Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-00438/USCOURTS-caed-2_04-cv-00438-7/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1332 Diversity-Employment Discrimination

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In their brief in support of their motion to certify 1

the class, plaintiffs corrected the spelling of “Fagundes”, which

had previously been spelled “Fegundes.” 

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

VICKI WEST and WENDY FAGUNDES,

individually and on behalf of

others similarly situated,

NO. CIV. S-04-0438 WBS GGH

Plaintiffs,

v. MEMORANDUM AND ORDER RE: 

PRELIMINARY MOTION TO APPROVE

CLASS ACTION SETTLEMENT

CIRCLE K STORES, INC.,

Defendant.

----oo0oo----

Plaintiffs Vicki West and Wendy Fagundes seek to bring 1

a class action suit against defendant Circle K Stores, Inc. for

alleged violations of the California Labor Code, Cal. Lab. Code

§§ 226.7, 227.3, and California’s Unfair Competition Law (“UCL”),

Cal. Bus. & Prof. Code §§ 17200-17210. Presently before the

court is plaintiffs’ motion for preliminary approval of

settlement with defendants. For the following reasons,

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plaintiffs’ motion is granted.

I. Factual and Procedural Background

On March 3, 2004, plaintiffs filed a class action

complaint claiming that defendant failed to pay (1) overtime

wages, (2) administrative leave wages, and (3) accrued but unused

vacation wages, all in violation of state law. (Compl. ¶ 17.) 

On July 15, 2005, this court granted in part plaintiffs’ motion

to amend their complaint. (July 15, 2005 Order at 2-3.) The

amendments dropped some of the claims of one proposed subclass

(managers) and added Wendy Fagundes as a named plaintiff,

representing an additional class of employees claiming that

defendant failed to pay meal and break wages. (Id. at 3-4.)

On March 20, 2004, plaintiffs moved to certify two

distinct classes based on their remaining claims: (1) a “meal

period class” defined as “all hourly store employees employed by

defendant in California since October 1, 2000, who did not

receive off-duty meal periods” and (2) a “vacation class” defined

as “all employees employed in California by defendant at any time

since March 3, 2000, who forfeited accrued but unused vacation

under defendant’s vacation policy.” (Pl.’s Mot. for Class Cert.

1.) However, before the court could hear that motion, the

parties attended a day long mediation with Justice Richard Neal

(retired) where they agreed to settlement terms. Accordingly,

the parties now seek preliminary approval of their Joint

Stipulation of Settlement and Release.

///

///

///

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3

II. Discussion

A. Legal Standard

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 the propriety of the

certification and the fairness of the settlement.” Staton v.

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

first 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); Hanlon v. Chrysler Corp., 150 F.3d 1011,

1019 (9th Cir. 1998) (quoting Amchem, 521 U.S. at 620). “[T]he

parties can[not] 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. CV

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 is

fair). In the second part of its inquiry, the “‘court must

carefully consider “whether a proposed settlement is

fundamentally fair, adequate, and reasonable,’ recognizing that

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

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Part of the reasoning in Diaz appears to have been 2

overruled by the Supreme Court in Amchem. Namely, Diaz assumed

that a court could approve settlement without certifying the

4

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).

Additionally, approval of a class action settlement

takes place in two stages. See In re Phenylpropanolamine (PPA)

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

(noting that 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”). Accordingly, in

this first order the court will only “determine[] whether a

proposed class action settlement deserves preliminary approval”

and lay the ground work for a future fairness hearing (see

schedule below). Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc.,

221 F.R.D. 523, 525 (C.D. Cal. 2004). At that subsequent

hearing, after notice is given to class members, the court will

entertain any objections by putative class members to (1) the

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

terms of the settlement. 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 that fairness hearing, the court will 2

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class. See Diaz, 876 F.2d at 1408 (“Before certification, the

dismissal is not res judicata against the absent class members

and the court does not need to perform the kind of substantive

oversight required when reviewing a settlement binding upon the

class.”). As the discussion above illustrates, however, this

reasoning is incompatible with the Court’s holding in Amchem.

5

make a final determination as to whether the parties should be

allowed to settle a class action pursuant to the terms agreed

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

B. Certification of the Class

A class action must meet four prerequisites identified

in Federal Rule of Civil Procedure 23(a), in addition to meeting

the requirements of at least one of the three subdivisions of

Federal Rule of Civil Procedure 23(b). See Fed. R. Civ. P.

23(a), (b). Additionally, although a district court has

discretion in determining whether the moving party has satisfied

each Rule 23 requirement, see Califano v. Yamasaki, 442 U.S. 682,

701 (1979); Montgomery v. Rumsfelo, 572 F.2d 250, 255 (9th Cir.

1978), the court must conduct a rigorous inquiry before

certifying a class, see Gen. Tel. Co. v. Falcon, 457 U.S. 147,

161 (1982); E. Tex. Motor Freight Sys. v. Rodriguez, 431 U.S.

395, 403-05 (1977). As noted above, although the parties have

stipulated that a class exists for purposes of settlement, this

does not relieve the court of its duty to conduct this inquiry.

Typically, when parties settle before the class is

certified, the court is denied adversarial briefs on the class

certification issue. However, in this case the court is in a

unique position, as the parties have already fully briefed a

motion for class certification. Although defendant now agrees,

at least for the purposes of settlement, that class treatment is

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appropriate, it composed a lengthy brief in opposition to

plaintiffs’ motion for certification. The court will therefore

consider several of defendant’s original arguments in deciding

whether the issues in this case should be treated as class claims

pursuant to Federal Rule of Civil Procedure 23(a) and 23(b)(3). 

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. See Fed. R. Civ. P. 23(a); Hanlon, 150 F.3d

at 1019. 

a. Numerosity

Courts have not established a precise threshold for

determining numerosity. See Gen. Tel. Co. v. E.E.O.C., 446 U.S.

318, 330 (1980). However, a class consisting of one thousand

members “clearly satisfies the numerosity requirement.” Sullivan

v. Chase Inv. Servs., Inc., 79 F.R.D. 246, 257 (N.D. Cal. 1978). 

To evidence the vacation class size, plaintiffs offer excerpts

from the depositions of Linda Prince and Robert Crandall, which

support their claim that 1,752 employees forfeited accrued but

unused vacation during the class period. (Mar. 20, 2006 Jones

Decl. Ex. C (Prince Dep. 10:9-17); Ex. E (Crandall Dep. 55:13-

57:2).) However, before defendant agreed to settle, it contended

that this figure is not accurate because it includes employees

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In contesting the number of putative vacation class 3

members, defendant originally argued that the law would not

support plaintiff’s claims. Namely, defendant contended that,

under California law, forfeiture cannot occur absent a

termination of employment and that a change in ownership does not

effectively amount to termination. As noted above, these

arguments speak directly to the merits of plaintiffs’ claims. 

See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (“In

determining the propriety of a class action, the question is not

whether the plaintiff or plaintiffs have stated a cause of action

or will prevail on the merits, but rather whether the

requirements of Rule 23 are met.” (quoting Miller v. Mackey

Int’l, 452 F.2d 424, 427 (5th Cir. 1971))).

7

who were not actually terminated, but rather were transferred to

defendant’s affiliated company (ConocoPhillips) following a sale

of defendant’s stock. While this may be true, in order to

eliminate this segment of the vacation class, the court would

have to consider the merits of the parties’ legal arguments,

which it cannot do at the class certification stage. See 3

Blackie v. Barrack, 524 F.2d 891, 901 n.17 (9th Cir. 1975)

(acknowledging that in accepting allegations regarding class

size, the resulting class order may be “speculative in the sense

that the plaintiff may be altogether unable to prove his

allegations”). Therefore, accepting plaintiffs’ alleged class

size as true, and recognizing that the joinder of 1,752

plaintiffs would be impracticable, the court holds that the

numerosity requirement is satisfied as to the vacation class. 

Likewise, numerosity is also satisfied for the meal

period class--a fact that defendant has never disputed. Since

March 3, 2000, defendant has employed up to 14,000 hourly

employees who might have claims for wrongfully withheld meal

breaks. (Rodriguez Decl. ¶ 1.) Again, although courts have not

established a precise number for the numerosity requirement,

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joinder of 14,000 people in a single case would clearly be

impracticable.

b. Commonality

Rule 23(a) also requires that “questions of law or fact

[be] common to the class.” Fed. R. Civ. P. 23(a)(2). The Ninth

Circuit construes commonality liberally. See Hanlon, 150 F.3d at

1019. It is not necessary that all questions of law and fact be

common. “The existence of shared legal issues with divergent

factual predicates is sufficient, as is a common core of salient

facts coupled with disparate legal remedies within the class.” 

Id.

 Here, a significant common question exists as to

whether the defendant, by policy or practice, failed to carry

over accrued but unused vacation time from year to year on behalf

of the class members. Had this case gone to trial, additional

common legal issues would have included: 1) whether termination

is necessary before the forfeiture of accrued but unused vacation

time is unlawful; 2) whether, under California Labor Code §

227.3, transfer of ownership constitutes a termination of the

employee relationship, requiring payment of all accrued but

unused vacation; and 3) whether the defendant’s policy or

practice of manually carrying over accrued but unused vacation

time only upon request violates California Labor Code § 227.3 as

a “use it or lose it policy.” Such commonality among the class

members, in issues of both law and fact, is sufficient to meet

requisites of Rule 23(a)(2). 

Commonality with respect to the meal period class

presents a closer question. The purpose of this class is to

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recover additional pay allegedly owed for missed meal breaks in

violation of California Labor Code § 226.7. Cal. Lab. Code §

226.7(b) (requiring employers to pay employees “one additional

hour of pay at the employee’s regular rate of compensation for

each work day that [a] meal or rest period[, as required by

subsection a,] is not provided”). However, the California Code

of Regulations further provides that “[a]n ‘on duty’ meal period

[is acceptable] when the nature of the work prevents an employee

from being relieved of all duty and when by written agreement

between the parties an on-the-job paid meal period is agreed to. 

The written agreement [must] state that the employee may, in

writing, revoke the agreement at any time.” Cal. Code Regs. tit.

8, § 11070(11)(C). 

At all times during the proposed the class period,

defendant required employees to sign some form of “meal period

agreement” (or waiver) that included the nature of the work

exception. Nevertheless, defendant originally argued that

evaluating the enforceability of the waiver would require an

individual inquiry into the nature of each employee’s work on

every shift where that employee missed a meal break. Depending

on the traffic in a given store on a given shift, defendant

argued, the nature of the work may have precluded an off-duty

meal break, and these individual inquiries defeat commonality.

However, this argument would again involve the court in

a determination of the merits of the case. The parties have not

provided the court with any authority establishing that the

nature of the work exception applies on a case-by-case, shift-byshift basis. Indeed, such a rule would potentially eviscerate

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the protections provided by California Labor Code § 226.7, as

every employer would defend against a claim of missed meal

periods by arguing that, because of the nature of the employee’s

work on that day, he was too busy to take a break. Instead, the

exception was more likely provided to allow employers some relief

when the nature of the work in their business overall does not

permit a mid-shift meal break. Significantly, the court is also

not aware of any authority establishing that the nature of the

work in a convenience store qualifies for the § 11070(11)(c)

exception. Consequently, because the court cannot resolve this

question without considering the merits of the case, the court

must recognize that a potential and significant common question

exists for the meal class.

c. Typicality

Rule 23(a) further requires that the “claims or

defenses of the representative parties [be] typical of the claims

or defenses of the class.” Fed. R. Civ. P. 23(a)(3). Typicality

requires that named plaintiffs have claims “reasonably

coextensive with those of absent class members,” but their claims

do not have to be “substantially identical.” Hanlon, 150 F.3d at

1020. The test for typicality “is whether other members have the

same or similar injury, whether the action is based on conduct

which is not unique to the named plaintiffs, and whether other

class members have been injured by the same course of conduct.” 

Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)

(quoting Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)).

In this case, all putative vacation class members

suffered the same injury when their accrued but unused vacation

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In opposing class certification prior to settlement, 4

defendant originally argued that typicality is frustrated by the

existence of four vacation policies encompassed by the class

definition. (Def.’s Opp’n to Mot. for Class Cert. 35-36.)

Specifically, defendant pointed out that two distinct vacation

policies apply to store managers and two distinct vacation

policies apply to store level employees. (Farthing Decl. ¶¶ 6-7.) 

However, a brief review of the policies suggests, at least as to

the forfeiture or carrying over of accrued vacation time, that

any differences among the policies are insignificant. (Compare

Farthing Decl. Ex. A (Section V), with Farthing Decl. Ex. B

(Section V) and Farthing Decl. Ex. C (Section V).) Distinctions

regarding how vacation was accrued, and how much time an employee

could store up, have no bearing on the typicality inquiry here. 

11

time was forfeited without compensation. The source of this

injury arises from a similar policy or practice instituted by the

defendant regarding the forfeiture of accrued but unused

vacation. Moreover, there is no indication of uniqueness as to 4

either defendant’s conduct toward the named plaintiff or the

injury suffered as a result of that conduct (allegedly, lost

vacation time). Therefore, the requirement of typicality has

been met. 

The analysis is again somewhat more strained with

respect to the meal period class. Defendant originally

challenged recognition of Fagundes as the class representative

because as a supervisor and a long term employee (nearly 11

years) in a business with nearly 100% turnover, her claims are

arguably not typical. In particular, Fagundes, who signed an

outdated meal period agreement, has additional grounds on which

to challenge defendant’s practices because her agreement lacks

the “revokable at will clause” that is presently required by Cal.

Code Regs. tit. 8, § 11070(11)(C). 

Nevertheless, “[w]hen the same unlawful conduct was

directed at or affected both the named plaintiffs and the members

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of the putative class, the typicality requirement is usually met,

irrespective of varying fact patterns that underlie individual

claims.” Stephenson v. Bell Atl. Corp., 177 F.R.D. 279, 285

(D.N.J. 1997) (citing Baby Neal v. Casey, 43 F.3d 48, 58 (3d Cir.

1994); Herbert Newberg & Alba Conte, Newberg on Class Actions §

3.13, at 3-76, 3-77 (3d ed. 1992)). Here, like those that served

under her, Fagundes allegedly was improperly denied earned meal

breaks in violation of Cal. Lab. Code § 226.7. Although she has

an additional ground on which to attack defendant’s policy, the

court cannot say with certainty that this argument would succeed

and that plaintiff would thus not need to “prove what others in

the class must establish.” Greeley v. KLM Royal Dutch Airlines,

85 F.R.D. 697, 701 (S.D.N.Y. 1980). This is not a case where the

proposed class representative’s legal arguments are completely

distinct from those of an identifiable subset of the class. 

Rather, Fagundes’ legal arguments are coextensive with those of

the class she proposes to represent. Therefore plaintiffs can

satisfy the typicality requirement for the meal period class.

d. Adequacy of Representation

Finally, rule 23(a) requires representative parties who

“will fairly and adequately protect the interests of the class.” 

Fed. R. Civ. P. 23(a)(4); see Hanlon, 150 F.3d at 1020. To

resolve the question of legal adequacy, the court must answer two

questions: (1) do the named plaintiff and her counsel have any

conflicts of interest with other class members and (2) will the

named plaintiff and her counsel vigorously prosecute the action

on behalf of the class? Hanlon, 150 F.3d at 1020.

Defendant initially contended that the named

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plaintiff’s duty to ensure some of the putative class members

took their vacation days, while a supervisor in defendant’s

employ, represents a conflict of interest with non-supervisor

class members. However, in those circumstances where a conflict

of interest might exist, such a conflict will only bar

certification when “the conflict is serious and irreconcilable.” 

Mateo v. M/S Kiso, 805 F. Supp. 761, 772 (N.D. Cal 1992); see

also O’Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 335 (C.D.

Cal. 1998) (“[O]nly a conflict that goes to the very subject

matter of litigation will defeat a party’s claim of

representative status.” (quoting 10B Charles Alan Wright et al.,

Federal Practice and Procedure § 1768, at 327-28 (3d ed. 1998))). 

Here, the possible conflict of interest must implicate the

forfeiture of vacation time, and it does not. Instead, the named

plaintiff’s alleged duty pertained to the accrual and use of

vacation time, a subject not in dispute. 

Further, the fact that plaintiff’s employment with

defendant ended in 2003 has no bearing on her adequacy as a class

representative. To prove the elements associated with her

forfeiture of accrued vacation time claim, West must necessarily

engage in a course of litigation that will prove the elements of

injury as to the entire class, including those members who were

injured in 2004 and beyond. Significantly, defendant has not

argued that it changed its policy or practice with respect to the

forfeiture and carrying over of vacation during the time

subsequent to the named plaintiff’s termination. 

Additionally, West has shown that her counsel is

adequately experienced in class actions. (See Mar. 20, 2006

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Moreover, to permit employers to hold supervisors 5

responsible for not taking their own meal breaks simply because

of the position they hold, as defendant originally argued, would

effectively deny supervisors the protections afforded by § 226.7. 

The court has not been advised of any authority suggesting that

the law should be applied in this way.

14

Jones Decl. ¶ 4.) As such, the court can safely assume that her

counsel has vigorously sought to maximize the return on its labor

and to vindicate the injuries visited on the entire class. 

Therefore, the court holds that West is an adequate class

representative. 

Likewise, Fagundes does not have substantive conflicts

with the proposed meal period class and therefore is an adequate

representative for this group. Although in theory, as a

supervisor in charge of scheduling meal breaks, Fagundes could be

partially responsible for failing to provide meal breaks, the

court is not aware of any source for such personal liability on

the part of the employee with respect to Cal. Lab. Code § 226.7.5

Cf. Cicairos v. Summit Logistics, Inc., 133 Cal. App. 4th 949,

962-63 (2005) (holding that an employer’s “obligation to provide

the plaintiffs with an adequate meal period is not satisfied by

[shifting responsibility to employees to take their meal breaks],

because employers have ‘an affirmative obligation to ensure that

workers are actually relieved of all duty.’” (quoting Wage Order

applicable to the transportation industry)). Significantly,

plaintiff acted in accordance with defendant’s well established

policies that left little room for discretion. (See, e.g., Mar.

20, 2006 Jones Decl. Ex. B (Farthing Dep. 90:20-91:14 (describing

defendant’s meal break policy and noting that employees could

take an off-duty meal break only after January, 2003 and only if

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“there were two or more employees working and the nature of the

business allowed” (emphasis added)).) The claims of her fellow

class members will not be that she denied them their meal breaks,

but rather that their breaks were denied pursuant to defendant’s

policies. These facts distinguish this case from the

discrimination cases originally relied on by defendant, where

supervisors were held to be inadequate representatives because

they played a part in discriminatory practices that could be

attributed to their employer. See Wagner v. Taylor, 836 F.2d 578

(D.C. Cir. 1987); Donaldson v. Microsoft Corp., 205 F.R.D. 558

(W.D. Wash. 2001).

Moreover, as noted by defendants, the Ninth Circuit has

declined to adopt a per se rule prohibiting the representation of

a subset of non-supervisory employees by supervisory employees. 

“[W]hether employees at different levels of the internal

hierarchy have potentially conflicting interests is contextspecific and depends upon the particular claims alleged in a

case.” Staton, 327 F.3d at 958. As with typicality, the

question boils down to whether the supervisor’s claims are

coextensive with those of the non-supervisory employees. Id. 

Because the court has already made this determination in favor of

plaintiffs, Fagundes can adequately represent the meal period

class.

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). 

See Eisen, 417 U.S. at 163. In this case, plaintiff seeks

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certification of two independently represented classes under Rule

23(b)(3), “which is appropriate ‘whenever the actual interests of

the parties can be served best by settling their differences in a

single action.’” Hanlon, 150 F.3d at 1022 (quoting 7A Charles

Alan Wright, et al., Federal Practice and Procedure § 1777 (2d

ed. 1986)). A class action may be maintained under Rule 23(b)(3)

if (1) “the court finds that the questions of law or fact common

to the members of the class predominate over any questions

affecting individuals members,” and (2) “that a class action is

superior to other available methods for the fair and efficient

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

a. Predominance

Because the Rule 23(a)(3) already considers

commonality, the focus of the Rule 23(b)(3) predominance inquiry

is on the balance between individual and common issues. Hanlon,

150 F.3d at 1022. Here, defendant originally contended that

differences among the class members in vacation accrual caps,

vacation accrual rates, and the ability to take vacation days

raise individual issues that predominate any common legal or

factual issues. (Def.’s Opp’n to Class Cert. 37-39.) However,

differences in accrual caps and rates are quantitative measures

that are irrelevant to the appropriate overarching liability

question: whether the defendant’s employment agreements amount

“to an impermissible ‘use or lose it’ policy or a valid ‘no

additional accrual’ policy” under California Labor Code § 227.3. 

Boothby v. Atlas Mech., Inc., 6 Cal. App. 4th 1595, 1603 (1992);

Cal. Labor Code § 227.3. Because of the uniform language among

the several vacation policies, and the alleged uniform

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In their reply to the defendant’s opposition to 6

certification, plaintiffs abandoned their assertion that

defendant’s vacation policies were “unfair and unreasonable

because workloads and chronic understaffing precluded employees

from taking vacation.” (Pl.’s Reply to Def.’s Opp’n to Class

Cert. 24.) Therefore, to the extent that this argument raised

individual issues, that concern is no longer relevant. 

17

implementation of these policies, common issues of law and fact

would predominate if this case were to go to trial. (See 6

Farthing Decl. Exs. A-C.) Importantly, individual differences in

accrual caps, accrual rates, and amount of vacation time accrued

would have pertained to damages only and individual issues

regarding damages will not, by themselves, defeat certification

under Rule 23(b)(3). See Blackie, 524 F.2d at 905-09 (“Courts

have generally declined to consider conflicts, particularly as

they regard to damages, sufficient to defeat class action status

at the outset unless the conflict is apparent, imminent, and on

an issue at the very heart of the suit.”). 

Likewise, assuming, as the court has, that the nature

of the work exception is intended to apply to the nature of the

work in general and not the circumstances on any given shift,

common claims would have predominated in the meal period class

action as well. Individual matters, such as whether a putative

class member worked long enough to qualify for a meal break and

whether she was permitted to take the earned break, as in the

vacation class, would relate only to damages. The predominant

issue, and one appropriate for class treatment, is whether

defendant’s policies, which routinely resulted in employees

having to take on-duty meal “breaks,” were lawful.

///

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b. Superiority

In addition to the predominance requirement, Rule

23(b)(3) provides a non-exhaustive list of matters pertinent to

the court’s determination that the class action device is

superior to other methods of adjudication. See Fed. R. Civ. P.

23(b)(3)(A)-(D). These matters include:

(A) the interest of members of the class in

individually controlling the prosecution or defense of

separate actions; 

(B) the extent and nature of any litigation concerning

the controversy already commenced by or against members

of the class; 

(C) the desirability or undesirability of concentrating

the litigation of the claims in the particular forum;

(D) the difficulties likely to be encountered in the

management of a class action.

Id. Some of these factors, namely (D) and perhaps (C), are

irrelevant if the parties have agreed to a pre-certification

settlement. Amchem, 521 U.S. at 620. Additionally, the court is

unaware of any concurrent litigation regarding the issues of the

instant case. In the absence of competing lawsuits, it is also

unlikely that other individuals have an interest in controlling

the prosecution of this action or other actions, although

objectors at the fairness hearing may reveal otherwise. As it

stands today however, the class action device appears to be the

superior method for adjudicating this controversy. As such, the

vacation class is properly maintained under Rule 23(b)(3).

The superiority consideration also favors certification

of the meal period class, despite the availability of an informal

wage claim processing service provided by the Division of Labor

Standards Enforcement (“DLSE”) (especially in light of the fact

that the parties have settled the case). The administrative

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hearing option (a “Berman hearing”) described by defendant in its

opposition to class certification “is conducted ‘in an informal

setting preserving the right[s] of the parties’ and ‘is designed

to provide a speedy, informal, and affordable method of resolving

wage claims.’” Lolley v. Campbell, 28 Cal. 4th 367, 372 (2002)

(quoting Cal. Lab. Code § 98(a) and Cuadra v. Millan, 17 Cal. 4th

855, 858 (1998)). Claimants need only submit a form to initiate

the process. Cal. Lab. Code § 98(a). However, the procedure is

not necessarily as quick and easy as defendants describe it. 

Notably, successful claimants will need to participate in a

hearing or mediation where their employer will undoubtedly be

represented by counsel. Id. Additionally, the Commissioner has

discretion to delay a proceeding and there is an appeals process

that might further delay recovery. Id.; Cal. Lab. Code § 98.2

(requiring that appeals be taken to a California Superior Court).

While these procedures might nevertheless be preferable

to a protracted class litigation, in light of the fact that the

parties here have proposed a settlement procedure that will allow

for virtually dispute-free claims to be processed in a matter of

months with minimal involvement on the part of the claimant or

the government, permitting the parties to proceed with class

certification and settlement seems to be the superior approach. 

Additionally, the fact that claimants/class members might not be

able to recover the exact number of meal breaks missed and will

sacrifice some of their recovery to attorneys’ fees must be

weighed against the fact that the settlement reaches back farther

than the DLSE proceedings would permit. Given these

circumstances, a meal period class action presents a superior

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The court notes that it has conducted a full analysis 7

of the class certification question at this stage to determine

early on if all of the effort that will necessarily go into

preparing for the fairness hearing is appropriate. This initial

determination that class certification is warranted is not,

however, binding on the court and the parties are discouraged

from changing their positions on the terms of the settlement in

reliance on this order. The court is not required to make a

final determination that class treatment is appropriate until the

final settlement approval, and it therefore does not herein make

that final determination. See In re General Motors Corp. Pick-Up

Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 797 (3d Cir. 

1995) (holding that while the trustworthiness of the negotiation

process used to approve the settlement can be relied on to

justify provisional certification of a settlement class, “final

settlement approval depends on the finding that the class met all

the requisites of Rule 23”). Moreover, because the analysis of

the superiority component of the Rule 23(b)(3) requirements

depends in part on the terms of the settlement, the parties

cannot assume that the court’s class certification analysis would

necessarily be the same if circumstances changed.

20

method for pursuing the claims at issue here and certification is

proper under Rule 23(b)(3).

C. 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 7

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

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

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

protect absentees). Given that some of these factors cannot be

fully assessed until the court conducts its fairness hearing, “a

full fairness analysis is unnecessary at this stage . . . .” 

Reade-Alvarez v. Eltman, Eltman & Cooper, P.C., No. 04-2195, 2006

WL 1367414, at *7 (E.D.N.Y. May 18, 2006). Accordingly, the

court will simply conduct a cursory review of the terms of the

parties’ settlement for the purpose of resolving any glaring

deficiencies before ordering the parties to send the proposal to

class members.

1. Terms of the Settlement Agreement

The key terms of the stipulation and settlement are as

follows:

1. Class Definitions: the meal period class is defined as “All

hourly employees employed by Circle K Stores, Inc. in the

state of California from October 1, 2000 through the date

the Court grants preliminary approval of this Settlement.” 

The vacation class is defined as “All employees employed by

Circle K Stores, Inc. in the state of California from March

3, 2000 through the date the Court grants preliminary

approval of this Settlement who did not have all their 

accrued but unused vacation carried forward from year to

year.” The agreement excludes from the class employees of

franchises who do/did not actually work for defendant Circle

K Stores, Inc. (June 1, 2006 Jones Decl. Ex. A (Joint Stip.

of Settlement & Release ¶ 6).)

2. Settlement Amount: Defendant agrees to a “total payout”

settlement of five million dollars ($5,000,000). Of this

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amount, three million eight hundred thousand dollars

($3,800,000) is allocated to the meal period class and one

million two hundred thousand dollars ($1,200,000) is

allocated to the vacation class. (Id. ¶ 16.)

3. Deductions: attorneys’ fees (up to 30%), plaintiffs’ costs

(up to $25,000), “service payments” to the class

representatives (up to $15,000 each), and claims

administration costs (up to $150,000) will be deducted from

defendant’s total liability of $5,000,000. With the

exception of the service payments, the meal period class

will bear 76% of these costs and fees; the vacation class

will bear the remainder. (Id. ¶ 15(d).)

4. Award Allocations: Meal period class members who file timely

claims will receive a proportionate share of the $3,800,000

class settlement amount, minus costs, fees, and service

payments. A member’s share will be based on the number of

weeks she worked for defendant during the class period and

this number will be determined based on the total number of

days worked divided by seven. (Id. ¶ 15(d)(i)(a).) The

parties estimate that this approach will at a minimum yield

an $8 per week payment for each class member, resulting in

payments in excess of $2,600 for employees that worked

throughout the entire class period. (P. & A. in Supp. of

Mot. for Prelim. Approv. 8.) Vacation class members who

file timely claims will likewise receive a proportionate

share of the $1,200,000 class settlement amount, minus

costs, fees, and service payments. After all claims are

filed, the vacation class award will be divided by the

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number of claimed vacation hours, yielding a per hour

payment. (June 1, 2006 Jones Decl. Ex. A (Joint Stip. of

Settlement & Release ¶ 15(d)(i)(b)).) The parties

anticipate that this will result in at least a $13 per hour

payment for employees who, on average, were making $7 per

hour. (P. & A. in Supp. of Mot. for Prelim. Approv. 8-9.) 

5. Claims Procedures: Members of each class will receive two

forms sent out by the Claims Administrator, Rosenthal &

Company LLC. (June 1, 2006 Jones Decl. Ex. A (Joint Stip.

of Settlement & Release ¶¶ 15(d)(ix), 22(h)).) One will be

a preprinted Class Claims Form that, based on defendant’s

records, will establish either the number of weeks worked

(for meal period class members) or the number of vacation

days owed (for vacation class members). (Id. ¶

15(d)(ix)(a)-(b).) Class members will also receive a

Request for Exclusion Form that will advise them on how to

opt out of the class action settlement. (Id.) These forms

will be sent, along with a notice announcement detailing the

history of this litigation and further explaining the terms

of the settlement, no more than twenty (20) days from the

date of this order. (Id. ¶ 18(c).) Class members will have

sixty (60) days from the date that notice is mailed to

submit a claim and forty-five (45) days to request exclusion

(in other words, to opt out). (June 1, 2006 Jones Decl. Ex.

D (Proposed Notice).) Payments to class claimants will be

mailed by the claims administrator within twenty (20) days

of the final approval of the settlement. (June 1, 2006

Jones Decl. Ex. A (Joint Stip. of Settlement & Release ¶

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20).)

6. Release: Class members who do not opt out of the class

action, even if they do not file a claim, are forever barred

from bringing claims for failure to provide meal or rest

breaks from October 1, 2000 until this settlement is finally

approved, and from bringing claims for failure to annually

carry over accrued but unused vacation from March 3, 2000

until this settlement is finally approved. (June 1, 2006

Jones Decl. Ex. D (Proposed Notice).) The release does not

cover employees who did not actually work for defendant, but

rather worked for a franchisee. Additionally, the release

does not apply to claims arising after December 2003 

against ConocoPhillips (which sold defendant Circle K

Stores, Inc. through a stock sale in December 2003 and

absorbed some of defendant’s existing employees through

“migration”). (Id.; Apr. 7, 2006 Jones Decl. Ex. F (Prince

Dep. 74:8-75:3).)

2. Preliminary Determination of Adequacy

Again, at this preliminary approval stage, the court

need only “determine whether the proposed settlement is within

the range of possible approval.” Gautreaux v. Pierce, 690 F.2d

616, 621 n.3 (7th Cir. 1982) (quotation marks omitted). The

court is really only concerned with “whether the proposed

settlement discloses grounds to doubt its fairness or other

obvious deficiencies such as unduly preferential treatment of

class representatives or segments of the class, or excessive

compensation of attorneys . . . .” Tenuto v. Transworld Sys,,

Inc., No. CIV. 99-4228, 2001 WL 1347235, at *1 (E.D. Pa. Oct. 31,

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In particular, the settlement creates an opportunity 8

for class members to file claims that might otherwise be timebarred. 

The stipulation recognizes that counsel must still 9

submit an application for attorneys’ fees, which it will do prior

to the fairness hearing, and that the ultimate award will be

determined by the court based on that application. Depending on

the form of plaintiffs’ counsel’s application, the amount could

be less than 30%. See Staton, 327 F.3d at 968 (discussing awards

of attorneys’ fees in the context of a pre-certification class

action settlement and noting that “[t]his circuit has established

25% of the common fund as a benchmark award for attorney fees.”

(quoting Hanlon, 150 F.3d at 1029)).

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2001).

 Accordingly, it is sufficient to note that the

stipulation and settlement appear to be, for the most part, the

result of vigorous, arms-length bargaining. Counsel for both

parties have been actively engaged in this litigation for over

two years and have diligently pursued the necessary discovery. 

Significantly though, despite having a factually well-developed

case, both sides still face significant uncertainty because the

claims (in particular the meal period class claim) encompass

unsettled legal issues. These circumstances and attendant risks

favor settlement. Hanlon, 150 F.3d at 1026. 

Additionally, the terms of the settlement provide for

significant recovery for class members while at the same time 8

offering a manageable approach to calculating awards. The

proposed attorneys’ fees, at no more than 30%, are also

potentially within reason. Likewise, the detailed notice 9

proposed by the parties clearly explains to class members what

their options are and is more than adequate. See Fed. R. Civ. P.

23(c)(2) (requiring only “the best notice practicable under the

circumstances” “[f]or any class certified under Rule 23(b)(3)”);

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Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th

Cir. 2004) (“Notice is satisfactory if it ‘generally describes

the terms of the settlement in sufficient detail to alert those

with adverse viewpoints to investigate and to come forward and be

heard.’” (quoting Mendoza v. Tucson Sch. Dist. No. 1, 623 F.2d

1338, 1352 (9th Cir. 1980))).

The only aspect of the settlement and notice that gives

this court pause is the proposed “service payment” for the class

representatives. In addition to the right to file claim forms,

the settlement proposes a $15,000 “enhancement award” for each

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. C-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); 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 document discovery requests”).

The proposed payment is not particularly unfair to

other class members, given that it will not significantly reduce

the amount of settlement funds available to the rest of the

class. However, the court has no way of knowing whether the

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payments are reasonable in light of applicable circumstances

because plaintiffs have provided only general and largely

conclusory statements about their involvement. They have failed

to account for the number of hours spent on this case and have

not described any personal sacrifices they made on behalf of the

class. Cf. Nilsen v. York County, 382 F. Supp. 2d 206, 215 (D.

Me. 2005) (awarding incentive payments of up to $6,500 to class

representatives who “sacrificed their privacy to vindicate the

privacy rights of the class members” by revealing in court

documents and to the media that they had been subjected to

illegal strip searches). Significantly, although Fagundes, who

remains in defendant’s employ, may have risked retaliation by her

employer, the same cannot be said for West, who left Circle K in

2003.

Moreover, prior to settlement, both named plaintiffs

declared that they “seek nothing for [themselves] in addition to

the relief [they] seek on behalf of the class as a whole.” (Mar.

20, 2006 Jones Decl. Ex. N (Fagundes Decl. ¶ 9), Ex. P (West

Decl. ¶ 7).) This change in the relief sought by plaintiffs, and

the fact that it is roughly six times the amount they would

likely receive as ordinary class members pursuant to the terms of

their own settlement, raises the specter that the named

plaintiffs have been “bought out” to circumvent a more costly

class action litigation. At the fairness hearing, based on

detailed evidence of plaintiffs’ involvement in this case, the

court will determine what portion of this amount is actually

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The Ninth Circuit has warned district courts that “[i]t 10

is the settlement taken as a whole, rather than the individual

component parts, that must be examined for overall fairness,” and

consequently “[t]he settlement must stand or fall in its

entirety.” Hanlon, 150 F.3d at 1026. However, because the terms

of the stipulation and settlement contemplate a service payment

of “not more than”, or “up to”, $15,000 per plaintiff “[s]ubject

to [c]ourt approval”, any modification of this award will be well

within the terms of the agreement. (June 1, 2006 Jones Decl. Ex.

A (Joint Stip. of Settlement & Release ¶¶ 15(d), (d)(xi)).)

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justified. 

10

In all other respects, the court preliminarily finds

that the stipulation and terms of parties’ settlement are

acceptable.

IT IS THEREFORE ORDERED that plaintiffs’ motion for

preliminary approval of settlement be, and the same hereby is,

GRANTED. 

IT IS FURTHER ORDERED that

(1) the following classes be provisionally certified

for the purpose of settlement in accordance with the terms of the

stipulation: (a) All hourly employees employed by Circle K

Stores, Inc. in the state of California from October 1, 2000

through the date the Court grants preliminary approval of this

Settlement; and (b) All employees employed by Circle K Stores,

Inc. in the state of California from March 3, 2000 through the

date the Court grants preliminary approval of this Settlement who

did not have all their accrued but unused vacation carried

forward from year to year.

(2) if the stipulation does not receive the court’s

final approval, should final approval be reversed on appeal, or

should the stipulation otherwise fail to become effective for any

reason (including any party’s exercise of a right to terminate

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under the stipulation), the court’s grant of certification of the

class shall be vacated and become null and void without further

action or order of the court.

(3) the stipulation and the settlement provided therein

are preliminarily approved as fair, reasonable, and adequate

within the meaning of Federal Rule of Civil Procedure 23, subject

to final consideration at the fairness hearing provided for

below.

(4) for purposes of the stipulation and carrying out

the terms of the settlement only:

a. Vicki West is appointed as the representative

of the vacation class.

b. Wendy Fagundes is appointed as the

representative of the meal period class.

c. the law firm of McInerney & Jones is appointed

as lead counsel for the classes and shall be responsible for the

acts and activities necessary or appropriate to present this

stipulation and the proposed settlement to the court for approval

and, if the settlement is finally approved, to implement the

settlement in accordance with the terms of the stipulation and

orders of the court.

(5) Rosenthal & Company LLC, 300 Bel Marin Keys

Boulevard, Novato, California, is hereby approved and appointed

as the Claims Administrator to carry out the duties of the Claims

Administrator set forth in the stipulation.

(6) the form and content of the Notice of Settlement of

Class Action (June 1, 2006 Jones Decl. Ex. D) is approved with

the exception of section six, addressing scheduling matters

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The terms of the parties’ stipulation and settlement 11

provide for twenty (20) days. However, at oral argument the

parties requested that the court provide the Claims Administrator

with thirty (30) days to prepare and send out the appropriate

forms.

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related to the Final Settlement Approval Hearing. These

provisions are modified as provided below in order line eleven.

(7) the form and content of the Class Claim Form (June

1, 2006 Jones Decl. Ex. E) is approved. 

(8) the form and content of the Request for Exclusion

Form (June 1, 2006 Jones Decl. Ex. F) is approved.

(9) no later than thirty (30) days from the date of 11

this order, the Claims Administrator shall cause a copy of the

Notice, the Claim Form, and the Exclusion Form to be mailed by

first class mail to all class members who can be identified

through reasonable effort from defendant’s records. Defendant is

hereby ordered and directed to provide the Claims Administrator

with class member information pursuant to the terms of the

stipulation.

(10) a hearing (the “Final Fairness Hearing”) shall be

held before this court on October 16, 2006 at 1:30 p.m. in

Courtroom 5 to determine whether the proposed settlement, on the

terms and conditions set forth in the stipulation, is fair,

reasonable, and adequate and should be approved by the court; to

determine whether a judgment as provided in the stipulation

should be entered finally approving the settlement; and to

consider class counsel’s applications for attorneys’ fees,

reimbursement of costs, and service payments. The court may

continue the Final Fairness Hearing without further notice to the

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members of the class.

(11) any person who has standing to object to the terms

of the proposed settlement may appear at the Final Fairness

Hearing in person or by counsel, if an appearance is filed as

hereinafter provided, and be heard to the extent allowed by the

court in support of, or in opposition to, (1) the fairness,

reasonableness, and adequacy of the proposed settlement; (2) the

requested award of attorneys’ fees, reimbursement of costs, and

service payments to class representatives; and/or (3) the

propriety of class certification. To be heard in opposition, a

person must, within forty-five (45) calendar days after notice is

mailed, (a) serve by hand or through the mails written notice of

his, her, or its intention to appear, stating the name and case

number of this litigation and each objection and the basis

therefor, together with copies of any papers and briefs, upon

class counsel and upon counsel for defendant, and (b) file said

appearance, objections, papers and briefs with the court,

together with proof of service of all such documents upon counsel

for the parties. Responses to any such objections and class

counsel’s application for attorneys’ fees, reimbursement of

costs, and class representative service payments shall be served

by hand or through the mails on the objectors (or on the

objector’s counsel if any there be) and filed with the Clerk of

this Court no later than fourteen (14) calendar days before the

Final Fairness Hearing. Objectors may file optional replies no

later than one week before the Final Fairness Hearing in the same

manner described above. Any settlement class member who does not

make his, her, or its objection in the manner provided herein

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shall be deemed to have waived such objection and shall forever

be foreclosed from objecting to the fairness or adequacy of the

proposed settlement as memorialized in the stipulation, the

judgment entered, and the award of attorneys’ fees, expenses, and

service payments unless otherwise ordered by the court. 

(12) pending final determination of whether the

settlement should be finally approved, the court preliminarily

enjoins all class members (unless and until the class member has

submitted a timely and valid Request for Exclusion Form) from

filing or prosecuting any claims, suits or administrative

proceedings (including but not limited to claims with the

California DLSE) regarding claims to be released by the

settlement.

DATED: June 12, 2006

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