additional counsel on the following page · kashif haque (state bar no. 218672)...
TRANSCRIPT
MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT
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Raul Perez (SBN 174687) [email protected] Matthew T. Theriault (SBN 244037) [email protected] Alexandria Witte (SBN 273494) [email protected] Capstone Law APC 1840 Century Park East, Suite 450 Los Angeles, California 90067 Telephone: (310) 556-4811 Facsimile: (310) 943-0396 Attorneys for Plaintiffs Zia Hicks and Anna Young (Additional counsel on the following page)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
ZIA HICKS, et al., Plaintiff vs. TOYS ‘R’ US-DELAWARE, INC., et al., Defendants. NICOLETTE GRANA, et al., Plaintiff vs. TOYS ‘R’ US-DELAWARE, INC., et al., Defendants.
Case No.: CV13-1302-DSF (JCGx)Related Action: EDCV 13-01159 DSF (JCGx) Assigned to the Hon. Dale S. Fischer CLASS ACTION & ENFORCEMENT UNDER THE PRIVATE ATTORNEYS GENERAL ACT, CALIFORNIA LABOR CODE §§ 2698 ET SEQ. NOTICE OF MOTION AND MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; MEMORANDUM OF POINTS AND AUTHORITIES Date: August 4, 2014 Time: 1:30 pm Place: Courtroom 840
Case 2:13-cv-01302-DSF-JCG Document 72 Filed 07/25/14 Page 1 of 26 Page ID #:3266
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Scott B. Cooper (State Bar No. 174520) [email protected] The Cooper Law Firm, P.C. 2030 Main Street, Suite 1300 Irvine, California 92614 Telephone: (949) 724-9200 Facsimile: (949) 724-9255 Roger Carter (State Bar No. 140196) [email protected] The Carter Law Firm 2030 Main Street, Suite 1300 Irvine, California 92614 Telephone: (949) 260-4737 Facsimile: (949) 260-4754 Kashif Haque (State Bar No. 218672) [email protected] Samuel Wong (State Bar No. 217104) [email protected] Aegis Law Firm, PC 9811 Irvine Center Drive, Suite 100 Irvine, California 92618 Telephone: (949) 379-6250 Facsimile: (949) 379-6251
Attorneys for Plaintiff Nicolette Grana
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TO THE HONORABLE COURT, ALL PARTIES, AND THEIR ATTORNEYS
OF RECORD:
PLEASE TAKE NOTICE that on August 4, 2014 at 1:30 p.m., or as soon
thereafter as counsel may be heard, in Courtroom 840 of the above-captioned court,
located at 255 East Temple Street Los Angeles, California 90012, the Honorable Dale S.
Fischer presiding, Plaintiffs Zia Hicks, Anna Young, and Nicolette Grana will, and
hereby do, move this Court for entry of an order and judgment granting final approval of
the class action settlement and all agreed-upon terms therein. This Motion, unopposed
by Defendant Toys ‘R’ Us-Delaware, Inc., seeks final approval of (1) the Joint
Stipulation of Class Action Settlement and Release Between Plaintiffs, on Behalf of
Themselves and all Others Similarly Situated, and Defendant; (2) settlement payments
to participating Class Members; (3) a payment to the California Labor and Workforce
Development Agency; and (4) and costs/expenses to the claims administrator, CPT
Group, Inc.
This Motion is based upon: (1) this Notice of Motion and Motion; (2) the
Memorandum of Points and Authorities in Support of Motion for Final Approval of
Class Action Settlement; (3) the Declaration of Raul Perez; (4) the Declaration of Roger
Carter; (5) the Declaration of Scott Cooper; (6) the Declaration of Kashif Haque; (7) the
Declaration of Lisa Leininger; (8) the [Proposed] Order Granting Final Approval of
Class Action Settlement; (9) the [Proposed] Judgment; (10) the records, pleadings, and
papers filed in this action; and (11) upon such other documentary and/or oral evidence as
may be presented to the Court at the hearing.
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Dated: July 25, 2014 Respectfully submitted, Capstone Law APC
By: Raul Perez Matthew T. Theriault Alexandria M. Witte Scott B. Cooper The Cooper Law Firm, P.C. Roger Carter The Carter Law Firm Kashif Haque Aegis Law Firm, PC
Attorneys for Plaintiffs Zia Hicks and Anna Young
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TABLE OF CONTENTS
I. INTRODUCTION ........................................................................................................... 1
II. FACTS AND PROCEDURE ......................................................................................... 3
A. Overview of the Litigation ..................................................................................... 3
B. Plaintiffs Thoroughly Investigated the Claims of the Class Before Filing
A Motion For Class Certification .......................................................................... 4
C. The Parties Settled After Further Arms’-Length Negotiations Following
A Second Mediation ............................................................................................... 6
D. The Proposed Settlement Fully Resolves Plaintiffs’ Claims .............................. 6
1. Composition of the Settlement Class ............................................................ 6
2. Settlement Consideration ............................................................................... 7
3. Release by the Settlement Class .................................................................... 8
E. The Notice and Claims Administration Process Were Completed
Pursuant to the Court Order ................................................................................... 8
III. ARGUMENT ................................................................................................................. 10
A. The Standard for Final Approval Has Been Met ............................................... 10
B. The Settlement Was Achieved After Evaluating the Strengths of
Plaintiffs’ Case and the Risks, Expense, Complexity, and Likely
Duration of Further Litigation .............................................................................. 12
C. The Settlement Was Reached Through Arm’s-Length Bargaining ................. 15
D. The Settlement Was Based on Facts Uncovered Through Investigation,
Formal Discovery, and Preparation for Mediation ............................................ 15
E. Counsel Is Experienced In Similar Litigation .................................................... 16
F. The Settlement Class Has Responded Positively to the Settlement ................. 17
G. The Proposed PAGA Payment Is Reasonable ................................................... 18
IV. CONCLUSION .............................................................................................................. 19
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TABLE OF AUTHORITIES
FEDERAL CASES
Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979) ......................... 15
Churchill Village, LLC v. General Electric, 361 F.3d 566 (9th Cir. 2004) ....................... 17
Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) ........................................... 11, 12
Hopson v. Hanesbrands Inc., Case No. 08-00844, 2009 U.S. Dist. LEXIS
33900 (N.D. Cal. Apr. 3, 2009) ......................................................................................... 18
In re Educ. Testing Serv., 447 F. Supp. 2d 612, 625-26 (2006) ........................................... 9
In re Netflix Privacy Litig., No. 5:11-CV-00379-EJD, 2013 U.S. Dist.
LEXIS 37286 (N.D. Cal. Mar. 18, 2013) .................................................................. 14, 15
Laguna v. Coverall N. Am., No. 12-55479, 2014 U.S. App. LEXIS 10259
(9th Cir. June 3, 2014) ................................................................................................. 13, 14
Molski v. Gleich, 318 F.3d 937 (9th Cir. 2003) ................................................................... 12
Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615 (9th Cir. 1982) ................. 11, 12
Rodriguez v. West Pub. Corp., 463 F.3d 948 (9th Cir. 2009) ............................................. 13
Rodriguez v. West Publ’g Corp., 563 F.3d 948 (9th Cir. 2009) .................................. 11, 12
Sylvester v. Cigna Corp., 369 F. Supp. 2d 34 (D. Me. 2005) ............................................... 9
Trans World Airlines, Inc. v. Hughes, 312 F. Supp. 478 (S.D.N.Y. 1970),
modified, 449 F.2d 51 (2d Cir. 1971), rev’d, 409 U.S. 363 (1973) ................................ 15
West Virginia v. Chas. Pfizer & Co., 314 F. Supp. 710 (S.D.N.Y. 1970),
aff'd, 440 F.2d 1079 (2d Cir. 1971) ............................................................................ 14, 15
STATE CASES
7-Eleven Owners for Fair Franchising v. Southland Corp., 85 Cal. App.
4th 1135 (2000) ................................................................................................................... 17
Munoz v. BCI Coca-Cola Bottling Co., 186 Cal. App. 4th 399 (2010) ............................... 9
Nordstrom Com. Cases, 186 Cal. App. 4th 576 (2010) ...................................................... 18
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STATE STATUTES
Cal. Bus. & Prof. Code §§ 17200 et seq. (Unfair Comp. Law (UCL)) ............................... 4
SECONDARY AUTHORITIES
Manual for Complex Litigation (4th ed. 2004) ............................................................. 10, 11
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
On March 24, 2014, this Court granted preliminary approval of the Joint
Stipulation of Class Action Settlement and Release Between Plaintiffs, on Behalf of
Themselves and all Others Similarly Situated, and Defendant1 and approved distribution
of the Notice of Class Action Settlement and Claim Form2 to all Class Members. Class
Members were given 60 days to submit Claim Forms, Requests for Exclusion, or
objections to the Settlement. Now that the Response Deadline has passed, Plaintiffs are
pleased to report that Participating Class Members have claimed over 58% of the Net
Settlement Amount, only 26 Class Members opted out (out of a class of 39,224
members) and not a single Class Member objected to the Settlement. (Declaration of
Lisa Leininger [“Leininger Decl.”] ¶¶ 9, 14-16.) The average Class Member payment is
approximately $124 and the highest is approximately $437. (Id. at ¶ 16.)
Plaintiffs Zia Hicks, Anna Young, and Nicolette Grana now seek final approval
of this Settlement with Defendant Toys ‘R’ Us-Delaware, Inc. Defendant does not
oppose this Motion for Final Approval of Class Action Settlement.
The basic terms of the Settlement provide for the following:
(1) A Settlement Class defined as: All persons who worked in non-exempt
positions at Toys ‘R’ Us’ California retail stores at any time from January
23, 2009 to March 31, 2014, including but not limited to Cashiers, Sales
Associates, and Key Holders.
(2) A Maximum Settlement Amount of Four Million Dollars $4,000,000 to be
paid by Defendant in full satisfaction of the claims arising from this Action.
The Maximum Settlement Amount includes:
(a) The Net Settlement Amount (the Maximum Settlement Amount
1 Hereinafter, “Settlement” or “Settlement Agreement.” Unless indicated
otherwise, all capitalized terms used herein have the same meaning as those defined by the Settlement Agreement.
2 Collectively with the Notice of Class Action Settlement, the “Class Notice.”
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minus Attorneys’ Fees and Costs, Claims Administration Costs, the
payment to the California Labor and Workforce Development
Agency (“LWDA”), and the requested Class Representative
Enhancement Payments to Plaintiffs Hicks, Young, and Grana),
which will be allocated to participating Class Members on a claims-
made basis in proportion to the number of weeks they worked during
the Class Period.
(b) Attorneys’ fees of $1,333,333 and litigation costs and expenses of
$47,606;
(c) Claims administration costs of $140,000, to be paid to the mutually
agreed upon class action claims administrator CPT Group, Inc.;
(d) Class Representative Enhancement Payments of $10,000, each, to
Plaintiffs Zia Hicks, Anna Young, and Nicolette Grana in recognition
of their efforts in prosecuting the action on behalf of Class Members,
obtaining the benefits of the Class Settlement on behalf of the Class,
and executing a general release; and
(e) A $3,750 payment to the California Labor and Workforce
Development Agency (“LWDA”) pursuant to the Labor Code
Private Attorneys General Act (“PAGA”).
(3) Defendant has acknowledged in writing that it has changed and/or clarified
its policies governing California employees as a result of this action and
settlement. Among those changes confirmed in writing, Defendant has
revised its Meal and Breaks Standard Operating Procedure and California
Meal and eTime Reporting Standard Operating Procedure so as to comply
with California law regarding authorizing and permitting rest breaks. Also
as a result of this action, Defendant recently provided education and training
to managers and supervisors regarding the requirements for authorizing and
permitting meal periods and rest breaks in accordance with the revised
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Standard Operating Procedures and California law. Further, Defendant
made changes to wage statements to identify payment of meal period and
rest break premiums as a result of this action. With respect to the
company’s security inspection policy, Defendant recently clarified in its
written Standard Operating Procedure that any such security inspections will
be conducted on the clock.
An objective evaluation of the Settlement confirms that the relief negotiated on
the Class’ behalf is fair, adequate, and reasonable. The Parties negotiated the Settlement
at arm’s length under the guidance of Mr. David Rotman, a well-regarded mediator
specializing in resolving wage and hour class actions, and the settlement provides Class
Members with valuable relief for their claims. The relief offered by the Settlement is
particularly impressive when viewed against the difficulties encountered by plaintiffs
pursuing wage and hour cases (see infra). Indeed, the proposed relief is arguably
superior to the relief that the Class might have obtained after a successful trial because,
by settling now rather than proceeding to trial, Class Members will not have to wait
(possibly years) for relief. Of course, settling now also mitigates the substantial risk of
class certification being denied or of Defendant prevailing at trial.
Accordingly, given the Settlement’s favorable terms and the manner in which
these terms were negotiated and received by Class Members, Plaintiffs respectfully
request that the Court grant this Motion for Final Approval of the Settlement Agreement
and retain jurisdiction to enforce the Settlement.
II. FACTS AND PROCEDURE
A. Overview of the Litigation
This litigation arises from two related cases that were consolidated: (1) Zia Hicks
and Anna Young v. Toys ‘R’ Us-Delaware, Inc., C.D. Cal. Case No. CV 13-1302-DSF
(JCGx); and (2) Nicolette Grana v. Babies ‘R’ Us-Delaware, Inc., C.D. Cal. Case No. CV
13-01159 DSF (JCGx).
Plaintiff Hicks was employed as a non-exempt Sales Team Member and cashier
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from approximately November 2007 to August 2010 at Defendant’s store located in
Cerritos, California. (Dkt. No. 40, First Amended Consolidated Complaint [“FAC’] at ¶
26.) Plaintiff Young was employed as a non-exempt Sales Team Member in a variety of
positions from November 1998 to June 2006, and again from November 2006 until
December 2012, at Defendant’s Clovis, California location. (FAC at ¶ 27.) Plaintiff
Grana has been employed as a non-exempt, hourly paid employee since April 2011 at
Defendant’s Babies ‘R’ Us location in Foothill Ranch, California. (FAC at ¶ 28.) Ms.
Grana is part of the Sales Team for Babies ‘R’ Us, but she also performs human resources
functions for the Foothill store.
On August 23, 2013, Plaintiffs filed a consolidated FAC to: (1) add Plaintiff Anna
Young as a Plaintiff, (2) consolidate the Action with the matter of Grana et al. v. Toys ‘R’
Us-Delaware, Inc., Case No.: 5:13-cv-01159-DSF-JCG, and thus adding Ms. Grana as a
Plaintiff in the Action, and (3) re-allege the causes of action from the original complaint
while adding a claim for penalties under the California Labor Code Private Attorney
General Act of 2004 (California Labor Code sections 2698, et seq., “PAGA”).
The operative First Amended Consolidated Complaint alleges meal/rest break, off-
the-clock, overtime and minimum wage violations, as well as derivative claims for the late
payment of wages, wage statement violations, and unlawful business practices under
California Business & Professions Code sections 17200 et seq. (See generally, FAC.)
B. Plaintiffs Thoroughly Investigated the Claims of the Class Before
Filing A Motion For Class Certification
During the pendency of this action, Class Counsel thoroughly investigated the
wage and hour claims, including reviewing Defendant’s policies, payroll records,
correspondences, and other documents related to the claims at issue in this Action.
(Declaration of Raul Perez [“Perez Decl.”] ¶ 6.) Class Counsel also interviewed over 100
class members, gathering information as to Defendant’s alleged unlawful policies as
practiced, as well as the type and frequency of Labor Code violations suffered by putative
Class Members. (Id.) Finally, Class Counsel participated in eight depositions, including
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taking the deposition of the person most knowledgeable regarding Defendant’s unlawful
policies at issue in this action, as well as the depositions of high ranking executives in the
company’s human resources department. (Id.)
On September 10, 2013, Plaintiffs Hicks and Young filed a motion for class
certification. (Perez Decl. ¶ 7.) Marshalling the evidence gathered in discovery, including
admissions by Defendant’s designated deponent, sworn declarations by class members,
and the policies themselves, Plaintiffs Hicks and Young sought to certify a class under
four theories of liability. Specifically, Plaintiffs alleged that Defendant implemented, in its
California locations: (1) a facially unlawful written rest break policy applied uniformly to
putative Class Members; (2) a uniform policy requiring putative Class Members to submit
to security checks off-the-clock; (3) a point-of-sale system that prevents putative Class
Members from clocking back in and recording time actually worked if they take shortened
or interrupted breaks; and (4) a practice of using allegedly unlawful meal break waiver to
insulate itself from liability. (Id.; see also Dkt. No. 43.) Plaintiffs Hicks and Young also
submitted an expert declaration from Dr. Robert Fountain and declarations from class
members. (Id.) Named Plaintiff Grana submitted a declaration in support of the
certification motion and, as a current employee in Human Resources, was able to provide
information about policy changes enacted by Defendant in response to the litigation. (Id.)
Defendant filed its opposition to the motion for class certification on January 21,
2014, arguing that (1) it complied with the wage order governing rest breaks in practice;
(2) any time worked “off-the-clock” due to Defendant’s security check policy is de
minimis and that the policy is not uniformly applied across the class; (3) Plaintiffs’ meal
break theory is not amenable to class treatment; and (4) its use of meal break waivers is
consistent with California law. (Perez Decl. ¶ 8; Dkt. No. 52.) In support of its
Opposition, Defendant submitted a number of declarations from its employees as well as a
declaration from a rebuttal expert. (Id. at ¶ 8.)
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C. The Parties Settled After Further Arms’-Length Negotiations
Following A Second Mediation
On November 7, 2013 and January 22, 2014, Plaintiffs and Defendant participated
in mediation before David Rotman, a respected mediator of wage and hour class actions.
(Perez Decl. ¶ 9.) After two full days of negotiations, Mr. Rotman proposed the principal
terms of a class action settlement. (Id.) Arm’s-length negotiations continued thereafter, at
which time the parties stipulated to the material terms of the Settlement Agreement now
before this Court. (Id.) Mr. Rotman’s supervision of the mediation and negotiations
thereafter—particularly in his skillful management of parties’ expectations and his
presentation of a neutral, cogent analysis of the issues and risks to both sides—was
instrumental in bringing the parties to agreement.
The settlement discussions during and after mediation involved detailed analysis of
Defendant’s potential liability of total exposure in relation to the costs and risks associated
with continued litigation. (Perez Decl. ¶ 10.) Defendant’s General Counsel participated
in the second mediation and was candid about the financial condition of the company
(some of the information was confidential). (Id.) Subsequent examination of publicly
available documents confirmed that Defendant’s significant debt obligations, declining
revenues, and fierce competition from on-line retailers put the company at a high risk of
default. (Id.) The discussions also focused on Defendant’s overall financial health and
potential solvency issues that would affect the likelihood of class members ever
recovering any compensation even if they prevailed in this litigation. (Id.) After fully
considering these issues, and accounting for the risks for both sides regarding a ruling on
the pending motion for class certification, the parties agreed to settle the dispute on the
terms memorialized in the Settlement Agreement. (Id.)
D. The Proposed Settlement Fully Resolves Plaintiffs’ Claims
1. Composition of the Settlement Class
The proposed Settlement Class consists of: All persons who worked in non-
exempt positions at Toys ‘R’ Us’ California retail stores at any time from January 23,
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2009 to March 31, 2014, including but not limited to Cashiers, Sales Associates, and
Key Holders. (Settlement Agreement ¶ 19.) The Settlement Class consists of 39,224
members.
2. Settlement Consideration
Plaintiffs and Defendant have agreed to settle the underlying class claims in
exchange for the Maximum Settlement Amount of $4,000,000. The Maximum
Settlement Amount includes: (1) settlement payments to participating Class Members;
(2) attorneys’ fees in the amount of $1,333,333 and litigation costs and expenses in the
amount of $47,606; (3) Administration Costs of $140,000; (4) a $3,750 payment to the
LWDA; and (5) Class Representative Enhancement Payments of $10,000 each to
Plaintiffs Zia Hicks, Anna Young, and Nicolette Grana for services on behalf of the
Settlement Class and for the general release of all claims each may have against
Defendant arising out of their employment. (Settlement Agreement ¶¶ 13, 16, 22, 27,
and 28.)
Subject to the Court approving the Attorneys’ Fees and Costs, Claims
Administration Costs, the payment to the California Labor and Workforce Development
Agency (“LWDA”), and the requested Class Representative Enhancement Payments,
the Net Settlement Amount will be available for distribution to Class Members. Each
Class Member’s share of the Net Settlement Amount will be proportional to the total
number of weeks he or she worked during the Class Period multiplied by the Net
Settlement Amount. (Settlement Agreement ¶ 41.) Workweek calculations are based
on Defendant’s records (although Class Members were given an opportunity to
challenge those records). (Id. at ¶¶ 41, 56, 63.)
By this settlement, Plaintiffs secured not only valuable monetary recovery, but
also contributed to a change in Defendant’s policies governing California employees.
Defendant has modified and clarified its Meal and Breaks Standard Operating Procedure
to authorize and permit rest breaks in compliance with California law. Defendant has
also clarified in its written policy that any security checks for employees will be
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conducted on the clock. Defendant further acknowledges that it provided recent training
and education to managers regarding meal and rest break compliance, and modified its
wage statements to identify meal period and rest break premiums.
3. Release by the Settlement Class
In exchange for the Settlement Amount, Plaintiffs and Class Members will agree
to release the Released Claims as set forth in the Agreement. (Settlement Agreement ¶
36.) The Released Claims are those that accrued during the period from January 23,
2009 to March 31, 2014. (Id. at ¶ 37.)
E. The Notice and Claims Administration Process Were Completed
Pursuant to the Court Order
As authorized by the Court’s Order preliminarily approving the Settlement
Agreement, the Parties engaged CPT Group, Inc. to provide settlement administration
services. (Leininger Decl. ¶ 2.) CPT’s duties have included: (1) printing and mailing
Class Notices, (2) receiving and logging undeliverable Class Notices, (3) processing
Claim Forms and Requests for Exclusion, (4) calculating settlement payments (this will
include distribution of funds and tax-reporting following final approval), and
(5) answering questions from Class Members. (Id.)
On March 25, 2014, CPT received the Class Notice prepared jointly by Class
Counsel and counsel for Defendant and approved by the Court. (Leininger Decl. ¶ 3.)
The Class Notice summarized the Settlement’s principal terms, provided Class Members
with an estimate of how much they would be paid if the Settlement received final
approval, and advised Class Members how to submit claims for payment, opt out, or
object to the Settlement. (Id., Ex. A.)
Counsel for Defendant subsequently provided CPT with a mailing list (the “Class
List”) including each Class Member’s full name, last known address, Social Security
Number, and information necessary to calculate payments. (Leininger Decl. ¶ 5.) The
mailing addresses contained in the Class List were processed and updated using the
National Change of Address Database maintained by the U.S. Postal Service. (Id. at
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¶ 6.) Class Notices were mailed on April 17, 2014 to the majority of the Settlement
Class, and again on May 13, 2014 to the balance of the Class.3 (Leininger Decl. ¶¶ 7, 9.)
A total of 11,481 Participating Class Members have claimed over 58%4 of the
Net Settlement Amount. The average settlement payment is approximately $124 and
the highest is approximately $437. (Id. at ¶ 16.) Significantly, only 26 Class Members
opted out and not a single Class Member objected to the Settlement. (Id. at ¶¶ 14-15.)
This level of participation compares favorably to other wage and hour class action
settlements approved by California state and federal courts.5
3 Following the April 17, 2014 mailing, Defendant realized that it had
inadvertently left approximately 3% of the Settlement Class off the Class List. Defendant promptly determined the names and contact information of the remaining 3% of the Settlement Class, and Class Notices were mailed to these individuals on May 13, 2014. All Class Members were given 60 days to submit Claim Forms, Requests for Exclusion, or objections to the Settlement.
4 The percentage of the Class Fund claimed by participating Class Members compares favorably to other class action settlements approved by California state and federal courts. See Hodges v. Thermasource, Inc., Case No. BC425928 (L.A. Super. Ct. July 26, 2011) (32% of net settlement fund claimed), Bejar v. Our Lady Queen of the Angels, Case No. BC390260 (L.A. Super. Ct. Apr. 30, 2010) (18% of net settlement fund claimed), Fukuchi v. Pizza Hut, Inc., Case No. BC302589 (L.A. Super. Ct. Sept. 29, 2006) (15% of net settlement fund claimed), Tae v. Wokcano Downtown L.A., Inc., Case No. BC428735 (L.A. Super. Ct. Jan. 20, 2012) (50.77% of the net settlement fund claimed), Morales v. GE Osmonics, Case No. 10-CV-01045 JM (WVG) (C.D. Cal Jan. 9, 2012) (45.57% claimed of the net settlement fund), Douglas v. Barney’s Associates, L.P., Case No. BC402900 (L.A. Super. Ct. Nov. 19, 2010) (44.50% of the net settlement fund claimed).
5 See Sylvester v. Cigna Corp., 369 F. Supp. 2d 34, 52 (D. Me. 2005) (“claims made” settlements regularly yield response rates of 10 percent or less); Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles, 186 Cal. App. 4th 399, 406 (2010) (average claims rate in wage and hour cases is 25%-30%); In re Educ. Testing Serv., 447 F. Supp. 2d 612, 625-26 (2006) (49.5% rate of claims being filed for subset of class is “unusually high” and strongly supports settlement); Hodges v. Thermasource, Inc., Case No. BC425928 (L.A. Super. Ct. July 26, 2011) (26% participation rate), Charles v. Aaron’s, Inc., Case No. BC431468 (L.A. Super. Ct. May 24, 2011) (30% participation rate), Grant v. Preferred Response Security Services, Case No. BC413046 (L.A. Super. Ct. Oct. 7, 2010) (30% participation rate), Bejar v. Our Lady Queen of the Angels, Case No. BC390260 (L.A. Super. Ct. Apr. 30, 2010) (11% participation rate), Contreras v. United Food Group, LLC, Case No. BC389253 (L.A. Super. Ct. Sept. 10, 2009) (21% participation rate), Fukuchi v. Pizza Hut, Inc., Case No. BC302589 (L.A. Super. Ct. Sept. 29, 2006) (8% participation rate), Guerra v. L’Occitane, Inc., Case No. BC373587 (L.A. Super. Ct., July 2, 2007) (21.4% participation rate), Alberto v. GMRI, Inc. (Olive Garden), Case No. 07-cv-01895 (E.D. Cal. Sept. 12, 2007) (27.8% participation rate), Keplinger v. Cal. Pizza Kitchen, Case No. 07CECG01534 (Fresno Super. Ct. May 15, 2007) (12.2% participation rate), Muniz v. Pilot Travel Ctrs., LLC, Case No. 07-cv-00325 (E.D. Cal. Feb. 16, 2007) (14% participation rate), Wu v. SR Invs., Case No BC356245 (L.A. Super. Ct. Aug. 1, 2006) (30% participation rate), Martinez v. Solar
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Class Counsel attribute the Class’ positive response to the Settlement to a number
of factors, including the significant monetary relief secured by the Settlement, the clarity
of the Class Notice and relative ease in submitting claims for payment, and CPT’s
careful and efficient administration of the Settlement.
III. ARGUMENT
A. The Standard for Final Approval Has Been Met
A class action may only be settled, dismissed, or compromised with the Court’s
approval. Fed. R. Civ. Proc. 23(e). The process for court approval of a class action
settlement is comprised of three principal stages:
Preliminary Approval: The proposed settlement agreement is preliminarily
reviewed by the Court for fairness, adequacy, and reasonableness. If the Court believes
the settlement falls within the range of reasonableness, such that proceeding to a formal
fairness hearing is warranted, it orders notice of the settlement disseminated to the class.
See Manual for Complex Litigation § 21.632 (4th ed. 2004).
Class Notice: Notice of the settlement is disseminated to the class, giving class
members an opportunity to object to the settlement’s terms or preserve their right to
Link Technologies, Inc., Case No. CIVRS813178 (San Bernardino Super. Ct. Sep. 29, 2011) (17.43% participation rate), Nelson v. YMCA of Metropolitan Los Angeles, Case No. BC435814 (L.A. Super. Ct. Jul. 12, 2011) (25.33% participation rate), Fernandez v. Dejon Enterprises, Inc., Case No. 30-2009-00316746 (Orange County Super. Ct. Jan. 28, 2011) (22.11% participation rate), Hernandez v. Quality Parking Service, Inc., Case No. BC363766 (L.A. Super. Ct. Apr. 8, 2011) (21.61% participation rate); See Garner v. State Farm Mut. Auto. Ins., No. CV 08 1365 CW (EMC), 2010 U.S. Dist. LEXIS 49477 (N.D. Cal. Apr. 22, 2010) (finding that an opt-out rate of 0.4 percent supported “the fairness of the Settlement”); Mangone v. First USA Bank, 206 F.R.D. 222, 227 (S.D. Ill. 2001) (finding that an opt-out rate of 0.1 percent and an objection rate of approximately 0.01 percent represented “overwhelming support” for the settlement by class members and “strong circumstantial evidence supporting the fairness of the Settlement”); Rodriguez v. West Publ’g Corp., 563 F.3d 948, 967 (9th Cir. 2009) (“The court had discretion to find a favorable reaction to the settlement among class members given that, of 376,301 putative class members to whom notice of the settlement had been sent, 52,000 submitted claims forms and only fifty-four submitted objections”); Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 577 (9th Cir. 2004) (affirming approval of a class action settlement where 90,000 class members received notice, and 45 objections were received); and In re Austrian and German Bank Holocaust Litig., 80 F.Supp.2d 164, 175 (S.D.N.Y. 2000) (finding a small number of objectors “indicative of the adequacy of the settlement”).
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bring an individual action by opting out. See id., § 21.633.
Final Approval: A formal fairness or final-approval hearing is held by the Court,
at which class members can be heard regarding the settlement, and at which evidence
and argument concerning the fairness, adequacy, and reasonableness of the settlement is
presented. 6 Following the hearing, the Court decides whether to approve the settlement
and enter a final order and judgment. See id., § 21.634.
The first two steps have been the completed. The Court has preliminarily
reviewed the proposed settlement for fairness and found it to be within the range of
reasonableness meriting court approval. (See March 24, 2014, Order Granting
Preliminary Approval of Class Settlement, Dkt. No. 68.) In addition, the Claims
Administrator has notified Class Members of the proposed settlement and upcoming
fairness hearing as directed by the Court. (See generally Leininger Decl.) Plaintiffs now
ask the Court to grant final approval of the proposed settlement.
The decision about whether to approve the proposed settlement is committed to
the sound discretion of the trial judge, and will not be overturned except upon a strong
showing of a clear abuse of discretion. Hanlon, 150 F.3d at 1026-1027. The Ninth
Circuit has set forth a list of non-exclusive factors that a district court should consider in
deciding whether to grant final approval, namely: (1) the strength of plaintiffs’ case, and
the risk, expense, complexity, and likely duration of further litigation; (2) the risk of
maintaining class action status throughout the trial; (3) the amount offered in settlement;
(4) the extent of discovery completed, and the stage of the proceedings; (5) the
6 A proposed class action settlement may be approved if the Court, after allowing
absent class members had an opportunity to be heard, finds that the settlement is “fair, reasonable, and adequate.” In making this determination, “the court’s intrusion upon what is otherwise a private consensual agreement negotiated between the parties to a lawsuit must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009) (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)); see also Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 625 (9th Cir. 1982) (“voluntary conciliation and settlement are the preferred means of dispute resolution. This is especially true in complex class action litigation . . . .”).
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experience and views of counsel; and (6) the reaction of the class members to the
proposed settlement. Id. at 963 (citing Molski v. Gleich, 318 F.3d 937, 953 (9th Cir.
2003)).
These factors, which are discussed below, confirm that the proposed settlement is
more than fair, reasonable, and adequate for Class Members. The settlement provides
considerable value; Class Members need not bear the risk and delay associated with trial
proceedings to obtain these benefits; and the settlement has been met with substantial
support and no opposition from Class Members.
B. The Settlement Was Achieved After Evaluating the Strengths of
Plaintiffs’ Case and the Risks, Expense, Complexity, and Likely
Duration of Further Litigation
In assessing the probability and likelihood of success, “the district court’s
determination is nothing more than an amalgam of delicate balancing, gross
approximations, and rough justice.” Officers for Justice, 688 F.2d at 625 (internal
quotation marks omitted). There is “no single formula” to be applied, but the court may
presume that the parties’ counsel and the mediator arrived at a reasonable range of
settlement by considering plaintiff’s likelihood of recovery. Rodriguez, 463 F.3d at 965.
Class Counsel evaluated the strengths of the claims and assessed the range of
potential outcomes of the litigation at trial, in light of the risks, expense, complexity and
ongoing duration of the litigation. First, while there is a strong trend in California courts
to certify wage and hour claims based on facially unlawful policies (see, e.g., Leyva v.
Medline Indus., Inc., 716 F.3d 510, 515 (9th Cir. 2013) (reversing and certifying
subclasses alleging violations of California Labor Code); see also, Williams v. Superior
Court, 221 Cal. App. 4th 1353 (2013) (reversing de-certification of off-the-clock class
due to existence of company-wide policy); Benton v. Telecom Network Specialists, Inc.,
220 Cal. App. 4th 701, 728 (2013) (reversing denial of meal break, rest break, and off-
the-clock claims and holding that claims are amenable to class treatment), other courts
have bucked this trend. Some courts have denied certification even when an employer’s
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policies are unlawful on their face. For instance, in Ordonez v. Radio Shack, Inc., 2013
U.S. Dist. LEXIS 7868 (C.D. Cal. Jan. 17, 2013), the court denied certification even
though the plaintiff submitted evidence of a facially unlawful policy. The Ordonez court
credited anecdotal evidence of compliance notwithstanding the unlawful policy, which is
the same defense raised by Defendant here.
Like the Ordonez court, this Court may very well credit Defendant’s anecdotal
evidence of compliance. This Court may also deny certification on the ground that
Defendant’s written policies allegedly were not implemented uniformly, or accept
Defendant’s position that, by posting the applicable California Wage Order in each store,
its written policies implicitly adopts the wage order. Indeed, regarding the risk of
adverse law, the Ninth Circuit recently explained that “California employment law
would likely make obtaining class certification particularly difficult.” Laguna v.
Coverall N. Am., No. 12-55479, 2014 U.S. App. LEXIS 10259, *11 (9th Cir. June 3,
2014) (affirming an order approving class action settlement of employment claims due,
in part, to the risks of adverse law). The risk that Plaintiffs would not be able to certify
this action—thus leaving the class with no recovery at all—remains quite high.
Second, Plaintiffs would assume an even greater risk by continuing to litigate.
The risk of changes in the law adversely affecting the interests of the class, increased
costs, and expiration of a substantial amount of time, among other factors, all weigh
heavily in favor of settlement. Rodriguez v. West, 463 F.3d at 966. At the time of the
second day of mediation, Plaintiffs faced the risks of not prevailing on their pending
motion for class certification, which would effectively sound the “death knell” for their
litigation since the wage claims at issue would be too low for individual employees to
pursue on their own. See Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v. Las
Vegas Sands, Inc., 244 F.3d 1152, 1163 (9th Cir. 2001) (explaining that “[i]f plaintiffs
cannot proceed as a class, some—perhaps most—will be unable to proceed as
individuals because of the disparity between their litigation costs and what they hope to
recover.”).
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Plaintiffs also face an additional danger––that even if Plaintiffs prevailed on all
claims at trial, they may never recover their damages. As reported by financial media
outlets, Defendant has suffered through years of falling sales, including a disappointing
Holiday sales season.7 The low rating for Defendant’s bonds indicate that investors
believe Defendant has a reasonable chance of defaulting on its debt. Likewise,
Defendant, in recent filings with the Securities Exchange Commission and in
negotiations with Plaintiffs, has provided evidence of financial stress, including
staggering debt obligations arising from a prior leveraged buyout. Continuing to litigate
would expose Plaintiffs and class members to a higher chance of Defendant defaulting
on payment obligations, and increase the risk of nonpayment, as Plaintiffs would likely
fall further behind other creditors in the event of a bankruptcy filing. In short, the “poor
financial health of [the defendant will] seriously increase[] the chance that Plaintiffs
would be left with nothing if they continued to litigate their claims.” Laguna, 2014 U.S.
App. LEXIS 10259, at *11 (finding potential insolvency to be additional risk that favors
approval of a class action settlement). Accordingly, Defendant’s documented financial
distress supports an earlier settlement.
Moreover, given the size of the class, in the event of a “win” that resulted in a de
minimis payout, the administrative costs would be substantial. See In re Netflix Privacy
Litig., 2013 U.S. Dist. LEXIS 37286, at *15 (holding that a large class size and the
possibility of a low payout weigh in favor of settlement approval).
In summary, although Plaintiffs believe their claims have merit and were
optimistic about the prospects of certifying the class and of prevailing at trial, Plaintiffs
nevertheless recognize that the outcome of any litigation is rarely certain. And even if
Plaintiffs had prevailed, the odds of a favorable verdict being reversed on appeal are not
remote enough to ignore. West Virginia v. Chas. Pfizer & Co., 314 F. Supp. 710, 743-44
(S.D.N.Y. 1970) (“[i]t is known from past experience that no matter how confident one
7 See, e.g., Krista Giovacco, Toys ‘R’ Us Investors Show Doubt of Repayment,
BLOOMBERG NEWS, Jan. 8, 2014. http://www.bloomberg.com/news/2014-01-08/toys-r-us-investors-show-doubt-of-repayment-corporate-finance.html.
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may be of the outcome of litigation, such confidence is often misplaced”), aff'd, 440 F.2d
1079 (2d Cir. 1971); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir.
1979) (reversing $87 million judgment after trial); Trans World Airlines, Inc. v. Hughes,
312 F. Supp. 478 (S.D.N.Y. 1970), modified, 449 F.2d 51 (2d Cir. 1971), rev’d, 409 U.S.
363 (1973) (overturning $145 million judgment after years of appeals).
Conversely, if Plaintiffs were to continue their prosecution of the action, they
enhance the risk that Defendant would eventually default on their debt obligations,
leaving nothing for the class. Thus, after balancing the risks of continued litigation
against the prospect of immediate and certain recovery from the settlement, Plaintiffs
conclude that the Settlement is fair, reasonable, and adequate, and provides Class
Members valuable relief for the released claims, including monetary relief and a change
in Defendant’s written policy.
C. The Settlement Was Reached Through Arm’s-Length Bargaining
The fairness and reasonableness of a settlement agreement is presumed “where
that agreement was the product of non-collusive, arms’ length negotiations conducted by
capable and experienced counsel.” In re Netflix Privacy Litig., 2013 U.S. Dist. LEXIS
37286 at *11. Here, the Settlement was reached after two days of mediation before
David A. Rotman, a seasoned mediator with broad experience in resolving wage and
hour class actions such as this one. Following the second day of mediation on January
22, 2014, the parties, guided by Mr. Rotman, and facing considerable risks (as described
below) agreed to the principal terms of this Settlement, thus resolving this putative class
action.
D. The Settlement Was Based on Facts Uncovered Through
Investigation, Formal Discovery, and Preparation for Mediation
During the action’s pendency, Class Counsel thoroughly investigated and
researched the claims in controversy, the potential defenses, and the developing body of
law. The investigation entailed the exchange of information pursuant to formal and
informal discovery methods, including document requests and special interrogatories. In
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response to this discovery, Class Counsel received, inter alia, the following information
and evidence with which to properly investigate and evaluate the claims: (1) Class
Member contact information; (2) handbooks, procedure manuals, and operations
manuals regarding, e.g., (i) timekeeping and payroll policies, (ii) meal and rest periods,
(iii) wage statements; and (3) employee time and wage records. (Perez Decl. ¶ 6.)
Using this information, Class Counsel were able to determine (or estimate): (i) the
average hourly rate of pay for Class Members; (ii) the total approximate number of
former and current employees who worked during the Class Period; (iii) the total
approximate number of Class Members employed during the PAGA period; and (iv) the
total approximate number of weeks worked by all Class Members during the Class
Period. (Id.)
Class Counsel made thoughtful use of documents and data provided by
Defendant to assess its potential exposure as to the claims at issue. (See Perez Decl. ¶¶
6-8.) Class Counsel marshalled this discovery in briefing on class certification.
Based on the data and on their own independent investigation and evaluation,
Plaintiffs believe that this Settlement for the consideration and on the terms set forth in
the Settlement Agreement is fair, reasonable and adequate, and is in the best interest of
the Settlement Class in light of all known facts and circumstances, including the risk of
significant delay and uncertainty associated with litigation, the Defendant’s financial
condition, various defenses asserted by Defendant, and potential appellate issues. (Perez
Decl. ¶ 11.)
E. Counsel Is Experienced In Similar Litigation
The Parties were represented by experienced counsel throughout the negotiations
resulting in this Settlement. Four firms seek to be appointed Class Counsel. Capstone
Law APC, which served as Lead Class Counsel in this action, regularly litigates
California Labor Code claims through certification and on the merits, and has
considerable experience settling wage and hour class actions. (Perez Decl. ¶¶ 12-15.)
The Cooper Law Firm, the Carter Law Firm, and the Aegis Law Firm are also
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experienced in prosecuting and settling wage and hour class actions. (Declaration of
Scott Cooper ¶¶ 3-12; Declaration of Roger Carter ¶¶ 3-4; 7-13; Declaration of Kashif
Haque ¶ 3-11.) All four firms have the requisite experience to defend the interests of the
Class.
Defendant is represented by Jackson Lewis PC. Jackson Lewis is a well-
regarded national firm specializing in employment defense practice.
F. The Settlement Class Has Responded Positively to the Settlement
The Class Members’ response demonstrates their support for this settlement.
Participating Class Members have claimed over 58% of the Net Settlement Amount,
while only 26 Class Members opted out, and not a single Class Member objected to the
Settlement. (Leininger Decl. ¶¶ 14-16.) A low number of opt outs and objections is a
strong indicator that a settlement is fair and reasonable. 7-Eleven Owners for Fair
Franchising v. Southland Corp., 85 Cal. App. 4th 1135, 1152-53 (2000) (class response
favorable where “[a] mere 80 of the 5,454 national class members elected to opt out
[(1.5% of the entire Class)] and . . . [a] total of nine members . . . objected to the
settlement); Churchill Village, LLC v. General Electric, 361 F.3d 566 (9th Cir. 2004)
(affirming settlement approval where 45 of approximately 90,000 notified class
members objected and 500 opted out). The Class Members’ response rate here—both in
the low rate of opt-outs and the complete absence of objectors—compares favorably to
those cases and warrants final approval.
Moreover, the average settlement payment is approximately $124 and the highest
is $437. (Leininger Decl. ¶ 16.) This recovery compares favorably to other wage and
hour class action settlements for similar claims on behalf of non-exempt, retail/food
service workers with no specialized training. See, e.g., Badami v. Grassroots
Campaigns, Inc., Case No. C 07-03465 JSW (N.D. Cal. Sept. 15, 2008) (average net
recovery of approximately $195); Sandoval v. Nissho of Cal., Inc., Case No. 37-2009-
00091861 (San Diego County Super. Ct. Dec. 3, 2010) (average net recovery of
approximately $145); Fukuchi v. Pizza Hut, Case No. BC302589 (L.A. County Super.
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Ct. Sept. 29, 2006) (average net recovery of approximately $120); Contreras v. United
Food Group, LLC., Case No. BC389253 (L.A. County Super. Ct. Sept. 10, 2009)
(average net recovery of approximately $120); Ressler v. Federated Department Stores,
Inc., Case No. BC335018 (L.A. County Super. Ct. Jan. 27, 2009) (average net recovery
of approximately $90); Doty v. Costco Wholesale Corp., Case No. CV05-3241 FMC-
JWJx (C.D. Cal. May 14, 2007) (average net recovery of approximately $65); Sorenson
v. PetSmart, Inc., Case No. 2:06-CV-02674-JAM-DAD (E.D. Cal. Dec. 17, 2008)
(average net recovery of approximately $60); Lim v. Victoria’s Secret Stores, Inc., Case
No. 04CC00213 (Orange County Super. Ct. Jan. 20, 2006) (average net recovery of
approximately $35); and Gomez v. Amadeus Salon, Inc., Case No. BC392297 (L.A.
County Super. Ct. July 23, 2010) (average net recovery of approximately $20). This is
another indicia of fairness, supporting final approval.
G. The Proposed PAGA Payment Is Reasonable
Pursuant to the Settlement Agreement, $5,000 from the Gross Settlement Amount
shall be allocated to the resolution of the PAGA claim, of which 75% ($3,750) will be
paid directly to the LWDA, and the balance will be added to the Net Settlement
Amount. (Settlement Agreement ¶ 27.) This result was reached after good-faith
negotiation between the parties. Where PAGA penalties are negotiated in good faith and
“there is no indication that [the] amount was the result of self-interest at the expense of
other Class Members,” such amounts are generally considered reasonable. Hopson v.
Hanesbrands Inc., Case No. 08-00844, 2009 U.S. Dist. LEXIS 33900, at *24 (N.D. Cal.
Apr. 3, 2009); see, e.g., Nordstrom Com. Cases, 186 Cal. App. 4th 576, 579 (2010)
(“[T]rial court did not abuse its discretion in approving a settlement which does not
allocate any damages to the PAGA claims.”).
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IV. CONCLUSION
The Parties have negotiated a fair and reasonable settlement of a case that
provides relief that likely would never have been realized but for this class action.
Accordingly, final approval of the Settlement should be granted.
Dated: July 25, 2014 Respectfully submitted, Capstone Law APC
By: Raul Perez Matthew T. Theriault Alexandria M. Witte Scott B. Cooper The Cooper Law Firm, P.C. Roger Carter The Carter Law Firm Kashif Haque Aegis Law Firm, PC
Attorneys for Plaintiffs Zia Hicks and Anna Young
Case 2:13-cv-01302-DSF-JCG Document 72 Filed 07/25/14 Page 26 of 26 Page ID #:3291