HAYLEY DILLER f/k/a HAYLEY BALL vs. UNDER ARMOUR RETAIL, INC.; UNDER ARMOUR, INC.; UNDER ARMOUR RETAIL OF CALIFORNIA, LLC

HAYLEY DILLER f/k/a HAYLEY BALL, as an individual and on behalf of all others similarly situated,

Plaintiffs,

vs.

UNDER ARMOUR RETAIL, INC.; UNDER ARMOUR, INC.; UNDER ARMOUR RETAIL OF CALIFORNIA, LLC; and DOES 1 through 50, inclusive,

Defendants.
Case No. 2014-1-CV-265729

TENTATIVE RULING RE: MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

The above-entitled action is set for hearing before the Honorable Thomas E. Kuhnle on May 19, 2017, at 9:00 a.m. in Department 5. Having reviewed the submissions of the parties, the Court issues its tentative ruling as follows:

I. INTRODUCTION

This is a class action lawsuit arising out of various alleged Labor Code violations. Plaintiff Hayley Diller (“Plaintiff”) was hired by defendants Under Armour Retail, Inc. and Under Armour, Inc. (collectively, “Defendants”) to work as a non-exempt employee at Defendants’ store located in Gilroy, CA. (First Amended Class Action Complaint (“FAC”), ¶ 8.) Plaintiff alleges Defendants violated various Labor Code sections because employees were required to submit to security checks after they had already clocked-out at the end of their shifts. (FAC, ¶¶ 33, 37, 40, 47, and 51.)

The FAC, filed on April 10, 2017, sets forth the following causes of action: (1) Violation of Labor Code §§ 1194 and 1197; (2) Violation of Labor Code §§ 510 and 1194; (3) Violation of Labor Code §§ 226.7 and 512; (4) Violation of Labor Code §§ 201-203; (5) Violations of the UCL, Business & Professions Code § 17200, et seq.; and (6) Violation of Labor Code § 2698, et seq. The parties have reached a settlement. Plaintiff now moves for preliminary approval of the settlement.

II. LEGAL STANDARD

Generally, “questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court’s broad discretion.” (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, citing Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794.)
In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant factors, such as “the strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the 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.”

(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at pp. 244-245, citing Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc. (9th Cir. 1982) 688 F.2d 615, 624.)

“The list of factors is not exclusive and the court is free to engage in a balancing and weighing of factors depending on the circumstances of each case.” (Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245.) The court must examine the “proposed settlement agreement to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.” (Ibid., quoting Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc., supra, 688 F.2d at p. 625, internal quotation marks omitted.)

The burden is on the proponent of the settlement to show that it is fair and reasonable. However “a presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”

(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245, citing Dunk, supra, 48 Cal.App.4th at p. 1802.)

III. ANALYSIS

A. Provisions of the Settlement

The case has been settled on behalf of “all current and former non-exempt California retail store employees of Defendants Under Armour Retail, Inc. and Under Armour, Inc. who were employed at any time from May 23, 2010 through December 31, 2016.” (Class Action Settlement Agreement and Release of Claims (“Settlement Agreement”), p. 3:6-9.) Pursuant to the settlement, Defendants will pay a total of $1,050,000. (Settlement Agreement”, ¶ 1.1.) The settlement is made on a non-claims made basis and is non-reversionary. (Ibid.) Out of the settlement payments will be made of $250,000 for attorneys’ fees (1/3 of the gross settlement amount), costs up to $50,000, $20,000 for a release of all Private Attorneys General Act claims ($15,000 paid to the California Labor and Workforce Development Agency and $5,000 to the net settlement fund), $10,000 for an enhancement award to Plaintiff, and up to $15,000 for settlement administration costs. (Settlement Agreement, ¶¶ 1.1, 1.5, 1.6, 1.7.) Based on a class size of approximately 1,988 class members, each class member will receive an average of approximately $306.84.

B. Fairness of the Settlement

Plaintiff contends the settlement is fair. Plaintiff states her counsel conducted extensive discovery and investigation and the settlement was reached following mediation and continued arm’s-length negotiations. Plaintiff also asserts Defendants planned to invoke the “de minimis” defense, a federal doctrine providing that small increments of unpaid time worked need not be paid if certain elements are met. Plaintiff states it is unclear whether this doctrine applies to California Labor Code claims, but if it is ultimately found to apply, Plaintiff and the class would have significant difficulty in prevailing on the merits. Plaintiff has sought to obtain a concrete monetary remedy for class members in light of this uncertainty.

Plaintiff contends the potential recovery for the class is approximately $3,500,000. The Court finds a settlement of a little less than a third of that amount is a reasonable recovery for the class. The settlement reduces the expense of litigation and eliminates the risks to Plaintiff and the class of continuing litigation.

Plaintiff will seek a class representative incentive award of $10,000.

The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class 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. These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.

(Cellphone Termination Fee Cases (2010) 186 Cal. App. 4th 1380, 1394-1395, quotation marks, brackets, ellipses, and citations omitted.)
Plaintiff has filed a declaration in which she states she spent approximately 50 hours meeting and/or conferring with her attorneys. (Declaration of Hayley Diller in Support of Plaintiff’s Motion for Preliminary Approval of Class Action Settlement, ¶ 4.) She asserts she provided information and various documents and traveled to her attorney’s office, as well as preparing for and attending her deposition. (Ibid.) In light of Plaintiff’s participation in the lawsuit and the recovery obtained for the class, the Court finds the incentive award is justified and it is approved.

The Court also has an independent right and responsibility to review the requested attorneys’ fees and only award so much as it determines reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) Plaintiff’s counsel will seek attorneys’ fees of $250,000 (1/3 of the total settlement fund) (plus costs and expenses not to exceed $50,000). While 1/3 of the common fund for attorneys’ fees is generally considered reasonable, Plaintiff’s counsel should submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees.

C. Class Notice

The content of a class notice is subject to court approval. “If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court.” (Cal. Rules of Court, rule 3.769(f).)
The notice generally complies with the requirements for class notice. (See Settlement Agreement, Exhibit A.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notice states that class members who wish to object to the settlement must submit a written objection to the Court, class counsel and defense counsel, and the settlement administrator by a certain date. (Id. at p. 5.) It states that the objection must include the name, address, telephone number, and last four digits of the class member’s social security number and must state the basis for the objection as well as any intention to appear at the final approval hearing. (Ibid.) The language of the section of the notice explaining how to object to the settlement must be changed to state that class members who wish to object can appear and speak at the final approval hearing without submitting any written objection or providing any advance notice.

Subject to the above modification, the motion for preliminary approval of the class action settlement is GRANTED. The Court approves Phoenix Class Administrators to serve as administrator for the settlement. The final approval hearing is set for August 18, 2017 at 9:00 a.m. in Department 5.

The Court will prepare the final order if this tentative ruling is not contested.