Derek J. Emge (SBN l6 | 1 05) Emse & Associates 52{8

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Derek J. Emge (SBN l6 | 1 05)Emse & Associates52{"8- Street, Suite 760San Dieeo. CA 92101Telepho-nei 6 I 9-595- I 400Facsimile: 6 I 9-595- 1 [email protected]

David A. Huch (SBN 222892\Law Offices of David A. Huch310 N. Indian Hill Blvd., Suite 459Claremont, CA 91711Teleohone: 888-533-2899Facsimile: 909-6 1 [email protected]

Attornevs for Plaintiff.WESLEYNIELSEN'

WESLEY MELSEN. lndividually andOn Behalf of All Others SimilarlvSituated,

Plaintiff,

vs.

HILTON WORLDWIDE. INC.. aDelaware Comoration: HILTONRESERVATIONS WORLDWIDE.LLC: a Delaware Limited Liabilitvpop!.anrr and DOES I through 50,lncluslve

LINITED STATES DISTRICT COTJRT

CENTRAL DISTRICT OF CALIFORNIA _ EASTERN DIVISION

Defendants.

Case No.: CV 10-04558 AHM (SSx)

CLASS ACTION

MEMORAI\DTJM OF POINTS ANDAUTHORITIES IN SUPPORT OFPLAINTIFF'S MOTION FOR FINALAPPROVAL OF CLASS ACTIONSETTLEMENT

Date: September 19, 201 ITime: 10:00 a.m.District Court Judge: Hon. A. Howard MatzCourtroom: 14

FINAL APPR558 AHM (SSx)CLASS ACTION SETTLEMENT

Case 2:10-cv-04558-AHM-SS Document 32-1 Filed 08/22/11 Page 1 of 26 Page ID #:526

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TABLE OF CONTENTS

rNTRODUCTION.. . . . . . . . . . . . . . . . . . . . . . .1

A. The Court granted Preliminary Approval of the Common Fund

Settlement.... . . . . . . . . . . . . . . . . . . . . . . 1

B. The Court-Approved Notice Procedures Were Successfully Completed......3

1. Data Transfer From Defendants' Counsel and Notice to Settlement

ClassMembers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

2. Notice to the Settlement Class Via U.S. Mail..... ...........3

3. Requests,Remai ls,andAdvancedAddressSearches.. . . . . . . . . . . . . . . . . . . . . . . .4

4. Tol l -Free Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

5. Only Three Workweek Disputes Were Submit ted. . . . . . . . . . . . . . . . . . . . . . . . . . . .5

6. Only Two Requests for Exclusion Were Submitted..........................5

7. There Were No Objections to the Common Fund Settlement...............5

SUMMARY OFTHE LITIGATION ...................5

THE SETTLEMENIAND RELEASEAGREEMENT ...........7

A.Sett lementAmountandDistr ibut ion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

B. TheRelease.. . . . . . . . . . . . . . . . . . . . . . . .9

CLASS CERTIFICATION GRANTEDAS PART OF PRELIMINARY

APPROVALST{OULD BE MANDATED............. ................9

THE SETTLEMENT AGREEMENT IS FAIR, REASONABLE, AND

ADEQUATE, AND THERAFORE WARRANTS FINAL APPROVAL......... I 0

A. The Sett lement Agreement Is Presumptively Fair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 I

B. The Strength of Plaint i f fs 'Case.. . . . , . , . . . . . . . . . .11

C. Complex,RiskyAndLengthyLitigation,AtGreatExpense.................. l3

D. TheRiskofMaintainingClassActionStatusThroughoutTrial.............. l4

E. TheAmountOfferedinSett lement. . . . . . . . . . . . .15

F. TheExtentofDiscoverycompletedandStageofProceedings............... l6


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G. TheExper ienceandViewsofCounsel . . . . . . . . . . . . . . . . . . . . . . . . . .17

H. TheAbsenceOfAGovemmentalParticipanl.... ..............18

L The Reaction of Class Members To The Proposed Settlement.................18

coNcLUSroN ..........20

CI-ASS ACTION SETTLEMENT


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TABLE OFAUTHORITIES

Page(s)Cnsrs

Adomav. Univ. of Phoenix, Inc.(E.D. Cal .20r0)27A F.R.D.543 . . . . . . . . . . . . . . . . . . . . . . . . . 14

Albav. Papa John's USA, Inc.2007 U.S. Dist. LEXIS 28079 (C.D. Cal., Feb. 7,2007) ...........14

AT&T Mobility LLC v. Concepcion,(2011) l3 l s. ct . 1740.. . . . . . . . . . . . . . . . . .12

Chinese Daily News623F.3d743,758 (9 'Cir .2010). . . . . . . . . . . . . . . . . . . . . . . . . 14

Churchill l/ill., LLC v. Gen. Elec.19th cir. 20004) 361 F.3d s66................. .............. l0

Class Plaintffi v. Seattle(9* Cir. 1992)955F.2d1268...... ................... 10, 19

Ellis v. Naval Air Rework Facility(N.D. Cal . 1980) 87 F.R.D. 15.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 l

Forrester v. Roth's LG.A. Foodliner, Inc.(9 'h c i r . 1981) 646 F.2d 413.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Franklin v. Kaypro Corp.(9* Cir. 1989) 884 F.2d1222..... ......................... 19

Glass v. UBS Fin. Servs., Inc.(N.D. Cal. Jan.26,2007)2007 U.S. Dist. LEXIS 8476..............................12,14

Hanlalt v. Chrys ler Corp.(9 'nCir .1998) 150F.3d 1011.. . . . . . . . . . . . . . . . . . . . . . . .10,11

In re Heritage Bond Litig.(C.D. Cal. June 10, 2005)2005 U.S. Dist. LEXIS 13555................................. l1

In Re Mercury Interactive Corp. Securities Litigation(9- Cir . 2010) 618 F.3d 988.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I

FOCLASS ACTION SETTLEMENT


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In re Omnivision Techs., Inc.(N.D. Cal. 2008) 5s9 F.Supp.2d 1036.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Kirkorian v. Borelli(N.D. Cal . 1988) 69s F. Supp. 446.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l9

Koikev. Starbucks(N.D. Cal. 2008) 2008 U.S. Dist. LEXIS I15164 ...................... 14

Kosalaw v. New Rochelle Radiologt Assoc., P.C.(2"d ct.200t) 274 F.3d 706........ ........................ t4

Linney v. Cellular Alaska P'ship(9 'Cir . 1998) 151 F.3d 1234.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Marshall v. Holiday Magic, Inc.(9thCir . 1977)550F.2d1173 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Nat'l Rural Tele. Coop. v. DIRECW, Inc.(C.D. Ca1.2004)221F.R.D.523 passim

fficers for Justice v. Civil Sem. Comm'n of City & Cty. of San Francisco(9'n c i r . 1982) 6s8 F.2d 615.. . . . . . . 10, l l , l2

Torrisi v. Tucson Elec. Power Co.(9 'n Cir . 1993) 8 F.3d 1370.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 19

Van Bronkhorst v. Safeco Corp.(9 'n Cir . 1976) 529F.2d943.. . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . 17

Vasquez v. Coast Valley Roofing, Inc.(E.D.Cal. 2009) 670 F.Supp.2d 1l14............... ............................. 9

Wangv. Chinese Daily News, Inc.,231 F.R.D. 602 (C.D. CaI.2005). . . . . . . . . . . . . . . . . . . . . . . . . 14

I{ashingtonv. Joe's Crab Shack(N.D. Cal. 2010) 271F.R.D 629..... ..................... 14

Young v. Katz(5'n Cir. l97l) 447 F.2d431........ ......................... 13

CLASS ACTION SETTLEMENT


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I. INTRODUCTION

Plaintiff Wesley Nielsen ("Plaintiff') respectfully submits this memorandum of

points and authorities in support of an Order: (a) granting final approval of the common

fund Settlement between Plaintiff and Defendants HILTON WORLDWIDE. INC. and

HILTON RESERVATIONS WORLDWIDE, LLC ("Defendants"); (b) certiffing for

settlement purposes the proposed Class:

All persons employed by Hilton Worldwide, Inc. or HiltonReservations Worldwide, LLC at the Hilton call center inHemet, Califomia as non-exempt agents between Jwre 21,2006and the date of this order of preliminary approval, who werepaid using the Pay By Sign On ("PBSO") system;

and (c) appointing Plaintiffas Class Representative and Plaintiffs attomeys of record,

Emge & Associates and Law Offices of David A. Huch, as Class Counsel.l

As set forth more fully below, the proposed corlmon fund Settlement provides

substantial pecuniary benefits to all Class members.

A. The Court Granted Preliminary Approval of the Common FundSettlement

On April 4, 2011, Plaintiff filed a Motion for Preliminary Approval of Class

Action Settlement. [See, Case Docket documents 19-23.] At the May 2,2011 hearing

on the Motion for Preliminary Approval, the Court conditionally granted the motion for

preliminary settlement approval-subject to the Parties filing a revised proposed

preliminary notice which corected the proposed class definition, provided the average

settlement amount as it relates to the approximate amount of hourly pay, and increased

' Pursuant to In Re Mercury Interactive Corp. Securities Litigation (9' Cir. 2010) 618 F.3d 988[holding that due process requires class members be given the opportunity to object to PlaintifPsrequested fees during the notice/objection period], by separate Motion filed on June 14, 2011, Plaintifffiled a separate motion in support of final approval of the requested attomeys' fees, litigation expensesand Class Representative service award. [See, Case Docket documents 30, and 30-1 through 30-6.]



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the opt-out request and/or rejection time period. At the May 2,2001 hearing, the Court

also ordered that a cover letter be issued with all settlement checks in order to confirm

that a Class Member's signature on the check operates as that Class member's consent

to release all FLSA claims.

The Parties, thereafter, addressed the conditions ordered by the Court at the May

2, 20ll hearing. Specifically, (1) the Class Notice was revised to define the Class

consistent with the definition of the Class in the Second Amended Complaint; (2) the

Class Notice and Notice of Award were revised to identifu the average settlement

amount as it relates to the approximate of hourly pay so Class members can view their

estimated payout in relationship to the average payout; (3) the Class Notice was revised

to increase the opt-out request and/or rejection time period from 30 calendar days to 60

calendar days; and (4) a cover letter to each Class member is to be included with the

Settlement Award check, stating as follows: "Enclosed please find your Settlement

Award check in the matter of Wesley Nielsen v. Hilton World'wide, Inc. et al. By

cashing the check you are deemed to have afhrmatively opted to release any FLSA

claims as described in the Notice previously sent to you about this lawsuit. You will

have no more than 180 calendar days from the date of issuance to negotiate or cash said

check; otherwise, the funds set aside for your particular check will be delivered to the

State Conholler as unclaimed wages and penalties under your name."2

On May 10,2011, the Parties filed a Stipulation Regarding Revision to Class

Notice and a Revised Proposed Order Granting Preliminary Approval of Class Action

Settlement, including references to the revised Class Notice. [,See, Case Docket

documents 28 and 28-l.l On May 77,2011, the Courl granted preliminary approval of

the Settlement, conditionally certified the Class for settlement purposes, appointed

Plaintiff as Class Representative, appointed Emge & Associates and Law Offices of

David A. Huch as Class Counsel, ordered mailing of the Court-approved Class Notice

' See Declaration of Derek J. Emge ("Emge decl."), 'tffl 5.



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and Notice of Settlement Award, and scheduled a hearing date for the Court to consider

final approval ofthe Settlement.

B. The Court-Approved Notice Procedures Were Successfully Completed

The terms of the settlement, as well as a description of the rights and obligations

of the Class, were fully described in the Class Notices approved by the Court on May 17,

2011. The parties jointly selected The Garden City Group, Inc. ("GCG") to act as the

Settlement Administrator. The Notices approved by the Court afforded each Class

member ample time to consider the merits of the proposed settlement and to object to or

opt-out of the Settlement as each Class member deemed appropriate.3 Class members'

reaction to the Settlement was exceptionally positive.

1. Data Transfer From Defendants' Counsel and Notice to SettlementClass Members

On May 31, 2011, Counsel for the Defendants provided GCG with a list, in

electronic format, of 1,354 records containing, among other things, the names, social

security numbers, dates of employment, last known mailing addresses, and weeks worked

(the "Class List"). GCG entered the initial Class List into a database created for the

administration of this settlement and updated addresses in the Class List through the

National Change of Address ("NCOA") database in order to create the updated Class

List. Of the 1,354 records sent for NCOA, 350 were updated via the NCOA database.

[See Declaration of Jennifer M. Keough, Executive Vice President of Operations for The

Garden City Group, Inc. ("Keough Decl."), fl 3.]

2. Notice to the Settlement Class Via U.S. Mail

GCG thereafter formatted the Notice Packets and caused them to be printed and

personalized with the name and address of each claimant. The Notice of Settlement

Award was individualized for each member of the Settlement Class with information

reflecting the number of workweeks worked durine the Class Period in which the

3 See Emge decl., !f 7.



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individual was employed at the Hilton call center in Hemet, Califomia as a non-exempt

(hourly) agent and the estimated Settlement Payment award. The Class Notice was

updated to include the Defendants' estimated share of payroll taxes as well as the

estimated average payout per Class Member. GCG mailed via first-class U.S. Mail the

Class Notice to the 1,354 individuals on the Class List on June 9,2011 (the'Notice

Date"). A sample of the Notice Packet is attached to Keough Decl. as Exhibit A. [See

Keough Decl., tf 4.l

3. Requests. Remails. and Advanced Address Searches

Notice Packets that were retumed by the U.S. Postal Service with forwarding

address information were promptly remailed by GCG to the address provided. A total of

15 Notice Packets were retumed to GCG as undeliverable with forwarding address

information. In addition, 234 Notice Packets were retumed to GCG as undeliverable

without forwarding address information. For all Notice Packets retumed by the U.S.

Postal Service as undeliverable and without forwarding address information, GCG

conducted an advanced address search and subsequently re-mailed Notice Packets to 203

Settlement Class Members with updated addresses resulting from the advanced address

search. Additionally, GCG mailed a copy of the Notice Packet to any Settlement Class

Member who requested one. [See Keough Decl., tf 5.]

4. Toll-Free Number

GCG's toll-free number (1-888-404-8013) was printed in the Notice Packet,

allowing Settlement Class Members to call and obtain information about the Settlement

from live representatives. The phone number was accessible Monday through Friday

from 8:30 a.m. to 5:00 p.m. Pacific Standard Time. GCG received 44 incoming calls and

I message for a retum call. GCG promptly returned each message. [See Keough Decl., fl

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5. Onl), Three Workweek Disputes Were Submitted

GCG received three (3) workweek disputes from Class Members. Two Class

Members demonstrated that they worked more weeks than were stated on their individual

claim forms, but a review of the records revealed that the additional weeks were outside

of the Class Period. Both Class Members have been notified of the date limitations on

the calculation of workweeks and their disputes are resolved. The third dispute involves

an additional three weeks that the Class Member claims to have worked. She has

provided supporting documentation that is presently being reviewed. A supplemental

declaration will be filed upon resolution of this workweek dispute. [See Keough Decl.,'||f., 1

6- Only Two Requests for Exclusion Were Submitted

Any Settlement Class Member who wished to exclude themselves from the Class

was required to submit a written Request for Exclusion postmarked by August 8, 2011.

GCG received only two timely exclusion requests from Settlement Class members. [See

Keough Decl., tf 8.1

7. There Were No Objections to the Common Fund Settlement

Any Settlement Class member who wished to object to the Settlement was required

to inform the Court and the Parties of their intent, postmarked no later than August 8,

2011. CGC did not receive any objections to the Settlement. [See Keough Decl., ![ 9.]

II. SUMMARY OF THE LITIGATION

On June 21,2010, Plaintiff filed a lawsuit on behalf of himself and other similarly

situated reservations agents of Hilton Worldwide Hotels. The present class action

alleges wage and hour violations under the Califomia Labor Code, Califomia Unfair

Competition Law and Federal Fair Labor Standards Act against Defendants HILTON

WORLDWIDE, INC. and HILTON RESERVATIONS WORLDWIDE, LLC

("Defendants"). Plaintiff is a former employee of Defendants who worked as a

reservations agent at Defendants' inbound customer reservations call center in Hemet,

Califomia, until the call center's closure in October 2010. Plaintiff alleges that



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Defendants failed to pay reservations agents for all hours worked, including "off-the-

cloclC' hours. As a result, Plaintiff claims that Defendants have failed to pay such

employees overtime wages, straight time pay and all compensations due and owing at

the time of separation of employment. Plaintiff also alleges that Defendants failed to

provide meal and rest periods to reservations agents, and failed to fumish accurate

itemized wage statements.

At the November 1,2010 Scheduling Conference, the Court set a tight timeline for

the parties to conduct discovery and for Plaintiffto file his motion for class certification.

For instance, the non-expert discovery cut-offdate was set for July 11,2011. Plaintifls

class certification deadline was set for April 24,2011, with a July 18, 201I hearing date.

After the Scheduling Conference, the parties communicated frequently in order to

agree upon an efficient and reasonable means of conducting discovery with respect to the

electronic records of the 1,354 former, non-exempt reservations agents in the proposed

settlement class.a A sampling protocol was eventually agreed upon, as well as a

stipulated protective order, which was signed by the Court on January 14, 2A11.

Thereafter, Defendants produced a comprehensive sampling of time records,

payroll records and work schedules for all putative Class members employed during pay

periods in July and December of each year of the class period (2006 through 2010).

Additionally, Defendants disclosed the total number of putative Class members employed

during the class period, the aggregate number of total workdays in which putative Class

members worked during the class period, and the average hourly rates for all putative

Class members during each year of the class period. In addition, Defendants produced all

operations manuals and training materials pertaining to all timekeeping systems used to

track the amount of time worked by putative Class members during the class period.5

More than 1.3 million lines of soreadsheet data were analvzed bv Plaintiff s counsel.

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In addition, Plaintiff and his counsel conducted their own investigation of the

relevant factual issues, including meeting with and otherwise communicating with a

number of former Hemet call center reservation agents. These putative Class members

fumished confidential signed declarations that set forth detailed descriptions of (1) the

type of work duties performed; (2) the amount of "off-the-clock" work time they

performed that was allegedly unrecorded and unpaid; and (3) statements regarding

Defendants' meal period and rest period compliance.6

On February 15, 2011, with the assistance of experienced class action mediator

Mark S. Rudy, a proposed settlement was reached wherein Defendants agreed to settle

all Class claims for a total settlement amount of $950,000 (Nine Hundred and Fifty

Thousand Dollars). This is a common fund settlement with no claim form requirement

and no reversionary amount to Defendants. The estimated average payout per Class

member is $474.10.7

ilI. THE StrTTLEMENT AND Rf,LEASE AGRf,EMENT

Negotiations between tJre parties were arms-lenglh. Both sides fully presented

their legal and factual positions, and numerous demands and offers were exchanged

throughout the mediation. At the conclusion of the full-day mediation, a tentative

settlement was reached. After extensive, subsequent negotiations over the following

weeks, including numerous exchanges of drafts and rewrites, the parties reached a

comprehensive settlement agreement.s

A. Settlement Amount and Distribution

The complete class-wide settlement is set forth in the Stipulation of Class Action

Settlement and Release Between Plaintiff and Defendants Hilton Worldwide, Inc. and

Hilton Reservations Worldwide LLC. which is attached to the Declaration of Derek J.

'Emge decl., flI0.i See Exhibit A to Keough Decl.: paragraph 3 of Notice of Settiement Award and Section 7 of ClassNotice.8 Emge decl., fll1.



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Emge in Support of Plaintiff s Motion for Final Approval as Exhibit "1.'o In consideration

for a release of all class claims arising out of the Second Amended Complaint,

Defendants have agreed to stipulate to class certification for settlement purposes only and

to pay the non-reversionary settlement amount of $ 950,000.00.

Out of the common fund, Plaintiffs counsel is seeking attorneys' fees in the

amount of $237,500 (25%;o), as well as the reimbursement of $8,726.90in litigation

expenses. In addition, Plaintiff is seeking a class representative service award in the

amount of $5,000 to be paid out of the settlement fund. The parties are also collectively

seeking settlement administration costs of $20,000, to be paid out of the settlement fund.

Finally, out of the common fund, $10,000 is to be paid to the State of Califomia's Labor

and Workforce Development Agency ("LWDA") as penalties under the Labor Code

Private Attomeys General Act of 2004 (PAGA") (Califomia Labor Code gg 2698 et

seq.).

The balance of the settlement fund, after applicable tax withholdings,e is to be

distibuted directly to all Class members (averaging $474.10 per Class member).ro This

distribution will be calculated on a ratio of the number of weeks worked by each Class

member during the Class period in relation to the total number of all weeks worked by all

Class members during the Class period who do not opt out of the settlement. Pursuant to

the disseminated Class Notice, all Class members were informed of their estimated

individual settlement amounts 60 days prior to the deadline to opt-out or object to the

proposed Settlement.

' As set forth in paragraph 58(a) of the Settlement Agreemen! one-third of Class Members' settlementamounts will be designated for alleged unpaid wages under Plaintiffs claims for overtime, straight timewages, and missed meal and rest periods (Califomia Labor Code $$ 204, 210, 226.7,218,510, l 194 andI198, and corresponding claim under FLSA), for which an IRS Form W-2 will be issued; one-third willbe designated for prejudgment interest under Plaintiffs claim for such interest (Califomia Labor Code $218.6), for which IRS Form 1099 will be issued; and one-third of t}re settlement amounts will bedesignated as civil penalties under PlaintifPs claims for such penalties (Califomia Labor Code gg 201-203,206 and 2699), for which IRS Forms 1099 shall issue.r0 .See Exhibit A to Keough Decl.: paragraph 3 of Notice of Settlement Award and Section 7 of ClassNotice.



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B. The Release

Pursuant to paragraph 28 of the Settlement Agreement, each member of the Class

will be deemed to have released Defendants and their affiliated entities and individuals

from any claims "...arising from or related to this case which were or could have

been pled in the Action based on the facts alleged in the Second Amended

Complaint... and any and all other claims of any kind whatsoever that were or

could have been alleged in this case based on the facts alleged in fhe Second

Amended Complaint...t' Thus, the Release only applies to the limited universe of the

facts and causes of action alleged in the Second Amended Complaint, which have been

prosecuted by Plaintiff and settled pursuant to arms-length negotiations.

The Release does not cover a wide variety of unrelated employment claims that

may exist as to individual Class members, such as employee benefits issues under

ERISA, discrimination under Title VII and Califomia Fair Employment and Housing

Act, leave rights under the Family Medical Leave Act, disability discrimination under the

ADA, age discrimination under the ADEA, etc.

As a result, the Settlement Agreement's release is limited in scope and should be

granted final approval . See Cf. Vasquez v. Coast Valley Roofing, Inc. (E.D.Cal. 2009)

670 F.Supp.2d 1114 (finding significant in granting preliminary approval of class

settlement, "These released claims appropriately track the breadth of Plaintiffs'

allegations in the action and the settlement does not release unrelated claims that Class

members may have against defendants.")

ry. CLASS CERTIFICATION GRANTED AS PART OF PRDLIMINARYAPPROVAL SHOULD BE MAINTAINED

After considering Plaintiff s fully briefed preliminary approval motion, the Court

found that the Rule 23 elements were satisfied and conditionally certified the Settlement

Class for purposes of settlement. [See May 17,20ll Preliminary Approval Order, P.

1:6-16.] Circumstances have not changed since the Court's certification that warrant any

change in the Certification decision. No Class member has objected on the basis that



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certihcation of the claims was improper. Accordingly, the Class is properly certified as a

class action for purposes offinal approval ofthe settlement.

V. THE SETTLEMENT AGREEMENT IS FAIR. REASONABLE ANDADEOUATE. AND THEREFORE WARRANTS FINAL APPROVAL

The Settlement is fair, reasonable, and adequate, providing real and substantive

benefits to all Class members. The Ninth Circuit has a "strong judicial policy that favors

settlements, particularly where complex class action litigation is concemed." C/ass

P laintffi v. Seattle (9'h Cir. 1992) 95 5 F .2d 1268, 127 6. F ederal Rules of Civil Procedure

23(e)(t)(C) dictates that a court should consider the faimess, adequacy, and

reasonableness of a settlement by balancing many factors, which include: (1) the strength

of plaintiffs case; (2) the risk, expense, complexity, and likely duration of fuither

litigation; (3) the risk of maintaining class action status tbroughout the trial; (4) the

amount offered in settlement; (5) the extent of discovery completed; (6) the experience

and views of counsel; (7) the presence of a govemmental participanq and (8) the reaction

of Class members to the proposed settlement. Churchitl Vill., LLC v. Gen. Etec. (96 C\r.

20004) 361 F.3d 566,575; Nat'l Rural Tele. Coop. v. DIRECTV, Inc. (C.D. CaL2004)

221 F.R.D. 523, 526. This list is not exclusive and different factors may predominate in

different factual contexts. Torrisi v. Tucson Elec. Power Co. (9h Cir. 1993) 8 F.3d 1370,

1375-1376. The importance of each factor varies with the circumstances of each case and

is dictated by the nature of the claim and the relief sought. See Hanlon v. Chrysler Corp.

(9'n Cir. 1998) 150 F.3d 1011, 1026; fficers for Justice v. Civil Serv. Comm'n of City &

Cty. of San Francisco (9ft Cir. l9s2) 68s F.2d615,625.

"The initial decision to approve or reject a settlement proposal is committed to the

sound discretion of the trial judge." Afficers for Jwtice,688 F.2d at 625. A proposed

settlement shall not "be judged against a hypothetical or speculative measure of what

might have been achieved by the negotialors." Id. The court is not "empowered to

rewrite the settlement agreed upon by the parties" and "may not delete, modifu, or

ROVALCLASS ACTION SETTLEMENT


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substitute certain provisions." Id. at 630. "The settlement must stand or fall in its

entirety." Hanlon, 1 50 F.3d at 1026.

A. The Settlement Agreement Is Presumptively Fair

A settlement agreement is entitled to a "presumption of fairness where: (1) counsel

is experienced in similar litigation; (2) settlement was reached through arm's length

negotiations; [and] (3) investigation and discovery are sufficient to allow counsel and the

court to act intelligently;' In re Heritage Bond Litig. (C.D. Cal. June 10, 2005) 2005 U.S.

Dist. LEXIS 13555, at *ll; see also Ellis v. Naval Air Rework Facilrfy N.D. Cal. 1980)

87F.R.D. 15.18.

After months of preparation, the parties met for a full-day mediation with Mark S.

Rudy, Esq. on February 15,2011. Plaintiffwas in attendance at the mediation, as well as

Defendants' vice President - Human Resources.rr The Settlement was the product o

lengthy and intense arm's length negotiation under the guidance of Mr. Rudy, an

experienced and highly respected class action mediator. After the mediation, the parties

took several weeks to negotiate the final terms of the comprehensive Stipulation of Class

Action Settlement and Release.l2 The substantial investigation and discovery in this

litigation informed Class Counsel's decision-making. Accordingly, investigation and

discovery were sufficient to allow counsel to act intelligently.r3 [See Section V.F.,

below.l

The Settlement Agreement is therefore entitled to a presumption of faimess.

B. The Strength of Plaintiffs' Case

The complexities and uncertainty inherent in litigating the present case through

trial and appeal favors granting final approval. "[A] proposed settlement is not to be

judged against a speculative measure of what might have been awarded in a judgment in

favor of the class." DIRECTI/,221 F.R.D. at 526. As noted by the Ninth Circuit:

tr Emge decl., '!f l I .'' Emge decl., t[d." Emge decl., !lll9-10.

OVAL OFCLASS ACTION SETTLEMENT


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[T]he settlement or faimess hearing is not to be tumed into a trial orrehearsal for trial on the medts. Neither the trial court nor [the Court ofAppeals] is to reach any ultimate conclusions on the contested issues of factand law which underlie the merits of the dispute, for it is the veryuncertainty of outcome in litigation and avoidance of wastefulness andexpensive litigation that induce consensual settlements.Officers for Justice,688 F.2d at 625.

In considering the strength of the plaintiffs case, uncertainties at the time o

settlement - particularly those which go to fundamental legal issues - favor approval. See

Glass v. UBS Fin. Servs., Inc. (1.{.D. Cal. Iwt.26,2007) 2007 U.S. Dist. LEXIS 8476, at* 11. At all points during the litigation, Defendants disputed, and continue to dispute,

Plaintiff s allegations. Defendants expressly deny any liability for any of the claims that

Plantiff and the Class have raised and deny that certifrcation in a non-settlement context

would be appropriate. Defendants' counsel, Jackson Lewis LLP, is a recognized leader

among firms specializing in the defense of wage and hour class actions.

As explained in Plaintiffs Motion for Preliminary Approval [See, Case Docket

documents 19-23, flJ,ed on April 4,2011, including confidential documents lodged under

seall, Defendants wielded two defenses that could have potentially dismissed Plaintiffls

claims without any recovery to the Class: (l) Plaintiff and hundreds of other members of

the Class executed severance agreements during the closing of the Hemet, Califomia

facility in October 2010. These severance agreements contain broad release language

that could have potentially covered Plaintiffs and Class members' allegations in the

present litigation. (2) Plaintiff and the members of the Class also signed arbitration

agreements upon hiring that very well could have had a negative, dispositive effect on the

case.to

ta See AT&T Mobility LLC v, Concepcion, (2011)131 S. Ct. 1740.


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This litigation therefore presented uncertain legal claims that may have resulted in

no recovery to the members of the Class, all of whom are no longer employed with

Defendants due to the closure of the Hemet facility. In contrast, settlement would assure

Class members real and substantial relief now. Accordingly, this factor heavily favors

approving the settlement.

C. Complex, Risky And Lengthy Litigation, At Great Expense

In applying this factor, the Court must weigh the benefits of the Settlement against

the expense and delay involved in achieving an equivalent or more favorable result at

trial. Youngv.Katz(5th Cir. 1971) 44TF.2d43l,434.Thisfactorstronglysupportsfinal

approval in the case at hand because the Settlement provides prompt relief for Class

members, while avoiding legal and factual hurdles that otherwise may have prevented

them from obtaining any recovery whatsoever. The Settlement was reached before the

Court ruled upon Plaintiffs anticipated motion for class certification and before the

parties prepared for a lengthy trial.

Furthermore, Defendants have forgone an iuray of legal defenses for all Class

members included in the Class definition. As a large corporation capable of defending

years of litigation, Defendants' highly respected counsel undoubtedly would have

continued with its zealous defense of the Class' claims.

Even if the case had been certified and the Class prevailed against Defendants at

trial, Defendants likely would have appealed. Even if the Class won on all issues on an

appeal, any Class recovery would nevertheless be substantially delayed, perhaps for

years.

"In most situations, unless the settlement is clearly inadequate, its acceptance and

approval are preferable to lengthy and expensive litigation with uncertain results."

DIRECTY, Inc.,22l F.R.D. at 526 (internal quotation marks and citations omitted).

The Court shall consider the vagaries of litigation and compare thesignificance of immediate recovery by way of the compromise to the merepossibility of relief in the future, after protracted and expensive litigation. In

10-04558CLASS ACTION SETTLEMENT


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this respect, '[i]t has been held proper to take the bird in hand instead of aprospective flock in the bush.' 1d. (quoting Oppenlander v. Standard Oil Co.(D. Colo. 1974\64 F.R.D.597,624).

The expense and possible duration of the litigation, including the likelihood o

appeal, are considered in evaluating the reasonableness of a settlement. Glass, 2007 U.S.

Dist. LEXIS 8476, at *12 (quoting In re Mego Financial Corp, Sec. Litig. (9h Cir. 2000)

213 F.3d 454, 458). Litigating through an appeal would only cause further expense,

delay, and uncertainty for the Class. Under this factor too, therefore, final approval of the

Settlement is warranted.

D. The Risk of Maintaining Class Action Status Throughout Trial

If Plaintiff were to move to certif the putative wage and hour claims, Defendants

would undoubtedly oppose the motion by citing to numerous Ninth Circuit and District

Court decisions ruling against certification under similar facts. See e.g., Forrester v.

Roth'sI.G.A.Foodliner, Inc.(9th Cir. l98l) 646F.2d413;Koikev.Starbucks (N.D.Cal.

2008) 2008 U.S. Dist. LEXIS 115164; Washington v. Joe's Crab Shack Qt{.D. Cal. 2010)

271F.R.D 62g.ts

For the reasons set forth in Section V.C, above, Defendants would also likely move

to compel arbitration and/or seek summary judgment (based upon Plaintiff s severance

agreement) prior to the Court's ruling on class certification. As a result, there is

significant risk that Plaintiffs claims could not maintain class action status, which

weighs in favor of final approval of the proposed Settlement.

" On the other hand, Plaintiff would rely upon numerous wage and hour decisions in favor ofcertification. See e.g., Adoma v. Univ. of Phoenix, Inc. (E.D. Cal. 2010) 270 F.R.D. 543; Kosakow v.New Rochelle Radiologt Assoc., P.C. (2"o Cir. 2001) 274 F.3d 706; Wang v. Chinese Daily News, Inc.,231 F.R.D. 602,612-613 (C.D. Cal. 2005) laff'd Wang v. Chinese Daily News, lnc.,623 F.3d743,758(9m Cir. 2010); I lba v. Papa John's uSA, Inc. 2007 U.S. Dist. LEXIS 28079, *40-43 (C.D. Cal., Feb. 7,2007)

MOTION FCLASS ACTION SETTLEMENT


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E. The Amount Offered In Settlement

The Settlement provides significant value to Class members. The Settlement Class

consists of 1,354 non-exempt reservations agents who were paid by Defendants' "Pay By

Sign On" timekeeping system. Defendants employed approximately 300 Class members

during any given pay-period between June 2006 (the beginning month ofthe applicable

statutory period) and October 2010 (the month when the Hemet call center was closed by

Hilton).r6 During the Class period, there were approximately 447,898 workdays. Class

members' average hourly rate during the Class Period was $10.56. The Settlement

$950,000.00, minus penalties, fees, taxes and expenses, equates to an average settlement

amount of $474 per Class member, or approximately 45 full hours worth of pay.l7

This is a non-reversionary settlement that is to be allocated directly to all Class

members, without the need to file a claim form. Given the differences in putative Class

members' statements regarding the amount of hours worked off-the-clock, if any, and

number of missed meal and rest periods, if any, this settlement is exemplary. For

example, both sides at the mediation presented the mediator with declarations signed by

putative Class members, The declarations submitted by Plaintiff demonstrated an

average of 15 minutes of off-the-clock time per shift and an average of l-3 missed meal

or rest periods per workweek. However, the declarations submitted by Defendants

demonstrated no off-the-clock time and. zero missed meal and rest periods. Thus, the

settlement amount of $950,000 represents a fair and reasonable compromise of the

disputed claims.

While further litigation might have theoretically resulted in a greater reaovery for

members of the Class, the average recovery amount under the present settlement

combined with the delay and expense of such litigation make it likely that the Settlement

Agreement reflects the best realistic recovery for all members of the Class. See Linney v.

16 Emge decl., lfl4 ." Emge decl., tfl5.



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Cellular Alaska P'ship (9h Cir. 1998) 151 F.3d 1234, 1242. The immediacy of the

recovery and guarantee that all Class members will recover a significant settlement

amount averaging several hundred dollars also supports approval of the Settlement

Agreement. See In re Omnivision Techs., Inc. (N.D. Cal. 2008) 559 F.Supp.2d 1036,

1042.

F. The Extent of Discovery Completed and Stage of Proceedings

The parties settled with full knowledge of the strengths and weaknesses of the

case, informed by completed discovery. Plaintiffs counsel reached this settlement only

after diligently pursuing the litigation. Prior to filing the original complaint, PlaintifPs

counsel conducted substantial research regarding both the factual and legal bases for the

allegations. Lengthy consultation with Plaintiff and his co-workers triggered an

investigation of Defendants' policies and practices in connection with wage and hour

laws. PlaintifPs Hilton call center training manuals, payroll records and time records

further evidenced Defendants' alleged practice of failing to record and pay for "off-the-

clocK't ime.r8

The scope of the Class and the magnitude of Defendants' conduct were explored at

a face to face meeting between counsel for all parties. Shortly thereafter, the parties

engaged in follow-up meet and confer communications regarding a sensible means

analyzing tens of thousands of wage statements, time cards and palroll records. The

electronic data produced by Defendants (totaling 1.3 million lines of spreadsheet data)

was sufficient to create a reasonably exact picture of the number of employees in the

Class, the average hourly rate of Class members and Defendant's potential exposure for

all alleged Labor Code violations throughout the duration of the Class period. By

analyzing the data, Plaintiff s counsel was able to formulate intemal valuations of the

r8 Emge decl., '!itf 9-10.



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case by assigning informed certification and liability probabilities to the total estimated

work shifts during the Class period.re

Fufihermore, both parties' counsel met with and obtained detailed declarations

from former Hilton reservations employees. Plaintiff and his counsel spent numerous

hours traveling to Hemet in order to meet in person with putative Class members. These

interviews further developed Plaintiffs factual and legal theories, and allowed PlaintifPs

counsel to make an informed settlement decision.20

"There is an overriding public interest in settling and quieting litigation," and this

is "particularly true in class action slits." Van Bronkhorst v. Safeco Corp. (9'" Cir. 1976)

529 F.zd 943, 950. Settlement spares the parties the costs of protracted litigation and

eases the congestion of judicial calendars. See id. at 943. In light of the extensive

discovery, and the public policy favoring resolution of class actions by settlement to

avoid protracted litigation, this factor also heavily favors approval.

G. The Experience and Views of Counsel

Counsel for the parties are experienced and respected class action attomeys and

believe the settlement is fair, adequate, and reasonable. "'Great weight' is accorded to the

recommendation of counsel, who are most closely acquainted with the facts of the

underlying litigation." DIRECTV, 221 F.R.D. at 528 (citing In re Painewebber Ltd.

P'ships lttrg. (S.D.N.Y. 1997) 171 F.R.D. 104, 125). Counsel "are better positioned than

courts to produce a settlement that fairly reflects each party's expected outcome in the

litigation." Id. (quoting Pactfic Enters. Sec. Litig. (9n Cir. 1995) 47 F.3d 373, 378).

"[A]bsent fraud, collusion, or the like, [the court] should be hesitant to substitute its own

judgment for that of counsel." 1d.

PlaintifPs counsel is comprised of two law firms: Emge & Associates, and Law

Offices of David A. Huch. The attomeys working on this matter have been appointed

re Emge decl., tf9.'" Emge decl., fll0.


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class counsel and lead counsel through both certification and settlement of numerous

wage and hour class actions.2l Plaintiffs counsels' experience in wage and hour class

actions was integral in evaluating the strengths and weaknesses of the case against

Defendants, as well as the reasonableness of the settlement.22 These evaluations included

an analysis of the applicable wage and hour law, and the probability of certifuing the

putative class claims.23

By the same token, Defendants' counsel, Jackson Lewis LLP, is a recognized

leader among firms specializing in the defense of wage and hour class actions. Under

this dynamic, the Settlement was the product of arms' length negotiation overseen by an

experienced mediator. Counsel for both sides believe that the Settlement Agreement

reflects the relative strengths and weaknesses of the parties' respective claims and

defenses, as well as the substantial risks presented in continuing litigation. Accordingly,

this factor heavily favors approval ofthe settlement.

H. The Absence Of A Governmental Participant

No governmental entity participated in the prosecution of this action or the

negotiation of this settlement. Under the Settlement, however, significant civil penalties

in the amount of $10,000 are to be remitted to the State of Califomia, Labor Workforce

and Development Agency pursuant to Plaintiffs PAGA cause of action which Plainti

undertook as a private attomey general.

The absence of any presence or objection by a govemmental entity favors final

approval. Torrisi v. Tucson Elec. Power Co., supra, S F.3d at 1375'1376-

I. The Reaction Of Class Members To The Proposed Settlement

Since the Court granted preliminary approval in April 2011, all identifiable Class

members were mailed individual notice of the preliminary settlement approval and of

2r Emge decl., 'tf 18." Emge decl., tftf 18-19." Emge decl., 'tf 18.


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their rights to comment on or opt out of the Settlement.2a As noted, no class member

has filed an objection to the Settlement and only two class members have requested

exclusion from the litigation.2s A eourt may appropriately infer that a class action

settlement is fair, adequate and reasonable when class members do not object to it.

Marshall v. Holiday Magic, Inc. (9thCk. 1977) 550 F.2d 1173 .

Even if objections are made, a court may approve a class action settlement over

the objections of even a significant percentage of class members. See C/ass Plaintiffs v.

Seattle 19'h Cir. lgg2) 955 F.zd 1268, 129l-96 (upholding trial court's grant of final

approval over class member objections); see also Kirkorian v. Borelli (N.D. Cal. 1988)

695 F. Supp. 446,451 [disapproved on other grounds in Franklin v. Kaypro Corp. (9'h

Cir. 1989) 884 F. 2d 12221 ("lAl settlement can be fair, notwithstanding opposition from

a large segment of the class.").

Here, the Court should construe the non-opposition to the Settlement and the

presence of only two opt-outs as a strong indication of Class members' overwhelming

support for the Settlement as fair, adequate, and reasonable.

VI. CONCLUSION

The proposed Settlement is a fair, adequate and reasonable settlement that will

bring to an end the present litigation, which could have resulted in little or no recovery

for the Class.

Each and every Class member was given 60 days to object or opt out of the

Settlement, including the opportunity to pursue his or her own individual claims against

Defendants. After this lengthy notice period, No Class members objected to the terms of

the Settlement, including the standard 25o/o fee award to Class Counsel and the $5,000

service award to the Class Representative. Only two Class members chose to opt out.

2a Keough decl., tftf 3-6-" Keough decl., flfl8-9.



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It is therefore respectfi.rlly requested that the Court grant this motion concluding

the present litigation by approving the Settlement, entering its Final Judgment and

awarding Class Counsel their requested fees and reimbursement of expenses, as well as

the Class Representative's requested service award.

Based on the foregoing, the Court should grant final approval of the Settlement.

DATED: August 22,2011

RespecttuIly Submitted,

Emge & Associates

Attomev for PlaintiffWESLEYMELSEN

By: /S/ Derek J. EmDerek J. Emee



Documents

Derek J. Emge (SBN l6 | 1 05) Emse & Associates 52{8