Adoma v. Univ. of Phx., Inc.

• Decision Date: 20 December 2012
• Docket Number: No. CIV. S–10–0059 LKK/GGH.,CIV. S–10–0059 LKK/GGH.
• Citation: 913 F.Supp.2d 964
• Parties: Diane ADOMA, Plaintiff, v. The UNIVERSITY OF PHOENIX, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of California

913 F.Supp.2d 964

Diane ADOMA, Plaintiff,

v.The UNIVERSITY OF PHOENIX, INC., et al., Defendants.

No. CIV. S–10–0059 LKK/GGH.

United States District Court, E.D. California.

Dec. 20, 2012.

Michael Lion Tracy, Law Office of Michael Tracy, Irvine, CA, for Plaintiff.

Jason S. Mills, John Spivey Battenfeld, Kathy H. Gao, Los Angeles, CA, for Defendants.

ORDER

LAWRENCE K. KARLTON, Senior District Judge.

This class-action wage and hour case was filed by enrollment counselors against their employer, defendant The University of Phoenix, Inc., a wholly-owned subsidiary of defendant Apollo Group, Inc. Presently before the court is a joint motion for final approval of the settlement (ECF No. 139), and class counsel's motion for attorneys' fees and costs. (ECF No. 138.) This matter came on for hearing on December 17, 2012. Having considered the matter, the court will approve the settlement and award attorneys' fees to class counsel in the amount of 29% of the common fund, for the reasons set forth below.

I. BackgroundA. Summary of the Litigation to Date

The lawsuit alleges violations of state and federal labor laws by the University of Phoenix. Plaintiffs' original claims were made under both the California Labor Code and the federal Fair Labor Standards Act (“FLSA”). On August 13, 2010, this court declined to exercise jurisdiction over plaintiffs' FLSA claims under the first-to-file rule, and transferred the FLSA claims to the Eastern District of Pennsylvania, where a complaint involving the same plaintiffs and issues had already been filed ( Sabol v. The University of Phoenix, No. CV 09–03439–JCJ (E.D.Pa.)), and where a nationwide collective action was certified. (Order, August 13, 2010, ECF No. 70, 2010 WL 3220134.) After supplemental briefing from the parties on the issue of the court's jurisdiction over the state law claims, this court concluded that jurisdiction over class claims under state law was proper under 28 U.S.C. § 1332(d), and that supplemental jurisdiction over individual claims was proper under 28 U.S.C. § 1367. (Order, 270 F.R.D. 543 (E.D.Cal.2010).)

Plaintiffs allege the following violations of state law: that they worked unpaid “off-the-clock” overtime, that defendants paid the wrong hourly rate for overtime, that defendants caused employees to miss meal periods, that defendants provided inaccurate pay stubs, and that the plaintiffs are entitled to waiting-time penalties.

In its August 31, 2010 order, the court granted class certification under Fed.R.Civ.P. 23(b)(3), holding that questions of law or fact common to the class predominated over questions affecting individual members, and further, that class treatment was the superior method for handling plaintiffs' state law claims. The court certified the following classes:

1. All current or former Enrollment Counselors ¹ who worked at least one week in the State of California for either The University of Phoenix, Inc. or ApolloGroup, Inc. at any time between April 5, 2005 and August 13, 2010. (“California Overtime Class”) and (“California Meal Break Class”);

2. All current or former Enrollment Counselors who received at least one paycheck statement for work performed in the State of California for either The University of Phoenix, Inc. or Apollo Group, Inc. at any time between April 5, 2008 and August 13, 2010. (“California Paystub Class”); and

3. All current or former Enrollment Counselors who worked at least one week in the State of California for either The University of Phoenix, Inc. or Apollo Group, Inc. at any time between April 5, 2006 and August 13, 2010 whose employment ended at least once during that same time period. This class includes current employees who worked during the covered time period, ceased working, and then began employment again. (“California Waiting Time Class.”)

Defendants sought permission to appeal the class certification order; the Ninth Circuit denied the petition to appeal. (ECF No. 110.)

The parties ultimately reached a settlement, and on April 16, 2012, filed a joint motion for certification of settlement classes and for preliminary approval of a settlement. Because the parties sought certification of settlement classes with different definitions than the classes previously certified, the court ordered additional briefing from the parties on the legal consequences of the change in definitions. (Order, May 14, 2012, ECF No. 134.) The parties filed their joint response on June 4, 2012 (ECF No. 135), and after reviewing it, the court granted preliminary approval of the proposed class settlement on June 18, 2012. (ECF No. 137.)

The instant motions for final approval of the settlement and for attorneys' fees and costs were originally set for hearing on November 5, 2012. After examining the parties' filings in support of these motions, the court was unable to find evidence that the parties had complied with notice requirements under the Class Action Fairness Act of 2005, Pub.L. 109–2, 199 Stat. 4–14 (“CAFA”), and therefore continued the fairness hearing while ordering briefing on this topic. (ECF No. 140.) The parties filed their joint response on November 5, 2012. (ECF No. 141.)

B. Material Terms of the Settlement Agreement.

The material terms of the Settlement Agreement are as follows:

1. Composition of Settlement Class

The settlement class is defined as, for the period from April 5, 2005 through June 19, 2012,

(a) all current and former Enrollment Counselors in California who were previously sent a class notice in this action, but who did not opt out of the class;

(b) all Enrollment Counselors in California hired from August 13, 2010 to and including June 19, 2012 who were not previously sent a class notice, and who do not opt out of this settlement;

(c) all Enrollment Counselors in California who originally opted into the action entitled Sabol, et al. v. Apollo Group, Inc., et al., United States District Court, Eastern District of Pennsylvania, No. 2:09–cv–03439–JCJ (“ Sabol ”), and who subsequently excluded themselves from the Sabol settlement; ² and (d) one individual (Angelica Michelle Lee) who previously communicated to class counsel her intent to opt in to the severed FLSA action transferred to the U.S. District Court for the Eastern District of Pennsylvania, which will be dismissed with prejudice if the court approves the settlement herein. (See Settlement Agmt. ¶¶ 2.6, 2.25, 7.3.1, ECF No. 129–3.)

The settlement class excludes all Enrollment Counselors in California who opted into Sabol but who did not exclude themselves from the settlement therein. ( Id. ¶ 2.6.)

2. Settlement Amount

Defendants have agreed to a maximum settlement amount of $4,000,000, which includes the cost of administration of the settlement, reasonable attorneys' fees not to exceed one-third of the maximum settlement amount, attorneys' costs not to exceed $25,000, service payments to the class representatives not to exceed $5,000 per class representative, an individual settlement payment of $20,000 to class representative Diane Adoma, and a payment of $50,000 to the California Labor and Workforce Development Agency. The remainder of the $4,000,000 will comprise a settlement pool to be divided among qualified claimants based on the number of weeks they worked during the relevant period. (Settlement Agmt. ¶¶ 2.22, 6.2.1.) If the qualified claimants do not claim at least 50% of the settlement pool, then the amounts paid to each qualified claimant will increase pro rata until 50% is paid out. (Settlement Agmt. ¶ 6.2.1.)

3. Scope of Release

Upon final approval of the settlement agreement, those class members who have not validly objected to or opted out of the settlement will be barred from bringing any causes of action or claims against defendants based on facts and allegations set forth in plaintiffs' Second Amended Class Complaint. (Settlement Agmt. ¶ 2.11, § 6.8.) The named class representatives have consented to a more comprehensive release of any and all “claims, obligations, demands, actions, rights, causes of action, and liabilities,” known or unknown, against defendants. ( Id.)

C. Performance of the Settlement Agreement.

The procedures for giving notice to the class members were the responsibility of the class settlement administrator, Simpluris, Inc. (“Simpluris”). (Settlement Agmt. § 7.2.)

On June 25, 2012, The University of Phoenix provided Simpluris with names, addresses, social security numbers, and number of weeks worked for 1,725 potential class members. (Butler Dec. ¶ 6.) On August 7, 2012, class notices were mailed to these individuals via first-class mail. (Butler Dec. ¶ 8.)

As of October 9, 2012, 393 notices had been returned to Simpluris as undeliverable. (Butler Dec. ¶ 9.) Simpluris performed address traces and mailed out new class notices; ultimately, only 45 notices proved undeliverable. ( Id.)

As of October 9, 2012, Simpluris had received claims from 557 class members, representing 31.76% of the individuals and 43.68% of the total work weeks in the settlement class. (Butler Dec. ¶ 10.) Simpluris received no requests for exclusion from the settlement, nor any objections to the settlement. (Butler Dec. ¶¶ 11, 12.)

II. Standard re: Final Approval of Class Action Settlements

Whether to approve a class action settlement is “committed to the sound discretion of the trial judge.” Class Plaintiffs v. Seattle, 955 F.2d 1268, 1276 (9th Cir.1992). A strong judicial policy favors settlement of class actions. Id.

Nevertheless, the court must examine the settlement as a whole for overall fairness. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir.1998) Neither district courts nor appellate courts have the power to delete, modify, or substitute provisions in the negotiated settlement agreement. Id. “The settlement must stand or fall in its entirety.” Id.

In order to approve the class action settlement herein, the court must conduct a three-step inquiry. First, it will assess whether defendants have met notice...