Quiruz v. Specialty Commodities, Inc.

Background

Andrew Quiruz brought a hybrid class and collective action against Specialty Commodities, Inc. and Archer-Daniels-Midland Company. The complaint alleged violations of federal and state credit-reporting laws, including the Fair Credit Reporting Act, and wage-and-hour laws, including the Fair Labor Standards Act and the California Labor Code. The twelve claims concerned credit reports, meal and rest periods, wages, overtime or double-time pay, wage statements, final wages, unfair competition, and penalties under California’s Private Attorneys General Act.

The parties negotiated a settlement requiring the defendants to pay $1,500,000. The proposed allocation included $10,000 for Quiruz’s incentive award, up to $65,000 for the settlement administrator, up to $460,000 in attorneys’ fees and $15,000 in costs, $30,000 to California’s Labor and Workforce Development Agency as its share of civil penalties, and $920,000 for distribution to the affected employees and collective members before taxes.

The settlement covered three California subclasses: non-exempt employees, exempt employees, and people who were employed by or applied for work with the defendants during the specified periods. It also covered a California Fair Labor Standards Act collective consisting of eligible non-exempt employees who timely opted into the federal wage claims. Class members generally did not need to submit a claim; the administrator would send payments to eligible members who did not opt out, while people joining the federal collective had to submit an opt-in form.

Court’s analysis

The court reviewed the settlement under Federal Rule of Civil Procedure 23, the Fair Labor Standards Act, and the Private Attorneys General Act. For the Rule 23 classes, it found that the notice was adequate, the requirements for settlement-purpose certification were met, and the settlement was fair, reasonable, and adequate. The court found common issues concerning the defendants’ alleged wage-and-hour and credit-reporting violations, and concluded that a class action was a superior method for resolving those claims.

The court noted that Phoenix Settlement Administrators mailed notice packets to 25,789 class members. Of those packets, 784 were undeliverable. Phoenix received 126 federal wage-claim opt-in forms. The court also found that the response from class members supported approval: there were no exclusions or objections from the non-exempt subclass, one exclusion and no objections from the exempt subclass, and 22 exclusions and four objections from the FCRA subclass.

The court overruled the objections of Randy Dillon, Joshua Durham, Jun Kyu Jeon, and Deborah Shults. It determined that the objections either did not challenge the settlement, did not provide a basis for rejecting it, or lacked supporting facts or legal citations.

For the PAGA claim, the court found that the settlement complied with the required allocation of civil penalties: 75 percent, or $30,000, would go to the Labor and Workforce Development Agency, and 25 percent, or $10,000, would go to the affected employees. The court also found the settlement consistent with PAGA’s goals of supporting state enforcement, encouraging compliance with labor laws, and deterring violations.

Fees, costs, and incentive award

The court approved $460,000 in attorneys’ fees and $15,000 in costs. The fee represented 31 percent of the gross settlement amount. Although that percentage was at the high end of the range normally awarded in the Ninth Circuit, the court found it reasonable based on the result obtained, the risks of continued litigation, the quality of counsel’s work, the contingent nature of the representation, and comparable awards. A lodestar cross-check also supported the award: counsel’s documented lodestar was $235,562.50, and the requested fee represented a 1.95 multiplier.

The court approved Quiruz’s requested $10,000 incentive award. It found that his participation was substantial and essential, including retaining counsel, providing information and documents, being deposed, and attending a full-day mediation. The court granted the motion for final approval of the class and collective action settlement and granted the requests for attorneys’ fees, costs, and an incentive award. It also approved settlement-administration costs not exceeding $65,000, directed that the file be closed, and required a post-distribution accounting within the time stated in the order.

Disposition and significance

Judge Beth Labson Freeman granted the motion for final approval of the class and collective action settlement. She also granted the requests for attorneys’ fees, costs, and the incentive award. The order resolved the case through an approved settlement; it did not determine whether the defendants were liable for the alleged violations, and the opinion notes that the defendants denied wrongdoing.