because the PAGA 5 Members includes those individuals who previously entered into an individual settlement 6 agreement with BAE through the Direct Settlement Campaign, there are a total of 2,582 7 eligible class members. Thus, the average payment to PAGA Representative Group 8 Members is $9.68. See Granados v. Hyatt Corp., No.: 23-cv-01001-H-VET, 2024 WL 9 3941828, at *2 (S.D. Cal. Aug. 26, 2024) (granting preliminary approval of class action 10 settlement which included terms that “the estimated average PAGA payment to aggrieved 11 employees is $5.17”); Perez v. Bodycote Thermal Processing, Inc., No.: CV 22-00145 12 RAO, 2024 WL 4329057, at *8 (C.D. Cal. Aug. 23, 2024) (finding PAGA payments 13 averaging $95.43, “with payments ranging from $3.48 to $366.68” fair, reasonable, and 14 adequate); North v. Superior Hauling & Fast Transit, Inc., No. EDCV 18-2564 JGB 15 (KKx), 2020 WL 12967997, at *4 (C.D. Cal. May 29, 2020) (approving settlement that 16 included PAGA average payout of $21.01). The Court finds that the Settlement 17 Agreement’s $100,000.00 PAGA penalty is reasonable, fundamentally fair, and adequate. 18 See Alcala v. Meyer Logistics, Inc., No. CV177211PSGAGRX, 2019 WL 4452961, at * 9 19 (C.D. Cal. June 17, 2019) (collecting cases in which courts approved PAGA penalties 20 between 0 and 2% of the gross settlement amount). 21 VI. CONCLUSION 22 Accordingly, for the reasons stated herein, the Court enters the following orders. 23 • Provisional Certification of Class: The Court GRANTS Plaintiffs’ motion for 24 provisional class certification, for settlement purposes only, of the following 25 settlement classes as set forth in the proposed Settlement Agreement: 26 o (1) all current and former California based non-exempt employees of BAE 27 who worked at least one Workweek during the Class Period, (2) all current 28 and former California based non-exempt employees of Acro Service 1 Corporation (“Acro”) who were placed to work at BAE for at least one 2 Workweek during the Class Period, and (3) all current and former 3 California based non-exempt employees of NSC who were placed to work 4 at BAE for at least one Workweek between August 9, 2021 and June 1, 5 2024. 6 o (1) all current and former California based non-exempt employees of BAE 7 who worked at least one Workweek during the FLSA Period, (2) all current 8 and former California based non-exempt employees of Acro who were 9 placed to work at BAE for at least one Workweek during the FLSA Period, 10 and (3) all current and former California based non-exempt employees of 11 NSC who were placed to work at BAE for at least one Workweek between 12 August 9, 2021 and the end of the FLSA Period. 13 • Preliminary Approval of Settlement: The Court finds, on a preliminary basis, 14 that the Settlement (Doc. No. 179-8), incorporated by reference in full and made 15 a part of this Order, appears fair, adequate, and within the range of reasonableness 16 which could ultimately be given final approval by this Court. Accordingly, the 17 Court GRANTS Plaintiffs’ motion for preliminary approval of class action 18 settlement. (Doc. No. 179.) 19 • Class Counsel: The Court APPROVES Plaintiffs’ counsel, Matern Law Group, 20 PC, as class counsel for settlement purposes; 21 • Class Representatives: The Court APPROVES named plaintiffs, Federico 22 Cabrales and Tychicus Stanislas, as class representatives for settlement purposes; 23 • Notice of Settlement: The Court APPROVES, as to form and content, the 24 Settlement Notice (Doc. No. 179-8 at 47–55) and finds it consistent with the 25 requirements of Rule 23 and due process to provide the best practicable notice 26 under the circumstances. 27 • Settlement Administration: The Court APPOINTS Phoenix Settlement 28 1 notice procedure in connection with the Settlement as well as the processing of 2 claims as more fully set forth below. 3 o Within 20 calendar days of the entry of this Order, BAE must provide or 4 cause to be provided to Phoenix in electronic format, such as an Excel 5 spreadsheet, (at no cost to the Settlement Fund, Class Counsel, or the 6 Settlement Administrator) its Class List (consisting of names, addresses, 7 telephone numbers, and Social Security numbers) of the Class Members 8 and the respective number of Workweeks that each Settlement Class 9 Member worked during the Class Period according to BAE’s records; 10 o Within 21 calendar days after receiving the Class List from Defendant, 11 Phoenix must cause a copy of the Notice Packet, substantially as it appears 12 in form at Doc. No. 179-8 at 47–55, to be mailed by first-class mail to all 13 Settlement Class Members at the addresses set forth in the records 14 provided by BAE or in the records which BAE caused to be provided, or 15 who otherwise may be identified through further reasonable effort; 16 o Within 10 calendar days of entry of this Order, Phoenix must cause copies 17 of the Settlement Agreement and Notice Packet to be posted on its 18 website. 19 • Objections: Written Notices of Objection to the Settlement must be filed with 20 the Court and submitted to Phoenix as set forth in the Settlement no later than 21 February 14, 2025. 22 • Final Approval Hearing: The Court sets a Final Approval Hearing on May 1, 23 2025 at 2:00 PM in Courtroom 4A, of the Edward J. Schwartz United States 24 Courthouse, 221 W. Broadway, San Diego, CA 92101, to consider: 25 o Whether the Settlement should be finally approved as fair, reasonable, and 26 adequate; and 27 o Class Counsel’s application for attorneys’ fees and expenses. 28 I e Other Filing Deadlines: The Court ORDERS the following schedule for further 2 proceedings: 3 o The motion for final approval of class action settlement and motion for 4 attorneys’ fees and costs must all be filed no later than February 28, 2025. 5 = The motion for final approval MUST INCLUDE AND 6 ADDRESS any Objections or responses received as of the filing 7 date. 8 " As for the fee motion: 9 e Class Counsel MUST PROVIDE documentation detailing 10 the number of hours incurred by attorneys in litigating this 11 action, supported by detailed time records, as well as hourly 12 compensation to which those attorneys are reasonably 13 entitled. 14 e Class Counsel MUST ADDRESS the appropriateness of any 15 upward or downward departure in the lodestar calculation, as 16 well as reasons why a percentage-of-the-fund approach to 17 awarding attorney fees may be preferable in this case and why 18 any upward or downward departure from the 25% benchmark 19 may be merited. 20 e Class Counsel MUST BE PREPARED to address any 21 questions the Court may have regarding the application for 22 fees at the Final Approval Hearing. 23 24 IT IS SO ORDERED. 25 Dated: December 5, 2024 © 26 Hon, Anthony J. attaglia 27 United States District Judge 28 35