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8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 9 10 ISMAEL ORTEGA, KRISINDA Case No. 3:20-cv-0879-LAB-NLS WOLFE, DORIS WILLIAMS- 11 JENKINS, and LILIA SILVA, ORDER GRANTING: 12 individuals, on behalf of themselves and all persons 1) MOTION FOR FINAL 13 similarly situated, APPROVAL OF CLASS 14 SETTLEMENT [Dkt. 33]; and Plaintiffs, 2) MOTION FOR ATTORNEY 15 v. FEES, COSTS, AND SERVICE 16 AWARDS [Dkt. 32] LOYAL SOURCE 17 GOVERNMENT SERVICES 18 LLC, a Limited Liability Company; and Does 1 through 19 50, Inclusive, 20 Defendants. 21 22

23 Plaintiffs Ismael Ortega, Krisinda Wolfe, Doris Williams-Jenkins and 24 Lilia Silva (“Plaintiffs”), were employees of Defendant Loyal Source 25 Government Services LLC (“Defendant”). They filed this putative class 26 action against Defendant asserting wage and hour claims and claims for 27 failure to make proper disclosures under the Fair Credit Reporting Act. 28 1 with Defendant and of payments to the Class, the Plaintiffs, Class Counsel, 2 and the Settlement Administrator. (Dkt. 32; Dkt. 33). 3 The Court has considered: 4 • Plaintiffs’ briefing in support of the Motion for Final Approval of 5 Class Settlement (the “Final Approval Motion”) (Dkt. 33); 6 • Plaintiffs’ briefing in support of the Motion for Attorneys’ Fees, 7 Costs, and Service Awards (the “Fee Motion”) (Dkt. 32); 8 • The Supplemental Declaration of Kyle Nordrehaug in support 9 of the Fee Motion (Dk; 10 • The Supplemental Declaration of Kyle Nordrehaug in support 11 of the Motion for Final Approval (Dkt. 41); 12 • The declarations and exhibits submitted in support of each 13 Motion and the Settlement; 14 • The Class Action Settlement Agreement (Dkt. 33-2 Ex. 2); 15 • The First Amended Class Action Settlement Agreement (the 16 “Agreement”, Dkt. 41 Ex. 1); 17 • The entire record in this proceeding, including but not limited to 18 the briefing, declarations, and exhibits submitted in support of 19 preliminary approval of the Settlement in its various iterations, 20 including: 21 o The Notice Plan for providing full and fair notice to the 22 Class; 23 o The lack of any Class Member objections to the 24 Settlement; 25 o The absence of any objection or response by any official 26 after the provision of all notices required by the Class 27 Action Fairness Act of 2005,

; and 28 o Counsel’s oral presentations at the two hearings on the 1 Settlement’s fairness; 2 • This Court’s experiences, observations, and file developed in 3 presiding over resolution of this matter; and 4 • The relevant law. 5 Based upon these considerations and the Court’s findings of fact and 6 conclusions of law as set forth in the Preliminary Approval Order and as 7 discussed below, IT IS ORDERED: 8 1) Final Approval of the Settlement, the terms of which are set forth 9 in the Agreement, is GRANTED; 10 2) The Settlement Class is CERTIFIED; 11 3) Plaintiffs Ismael Ortega, Krisinda Wolfe, Doris Williams-Jenkins 12 and Lilia Silva are appointed as Class Representatives and the 13 incentive awards requested in the Fee Motion are APPROVED; 14 4) The payments to Claims Administrator KCC, LLC requested in the 15 Fee Motion are APPROVED; 16 5) Blumenthal Nordrehaug Bhowmik De Blouw LLP is appointed as 17 Class Counsel and the attorneys’ fees requested in the Fee Motion 18 are APPROVED; 19 6) Plaintiffs’ claims are DISMISSED WITH PREJUDICE in 20 accordance with the terms of this Order. 21 DISCUSSION 22 I. Definitions 23 Except as otherwise specified herein, the Court for purposes of this 24 Final Approval Order adopts all defined terms set forth in the Agreement. 25 II. Jurisdiction 26 The Court has subject matter jurisdiction over this action, including 27 jurisdiction over all claims alleged in the action, settlement of those claims 28 on a class-wide basis, all claims released by the Settlement, and any 1 objections submitted to the Settlement pursuant to

(a) 2 and (d). 3 The Court also has personal jurisdiction over the parties. As 4 discussed in greater detail below and in the Court’s Preliminary Approval 5 Order, the Class Members received adequate notice, had the right to opt 6 out, and were adequately represented by Plaintiffs. Accordingly, the Court 7 can and does exercise jurisdiction over those Class Members’ claims. See 8 Phillips Petroleum Co. v. Shutts,

, 811–12 (1986) (adequate 9 notice and opportunity to be heard permits courts to exercise jurisdiction 10 over claims of absent class members). 11 III. Findings and Conclusions 12 A. Definition of Class and Class Members 13 The Court adopts the Preliminary Approval Order’s definitions of the 14 “California Class,” comprised of the “California Class Members,” and the 15 “FCRA Class,” comprised of the “FCRA Class Members.” Those class 16 definitions are reproduced below: 17 • The California Class is defined as all individuals who worked 18 for Defendant in California as non-exempt employees during 19 the California Class Period. The “California Class Period” is 20 February 14, 2016 to September 29, 2020. 21 • The FCRA Class is defined as all employees or prospective 22 employees of Defendant in the United States for whom 23 Defendant procured a background check during the FCRA 24 Class Period. The “FCRA Class Period” is February 14, 2018 25 to September 29, 2020. 26 The Court excludes from the Classes individuals who requested such 27 an exclusion. Those individuals are listed in Exhibit C to the Declaration of 28 Bernella Osterlund submitted in support of the motion. (Dkt. 34 at 28). 1 B. Definition of Class and Class Members 2 Before approving a settlement of class claims, the Court must confirm 3 that the class form is appropriate to the case. Rule 23(a) requires a class 4 to satisfy four prerequisites, generally referred to as numerosity, 5 commonality, typicality, and adequacy of representation. If these are 6 satisfied, the Court must confirm that the action meets one of the class 7 action types enumerated in Rule 23(b)—as relevant here, subsection (3) of 8 that Rule requires that the common questions predominate over individual 9 ones and that a class action be superior to other available methods for fairly 10 and efficiently adjudicating the controversy. Because each of these 11 requirements is met as discussed below, the Court grants final certification 12 of the Class. All Class Members are subject to this Order. 13 1. Numerosity 14 The proposed Classes each include over 750 members. This is 15 sufficiently numerous that joinder of all members is impracticable, so Rule 16 23’s numerosity requirement is satisfied. Fed. R. Civ. P. 23(a)(1). 17 2. Commonality 18 A properly certified class must also have questions of law or fact 19 common to the class members. Fed. R. Civ. P. 23(a)(2). Each proposed 20 Class satisfies this requirement. The FCRA Class’s claims depend on a 21 question regarding the sufficiency of the disclosures contained in the 22 consent form Defendant provided to each FCRA Class Member. The 23 California Class’s claims relate to Defendant’s generally applicable policies 24 relating to overtime pay, wages, meal and rest periods, wage statements, 25 and cell phone reimbursement. 26 3. Typicality 27 A class can be certified only if the class representative’s claims are 28 typical of the class’s claims. Fed. R. Civ. P. 23(a)(3). A representative’s 1 claims are typical “if they are reasonably co-extensive with those of absent 2 class members; they need not be substantially identical.” Hanlon v. 3 Chrysler Co.,

, 1020 (9th Cir. 1998), overruled on other 4 grounds by Wal-Mart Stores, Inc. v. Dukes,

(2011). Each 5 Plaintiff was allegedly subject to the employment policies that form the 6 basis of the California Class’s claims, and each Plaintiff allegedly received 7 and signed the consent form that forms the basis of the FCRA class’s 8 claims. The Court finds that Plaintiffs’ claims are reasonably co-extensive 9 with those of the other Class Members. 10 4. Adequacy of Class Representatives 11 The next prerequisite to class certification, adequacy of 12 representation, “serves to uncover conflicts of interest between named 13 parties and the class they seek to represent.” Amchem Prods., Inc. v. 14 Windsor,

(1997); Fed. R. Civ. P. 23(a)(4). No party or 15 objector contends that the Classes lack adequate representation, and 16 Class Counsel has fully and competently prosecuted all claims available to 17 the Classes. Plaintiffs, who are each members of both Classes, possess 18 no apparent interests adverse to those Classes. Class Counsel and the 19 named Plaintiffs are adequate to represent the Classes. 20 5. The Classes Meet the Requirements of Rule 23(b)(3) 21 Having met Rule 23(a)’s prerequisites for class certification, Plaintiffs 22 contend that each Class can be certified under Fed. R. Civ. P. 23(b)(3). 23 (See Dkt. 27-1 at 19). This requires the Court to find that questions of law 24 or fact common to Class Members predominate over any questions 25 affecting only individual members and that class treatment is the superior 26 means to adjudicate plaintiffs’ claims. Fed. R. Civ. P. 23(b)(3). These 27 requirements are satisfied as to each Class. 28 Predominance can be established by the existence of a company- 1 wide policy or practice. See, e.g., Duque v. Bank of America, Case No. SA 2 CV 18-1298 PA (MRWx),

at *3-4 (C.D. Cal. Dec. 10, 3 2018). Here, Plaintiffs’ claims arise from Defendant’s allegedly uniform and 4 systematic employment policies applicable to non-exempt employees, for 5 the California Class, and to background checks, for the FCRA Class. The 6 common questions surrounding these policies predominate this case, and 7 so the predominance requirement is met. 8 The Court must also confirm that the class form is superior to other 9 methods of litigation before certifying a class under Rule 23(b)(3). This 10 inquiry “requires determination of whether the objectives of the particular 11 class action procedure will be achieved in the particular case.” Hanlon, 150 12 F.3d at 1023. The “dominant[]” objective of the class form is “vindication of 13 the rights of groups of people who individually would be without effective 14 strength to bring their opponents into court at all. . . . The policy at the very 15 core of the class action mechanism is to overcome the problem that small 16 recoveries do not provide the incentive for any individual to bring a solo 17 action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521

, 617 (1997) (cleaned up). Counsel in this case estimates the 19 California Class’s damages at $4,184,920.36, or $6,073.90 per member of 20 that 689-person class. The FCRA Class’s claims permit recovery of 21 statutory damages of $100 to $1,000 per willful violation, plus the costs and 22 reasonable fees incurred in prosecuting the action. 15 U.S.C. 23 § 1681n(a)(1). The Court finds that these amounts are sufficiently small 24 that individual Class Members wouldn’t have a sufficient incentive to bring 25 individual actions, so the superiority requirement is satisfied. 26 With the requirements of Rules 23(a) and b(3) satisfied, the Court 27 grants final certification of the California Class and the FCRA Class for 28 settlement purposes only. 1 IV. The Settlement 2 “Federal Rule of Civil Procedure 23(e) requires district courts to 3 review proposed class action settlements for fairness, reasonableness, 4 and adequacy.” Roes, 1–2 v. SFBSC Management, LLC,

, 5 1048 (9th Cir. 2019). Because the named plaintiffs, class counsel, and 6 defense counsel may have incentives inconsistent with the interests of 7 absent class members, the Court must take care to protect the due process 8 rights of those absent class members. And because this incongruity is most 9 pronounced where the settlement comes prior to class certification, 10 “settlement approval requires a higher standard of fairness and a more 11 probing inquiry than may normally be required under Rule 23(e).”

at 12 1048-49 (internal marks and citation omitted). The Court must look 13 particularly for evidence of collusion or other conflicts of interest to protect 14 absent class members.

15 Applying this standard, the Court finds that the Settlement is fair, 16 reasonable, and adequate to each Class, in light of the complexity, 17 expense, and likely duration of the litigation (including appellate 18 proceedings), as well as the risks involved in establishing liability, 19 damages, and the appropriateness of class treatment through trial and 20 appeal. See Rodriguez v. West Publ’g Corp.,

(9th Cir. 21 2009). The Settlement appears to be the result of arm’s-length negotiation 22 and the record doesn’t support a conclusion that the Settlement is the result 23 of either: 1) collusion among Plaintiffs, Class Counsel, and Defendants; or 24 2) conflicts of interest between Plaintiffs and Class Counsel, on the one 25 hand, and the Class Members, on the other. 26 A. Generally 27 Under the terms of the Agreement, Defendant will pay a total of 28 $2,750,000. After subtracting attorneys’ fees and costs, administration 1 costs, Plaintiffs’ service awards, the Private Attorneys General Act (PAGA) 2 payment, 41% of the remaining common fund will be paid to members of 3 the FCRA Class and 59% will be paid to members of the California Class. 4 B. The Settlement Affords Meaningful Relief 5 Accounting for the fees, costs, service awards, and PAGA payment 6 provided for in this Order, the FCRA Class will receive $786,955, or 7 $114.83 per class member. The California Class will receive $1,132,448: 8 $1,435.30 per class member or $37.16 for each week that a class member 9 worked during the period. Each FCRA Class member’s recovery amounts 10 to 114% of the statutory minimum recovery, a reasonable amount in 11 settlement. The California Class’s recovery is 27% of the damages 12 estimated by Plaintiffs’ expert. 13 On the other side of the ledger and as described in further detail infra, 14 Section VIII, participating class members will release the claims actually 15 brought and claims that could have been brought under federal or state law 16 arising out of the allegations of the operative complaint and that accrued 17 on or before January 29, 2021. The plaintiffs themselves will release all 18 “claims, transactions or occurrences between them [and Defendant or its 19 affiliated entities or individuals] that occurred during the Class Period.” (Dkt. 20 33-2 at 54). And aggrieved employees will release claims for civil penalties 21 that were or could have been asserted under

and 22 that accrued on or before January 29, 2021. 23 The Court finds the releases reasonable in scope and, in light of the 24 risks, costs, and duration of continued litigation, the amounts paid to 25 Plaintiffs and the Classes fair, reasonable, and adequate consideration for 26 those releases. 27 C. No Collusion or Conflicts of Interest 28 The Court finds no evidence to support a conclusion that Plaintiffs 1 and the Defendant colluded. To the contrary, up to and through the 2 Settlement, both Parties vigorously litigated and negotiated this action, as 3 evidenced by the docket. 4 However, the Agreement’s “clear sailing” provision, under which 5 Defendants agreed not to contest any request for fees exceeding 25% of 6 the Settlement funds, can be a “subtle sign of collusion.” SFBSC 7 Management,

. The presence of such a provision requires 8 the Court to look closely at the reasonableness of the recovery and the 9 reasonableness of fees to confirm that Class Counsel haven’t negotiated a 10 benefit for themselves using the Class’s claims as leverage.

11 That scrutiny doesn’t reveal evidence that Class Counsel bargained 12 away a Class benefit in exchange for clear sailing on an unreasonably large 13 fee award. The Settlement’s benefit to the Class is appropriate in relation 14 to the likelihood of success at trial and the magnitude of the Class claims. 15 Class Counsel’s requested fees withstand close scrutiny, too. They seek 16 25% of the total—equal to the Ninth Circuit’s benchmark rate and less than 17 the maximum the clear sailing agreement allows without objection. These 18 fees are reasonable. And while the Court finds that the maximum fees 19 allowable under the clear sailing provision would be too high, that amount 20 isn’t so extraordinary that the Court can infer that Class Counsel obtained 21 the provision by bargaining away a class benefit. 22 Because it’s unlikely that the clear sailing agreement provided a non- 23 negligible benefit to Class Counsel, and because the Class benefit from the 24 Settlement is adequate, the Settlement withstands close scrutiny and the 25 Court finds no apparent collusion. 26 D. Response of the Classes 27 The Classes’ responses after full, fair, and effective notice (as 28 discussed below) favor final approval of the Settlement. Out of the 1 estimated 7,733 who received notice,1 none filed an objection to the 2 Settlement and only nine Class Members—one from the California Class 3 and eight from the FCRA Class—requested exclusion. 4 V. Notice 5 Pursuant to the Preliminary Approval Order, the Notice of Pendency 6 of Class Action Settlement and Hearing Date for Court Approval (“Class 7 Notice”) was sent to 7,642 Class Members by mail. KCC sent emails to an 8 additional 137 members of the FCRA Class for whom no mailing address 9 was available—91 of these were successfully contacted. The Class Notice 10 informed Class Members of the terms of the Settlement, their right to 11 receive a Settlement Share, their right to comment on or object to the 12 Settlement and/or the attorneys’ fees and costs, their right to elect not to 13 participate in the Settlement and pursue their own remedies, and their right 14 to appear in person or by counsel at the final approval hearing and be heard 15 regarding approval of the Settlement. Adequate periods of time were 16 provided by each of these procedures. 17 This notice procedure afforded adequate protections to Class 18 Members and provides the basis for the Court to make an informed 19 decision regarding approval of the settlement based on the responses of 20 Class Members. The Class Notice provided in this case was the best notice 21 practicable, satisfying the requirements of law and due process. 22 VI. PAGA Payment 23 The PAGA payment of $30,000, with $22,500 going to the California 24 Labor and Workforce Development Agency and $7,500 to be distributed 25 among the subset of the California Class that worked for Defendant during 26 the PAGA Period, is approved. That payment must be distributed as set 27 1 This number includes 7,642 who received notice via mail and 91 who were 28 successfully contacted via email. 1 forth in the Agreement. Upon entry of this order and judgment, Plaintiffs, 2 individually, and in their capacity as a private attorney generals for, and 3 proxies or agents of, the California Labor and Workforce Development 4 Agency (“LWDA”), and the LWDA, as the real party in interest, will 5 irrevocably release, acquit, and forever discharge Defendant of all claims 6 for civil penalties asserted or which could have been asserted under 7 California Labor Code § 2699, based on the facts and claims alleged in the 8 operative complaints filed in the Action, which have accrued at any time 9 from the beginning of the PAGA Period through January 29, 2021 with 10 respect to the Aggrieved Employees, and, expressly excluding all other 11 claims, including claims for wrongful termination, unemployment insurance, 12 disability, social security, and workers’ compensation, and claims outside 13 of the applicable PAGA Period. 14 VII. Costs and Fees 15 The fees and expenses of KCC, LLC in administrating the settlement, 16 in the amount of $70,000, are fair and reasonable. The Court hereby grants 17 final approval to and orders that the payment of that amount be paid out of 18 the Gross Settlement Amount in accordance with the Agreement. 19 The requested Class Representative Service Payments and 20 attorneys’ fees and costs are fair and reasonable. The Court hereby grants 21 final approval to and orders that the payment of the amounts of $5,000 to 22 each of the four Plaintiffs for their Class Representative Service Payments, 23 $687,500.00 for attorneys’ fees to Class Counsel, and $23,097.30 for 24 reimbursement of costs be paid out of the Gross Settlement Amount in 25 accordance with the Settlement. 26 VIII. Release 27 Upon entry of final judgment, Class Members will fully release and 28 forever discharge Defendants and the Released Parties of liability for all 1 claims that were or reasonably could have been alleged based on the facts 2 in the operative complaint which occurred during the Class Period, 3 including any claims related to background checks and any claims arising 4 under the FCRA, CCRAA, ICCRAA, and expressly excluding all other 5 claims, including claims for Labor Code violations, wrongful termination, 6 unemployment insurance, disability, social security, and workers’ 7 compensation, and claims outside of the Class Period (collectively, the 8 “Released Claims”). 9 Upon entry of final judgment, Plaintiffs will also fully and finally 10 release Defendants and the Released Parties from Plaintiffs’ Released 11 Claims. 12 The Plaintiffs also fully and finally release Defendant and the other 13 Released Parties from Plaintiffs’ Released Claims. 14 Nothing in this order shall preclude any action to enforce the Parties’ 15 obligations under the Settlement or under this order, including the 16 requirement that Defendant make payment in accordance with the 17 Agreement. 18 If, for any reason, the Effective Date (as defined by the Settlement) 19 does not occur, this Order will be vacated; the Parties will return to their 20 respective positions in this action as those positions existed immediately 21 before the Parties executed the Agreement; and nothing stated in the 22 Agreement or any other papers filed with this Court in connection with the 23 Settlement will be deemed an admission of any kind by any of the Parties 24 or used as evidence against, or over the objection of, any of the Parties for 25 any purpose in this action or in any other action. 26 The Parties represent that they entered into the Settlement solely for 27 the purpose of compromising and settling disputed claims. Defendant 28 expressly denies any violation of law or any liability whatsoever to Plaintiffs 1 || and/or the Class, individually or collectively. 2 CONCLUSION 3 The Settlement is ordered finally approved, and that all terms and 4 || provisions of the Settlement are ordered to be consummated. Participating 5 || Class Members will be bound by the Settlement. The Parties are hereby 6 || ordered to comply with the terms of the Agreement. 7 The action is DISMISSED WITH PREJUDICE, and final judgment is 8 || entered. Each side will bear its own costs and attorneys’ fees except as 9 || provided by the Settlement and this Order. 10 The parties have consented to the continued jurisdiction of United 11 || States Magistrate Judge Nita L. Stormes or any Magistrate Judge who may 12 || later be assigned over all matters relating to the interpretation, 13 || administration, implementation, effectuation and enforcement of this order 14 || and the Settlement. 15 The Clerk is directed to close the case. 16 IT IS SO ORDERED. Dated: February 7, 2022 (aus Ae f Zul 18 Hon. Larry Alan Burns 19 United States District Judge 20 21 22 23 24 25 26 27 28

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