Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-02778/USCOURTS-casd-3_14-cv-02778-2/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1332pr Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DOUGLAS THOMPSON on behalf of 

himself, others similarly situated, and the 

general public,

Plaintiff,

v.

COSTCO WHOLESALE

CORPORATION,

Defendant.

Case No.: 14-cv-2778-CAB-WVG

ORDER GRANTING SECOND 

RENEWED MOTION FOR 

PRELIMINARY APPROVAL OF 

CLASS ACTION SETTLEMENT

[Doc. No. 67]

This matter is before the Court on the Plaintiff’s Unopposed Second Renewed 

Motion for Preliminary Approval of Class Action Settlement. For the reasons set forth 

below, the motion is GRANTED.

I. Background1

Defendant Costco Wholesale Corporation (“Costco”), employs truck drivers who 

operate trucks within San Diego County and elsewhere in California. Plaintiff Douglas 

Thompson is a former truck driver for Defendant. This lawsuit arises out of Costco’s

alleged failure to properly provide meal and rest periods and to properly compensate its 

truck drivers.

On October 17, 2014, Thompson filed a class action complaint in the San Diego 

County Superior Court asserting eleven claims under California’s labor and unfair 

 

1 Most of the first three sections of this order, as well as some of the legal standards throughout, are 

identical to the Court’s prior order denying preliminary approval. [Doc. No. 60.] They are repeated here 

for ease of reference.

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competition laws. Costco removed the lawsuit to this Court on November 20, 2014, and 

then filed a motion to dismiss. Instead of opposing the motion, Thompson filed the first 

amended complaint (“FAC”) on January 12, 2015. The FAC narrowed the issues, 

eliminated several claims, and ultimately alleged seven claims under California’s labor and 

unfair competition laws. [Doc. No. 14.] On February 10, 2015, Thompson filed a Second 

Amended Complaint (“SAC”) that further narrowed the focus of the complaint, including 

limiting the class to California truck drivers. [Doc. No. 19.] The SAC asserted seven claims 

under California law: (1) Wage Theft/Time-Shaving; (2) Failure to pay overtime; (3) 

Failure to provide meal periods; (4) Failure to provide rest periods; (5) Failure to pay 

compensation for all time worked; (6) Waiting time penalties; and (7) Violation of 

California’s unfair competition law, California Business and Professions Code Section 

17200, et seq.

After conducting some discovery, the parties participated in a private mediation on 

March 11, 2016. The mediation concluded with a mediator’s proposal, and after additional 

discussions, the proposal was revised and resulted in a Memorandum of Understanding

(“MOU”). The MOU led to a settlement agreement dated June 27, 2016 (the “Settlement 

Agreement”). [Doc. No. 59-2.] In addition to the terms listed below, the Settlement 

Agreement required Plaintiff to file a Third Amended Complaint (“TAC”) adding claims

for unpaid wages and liquidated damages under the Fair Labor Standards Act (“FLSA”), a 

claim for penalties under California Labor Code section 226, and a claim under the Private 

Attorney General Act of 2004 (“PAGA”).

On September 27, 2016, Plaintiff’s counsel filed a joint motion seeking leave to file 

a third amended complaint (“TAC”). [Doc. No. 55.] The Court granted the motion, and

Plaintiff filed the TAC on October 3, 2016. [Doc. No. 57.] The TAC added an FLSA 

minimum wage claim, a PAGA claim, and a wage statement penalty claim. 

II. First Settlement Agreement Terms

On December 2, 2016, Plaintiff filed a motion for preliminary approval of a June 27, 

2016 Settlement Agreement. The motion defined one class as follows:

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[A]ll current and former fleet drivers employed at a Costco business center or 

depot in California from October 17, 2010 through October 4, 2016 (the date 

85 days after Plaintiff signed the Agreement).

[Doc. No. 59 at 4-5]

The Settlement Agreement required Costco to pay a gross settlement amount of 

$2,000,000, allocated as follows: $1,308,000 to the settlement members for their claims; 

$5,000 as an incentive award for Thompson; $660,000 to Plaintiff’s counsel; $10,000 to 

settlement of PAGA claims; and $17,000 to the CPT Group, Inc., the Class Administrator, 

for administration costs. [Doc. No. 59-2 at 6-8.] The Agreement estimated 882 class 

members, meaning that each class member will receive an average of $1,483 from the gross 

settlement amount based on the agreed upon allocation. In exchange for these payments, 

the settlement agreement defined the Released Claims as including:

any and all claims, debts, liabilities, demands, obligations, penalties, 

guarantees, costs, expenses, attorney’s fees, damages, action or causes of 

action of whatever kind or nature, whether known or unknown, contingent or 

accrued, that were alleged or that reasonably could have been alleged based 

on the facts alleged in the Lawsuit, as amended, including, but not limited to, 

any claims under federal law and state law, claims for unpaid overtime, claims 

for missed meal or rest breaks, claims for meal or rest break penalties, 

liquidated damages, unlawful deductions from wages, conversion of wages, 

record-keeping violations, wage-statement penalties, and “waiting time” 

penalties, claims for unpaid wages and liquidated damages under the Fair 

Labor Standards Act, claims under the applicable Wage Order and Labor 

Code sections 201, 202, 203, 218, 218.5, 226, 226.3, 226.7, 510, 512, 558, 

1194, 1194.2, 1197, as well as claims under Business and Professions Code 

section 17200 et seq., and Labor Code section 2698 et seq. based on alleged 

violations of these Labor Code provisions. The Agreement is conditioned 

upon the release by all Settlement Class Members of any claim under Labor 

Code section 2699, as to the released claims set forth above, and upon 

covenants by all members that they will not participate in any proceeding 

seeking penalties under Section 2699, as to the released claims set forth above. 

Defendant shall not owe, beyond the amount of Gross Settlement Fund, any 

further monies to the Settlement Class or to the State of California based upon 

the claims made in the Lawsuit during the Settlement Period. This release is 

effective for the Settlement Period.

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[Doc. No. 59-1 at 9.]

The Agreement then reiterated that it released any FLSA claims by Settlement Class 

Members who cash, deposit, or endorse settlement checks:

The Parties intend that this agreement shall bind all Settlement Class 

Members. This Agreement shall constitute, and may be pleaded as, a complete 

and total defense to any such dispute or claim if raised in the future. The 

procedure adopted under the Agreement will operate as a release of any FLSA 

claim by those Settlement Class Members who cash, deposit, or endorse 

settlement checks.

[Doc. No. 59-1 at 10.]

III. Denial of Preliminary Approval of First and Second Settlements

Although the Court held that all of the requirements for certification of a Rule 23 

class and FLSA collective for settlement purposes, except for the adequacy of Plaintiff’s 

counsel, had been satisfied, it denied Plaintiff’s motion for preliminary approval of the first 

settlement. [Doc. No. 60.] As explained in the order, the reasons for denying the motion 

included:

1. The motion did not explicitly request certification of an FLSA collective 

action;

2. The settlement required Rule 23 class members to release FLSA claims to 

benefit from the settlement of the state law claims;

3. The settlement called for a release of the class’ FLSA claims in exchange for 

no consideration; 

4. The motion did not provide any evidence or information that would allow the 

Court to evaluate the reasonableness of the settlement amount itself. 

5. The notice to the class did not adequately explain the differences between the 

Rule 23 class action and the FLSA collective action that were subject to the 

proposed settlement;

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6. The proposed notice did not clearly identify the Class Administrator, provide 

its telephone number, or provide an address where absent class members can 

send their opt-in and opt-out forms;

7. The proposed notice unduly burdened absent class members who wanted to 

obtain a copy of the settlement agreement by requiring them to obtain it from 

the Court; and 

8. The proposed notice did not explicitly notify class members that they have the 

right to object to the specific attorney’s fees and costs and incentive award 

sought.

The Court then required each of these deficiencies to be remedied in any renewed 

motion for preliminary approval of a settlement. On March 30, 2017, Plaintiff filed a

renewed motion for preliminary approval of a new settlement agreement signed on or about 

March 23, 2017 that, according to class counsel, fixed these deficiencies. On April 26, 

2017, the Court denied Plaintiff’s renewed motion, noting that although the revised 

settlement agreement corrected some of the deficiencies noted by the Court, the release 

language remained in adequate.

On May 10, 2017, Plaintiff filed what is now his third motion for preliminary 

approval of a settlement. According to the motion, the current version of the settlement 

agreement, signed on or about May 8, 2017, remedies all of the deficiencies identified by 

the Court in its prior orders.

IV. Legal Standards For Approval of a Settlement of a Hybrid FLSA

Collective/Rule 23 Class Action

A Rule 23 class action may not be settled without approval of the court. Hanlon v. 

Chrysler Corp., 150 F.3d 1011, 1025-26 (9th Cir. 1998) (citing Fed. R. Civ. P. 23(e)). “The 

primary concern . . . is the protection of those class members, including the named 

plaintiffs, whose rights may not have been given due regard by the negotiating parties.” 

Officers for Justice v. Civil Serv. Comm'n of City & Cty. of San Francisco, 688 F.2d 615, 

624 (9th Cir. 1982). “Approval of a class action settlement requires a two-step process—

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a preliminary approval followed by a later final approval.” Spann v. J.C. Penney Corp., 

314 F.R.D. 312, 319 (C.D. Cal. 2016). The instant motion involves the first step of the 

process. 

Meanwhile, FLSA claims brought on behalf of similarly situated individuals are 

frequently referred to as collective actions. See Leuthold v. Destination Am., Inc., 224 

F.R.D. 462, 466 (N.D. Cal. 2004); see also Does v. Advanced Textile Corp., 214 F.3d 1058,

1064 (9th Cir. 2000). Similar to Rule 23 class actions, “[s]ettlement of an FLSA claim, 

including a collective action claim, requires court approval.” Kempen v. Matheson TriGas, Inc., No. 15-cv660-HSG, 2016 WL 4073336, at *4 (N.D. Cal. Aug. 1, 2016); see also 

Dunn v. Teachers Ins. & Annuity Assoc. of Am., No. 13-cv-5456-HSG, 2016 WL 153266, 

at *3 (N.D. Cal. Jan. 13, 2016) (“Most courts hold that an employee’s overtime claim under 

FLSA is non-waivable and, therefore, cannot be settled without supervision of either the 

Secretary of Labor or a district court.”). 

However, “Rule 23 actions are fundamentally different from collective actions under 

the FLSA.” Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1529 (2013). One of 

the primary differences is that the “FLSA and Rule 23 provide different means for 

participating in a class action.” Leuthold, 224 F.R.D. at 469. Specifically:

In a class action, once the district court certifies a class under Rule 23, all class 

members are bound by the judgment unless they opt out of the suit. By 

contrast, in a collective action each plaintiff must opt into the suit by “giv[ing] 

his consent in writing.” 29 U.S.C. § 216(b). As result, unlike a class action, 

only those plaintiffs who expressly join the collective action are bound by its 

results.

McElmurry v. U.S. Bank Nat. Ass’n, 495 F.3d 1136, 1139 (9th Cir. 2007). Despite these 

differences, when considering a motion to approve the settlement of either a Rule 23 class 

or an FLSA collective action before a class or collective has been certified, the Court must 

first certify the class or collective for the purpose of the settlement. See generally Millan 

v. Cascade Water Servs., Inc., 310 F.R.D. 593, 602-07 (E.D. Cal. 2015).

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V. Preliminary Certification of Rule 23 Class 

In its prior order, the Court found that all the requirements for class certification for 

the purposes of settlement had been satisfied, with the exception of the adequacy 

requirement. Fed. R. Civ. P. 23(a)(2). That holding applies here as well, leaving only the 

adequacy requirement undetermined. The adequacy requirement asks whether the 

representative “will fairly and adequately protect the interest of the class.” Id. “The proper 

resolution of this issue requires that two questions be addressed: (a) do the named plaintiffs 

and their counsel have any conflicts of interest with other class members and (b) will the 

named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?” 

In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir. 2000).

In its first order denying preliminary approval, the Court found that:

Plaintiff’s counsel appears to have extensive experience in litigating wage and 

hour class actions. [See Doc. No. 59-1 at 3.] Further, there is no obvious 

conflict between Thompson’s interests and those of the class members.

However, the terms of the settlement, including the release of FLSA claims 

despite no such claims having been pled at the time of settlement, reflects that 

Thompson and class counsel may have favored their own interests at the 

expense of the class members to achieve the settlement. Moreover, the 

complete failure to recognize this action as hybrid action raises questions as 

to counsel’s understanding of the procedural rules applicable to the FLSA 

claims it proposes that the class release without compensation. 

Notwithstanding the foregoing, because the Court is denying the instant 

motion on other grounds, it need not reach a conclusion at this stage as to 

whether counsel adequately represents the class.

Although the revised settlement remedies the deficiencies enumerated by the Court, it does 

little to satisfy the Court that class counsel have prosecuted the action vigorously on behalf 

of the class.

Class counsel’s actions and various inconsistent statements to the Court have 

undermined their credibility making it difficult, if not impossible, for the Court to evaluate 

the proposed settlement. Specifically:

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 On December 2, 2016, proposed class counsel asked the Court to approve a 

settlement that required class members to release FLSA claims in exchange for 

no compensation. Proposed counsel William Turley filed a declaration stating:

“Plaintiff has analyzed the potential value of the FLSA claims and has concluded 

that they are worth very little to nothing such that the release of said claims should 

not prejudice Settlement Class Members.” [Doc. No. 59-1 at 11, ¶ 36.]

 The original settlement envisioned a fee award of $660,000, or approximately 

one-third of the total settlement amount to be paid by Costco.

 On March 3, 2017, David Mara, who is Mr. Turley’s partner, in response to the 

Court’s order to show cause as to why sanctions should not issue for filing the 

TAC adding FLSA claims when counsel concluded they were worth little to 

nothing, walked back (if not directly contradicted) Mr. Turley’s statement, 

asserting that the FLSA claims “had real value” and “absolutely were not 

meritless.”

 In his declarations supporting the second motion for preliminary approval and 

the instant motion, Mr. Turley states that: (1) “this case was factually and legally 

strong” [Doc. Nos. 64-1 and 67-1 at 11, ¶ 39]; (2) “Plaintiff’s unpaid wages claim 

under state and FLSA law are based on the same two theories” [Id. at 12, ¶ 44]; 

(3) “Costco’s potential exposure for wage claims under the FLSA to be . . . 

$1,315,559,” [Id. at 13 ¶ 47]; and (4) if Plaintiff could show that Costco acted 

willfully, Costco’s exposure under the FLSA would be doubled to $2,631,118. 

[Id. ¶ 48.]

 This renewed motion allocates $146,750 to settlement of the FLSA claims while 

envisioning only $500,000 in attorney’s fees.

Based on this timeline of events and statements to the Court, it is hard for the Court 

not to conclude that with the first settlement, class counsel, who is supposed to be 

representing absent class members, was putting its own interests first. If the FLSA claims 

had real value and are worth $146,750 in settlement, Mr. Turley’s original declaration that 

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the claims are worth little to nothing was false. The obvious explanation or motivation for 

this falsehood is that in the original settlement, instead of obtaining any consideration on 

behalf of the class for a release of FLSA claims, counsel sought to keep that money itself 

in the form of an excessive attorney fee request. Only when challenged by the Court did 

class counsel attempt to obtain any consideration for the class’ release of these claims. 

Even then, counsel did so by simply reallocating some of the exorbitant amount it initially 

intended to request in fees (an amount the Court was unlikely to approve anyway). Put 

simply, it is difficult to find that counsel who have engaged in these actions are adequately 

representing absent class members.

Notwithstanding the foregoing, because the instant motion seeks only preliminary 

approval of the settlement, the Court is free to revisit this adequacy requirement at the final 

approval hearing, at which time it will have the benefit of any objections filed by absent 

class members. Accordingly, giving class counsel every benefit of the doubt at this time, 

the Court finds that this requirement has been satisfied for the purposes of preliminary 

approval.

VI. Review of New Settlement Terms

A. Legal Standards

“At the preliminary approval stage, the Court may grant preliminary approval of a 

settlement if the settlement: (1) appears to be the product of serious, informed, noncollusive negotiations; (2) has no obvious deficiencies; (3) does not improperly grant 

preferential treatment to class representatives or segments of the class; and (4) falls within 

the range of possible approval.” Sciortino v. PepsiCo, Inc., No. 14-CV-00478-EMC, 2016 

WL 3519179, at *4 (N.D. Cal. June 28, 2016) (quoting Harris v. Vector Mktg. Corp., No. 

C-08-5198 EMC, 2011 WL 1627973, at *7 (N.D. Cal. Apr. 29, 2011)). “At the preliminary 

approval stage, a full fairness analysis is unnecessary.” Zepeda v. PayPal, Inc., No. C 10-

1668 SBA, 2014 WL 718509, at *4 (N.D. Cal. Feb. 24, 2014) (internal quotation marks 

and citation omitted). “Closer scrutiny is reserved for the final approval hearing.” 

Sciortino, 2016 WL 3519179, at *4.

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Although the Ninth Circuit has not established a standard for district courts to follow 

when evaluating an FLSA settlement, California district courts frequently apply the 

standard established by the Eleventh Circuit in Lynn’s Food Stores, Inc. v. U.S. By and 

Through U.S. Dep’t of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982). Dunn, 2016 WL 

153266, at *3. Under that standard, the settlement must constitute “a fair and reasonable 

resolution of a bona fide dispute over FLSA provisions.” 29 U.S.C. § 216(b); Lynn’s Food 

Stores, 679 F.2d at 1355; see also Ambrosino v. Home Depot U.S.A., Inc., No. 11cv1319 

L(MDD), 2014 WL 3924609, at *1 (S.D. Cal. Aug. 11, 2014) (“A district court may 

approve an FLSA settlement if the proposed settlement reflects ‘a reasonable compromise 

over [disputed] issues.’”) (quoting Lynn’s Food Stores, 679 F.2d at 1354). 

The standard for approving FLSA collective actions may be nominally different 

from the standard for approving class actions under Federal Rule of Civil Procedure 23, 

but “many courts begin with the well-established criteria for assessing whether a class 

action settlement is fair, reasonable and adequate under [Rule] 23(e) and reason by analogy 

to the FLSA context.” Millan v. Cascade Water Servs., Inc., No. 1:12-cv-1821-AWI-EPG, 

2016 WL 3077710, at *3 (E.D. Cal. Jun. 2, 2016) (internal quotation marks omitted); see 

also Otey v. Crowdflower, Inc., No. 12-cv5524-JST, 2014 WL 1477630, at *11 (N.D. Cal. 

Apr. 15, 2014) (“[T]he factors that courts consider when evaluating a collective action 

settlement are essentially the same as those that courts consider when evaluating a Rule 23 

settlement.”).2 Accordingly, if the settlement here warrants approval under Rule 23(e), it 

is likely to warrant approval under the FLSA as well. 

Federal Rule of Civil Procedure 23(e) instructs that “[t]he claims, issues, or defenses 

of a certified class may be settled, voluntarily dismissed, or compromised only with the 

court’s approval.” Fed. R. Civ. Pro. 23(e). “Adequate notice is critical to court approval of 

 

2 But see Selk v. Pioneers Mem. Healthcare Dist., 159 F.Supp. 3d 1164, 1173 (S.D. Cal. 2016) (evaluating 

an FLSA settlement using a totality of the circumstances approach “that replicates the factors relevant to 

Rule 23 class actions where appropriate, but adjusts or departs from those factors when necessary to 

account for the labor rights at issue.”)

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a class settlement under Rule 23(e).” Hanlon, 150 F.3d at 1025. In addition, Rule 23(e) 

“requires the district court to determine whether a proposed settlement is fundamentally 

fair, adequate, and reasonable.” Id. at 1026. This determination requires the Court to 

“evaluate the fairness of a settlement as a whole, rather than assessing its individual 

components.” Lane v. Facebook, Inc., 696 F.3d 811, 818-19 (9th Cir. 2012). 

“Assessing a settlement proposal requires the district court to balance a number of 

factors: 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. Further, because the Settlement Agreement here was negotiated prior to 

formal class certification, “there is an even greater potential for a breach of fiduciary duty 

owed the class. Accordingly, such agreements must withstand an even higher level of 

scrutiny for evidence of collusion or other conflicts of interest than is ordinarily required 

under Rule 23(e) before securing the court’s approval as fair.” Radcliffe v. Experian Info. 

Sols. Inc., 715 F.3d 1157, 1168 (9th Cir. 2013) (quoting In re Bluetooth Headset Prods. 

Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011)). However, “the question whether a 

settlement is fundamentally fair within the meaning of Rule 23(e) is different from the 

question whether the settlement is perfect in the estimation of the reviewing court.” Lane, 

696 F.3d at 819. Ultimately, a “district court’s final determination to approve the 

settlement should be reversed ‘only upon a strong showing that the district court’s decision 

was a clear abuse of discretion.’” Hanlon, 150 F.3d at 1027 (quoting In re Pacific Enter. 

Sec. Litig., 47 F.3d 373, 377 (9th Cir. 1995)).

B. New Settlement Agreement Terms

The instant motion seeks preliminary certification of the following Rule 23 class: 

“All current and former fleet drivers employed at a Costco business center or depot in 

California from October 17, 2010, through October 4, 2016.” It also seeks certification of 

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the following FLSA collective: “All current and former fleet drivers employed at a Costco 

business center or depot in California from October 17, 2011 through October 4, 2016.”

Similar to the first settlement, the new settlement proposes a $2,000,000 gross 

settlement amount to be paid by Costco. However, the new agreement allocates the fund 

differently: $5,000 as an incentive award for Thompson; $500,000 to Plaintiff’s counsel 

for fees; $20,000 in reimbursement to Plaintiff’s counsel for costs; $10,000 to settlement 

of PAGA claims; up to $30,000 to the CPT Group, Inc., the Class Administrator, for 

administration costs; 90% of the remainder after the aforementioned payments as the net 

Rule 23 class settlement fund (estimated to be $1,320,750); and 10% of the remainder as 

the net FLSA collective settlement fund (estimated to be $146,750). [Doc. No. 64-1 at 5-

7.] Plaintiff’s counsel estimates the 882 class members who also opt-in to the FLSA 

collective will receive an average of $1,664 from the gross settlement amount based on the 

agreed upon allocation. In sum, the new settlement agreement reduces the proposed 

allocation to Plaintiff’s counsel from $660,000 (or 33% of the total settlement fund—and 

an amount unlikely to be approved by the Court) to $500,000 (25% of the total settlement 

fund) and uses the difference to create a settlement fund for the FLSA collective.

C. Analysis

The new settlement remedies most of the deficiencies identified in the Court’s 

orders denying the prior two settlement agreements. However, further analysis is required. 

One of those deficiencies was that counsel had not provided sufficient evidence or 

information that would allow the Court to evaluate the reasonableness of the settlement. 

Now that counsel have provided that information, the Court must actually evaluate the 

reasonableness of the settlement.

“Settlement is the offspring of compromise; the question we address is not whether 

the final product could be prettier, smarter or snazzier, but whether it is fair, adequate and 

free from collusion.” Hanlon, 150 F.3d at 1027. “Basic to [the process of deciding whether 

a proposed settlement is fair, reasonable and adequate] * * * is the need to compare the 

terms of the compromise with the likely rewards of litigation.” In re TD Ameritrade 

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Accountholder Litig., 266 F.R.D. 418, 422 (N.D. Cal. 2009) (quoting Protective Committee 

for Independent Stockholders of TMT Trailer Ferry Inc. v. Anderson, 390 U.S. 414, 424–

25, (1968)). However, “[t]he fact that a proposed settlement may only amount to a fraction 

of the potential recovery does not, in and of itself, mean that the proposed settlement is 

grossly inadequate and should be disapproved.” Linney v. Cellular Alaska P’ship, 151 F.3d 

1234, 1242 (9th Cir. 1998) (citation omitted). Ultimately, “[i]n most situations, unless the 

settlement is clearly inadequate, its acceptance and approval are preferable to lengthy and 

expensive litigation with uncertain results.” Nat’l Rural Telecomms. Coop. v. DIRECTV, 

Inc., 221 F.R.D. 523, 526 (C.D.Cal.2004).

In the motion, class counsel argues that the gross settlement amount reflects 

approximately 10% of the potential exposure, and that based on Costco’s defenses and the 

hurdles of Plaintiff’s case, this settlement is fair, adequate and reasonable. Although this 

low estimated recovery3for the class is not fatal to the settlement, the only information 

available to the Court that even this estimate is correct is the declaration of Mr. Turley. To 

accept that the settlement equals an approximate 10% recovery for the class, the Court 

necessarily must find that Mr. Turley’s declaration is credible. Mr. Turley, however, is not 

a credible witness in light of his previous declaration that the FLSA claims are worth very 

little to nothing, which was contradicted by a subsequent declaration of his partner, Mr. 

Mara, and by the new settlement itself. Because the motion does not provide any evidence 

other than Mr. Turley’s declaration to support the reasonableness of the settlement, the 

Court lacks any credible evidence to support the settlement amount in the context of this 

case.

Notwithstanding the foregoing, based on the Court’s experience with wage and hour 

class actions, including class actions involving truck drivers asserting claims similar to 

those at issue in this case, the Court is comfortable preliminarily approving the settlement. 

 

3 The net recovery to the class is far less after accounting for attorney’s fees and other expenses.

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At the final approval hearing, the Court will give careful consideration to any objections 

from class members (or the lack thereof) when determining whether final approval is 

warranted.

VII. Conclusion and Order

In light of the foregoing, it is hereby ORDERED as follows:

1. The Court finds on a preliminary basis that the provisions of Joint Stipulation 

for Class/Collective Action Settlement (hereinafter “Agreement”), filed with the Court as 

Exhibit 1 to the Declaration of William Turley [Doc. No. 67-1], are fair, just, reasonable, 

and adequate and, therefore, meets the requirements for preliminary approval.

2. For purposes of this Order, the Court adopts all defined terms as set forth in 

the Agreement.

3. The Court conditionally certifies, for settlement purposes only, the following 

stipulated Collective (“Stipulated Collective”) described in the Motion for Preliminary 

Approval: “All current and former fleet drivers employed at a Costco business center or 

depot in California from October 17, 2011, through October 4, 2016.”

4. The Court preliminarily certifies, for settlement purposes only, the following 

stipulated class (“Stipulated Class”) described in the Motion for Preliminary Approval: 

“All current and former fleet drivers employed at a Costco business center or depot in 

California from October 17, 2010 through October 4, 2016.”

5. The Court preliminarily finds, for settlement purposes only, the requirements 

of Federal Rule of Civil Procedure 23(a) and Federal Rule of Civil Procedure 23(b)(3) are 

satisfied.

6. The Court preliminarily finds, for settlement purposes only, the requirements 

of 29 U.S.C. section 216(b) for conditional certification of an FLSA Collective Action are 

satisfied. 

7. The Court appoints, for settlement purposes only, Douglas Thompson as the 

Class/Collective Representative.

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8. The Court preliminarily appoints, for settlement purposes only, William 

Turley, David Mara, and Jill Vecchi of The Turley & Mara Law Firm, APLC, as 

Class/Collective Counsel for the purposes of settlement and the releases and other 

obligations therein. 

9. The Court appoints CPT Group as Class Administrator. The Class 

Administrator shall disseminate Class Notice, supervise and carry out the settlement 

administration procedures in the Agreement, and respond to Class member inquiries.

10. The Class/Collective Notice, in the form attached to the Declaration of 

William Turley as Exhibit A to the Agreement [Doc. 67-1 at 47-56], is approved. 

11. The FLSA Collective Claim Form, in the form attached to the Declaration of 

William Turley as Exhibit B to the Agreement [Doc. 67-1 at 58-59], is approved. 

12. The Class Administrator is ordered to mail the Class/Collective Notice and 

Claim Form to the Stipulated Class and Collective Members as provided in the Agreement. 

The Court finds that this Notice is the best notice practicable under the circumstances and 

is in compliance with the requirements of Fed. R. Civ. P. 23 and applicable standards of 

due process and that, when completed, shall constitute sufficient notice to Stipulated 

Class/Collective Members of the settlement, the Final Approval Hearing, and the right to 

be excluded from the settlement.

13. The Court will hold a Final Approval Hearing on September 1, 2017 at 2:00 

p.m., in the Courtroom of the Honorable Cathy Ann Bencivengo, United States District 

Court for the Southern District of California, Courtroom 4C (4th Floor—Schwartz), 221 

West Broadway, San Diego, CA 92101, for the following purposes:

a. Finally determining whether the Class meets all applicable requirements of 

Rule 23 of the Federal Rules of Civil Procedure and whether the Class should 

be certified for the purposes of effectuating the Settlement;

b. Finally determining whether the Collective satisfies the requirements of the 

FLSA allowing “a private right of action to enforce its provisions “by any one 

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or more employees for and in [sic] behalf of himself or themselves and other 

employees similarly situated.” 29 U.S.C. § 216(b);

c. Finally determining whether the proposed Settlement of the case on the terms 

and conditions provided for in the Agreement is fair, reasonable, and adequate 

and should be approved and ordered by the Court;

d. Considering the application of class counsel for an award of attorneys’ fees 

and costs, as provided for in the Agreement;

e. Considering the application of the named Plaintiffs for a class representative 

incentive award, as provided for in the Agreement;

f. considering whether the release by the Class and Collective Members of the 

Released Claims as set forth in the Agreement should be provided; and

g. Ruling upon such other matters as the Court may deem just and appropriate.

14. The Court may adjourn the Final Approval Hearing and later reconvene such 

hearing without further notice to the Class Members.

15. Class counsel shall file a motion for final approval of the Settlement no later 

than August 4, 2017. Any request by class counsel for an award of attorneys’ fees or 

reimbursement of expenses shall be filed concurrently, and that request shall be 

accompanied by supporting evidence.

16. Each Stipulated Class/Collective Member will have forty-five (45) days after 

the date on which the Class Administrator mails the Class/Collective Notice to object to 

the Settlement by serving on the Settlement Administrator, Class/Collective Counsel, and 

Counsel for Defendant, and filing with the Court, by the forty-five (45) day deadline, a 

written objection to the Settlement.

17. Each Stipulated Class Member who wishes to be excluded from the settlement 

shall sign and mail or fax a written opt out to the Class Administrator. The written request 

must: (a) state the Class Member’s name, address, telephone number, and Social Security 

Number; (b) state the Class Member’s intention to opt out of the Settlement; (c) be 

addressed to the Class Administrator; (d) be signed by the Class Member or their lawful 

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representative; and (e) be postmarked to the Settlement Administrator no later than 45 days 

after notice packet is mailed.

18. Each Stipulated FLSA Collective Member who wishes to participate in the 

settlement of the FLSA Collective claims, shall mail a properly executed Claim Form to 

the Settlement Administrator that is postmarked no later than 45 days after the notice 

packet is mailed. 

19. If the Agreement is not finally approved by the Court or for any reason is 

terminated or otherwise does not become effective, the following will occur: (1) this 

Preliminary Approval Order, and all of its provisions, will be automatically vacated; (2) 

the case will proceed as if no settlement has been attempted and notice will be provided to 

the putative class/collective members that the settlement will not proceed and that, as a 

result, no payments will be made; (3) no party shall be deemed to have waived any claims, 

objections, rights, or defenses, or legal arguments or positions, including, but not limited 

to, objections to class certification and claims and defenses on the merits; (4) no term or 

draft of the Agreement, or any aspect of the Parties’ settlement discussions, including 

related documentation, will have any effect or be admissible into evidence for any purpose 

in the case or in any other proceeding; and (5) Costco shall have no obligation to pay all or 

any part of the settlement.

20. During the Court’s consideration of the settlement and pending further order 

of the Court, all proceedings in this case, other than proceedings necessary to carry out the 

terms and provisions of the Agreement and this order, or as otherwise directed by the Court, 

are hereby stayed and suspended.

21. The parties may further modify the Agreement prior to the Final Approval

Hearing so long as such modifications do not materially change the terms of the Settlement 

provided thereunder. The Court may approve the Settlement Agreement with such 

modifications as may be agreed to by the parties, if appropriate, without further notice to 

the Settlement Class.

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22. To facilitate administration of the settlement pending final approval, the Court 

hereby enjoins Stipulated Class Members from prosecuting any claims or administrative 

proceedings (including filing any claims with the California Division of Labor Standards 

Enforcement) regarding the claims released by the Settlement unless and until the 

Stipulated Class Members files a valid request for exclusion.

23. On or before June 5, 2017, defense counsel shall file a sworn affidavit 

confirming that the requirements of 28 U.S.C. § 1715 have been satisfied, or in the 

alternative, a notice explaining why such requirements do not apply to this settlement.

24. No later than fourteen days prior to the Final Approval Hearing date, the Class 

Administrator shall file an affidavit and serve a copy on class counsel and defense counsel, 

attesting that notice was disseminated as required by the terms of the settlement agreement

or as ordered by the Court. This affidavit shall also inform the Court of any requests for 

exclusion from the Class, the names of employees who opted in to the FLSA collective, 

and objections or other reactions from Class/Collective Members received by the Class 

Administrator.

25. The Parties are further ordered to carry out the Settlement Agreement in the 

manner provided in the Settlement Agreement.

It is SO ORDERED.

Dated: May 11, 2017

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