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’ renewed, joint motion for preliminary approval of a settlement, as well as a motion by plaintiffs for approval of their attorney fees and costs.

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 declarations of Brian T. Ashe filed in support of the parties’ original and renewed motions for preliminary approval. 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.

In an order filed on February 7, 2019, the Court denied without prejudice the parties’ motion for preliminary approval of the class settlement and for approval of the individual settlement agreements executed by the majority of putative class members. The Court discussed its concerns with the reversionary structure of the settlement, the parties’ failure to provide a valuation of the settled claims, and the proposed release of FLSA claims, among other issues.

The parties now renew their motion for an order preliminarily approving the settlement, which has been amended in some respects in response to the Court’s order; provisionally certifying the settlement class; approving the form and method for providing notice to the class; and scheduling a final fairness hearing. They also renew their request for an order approving the FLSA releases reflected in the individual settlement agreements. Finally, plaintiffs move for approval of their attorney fees and costs, although with the understanding “that the Court will likely defer ruling on [that] motion until after the final fairness hearing.”

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. Individual Settlement Agreements

The Court has reviewed the materials submitted by the parties with regard to the individual settlement agreements, and finds no evidence of unfairness or coercion that would prevent it from approving the class and collective settlement before it. However, as stated in its prior order, the Court will not approve individual settlement agreements between the defendants and absent putative class members. (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.”].)

The parties insist that the FLSA releases reflected in the individual settlement agreements are “subject to Court approval.” However, they did not seek that approval prior to administering the individual settlements well over a year ago. As discussed in the Court’s prior order, the FLSA establishes an “opt-in” procedure for collective actions under its authority, which 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 (2009) 174 Cal.App.4th 1067, 1071.) That procedure has not been complied with as to the individual settlements, and the employees who executed those settlements are thus not parties to this action. They are also not members of the putative settlement class, since employees who executed individual settlement agreements are expressly excluded from the settlement class. Ultimately, any uncertainty regarding the enforceability of the individual FLSA releases is a result of Island’s decision to administer the individual settlements without court approval. The Court expresses no opinion as to whether the releases are enforceable, but it will not bless them after-the-fact.

Finally, the Court has considered the resolution of Ms. Ruffy’s individual claims, and finds no issues that would impact its analysis of the proposed class and collective settlement.

V. Provisions of the Class, PAGA, and FLSA Collective Action Settlement

The gross settlement amount is $428,500 ($5,000 more than the parties’ original settlement), a sum which includes $168,000 in attorney fees and costs, 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 of $231,999.75 will be allocated $145,333 to the misclassification class, $5,000 to the identical FLSA class, and $80,000 to the wage statement class. These funds will be 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 and FLSA classes, 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, with the exception of the FLSA class as discussed below. As in the parties’ original agreement, 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 funds associated with settlement checks that are not cashed without 90 days of mailing.

Misclassification class members who do not opt out of the settlement will release all state and local law 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. Wage statement class members will release such claims as to that class, including specified wage and hour claims. Finally, the FLSA class will release such federal claims as to that class.

VI. Fairness of the Class and PAGA Settlement

In response to the Court’s prior order, plaintiffs explain that the claims of the 16 remaining members of the misclassification class are worth up to $403,200 for the overtime claims, $107,520 for the meal and rest period claims, and $76,800 for the waiting time penalty claims. They submit that the $150,000 allocated to the misclassification class—which includes the $5,000 allocated to the FLSA settlement—thus represents twenty-five percent of the maximum value of this group’s claims. Setting the FLSA claim aside for the moment, the Court is inclined to find that the settlement allocated to the other misclassification claims is fair and reasonable. While it typically does not approve reversionary settlements, here, there is no claims process, and plaintiffs’ counsel have spoken with 10 of the 16 misclassification class members, who have all indicated that they intend to participate in the settlement. Considering the small class size and the significant settlement payments (an average of over $9,000) at issue, as well as the fact that reversion will occur only where individuals affirmatively opt-out of the class or fail to cash their settlement checks within 90 days, the Court anticipates that the participation rate will be high, and that the settlement will achieve a good result for these individuals.

With regard to the wage statement class, the maximum penalties are $700,000; however, the violation at issue is a technical one, and defendants’ witnesses testified it was unintentional, which is a defense to liability under Labor Code section 226. Plaintiffs’ counsel thus believe the reasonable value of this claim is closer to $100,000, with the settlement of $80,000 representing the majority of that value. The Court agrees with this assessment. Again, it would normally not approve a reversionary settlement, but considering the low likelihood of any recovery on this claim, it is willing to do so here. These settlement payments will also be substantial enough (an average of $169) that good participation can be expected among this group as well.

Notably, it appears that the parties have failed to allocate the employees’ share of PAGA penalties ($1,666.75) between the two classes. Prior to the hearing on this matter, the parties shall meet and confer on this issue and plaintiffs’ counsel shall file a supplemental declaration describing how they propose to address it. In addition, the additional release language found at paragraph 106 of the settlement agreement still indicates that misclassification class members who do not opt in to the FLSA settlement will release FLSA claims. The Court assumes this was an error, as this language does not appear in the version of the release set forth in the class notice. It will approve the release without this language.

Finally, the Court has reviewed plaintiffs’ motion for attorney fees, and is persuaded that the request warrants preliminary approval. Assuming that the preliminary approval is granted, the Court will rule on this motion at final approval, after considering any objections that may be raised by members of the putative class.

VII. The FLSA Settlement

In response to the Court’s prior order, the amended settlement provides an additional $5,000 in consideration for the release of FLSA claims and provides that each of the 16 eligible class members who returns an opt-in form will receive his or her proportional share of that fund, with unclaimed funds distributed among the misclassification class comprised of the same 16 individuals rather than reverting to Island.

In reviewing an FLSA settlement, a court must determine whether the settlement represents a “fair and reasonable resolution of a bona fide dispute.” (Selk v. Pioneers Memorial Healthcare District (S.D. Cal. 2016) 159 F.Supp.3d 1164, 1172, quoting Lynn’s Food Stores, Inc. v. U.S. By and Through U.S. Dept. of Labor, Employment Standards Admin., Wage and Hour Div. (11th Cir. 1982) 679 F.2d 1350, 1355; see also Kerzich v. County of Tuolumne (E.D. Cal. 2018) 335 F.Supp.3d 1179, 1184 [district courts in the Ninth Circuit have frequently applied the widely-used Lynn’s Food standard].) First, the court must find that a bona fide dispute exists, in that there are legitimate questions about the existence and extent of the defendant’s FLSA liability: “If there is no question that the FLSA entitles plaintiffs to the compensation they seek, then a court will not approve a settlement because to do so would allow the employer to avoid the full cost of complying with the statute.” (Selk v. Pioneers Memorial Healthcare District, supra, 159 F.Supp.3d at p. 1172.) The court must then determine whether the settlement is fair and reasonable, considering the totality of the circumstances and factors similar to those used to assess class action settlements: “(1) the plaintiff’s range of possible recovery; (2) the stage of proceedings and amount of discovery completed; (3) the seriousness of the litigation risks faced by the parties; (4) the scope of any release provision in the settlement agreement; (5) the experience and views of counsel and the opinion of participating plaintiffs; and (6) the possibility of fraud or collusion.” (Id. at pp. 1172-1173.) “The settlement amount need not represent a specific percentage of the maximum possible recovery,” but must “bear[] some reasonable relationship to the true settlement value of the claims.” (Id. at p. 1174.)

Here, the Court finds that there is a bona fide dispute over whether Island misclassified the FLSA class members. The parties do not provide a valuation of the FLSA claims, other than to characterize them as “duplicative of the underlying state law claims in that they seek recovery for the same alleged overtime hours ….” This characterization is not correct, since double damages are “the norm” under the FLSA. (See Alvarez v. IBP, Inc. (9th Cir. 2003) 339 F.3d 894, 910, aff’d (2005) 546 U.S. 21 [“a FLSA-liable employer bears the ‘difficult’ burden of proving both subjective good faith and objective reasonableness, ‘with double damages being the norm and single damages the exception’ ”], citation omitted.) If plaintiffs’ overtime claims are worth up to $403,200, the FLSA claim could provide that much in additional value. However, the parties correctly urge that it is more difficult to establish misclassification under the FLSA than under California law (see Ortiz v. Amazon.com LLC (N.D. Cal. 2019) 389 F.Supp.3d 728, 739): this would also make a finding of good faith and reasonableness more likely. Here, in light of these and the other unique circumstances presented by this case, and considering the FLSA settlement as part of the settlement as a whole, the Court finds it fair and reasonable to the class.

VIII. Proposed Settlement Classes

Plaintiff requests that the following settlement classes be provisionally certified:

The “California Misclassification Class” of “all current and former employees of either of the Defendants or for” several related entities “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 Defendants” or for several related entities “at any time during the Wage Statement Class Period, excluding the Individual Settlement Group.”

The “California FLSA Class” of “all current and former employees of either of the Defendants or for” several related entities “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 FLSA 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, since the parties originally submitted their settlement for preliminary approval, the proposed class definitions have been amended to include employees of several related Island entities. The parties do not explain why this was done and whether these changes impact the class sizes. The parties shall meet and confer regarding this issue, and plaintiffs’ counsel shall address it in the supplemental declaration previously ordered by the Court.

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. Having reviewed the billing summaries submitted by counsel, the Court is also prepared to find adequacy of representation.

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.

E. FLSA Collective Action

An employee may bring a FLSA collective action on behalf of himself/herself and other employees who are “similarly situated” and who have filed written consents to join the action. (Millan v. Cascade Water Services, Inc. (E.D. Cal. 2015) 310 F.R.D. 593, 607, citing 29 U.S.C. § 216(b).) This requirement is similar but less stringent than the requirements to certify a class action: “a proper collective action will address in a single proceeding claims of multiple plaintiffs who share ‘common issues of law and fact arising from the same alleged prohibited activity.’ ” (Ibid., quoting Hoffmann–La Roche, Inc. v. Sperling (1989) 493 U.S. 165, 170.) Here, for the reasons already discussed above, it is appropriate to certify a collective action with regard to the misclassification claims. The settlement now provides that FLSA collective action members will return written consents to be filed with the Court.

IX. 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 payments. 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, submit a written objection, and/or submit a consent to join form. They are instructed that they must submit a consent to join form to participate in the FLSA settlement, but that they will still be able to participate in the class settlement without doing so. The notice also instructs class members that they may make an oral objection at the final fairness hearing without submitting a written objection.

The notice is generally adequate, but must be modified to make it clear that funds that will “revert” will “revert to the defendants” specifically. Also, section 7 (b) of the notice (page 6), appears to misstate the method for calculating each “FLSA Class Member’s share” and must be corrected.

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.

X. Conclusion and Order

The parties’ request for approval of any aspect of the individual settlements already administered by Island is again DENIED.

The Court is inclined to approve the class and collective action settlement. However, prior to the hearing on this matter, plaintiffs’ counsel shall file a supplemental declaration addressing (1) how the employees’ share of PAGA penalties ($1,666.75) will be distributed between the two classes and (2) why the proposed class definitions were amended to include employees of several related Island entities, and whether these changes impact the class sizes. The supplemental declaration shall also confirm that the release language set forth paragraph 106 of the settlement agreement erroneously indicates that misclassification class members who do not opt in to the FLSA settlement will release FLSA claims, and the version of the release set forth in the class notice is the correct one.

The Court will prepare the order.