Ellis v. Harder Mechanical Contractors, Inc.

Background

Gary Ellis originally filed the action in California state court. Harder Mechanical Contractors, Inc. removed it to federal court. The operative complaint alleged that Harder failed to pay minimum wages for pre-shift and post-shift work and failed to pay all wages due at termination. The claims arose under California’s unfair-competition law, Labor Code sections 201–203, 1194, 1194.2, 1197, and 1197.1, and Wage Order 16.

The parties mediated with Jeffrey A. Ross and reached a settlement. The court preliminarily approved the settlement, but the parties later learned that the number of qualifying shifts was higher than initially estimated. They renegotiated parts of the agreement, and the court approved the amended settlement. The settlement class consisted of current and former hourly employees who worked for Harder in California during the period from May 1, 2016, through June 2, 2022.

Phoenix Settlement Administrators mailed notice to 2,613 class members. As of February 23, 2023, 2,592 notices had been mailed successfully, a 99% success rate. No class members had disputed their shift counts, and the administrator had received no requests for exclusion or objections at that time. The court received one later objection, from James Philip Daniels.

Settlement Approval

The court concluded that the notice process was the best practicable notice under Federal Rule of Civil Procedure 23. The court overruled Daniels’s objections because several concerned matters outside the claims being settled, and because he did not provide evidence showing that his individual payment calculation was unfair or inadequate. The court also found that he received notice sufficiently before the deadline to object, opt out, or dispute his shift count.

The settlement required Harder to pay $1,633,880.48 plus its share of payroll taxes. The estimated net settlement amount, after fees and costs, was $1,215,880.48. Payments were to be distributed under the settlement formula; the estimated average payment was $465.32, the estimated highest payment was $3,777.44, and no payment was to be less than $25. Harder had no right to recover unclaimed funds, which would instead go to the State Controller’s Office, Unclaimed Property Division.

The court found that the settlement resulted from serious, non-collusive, arm’s-length negotiations and that the settlement factors supported approval. The court noted that liability was disputed and that trial could result in reduced or no damages. It found the settlement fair, reasonable, adequate, and in the best interests of the class.

Fees, Costs, and Awards

The court approved $375,000 in attorneys’ fees, equal to 23% of the common fund. It found the award reasonable based on the work performed, the contingent nature of the case, the results obtained, counsel’s experience, and the class’s response. A lodestar cross-check—a comparison with counsel’s hours multiplied by reasonable hourly rates—also supported the award. The court approved $11,807.18 in litigation costs and up to $18,000 for Phoenix Settlement Administrators’ work.

The court also approved $4,000 for Jeff Shipe and $4,000 for the estate of Gary Ellis as class-representative incentive awards. The court relied on the participants’ work on the case and the asserted reputational risks of serving as named plaintiffs.

Disposition

The court granted the motion for final approval and granted the requests for attorneys’ fees, costs, settlement-administration fees, and incentive awards. It confirmed class counsel, approved distribution of the net settlement funds, and directed that residual funds be handled under the settlement agreement. The court stated that the judgment would bar the named plaintiff and settlement class members from bringing actions asserting released claims against released parties. It dismissed the action with prejudice, entered judgment, and directed the clerk to close the file.

Judge Jeffrey J. White signed the order on March 22, 2023.