Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-00923/USCOURTS-casd-3_05-cv-00923-0/pdf.json

Nature of Suit Code: 720
Nature of Suit: Labor Management Relations Act
Cause of Action: 29:185 Labor/Mgt. Relations (Contracts)

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DEMETRIOS MAVROGIORGOS,

individually, and on behalf of the

general public similarly situated,

Plaintiff,

CASE NO. 05CV923-H (CAB)

ORDER:

(1) CERTIFYING CLASS

FOR PURPOSES OF

SETTLEMENT;

(2) APPROVING CLASS

SETTLEMENT INCLUDING

ATTORNEY FEES AND

CLASS REPRESENTATIVE

ENHANCEMENT AWARD;

AND

(3) TERMINATING CASE

vs.

RITE AID CORPORATION, a

Delaware corporation; RITE AID

HDQTRS. CORP., a Delaware

corporation, and DOES 1 through 10,

inclusive,

Defendant.

On April 29, 2005, this matter was removed from state court. (Doc. No. 1.)

Plaintiff Demetrios Mavrogiorgos (“Plaintiff”) brought this action against Defendants

Rite Aid Corp. and Rite Aid Headquarters Corp. (collectively “Defendants”) alleging

claims for violation of the Fair Labor Standards Act (“FLSA”) and state law. (Doc. No.

1.) On March 13, 2006, pursuant to a stipulation of the parties, the Court dismissed

Plaintiff’s first, second and fourth causes of action with prejudice, leaving only

Plaintiff’s third cause of action based on Defendants’ violation of California Labor

Code section 226(a)(9). (Doc. No. 28.) On May 22, 2006, the parties submitted a joint

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motion for certification of the class for settlement and preliminary approval of the

settlement. (Doc. No. 53.) On June 20, 2006, the Court issued an order provisionally

certifying the class and preliminarily approving the settlement. (Doc. No. 58.) On

September 1, 2006, the parties filed a joint motion for final approval of the class

settlement and Plaintiffs separately filed a motion for approval of the attorneys’ fees

and the class representative enhancement award. (Doc. No.’s 59-60.) The Court held

a final approval hearing on September 18, 2006. Mark Primo appeared telephonically

for Plaintiffs and Jeffrey Wohl appeared for Defendants. For the following reasons, the

Court APPROVES the class settlement and APPROVES Plaintiffs’ request for attorney

and class representative enhancement fees.

Background

Plaintiff, an assistant in the photo department of Defendant Rite Aid Corp., and

an hourly employee, filed a complaint against Defendants in San Diego Superior Court

Case No. GIC84209 (Mavrogiorgos v. Rite Aid Corp., et al.) alleging six state law

causes of action. (Compl., ¶¶ 25-66.) Plaintiff brought the action on behalf of himself

and all former and current hourly employees who had worked for Defendants from

February 2004 to April 2006. (First Amended Compl. (“FAC”), ¶¶ 3-4.) Defendants

removed the action pursuant to § 301 of the Labor Management Relations Act

(“LMRA”). (Doc. No. 1.) The LMRA provides for original jurisdiction in federal

district court for claims brought for violation of a contract between an employer and a

labor organization representing employees in an industry affecting commerce. 

After removal, Plaintiff amended the complaint to state four causes of action for:

(1) violation of 29 U.S.C. § 201; (2) violation of California Labor Code §§ 201 and 202;

(3) violation of California Labor Code § 226(a); and violation of California Business

and Professions Code § 17200, et seq. (FAC, ¶¶ 32-56.) Subsequently, the parties

stipulated to the dismissal of Plaintiff’s first, second, and fourth causes of action,

leaving only the claim for violation of California Labor Code § 226(a). (Doc. No. 28.)

That claim alleges that Defendants failed to provide their employees with “accurate,

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itemized pay stubs as required by California Labor Code § 226(a)(9).” (FAC, ¶¶ 49-

52.) Specifically, Plaintiff alleges that Defendants failed to list the employees’ hourly

rate of pay. (Id.) 

Defendants assert that the wage statements conformed with the terms of their

employees’ collective bargaining agreements. Defendants further contend that

Plaintiff’s claims are preempted by § 301 of the LMRA, do not violate California Labor

Code § 226(a)(9), and that any alleged violations were not “knowing and intentional,”

which precludes liability under California Labor Code § 226(e), and in any event, did

not damage Plaintiff or the proposed class.

The parties entered into a settlement agreement on April 9, 2006, which the Court

preliminarily approved on June 20, 2006 after a hearing with appearances by both

parties. (Doc. No. 58.) The settlement terms, set forth in the written settlement

agreement, provide: (1) that Defendants will issue wage statements, beginning with the

pay period of April 19, 2006 to April 29, 2006, in conformity with California Labor

Code § 226(a)(9); (2) will pay Plaintiff, as class representative, $10,000; (3) will issue

six settlement coupons to each participating class member redeemable at California Rite

Aid stores and good for 15% off of the purchase price of any item sold in the store; (4)

will pay class counsel $350,000 for their fees and expenses; and (5) Defendants will pay

the reasonable costs of settlement administration. (Primo Preliminary Approval Decl.,

Ex. A.) 

The parties move for final approval of the settlement, including approval of

attorneys’ fees and the class representative enhancement fee.

Discussion

A. The Settlement Agreement

Whether to approve or reject a proposed settlement is committed to the district

court’s sound discretion. In Re Mego Financial Corp. Securities Litigation v. 

Nadler, 213 F.3d 454. 458 (9th Cir. 2000). Fed. R. Civ. P. 23(e) mandates that the

district court determine whether the proposed settlement is “fundamentally fair,

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adequate, and reasonable.” Staton v. Boeing Co., 327 F.3d 938, 959 (9th Cir. 2003). 

The court must assess the settlement proposal, balancing 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 . . . and the reaction of class

members to the settlement.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th

Cir. 1998) (citing Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir.

1993)). This is not an exhaustive list, but factors the court may consider. Officers

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

1982). A higher standard of fairness applies where the court approves the settlement

prior to formal class certification. Hanlon, 150 F.3d at 1026. However, the court

should limit the extent of its intrusion into the privately negotiated settlement to

determining whether the agreement was reached by fraud or other impropriety and

whether the settlement, in its totality, is fundamentally fair. Id. (citing Officers for

Justice, 688 F.2d at 625). The fact that the settlement could have been better does

not, on its own, require that the court reject the settlement. Id. With these standards

in mind, the Court turns to the proposed settlement.

1. The Strength of Plaintiffs’ Case and the Risk, Expense and Complexity of Trial

The only claim presented by Plaintiffs which remains in the case for

settlement is the claim for violation of California Labor Code § 226(a)(9). The

parties dispute whether Defendants violated that provision by not including all

applicable hourly rates in effect during the pay periods at issue. Plaintiffs admit that

the wage statements accurately reflected the employees’ regular rate of pay and for

each category of hours worked, the total number of hours worked and the total

amount of wages paid. From that information the employees could have ascertained

the hourly rate of pay. Defendants assert that the wage statements issued did not

violate California Labor Code § 226(a)(9). Defendants contend that § 301 of the

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1

 The Court notes that the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4., which imposes additional requirements for determining the fairness of a class action settlement, including special provisions for redeemable coupon settlements, took effect after the initiation of this lawsuit, and Congress did not provide

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Labor Management Relations Act (“LMRA”), 29 U.S.C. §§ 141-187, preempts a

cause of action under California Labor Code § 226(a)(9), and even if preemption

does not apply, the wage statements did not violate the statute and/or Plaintiffs

suffered no injuries as a result of the alleged violation. Alternatively, Defendants

assert that any alleged injury was not a result of knowing and intentional conduct,

which Defendants contend, is required for a violation of California Labor Code §

226(a)(9). 

In light of the evidence in the record, the parties arguments and the law, it

appears that Plaintiffs would have borne a significant risk of an unfavorable result

had the matter proceeded to trial. Plaintiffs had only one surviving claim for which

Defendants asserted numerous defenses. Furthermore, litigating a class action case

against a large company with significant resources would be expensive and time

consuming. Employment actions, especially those regarding wage and hours

disputes, can be extensive. Accordingly, the Court concludes that the strength of

Plaintiff’s case, and the risk, complexity and expense of trial favor settlement in

these circumstances. See Hanlon, 150 F.3d at 1026. 

2. The Amount Offered in Settlement

According to the terms of the proposed settlement, Defendants began issuing

wage statements in conformity with California Labor Code § 226(a)(9). Defendants

will also issue six settlement coupons to each participant in the settlement class,

redeemable at California Rite Aid stores and good for 15% off of the purchase price

of any item sold in the store. The total aggregate value of the coupon settlement is

estimated at approximately $1,750,000. In light of the uncertainties of trial and the

nature of the claims, the Court concludes that the settlement amount is fair and 

reasonable.1

 See Hanlon, 150 F.3d at 1026.

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for retroactive effect. See Exxon Mobil Corp. v. Allapattah Services, Inc., 125 S.Ct.

2611, 2628 (2005); see also Bush v. Cheaptickets, Inc., 425 F.3d 683, 687 (9th Cir. 2005). 

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3. The Extent of Discovery Completed and Stage of the Proceedings

While the parties had not completed formal discovery by the time they reached

a tentative settlement, the parties had spent significant time preparing for the case,

and both parties had filed motions for summary judgment. The completion of formal

discovery is not a prerequisite to a fair settlement, so long as the parties had

“sufficient information to make an informed decision about settlement.” Mego

Financial, 213 F.3d at 459. The record demonstrates that both parties had sufficient

information to enter into informed agreement. See Hanlon, 150 F.3d at 1026.

4. The Experience and Views of Counsel

The parties assert that Counsel for both sides are competent and experienced

in class action litigation. The endorsement of experienced and competent counsel is

entitled to deference. See e.g. Officers for Justice, 688 F.2d at 625. Plaintiff’s

counsel, Mark Primo, Shawn Westrick, and Mark Yablonobich of Initiative Legal

Group, LLP, have extensive class action litigation experience. (Primo Preliminary

Approval Decl., ¶ 13.) Defense counsel, the law firm of Paul, Hastings, Janofsky &

Walker LLP, is a large national firm which has handled various class action cases

across the country. All counsel involved assert that the settlement is fair, reasonable,

adequate and in the best interests of the class as a whole. (Id., ¶ 14.) Thus, the

experience and views of counsel favors settlement. See Hanlon, 150 F.3d at 1026.

5. The Reaction of Class Members

After the Court granted preliminary approval of the settlement, the appointed

Settlement Administrator, CPT Group, Inc. (“CPT”), distributed the proposed notice

by first class mail, together with opt out forms and a copy of the settlement

agreement, on July 13, 2006 to the 32,082 class members. (Hoffman Decl., ¶ 4.) 

Between July 13, 2006 and August 31, 2006, 2,369 notice packets were returned to

CPT by the United States Postal Service. (Id., ¶ 6.) CPT obtained additional

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information regarding the mailing addresses, and re-mailed 1,454 notice packets

during the period from July 13, 2006 to August 3, 2006, 704 of which were returned

undeliverable. (Id., ¶ 6.) Only 1,619 notice packets, of a total of 32,082 were

returned, representing only five-percent of the total class. (Id., ¶ 7.) 

CPT also provided a toll-free telephone service to assist class members who

had questions regarding the settlement. (Id., ¶ 8.) CPT received only 139 calls from

July 13, 2006 through August 31, 2006. 

CPT received zero objections by the designated August 3, 2006 deadline for

opposing the settlement. (Id., ¶ 11.) Only 199 individuals chose to opt out by

submitting valid elections not to participate. (Id., ¶¶ 9, 10.) This represents only

.62% of the class. Therefore, the Court concludes that the reaction of the class

members to the settlement favors final approval. See Hanlon, 150 F.3d at 1026.

B. Attorneys’ Fees

The settlement agreement reached by the parties provides that Defendants will

pay, in addition to the value of the coupon settlement, $350,000 for lead counsels’

fees. “Federal courts have the ability to award attorneys’ fees ‘in the exercise of

their equitable powers.’” Wininger v. SI Management L.P., 301 F.3d 1115, 1120

(9th Cir. 2002). The common fund doctrine permits the burden of litigating to be

shared among the individuals that are benefitted by the efforts of the litigant. Paul,

Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 271 (9th Cir. 1989). 

“‘Jurisdiction over the fund involved in the litigation allows a court to ... assess[ ]

attorney’s fees against the entire fund, thus spreading fees proportionately among

those benefitted by the suit.’” Wininger, 301. F.3d at 1120 (quoting Boeing Co. v.

Van Gemert, 444 U.S. 472, 478 (1980)). In this case, counsel have conferred value

upon the individual class members in the form of six coupons worth 15% off

merchandise in California Rite Aid stores. Counsel expended significant time and

effort in obtaining this settlement. Furthermore, $350,000 represents only 20% of

the total estimated $1,750,000 value of the coupon settlement. Accordingly, the

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Court concludes that the requested attorneys’ fees are fair and reasonable.

C. Class Representative Enhancement

The settlement requires Defendant to pay Plaintiff a class representative

enhancement award of $10,000. Court’s assess incentive awards based on the

following criteria: (1) the risk assumed by the class representative; (2) the

difficulties incurred to the plaintiff personally; (3) time and energy spent; (4) the

length of the litigation; and (5) the benefit to the plaintiff as class representative. 

See Van Vranken v. Atlantic Richfield Co., 901 F.Supp. 294, 299 (N.D.Cal. 1995). 

In light of the standards and the time Plaintiff spent preparing the case with his

counsel and the risks and costs assumed, the Court concludes that the class

representative enhancement award of $10,000 is fair and reasonable.

Conclusion

For the reasons set forth above, the Court:

1. CERTIFIES as class members for the purposes of settlement each

current and former hourly Rite Aid employee, including each hourly

employee of Thrifty Pay Less, Inc., who is or was employed in the State

of California at any time during the period from February 15, 2004 to

April 15, 2006.

2. APPROVES the parties’ settlement agreement which requires

Defendants to issue wage statements in conformity with California

Labor Code § 226(a), beginning in April 2006, and to provide each

class member with six coupons worth 15% off of merchandise in

Defendants’ California stores, valued at approximately $1,750,000.

3. APPROVES attorneys’ fees for Plaintiff’s counsel in the amount of

$350,000 to be paid in addition to the coupon settlement.

/ / / /

/ / / /

4. APPROVES the class representative enhancement award for Plaintiff

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in the amount of $10,000 to be paid in addition to the coupon

settlement.

Defendants shall bear the costs of settlement administration. Additionally, the Court

ORDERS the clerk to close this case.

IT IS SO ORDERED.

DATED: September 19, 2006

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

COPIES TO:

Mark Primo

Initiative Legal Group

1875 Century Park East, Suite 1800

Los Angeles, CA 90067

Jeffrey D. Wohl

Paul Hasting Janofsky and Walker LLP

55 Second Street, Suite 2400

San Francisco, CA 94105-3441

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