333 F.R.D. 157 (N.D.Cal. 2019), 18-cv-01039-JSC, Uschold v. NSMG Shared Services, LLC

• Docket Nº: 18-cv-01039-JSC
• Citation: 333 F.R.D. 157, 104 Fed.R.Serv.3d 1823
• Opinion Judge: JACQUELINE SCOTT CORLEY, United States Magistrate Judge
• Party Name: William USCHOLD, et al., Plaintiffs, v. NSMG SHARED SERVICES, LLC, Defendant.
• Attorney: Na’il Benjamin, Allyssa Briana Villanueva, Benjamin Law Group, P.C., Hayward, CA, for Plaintiffs. JoAnna L. Brooks, Michael William Nelson, Littler Mendelson, P.C., Walnut Creek, CA, for Defendant.
• Case Date: October 08, 2019
• Court: United States District Courts, 9th Circuit, Northern District of California

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333 F.R.D. 157 (N.D.Cal. 2019)

104 Fed.R.Serv.3d 1823

William USCHOLD, et al., Plaintiffs,

v.

NSMG SHARED SERVICES, LLC, Defendant.

No. 18-cv-01039-JSC

United States District Court, N.D. California

October 8, 2019

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Na’il Benjamin, Allyssa Briana Villanueva, Benjamin Law Group, P.C., Hayward, CA, for Plaintiffs.

JoAnna L. Brooks, Michael William Nelson, Littler Mendelson, P.C., Walnut Creek, CA, for Defendant.

ORDER RE: AMENDED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Re: Dkt. No. 48

JACQUELINE SCOTT CORLEY, United States Magistrate Judge

William Uschold and Tyrone Dangerfield filed this state law wage-and-hour action on behalf of themselves and others similarly situated against their employer, NSMG Shared Services, LLC ("NSMG" or "Defendant").¹ (Dkt. No. 1 at 11.)^[2] Plaintiffs allege that NSMG violated California state law in its operation of a commission payment system and failed to reimburse Plaintiffs for reasonable business expenses incurred while using personal property for work purposes. Now before the Court is Plaintiffs’ amended, unopposed motion for preliminary approval of the parties’ class action settlement agreement.³ (Dkt. No. 48.) After reviewing the proposed settlement, with the benefit of oral argument on October 2, 2019, and upon review

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of the amended proposed Class Notice filed October 3, 2019, (Dkt. No. 52), the Court GRANTS the motion for preliminary approval.

BACKGROUND

Plaintiffs filed this action in the Superior Court of California for the County of Alameda on January 17, 2018, asserting five claims for relief: (1) unlawful collection of wages earned in violation of California Labor Code § 221; (2) unauthorized deductions in violation of California Labor Code § 224; (3) failure to reimburse for all necessary and reasonable business expenses in violation of California Labor Code § 2802; (4) failure to pay wages in violation of California Labor Code § 510 et seq.; and (5) violation of California Business & Professions Code § 17200. (Dkt. No. 1, Ex. A.) Defendant answered the complaint on February 15, 2018 and removed the case to this District on February 16, 2018. (Dkt. No. 1 at 1.)

The parties participated in private mediation on October 24, 2018 and February 5, 2019 but were unable to reach a settlement agreement. (Dkt. No. 48-2 at ¶¶ 3, 11.) The parties continued to negotiate, however, and on March 8, 2019, Plaintiffs filed a Notice of Settlement. (Dkt. No. 36.) The terms of the settlement agreement are memorialized in the parties’ Joint Stipulation of Class Settlement and Release (the "Settlement Agreement"). (See Dkt. No. 48-2, Ex. A.)

I. The Parties

NSMG is a limited liability corporation organized under Delaware law; the company maintains its principal place of business in Houston Texas. (Dkt. No. 4 at ¶¶ 3-4.) "NSMG employs individuals who provide funeral and burial related services throughout the Bay Area." (Dkt. No. 24 at 2.) Plaintiffs are former Bay Area employees of NSMG who worked for the company in 2017. (Dkt. No. 1, Ex. A at ¶ 7.)

II. Complaint Allegations⁴

Defendant paid Plaintiffs using a "commission payment system," whereby the company advanced commission to Plaintiffs "[o]n a weekly basis." (Id. at ¶ 2.) Plaintiffs were required to meet the sales quota set by Defendant each week "to actually earn the commission." (Id. ) If Plaintiffs did not meet the quota, Defendant would "recoup or ‘chargeback’ the commission each week." (Id. ) As explained by Plaintiffs: The chargebacks are cumulative so that an Employee may still owe a chargeback on a week he did earn the commission. Yet, if an Employee exceeds the quota, his excess commission or points are neither paid nor accumulated to offset future weeks. Defendant[ ] set the quota based on a 40-hour work week regardless of whether an Employee actually works 40 hours in a week.

(Dkt. No. 1, Ex. A at ¶ 2.) Plaintiffs did not know the terms of the commission payment system or how it operated "until several months into employment." (Id. ) Defendant’s operation of the commission payment system "violated numerous Labor Code provisions" because Defendant failed to obtain "express authorization from [e]mployees" regarding its use and the system resulted in "unlawful deductions of earned commissions." (Id. )

Defendant also knew or required that its employees "use[ ] personal property for work including personal vehicles for travel to meet with clients and prospective clients and personal cell phones for business calls." (Id. ) Defendant did not, however, "reimburse all necessary and reasonable business expenses as required by California law." (Id. )

In addition to violating the California Labor Code, Defendant’s acts "constitute unlawful and unfair business practices in violation of California Unfair Competition Laws" ("UCL"), California Business & Professions Code § 17200. (Id. ) Plaintiffs "seek unpaid

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wages, reimbursement for necessary and reasonable business expenses, statutory penalties, injunctive relief, attorneys’ fees and costs, prejudgment interest, and other relief the [C]ourt may deem appropriate." (Id. at ¶ 3.)

III. Settlement Agreement

A. Proposed Class

The proposed class consists of "all employees paid commissions by Defendant ... at any time from January 17, 2014 through the date of Preliminary Approval of Settlement."⁵ (Dkt. No. 48-2, Ex. A at ¶ 10.) The parties "conditionally stipulate and agree that the requisites for establishing class certification ... have been met, ... for purposes of effectuating th[e] Settlement Agreement." (Id. at ¶ 34.)

B. Proposed Operative Complaint for Settlement Purposes

Defendant consents to Plaintiffs filing a First Amended Complaint ("FAC") adding Tiana Naples and Jose Almendarez as named plaintiffs. (Dkt. No. 48-2, Ex. A at ¶ 33.) The FAC also adds new factual allegations and additional claims that will be settled and released through the Settlement Agreement. (Id. at ¶¶ 19, 33.) In total the proposed FAC alleges claims for: (1) Unlawful Collection of Wages Earned, Cal. Lab. Code § 221; (2) Unauthorized Deduction, Cal. Lab. Code § 224; (3) Failure to Reimburse for Necessary and Reasonable Business Expenditures, Cal. Lab. Code § 2802; (4) Failure to Pay Wages, Cal. Lab. Code § § 510, 1174; (5) Breach of Contract; (6) Fraud - Intentional Misrepresentation; (7) Fraud - False Promise; (8) Failure to Pay Minimum Wages, Cal. Lab. Code § § 1194, 1197; (9) Failure to Provide Meal Periods, Cal. Lab. Code § § 226.7, 512, 1198; (10) Failure to Provide Rest Periods, Cal. Lab. Code § § 226.7, 1198 and applicable Wage Orders; (11) Failure to Provide Accurate Wage Statements, Cal. Lab. Code § § 226, 226.3; (12) Failure to Timely Pay Wages, Cal. Lab. Code § 204; (13) Failure to Timely Pay All Final Wages, Cal. Lab. Code § 201-203; (14) violation of the UCL, Cal. Business & Professions Code § 17200; and (15) violation of the Private Attorneys General Act ("PAGA"), Cal. Lab. Code § 2698 et seq. (Id. at ¶ 19; see also Dkt. No. 48-2, Ex. B at 54-55.)

C. Payment Terms

Defendant agrees to pay $2.2 million ("Gross Settlement Amount") to the Settlement Administrator, who will deposit that amount in a qualified settlement fund. (Dkt. No. 48-2, Ex. A at ¶¶ 37-40.) The following will be deducted from the Gross Settlement Amount: (1) payment of $33,000 to the Labor Workforce Development Agency to settle the PAGA claim asserted in the FAC; (2) the Settlement Administrator’s fees and costs, not exceeding $9,000.00; (3) Plaintiffs’ attorneys’ fees (not exceeding $736,200.00 (representing one-third of the Gross Settlement Amount)) and costs (not exceeding $20,000.00); (4) "Defendant’s estimated share of applicable payroll taxes to be paid on the individual settlement payments"; and (5) "Service Awards" of $2,000.00 to each of the four named Plaintiffs in the FAC. (Dkt. No. 48-2, Ex. A at ¶¶ 41, 53, 54, 60, 68.) The remainder following those deductions (approximately $1,417,400.00) constitutes the "Net Settlement Amount" from which individual class members will be paid ("Class Settlement Payments"). (Id. at ¶¶ 41-42.)

1. Class Settlement Payments

The individual Class Settlement Payments for class members that do not opt out will be calculated as follows: (a) Each Class Member’s "Total Individual Workweeks" will be determined on a pro-rata basis as determined by the number of workweeks each Class Member worked in the state of California from January 17, 2014 through the date of preliminary approval of the settlement.⁶

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(b) The Total Individual Workweeks for each...