Sanft v. Sims Group USA Corporation

Background

Paea Sanft brought a collective and class action against Sims Group USA Corporation concerning alleged wage-and-hour violations. The operative complaint asserted claims for failure to provide meal periods or compensation, failure to provide rest periods or compensation, inaccurate itemized wage statements, violations of California’s Unfair Competition Law, and unpaid overtime under the Fair Labor Standards Act (FLSA). Sergio Bernal-Rodriguez was involved in related proceedings but was not a named plaintiff in the operative complaint because, according to the plaintiffs, his paystubs supported only a state-law overtime claim.

The parties conducted discovery, exchanged information and documents, took written discovery, and conducted a deposition of a company representative. The court had previously granted preliminary approval of the settlement and the proposed notice plan. Notice was mailed to 529 people. No class member objected, and one person opted out.

Settlement terms

The settlement covered three groups: certain California employees who worked more than 40 hours in a week and earned shift-differential pay during the same pay period; certain non-exempt California employees with meal- and rest-period claims; and certain non-exempt California employees with wage-statement claims. Sims Group agreed to pay a $157,500 settlement amount, plus its share of payroll taxes on individual payments.

The settlement amount included class-member payments, a $10,000 payment resolving the plaintiffs’ Private Attorneys General Act (PAGA) claims, service awards, attorneys’ fees and costs, and administration costs. Of the PAGA payment, $7,500 would go to the California Labor and Workforce Development Agency and $2,500 would be distributed to class members. Individual payments were calculated proportionally based on weeks worked. After the opt-out, 528 class members were to receive payments ranging from approximately $0.32 to $690.25, with an average estimated payment of $91.31. Class members released covered wage-related claims, while Sanft and Bernal-Rodriguez agreed to broader releases of known and unknown claims.

Final approval

The court found that the notice process was sufficient and that the settlement was fair, reasonable, and adequate. It considered the strength and risks of the plaintiffs’ claims, the amount offered, the discovery completed, the views and experience of counsel, the distribution method, the treatment of class members, possible signs of collusion, and the class’s reaction. The court noted that plaintiffs faced disputed liability and damages and other obstacles if litigation continued. It also found that the settlement treated class members equally because payments used the same formula and that the $157,500 fund represented approximately 37.5% of the class’s maximum estimated damages, according to class counsel.

The court confirmed class certification for settlement purposes only and granted final approval of the settlement. It also entered judgment on the approved terms, retained limited jurisdiction to enforce and administer the settlement, and directed the clerk to close the file.

Attorneys’ fees and expenses

Class Counsel requested $60,000, or 38% of the settlement fund, in attorneys’ fees. The court explained that the usual Ninth Circuit benchmark for a common-fund class settlement is 25%. It found the requested 38% fee unreasonable, in part because counsel did not adequately support a departure from the benchmark and repeatedly miscited cases in support of the request. The court conducted a lodestar cross-check, which compares reasonable hours multiplied by reasonable hourly rates, but still awarded the 25% benchmark: $39,250. The difference between the requested and awarded fees was to revert to the class. The court granted $20,809.89 in litigation expenses, including expert, mediation, filing, and service-of-process fees. It also ordered that 10% of the awarded fees and expenses, plus interest earned on that amount, be withheld until a post-distribution accounting was filed.

Service awards, administration costs, and PAGA payment

The plaintiffs requested $5,000 service awards. The court denied Bernal-Rodriguez’s request because he was a class member but not a named plaintiff or class representative. The court reduced Sanft’s award to $1,500, finding that the requested $5,000 was disproportionate to the average class-member recovery even though Sanft assisted counsel with document review and discovery responses.

The court granted $10,980 in settlement-administration costs and approved the $7,500 PAGA payment to the California Labor and Workforce Development Agency. The order therefore granted the motion for final settlement approval and granted the requests for expenses and administration costs, while awarding reduced attorneys’ fees and a reduced service award to Sanft and denying Bernal-Rodriguez’s service-award request.