In re E-3 Systems Litigation

Background

Jose Franco filed a putative wage-and-hour class action against E-3 Systems. He alleged nine causes of action, including failure to pay minimum wages and overtime, meal- and rest-period violations, inaccurate wage statements, failure to reimburse necessary expenses, and related claims under California law. Franco also filed a separate representative action seeking penalties under California’s Private Attorneys General Act. The two actions were later consolidated.

After formal discovery and mediation, the parties entered into a settlement agreement on October 7, 2020. The settlement class consisted of current and former non-exempt E-3 Systems employees who worked during the period from February 13, 2015, through October 23, 2020. E-3 Systems estimated that the class included approximately 81 people.

Settlement Terms and Notice

E-3 Systems agreed to pay a gross settlement amount of $125,000. Approximately $59,584.22 was allocated for individual class-member payments, averaging about $735.61 per employee. The gross amount also covered up to $41,666.67 in attorneys’ fees, litigation costs, estimated administration expenses of $4,999.11, a $5,000 PAGA payment, and a service enhancement of up to $5,000 for Franco.

The settlement released wage-and-hour and related claims arising from the allegations in the operative complaint during the class period, including claims involving unpaid wages, overtime, meal and rest periods, wage statements, records, expense reimbursement, and PAGA penalties. Individual payments were allocated 20 percent to wages and 80 percent to interest, penalties, and liquidated damages. Uncashed checks were to be distributed to Civicorps, a local job-training organization in Oakland.

The claims administrator mailed notice to 81 class members after verifying addresses and performing additional address searches. Two notices were re-mailed, and two remained undeliverable. The court found that the parties provided the best practicable notice. No class member requested exclusion or objected to the settlement, resulting in a reported 100 percent participation rate.

Court’s Analysis and Rulings

The court incorporated its earlier analysis supporting preliminary class certification and examined the settlement under the heightened scrutiny applicable to settlements reached before class certification. The court found that the relevant approval factors favored settlement, including the risks of continued litigation, the risks of maintaining class-action status, the discovery completed, and the views and experience of counsel. The absence of objections or opt-outs also supported approval.

The court approved the settlement and granted final approval of the class action settlement. It also granted attorneys’ fees of $41,666.67. Although that amount equaled one-third of the settlement and exceeded the 25 percent benchmark commonly used in the court’s analysis, the court found the amount reasonable based on the recovery, litigation risks, discovery, mediation, counsel’s contingent representation, and a lodestar cross-check.

The court granted reimbursement of $7,404.96 in litigation costs. It also granted Franco a $5,000 incentive award after reviewing his statement that he spent approximately 45 hours assisting with complaint preparation, discovery, communications with class members, mediation, settlement negotiations, and the approval process. The court approved the $125,000 settlement, administration fees not exceeding $4,999.11, the attorneys’ fees, and the costs, and directed implementation of the agreement and filing of a stipulated final judgment within 14 days.