Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01973/USCOURTS-casd-3_09-cv-01973-1/pdf.json

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

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09cv1973-DMS (BLM)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TASSO KOUMOULIS, ROBERT EARL, and

CHRISTOS HATZIS, on behalf of

themselves and all others similarly

situated,

Plaintiffs,

v.

LPL FINANCIAL CORPORATION, a

California Corporation,

Defendant.

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Case No. 09cv1973-DMS (BLM)

ORDER GRANTING:

(1) CLASS CERTIFICATION;

(2) FINAL APPROVAL OF CLASS

SETTLEMENT;

(3) REQUEST FOR ATTORNEYS’

FEES AND COSTS; and

(4) REQUEST FOR AN

ENHANCEMENT AWARD.

[ECF No. 37]

Currently before the Court is the parties’ Joint Motion for Final Approval of Settlement. ECF

No. 37. For the reasons set forth below, the Court GRANTS the motion.

DISCUSSION

When the parties reach a settlement prior to class certification, the court 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). This requires the court

to assess both whether a class exists and whether the proposed settlement is “‘fundamentally

fair, adequate, and reasonable.’” Id. (citation omitted). Accordingly, in the present case, the

Case 3:09-cv-01973-DMS-BLM Document 42 Filed 11/19/10 Page 1 of 10
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Court will examine the propriety of class certification, the fairness of the settlement agreement,

and the appropriateness of the requested attorneys’ fees and enhancement award for the named

Plaintiffs.

I. Class Certification

A plaintiff seeking a Rule 23(b)(3) class certification must satisfy the prerequisites of both

Rule 23(a) and Rule 23(b)(3). In the present case, the Court preliminarily certified the class in

its July 14, 2010 Order, concluding that the proposed class satisfied the numerosity,

commonality, typicality, and adequacy of representation requirements of Rule 23(a) and the

predominance and superiority requirements of Rule 23(b)(3). ECF No. 34 at 3. The Court has

reviewed those elements again and adopts its prior analysis. Accordingly, the Court finds that

Plaintiffs have satisfied the requirements of both Rule 23(a) and Rule 23(b)(3) and GRANTS

certification of the class for the purpose of settlement.

II. The Settlement

Federal Rule of Civil Procedure 23(e) requires the court to determine whether a proposed

settlement is “‘fundamentally fair, adequate, and reasonable.’” Staton, 327 F.3d at 959 (quoting

Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). To make this determination, the

court must consider a number of factors, including:

the strength of 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; . . . and the reaction of

the class members to the proposed settlement. 

Id. (citation omitted). Additionally, “the settlement may not be the product of collusion among

the negotiating parties.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000)

(citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1290 (9th Cir. 1992)).

A. The strength of plaintiffs’ case; the risk, expense, complexity, and likely duration of

further litigation; and the risk of maintaining class action status throughout the trial

Class Counsel and counsel for Defendant both represent that each of the three abovementioned factors weigh in favor of settlement. Although Plaintiffs “believe strongly in the merits

of their case,” they also acknowledge that “the outcome was far from certain given the state of

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the law and the facts of the case.” Mem. of P. & A. in Supp. of Settlement at 9. Counsel for

Defendant similarly states his belief that “LPL had many meritorious procedural and substantive

defenses to the claims, [but] there is uncertainty inherent in any litigation” and settlement

removes that uncertainty. Markun Decl. ¶ 4. Moreover, whereas individual litigation would likely

be rife with “significant legal and factual hurdles,” and “would tax private and judicial resources

over a period of years,” settlement at this juncture “provides to all Members, regardless of their

means, substantial relief promptly and efficiently.” Mem. of P. & A. in Supp. of Settlement at 9;

Markun Decl. ¶ 4. Finally, despite Plaintiffs’ belief that “this lawsuit is maintainable as a class

action,” Plaintiffs concede that “there are risks associated with the class certification issue,” and

“[t]he uncertainty of whether a contested class certification motion would have been granted

warrants settlement now.” Mem. of P. & A. in Supp. of Settlement at 10.

In light of these admitted weaknesses and potential pitfalls, the Court agrees with counsel

that the actual recovery through settlement confers substantial benefits on the class that

outweigh the potential recovery through full adjudication. The Court therefore finds that each

of these three factors weighs in favor of granting final approval.

B. The amount offered in settlement 

Defendant LPL agreed to pay “an all-inclusive, maximum settlement amount of $470,000,”

from which each Class Member “shall be eligible to recover his or her pro-rated share of the Class

Member Distribution Amount based upon his or her individual Compensable Work Weeks.” Mem.

of P. & A. in Supp. of Settlement at 3-4. Although Class Counsel did not indicate what the

maximum potentially recoverable amount would be if the instant case was to proceed to trial,

the Court is able to assess the reasonableness of the amount offered in settlement without such

a comparison point. Notably, even if the potential recovery far exceeds the amount offered in

settlement, such a disparity is not dispositive because “it is well-settled law that a cash

settlement amounting to only a fraction of the potential recovery will not per se render the

settlement inadequate or unfair.” Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of San

Francisco, 688 F.2d 615, 628 (9th Cir. 1982) (citations omitted). 

Here, Class Counsel and counsel for Defendant state that the settlement “is reasonable

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given the claims asserted and the uncertainties in the outcomes under the law . . . .” Mem. of

P. & A. in Supp. of Settlement at 10; Markun Decl. ¶ 4. These representations are significant

because “[t]he recommendations of plaintiffs’ counsel should be given a presumption of

reasonableness.” In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2008)

(quoting Boyd v. Bechtel Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979)). Moreover, prior to

reaching a settlement on April 23, 2010, Class Counsel and counsel for Defendant “engaged in

extensive negotiation, including an exchange of substantial information.” Mem. of P. & A. in

Supp. of Settlement at 3; Markun Decl. ¶ 2. The Court agrees that this “considerable exchange

of information,” in addition to both attorneys’ expertise, made the parties “well-equipped to

negotiate at arm’s length, and, ultimately, reach a reasonable settlement of the overtime claims.”

Mem. of P. & A. in Supp. of Settlement at 3. The Court is further convinced of the

reasonableness and adequacy of the settlement because “zero (0) Class Members have

expressed any form of opposition to the Settlement,” and any Class Members who excluded

themselves believing that their claims have a greater value “preserved the right to pursue [their]

individual claim[s] seeking that potential greater payout.” Mem. of P. & A. in Supp. of Settlement

at 11-12. 

The Court finds that the settlement amount is in the range of reasonableness given the

probability of lengthy litigation in the absence of a settlement, the risk that the employees would

not have been able to succeed at trial, and the risk that a jury could have awarded less than the

settlement amount. Accordingly, the Court finds the amount offered in settlement to the Class

Members weighs in favor of granting final approval of the Settlement.

C. The extent of discovery completed, and the stage of the proceedings

In the class action settlement context, “‘formal discovery is not a necessary ticket to the

bargaining table’ where the parties have sufficient information to make an informed decision

about settlement.” In re Mego, 213 F.3d at 459 (quoting Linney v. Cellular Alaska P’ship, 151

F.3d 1234, 1239 (9th Cir. 1998)). Here, prior to reaching a settlement, “the Parties exchanged

substantial information and conducted informal investigation,” such that “Class Counsel fully

understood LPL’s wage-paying practices and the composition of the Class.” Mem. of P. & A. in

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Supp. of Settlement at 11; see also Markun Decl. ¶¶ 2-3. The Court agrees that Class Counsel

had enough information to negotiate a fair settlement and this factor therefore weighs in favor

of granting final approval.

D. The experience and views of counsel

Class Counsel, who has been in practice for more than thirty years and negotiated “[s]ome

of [the] largest class action overtime wage-hour settlements in California history, as well as many

smaller ones,” expressly “supports the Settlement as fair, reasonable, and adequate, and in the

best interest of the Class as a whole.” Mem. of P. & A. in Supp. of Settlement at 11; Thierman

Decl. Ex. A. Counsel for Defendant also “strongly support[s] the Settlement of this action.”

Markun Decl. ¶ 4. Accordingly, the Court finds that this factor weighs in favor of granting final

approval. 

E. The reaction of the class members to the proposed settlement

Rust Consulting, Inc. (“Rust”), the entity hired to disseminate the Class Notice in the

present case, successfully delivered notices to 148 of the 151 Class Members, or 98% of the

putative class. Zeleke Decl. ¶¶ 1, 3, 8, 10. As of October 22, 2010, a total of ninety-six (96)

Class Members had chosen to participate in the Settlement and submit Claim Forms. Zeleke

Suppl. Decl. ¶ 4. Twenty-four (24) Class Members submitted incomplete forms, however, as of

October 22, 2010, sixteen (16) had resolved the deficiencies and the remaining eight (8) were

still working on them. Id. One (1) Class Member chose to opt out and six (6) Class Members

submitted disputed Claim Forms which were ultimately deemed to be without merit. Id.

Ultimately, 64% of the class chose to participate in the Settlement, and the Class Members

collectively claimed 17,270.74 work weeks out of a total of 20,908.02 work weeks for the Class

(approximately 83%). Id. The timely postmarked Claims Forms therefore constitute a potential

payout of approximately $295,500.00, with an average payment per Class Member of $3,078.13.

Id. Notably, as of October 22, 2010, zero (0) Class Members had objected to the Settlement.

Id. at ¶ 5. See In re Austrian & German Bank Holocaust Litig., 80 F. Supp. 2d 164, 175 (S.D.N.Y.

2000) (“If only a small number of objections are received, that fact can be viewed as indicative

of the adequacy of the settlement.”); Boyd, 485 F. Supp. at 624 (acknowledging that

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approximately sixteen percent of the class filed some opposition to the settlement, but “find[ing]

persuasive the fact that eighty-four percent of the class has filed no opposition”). In light of

these facts, the Court finds that the overall reaction of the Class Members weighs in favor of

granting final approval. 

F. Collusion among the negotiating parties

The collusion inquiry centers on the possibility that the agreement is the result of either

overt misconduct by the negotiators or improper incentives of certain class members at the

expense of other members of the class. See Staton, 327 F.3d at 960. Here, there is no evidence

of overt misconduct so the Court will focus its inquiry on the aspects of the settlement that lend

themselves to self-interested action: the enhancement award for the named Plaintiffs and the

attorneys’ fees.

Although Class Counsel initially requested $50,000 enhancement awards for each of the

three Class Representatives, the Court declined to approve such an admittedly “large” award.

ECF No. 27 at 6, 9; ECF No. 27-1 at 14; see also ECF No. 32. Accordingly, the Notice sent to

Class Members stated that the Class Representatives would receive an enhancement award of

“up to $10,000.” ECF No. 33 at 7. None of the Class Members objected to this proposed amount

and, as discussed in more detail below, the Court finds this revised amount is not the result of

collusion.

The requested attorneys’ fees are not the result of collusion. Plaintiffs may simultaneously

negotiate the merits and attorneys’ fees. Staton, 327 F.3d at 971. In the present case, Plaintiffs

seek the Court’s approval of attorneys’ fees in the total amount of $117,500, which equals 25%

of the total settlement of $470,000. Mem. of P. & A. in Supp. of Fees at 0-1. As discussed in

more detail below, the Court finds the recovery of attorneys’ fees sought by Class Counsel to be

reasonable.

III. Attorneys’ Fees and Costs for Class Counsel

The Settlement Agreement provides that Class Counsel may recover no more than

$10,000 in litigation costs and $117,500 in attorneys’ fees. ECF No. 27 at 9-10; ECF No. 27-1

at 14; ECF No. 33 at 4, 7. Parties to a class action may appropriately negotiate the payment of

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attorneys’ fees and costs in conjunction with the settlement of the action itself. See Evans v. Jeff

D., 475 U.S. 717, 733-35 (1986). 

With respect to the litigation costs, Class Counsel incurred $4,178.85 in costs as of

October 11, 2010, and anticipated another $500 in costs for attendance at the Final Approval

Hearing, bringing the total costs to $4,678.85. Mem. of P. & A. in Supp. of Fees at 1, 13-14;

Thierman Decl. Ex. D. Class Counsel states that these costs include “travel, photocopies,

computer research, filing fees, messenger service and postage.” Mem. of P. & A. in Supp. of

Fees at 13. Because the Settlement Agreement provides for costs up to $10,000 (ECF No. 27-1

at 14; ECF No. 33 at 7), the Court notes that the costs incurred by Class Counsel were modest.

Moreover, the Court finds that the costs Class Counsel incurred were necessary to properly

litigate the case and the costs are the type commonly approved by courts. See, e.g., Harris v.

Marhoefer, 24 F.3d 16, 19-20 (9th Cir. 1994); In re Immune Response Sec. Litig., 497 F. Supp.

2d 1166, 1177-78 (S.D. Cal. 2007); In re Media Vision Tech. Sec. Litig., 913 F. Supp. 1362, 1365-

72 (N.D. Cal. 1996). The Court therefore finds the award of litigation costs in the amount of

$4,678.85 to be reasonable.

With respect to the attorneys’ fees, Class Counsel seeks a total sum of $117,500, which

equals 25% of the total settlement of $470,000. Mem. of P. & A. in Supp. of Fees at 0. Notably,

the Ninth Circuit has established a 25% “benchmark” for common fund cases. In re Coordinated

Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 109 F.3d 602, 607 (9th Cir. 1997). This

“‘benchmark percentage should be adjusted, or replaced by a lodestar calculation, when special

circumstances indicate that the percentage recovery would be either too small or too large in

light of the hours devoted to the case or other relevant factors.’” Torrisi v. Tucson Elec. Power

Co., 8 F.3d 1370, 1376 (9th Cir. 1993) (quoting Six Mexican Workers v. Ariz. Citrus Growers, 904

F.2d 1301, 1311 (9th Cir. 1990)). However, regardless of whether the court uses the percentage

approach or the lodestar method, the critical inquiry is whether the “fees and expenses ultimately

awarded [are] reasonable in relation to what the plaintiffs recovered.” Powers v. Eichen, 229

F.3d 1249, 1258 (9th Cir. 2000). In determining the reasonableness of an award, the Ninth

Circuit has identified the following relevant factors: (1) the results achieved; (2) the risks of

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1

 Additionally, Class Counsel stated that his request for 25% of the gross potential settlement value

“represents a multiplier of only 1.73 from the fair market value for [his] services.” Thierman Decl. ¶ 22. “Calculation

of the lodestar, which measures the lawyers’ investment of time in the litigation, provides a check on the

reasonableness of the percentage award.” Vizcaino, 290 F.3d at 1050.

-8- 09cv1973-DMS (BLM)

litigation; (3) the skill required and the quality of work; (4) the awards made in similar cases;

and (5) the contingent nature of the fee and the burdens carried by class counsel. See Vizcaino

v. Microsoft Corp., 290 F.3d 1043, 1048-50 (9th Cir. 2002). The Court addresses each of these

factors in turn.

First, the results achieved in this case are favorable to the Class Members. The average

payment per Class Member is estimated to be over $3,000 and the highest award for a claimant

in the Class who worked for the entire class period is estimated to be more than $6,000. Mem.

of P. & A. in Support of Fees at 8; Zeleke Suppl. Decl. ¶ 4. Moreover, the existence of only one

“opt out” and the complete lack of objectors indicates the Class Members’ satisfaction with the

Settlement. Mem. of P. & A. in Support of Fees at 8; Zeleke Suppl. Decl. ¶¶ 4-5. Second, as

detailed above through the averments of both Class Counsel and counsel for Defendant, the risks

of litigation were real and substantial. Third, the complexity of wage and hour class action cases,

coupled with the experience of Class Counsel, weighs in favor of approving Class Counsel’s fee

award. Fourth, the request for attorneys’ fees in the amount of 25% of the common fund is not

outside the normal range for fee awards in similar cases.1

 Fifth, in the absence of recovery for

the Plaintiffs, Class Counsel would have received nothing. Mem. of P. & A. in Supp. of Fees at

11. Accordingly, the Court finds that the requested attorneys’ fees and costs are reasonable. 

IV. Enhancement Award for Class Representatives

In evaluating the enhancement award to a class representative, a court should consider

all “‘relevant factors including the actions the plaintiff has taken to protect the interests of the

class, the degree to which the class has benefitted from those actions, . . . the amount of time

and effort the plaintiff expended in pursuing the litigation . . . and reasonable fears of workplace

retaliation.’” Staton, 327 F.3d at 977 (quoting Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir.

1998)). 

In the present case, the Class Representatives initially requested an enhancement award

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in the amount of $50,000 each. ECF No. 27 at 6, 9. The Court declined to approve, even

preliminarily, the requested enhancement. See ECF No. 32. As a result of the Court’s ruling, the

Notice sent to the potential Class Members included a statement that the Class Representatives

could receive “up to $10,000" each. ECF No. 33 at 4, 7. 

In their enhancement request, the Class Representatives explained that they have

protected the interests of the class by maintaining this class action for the past year and argued

that their actions have benefitted the class. They also expressed concern “that they have been

subject to pervasive covert discrimination as whistleblowers in the industry” and “fear that they

may be silently blackballed by this litigation.” ECF No. 27 at 5-6, 16-17. However, the Class

Representatives do not state what specific actions they took to further the litigation. For

example, there is no indication that the Class Representatives were deposed or otherwise

personally involved in discovery, nor did they participate in the Early Neutral Evaluation

Conference. See, e.g., Alberto v. GMRI, Inc., 252 F.R.D. 652, 669 (E.D. Cal. 2008) (“Given . . .

the utter lack of evidence demonstrating the quality of plaintiff’s representative service, the court

may be reticent to ultimately approve the parties’ proposed settlement.”); Apparicio v.

Radioshack Corp., No. CV 08-1145, 2009 WL 1490560, at *2 (C.D. Cal. May 21, 2009) (“Plaintiffs

have provided no detail on the amount of time and effort expended by the named plaintiffs, or

any risk they incurred.”). Moreover, the Class Representatives do not provide any facts to

support their concern about discrimination or blackballing. See Staton, 327 F.3d at 977 (court

should consider reasonable fears of workplace retaliation). Finally, the Court notes that a

$10,000 enhancement would constitute 2.13% of the $470,000 settlement and a $30,000

enhancement (the total requested enhancement to all three Class Representatives) would

constitute 6.38% of the settlement. See Sandoval v. Tharaldson Emp. Mgmt., Inc., No. EDCV

08-482, 2010 WL 2486346, at *10 (C.D. Cal. June 15, 2010) (lowering the named plaintiff’s

enhancement award to a sum constituting 1% of the gross settlement and citing cases in which

enhancement awards constituting less than 1% of the settlement amount were approved). 

While no Class Member has objected to the $10,000 enhancement awards, the Court finds

the requested amount to be excessive given the facts of this case. The Court agrees that an

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enhancement award is appropriate in this case given the length of time the litigation has been

pending, the value provided to the Class Members, and the possibility that the Class

Representatives may experience difficulties in their future employment, but the Court finds that

the appropriate amount is $6,000 per person. Accordingly, the Court finds an enhancement

award of $6,000 per Class Representative (for a total enhancement award of $18,000) to be fair

and reasonable under the circumstances. 

CONCLUSION

For the foregoing reasons, the Court: (1) GRANTS certification of the applicable class;

(2) GRANTS final approval of the settlement; (3) GRANTS the request for award of attorneys’

fees and costs and AWARDS Class Counsel litigation costs in the amount of $4,678.85 and

attorneys’ fees in the amount of $117,500.00; and (4) GRANTS the request for an

enhancement award and AWARDS each named Plaintiff, Tasso Koumoulis, Robert Earl, and

Christos Hatzis, a class representative enhancement award of $6,000.

IT IS SO ORDERED.

DATED: November 19, 2010

BARBARA L. MAJOR

United States Magistrate Judge

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