Merante v. American Institute for Foreign Study, Inc.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 ISABELLA SAVINI MERANTE, Case No. 21-cv-03234-EMC 8 Plaintiff, ORDER GRANTING PRELIMINARY 9 v. APPROVAL OF CLASS ACTION AND PAGA SETTLEMENT 10 AMERICAN INSTITUTE FOR FOREIGN STUDY, INC., Docket No. 45 [11] Defendant. [14] 15 I. INTRODUCTION 16 This matter comes before the Court on Plaintiff’s motion for preliminary approval of a 17 class action and Private Attorney General Act (“PAGA”) settlement of the claims asserted against 18 Defendant in this action. Having considered the arguments of counsel at the July 21, 2022 hearing 19 and the evidence submitted in support of Plaintiffs’ motion, the for the reasons stated on the record 20 and those that follow, the Court hereby grants Plaintiffs’ motion and orders as follows. 21 II. TERMS OF THE PROPOSED SETTLEMENT 22 The terms of the settlement are memorialized in the Settlement Agreement (“Agreement” 23 or “Settlement”) filed contemporaneously with Plaintiff’s motion. A summary of the terms of the 24 Settlement is as follow: 25 A. Monetary and Non-Monetary Relief 26 As part of the Agreement, Defendant will pay $1,000,000, known as the “Gross Settlement 27 Amount,” inclusive of the following: (a) payments to participating Class Members; (b) Class 1 litigation costs and associated expenses of $3,000, if finally approved by the Court; (d) PAGA 2 Allocations of $100,000 total, with $75,000 to be distributed to California’s Labor Workforce 3 Development Agency (“LWDA”) and the remaining $25,000 to be paid proportionately to all 4 PAGA; (d) administration costs not to exceed $24,623, if finally approved by the Court; and (e) 5 the Class Representative Service Payment of $5,000 to Named Plaintiff Isabella Savini Merante, if 6 finally approved by the Court. The participating Rule 23 Class Members will receive an average 7 net payment of approximately $457.66. 8 As part of the Agreement, Defendant further agrees to notify the host families in California 9 who participate in Defendant’s program that they: “are responsible for complying with the 10 California Labor Code, including the obligation to pay all hours worked by the au pair at the 11 applicable state or local minimum wage.” See Agreement § 61(a). 12 B. Definition of PAGA Group and Rule 23 Class 13 PAGA Members are defined as those Class Members who resided with a family in the 14 State of California that engaged Defendant for the purpose of receiving the placement of an au pair 15 to provide services for the Host Family from January 8, 2020 through the date of this order. Id. at 16 §§ 19, 28, 29. 17 The proposed Rule 23 class consists of all current and former au pairs participating in the 18 Defendant’s program who resided with Host Families in California from January 8, 2020 through 19 the date of this order. Id. at §§ 8, 11. 20 C. Settlement Administrator 21 The Parties have agreed to use Analytics Consulting LLC as the Settlement Administrator 22 (“the Administrator”). Plaintiff submits that the Parties chose Analytics Consulting LLC based on 23 its extensive experience in implementing class action communications and settlement programs, 24 including settlements involving international plaintiffs. The Administrator’s duties will include 25 setting up and monitoring a settlement website that will house the Class Notice and allow for 26 Class Members to respond to the notice; e-mailing the Notice Packet to all Class Members; 27 following up with text message notice to Class Members who do not open their email notice; 1 communications from Class Members which include, for instance, questions, disputed claims, 2 updated contact information, requests regarding payment; requests for exclusion, and objections; 3 providing the Parties with weekly status reports; calculating Individual Class Settlement Payments 4 and Individual PAGA Payments; setting up a Qualified Settlement Fund to handle the distribution 5 of payments, providing payment to effectuate the payments due under the Settlement; issuing the 6 tax reports required under this Settlement; handling returned funds, providing declarations as 7 requested by the Parties, and otherwise administering the Settlement. Agreement §§ 38, 47. 8 Having reviewed Plaintiff’s motion and Analytics Consulting LLC’s Expert CV and Firm 9 Resume, this Court finds Analytics Consulting LLC to be qualified to act as Settlement 10 Administrator. 11 D. Notice to Class Members 12 Having reviewed the Parties’ proposed notice and notice plan, the Court finds the Parties’ 13 notice plan to be constitutionally sound because individual notices will be emailed to all Class 14 Members, with follow up notice via text message to recipients who do not open their email notice. 15 Given the transient nature of the international immigrant-worker Class Members the Court finds 16 such notice is the best notice practicable. The Court further finds the parties’ proposed Class 17 Notice, filed contemptuously with the Motion, is sufficient to inform Class Members of the terms 18 of the Settlement, their rights under the settlement, their rights to object to the Settlement, their 19 right to receive a payment under the settlement or elect not to participate in the settlement, and the 20 processes for doing so, and the date and location of the final approval hearing. As stated at the 21 July 21, 2022 hearing, the Court requires the parties to make one modification to the content of the 22 notices. The parties are instructed to add the following language to the top of the notices, in bold 23 and capitalized text: “YOU MAY BE ENTITLED TO A CASH AWARD.” With this 24 modification, the proposed notice and notice plan are approved. 25 E. Release of Claims 26 Pursuant to the Agreement, the Released Parties include: the named Defendant, the 27 American Institute For Foreign Study, Inc., and its past, present and/or future, direct and/or 1 insurers, partners, investors, shareholders, administrators, parents, subsidiaries, affiliates, 2 divisions, predecessors, successors, assigns, and joint venturers. The Released Parties further 3 includes all host families who hosted a Class Member in the Defendant’s au pair program during 4 the Class Period. 5 The Rule 23 Class release extends to the alleged violations of Labor Code Section 226 for 6 failure to provide accurate wage statements and any related claims under Section 226 that could 7 have been alleged based on the facts and legal theories asserted in the First Amended Complaint. 8 (Agreement § 35). The release covers the period from January 8, 2020 through the date of this 9 order. Id. The PAGA release extends to the PAGA claims that were alleged in the complaint, and 10 any related PAGA claims that could have been asserted based on the facts alleged. Id. at § 34. 11 The PAGA release expressly excludes all other claims. Id. The release covers the period from 12 January 8, 2020 through the date of this order. Any Class Member who opts out of the Class 13 Settlement will still be bound by the PAGA Release if they are PAGA Members. Id. at § 30. 14 F. Distribution of Funds 15 After this Court’s entry of judgment becomes final, as defined by the Agreement. 16 Defendant shall fund the Qualified Settlement Fund with the Gross Settlement Amount within 17 thirty-five (35) calendar days. Agreement § 56. All PAGA Members will receive a pro rata 18 allocation of the $25,000 Civil Penalty Payment based on the number of workweeks they resided 19 with host families in California during the PAGA Period, in relation to the aggregate number of 20 workweeks when members resided with host families in California during the relevant period. 21 Agreement § 46(c). Individual Class Settlement Payments will be paid from the Net Settlement 22 Amount and paid pursuant to the formula as follows: (i) first, using the Class Data List, the 23 Administrator will compute the total number of Workweeks of all Participating Class Members 24 collectively during the Class Period; this sum shall be known as the “Workweek Total;” (ii) 25 second, the Administrator will divide the Net Settlement Amount by the Workweek Total to 26 determine the settlement value of each eligible Workweek; this shall be known as the “Workweek 27 Value;” (iii) third, the Administrator will multiply the number of Workweeks of a Participating 1 Class Member’s Individual Class Settlement Payment. Id. at § 46(a). Within fourteen (14) days 2 after Defendant funds the QSF, the Administrator will issue payments to PAGA Members and 3 Participating Class Members via PayPal to the email address used to distribute Notice. Id. During 4 the notice period, Class Members may request PayPal payment directed to a different email 5 address, or may provide instructions for ACH payment. 6 III. DISCUSSION 7 A. The Rule 23 Class is Preliminarily Certified for Settlement Purposes 8 Plaintiff seeks an order certifying the following persons as Class Members solely for the 9 purpose of entering a settlement in this matter: 10 All current and former au pairs participating in the Defendant’s program who resided with Host Families in California from January 11 8, 2020 through the date on which the Court grants preliminary approval of this Agreement. [12] 13 Having considered the proposed Settlement Class and Plaintiff’s briefing on the matter, this Court 14 herby preliminarily finds the requirements of Rule 23(a) are satisfied because this proposed Class 15 is so numerous that joinder of all Class Members is impracticable, there are questions of law or 16 fact common to the Class, the claims of Plaintiff are typical of the claims of the Class; and 17 Plaintiff will fairly and adequately protect the interests of the Class. 18 Based on the information obtained from Defendant, the Class is composed of 19 approximately 1,349 individuals. Helland Decl. ¶ 10. Additionally, Class Members are, by 20 definition, foreign nationals, and Plaintiffs assert that the majority of the have returned to their 21 home countries. Mot. at 19. Because it would be impracticable to join such a large number of 22 class members, many of whom no longer reside int the United States, in a single action, the 23 numerosity requirement is met. 24 Here there are common contentions of law and fact governing Defendant’s alleged failure 25 to issue accurate wage statements. California Labor Code section 226 requires that accurate wage 26 statements must accompany employees’ paychecks. An employee is deemed to suffer injury if the 27 employer fails to provide accurate and complete information as required by § 226(a) and “the 1 statement alone. Cal. Lab. Code § 226 (e)(2)(B). Where an employer fails to provide wage 2 statements, the employee is entitled to recover actual damages or $50 for the first pay period in 3 which a violation occurs and $100 for each subsequent pay period. Id. § 226(e). Here, Defendant 4 uniformly did not provide wage statements to au pairs and uniformly states that it was not required 5 to do so because it was not the au pairs’ employer and because the Exchange Visitor Program 6 Regulations preempt and preclude application of the California Labor Code to Defendants. Thus, 7 the evidence and arguments upon which the class allegations rest are common to the class. 8 The requirements of Rule 23(b) are satisfied because questions of law or fact common to 9 Class Members predominate over any questions affecting only individual Class Members. 10 B. Appointment of Class Counsel and Named Representative 11 Named Plaintiff Merante seeks appointment as Class Representative. Class Counsel 12 submits that Plaintiff Merante has been dedicated to the case throughout, having provided valuable 13 information, produced relevant documents, and participated in both settlement conferences. 14 Moreover, as an au pair for Defendant in California during the relevant period Plaintiff Merante 15 did not receive any wage statements from Defendant and thus the fact pattern relating to her to 16 wage statement claims is similar, if not identical, to that for other Class Members. Further, she 17 has no conflicts of interest with the Class, sharing their likely desire to be compensated for 18 Defendant’s failure. The Court finds her appointment as Class Representative appropriate. 19 Matthew Helland and H. Clara Coleman of Nichols Kaster, LLP, Peter Rukin of Rukin 20 Hyland & Riggin LLP, and Rachel Dempsey of Towards Justice seek appointment as Class 21 Counsel. Based on their submissions I find the attorneys qualified to be Class Counsel, all having 22 extensive experience in representing employees in class action suits. 23 C. Requirements of Rule 23(b)(3) 24 Rule 23(b)(3) requires the Court to find that: (1) “the questions of law or fact common to 25 class members predominate over any questions affecting only individual members,” and (2) “a 26 class action is superior to other available methods for fairly and efficiently adjudicating the 27 controversy.” Fed. R. Civ. P. 23(b)(3). 1 case and they can be resolved for all members of the class in a single adjudication.’” Edwards v. 2 First Am. Corp., 798 F.3d 1172, 1182 (9th Cir. 2015). But when “one or more of the central 3 issues in the action are common to the class and can be said to predominate, the action may be 4 considered proper under Rule 23(b)(3) even though other important matters will have to be tried 5 separately.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016). Here, the central 6 inquiry is whether Defendant provided wage statements to Class Member au pairs. This is a 7 common question which predominates over individual questions (such as the number of the weeks 8 worked by an au pair), and the Class Members’ potential legal remedies are identical rather than 9 individualized. The legality of Defendant’s failure to provide wage statements can be settled on a 10 class-wide basis only once rather than many separate times by each Class Member. Therefore, the 11 predominance requirement is satisfied. 12 With respect to the Court’s “superiority” analysis, Rule 23(b)(3) suggests the Court 13 consider: (A) the class members’ interests in individually controlling the prosecution or defense 14 of separate actions; (B) the extent and nature of any litigation concerning the controversy already 15 begun by or against class members; (C) the desirability or undesirability of concentrating the 16 litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class 17 action. Fed. R. Civ. P. 23(b)(3)(A)-(D). The alternative method of resolution here would require 18 over 1,000 individual claims. Additionally, a significant portion of the Class Members no longer 19 reside in the United States and are unlikely to be in a position to initiate litigation from an 20 international jurisdiction for the relatively small potential recovery at stake in the class claim. 21 Therefore, a class action is the superior method of resolution under Rule 23(b)(3). 22 In sum, the requirements for certifying the Settlement Class are met. 23 D. The Settlement is Fair, Adequate, and Reasonable 24 In deciding whether to approve a proposed class action settlement, the Court must 25 determine whether a proposed settlement is “fair, adequate and reasonable.” Officers for Justice v. 26 Civil Serv. Comm’n, 688 F.2d 615 , 625 (9th Cir. 1982); see also Fed. R. Civ. P. 23(e)(1)(C). 27 Moreover, federal district courts reviewing PAGA settlements have also drawn on factors utilized 1 adequate, and reasonable.” See O’Connor v. Uber Techs., 201 F. Supp. 3d. 1110, 1134 (N.D. Cal. 2 2016); see also Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998). 3 For the reasons stated on the record and those that follow, the Court finds the PAGA and 4 Rule 23 settlement is fair, adequate and reasonable. First, the Court finds that the settlement 5 reflects the informed views of experienced counsel and is the product of serious, arms-length 6 negotiations conducted after investigation and discovery. 7 Here, the parties arrived at the Settlement Agreement after engaging in early-stage formal 8 discovery, and participating in two settlement conferences before Chief Magistrate Judge Spero. 9 The parties reached their agreement after their second session before Judge Spero. Further, there 10 appear to be no red flags of collusion. Plaintiff’s counsel requests 25% of the settlement fund for 11 attorneys’ fees, which is consistent with the Ninth Circuit’s presumptive benchmark for reasonable 12 attorneys’ fees in common fund cases. See In re Bluetooth Headset Products Liability Litigation, [13] 654 F.3d 935, 942 (9th Cir. 2011). Although the settlement agreement provides that Plaintiff’s 14 counsel will make a fee request of up to 25% of the gross settlement amount, the agreement also 15 provides that an “award by the Court of lesser amounts than those sought by Plaintiff. . . and class 16 counsel for Class Counsel Fees Payment. . . will not constitute a material modification of the 17 Agreement,” and will not affect the effectiveness of the other terms of the agreement. See 18 Agreement § 55(d); O’Connor, 2019 WL1437101, at *7. 19 Second, the Court finds that the settlement is fair given the strength of Plaintiff’s case and 20 the risk, expense, and complexity of further litigation. In addition to substantial monetary 21 payment, the settlement also contains critical non-monetary relief. Under Rule 23(e)(2)(C)(i), the 22 Court must also consider whether “the relief provided for the class is adequate, taking into account 23 . . . the costs, risks, and delay of trial and appeal” along with other relevant factors. Fed. R. Civ. P. 24 23(e)(2)(C). Rule 23(e)(2)(C)(i) essentially incorporates three of the traditional Hanlon factors: 25 the strength of Lead Plaintiff’s case (first factor); the risk, expense, complexity, and likely 26 duration of further litigation (second factor); and the risks of maintaining class action status 27 through the trial (third factor). Arlo, 2021 WL 1146042 , at *8 (citing Hanlon, 150 F.3d at 1026 ). 1 workers and law-abiding employers by ensuring compliance with the State’s labor standards and 2 deterring future Labor Code violations; (2) collecting civil penalties to augment the State’s labor 3 enforcement capabilities and educating workers; and (3) ensuring settlement has a rational basis in 4 view of the strength and full value of the PAGA claims. O'Connor, 201 F. Supp. 3d at 1132–35. 5 Class Claim 6 Plaintiff’s counsel estimates that the maximum verdict value of potential wage statement 7 penalties for the class are the range of $2.7 to $4 million. Helland Decl. ¶ 13. As of February 8 2022, the parties estimated that there were approximately 900 class members. Id. Given the 9 $4,000 cap on Section 226 wage statement penalties, see Cal. Lab. Code § 226 (e)(1), potential 10 wage statement penalties ranged from $2,700,000 (at an average of $3,000 per class member) to 11 $3,600,000 (assuming a full $4,000 per class member), depending on class members’ timing 12 within the statutory period. Id. More class members have begun working for Defendant since 13 February 2022, although those individuals would not have yet reached the statutory maximum, 14 which is calculated by starting with a penalty of $50 for the first pay period violation and $100 for 15 each subsequent pay period. Id. If the 1,361 class members have an average wage statement 16 entitlement of $3,000, the potential wage statement penalties would total just over $4,000,000. Id. 17 Thus, the net class award of approximately $600,000 the settle the class claim regarding 18 inadequate wage statements – after deducting the requested attorneys’ fee, expenses and $100,000 19 PAGA allocation from the $1 million settlement fund amount, calculates to between 15-22.2% of 20 the maximum verdict value for the wage statement claim. The proportion of the settlement offer 21 in comparison to maximum potential liability is within the range of reasonableness for wage and 22 hour actions in view of the litigation risks herein. See e.g., Bellinghausen v. Tractor Supply Co., [23] 306 F.R.D. 245, 256 (N.D. Cal. 2015) (finding a wage and hour class settlement fair where the 24 settlement fund represented between 9% and 27% of the total potential recovery); Alleyne v. Time 25 Moving & Storage Inc., 264 F.R.D. 41 , 57–58 (E.D.N.Y.2010) (settlement fund within range of 26 reasonableness when it represented approximately 13% to 17% of the maximum possible 27 recovery); Glass v. UBS Fin. Serv., Inc., No. C–06–4068, 2007 WL 221862 , at *4 (N.D. Cal. Jan. 1 range of 25 to 35% of claimed damages fair and reasonable in light of the uncertainties involved in 2 the litigation). 3 PAGA Claim 4 The parties allocate $100,000 to settle the PAGA claim. Plaintiff calculated maximum 5 possible PAGA penalties at approximately $37 million. Helland Decl. ¶ 12. However, this 6 amount is a theorical value which assumes penalties for six different wage and hour violations, 7 totaling $700 for each pay period. Id. This Court has previously noted that California Law is 8 unsettled as to whether PAGA penalties may be stacked, and has observed that in the absence of 9 binding appellate decision on this issue, courts have gone in different directions. See Hamilton v. 10 Juul Labs, Inc., No. 20-CV-03710-EMC, 2021 WL 5331451 , at *9 (N.D. Cal. Nov. 16, 2021) 11 (noting that the assumption of stacked PAGA penalties “is subject to challenge” based on mixed 12 precedent in federal district courts). Plaintiff observes that if PAGA penalties are limited to one 13 per pay period, the possible recovery is closer to $5 million. Helland Decl. ¶ 12. The PAGA 14 settlement amount is between .27% and 2% of the maximum PAGA liability. While this 15 proportion is small, the Court’s analysis of the settlement of the PAGA claim is informed by 16 broader principles related to the litigation risks, discussed below, and the significant recovery for 17 the Rule 23 class, which suggests that the settlement is within the range of reasonableness. See, 18 e.g., Carrington v. Starbucks Corp., 30 Cal. App. 5th 504 (2018) (affirming the superior court’s 19 imposition of .2% award of the total PAGA penalties); Viceral v. Mistras Group, Inc., 2016 WL 20 5907869, * 9 (N.D. Cal. Oct. 11, 2016) (approving the settlement of PAGA claims for 0.15% of 21 their maximum value where the settlement taken as a whole vindicates employee rights and may 22 have a deterrent effect on the defendant employer); Hamilton v. Juul Labs, Inc., No. 20-CV23 03710-EMC, 2021 WL 5331451 , at *10 (N.D. Cal. Nov. 16, 2021) (approving settlement of 24 PAGA claims at a rate of 1.3-2.2% of the maximum value). 25 Costs, Litigation Risks, and Rational Basis in View of the Strength of the PAGA 26 Claim 27 Plaintiff faces several significant legal obstacles on the merits of her claims, both for class 1 that the Supreme Court’s awaited decision in Viking River would adversely impact or effectively 2 end this litigation. Now that the Supreme Court has decided Viking River, it appears almost 3 certain that Plaintiff would be precluded from asserting the PAGA claim against Defendant. 4 In Viking River, the Supreme Court held that the Federal Arbitration Act preempts 5 California law “insofar as it precludes division of PAGA actions into individual and non6 individual claims through an agreement to arbitrate.” Viking River Cruises, Inc. v. Moriana, 142 7 S. Ct. 1906 , 1924–25 (2022). In the event that an arbitration agreement mandates arbitration of an 8 individual PAGA claim, the arbitration agreement is enforceable and the individual PAGA claim 9 must be compelled to arbitration. Id. However, the Supreme Court observed that “PAGA 10 provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an 11 individual claim has been committed to a separate proceeding.” Id. So, “[w]hen an employee's 12 own dispute is pared away from a PAGA action, the employee is no different from a member of 13 the general public, and PAGA does not allow such persons to maintain suit,” and the individual’s 14 representative PAGA claims must also be dismissed. Id. at 1925 . 15 Here, Defendant maintained throughout the action that Plaintiff Merante “executed an 16 arbitration agreement with the Defendant, the terms of which require her to arbitrate claims 17 against Defendant on an individual, non-class and non-collective basis.” See Docket No. 35 at 8. 18 Thus, if Defendant’s representation is accurate, then, under Viking River, Plaintiff Merante would 19 be required to pursue her individual PAGA claim in arbitration and would, therefore, lack 20 statutory standing to pursue a PAGA claim in a representative capacity in this Court. In light of 21 Viking River, then, it is highly likely that Plaintiff would not be able to proceed on her PAGA 22 claim at all, and, therefore, there is a high likelihood that if she maintained this action, Plaintiff 23 would face the prospect of no recovery. Were Defendant to have moved to stay proceedings 24 during the pendency of Viking River or otherwise litigated this matter through June 2022, when 25 the Supreme Court decided Viking River, Defendant would very likely face no liability at all in 26 this action. See also Alonso v. AuPairCare, Inc., No. 3:18-CV-00970-JD, 2018 WL 4027834 , at 27 *6 (N.D. Cal. Aug. 23, 2018) (enforcing arbitration agreement over arguments by plaintiff au pairs 1 Indeed, although Viking River addressed only the relationship between PAGA and the 2 Federal Arbitration Act, in this case, Plaintiff’s class claim would also have been affected. This is 3 because when Plaintiff initially filed this action, it included only a claim under PAGA. See 4 Docket No. 1. Plaintiff did not pursue a class claim until after the parties already reached a 5 settlement agreement, and the parties stipulated to Plaintiff raising a class claim for inadequate 6 wage statements as part of an amended complaint for the purposes of consideration of approval of 7 the settlement. See FAC, Count Two. Had Defendant moved to and obtained a stay proceedings 8 during the pendency of Viking River, the initial complaint would still have been operative, and no 9 class claims would have been asserted. Thus, in the aftermath of Viking River, Plaintiff likely 10 would have been forced to arbitrate her individual PAGA claim, and the Court would have been 11 required to dismiss the representative PAGA claim. It is unclear whether Plaintiff would have 12 been permitted to assert, for the first time, a class claim at that juncture, when Plaintiff would have 13 no other independent claims appropriately before this court. The likely-severe impact of Viking 14 River on this litigation had it continued a mere five months beyond the date of the settlement 15 agreement weighs heavily in favor of granting the preliminary settlement approval; in the absence 16 of the parties’ settlement agreement, there likely would not have been any relief at all available to 17 the PAGA Members or Class. 18 Second, all of Plaintiff’s claims, class and PAGA, turn on whether Defendant “employs” 19 au pairs. Defendant disputes its status as an employer, a defense, if successful, would have left 20 Class and PAGA members without any recovery. Plaintiff asserts that no court has yet held that 21 an au pair program sponsor qualifies as an “employer.” Mot. at 24. Some courts have found that 22 allegations against au pair sponsor organizations as "employers” of the au pair are sufficiently 23 plausible to survive a motion to dismiss. See Morales Posada v. Cultural Care, Inc., 554 F. Supp. 24 3d 309, 322 (D. Mass. 2021) (“Cultural Care next argues, under Rule 12(b)(6), that Plaintiffs did 25 not adequately allege that Cultural Care ‘employs’ au pairs because merely following federal 26 regulations—as Cultural Care argues is the full extent of its role and the full extent of Plaintiffs' 27 allegations—does not make it an employer. Though there is some support for the idea that merely 1 here given the extent of Cultural Care's alleged activities.”); Beltran v. InterExchange, Inc., 176 F. 2 Supp. 3d 1066, 1080 (D. Colo. 2016) (“That the au pair program has been generally described an 3 “exchange program” is in no way probative of the Sponsors' status as a joint employer. Indeed, the 4 doctrine of “joint employment” exists to recognize that an apparently-independent entity can still 5 “employ” an individual for purposes of the FLSA”). Still, Plaintiff is correct in pointing out that 6 whether an au pair sponsor program qualifies as an employer is not a settled question of law, and, 7 thus, Plaintiff faced a degree of risk in litigating the issue. 8 Third, Plaintiff faced a plausible defense by Defendant that each of her state law wage and 9 hour claims are preempted by federal law. Specifically, Defendant asserts that Plaintiff’s claims – 10 all of which arise under state law – are preempted by the U.S. Department of State Exchange 11 Visitor Program Regulations, 22 C.F.R. § 62 et seq. Defendant argues that the regulations 12 governing the sponsor program impliedly preempt the application of state and local wage laws 13 under both field and conflict preemption. Mot. at 24. Although it does not appear that any circuits 14 have squarely addressed this argument as applied to au pair sponsor organization, the First Circuit 15 has held that held that state wage regulations are not preempted as applied to host families of au 16 pairs. See Capron v. Off. of Att'y Gen. of Massachusetts, 944 F.3d 9, 43-44 (1st Cir. 2019). And 17 the two district courts which found that the claims of au pairs against sponsor programs as 18 employers could proceed beyond the pleadings stage considered and clearly rejected variations of 19 this preemption argument as applied to sponsor organizations. See Beltran v. InterExchange, Inc., [20] 176 F. Supp. 3d 1066, 1084 (D. Colo. 2016) (“[A]s has already been discussed, the regulations 21 implemented by the USIA expressly provided that the au pair program must conform with the 22 FLSA, without exception; the FLSA, in turn, explicitly provides that, if a state sets a higher 23 minimum wage than that mandated by the FLSA, employees within that state are entitled to 24 receive that higher wage.”); Morales Posada v. Cultural Care, Inc., 554 F. Supp. 3d 309 , 322 (D. 25 Mass. 2021 ) (“Cultural Care's preemption argument, as to both field and conflict preemption, 26 fails.”). Thus, while there does appear to be a dearth of Ninth Circuit or decisions of courts in this 27 circuit on this precise question, the persuasive authority that does exist seems to suggest that 1 as to the viability of Plaintiff’s claims, it does not appear to be overwhelming. 2 Fourth, specifically as to Plaintiff’s class claim regarding inadequate wage statement, the 3 Class faced uncertainty on this claim based on Section 226’s requirement that a violation must be 4 “knowing and intentional.” In light of the unsettled law as to whether Defendant, as an au pair 5 sponsor program, is an employer and, if they are an employer, whether they are subject to 6 California labor law, Defendant could put forward a reasonable “good faith” defense to avoid 7 liability under Section 226’s “knowing and intentional” requirement. See Wilson v. SkyWest 8 Airlines, Inc., No. 19-CV-01491-VC, 2021 WL 2913656 , at *3 (N.D. Cal. July 12, 2021) 9 (recognizing good faith defense to liability for Section 226 claim); id. (“At the time SkyWest 10 issued the wage statements at issue in this case, it had a good faith belief that it was not violating 11 California law based on numerous decisions that the dormant Commerce Clause precluded 12 applying California labor laws (including section 226) to interstate airline workers.”). 13 Taken together, Plaintiff, the Class and PAGA Members faced significant legal risks if 14 they were to have maintained the litigation. Most significantly, the Supreme Court’s decision in 15 Viking River very likely would have altogether eviscerated the PAGA claim in this action. And, 16 because the class claim was only raised as a result of the parties’ preliminary settlement 17 agreement, in the absence of the settlement and the likely stay of proceedings that would have 18 been put into place during the pendency of Viking River, the class claim would likely never have 19 been asserted. Even if Plaintiff did assert the Section 226 class claim, Plaintiff faced a significant 20 risk of minimal or zero recovery because Defendant has a plausible good faith defense based on 21 the lack of binding law finding au pair sponsor organizations to be employers. 22 Moreover, in addition to monetary relief, the Agreement requires Defendant to notify all 23 California host families that they: “are responsible for complying with the California Labor Code, 24 including the obligation to pay all hours worked by the au pair at the applicable state or local 25 minimum wage.” Agreement § 63(a). This non-monetary relief weighs in favor of approval as it 26 significantly benefits the PAGA Group and future workers by promoting PAGA’s goal of 27 encouraging compliance with the California Labor Code. See Bedolla v. Allen, 736 F. App’x 614 , 1 provided value to the class in part because it provided nonmonetary relief such as training and 2 auditing staff on compliance with labor laws); Rincon v. W. Coast Tomato Growers, LLC, No. 133 CV-2473-JLS (KSC), 2018 WL 828104 , at *4 (S.D. Cal. Feb. 12, 2018) (finding the settlement 4 term requiring institution of workplace practices to ensure compliance with wage and hour laws 5 favored a finding the settlement was fair and reasonable); Hamilton v. Juul Labs, Inc., No. 20-CV6 03710-EMC, 2021 WL 5331451 , at *10 (N.D. Cal. Nov. 16, 2021) (“The settlement “remediates 7 the alleged present violations and provides notice to current and former employees of important 8 rights. The settlement notifies more than a thousand employees that their NDAs do not prevent 9 them from exercising the rights provided by California's anti-gag rule, including the right to 10 whistle blow and speak.”). 11 Finally, this case does not present the risk of cases where PAGA claims are brought in 12 conjunction with class claims, such that “there may be a temptation to include a PAGA claim in a 13 lawsuit to be used merely as a bargaining chip, wherein the rights of individuals who may not even 14 be members of the class and the public may be waived for little additional consideration in order 15 to induce the employer to agree to a settlement with the class.” O'Connor, 201 F. Supp. 3d at 16 1134 (emphasis added). Here, this action began as a PAGA-only action and it was only after the 17 parties reached a settlement agreement that, as part of the settlement, the parties stipulated to 18 allowing Plaintiff to also assert a class claim. Rather than using the PAGA claim as a disposable 19 bargaining “chip,” the PAGA claim was the bargain – without the PAGA claim, there is no case. 20 In light of these significant risks, the Court concludes that Plaintiff’s results on both the 21 class and PAGA claim are within the range of reasonableness favoring preliminary approval. 22 Attorneys’ Fees, Costs and Service Award 23 Plaintiff’s counsel will file a detailed motion seeking final approval of attorneys’ fees, 24 expenses and a service award for Named Plaintiff prior to the final fairness hearing. Nonetheless, 25 “courts have an independent obligation to ensure that [an attorneys’ fee] award, like the settlement 26 itself, is reasonable, even if the parties have already agreed to an amount.” In re Bluetooth 27 Headset, 654 F.3d at 941 . “Where a settlement produces a common fund for the benefit of the 1 recovery method” in awarding attorneys’ fees. Id. at 942 (citation omitted). “Because the benefit 2 to the class is easily quantified in common-fund settlements,” courts may “award attorneys a 3 percentage of the common fund in lieu of the often more time-consuming task of calculating the 4 lodestar.” Id. “Applying this calculation method, courts typically calculate 25% of the fund as the 5 ‘benchmark’ for a reasonable fee award.” Id. 6 Here, Plaintiff’s counsel seeks 25% of the Gross Settlement Amount, or $250,000. 7 Agreement § 46(b). This amount is consistent with the Ninth Circuit presumptively reasonable 8 bench mark rate. As a cross-check, Class Counsel’s combined lodestar is approximately 9 $151,000. Helland Decl. ¶ 19; Rukin Decl. ¶ 8; Dempsey Decl. ¶ 18. Accordingly, a 25% fee 10 award would represent a lodestar multiplier of approximately 1.66. Parkinson v. Hyundai Motor 11 Am., 796 F. Supp. 2d 1160 , 1170 C.D. Cal. 2010) (“Where appropriate, multipliers may range 12 from 1.2 to 4 or even higher”). Class Counsel took this case on a contingency fee basis and 13 assumed a significant risk that there would be no recovery. At this stage, the fee request is within 14 the range of reasonableness warranting preliminary approval. So too is Plaintiff’s estimate of 15 costs of $2,405.51. 16 Finally, Plaintiff requests a service award of $5,000 in addition to her individual class 17 settlement payment. The Ninth Circuit has recognized that service awards to named plaintiffs in a 18 class action are permissible and do not render a settlement unfair or unreasonable. Staton v. 19 Boeing Co., 327 F.3d 938, 977 (9th Cir. 2003). An incentive award of $5,000 is considered 20 “presumptively reasonable” in this District, though courts have approved higher awards where 21 class representatives can make a strong showing on one or more of the Staton factors. O'Connor, [22] 2019 WL 4394401 , at *14; see also Harris v. Vector Mktg. Corp., No. 08-CV-5198-EMC, 2012 23 WL 381202 , at *7 (N.D. Cal. Feb. 6, 2012) (“[I]ncentive payments of $10,000 or $25,000 are 24 quite high and . . . as a general matter, $5,000 is a reasonable amount.”). 25 Here, Plaintiff Merante initiated this case, performed substantial work in support of the 26 case, including attending two lengthy settlement conferences. Helland Decl. ¶ 21. She reviewed 27 the initial Complaint and consulted with Class Counsel regarding the facts and theories in the 1 reviewed and approved both the Memorandum of Understanding and the Settlement Agreement. [2] Id. Ms. Merante’s availability and attention to this case was especially instrumental considering 3 that many Class Members moved out of the country during the course of litigation. Mot. at 30. 4 Thus, the Court finds a service award of $5,000 for Ms. Merante to be within the range of 5 reasonableness, as this amount is presumptively reasonable in this District. 6 IV. CONCLUSION 7 In conclusion, it is therefore ORDERED that: 8 (a) The settlement class is preliminarily CERTIFIED. The Parties are directed to 9 substitute the date of Preliminary Approval into the Class definition before issuing the 10 Class Notice. 11 (b) The Court APPROVES the procedure for Settlement Class members to participate in, 12 to opt out of, and to object to, the Settlement as set forth in the Class Notice. 13 (c) The Court APPOINTS Nichols Kaster, LLP, Rukin Hyland & Riggin LLP, and 14 Towards Justice as Class Counsel and Plaintiff Isabella Savini Merante as the Class 15 Representative. 16 (d) The Settlement Agreement and the PAGA settlement and class action settlement it 17 embodies is fair, adequate and reasonable, and appears to be the product of arm’s18 length and informed negotiations. Therefore, the Agreement is hereby preliminarily 19 APPROVED. 20 (e) The Court APPOINTS Analytics Consulting, LLC as the Settlement Administrator 21 pursuant to the terms set forth in the Agreement. 22 (f) The Court finds the proposed notice plan constitutionally sound and ADOPTS the 23 Parties’ proposed notice with the modification noted above. 24 (g) Defendant is directed to provide the Settlement Administrator not later than twenty 25 (20) calendar days after the date of this Order the name, most recent known email 26 address, and any other information required in accordance with the Agreement. 27 (h) The Settlement Administrator is directed to email the approved Class Notice to the 1 (i) A final approval hearing will be held on December 15, 2022, at 3:00 p.m. Pacific 2 Standard Time to determine whether the settlement should be granted final approval 3 as fair, reasonable, and adequate as to the Class Members. At that time, the Court will 4 hear all evidence and arguments necessary to evaluate the Settlement, will consider 5 Plaintiff’s request for the Class Representative Enhancement Award, and Class 6 Counsel’s request for an award of Attorney’s Fees and Costs. 7 (j) Prior to the Final Approval Hearing, Plaintiff shall file a motion for final approval of 8 the settlement, that shall include Class Counsel’s application for the Class 9 Representative Service Payment, Administration Expenses and PAGA Civil Penalty 10 Payment. Class Counsel shall also file a motion for an award of attorneys’ fees and 11 costs at least 35 days prior to the close of the notice period. 12 (k) As set forth in the Agreement, any Class Member may appear at the final approval 13 hearing in person or by his or her own attorney and show cause why the Court should 14 not approve the settlement, or object to the motion for awards of the Class 15 Representative Enhancement Award and Attorney’s Fees and Costs. 16 (l) The Court orders the following implementation schedule for further proceedings: [17] Deadline for Defendant to provide Settlement 20 calendar days after Preliminary 18 Administrator with list and contact information Approval of Class Members [19] Deadline for Settlement Administrator and 10 calendar days from receiving list of Class 20 email Notice of Class Settlement to Class Members from Defendant Members (“Notice Date”) [21] Deadline for Settlement Administrator to 20 days calendar days after distribution of 22 identify to Defendant which emails to Class email notices Members were not opened or were [23] undeliverable 24 Deadline for Defendant to provide Class Data 20 calendar days after Defendant’s receipt Supplement to Administrator regarding of Administrator’s identification of Class [25] contact information for Class Members who Members who were not reached 26 were not reached Last day for Class Members to submit 60 calendar days from the Notice Date [27] Requests for Exclusion or Objections 1 Settlement Administrator to provide At least fourteen calendar days prior to the declaration reporting on Requests for Fairness Hearing 2 Exclusion, Objections, and other results of class notice [3] Deadline to file motion for Attorneys’ fees, November 10, 2022 4 costs, and class representative service award 5 Deadline to file motion for Final Approval November 10, 2022 Fairness hearing on Final Approval and on December 15, 2022 at 3:00 p.m. PST [6] Class Counsel Award and Service Award [7] This order disposes of Docket No. 45. [9] IT IS SO ORDERED. [11] Dated: July 25, 2022 [13] ______________________________________ [14] EDWARD M. CHEN 15 United States District Judge