Case Name: Charmie Ruffy v. Island Hospitality Management, Inc., et al.
Case No.: 16-CV-301473 (lead case)

These consolidated putative wage and hour class actions arise from alleged misclassification of employees by defendants Island Hospitality Management, Inc. and Island Hospitality Management, LLC (collectively, “Island”). Before the Court is the parties’ joint motion for preliminary approval of a settlement.

I. Factual and Procedural Background

As alleged in the operative complaint in the lead action (the First Amended Complaint or “FAC”), defendant Island Hospitality Management, Inc. provided hotel management services to hotels throughout California until December of 2014, when it converted to Island Hospitality Management, LLC. (FAC, ¶¶ 7-8.) Among the hotels to which defendants have provided services is the Residence Inn by Marriott in San Jose. (Ibid.)

Plaintiff Charmie Ruffy worked for defendants in San Jose as an Assistant General Manager from April of 2012 through September of 2015, and continued as a General Manager until she was terminated in May of 2016. (FAC, ¶ 16.) While she was classified as exempt during her tenure as an Assistant General Manager, she and other employees in this position actually performed non-exempt job duties and should have been classified accordingly. (Id. at ¶ 17.) In addition, defendants’ wage statements issued to all of its employees did not reflect the correct legal name and address of the employer from January 1, 2015 until early 2017. (Id. at ¶ 79.)

On October 21, 2016, Ms. Ruffy filed the lead action, alleging misclassification of Assistant General Managers on behalf of a putative class of such workers, as well as individual claims for sex discrimination related to her termination. On April 24, 2017, she filed the operative FAC, asserting putative class claims for (1) failure to pay overtime, (2) meal period violations, (3) rest period violations, (4) failure to timely pay all wages due, (5) failure to properly itemize wage statements, and (6) unfair competition, plus individual claims for (7) sex discrimination and (8) wrongful termination in violation of public policy. The FAC alleges wage statement violations on behalf of both the original class and a second putative class of employees who received inaccurate wage statements.

Another former Assistant General Manager, Liliana Doonan, filed suit against Island Hospitality Management LLC in 2017. Ms. Doonan and Ms. Ruffy are represented by the same counsel, who declares that the 2017 Doonan action was dismissed without prejudice in light of ongoing settlement negotiations, subject to a tolling agreement. Ms. Doonan essentially re-filed her complaint as Doonan v. Island Hospitality Management, LLC (Super. Ct. Santa Clara County, No. 18-CV-325187), the second action now before the Court. The pending Doonan action alleges that Island ultimately split the Assistant General Manager responsibilities between Operation Managers and Front Office Managers, who continue to perform the duties of Assistant General Managers and are also misclassified. (Doonan Complaint, ¶ 14.) The operative complaint in Doonan asserts the same putative class claims as the Ruffy FAC, along with a seventh cause of action under the Private Attorneys General Act (“PAGA) and an eighth cause of action under the federal Fair Labor Standards Act (“FLSA”).

According to counsel, from November of 2017 to March of 2018, defendants engaged in an individual settlement campaign, making direct offers to putative class members in groups. Materials provided to putative class members about the offers are attached to the declaration of Brian T. Ashe filed in support of the parties’ motion. It appears that putative class members communicated with both defendants and plaintiffs’ counsel about these offers. Ultimately, 105 of 121 misclassification class members and 1,048 of 1,519 wage statement class members accepted individual settlement offers.

In July of 2018, the parties reached a global settlement of the Ruffy and Doonan actions. In a stipulated order adopted by the Court (Hon. Stoelker), they agreed to consolidate the actions for purposes of settlement approval, with Ruffy serving as the lead action.

The parties now move for an order preliminarily approving the settlement, provisionally certifying the settlement class, approving the form and method for providing notice to the class, and scheduling a final fairness hearing. In addition, they seek the Court’s approval of the individual settlement agreements executed by the majority of putative class members.

II. Legal Standards for Approving a Class Action/PAGA Settlement

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, disapproved of on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.)

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, internal citations and quotations omitted.)

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 v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1801, 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 v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1802.) The presumption does not permit the Court to “give rubber-stamp approval” to a settlement; in all cases, it must “independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished,” based on a sufficiently developed factual record. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.)

Finally, Labor Code section 2699, subdivision (l) provides that “[t]he superior court shall review and approve any penalties sought as part of a proposed settlement agreement pursuant to” the Private Attorneys General Act (“PAGA”). Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (“LWDA”), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380.) “[T]here is no requirement that the Court certify a PAGA claim for representative treatment” as in a class action. (Villalobos v. Calandri Sonrise Farm LP (C.D. Cal., July 22, 2015, No. CV122615PSGJEMX) 2015 WL 12732709, at *5.) “[W]hen a PAGA claim is settled, the relief provided … [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….” (Id. at *13.) The settlement must be reasonable in light of the potential verdict value (see O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110, 1135 [rejecting settlement of less than one percent of the potential verdict]); however, it may be substantially discounted given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds a trial (see Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8-9).

III. Settlement Process

According to a declaration by plaintiffs’ counsel, counsel interviewed approximately 20 former employees after filing suit on behalf of Ms. Ruffy. Among those former employees was Ms. Doonan, who counsel determined could assert additional claims under PAGA and the FLSA and on behalf of Front Office Managers and Operations Managers. Counsel also propounded document requests resulting in the production of over 1,000 pages of documents, including defendants’ handbook, job descriptions, randomized wage statements, sample schedules, putative class member data, and Ms. Ruffy’s personnel file. Plaintiffs also obtained a list of current and former Assistant General Managers. Because the list did not include contact information, counsel engaged a private investigator to locate the employees and contacted twenty former employees to request interviews. As a result of these efforts, counsel obtained six witness statements that substantiated plaintiffs’ claims.

Counsel “created complex spreadsheets to determine the range of damages and informally consulted with fellow lawyers experienced in wage and hour law” to determine the potential value of plaintiffs’ claims. An initial mediation with Jeffrey A. Ross was held on August 30, 2017. After the first mediation failed, counsel focused on trial preparation, deposing two corporate witnesses over three days.

At this point, defendants began their individual settlement campaign, and plaintiffs’ counsel fielded dozens of resulting phone calls from putative class members. Counsel established a web site providing putative class members with information about the litigation and offering to speak with them about their settlement offers. Ultimately, many employees accepted the individual settlement offers, but some did not, and plaintiffs obtained additional witness statements for use in the litigation.

Settlement negotiations continued with Mr. Ross’s assistance, and the parties ultimately achieved a global settlement in July of 2018.

IV. Provisions of the Settlement

The gross settlement amount is $423,500, a sum which includes $168,000 in attorney fees, service awards of $5,500 to Ms. Ruffy and $3,000 to Ms. Doonan, and administration costs not to exceed $15,000. $6,667 of the gross settlement will be allocated to PAGA penalties, 75 percent of which will be paid to the California Labor and Workforce Development Agency.

The net settlement will be allocated $142,000 to the misclassification class and $80,000 to the wage statement class and distributed based on class members’ weeks worked during the applicable class period. Notwithstanding this formula, the minimum payment to settlement class members shall be $25. For the misclassification class, the settlement payments will be characterized 50 percent as wages and 50 percent as penalties; for the wage statement class, the payments will be characterized 100 percent as penalties. The employees’ share of payroll taxes will be paid from the net settlement. As the settlement agreement does not address the employer’s share of payroll taxes, the Court presumes that Island will be responsible for any such taxes.

Class members are not required to submit a claim to receive their payments. Notably, however, should any putative class members choose to opt out of the class, the settlement provides that their portion of the net settlement will revert to defendants. Any unapproved amounts of attorney fees, service awards, or PAGA penalties will also revert to Island, along with any unclaimed funds.

Misclassification class members who do not opt out of the settlement will release all claims “that were alleged in the Action on behalf of the California Misclassification Class, whether known or unknown as well as similar claims that arise from the same factual predicate of the Action, whether known or unknown, that exist or existed at any time during the Class Period,” including specified wage and hour claims and FLSA claims. Wage statement class members will release such claims as were alleged on behalf of that class, including specified wage and hour claims (but not FLSA claims).

V. Fairness of the Settlement

Particularly in light of several unusual and troubling features of the agreement before it, the Court lacks information necessary to evaluate whether the settlement is fair and reasonable to the remaining putative class members. Consequently, it will deny the parties’ motion without prejudice. Still, the Court will provide its analysis of the proposed settlement, settlement class, and notice procedures to guide the parties should they renew their motion in the future.

A. Individual Settlement Agreements

As an initial matter, the Court will not review and approve individual settlement agreements between the defendants and absent putative class members—at least where there are no signs or allegations of unfairness or coercion. (See Hinds County, Miss. v. Wachovia Bank N.A. (S.D.N.Y. 2011) 790 F.Supp.2d 125, 132 [“Prior to certification, court approval is not required to compromise the individual claims of potential class members.”].) Still, the terms of the individual settlement agreements bear on the Court’s evaluation of the global settlement’s fairness to the remaining putative class members. The parties indicate that Island paid $566,600.76 in total compensation for the individual settlements, but do not explain how those funds were allocated among employees. Nor do they comprehensively describe their communications with the class pursuant to defendants’ settlement campaign. They must do so in any future motion for preliminary approval so that the Court may consider all of the relevant circumstances to its fairness determination.

Relatedly, Ms. Ruffy has asserted individual claims for sex discrimination and wrongful termination in violation of public policy, but the parties do not specify whether these claims were resolved through a separate agreement or whether they will simply be released in exchange for Ms. Ruffy’s service award. The parties must address this issue in any future motion and lodge any individual settlement by Ms. Ruffy for the Court’s review.

B. The Value of the Case and the Structure of the Settlement

The Court appreciates counsel’s efforts in achieving the settlement and their recommendation that it be approved. Still, the Court must not “give rubber-stamp approval” to a settlement; in all cases, it must “independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished,” based on a sufficiently developed factual record. (Kullar v. Foot Locker Retail, Inc., supra, 168 Cal.App.4th at p. 130.) Here, plaintiffs have provided a general discussion of the strengths and weaknesses of the class claims, but have not shared their valuation of the case with the Court. Plaintiffs must disclose and explain their valuation in any future motion so that the Court may consider this critical information in assessing the fairness of the settlement.

This information is particularly crucial given the reversionary structure of the settlement proposed by the parties, which the Court is disinclined to approve. While this unusual structure may be permissible “as long as it d[oes] not render the settlement unfair, inadequate or unreasonable” (Cundiff v. Verizon California, Inc. (2008) 167 Cal.App.4th 718, 728), here, plaintiffs do not address the reasoning supporting the reversion. Defendants urge that participating class members will receive a “windfall” if nonparticipating class members’ payments are redistributed to the class, but provide no support for this conclusion, particularly where they give no indication of the potential value of putative class members’ claims. Defendants appear to suggest that settlement class members should not receive higher payments than employees who executed individual settlements. However, in the Court’s opinion, class members should be compensated for the risk of no recovery that they faced in rejecting an individual settlement—while a campaign like defendants’ may be permissible under some circumstances, the Court does not share Island’s view that this approach should be encouraged. In a future motion, the parties must better explain the justification for the various reversions to defendants in this case, unless they opt to eliminate them to speed the approval of their settlement.

Finally, the combination of higher than usual attorney fee request and a “kicker” provision whereby any fees not approved by the Court will revert to Island is of serious concern to the Court. (See In re Bluetooth Headset Products Liability Litigation (9th Cir. 2011) 654 F.3d 935, 949 [“If the defendant is willing to pay a certain sum in attorneys’ fees as part of the settlement package, but the full fee award would be unreasonable, there is no apparent reason the class should not benefit from the excess allotted for fees.”].) This Court has never been presented with a settlement containing such a “kicker” provision and is unlikely to approve one absent highly unusual circumstances.

C. Release of FLSA Claims

Finally, in a future motion, the parties must address another significant and unusual feature of their settlement: its purported release of claims under the FLSA.

As explained in Haro v. City of Rosemead (2009) 174 Cal.App.4th 1067, the FLSA “govern[s] minimum wages and maximum hours.” (At p. 1070.) Notably, the FLSA establishes an “opt-in” procedure for collective actions under its authority, which is essentially the opposite of the “opt-out” procedure typically employed in class actions. The “opt-in” procedure requires that aggrieved employees “give[] [their] consent in writing” to become a party to an FLSA action, which consent must be “filed in the court in which such action is brought.” (29 U.S.C. § 216(b); Haro v. City of Rosemead, supra, 174 Cal.App.4th at p. 1071.) As held by Haro, “[a]n FLSA action has to be litigated according to rules that are specifically applicable to these actions” and may not be prosecuted as a class action. (Haro v. City of Rosemead, supra, 174 Cal.App.4th at p. 1077.)

While some unpublished federal decisions have approved “hybrid” class action and FLSA settlements, these settlements have not complied with the statutory requirement of written consents that are filed with the court. (See Smothers v. Northstar Alarm Services, LLC (E.D. Cal., Jan. 22, 2019, No. 217CV00548KJMKJN) 2019 WL 280294, at *10 [“Courts more elevated than this one have read the statutory language as requiring written consent filed with the court ….”].) Further, as discussed in other federal cases, “hybrid” settlements raise a number of additional issues that are wholly unaddressed by the parties here.

First, plaintiff’s motion for preliminary approval “does not explicitly request certification of an FLSA collective action, even though [the structure of the settlement] clearly contemplates the existence of a collective action ….” (Thompson v. Costco Wholesale Corporation (S.D. Cal., Feb. 22, 2017, No. 14-CV-2778-CAB-WVG) 2017 WL 697895, at *7.) In the Court’s view, this step is a prerequisite to approval of a hybrid settlement. Moreover, the settlement requires class members “to release FLSA claims to benefit from the settlement of the[ir] state law claims,” while assigning no value to the FLSA claims. (Id. at *7-8.) The parties’ failure to allow putative class members to participate in one but not the other form of action “counsels against the court’s granting of preliminary approval.” (Maciel v. Bar 20 Dairy, LLC (E.D. Cal., Oct. 23, 2018, No. 117CV00902DADSKO) 2018 WL 5291969, at *8, citing Millan v. Cascade Water Services, Inc. (E.D. Cal. 2015) 310 F.R.D. 593, 602.) Likewise, a “release of [an] FLSA claim in exchange for no consideration does not appear to be a fair and reasonable resolution of a bona fide dispute over FLSA provisions.” (Id. at *6, internal citation and quotations omitted.)

Finally, courts considering settlements in hybrid FLSA and class actions “consistently require class notice forms to explain: (1) the hybrid nature of the action; and (2) the claims involved in the action; (3) the options that are available to [class] members in connection with the settlement, including how to participate or not participate in the … class action and the FLSA collective action aspects of the settlement; and (4) the consequences of opting-in to the FLSA collective action, opting-out of the … class action, or doing nothing.” (Id. at *6, quoting Thompson v. Costco Wholesale Corporation, supra, 2017 WL 697895, at *8.) Here, the notice does not even reference the FLSA or disclose the FLSA release.

While the Court might conceivably approve an appropriately structured hybrid FLSA/class action settlement, here, significant changes to the settlement would be required for the Court to approve the FLSA release before it. Further, the Court is unlikely to approve the FLSA release in this settlement unless additional consideration is provided, given that plaintiffs do not appear to have included such a claim in their damages analysis. Accordingly, unless the parties agree to simply remove the FLSA release from their settlement (presumably accompanied by the dismissal of Ms. Doonan’s FLSA claim), the Court is unlikely to grant preliminary approval.

VI. Proposed Settlement Class

Plaintiff requests that the following settlement classes be provisionally certified:

The “California Misclassification Class” of “all current and former employees of either Defendant who work, or have worked, as exempt Assistant General Managers, Front Office Managers, or Operations Managers in California for either of the Defendants at any time during the Class Period, excluding the Individual Settlement Group.

The “California Wage Statement Class” of “all current and former employees who work, or have worked, in California for either of the Defendants at any time during the Class Period, excluding the Individual Settlement Group.

A. Legal Standard for Certifying a Class for Settlement Purposes

Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.” California Code of Civil Procedure Section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court ….” As interpreted by the California Supreme Court, Section 382 requires the plaintiff to demonstrate by a preponderance of the evidence (1) an ascertainable class and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (Rocher) (2004) 34 Cal.4th 319, 326, 332.)

The “community-of-interest” requirement encompasses three factors: (1) predominant questions of law or fact, (2) class representatives with claims or defenses typical of the class, and (3) class representatives who can adequately represent the class. (Ibid.) “Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) The plaintiff has the burden of establishing that class treatment will yield “substantial benefits” to both “the litigants and to the court.” (Blue Chip Stamps v. Superior Court (Botney) (1976) 18 Cal.3d 381, 385.)

In the settlement context, “the court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled.” (Luckey v. Superior Court (Cotton On USA, Inc.) (2014) 228 Cal.App.4th 81, 93.) As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court’s review is more lenient in this respect. (Id. at pp. 93-94.) However, considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold. (Id. at p. 94.)

B. Ascertainable Class

“The trial court must determine whether the class is ascertainable by examining (1) the class definition, (2) the size of the class and (3) the means of identifying class members.” (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) “Class members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.)

Here, the estimated 16 California Misclassification Class members and 471 California Wage Statement Class members have already been identified based on defendants’ records, and the class is clearly defined. The Court finds that the class is numerous and ascertainable.

However, the proposed definition of the California Wage Statement Class is inconsistent with the definitions in the operative complaints, which limit the class to employees “who received inaccurate itemized wage statements from 2015 to the present.” This limitation is consistent with plaintiffs’ allegations that Island Hospitality Management, Inc. converted to Island Hospitality Management, LLC in December of 2014 and employees began receiving incorrect wage statements in 2015. Any future motion for preliminary approval shall explain why this limitation on the class period for this class was removed.

C. Community of Interest

With respect to the first community of interest factor, “[i]n order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.” (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916.) The court must also give due weight to any evidence of a conflict of interest among the proposed class members. (See J.P. Morgan & Co., Inc. v. Superior Court (Heliotrope General, Inc.) (2003) 113 Cal.App.4th 195, 215.) The ultimate question is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. (Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at pp. 1104-1105.) “As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.” (Hicks v. Kaufman & Broad Home Corp., supra, 89 Cal.App.4th at p. 916.)

Here, common legal and factual issues predominate. Plaintiffs’ claims all arise from defendants’ wage and hour practices applied to the similarly-situated class members.

As to the second factor,

The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.

(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)

Like other members of the classes, plaintiffs were employed by defendants in the relevant positions and allege that they were misclassified and received defective wage statements. The anticipated defenses are not unique to plaintiffs, and there is no indication that plaintiffs’ interests are otherwise in conflict with those of the class.

Finally, adequacy of representation “depends on whether the plaintiff’s attorney is qualified to conduct the proposed litigation and the plaintiff’s interests are not antagonistic to the interests of the class.” (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.) The class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 238.) “Differences in individual class members’ proof of damages [are] not fatal to class certification. Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status.” (Ibid., internal citations and quotation marks omitted.)

Plaintiffs appear to have the same interest in maintaining this action as any class member would have. However, the Court is not prepared to find adequacy of representation without further information. In addition to addressing the issues identified above, plaintiffs’ counsel must submit billing summaries for the Court’s review in connection with any future motion for preliminary approval.

D. Substantial Benefits of Class Certification

“[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .” (Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.) The question is whether a class action would be superior to individual lawsuits. (Ibid.) “Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.” (Ibid.) Generally, “a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.” (Id. at pp. 120-121, internal quotation marks omitted.)

Here, there are an estimated 16 and 471 members of the proposed classes. It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member. Further, it would be cost prohibitive for each class member to file suit individually, as each member would have the potential for little to no monetary recovery. It is clear that a class action provides substantial benefits to both the litigants and the Court in this case.

VII. Notice

The content of a class notice is subject to court approval. (Cal. Rules of Court, rule 3.769(f).) “The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Ibid.) In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.” (Cal. Rules of Court, rule 3.766(e).)

Here, the notice describes the lawsuit, explains the settlement, and instructs class members that they may opt out of the settlement or object. The gross settlement amount and estimated deductions are provided, along with each class member’s estimated payment. Class members are informed of their qualifying work weeks as reflected in defendants’ records and instructed how to dispute this information. Class members are given 60 days to request exclusion from the class, dispute their workweek information, or submit a written objection.

The notice is generally adequate, but must be modified to indicate that class members may appear at the final fairness hearing to make an oral objection without submitting a written objection. The notice must also be modified to highlight the estimates of class members’ eligible workweeks and settlement payments by displaying this information in bold within a box set off from the rest of the text on the first page of the notice. The verbatim definitions of “Released Wage Statement Claims” and “Released Misclassification Claims” must be provided. In addition, substantial modifications to the notice will be required if the parties seek approval of a modified hybrid FLSA/class action settlement, as discussed above.

Turning to the notice procedure, the parties have selected Simpluris, Inc. as the settlement administrator. The administrator will mail the notice packet within 20 days of receiving the class data, after updating class members’ addresses using the National Change of Address database. Any notice packets returned as undeliverable will be re-mailed to any forwarding address provided or located through appropriate tracing methods. These notice procedures are appropriate.

VIII. Conclusion and Order

In light of the issues discussed above, the motion for preliminary approval is DENIED WITHOUT PREJUDICE.

The Court will prepare the order.