class action settlement agreement and release of claims · 2019. 7. 2. · this settlement...

- 1 - CUSTARD INSURANCE ADJUSTERS WAGE AND HOUR CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS

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CLASS ACTION SETTLEMENT AGREEMENT

AND RELEASE OF CLAIMS

This Settlement Agreement and Release of Claims (“Settlement Agreement”) is entered

into by and between Defendant Custard Insurance Adjusters, Inc. (“Defendant” or “CIA”) and

Representative Plaintiffs Perry Wadler, Armen Abgaryan, Ray Paiva, Gerald Springer, Keith

Tyner, and Troy Willis (“Representative Plaintiffs,” “Class Representatives” and/or “Plaintiffs”)

on behalf of themselves individually, and on behalf of all members of the “Plaintiff Classes,” in

the following pending actions: Perry Wadler v. Custard Insurance Adjusters, Inc. – AAA Case No.

01-18-0001-5803, Wadler, et al. v. Custard Insurance Adjusters, Inc., U.S.D.C., N.D. Cal. Case

No.: 17-cv-05840-WHO, Wadler, et al. v. Custard Insurance Adjusters, Inc., U.S.D.C., N.D. Cal.

Case No.: 18-cv-02768-WHO, Paiva v. Custard Insurance Adjusters, Inc., U.S.D.C., N.D. Cal.

Case No.: 18-cv-04670-EDL, and Abgaryan v. Custard Insurance Adjusters, Inc., U.S.D.C., N.D.

Cal. Case No.: 18-cv-05487-WHO, as further described herein. This Agreement is intended to

fully and finally compromise, resolve, discharge, and settle the claims as defined and based on the

terms set forth below, to the full extent reflected herein, subject to the approval of the Court.

RECITALS

1. WHEREAS on October 11, 2017 Plaintiffs Springer, Wadler, Tyner, and Willis

filed a putative class action Complaint in the Federal Court for the Northern District of California

assigned case number 3:17-cv-05840- EDL (“Wadler Action”) alleging the following causes of

action:

a. Failure to Pay Overtime Under the Fair Labor Standards Act FLSA;

b. Failure to Pay Minimum Wage Under the Fair Labor Standards Act

FLSA;

c. Failure to Pay Overtime under California Labor Code §§ 510 and

1198;

d. Failure to Pay Minimum Wage under California Labor Code §§

1194, 1197, and 1197.1 (Unpaid Minimum Wage);

DocuSign Envelope ID: A8A3E6D7-1FC5-4899-998D-FE467186FA8D


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e. Violation of California Labor Code §§ 226. 7 and 512(a) (Unpaid

Meal Period Premiums);

f. Violation of California Labor Code § 226.7 (Unpaid Rest Period

Premiums);

g. Violation of California Labor Code § 226(a) (Non-Compliant Wage

Statements);

h. Violation of California Labor Code §§ 201 and 202 (Final Wages

Not Timely Paid);

i. Violation of California Labor Code §§ 2800 and 2802

(Unreimbursed Business Expenses);

j. Conversion;

k. Violation of California Business & Professions Code §§ 17200, et

seq.; and

2. WHEREAS the Wadler Action was later assigned the case number 3:17-cv-05840-

WHO;

3. WHEREAS on October 23, 2017 Plaintiff Abgaryan filed a putative class action

complaint against CIA in California’s Central District Federal Court assigned case number 8:17-

CV-01849-DOC-JDE (“Abgaryan Action”) alleging the following causes of action:

a. Violations of Fair Labor Standards Act [29 U.S.C., §§ 201 et seq.];

b. Unpaid Wages Due and Damages [Lab. Code §§ 204, 218.5, 223];

c. Failure to Pay Wages Due Upon Termination; Waiting Time

Penalties [Lab. Code §§ 201, 203];

d. Failure to Provide an Accurate Itemized Wage Statement [Lab.

Code § 226];

e. Breach of Written Contract;

f. Breach of Implied Covenant of Good Faith and Fair Dealing;

g. Violation of Bus. & Prof. Code § 17200, et seq.;



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h. Unlawful Deductions from Wages - Wage Forfeiture [Lab. Code §§

221, 2802]

4. WHEREAS on December 6, 2017, based on arbitration agreements executed by all

plaintiffs in the Springer Action, CIA sought to compel the matter to arbitration. Given the U.S.

Supreme Court’s then-pending decision in Epic Systems v. Lewis, the Court stayed the claims of

plaintiffs Springer, Willis, and Tyner until after the Supreme Court issued its opinion;

5. WHEREAS Plaintiff Wadler’s claims were compelled to arbitration;

6. WHEREAS the Abgaryan Action was also stayed by mutual agreement of the

parties until the Supreme Court’s decision in Epic Systems v. Lewis;

7. WHEREAS on April 12, 2018 Plaintiff Wadler filed suit in the Superior Court of

the State of California for the County of San Francisco assigned case number CGC-18-565724

(“Wadler PAGA Action”) asserting a single claim for “Violation of the California Labor Code

Private Attorneys General Act of 2004”;

8. WHEREAS on May 10, 2018 the Wadler PAGA Action was removed to the

Federal Court for the Northern District of California and assigned new case number 3:18-cv-

02768-EDL;

9. WHEREAS on April 19, 2018 Plaintiff Wadler also instituted an action in

arbitration through the American Arbitration Association assigned case number 01-18-0001-5803

(Wadler Arbitration Action);

10. WHEREAS on August 2, 2018 Ray Paiva filed suit against CIA in the Federal

Court for the Northern District of California assigned case number18-cv-04670-EDL (“Paiva

Action”) alleging the following causes of action:

a. Failure to Pay Overtime Under the Fair Labor Standards Act FLSA;

b. Failure to Pay Minimum Wage Under the Fair Labor Standards Act FLSA;

c. Failure to Pay Overtime under California Labor Code §§ 510 and 1198;

d. Failure to Pay Minimum Wage under California Labor Code §§ 1194, 1197,

and 1197.1 (Unpaid Minimum Wage);



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e. Violation of California Labor Code §§ 226. 7 and 512(a) (Unpaid Meal

Period Premiums);

f. Violation of California Labor Code § 226.7 (Unpaid Rest Period

Premiums);

g. Violation of California Labor Code § 226(a) (Non-Compliant Wage

Statements);

h. Violation of California Labor Code §§ 201 and 202 (Final Wages Not

Timely Paid);

i. Violation of California Labor Code §§ 406 and 2802 (Failure to Indemnify

Employees for Necessary Expenditures Incurred);

j. Violation of California Labor Code §§ 2800 and 2802 (Unreimbursed

Business Expenses); and

k. Violation of California Business & Professions Code §§ 17200, et seq.

11. WHEREAS on August 15, 2018 the Parties attended an in-person mediation

session with professional mediator David Rotman and reached terms of this arm’s-length

Settlement of the Abgaryan Action, Wadler Action, Paiva Action, Wadler Arbitration Action, and

Wadler PAGA Action;

12. WHEREAS on October 22, 2018 the Abgaryan Action was deemed related to the

Springer Action and the Court assigned case the amended case number 17-cv-05840-WHO;

13. WHEREAS on November 30, 2018 Plaintiff Abgaryan filed a First Amended

Complaint alleging the following causes of action:

a. Violations of Fair Labor Standards Act [29 U.S.C., §§ 201, et seq.]

b. Failure to Pay Overtime Wages [Lab. Code §§ 510 &1198]

c. Failure to Pay Wages Due Upon Termination; Waiting Time

d. Penalties [Lab. Code §§ 201, 203, 204, 218.5, 223]

e. Failure to Provide an Accurate Itemized Wage Statement [Lab. Code §

226]



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f. Unlawful Deductions from Wages - Wage Forfeiture [Lab. Code §§ 221,

2802]

g. Violation of Bus. & Prof. Code § 17200, et seq.

h. Breach of Written Contract; and

i. Breach of Implied Covenant of Good Faith and Fair Dealing.

14. WHEREAS, a bona fide dispute exists as to whether any amount of wages,

compensation, reimbursement, or penalties are due from Defendant to any California Class

members and/or FLSA Class members, to the California Labor and Workforce Development

Agency (“LWDA”) and/or to any allegedly aggrieved employees;

15. WHEREAS, the Parties desire to compromise and settle all issues and claims that

have been or could have been brought, based on the allegations in the Abgaryan Action, Wadler

Action, Paiva Action, Wadler Arbitration Action, and Wadler PAGA Action against CIA or related

persons and entities in the Action, including all claims brought on a putative class, collective and,

representative basis in each of the actions;

16. WHEREAS, based on the discovery exchanged as well as their own independent

investigation and evaluation, the Parties have considered the claims asserted by Plaintiffs, the

defenses asserted by CIA, the risks associated with the continued prosecution of the Action, the

cost of continued litigation through trial and appeals, and after considering all the circumstances,

the Parties have concluded that the proposed settlement set forth in this Agreement is fair,

adequate, and reasonable and confers substantial benefits upon the California Settlement Class

members and the FLSA Settlement Class members;

17. WHEREAS, the Parties further agree that this Agreement, the fact of this

Settlement, any of the terms of this Agreement, and any documents filed in connection with the

Settlement shall not constitute, or be offered, received, claimed, construed, or deemed as an

admission, finding, or evidence of: (i) any wrongdoing by any Released Parties, (ii) any violation

of any statute or law by Released Parties, (iii) any liability on the claims or allegations in the Action

on the part of any Released Parties, (iv) any waiver of Defendant’s right to arbitration or the



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enforceability of any arbitration agreement, or (v) the propriety of certifying a litigation class or

collective (conditionally or otherwise) or pursuing representative relief under the PAGA in the

Action or any other civil or administrative proceeding; and this Agreement shall not be used by

any Person for any purpose whatsoever in any administrative or legal proceeding, including but

not limited to arbitrations, other than a proceeding to enforce the terms of the Agreement;

18. NOW, THEREFORE, IT IS HEREBY STIPULATED, CONSENTED TO, AND

AGREED, by Plaintiffs for themselves and on behalf of the California Settlement Class members

and FLSA Settlement Class members, and by Defendant, that, subject to the approval of the Court,

the Action shall be settled, compromised, and dismissed, on the merits and with prejudice, and the

California Settlement Class members’ Released Claims and the FLSA Settlement Class members’

Released Claims, as defined below, shall be finally and fully compromised, settled and dismissed

as to the Released Parties, in the manner and upon the terms and conditions hereafter set forth in

this Agreement.

DEFINITIONS

19. “Action” collectively refers to Perry Wadler v. Custard Insurance Adjusters, Inc.

– AAA Case No. 01-18-0001-5803, Wadler, et al. v. Custard Insurance Adjusters, Inc.,

U.S.D.C., N.D. Cal. Case No.: 17-cv-05840-WHO, Wadler, et al. v. Custard Insurance

Adjusters, Inc., U.S.D.C., N.D. Cal. Case No.: 18-cv-02768-WHO, Paiva v. Custard Insurance

Adjusters, Inc., U.S.D.C., N.D. Cal. Case No.: 18-cv-04670-EDL, and Abgaryan v. Custard

Insurance Adjusters, Inc., U.S.D.C., N.D. Cal. Case No.: 18-cv-05487-WHO.

20. “California Class” refers to all persons who were employed as overtime-exempt

insurance adjusters by Defendant in one or more of its Custard branch office locations in California

at any time on or after October 4, 2013.

21. “California Class Claims” means all claims for wages, benefits and related penalties

actually alleged or that could have been alleged in the Action by Plaintiffs, on behalf of themselves

and the California Class members, based on the facts alleged in Plaintiffs’ Complaints, including

but not limited to: (1) failure to pay minimum wages (Cal. Labor Code §§ 1182.11-1182.13, 1194,



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1194.2, 1197); (2) failure to pay overtime wages (Cal. Labor Code §510); (3) failure to provide

meal periods (Cal. Labor Code §§ 226.7 and 510); (4) failure to provide rest breaks (Cal. Labor

Code §226.7); (5) failure to reimburse necessary business expenses (Cal. Labor Code §2802); (6)

waiting time penalties (Cal. Labor Code §§ 201, 202 and 203); (7) failure to provide accurate wage

statements (Cal. Labor Code §226(a); (8) unfair competition (Cal. Business & Professions Code

§§17200, et seq.); (9) penalties pursuant to the Private Attorneys General Act (“PAGA”) (Cal.

Labor Code §2699, et seq.; and (10) attorneys’ fees and costs of litigation associated with this

Action. “California Class Claims” also includes all claims that Plaintiffs and/or California Class

members may have against the Released Parties relating to (i) the payment, taxation and allocation

of the Class Counsel Award pursuant to this Settlement Agreement and (ii) the payment, taxation

and allocation of Plaintiffs’ Service Awards pursuant to this Settlement Agreement. “California

Settlement Class” refers to all California Class members who do not opt out of the Settlement,

consistent with the Claims Process described below. “Class Counsel” is Scott Edward Cole, Esq.

of Scott Cole & Associates, APC, Greg Hafif, Esq. and Michael G. Dawson, Esq. of Law Offices

of Herbert Hafif, Larry A. Sackey, Esq. of Law Offices of Larry A. Sackey and Joshua D. Boxer,

Esq. of Matern Law Group, PC.

22. “Class Notice Package” means (a) the Class Notice, and (b) a Claim Form which

apprises each member of the Plaintiff Classes of the approximate dates he or she held an eligible

position during the Settlement Period as well as his or her total number of workweeks. These forms

are attached hereto as Exhibits “A” and “B,” respectively, shall be subject to Court approval, and

are incorporated by reference into this Settlement Agreement.”

23. “Compensable Workweeks” shall mean any week in which a California Settlement

Class and/or FLSA Settlement Class member worked at least one hour in the service of

Defendant(s) during the respective class periods.

24. “Complaint” or “Complaints” shall mean the, Demand for Arbitration,

Complaint(s) or Amended Complaint(s) filed by Representative Plaintiffs in the American

Arbitration Association Case No. 01-18-0001-5803, entitled Perry Wadler v. Custard Insurance



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Adjusters, Inc., U.S. District Court for the Northern District of California Case No.: 17-cv-05840-

WHO, entitled Wadler, et al. v. Custard Insurance Adjusters, Inc., U.S. District Court for the

Northern District of California Case No.: 18-cv-02768-WHO, entitled Wadler, et al. v. Custard

Insurance Adjusters, Inc. U.S. District Court for the Northern District of California Case No.: 18-

cv-04670-EDL, entitled Paiva v. Custard Insurance Adjusters, Inc., U.S. District Court for the

Central District of California Case No.: 18-cv-05487-WHO (previously numbered 18-cv-05487-

HSG), entitled Abgaryan v. Custard Insurance Adjusters, Inc.

25. “Complete and General Release” means an irrevocable and unconditional release

given only by Plaintiffs, releasing Defendant and the Released Parties from any and all charges,

complaints, claims, causes of action, debts, sums of money, controversies, agreements, promises,

damages and liabilities of any kind or nature whatsoever, both at law and equity, known or

unknown, suspected or unsuspected, arising from conduct occurring on or before the date Plaintiffs

sign this Settlement Agreement, including but not limited to a release of any and all rights Plaintiffs

have to sue or bring any type of claim under (a) California state law and (b) the Fair Labor

Standards Act; (c) Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et

seq., (d) the Employment Act of 1967, (e) the Civil Rights Act of 1991, (f) the Civil Rights Act of

1866 and 1870, (g) 42 U.S.C. § 1981, as amended, (h) Executive Order 11246, (i) the Americans

with Disabilities Act 42 U.S.C. § 12101, et. seq, as amended, (j) the Family and Medical Leave

Act, as amended, (k) the Equal Pay Act of 1963, as amended, (l) the Immigration and Reform

Control Act, as amended, (m) the Occupational Safety and Health Act, as amended, (n) the

Sarbanes-Oxley Act of 2002, as amended, (o) the Employment Retirement Income Security Act

of 1974, as amended (except vested benefits), (p) the Worker Adjustment and Benefit Protection

Act of 1990, as amended, (q) the Worker Adjustment and Retraining Notification Act, as amended,

(r) any federal, state or common law claim or cause of action based on any alleged failure to pay

wages, breach of contract, wrongful discharge, constructive discharge, retaliation, defamation,

slander, liable, intentional or negligent infliction of emotional distress, misrepresentation, fraud,

promissory estoppel, (s) any other tort or negligence claim or obligations arising out of any of



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Defendant’s employment policies or practices, employee handbooks, and/or any statements by any

employee or agent of Defendant whether oral or written; and (t) for reinstatement, back pay, bonus,

attorneys’ fees, compensatory damages, costs, front pay, any form of equitable or declaratory

relief, liquidated damages, emotional distress, personal injury, punitive damages, pain and

suffering, medical expenses, damage to reputation, damage for personal, emotional or economic

injury or damage of any kind. This provision is intended by the Parties to be all-encompassing and

to act as a full and total release of any claim, whether specifically enumerated herein or not, that

Plaintiff might have or have had, that exists or ever has existed on or prior to the date this

Settlement Agreement is signed. This release includes a 1542 Waiver. The Parties understand and

agree that the word “claims” includes all actions, group actions (including any pending or future

collective, class, private attorney general or representative actions for which Plaintiffs may

otherwise qualify as a putative class member or represented party), complaints and grievances that

could potentially be brought by Plaintiffs against the Released Parties.

26. “Court” means the United States District Court for the Northern District of

California.

27. “Defendant’s Counsel” is Mark A. Saxon, Esq., Brandon D. Saxon, Esq., and

Travis K. Jang-Busby, Esq. of Gordon Rees Scully Mansukhani, LLP.

28. “Effective Date” means the date by which this Settlement is finally approved as

provided herein and the Court’s Final Approval Order and Judgment becomes binding. For

purposes of this Settlement Agreement, the Final Approval Order becomes binding upon the later

of: (1) the day after the last day by which a notice of appeal to the Ninth Circuit Court of Appeal

of the Final Approval Order and/or of an order rejecting any motion to intervene may be timely

filed, and none is filed; (2) if such an appeal is filed, and the final approval order is affirmed, the

day after the last date for filing a request for further review of the Ninth Circuit’s decision passes

and no further review is requested; (3) if an appeal is filed and further review of the Ninth Circuit’s

decision affirming the final approval order is requested, the day after the request for review is

denied with prejudice and/or no further review of the decision can be requested, or (4) if review is



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accepted, the day after the United States Supreme Court affirms the Settlement. The Effective Date

cannot occur, and Defendant will not be obligated to fund this Settlement, until and unless there is

no possibility of an appeal or further appeal that could potentially prevent this Settlement

Agreement from becoming final and binding.

29. “Final Approval Order and Judgment” means the Court’s entry of an order finally

approving this Settlement.

30. “Final Approval Hearing” means the hearing at or after which the Court will make

a final decision as to whether the Settlement is fair, reasonable, and adequate, and therefore, is

finally approved by the Court.

31. “FLSA Class” refers to all persons who were employed as overtime-exempt

insurance adjusters by Defendant in one or more of its Custard branch office locations in the United

States at any time on or after October 4, 2014.

32. “FLSA Class Claims” means all claims for wages, benefits and related penalties

actually alleged or that could have been alleged in the Action by Plaintiffs, on behalf of themselves

and the FLSA Class members, based on the facts alleged in the Complaints, including but not

limited to: (1) failure to pay all minimum and overtime wages due under the Fair Labor Standards

Act (29 U.S.C. §201, et seq.; and (2) attorney fees and litigation costs incurred to litigate and

resolve this Action. “FLSA Class Claims” also includes all claims that Plaintiffs and/or FLSA

Class members may have against the Released Parties relating to (i) the payment, taxation and

allocation of the Class Counsel Award pursuant to this Settlement Agreement and (ii) the payment,

taxation and allocation of Plaintiffs’ Service Awards pursuant to this Settlement Agreement.

33. “FLSA Settlement Class” refers to all FLSA Class members who opt in to the

Settlement, consistent with the Claims Process described below.

34. “Gross Settlement Fund” refers to the amount of Two Million Four-hundred and

Thirty Thousand Dollars and Zero Cents ($2,430,000.00) that Defendant will make available for

payment, in its entirety, pursuant to this Settlement Agreement.



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35. “Individual Settlement Payment” or “Individual Settlement Pay” means the amount

payable from the Net Settlement Fund to each California Settlement Class member and FLSA

Settlement Class member who does not opt out of this Agreement.

36. “Net Settlement Fund” shall be calculated by deducting approved Class Counsel’s

attorneys’ fees and litigation costs, the enhancement awards to the Representative Plaintiffs, the

payment to the California Labor & Workforce Development Agency (“LWDA”) for release of

claims under the Private Attorneys General Act (“PAGA”) under Labor Code §§ 2699, et seq., and

the fees and expenses of the Settlement Administrator from the Gross Settlement Fund.

37. “Parties” refers to the Class Representatives, the Plaintiff Classes, and Defendant,

collectively.

38. “Plaintiff Class” or “Plaintiff Classes” refer to the California Class and the FLSA

Class.

39. “Preliminary Approval Order” means the order granting preliminary approval of

this Settlement Agreement.

40. “Qualified Claimant” and/or “Settlement Class” comprises of all members of the

California Settlement Class and FLSA Settlement Class.

41. “Released Parties” means (i) Custard Insurance Adjusters Inc. and its past, present,

and future parents, subsidiaries, affiliates, divisions, joint ventures, licensees, franchisees, and any

other legal entities, whether foreign or domestic, and (ii) the past, present, and future shareholders,

officers, directors, members, investors, agents, employees, consultants, representatives,

fiduciaries, insurers, attorneys, legal representatives, predecessors, successors, and assigns of the

entities listed in (i).

42. “Settlement Administrator” means CPT Group.

43. “Settlement Administration Expenses” are those expenses incurred by the

Settlement Administrator in effectuating the Settlement, not to exceed $15,000.



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44. “Settlement,” “Settlement Agreement” and “Agreement” mean the settlement of

this Action between and among Plaintiffs and Custard Insurance Adjusters Inc., as set forth in this

document.

45. “Settlement Period” is October 3, 2013 (for the California Class) and October 4,

2014 (for the FLSA Class) through the date the Court preliminarily approves this Settlement

Agreement.

BACKGROUND

46. This Settlement Agreement affects claims of the Plaintiff Classes arising during the

Settlement Period alleged in the Complaints. Plaintiffs allege that Defendant violated wage and

hour laws and seek, on each Plaintiffs’ own behalf, and on behalf of the class alleged therein,

unpaid wages and interest thereon, penalties, unreimbursed business expenses, liquidated

damages, injunctive and other equitable relief, and reasonable attorneys’ fees and costs, under,

inter alia, Fair Labor Standards Act as codified in 29 U.S.C. §201, et seq., Title 8 of the California

Code of Regulations, Business & Professions Code §§ 17200, et seq., various Industrial Welfare

Commission Wage Order(s), California Code of Civil Procedure §1021.5, and various provisions

of the California Labor Code.

47. Defendant denies that it violated the law in any manner alleged in the Complaints

or otherwise. Nothing contained herein, nor the consummation of this Settlement Agreement, is to

be construed or deemed an admission of liability, culpability, negligence, or wrongdoing by

Defendant.

48. The Parties intend to fully, finally, and forever settle, compromise, and discharge

all disputes and claims arising during the Settlement Period alleged in the Complaints as well as

known and unknown claims which could have been brought based on the specific factual

allegations contained in the Complaints, including, but not limited to claims for unpaid wages,

unpaid minimum wages, unpaid overtime, paycheck and/or wage statement violations, meal period

and rest period violations, “waiting time” penalties, failure to reimburse business expenses,

conversion, unfair business practices, and all civil and/or statutory penalties related to the



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foregoing, which arose between October 4, 2013 (for the California Class) or October 4, 2014 (for

the FLSA Class) and the date the Court preliminarily approves this Settlement Agreement.

49. The Parties intend that this Settlement Agreement shall include a full and complete

settlement and release, as described herein, and which includes in its effect all of Defendant’s

present and former parent companies, subsidiaries, shareholders, officers, directors, attorneys,

insurers, and affiliates.

50. Class Counsel represent that they have conducted a sufficiently thorough

investigation into the claims of the Plaintiff Classes against Defendant. Based on their own

independent investigation and evaluation and all known facts and circumstances, including the risk

of significant defenses asserted by Defendant, Class Counsel are of the opinion that the Settlement

is fair, reasonable, and adequate and is in the best interest of the Plaintiff Classes.

51. The Parties agree to cooperate and take all steps necessary and appropriate to obtain

preliminary and final approval of this Settlement and to effectuate all aspects of this Settlement

Agreement.

CERTIFICATION OF THE PLAINTIFF CLASSES

FOR SETTLEMENT PURPOSES ONLY

52. For settlement purposes only, the Parties agree that the Plaintiff Classes shall be

certified. This Settlement Agreement is contingent upon the approval and certification by the Court

of the Plaintiff Classes for settlement purposes only. Defendant does not waive, and instead

expressly reserves, its rights to challenge the propriety of class certification for any purpose should

the Court not approve the Settlement Agreement. In connection with the proposed certification of

the Plaintiff Classes, the Parties shall cooperate and present to the Court for its consideration

competent evidence, as may be requested by the Court, under the applicable due process

requirements and standards for class certification.

53. Solely for the purposes of this Settlement, the Parties stipulate and agree Plaintiffs

shall be appointed as representatives of the California Settlement Class and the FLSA Settlement

class.



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54. Solely for the purposes of this Settlement, the Parties stipulate and agree that Class

Counsel shall be appointed as counsel for the California Settlement Class, and the FLSA

Settlement Collective.

55. The Parties agree to stay all proceedings in the Action, except such proceedings

necessary to implement and complete the Settlement, pending the Final Approval hearing to be

conducted by the Court.

56. The Settlement is not intended to and may not be deemed to affect the enforceability

of any arbitration agreement between Defendant and Plaintiffs and/or between Defendant and any

members of the California Class or FLSA Class.

PRELIMINARY SETTLEMENT APPROVAL PROCEDURE

57. Upon execution of this Settlement Agreement, Plaintiffs shall submit a motion for

preliminary approval of the Settlement to the Court. Plaintiffs’ motion for preliminary approval

shall ask the Court to enter a Preliminary Approval Order which must be approved by all Parties

and incorporates the terms set forth below. Plaintiffs’ motion and the [Proposed] Order shall also

ask the Court to stay this action, and to prohibit any California Class Member and/or FLSA Class

Member from pursuing a separate action regarding any of the claims at issue in this case pending

the Final Approval Hearing.

58. The proposed Preliminary Approval Order submitted by Class Counsel shall:

Conditionally certify the California and FLSA classes and the California Class

Claims, and the FLSA Class Claims;

Conditionally appoint Plaintiffs and Class Counsel as representatives of the

proposed California Settlement Class and the FLSA Settlement Class;

Appoint CPT Group as the Settlement Administrator, and order the Settlement

Administrator to provide notice of the settlement as outlined below;

Confirm that the procedure for distributing the Class Notice (discussed below) (i)

constituted the best practicable notice; (ii) constituted notice that was reasonably

calculated, under the circumstances, to apprise Settlement Class Members of the



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pendency of the Action, and their right to exclude himself from or object to the

proposed settlement and to appear at the Final Approval Hearing; (iii) was

reasonable and constituted due, adequate, and sufficient notice to all persons

entitled to receive notice; and (iv) met all applicable requirements of Federal Rule

of Civil Procedure 23, due process, and any other applicable rules or law;

Confirm the notice of settlement to be served by Plaintiff on the California Labor

and Workforce Development Agency satisfies the requirements of PAGA.

Confirm that the notice of settlement to be served by Defendant on the U.S. and

applicable state attorneys general satisfies the requirements of the Class Action

Fairness Act.

Impose a stay on all litigation of the Action pending the Final Approval Hearing,

or prohibit Plaintiffs, California Class members and FLSA Class members from

prosecuting any claims against CIA or the Release Parties pending the Final

Approval Hearing; and Order that the preliminary approval of the Settlement,

certification of the California Settlement Class members and the California Class

Claims, and the FLSA Settlement Class members and the FLSA Class Claims, and

all actions associated with them, are undertaken on the condition that they shall be

vacated if the Settlement Agreement is terminated or disapproved in whole or in

part by the Court, or any appellate court and/or other court of review in which

event the Settlement Agreement and the fact that it was entered into shall not be

offered, received, or construed as an admission or as evidence for any purpose,

including but not limited to an admission by any Party of liability or non-liability

or of the certifiability of a litigation class or the appropriateness of maintaining a

representative action.

59. The motion for preliminary approval shall request: that the Final Approval Hearing

and any determination on the request for a Class Counsel Award and Service Awards be set no

earlier than thirty-five (35) days after the Exclusion/Objection deadline; that Plaintiffs be permitted



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to file their motion for final approval no later than twenty-eight (28) days before the Final Approval

Hearing; that any opposition briefs on such motions and petitions be filed fourteen (14) days before

the Final Approval Hearing; and that any reply briefs on such motions and petitions be filed seven

(7) days before the Final Approval Hearing.

60. Plaintiffs shall serve a notice of settlement on the California Labor and Workforce

Development Agency at the same time they file motion for preliminary approval.

61. At the same time that Plaintiffs file their motion for preliminary approval, Class

Counsel will notify the LWDA that the Parties have filed a motion for preliminary approval of the

settlement of a PAGA claim, and Plaintiffs’ Counsel will provide Class Action Fairness Act

(“CAFA”) notices to the appropriate federal officials and state officials in each of the states in

which California Settlement Class members, and FLSA Settlement Class members live, pursuant

to 28 U.S.C. § 1715.

62. Defendant shall serve a notice of settlement on the U.S. and applicable state

attorney generals within ten (10) days after Plaintiffs files their motion for preliminary approval.

NOTICE TO THE PLAINTIFF CLASSES

63. Following the Court’s Preliminary Approval Order, the Class Notice Package shall

be provided to all Class Members by the Claims Administrator, and California Class members

shall submit objections to the Settlement, disputes, or requests for exclusion. The Class Notice will

be provided to members of the FLSA Class who worked in a Custard location inside and outside

the State of California, who may submit a dispute or object to the Settlement in accordance with

the terms specified in the Notice.

64. Within ten (10) calendar days of the entry of an Order granting preliminary

approval of the Settlement and Class Notice Package, Defendant will provide the Settlement

Administrator the best information in its possession, custody, or control with respect to the names,

last known addresses, home telephone numbers, and e-mail address for each member of the

Plaintiff Classes, and the dates of service and number of workweeks that each member of the

Plaintiff Classes worked for Defendant during the Settlement Period (“Class Information”). In



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addition thereto, Defendant will provide Social Security numbers for members of the Plaintiff

Classes to the Settlement Administrator. Defendant agrees to provide this information in a format

reasonably acceptable to the Settlement Administrator. The Settlement Administrator shall keep

and maintain the information as confidential and shall only use the Social Security information for

purposes of this settlement and to locate members of the Plaintiff Class. In no event shall Class

Information be provided to Class Counsel.

65. Upon completion of its calculation of payments, the Settlement Administrator will

provide Class Counsel and Defendant’s Counsel with a report listing the amount of all payments

to be made to each Qualified Claimant. The Settlement Administrator’s report shall not include

Qualified Claimants’ personal identifying information such as name, address, telephone number,

email address, or Social Security number. After receiving the Settlement Administrator’s report,

Class Counsel and Defendant’s Counsel shall jointly review the Settlement Administrator’s report

to determine if the calculation of payments to Settlement Class members is consistent with this

Settlement.

66. The Settlement Administrator will use the United States Postal Service National

Change of Address (“NCOA”) List to verify the accuracy of all addresses before the initial mailing

date to ensure that the Class Notice Package is sent to all Plaintiff Class Members at the addresses

most likely to result in immediate receipt of the claim documents. It will be conclusively presumed

that if an envelope so mailed has not been returned within thirty (30) days of the mailing that the

Class Member received the Class Notice Package. With respect to any returned envelopes, the

Settlement Administrator will perform a routine skip trace procedure to obtain a current address

and, if an updated address is located, then re-mail the envelope to such address within five (5)

calendar days of the receipt of the returned envelope. Plaintiff Class Members to whom Class

Notice Packages were re-sent after having been returned undeliverable to the Settlement

Administrator shall have ten (10) calendar days thereafter to make a claim, object, opt in or opt

out of the settlement. Class Notice Packages that are re-mailed shall be accompanied by a short



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cover letter from the Settlement Administrator informing the recipient of this adjusted deadline.

No third mailing shall occur without good cause, as determined by the Settlement Administrator.

67. Class Counsel shall provide the Court, at least five (5) calendar days prior to the

final approval hearing, a declaration by the Settlement Administrator of due diligence and proof

of mailing with regard to the mailing of the Class Notice Package.

CLAIMS PROCESS

68. California Class: Members of the California Class need not take any affirmative

action to receive their Individual Settlement Payment. Members of the California Class may opt

out of the Settlement by following the directions in the Class Notice Package. Any such request

must be postmarked not more than thirty (30) calendar days after the date the Class Notice Package

is mailed to the California Class (or not more than ten (10) calendar days after the date the Class

Notice Package is re-mailed, in the circumstance described above, whichever period of time is

longer). Requests to opt out that do not include all required information, or that are not submitted

on a timely basis, will be deemed null, void, and ineffective.

69. The Class Notice Package will inform California Class members that unless they

file a request to be excluded from the Settlement: they will become California Settlement Class

members; they will receive Individual Settlement Payments under the Agreement; they will be

bound by the release of California Settlement Class members Released Claims; and if they cash

their Individual Settlement Payment check, they will thereby opt into the FLSA Settlement Class

and release their FLSA Class Claims.

70. Notwithstanding the submission of a timely request for exclusion, California Class

members will still be bound by the settlement and release of the PAGA Claims or remedies under

the Judgment pursuant to Arias v. Superior Court, 46 Cal. 4th 969 (2009). Requests for exclusion

do not apply to the PAGA Claims, and will not be effective to preclude the release of the PAGA

Claims.

71. FLSA Class: Members of the FLSA Class may opt in to the Settlement by cashing

their checks for Individual Settlement Pay. The Class Notice will inform the FLSA Class of their



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right to join the Settlement by cashing the check for their Individual Settlement Pay, and that by

cashing the check for their Individual Settlement Payment, FLSA Class members will become

FLSA Settlement Class members bound by the terms of this Agreement, including the release of

the FLSA Class Claims.

72. By signing this agreement, the Class Representatives waive their right to opt out of

this Settlement in any way and any such request for an exclusion will be void and of no force and

effect. Furthermore, by signing this agreement, the Class Representatives shall automatically be

opted in to the settlement for purposes of resolving their FLSA claims.

73. Defendant will not retaliate against members of the Plaintiff Classes for any actions

taken or not taken with respect to this Settlement or retaliate against the Class Representatives for

filing the litigation, and in response to any inquiry concerning the Class Representatives,

Defendant will only provide a neutral statement regarding the Class Representatives as to his or

her dates of service and job title.

OBJECTIONS

74. Objections to the Settlement must be submitted electronically to the Court and in

writing to the Settlement Administrator. Objections must be submitted not more than thirty (30)

calendar days after the date the Class Notice Package is mailed to the Plaintiff Classes (or not more

than ten (10) calendar days after the date the Class Notice Package is re-mailed, in the circumstance

described above, whichever period of time is longer). All objections will be scanned into the

electronic case docket and all Parties will receive electronic notices of the filing.

75. Objections must describe why the objector believes the Settlement is unfair and

whether the objector intends to appear at the final approval hearing. Deficient or untimely

objections shall not be considered. Class Members who fail to file and serve timely written

objections in the manner specified above shall be deemed to have waived any objections and shall

be foreclosed from making any objection (whether by appeal or otherwise) to the Settlement,

unless otherwise ordered by the Court. Class Counsel and Defendant’s Counsel may, at least ten



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(10) days (or some other number of days as the Court shall specify) before the Final Approval

Hearing, file responses to any written objections submitted to the Court.

CLAIM FORM DISPUTE PROCESS

76. The Claim Form incorporated into this Agreement as Exhibit “B” will apprise each

member of the Plaintiff Classes of the approximate dates he or she held an eligible position during

the Settlement Period as well as his or her total number of workweeks. This information shall be

based on Defendant’s records. Defendant’s records are presumed to be accurate.”

77. If a member of either or both classes wishes to challenge the information set forth

in the Claim Form, the member must submit a written, signed challenge along with supporting

documents, if any exist, to the Settlement Administrator at the address provided on the Claim Form

within thirty (30) calendar days of the date the Class Notice Package was mailed to the member of

the Plaintiff Class (or within ten (10) calendar days of the date the Class Notice Package was re-

mailed, in the circumstance described above, whichever period of time is longer). While

information contained in the Claim Form should be referenced in connection with any such

challenges, the Claim Form itself need not be returned by any particular California or FLSA Class

Member for that member to receive compensation pursuant to this settlement.

78. No dispute will be considered timely if it is postmarked more than the number of

days set forth in the preceding paragraph of this agreement. Absent an agreement between Class

Counsel and Defendant’s Counsel regarding how to address the dispute, the Settlement

Administrator shall have authority to resolve the challenge and make a final and binding

determination without hearing or right of appeal. Defendant agrees to provide the Settlement

Administrator with additional documents necessary to assess the challenge, if such documents

exist. All disputes shall be resolved, either by agreement of Class Counsel and Defendant’s

Counsel, or by decision of the Settlement Administrator as provided herein, prior to submitting the

Settlement Administrator’s declaration to the Court for final approval.

79. Settlement checks issued to the Class Representatives and Qualified Claimants

shall remain valid for one hundred and eighty (180) calendar days from the date of issuance. This



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expiration or cancellation date shall be clearly printed on the front of the check (“Void Date”). If

any Class Representative or any Qualified Claimant does not cash his or her settlement payment

check(s) before the Void Date, the funds will be distributed to Legal Services of Northern

California. Settlement checks can be reissued to Qualified Claimants upon request within this 180-

day period but any reissued checks shall have the same Void Date as the original settlement check.

Those Qualified Claimants who fail to cash their settlement checks will be deemed to have waived

irrevocably any right in or claim to a settlement share paid directly by Defendant, but the

Settlement Agreement shall remain binding upon them.

FINAL SETTLEMENT APPROVAL PROCEDURE

80. This Settlement Agreement will become final and effective upon occurrence of all

of the events described in paragraphs 57 through 62, inclusive, and the occurrence of the events

set forth below in paragraphs 81 through 84, and after the Effective Date.

81. Execution of this Settlement Agreement by the Parties and their respective counsel

of record.

82. Entry of an Order by the Court (a) granting preliminary approval of the Settlement

Agreement, including conditional certification of the Plaintiff Classes for settlement purposes

only, (b) approving the proposed Class Notice and Claim Form (the Parties’ proposed forms are

attached hereto as Exhibits “A” and “B,” respectively), and (c) scheduling a hearing date for final

approval of the Settlement Agreement.

83. Filing by Class Counsel, at least five (5) court days prior to the final approval

hearing, the Settlement Administrator’s verification, in writing, that the Class Notice Package to

the Plaintiff Classes has been disseminated in accordance with the Court’s preliminary approval

Order.

84. Entry of an Order by the Court granting final approval of the Settlement Agreement.

The proposed Final Approval Order to be submitted by Class Counsel and approved by Defendant

and Defense Counsel shall adjudge that, among other things:



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a. The Settlement Administrator has fulfilled its initial notice and reporting

duties under the Settlement and that the Class Notice (i) constituted the best

practicable notice; (ii) constituted notice that was reasonably calculated,

under the circumstances, to apprise Settlement Class Members of the

pendency of the Action, and their right to exclude himself from or object to

the proposed settlement and to appear at the Final Approval Hearing; (iii)

was reasonable and constituted due, adequate, and sufficient notice to all

persons entitled to receive notice; and (iv) met all applicable requirements

of Federal Rule of Civil Procedure 23, due process, and any other applicable

rules or law.

b. The Settlement as fair, reasonable, and adequate;

c. Plaintiffs and Class Counsel may adequately represent the California

Settlement Class members, and the FLSA Class members for the purpose

of entering into and implementing the Agreement;

d. The Settlement Administrator is to execute the distribution of proceeds

pursuant to the terms of this Agreement;

e. The Final Approval Order and Judgment of dismissal shall be final and

entered forthwith;

f. Without affecting the finality of the Final Approval order and Judgment, the

Court retains continuing jurisdiction over Plaintiffs, Defendant, the

California Settlement Class and the FLSA Class as to all matters concerning

the administration, consummation, and enforcement of this Settlement

Agreement;

g. As of the Final Approval Date, the Plaintiffs, California Settlement Class,

the and the FLSA Settlement Class, and their legally authorized

representatives, heirs, estates, trustees, executors, administrators,

principals, beneficiaries, representatives, agents, assigns, and successors,



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and/or anyone claiming through them or acting or purporting to act for them

or on their behalf, regardless of whether they have received actual notice of

the proposed Settlement, have conclusively compromised, settled,

discharged, and provided: the Complete and General Release (in the case of

Plaintiffs); the release of California Class Claims by the California

Settlement Class; and release of FLSA Class Claims by the FLSA

Settlement Class against Defendant and the Released Parties, and are bound

by the provisions of this Settlement Agreement;

h. Notwithstanding the submission of a timely request for exclusion,

California Class members are still bound by the settlement and release of

the PAGA Claims or remedies under the Judgment pursuant to Arias v.

Superior Court, 46 Cal. 4th 969 (2009), as requests for exclusion do not

apply to the PAGA Claims, and further affirms that the State’s claims for

civil penalties pursuant to PAGA are also extinguished;

i. This Settlement Agreement and the Final Approval order and Judgment to

be binding on, and have res judicata and preclusive effect in, all pending

and future lawsuits or other proceedings that encompass Plaintiffs’,

California Settlement Class’, and the FLSA Settlement Class’ claims

released herein, and that are maintained by or on behalf of Plaintiffs,

California Settlement Class members, the and the FLSA Settlement Class

and/or their heirs, estates, trustees, executors, administrators, principals,

beneficiaries, representatives, agents, assigns, and successors, and/or

anyone claiming through them or acting or purporting to act for them or on

their behalf;

j. Plaintiffs, the California Settlement Class and the FLSA Settlement Class

are permanently barred from filing, commencing, prosecuting, intervening

in, or participating (as class members or otherwise) in any other lawsuit or



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administrative, regulatory, arbitration, or other proceeding in any

jurisdiction based on the claims released herein;

k. The Settlement provided for herein, and any proceedings undertaken

pursuant thereto, are not, and should not in any event be offered, received,

or construed as evidence of, a presumption, concession, or an admission by

any Party of liability or non-liability or of the certifiability or non-

certifiability of a litigation class or collective, or that PAGA representative

claims may validly be pursued; provided, however, that reference may be

made to this Settlement in such proceedings as may be necessary to

effectuate the provisions of this Settlement;

l. The Action is dismissed with prejudice;

m. The Parties, without further approval from the Court, are authorized to agree

to and adopt such amendments, modifications, and expansions of this

Agreement, including all Exhibits hereto, as (i) shall be consistent in all

material respects with the Final Approval order; (ii) do not limit the rights

of California Settlement Class and/or FLSA Settlement Class; and (iii)

contains such other and further provisions consistent with the terms of this

Settlement Agreement to which the Parties expressly consent in writing.

85. At the Final Approval Hearing, Class Counsel may also request entry of an Order

approving the Class Counsel Award and the Service Awards to Plaintiffs. Any such Class Counsel

Award or Service Award shall be paid exclusively from the Total Settlement Payment. In no event

shall any Released Party otherwise be obligated to pay for any attorneys’ fees and expenses or

Service Awards. The disposition of Class Counsel’s application for a Class Counsel Award, and

for Service Awards, is within the sound discretion of the Court and is not a material term of this

Settlement Agreement, and it is not a condition of this Settlement Agreement that such application

be granted. Except as set forth in paragraphs 101 through 104, any disapproval or modification of

such application by the Court shall not (i) affect the enforceability of the Settlement Agreement,



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(ii) provide any of the Parties with the right to terminate the Settlement Agreement, or (iii) increase

the consideration any Released Party pays in connection with the Settlement. Released Parties

shall have no liability to Plaintiffs or Class Counsel arising from any claim regarding the division

of any attorneys’ fee/litigation cost award between and among Class Counsel.

SETTLEMENT PAYMENT AND CALCULATION OF CLAIMS

86. In consideration of the mutual covenants and promises set forth herein, the Parties

agree, subject to the Court’s approval, as follows:

87. Gross Settlement Fund: Defendant agrees to pay Two Million Four Hundred Thirty

Thousand Dollars and Zero Cents ($2,430,000.00). This amount includes: (i) payments made to

Qualified Claimants as described in this Settlement Agreement on a claims-made basis; (ii)

enhancement awards (i.e., service payments) to the Class Representatives (of up to $7,500 each

for Representative Plaintiffs Keith Tyner, Armen Abgaryan, Perry Wadler, Gerald Springer, and

Troy Willis, and up to $2,500 for Representative Plaintiff Ray Paiva); (iii) $15,000 for the release

of any PAGA claims that could be asserted; (iv) fees and expenses of the Settlement Administrator

(not to exceed $15,000); (v) Class Counsel’s approved attorneys’ fees (of up to $810,000); (vi)

Class Counsel’s approved litigation costs, and (vii) and all other claims for interest, fees, and costs.

Under no circumstances shall Defendant be required to pay anything more than the Gross

Settlement Amount, except that Defendant will separately pay the employer payroll and

employment taxes due for the wages payments made under this Agreement. Defendant shall fully

fund the Gross Settlement Fund to the Settlement Administrator within ten (10) calendar days of

the Effective Date. In no event will Defendant be liable for making any payments under this

Settlement, or for providing any relief to the California Settlement Class and/or the FLSA

Settlement Class, before the Effective Date of this Agreement.

a. Attorneys’ Fees and Costs: In conjunction with final approval of this

Settlement Agreement, Class Counsel will apply to the Court for an award

of attorneys’ fees in an amount totaling up to 33 1/3% of the Gross

Settlement Fund (i.e., $810,000), plus actual costs. Defendant will not



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oppose such application. If the Court does not approve an award of 33 1/3%

of the Gross Settlement Fund, the difference between this amount and the

actual amount approved shall be returned to the Net Settlement Fund to be

distributed to the Settlement Class Members, according to the formula set

forth below. These fees and costs are included in, and come from, the Gross

Settlement Fund and will be paid directly to Class Counsel by the

Settlement Administrator within five (5) calendar days after Defendant

funds the Gross Settlement Fund. Class Counsel, and only Class Counsel

will be issued an IRS Form 1099 for their award of attorneys’ fees. No

portion of these fees shall be part of any Form 1099 issued to Class

Representatives. Moreover, Plaintiffs’ counsel shall collect no fees from

any service payment awarded to Class Representatives.

b. Enhancement Awards: Subject to Court approval, in addition to any

payment each of the Representative Plaintiffs receives in his or her capacity

as a Class Member, each Representative Plaintiff will individually receive

an enhancement award from the Gross Settlement Fund for his/her services

as a Class Representative. The enhancement awards for Representative

Plaintiffs Keith Tyner, Armen Abgaryan, Perry Wadler, Gerald Springer

and Troy Willis shall be in an amount up to Seven Thousand, Five Hundred

Dollars ($7,500) each, and the enhancement award for Representative

Plaintiff Ray Paiva shall be in an amount up to Two Thousand, Five

Hundred Dollars ($2,500), for a total of Forty Thousand Dollars ($40,000).

If the Court does not approve the suggested awards in full for each of the

Class Representatives, the difference between this amount and the actual

amount approved shall be returned to the Net Settlement Fund to be

distributed to the Settlement Class Members, according to the formula set

forth below. The Class Representatives’ enhancement awards will be



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distributed by the Settlement Administrator within five (5) business days

after Defendant funds the Gross Settlement Fund noted herein and will

include the issuance of an IRS Form 1099 in connection with this payment.

No other Form 1099s will issue to Class Representatives.

c. Payments to the California Labor & Workforce Development Agency:

Plaintiffs shall apply to the Court for approval of a payment under the

PAGA, Labor Code §§ 2699, et seq. The Parties have agreed to allocate

Fifteen Thousand Dollars ($15,000) (the “PAGA Payment”) from the Gross

Settlement Fund towards a release of the PAGA claims, as described more

fully herein. The Parties agree that this amount is reasonable in light of the

facts and circumstances presented in the Action. If approved, the California

Labor & Workforce Development Agency (“LWDA”) shall be paid

seventy-five percent (75%) of the total amount allocated towards PAGA

claims from the Gross Settlement Fund within five (5) business days after

Defendant funds the Gross Settlement Fund noted herein. If approved,

twenty-five percent (25%) of the total amount allocated towards PAGA

claims shall be included in the calculation of the Net Settlement Fund and

thereafter be distributed to the Settlement Class in accordance with the

terms of this agreement. In the event the LWDA or Court rejects this

allocation, the parties will meet and confer with the Court and the LWDA

to reach a penalty allocation that is acceptable to all parties and that does

not materially alter the terms of the Settlement Agreement. Notably, the

LWDA has been notified of the pendency of this action, and has elected not

to pursue penalties or any other remedy for the alleged violations described

in the Complaint.

d. Cost of Settlement Administration: The fees and expenses of the Settlement

Administrator (not to exceed $15,000) shall be paid from the Gross



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Settlement Fund within ten (10) business days after Defendant funds the

Gross Settlement Fund. If Defendant opts to terminate the Settlement

Agreement pursuant to the terms of this Agreement, then Defendant shall

bear the cost of such fees and expenses. If Plaintiffs opt to terminate the

Settlement Agreement pursuant to the terms of this Agreement, then

Plaintiffs shall bear the cost of such fees and expenses. If the Settlement

Agreement is not given final approval by the Court for any other reason, the

Parties shall bear the cost of such fees and expenses equally.

e. Cy Pres Awards: Any unclaimed funds (including any checks not cashed

within 180 days of mailing) shall be distributed to Legal Services of

Northern California, a cy pres organization. As part of the preliminary

approval process, the Parties will inform the Court of the relation of this cy

pres organization to the subject matter of this class action or to any of the

class members. The attorneys for the Parties will also inform the Court of

any relationship between the attorneys and Legal Services of Northern

California. The Parties acknowledge that Court approval of this selection is

required, and if the Court declines to designate Legal Services of Northern

California, the Parties agree that the Court may designate a cy pres

organization of its choosing.

88. Settlement Awards to Class Members: The parties agree that, given the existence

of class members working both within and outside the State of California, the Net Settlement Fund

shall be divided as follows:

a. California Class: Eighty Percent (80%) of the Net Settlement Fund shall be

allocated to the California Class (“California Class Award”). Each member

of the California Class shall be entitled to receive a pro rata portion of the

California Class Award (his/her “California Individual Settlement Share”),

pursuant to the workweek differential set forth below in this paragraph.



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California Class Awards shall thus be calculated by applying the following

procedure:

i. For each California Settlement Class Member, the Settlement Administrator

shall determine the number of Compensable Workweeks worked thereby

for (a) the period between October 4, 2013 and December 31, 2017 (The

“Pre-January 2018 Period”), and (b) the period between January 1, 2018

and the date the Court preliminarily approves this Settlement Agreement

(the “Post-January 2018 Period”);

ii. For each California Settlement Class Member, the Settlement Administrator

shall next multiply his/her Compensable Workweeks worked within the

Post-January 2018 Period by a factor of 0.75. For each California Settlement

Class Member, this result shall be considered his/her total “2018 Weighted

Workweeks.”

iii. For each California Settlement Class Member, the Settlement Administrator

shall next add his/her the Compensable Workweeks worked within the Pre-

January 2018 Period to his/her 2018 Weighted Workweeks (as defined in

the preceding subsection), to produce his/her “Individual Workweeks.”

iv. The Settlement Administrator shall next add the Individual Workweeks of

all California Settlement Class members to produce the “Aggregated

California Workweeks.” The California Class Award (as defined above)

shall be divided by the Aggregated California Workweeks to produce the

settlement value of each California Settlement Class Member’s Individual

Workweek. This settlement value shall then be multiplied by each

California Settlement Class Member’s number of Individual Workweeks to

yield each California Individual Settlement Share.



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v. California Settlement Class members’ settlement checks shall be distributed

by the Settlement Administrator within five (5) business days after

Defendant funds the Gross Settlement Fund.

b. FLSA Class: Twenty Percent (20%) of the Net Settlement Fund shall be

allocated to the FLSA Class (“FLSA Class Award”). Each member of the

FLSA Class shall be entitled to receive a pro rata portion of the FLSA Class

Award (his/her “FLSA Class Individual Settlement Share”), pursuant to the

workweek differential set forth below in this paragraph. FLSA Class

Awards shall thus be calculated by applying the following procedure:

i. For each FLSA Settlement Class Member, the Settlement Administrator

shall determine the number of Compensable Workweeks worked thereby

for (a) the period between October 4, 2014 and December 31, 2017 (The

“Pre-January 2018 Period”), and (b) the period between January 1, 2018

and the date the Court preliminarily approves this Settlement Agreement

(the “Post-January 2018 Period”);

ii. For each FLSA Settlement Class Member, the Settlement Administrator

shall next multiply his/her Compensable Workweeks worked within the

Post-January 2018 Period by a factor of 0.75. For each FLSA Settlement

Class Member, this result shall be considered his/her total “2018 Weighted

Workweeks.”

iii. For each FLSA Settlement Class Member, the Settlement Administrator

shall next add his/her the Compensable Workweeks worked within the Pre-

January 2018 Period to his/her 2018 Weighted Workweeks (as defined in

the preceding subsection), to produce his/her “Individual Workweeks.”

iv. The Settlement Administrator shall next add the Individual Workweeks of

all FLSA Settlement Class members to produce the “Aggregated FLSA

Workweeks.” The FLSA Class Award (as defined above) shall be divided



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by the Aggregated FLSA Workweeks to produce the settlement value of

each FLSA Settlement Class Member’s Individual Workweek. This

settlement value shall then be multiplied by each FLSA Settlement Class

Member’s number of Individual Workweeks to yield each FLSA Individual

Settlement Share.

v. FLSA Settlement Class members’ settlement checks shall be distributed by

the Settlement Administrator within five (5) business days after Defendant

funds the Gross Settlement Fund.

TAX TREATMENT

89. The Parties agree that one-third (33 1/3%) of the Individual Settlement Share that

is distributed to each Qualified Claimant will be considered penalties, one-third (33 1/3%) will be

considered interest, and one-third (33 1/3%) will be considered wages. The wages portion will be

reported as such to each Qualified Claimant on an IRS Form W-2. Appropriate federal, state, and

local withholding taxes will be taken out of the wage allocations, and each Qualified Claimant will

receive an IRS Form W-2 with respect to this portion of the California and FLSA Individual

Settlement Shares. The penalties and interest portions will be reported as such to each Qualified

Claimant via an IRS Form 1099. Notwithstanding the treatment of the payments to each Settlement

Class member above, none of the payments called for herein, including the wage portion, are to be

treated as earnings, wages, pay or compensation for any purpose of any applicable benefit or

retirement plan, unless required by such plans.

90. Any tax obligation arising from the Settlement Payments, Class Representatives’

enhancement award, and/or Class Counsels’ fees and costs made under the terms of this Agreement

will be the sole responsibility of each person receiving such payment(s). Each Qualified Claimant

is responsible to pay his or her portion of the taxes due on any payment he or she receives under

this Settlement Agreement.

91. The employer’s taxes include all statutory FICA, FUTA and California payroll and

withholding taxes arising from any payments to Qualified Claimants and shall be paid by



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Defendant separately and apart from this Settlement Agreement. Such amounts will be computed

by the Settlement Administrator based on the amounts paid to the Qualified Claimants. The

Settlement Administrator shall be responsible for making all necessary filings in connection with

such payments.

92. The Plaintiffs, the California Settlement Class, and the FLSA Settlement Class who

receive a Settlement payment of any kind (including, in the case of the Plaintiffs, Service Awards)

expressly agree to hold Plaintiffs, Class Counsel, Defendant, Defense Counsel and the Settlement

Administrator harmless from any claim or liability for taxes, penalties, or interest arising as a result

of the payments under this Settlement.

SPECIAL MASTER APPOINTMENT FOR SETTLEMENT APPROVAL PURPOSES

93. Notwithstanding any legal and/or factual positions adopted by the parties, including

any filings in which the parties, or any of them, alleged the arbitrability or non-arbitrability of any

claims brought in this litigation, the parties hereby agree that, for the purposes of evaluating the

fairness and adequacy of this settlement, they may petition the Court for appointment of a Special

Master for Settlement (“Special Master”) pursuant, inter alia, to Northern District Court A.D.R.

L.R. 3-4(b), 8-1(c) and/or 8-2. By failing to opt-out and/or object to the settlement, each class

member shall be deemed to have consented to the appointment of the Special Master.

94. Among other responsibilities, the Special Master shall receive, evaluate and

adjudicate all motions for preliminary and final approval, shall conduct proceedings (including the

taking of testimony of objectors, if applicable), shall oversee the Settlement Notice process

detailed herein, including the allocation and distribution of the Settlement Awards to Class

Members, and to take any other action in its sole discretion, to determine the amounts the class

members are entitled to receive as Settlement Awards. Upon completion of these duties, shall

provide a recommended judgment to the Court for consideration. Under no circumstances will

Defendant be responsible for paying any fees or costs associated with the use of the Special Master.



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APPOINTMENT OF SETTLEMENT ADMINISTRATOR

95. The Settlement Administrator will perform the duties of distributing notice,

independently reviewing requests for exclusion and objections, and verifying and distributing any

amounts due to Qualified Claimants as described in this Settlement Agreement. The Settlement

Administrator will report, in summary or narrative form, the substance of its findings. All disputes

relating to the Settlement Administrator’s ability and need to perform its duties shall be referred

to the Court, if necessary, which will have continuing jurisdiction over the terms and conditions

of this Settlement Agreement, until all payments and obligations contemplated by the Settlement

Agreement have been fully carried out.

RELEASES

96. Upon the final approval by the Court of this Settlement Agreement, and except as

to such rights or claims as may be created by this Settlement Agreement, all members of the

Plaintiff Classes who do not timely request exclusion fully release and discharge Defendant and

Defendant’s present and former parent companies, subsidiaries and affiliates, including Custard

Insurance Adjusters, Inc., as well as their shareholders, officers, directors, attorneys, insurers,

successors and assigns (“Releasees”), from any and all individual and class claims, debts,

liabilities, demands, obligations, penalties, guarantees, costs, expenses, attorneys’ fees, damages,

action or causes of action of whatever kind or nature, whether known or unknown, that were

actually alleged in the Complaints, as well as wage and hour class claims which could have been

brought based on the specific factual allegations contained in the Complaints, including, but not

limited to, any claims for unpaid wages, unpaid overtime, unpaid minimum wages, deduction(s)

from wages, record-keeping violations, paycheck and/or wage statement violations, meal period

and rest period violations, “waiting time” penalties, and failure to reimburse business expenses,

conversion, unfair business practices, and all civil and/or statutory penalties related to the

foregoing, which arose between October 4, 2013 (for the California Class) or October 4, 2014 (for

the FLSA Class), and the date the Court preliminarily approves this Settlement Agreement,

inclusive. With respect to only those members of the Plaintiff Classes who deposit or cash his/her



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settlement check, the released claims shall also include any and all claims under the Fair Labor

Standards Act (FLSA) or that could have been asserted under federal law based on the specific

facts alleged in the Complaints.

97. Upon Final Approval by the Court of this Settlement Agreement, and for and in

consideration of the payment of the Class Representatives’ enhancement awards for services

performed on behalf of the Classes, the Class Representatives enter a General Release and

discharge Releasees from any and all claims, debts, liabilities, demands, obligations, guarantees,

costs, expenses, attorneys’ fees and costs, damages, penalties, prejudgment interest, actions or

causes of action of whatever kind or nature, whether known or unknown, which the Class

Representatives have ever had, or hereafter may claim to have, arising on or before the date that

he or she signs this Settlement Agreement, including without limitation, any claims for unpaid

compensation, wages, missed meal breaks, missed rest breaks, time-shaving, penalties, or waiting

time penalties under the California Labor Code, the California Business and Professions Code, the

federal Fair Labor Standards Act, 29 U.S.C. section 201, et seq., or any state, county or city law

or ordinance regarding wages or compensation; any claims for employee benefits, including

without limitation, any claims for under the Employee Retirement Income Security Act of 1974;

any claims of unemployment discrimination on any basis, including without limitation, any claims

under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, 42 U.S.C. section

1981, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1991, the Family and

Medical Leave Act of 1993, the California Government Code, or any other state, county or city

law or ordinance regarding employment discrimination or retaliation. The Class Representatives

acknowledge and agree that the foregoing general release is given in exchange for the

consideration provided to them under this Settlement Agreement by Defendant.

98. The Class Representatives expressly waive any rights or benefits afforded by

Section 1542 of the Civil Code of the State of California, and do so understanding the significance

of that waiver. Section 1542 provides:



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a. A general release does not extend to claims which the creditor does

not know or suspect to exist in his or her favor at the time of

executing the release, which if known by him or her must have

materially affected his or her settlement with the debtor.

DUTIES OF THE PARTIES PRIOR TO COURT APPROVAL

99. Class Counsel shall promptly submit this Settlement Agreement to the Court in

support of Plaintiffs’ Motion for Preliminary Approval for determination by the Court as to its

fairness and adequacy and apply for the entry of a preliminary Order as set forth in paragraphs 57

through 61.

DUTIES OF THE PARTIES FOLLOWING FINAL COURT APPROVAL

100. Following final approval by the Court of this Settlement Agreement, Class

Counsel will submit a proposed final Order and judgment as set forth in paragraph 80 through 85.

VOIDING THE SETTLEMENT AGREEMENT

101. Defendant has the right to rescind the Settlement Agreement as a result of an opt-

out percentage that equals or exceeds five percent (5%) of all members of the Settlement Class

(“Excessive Opt-Out Percentage”). The Parties agree that, if the number of individuals opting out

of the settlement equals or exceeds the Excessive Opt-Out Percentage, Defendant may elect to

terminate the Settlement Agreement by providing written notice to Class Counsel of same within

ten (10) days after the expiration of the right of the Plaintiff Class Members to Opt-Out of the

Settlement Agreement.

102. If the Court does not approve any material condition of this Settlement Agreement

or effects a fundamental change of the Parties’ Settlement, with the exception of any changes to

the Class Notice Package, the award of Class Counsels’ fees/costs, and the award of an

enhancement award, then the entire Settlement Agreement will be voidable and unenforceable at

the option of either Party hereto.



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103. Either Party may void this Settlement Agreement as provided in the preceding

paragraph, by giving notice in writing to all other Parties and the Court at any time prior to final

approval of the Settlement Agreement by the Court.

104. In the event that: (i) the Settlement is not approved, is overturned, or is materially

modified by the Court or on appeal, (ii) the Judgment does not become Final, or (iii) this Settlement

Agreement is terminated, cancelled, voided, or fails to become effective for any reason, then: (a)

the Parties stipulate and agree the Settlement, the Class Information, and all documents exchanged

and filed in connection with the Settlement shall be treated as inadmissible mediation

communications under Cal. Evid. Code §§ 1115 et seq., (b) the Settlement shall be without force

and effect upon the rights of the Parties hereto, and none of its terms shall be effective or

enforceable, with the exception of this Paragraph, which shall remain effective and enforceable;

(c) the Parties shall be deemed to have reverted to their respective status prior to execution of this

Agreement; (d) all Orders entered in connection with the Settlement, including the certification of

the California Settlement Class members and the California Class Claims, and the FLSA

Settlement Class and FLSA Class Claims, shall be vacated without prejudice to any Party’s

position on the issue of class certification, the issue of amending the complaint, or any other issue,

in this Action or any other action, and the Parties shall be restored to their litigation positions

existing on the date of execution of this Agreement; and (e) the Parties shall proceed in all respects

as if the Settlement Agreement and related documentation and orders had not been executed, and

without prejudice in any way from the negotiation or fact of the Settlement or the terms of the

Settlement Agreement. The Settlement, all documents, orders, and evidence relating to the

Settlement, the fact of their existence, any of their terms, any statement or report concerning the

Settlement Agreement, its existence, or their terms, any negotiations, proceedings, acts performed,

or documents executed pursuant to or in furtherance of the Settlement Agreement shall not be

admissible in any proceeding, and shall not be offered, received, or construed as evidence of a

presumption, concession, or an admission of liability, of unenforceability of any arbitration



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agreement, of the certifiability of a litigation class, or otherwise used by any Person for any purpose

whatsoever, in any trial of this Action or any other action or proceedings.

PARTIES’ AUTHORITY

105. The signatories represent that they are fully authorized to enter into this

Settlement Agreement and bind the Parties to its terms and conditions.

MUTUAL FULL COOPERATION

106. The Parties agree to fully cooperate with each other to accomplish the terms of

this Settlement Agreement, including but not limited to, execution of such documents as may

reasonably be necessary to implement the terms of this Settlement Agreement. The Parties to this

Settlement Agreement shall use their best efforts, including all efforts contemplated by this

Settlement Agreement and any other efforts that may become necessary by order of the Court, or

otherwise, to effectuate this Settlement Agreement. As soon as practicable after execution of this

Settlement Agreement, Class Counsel shall, with the assistance and cooperation of Defendant’s

Counsel, take all necessary steps to secure the Court’s final approval of this Settlement Agreement.

107. Defendant understands that in the course of applying for settlement approval,

Plaintiffs will be required to submit sufficient evidence to support the fairness of the proposed

settlement terms. Defendant affirmatively agrees to assist and support Plaintiffs in providing such

evidence and, if requested by Plaintiffs, may provide declaration(s) or other admissible evidence

reflecting class size, compensation information, and workweeks worked during the Settlement

Period.

108. The Parties agree that neither they nor their counsel will solicit or otherwise

encourage, directly or indirectly, Plaintiff Class Members to request exclusion from the Settlement

Class, object to the Settlement, or appeal the final judgment.

NO ADMISSION OF LIABILITY

109. Each of the Parties has entered into this Settlement Agreement with the intention

to avoid further disputes and litigation with the attendant risk, inconvenience, and expense.

Nothing contained herein, nor the consummation of this Settlement Agreement, is to be construed



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or deemed an admission of liability, culpability, negligence, or wrongdoing on the part of

Defendant. This Settlement Agreement is a settlement document and shall, pursuant to California

Evidence Code Section 1152 and/or Federal Rules of Evidence Section 408, be inadmissible as

evidence in any proceeding. The preceding sentence shall not apply to an action or proceeding to

approve, interpret, or enforce this Settlement Agreement.

PUBLICITY

110. Representative Plaintiffs and Class Counsel agree that they will not issue any

press releases or initiate communication with the press about the fact, amount or terms of the

settlement among the parties contemplated herein (the “Settlement”). Additionally, Representative

Plaintiffs agree not to disclose or publicize the Settlement, the fact of the Settlement, its terms or

contents, and the negotiations underlying the Settlement, in any manner or form, directly or

indirectly, to any person or entity, except the Court and the Plaintiff Classes, and as shall be

contractually required to effectuate the terms of the Settlement as set forth in this Settlement

Agreement. Representative Plaintiffs, in response to any inquiries, will state that the Action was

resolved. Nothing herein shall prevent Class Counsel from disclosing the names of the Parties or

providing general information regarding the Action on their website, disclosing information

regarding the Action to prove adequacy as class counsel in other actions, communicating with the

Court or Plaintiff Classes regarding the Action, or making disclosures as required to effectuate the

terms of the Settlement as set forth herein. Additionally, nothing herein shall prevent

Representative Plaintiffs from making disclosures regarding the Settlement to their respective

professional representatives (e.g., attorneys, accountants, auditors, tax preparers) and to their

spouses; however, if any such disclosures are made, each individual shall first be informed of and

agree to be bound by this paragraph of the Agreement.

ENFORCEMENT OF THE SETTLEMENT AGREEMENT

111. In the event that one or more of the Parties to this Settlement Agreement institutes

any legal action, arbitration, or other proceeding against any other Party or Parties to enforce the

provisions of this Settlement Agreement or to declare rights and/or obligations under this



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Settlement Agreement, the successful Party or Parties shall be entitled to recover from the

unsuccessful Party or Parties reasonable attorneys’ fees and costs, including expert witness fees

incurred in connection with any enforcement actions.

NOTICES

112. Unless otherwise specifically provided, all notices, demands or other

communications in connection with this Settlement Agreement shall be: (1) in writing; (2) deemed

given on the third business day after mailing; and (3) sent via United States registered or certified

mail, return receipt requested, addressed as follows:

To Plaintiffs (c/o Plaintiffs’ Class Counsel):

Scott Cole & Associates, APC 1485 Civic Court, Suite 1500 Concord, CA 94520

Law Offices of Herbert Hafif, P.C. 269 West Bonita Avenue Claremont, California 91711

Law Offices of Larry A, Sackey 11500 W. Olympic Blvd. Suite 550 Los Angeles CA 90064

Matern Law Group, PC 1230 Rosecrans Ave., Suite 3676 Manhattan Beach, California 90266

To Defendant:

Mark A. Saxon, Esq. Travis K. Jang-Busby, Esq. GORDON REES SCULLY & MANSUKHANI LLP

101 West Broadway, Suite 2000 San Diego, CA 92101

CONSTRUCTION AND INTERPRETATION

113. The Parties agree that the terms and conditions of this Settlement Agreement are

the result of lengthy, intensive arm’s-length negotiations between the Parties and that this

Settlement Agreement shall not be construed in favor of or against any of the Parties by reason of

their participation in the drafting of this Settlement Agreement.

114. Paragraph titles are inserted as a matter of convenience and for reference, and in

no way define, limit, extend, or describe the scope of this Settlement Agreement or any of its

provisions. Each term of this Settlement Agreement is contractual and not merely a recital.



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115. This Agreement shall be subject to and governed by the laws of the State of

California. The Parties acknowledge that they are subject to the continuing jurisdiction of the Court

to enforce the terms of the Settlement contained herein.

MODIFICATION

116. This Settlement Agreement may not be changed, altered, or modified, except in

writing and signed by counsel for the Parties, and approved by the Court. This Settlement

Agreement may not be discharged except by performance in accordance with its terms or by a

writing signed by counsel for the Parties.

INTEGRATION CLAUSE

117. This Settlement Agreement contains the entire agreement between the Parties

relating to any and all matters addressed in the Settlement Agreement, and all prior or

contemporaneous agreements, understandings, representations, and statements, whether oral or

written and whether by a Party or such Party’s legal counsel, with respect to such matters are

extinguished. No rights hereunder may be waived or modified except in a writing signed by all

Parties.

BINDING ON ASSIGNS

118. This Settlement Agreement shall be binding upon and inure to the benefit of the

Parties and their respective heirs, trustees, executors, administrators, successors, and assigns.

CLASS COUNSEL SIGNATORIES

119. It is agreed that it is impossible or impractical to have each member of the Plaintiff

Class execute this Settlement Agreement. The Notice will advise all Class Members of the binding

nature of the release and such shall have the same force and effect as if each member of the Plaintiff

Classes executed this Settlement Agreement.

COUNTERPARTS

120. This Settlement Agreement may be executed in counterparts, and when each party

has signed and delivered at least one such counterpart, each counterpart shall be deemed an

original, and, when taken together with other signed counterparts, shall constitute one Settlement



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Agreement, which shall be binding upon and effective as to all Parties. Copies of the executed

agreement shall be effective for all purposes as though the signatures contained therein were

original signatures.

IT IS SO AGREED, CLASS REPRESENTATIVES: DATED: _______________, 2018 By: ARMEN ABGARYAN Class Representative DATED: _______________, 2018 By: RAY PAIVA Class Representative DATED: _______________, 2018 By: GERALD SPRINGER Class Representative DATED: _______________, 2018 By: KEITH TYNER Class Representative DATED: _______________, 2018 By: PERRY WADLER Class Representative DATED: _______________, 2018 By: TROY WILLIS Class Representative


1/15/2019


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DEFENDANT:

DATED: _______________, 2018 CUSTARD INSURANCE ADJUSTERS, INC. By: Title: ______________________________ APPROVED AS TO FORM,

CLASS COUNSEL:

DATED: _______________, 2018 SCOTT COLE & ASSOCIATES, APC By: Scott Edward Cole, Esq. Attorneys for Keith Tyner and the Plaintiff Classes

DATED: _______________, 2018 LAW OFFICES OF HERBERT HAFIF By: Greg Hafif, Esq. Attorneys for Armen Abgaryan and the Plaintiff Classes

DATED: _______________, 2018 LAW OFFICES OF LARRY SACKEY By: Larry Sackey, Esq. Attorneys for Armen Abgaryan and the Plaintiff Classes



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DATED: _______________, 2018 MATERN LAW GROUP By: Joshua D. Boxer, Esq. Attorneys for Perry Wadler, Gerald Springer, Ray Paiva, Troy Willis and the Plaintiff Classes COUNSEL FOR DEFENDANT:

DATED: _______________, 2018 GORDON REES SCULLY MANSUKHANI LLP By: Mark A. Saxon, Esq. Attorneys for Defendant Custard Insurance Adjusters, Inc.

1145262/42000695v.1


class action settlement agreement and release of claims · 2019. 7. 2. · this settlement...

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