Hubbard v. RCM Technologies, Inc.

Background

Rhonda Hubbard filed a putative class action against RCM Technologies (USA), Inc. She alleged that RCM, described in the opinion as a healthcare staffing company, underpaid employees assigned to travel work in California by excluding weekly per diem and stipend payments from the regular rate used to calculate overtime. The complaint asserted claims for unpaid overtime under California Labor Code section 510, unfair business practices under California Business and Professions Code section 17200 and following, and waiting-time penalties under California Labor Code section 203. RCM denied liability.

The court certified a class on October 20, 2020, consisting of non-exempt hourly RCM employees employed in California who, during the relevant period, worked at least one week in which they were paid overtime and received a weekly per diem or stipend. After class certification, the parties reached a settlement with the assistance of a mediator. The court had previously granted preliminary approval and provisionally appointed Hayes Pawlenko LLP as class counsel, Hubbard as class representative, and ILYM Group Inc. as settlement administrator.

Settlement Terms and Notice

RCM agreed to pay $1,500,000 into a common settlement fund without admitting liability. The fund included attorney’s fees and costs, settlement-administration expenses, and Hubbard’s service award, but did not include the employer’s share of payroll taxes.

After approved deductions, approximately $1,092,343.14 was to be distributed pro rata among participating class members based on the number of qualifying overtime hours. The opinion states that 307 class members were eligible, producing an average estimated recovery of approximately $3,558.12 per class member. No funds were to revert to RCM. Uncashed checks were to be deposited in the Northern District Court’s Unclaimed Funds Registry in the name of the person to whom each check was addressed. Class members also released claims described in the settlement agreement.

The administrator mailed notice packets using last-known addresses supplied by the defendants. Eleven packets were returned as undeliverable, and follow-up efforts produced a 96% reach rate. None of the 307 class members objected to the settlement or requested exclusion from it.

Court’s Analysis

Under Federal Rule of Civil Procedure 23, the court may approve a class settlement after a hearing if it finds the settlement fair, reasonable, and adequate and determines that class-certification requirements are met. The court considered the relevant settlement factors, including the strength of the claims, the risks and costs of continued litigation, the amount offered, the stage of the case, counsel’s experience, and the class members’ reaction.

The court found that liability was contested and that the legal question whether per diem and stipend payments had to be included in the overtime regular rate was unsettled and conflicting when the parties reached their agreement. Although the Ninth Circuit later held in a cited case that certain per diem payments had to be included in the regular rate, it also required a case-specific inquiry. The court therefore found that risks remained regarding whether Hubbard’s theory would succeed against RCM’s policies. The court also noted the costs of trial and the possibility of appeals.

The court found that the parties had engaged in extensive litigation and information exchange, including class-certification motion practice and interviews of more than 15 witnesses. It found no indication of collusion or self-dealing and concluded that the agreement resulted from informed, arm’s-length negotiations. The court also found that the settlement treated class members equitably and that the absence of objections or opt-outs supported approval.

Fees, Costs, and Service Award

The court approved $375,000 in attorney’s fees for class counsel. It explained that the amount represented 25% of the settlement fund, the benchmark commonly used in the Ninth Circuit, and was less than the lodestar figure of $388,125 described in the opinion. The court found the requested fee fair, reasonable, and adequate.

The court also approved $7,661.91 in litigation costs, finding the documented expenses reasonable. It approved a $10,000 incentive award for Hubbard after considering her work on behalf of the class, including compiling documents, corresponding regularly with counsel, and undertaking the risks of litigation.

Disposition

The court granted the motion for final approval of the class settlement. It granted the motion for attorney’s fees, costs, and service awards, awarding class counsel $375,000 in fees and $7,661.91 in costs and awarding Hubbard $10,000. The court granted certification of the settlement class, entered final judgment according to the settlement and prior orders, retained jurisdiction over matters concerning the settlement, and required a post-distribution accounting. The order terminated Docket Nos. 44 and 45.