United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

WALTER PEREZ ESCOBAR,

MARGARITO GONZALEZ, and

FRANCISCO CISNEROS-ZAVALA,

individually and on behalf of all others

similarly situated,

Plaintiffs,

 v.

WHITESIDE CONSTRUCTION

CORPORATION, NMS SUPPLY, INC.,

J.W. CONSTRUCTIONS, INC., and

DAVID R. WHITESIDE,

Defendants. /

No. C 08-1120 WHA

ORDER GRANTING FINAL

APPROVAL TO CLASS

SETTLEMENT

On February 18, 2010, the Court held a final fairness hearing pursuant to FRCP 23(e)(2)

on the settlement reached between defendants Whiteside Construction Corporation, NMS

Supply Inc., J.W. Construction, Inc., and David R. Whiteside, and plaintiffs Walter Perez

Escobar, Margarita Gonzalez and Francisco Cisneros-Zavala, on behalf of themselves and all

others similarly situated, in this putative class action alleging claims under various provisions of

state and federal labor law.

Having scrutinized the terms of the settlement agreement, proposed plan of distribution,

and adequacy of notice provided to class members, and having considered the motion for final

approval of the settlement agreement, the declarations submitted therewith, oral argument by

counsel, and all other documents of record in this matter, this order holds that the settlement

Case 3:08-cv-01120-WHA Document 86 Filed 02/19/10 Page 1 of 5
United States District Court

For the Northern District of California

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agreement is in the best interests of the class and is fair, reasonable, and adequate under the

factors set forth in Hanlon v. Chrysler, 150 F.3d 1011 (9th Cir. 1998).

Preliminary approval in this matter was only granted after numerous revisions were

made to the original settlement agreement. The scope of the release was narrowed significantly

to protect the interests of absent class members. Class members who submitted claims forms

release only claims that were asserted in the complaint. Class members who did not opt-out of

the settlement but did not submit claims forms release only the state-law claims asserted in the

complaint but not any claims under the Fair Labor Standards Act, or any other claims they may

have against defendants.

Nevertheless, the settlement value is extremely low for the merits of the case. The

damages study by plaintiffs’ expert estimated plaintiffs’ claims to be worth as much as

$9,128,831, and at a minimum to be worth $2,650,000. The settlement amount is only

$444,000 — before any reduction thereof for attorney’s fees and costs. In other words, the

proposed settlement is just five to seventeen percent of the estimated damages even before fees

and costs. The only reason that such a low settlement has been approved is that the parties have

submitted documentation supporting their contention that a larger verdict would push

defendants into bankruptcy.

The version of the agreement and notice of settlement was also revised to clearly

communicate the Court’s concern with the tiny recovery. When the notice was initially mailed

to the 398 names on the class list, a summary paragraph of the proposed settlement noting these

reservations was omitted by plaintiffs’ counsel and the claims administrator. They were

subsequently ordered to mail a revised notice including the summary paragraph to all class

members, and the objection, comment, and opt out deadline was extended. Of the 398 class

members, 164 claim forms were submitted. No objections to the settlement were submitted and

only one class member opted out. The class member who opted out wrote that he only worked

for defendants for one day and for that reason did not want to participate. He did not raise any

objections to the settlement itself.

 Accordingly, final approval of settlement shall be granted.

Case 3:08-cv-01120-WHA Document 86 Filed 02/19/10 Page 2 of 5
United States District Court

For the Northern District of California

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* * *

Plaintiff’s counsel seek attorney’s fees in the amount of $132,000, as well as

reimbursement of their costs in the amount of $11,397.38. For district courts applying the

percentage-of-the-fund method, the Ninth Circuit has “established twenty-five percent of the

recovery as a ‘benchmark’ for attorneys’ fees calculations.” Powers v. Eichen, 229 F.3d 1249,

1256 (9th Cir. 2000). “The benchmark percentage should be adjusted . . . 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.” Sex Mexican Workers v. Ariz.

Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990) (emphasis added).

Plaintiff’s counsel claim a lodestar of $222,181. Although they seek considerably less

than this, their requested attorney’s fees of $132,000 nevertheless represent thirty percent of the

recovery of $440,000. This is an unreasonably large percentage — well above the Ninth

Circuit’s benchmark — especially in light of the very low recovery in this action as noted

above. This order shall grant attorney’s fees at the Ninth Circuit benchmark of twenty-five

percent of the recovery. No special circumstances warrant an upward adjustment here.

The claims administrator seeks administration costs of $25,000. This does not include

the costs of mailing the revised notice which was necessitated by the original notice’s omission

of the summary paragraph due, as explained above, to the inadvertence of plaintiffs’ counsel

and the claims administrator. Plaintiffs’ counsel and the claims administrator will not be

reimbursed for the costs of mailing the revised notice.

* * *

Accordingly, it is hereby ordered as follows:

1. The Court hereby makes final the certification of the settlement class.

2. The Court hereby finds that the revised notice as mailed to all class members

fairly and adequately described the proposed settlement, the manner in which class members

could object to or participate in the settlement, and the manner in which class members could

opt out of the class; was the best notice practicable under the circumstances; was valid, due, and

sufficient notice to all class members; and complied fully with the Federal Rules of Civil

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United States District Court

For the Northern District of California

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Procedure, due process, and all other applicable laws. The Court further finds that a full and

fair opportunity has been afforded to class members to participate in the proceedings convened

to determine whether the proposed settlement should be given final approval. Accordingly, the

Court hereby determines that all class members who did not exclude themselves from the

Settlement by filing a timely request for exclusion are bound by this settlement order and

judgment.

3. The Court hereby finds that the settlement is fair, reasonable, and adequate as to

the class, plaintiffs and defendants; that it is the product of good faith, arms-length negotiations

between the parties; and that the settlement is consistent with public policy and fully complies

with all applicable provisions of law. Accordingly, the Court hereby finally and

unconditionally approves the settlement and authorizes defendants to pay the settlement awards

and associated tax obligations in accordance with the terms of the settlement.

4. Defendants agreed in the settlement to pay reasonable attorney’s fees to

plaintiffs’ counsel as approved by the Court, as well as to reimburse plaintiffs’ counsel for

actual and reasonable costs and expenses incurred in bringing this action as approved by the

Court. The Court has considered plaintiffs’ motion for award of attorney’s fees and

reimbursement of costs. It hereby awards plaintiffs’ counsel attorney’s fees in the amount of

$110,000 and costs and expenses in the amount of $11,397.38. Defendants are authorized to

pay half of the attorney’s fees to Harris & Ruble immediately. The other half is authorized to

be paid at the end of the distribution process.

5. Defendants further agreed in the settlement to pay from the settlement fund the

reasonable costs and expenses of the settlement administrator in connection with the

operation and implementation of the settlement. Good cause appearing, the Court hereby

authorizes defendants to pay the amount of $10,000 to the settlement administrator in

accordance with the terms of the Settlement.

6. The claims in this action are hereby dismissed with prejudice. Class members

who did not opt out of the settlement are barred from reasserting against defendants any and all

state-law claims for unpaid wages (including minimum wages, overtime compensation, and

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United States District Court

For the Northern District of California

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compensation for missed meal and/or rest breaks), unreimbursed business expenses and

inaccurate wage statements arising between February 25, 2004, and September 15, 2008. In

addition, class members who submitted a claim form are barred from reasserting against

defendants all claims pursuant to the Fair Labor Standards Act, 29 U.S.C. 206–07, for failure to

pay minimum wage and overtime compensation arising between February 25, 2004, and

September15, 2008. Without affecting the finality of this settlement order and judgment, the

Court hereby retains exclusive and continuing jurisdiction over the action, plaintiffs, all

settlement class members, and defendants for purposes of supervising, administering,

implementing, interpreting, and enforcing this settlement order and judgment, as well as the

settlement, for a period of three years.

IT IS SO ORDERED.

Dated: February 19, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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