Nunez v. Bae Sys. San Diego Ship Repair Inc.
292 F. Supp. 3d 1018
S.D. Cal.2017Background
- Plaintiff Eduardo Nunez filed a class action on behalf of non-exempt BAE Systems San Diego Ship Repair, Inc. (BAE SDSR) employees for unpaid straight/time and overtime wages, missed meal/rest periods, inaccurate wage statements, unreimbursed expenses, waiting-time penalties, and PAGA claims for work between May 27, 2012 and October 13, 2016.
- After extensive informal discovery and a full-day mediation, the parties reached a non-reversionary $2.9 million settlement; notice was sent to ~1,970 class members and preliminary approval was granted.
- Only one class member opted out; six attempted to object but the court found those objections procedurally deficient (late or not sent to claims administrator). Nunez later objected and substituted counsel, prompting inquiries about his adequacy as class representative.
- The court conducted the Rule 23 analysis, concluded certification for settlement purposes remained proper, and evaluated fairness under the Hanlon factors, finding the settlement fair, reasonable, and adequate.
- Class counsel sought 25% of the fund ($725,000) plus costs (~$14,995) and $5,000 total in incentive awards; court approved fees at the Ninth Circuit 25% benchmark, reimbursed costs, and awarded $3,000 to Nunez and $2,000 to successor representative Bryan De Anda.
- Because Nunez continued to object after the court found the settlement fair, the court granted the parties’ motion to substitute De Anda as the sole class representative and dismissed the action with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement class satisfies Rule 23(a) and (b)(3) for settlement-only certification | Nunez supported certification and argued (when objecting) that issues like damages and factual predicate required scrutiny; initially supported settlement | BAE stipulated to settlement-class certification for settlement purposes | Court reaffirmed certification: numerosity, commonality, typicality, adequacy (at certification stage), predominance and superiority satisfied for settlement purposes |
| Whether the proposed $2.9M settlement is fair, reasonable, and adequate under Rule 23(e) | Nunez argued the fund is inadequate relative to his higher damage estimates, the release is overbroad, discovery was insufficient, and there was collusion/coercion | Parties argued arm’s-length negotiation, substantial informal discovery, mediator involvement, and low opt-out/objection rate support fairness | Court applied Hanlon factors, found settlement reasonable (average ~$890 per class member, defenses and risks significant), cured notice issues via supplemental notice, overruled objections and approved settlement |
| Whether Class Counsel’s fee request (25% of fund) is reasonable and procedurally proper | Nunez argued fees were high, counsel should have moved earlier for fees, and negotiating fees from the fund can create conflicts | Parties relied on the common-fund percentage method, benchmark 25%, lodestar cross-check ~1.82, and supplemental notice cured any timing defect | Court awarded 25% ($725,000) as reasonable under Ninth Circuit benchmark, approved costs, found lodestar cross-check acceptable, and noted no class objections to fees after supplemental notice |
| Whether Nunez remained an adequate class representative after objecting such that substitution is required | Nunez contended that objecting does not render a rep inadequate and disputed substitution; he alleged coercion and other flaws in counsel’s work | Parties argued that continued objection after the court finds settlement fair places Nunez in direct conflict with class and justifies substitution by De Anda | Court held that mere objection does not automatically render a rep inadequate at certification stage, but once court finds settlement fair continued objection is a fundamental conflict; substituted Bryan De Anda as sole class representative |
Key Cases Cited
- Amchem Prods. v. Windsor, 521 U.S. 591 (1997) (heightened attention to settlement-only class certification)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (commonality requires class members suffered the same injury)
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (factors for evaluating settlement fairness and adequacy)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (common-fund procedure and conflicts risk in settlement negotiations)
- Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615 (9th Cir. 1982) (settlement approval not to be judged against hypothetical best result)
- Rodriguez v. West Publishing Corp., 563 F.3d 948 (9th Cir. 2009) (notice sufficiency and fairness review guidance)
- Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (lodestar cross-check and multipliers in fee awards)
- In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454 (9th Cir. 2000) (settlement that is a fraction of potential recovery can still be fair)
- Heit v. Van Ochten, 126 F. Supp. 2d 487 (W.D. Mich. 2001) (permitting substitution of a class representative who later objected to a settlement)
- Olden v. LaFarge Corp., [citation="294 F. App'x 210"] (6th Cir. 2008) (affirming district court substitution of objecting class representatives after settlement approval)