Plaintiff Eric Paton (“Plaintiff”) brings this class action on behalf of himself and all persons formerly employed by defendant Advanced Micro Devices, Inc.’s (“AMD”) California locations who, on or after April 27, 2003, forfeited partially or fully accrued and unused vacation time in the form of a paid sabbatical upon termination of employment.[1]  According to the Complaint, AMD has a uniform written sabbatical policy that provides, in pertinent part, that “all regular salaried (exempt) employees who work at least 80 hours per pay period are eligible for an eight-week sabbatical at regular pay after every seven years of credited service.  Employees normally working at least 40 hours a pay period are eligible for a prorated sabbatical.”[2]   AMD’s uniform sabbatical policy also provides, “employees who terminate and have not taken their sabbatical forfeit their eligibility.”[3]

 

Plaintiff was an employee of AMD from June 6, 1997 until July 22, 2005 at AMD’s Sunnyvale, California location.[4]   For the majority of his employment he held the title of Senior Process Development Engineer.[5]   Plaintiff became eligible for an eight-week sabbatical on June 9, 2004, but it was delayed by AMD for “business reasons.”[6]  Plaintiff’s employment relationship with AMD ended prior to the start of the sabbatical and Plaintiff was not compensated for the sabbatical.[7]   Based on AMD’s uniform policies, Plaintiff believes that AMD, in each instance, refuses to compensate its employees for their fully or partially earned and unused vacation time in the form of sabbatical when an employee’s employment relationship with AMD ends prior to taking the sabbatical.[8]

 

The Complaint, filed on April 27, 2007, sets forth the following causes of action: (1) Nonpayment of Wages (Violation of California Labor Code section 227.3); (2) Waiting Time Penalties (Violation of California Labor Code sections 202-203); (3) Unlawful Business Acts and Practices (Violation of California Business and Professions Code section 17200, et seq.); (4) Unfair Business Acts and Practices (Violation of California Business and Professions Code section 17200, et seq.); (5) Breach of Contract; (6) Unjust Enrichment; and (7) Declaratory and Injunctive Relief (California Code of Civil Procedure Sections 526 and 1060 and Civil Code section 3422).

 

On or about September 3, 2008, the Court certified the following class: “All salaried employees of Advanced Micro Devices, Inc. who (a) worked for AMD’s California locations while residing in California; (b) terminated on or after April 27, 2003; (c) did not sign a release; and (d) were not paid for a sabbatical benefit.”[9]  On November 12 and 25, 2008, the Court issued orders regarding notice to the class.

 

On May 8, 2009, AMD moved for summary judgment, or alternatively summary adjudication of all class claims and Plaintiff’s individual claims.  On June 9, 2009, the Court denied the motion for summary judgment, but granted the motion for summary adjudication against the class claims on all causes of action and all of Plaintiff’s causes of action except for the fifth cause of action for breach of contract.[10]  Plaintiff appealed, and on August 5, 2011, the Court of Appeal reversed the grant of summary adjudication, holding that the record did not resolve, as a matter of law, whether the eight-week leave was intended as a sabbatical with a specific purpose or whether it was intended as additional vacation for longer term employees.  (See Paton v. AMD (2011) 197 Cal.App.4th 1505, 1523-1525.)

 

On July 19, 2013, the Court granted Plaintiff’s motion to expand the class definition, extending the class period cutoff date from December 8, 2008 to September 1, 2013 and adding two subclasses.

 

Under the terms of the proposed settlement, AMD will pay $5.2 million (the “Maximum Settlement Amount”), which includes $1,733,333 in attorney’s fees, $88,550 in litigation costs, a $10,000 class representative payment, and $20,000 in claims administration expenses.  The remaining $3,348,117 (“Net Settlement Proceeds”) will be distributed among Class Members who submit a timely, valid Claim Form based on information provided by AMD to the Settlement Administrator regarding unpaid sabbatical benefits for each claiming Class Member.

 

The terms of the settlement are set forth in the Stipulation of Settlement and Release (“Stipulation of Settlement”).[11]  Exhibit 1 to the Stipulation of Settlement is a sample Claim Form; Exhibit 2 is a sample of the Class Notice; Exhibit 3 is a sample reminder postcard; Exhibit 4 is the “Plan of Allocation” of settlement proceeds; Exhibit 5 is a “Remainder Schedule.”  The Plan of Allocation has five steps: (1) determine individual claim amount by multiplying the final daily rate of pay by the number of earned but unused sabbatical days (the “Individual Claim Amount”); (2) adjust individual claim amounts for subclass members by multiplying their Individual Claim Amounts by 66 2/3% (the “Adjusted Subclass Member Individual Claim Amount”); (3) add all Individual Claim Amounts and Adjusted Subclass Member Individual Claim Amounts together (the “Total Claim Amount”); (4) divide each AMD Class Member’s Individual Claim Amount and Adjusted Subclass Member Individual Claim Amount by the Total Claim Amount to determine each Class Member’s “Percentage Share”; and (5) multiply each Class Member’s Percentage Share by the Net Settlement Proceeds to determine each “Estimated Individual Settlement Payment.”[12]

 

To determine any remainder to AMD based on the Remainder Schedule,[13] the Settlement Administrator will determine the “Claimant Claim Rate” (total Estimated Individual Settlement Payments claimed by Claimants divided by Net Settlement Proceeds) and apply the Claimant Claim Rate to the Remainder Schedule to determine the Remainder that will be subtracted from the Net Settlement Proceeds.  According to Plaintiff, if the total of the Estimated Individual Settlement Payments is less than 50% of the Net Settlement Proceeds, a portion of the Remainder will be divided among and added to the Individual Settlement Payments, and the balance of the Remainder will be retained by AMD.[14]

 

On April 4, 2014, the Court continued Plaintiff’s motion for preliminary approval of class action settlement and requested supplemental briefing on: (1) the strength of Plaintiff’s claims; and (2) the amount of time and energy Plaintiff expended in pursuit of the lawsuit in support of the class representative payment.  The Court also ordered modification of the Notice to include the right of Class Members not opting-out to enter an appearance through counsel.

 

On April 24, 2014, Plaintiff filed supplemental papers addressing some of the issues raised by the Court following submission of the original papers.  After reviewing the supplemental papers submitted, this Court granted preliminary approval of the class action settlement on May 16, 2014.

 

Discussion

 

Plaintiff now moves for final approval of the class action settlement, $1,733,333 in attorney’s fees, $88,550 in litigation costs, net settlement proceeds to the class totaling $3,348,117, a $10,000 class representative payment and $20,000 in claims administration expenses.

 

“The well-recognized factors that the trial court should consider in evaluating the reasonableness of a class action settlement agreement include ‘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.’ [Citations.]  This list ‘is not exhaustive and should be tailored to each case.’ [Citation.]”  (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)  “[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.  [Citation.]”  (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802.)

 

As noted in the preliminary approval papers, the settlement is entitled to a presumption of fairness.  The settlement was reached through arm’s-length bargaining with the assistance of mediator Mark Rudy in February and October of 2013.[15]  The case has been vigorously litigated over the course of many years, with significant discovery, law and motion practice, and appellate work.[16]  Regarding counsels’ experience, Plaintiff’s counsel submits that they are involved in numerous class action and complex cases.[17]

 

“Although [t]here is usually an initial presumption of fairness when a proposed class settlement … was negotiated at arm’s length by counsel for the class, … it is clear that the court should not give rubber-stamp approval.  Rather, to protect the interests of absent class members, the court 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.  To make this determination, the factual record before the … court must be sufficiently developed… . The proposed settlement cannot be judged without reference to the strength of plaintiffs’ claims.  The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.  The court must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case, but nonetheless it must eschew any rubber stamp approval in favor of an independent evaluation.”  (Kullar, supra, 168 Cal.App.4th at p. 130, internal citations and quotation marks omitted.)

 

As noted in the moving papers,  Notice of the Settlement was mailed to over 1800 potential Class Members containing a description of the nature of the litigation, the specific terms of the settlement and the manner in which the net settlement proceeds are to be allocated and distributed.  Notably, the Notice also advised the potential Class Members of their right to object and the procedures for objecting.  Although numerous potential claimants have responded, the Court is not aware of any single individual objecting to the terms and conditions of the settlement.

 

The $1,733,333 attorney’s fee award represents 1/3 of the Maximum Settlement Amount, which the Court earlier noted was not an uncommon contingency fee percentage.  Clearly, the record indicates that this case has been actively litigated over a period of years, including an appeal.  At the time of the preliminary approval, the Court advised Plaintiff’s counsel that they should provide adequate billing records in support of a lodestar cross-check prior to final approval.  In response to the Court’s request, Plaintiff’s counsel submitted an Application for Approval of Attorney’s fees and expenses together with a separate memorandum of points and authorities and supporting declarations.  Class counsel submits that they expended over 5528 hours and incurred $88,550 in costs and expenses prosecuting the subject litigation.  Furthermore, class counsel indicated that their hourly rates were between $400 and $715 per hour for the attorneys who worked on the case.  Declarations were submitted by Eric J. Sidebotham and Edward M. Gergosian indicating the hourly rates for their respective firms and breaking down the hours and rates per attorney/clerk/paralegal.  Class counsel further argues that the reasonableness of their respective rates is supported by a comparison of the rates charged by defense counsel.  After a review of the records submitted as well as the pleadings and declarations, the Court finds that the fee award is not greatly disproportionate to the actual lodestar, supporting the reasonableness of the award.  In addition, a detailed breakdown of the time spent was provided by class counsel pursuant to the Court’s request.  The Court finds that given the complexity, length, quality of representation and the contingency nature of the fee arrangement, the fees requested are properly supported by the documentation provided and are reasonable.  The Court further finds support for the costs incurred in the sum of $88,550.

 

Regarding the $10,000 award to Plaintiff Eric Paton, counsel maintains that Mr. Paton was actively involved in the class litigation and expended significant time and effort to assist in the prosecution as set forth in his Declaration submitted with Plaintiff’s request for Preliminary Approval.  Taking into account the risks associated with initiating the litigation as well as the time invested, the Court finds that the Plaintiff adequately supports the reasonableness of the enhancement payment of $10,000.

 

Regarding the settlement administration costs, Ms. Stacey Roe submits in her declaration that the total cost for the administration of the settlement  including fees already incurred and future costs for completion of the administration is estimated to be $20,000.  Additionally, Ms. Roe details in her declaration that Notices and Claims forms have already been sent out to 1814 potential claimants and close to 50% have been completed and returned.  She also notes that there have been only three exclusion letters and no objections received to the class settlement.  The Court finds the administrator’s fee of $20,000 to be reasonable.

 

In light of the above-mentioned, the Motion for Final Approval of Class Action Settlement is GRANTED.

 

 

[1] Compl. ¶ 20.

[2] Compl. ¶ 12.

[3] Compl. ¶ 13.

[4] Compl. ¶ 15.

[5] Compl. ¶ 15.

[6] Compl. ¶ 16.

[7] Comp. ¶ 17.

[8] Compl. ¶ 18.

[9] Order Granting Pltf’s Mot. for Class Cert., docket no. 95.

[10] Order Granting Def’s MSA, docket no. 254.

[11] Exh. A to Decl. Eric J. Sidebotham ISO Pltf’s Mot. for Prelim. Approv.

[12] Plan of Allocation, Exh. 4 to Stip. of Settl., Sidebotham Exh. A.

[13] Exh. 5 to Stip. of Settl., Sidebotham Exh. A.

 

[15] Decl. Sidebotham ¶¶ 14-16.

[16] Decl. Sidebotham ¶¶ 11-13.

[17] Decl. Sidebotham ¶¶ 4-5.