Sanchez v. Frito-Lay, Inc.

ELIAZAR SANCHEZ, et al., Plaintiffs, v. FRITO-LAY, INC., Defendant.

1:14-cv-00797 AWI-MJS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

August 5, 2015

FINDINGS AND RECOMMENDATIONS RECOMMENDING THAT PLAINTIFFS' MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT BE DENIED

[Doc. 9]

OBJECTIONS DUE WITHIN FOURTEEN (14) DAYS

On December 11, 2014, Plaintiff Eliazar Sanchez, on behalf of himself and others similarly situated (hereinafter collectively referred to as "Plaintiffs"), filed a motion for preliminary approval of a class action settlement. (ECF No. 9.) On January 22, 2015, Defendant, Frito-Lay, Inc., filed a statement of non-opposition to the motion.

The motion was referred to the undersigned magistrate judge for findings and recommendations pursuant to 28 U.S.C. § 636(b). The hearing on Plaintiffs' motion took place on January 30, 2015. Counsel Jerusalem Beligan appeared telephonically on behalf of Plaintiffs and counsel Ashely Hirano appeared telephonically on behalf of Defendant.

At the hearing, the Court requested further briefing from the parties. (ECF No. 11.) Plaintiffs provided supplemental briefing to the Court on March 6, 2015. (ECF No. 14.) On April 28, 2015, the Court vacated further hearings in the matter, and took the motion under submission. (ECF No. 15.) Accordingly, the matter stands ready for adjudication.

I. BACKGROUND

A. Allegations in the Complaint

The operative complaint in this action was filed in Kern County Superior Court on April 11, 2014, and removed to this court on May 23, 2014. (ECF No. 1.) Plaintiffs filed the complaint against Defendant alleging violations of the California labor code including failure to pay regular hourly wages, failure to pay overtime wages, failure to pay the correct overtime rate of pay, failure to pay premium wages for denial of meal and rest periods, failure to pay vested vacation wages, illegal deductions of vested vacation wages, breach of contract for failure to pay vested wages, failure to pay final wages due upon termination, failure to provide accurate itemized wage statements, and violations of California Unfair Competition Law. (Id.)

Plaintiffs reside in California and were employed as non-exempt hourly employees of Defendant whose job positions did not include "merchandiser," "route sales representatives," "relief sales associates," or "route salespersons." (Compl. ¶¶ 27, ECF No. 1.) Defendant owns and operates plants, manufacturing sites, distribution centers, warehouses, facilities, branches and cost centers throughout California including, but not limited to, manufacturing sites in Kern County and Rancho Cucamonga. (Id. at ¶ 3.) Defendant also owns and operates distribution centers located in Chula Vista, Santee, Vista, City of Industry, Bloomington, Murrieta, Sylmar, Nipomo, Ventura, Bakersfield, Lancaster, El Toro, Torrance, La Mirada, Palm Springs and Victorville. (Id.)

In the complaint, Plaintiffs assert that the above violations were a result of Defendant's policies and practices such as rounding time in a manner that did not compensate class members for all hours worked, not paying overtime at the correct rate,failing to either provide class members uninterrupted meal periods or compensate them an additional hour of pay for non-compliant meal periods, failing to provide appropriate rest periods, and failing to allow accrued vacation to carry over from year to year or to provide accrued vacation pay at termination. (Id. at 4.)

At the time the complaint was filed the named plaintiff, Eliazar Sanchez resided in and was employed by Defendant at a plant located in Kern County. (Id. at 23.)

Besides the issuance of a scheduling order by the Court on September 3, 2014, no substantive actions have taken place with regard to this matter prior to the filing of the instant motion for preliminary approval of the class action settlement.

B. Terms of the Proposed Settlement Agreement

The parties seek to approve a single class for purposes of settlement only. The class would consist of employees of Defendant in California who held the title of maintenance mechanic. The agreement does not specify the dates when the class members were required to be employed by Defendant, but the parties stipulate that the member class consists of 137 current and former maintenance mechanics who worked at manufacturing and warehouse plants throughout California.

Under the terms of the proposed settlement, Defendant agrees to pay $600,000.00 ("gross settlement amount") to resolve the claims of any class members who timely return to the claims administrator a consent and claim form.

The parties propose the following deductions from the gross settlement amount:

• $15,000.00 to Sanchez, the named plaintiff, as an incentive award for his services and participation as class representative;

• Up to $198,000.00 (33 percent of the gross settlement fund) to class counsel for attorney fees;

• Up to $20,000.00 in legal costs and expenses;

• Up to $10,000.00 in claims administrator costs; and

• The remaining settlement amount of roughly $357,000 is to be distributed to individual class members.

Of the individual settlement payments provided to individual class members, 50% of the payment would be allocated to the member's wage claim and be subject to payroll withholding, and the other 50% would be for wage penalties and interest and not subject to withholding. (Memo. P&A for Prelim. Approval, ECF No. 9-1 at 8.)

The settlement provides that if the net settlement amount exceeds the sum of the individual payments, the remaining funds will first be used to pay Defendant's own tax obligations on payments made under the settlement agreement, and the remainder distributed cy pres to The United Way, with 50% of the latter distribution earmarked for a veteran's organization arm of the United Way if practicable.

The parties agree that recovery would be allocated based on the number of weeks worked by each class member during the class period relative to the total number of weeks worked by all members during the period. Each class member would receive his proportionate share of the payout fund based on such calculations. Defendant would examine the time and payroll records of each class member to calculate the gross settlement amount due each member and provide that information to the class administrator within 30 days after the close of the class period.

Funds uncollected by a class member would be held as unpaid funds and paid out as described above with regard to excess funds—used to pay Defendant's employer-owed tax obligations on the wage payments made under the agreement, with any residual remaining thereafter distributed cy pres to The United Way.

II. CONDITIONAL CLASS CERTIFICATION

For the purposes of the proposed settlement, the parties request the Court to provisionally certify the class. See, Mot. at 13.

To certify a class, a plaintiff must demonstrate that all of the prerequisites of Rule 23(a), and at least one of the requirements of Rule 23(b) of the Federal Rules of Civil Procedure have been met. Wang v. Chinese Daily News, Inc., 737 F.3d 538, 542 (9th Cir. 2013). When determining whether to certify a class for settlement purposes, a court must pay "heightened" attention to the requirements of Rule 23. Amchem Prods., Inc. v.Windsor, 521 U.S. 591, 620 (1997); Narouz v. Charter Communs., LLC, 591 F.3d 1261, 1266 (9th Cir. 2010). Indeed, "[s]uch attention is of vital importance, for a court asked to certify a settlement class will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold." Amchem Prods., Inc., 521 U.S. at 620.

In order to depart from the usual rule that litigation is conducted by individually named parties, "a class representative must be part of the class and 'possess the same interest and suffer the same injury' as the class members." Wal-Mart Stores, Inc. v. Dukes (Wal-Mart), 131 S.Ct. 2541, 2550 (2011). Rule 23(a) provides that the named plaintiffs are appropriate representatives where: "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." These requirements ensure that the class claims are limited to those fairly encompassed by the named plaintiff's claims. Wal-Mart, 131 S.Ct. at 2550.

Additionally, Plaintiffs seek certification of a class under Federal Rule of Civil Procedure 23(b)(3), which requires a demonstration that questions of law or fact common to class members predominate over any questions affecting only individual members and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

Finally, it is noted:

Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficient numerous parties, common questions of law or fact, etc. We recognized in Falcon that "sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question," [citation] and that certification is proper only if "the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied, [citation]."

Wal-Mart, 131 S. Ct. at 2551 (italics in original).

A. Numerosity

The numerosity requirement is satisfied where "the class is so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). This requires the Court to consider "specific facts of each case and imposes no absolute limitations." General Tel. Co. v. EEOC, 446 U.S. 318, 330, 100 S. Ct. 1698, 64 L. Ed. 2d 319 (1980). Courts interpreting...