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U.S. Supreme Court Reverses Class Certification, Rejecting Damages Model

In 23(b)(3) Class, Certification, Class Actions, Class vs. Merits Discovery, Damages, Damages Experts, Experts, Use of Experts to Show Class Damages on March 27, 2013 at 4:07 pm
Comcast Cables

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In a class action ruling that may impact employers’ attacks on wage & hour class certification motions, the U.S. Supreme Court issued a 5 to 4 ruling today reversing certification of a proposed antitrust class action.  See Comcast Corp., et al. v. Behrend, et al., No. 11-864, 569 U.S. ___ (Mar. 27, 2013).  Justice Scalia, writing for the Court, concluded that the class was improperly certified under Rule 23(b)(3) because plaintiff’s damages model fell short of establishing that damages can be measured classwide.  The District Court and Third Circuit approved certification of a class of more than 2 million current and former Comcast subscribers who sought damages for alleged violations of the federal antitrust laws.

At the trial court level, plaintiffs proposed four theories of antitrust impact, only one of which–the “overbuilder” theory–the trial court accepted.  To establish damages, plaintiffs relied solely on the testimony of Dr. James McClave, who designed a regression model comparing actual cable prices in one area with hypothetical prices that would have prevailed but for defendant’s allegedly anticompetitive practices.  Dr. McClave acknowledged that the model did not isolate damages resulting from any one theory of antitrust impact.  Id. at 4.

The Supreme Court held that the class was improperly certified.

By refusing to entertain arguments against respondents’ damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination, the Court of Appeals ran afoul of our precedents requiring precisely that inquiry. And it is clear that, under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis. Without presenting another methodology, respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage  calculations will inevitably overwhelm questions common to the class.

The Court reasoned that the “model failed to measure damages resulting from the particular antitrust injury on which petitioners’ liability in this action is premised.”  Id. at 8.  Justice Scalia emphasized that “it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question, . . . Such an analysis will frequently entail overlap with the merits of the plaintiff ’s underlying claim.” Id. at 6 (internal quotations omitted).

By CHARLES H. JUNG

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Class Certification Granted in Vacation, Uniform, Paycheck, Wage and Contract Class Action

In 23(b)(3) Class, Class Actions, Contract, Paystub, Uniform, Vacation, Wages on September 24, 2010 at 2:20 pm
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The Southern District of California granted class certification in a vacation, uniform, paycheck, wage and contract class action.  Lopez v. G.A.T. Airline Ground Support, Inc., No. 09cv2268-IEG(BGS), 2010 WL 3633177 (S.D. Cal. Sept. 13, 2010) (slip op.).

Background

Former employees of Defendant G.A.T. Airline Ground Support, Inc. (“GAT”) sued for systematic wage and hour violations in violation of federal and state law. Id. *1.  GAT provides services to airlines, including ground transportation, aircraft maintenance, and cargo operations management.  Id. The four named Plaintiffs are former ramp agents employed by GAT in California.  Id. Read the rest of this entry »

Northern District Approves 28.9% Fee Award in Wage and Hour Class Action Settlement

In 23(b)(3) Class, Attorney's Fees, Class Actions, Settlement on August 14, 2010 at 12:50 pm
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Judge Jeffrey S. White approved a wage and hour class action settlement of a non-reversionary $1.8 million, inclusive of $520,000 in attorneys fees, in Ozga v. U.S. Remodelers, Inc., No. C 09-05112 JSW, 2010 WL 3186971 (N.D. Cal. Aug. 9, 2010).

Plaintiff filed a class action in the Alameda Superior Court on February 17, 2009, alleging that Defendant U.S. Remodelers Inc. violated the California Labor Code and violated California Industrial Welfare Commission Wage Orders by: (1) requiring its Installer employees to work substantial amounts of time without compensation; (2) regularly failing to provide Installers with meal and rest periods; and (3) refusing to reimburse expenses that Installers incurred in the performance of their work duties, including travel expenses and equipment costs.

Defendant removed the action to this Court, and Plaintiff subsequently moved to remand.  But before the hearing on the motion to remand, the parties reached a settlement, which was facilitated, in part, by a mediation that occurred on October 1, 2009, before Michael Loeb.  The parties also engaged in some discovery, and Class Counsel interviewed a number of Settlement Class members.

The Court finds that the terms of the Settlement are fair, adequate and reasonable. As noted, the settlement was reached after the parties engaged in discovery, conducted a meditation, and continued to engage in arms-length negotiations. The parties agreed to a Settlement payment of $1,800,000.00, none of which will revert to the Defendant. The overall reaction to the settlement has been positive. The Claims Administrator has received 156 claim forms from the 270 Class Members. (Id., ¶¶ 20-21.) Neither the Claims Administrator nor the Court received any objections to the Settlement. No Class Member appeared at the final approval hearing to object. According to the Claims Administrator, assuming the Court were to grant in full Plaintiff’s motion for attorneys’ fees and costs and service awards, approximately $1,108,917.72 would be available to distribute Class Members who submitted timely claim forms, for an average award of just over $7,000. (Id. ¶¶ 16-18.)

The Court approved costs to be paid to the Claims Administrator of $10,000.00 from the Settlement Fund.

Attorneys Fees, Costs, and Service Awards

Plaintiff brought an unopposed fee application, seeking $600,000.00 in attorneys’ fees, $11,274.89 in costs, and $10,000.00 in service awards to him and to class member Boris Moskovich.

Plaintiff’s counsel sought an award of attorneys’ fees based on the percentage method, asking for 33 1/3% of the Settlement Fund.  The court agreed to depart from the 25% benchmark.  See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (noting that 25% is benchmark and “usual” range of awards is 20-30%); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998) (stating that 25% is benchmark).  But the court would not vary from the benchmark to the degree requested by counsel.

The Court concludes that counsel did achieve an excellent result for the class, that the reaction to the settlement has been overwhelmingly positive, and that Plaintiff faced significant risk in prosecuting this case given the uncertain state of California law in similar wage and hour cases. The Court also recognizes that other courts have awarded settlement fees of up to 33 1/3% in such cases. However, the parties reached this settlement quickly and did not engage in any motion practice. Seee.g.Navarro v. Servisair, 2010 WL 1729538 (N.D. Cal. Apr. 27, 2010) (finding that proposed award of 30% of settlement fund unjustifiably departed from benchmark based in part on speed with which parties reached a settlement). Moreover, the requested percentage would amount to award that is more than double the fees actually incurred by counsel. Compare Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (awarding 33 1/3% of settlement fund which was “significantly less” than asserted lodestar).

Thus the court found that an award of  $520,000.00 was reasonable.

The court found counsels’ requests for costs in the amount of $11,274.89 reasonable.

The court also approved service awards in the amount of $10,000.00 for the lead plaintiff and for a class member.

By CHARLES H. JUNG

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S.D. California Certifies 23(b)(3) Class of Newspaper Home Delivery Carriers

In 23(b)(3) Class, Class Actions, Employee/Independent Contractor on August 4, 2010 at 8:14 am
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In another case involving an employer’s attempt to contract around a putative employer/employee relationship, the Southern District of California certified a 23(b)(3) class of newspaper home delivery carriers.  Dalton v. Lee Publications, Inc., 2010 WL 2985130 (S.D. Cal. July 27, 2010) (slip op.).

Defendant Lee Publications, doing business as North County Times (“NCT”), operates the North County Times, a newspaper of general circulation in the San Diego area. Plaintiffs are current and former home-delivery newspaper carriers for NCT.

The class was defined as “[a]ll persons presently and formerly engaged as newspaper home delivery carriers by LEE PUBLICATIONS, INC. and for the North County Times newspaper in the State of California during the period from and including April 18, 2004, through and including the date of trial set for this action, and who, as a condition of such engagement, signed a written agreement for the home delivery of newspapers, which categorized them as independent contractors and not employees.”  Id. at *1, n.1.

Each class member has signed contracts with NCT that contained provisions regarding the carriers’ primary duties, rate of pay, liabilities, penalties, and expense reimbursement, among other things.  All the contracts stated that the carrier “is an independent contractor, is not an employee or agent of the Company, and is not subject to the Company’s direction or control.” And either party may terminate the contract without cause with thirty-days notice, or for cause without notice. The Court examines the contracts in more detail below.

The Court described the Plaintiff’s Tasks as follows:

Plaintiffs deliver the North County Times to the homes of subscribers. Each morning, the newspaper carriers arrive at one of several distribution centers in San Diego County. The carriers arrive at different times. Although they generally arrive between 1:00 a.m. and 4:00 a.m., some arrive earlier or later. The arrival time varies depending on the day of the week.

The carriers are contractually obligated to deliver the assembled newspapers by 6:00 a.m. each weekday and 7:00 a.m. on Saturday and Sunday.

Upon arrival, the carriers are responsible for assembling the newspapers. Some assemble the papers at the distribution center-those that use the distribution center pay a rental fee-and others assemble the papers elsewhere. Assembling the newspapers may involve folding or inserting the following: newspaper inserts, sections, pre-prints, samples, supplements and other products at NCT’s direction. The carriers pay for their own rubber bands and plastic bags used to assemble the papers. Some carriers buy the rubber bands and bags from Defendant, and others purchase them elsewhere. The carriers also pay for their own gas and automobile expenses they incur delivering the newspapers.

Id. at *1.

In analyzing whether the primary factor in determining the employee-employer relationship, the right to control, is susceptible to common proof, the court found that the class members are all home-delivery newspaper carriers who work, or used to work, for Defendant. They all did the same job. Although there are differences between them, which Defendant lists in detail, whether they are independent contractors or employees is still susceptible to common proof.  Thus, the Court found that common questions predominate on this issue.

Defendant argued that calculating damages on each of Plaintiffs’ causes of action would require individualized proof. The court rejected this argument stating that “although calculating damages is generally an individualized task, the Court finds that calculating them here would not require so much individualized analysis to defeat certification. That is mainly because Defendant has kept extensive records.”  Id. at *7.  The Court concluded that the “calculation of the [damages] for each individual [carrier], if necessary, will likely be fairly mechanical.”  Id. at *8.

Thus, the Court certified the Rule 23(b)(3) class.

By CHARLES H. JUNG

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