please take notice - sanford heisler sharp, llp...2018/08/08 · 1 2 3 4 5 6 7 8 9 10 11 12 13 14...

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PLAINTIFF’S UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS SETTLEMENT

CASE NO. RG17852058

PLEASE TAKE NOTICE that Plaintiff Martin Fletscher hereby moves for an order granting

his Motion for Preliminary Approval of the Class Action Settlement. Submitted herewith is Plaintiff’s

Memorandum of Law in Support of Motion for Preliminary Approval of the Class Settlement, the

supporting Declarations of Michael D. Palmer, Xinying Valerian, and Danielle Fuschetti, and a

[Proposed] Order Granting Plaintiff’s Motion for Preliminary Approval of the Class Settlement.

Dated: August 8, 2018

Respectfully submitted,

/s/ Michael D. Palmer

Michael D. Palmer (pro hac vice)

SANFORD HEISLER SHARP, LLP

1350 Avenue of the Americas, 31st Floor

New York, NY 10019

Xinying Valerian (CA Bar No. 254890)

VALERIAN LAW

1604 Solano Avenue, Suite D

Albany, CA 94707

Danielle Fuschetti (CA Bar No. 294064)


111 Sutter Street, Suite 975

San Francisco, CA 94104

Attorneys for Plaintiff and the Class

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PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF UNOPPOSED MOTION FOR PRELIMINARY

APPROVAL – CASE NO. RG17852058

i

TABLE OF CONTENTS

I. INTRODUCTION .................................................................................................................1

II. BACKGROUND ...................................................................................................................2

III. PROCEDURAL HISTORY ..................................................................................................2

IV. CASE INVESTIGATION, DISCOVERY, NEGOTIATIONS, AND MEDIATION ..........3

A. Informal Discovery ........................................................................................................4

B. Mediation and Settlement ..............................................................................................4

V. CLASS REPRESENTATIVE’S SERVICES TO THE CLASS ...........................................5

VI. KEY TERMS OF THE SETTLEMENT ...............................................................................5

A. Definition of the Settlement Class .................................................................................5

B. $2.4 Million Non-Reversionary Total Settlement Fund ................................................6

C. Released Claims .............................................................................................................6

D. Attorneys’ Fees and Incurred Expenses .........................................................................7

E. Payments to LWDA and Settlement Administrator.......................................................7

F. Service Award ................................................................................................................7

VII. THE SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATE AND SHOULD BE

PRELIMINARILY APPROVED. .........................................................................................8

A. The Settlement Is the Product of Non-Collusive, Arm’s-Length, and Well-Informed

Negotiations. ..................................................................................................................9

B. The Settlement Agreement Provides Reasonable Compensation for Class Members’

Damages in Light of Significant Litigation Risks. ........................................................9

C. The Class Settlement Payment Process is Fair and Reasonable. .................................16

D. The Settlement Amount Allocated to the Private Attorney General Act Claim is

Reasonable. ..................................................................................................................17

E. The Settlement’s Provision for Attorneys’ Fees, Expenses, and Costs is Reasonable and

Fair Under the Circumstances. .....................................................................................18

F. The Service Award Is Reasonable and Routinely Awarded. .......................................19

G. RG/2 Claims Administration LLC Should Be Appointed as the Settlement

Administrator. ..............................................................................................................20

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VIII. THE COURT SHOULD CONDITIONALLY CERTIFY A PROVISIONAL SETTLEMENT

CLASS. ..............................................................................................................................21

IX. THE COURT SHOULD APPROVE THE PROPOSED CLASS NOTICE. ....................23

X. A FINAL APPROVAL HEARING SHOULD BE SCHEDULED. ..................................24

XI. CONCLUSION ..................................................................................................................24

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TABLE OF AUTHORITIES

CASES

Federal Cases

Bibo v. Fed. Exp., Inc. (N.D. Cal. Apr. 21, 2009) 2009 WL 1068880 ..........................................23

Collins v. Cargill Meat Solutions Corp.(E.D. Cal. 2011) 274 F.R.D. 294, 2011 WL 837140 ......16

Cotter v. Lyft, Inc. (N.D. Cal. 2016) 176 F. Supp. 3d 930, 2016 WL 1394236.............................14

Franco v. Ruiz Food Prod., Inc. (E.D. Cal. Nov. 27, 2012) 2012 WL 5941801 ...........................17

Gardner v. GC Servs., LP (S.D. Cal. Apr. 2, 2012) 2012 WL 1119534 .......................................15

Graham v. Overland Solutions, Inc. (S.D. Cal. Sep. 12, 2012) 2012 WL 4009547 ......................16

Harris v. Vector Mktg. Corp.

(N.D. Cal. Apr. 29, 2011) No. C-08-5198 EMC, 2011 WL 1627973 .................................8

Lawson v. Grubhub, Inc.

(N.D. Cal., Feb. 8, 2018) 302 F. Supp. 3d 1071, 2018 WL 776354 ..............................................12

In re Pacific Enters. Sec. Litig. (9th Cir. 1995) 47 F.3d 373, 1995 WL 49484 .............................18

In re High-Tech Employee Antitrust Litig.

(N.D. Cal. Sept. 2, 2015) No. 11-CV-02509-LHK, 2015 WL 5158730 ...........................20

Ingalls v. Hallmark Mktg. Corp.

(C.D. Cal. May 18, 2009) No. 08cv4342 VBF (Ex) 2009 WL 10674054 .........................17

McNeal v. RCM Techs. USA Inc. (C.D. Cal. Mar. 16, 2017) 2017 WL 1807595 .........................21

Nat'l Rural Telecommunications Coop. v. DIRECTV, Inc.

(C.D. Cal. 2004) 221 F.R.D. 523, 2004 WL 1157739 .......................................................15

Nelson v. Avon Prod., Inc. (N.D. Cal. Feb. 24, 2017) 2017 WL 733145 ......................................17

Officers for Justice v. Civil Serv., Commission (9th Cir. 1982) 688 F.2d 615 ..............................10

Ogbuehi v. Comcast of California/Colorado/Florida/Oregon, Inc.

(E.D. Cal. June 9, 2015) 2015 WL 3622999 .....................................................................15

Oppenlander v. Standard Oil Co. (Indiana) (D. Colo. Feb. 22, 1974) 64 F.R.D. 597 ..................16

Rippee v. Boston Mkt. Corp.

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(S.D. Cal. Oct. 10, 2006) Case No. 05cv1359 BTM (JMA) 2005 WL 3578784 ..............18

Ruiz v. Affinity Logistics Corp. (S.D. Cal. Dec. 20, 2017) 2017 WL 6513962 .............................20

Singer v. Becton Dickinson & Co. (S.D. Cal. June 1, 2010) 2010 WL 2196104 ....................18, 20

Smith v. CRST Van Expedited, Inc. (S.D. Cal. Jan. 14, 2013) 2013 WL 163293 ..........................18

State Farm Mut. Auto. Ins. Co. v. Campbell (U.S. April 7, 2003) 538 U.S. 408 ..........................14

Stuart v. Radioshack Corporation

(N.D. Cal. Aug. 9, 2010) No. C-07-4499 EMC, 2010 WL 3155645.................................17

Taylor v. Shippers Transp. Express, Inc. (C.D. Cal. May 14, 2015) 2015 WL 12658458 ............17

Thieriot v. Celtic Inc. Co. (N.D. Cal. Apr. 21, 2011) 2011 WL 1522385 ...............................19, 20

Van Bronkhorst v. Safeco Corp. (9th Cir. 1976) 529 F.2d 943 .......................................................8

Zackaria v. Wal-Mart Stores, Inc.

(C.D. Cal. 2015) 142 F. Supp. 3d 949, 2015 WL 6745714 ...............................................14

State Cases

7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135 ............11

Abzug v. Kerkorian (L.A.Super.Ct., Nov. 1990) CA-000981 .......................................................17

Brinker Rest. Corp. v. Superior Court (2012) 53 Cal.4th 1004 .....................................................21

Capitol People First v. Dep't of Developmental Servs. (2007) 155 Cal.App.4th 676 ...................21

Cartt v. Superior Court (1975) 50 Cal.App.3d 960 .......................................................................21

Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794 ............................................................10, 11

Haitz v. Meyer, et al. (Alameda Super.Ct., Aug. 20, 1990) No. 572968-3....................................17

Hasty v. Elec. Arts, Inc. (San Mateo Cty. Super. Ct., Sept. 22, 2006) No. CIV 444821 ...............18

In re California Indirect-Purchaser Plasticware Antitrust Litigation

(San Francisco Super.Ct.1995) Civ. Case. Nos. 961814, 963201, and 963590 ................17

In re Cellphone Fee Termination Cases (2010) 186 Cal.App.4th 1380 ........................................18

In re Consumer Privacy Cases (2009) 175 Cal.App.4th 545 ........................................................16

In re Facsimile Paper Antitrust Litigation

(San Francisco Super.Ct.1997) Civ. Case Nos. 963598, 964899, and 967137 .................17

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In re Liquid Carbon Dioxide Cases (San Diego Super.Ct.1996) J.C.C.P. 3012 ...........................17

In re Milk Antitrust Litigation (L.A.Super.Ct.1998) Civ. Case No. BC070061 ............................17

Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497 ..................................................20

Laffitte v. Robert Half Int'l Inc. (2016) 1 Cal.5th 480 ...................................................................16

Liodas v. Sahad, (1977) 19 Cal. 3d 278 .........................................................................................14

Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429 ............................................................................21

Lusardi Construction Co. v. Aubry (1992) 1 Cal. 4th 976 .............................................................14

McGhee v. Bank of America (1976) 60 Cal.App.3d 442 ...............................................................21

Meewes v. ICI Dulux Paints (Los Angeles Cty. Super. Ct. Sept. 19, 2003) No. BC265880.........18

Potter v. Pacific Coast Lumber Co. (1951) 37 Cal. 2d 592 ...........................................................10

Roe v. SFBSC Mgmt., LLC (N.D. Cal. Sep. 14, 2017) 2017 WL 4073809 .............................16, 18

Singh v. Roadrunner Intermodal Servs., LLC

(E.D. Cal. May 25, 2018), No. 1:15-cv-01497-DAD-BAM, 2015 WL 5728415..............19

Steiner v. Whittacker Corp. (L.A. Superior Court, March 13, 1989) CA 000817 .........................17

Villacres v. ABM Indus., Inc. (2010) 189 Cal. App. 4th 562 .........................................................14

Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224 ..............................11, 12, 14, 20, 21

Williams v. Superior Court (2013) 221 Cal.App.4th 1353 ............................................................20

STATUTES

Federal Statutes

Industrial Welfare Commission Wage Orders .................................................................................3

State Statutes

California Business and Professions Code §§ 17200 et seq. ...........................................................3

California Labor Code § 201 ...........................................................................................................3





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California Labor Code § 1174 .........................................................................................................3



California Labor Code § 2699(i) ....................................................................................................18


California Private Attorney General Act of 2004 ..................................................................4, 9, 11

RULES

California Code of Civil Procedure § 384 .....................................................................................15

Cal. Rules of Court, rule 3.766 ......................................................................................................22

Cal. Rules of Court, rule 3.769 ..........................................................................................10, 19, 22

SECONDARY SOURCES

4 NEWBERG ON CLASS ACTIONS (5th ed. 2014) .......................................................................10, 22

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I. INTRODUCTION

On behalf of himself and similarly situated individuals, Plaintiff Martin Fletscher (“Plaintiff”

or “Class Representative”) respectfully moves for preliminary approval of a $2,400,000 settlement of

this proposed class action (“the Lawsuit”) against Defendant Overland Solutions, Inc. (“Defendant”

or “OSI”) (together with the Plaintiff, the “Parties”).1

After a rigorous investigation and exchange of extensive information and documents, the

Parties reached an informed agreement to settle the Lawsuit pursuant to the Joint Stipulation of Class

Settlement and Release, dated August 1, 2018 (“Settlement Agreement,” “Settlement,” or

“Agreement”). The Settlement represents an excellent value for the Class and provides an average

Class Member award of over $6,000. This favorable settlement avoids years of risky and costly

litigation, presents substantial benefits to the Class Members and promotes judicial economy. The

Parties’ investigations and exchange of information, documents and data enabled them to conduct

meaningful and intense negotiations with a keen eye towards the strengths and weaknesses of their

positions and towards the value of the claims. All negotiations were conducted at arm’s-length and

were facilitated by a mediator. The Parties vigorously disagree on the merits of the case; indeed, class

certification, liability and damages are all sharply disputed. As detailed in these papers, the Settlement

is eminently fair and reasonable, given the substantial risks and delays associated with litigation. The

Court should therefore authorize notice to the Class Members and submit the Settlement to them for

their feedback and approval.

In order to effectuate the Settlement and the resolution of this action, Plaintiff respectfully

moves the Court to:

(i) Preliminarily approve the Settlement Agreement;

(ii) Provisionally and for settlement purposes certify the proposed Class defined as: All

individuals classified by OSI as independent contractors who performed insurance

inspections or surveys as part of OSI’s Survey Division in the state of California at any

1 Plaintiff will file a stipulation by the Parties for leave to file a Second Amended Complaint to add a claim for

failure to pay earned wages upon separation and remove “DOES 1-100” as defendants.

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point from March 8, 2013 to July 25, 2018;

(iii) Appoint Martin Fletscher as Class Representative and Plaintiff’s Counsel as Class

Counsel;

(iv) Approve the method and manner of providing Notice to the Class as set forth in the

Settlement Agreement; and

(v) Schedule a final approval hearing.

II. BACKGROUND

OSI contracts with insurers to perform surveys of and prepare reports on insured commercial

and residential properties. The Class Members—who are often referred to by OSI as “Insurance

Inspectors” or “Insurance Consultants”—perform surveys and provide reports to the insurance

industry to assist in the underwriting of insurance policies. OSI classifies these individuals as

independent contractors. From 2011 until October 2017, Plaintiff Martin Fletcher performed work for

OSI in the Class Member position.

III. PROCEDURAL HISTORY

On March 8, 2017, Plaintiff Martin Fletscher filed a class action complaint against Defendant

in the Superior Court of California for the County of Alameda. The Lawsuit was assigned to Honorable

Brad Seligman who issued an order deeming the case complex. The case was later reassigned to the

Honorable George C. Hernandez and again reassigned to the Honorable Ioana Petrou. (Valerian Decl.

¶ 7; Fuschetti Decl. ¶ 7.).

In or around April 2017, the Parties agreed to stay formal discovery in order to attempt to

negotiate a settlement through the use of private mediation. (Valerian Decl. ¶ 8; Fuschetti Decl. ¶ 8).

Plaintiff filed the First Amended Complaint (the “FAC”) on May 24, 2017. (Valerian Decl. ¶

9; Fuschetti Decl. ¶ 9.) The FAC alleges that, notwithstanding OSI’s classification of Class Members

as independent contractors, they were Defendant’s employees, protected by the California Labor Code.

(FAC ¶ 1.) Plaintiff further alleges that Defendant (i) failed to pay Class Members minimum wages

for all hours worked, including for travel time to and from inspections, time engaged in business

communications, and reviewing work orders and other materials, (ii) failed to reimburse Class

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Members for business expenses, including fuel and automobile usage expenses, cell phone and internet

costs, and printing costs, and (iii) failed to furnish accurate, itemized wage statements. Plaintiff asserts

class claims against Defendant on behalf of all Class Members, pursuant to California Labor Code §§

204, 223, 226, 226.2, 226.8, 1174, 1197, and 2802, the Industrial Welfare Commission Wage Orders,

and California Business and Professions Code § 17200 et seq. Plaintiff also sues under the Private

Attorneys General Act of 2004 (“PAGA”), California Labor Code § 2698 et seq. (See FAC.)

On June 28, 2017, Defendant filed an answer, generally denying each and every allegation in

the FAC and asserting twenty-seven (27) Affirmative Defenses. (Valerian Decl. ¶ 11; Fuschetti Decl.

¶ 11.)

On or about February 1, 2018, the Parties executed a tolling agreement to toll all claims

Plaintiff and Class members may have that are related to the timeliness of payment upon (voluntary

or involuntary) termination of employment. (Valerian Decl. ¶ 12; Fuschetti Decl. ¶ 12.)

Pursuant to the Parties’ stipulation, based on Plaintiff’s separation from OSI in October 2017,

Plaintiff is seeking leave to file a Second Amended Complaint (“SAC”). The SAC would add a claim

for failure to pay earned wages upon separation from employment, pursuant to California Labor Code

§§ 201, 202, and 203. (Valerian Decl. ¶ 13; Fuschetti Decl. ¶ 13.)

IV. CASE INVESTIGATION, DISCOVERY, NEGOTIATIONS, AND MEDIATION

The Parties vigorously investigated and debated the claims asserted. They spent many months

in discussions and negotiations regarding the claims, discovery, the existence and production of

extensive ESI, the scope of the class, and the terms of mediation.

A. Informal Discovery

Plaintiff and Defendant engaged in extensive informal discovery. Plaintiff served 27 informal

individual interrogatories and requests for production and requested extensive information and data

pertaining to the class, class members’ work, and class members’ compensation. Defendants served

29 informal interrogatories and requests for production. (Valerian Decl. ¶ 14; Fuschetti Decl. ¶ 14.)

The Parties informally exchanged extensive documents – totaling over 22,500 pages. (Valerian Decl.

¶ 15; Fuschetti Decl. ¶ 15.) In pre-mediation discovery, OSI’s production included anonymized class-

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wide data reflecting earnings and assignments. For a sample of 20 class members, including Plaintiff,

OSI also produced detailed data reflecting the locations of insured entities that class members

inspected and the dates on which those inspections were performed. Additionally, OSI produced

information and documents reflecting company policies and practices and answered informal

interrogatories. (Valerian Decl. ¶ 15; Fuschetti Decl. ¶ 15.) Before mediation, Defendant informed

Plaintiff that there were approximately 250 individuals who fell within the Class definition. (Valerian

Decl. ¶ 16; Fuschetti Decl. ¶ 16.)

The Parties analyzed the exchanged discovery and data to assess potential liability and

damages, as well as the strength of their claims and likelihood of success on motions for class

certification and summary judgment. (Valerian Decl. ¶ 17; Fuschetti Decl. ¶ 17.)

B. Mediation and Settlement

On March 1, 2018, the Parties engaged in a full day of mediation with Tripper Ortman, a highly

experienced class action and wage-and-hour lawyer.2 For the Class, Class Representative Martin

Fletcher and Class Counsel attended the mediation. Defendant’s in-house and outside counsel attended

for Defendant. (Valerian Decl. ¶ 18; Fuschetti Decl. ¶ 18.)

During the in-person mediation, the Parties vigorously debated the merits of the case, the

likelihood of class certification, and the damages. After a full day of mediation, the Parties had still

not reached an agreement. (Valerian Decl. ¶ 19; Fuschetti Decl. ¶ 19.) On March 6, 2018, after

considering the strengths and weakness of the claims alleged in the Lawsuit and reviewing all

necessary discovery, the Parties reached an agreement in principle to settle the class and PAGA claims

for $2,400,000, subject to Court approval. (Valerian Decl. ¶ 20; Fuschetti Decl. ¶ 20.)

Over the following month and a half, the Parties engaged in further intense negotiations

regarding the principal terms of the class settlement. While the tentative agreement almost collapsed

during the negotiations, the Parties ultimately reached an agreement on the principal terms that were

memorialized in a Memorandum of Understanding dated April 26, 2018. (Valerian Decl. ¶ 21;

Fuschetti Decl. ¶ 21.)

2 http://ortmanmediation.com/mediator-tripper-ortman/

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The parties negotiated a formal Settlement Agreement, which was fully executed on August 1,

2018. (Id. at ¶ , Exhibit 1.)

V. CLASS REPRESENTATIVE’S SERVICE TO THE CLASS

Martin Fletscher initiated this class action against OSI after working for the company as an

insurance inspector for six years. Mr. Fletscher was still working for Defendant at the time he started

the case; nevertheless, he came forward as the sole plaintiff and retained Class Counsel in October

2016. He was the driving force behind this class action and participated fully at every stage, from

initial investigation to settlement. (Valerian Decl. ¶ 23-25; Fuschetti Decl. ¶ 23-25.)

Plaintiff was acutely aware that, by initiating this class action as the sole named plaintiff, he

put his career at risk. He accepted the risk to his then-current and future employment opportunities –

whether as employee or contractor – that inhered in acting as lead plaintiff in a public class action

against the company that was giving him work.3 Nevertheless, Plaintiff Fletscher willingly stepped

into the role as Plaintiff and Class Representative. (Valerian Decl. ¶ 26; Fuschetti Decl. ¶ 26.)

Over the last twenty-one months, Plaintiff Fletscher has engaged in numerous meetings,

telephone conversations, and email communications with Class Counsel to aid in the initial

investigation, factual development, discovery exchange, mediation, and resolution of this case. The

Settlement could never have been achieved without his service on behalf of the Class. (Valerian Decl.

¶ 27-28; Fuschetti Decl. ¶ 27-28.)

VI. KEY TERMS OF THE SETTLEMENT

The Settlement provides for a significant settlement payment to each Class Member. In

exchange, Class Members will release claims which were asserted or could have been asserted in the

Lawsuit based on the facts alleged in support of the class claims.

A. Definition of the Settlement Class

Under the Settlement Agreement, the “Class” is defined as: “All individuals classified by OSI

as independent contractors who performed insurance inspections or surveys as part of OSI’s Survey

3 Indeed, Plaintiff has reason to believe that he may have experienced retaliation from another company for which he

worked part-time. (Valerian Decl. ¶ 26; Fuschetti Decl. ¶ 26.)

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Division in the state of California at any point from March 8, 2013 to July 25, 2018.” (Settlement § I,

¶ 9.) However, the “Class” does not include individuals who opt-out of the Settlement. (Id.)

B. $2.4 Million Non-Reversionary Total Settlement Fund

The Settlement provides for Defendant to make a non-reversionary payment of $2.4 million in

settlement of all class claims in the case, including attorney’s fees and costs. Of this amount, at least

$1,509,500 will be distributed in payments to the Class (the “Net Settlement Amount”). (Valerian

Decl. ¶ __; Fuschetti Decl. ¶ ___.) Each Class Member will be assigned a proportionate share of the

Net Settlement Amount, based upon the compensation s/he received from OSI as a share of the total

amount paid as compensation to Class Members from March 8, 2013 through July 25, 2018. (See

Settlement § VII, ¶¶ 51.)

C. Released Claims

Upon final approval of the Settlement by the Court, Class Members will fully release

Defendant and other Released Parties4 from any and all claims arising at any point from March 8, 2013

through July 25, 2018 (the “Settlement Period”), that were asserted in this lawsuit, or that are based

on any of the facts, circumstances, transactions, events, occurrences, acts, disclosures, statements,

omissions or failures to act alleged in the complaint which is in effect at the time of distribution of

class notice (i.e., the SAC). (See Settlement § I, ¶ 13.) The Released Claims specifically include: (1)

failure to pay minimum wages for all hours worked; (2) failure to furnish accurate wage statements;

(3) failure to reimburse business expenses; (4) failure to timely pay all final wages to Class Members

upon termination of Services for OSI; (5) incorporated or related claims asserted through California

Business and Professions Code § 17200; (6) incorporated or related claims asserted through PAGA;

and (7) any and all penalties, interest and attorneys’ fees and costs based on the alleged. Unnamed

Class Members are not releasing any claims unrelated to the wage claims asserted in the SAC; there

is no class-wide general release. (See id.)

4 The “Released Parties” means Defendant, its subsidiaries, officers, directors, members, partners, owners,

shareholders, employees, former employees, agents, servants, attorneys, assigns, affiliates, independent

contractors, volunteers, predecessors, successors, parent companies and organizations, insurers, and any and all

other persons, firms and corporations in which Defendant may have an interest. (Settlement § I, ¶ 12.)

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In addition to being subject to the Class Member release, Plaintiff Fletscher will generally

release all claims against Defendant. (See Settlement § XV, ¶¶ 112-113.) Plaintiff agreed to this

general release—which was a material term for OSI—in service to the class; he is not receiving any

additional financial consideration for this release of claims.

D. Attorneys’ Fees and Incurred Expenses

Under the terms of the Settlement, Class Counsel will move for reasonable attorney’s fees, not

exceeding one-third of the Settlement fund ($800,000). (Settlement § X, ¶¶ 71-72). Class Counsel will

also seek reimbursement of reasonable expenses incurred by Class Counsel in connection with the

Lawsuit, not exceeding $25,000. (Id. ¶ 73.) Estimated expenses incurred to date are $18,350. (Valerian

Decl. ¶ 29; Fuschetti Decl. ¶ 29.) The Court need not rule on Class Counsel’s fees and expenses now;

a formal application will be filed prior to the Final Approval Hearing. As counsel’s application will

explain in detail, the requested fees and costs are eminently reasonable considering the amount of time

and expenses incurred by Class Counsel in this case.

E. Payments to LWDA and Settlement Administrator

Fifty Thousand Dollars ($50,000) of the class fund is allocated to the resolution of PAGA

claims asserted in the SAC. Pursuant to PAGA, 75% of this amount ($37,500) is to be paid to the

California Labor and Workforce Development Agency. (Settlement § VIII, ¶ 65.)

Prior to the Final Approval Hearing, Class Counsel will apply to the Court for payment from

the class fund of no more than $10,000 to the Settlement Administrator, RG/2 Claims Administration

LLC, for its services administering the settlement. (Settlement § XII, ¶ 81.)

F. Service Award

Pursuant to the terms of the Settlement, Class Counsel will seek a Service Award of $18,000

for Class Representative Fletscher (Settlement § IX, ¶ 66.) The Court need not rule on the Service

Awards now; a formal application will be filed prior to the Final Approval Hearing. As will be

explained in detail in the application, the requested Service Award is reasonable and justified based

on the significant time, effort and risks the Class Representative incurred in bringing this case on

behalf of the Class, as well as the substantial benefits the resulting Settlement provides the Class.

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Further, the proposed Service Award represents only 0.75 percent of the total Settlement and will not

significantly reduce the awards of the Class Members.

Public policy strongly supports service awards to plaintiffs in employment class actions, and

they are routinely granted by courts in this state and around the country. Such awards compensate

plaintiffs for the efforts and risks they have undertaken on behalf of the Class, without which no

settlement would be possible. And, they provide an incentive for other employees to bring cases that

vindicate the public interest in the lawful payment of wages.

VII. THE SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATE AND SHOULD BE

PRELIMINARILY APPROVED.

The law favors settlements, especially of class actions. See Potter v. Pacific Coast Lumber

Co. (1951) 37 Cal. 2d 592, 602; Van Bronkhorst v. Safeco Corp. (9th Cir. 1976) 529 F.2d 943, 950.

To ensure there is no “fraud, collusion or unfairness to the class,” class claims can only be settled

through Court review and approval. Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801. The

trial court is required to determine whether the “settlement is fair, adequate and reasonable,” and has

“broad discretion” in making this assessment. Id. Nevertheless, “[d]ue regard should be given to what

is otherwise a private consensual agreement between the parties.” Id.

At this stage, the Court is making a preliminary assessment of whether the Settlement appears

to be fair, adequate, and reasonable and, thus, whether notice to the class of the settlement terms and

conditions and the scheduling of a final approval hearing is worthwhile. See Cal. Rules of Court, rule

3.769; 4 NEWBERG ON CLASS ACTIONS § 13:13 (5th ed. 2014). (“The goal of preliminary approval

[of a class settlement] is for a court to determine whether notice of the proposed settlement should

be sent to the class, not to make a final determination of the settlement’s fairness.”) “The general rule

is that a court will grant preliminary approval where the proposed settlement is neither illegal nor

collusive and is within the range of possible of approval.” 4 NEWBERG ON CLASS ACTIONS § 13:10

(5th ed. 2014). See also Harris v. Vector Mktg. Corp. (N.D. Cal. Apr. 29, 2011) No. C-08-5198 EMC,

2011 WL 1627973, at *7 (“the Court may grant preliminary approval of a settlement and direct notice

to the class if the settlement (1) appears to be the product of serious, informed, non-collusive

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negotiations; (2) has no obvious deficiencies; (3) does not improperly grant preferential treatment to

class representatives or segments of the class; and (4) falls within the range of possible approval.”)

Following notice to the Class, the Court will make a final determination regarding the fairness of the

Settlement.

A. The Settlement Is the Product of Non-Collusive, Arm’s-Length, and Well-

Informed Negotiations.

In reaching the Settlement Agreement, the Parties’ counsel relied on their respective

substantial litigation experience in similar employment class actions and thorough analysis of the

legal and factual issues presented in this case. (Valerian Decl. ¶¶ 30, 37-42; Fuschetti Decl. ¶¶ 30,

37-40; Declaration of Michael D. Palmer ¶¶ 5-15. Information obtained through Class Member

interviews and informal discovery informed Plaintiff’s assessment of the strengths and weaknesses

of the case and the benefits of the Settlement Agreement. The document and data exchanges have

allowed the Parties’ Counsel to closely evaluate the claims and the benefits of the proposed

Settlement Agreement under the circumstances of this case. See 7-Eleven Owners for Fair

Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135, 1150 (“[I]n the context of class action

settlements, formal discovery is not a necessary ticket to the bargaining table where the parties had

sufficient information to make an informed decision about settlement.”) (quoting Linney v. Cellular

Alaska P'ship (9th Cir. 1998) 151 F.3d 1234, 1239).

The Parties initially engaged in a full day of mediation but did not reach a resolution. It was

only after further negotiations, including additional work by the mediator, that a settlement in

principle was reached. Further, even after a tentative deal was reached, the Parties continued to

engage in arm’s-length negotiations over several months regarding the terms of the Settlement.

The fact that the Settlement “was the product of extensive and hard-fought adversarial

negotiations between the parties” and only reached with the assistance of an experienced mediator is

a strong indication that the settlement process was fair and non-collusive. See Wershba v. Apple

Computer, Inc., supra, 91 Cal.App.4th at p. 245.

B. The Settlement Agreement Provides Reasonable Compensation for Class

Members’ Damages in Light of Significant Litigation Risks.

Class Members will share in a Net Settlement Amount of no less than $1,509,500. This

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substantial recovery provides for an average pre-tax award of over $6,000 to each of the

approximately 250 Class Members. The amount of settlement is excellent in light of litigation risks

and falls within the range of possible approval.

The reasonableness of the settlement amount must not be solely assessed against the

theoretical maximum that could be recovered assuming a clean sweep at trial; rather, it must be

viewed in light of the particular challenges of each case. “The proposed settlement is not to be judged

against a hypothetical or speculative measure of what might have been achieved had plaintiffs

prevailed at trial.” Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 246.

A settlement need not obtain 100 percent of the damages sought in order to

be fair and reasonable. (See Rebney v. Wells Fargo Bank, supra, 220

Cal.App.3d at p. 1139 [settlements found to be fair and reasonable even

though monetary relief provided was “relatively paltry”]; City of Detroit v.

Grinnell Corp., supra, 495 F.2d at p. 455 [settlement amounted to only “a

fraction of the potential recovery”].)

Id. at 250. See also Officers for Justice v. Civil Serv., Commission (9th Cir. 1982) 688 F.2d

615, 624, 628 (recognizing that “the very essence of a settlement is compromise, a yielding of

absolutes and an abandoning of highest hopes” and that “[i]t is well-settled law that a cash settlement

amounting to only a fraction of the potential recovery will not per se render the settlement inadequate

or unfair.”) (internal quotation omitted). Here, the amount of the Settlement is eminently reasonable

given: (1) the difficulty of the claims, (2) the out-of-pocket costs required to prove the claims; (3) the

risk and uncertainty involved in further litigation, and (4) the amount of time that would pass before

Plaintiff and the Class Members would see the fruits of any class verdict in their favor. (Valerian

Decl. ¶ 31; Fuschetti Decl. ¶ 31.)

Based on class and sample data and using assumptions favorable to the Class, Plaintiff

believes that a realistic, best-case scenario would result in a total recovery of $24 million. (Valerian

Decl. ¶ 32; Fuschetti Decl. ¶ 32.) This best-case estimate includes potential actual damages, interest

and liquidated damages where available by law, waiting time penalties, and stacked PAGA penalties

for seven alleged ongoing Labor Code violations. (Valerian Decl. ¶ 32; Fuschetti Decl. ¶ 32.) The

breakdown in the maximum recovery calculations is as follows: $8.85 million in minimum wage

damages (including interest and liquidated damages); $8.75 million in business expenses; $0.53

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million for failure to provide wage statements; $0.14 million in waiting time penalties for

nonpayment of wages upon separation; and $5.96 million in PAGA penalties, of which 75 percent

would be allocated to the State and 25 percent to the employees. The PAGA penalties amount is

comprised of seven underlying Labor Code violations: § 204 untimely payments, § 1197 failure to

pay minimum wage, § 223 secret payment of a lower wage, §§ 226 and 226.2 wage statement

violations, § 1174 recordkeeping violations, Labor Code § 226.8 willful misclassification, and § 2802

failure to reimburse expenses. (Valerian Decl. ¶ 32; Fuschetti Decl. ¶ 32.)

Excluding the share of PAGA penalties that is required to be remitted to the LWDA, the

amount comprising the Class’s recovery would be approximately $19.97 million. By the same

measure, excluding the allocation payment to the LWDA, the Settlement yields a Class recovery of

approximately $2.35 million, or about 12 percent of the maximum Class recovery scenario described

here.

Defendant asserts numerous legal and factual grounds for defending this action including,

without limitation: (1) OSI is not an employer because Class Members have the exclusive right to

control the manner and means of their inspection services; (2) variations exist among Class Members

based on which survey division they worked in (such as residential versus commercial) and whether

they worked for competitors and negotiated extra payments; (3) because Class Members controlled

when and how they worked, many varying and individualized factors affected their work time, drive

time, and business expenditures; and (4) insufficient commonalities and individualized practices

among Class Members rendered class proceedings inferior and unmanageable. In addition, there are

no time records for class members, making damages calculations uniquely challenging. Absent this

Settlement, Defendant can be expected to vigorously pursue those and other defenses and contest the

propriety of class treatment in response to a motion for certification and through trial.

While Plaintiff remains confident that were this case to proceed in litigation, he would obtain

class certification, defeat decertification, and prove his claims at trial, Plaintiff recognizes there are

considerable risks. First and foremost, there is no guarantee that Plaintiff would prevail on the

misclassification issue. If Plaintiff lost on misclassification, the Class would recover nothing. The

law on misclassification was unsettled during the mediation and in the period before the parties

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entered into the Memorandum of Understanding. The California Supreme Court’s decision regarding

the legal standard for misclassification in Dynamex was still pending and it was uncertain when the

decision would issue and what impact it might have on the law.5 Furthermore, shortly before the

mediation in this case, in what was considered a bellwether case on misclassification issues in the

gig economy, defendant Grubhub Inc. prevailed in a bench trial in federal court in San Francisco.

See Lawson v. Grubhub, Inc. (N.D. Cal., Feb. 8, 2018) 302 F. Supp. 3d 1071, 1093, 2018 WL 776354.

There, Magistrate Judge Jacqueline Corley ruled that Grubhub Inc. had properly classified plaintiff,

a courier, as an independent contractor. Defendant OSI would undoubtedly emphasize, as Grubhub

Inc. did for its couriers, id. at 1085, that OSI insurance inspectors are free to pick their own schedule,

free to reject work orders, and free to work for OSI’s competitors, without being penalized.

Further, even if Plaintiff succeeded in proving at trial that Defendant misclassified the Class

as independent contractors, Plaintiff would still have the challenge of proving the extent of time

worked and business expenses incurred. Because OSI classified inspectors as independent

contractors, there are no records which clearly establish the hours actually worked by inspectors.

Plaintiff’s theory of recovery is that OSI followed a piece rate system that paid for only certain tasks,

but failed to compensate for other tasks. However, based on substantial informal discovery exchanges

and independent investigation, Class Counsel expects that continued litigation would require

significant resources expended on ESI discovery, survey evidence, and expert discovery, and would

expect Defendant to dispute whether there are reliable records from which to estimate the time spent

on the uncompensated tasks.

In addition, time spent driving to inspections – a major component of the damages model –

presents unique challenges for proving liability and damages. Drive time accounts for over $6.5

million of the potential maximum damages, representing 74 percent of the minimum wage damages.

Class Counsel evaluated drive time compensation and reimbursements using a 20-person sample.

Using logistics software, Class Counsel mapped the distance drivers would likely have driven from

the time they left to the time they returned home if they travelled an economical route between their

5 The Supreme Court issued its decision in Dynamex Operations West Inc. v. Superior Court, 4 Cal. 5th 903 (2018), on

April 30, 2018. In the wake of the Dynamex decision, there remains an open question of the proper misclassification test

for statutory wage claims that are not based on IWC wage orders. See, id. at 916, n.5.

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home and inspection sites. Class Counsel then estimated total class mileage in the class period by

comparing the total number of inspections performed by the sample with the total number performed

by the class in the class period and assumed a favorable average driving speed to arrive at drive time.

The valuation model does not take into account several defense arguments that are likely to be central

to the litigation, such as whether travel from the inspector’s home to the first OSI inspection should

be compensated and how to determine and allocate time spent on the road for purposes other than

driving directly to an OSI customer’s location. (Valerian Decl. ¶ 34; Fuschetti Decl. ¶ 34.) Defendant

is also likely to contend that compensation for inspection work includes compensation for driving to

and from inspection sites. Further, during class certification proceedings and beyond, Defendant is

likely to press the argument that drive time includes time spent on personal errands and non-OSI

work, such as inspections performed for other companies. In reaching the Settlement, Class Counsel

necessarily considered the substantial costs and risks involved in proving the compensability of drive

time and the amount of compensable drive time. (Valerian Decl. ¶ 36; Fuschetti Decl. ¶ 36.)

The business expense claim, accounting for over one-third of maximum damages, also

presents certain challenges as to class-wide proof. Mileage and vehicle expenses comprise the biggest

(likely over 90 percent) category of expense and Plaintiff would need to consider the allocation of

mileage and vehicle expenses between those incurred for OSI and those incurred for any other

purpose. Defendant is likely to challenge Plaintiff’s model at class certification and trial, by arguing

that Plaintiff’s data analysis is unreliable and his assumptions are overly aggressive. Furthermore,

Defendant is expected to present evidence of situations where inspectors requested and negotiated

extra pay and reimbursements.

In addition, the PAGA claim implicates unique defenses that would make recovery uncertain.

Defendant may invoke numerous arguments that could, individually or together, dramatically reduce

PAGA penalties. For example, OSI would likely argue that a representative PAGA claim would be

unmanageable and that Plaintiff will not be able to provide a violation as to each aggrieved employee.

See Zackaria v. Wal-Mart Stores, Inc. (C.D. Cal. 2015) 142 F. Supp. 3d 949, 960, 2015 WL 6745714

(“that Plaintiffs have not presented a viable plan for proving violations as to all employees ... merely

means that Plaintiffs may ultimately be unable to prove their case”). OSI could also argue that any

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penalties assessed should be reduced because its classification of inspectors as independent

contractors was in “good faith.” See Cotter v. Lyft, Inc. (N.D. Cal. 2016) 176 F. Supp. 3d 930, 941,

2016 WL 1394236 (stating that the court would likely substantially reduce PAGA penalties to

because there was no indication that Lyft “deliberately sought to evade California’s wage and hour

laws by classifying workers as ‘independent contractors’ when it knew they were really

‘employees.’”).

Furthermore, OSI would probably challenge Plaintiff’s penalties model on the grounds that

PAGA penalties cannot be “stacked” and that instead, the Court could award only one $100 penalty

per “aggrieved employee” per pay period for each violation of the same nature, because to do

otherwise would result in multiple penalties being assessed from the same allegedly unlawful

practice. See Villacres v. ABM Indus., Inc. (2010) 189 Cal. App. 4th 562, 577 (“One injury gives rise

to only one claim for relief ... The violation of one primary right constitutes a single cause of action.”).

OSI would also likely argue that PAGA penalties are only assessable as “initial violations” because

OSI has not been formally notified that it is in violation of the law. See Amaral v. Cintas, (2007) 163

Cal. App. 4th 1157 (holding that $100 PAGA penalties for “initial violations” are assessed until such

time as a defendant has been put on notice that is violating the law, at which point $200 penalties for

“subsequent violations” apply). Similarly, OSI would likely argue that imposition of PAGA penalties

may constitute a confiscatory “taking.” See, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell (2003)

538 U.S. 408, 419-23 (reducing punitive damages where award “bore no relation to [plaintiffs]

harm”); Liodas v. Sahad, (1977) 19 Cal. 3d 278, 284 (“exemplary damages must bear a reasonable

relation to actual damages.”). Indeed, the California Supreme Court has stated “courts refuse to

impose civil penalties against a party who acted with a good faith and reasonable belief in the legality

of his or her actions.” Lusardi Construction Co. v. Aubry (1992) 1 Cal. 4th 976, 996-97. Any of these

arguments, if successful, would significantly reduce potential PAGA penalties.

In short, the primary drivers of the total potential recovery in the combined class and PAGA

action – the unpaid minimum wage time, the business expense reimbursements, and the PAGA

penalties – are rife with risks in continued formal litigation. As described above, Plaintiff would need

to meet significant practical and legal obstacles to achieve the potential maximum recovery.

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Considering the significant challenges faced by Plaintiff as well as Defendant’s legal and factual

defenses, there is a great risk the Class would do substantially worse in litigation than under the

Settlement.

Further, absent a settlement, Class Members would not receive any recovery until after years

of litigation, including appeals. See Nat'l Rural Telecommunications Coop. v. DIRECTV, Inc. (C.D.

Cal. 2004) 221 F.R.D. 523, 2004 WL 1157739 526 (“In most situations, unless the settlement is clearly

inadequate, its acceptance and approval are preferable to lengthy and expensive litigation with

uncertain results.”) (internal quotation omitted). Without the Settlement, there remained extensive,

costly, and complex litigation to follow. For example, the Parties have yet to litigate discovery

motions, summary judgment or class certification, all of which entail significant costs relating to ESI

and non-ESI discovery, depositions, and the retention of experts. Here, Plaintiff would likely have

needed to survey the class, for at least the damages case, if not the liability case, and would have likely

required both a statistician and an economist. If Plaintiff won class certification, he would face the risk

of maintaining class action status through trial. Additionally, at the trial stage, this case may have

presented a costly and complicated trial potentially spanning several weeks, which would also

necessitate extensive and costly pre-trial preparation. Even if neither side pursued appeals, the length,

expense, and uncertainty surrounding future litigation weigh in favor of approval of the settlement.

With this Settlement, the average Class Member will receive over $6,000 and avoid the many

litigation risks relating to the ability to prove class liability and damages. This is a very significant

recovery to be achieved in a relatively speedy manner, especially compared to many other wage and

hour actions. See e.g. Roe v. SFBSC Mgmt., LLC (N.D. Cal. Sep. 14, 2017) 2017 WL 4073809, at *8-

9 (independent contractor misclassification settlement awarding nightclub dancers between $350 and

$850 depending on months of performance); Ogbuehi v. Comcast of

California/Colorado/Florida/Oregon, Inc. (E.D. Cal. June 9, 2015) 2015 WL 3622999, at *7, 10

(approval of wage settlement where the average non-exempt/hourly class member was receiving

$531.67); Gardner v. GC Servs., LP (S.D. Cal. Apr. 2, 2012) 2012 WL 1119534, at *4 (average

settlement award for the non-exempt/hourly employee class was “around several hundred dollars” –

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“a good result for the class”); Collins v. Cargill Meat Solutions Corp. (E.D. Cal. 2011) 274 F.R.D.

294, 2011 WL 837140 302 (preliminary approval of wage settlement where the average non-

exempt/hourly class member was receiving $685). See also Oppenlander v. Standard Oil Co.

(Indiana), 64 F.R.D. 597, 624 (D. Colo. 1974) (“It has been held proper ‘to take the bird in the hand

instead of a prospective flock in the bush.”).

The Settlement here is comparable to the result reached in an earlier class action of a similar

size against the same defendant, Graham v. Overland Solutions, Inc. (S.D. Cal. Sep. 12, 2012) 2012

WL 4009547. There, OSI’s field auditors6 (classified as non-exempt employees) sued for minimum

wage and related wage violations, like here. Like here, the California class was relatively small,

comprising about 240 field auditors. Unlike here, Graham did not involve a misclassification claim

or unreimbursed expenses. The class settlement was reached after over two years of contentious

litigation, where the plaintiffs incurred litigation costs of $55,000 and where class certification was

denied on adequacy grounds because the class representatives were saddled with the unique defenses

of unclean hands. Id. at *8, 19. The ultimate Net Settlement Amount allocated to the California class,

$1,531,244.10, is similar to the estimated NSA here, and the average recovery of $6,380 is also

similar to the estimated average recovery here. Id. at *20. The outcome here compares favorably;

this case resolved faster and with lower expense, and it carried additional risk associated with proving

misclassification on a class basis.

In sum, the Settlement provides meaningful, prompt relief for the disputed wage and hour

violations and is well within the range of reasonableness.

C. The Class Settlement Payment Process is Fair and Reasonable.

All Class Members will be eligible to receive a share of the Net Settlement Amount

proportional to the amount of compensation s/he received compared to the total compensation paid

to inspectors in the Class during the Settlement Period. (See Settlement § VII.) This method of

distribution is reasonably designed so that Class Members who had higher pay rates, completed more

6 Field auditors are non-exempt (i.e., hourly) employees who travel from site to site to audit policy premiums for

Defendant's insurance-company clients. Graham *1

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work orders, and worked a longer period of time for OSI will receive a larger share of the Settlement.

Significantly, the checks-mailed payment process ensures that the maximum possible Net

Settlement Amount will actually be received by Class Members. As stated in the Class Notice, a

Class Member need not take any further action to receive a Settlement payment. Class Members who

may be hesitant to take affirmative action to claim monies from Defendant will not face that barrier

to recovery. Class Members will have 180 days to cash their checks. No settlement funds will revert

to Defendant.

If money remains in the settlement fund after the 180-day period, the remaining uncashed

funds will be distributed to a worthy regional non-profit organization, Bay Area Legal Aid, which

provides civil legal services to the indigent.7 Thus, the Settlement’s provision for distribution of

residual monies complies with California Code of Civil Procedure § 384 .

D. The Settlement Amount Allocated to the Private Attorney General Act Claim is

Reasonable.

The settlement of the PAGA claim for $50,000 is well within the range of reasonable PAGA

settlement amounts approved by the courts. See, e.g. Nelson v. Avon Prod., Inc. (N.D. Cal. Feb. 24,

2017) 2017 WL 733145, at *2 (approving class settlement of $1.8 million with $10,000 attributed to

PAGA claim); Taylor v. Shippers Transp. Express, Inc. (C.D. Cal. May 14, 2015) 2015 WL 12658458,

at *19 (approving payment of $50,000 for PAGA penalties from a $11 million class settlement, finding

that “[t]he proposed PAGA payment is greater than awards deemed reasonable and approved in other

cases,” and citing cases); Franco v. Ruiz Food Prod., Inc. (E.D. Cal. Nov. 27, 2012) 2012 WL

5941801, at *14 (approving PAGA payment of $10,000 from a $2.5 million class settlement, finding

the “amount comports with settlement approval of PAGA awards in other cases,” and citing cases);

Stuart v. Radioshack Corporation (N.D. Cal. Aug. 9, 2010) 2010 WL 3155645, at *2-5 (recognizing

the uncertainty of penalty amounts under PAGA and approving a $4.5 million class settlement with

$50,000 PAGA award for the state); Roe v. SFBSC Mgmt., LLC, supra, 2017 WL 4073809, at *9

(approving PAGA payment of $100,000 from gross settlement of $5 million).

7 https://legalaidatwork.org/

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Pursuant to Labor Code § 2699(i), the LWDA will receive 75 percent of the PAGA amount

($37,500), and the remaining 25 percent ($13,500) will be included in the Net Settlement Amount and

shared by the Class Members.

E. The Settlement’s Provision for Attorneys’ Fees, Expenses, and Costs is

Reasonable and Fair Under the Circumstances.

In connection with final settlement approval, Class Counsel will apply to the Court for

reasonable attorney’s fees and costs. The Settlement Agreement allows Counsel to seek a fee of one-

third of total Settlement fund, a fee of approximately $800,000 here. Fee awards of 33% are

commonly awarded by courts. See, e.g. Laffitte v. Robert Half Int'l Inc. (2016) 1 Cal. 5th 480, 503

(affirming fee award of one-third of the common fund in a wage and hour class action and

recognizing the following advantages in using the percentage method: “relative ease of calculation,

alignment of incentives between counsel and the class, a better approximation of market conditions

in a contingency case, and the encouragement it provides counsel to seek an early settlement and

avoid unnecessarily prolonging the litigation”) (internal quotation omitted); In re Consumer Privacy

Cases (2009) 175 Cal.App.4th 545, 558 (“Empirical studies show that, regardless whether the

percentage method or the lodestar method is used, fee awards in class actions average around one-

third of the recovery.”) (internal quotation omitted); Smith v. CRST Van Expedited, Inc. (S.D. Cal.

Jan. 14, 2013) 2013 WL 163293, at *5 (recognizing the California benchmark for fee awards in class

actions as 33%).8 Class Counsel will further request reimbursement of their incurred, reasonable

8 See also, e.g., In re Pacific Enters. Sec. Litig (9th Cir. 1995) 47 F.3d 373, 379 1995 WL 49484 (affirming

award of one-third of $12 million fund); Singer v. Becton Dickinson & Co. (S.D. Cal. June 1, 2010) 2010 WL

2196104, at *8 (“the request for attorneys’ fees in the amount of 33.33% of the common fund falls within the

typical range of 20% to 50% awarded in similar cases, and is commensurate with other cases litigated by

Plaintiff's counsel. See, e.g., Ingalls v. Hallmark Mktg. Corp. (C.D. Cal. Oct. 16, 2009) 08cv4342 VBF (Ex)

2009 WL 10674054, Doc. No. 77, ¶ 6 (awarding 33.33% fee on a $5.6 million wage and hour class action);

Rippee v. Boston Mkt. Corp. (S.D. Cal. Oct. 10, 2006) Case No. 05cv1359 BTM (JMA) 2005 WL 3578784,

Doc. No. 70, at 7–8 (awarding a 40% fee on a $3.75 million wage and hour class action).”); Abzug v. Kerkorian

(L.A. Super.Ct., Nov. 1990) CA-000981 (45% fee of $35 million class action settlement).

Also, by way of example only, numerous California Superior Courts have made similar fee awards. Haitz v.

Meyer, et al. (Alameda Super.Ct., Aug. 20, 1990) No. 572968-3 (45% fee award); Steiner v. Whittacker Corp.

(L.A. Super.Ct. March 13, 1989) CA 000817 (Reporter's Transcript) (35% fee award); In re Milk Antitrust

Litigation (L.A.Super.Ct.1998) Civ. Case No. BC070061 (33⅓% award); In re Facsimile Paper Antitrust

Litigation (San Francisco Super. Ct. 1997) Civ. Case Nos. 963598, 964899, and 967137 (same); In re Liquid

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costs, not exceeding $25,000. See Thieriot v. Celtic Inc. Co. (N.D. Cal. Apr. 21, 2011) 2011 WL

1522385, *7 (“Class counsel are entitled to reimbursement of reasonable out-of-pocket expenses.”)

The maximum expense reimbursement sought here is relatively low compared to other cases. See,

e.g., Singh v. Roadrunner Intermodal Servs., LLC (E.D. Cal. May 25, 2018), No. 1:15-cv-01497-

DAD-BAM, 2015 WL 5728415, at *7-8 (litigation expenses of $90,000 in independent

misclassification case); Graham v. Overland Solutions, Inc., supra, 2012 WL 4009547, at *19

(litigation expenses of $55,000).

The Court need not rule on Class Counsel’s fees and costs now; a formal application will be

filed prior to the Final Approval Hearing. As will be explained in detail in the application, a fee award

of one-third of the Settlement fund ($800,000) is reasonable and well-justified in consideration of

the risks Class Counsel has undertaken in pursuing this case on a contingency basis and the

outstanding result achieved on behalf of the Class. Despite settling this case expeditiously, Class

Counsel expended significant time and resources on this matter and will continue to do so over the

next year as they oversee the administration of the Settlement.

F. The Service Award Is Reasonable and Routinely Awarded.

Before the Final Approval Hearing, Class Counsel will file a motion seeking a Service Award

for the Class Representative. The Court need not rule on this request now. At present, it is sufficient

for the Court to determine that the award provided for in the Settlement Agreement does not render

the overall Settlement inherently unfair and is not an obstacle to preliminary approval.

Courts routinely approve service (or incentive) awards to compensate class representatives

for the services they provide and the risks they incur during class litigation. See In re Cellphone Fee

Termination Cases (2010) 186 Cal.App.4th 1380, 1393 (“incentive awards are fairly typical in class

action cases . . . and are intended to compensate class representatives for work done on behalf of the

class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes,

Carbon Dioxide Cases (San Diego Super.Ct.1996) J.C.C.P. 3012 (same); In re California Indirect-Purchaser

Plasticware Antitrust Litigation (San Francisco Super.Ct.1995) Civ. Case. Nos. 961814, 963201, and 963590

(same).

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to recognize their willingness to act as a private attorney general.”)

At the Final Approval Hearing, Class Counsel will ask the Court to approve a Service Award

of $18,000 for Class Representative Fletscher. Based on Mr. Fletscher’s significant time, effort and

risks incurred in bringing this case on behalf of the Class, his sacrifice in agreeing to a general release

of his claims against Defendant, and the substantial benefits recovered for the Class by Mr. Fletscher,

the requested service award should ultimately be found to be reasonable. See, e.g. In re High-Tech

Employee Antitrust Litig. (N.D. Cal. Sept. 2, 2015) No. 11-CV-02509-LHK, 2015 WL 5158730, at

*17 (awarding service awards of $80,000 and $120,000); Ruiz v. Affinity Logistics Corp. (S.D. Cal.

Dec. 20, 2017) 2017 WL 6513962, at *9 (granting service award of $100,000 to plaintiff in wage

and hour class action).9

The requested Service Award is also in reasonable proportion to the overall Settlement. In

total, it represents only 0.75% of the total Settlement fund and thus barely impacts the recovery of

the Class Members. See Singer v. Becton Dickinson & Co. (S.D. Cal. June 1, 2010) 2010 WL

2196104, at *9 (awarding $25,000 to class representative from $1 million wage and hour case

settlement (2.5% of fund)); Thieriot v. Celtic Inc. Co, supra, 2011 WL 1522385 at *8 (awarding

$25,000 service award to class representative from class settlement of $1.375 million (1.8% of fund)).

In sum, the proposed attorneys’ fees/costs and Service Award are within the typical range of

possible approval and justified given the facts of this case. Preliminary approval of these requests

should be granted subject to assessment at the final approval stage after Class Counsel formally

applies for fees/costs and Service Awards and the Class Members have an opportunity to respond.

G. RG/2 Claims Administration LLC Should Be Appointed as the Settlement

Administrator.

Pursuant to the Settlement, Plaintiff seeks to have RG/2 Claims Administration LLC

appointed as the Settlement Administrator.

9 Similar awards have been granted by Superior Courts in this state. By way of example, in Ha v. Google Inc. (Santa

Clara Cty. Super. Ct., February 7, 2018) No. 116-CV-290847, the Santa Clara Superior Court approved an award of

$25,000 to the class representative who initiated the wage and hour class action as the sole named plaintiff. See also

Hasty v. Elec. Arts, Inc. (San Mateo Cty. Super. Ct., Sept. 22, 2006) No. CIV 444821 (approving an award of $30,000 to

the class representative in a wage and hour class action); Meewes v. ICI Dulux Paints (Los Angeles Cty. Super. Ct. Sept.

19, 2003) No. BC265880 (approving service awards of $50,000, $25,000 and $10,000 to the named plaintiffs);

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Amongst other things, the Settlement Administrator will be responsible for: processing class

data from Defendant; verifying addresses and mailing the Class Notice to Class Members; for

returned Class Notices, using skip-tracing to obtain current addresses for Class Members; creating

and overseeing a Qualified Settlement Fund (QSF); calculating the Class Settlement Payments (with

the assistance and input of the Parties); and distributing the Class Settlement Payments to Class

Members.

RG/2 Claims Administration LLC is a competent and experienced settlement administration

company. Plaintiff will apply to the Court for up to $10,000 to cover RG/2 Claims Administration

LLC’s fees. Based on the amount of work to be performed by the Settlement Administrator, this sum

is reasonable. See, e.g., McNeal v. RCM Techs. USA Inc. (C.D. Cal. Mar. 16, 2017) 2017 WL

1807595, at *3 (preliminarily approving $327,000 class settlement where the Claims Administrator

would receive fees not exceeding $20,000).

VIII. THE COURT SHOULD CERTIFY A PROVISIONAL SETTLEMENT CLASS.

Pursuant to Rule 3.769(d) of the California Rules of Court, “[t]he court may make an order

approving or denying certification of a provisional settlement class after [a] preliminary settlement

hearing.” In support of class certification, a party must show that (1) the class is “ascertainable and

sufficiently numerous;” (2) there are “predominant common questions of law or fact;” (3) the class

representatives have “claims or defenses typical of the class;”; (4) the class representatives can

“adequately represent the class;” and (5) the benefits of a class action make it “superior to the

alternatives.” Brinker Rest. Corp. v. Superior Court (2012) 53 Cal. 4th 1004, 1021.

The Class Members are identifiable from Defendant’s records, and they total approximately

250 individuals. There is thus no question that the Class is ascertainable and sufficiently numerous

as to make joinder impracticable.

Common legal and factual questions predominate over any individual issues. The common

questions include, without limitation: (i) whether Defendant was an employer of the Class Members;

(ii) whether Defendant’s uniform right of control requires that Class Members be considered OSI’s

employees under California law; (iii) whether Defendant had improper piece rate compensation

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policies and practices; (iv) whether Defendant’s compensation policies paid Class Members for all

hours worked; (v) whether Defendant’s failure to provide accurate, itemized wage statements

violated Labor Code § 226; (vi) whether Defendant required Class Members to pay for specific

business expenses without reimbursement; (vii) whether Defendant’s failure to provide formerly

employed Class Members with all wages due upon separation violated Labor Code §§ 201, 202 and

203; (viii) whether Defendant knowingly and willfully violated wage and hour laws; and (ix) whether

Defendant violated Business and Professions Code § 17200 by virtue of its violations of the Labor

Code.

“The test of typicality is whether other members have the same or similar injury, whether the

action is based on conduct which is not unique to the named plaintiffs, and whether other class

members have been injured by the same course of conduct.” Johnson v. GlaxoSmithKline, Inc. (2008)

166 Cal.App.4th 1497, 1509. Like all Class Members, Plaintiff was engaged as an insurance inspector

for OSI and alleges that he and all other insurance inspectors to OSI’s common policies and practices

for using independent contractor inspectors to perform insurance inspections. Further, Plaintiff

alleges that, like all Class Members, as a result of these policies and practices he was denied minimum

wages for time spent working for OSI, he paid for business expenditures required by OSI but was

not reimbursed, and he was denied itemized wage statements. See Wershba v. Apple Computer, Inc.,

supra, 91 Cal.App.4th at p. 239 (class representative typical as “all of the class members [including

the class representative] here suffered a common alleged wrong.”)

Plaintiff Fletscher will adequately represent the Class. He has the same interest in maintaining

this action as any Class Member would have. Moreover, he has hired counsel experienced in class

actions and wage and hour law. See McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450

(“Adequacy of representation depends on whether the plaintiff's attorney is qualified to conduct the

proposed litigation and the plaintiff's interests are not antagonistic to the interests of the class.”)

Further, the maintenance of the Class results in “substantial benefits” to the Parties, including

the Class Members, and the Court. Linder v. Thrifty Oil Co. (2000) 23 Cal. 4th 429, 435. It would be

inefficient and a waste of the Court’s and Parties’ resources to require 250 Class Members to

separately litigate the same issues in different lawsuits. Capitol People First v. Dep't of

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Developmental Servs. (2007) 155 Cal.App.4th 676, 702 (“without class treatment there could be

multiple actions that would burden the litigants and the courts with cumulative and excessive

expenses, discovery efforts and evidence.”) The class action procedure is an ideal method for

resolving the relatively modest claims of hundreds of current and former OSI insurance inspectors,

many of whom would be deterred from bringing individual claims due to the costs of litigation and

concerns that bringing a lawsuit could adversely affect current or future employment. See Bibo v.

Fed. Exp., Inc. (N.D. Cal. Apr. 21, 2009) 2009 WL 1068880, at *9 (“Class treatment will increase

class members’ access to redress because it unifies what may be a series of small claims . . .

Additionally, class treatment may relax any concerns that current employees may have about

retaliation if they were to bring a suit against FedEx, as unity of the employee class would prevent

retaliation.”)

Accordingly, the Class should be certified as a provisional settlement class.

IX. THE COURT SHOULD APPROVE THE PROPOSED CLASS NOTICE.

A court is afforded broad discretion in determining appropriate notice to class members. Cartt

v. Superior Court (1975) 50 Cal.App.3d 960, 973-74. The Class Notice should be provided in a

manner that “has a reasonable chance of reaching a substantial percentage of the class members.”

Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 251 (internal quotation omitted). “In

regard to the contents of the notice, the notice given to the class must fairly apprise the class members

of the terms of the proposed compromise and of the options open to dissenting class members.” Id.

(internal quotation omitted).

The proposed Class Notice, attached as Exhibit A to the Settlement Agreement, conforms to

the Rules of Court and this Court’s guidelines. The Class Notice clearly and accurately describes (i)

the case; (ii) the terms of Settlement; (iii) that Class Members who do not opt out will be bound by

the Settlement Agreement, including the release of claims, if the Agreement is approved by the Court;

(iv) the process for opting out of the Settlement and the deadline to do so; (v) the method and deadline

to submit written objection; (vi) the process to appear at the Final Approval Hearing to state

objections; and (vii) that a Class Member may retain separate counsel to appear on the Class

Member’s behalf. See Cal. Rules of Court, rule 3.766(d) & 3.769(f).

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The proposed plan for distributing the Class Notice is also reasonable and satisfies the notice

requirements of California Rules of Court, Rules 3.766 & 3.769(f) and all other legal and due process

requirements. Individual notice will be mailed to Class Members which is a reasonable and

practicable way of reaching Class Members. 4 NEWBERG ON CLASS ACTIONS § 8:15 (5th ed. 2014).

Defendant will provide the Settlement Administrator the last known addresses for Class Members.

Prior to the mailing of the Class Notice, the Settlement Administrator will run the list of all Class

Members through the United States Postal Service’s National Change of Address database

(“NCOA”). However, if Class Notices are returned because the address of the recipient is no longer

valid, the Settlement Administrator will perform skip traces to locate Class Members. Further, the

Settlement Administrator will re-send notices based on skip traces or upon request from Class

Members. (Settlement XIII, ¶¶ 83-90.)

The proposed mailing and distribution of the Class Notice constitutes the best notice

practicable under the circumstances.

X. A FINAL APPROVAL HEARING SHOULD BE SCHEDULED.

The last step in the settlement approval process is a final approval hearing, at which the Court

may hear all evidence and argument necessary to evaluate the proposed Settlement. See California

Rules of Court, Rules 3.769(g). Plaintiff respectfully requests that the Court schedule the Final

Approval Hearing and set deadlines for the submission of supporting papers.

XI. CONCLUSION

For the reasons set forth above and in the accompanying papers, Plaintiff respectfully requests

that the Court grant his Motion for Preliminary Approval of the Class Settlement.

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Dated: August 8, 2018

Respectfully submitted,

/s/ Michael D. Palmer

Michael D. Palmer (pro hac vice)


1350 Avenue of the Americas, 31st Floor

New York, NY 10019

Xinying Valerian (CA Bar No. 254890)

VALERIAN LAW

1604 Solano Avenue, Suite D

Albany, CA 94707

Danielle Fuschetti (CA Bar No. 294064)


111 Sutter Street, Suite 975

San Francisco, CA 94104

Attorneys for Plaintiff and the Class

please take notice - sanford heisler sharp, llp...2018/08/08 · 1 2 3 4 5 6 7 8 9 10 11 12 13 14...

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