Uschold v. NSMG Shared Services, LLC

Background

William Uschold, Jose Almendarez, Tyrone Dangerfield, and Tiana Naples brought a California wage-and-hour class action against their former employer, NSMG Shared Services, LLC. The plaintiffs alleged that NSMG’s commission payment system improperly carried sales shortfalls into later weeks and delayed commission payments. They also alleged unpaid off-the-clock work, misclassification under the outside-sales overtime exemption, unreimbursed business expenses, inadequate meal and rest periods, inaccurate wage statements, untimely wage payments, fraud, breach of contract, unfair competition, and civil penalties under California’s Private Attorneys General Act.

The proposed class covered all employees paid commissions by NSMG from January 17, 2014, through October 8, 2019. The class contained 449 members. The parties agreed that NSMG would pay a gross settlement amount of $2.2 million. After deductions, including attorneys’ fees, litigation costs, administration expenses, payments related to the civil-penalty claim, payroll taxes, and incentive awards, the remaining amount would be distributed to class members on a pro-rata basis according to their California workweeks.

Notice and Class Certification

The settlement notice described the claims, settlement terms, payment method, release of claims, and class members’ rights to participate, exclude themselves, or object. The initial notice omitted court-ordered information about reviewing and objecting to the attorneys’ fee request. Class counsel corrected the omission by mailing a separate attorneys’ fee notice and updating the settlement website. No class member opted out. The opinion identifies one objection, by Maria Lara, concerning payment of attorneys’ fees from the settlement fund.

The court determined that the class met the requirements for certification under Federal Rule of Civil Procedure 23, including numerosity, common legal or factual questions, typical claims, adequate representation, predominance, and superiority. The court also found that the notice was sufficient. It therefore granted final certification of the settlement class.

Settlement Approval

The court reviewed whether the settlement was fair, adequate, and reasonable. It considered the strength and risks of the plaintiffs’ claims, the amount offered, the parties’ discovery and mediation, the experience and views of class counsel, the reaction of class members, and the risks of continued class litigation. The court found that these considerations supported approval.

The court also examined whether the pre-certification settlement showed collusion. The agreement contained a “clear sailing” provision under which NSMG would not oppose an attorneys’ fee award up to $736,200, but amounts not awarded would remain in the class fund rather than return to NSMG. The court found no evidence of collusion, noting the parties’ discovery, mediation, and arms-length negotiations. It approved the settlement despite the fee objection.

Fees, Costs, Incentive Awards, and Administration Expenses

Plaintiffs requested $550,000 in attorneys’ fees, equal to 25 percent of the gross settlement. The court found that this percentage would produce an unreasonable 7.8 multiplier of counsel’s lodestar, meaning the requested fee would substantially exceed the value of the hours recorded at reasonable hourly rates. The court instead applied a multiplier of four to a lodestar of $70,693.75 and awarded $282,775 in attorneys’ fees.

The court awarded $12,428.44 in litigation costs, rather than the $12,431.44 requested, because the submitted cost records reflected the lower amount. It approved incentive awards of $2,000 each for Almendarez, Dangerfield, Naples, and Uschold. It also approved $7,500 for the settlement administrator.

Disposition

The court GRANTED the motion for final approval of the parties’ class action settlement. It GRANTED IN PART the motion for attorneys’ fees and costs, awarding $282,775 in attorneys’ fees, $12,428.44 in litigation costs, $2,000 to each named plaintiff, and $7,500 to the settlement administrator. The court also required class counsel to file a post-distribution accounting within 21 days after the settlement funds and attorneys’ fees were distributed.