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Timothy Lara and Daryl Dean Davis v. Renaissance Hotel Operating Company

November 29, 2011

TIMOTHY LARA AND DARYL DEAN DAVIS, PLAINTIFF,
v.
RENAISSANCE HOTEL OPERATING COMPANY, DEFENDANT.



The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge

ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND GRANTING PLAINTIFF'S MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT

On October 3, 2011, Plaintiffs Timothy Lara and Daryl Dean Davis ("Plaintiffs"), on behalf of themselves and all others similarly situated (all collectively "the Class"), filed the instant Motion for Final Approval of Class Action Settlement ("Motion"). [Dkt. no. 83.] On October 17, 2011, Defendant Renaissance Hotel Operating Co., doing business as Renaissance Wailea Beach Resort ("Defendant"), filed a statement of no opposition to the Motion. [Dkt. no. 85.] Plaintiffs filed two supplemental statements in support of the Motion, one on October 24, 2011 ("10/24/11 Supplement"), and one on October 31, 2011 ("10/31/11 Supplement"). [Dkt. nos. 87, 88.]

On November 7, 2011, this matter came before the Court for a final fairness hearing for the proposed settlement*fn1 and a hearing on Plaintiffs' Motion. [Minutes (dkt. no. 91).]

Lori Aquino, Esq., appeared on behalf of Plaintiffs, and Shannon Liss-Riordan also appeared by telephone on behalf of Plaintiffs. Richard Rand, Esq., appeared on behalf of Defendant. For the reasons set forth below, and after due consideration of the evidence and arguments presented by the parties and the record in this case, the Court CONCLUDES that good cause exists to GRANT final approval of the settlement agreement in this action pursuant to Federal Rules of Civil Procedure Rule 23(e) and to GRANT Plaintiff's Motion.

BACKGROUND

This action is one of seven similar cases that Plaintiffs' counsel initiated from November 2008 to January 2009 relating to the distribution of hotel services charges pursuant to Haw. Rev. Stat. § 481B-14. Plaintiffs allege that Defendant imposed service charges in its resort that were subject to § 481B-14 and that Defendant used a portion of the service charges "to pay for costs or expenses other than wages and tips of employees." See id. Defendant, however, allegedly did not clearly disclose its practice to its customers. Plaintiffs allege that Defendant's failure to make clear disclosures required Defendant to distribute all of the service charges directly to its food and beverage service employees as tip income, but Defendant failed to do so. Plaintiffs contend that this failure constitutes: violations of Haw. Rev. Stat. §§ 481B-14, 481B-4, and 480-2; intentional interference with contractual and/or advantageous relations; breach of implied contract; unjust enrichment; and violations of Haw. Rev. Stat. §§ 388-6, 388-10, and 388-11. The Amended Class Action Complaint ("Amended Complaint"), [filed 6/28/10 (dkt. no. 57),] seeks: certification of the class action; damages compensating the Class for the lost income from the service charges they were entitled to; treble damages and liquidated damages; attorneys' fees; interest; and any other relief that they are entitled to receive.

PROPOSED SETTLEMENT

On August 12, 2011, the parties filed their Stipulation Regarding Entry of Order: (1) Preliminarily Approving Class Action Settlement Agreement, (2) Approving Form of Notice, (3) Establishing Objection Deadline, (4) Directing Dissemination of Notice, and (5) Scheduling "Final Fairness Hearing" ("Preliminary Approval Stipulation"). [Dkt. no. 80.] The parties' Settlement Agreement and Release Agreement ("Settlement Agreement") is attached to the Preliminary Approval Stipulation as Exhibit 1. The parties agreed to the following definition of the settlement class: "All individuals who worked as banquet or room service food and beverage service employees at the Renaissance Wailea Beach Resort between December 10, 2004, and the hotel's closing on September 6, 2007." [Settlement Agreement at 2.]

The key terms of the settlement are as follows:

*Defendant agrees to pay $90,000.00 as the total settlement amount;

*Plaintiffs agree that Class counsel will petition the Court for an award of attorneys' fees and costs of no more than $30,000.00 to be paid from the total settlement amount; and *the two Plaintiffs would request incentive payments of $5,000.00 each to be paid from the total settlement amount.

[Id. at 3-4.]

PRELIMINARY APPROVAL OF THE SETTLEMENT AND NOTICE OF THE SETTLEMENT TO THE CLASS This Court granted preliminary approval of the settlement, finding that it was "sufficiently fair and reasonable to warrant providing notice to the Class of its terms" as required by Fed. R. Civ. P. Rule 23(e). [Prelim. Approval Order at 3.] The Court scheduled the final fairness hearing for November 7, 2011.

The Motion states that eighteen out of sixty-one Class members returned claim forms. No Class member filed an objection, and no Class member opted out. [Motion at 3.] Eight notices and claim forms were returned to Plaintiffs' counsel as undeliverable, and counsel obtained updated addresses and reissued the notices and claim forms for seven of those individuals. [Id. at 5.]

The Motion also states that Defendant was working to provide Plaintiffs' counsel with the records necessary to determine the service charge earnings during the period in question. The Class members' respective settlement distributions will be determined, as set forth in the Settlement Agreement, based on these records. Each Class member will receive a distribution in proportion to the number of hours that he or she worked as banquet or room service employees during the period in question. [Id. at 5-6.]

By the date of the 10/24/11 Supplement, forty-three Class members submitted claims "accounting for approximately 90% of the class settlement funds." [10/24/11 Supplement at 3.] The 10/24/11 Supplement also states that no Class member filed an objection, and no Class member opted out. [Id.] Attached to the 10/24/11 Supplement as Exhibit 1 is a spreadsheet showing the estimated distribution of the Class members' portion of the settlement amount. Based on those estimates, "just over $45,000 has been claimed out of a $50,000 class settlement fund (assuming court approval of the attorneys' fees and lead plaintiff incentive payments requested in Plaintiffs' motion), which accounts for 90% of the class settlement fund." [Id. at 4.]

At the hearing on the Motion, Plaintiffs' counsel represented that, since the filing of the 10/24/11 Supplement, they may have received one or two more claims. Plaintiffs' counsel noted that there was still additional time for Class members to submit claims and be included in the distribution. Plaintiffs' counsel did not report receiving any objections or any opt out notices since the filing of the 10/24/11 Supplement.

The Court therefore FINDS that, as required by Federal Rules of Civil Procedure Rule 23(e)(1), notice of the settlement was directed in a reasonable manner to all Class members who would be bound by the settlement.

REQUEST FOR ATTORNEYS' FEES AND COSTS

Insofar as the parties have allocated a portion of the settlement amount for Plaintiffs' attorneys' fees and expenses, this Court must examine the reasonableness of the award before it can grant final approval of the settlement.

I. Entitlement to Attorneys' Fees and Expenses

The Settlement Agreement between Plaintiffs and Defendant provides that a portion of the settlement amount be allocated for an award of Plaintiffs' attorneys' fees and expenses. Plaintiffs also rely upon the "common fund" doctrine. [Motion at 14-19.] Further, they contend that the award is reasonable based on a lodestar cross-check. [Id. at 19-26.]

At the outset, the Court notes that the "common fund" doctrine does not apply because the parties did not follow regular common fund procedure in this case. See Staton v. Boeing Co., 327 F.3d 938, 969 (9th Cir. 2003) (citations omitted) ("Under regular common fund procedure, the parties settle for the total amount of the common fund and shift the fund to the court's supervision. The plaintiffs' lawyers then apply to the court for a fee award from the fund.").

Federal Rule of Civil Procedure 23(h), however, states: "In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." Thus, pursuant to Rule 23(h), the parties' Settlement Agreement alone is a sufficient basis for an award of reasonable attorneys' fees to Plaintiffs. The Court, however, emphasizes that it has only relied upon the parties' agreement as the basis for the entitlement to award; the Court has not relied upon the ...


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