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Bell v. Consumer Cellular, Inc.

United States District Court, D. Oregon

June 21, 2017

SHAWNA BELL, individually and on behalf of all others similarly situated, Plaintiff,
v.
CONSUMER CELLULAR, INCORPORATED, an Oregon Domestic Business Corporation, Defendant.

          Alan J. Leiman and Drew G. Johnson, Leiman & Johnson, LLC, 44 W. Broadway, Suite 326, Eugene, OR 97440. Of Attorneys for Plaintiff.

          Francis T. Barnwell, Kathryn M. Hindman, and Liani Jeanheh Reeves, Bullard Law, 200 SW Market Street, Suite 1900, Portland, OR 97201. Of Attorneys for Defendant.

          OPINION AND ORDER

          Michael H. Simon United States District Judge..

         This is a class action under Federal Rule of Civil Procedure 23 brought by Plaintiff Shawna Bell (“Plaintiff” or the “Class Representative”) individually and on behalf of current and former employees of Defendant Consumer Cellular Incorporated (“Consumer Cellular”). Plaintiff alleges that Consumer Cellular failed properly to pay her and others the correct amount of overtime wages in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and Oregon wage and hour laws. Before the Court is the parties' Joint Motion for Settlement and Plaintiff's Motion for Attorney's Fees. The Court has considered the motions, the proposed Settlement Agreement, the papers submitted in connection with both motions, the arguments of counsel, the response of the Settlement Class to the Notice of Class Action Settlement (“Class Notice”), and the files, records, and proceedings in the above-captioned action (“Action”). The final approval hearing was held on April 28, 2017. For the following reasons, the parties' Joint Motion for Settlement and Plaintiff's Motion for Attorney's Fees are granted. Class Counsel is awarded attorney's fees in the amount of $250, 000 and costs in the amount of $24, 000. The Class Representative is awarded $2, 500 as an incentive award.

         STANDARDS

         Federal Rule of Civil Procedure 23(e) provides, in part, that “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.” When a district court evaluates a class action settlement under Rule 23(e), the court must determine whether the settlement is fundamentally fair, reasonable, and adequate. In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). “The purpose of Rule 23(e) is to protect the unnamed members of the class from unjust or unfair settlements affecting their rights.” Id.; see also 2 McLaughlin on Class Actions § 6:4 (12th ed. 2015) (“In the context of reviewing a proposed class action settlement, the district court has a special duty to act as guardian for the interests of absent class members because they are not present but will be bound by the disposition of the case.”).

         The Ninth Circuit has a “strong judicial policy that favors settlements, particularly where complex class action litigation is concerned.” Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). “But where, as here, class counsel negotiates a settlement agreement before the class is even certified, courts ‘must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.'” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (quoting In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011)). “In such a case, settlement approval ‘requires a higher standard of fairness' and ‘a more probing inquiry than may normally be required under Rule 23(e).'” Id. (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)).

         BACKGROUND

         On May 30, 2015, Plaintiff filed a collective and class action Complaint in this Court alleging that Consumer Cellular failed properly to pay her and other similarly situated customer service representatives (“CSRs”) the correct amount of overtime pay in violation of the FLSA and Oregon state wage and hour laws. Specifically, Plaintiff alleged that Consumer Cellular did not include non-discretionary incentive pay and bonuses in the computation of the regular rate of pay for the purposes of computing the overtime rate. In its Answer, Consumer Cellular conceded that a payroll system error that occurred from approximately September 2014 until March 2015 may have resulted in the improper calculation of overtime pay for CSRs. Consumer Cellular, however, maintains that it acted in good faith to comply with the FLSA, had reasonable grounds for believing that it was in compliance with the FLSA, and did not act willfully.

         In January 2016, the parties participated in mediation with the Honorable Susa Leeson and Richard “Sam” Hall and reached a preliminary settlement. On April 8, 2016, the parties filed a joint motion for preliminary approval. The Court denied this motion on May 31, 2016, identifying a number of issues, concerns, and deficiencies raised by the proposed settlement agreement. After the Court's denial of the first motion for preliminary approval, the parties participated in further negotiations and reached a new settlement (the “Amended Settlement”). On September 30, 2016, the parties filed a renewed joint motion for preliminary approval. The Court granted this motion, preliminarily approving the Amended Settlement and Settlement Class; appointing Alan J. Leiman and Drew G. Johnson as class counsel; appointing Class Action Administration, LLC (“CAA”) as settlement administrator; approving the settlement class notices for distribution; and requiring that notice of the Amended Settlement be mailed and posted on the web.

         The parties propose a gross settlement amount (GSA) of $900, 000 less requested attorney's fees of $250, 000 (27.8% of the GSA), settlement administration expenses of $24, 000, and an incentive award to Plaintiff of $2, 500. Thus, the remaining Net Settlement Fund (NSF) is $626, 000. The settlement provides for different award amounts for different subclasses of claimants as follows: (1) current Oregon employees will receive $880 each if they submit a claim form and $35 each if they do not; (2) former Oregon employees will receive $1, 791 each if they submit a claim form and $35 each if they do not; and (3) current and former Arizona employees will receive $50 each or the amount of recomputed overtime if they submit a claim form and nothing if they do not. There are 299 current Oregon employees, 197 former Oregon employees, and 232 current and former Arizona employees. Thus, the Settlement Class contains 728 members (the “Settlement Class Members”).

         CAA mailed 728 notice packets to the Settlement Class Members and tracked 65 packets that had been returned as undeliverable. CAA re-mailed three of the returned notice packets to forwarding addresses provided by USPS and 19 of the returned notice packets to addresses found using skip-trace databases. In total, CAA mailed a notice packet to 685 class members, 94% of the total, without the packets being returned as undeliverable.

         CAA received 342 properly completed claim forms before the deadline to respond, which is a response rate of 47%. Only two of the Settlement Class Members timely filed requests for exclusion, and no member filed an objection. Of the 342 Settlement Class Members who submitted claim forms, 170 are members of the subclass of current Oregon employees and will receive a total of $149, 600, 114 are members of the subclass of former Oregon employees and will receive a total of $204, 174, and 58 are members of the subclass of current and former Arizona employees and will receive $3, 511.58. Of the 384 Settlement Class Members who did not timely submit a claim form or a request for exclusion, 128 are members of the subclass of current Oregon employees and will receive a total of $4, 480, 82 are members of the subclass of former Oregon employees and will receive a total of $2, 870, and 174 are members of the subclass of current and former Arizona employees and will receive nothing. In total Consumer Cellular will pay $364, 635.58 to class members, which is 58% of the NSF.

         DISCUSSION

         A. Certification of the Settlement Class

         1. Notice to the Class

         The Court granted preliminary approval to the parties' proposed notice procedure after the parties made certain amendments to the notice as requested by the Court. See ECF 19, 23. The Court is satisfied that the notice procedure was carried out according to the applicable standards. The Court finds that notice of the Amended Settlement was given to the Settlement Class by the best means practicable under the circumstances, including mailing the notice and claim form to the class members and posting the notice, claim form, settlement agreement, and preliminary approval order on a dedicated website.

         The Notice provided Settlement Class Members with all required information including, among other things: (1) a summary of the lawsuit and the claims asserted; (2) a clear definition of the Settlement Class; (3) a description of the material terms of the Amended Settlement; (4) the requirement to submit a claim form and instructions as to how to do so and the deadline for doing so; (6) a disclosure of the release of claims should Settlement Class Members choose to remain in the Settlement Class; (7) an explanation of Settlement Class Members' opt-out rights, the date by which Settlement Class Members must opt out, and information regarding how to do so; (8) instructions about how to object to the Amended Settlement and the deadline for Settlement Class Members to submit any objections; (9) the date, time, and location of the Final Approval Hearing; (10) the internet address for the settlement website and the toll-free number from which Settlement Class Members could obtain additional information about the Amended Settlement; (11) contact information for the class counsel, the settlement administration, and the court; and (11) information regarding how Class Counsel and the Class Representative would be compensated. The Notice is sufficient. See Lane v. Facebook, Inc., 696 F.3d 811, 826 (9th Cir. 2012) (reaffirming that a class notice need only “generally describe[] the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard” (alteration in original) (quoting Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 962 (9th Cir. 2009)).

         The form and method of notifying the Settlement Class fairly and adequately advised Settlement Class Members of all relevant and material information concerning the Action and the terms of the proposed Amended Settlement. The Court finds that the notice fully satisfies the requirements of due process and Rule 23.

         2. Final Certification

         The parties jointly move to resolve this case as a settlement class. In order to certify a settlement class, the requirements of Federal Rule of Civil Procedure 23 must be satisfied. See Hanlon, 150 F.3d at 1019. Rule 23 affords this Court with “broad discretion over certification of class actions . . . .” Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1021 (9th Cir. 2011). A plaintiff seeking class certification must satisfy each requirement of Rule 23(a)-numerosity, commonality, typicality, and adequacy of representation-and at least one subsection of Rule 23(b). See, e.g., Lozano v. AT & T Wireless Servs., Inc., 504 F.3d 718, 724 (9th Cir. 2007). The parties agreed to certification of the class for settlement purposes, and the Court previously evaluated the requisite factors in conditionally certifying the class for settlement purposes in the preliminary approval of the Settlement. Having fully reviewed the record, the Court finds no reason to alter that assessment. Accordingly, the Court certifies for settlement purposes the following Settlement Class:

1. The Arizona Subclass consisting of a total of 232 current and former employees of Consumer Cellular, Inc. who worked for Defendant between September 1, 2014 and March 31, 2015, and who allegedly earned overtime and non-discretionary incentive pay and/or bonus pay during that time period;
2. The Oregon Current Employee Subclass consisting of a total of 300 current and former employees of Consumer Cellular, Inc. who were working for Defendant as of January 19, 2016, and who worked for Defendant between September 1, 2014 and March 31, 2015, and who allegedly earned overtime and non-discretionary incentive pay and/or bonus pay during that time period; and
3. The Former Oregon Employee Subclass consisting of a total of 196 former employees of Consumer Cellular, Inc. who worked for Defendant between September 1, 2014 and March 31, 2015, and who allegedly earned overtime and non-discretionary incentive pay and/or bonus pay during that time period.

         B. Settlement Agreement

         To approve a class action settlement, a court must find that the settlement is “fair, reasonable, and adequate.” Fed.R.Civ.P. 23(e); Lane, 696 F.3d at 818. The settlement must be considered as a whole, and although there are “strict procedural requirements on the approval of a class settlement, a district court's only role in reviewing the substance of that settlement is to ensure it is ‘fair, adequate, and free from collusion.'” Lane, 696 F.3d at 818-19 (quoting Hanlon, 150 F.3d at 1027). A number of factors guide this review, including: (1) the strength of plaintiff's case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement. Id. at 819. Courts within the Ninth Circuit “put a good deal of stock in the product of an arms-length [sic], non-collusive, negotiated resolution.” Rodriguez, 563 F.3d at 965.

         Additionally, class action settlements involve “‘unique due process concerns for absent class members' who are bound by the court's judgments.” Radcliffe v. Experian Info. Sols. Inc., 715 F.3d 1157, 1168 (9th Cir. 2013) (quoting In re Bluetooth, 654 F.3d at 946). Where the settlement agreement is negotiated before formal class certification, as in this case, the district court should engage in “an even higher level of scrutiny for evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) . . . .” In re Bluetooth, 654 F.3d at 946. Evidence of collusion may not be evident on the face of a settlement, and a court should consider whether there is evidence of more subtle signs of collusion. Staton v. Boeing Co., 327 F.3d 938, 958 n.12, 960 (9th Cir. 2003). The Court reviews, in turn, the relevant factors bearing on the evaluation of whether the Amended Settlement is fair, reasonable and adequate.

         1. The Strength of Plaintiff's Case

         This factor examines the strength of a plaintiff's case on the merits balanced against the amount offered in the settlement. Ontiveros v. Zamora, 303 F.R.D. 356, 369 (E.D. Cal. 2014). The “fairness hearing is not to be turned into a trial or rehearsal for trial on the merits, ” and the court is not “to reach any ultimate conclusions on the contested issues of fact and law which underlie the merits of the dispute, for it is the very uncertainty of outcome in litigation and avoidance of wasteful and ...


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