Uschold v. NSMG Shared Services, LLC, 3:18-cv-01039

Background

Plaintiffs (four former NSMG commission-paid employees) sued NSMG for California wage-and-hour violations (commission scheme, off-the-clock work, misclassification as outside sales, failure to reimburse expenses, meal/rest breaks, inaccurate wage statements), UCL and PAGA claims.
The settlement class: all commission-paid employees in California from Jan. 17, 2014 to Oct. 8, 2019 (449 members). No opt-outs; one objection to attorneys’ fees.
Settlement: $2.2 million gross fund; deductions include $33,000 to LWDA (PAGA), admin fees (up to $9,000), attorneys’ fees/costs (agreement cap $736,200/$20,000), payroll taxes, and four $2,000 service awards. Net fund to class ≈ $1.3M (estimated) and average individual payout ≈ $2,913.80 (will increase because counsel sought less than the cap).
Notice was mailed to 449 class members, with follow-up skip-traces; five notices undeliverable. An additional notice about counsel’s fee motion was later mailed to cure an omission.
Court action: Magistrate Judge Corley granted final approval, certified the settlement class, found no collusion despite a clear-sailing clause, and awarded fees/costs/incentives as detailed below.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Final approval / class certification under Rule 23	Settlement is fair, adequate, and reasonable; satisfies Rule 23(a) & (b)(3); notice adequate	Denies liability; contended defenses would make certification and recovery uncertain	Court certified the settlement class, found notice adequate, and granted final approval under Churchill factors and Rule 23(e)
Collusion / Bluetooth warning signs (clear-sailing, fee distribution, reversion)	Negotiations were arm’s-length with mediator; fees reasonable and will not harm class	Settlement contains a clear-sailing clause (defendant agreed not to oppose up to $736,200)	Court applied heightened scrutiny; found no collusion: fee request not disproportionate, settlement non-reversionary, and settlement resulted from non-collusive mediation
Attorneys’ fees calculation (percentage vs. lodestar)	Requested 25% of gross ($550,000) as reasonable benchmark for common-fund cases	Defendant did not oppose fee request but court must independently assess reasonableness	Court performed lodestar cross-check, found 25% produced an excessive multiplier; awarded $282,775 (lodestar enhanced by multiplier of 4)
Costs, incentive awards, and administration fees	Sought ~$12,431 in costs, $2,000 service award each to four named plaintiffs, and $7,500 for settlement administrator	No opposition on these items	Court awarded $12,428.44 in costs, $2,000 to each named plaintiff, and $7,500 to the administrator; found amounts reasonable and proportional to class recovery

Key Cases Cited

Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (court must scrutinize fairness of pre-certification settlements and adequacy of class representation)
Churchill Village, L.L.C. v. Gen. Elec., 361 F.3d 566 (9th Cir. 2004) (notice is satisfactory if it alerts those with adverse viewpoints to investigate and be heard)
In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (district court must scrutinize settlements for collusion and identify Bluetooth warning signs)
Laffitte v. Robert Half Int’l Inc., 1 Cal.5th 480 (Cal. 2016) (California law permits percentage or lodestar method for class attorneys’ fees and requires lodestar cross-check)
Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (percentage-of-recovery benchmark guidance and lodestar cross-check in common-fund cases)
Powers v. Eichen, 229 F.3d 1249 (9th Cir. 2000) (25% common-fund benchmark identified)
Ketchum v. Moses, 24 Cal.4th 1122 (Cal. 2001) (lodestar computation and standards for adjusting with multiplier)
Boeing Co. v. Van Gemert, 444 U.S. 472 (1980) (attorney fees may be awarded from a common fund created for the benefit of the class)
Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (absent objections and opt-outs support presumption of fairness in settlement)