Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-cv-05515/USCOURTS-caed-1_04-cv-05515-4/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 29:1801 Farmworker Rights

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GEORGE HERNANDEZ, JR.; JOE A.

HERNANDEZ; MANUEL A. HERNANDEZ;

and ARMANDO PULIDO,

Plaintiffs,

v.

KOVACEVICH “5” FARMS; KENNETH

KOVACEVICH, JR.; MARK J.

KOVACEVICH; CAROL K. YINGST;

MARSHA RITCHIE; ANN K.

TARTAGLIA; and KENNETH

KOVACEVICH, SR.,

Defendants.

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1:04-cv-5515 OWW DLB

MEMORANDUM DECISION AND

ORDER RE APPROVAL OF CLASS

SETTLEMENT AGREEMENT AND

APPROVAL OF NOTICE.

I. INTRODUCTION

This matter is before the court on Plaintiffs’ unopposed

motion for final approval of the Parties’ class action settlement

agreement (“Settlement Agreement”), which includes a negotiated

attorney’s fee award. The proposed Settlement Agreement would

resolve a dispute between the Plaintiff Class of seasonal

agricultural workers and Defendants Kovacevich “5” Farms, its

individual partners, and Kenneth Kovacevich, Sr. (“Kovacevich,

Sr.”) (collectively, “Defendants” or “K5 Farms”). Plaintiff

Class alleged that Defendants required Class members to perform

unpaid, “off-the-clock” work in violation of federal and state

worker protection laws. (Doc. 162 at 2:27.) 

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II. FACTUAL BACKGROUND

A. Background Union Activity at K5 Farms.

This lawsuit arises in the context of an ongoing effort by

the United Farm Workers of America, AFL-CIO (“UFW”) to organize

the employees of K5 Farms. (Doc. 37 at 2:2-3.) This effort led

to a secret ballot election supervised by the California

Agricultural Labor Relations Board, held on August 19, 2003. 

(Id. at 2:3-5.) The employees voted 160-95 against UFW

representation. (Id. at 2:6-7.) All of the Named Plaintiffs in

this lawsuit, while not union members, are members of the UFW’s

“Organizing Committee,” a group actively engaged in promoting

union representation on behalf of the UFW. (Id. at 2:11-14.) 

Moreover, Thomas P. Lynch, who is one of Plaintiffs’ counsel,

works for the law firm headed by Marcos Camacho. Marcos Camacho

himself, according to an exhibit attached to Defendants’

Opposition, serves as General Counsel to the UFW. (Id. at Ex.

5.)

B. Facts under which this Case Arises.

Representative Plaintiffs George Hernandez, Jr., Manual A.

Hernandez, Joe. A. Hernandez, and Armando Pulido (collectively,

“Named Plaintiffs”) brought this class action under the Migrant

and Seasonal Agricultural Worker Protection Act (“AWPA”), 29

U.S.C. § 1801 et seq. and California state law, on behalf of

themselves and all similarly-situated field laborers to recover

unpaid wages, accrued interest and penalties, attorneys’ fees and

costs, and injunctive relief from Defendants. (Doc. 162 at 2:21-

26.) Defendants are engaged jointly in the business of growing

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3

table grapes and other agricultural commodities, including

persimmons, on land located primarily in Tulare County,

California. (Doc. 88 at 2:16-19.) The Named Plaintiffs are

seasonal farm workers who have worked in Defendants’ table grape

fields. (Id. at 2:19-20.) One of the Named Plaintiffs, Armando

Pulido, along with a Subclass, has also harvested other crops for

Defendants. (Id. at 2:20-21.) On behalf of themselves and the

Class, Plaintiffs complained that Defendants required Class

members to perform unpaid, off-the-clock preparation work before

the start of their official work shifts each morning during the

harvest, in violation of federal and state wage and hour laws. 

(Id. at 2:21-23.) Plaintiffs also complained that Defendants

violated other state law by failing to keep accurate records of

all hours worked, failing to post required signs, and failing to

provide Class members with all necessary tools and equipment. 

(Id. at 2:23-26.)

III. PROCEDURAL HISTORY

Three of the four Named Plaintiffs, and another plaintiff

whose subsequent withdrawal as a Class representative was

approved by the Court, filed the original complaint on April 2,

2004 on behalf of themselves and a proposed Class of more than

500 similarly situated field laborers. On August 13, 2004,

Plaintiffs moved for a protective order regarding Defendants’

communications with putative Class members. (Doc. 20.) This

motion was denied on September 10, 2004. (Doc. 29.) Plaintiffs

amended their complaint on September 30, 2004 to add Plaintiff

Pulido as a Class representative and to add a Subclass, of which

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1 Defendant Kovacevich Sr. controls and owns, as a sole

proprietor, an agricultural business that includes the

cultivation and harvest of persimmons, pomegranates, and other

crops. He has also been, during the relevant period, actively

involved in the management and operation of K5 Farms and has

exercised control over the terms and conditions of employment of

Class members. It does not appear from the Settlement Agreement

that work performed on Kovacevich, Sr.’s individual agricultural

operations are implicated in this action. Rather, Kovacevich

Sr.’s role in the operations only of K5 farms is implicated.

4

Plaintiff Pulido is a member. (Doc. 35.) The allegations of the

Subclass encompass unpaid work performed by K5 Farm workers who

also harvested persimmons and other crops for Defendant

Kovacevich, Sr. (Id. at ¶ 24.)1 

Plaintiffs also moved for Class certification on September

30, 2004. (Doc. 31.) On December 2, 2004, the Court certified a

Class of “all persons who worked at K5 Farms as agricultural

field laborers and who were not paid for time worked at the

beginning of the day.” (Doc. 44 at 3:15-17.) The Court held

that the Class includes persons who are owed “wages that first

became due on April 2, 2001 and continuing up to the date that

damages are awarded.” (Id. at 3:17-19.) 

On February 16, 2005, representative Plaintiff Jesus

Gutierrez moved to withdraw as a Class representative. (Doc.

55.) The motion was granted on March 15, 2005. (Doc. 68.) 

Plaintiffs again amended their complaint on April 7, 2005 to

clarify certain claims. (Doc. 88.) On March 11, 2005, Class

counsel mailed the first court-approved Class Notice to 541

persons. (Doc. 162 at 4:4-6.) The Notice informed potential

Class members of the lawsuit and provided them an opportunity to

exclude themselves by completing a Class Exclusion Form enclosed

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with the Notice and filing it with the Court on or before May 10,

2005. (Id. at 4:6-8.) By May 20, 2005, approximately 50 of the

541 recipients had filed the court-approved Class Exclusion Form. 

(Id. at 4:9-11.) An additional 25 signatures of persons who did

not sign individual Exclusion Forms appeared on a petition-style

exclusion document also filed with the Court. (Id. at 4:12-14.) 

On April 1, 2005, Plaintiffs filed a motion for a temporary

restraining order for alleged “interference by [D]efendants’

agents with the right of [C]lass members to participate in this

[action].” (Doc. 74 at 1:22-25.) The Parties later stipulated

to a temporary restraining order and the motion was taken off

calendar. (See Doc. 87.)

On April 15, 2005, the Parties filed cross-motions for

partial summary judgment and responded to these motions on April

29 (Defendants) and May 2 (Plaintiffs), 2005. (Doc. 162 at 4:15-

17.) On May 4, 2005, while the cross-motions for summary

judgment were still pending, the Parties reached a compromise on

the terms of the Settlement Agreement and, by stipulation, the

Parties withdrew their summary judgment motions. The parties

moved for preliminary approval of the settlement, and oral

argument was held on July 11, 2005. On July 14, 2005, the

district court granted preliminary approval of the settlement and

approved the method and form of class notice. (Doc. 169.) The

order granting preliminary approval provided that any objections

to the settlement must be made in writing on or before September

19, 2005. A fairness hearing was set for September 26, 2005. 

(Id. at 23.) 

The court-approved Notice of Proposed Settlement was mailed

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to all potential Class members. (Doc. 171.) Class Counsel also

published a shortened notice in a local Spanish-language

newspaper circulated in the area where most of the class members

reside. In addition, reminder post-cards were sent out to the

Class, highlighting the deadlines for filing objections. See

(Doc. 173.) As of the September 19, 2005 deadline for

objections, none had been filed. 

IV. STANDARD OF REVIEW

Fed. R. Civ. P. 23(e) requires court approval for all class

action settlements. A court may approve a settlement only after

a hearing and on finding that it is fair, reasonable, and

adequate. Fed. R. Civ. P. 23(e)(1)(C). The court must also

ensure that “the best notice practicable under the circumstances”

be provided to class members. Fed. R. Civ. P. 23(c)(2)(B). In

addition, where the payment of attorneys fees is also part of the

negotiated settlement, the fee settlement must be evaluated for

fairness in the context of the overall settlement. See Robbins

v. Alibrandi, 127 Cal. App. 4th 438, 444 (2005).

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2 (a)$850,000.00 on November 30, 2005 (“first

installment”); (b)$850,000.00 on November 30, 2006 (“second

installment”)

7

V. LEGAL ANALYSIS

A. Terms of Proposed Settlement Agreement.

1. Class Settlement Fund.

Defendants will make two separate installment payments into

a settlement fund (“Settlement Fund”), totaling $1.7 million,2

which will be processed and distributed by Miner, Barnhill &

Galland, P.C. (“MBG”). (Doc. 162, Settlement at 5:9-13.) No

portion of the Settlement Fund will revert to any of the

Defendants under any circumstances. (Id. at 5:14-15.) 

The Notice of Class Action Settlement mailed to all nonexempt Class members included a Claim Form. (Id. at 5:23-25.) 

The Claim Form explains that the deadline for submitting claims

is 75 days from the date the Forms are mailed. (Id. at 5:26-27.) 

Class members who timely submit their claims will be

considered “Claiming Class Members.” (Id. at 5:27-28.) Class

counsel will make two distribution payments to Claiming Class

Members promptly upon receipt of each of Defendants’ two

installment payments into the Settlement fund. (Id. at 6:26-

7:4.) 

Any money remaining in the Settlement Fund six months after

the second distribution, whether resulting from the accrual of

interest on the Fund or settlement checks not cleared within six

months from issuance, will be used first to pay late claims. 

(Id. at 7:5-8.) Late claims will be paid only after the second

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3 During oral argument on the instant motion, Class

Counsel explained that they will make a distribution if enough

funds remain send out a payment to individual Class Members

exceeding $10.00, taking into account the expense of printing and

mailing checks, which will be approximately $1,000.00 for the

entire Class. Otherwise, the remaining funds will be tendered to

the California Labor Commission.

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distribution and only if residual money exists in the Fund at

that time. (Id. at 7:8-10.) If money remains in the Fund after

full satisfaction of all late claims, it will be applied to

defray costs incurred by Class counsel in locating Class members

and/or distributing payments to Class members who reside outside

the United States at the time of distribution. (Id. at 7:11-14.) 

If any money still remains, Class counsel will distribute it pro

rata among Claiming Class Members, except that if such money is

insufficient to provide a “meaningful”3 pro rata distribution, it

will be tendered to the California Labor Commissioner for deposit

in the state Unpaid Wage Fund. (Id. at 7:15-19.) 

2. Injunctive Relief.

Defendants agree that neither they nor any of their agents

will retaliate in any manner against any person involved in the

prosecution of this action. (Id. at 7:20-28.) Defendants will

ensure that their record-keeping practices are consistent with

Wage Order No. 14 and the California Labor Code. (Id. at 8:1-5.) 

Defendants will also continue to provide pruning shears and

clippers to all of their field laborer employees at or before the

start of any agricultural season, and will make available, at no

charge, protective work gloves for use during pruning season. 

(Id. at 8:6-15.) 

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4 The three equal installments of $265,000.00 are due on

May 1, 2006, May 1, 2007, and November 30, 2007.

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3. Relief for the Named Plaintiffs.

In consideration for their commitment of effort and time,

Defendants agree to a bonus of $1,000 to each of the four Named

Plaintiffs: George Hernandez, Jr., Joe A. Hernandez, Manuel A.

Hernandez, and Armando Pulido. (Id. at 8:18-25.) The four Named

Plaintiffs will also be assured continuous seasonal employment,

consistent with their past work history, for a period of two

years. (Id. at 9:3-4.) Defendants also agree to resolve

allegations of demotion and retaliation, raised by family members

and close associates of Named Plaintiffs, by restoring their work

positions to the positions held prior to this suit. (Id. at 9:7-

21.) 

4. Attorneys’ Fees and Costs.

Defendants will pay Plaintiffs’ attorneys’ fees and costs in

three equal installments, totaling $795,000.00. (Id. at 9:23-

27.)4 Also, Defendants will pay Class counsel up to $25,000.00

for additional attorneys’ fees and costs actually incurred in the

administration of the Settlement and distribution of payments to

Claiming Class Members after final approval of the Settlement. 

(Id. at 10:1-4.) 

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5 “Significant reduction” in work force accords with the

standards set forth in the WARN Act, 29 U.S.C. § 2101 et. seq.,

and Cal. Lab. Code § 1400 et. seq.

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5. Defendants’ Assurance That They Will Meet Their

Obligations Without Job Loss To Class Members.

Defendants have stipulated that they will meet the foregoing

financial and other obligations of this Settlement without taking

measures which would result in the reduction of their field

laborer work force. (Id. at 10:9-15.) In the event that, due to

unforeseeable events or conditions beyond Defendants’ control,

the only way for Defendants to meet their financial obligation to

timely make the second installment payment and also remain in

operation is either to sell real property on which Class members

are working or to reduce their field laborer work force,

Defendants will consult with Class counsel about delaying such

payment. (Id. at 10:15-18.) Absent agreement between the

Parties in such event, no significant reduction5 in Defendants’

field laborer work force may occur without advance approval of

the Court. (Id. at 10:19-22.)

6. Effective Date.

If the Court approves of substantially all the terms

described in the Settlement Agreement, the Settlement is to

become effective thirty-five (35) days after the Court grants a

final judgment order--provided that no notice of appeal is filed. 

(Id. at 10:25-28.) If a notice of appeal is filed, the

Settlement is to become effective ten days after all appellate

proceedings pertaining to the action have been completed and

settlement of the action is final and binding. (Id. at 11:1-5.)

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7. Mutual Releases.

Plaintiffs release Defendants from liability for all claims

asserted in this action, any allegations of retaliation that have

arisen in connection therewith, and any other claims arising from

the set of facts alleged in this action. (Id. at 11:8-17.) 

Defendants likewise discharge Plaintiffs from all claims that

arise from the claims and defenses alleged in this action. (Id.

at 11:18-22.) 

B. Analysis of the Merits of the Settlement Agreement.

“The court must approve any settlement...of the claims...of

a certified class.” Fed. R. Civ. P. 23(e)(1)(A). The court may

approve a settlement only after a hearing and on finding that it

is fair, reasonable, and adequate. Fed. R. Civ. P. 23(e)(1)(C). 

Such approval is required to make sure that any settlement

reached is consistent with plaintiffs’ fiduciary obligations to

the class. Ficalora v. Lockheed Cal. Co., 751 F.2d 995, 996 (9th

Cir. 1985). The court also serves as guardian for the absent

class members who will be bound by the settlement, and therefore

must independently determine the fairness of any settlement. Id.

However, the district court’s role in intruding upon what is

otherwise a private consensual agreement is limited to the extent

necessary to reach a reasoned judgment that the agreement is not

the product of fraud or collusion between the negotiating

parties, and that the settlement, taken as a whole, is fair,

reasonable, and adequate to all concerned. Officers for Justice

v. Civil Serv. Comm’n of San Francisco, 688 F.2d 615, 625 (9th

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6 It is not the role of the district court to reach any

ultimate conclusions on the contested issues of fact and law

which underlie the merits of the dispute. Officers for Justice,

688 F.2d at 625. It is the uncertainty of the outcome in

litigation and avoidance of wasteful and expensive litigation

that induce consensual settlements. Id.

12

Cir. 1982). Therefore, the settlement hearing is not to be

turned into a trial or rehearsal for trial on the merits. Id.6

Ultimately, the district court’s determination is nothing more

than an amalgam of delicate balancing, gross approximations, and

rough justice. Id.

In determining whether a settlement agreement is fair,

adequate, and reasonable to all concerned, a district court may

consider some or all of the following factors: (a) the risk,

expense, complexity, and likely duration of further litigation;

(b) the amount offered in settlement; (c) the solvency of the

defendants; (d) the extent of discovery completed, and the stage

of the proceedings; (e) the views and experience of counsel; and

(f) any opposition by class members. See Molski v. Gleich, 318

F.3d 937, 953 (9th Cir. 2003); see also In re Montgomery County

Real Estate Antitrust Litig., 83 F.R.D 305, 316 (D.C. Md. 1979). 

This list of factors is not exclusive and the court may balance

and weigh different factors depending on the circumstances of

each case. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376

(9th Cir. 1993). This necessarily requires the court to make a

careful analysis of all the facts and applicable law. Montgomery

County Real Estate, 83 F.R.D at 316.

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7 Defendants provided financial information, subject to a

stipulated protective order, which was used in determining an

adequate and reasonable award for Plaintiffs. (See Doc. 86,

Protective Order for Financial Info..) 

13

1. Expense, Complexity, and Likely Duration of

Further Litigation.

The trial of this action has the potential of being complex,

expensive, and protracted because it involves a large Class with

many causes of action and a high amount in controversy. Trial of

this action will also require significant evidentiary foundation,

requiring large expenditures by counsel for both Parties. The

additional expense of further litigation may also diminish the

likelihood of full or adequate recovery to members of the Class,

whose interests are of paramount concern to the Court. In

contrast, while the Settlement Agreement sets forth a high award,

Defendants’ financial position has been taken into consideration

by both Parties in negotiation, and they believe that the current

Settlement Agreement can be met.7

2. Amount Offered in Settlement.

The Settlement Agreement sets the monetary award to Class

members at $1,700,000.00. (Doc. 161 at 5:4-5.) Class counsel

asserts that this figure provides Class damages equal to 100

percent of the Class members’ unpaid wages plus penalties of four

times the unpaid wages. (Id. at 5:5-6.) Class Counsel present

the Declaration of Whitman T. Soule, Doc. 181, an analyst

“specializing in the discovery and analysis of computer readable

data in class-action litigation.” (Id. at ¶1.) Mr. Soule,

utilizing computerized earnings records produced in discovery by

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defendants, computed a damages figure for each class member in

the amount of one-half hour pay at the prevailing rate of pay for

each day worked during the 2000-2003 harvest periods. (Id. at

¶¶3-8; id. at Attachment A.) Attachment B to Mr. Soule’s

declaration summarizes the damages calculation for each class

member. With interest, the total actual damages figure as

calculated by Mr. Soule is $321,440.96. The total settlement

fund of $1,700,000 is more than five times the actual damages

figure. This is a significant victory for the Class. 

3. Solvency of the Defendants.

Class counsel asserts that it was able to maximize the award

for the Class, while at the same time safeguarding Class members

from any negative effect an excessive recovery might have had on

the viability of Defendants’ business, or on their continued

employment by Defendants. (Id. at 5:6-11.) After careful

analysis of Defendants’ financial records, the Parties agreed to

an amount of money and a payment plan that will allow Defendants

to maintain solvency and sustain their current level of business

operations. (See Doc. 162 at 12-13.)

4. The Extent of Discovery Completed, and the Stage

of Proceedings.

This case has been aggressively litigated, generating an

extensive record and resulting in several pre-trial motions and

orders. From December 2004 through March 2005, the Parties

engaged in intensive merits discovery, including Plaintiffs’

procurement of nearly 60 declarations and eleven depositions

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8 Miner, Barnhill & Galland represented farm laborers in a

class action suit brought before this court in November, 2001. 

(See Quevedo v. Dole, 1:01-cv-6443, Doc. 1.) 

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taken of Defendants’ principals, their foremen, and the Named

Plaintiffs. (Doc. 162 at 4:1-3.) Both Parties have filed

numerous motions, including motions for a protective order and

temporary restraining order by Plaintiffs, two amended complaints

submitted by Plaintiffs, and motions for summary judgment

submitted by both Parties. The Settlement proposal was not

hastily arrived at. It came after several months of negotiations

and a failed settlement attempt in February 2005. After

conducting extensive discovery, the strengths and weaknesses of

each parties’ case and their respective exposures to risk at

trial were revealed, leading to the proposed Settlement Agreement

now before the Court. (Doc. 161 at 4:22-5:2.) 

5. The Views and Experience of Counsel.

Plaintiffs’ attorneys recommend the Settlement Agreement as

a significant victory for the Class and highly favorable

resolution of Class claims. (Id. at 5:4-5.) They believe that

the Settlement Agreement is “fair and reasonable and that it is

in the best interests of the [C]lass.” (Doc. 162, 4.) The

curricula vitae submitted by Class Counsel demonstrate their

considerable experience with complex class action litigation in

the field of employee benefits.8 See Siskind Decl. Ex. 1;

Willenson Decl. at ¶26-28.

6. Opposition by Class Members.

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The response of the class to the settlement plan is

particularly helpful in cases in which the court believes that

the settlement is widely understood and intelligently considered

by the class. Here, the Class has been properly notified. No

class member has objected to the terms of the settlement, nor has

any third party. 

C. Was the Notice of Settlement Provided Fair?

Adequate notice is critical to court approval of a class

settlement under Fed. R. Civ. P. 23(e). Hanlon v. Chrysler

Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). “The best notice

practicable under the circumstances” must be provided to class

members. Fed. R. Civ. P. 23(c)(2)(B). Notice is satisfactory in

the context of settlement if it fairly apprises class members of

the terms of the settlement in sufficient detail to afford them

the opportunity to decide whether they should accept the benefits

offered, opt out and pursue their own remedies, or object to the

settlement. Churchill Village, L.L.C. v. General Elec., 361 F.3d

566, 575 (9th Cir. 2004); see also Hanlon, 150 F.3d at 1025.

The district court approved the form of notice in this case

during the preliminary approval process. See Doc. 169 at 20-22. 

The Notice presented meets the requisite standards of clarity and

conciseness as required by Fed. R. Civ. P. 23. It explains the

nature of the action, the definition of the Class, a brief

summary of the Class claims, and that a Class member may enter an

appearance through counsel if the member so desires. (See Doc.

162 at Ex. A-1.) The Notice provides Class members with the

opportunity to opt-out of the Settlement Agreement, giving

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specific instructions of when and how they may do so. (See id.

at Ex. A-1, 4.) In addition, the Notice explains the binding

effect of the Settlement Agreement on Class members, stating that

they “will be bound by it, and [] will not be able to bring a

separate lawsuit alleging the same or similar claims.” (See id.

at Ex. A-1, 2.) 

The method by which Class counsel notified Class members was

also sufficient. Notice was sent to the Class by first-class

mail, a form of notice that is generally considered adequate. 

See Varacallo v. Mass. Mutual Life Ins. Co., 226 F.R.D. 207, 225

(D.N.J. 2005). In this case, Class Counsel suggests that notice

by mail will be particularly effective. (See Doc. 170 at 2.)

Most Class members reside continuously in Earlimart, California,

as they are seasonal, but not generally migrant, farmworkers. 

Id. Of the 551 Class Members, 464 provided Class Counsel with a

P.O. Box specifically designated for the receipt of mail. (Id.) 

Of the 551 letters sent to Class Members containing the Notice of

Class Settlement (in both English and Spanish), only 38 (less

than 1%) were returned as undeliverable. (Id.) 

A short-form of the Notice was published in the local

Spanish-language newspaper, “Noticiero Semanal”, of Porterville,

California. (Doc. 167 at 2:18-20.) Finally, Class Counsel sent

a reminder postcard to the class members, highlighting the filing

deadlines in the case. This is adequate justification for using

these methods instead of other methods. 

On the merits, the settlement is fair, reasonable, and

adequate. 

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D. Is the Negotiated the Attorneys’ Fees Award

Reasonable?

Attorneys’ fees provisions included in proposed class action

settlement agreements are, like every other aspect of such

agreements, subject to the court’s scrutiny for fairness,

reasonableness, and adequacy. Staton v. Boeing Co., 327 F.3d

938, 963 (9th Cir. 2003). “Thus, to avoid abdicating its

responsibility to review the agreement for the protection of the

class, a district court must carefully assess the reasonableness

of a fee amount spelled out in a class action settlement

agreement.” Id. If fees are unreasonably high, there is a

“likelihood [] that the defendant obtained an economically

beneficial concession with regard to the merits provisions, in

the form of lower monetary payments to class members or less

injunctive relief for the class than could otherwise have [been]

obtained.” Id. at 964. However, the court’s task in reviewing

negotiated fees is different from the court’s task in fashioning

fee awards from scratch. Robbins, 127 Cal. App. 4th at 444. The

court is simply to determine whether the negotiated fee is

facially fair and reasonable. Id. This task requires the court

to review the settlement agreement as a whole, including the fee

award, to ensure that it was fairly and honestly negotiated, is

not collusive, and adequately protects the interests of the

parties. Id. Plaintiffs’ attorneys have a duty to limit fees to

an amount that represents the value of the work done. Id.

Therefore, although a negotiated fee may represent a reasoned

business decision to settle, a negotiated fee that exceeds a

reasonable fee for the attorneys’ contribution may not be

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9 When a settlement agreement creates a large fund for

distribution to a class, as is the case here, courts may use

either of these two options in determining what is fair and

reasonable. 

10 Under the percentage method, the Ninth Circuit has

established 25% as a benchmark award for attorneys’ fees in class

actions. Hanlon, 150 F.3d at 1029.

11 Also, “the product of reasonable hours times a

reasonable rate does not end the inquiry. There remain other

considerations that may lead the district court to adjust the fee

upward or downward...” through use of multipliers. Hensley, 461

U.S. at 433. Multipliers, which come from a percentage of the

value of the class recovery fund, may be added to account for

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approved. Id.

In calculating attorneys’ fees in civil class action suits,

the district court has discretion to use either the percentage

method or the lodestar/multiplier method. Hanlon, 150 F.3d at

1029.9 Under the percentage method of determining attorneys’

fees, “the court simply awards the attorneys a percentage of the

fund sufficient to provide class counsel with a reasonable fee.” 

Id.10 Class counsel here use the lodestar/multiplier method to

justify their proposed settlement. Under the lodestar/multiplier

approach, the lodestar is calculated by multiplying the

reasonable hours expended by a reasonable hourly rate. 

This calculation provides an objective basis on

which to make an initial estimate of the value of

a lawyer’s services. [Attorneys] should submit

evidence supporting the hours worked and rates

claimed. Where the documentation of hours is

inadequate, the district court may reduce the

award accordingly.

Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The district

court should exclude from this initial fee calculation hours that

were not “reasonably expended.” Id. at 434.11 

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such considerations as risk, magnitude and complexity of the

litigation, the quality of the services provided, and the

beneficial result achieved. Arenson v. Board of Trade of

Chicago, 372 F. Supp. 1349, 1351 (D.C. Ill. 1974). However, a

strong presumption exists that the lodestar figure represents a

reasonable fee, and upward adjustments of the lodestar by use of

multipliers are proper only in rare and exceptional cases. 

Jordan v. Multnomah County, 815 F.2d 1258, 1262 (9th Cir. 1987). 

Plaintiffs’ attorneys in this case do not seek additional payment

through use of multipliers. Therefore, the fees here are based

solely on the product of reasonable hours worked times a

reasonable hourly rate.

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The Settlement Agreement sets attorneys’ fees at $795,000.00

plus up to $25,000.00 in fees incurred by Class Counsel during

the administration of the settlement disbursement, for a total

potential settlement of $820,000. This amounts to approximately

33 percent of the total settlement of $2,520,000.000

($1,700,000.00 to the Class plus $820,000 in fees and costs).

Although this figure appears high in relation to the Ninth

Circuit’s standard benchmark of 25% set forth in Hanlon, 150 F.3d

at 1029, the negotiated fee represents only 85% of the lodestar

for work performed on this case. 

The district court has reviewed the extensive documentation

provided by Class Counsel in support of the lodestar calculation

and finds the hours expended to be reasonable and the rates

charged to be appropriate. For example, during the investigatory

(pre-complaint) phase of the case, a total of six staff members

from the firms of Miner, Barnhill & Galland (“MBG”) and three

from the Marcos Camacho law firm (“MC”) spent slightly more than

two hundred (200) hours on the case (averaged across the ninemember team, this is approximately one week’s full-time work). 

The work was performed primarily by attorneys in the fee range of

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$200-300 dollars per hour, while far fewer hours were expended by

attorney’s charging higher hourly rates. (See Doc. 178 at 5.)

The first post-complaint phase of the litigation was also

performed with reasonable efficiency. Slightly more than eight

hundred hours were billed by nine staff members. This included

discovery scheduling, initial disclosures, fact investigation,

drafting a first amended complaint, and a vigorously opposed

motion for class certification. Again, the bulk of the work was

performed by attorney’s at the lower end of the billing scale

and/or by non-legal staff. Id. at 5-6.

The next phase of the litigation was the most time-consuming

for Class counsel. During this stage, Class Counsel responded to

discovery demands, deposed many witnesses, and defended the

depositions of the Named plaintiffs. In addition, Class counsel

filed a second amended complaint, negotiated and issued the

court-approved class notice, and participated in a mandatory

settlement conference before the magistrate judge. During this

phase, more than twelve hundred (1200) hours were billed by

lawyers and staff members from both firms, for a total lodestar

of $313,471. (Id. at 7-8.) Although this figure is large, the

district court has reviewed the billing statements for this phase

of the litigation and finds the hours billed to be necessary and

reasonable. See Doc. 179, Siskind Decl., at Ex. 3; Doc. 180,

Lynch Decl.; Doc. 182, Willenson Decl., at Ex. 2. 

Similarly, Class Counsel billed for the remaining phases of

the litigation in a reasonable manner. During April 2005, Class

Counsel prepared summary judgment motions, continued to prepare

for trial by securing declarations from witnesses, and prepared a

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12 As mentioned above, the settlement also provides for

the payment of up to $25,000.00 in fees and costs that may be

incurred by Class Counsel in administering the settlement

disbursement. This potential future payment is figured into the

actual lodestar, as the fees/costs have yet to be occurred. 

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motion for a temporary restraining order. In accomplishing these

activities, Class Counsel billed slightly more than four hundred

hours for a total lodestar of $112,783.00. (Id. at 8-9.) From

May 2005 through the present, Class Counsel, participated in

settlement negotiations, draw up settlement documents, prepared

documents in support of preliminary approval, mailed class notice

and claims forms, fielded inquiries from class members, performed

payroll data analysis concerning the Class, and prepared papers

in support of final approval of the settlement. During this

phase, Class Counsel billed slightly more than seven hundred

hours, for a total lodestar of $205,809.30. Again, the billing

documentation in support of this figure is extensive and reveals

that the time spent on the case by Class Counsel was appropriate,

reasonable, and not duplicative. 

Class Counsel also submits documentation of the costs

incurred in pursuing this litigation, which amounts to

$79,201.70. It is appropriate for Class Counsel to be reimbursed

for such expenses. In re Media Vision Tech. Serv. Sec. Litig.,

913 F. Supp. 1362, 1368 (N.D. Cal 1996). Subtracting these costs

from the negotiated fee award of $795,000, results in

$715,882.30, a figure representing the total amount of fees to be 

actually reimbursed pursuant to the settlement. This figure

($715,882.30) is 85% of the total lodestar for the litigation

($842,751).12

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In addition, pursuant to the structured negotiation

procedure utilized by the parties, the merits settlement was

negotiated first, before the issue of fees was discussed. See

(Doc. 178 at 2-3.) This process helped to safeguard the

interests of the Class. See In re Prudential Ins. Co., 962 F.

Supp. 572, 577 (D.N.J. 1997); see also Lealao v. Beneficial Cal.,

82 Cal. App. 4th 19, 52 (2000).

Finally, Class Counsel have agreed to defer the payment of

fees and costs. The first third of the negotiated fee will be

paid in May 2006, the second third is due a year later, and the

final payment six months after that. Moreover, the entire

settlement is subject to a provision that prohibits layoffs

resulting from the settlement’s financial obligations and

provides Defendants the opportunity to demonstrate the necessity

of further deferring payments to prevent layoffs. (Doc. 176 at

9.) 

The negotiated fee is reasonable in light of the overall

lodestar and the procedural protections afforded to the Class

under the structured negotiation procedure. 

 

VIII. CONCLUSION

For the reasons set forth above, the motions for approval of

the settlement agreement and for approval of the negotiated fee

award are GRANTED. 

SO ORDERED.

Dated: September 30, 2005

/s/ OLIVER W. WANGER 

________________________________

 Oliver W. Wanger

UNITED STATES DISTRICT JUDGE

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