Ludlow v. Flowers Foods, Inc.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA DANIEL LUDLOW, ET AL., Case No. a<T8-c¥-01190-JO-JLB il Plaintiffs, RDER GRANTING V. OINT MOTION FOR FINAL 1D APPROVAL OF CLASS ACTION, FLOWERS FOODS, INC., FLOWERS | FLSA, AND PAGA SETTLEMENT BAKERIES, LLC, and FLOWERS FINANCE, LLC, Date: March 1, 2024 14 Time: 9:00 a.m.

Defendants. Courtroom: 4C Judge: Hon. Jinsook Ohta Magistrate: Hon. Jill L. Burkhardt 16 and 7 fomplaint Filed: June 6, 2018 Final Pretrial Conf.: Not Set | JOSE MACIEL, an individual, and MACIEL DISTRIBUTION, INC., a Case No. 3:20-cv-02059-JO-JLB California corporation, on behalf of themselves and others similarly situated, Plaintiffs, 21 Vv.

2 | FLOWERS FOODS, INC., a Georgia corporation, FLOWERS BAKERIES, LLC, a Georgia limited liability company, | FLOWERS. “INANCE, LLC, a Delaware limited liability company, 25 Defendants. [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF 1 Daniel Ludlow, William Lancaster, and Jose Maciel (collectively referred to | as “Plaintiffs” or “Named Plaintiffs”), on behalf of themselves and any corporation | or business entity through which they operated, and on behalf of each of the Class | Members, and Flowers Foods, Inc. (“Flowers Foods”), Flowers Bakeries, LLC, and | Flowers Finance, LLC (collectively, “Defendants”), along with Flowers Baking Co. | of Henderson, LLC and Flowers Baking Co. of Modesto, LLC, have entered into a Class Action Settlement Agreement and Release (“Settlement Agreement”)! after | extensive arms-length settlement negotiations assisted by an experienced mediator.

9 Previously, this Court preliminarily approved the Settlement Agreement as | fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e). ECF | No. 433. The Court also consolidated the Maciel v. Flowers Foods, Inc., et al.

12 | Private Attorney General’s Act (“PAGA”) claim into this Action. The Parties now | request final approval of the Settlement Agreement under Rule 23(e), approval of the | settlement of the FLSA claims, and approval of the settlement of the PAGA claim.

15 | Relatedly, Plaintiffs also seek approval of their request for attorneys’ fees, costs, and | service awards to be paid out of the settlement. See ECF No. 439 (Plaintiffs’ Motion for | Fees, Costs, and Service Awards set for hearing on the same day as the Joint Motion for | Final Approval of Class, FLSA, and PAGA Settlement (“Joint Motion for Final | Approval’’)). Having reviewed and considered the Parties’ Joint Motion for Preliminary | Approval and accompanying materials, this Court’s Order granting Preliminary Approval, | the Parties’ Joint Motion for Final Approval and accompanying materials, the Settlement | Agreement itself, the Plaintiffs’ Motion for Fees, Costs, and Service Awards and its | accompanying materials, and the presentations at the final fairness hearing held on March | 1, 2024, the Court finds that the Settlement Agreement is fair, reasonable, and adequate in | all respects, and grants the pending requests as further discussed below.

23 |' All capitalized terms have the meanings set forth and defined in the Parties’ Settlement Agreement at ECF No. 431-2.

2 3:18-cv-01190-JO-JLE (PROPOSED! ORDER GRANTING TOINT MOTION FOR FINAT. APPROVAI, OF 1|A. Background 2 1. The Parties.

3 Plaintiffs allege that Flowers* contracts with and sells bakery products t | large retail and fast-food customers via its national direct-store-delivery (“DSD” | business segment and then engages “independent contractor” distributors like th | Named Plaintiffs and the Class Members to assist with the “delivery” or distributio | part of the DSD business. See ECF No. 1 (the original complaint).

8 Named Plaintiffs, the FLSA Plaintiffs, and all Class Members are a mix o | current and former California distributors that each have or had a Distribute | Agreement (“DA”) with either Flowers Baking Co. of Henderson, LLC, Flower |Baking Co. of Modesto, LLC, or Flowers Baking Co. of California, LLC | Distributor Class Members purchased territories and the accompanying distributio | rights as part of entering their DAs with Flowers. Flowers has been operating it | independent distributor franchise model in California since at least 2013.

15 2. The Claims, Discovery, and Other Procedural History.

16 Plaintiff Daniel Ludlow originally filed this action in June of 2018 allegin |that he and his fellow California distributors were misclassified as “independer | contractors” and that, in turn, Defendants failed to pay all required wages due unde | both the California Labor Code and the federal Fair Labor Standards Act □□□□□□□□ | ECF No. 1. Mr. Ludlow also brought claims for violations of California’s Unfai | Competition Law, for fraud, for unlawful deductions from wages, failure t |indemnify for necessary expenditures, and failure to provide proper wag | statements. Jd. On February 21, 2019, co-Plaintiff William Lancaster joined Mi | Ludlow as an additional named plaintiff. ECF No. 56.

26 | “Flowers” refers collectively here to the named Defendants as well as their wholl owned subsidiaries who will be obtaining releases via this settlement, including th separately formed regional bakeries that also help carry out the business and tha | for example, are counterparties to the Distributor Agreements. See Settlemer Agreement at § 3.27.

3 3:18-cv-01190-JO-JL [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF 1 On June 10, 2020, distributor Jose Maciel filed his own separate class and |FLSA collective action against Defendants in the Northern District of California | asserting similar theories and claims. Eventually Mr. Maciel’s case was transferred 4 this District and consolidated with the Ludlow case. See ECF No. 195 | (Consolidation Order). Mr. Maciel’s operative complaint today also includes a | claim for Civil Penalties under the PAGA. See ECF No. 429-4.

7 On July 5, 2022, the Court granted Plaintiffs’ contested motion for class | certification. See ECF No. 312. The Parties continued to litigate thereafter including || by completing significant additional fact discovery and expert discovery. Plaintiffs | then filed a motion for partial summary judgment asserting that Defendants cannot |meet their burden to satisfy “Prong B” of California’s “ABC Test” for worker | misclassification. See ECF No. 359. The Court denied Plaintiffs’ motion on July 19, 13 2023. ECF No. 410. The Parties were then ordered to prepare for a first phase of | trial to begin in the fall of 2023.

15 The Parties attended two back-to-back days of mediation, in-person, with The | Honorable Herbert B. Hoffman (Ret.) (“Judge Hoffman”), on August 15 and | August 16, 2023, respectively, and then a third session on August 29, 2023. At the | end of the second day, the case did not settle, but Judge Hoffman did make a |““mediator’s proposal.” Throughout the three days of mediation with Judge | Hoffman, the Parties engaged in extensive negotiations involving substantial offers | and counteroffers, with the Parties ultimately reaching a settlement on August 29, 12023, and agreeing to a binding written term sheet encompassing all three cases 23 described above. The Parties then spent weeks negotiating the final long form | Settlement Agreement discussed above and described more fully below.

25 3. The Proposed Settlement.

26 The Settlement Agreement resolves the claims of the Named Plaintiffs, plus | any “Class Member” defined as “any individual who, either individually and/or on | behalf of a corporation or business entity, operated under a Distributor Agreement 4 3:18-cv-01190-JO-JLB IPROPOSEDN] ORDER GRANTING IOINT MOTION FOR FINAT APPROVAT OF | with Flowers/Henderson or Flowers/Modesto during the Covered Period | | California” who has not opted out or excluded himself or herself from tt | Settlement. The Settlement Agreement also resolves the claims of the “FLS.

4 | Plaintiffs,” meaning those individuals who filed FLSA opt-in consent forms in tl | Ludlow or Maciel Actions and have not withdrawn their consents or otherwis | excluded themselves from the Settlement.’ Finally, and as more particularly state | in the Parties’ PAGA Settlement and Release Agreement (Decl. of Alex Tomasev- |in Support of Joint Motion for Final Approval of Class Action, FLSA, and PAG.

9 | Settlement, Ex. 2, ECF No. 451-4) the Parties have resolved the PAGA □□□ | originally brought by Mr. Maciel. At present, it appears that there are 486 tot | Class Members, 128 FLSA Plaintiffs, and 378 PAGA Settlement Members.

12 The Settlement Agreement is at ECF no. 431-2. In summary, the Settleme: | has three main components as follows: 14 1. An initial fund or payment of $55 million in non-reversionary cash t | front to all participating Class Members (i.e., those who did not opt out). See EC | No. 431-2 at § 3.30. This fund will be divided and distributed equitably amor | Settlement Class Members according to the number of workweeks they were und | contract during the class period. Jd. at § 13.3. Additionally, those Settlement Cla: | *The “Covered Period” means the period from June 6, 2014 through the date « Preliminary Approval. Previously, this Court certified the following class und | Fed. R. Civ. Proc. Rule 23: 22 . . . oe All persons who worked in California pursuant to a “Distributor 3 Agreement” or similar arrangement with Flowers Food, Inc., or one of its subsidiaries, that were classified as “independent contractors” 24 during the period commencing four years prior to the commencement of this action through judgment.

ECF No. 312. * The FLSA Plaintiffs include 128 current and former distributors who contracte | with either Flowers/Henderson or Flowers/Modesto. Two such distributors, Apt | Davis-Ng and Roberto Jimenez, were inadvertently not listed in the □□□□□□□□ Agreement, but are included among the FLSA Plaintiffs.

5 3:18-cv-01190-JO-J PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAT, APPROVAI, OF |Members who affirmatively opted into the case as FLSA Plaintiffs will receive | higher amounts according to a negotiated formula that accounts for, e.g., the extra | work those Settlement Class Members had to do in the case as well as the additional | value of those claims and exposure to Flowers those claims naturally created. Id. | Participating Settlement Class Members will receive an estimated average gross | payment of over $112,000 out of this initial fund.

7 2. A territory buyback for all current Distributors resulting in Flowers | paying Class Members (including both Settlement Class Members and those current | Distributors who previously opted out of the Settlement but are covered by the 10 Injunctive Relief), collectively, another approximately $64.2 million net, after also | resolving (and deducting) the amounts owed by Class Members on the notes/loans | they have on those territories.° Individual buyback dollars will be paid according to 13 a formula that is approximately 13 times the Distributor’s recent 52-week sales | average preceding the date of repurchase. ECF No. 431-2 at § 7.4. Flowers will be | completely discontinuing its independent distributor program in California, and as | such, this injunctive relief component and the relevant portion of the class (i.e., | current Distributors) were certified under Rule 23(b)(2) as a non-opt-out injunctive | relief class.

19 3. Flowers will discontinue its independent distributor program in | California. Flowers will offer route employment positions with compensation | estimated between approximately $78,000 to $99,000 per year, plus benefits | (health, vision, dental, retirement, insurance, etc.).

24 | ———_________— > As explained by the Parties, the total cost of the buyback component will fluctuate *> | somewhat because the buyback formula includes a multiplier of sales, and the | relevant sales can go up or down over time. Plus, the notes owed by the Distributors continue to be paid and those balances will continue to go down. As of the final | fairness hearing, the Parties’ calculations revealed that the buyback component | would lead to an approximate net cash payout to distributors of $64.2 million, after resolving their territory notes/loans with Flowers subsidiary FLOFIN.

6 3:18-cv-01190-JO-JLB TDR QETY] ORDIER ORANITINICL TOTNRAIT AAOVTIONI COR LINTAT ADDDOHVAT □□□ 1 On November 29, 2023, this Court issued its order preliminarily approvin | the settlement.° The Parties now seek final approval of their Settlement Agreemen | including with respect to all FLSA and PAGA claims alleged.

41B. Jurisdiction and Preliminary Findings 5 1. Jurisdiction. The Court has jurisdiction over the Parties, has subjec | matter jurisdiction over the federal law claims, and has supplemental jurisdictic | over the state-law claims.

8 2. Preliminary Findings and Notice to the Class. The Court conducted preliminary assessment of the fairness, reasonableness, and adequacy of tk | Settlement Agreement, and found that the settlement falls within the range « | reasonableness meriting possible final approval. The Court then approved ar | ordered the dissemination of the Class Settlement Notices to the Class Member |The Court also approved the appointment of Rust Consulting as Settleme: | Administrator.

15 3. The Court has reviewed, along with all other materials, the Declaratic |of Jennifer Mills for Rust Consulting, Inc. and finds that the Class Settleme | Notices were disseminated to Class Members in compliance with the Court | Preliminary Approval Order and that they provided the best notice to Cla: | Members practicable under the circumstances, fully satisfied due process, met tl | requirements of Rule 23 of the Federal Rules of Civil Procedure, and complied wi }all other applicable laws.

23 |6 Procedurally, in addition to also consolidating the Maciel PAGA claim into th |action for settlement purposes only, the Court also conditionally certified f settlement purposes only a Rule 23(b)(2) no-opt-out class for current Distributors □ | follows: “All California distributors of Flowers Baking Company of Henderso: | LLC or of Flowers Baking Company of Modesto, LLC who are operating under Distributor Agreement, either individually or on behalf of his or her corporation « | business entity as of the date of preliminary approval.” That condition | certification, made at preliminary approval, is hereby confirmed and_ final approved.

7 3:18-cv-01190-JO-J [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF □□□ Responses to the Settlement by Class Members 2 1. No Class Members responded to the Class Settlement Notices by | requesting exclusion or withdrawing from the Settlement. The Court received seven | letter objections from Class Members. The Court has carefully considered each of | those objections along with Plaintiffs’ written responses to each. The Court also | held a hearing on March 1, 2024. The Objectors were given an opportunity to | present and speak at the hearing in support of their objections. Several objectors | availed themselves of this opportunity and spoke at the final fairness hearing.

9 2. The Court finds that the objections, which often lacked any evidentiary | support, do not preclude finding that the Settlement Agreement is fair, reasonable, | adequate and worthy of final approval as originally requested. The Court hereby | overrules all objections.

13 3. More specifically, the objectors typically fail to understand the | settlement and/or they want relief that they are not legally entitled. The objectors | take issue with several common issues each discussed below.

16 a. The first and main objection relates to the injunctive relief | provided by the Settlement Agreement where Flowers will end its independent | contractor model and implement an employment model in California. See Montanez | Objections (ECF No. 440); Valdez Objections (ECF No. 441); Gonzalez Objections | (ECF No. 443); Foraker Objections (ECF No. 444); Young Objections (ECF No. |445); Morrison Objections (ECF No. 446). While these individuals understandably | wish to continue working hard to make a living for their families, this settlement | will not preclude them from doing so. Further, the same Distributor Agreement |these objectors wish to preserve explicitly grants Flowers the right to change |models and terminate its independent contractor relationships. The objectors are | thus asking for this Court to create a right or guarantee that they never had to begin | with. Additionally, while these objectors did not provide many details, calculations, | or any evidence to support their objections, it appears they do not appreciate that 8 3:18-cv-01190-JO-JLB ADACENI APNEPR CP ANTING TAMNIT MOTION ROR RINAT APPROVAT OR the change to a W-2 employment model will provide valuable benefits and leg: protections and will eliminate the financial risks inherent in the independer ° contractor model. Further still, Plaintiffs presented substantial evidence showin that some Cass Members who accept post-settlement employment positions wit ° Flowers will end up making more than before, on top of receiving access t ° employment benefits like health and dental insurance, employment benefits, and th ' like. Indeed, at least 146 Class Members affirmatively responded to the Settlemer Agreement by stating that they were interested in or would accept the □□□□□□ ° offers of employment. b. Secondly, a few objectors apparently take issue with the settlement share and how the settlement monies are allocated. See Gonzale Objections (ECF No. 443); Young Objections (ECF No. 445). However, the onl complaints against the settlement amounts are based on a misunderstanding of □□□ the Settlement works — there is an initial cash component (aka payment of damage: and a territory buyback, but, for example, the Gonzales Objectors believe all the will receive is the former, which for the Gonzalez Objectors amounts to $93,00 each according to the Parties. Relatedly, some objectors wish to divide the damage fund by some formula other than weeks worked under contract for Flowers. But th Court finds that the workweek apportionment of the settlement method here is fa and widely accepted. See, e.g., Cicero v. DirecTV, Inc., No. EDCV 07-1182, 201 WL 2991486, at *5 (C.D. Cal. July 27, 2010) (wage per hour distribution based o the number of weeks worked is a “fair method” of distribution). This metho °° directly ties settlement allocations to the underlying Labor Code claims lik overtime hours worked. Distributors who worked more will receive proportionately larger share of the common fund. The Court finds that this is a fa *° formula. c. Third, one objector takes issue with an attorney fee request thé he thinks amounts to 40%. See Young Objections (ECF No. 445). But Plaintiffs ar 9 3:18-cv-01190-JO-JL [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF not making such a request. The requested attorneys’ fees — discussed further below- ; represent less than approximately 17% of the total class recovery or 33% of the $55 million damages payment. In short, the objections do not defeat the overall reasonableness and fairness of the compromises reached and they are each ° overruled in full. ° d. Finally, some objectors expressed concern with the amount of ’ time it might take to consummate the buyback of their territories. Some objectors wish to be bought back more quickly than the maximum twelve-month period ° agreed to by the Parties in the Settlement Agreement. The Court finds that, under the circumstances, including the sheer size of the endeavor to change a long- standing business model in the California market relating to hundreds of distribution territories, that it was reasonable for the Parties to negotiate a phased 12-month buyback period as discussed in the Settlhement Agreement. The Court recognizes that Flowers needs to implement the employment model in an orderly fashion and the twelve months’ time frame in the Settlement Agreement is ‘8 reasonable. Finally, Current Class Members who are interested in having Flowers consider a buyback prior to the planned repurchase date should contact Class Counsel who will convey the request to Flowers’ counsel. As it did during the preliminary approval period, Flowers, in turn, will consider the request consistent with its ability to conduct an orderly transition and the availability of a qualified candidate in the applicable geographical area to assume operation of the territory.

After reviewing the totality of the circumstances, the Court finds that the Parties’ °° plan for consummating the buyback portion of the Settlement Agreement is fair, reasonable, and adequate. ° D. Application of the Rule 23(e) Factors *° 1. FRCP 23(e) provides that, in assessing the overall fairness and adequacy of a proposed settlement, a court should consider at least whether: (1) “the class representatives and class counsel have adequately represented the class”; 10 3:18-cv-01190-JO-JLB IPR OADACEN] ORDER CRANTING IOINT MOTION FOR FINAT APPROVAT OF || (2) “the proposal was negotiated at arm’s length”; (3) “the relief provided for tt |class is adequate,” taking into consideration the risks associated with continue | litigation, the effectiveness of distributing the proposed relief to the class, the term | of any proposed attorneys’ fees, and the underlying settlement agreement; and ( | “the proposal treats class members equitably relative to each other.” Fed. R. Civ. ] | 23(e)(2).

7 2. Also, in the Ninth Circuit, there is a “strong judicial policy that favo: | settlements, particularly where complex class action litigation is concerned.” Cla: | Plaintiffs v. Seattle, 955 F.2d 1268, 1276 (9th Cir. 1991). “Litigation settlemen | offer parties and their counsel relief from the burdens and uncertainties inherent trial. ... The economies of litigation are such that pretrial settlement may be mo!

12 | advantageous for both sides than expending the time and resources inevitab!

13 | consumed in the trial process.” Franklin v. Kaypro, 884 F. 2d 1222, 1225 (9th C1 | 1989). To that end, the Ninth Circuit has articulated its own factors for fin: | approval, which although they predate revised Rule 23(e), they overlap with tk | Rule: (1) the strength of plaintiffs’ case; (2) the risk, expense, complexity, ar | likely duration of further litigation; (3) the risk of maintaining the case as a cla | action; (4) the amount of recovery; (5) the extent of discovery completed and tk | stage of proceedings; (6) the experience and views of counsel; (7) the presence of | governmental participant; and (8) the reaction of class members. Staton v. Boeir 1 Co., 327 F.3d 938, 959 (9th Cir. 2003). “The relative degree of importance to | | attached to any particular factor will depend upon and be dictated by the nature « |the claim(s) advanced, the type(s) of relief sought, and the unique facts ar | circumstances presented by each individual case.” Officers for Justice v. Civil Ser |Comm’n of City & Cty. of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982 | Ultimately, “[t]he initial decision to approve or reject a settlement proposal | committed to the sound discretion of the trial judge.” Jd.

1 3:18-cv-01190-JO-JI [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF 1 3. After careful consideration of all materials, including all objections, the |Court finds that the requirements of Rule 23(e) of the Federal Rules of Civil | Procedure and other laws and rules applicable to final settlement approval of class | actions have been fully satisfied, and the Court approves the settlement of this | matter as memorialized in the Settlement Agreement, which is incorporated herein | by this reference, as being fair, just, reasonable, adequate, is in the best interests of Class Members, and fully and finally resolves all such claims. More specifically, | the Court hereby finds that: 9 A. The class representatives and class counsel have adequately represented the 10 class. Here, Class Counsel — who recommends this settlement — includes 1] experienced class action trial attorneys having specific experience, and a 12 track record of success, in worker misclassification class actions, along with 13 class actions of all types. Notably this Court also specifically found counsel 14 to be adequate to represent the class during the contested Motion for Class 15 Certification. ECF No. 312 at pp. 9-11. Further, the Named Plaintiffs have 16 been instrumental in starting and shepherding this case over many years, 17 having participated actively in discovery, depositions, settlement discussions, 18 and so forth, and having collectively devoted hundreds of personal hours to 19 the prosecution of this matter.

20 B. The proposal was negotiated at arm’s length. The Settlement Agreement is 21 the result of arm’s-length negotiations involving experienced employment 22 counsel who are well-versed in the applicable (evolving) substantive law, 23 class action litigation procedures, and the legal and factual issues of this case.

24 The Parties attended three full days of mediation with a retired Judge and 25 conducted follow-up negotiations over the course of several months. The 26 Settlement occurred after more than five years of hard-fought litigation, on 27 the doorstep of trial, and only after extensive written and documentary 28 discovery, the exchange of expert reports, many depositions (including of 12 3:18-cv-01190-JO-JLB IROADACEN] ORDER CP ANTING TOINT VWOTION CAR EINIAT ADPRPOVAT OF every named Plaintiff and several of Defendants’ corporate representatives ; and several contested motions including for class certification and □□□□□□ ° adjudication. Defendants vigorously defended the litigation and tk independent contractor business model used in California throughout th ° case. “[S]uch negotiations are highly indicative of [the] fairness” of tk ° proposed Settlement. See In re Immune Response Sec. Litig., 497 F. Supp. 2 ’ 1166, 1171 (S.D. Cal. 2007). Finally, the Ninth Circuit has highlighte ° additional “signs” that may suggest collusion, or that the settlement was n ° truly negotiated at ‘“arm’s length:’ (1) when counsel receive “disproportionate” distribution of the settlement, such as “when the cla receives no money but class counsel are amply rewarded;” (2) when tk i? parties negotiate a ‘clear sailing’ arrangement where the parties have agree ° on an amount of attorneys’ fees that the Defendant agrees beforehand not | 4 contest; and (3) when the parties arrange for reversion of funds back to tl Defendant, e.g., when claims to funds are not made or if fees are n awarded. In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 94 (2011); Briseno v. Henderson, 998 F.3d 1014, 1023 (9th Cir. 2021). None 8 these warning signs are present here. Class Counsel here are seeking, in fee less than approximately 17% of the total cash component of this settlemer i.e., Significantly less than even the Ninth Circuit’s usual “benchmark.” Ar 1 there is no “clear sailing” agreement here nor any possibility of reversio _ Indeed, the settlement does not require any claims at all. Class Members wi automatically receive payment according to the number of workweeks the were under contract with Flowers. This settlement was negotiated at arm length only after counsel fully informed themselves through years | *° litigation, discovery, and motion work, and only with the assistance of < experienced mediator who spent three days with the Parties.

ITPROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF C. The settlement_is adequate given the risk, expense, complexity, and likely duration of further litigation, compared to the results achieved. Indeed, there was substantial risk on both sides. If a jury believed Flowers, Plaintiffs would get nothing. Flowers, on the other hand, was facing the developments in the ° law presenting challenges against the use of an independent contractor model ° in California. ’ D. The number, complexity, and continually evolving nature of the legal issues in this matter further support the settlement. Plaintiffs and Class Counsel ° believe the compromise reached here is significantly favorable for Class members. The average Class Member gross award (before deduction for fees and expenses) will be over $112,000 per worker and compares favorably to other cases of this type.

E. Next, the proposed methods for distributing the relief are effective and 4 efficient. Here, Class Members will not be required to make a formal claim » as a condition of recovery. Class Members will receive their payments simply by being members of the class. Nor is there any danger of any illegitimate 7 claims because, once again, there is no claims process, plus we know the 8 actual identities of every class person and their number of workweeks under contract, because the Distributor Agreements signed by Class Members that they operated under were kept by Flowers in the normal course of business.

As such, this method of distribution imposes no burden on Class Members, class treatment here is manageable, and relief distribution will be efficient without facing any systematic fraud threats. This favors approving the class wide Settlement.

F. The proposed allocation plan is also fair. Next, the plan of allocation of the *° Settlement to Class Members is also fair and reasonable. The plan is objective. The Net Settlement Amount will be allocated among Class °° Members based on several factors, including: (1) the amount of time spent as 14 3:18-cv-01190-JO-JLB [PROPOSET)] ORDER GRANTING TOINT MOTION FOR FINAT APPROVAT, OF ] a distributor during the applicable liability period; (2) whether they are 2 current or former Distributor (which dictates whether they receive addition: 3 funds as part of the injunctive relief component or buyback); (3) whether the 4 are an aggrieved employee and entitled to a portion of the PAGA allocatio 5 of the Settlement; and (4) whether they opted into the FLSA component « 6 this case. See, e.g., Cicero, 2010 WL 2991486, at *5 (C.D. Cal. July 2 7 2010) (distribution based on the number of weeks worked is a “fair methoc 8 of distribution). The Court also finds that the extra amounts for the FLS.

9 Plaintiffs are fair and appropriate. The Settlement satisfies the “equitab 10 treatment” prong of Rule 23(e)(2).

1] G. The attorneys’ fees request is reasonable. The Settlement Agreement, ; 12 section 9.1.4, allows Class Counsel to petition the Court for an award of fee 13 which they have done. As explained more fully below, the request ft 14 $18,333,333.00 is fair and reasonable given the significant time and □□□□□□ 15 that Class Counsel have devoted to this case over the last five years and tt 16 result that they have achieved for the Class compared to the contingent ris 17 of not recovering any monies, fees, or costs at all. _ 18 |E. The Remaining Components of the Settlement 19 1. The Court also finds that, for the same reasons the Settleme: | Agreement is adequate under Rule 23(e), it is also adequate under the FLSA and 1 || resolve the FLSA claims.

22 2. Also, the Court finds that the Settlement Agreement, and particular!

23 |its allocation of $200,000 to the PAGA claims (75% of which will be paid to tt | LWDA per statutory requirements) is reasonable and sufficient and the Cou ||hereby approves the settlement and release of all PAGA claims as also state || separately in the Parties’ PAGA Settlement and Release Agreement (ECF No. 45.

27 | 4). In this regard, the Court also finds persuasive that the California Labor ar | Workforce Development Agency (“LWDA”) was given notice of the propose 15 3:18-cv-01190-JO-J] [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF settlement of the PAGA claims and of this hearing and has not attempted to | intervene or make any comment on the settlement terms whatsoever.

3 3. The Court further finds that the requested payment to the Settlement | Administrator, Rust Consulting, and their estimated current and future expenses (Mills Decl., 4 28, ECF No. 451-6) of $30,000 are reasonable and shall be paid | consistent with the Settlement Agreement.

7 4. The Court further finds that the requested payment of attorney’s fees to class counsel, as formally requested in the Motion for Attorney’s Fees, Costs, and Service Awards, is also reasonable. Plaintiffs on behalf of Class Counsel request | $18,333,333.000 in fees, which is less than approximately 17% of what is estimated | Flowers will pay, net and in total, to all class members, including for territory | buybacks, which is significantly lower than the Ninth Circuit’s 25% “benchmark” | for presumptively reasonable fees. Arguably the Settlement Agreement is worth 14 even more than as stated here because it also includes offers of employment plus | benefits (health, dental, vision, retirement benefits, etc.) the class did not have | before the settlement. Moreover, the fee request here would be reasonable even if 17 counsel achieved the initial damages component only, i.e. even if the Court | benchmarked the fee to only the $55 million (the requested fee being 33% of that |amount). Awards more than the benchmark are common. See, e.g., Deluca v. | Farmers Ins. Exch., No. 17-CV-00034-TSH, 2020 WL 5071700, at *7 (N.D. Cal. | Aug. 24, 2020) (awarding 30% of common fund in wage and hour class settlement); | Gutierrez-Bejar v. SOS Int'l, LLC, No. LACV1609000JAKJEMX, 2019 WL 23 15683901, at *10 (C.D. Cal. Nov. 1, 2019) (awarding 29.33% of fund in independent | contractor misclassification case and noting that awards in excess of benchmark 25 “are not uncommon”); Barbosa v. Cargill Meat Sols. Corp., 297 F.R.D. 431, 450 1(E.D. Cal. 2013) (awarding 33.3% of fund as attorneys’ fees and listing cases); | Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) | (“[The] exact percentage [awarded] varies depending on the facts of the case, and in 16 3:18-cv-01190-JO-JLB (PR OPOACENI] ORDER OP ANTING TONIT MOTION GAR EINTAT APPRBOVAT OG | most common fund cases, the award exceeds that benchmark.”); Conte & Newbers | Newberg on Class Actions § 14:6, p. 551 (4th Ed. 2002) (“fee awards in cla: | actions average around one third of recovery”). Such a fee is warranted considerin |the substantial results achieved, the effort expended by Class Counsel over th | better part of six years, Class Counsels’ considerable skill and experience, th | complexity of the issues, and the risks of litigation. The Court also finds that | “lodestar cross-check” supports the requested fee award. The Court finds that Clas | Counsel’s total lodestar of $6,389,537.50 (a total of 11,721.60 billable how | through Jan. 31, 2024) is reasonable. The hourly rates billed by the professionals | | this matter are reasonable as were the hours expended as further described b | counsel in their Motion for Attorneys Fees and supporting materials. The lodest | cross-check multiplier of 2.86 does not warrant deviation from the fee request give | the extraordinary results Plaintiffs and their counsel have obtained here. The Nint | Circuit has recognized that multipliers typically can range up to 4, and Cour 15 “commonly apply multipliers in that range in California wage and hour cla: | actions,” and often apply multipliers that far exceed that range. Kang v. Wel | Fargo Bank, N.A., 2021 WL 5826230, at *17-18 (N.D. Cal. Dec. 8, 2021) (orderin | multiplier of 5.5 in wage and hour class action); see, e.g., Uschold v. NSMG Share | Servs., LLC, 2020 WL 3035776, at *16 (N.D. Cal. June 5, 2020) (awardin | multiplier of 4 in wage and hour class action); Lazarin v. Pro Unlimited, Inc., □□ |C11-03609 HRL, 2013 WL 3541217, at *8 (N.D. Cal. July 11, 2013) (findin | lodestar multiplier of 3.36 in wage and hour action was reasonable and did □□ | warrant a downward departure from 25% benchmark).

24 5. Next, the Court also finds that Plaintiffs’ request for reimbursement « | their costs, totaling $160,545.48 as of today, is reasonable and shall also be grantes | See In re Bluetooth Headset Products Liability Litigation, 654 F.3d 935, 941 (91 | Cir. 2011) (“Attorneys’ fees and costs may be awarded in a certified class actic | where so authorized by law or the parties’ agreement”).

17 3:18-cv-01190-JO-J] [PROPOSED] ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF l 6. Next, the Court also finds that each Named Plaintiffs’ request for Service Awards, of $25,000 each, is reasonable and proportional to the time they | devoted to this matter and the results achieved. The Court hereby grants those | requests. See Graham v. Overland Sols., Inc., No. 10-CV-0672 BEN BLM, 2012 5S | WL 4009547, at *8 (S.D. Cal. Sept. 12, 2012) (quoting Staton v. Boeing Co., 327 6 F.3d 938, 977 (9th Cir. 2003) (approving service awards of $25,000 each to the | named plaintiffs for their time and effort, the risks they undertook, and the stigma | upon future opportunities, and a general release of all claims).

9 7. Class Action Fairness Act Notice. The Court finds that, in accordance | with the Class Action Fairness Act of 2005, 28 U.S.C. § 1715 (“‘CAFA”), and as set | forth by the Declaration and Supplemental Declaration of Jared L. Palmer (ECF | Nos. 432, 452), Defendants properly and timely caused to be mailed a copy of the | proposed class action Settlement and all other documents required by law to the | Attorney General of the United States and the State Attorneys General in each | jurisdiction where class members reside. No Attorney General has filed objections | to the Settlement.

17 8. Defense counsel notified the United States Attorney General and the | Attorney General of the State of California of the terms of the proposed class action || settlement by letters dated October 26, 2023, November 16, 2023, and February 20, | 2024, with enclosures. (ECF Nos. 432, 452). Defense counsel notified the Attorney | General of the State of Nevada of the terms of the proposed class action settlement | by letter dated October 26, 2023, with enclosures, as well as via email on || November 16, 2023, and February 21, 2024, with enclosures. (ECF Nos. 432, 452).

24 |On February 20, 2024, Defense counsel notified the Attorneys General for 18 | additional States of the terms of the proposed class action settlement by letter dated |that same day, with enclosures, in which it was determined during the Class | Settlement Notice period that at least one Class Member was determined to be a 18 3:18-cv-01190-JO-JLB IDPADACEN] ORNEP CPR ANTINIG IOTNIT MOTION FOR EINAT APPROVAT OF | resident based on updated address information provided during the Class Settlemen | Notice process. (ECF No. 452).

3 9. The Parties and the Settlement Administrator are hereby directed t |implement and carry out the Settlement Agreement and the PAGA Settlement an | Release Agreement in accordance with the terms and provisions thereof.

6 10. The releases set forth in the Settlement Agreement and PAG/ | Settlement and Release Agreement will become binding and effective upon entry o | this Final Approval Order.

9 11. Neither this Order, the Settlement Agreement, nor any documer | referred to herein, nor any action taken to carry out the Settlement Agreement i: | may be construed as, or may be used as an admission by or against Defendants o | any of the other Releasees of any fault, wrongdoing, or liability whatsoever. Nor 1 |this Order a finding of the validity of any claims in the Action or of an | wrongdoing by Defendants or any of the other Releasees. The entering into a 1S | carrying out of the Settlement Agreement, and any negotiations or proceeding | related thereto, shall not in any event be construed as, or deemed to be evidence 0!

17 | an admission or concession with regard to the denials or defenses by Defendants o | any of the other Releasees and shall not be offered in evidence against Defendant for any of the other Releasees in any action or proceeding in any cour | administrative agency or other tribunal for any purpose whatsoever other than t 21 enforce the provisions of this Order, the Settlement Agreement, or any relate | agreement or release. Notwithstanding these restrictions, any of the Releasees ma | file in the action or in any other proceeding, this Order, the Settlement Agreement | or any other papers and records on file in the Action as evidence of the Settlemer | Agreement and to support a defense of res judicata, collateral estoppel, release || waiver, or other theory of claim preclusion, issue preclusion or similar defense.

27 12. In the event that the Settlement Agreement does not become final an | effective in accordance with its terms, then this Final Approval Order and the prio 19 3:18-cv-01190-JO-IL [PROPOSED] ORDER CR ANTING TOIT MOTION FOR ETINAT APPROVAT OF Preliminary Approval Order, shall be rendered null and void and be vacated.

2 | Moreover, any funds tendered by Defendants shall be returned and/or retained by | Defendants consistent with the terms of the Settlement Agreement.

4 13. For the reasons stated in this Order, the Joint Motion for Final | Approval of Class Action, FLSA, and PAGA Settlement is GRANTED. Plaintiffs’ | Motion for Attorneys’ Fees, Costs, and Service Awards is also GRANTED. Per the |'terms of the Parties’ Settlement Agreement, this Action shall be, and hereby is, | DISMISSED with PREJUDICE and the Clerk of the Court shall enter this Order as |a final order and Judgment. In the event there is a dispute concerning the | enforcement of the terms of the Settlement Agreement, the Parties agreed to confer |in good faith in an attempt to resolve any such dispute and if such dispute remains j unresolved, the dispute shall be heard by Judge Hoffman or, if unresolved, the | Court, which shall retain jurisdiction.

15 | IT IS SO ORDERED 17|patep: _? [¢3/ ue 18 Ute dos District Iudge 2) 20 3:18-cv-01190-JO-JLE DD NDNCLNI] ODNMNLYP MD ANTITIAIMN IDWTNTIT ASOTION ROR FINTAT ADDROVAT □□