MEMORANDUM AND ORDER RE: MOTION FOR FINAL SETTLEMENT APPROVAL
Plaintiff Jose Ontiveros brought this wage- and-hour action on behalf of himself and a putative class of approximately three hundred similarly situated service technicians at automotive dealerships affiliated with defendant Zamora Automotive Group (“ZAG”), which operates numerous automotive dealerships located throughout the San Joaquin Valley. Over six years after the litigation commenced, the parties agreed to settle the action on a class-wide basis. The court granted preliminary approval of the $2,000,000 settlement. (July 7, 2014 Order (Docket No. 137,
I. Factual and Procedural History
Plaintiff worked at Stockton Honda, a ZAG-affiliated dealership, for seven months
In his Second Amended Complaint (“SAC”), plaintiff alleges that defendants’ compensation practices violated both federal and state wage-and-hour statutes and asserts ten claims under California law.
This action was previously assigned to another district judge. Prior to reassignment, the court denied in part defendants’ motion for judgment on the pleadings and held that plaintiff had stated plausible claims that defendants' compensation practices were unlawful. (Docket No. 29.) The court stayed the ease in 2010 pending the resolution of a related insurance-coverage case in state court and subsequently lifted that stay on July 26, 2012. (Docket Nos. 51, 58, 64.) In December 2012, plaintiff moved for class certification and defendants moved to compel individual arbitration of plaintiffs claims. (Docket Nos. 72-73.) The court denied defendants’ motion to compel arbitration, and defendants timely appealed. (Docket Nos. 104-05.) The court once again stayed the case pending the outcome of that appeal. (Docket No. 118.)
Before the Ninth Circuit resolved defendants’ appeal, the parties reached a settlement. (Mallison Deck ¶¶ 30-36 (Docket No. 143), Ex. 1 (“Settlement Agreement” (Docket No. 145).) The Agreement requires defendants to pay $2,000,000 to plaintiff and a class of similarly situated ZAG service technicians. (Id. ¶ 31.) After accounting for attorney’s fees, civil penalties, taxes, an incentive award to plaintiff, and other administrative expenses, the remainder of the settlement funds will be divided between the class members in proportion to the number of weeks worked during the class period. (Id. ¶¶ 31-32.) Any unclaimed settlement funds will be redistributed to class members on a pro rata basis; if there are funds left over after that point, the funds are to be redistributed to designated cy pres beneficiaries. (Settlement Agreement § III, ¶ E.) No portion of the settlement fund will revert to defendants. (Id.)
After the parties reached this settlement, plaintiff moved for preliminary approval of the settlement and conditional certification of a class of current and former service technicians pursuant to Federal Rule of Civil Procedure 23. (Docket No. 123.) The previously-assigned district judge recused himself on June 25, 2014, and the action was subsequently reassigned to the undersigned judge for all further proceedings. (Docket No. 125.) In its Order granting preliminary approval of a class and collective action settlement, the court provisionally certified the following class: “all nonexempt automotive technicians who have been employed by one
After conducting the final fairness hearing and carefully considering the terms of the settlement, the court now addresses whether this collective and class action should receive final certification; whether the proposed settlement is fair, reasonable, and adequate; and whether class counsel’s request for attorneys’ fees and costs, as well as an enhancement award for the representative plaintiff, should be granted.
II. Discussion
Judicial policy strongly favors settlement of class actions. Class Plaintiffs v. City of Seattle,
The approval of a class action settlement takes place in two stages. In the first stage of the approval process, as it did here, the court preliminarily approves the settlement pending a fairness hearing, temporarily certifies a settlement class, and authorizes notice to the class. See Murillo v. Pac. Gas & Elec. Co.,
A. Use of An Opt-Out Class
For reasons discussed in the Order granting preliminary approval, the court permitted plaintiff to seek certification of an opt-out class. (July 7, 2014 Order at 10.) Because nothing has come to the court’s attention that would change its earlier reasoning, the court permits the same here.
B. Final Certification of the Class
For certification, a putative class “must meet the four threshold requirements of Federal Rule of Civil Procedure 23(a): nu-merosity, commonality, typicality, and adequacy of representation. Moreover, the proposed class must satisfy the requirements of Rule 23(b), which defines three different types of classes.” Leyva v. Medline Indus. Inc.,
1. Rule 23(a)
Rule 23(a) restricts class actions to cases where:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
Fed.R.Civ.P. 23(a). These requirements are more commonly known as numerosity, commonality, typicality, and adequacy of representation, respectively. Leyva,
In the court’s Order granting preliminary approval of the settlement, the court found that the putative class satisfied the numerosity, commonality, and typicality requirements of 23(a). However, the court expressed concern that the proposed incentive to the class representative, which is unusually high, might create a conflict. Additionally, the parties’ preliminary approval papers, upon which the court relied in making its initial determination, inadvertently discussed 197 class members instead of 300. (Mem. in Support of Mot. for Final Approval at 1 n. 1. (Docket No. 144).) The court is unaware of any changes that would alter its analysis as to typicality and commonality, and because the parties did not indicate at the fairness hearing that they were aware of any such developments, the court finds these requirements have been met. The court will thus evaluate numerosity and adequacy of representation for purposes of final certification.
a. Numerosity
In its preliminary order, the court found the proposed class easily satisfied the numerosity requirement. (July 7, 2014 Order at 12.) However, the parties’ preliminary approval papers inadvertently discussed 197 class members, and parties now assei't there are approximately 300 class members. (Mem. in Support of Mot. for Final Approval at 1 n. 1.) Because the number of proposed class members is actually greater than that upon which the court granted its preliminary approval of the settlement, the court still finds the class satisfies the numerosity requirement of 23(a). See Collins v. Cargill Meat Solutions Corp.,
b. Adequacy of Representation
Rule 23(a) requires that “the representative parties will fairly and adequately protect the interests of the class.” Fed. R.Civ.P. 23(a)(4). “Resolution of two questions determines legal adequacy: (1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?” Hanlon v. Chrysler Corp.,
Incentive awards “are discretionary and are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputation risk undertaken in bringing the action, and,
Courts must “scrutinize carefully the awards so that they do not undermine the adequacy of the class representatives.” Radcliffe v. Experian Info. Solutions Inc.,
The parties propose an incentive payment of $20,000 to the named plaintiff, Mi-. Ontiveros, (see Mallison Deck ¶ 310), which comprises 1% of the common fund. In the event the court grants a lesser amount, the remainder of those funds will be redistributed to other class members. (Settlement Agreement 111(c).) A this final stage, parties continued to assert that Mr. Ontive-ros’s efforts warrant the $20,000 award, they also suggest the incentive award could be reduced to $15,000 if needed. (Mem. in Support of Mot. for Final Approval at 27:13-23.)
A $20,000 incentive award consisting of one percent of the common fund is unusually high, and some courts have been reluctant to approve incentive awards constituting such a great portion of the common fund. See, e.g., Clayton v. Knight Transp., Civ. No. 1:11— 00735 SAB,
Other courts, however, have found awards comprising a significantly high portion of the common fund to be reasonable. See, e.g., Bond v. Ferguson Enters., Inc., Civ. No. 1:09-1662 OWW MJS,
The named plaintiff appears to have been significantly involved in this litigation. (Mem. in Support of Mot. for Final Approval at 27:13.) He estimates he spent 271 hours on his duties as class representative over a period of six years. (See Ontiveros Deck ¶4.) Of that total, he spent the greatest portion of time consulting with class counsel (seventy hours); reviewing discovery produced by defendants (sixty hours); communicating with workers about the ease (fifty hours); and reviewing records and assisting counsel during the initial investigation (thirty hours). (See id.) These are exactly the sort of tasks for which an incentive award is appropriate. See Staton,
The court disagrees, however, with the parties’ appraisal of a fair rate at which to compensate the named plaintiff. An incentive award of $20,000 compensates Mr. Ontiveros at a rate of $73.80 per hour. Incentive awards should be sufficient to compensate class representatives to make up for financial risk, see Rodriguez,
At oral argument, class counsel indicated that by proceeding on his wage and hour claims as class representative, Mr. Ontiveros relinquished the opportunity to bring several of his own claims relating to alleged uncompensated meal periods. While it is unclear whether those claims would have had merit, the court takes this sacrifice into account when scrutinizing an incentive award, see Rodriguez,
In light of plaintiffs significant efforts, an award of $15,000 does not appear grossly disproportionate to the estimated average recovery of other individual class members of approximately $3,700,
2. Rule 23(b)
An action that meets all the prerequisites of Rule 23(a) may only be certified as a class action if it also satisfies the requirements of one of the three subdivisions of Rule 23(b). Leyva,
In its Order granting preliminary approval of the settlement, the court found that both prerequisites of Rule 23(b)(3) were satisfied. (July 7, 2014 Order at 21-24.) The court is unaware of any changes that would affect this conclusion, and the parties indicated at the fairness hearing that they were unaware of any such developments. There were no objections by individual class members who claimed to have an interest in controlling the prosecution of this action or related actions.
3. Rule 23(c)(2) Notice Requirements
If the court certifies a class under Rule 23(b)(3), it “must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Fed.R.Civ.P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and content of a proposed notice. See Ravens v. Iftikar,
As provided by the Settlement Agreement, the settlement administrator, Simpluris, mailed notice of the settlement to the last known address of all class members. (Salinas Deck ¶8.) Simpluris used its best efforts to locate updated addresses for class members by updating the class list in accordance with the National Change of Address Database. (See id. ¶ 7.) If a class member’s notice packet was returned as undeliverable without a forwarding address, Simpluris performed an advanced search on those addresses. (Id. ¶ 9.) Ultimately, only four notices of 307 were undeliverable because Simpluris was unable to find a correct address. (Id. ¶ 10.) The court is satisfied that this system of providing notice was reasonably calculated to provide notice to class members and was the best form of notice available under the circumstances. See Monterrubio v. Best Buy Stores, L.P.,
Likewise, the notice itself clearly identified the options available to putative class membei’s—do nothing, object, or opt out—and comprehensively explained the nature and mechanics of the settlement in a separate document. (See Mallison Deck Ex. A) The content of the notice is therefore sufficient to satisfy Rule 23(c)(2)(B). See Churchill Vill., L.L.C. v. Gen. Elec.,
C. Rule 23(e): Fairness, Adequacy, and Reasonableness of Proposed Settlement
Having detex-mined that class treatment appears to be wai’ranted, the court must now address whether the terms of the parties’ settlement appear fair, adequate, and reasonable. In conducting this analysis, the court must balance sevex’al factors including
the sti’ength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offei’ed in settlement; the extent of discovery completed and the*368 stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.
Hanlon,
1. Terms of the Settlement Agreement
The key terms of the Settlement Agreement are as follows:
(1) Settlement Class: All nonexempt automotive technicians employed by one or more defendants at any time between March 12, 2004, and the date of preliminary approval. (Settlement Agreement § I, ¶ C.) As of September 8,2014, there were 307 participating class members. (Salinas Deel. ¶ 14.)
(2) Notice: Pursuant to the Agreement, the settlement administrator, Simpluris, sent a packet containing a class notice, share and correction form, and opt-out form to all class members after verifying the class list with the National Change of Address Database. (Id. ¶ 5-7.) For the reasons previously discussed, the court found that notice under the agreement complied with Rule 23(c)(2). See supra Part B.3.
(3) Opt-Out Procedure: To opt out of the settlement, a class member was required to submit and sign an opt-out form and mail that form to the settlement administrator no later than forty-five days after the administrator mailed the class notice packet. A class member who did not do so automatically became part of the settlement class and will be bound by all terms and conditions of the Settlement Agreement, including release of claims. (Settlement Agreement § III, ¶ G.4.b.) Simpluris received no requests for exclusion from the Settlement. (Salinas Decl. ¶ 13.)
(4) Objections to Settlement: Any individual class member could object to or comment on the settlement so long as he or she filed and served a copy of the comment or objection no later than sixty days after the court granted preliminary approval. Any objection not filed by that deadline was deemed waived. (Settlement Agreement § III, ¶ G.4.a.) At the fairness hearing, no objections were voiced.
(5) Settlement Amount: Defendants have agreed to pay a gross settlement amount of $2,000,000. (Id. § III, ¶¶ B-C.) That amount shall be used to satisfy the claims of all participating settlement members, class counsel’s litigation expenses, any award of attorney’s fees to class counsel, an incentive award to plaintiff, a payment to the state of California in satisfaction of plaintiffs Private Attorney General Act claim, payroll taxes on the portion of the settlement fund designated as wages, and claims administration expenses. (Id.) The settlement administrator calculates that after all other payments are deducted, the net settlement amount available to pay participating class members is $1,135,118.47. (Salinas Deck ¶ 14.)7
(6) Attorney’s Fees and Incentive Award: Plaintiff and class counsel request a fee award of 33.3% of the settlement fund, expenses and costs of $50,000, and an incentive award for the named plaintiff of $20,000. Defendants agreed not to oppose these requests. (Settlement Agreement § III, ¶ C.)
(7) Settlement Distribution: Settlement funds will be distributed on an individualized basis using a formula created by the parties. That formula will pay each class member a share of the settlement fund equivalent to the number of weeks that individual worked during the class period divided by the number of weeks worked by all class members over that period. One third of each class member’s recovery is intended to settle claims for lost wages, and that portion of the recovery shall be subject to tax withholding.*369 Class members shall be paid by check. After sixty days, any un-cashed cheeks will be can-celled and the remaining sum available will be distributed to those class members who did cash their cheeks. In the event that any class members fail to cash cheeks issued in the second round, those funds will be distributed to designated cy pres beneficiaries. (Id. § III, ¶ E.)
(8) Release: Class members agree to release “any and all claims, debts, liabilities, guarantees, costs, expenses, attorney’s fees, damages, actions, or causes of action set forth in the Second Amended Complaint.” (Id. § III, ¶ H.) The release excludes “all other claims, including but not limited to retaliation, discrimination, unemployment, disability, and workers’ compensation.” (Id.) In addition, plaintiff agrees to execute a general release of all claims against defendants and to waive any rights he may retain against defendants under section 1542 of the California Civil Code. Defendants agree to execute a corresponding general release of any claims against plaintiff and to dismiss their pending appeal to the Ninth Circuit. (Id.)
2. Rule 23(e) Factors
a. Strength of Plaintiff s Case
An important consideration is the strength of the plaintiffs case on the merits balanced against the amount offered in the settlement. DIRECTV,
Plaintiffs claims that defendants’ piece-rate compensation practice was unlawful survived defendants Stockton Motor Cars and Zamora’s motion for judgment on the pleadings. (See Feb. 20, 2009 Order (Docket No. 29).) In the order denying defendants’ motion in part, the judge previously assigned to this case found that both plaintiff and defendants agree that the corporate defendants used a pure piece-rate system to compensate employees. (Id. at 5.) Defendants argued the system was lawful, but the court rejected that argument. (See id. at 6 (“It appears that plaintiff has alleged a valid theory of recovery on this issue such that judgment on the pleadings is not appropriate.”)) With respect to its claim based on defendants’ piece-rate system, at least, plaintiff appears to have a strong case.
Plaintiff also filed declarations in support of his motion for class certification revealing that defendants’ compensation policies did not provide payment to employees for time not spent on piece-rate work. (Pl.’s Mem. in Support of Class Certification at 4:23-5:5 (Docket No. 47).) That fact, if true, would strengthen plaintiffs case. Additionally, plaintiffs, having reviewed employee time cards through discovery, stated it was possible to use those cards as a basis for determining precisely the amount of unpaid time for each employee on every day during the class period. (Id. at 7:4-6.) Because the action was stayed pending the outcome of the Ninth Circuit appeal, defendants never filed an opposition to the motion for class certification and thus had no opportunity to dispute those facts.
On balance, the record suggests plaintiff presented a strong ease, although the facts remain undeveloped at this early stage of the litigation. The court will consider the relative strength of plaintiffs ease together with risks weighing against it.
b. Risk, Expense, Complexity, and Likely Duration of Further Litigation
The named plaintiff signed an employment agreement containing an arbitration provision. (See Joy Decl. Ex. A (Docket No. 72-2).) On that basis, defendants moved to compel arbitration, (Docket No. 72), but the previous judge assigned to this case denied the motion, (Docket No. 104). At the time the parties moved for the court’s preliminary approval of their settlement, (see Docket No. 12), defendants’ appeal concerning the enforceability of an arbitration clause in the plaintiffs employment agreement was pending before the Ninth Circuit. (Mallison Decl. ¶ 40.) Before the Ninth Circuit heard
Class counsel state that if defendants had prevailed on appeal, there would not likely have been any method by which plaintiffs could litigate this case on a class basis. (Mem. in Support of Mot. for Final Approval at 12:23-25.) The Order denying defendants’ motion to compel arbitration noted that while the agreement signed by plaintiff did not include an express class arbitration waiver, it was possible that the provision’s language implicitly waived the right to proceed as a class. (Feb. 14, 2013 Order at 5 n. 2 (Docket No. 104) (citing Kinecta Alt. Fin. Solutions, Inc. v. Superior Court,
Having determined the parties intended the California Arbitration Act’s (“CAA”) procedural rules to govern the agreement, the court interpreted the arbitration agreement under the Federal Arbitration Act (“FAA”) but applied the CAA where the two statutes conflicted. (Feb. 14, 2013 Order at 10:17-24.) The court found defendants did not act diligently to exercise them right to arbitrate the dispute, (id. at 19:19-20 (citing St. Agnes Med. Ctr. v. PacifiCare of Cal.,
It is impossible for the court to predict with certainty whether defendants would have prevailed on appeal, but it is not required to do so, see Officers for Justice
c. Risk of Maintaining Class Action Status Throughout Trial
The court is unaware of any foreseeable difficulty the class might have in maintaining class-action certification at trial.
d. Amount Offered in Settlement
“In assessing the consideration obtained by the class members in a class action settlement, ‘it is the complete package taken as a whole, rather than the individual component parts, that must be examined for overall fairness.’ ” DIRECTV,
The gross settlement will cover the employer payroll taxes on the settlement shares; a $40,000 payment to the California Labor and Workforce Development Agency for civil penalties; the incentive payment to the named plaintiff; settlement administration costs of $9,700; payment of the $666,667 in fees class counsel is requesting; and $50,000 in costs. (Salinas Deck ¶ 14.) The settlement administrator estimates the net settlement, or the amount paid to participating class members, is $1,135,118.47. (Id.) As of the time of the fairness hearing, 307 members have opted into the class, and the estimated average settlement share for a class member is approximately $3,680.19. (Salinas Deck ¶ 14.)
e. Extent of Discovery and the State of the Proceedings
A settlement that occurs in an advanced stage of the proceedings indicates the parties carefully investigated the claims before reaching a resolution. Alberto v. GMRI, Inc., Civ. No. 07-1895 WBS DAD,
After filing the SAC, class counsel conducted discovery and non-discovery investigation regarding class certification and the merits of their claims. (Mem. in Support of Mot. for Final Approval at 3:25-26.) Counsel scanned 142,700 pages of payroll and timekeeping documents, which involved four months of photocopying, printing, and organizing. (Id. at 3:27-4:4.) Plaintiffs believed these materials provided them a basis for determining precisely the amount of unpaid time for each employee on every day during the class period. (Pl.’s Mem. in Support of Class Certification at 7:4-6.)
Additionally, the parties engaged in four full days of mediation and incorporated their mediator’s proposals in their settlement agreement. (See id. at 15:14-15.) The parties use of mediation, which took place after significant discovery, and their reliance on the mediator’s proposal in settling demonstrates the parties considered a neutral opinion in evaluating the strength of their arguments. See Murillo v. Pac. Gas & Elec. Co., Civ. No. 2:08-1974 WBS GGH,
f. Experience and Views of Counsel
Class counsel indicate that they have extensive experience litigating wage-and-hour class actions; since starting their firm in 2005, they have litigated over sixty wage- and-hour class actions and have brokered seven-figure settlements in at least five of those cases. (Mallison Deck ¶ 6.) Counsel believes the settlement provides for substantial recovery in light of numerous factors, including the risks of significant delay, defendants’ defenses, and the merits of the (now-dismissed) Ninth Circuit appeal. (Id. at ¶¶ 39-40.) The court gives considerable weight to class counsel’s opinions regarding the settlement due to counsel’s experience and familiarity with the litigation. Counsel’s assertion that the settlement is fair, adequate and reasonable is a factor supporting the court’s final approval of the agreement. See Hanlon,
g. Presence of a Government Participant
No government entity participated in this case. However, plaintiff brought claims under the California Private Attorney General Act of 2004, Cal. Labor Code § 2698 et seq., (“PAGA”). Because plaintiff will share civil penalties of $40,000 with the State of California, this factor weighs in favor of approval of the settlement. See Adoma v. Univ. of Phoenix, Inc.,
h. Reaction of the Class Members to the Proposed Settlement
The settlement administrator identified 307 participating class members and reported only four notices that were undeliverable because it was unable to find a correct address. (Salinas Deck ¶ 9.) As of this date, the court is unaware of any class member who has filed an objection to the settlement. “It is established that the absence of a large number of objections to a proposed class action settlement raises a
Having considered the foregoing factors, the court finds the settlement is fair, adequate, and reasonable pursuant to Rule 23(e). See Hanlon,
D. Attorney’s Fees
If a negotiated class action settlement includes an award of attorney’s fees, that fee award must be evaluated in the overall context of the settlement. Knisley v. Network Assocs.,
The Ninth Circuit has approved two methods of assigning attorney’s fees in common fund cases: the “percentage of the fund” method and the “lodestar” method. Vizcaino v. Microsoft Corp.,
Under the percentage method, the court may award class counsel a percentage of the common fund recovered for the class. Id. The percentage method is particularly appropriate in common fund cases, where “the benefit to the class is easily quantified.” Bluetooth,
The court will adopt the “common fund” model and incorporate a lodestar crosscheck. In its order granting preliminary approval, the court expressed reservation regarding class counsel’s request for a percentage award of 33.3%. While some courts have approved percentage awards that high, awards of that size are generally disfavored unless they are corroborated by the lodestar or reflect exceptional circumstances. See, e.g., Adoma,
1. Reasonableness of the Percentage
Class counsel argues that the requested fee of 33.3%, or $666,667 is reasonable in light of several factors. First, class counsel points out that they achieved excellent results. (Mem. in Support of Final Approval at 21:25.) Counsel compares the $2 million settlement to the $3-4 million estimated value of the class members’ primary claim. (Id. at 21:26-22:5.) Class counsel asserts that undertaking this case was risky because the underlying legal theories had never before been tested, (id. at 22:6-10), and by prevailing on those theories, they advanced important developments in California wage-and-hour law, (id. at 22:6-23:18). Counsel also claim they “doggedly pursued” this matter, expending great effort on behalf
The court hesitates to characterize some of these circumstances as special so as to justify a departure from the 25% benchmark. While the court notes class counsel’s diligence during discovery, their experience and reputation, their successes in opposing a motion for judgment on the pleadings and a motion to compel arbitration, (see Docket Nos. 29, 104), the size of the gross settlement, and their outlay of time and resources with no guarantee of recovery, counsel has not demonstrated how these factors constitute “special circumstances” that are not typically present in other common fund cases.
The novelty of class counsel’s legal arguments may constitute “special circumstances” justifying a departure from the benchmark. Counsel states his firm “undertook this wage and hour class action at a time in which the underlying theories of liability had never been tested.” (Mem. in Support of Final Approval at 22:6-10.) Citing cases, counsel indicates the firm’s novel piece-rate theory, which alleged defendant Zamora’s wage formula failed to compensate plaintiff for rest breaks and essential tasks, impacted California labor law. (See id. at 22:11-23:18.) The court finds counsel’s novel theory may constitute a “special circumstance.” See Teitel-baum v. Sorenson,
2. Lodestar Cross-Check
Calculation of the lodestar can provide a useful perspective on the reasonableness of a given percentage award. See Vizcaino v. Microsoft Corp.,
a. Reasonable Rate
Class counsel submitted a summary of their lodestar fees to date, which totaled $487,947. (Mallison Deck ¶47.) The total accounts for the hours of Stan Mallison and Hector Martinez, who both ask for an hourly rate of $650; Marco Palau, asking for a rate of $495; Joseph Sutton, asking for a rate of $425; and Eric Trabucco, asking for a rate of $325.
A reasonable rate is typically based upon the prevailing market rate in the community for “similar work performed by attorneys of comparable skill, experience, and reputation.” Chalmers v. City of Los Angeles,
Although the court has no reason to question class counsel’s experience and vigor, counsel has not provided the court with any helpful information regarding the prevailing market rates for similar work performed by competent attorneys in the relevant legal community, and the court must look to other sources.
In the absence from any apposite information provided by class counsel, and for the purposes of conducting a lodestar “cross cheek,” the court will use rates that in the Eastern District of California would be considered among the highest for experienced attorneys as part of its calculations: $400 per hour for Mallison, Martinez, and Palau, and $175 for the other associates. Both rate levels ai’e generous in light of common fee awards in this district. See Johnson,
b. Reasonable Hours
When calculating a lodestar, normally a court may independently scrutinize time sheets to determine whether the hours attorneys are asserting are duplicative or excessive. See In re Washington Public Power Supply System Securities Litigation,
c. Lodestar Calculation
The lodestar in this ease is thus $323,005.75, calculated as follows:
Mallison: 428.75 x $400/hour = $171,500
Martinez: 64.85 x $400/hour = $25,940
Palau: 246.08 x $400/hour = $98,432
Joseph Sutton: 149.05 x $175/hour = $26,083.75
Eric Trabucco: 6 x $175/hour = $1,050
Even when applying these generous numbers, and taking the “reasonable hours” calculated by counsel at face value, the lodestar is significantly lower than what class counsel is seeking. A lodestar of $323,005.75 comprises approximately 16% of the common fund, which is notably below the Ninth Circuit benchmark. By requesting a 33.3% award of $666,667, counsel is, according to these figures, in essence seeking a multiplier of two.
As discussed, counsel’s novel legal theories and their asserted impact on state labor law could constitute grounds for an upward de
E. Costs
“There is no doubt that an attorney who has created a common fund for the benefit of the class is entitled to reimbursement of reasonable litigation expenses from that fund.” In re Heritage Bond Litig.,
F. Incentive Payment to Named Plaintiff
For the reasons previously discussed, see supra Part II.B.l.b, the court orders that an incentive payment of $15,000 be paid to the named plaintiff.
IT IS THEREFORE ORDERED that the parties’ joint motion for final approval of the class and collective action settlement be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED THAT:
(1) The court has jurisdiction over this action and the parties’ settlement under 28 U.S.C. §§ 1331 and 1367, as plaintiffs original Complaint was brought under the Fair Labor Standards Act 29 U.S.C. §§ 201 et seq.; and the court has supplemental jurisdiction over plaintiffs state-law claims;
(2) Solely for the purpose of this settlement, and pursuant to Federal Rule of Civil Procedure 23, the court hereby certifies the following class: all nonexempt automotive technicians who have been employed by one or more of the defendants at any time between March 12, 2004, through July 7, 2014. Specifically, the court finds that:
a. the settlement class members are so numerous that joinder of all settlement class members would be impracticable;
b. there are questions of law and fact common to the settlement class which predominate over any individual questions;
e. claims of the named plaintiff are typical of the claims of the settlement class;
d. the named plaintiff and class counsel have fairly and adequately represented and protected the interests of the settlement class; and
e. a class action is superior to other available methods for the fair and efficient adjudicating of the controversy;
(3) the court appoints the named plaintiff, Jose Ontiveros, as representative of the class and finds that he meets the requirements of Rule 23;
(4) the court appoints the following lawyers as counsel to the settlement class, and finds that counsel meets the requirements of Rule 23: Stan S. Mallison and Hector R. Martinez, Law Offices of Mallison & Martinez, 1939 Harrison Street, Suite 730, Oakland, California 94612;
(5) the settlement agreement’s plan for class notice is the best notice practicable under the circumstances and satisfies the requirements of due process and Rule 23. The plan is approved and adopted. The Notice to the class complies with Rule 23(c)(2) and Rule 23(e), and is approved and adopted;
(6) the parties have executed the notice plan in the court’s Preliminary Approval Order, in response to which none of the 307 collective class members have opted out or objected. Having found that the parties and their counsel took extensive efforts to locate and inform all putative class members of the settlement, and*376 given that no class members have filed any objections to the settlement, the court finds and orders that no additional notice to the class is necessary;
(7) all class members who did not opt out from the settlement will receive a settlement share;
(8) class administrator Simpluris, Inc. is awarded $9,700 for their services as settlement administrator;
(9) class representative, Jose Ontiveros, is awarded $15,000 as an incentive payment;
(10) class counsel, Mallison & Martinez, is awarded $500,000 of the gross recovery in attorneys’ fees and $50,000 in costs;
(11) the California Labor Code PAGA payment of $40,000 to the State of California is approved;
(12) by means of this Final Approval Order, the court enters final judgment in the action, as defined in Rule Federal Rule of Civil Procedure 58(a)(1);
(13) this action is dismissed with prejudice, each side to bear its own costs and attorneys’ fees except as provided by the settlement and this order;
(14) the court retains jurisdiction to consider all further applications arising out of or in connection with the settlement.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Notes
. Those claims include: (1) unlawful business practices under California Business & Professions Code sections 17200 et seq. based on violations of the Fair Labor Standards Act ("FLSA”), 29 U.S.C. §§ 201 et seq.; (2) failure to pay overtime wages under section 1194(a) of the California Labor Code; (3) failure to pay minimum wage under section 1194(a) of the California Labor Code; (4) failure to provide rest periods under section 1194(a) of the California Labor Code; (5) unlawful kickback payments in violation of sections 221 to 223 of the California Labor Code; (6) failure to pay timely wages due at termination in violation of sections 201 to 203 of the California Labor Code; (7) failure to provide accurate employee wage statements in violation of sections 1174 and 1175 of the California Labor Code; (8) failure to pay reporting time wages in violation of section 1197 of the California Labor Code; (9) unlawful and unfair business practices under California Business and Professions Code based on violations of the California Labor Code. In addition, plaintiff asserts a claim on his own behalf under the California Private Attorney General Act, Cal. Labor Code §§ 2698 et seq. (SAC ¶¶ 41-118 (Docket No. 18).)
. The $7,500 award constituted 2.5% of the common fund of $300,000, which had a 40% floor of net distribution to class members. See Clayton,
. Mr. Ontiveros indicated that in 2007, his hourly flat rate at Zamora was $ 15 per hour.
. The court notes that the per-member recovery will actually be greater, due to the court's reduction of the incentive and attorneys' fees awards.
. In their Memorandum in support of their motion for preliminary approval, the parties stated the average settlement would be approximately $6,000 per class member. This figure was based on a 200-person class. Now, parties state the class has approximately 300 members, and therefore the average payout has decreased.
. Class members who wished to object were directed to file their objection with the Court and serve a copy of their objection on the parties' attorneys. The claims administrator indicated that as of September 8, 2014, it had not received any objections. There were no objections voiced at the hearing.
. Because this Order makes downward adjustments to the attorney’s fees award and incentive payment, the actual net settlement will be higher than that calculated by the settlement administrator.
. Parties state "there is no guarantee of continued class certification relating to a myriad legal and factual issues in this case” but give no concrete basis for doubting that class members would be able to maintain certification.
. The net settlement amount and average share will increase due to the court's reduction of the plaintiff’s incentive award and attorneys’ fees.
. Class counsel states the firm has "routinely received fee awards in excess of the [25%] benchmark.” (Mem. in Support of Final Approval at 20:15.) However, in three of four of these cases, the 33.3% class counsel was seeking was less than the asserted lodestar. See Alvarado et al. v. Rex Nederend, Civ. No. 1:08-1099 OWW DLB,
. There is an exception to the local forum rule. ’’[R]ates outside the forum may be used ‘if local counsel was unavailable, either because they are unwilling or unable to perform because they lack the degree of experience, expertise, or specialization required to handle properly the case.’ ” Barjon v. Dalton,
. Class counsel makes references to previous fee awards in cases it settled in the Eastern District. (See Mallison Deck ¶¶ 10, 11.) These instances are not instructive, because the awards did not result from an adversarial procedure. Because of the parties’ mutual interest in the court approving the agreed upon settlement, counsel’s request for fees in those cases went unopposed by defendants.