Borelli v. Black Diamond Aggregates, Inc.

8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 11 Edward Borelli, et al., No. 2:14-cv-02093-KJM-KJN 12 Plaintiffs, ORDER 13 v. Black Diamond Aggregates, Inc., et al., 1S Defendants.

17 The plaintiffs move for class certification and final approval of a settlement agreement in | this action for violations of the Fair Labor Standards Act and California wage and hour laws.

19 | Plaintiffs’ counsel also requests an award of reasonable attorneys’ fees. The proposed class meets | the requirements of Federal Rule of Civil Procedure 23(a) and (b)(3), so the court certifies it. The | proposed settlement is fair and adequate, so the court approves it. The court also finds the | proposed fee award to be reasonable, as explained below. The motions are thus granted.

23 | I. BACKGROUND 24 The court summarized the plaintiffs’ allegations, the history of this litigation, and the | terms of the proposed settlement agreement in a previous order, as follows: 26 According to the operative complaint, Black Diamond used a 27 compensation scheme that paid drivers less than minimum wages and 28 wrongfully withheld pay for required rest breaks and other working 29 time. See, e.g., First Am. Compl. §§ 30, 39, 44, 48, 64. The 1 complaint also includes claims for wrongfully withheld meal breaks, 2 faulty pay stubs, and related wage and hour claims, among others.

3 See, e.g., id. ¶¶ 55, 59. It seeks certification of a class action as well 4 as a collective action under the federal Fair Labor Standards Act 5 (FLSA). See id. ¶¶ 16–24, 27–34.

6 Black Diamond successfully moved to compel arbitration in 2017.

7 See Order, ECF No. 67. The court also compelled Basic Resources 8 to participate in the arbitration, finding the two companies were alter 9 egos. See id. at 21–22. While the arbitration was still ongoing, the 10 parties participated in mediation with Lisa Klerman, a mediator 11 whom California district courts have described as “experienced” and 12 “well-respected” in wage and hour class actions. Sohnen Decl. ¶ 15, 13 ECF No. 87-2; see also, e.g., De Leon v. Ricoh USA, Inc., No. 18- 14 03725, 2019 WL 6311379, at *1 (N.D. Cal. Nov. 25, 2019); Galarza 15 v. Kloeckner Metals Corp., No. 17-4910, 2019 WL 8886020, at *8 16 (C.D. Cal. Feb. 4, 2019). The parties eventually reached an 17 agreement to settle on behalf of all former Black Diamond truck 18 drivers with the same wage and hour claims. See Settlement Agmt., 19 Sohnen Decl. Ex. A, ECF No. 87-2.

20 The agreement creates three overlapping subclasses of former Black 21 Diamond employees: one with claims under California labor law, a 22 second with federal FLSA claims, and a third with claims under the 23 California Private Attorneys General Act (PAGA). See id. ¶¶ 63–65.

24 In total the class includes 85 drivers who worked at Black Diamond 25 between 2010 and 2014, when the company ceased operations. See 26 Sohnen Decl. ¶¶ 18, 31. Black Diamond and Basic Resources agree 27 to pay $340,000 to settle these claims. Settlement Agmt. ¶ 70.c. Of 28 that sum, the parties agree that up to $112,000 may cover attorneys’ 29 fees, $12,000 may be allocated to costs, and $7,500 will be paid to 30 each of the three named plaintiffs as service awards. See id. ¶¶ 70.f– 31 h. The parties estimate $5,200 will be paid to administer the 32 settlement. See id. ¶ 70.g. The settlement amount will be reduced 33 by any resulting payroll taxes, approximately $11,300, and a $7,500 34 payment to the California Labor and Workforce Development 35 Agency (LWDA), as required by the California Labor Code. See id. 36 ¶ 70.e; Cal. Lab. Code § 2699(i). These deductions would result in 37 a net settlement amount of approximately $169,300, slightly less than 38 half the gross. Mem. P.&A. at 12 n.9, ECF No. 87-1. [Today, the 39 settlement administrator estimates the total net settlement amount is 40 slightly lower: $167,167.50. Mem. Approv. at 10 n.7, ECF No. 106.]

41 The parties propose[d] that notice be given to class members and 42 money distributed from the net settlement fund using the contact 43 information in Black Diamond’s employment records. See 44 Settlement Agmt. ¶¶ 79–91 & Exs. A & B. Members of the putative 45 Rule 23 subclass [could] opt out or object, see id. ¶¶ 93–96; members 1 of the FLSA collective action [were required to] either opt in or 2 [consent] as provided in the FLSA, see id. ¶ 70.e.iv; see also 3 Campbell v. City of Los Angeles, 903 F.3d 1090, 1109 (9th Cir. 4 2018); and membership in the PAGA subclass is automatic under 5 California law, see Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 6 425, 436 (9th Cir. 2015). No class member [would] receive less than 7 $25.00. See id. ¶ 70.e.v. The parties propose[d] that any unclaimed 8 funds be paid cy pres to the Salvation Army in Modesto. Id. ¶ 70.i.

9 Prev. Order at 1–3, ECF No. 103 (with update on net settlement amount in brackets).

10 The court preliminarily approved the proposed settlement. First, the court found the proposed Rule 23 class was likely to both meet the four prerequisites of Rule 23(a), id. at 6–8, and to satisfy the requirements of Rule 23(b)(3), id. at 8–10. Several aspects of the proposed settlement agreement supported the plaintiffs’ belief the agreement was fair and reasonable: 14 The parties litigated over the arbitration clause, participated in 15 arbitration, undertook discovery during the arbitration, and went to 16 mediation with an experienced third-party neutral. They reached an 17 agreement only after a day-long in-person meeting and one month of 18 follow-up negotiations. . . . The named plaintiffs have also each 19 devoted many hours of their own time to the litigation and 20 arbitration, . . . and their attorneys vigorously contested Black 21 Diamond’s motion to compel arbitration. Plaintiffs also secured 22 Basic Resources’ participation in the arbitration and mediation as an 23 alter ego of Black Diamond. . . . The proposed agreement also treats 24 similar class members similarly, with the exception of the proposed 25 service awards . . . , and ensures that each receives at least a small 26 award using Black Diamond’s employment records. Counsel 27 believes the settlement is fair. And finally, a settlement would make 28 potentially costly and time-consuming arbitration unnecessary.

29 Id. at 11.

30 Other aspects of the proposed agreement, however, gave the court concern. First, according to an estimate by plaintiffs’ counsel, a full recovery would have been worth more than $1.6 million, but under the proposed settlement agreement, class members would receive only about $170,000. Id. at 12. The court found this discount might ultimately prove reasonable given a number of legal and evidentiary risks counsel cataloged in a declaration, but required “a more searching analysis of those risks before granting final certification.” Id. ///// 1 Second, a portion of the difference between the net award and the maximum potential award flowed “from the subtraction of $112,200 in fees, $22,500 in incentive awards, and $12,000 in estimated costs.” Id. The defendants agreed not to contest those amounts. Id. at 12– 13. As a result, on average, class members each would be giving up about $1,700 to cover fees, costs, and incentive awards, and they would receive average distributions of about $2,000. See id. at 13. Some might receive only $25. Id. 7 Third, the 33 percent fee award made up a relatively large percentage of the total gross award, higher than the 25 percent benchmark against which such awards are normally measured.

9 Id. at 13. Based on the record at the time, the court could not conclude that this departure was justified. Id. The summaries of attorney hours and rates counsel filed in support of their request motion did not include enough detail to permit a useful cross check against a “lodestar” award amount. See id. 13 Fourth, the court expressed concern regarding the proposed incentive awards. See id. at 13–14. The named plaintiffs would each receive $7,500, much more than the average recovery amount. See id. at 13. The court required “greater support” for the proposed incentive award before giving final approval. Id. at 14.

17 These concerns were “compounded by the defendants’ agreement not to oppose the requests for fees, costs and incentive awards.” Id. The court nevertheless granted preliminary approval after considering (1) the parties’ agreement that any fees and incentive payments not paid out would revert to the class or would be paid cy pres to the Salvation Army, (2) the absence of any other indication counsel and the named plaintiffs [had] shirked their responsibilities to the absent class members,” and (3) the “strong judicial policy favoring settlement of class actions.”

23 Id. at 14 (alterations, citations, quotation marks omitted).

24 Finally, the court certified the proposed FLSA collective action on a preliminary basis for the same reasons, id. at 15, and approved the parties’ proposed notice, id. at 15–16.

26 Plaintiffs then arranged for notice to be sent to the proposed class members. Brunner Decl. ¶ 9, ECF No. 106-2. None objected to the proposed class action, none opted out, and only one claimant disputed the worksheets used to calculate the pro rata awards. See id. ¶¶ 12, 14–17; Second Suppl. Sohnen Decl. ¶ 5, ECF No. 107. The claims administrator rejected the dispute as unsubstantiated. See Second Suppl. Sohnen Decl. ¶ 5. Of the 66 former employees who were eligible to participate in the FLSA collective action, 42 opted in. Id. ¶ 4. With these final counts, according to data provided by the settlement administrator, the average recovery per proposed class member would be a little more than $2,000, not including incentive payments. Brunner Decl. ¶ 13. The maximum recovery would be almost $6,000 (to Christiana Pitassi, one of the named plaintiffs, again, not including incentive payments), and no class member would receive less than $25. Id. The other two named plaintiffs would receive $1,305.36 and $5,172.62, respectively. Id. 10 The plaintiffs now move for final approval and certification, and they request an award of $112,200, the maximum fee to which the defendants agreed not to object. See Mot. Approv., ECF No. 104; Mem. Approv., ECF No. 106; Mot. Fees, ECF No. 105; Mem. Fees, ECF No. 105- 1. Counsel also lodged confidential copies of the parties’ mediations briefs, which the court has reviewed in camera. The defendants do not oppose the pending motions. The court held a hearing on October 8, 2021. Hr’g Min., ECF No. 110. Harvey Sohnen appeared for the plaintiffs, Barbara Cotter appeared for Black Diamond, and Bryan Hawkins appeared for Basic Resources.

18 II. RULE 23 CLASS 19 “Rule 23 governs class certification.” Stromberg v. Qualcomm Inc., 14 F.4th 1059, 1066 (9th Cir. 2021). “As a threshold matter, a class must first meet the four requirements of Rule 23(a): (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.” Id. “In addition . . . , the class must meet the requirements of at least one of the ‘three different types of classes’ set forth in Rule 23(b).” Id. (quoting Senne v. Kansas City Royals Baseball Corp., 934 F.3d 918, 927 (9th Cir. 2019), cert. denied, 141 S. Ct. 248 (2020)). For classes proposed under Rule 23(b)(3), such as the proposed class in this case, “a court must find that ‘the 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.’” Id. (quoting Fed. R. Civ. P. 23(b)(3)). “This ‘inquiry focuses on the relationship between the common and individual issues and ‘tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.’” Id. (quoting Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 944 (9th Cir. 2009)).

4 For the reasons explained in this court’s previous order, the proposed classes meet the requirements of Rule 23. No new evidence or other developments suggest otherwise. No proposed class member has objected or opted out. The proposed class is certified.

7 Class claims may be settled, but “only with the court’s approval,” Fed. R. Civ. P. 23(e): 8 If the proposal would bind class members, the court may approve it 9 only after a hearing and only on finding that it is fair, reasonable, and 10 adequate after considering whether: 11 (A) the class representatives and class counsel have 12 adequately represented the class; 13 (B) the proposal was negotiated at arm’s length; 14 (C) the relief provided for the class is adequate, taking into 15 account: 16 (i)the costs, risks, and delay of trial and appeal; 17 (ii) the effectiveness of any proposed method of 18 distributing relief to the class, including the method 19 of processing class-member claims; 20 (iii) the terms of any proposed award of attorney's 21 fees, including timing of payment; and 22 (iv) any agreement required to be identified under 23 Rule 23(e)(3); and 24 (D) the proposal treats class members equitably relative to 25 each other.

26 Fed. R. Civ. P. 23(e)(2).

27 “In this Circuit, a district court examining whether a proposed settlement comports with Rule 23(e)(2) is guided by the eight ‘Churchill factors’”: 29 (1) the strength of the plaintiff's case; 30 (2) the risk, expense, complexity, and likely duration of further 31 litigation; 1 (3) the risk of maintaining class action status throughout the trial; 2 (4) the amount offered in settlement; 3 (5) the extent of discovery completed and the stage of the 4 proceedings; 5 (6) the experience and views of counsel; 6 (7) the presence of a governmental participant; and 7 (8) the reaction of the class members of the proposed settlement.

8 Kim v. Allison, 8 F.4th 1170, 1178 (9th Cir. 2021) (line breaks added) (quoting In re Bluetooth Headset Prods. Liab., 654 F.3d 935, 946 (9th Cir. 2011), in turn quoting Churchill Vill. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)).

11 The Ninth Circuit recently made clear that Rule 23(e) “imposes on district courts an independent obligation to ensure that any class settlement is ‘fair, reasonable, and adequate,’ accounting for the interests of absent class members.” Briseño v. Henderson, 998 F.3d 1014, 1022 (9th Cir. 2021) (quoting Fed. R. Civ. P. 23(e)(2)). District courts must “ensure that [any attorneys’ fee] award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount.” Id. (alteration in original) (quoting Bluetooth, 654 F.3d at 941). “In other words, . . . Rule 23(e) makes clear that courts must balance the ‘proposed award of attorney’s fees’ vis-à-vis the ‘relief provided for the class’ in determining whether the settlement is ‘adequate’ for class members. Id. at 1024. A district court must therefore “scrutinize fee arrangements” to determine if class members have been “shortchanged” as a result of “collusion.”

21 Id. at 1026. Three “red flags” might reveal collusion: “(1) a handsome fee award despite little to no monetary distribution for the class, (2) a ‘clear sailing’ provision under which defendant agrees not to object to the attorneys’ fees sought, and (3) an agreement that fees not awarded will revert to the defendant, not the class fund.” Kim, 8 F.4th at 1180.

25 Now, as when this court granted the motion for preliminary approval, several aspects of the proposed settlement agreement weigh in favor of approving it finally.

27 ///// ///// 1 First, the named plaintiffs have represented the class adequately. See Fed. R. Civ. P. 23(e)(2)(A). The individual named plaintiffs1 have devoted dozens of hours to this case, including by participating in discovery and assisting class counsel in developing their case. See generally Borelli Decl, ECF No. 87-3; Pitassi Decl., ECF No. 87-4; Muniz Decl., ECF No. 87-5; see also Suppl. Sohnen Decl. ¶ 31, ECF No. 106-1. Class counsel also litigated diligently on behalf of the class, including in disputes about the enforcement of the arbitration clause, the arbitration itself, during mediation, and now, in class certification. See Prev. Order at 2.

8 Second, the mediation that produced the proposed settlement agreement bears several hallmarks of arm’s-length negotiations. See Fed. R. Civ. P. 23(e)(2)(B). The parties began negotiating a potential settlement agreement only after vigorous litigation over whether the arbitration clause was enforceable and only after conducting discovery in that arbitration. Prev.

12 Order at 11. They selected a well-known and capable mediator. See Sohnen Decl. ¶ 15, ECF No. 87-2; Prev. Order at 2. They did not reach an agreement immediately, but rather after nearly a month of follow-up negotiations. See Prev. Order at 2.

15 Third, the method the settlement agreement uses to distribute the net award is objective and lends support to counsel’s claim that the agreement treats class members equitably. See Fed. R. Civ. P. 23(e)(2)(D). First, $10,000 is allocated to the claims bought by the plaintiffs as private attorneys general on California’s behalf. See Settlement Agmt. at 14. After the statutory $7,500 payment to the California Labor and Workforce Development Agency, the remaining $2,500 is distributed to the class pro rata using the number of workweeks each class member actively worked. See id. Of the remaining net award, 75 percent is allocated to the claims arising under California law, which make up the majority of those claims in the complaint. See id. at 14–15; First Am. Compl. ¶¶ 25–89, ECF No. 37. That 75 percent is divided again among the class, also using workweeks as an objective indicator of the value of each class member’s claims. See Settlement Agmt. at 15. The remainder of the net award is allocated to the claims by plaintiffs who opted into the federal Fair Labor Standards Act collective action. See id. This scheme will Mr. Muniz passed away, and the court approved the substitution of the representative of his estate, Lynett Ann Muniz, as a named plaintiff. See Order (Sept. 4, 2020), ECF No. 100.

1 not result in any starkly larger or smaller awards to any particular class members: the minimum award is $25; the average award is approximately $2,000, and the maximum award is a little less than $6,000. Brunner Decl. ¶ 13. No class members opted out of this compensation scheme, none objected to it, and only one class member submitted a dispute, which was unsuccessful. See id. ¶¶ 15–17; Second Suppl. Sohnen Decl. ¶ 4.

6 Fourth, the settlement agreement offers class members monetary compensation sooner than they would receive it if the case were litigated through the completion of arbitration, the judicial action, any motion practice related to confirmation of the arbitration, and any appeals.

9 See Fed. R. Civ. P. 23(e)(2)(C)(i). Direct payment of a monetary award is an effective means of compensation for the class’s injuries, which all are related to wages. See Fed. R. Civ. P. 23(e)(2)(C)(ii). It is unlikely the settlement agreement will squelch meritorious claims. No other action concerns the same or similar claims, and all those whom the agreement binds are likely to be included in the distribution. The parties used employment records to locate class members and determine the amount of their individual compensation. Cf. Kim, 8 F.4th at 1179 (reversing final approval when settlement released strong claims). In other words, this class does not present the dangers of claims-made distributions, which the Ninth Circuit recently summarized. See Briseño, 998 F.3d at 1020.

18 Fifth, to the extent the remaining Churchill factors are relevant here, they weigh in favor of approval or are neutral. See Kim, 8 F.4th at 1178 (listing “the experience and views of counsel,” “the presence of a governmental participant,” and “the reaction of the class members of the proposed settlement” (quoting verbatim Bluetooth, 654 F.3d at 946).

22 As this court wrote in its previous order, however, the net award to class members is much smaller than their attorneys’ estimate of the value of their claims. See Prev. Order at 12. Under the proposed settlement agreement, about $170,000 will go to the class to compensate injuries their attorneys have estimated at $1.6 million. See id. Although this discount is substantial, after further reviewing the record and the parties’ confidential submissions, the court finds that the settlement agreement represents a rational compromise. Without a settlement, the plaintiffs would have had to overcome several nontrivial obstacles: 1  The Ninth Circuit recently upheld the Federal Motor Carrier Safety 2 Administration’s decision that some of the California laws in question here were 3 preempted in ways that could reduce the expected value of the plaintiffs’ claims.

4 See generally Int’l Bhd. of Teamsters, Loc. 2785 v. Fed. Motor Carrier Safety 5 Admin., 986 F.3d 841 (9th Cir. 2021), cert. denied, ___ U.S. ___, 2021 WL 4507755 (U.S. Oct. 4, 2021).

7  Several courts have recently held that California’s wage statement laws do not 8 permit some aspects of the plaintiffs’ claims to relief for unpaid wages. See, e.g., 9 Castro v. Wal-Mart, Inc., No. 20-00928, 2020 WL 4748167, at *2 (E.D. Cal. Aug.

10 17, 2020) (citing Maldonado v. Epsilon Plastics, Inc., 22 Cal. App. 5th 1308, 11 1335–37 (2018)).

12  The record includes no documentary evidence showing how much time employees 13 spent on tasks that did not contribute to their pay, but which were mandatory. See 14 Suppl. Sohnen Decl. ¶ 13. As a result, for employees to prove they were not 15 compensated for this time, they would have needed to conduct employee surveys, 16 which would have taken time and money. Id. ¶¶ 13–15. Relying on surveys 17 would also have been a risky proposition in this case. Years have passed since the 18 alleged violations, so employees’ memories are likely poor, could be 19 contradictory, and may be subject to reliability challenges. Survey response rates 20 might also be low, so survey results might not have been reliable in statistical 21 terms.

22  At least some evidence suggests the defendants did not force drivers to forego 23 meal or rest breaks. For example, drivers signed cards acknowledging the 24 company’s policy did not allow employees to work more than five hours without a 25 meal break. Some drivers may also have agreed to take meals on duty.

26  Some class members may have waived their rights to participate in class litigation.

27  If this case went forward, the defendants might have successfully proved that 28 wages exceeded minimum requirements even if some required tasks did not 1 contribute to the employees’ overall pay. The defendants would also argue that 2 drivers could request compensation for time they were on duty but could not work, 3 for example, if they were stuck in traffic.

4  The plaintiffs believe that without the proposed settlement agreement, they would 5 face stiff opposition if they attempted to litigate this case on a classwide or 6 representative basis. See, e.g., Suppl. Sohnen Decl. ¶ 10. The court has reviewed 7 the parties’ confidential mediation briefs and declarations and is not persuaded that 8 a class certification motion would be as difficult an obstacle as the plaintiffs now 9 suggest. Even if that legal risk were low, however, a contested motion to certify a 10 class would be expensive and time-consuming. The settlement agreement short- 11 circuits that motion practice and thus saves time and money, so a discount to the 12 award is rational. See Fed. R. Civ. P. 23(e)(2)(C)(i) (requiring court to consider 13 any “costs” and “delay” avoided by settlement agreement).

14  Finally, the plaintiffs point out that this court’s previous orders do not preclude 15 Black Diamond and Basic Resources from attempting to prove in the arbitration or 16 elsewhere that they were not corporate alter egos. See Order (Mar. 28, 2018) at 7, 17 ECF No. 79; Suppl. Sohnen Decl. ¶¶ 5–9. The court has reviewed the parties’ 18 private mediation briefs and is not persuaded that the defendants would have 19 succeeded in reasserting that position in this court, but an arbitrator or appellate 20 panel might conclude differently. At a minimum, the settlement agreement avoids 21 uncertainty and further litigation, so a discount is rational to recognize these risks.

22 On balance, the settlement agreement permits class members to receive a certain sum now rather than an uncertain sum later. After considering the parties’ confidential mediation briefs and counsel’s analysis, the court is satisfied that the total value of the proposed settlement is not so steeply discounted that it is not “adequate” under Rule 23(e)(2).

26 The court must also ensure the net settlement value remains “reasonable” after reductions for agreed attorneys’ fees. See Kim, 8 F.4th at 1180; Briseño, 998 F.3d at 1022, 1024–26. As the court wrote in its previous order, the proposed fee award of $112,200 is relatively large compared to the net settlement amount of about $170,000. See Prev. Order at 12–13. As explained below, however, the court has reviewed counsel’s further submissions and is now satisfied that the proposed fee award is reasonable overall. See infra section V. The fee is also much lower in comparison to the net award than those that have recently provoked rebukes by reviewing courts.

5 Cf. Kim, 8 F.4th at 1180–82 (reversing district court’s approval of fee award much larger than amount awarded to class); Briseño, 998 F.3d at 1020–22, 1028–29 (same).

7 The court also finds the settlement agreement to be reasonable despite the substantial incentive awards to the named plaintiffs. Courts may consider several factors when deciding whether to award an incentive fee to a named plaintiff: (1) “the risk to the class representative in commencing suit, both financial and otherwise”; (2) “the notoriety and personal difficulties encountered by the class representative;” (3) “the amount of time and effort spent by the class representative”; (4) “the duration of the litigation;” and (5) “the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation.” Smothers v. NorthStar Alarm Servs., LLC, No. 17-00548, 2020 WL 1532058, at *9 (E.D. Cal. Mar. 31, 2020) (quoting Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995)). Here, the named plaintiffs spent many hours on this case, which has gone on for some time and not rewarded them with any personal benefits outside of the benefits to the class as a whole. Although this case was not widely publicized, the named plaintiffs have attached themselves to it, and as a result, they may face negative consequences from any employers who assume past participation in litigation is a potential liability. The amount of the incentive award is also reasonable given the size of the net award to class members, both in total and on average. See id. *12–13 (approving $10,000 incentive award and collecting authority); Emmons v. Quest Diagnostics Clinical Labs., Inc., No. 13-0474, 2017 WL 749018, at *9 (E.D. Cal. Feb. 27, 2017) (approving $8,000 incentive award and collecting authority).

25 The proposed cost reimbursement is also reasonable. The amount, $11,307.99, is modest for a case of so many years’ duration. See Pena v. Taylor Farms Pac., Inc., No. 13-1282, 2021 27 WL 916257, at *7 (E.D. Cal. Mar. 10, 2021) (approving an expenses award of more than $210,000 in a wage and hour case that had been pending for more than eight years).

1 Finally, only one of the three commonly cited “red flags” of collusion might be cause for concern here: the parties’ clear-sailing agreement. See Kim, 8 F.4th at 1180; Bluetooth, 654 F.3d 3 at 947. The court is persuaded, however, after reviewing the parties’ supplemental submissions, that the risk of collusion is low despite the defendants’ agreement not to contest the proposed attorneys’ fees, costs, and incentive awards. The agreed amounts are relatively modest, and any amounts not awarded would revert to the class.

7 III. FLSA COLLECTIVE ACTION 8 For the reasons discussed above, the court also approves the terms of the proposed FLSA collective action settlement. The members of the proposed collective action assert violations of the FLSA, are “similarly situated,” have affirmatively opted in, and the dispute here is “bona fide” under the commonly applied test. See Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982); see also Prev. Order at 5 (summarizing applicable law); Maciel v. Bar 20 Dairy, LLC, No. 17-00902, 2018 WL 5291969, at *4–5 (E.D. Cal. Oct. 23, 21 2018) (same).

15 IV. PAGA CLAIMS 16 “An employee bringing a PAGA action does so as the proxy or agent of the state’s labor law enforcement agencies, . . . who are the real parties in interest.” Sakkab v. Luxottica Retail N.

18 Am., Inc., 803 F.3d 425, 435 (9th Cir. 2015) (citations omitted). Thus, “[a]n action brought under the PAGA is a type of qui tam action.” Id. at 429. Because a settlement of PAGA claims compromises a claim that could otherwise be brought by the state, the PAGA provides that “court[s] shall review and approve any settlement of any civil action filed pursuant to [PAGA].”

22 Cal. Lab. Code § 2699(l)(2).2 23 The PAGA provides that courts may exercise their discretion to lower the amount of civil penalties awarded “if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” Id. Because this case was filed before July 1, 2016, the parties were not required to submit the proposed settlement agreement to the LWDA at the same time it was submitted to the court.

See 2016 Cal. Legis. Serv. Ch. 31, § 189 (S.B. 836) (West).

1 § 2699(e)(2). Because state law enforcement agencies are the “real parties in interest” for PAGA claims, the court’s task in reviewing the settlement is to ensure the state’s interest in enforcing the law is upheld. Sakkab, 803 F.3d at 435. But the PAGA does not establish any more specific standard for evaluating PAGA settlements. Nor has any California state court established a “benchmark for PAGA settlements, either on their own terms or in relation to the recovery on other claims in the action.” Ramirez v. Benito Valley Farms, LLC, No. 16-04708, 2017 WL 7 3670794, at *3 (N.D. Cal. Aug. 25, 2017) (quoting from LWDA response in O’Connor v. Uber Technologies Inc., 201 F. Supp. 3d 1110 (N.D. Cal. 2016)).

9 In the absence of such guidance, this court and at least one other California federal district court have referred to the factors in Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998), overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). See Decker v. AllStates Consulting Services, LLC, No. 18-03216, 2020 WL 7769842, at *2 (E.D. Cal. Dec. 30, 2020); O’Connor, 201 F. Supp. 3d at 1134–35. These factors are not unique to class action lawsuits. They bear on the fairness of settlements involving many plaintiffs. This court, as it has before, finds these factors useful in evaluating a PAGA settlement. And for the reasons discussed above, those factors favor approval of the settlement agreement.

17 V. FEES AND COSTS 18 Rule 23 permits a court to award “reasonable attorney’s fees . . . that are authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). Even when the parties have agreed on an amount, the court must award only reasonable attorneys’ fees. See Bluetooth, 654 F.3d at 941.

21 For claims arising under state law and the court’s supplemental jurisdiction, such as this one, the Ninth Circuit “has applied state law in determining not only the right to fees, but also in the method of calculating fees.” Mangold v. Cal. Public Util. Comm’n, 67 F.3d 1470, 1478 (1995); see also Carey v. Maricopa Cty., 602 F. Supp. 2d 1132, 1135 (D. Ariz. 2009) (“A federal court exercising supplemental jurisdiction over a state law claim is bound to apply state law in the same manner it would were it sitting in diversity.” (citing United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966))). California courts permit the payment of attorneys’ fees from a settlement. See Serrano v. Priest, 20 Cal. 3d 25, 34 (1977).

1 Federal district courts applying state law evaluate fee awards using two methods: (1) as a percentage of the total settlement fund and (2) in light of the “lodestar,” i.e., the product of a reasonable hourly rate and a reasonable number of hours dedicated to the case. Kim, 8 F.4th at 1180. District courts have discretion to use the method they find most fitting. See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). Percentage awards are simple and transparent, but they might be unreasonable. A 25 percent fee, for example, might be either a bonanza or a pittance depending on the size of the gross settlement award. See Bluetooth, 654 F.3d at 942. The lodestar fee can therefore serve as both a “cross check” against and a substitute for percentage-based awards. See id. at 944–45; Espinosa v. Cal. Coll. of San Diego, Inc., No. 17-0744, 2018 WL 1705955, at *8 (S.D. Cal. Apr. 9, 2018). But in the end, however an award is calculated, the reviewing court’s goal is the same: “a reasonable fee to compensate counsel for their efforts.” In re Consumer Privacy Cases, 175 Cal. App. 4th 545, 557–58 (2009) (quotation marks, citations omitted).

14 Courts within this circuit have usually measured percentage awards against a 25 percent benchmark. See Bluetooth, 654 F.3d at 942; In re Nat’l Collegiate Athletic Ass’n Athletic Grant- in-Aid Cap Antitrust Litig., 768 F. App’x 651, 653 (9th Cir. 2019) (unpublished). California state courts have also referred to a 25 percent benchmark, but they have often been willing to approve awards of up to 33 percent of the total fund. See In re Consumer Privacy Cases, 175 Cal. App. 19 4th 545, 557 n.13 (2009) (noting fees of up to one-third are frequently awarded but a “fee award of 25 percent is the benchmark” for “common fund cases” (internal quotation and alteration marks omitted)); see also Greer v. Dick’s Sporting Goods, Inc., No. 15-01063, 2020 WL 5535399, at *8 (E.D. Cal. Sept. 15, 2020) (collecting authority). Awards above the 25 percent benchmark may be appropriate “when counsel achieves exceptional results for the class, undertakes extremely risky litigation, generates benefits for the class beyond simply the cash settlement fund, or handles the case on a contingency basis.” Seguin v. County of Tulare, No. 16-01262, 2018 WL 1919823, at *6 (E.D. Cal. Apr. 24, 2018) (quotation marks omitted) (citing Vizcaino, 290 F.3d at 1048–50).

28 ///// 1 Here, although a 33 percent award is above the Ninth Circuit benchmark, the court finds it is reasonable. This case has been pending for many years, plaintiffs’ counsel accepted representation on a contingency basis, the defendants firmly contested the plaintiffs’ claims, and the class faced many legal and evidentiary obstacles. Although the fee award is large in relative terms, it is not a windfall in absolute terms. See Vizcaino, 290 F.3d at 1048–50 (recognizing higher-than-benchmark fee may be reasonable in lengthy risky case when counsel has accepted representation on contingency basis, among other reasons). Courts within this district have approved awards of 33 percent or higher in roughly similar cases. See, e.g., Pena, 2021 WL 9 916257 at *5 (approving 35 percent award in wage and hour class action because case had been hard-fought and lasted many years); Barbosa v. Cargill Meat Sol’ns Corp., 297 F.R.D. 431, 450 (E.D. Cal. 2013) (collecting authority supporting 33 percent award); Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 492 (E.D. Cal. 2010) (same).

13 A cross-check against the lodestar fee confirms the proposed fee award is reasonable. The first part of a lodestar cross-check is “determining how many hours were reasonably expended on the litigation.” Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008). The second part is multiplying reasonably expended hours “by the prevailing local rate for an attorney of the skill required to perform the litigation.” Id. “The court may then ‘adjust’ the award ‘by an appropriate positive or negative multiplier reflecting . . . the quality of representation, the benefit obtained for the class, the complexity and novelty of the issues presented, and the risk of nonpayment.’” Kim, 8 F.4th at 1180–81 (quoting Bluetooth, 654 F.3d at 941–42).

21 Here, class counsel tabulated the hours they dedicated to this litigation and noted which attorneys devoted how many hours at what rates. See Sohnen Decl. ¶¶ 43–50 & Ex. C, ECF No. 105-2. A skeptical client deciding whether to pay these bills would raise an eyebrow at many entries on these records, which are often vague and sometimes questionable. See, e.g., Ex. C at 4 (recording 24 minutes’ “[f]urther attention to informal discovery requests”); id. at 5 (recording 24 minutes’ “[a]ttention to issues regarding Arbitrator”); id. at 6 (recording 45 minutes’ “[a]ttention to research on arbitration issues”). These records do not allow the court to reliably assess whether time was spent unnecessarily. That said, counsel’s proposed hourly rates are roughly in line with those ordinarily approved in this District in similar cases. Compare, e.g., Smothers, 2020 WL 2 1532058 at *9 (“Courts in the Eastern District have previously accepted hourly rates between $370 and $495 for associates, though lower rates are more commonly approved.”), with, e.g., Sohnen Decl. ¶ 44 (requesting hourly rate of $350 for attorney with six years’ experience). And the total award, inclusive of fees for time recorded by non-lawyer staff, is approximately $760,000. See id. ¶¶ 43–50. As a result, awarding counsel’s proposed $112,200 fee is already equivalent to slashing the award by more than 80 percent. The court is not persuaded, after reviewing the line-by-line billing records, that a steeper reduction would be justified or fair. The amount of the hypothetical lodestar award supports counsel’s fee request and confirms it is reasonable.

11 VI. CONCLUSION 12 The court grants the motions for final approval and fees. The parties are hereby ordered to comply with and carry out the terms of the Settlement Agreement. Every person in the California Settlement Class shall be bound by the Settlement Agreement and be deemed to release and forever discharge all Released State Law Claims, as set forth in the Settlement Agreement. Every person in the FLSA Settlement Class who filed a consent form with the court or sent an opt-in claim form to the Settlement Administrator is an FLSA Settlement Class Member and shall be bound by the Settlement Agreement and be deemed to release and forever discharge all Released Federal Law Claims, as set forth in the Settlement Agreement. Every person in the PAGA Settlement Class shall be bound by the Settlement Agreement and be deemed to release and forever discharge all Released PAGA Claims, as set forth in the Settlement Agreement.

23 The court retains jurisdiction over the administration and effectuation of the Settlement including, but not limited to, the ultimate disbursal to the participating Settlement Class Members, payment of attorneys’ fees and expenses, the service awards to the Class Representatives, payment to the Settlement Administrator, and other issues related to this Settlement. Nothing in this order shall preclude any action to enforce the parties’ obligations ///// under the Settlement or under this order. Plaintiff shall notify the court within seven days after administration and effectuation of the settlement is complete.

3 This order resolves ECF Nos. 104 and 105.

4 IT IS SO ORDERED.

5 DATED: November 3, 2021.