Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-01974/USCOURTS-caed-2_08-cv-01974-7/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

MANUEL MURILLO, an individual,

on behalf of himself and all

others similarly situated,

Plaintiff,

 v.

PACIFIC GAS & ELECTRIC

COMPANY, a California

corporation, and DOES 1

through 10, inclusive, 

Defendants. /

NO. CIV. 2:08-1974 WBS GGH

MEMORANDUM AND ORDER RE: FINAL

APPROVAL OF CLASS AND

COLLECTIVE ACTION SETTLEMENT

----oo0oo----

Plaintiff Manuel Murillo brought this action seeking a

collective and class action suit against defendant Pacific Gas &

Electric Company (“PG&E”) for alleged violations of the Fair

Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219; the

California Labor Code, Cal. Lab. Code §§ 201, 203, 204, 226(a),

226.3, 226.7, 510, 512, 1194; and California’s Unfair Competition

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Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200-17210. Presently

before the court is plaintiff’s motion for final approval of the

settlement of his hybrid action which consists of a Federal Rule

of Civil Procedure 23(b)(3) class action and FLSA § 216(b)

collective action. 

I. Factual and Procedural Background

Plaintiff was employed by defendant as a meter reader

from February 5, 2006 to May 16, 2008. As part of his

compensation, plaintiff received funds to purchase health care

and other benefits in lieu of receiving these benefits directly

from defendant. These funds were known as the Hiring Hall Line

Benefit Premium (“Hiring Hall Premium”).

On August 22, 2008, plaintiff filed a putative class

and collective action claiming that defendant engaged in unfair

and illegal business practices in its payment of meter readers

who received the Hiring Hall Premium. (Docket No. 1.) Plaintiff

amended his Complaint once as a matter of course. (Docket No.

16.) On July 24, 2009, plaintiff filed a Second Amended

Complaint that withdrew several previously asserted causes of

action and plead a federal FLSA claim as well as state claims

that specifically alleged that defendant (1) failed to properly

calculate meter readers’ overtime premiums in accordance with the

FLSA by excluding the Hiring Hall Premium from its calculations

of overtime pay and (2) failed to include all required

information on meter readers’ paychecks. (Docket No. 26.) 

Plaintiff filed a motion for conditional certification of a

collective action class pursuant to § 216(b) of the FLSA on July

28, 2009, but withdrew this motion one day later. (See Docket

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Nos. 27, 28.)

On October 6, 2009, the parties attended a day-long

mediation session with a neutral third-party mediator, Lester

Levy, Esq. of JAMS, where they agreed to settlement terms. The

parties then filed a motion for preliminary approval of a class

and collective action settlement on January 26, 2010. (Docket

No. 30.) In its Order granting preliminary approval of the

settlement, the court provisionally certified the following

class: “all Hiring Hall meter readers employed by PG&E between

August 18, 2006 and December 31, 2009.” The court appointed

Manuel Murillo as class representative, the Law Offices of

Michael Tracy as class counsel, and PG&E as settlement

administrator. The court also approved the class opt-in form,

opt-out form, and notice of settlement, and directed class

counsel to file with the court, within thirty-one days prior to

the final fairness hearing, the settlement administrator’s

declaration setting forth the services rendered, proof of

mailing, and list of all class members who opted out of and opted

into the settlement. The court set the final fairness hearing

for July 19, 2010, at 2:00 p.m.

After conducting the final fairness hearing and

carefully considering the settlement terms, the court now

addresses whether this collective and class action should receive

final certification; whether the proposed settlement is fair,

reasonable, and adequate; and whether class counsel’s request for

attorneys’ fees and costs, as well as an incentive payment for

the named plaintiff, should be granted. 

II. Discussion

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A. FLSA Collective Certification

The FLSA requires employers to pay an overtime rate of

one and one-half times their regular pay rate for hours worked

over forty hours in a week. 29 U.S.C. § 207(a). The statute

provides that an aggrieved employee may bring a collective action

on behalf of himself and other employees “similarly situated”

based on an employer’s failure to adequately pay overtime wages. 

Id. § 216(b). To maintain a collective action under the FLSA a

plaintiff must demonstrate that the putative collective action

members are similarly situated. Id.; Adams v. Inter-Con Sec.

Sys., 242 F.R.D. 530, 535-36 (N.D. Cal. 2007); Leuthold v.

Destination Am., Inc., 224 F.R.D. 462, 466 (N.D. Cal. 2004). 

Neither the FLSA nor the Ninth Circuit have defined

“similarly situated.” Adams, 242 F.R.D. at 536; Leuthold, 224

F.R.D. at 466. A majority of courts have adopted a two-step

approach for determining whether a class is “similarly situated.” 

See Leuthold, 224 F.R.D. at 466 (compiling district court cases

following the two-step approach); see, e.g., Thiessen v. Gen.

Elec. Capital Corp., 267 F.3d 1095, 1102-03 (10th Cir. 2001);

Hipp v. Liberty Nat. Life. Ins. Co., 252 F.3d 1208, 1219 (11th

Cir. 2001); Mooney v. Aramco Serv. Co., 54 F.3d 1207, 1213-14

(5th Cir. 1995), overruled on other grounds by Desert Palace,

Inc. v. Costa, 539 U.S. 90 (2003). Under this approach, a

district court first determines, based on the submitted pleadings

and affidavits, whether the proposed class should be notified of

the action. Leuthold, 224 F.R.D. at 467. District courts have

held that conditional certification requires only that

“‘plaintiffs make substantial allegations that the putative class

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members were subject to a single illegal policy, plan or

decision.’” Adams, 242 F.R.D. at 536 (citing Leuthold, 224

F.R.D. at 468); see also Thiessen, 267 F.3d at 1102.

The second-step usually occurs after discovery is

complete, at which time the defendants may move to decertify the

class. Leuthold, 224 F.R.D. at 467. In this step, the court

makes a factual determination about whether the plaintiffs are

similarly situated by weighing such factors as “(1) the disparate

factual and employment settings of the individual plaintiffs, (2)

the various defenses available to the defendant which appeared to

be individual to each plaintiff, and (3) fairness and procedural

considerations.” Misra v. Decision One Mortg. Co., 673 F. Supp.

2d 987, 993 (C.D. Cal. 2008) (quotation marks, citations

omitted). Even when the parties settle, the court “must make

some final class certification finding before approving a

collective action settlement.” Carter v. Anderson Merchandisers,

LP, Nos. EDCV 08-00025-VAP (OPx), EDCV 09-0216-VAP (Opx), 2010 WL

144067, at *3 (C.D. Cal. Jan. 7, 2010) (citations omitted).

The court previously found that plaintiffs satisfied

the modest factual showing that is required with respect to the

first-step of this approach and granted conditional

certification. Since this case did not proceed to trial,

defendant did not have the opportunity to decertify the class,

and accordingly any motion to decertify under the FLSA is moot. 

See Misra v. Decision One Mortg. Co., No. SA CV 07-0994 DOC

(Rcx), 2009 WL 4581276, at *4 (C.D. Cal. April 13, 2009). Since

the analysis required by the second step, including issues of

factual similarities between the employees and their claims,

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largely overlap with class certification analysis under Federal

Rule of Civil Procedure 23(a), the court will now turn to analyze

the propriety of class certification under Rule 23. See id.

B. Rule 23 Class Certification

The Ninth Circuit has declared that a strong judicial

policy favors settlement of class actions. Class Plaintiffs v.

City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). 

Nevertheless, where, as here, “parties reach a settlement

agreement prior to class certification, courts must peruse the

proposed compromise to ratify both [1] the propriety of the

certification and [2] the fairness of the settlement.” Staton v.

Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). 

In conducting the first part of its inquiry, the court

“must pay ‘undiluted, even heightened, attention’ to class

certification requirements” because, unlike in a fully litigated

class action suit, the court will not have future opportunities

“to adjust the class, informed by the proceedings as they

unfold.” Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620

(1997); accord Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th

Cir. 1998). The parties cannot “agree to certify a class that

clearly leaves any one requirement unfulfilled,” and consequently

the court cannot blindly rely on the fact that the parties have

stipulated that a class exists for purposes of settlement. Berry

v. Baca, No. 01-02069, 2005 WL 1030248, at *7 (C.D. Cal. May 2,

2005); see also Amchem, 521 U.S. at 622 (observing that nowhere

does Rule 23 say that certification is proper simply because the

settlement appears fair). In conducting the second part of its

inquiry, the “court must carefully consider ‘whether a proposed

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settlement is fundamentally fair, adequate, and reasonable,’

recognizing that ‘[i]t is the settlement taken as a whole, rather

than the individual component parts, that must be examined for

overall fairness . . . .’” Staton, 327 F.3d at 952 (quoting

Hanlon, 150 F.3d at 1026); see also Fed. R. Civ. P. 23(e)

(outlining class action settlement procedures).

Procedurally, the approval of a class action settlement

takes place in two stages. In the first stage of the approval

process, “‘the court preliminarily approve[s] the Settlement

pending a fairness hearing, temporarily certifie[s] the Class . .

. , and authorize[s] notice to be given to the Class.’” West v.

Circle K Stores, Inc., No. 04-0438, 2006 WL 1652598, at *2 (E.D.

Cal. June 13, 2006) (quoting In re Phenylpropanolamine (PPA)

Prods. Liab. Litig., 227 F.R.D. 553, 556 (W.D. Wash. 2004)). The

court previously preliminarily approved the class action

settlement in its March 5, 2010 Order. (Docket No. 39.)

In the second stage, the court holds a fairness

hearing, after notice is given to putative class members, where

the court entertains any of their objections to (1) the treatment

of this litigation as a class action and/or (2) the terms of the

settlement. See Diaz v. Trust Territory of Pac. Islands, 876

F.2d 1401, 1408 (9th Cir. 1989) (holding that prior to approving

the dismissal or compromise of claims containing class

allegations, district courts must, pursuant to Rule 23(e), hold a

hearing to “inquire into the terms and circumstances of any

dismissal or compromise to ensure that it is not collusive or

prejudicial”). Following the fairness hearing, the court makes a

final determination as to whether the parties should be allowed

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to settle the class action pursuant to the terms agreed upon. 

DIRECTV, Inc., 221 F.R.D. at 525.

A class action will be certified only if it meets the

four prerequisites identified in Federal Rule of Civil Procedure

23(a) and additionally fits within one of the three subdivisions

of Rule 23(b). Although a district court has discretion in

determining whether the moving party has satisfied each Rule 23

requirement, Califano v. Yamasaki, 442 U.S. 682, 701 (1979);

Montgomery v. Rumsfeld, 572 F.2d 250, 255 (9th Cir. 1978), the

court must conduct a rigorous inquiry before certifying a class. 

Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982); E.

Tex. Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 403-05

(1977). 

1. Rule 23(a)

Rule 23(a) restricts class actions to cases where:

(1) the class is so numerous that joinder of all members

is impracticable; (2) there are questions of law or fact

common to the class; (3) the claims or defenses of the

representative parties are typical of the claims or

defenses of the class; and (4) the representative parties

will fairly and adequately protect the interests of the

class.

Fed. R. Civ. P. 23(a). These requirements are more commonly

referred to as numerosity, commonality, typicality, and adequacy

of representation, respectively. Hanlon v. Chrysler Corp., 150

F.3d 1011, 1019 (9th Cir. 1998). In the court’s Order granting

preliminary approval of the settlement, the court found that the

putative class satisfied the numerosity, commonality, typicality,

and adequacy of representation requirements of Rule 23(a). Since

the court is unaware of any changes that would alter its Rule

23(a) analysis, and because the parties indicated at the fairness

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hearing that they were unaware of any such developments, the

court finds that the class definition proposed by plaintiffs

meets the requirements of Rule 23(a). 

2. Rule 23(b)

An action that meets all the prerequisites of Rule

23(a) may be maintained as a class action only if it also meets

the requirements of one of the three subdivisions of Rule 23(b). 

Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 163 (1974). In this

case, plaintiff seeks certification under Rule 23(b)(3). A class

action may be maintained under Rule 23(b)(3) if (1) “the court

finds that questions of law or fact common to class members

predominate over any questions affecting only individual

members,” and (2) “that a class action is superior to other

available methods for fairly and efficiently adjudicating the

controversy.” Fed. R. Civ. P. 23(b)(3). 

In its Order granting preliminary approval of the

settlement, the court found that both prerequisites of Rule

23(b)(3) were satisfied. The court is unaware of any changes

that would affect this conclusion, and the parties indicated at

the fairness hearing that they were aware of no such

developments. Accordingly, since the settlement class satisfies

both Rule 23(a) and 23(b)(3), the court will grant final class

and collective action certification.

C. Rule 23(e): Fairness, Adequacy, and Reasonableness of

Proposed Settlement

Having determined that class treatment appears to be

warranted, the court must now address whether the terms of the

parties’ settlement appear fair, adequate, and reasonable. In

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conducting this analysis, the court must balance several factors

including

the strength of the plaintiffs’ case; the risk, expense,

complexity, and likely duration of further litigation;

the risk of maintaining class action status throughout

the trial; the amount offered in settlement; the extent

of discovery completed and the stage of the proceedings;

the experience and views of counsel; the presence of a

governmental participant; and the reaction of the class

members to the proposed settlement. 

Hanlon, 150 F.3d at 1026; but see Molski v. Gleich, 318 F.3d 937,

953-54 (9th Cir. 2003) (noting that a district court need only

consider some of these factors--namely those designed to protect

absentees).

1. Terms of the Settlement Agreement

The key terms of the settlement agreement are as

follows:

(1) The Settlement Class: Class members include all

meter readers employed by defendant who received the

Hiring Hall Premium between August 18, 2006 and

December 31, 2009. (Hutchins Decl. ¶ 9.)

(2) Notice: Defendant sent a class notice, Consent to

Join/Opt-In Form, and Opt-Out Form to each individual

in the class within twenty-one days after the entry of

the order conditionally approving the settlement. Any

class members whose notice was returned as

undeliverable within twenty-three days of the initial

mailing defendant was skip traced and sent a second

mailing within thirty-three days of the initial

mailing. (Settlement Agreement ¶ 62.)

(3) Opt-In Procedure: To opt-in to the settlement class

members submitted and signed an Opt-In Form and

returned the form so that it was postmarked on or

before thirty-three days after the initial mailing, or

if in the second mailing, thirty-three days after the

second mailing. (Id. ¶ 63.) Sending an Opt-In Form

bound the class member to both the collective action

and Rule 23 class action. (Id. ¶ 64(c).)

(4) Opt-Out Procedure: To opt-out of the settlement

class members must have submitted and signed an Opt-Out

Form and returned the form so that it was postmarked on

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or before thirty-three days after the initial mailing,

or if in the second mailing, thirty-three days after

the second mailing. (Id. ¶ 64.) Sending in both an

Opt-In and Opt-Out form deemed the class member to be

opted into the Rule 23 and FLSA collective action and

the Opt-Out form did not have any legal effect. (Id. ¶

64(c).) Failure to send in either an Opt-In or Opt-Out

form by the opt-in and opt-out deadlines bound the

class member to the settlement of the Rule 23 state law

claims, but does not preclude the class member from

pursuing future FLSA claims against defendant. (Id. ¶

64(b).)

(5) Objections to Settlement: Any individual class

member who wished to object to the settlement could do

so if they filed any objection with the Clerk of the

Court and served it on all counsel by the close of the

opt-in/opt-out period. Otherwise, the objection was

deemed waived. (Id. ¶ 65.) 

(6) Settlement Amount: In total the settlement amount

paid to class members is $200,020.80. (Loper Decl. ¶

7.)

(7) Attorney’s Fees and Enhancement Award: Class

counsel requests a separate award of $140,000 in

attorney’s fees and costs, and an enhancement award for

the named plaintiff of $10,000. Defendant has agreed

not to oppose this request. (Settlement Agreement ¶

59.) 

(8) Settlement Distribution: Settlement funds will be

distributed on an individualized basis using a formula

created by the parties. The parties calculated the

amount of FLSA overtime payments arguably due to each

individual in the class. (Id. ¶ 60.) The parties then

subtracted the “extra compensation” offset to which

defendant was entitled within each pay period.1

 (Id.) 

This number was then multiplied by 1.5, which

represents the addition of fifty percent of the maximum

allowed liquidated damages available under the FLSA. 

(Id.) Because the total number owed to each class

member was less than $200,000 after these calculations,

defendant increased the amount paid to each class

member on a pro-rata basis such that the total

settlement amount is equal to $200,000. (Id. ¶ 60(c).)

(9) Release: Class members agreed to release “any and

all charges, claims causes of action, lawsuits,

1 Under the FLSA, if an employer pays an overtime rate

for hours worked below forty in a week, the employer may subtract

such non-mandatory “extra compensation” from the overtime amount

it otherwise owes employees. See 29 U.S.C. § 207(e)(5-7). 

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demands, complaints, liabilities, obligations,

penalties, fines, promises, agreements, controversies,

damages, rights, offsets, liens, attorneys’ fees,

costs, expenses, losses, debts, interest, penalties,

and fines of any kind, . . . for any relief whatsoever,

including monetary, injunctive, or declaratory relief,

whether direct or indirect, whether under federal law

or law of any state, whether contingent or vested,

which the Named Plaintiff or any Class Member had, now

has, or may have in the future against Released Parties

or any of them for any acts occurring on or before

December 32, 2009 that were asserted in this Action or

that are based upon, arise out of, or relate to the

facts of this Action.” (Id. ¶ 30(a).)

2. Rule 23(e) Factors

a. Strength of the Plaintiff’s Case

Ascertaining the strength of plaintiff’s case is

difficult due to the limited record of evidence available to the

court. Prior to settlement in October 2009, the only motion

filed in this action was a motion to strike portions of

defendant’s answer to the First Amended Complaint. Discovery

also remained open at the time of settlement. As a result, the

court does not have the benefit of a long record of adversarial

testing of plaintiff’s case prior to plaintiff’s unopposed motion

to certify the settlement class. However, it is evident that a

number of legal issues relating to plaintiff’s case were disputed

by defendant at mediation, including whether the Hiring Hall

Premium could be excluded from overtime calculations as a health

benefit and whether defendant was entitled to substantial offsets

for any inadequate overtime pay. Nonetheless, the paucity of the

record ultimately precludes the court from assessing whether

plaintiff’s case is either strong or weak. Accordingly, the

court will not consider this factor for settlement purposes.

b. Risk, Expense, Complexity, and Likely

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Duration of Further Litigation

 Although the court cannot assess the strength of

plaintiff’s case from the record, the presence of substantially

disputed legal issues at the heart of plaintiff’s case does serve

to heighten the risk and uncertainty that both parties would face

if this action went to trial. See Hanlon, 150 F.3d at 1026. 

First, the parties disagreed over whether the FLSA even required

Hiring Hall Premium payments to be included in overtime pay

calculations. The parties specifically disputed whether the

premium could be excluded from overtime calculations as a health

care benefit pursuant to 29 U.S.C. § 207(e)(4). (See Settlement

Agreement ¶ 46.) 

Second, the parties disagreed over the extent to which

defendant was entitled to offsets for any underpayment of

overtime because of substantial amount of extra compensation,

including weekend and holiday pay, that defendant provided to its

employees. (Id. ¶¶ 48-49.) Defendant contended that it was

entitled to reduce overtime obligations by any extra compensation

each employee received over the entire period of the lawsuit,

rather than during each individual pay period; a view which is

shared by the majority of courts. See, e.g., Farris v. County of

Riverside, 667 F. Supp. 2d 1151, 1164-65 (C.D. Cal. 2009). If

defendant were to prevail on its interpretation of the offset

period, class members would likely have been able to recover

little, if any, damages from defendant. Third, the parties

disagreed over whether plaintiff was entitled to liquidated

damages under the FLSA. (Settlement Agreement ¶ 50.) These

disputed and novel legal issues injected a great deal of risk and

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uncertainty for both sides into further litigation of this

action.

Assuming the case progressed even further, the

complexity and duration of the litigation would also have been

considerable. With a class of over 1,000 members, completing

discovery in this case and going through a series of dispositive

motions would have been extremely costly. Accordingly, the court

finds that the uncertainty and likely expense and duration of

further litigation favors settlement in this case.

 c. Risk of Maintaining Class-Action Status

Throughout Trial

The court is unaware of any specific difficulty in

maintaining class-action status were this case to continue to

trial. Accordingly, the court will not consider this factor for

settlement purposes. See In re Veritas Software Corp. Sec.

Litig., No. 03-0283, 2005 WL 3096079, at *5 (N.D. Cal. Nov. 15,

2005) (favoring neither approval nor disapproval of settlement

where the court was “unaware of any risk involved in maintaining

class action status”), aff’d in relevant part, 496 F.3d 962 (9th

Cir. 2007).

d. Amount Offered in Settlement

The value of the settlement in this case is

$200,020.80, which will be paid out to class members based upon

the number of overtime hours they worked while employed for

defendant. (See Loper Decl. Ex. B.) Defendant has also agreed

to make separate payments of $132,602.00 in attorney’s fees,

$7,398.00 in costs, and a $10,000.00 incentive payment to the

named plaintiff. (Mot. Attorney’s Fees at 1.) As of the time of

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the fairness hearing 358 class members opted in and are eligible

to receive claims from the settlement administrator. (Loper

Decl. ¶ 7.) 

According to an analysis submitted by the settlement

administrator, class members will almost uniformly recover more

than they would have been due if they had prevailed on their

claims and plaintiff’s interpretation of the offset period was

adopted, taking the three year statute of limitations into

account. (See id. Ex. B.) Class members’ actual recovery,

therefore, at least appears comparable to their injuries and is

fair and reasonable in light of the risks and costs of further

litigation in this case. Accordingly, the court finds that the

amount offered favors approving the settlement.

e. Extent of Discovery Completed and the Stage

of the Proceedings

The parties arrived at settlement at an advanced stage

of the proceedings. At the time of the mediation session in

October 2009 that led to settlement, discovery had been ongoing

in this matter for almost a year and the parties were two months

away from the close of discovery. (See Status (Pretrial

Scheduling) Order (Docket No. 13.) at 2-3.) A settlement that

occurs in an advanced stage of the proceedings “suggests that the

parties . . . carefully investigated the claims before reaching a

resolution.” Alberto v. GMRI, Inc., No. Civ. 07-1895 WBS DAD,

2008 WL 4891201, at *9 (E.D. Cal. Nov. 12, 2008) (internal

citations omitted). The parties’ use of third-party mediation

also suggests that they had sufficient information about the

claims to present their arguments to an experienced mediator and

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considered a neutral opinion in evaluating the strength of their

arguments in this matter. Accordingly, the court finds that

amount of discovery completed and the stage of the proceedings at

the time of settlement weigh in favor of settlement in this case.

f. Experience and Views of Counsel

The Law Offices of Michael Tracy, class counsel in this

action, specializes in employment law and has served as class

counsel in numerous federal and state class action lawsuits. 

(See Hutchins Decl. ¶¶ 4-5.) The lead counsel for the class has

also personally litigated over 200 wage and hour cases. (Id.) 

Therefore, class counsel is familiar with the attendant risks of

litigating class action lawsuits similar to this case.

Class counsel, moreover, indicates that it endorses the

settlement as fair, adequate, and reasonable. (Id. at ¶ 8.) 

When approving class action settlements, the court must give

considerable weight to class counsel’s opinions due to counsel’s

familiarity with the litigation and its previous experience with

class action lawsuits. In re Wash. Pub. Power Supply Sys. Sec.

Litig., 720 F. Supp. 1379, 1392 (D .Ariz. 1989) (citing Officers

for Justice v. Civil Serv. Comm’n of the City & County of S.F.,

688 F.2d 615, 625 (9th Cir. 1982)). Thus, this factor supports

approval of the Settlement Agreement. 

g. Presence of a Government Participant

No government party participated in this matter; this

factor, therefore, is irrelevant to the court’s analysis.

h. Reaction of the Class Members to the Proposed

Settlement

Using a mailing list generated by defendant’s

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employment records, the settlement administrator mailed packets

comprised of the court-approved class notice, opt-in, and opt-out

forms to 1,116 potential class members. (Loper Decl. ¶ 3.) When

113 of the packets were returned as undeliverable, the settlement

administrator used the National Change of Address service and

“skip tracing” via the credit reporting agency Experian to find

updated addresses for these individuals. (Id. ¶ 5.) The

settlement administrator then mailed the packets to these 113

individuals, none of which were returned as undeliverable. (Id.

¶¶ 5-6.) In total, 358 individuals opted-in to the settlement,

and only 25 opted out. (Id. ¶ 7.)

The notice complied with Federal Rules of Civil

Procedure 23(c)(2) and 23(e). It provided the best notice

practicable under the circumstances, and it informed potential

class members of the settlement amount, the basis of the lawsuit,

the definition of the class, the procedure for and consequences

of opting-in to the settlement, the procedure for and

consequences of objecting to or obtaining exclusion from the

settlement, and the date of the final fairness hearing.

As of this date, no member of the class has filed an

objection to the settlement. (Id. ¶ 9.) “It is established that

the absence of a large number of objections to a proposed class

action settlement raises a strong presumption that the terms of a

proposed class settlement action are favorable to the class

members.” In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036,

1043 (N.D. Cal. 2008) (quoting Nat’l Rural Telecomms. Coop. v.

DIRECTV, Inc., 221 F.R.D. 523, 528-29 (C.D. Cal. 2004)).

Therefore, the court finds that this factor weighs in favor of

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settlement.

D. Attorneys’ Fees

 Federal Rule of Civil Procedure 23(h) provides, “In an

action certified as a class action, the court may award

reasonable attorneys’ fees and nontaxable costs authorized by law

or by agreement of the parties . . . .” The parties agreed as

part of the Settlement Agreement that defendant would pay

attorneys’ fees, costs, and an enhancement award to plaintiff of

up to $150,000.00 in addition to the funds paid to class members. 

To determine attorneys’ fees, courts “typically apply either the

percentage-of-recovery method or the lodestar method.”2 In re

Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005)

(internal quotations and citation omitted). While the

percentage-of-recovery methods is favored in common fund cases,

here, where attorneys’ fees do not detract from a common

settlement fund, the lodestar method is more appropriate. See

id. 

“In an action where a district court is exercising its

subject matter jurisdiction over a state law claim, so long as

‘state law does not run counter to a valid federal statute or

rule of court, and usually it will not, state law denying the

right to attorney’s fees or giving a right thereto, which

reflects a substantial policy of the state, should be followed.’” 

MRO Commc’ns, Inc. v. AT & T Corp., 197 F.3d 1276, 1281 (9th Cir.

1999) (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421

2 Under the percentage-of-recovery method, the court

calculates the fee award by designating a percentage of the total

common fund. Six Mexican Workers v. Ariz. Citrus Growers, 904

F.2d 1301, 1311 (9th Cir. 1990). 

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U.S. 240, 259 n.31 (1975)). Thus, when a federal court has

federal question jurisdiction and exercises supplemental

jurisdiction over a state law claim, the court may award

attorney’s fees under the applicable statute. See MRO Commc’ns,

197 F.3d at 1281-83. 

In this case, class members are entitled to a statutory

award of attorneys’ fees pursuant to § 216(b) of the FLSA and

California Code of Civil Procedure section 1021.5. See 29 U.S.C.

§ 216(b) (“The court in such action shall, in addition to any

judgment awarded to the plaintiff or plaintiffs, allow a

reasonable attorney’s fee to be paid by the defendant, and costs

of the action.”); Parks v. Eastwood Ins. Servs., Inc., No. SA CV

02-507-GLT (MLGx), 2005 WL 6007833, at *2-3 (C.D. Cal. June 28.

2005) (holding a hybrid FLSA-California state law action was

entitled to attorney’s fees under California Code of Civil

Procedure section 1021.5) rev’d on other grounds by 240 Fed.

Appx. 172 (9th Cir. 2007). 

 “[T]he fee setting inquiry in California ordinarily

begins with the ‘lodestar,’ i.e., the number of hours reasonably

expended multiplied by the reasonable hourly rate.” PLCM Group

v. Drexler, 22 Cal. 4th 1084, 1095 (2000). “The reasonable

hourly rate is that prevailing in the community for similar

work.” Id. (citing Margolin v. Reg’l Planning Comm’n, 134 Cal.

App. 3d 999, 1004 (1982)). The lodestar may then by adjusted

upward or downward “by the court based on factors including . . .

(1) the novelty and difficulty of the questions involved, (2) the

skill displayed in presenting them, (3) the extent to which the

nature of the litigation precluded other employment by the

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attorneys, (4) the contingent nature of the fee award.” Ketchum

v. Moses, 24 Cal. 4th 1122, 1132 (2001). The purpose of

adjusting the lodestar is to fix the fee for the action in

question at fair market value. Id.

A similar approach is applied under federal law. The

court first calculates the lodestar by taking the number of hours

reasonably expended by the litigation and multiplying it by a

reasonable hourly rate. Fisher v. SJB-P.D. Inc., 214 F.3d 1115,

1119 (9th Cir. 2000) (citing Hensley v. Eckerhart, 461 U.S. 424,

433 (1983)). The court may then adjust the lodestar based on an

evaluation of the factors articulated in Kerr v. Screen Extras

Guild, Inc., 536 F.2d 67 (9th Cir. 1975) that are not subsumed

under the lodestar calculation.3 Id.

Federal law, unlike California law, does not allow for

contingency multipliers. Compare City of Burlington v. Dague,

505 U.S. 557, 567 (1992) with Serano v. Priest, 20 Cal. 3d 25,

48-49 (1977). Here, class counsel requests $89,041.00 in

attorneys’ fees with a multiplier of 1.5, bringing the total fees

to $132,602.00. Accordingly, the court will first evaluate the

attorneys’ fee award under California law.

Plaintiff’s proposed lodestar amount principally

3 The factors articulated by the Ninth Circuit in Kerr

are: (1) the time and labor required, (2) the novelty and

difficulty of the questions involved, (3) the skill required to

perform the legal service properly, (4) the preclusion of other

employment by the attorney due to acceptance of the case, (5) the

customary fee, (6) whether the fee is fixed or contingent, (7)

time limitations imposed by the client or the circumstances, (8)

the amount involved and the results obtained, (9) the experience,

reputation, and ability of the attorneys, (10) the

“undesirability” of the case, (11) the nature and length of the

professional relationship with the client, and (12) awards in

similar cases. Kerr, 526 F.2d at 70. 

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accounts for the hours expended by attorneys Michael L. Tracy and

Megan Ross Hutchins and paralegal Virginia Tomlinson. Tracy and

Hutchins ask for an hourly rate of $300 per hour, and Tomlinson

asks for an hourly rate of $95 per hour. A reasonable rate is

typically based upon the prevailing market rate in the community

for “similar work performed by attorneys of comparable skill,

experience, and reputation.” Chalmers v. City of Los Angeles,

796 F.2d 1205, 1210 (9th Cir. 1986); see also Blum v. Stenson,

465 U.S. 886, 895-96 n.11 (1984) (“[T]he burden is on the fee

applicant to produce satisfactory evidence . . . that the

requested rates are in line with those prevailing in the

community.”); Drexler, 22 Cal. 4th at 1095. The relevant

community is generally the forum in which the court sits. Barjon

v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997). 

 In support of their requested fee rates, Tracy,

Hutchins, and Tomlinson each submit a declaration. Tracy’s

declaration states that his firm normally charges an hourly rate

of $300 per hour for work by attorneys and $95 per hour for

paralegal work for non-contingency fee cases, including cases in

this District, and that the firm billed approximately $50,000

worth of hourly work at this rate. (Tracy Decl. ¶ 9.) Several

California Federal District Courts have also awarded Tracy’s firm

an hourly rate of $300 per hour in similar wage and hour class

actions. (Id. ¶¶ 12-13.) Hutchins’s declaration states that she

has similarly been awarded attorney’s fees at a $300 per hour

rate by other courts and typically charges a rate of $300 per

hour for wage and hour cases. (Hutchins Decl. ¶¶ 6-7.) 

Tomlinson’s declaration indicates that she typically charges a

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rate of $95 per hour for her paralegal work and that she has

assisted attorneys in lawsuits in both federal and state courts

in California since 2005. (Tomlinson Decl. ¶¶ 3-5.)

Class counsel have sufficiently shown that their rates

were reasonable. As previously indicated, class counsel has

extensive experience with wage and hour class action litigation. 

Counsel also charges a $300 per hour attorney rate and $95 per

hour paralegal rate for non-contingency fee cases, and many

clients have agreed to pay these rates. That clients were

willing to pay Tracy, Hutchins, and Tomlinson’s hourly rates is a

strong indication that their rates are reasonable for wage and

hour cases in this market. See Tire Kingdom, Inc. v. Morgan Tire

& Auto, Inc., 253 F.3d 1332, 1337 (11th Cir. 2001). In light of

the findings of other courts, the briefs, and the declarations

submitted, the court finds that an hourly rate of $300 per hour

is appropriate for similar work performed by similar attorneys of

Tracy and Hutchins’s caliber and paralegals of Tomlinson’s

caliber in the Sacramento area. 

Plaintiff’s counsel also submitted itemized billing

statements for the court’s review. (See Tracy Decl. Ex. 1;

Hutchins Decl. Ex. 1; Tomlinson Decl. Ex. 1.) Class counsel

expended over 280 attorney-hours in developing this case, which

included conducting discovery, attending depositions and

mediation, and interviewing class members. After reviewing the

billing statements provided by Tracy, Hutchins, and Tomlinson,

the court finds that the hours expended on this case were

reasonable. Accordingly, the initial lodestar for class

counsel’s attorneys’ fees is $89,041.00.

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After calculating the lodestar, the court must decide

whether to enhance or reduce the award in the light of particular

factors, including the novelty and difficulty of the case, the

skill displayed in presenting them, the extent the litigation

precluded other employment by the attorneys, and the contingent

nature of the fee award. Ketchum, 24 Cal. 4th at 1132. However,

“[t]here is no hard-and-fast rule limiting the factors that may

justify an exercise of judicial discretion to increase or

decrease a lodestar calculation.” Thayer v. Wells Fargo Bank,

N.A., 92 Cal. App. 4th 819, 834 (2001).

Class counsel requests a multiplier of approximately

1.5 to be added to the lodestar so that total attorney’s fees

come to $132,602.00. (Mot. Attorneys’ Fees at 3.) This case

contained multiple novel legal issues, including whether a

payment of cash in lieu of health benefits needs to be included

in the calculation of overtime under the FLSA. To the court’s

knowledge, this issue, which is at the heart of plaintiff’s case,

remains an open legal question. Class counsel also displayed

skill in litigating this case, receiving a settlement amount that

paid class members in a manner commensurate to their injuries. 

Finally, the contingent nature of this case also weights in favor

of enhancement of the lodestar. Fee enhancements in contingency

cases exists to compensate for the risk of loss inherent in such

cases and create financial incentives for attorneys to take cases

to protect important rights and goals, such as fair labor

standards, in addition to fee-for-services cases. See Ketchum 24

Cal. 4th at 1132-33; Beasley v. Wells Fargo Bank, 235 Cal. App.

3d 1407, 1419 (1991). Because all of these factors weigh in

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favor of enhancing the lodestar, the court will grant counsel’s

request for a fee enhancement and award a total of $132,602.00 in

attorneys’ fees.

E. Costs

As previously noted, class counsel is entitled to cover

for their reasonable costs under the FLSA. See 29 U.S.C. §

216(b). Class counsel has submitted an itemized list of costs

relating to mediation fees, travel expenses, transcript requests,

filing fees, and courier services. (Tracy Decl. Ex. 2.) These

expenses total $ 7,397.54. (Id.) The court finds that these are

reasonable litigation expenses, and it will therefore grant class

counsel’s request for compensation for costs.

F. Enhancement Payment to Named Plaintiff

 The settlement proposes a $10,000.00 “enhancement

payment” to the named plaintiff. The court recognizes that “a

class representative is entitled to some compensation for the

expense he or she incurred on behalf of the class lest

individuals find insufficient inducement to lend their names and

services to the class action.” In re Oracle Secs. Litig., No.

90-0931, 1994 WL 502054, at *1 (N.D. Cal. June 18, 1994) (citing

In re Continental Ill. Secs. Litig., 962 F.2d 566, 571 (7th Cir.

1992)). “Such payments, however, must be reasonable in light of

applicable circumstances, and not ‘unfair’ to other class

members.” Smith v. Tower Loan of Miss., Inc., 216 F.R.D. 338,

368 (S.D. Miss.2003) (citation omitted); see also In re Oracle

Secs. Litig., 1994 WL 502054 at *1 (reducing requested payment of

$2,500 to $500 for spending “between two and five hours

undergoing depositions and . . . respond[ing] to a few narrow

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document discovery requests”). 

The proposed payment is not particularly unfair to

other class members, given that it will not reduce the amount of

settlement funds available to the rest of the class because the

award will be made as a separate payment by defendant. In

addition, none of the class members have objected to the amount

of additional compensation sought by the named plaintiff. Class

counsel also contends that the named plaintiff attended an allday deposition, worked extensively with class counsel to review

documents in the case upwards of fifteen hours, and attended over

nine hours of mediation. (Mot. Final Class Certification at 6.) 

Accordingly, the court finds the 10,000.00 enhancement payment to

the named plaintiff is reasonable.

III. Conclusion

Based on the foregoing, the court grants final

certification of the settlement class and approves the settlement

set forth in the Settlement Agreement as fair, reasonable, and

adequate. The court finds an award of $150,000.00 to be an

appropriate amount for attorneys’ fees, costs, and plaintiff’s

enhancement payment. Consummation of the settlement in

accordance with the terms and provisions of the Settlement

Agreement is therefore approved, and the definitions provided in

the Settlement Agreement shall apply to the terms used herein. 

The Settlement Agreement shall be binding upon all members of the

class action who did not timely elect to be excluded and all

members of the collective action who chose to opt-in.

IT IS THEREFORE ORDERED that plaintiff’s motion for

final approval of the class and collective action settlement be,

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and the same hereby is, GRANTED.

IT IS FURTHER ORDERED that:

(1) solely for the purpose of this settlement, and

pursuant to Federal Rule of Civil Procedure 23 and FLSA § 216(b),

the court hereby certifies the following class: All Hiring Hall

Meter Readers employed by Pacific Gas and Electric Company from

August 18, 2006 through December 31, 2009, inclusive. Specially,

the court finds that:

(a) the settlement class members are so numerous

that joinder of all settlement class members would be

impracticable;

(b) there are questions of law and fact common to

the settlement class which predominate over any individual

questions;

(c) claims of the named plaintiff are typical of

the claims of the settlement class;

(d) the named plaintiff and class counsel have

fairly and adequately represented and protected the interests of

the settlement class; and

(e) a class action is superior to other available

methods for the fair and efficient adjudication of the

controversy;

(2) the court appoints the named plaintiff, Manuel

Murillo, as representative of the class and finds that he meets

the requirements of Rule 23 and § 216(b);

(3) the court appoints the following lawyers as counsel

to the settlment class, and finds that counsel meets the

requirements of Rule 23 and § 216(b):

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Michael Tracy

Meghan Ross Hutchins

Law Offices of Michael Tracy

2030 Main Street, Suite 1300

Irvine, CA 92614

Telephone: (949) 260-9171

Facsimilie: (866) 365-3051

(4) the settlement agreement’s plan for class notice is

the best notice practicable under the circumstances and satisfies

the requirements of due process, Rule 23, and § 216(b). The plan

is approved and adopted. The Notice of Class and Collective

Action Settlement complies with Rule 23(c)(2), Rule 23(e), and §

216(b) and is approved and adopted;

(5) the parties have executed the notice plan in the

court’s Preliminary Approval Order, in response to which 358

collective action class members submitted an Opt-In/Consent to

Join form, and 25 putative class members submitted an Opt-out

form. Having found that the parties and their counsel took

extensive efforts to locate and inform all putative class members

of the settlement, and given that no class members (or opt-outs)

have filed any objections to the settlement, and having found

that the number of individuals who opted in and opted out,

respectively, to be reasonable, the court finds and orders that

no additional notice to the class is necessary;

(6) as of the date of the entry of this Order,

plaintiff and all class members hereby do and shall be deemed to

have fully, finally, and forever released, settled, compromised,

relinquished, and discharged any and all of the Released Parties

(as defined by paragraph 29 of the Settlement Agreement) of and

from any and all Settled Claims (as that term is defined in

paragraph 74 of the Settlement Agreement). The claims released

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by plaintiff and class members include, but are not limited to,

claims for damages, penalties, attorneys’ fees or costs arising

from or dependent on the Fair Labor Standards Act, the California

Civil Code, the California Labor Code, the wage orders of the

California Industrial Welfare Commission, California Business and

Professions Code section 17200 et seq., California Labor Code

section 2698 et seq., and the California common law of tort and

contract;

(7) the distribution of settlement payments shall occur

not later than thirty (30) days after the Effective Date (as that

term is defined in paragraph 74 of the Settlement Agreement). 

Defendant shall effect the distribution of settlement payments by

placing in the mail via check or via direct deposit into class

members’ bank accounts, the settlement payments for all

collective action class members pursuant to the Settlement

Agreement. No person shall have any claim against defendant,

class counsel, defendant’s counsel or any other agent designated

by plaintiff or defendant based upon the distribution of

settlement payments made substantially in accordance with the

Settlement Agreement or further Orders of the court;

(8) class counsel is entitled to fees and costs in the

amount of $140,000.00;

(9) the named plaintiff is entitled to an enhancement

award in the amount of $10,000.00;

(10) the distribution of class counsel’s fees and costs

and the enhancement award shall occur no later than fifteen (15)

calendar days after the Effective Date (as that term is defined

in paragraph 74 of the Settlement Agreement);

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(11) Upon the distribution of settlement payments,

attorneys’ fees and costs, and the enhancement payment,

defendant, the Released Parties, and defendant’s counsel shall

have no further liability or responsibility to class counsel,

plaintiff, or any other class member; and

(12) the action is dismissed with prejudice; however,

without affecting the finality of this Order, the court shall

retain continuing jurisdiction over the interpretation,

implementation, and enforcement of the Settlement Agreement with

respect to all parties to this action, and their counsel of

record.

LET JUDGMENT BE ENTERED ACCORDINGLY.

DATED: July 20, 2010

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