1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JEFFREY PIPICH, as an “aggrieved Case No.: 3:21-cv-01120-AHG employee” on behalf of all other similarly 12 ORDER GRANTING MOTION FOR situated “aggrieved employees” under the

PRELIMINARY APPROVAL OF

13 Labor Code Private Attorney General Act

CLASS ACTION SETTLEMENT

of 2004, 14 Plaintiff, [ECF No. 89] 15 v. 16

O’REILLY AUTO ENTERPRISES, LLC,

17 a Delaware limited liability company; 18 EXPRESS SERVICES, INC., a Colorado corporation d/b/a Express Employment 19 Professionals; and DOES 2-50, inclusive, 20 Defendants. 21

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28 1 Before the Court is Plaintiffs’ Motion for Preliminary Approval of Class Action 2 Settlement. ECF No. 89. Defendants O’Reilly Auto Enterprises, LLC (“O’Reilly”) and 3 Express Services, Inc. (“Express”) each filed a Notice of Non-Opposition to the Motion on 4 May 28 and May 31, 2024, respectively. ECF Nos. 91, 93. For the reasons set forth below, 5 the Court GRANTS the unopposed Motion for Preliminary Approval of Class Action 6 Settlement. 7 I. BACKGROUND 8 On June 16, 2021, Plaintiff filed his initial complaint against Defendant 9 O’Reilly in this Court, styling his claims as a collective action under the Fair Labor 10 Standards Act (“FLSA”), and alleging that O’Reilly had failed to provide proper payment 11 of all wages to Plaintiff and other employees who were putative collective members by 12 requiring them to undergo COVID-19 screenings and security inspections each day without 13 pay, including during meal breaks, rest breaks, and off-the-clock pre-shift and post-shift 14 time. ECF No. 1. After the Court found that Plaintiff failed to state a cognizable legal claim 15 under the FLSA and dismissed the action without prejudice (ECF No. 15), Plaintiff filed a 16 Second Amended Complaint against O’Reilly on April 7, 2022, bringing claims under the 17 Private Attorneys General Act (“PAGA”) of the California Labor Code based on the same 18 underlying allegations. ECF No. 23. After discovery was underway, in September 2022, 19 the parties requested and were granted a stay of the case for approximately six months 20 pending private mediation in February 2023, which ultimately proved unsuccessful. ECF 21 Nos. 32, 33, 38. The stay was lifted on March 7, 2023. ECF No. 39. On April 14, 2023, 22 upon the order of the Court, Plaintiff amended the complaint once more to properly allege 23 subject-matter jurisdiction. ECF No. 45. 24 On February 21, 2024, the parties settled the case during a Mandatory Settlement 25 Conference conducted by Magistrate Judge Jill L. Burkhardt. ECF No. 70. The settlement 26 was a global settlement including this matter and three related matters involving Defendant 27 O’Reilly: (1) Eve Storm v. O’Reilly Auto Enterprises, et al., Riverside Superior Court, Case 28 No. CVRI2104730; (2) Eve Storm v. O’Reilly Auto Enterprises, et al., Case No. 5:23-cv- 1 00597-FLA-MAR (C.D. Cal.); and (3) Gary Cull, et al. v. O’Reilly Auto Enterprises, LLC, 2 Case No. 5:23-cv-01623-FLA-MAR (C.D. Cal.). See ECF No. 82 at 4. The parties agreed 3 to settle these cases on a class-wide basis, and the federal matters in the United States 4 District Court for the Central District of California have since been dismissed without 5 prejudice. ECF No. 89-1 at 21.1 Pursuant to the terms of the settlement and with leave of 6 Court, Plaintiff filed the operative Fourth Amended Complaint (“4AC”) on May 21, 2024. 7 ECF No. 86. The 4AC added Plaintiffs Eve Storm, Gary Cull, Melissa Kolakowski, and 8 Daniel Lopez to the case as class representatives, added Express (a named defendant in the 9 Storm cases) as a Defendant, and added certain class allegations and causes of action. See 10 ECF No. 82 at 5; ECF No. 86. Specifically, in the 4AC, Plaintiffs bring class-wide claims 11 in the 4AC for (1) failure to provide meal periods under California Labor Code §§ 226.7, 12 512, and 1198; (2) failure to authorize and permit rest breaks under California Labor Code 13 §§ 226.7 and 1198; (3) failure to pay all wages earned at the correct rates of pay under 14 California Labor Code §§ 223, 510, 1194, 1197, 1198; (4) failure to indemnify under 15 California Labor Code §§ 1198 and 2802; (5) failure to issue accurate and complete wage 16 statements under California Labor Code § 226; (6) willful failure to timely pay final wages 17 under California Labor Code §§ 201-203; and (7) unfair competition under California 18 Business and Professional Code §§ 17200, et seq. Id. ¶¶ 65-137. In addition, Plaintiffs bring 19 an eighth cause of action seeking civil penalties under PAGA on behalf of the “Aggrieved 20 Employees,” defined as all members of the Class employed by Defendants during the 21 period beginning May 11, 2020 and ending on the date that final judgment is entered in 22 this action. Id. ¶¶ 138-164. 23 The parties have consented to the undersigned Magistrate Judge to preside over the 24 case and review the proposed class action settlement for court approval. ECF No. 77. 25

26 27 1 Plaintiff Eve Storm’s PAGA action in the Riverside County Superior Court remains pending, but as part of the settlement agreement, Plaintiffs agree to dismiss that case 28 without prejudice within 14 days after final approval of the settlement. ECF No. 89-2 at 1 Therefore, the Court will review the settlement agreement to determine the propriety of 2 certifying a settlement class and whether the proposed settlement is fair and reasonable. 3 II. TERMS OF THE SETTLEMENT AGREEMENT 4 The parties have submitted their proposed Class Action and PAGA Settlement 5 Agreement and Class Notice (“Settlement Agreement”) for the Court’s review. ECF No. 6 89-2. The Settlement Agreement contains the following key terms: 7 • The Settlement Class is defined as all individuals employed by one or both 8 Defendants as non-exempt, hourly employees, either directly or indirectly through 9 staffing agencies, and who worked at one of Defendant O’Reilly Auto Enterprises, 10 LLC’s distribution centers in California at any time during the Class Period of 11 July 5, 2018 to May 22, 2024. The “Aggrieved Employees” are all class members 12 who were employed by one or both Defendants in California and classified as non- 13 exempt, hourly employees, either directly or indirectly through staffing agencies, at 14 one of Defendant O’Reilly Auto Enterprises, LLC’s distribution centers in 15 California at any time during the PAGA Period of May 11, 2020 to May 22, 2024. 16 The Settlement Class thus includes all Aggrieved Employees. 17 • Defendant O’Reilly will pay $4,100,000.00 (the “Gross Settlement Amount”), in 18 addition to any and all employer payroll taxes owed on the Wage Portions2 of the 19 Individual Class Payments, to settle the claims of the Settlement Class. The 20 Administrator will disburse the entire Gross Settlement Amount without asking or 21 requiring Participating Class Members or Aggrieved Employees to submit any claim 22 as a condition of payment. None of the Gross Settlement Amount will revert to 23 Defendants. 24 • The Administrator will make and deduct the following payments from the Gross 25 Settlement Amount: 26 o Class Representative Service Payments to the Class Representatives totaling 27

28 1 not more than $55,000 (in addition to any Individual Class Payment and any 2 Individual PAGA Payment each Class Representative is entitled to received 3 as a Participating Class Member), divided among the Class Representatives 4 as follows: 5  $22,500 to Jeffrey Pipich; 6  $10,000 to Eve Storm; 7  $7,500 to Gary Cull; 8  $7,500 to Melissa Kolakowski; and 9  $7,500 to Daniel Lopez. 10  If the Court approves Class Representative Service Payments for less 11 than the amount requested, the Administrator will retain the remainder 12 in the Net Settlement Amount. Plaintiffs and the Class Representatives 13 shall not have the right to revoke or cancel the Settlement Agreement 14 if the Court does not approve any or all of the requested Class 15 Representative Service Payments. 16 o Attorney fee payments to Class Counsel of not more than one-third of the 17 Gross Settlement Amount, which is estimated to be $1,366,666.67, and a 18 Class Counsel Litigation Expenses Payment of not more than $120,000. If the 19 Court approves a Class Counsel fees payment and/or a litigation expenses 20 payment for less than the amounts requested, the Administrator will retain the 21 remainder in the Net Settlement Amount. The Settlement Agreement is not 22 contingent upon the Court’s decision to award Class Counsel any particular 23 amount, or any amount, for fees or litigation expenses. 24 o An Administration Expenses Payment to the Administrator not to exceed 25 $40,000, except for a showing of good cause and as approved by the Court. If 26 the Administration Expenses are less than $40,000 or the Court approves 27 payment for less than $40,000, the Administrator will retain the remainder in 28 the Net Settlement Amount. 1 o An Individual Class Payment to each Participating Class Member, which will 2 be calculated by (a) dividing the Net Settlement Amount by the total number 3 of workweeks worked by all Participating Class Members during the Class 4 Period; and (b) multiplying the result by each Participating Class Member’s 5 workweeks. 6  Ten percent of each Participating Class Member’s Individual Class 7 Payment will be allocated to settlement of wage claims (“Wage 8 Portion”), while the remaining ninety percent of each participating 9 Class Member’s Individual Class Payment will be allocated to 10 settlement of claims for interest and penalties (“Non-Wage Portion”). 11  Non-Participating Class Members will not receive any Individual Class 12 Payments. The Administrator will retain amounts equal to the 13 Individual Class Payments in the Net Settlement Amount for a pro rata 14 distribution to Participating Class Members. 15 o PAGA Penalties in the amount of $410,000 to be paid from the Gross 16 Settlement Amount, with 75% allocated to the LWDA PAGA Payment and 17 25% allocated to the Individual PAGA Payments. 18  An Individual PAGA Payment is each Aggrieved Employee’s pro rata 19 share of 25% of the PAGA Penalties, calculated according to the 20 number of PAGA workweeks worked during the PAGA Period. The 21 Administrator will calculate each Individual PAGA Payment by (a) 22 dividing the amount of the Aggrieved Employees’ 25% share of PAGA 23 Penalties ($102,500) by the total number of PAGA workweeks worked 24 by all Aggrieved Employees during the PAGA Period and (b) 25 multiplying the result by each Aggrieved Employee’s PAGA 26 workweeks. 27 • Defendant O’Reilly shall fully fund the Gross Settlement Amount, as well as the 28 amounts necessary to fully pay Defendants’ share of payroll taxes, by transmitting 1 the funds to the Administrator no later than fourteen days after the Effective Date of 2 settlement, which is defined as the date when the Court’s Judgment on its Order 3 Granting Final Approval of the Settlement becomes final. Within fourteen days after 4 Defendant O’Reilly funds the Gross Settlement Amount, the Administrator will mail 5 checks for all seven categories of payments outlined above. 6 • Effective on the date when Defendant O’Reilly fully funds the Gross Settlement 7 Amount and funds all employer payroll taxes owed on the Wage Portion of the 8 Individual Class Payments, Plaintiffs, Class Members, and Class Counsel will 9 release all claims against the Released Parties, as defined in the Settlement 10 Agreement. See Settlement Agreement ¶ 6. 11 III. LEGAL STANDARD 12 Under Rule 23 of the Federal Rules of Civil Procedure, parties may not settle claims 13 on a class-wide basis without court approval. Fed. R. Civ. P. 23(e). Rule 23(e) sets forth 14 the procedures that courts must apply to a proposed settlement of class claims. These 15 procedures include: (1) notice to the class; (2) if the settlement proposal would bind class 16 members, approval by the Court only after a hearing and only on finding that it is fair, 17 reasonable, and adequate based on certain specific considerations; (3) identification of any 18 agreement made by the parties in connection with the settlement proposal; (4) if the class 19 action was previously certified under 23(b)(3), a new opportunity for class members to 20 request exclusion; and (5) the opportunity for class members to object to the proposed 21 settlement. 22 Where, as here, the parties reach a settlement agreement prior to class certification, 23 “courts must peruse the proposed compromise to ratify both the propriety of the 24 certification and the fairness of the settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 25 (9th Cir. 2003). In evaluating the propriety of certification for purposes of class-wide 26 settlement, the Court must first assess whether a class exists. Id. Second, the Court must 27 “carefully consider whether the proposed settlement is fundamentally fair, adequate, and 28 reasonable, recognizing that it is the settlement taken as a whole, rather than the individual 1 component parts, that must be examined for overall fairness[.]” Id. (internal quotations and 2 citation omitted). 3 As set forth in Rule 23(e), the Court’s assessment of whether the proposed settlement 4 is fair, adequate, and reasonable requires the Court to consider whether: (A) the class 5 representatives and class counsel have adequately represented the class; (B) the proposal 6 was negotiated at arm’s length; (C) the relief provided for the class is adequate, taking into 7 account (i) the costs, risks, and delay of trial and appeal, (ii) the effectiveness of any 8 proposed method of distributing relief to the class, (iii) the terms of any proposed award of 9 attorney fees, and (iv) the terms of the settlement agreement; and (D) the proposed 10 settlement treats class members equitably relative to each other. Fed. R. Civ. P. 11 23(e)(2)(A)-(D). See also In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 12 (N.D. Cal. 2007) (“As noted in the Manual for Complex Litigation[,] ‘if the proposed 13 settlement appears to be the product of serious, informed, non-collusive negotiations, has 14 no obvious deficiencies, does not improperly grant preferential treatment to class 15 representatives or segments of the class, and falls within the range of possible approval, 16 then the court should direct that the notice be given to the class members of a formal 17 fairness hearing.’”) (citation omitted). Importantly, for the Court to reach a determination 18 that preliminary approval is appropriate, “the settlement need only be potentially fair, as 19 the Court will make a final determination of its adequacy at the hearing on Final Approval, 20 after such time as any party has had a chance to object and/or opt out.” Acosta v. Trans 21 Union, LLC, 243 F.R.D. 377, 386 (C.D. Cal. 2007). 22 If the Court preliminarily certifies the class and finds the proposed settlement fair, 23 adequate, and reasonable, it then appoints a class representative or representatives and class 24 counsel. 25 IV. CONDITIONAL CLASS CERTIFICATION UNDER RULE 23 26 As discussed above, the first step in the Court’s analysis is to evaluate the propriety 27 of class certification for purposes of class-wide settlement. Plaintiffs seek provisional 28 certification of the Settlement Class under Rule 23(b)(3), with the following Class 1 Definition: 2 [A]ll individuals employed by one or both Defendants as hourly, non- exempt employees, either directly or indirectly through staffing agencies, and 3 who worked at one of Defendant O’Reilly Auto Enterprises, LLC’s 4 distribution centers in California at any time during the Class Period. 5 Settlement Agreement ¶ 1.5. The Settlement Agreement further defines the Class Period 6 as the period from July 5, 2018 to May 22, 2024. Id. ¶ 1.12. 7 To obtain class certification, Plaintiffs must provide facts in support of the four 8 requirements of Rule 23(a): numerosity, commonality, typicality, and adequacy of 9 representation. Fed. R. Civ. P. 23(a). As the party seeking class certification, Plaintiffs bear 10 the burden of demonstrating that their proposed class meets each of these four requirements 11 in addition to at least one of the requirements of Rule 23(b). Zinser v. Accufix Rsch. Inst., 12 Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Rule 23(b) is satisfied if: (1) prosecuting separate 13 actions by individual class members would create a risk of either inconsistent adjudications 14 with respect to individual class members, or a risk of adjudications with respect to 15 individual class members that, as a practical matter, would be dispositive of the interests 16 of other non-party class members or would substantially impair or impede their ability to 17 protect their interests; (2) the party opposing the class has acted or refused to act on grounds 18 that apply generally to the class, so that final injunctive or declaratory relief is appropriate 19 for the class as a whole; or (3) questions of law or fact common to class members 20 predominate over any questions affecting only individual members, and a class action is 21 superior to other available methods of adjudication. Fed. R. Civ. P. 23(b)(1)-(3). See also 22 Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 944 (9th Cir. 2009). 23 The Court will address each of these requirements in turn. 24 a. Numerosity 25 To determine whether the numerosity requirement is met, the Court should look to 26 the size of the proposed class. Many courts have held that numerosity is presumed to be 27 met if a proposed class has forty or more members. See, e.g., Consol. Rail Corp. v. Town 28 of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995) (“[N]umerosity is presumed at a level of 40 1 members”); Ikonen v. Hartz Mountain Corp., 122 F.R.D. 258, 262 (S.D. Cal. 1988) (“As a 2 general rule, classes of 20 are too small, classes of 20–40 may or may not be big enough 3 depending on the circumstances of each case, and classes of 40 or more are numerous 4 enough.”) (citation omitted). That said, the numerosity requirement “requires examination 5 of the specific facts of each case and imposes no absolute limitations.” Gen. Tel. Co. of the 6 Nw., Inc. v. EEOC, 446 U.S. 318, 330 (1980). “Although the absolute number of class 7 members is not the sole determining factor, where a class is large in numbers, joinder will 8 usually be impracticable.” Jordan v. Los Angeles Cnty., 669 F.2d 1311, 1319 (1982), 9 vacated on other grounds, 459 U.S. 810 (1982). Accord A. B. v. Hawaii State Dep’t of 10 Educ., 30 F.4th 828, 835 (9th Cir. 2022). The term “impracticable” does not mean 11 “impossible,” and only refers to “the difficulty or inconvenience of joining all members of 12 the class.” Harris v. Palm Springs Alpine Ests., Inc., 329 F.2d 909, 914 (9th Cir. 1964) 13 (quoting Advertising Specialty Nat’l Ass’n v. FTC, 238 F.2d 108, 119 (1st Cir. 1956)). 14 Here, the proposed settlement class includes an estimated 5,750 members. ECF No. 15 89-1 at 39. Plaintiffs also maintain that the size of the settlement class is ascertainable 16 because its members may be identified by reference to Defendants’ records, and 17 Defendants have agreed to share the relevant information from their records to facilitate 18 the settlement process. Id. 19 The Court agrees that the estimated size of the proposed settlement class would make 20 joinder impracticable in this case. Therefore, the proposed settlement class meets the 21 numerosity requirement. 22 b. Commonality 23 The commonality requirement of Rule 23(a)(2) requires that questions of law or fact 24 be common to the class. “Commonality is construed permissively and is ‘less rigorous than 25 the companion requirements of Rule 23(b)(3).’” Fine v. Kansas City Life Ins. Co., No. 26 2:22-cv-2071, 2023 WL 7393027, at *3 (C.D. Cal. Nov. 6, 2023) (quoting Hanlon v. 27 Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998), overruled on other grounds by Wal- 28 Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)). There is no requirement that all questions 1 of law and fact be common to satisfy the rule; the existence of shared legal issues with 2 divergent factual predicates is sufficient, as is a common core of salient facts coupled with 3 disparate legal remedies within the class. Hanlon, 150 F.3d at 1019. 4 Here, the parties agree that for purposes of the settlement, the claims of the putative 5 class members all stem from the same sources. ECF No. 89-1 at 40. All members of the 6 proposed settlement class were subject to the same or similar operations and employment 7 policies, practices, and procedures. Id. Plaintiffs assert that common questions include: (1) 8 whether Defendants failed to pay all wages earned to class members for all hours worked 9 at the correct rates of pay; (2) whether Defendants failed to provide class members with all 10 meal and rest periods required under California law; (3) whether Defendants failed to pay 11 class members one additional hour of pay on workdays when they failed to provide one or 12 more meal or rest periods as required by law; (4) whether Defendants failed to indemnify 13 the class for all necessary business expenditures incurred during the discharge of their 14 duties; (5) whether Defendants knowingly and intentionally failed to provide class 15 members with accurate wage statements; (6) whether Defendants willfully failed to provide 16 the class with timely final wages; and (7) whether Defendants engaged in unfair 17 competition in violation of Cal. Bus. and Prof. Code § 17200 with respect to members of 18 the class. Id. at 40-41. 19 The Ninth Circuit has held that the commonality requirement is satisfied when the 20 lawsuit challenges a system-wide practice or policy that affects all of the putative class 21 members, even where there are factual differences among the individual litigants. See 22 Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir. 2001), abrogated on other grounds by 23 Johnson v. California, 543 U.S. 499 (2005)) (finding the commonality requirement met 24 where all members of a putative class of disabled prisoner plaintiffs challenged the same 25 parole-related policies and practices implemented by the Board of Prison Terms under the 26 ADA, despite having different disabilities); LaDuke v. Nelson, 762 F.2d 1318, 1332 (9th 27 Cir. 1985) (finding a “question of law or fact common to the class” on the basis that all 28 putative class members challenged the constitutionality of the same INS practice). 1 Similarly, here, all putative members of the settlement class are employees of Defendants 2 who were subject to the same or similar employment policies, practices, and procedures 3 being challenged in the operative complaint. Therefore, the Court agrees that the 4 commonality requirement is met despite the fact that class members may have been 5 employed in different positions and at different O’Reilly distribution center locations in 6 California. 7 c. Typicality 8 The purpose of the typicality requirement is “to assure that the interest of the named 9 representative aligns with the interests of the class.” Hanon v. Dataproducts Corp., 976 10 F.2d 497, 508 (9th Cir. 1992). Although the commonality and typicality requirements often 11 merge into one another, there is some distinction between the two. As opposed to 12 commonality, which requires common questions of law or fact to be shared among the 13 claims of the putative class members, typicality is satisfied where the claims of the class 14 representatives are typical of those of the class, and “when each class member’s claim 15 arises from the same course of events, and each class member makes similar legal 16 arguments to prove the defendant’s liability.” Armstrong v. Davis, 275 F.3d 849, 868 (9th 17 Cir. 2001) (quoting Marisol v. Giuliani, 126 F.3d 372, 376 (2nd Cir. 1997)). In other words, 18 the claims of the putative class representatives and the claims of the putative class must 19 arise from the same events or course of conduct and must be based on the same legal theory. 20 In re United Energy Corp. Solar Power Modules Tax Shelter Invs. Sec. Litig., 122 F.R.D. 21 251, 256 (C.D. Cal. 1988). Class certification is inappropriate “where a putative class 22 representative is subject to unique defenses which threaten to become the focus of the 23 litigation.” Hanon, 976 F.2d at 508 (quoting Gary Plastic Packaging Corp. v. Merrill 24 Lynch, 903 F.2d 176, 180 (2d. Cir. 1990)). “The crux of both [the commonality and 25 typicality] requirements is to ensure that maintenance of a class action is economical and 26 that the named plaintiff’s claim and the class claims are so interrelated that the interests of 27 the class members will be fairly and adequately protected in their absence.” Armstrong, 28 275 F.3d at 868 (quoting Marisol, 126 F.3d at 376) (internal quotations and alteration 1 omitted). 2 Here, all named Plaintiffs assert that they were subject to the same relevant policies 3 and procedures governing their compensation, hours of work, and meal and rest periods as 4 were absent members of the putative settlement class. ECF No. 89-1 at 41. Their claims 5 arise from the same underlying facts and rest on the same legal theories as the claims of 6 absent class members. Moreover, nothing in the operative complaint suggests that any 7 claims of the named Plaintiffs would be subject to unique defenses that would not apply to 8 the claims of absent class members. Therefore, the Court agrees that the typicality 9 requirement is met. 10 d. Adequate Representation 11 Rule 23(a)(4) requires that class representatives “fairly and adequately protect the 12 interests of the class.” To determine whether this requirement is satisfied, the Court must 13 resolve two questions: “(1): do the named plaintiffs and their counsel have any conflicts of 14 interest with other class members and (2) will the named plaintiffs and their counsel 15 prosecute the action vigorously on behalf of the class?” Anders v. Cal. State Univ., Fresno, 16 No. 23-15265, 2024 WL 177332, at *1 (9th Cir. Jan. 17, 2024) (quoting Hanlon, 150 F.3d 17 at 1020). This inquiry is also relevant to the Court’s inquiry into whether a proposed class 18 settlement is fair under Rule 23(e). Kim v. Allison, 87 F.4th 994, 1000 (9th Cir. 2023); see 19 also Fed. R. Civ. P. 23(e)(2)(A). With respect to the first question, “[o]nly conflicts that 20 are fundamental to the suit and that go to the heart of the litigation prevent a plaintiff from 21 meeting the Rule 23(a)(4) adequacy requirement.” In re Online DVD-Rental Antitrust 22 Litig., 779 F.3d 934, 942 (9th Cir. 2015) (quoting 1 William B. Rubenstein et al., Newberg 23 on Class Actions § 3.58 (5th ed. 2011)). A conflict is fundamental when it goes to the 24 specific issues in controversy. Id. As to the second question, “the relevant inquiry is 25 whether the plaintiffs maintain a sufficient interest in, and nexus with, the class so as to 26 ensure vigorous representation.” Id. (quoting Roper v. Consurve, Inc., 578 F.2d 1106, 1112 27 (5th Cir. 1978)). 28 In support of the Motion for Preliminary Approval, Plaintiffs assert that they and the 1 putative members of the settlement class “have strong and co-extensive interests in this 2 litigation because they all worked for Defendants during the relevant time period, allegedly 3 suffered the same alleged injuries from the same alleged court of conduct, and there is no 4 evidence of any conflict of interest between Plaintiffs and the class members.” ECF No. 5 89-1 at 42. Although the Court finds that some of these points go toward questions of 6 commonality and typicality rather than adequacy, the Court agrees that there is no evidence 7 of any conflict of interest between Plaintiffs and the class members, at least not on the 8 record before it so far. Although the named Plaintiffs will receive service awards under the 9 proposed Settlement Agreement, service payments to class representatives “are fairly 10 typical in class action cases” and “do not, by themselves, create an impermissible conflict 11 between class members and their representatives.” In re Online DVD-Rental Antitrust 12 Litig., 779 F.3d at 942. Moreover, as in the DVD-Rental case, the proposed Settlement 13 Agreement “provide[s] no guarantee that the class representatives would receive incentive 14 payments, leaving that decision to later discretion of the district court[,]” and even goes 15 further to expressly provide that the class representatives shall not have the right to revoke 16 or cancel the Settlement Agreement if the Court does not approve any or all of the requested 17 service payments. See id.; see also Settlement Agreement ¶ 3.2.1. 18 There is also, at present, no evidence of any conflicts of interest between class 19 counsel and the absent class members, and Plaintiffs’ counsel expressly disclaim 20 knowledge of any such conflicts, both in declarations submitted to the Court and in the 21 Settlement Agreement itself. See Settlement Agreement ¶ 27; ECF No. 89-2, Spivak Decl. 22 ¶ 42; ECF No. 89-3, Haines Decl. ¶ 3; ECF No. 89-4, Piazza Decl. ¶ 3. 23 With respect to the second question regarding whether the named Plaintiffs and their 24 counsel will prosecute the action vigorously on behalf of the class, “[a]lthough there are 25 no fixed standards by which ‘vigor’ can be assayed, considerations include competency of 26 counsel and, in the context of a settlement-only class, an assessment of the rationale for not 27 pursuing further litigation.” Hanlon, 150 F.3d at 1021. Here, Plaintiffs’ counsel David 28 Spivak, Walter Haines, and Alexandra Piazza have provided declarations to the Court to 1 show that they have significant experience in employment litigation generally, and wage 2 and hour and employment-related class action litigation specifically. See Spivak Decl. ¶¶ 3 43-50; Haines Decl. ¶¶ 2, 4; Piazza Decl. ¶¶ 4-9. They also affirmatively state that they 4 will vigorously represent the interests of the class. See Spivak Decl. ¶ 42; Haines Decl. ¶ 5 3; Piazza Decl. ¶ 3. The record reflects that the parties have engaged in settlement 6 negotiations numerous times over the three years that the case has been pending, including 7 both court-facilitated and private mediation. See ECF Nos. 29, 38, 66, 70. These numerous 8 attempts at settlement over several years show that Plaintiffs and their counsel did not 9 prioritize obtaining a quick settlement for themselves over the interests of the class as a 10 whole. 11 Further, Plaintiffs have explained in thorough detail their rationale for settling the 12 case rather than pursuing further litigation. Specifically, as outlined in the Motion for 13 Preliminary Approval, Plaintiffs were concerned about the possibility that Defendant 14 would launch a “pick off” settlement campaign to pursue individual release agreements 15 from class members, thereby narrowing the size of the Settlement Class until it is no longer 16 numerous enough for class certification and reducing the claim value in settlement 17 negotiations. ECF No. 89-1 at 58. Plaintiffs’ counsel also outlines specific risks of 18 continued litigation, including but not limited to risks associated with (1) arbitration 19 agreements between Defendant Express and the temp worker class members; (2) the effect 20 of Defendants’ written policies prohibiting off-the-clock work on Plaintiffs’ unpaid wages 21 claim, as well as the difficulty of proving that claim; (3) evidence tending to weaken 22 Plaintiffs’ meal period and rest break claims, including that employees often chose to spend 23 their meal periods and rest breaks in break rooms at the distribution centers and thus did 24 not need to pass through security screening at the beginning and end of meal periods or 25 breaks, as well as written policies that are consistent with the relevant Industrial Welfare 26 Commission Wage Order; (4) the effect of the fact that the wage statements issued by 27 Defendants comply with the requirements of Labor Code § 226 on the wage statement 28 penalty claims, although Plaintiffs dispute whether the statements are accurate; (5) the 1 effect of the fact that Plaintiffs’ pay stubs show sick leave use and accrual on the sick leave 2 claims; (6) whether Plaintiffs would be able to prove willful behavior to support the waiting 3 time penalties claims; (7) defenses to the Labor Code claims underlying Plaintiffs’ PAGA 4 allegations and the difficulty of proving that Defendants acted intentionally, knowingly, 5 and willfully in violating the rights of class members under the Labor Code; (8) the 6 uncertainty that a Court would “stack” civil penalties under all 20 relevant sections of the 7 Labor Code for the same violation for the same employee for the same pay period, and the 8 unlikelihood that Plaintiffs would recover any significant PAGA penalty award in a 9 contested proceeding; (9) other evidence tending to weaken Plaintiffs’ PAGA claims under 10 Labor Code §§ 2102 and 2103 and their claims that certain areas within Defendants’ 11 facilities were inadequate and temperatures either too hot or too cold. See id. at 50-58. 12 Thus, Plaintiffs agreed to a settlement amount reflecting counsel’s estimate of the total 13 amount of damages, monetary penalties, or other relief that the class could reasonably 14 expect to be awarded at trial, taking into account the likelihood of prevailing and these 15 other attendant risks. Id. at 58. 16 Based on these considerations, the Court finds that Plaintiffs have met their burden 17 to establish that all four requirements of Rule 23(a) are satisfied. 18 e. Predominance 19 As noted above, Plaintiffs must not only show that the requirements of Rule 23(a) 20 are met to obtain class certification, but they must also show that at least one subsection of 21 Rule 23(b) is satisfied. Here, the parties agree that certification is appropriate under Rule 22 23(b)(3)—that is, that questions of law or fact common to class members predominate over 23 any questions affecting only individual members, and a class action is superior to other 24 available methods for fairly and efficient adjudicating the controversy. Fed. R. Civ. P. 25 23(b)(3); ECF No. 89-1 at 38. The Rule 23(b)(3) predominance inquiry “tests whether 26 proposed classes are sufficiently cohesive to warrant adjudication by representation.” 27 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997). The matters pertinent to the 28 Court’s analysis of whether the predominance requirement of Rule 23(b)(3) is satisfied 1 include: (A) the class members’ interests in individually controlling the prosecution or 2 defense of separate actions; (B) the extent and nature of any litigation concerning the 3 controversy already begun by or against class members; (C) the desirability or 4 undesirability of concentrating the litigation of the claims in this particular forum; and (D) 5 the likely difficulties in managing a class action. Fed. R. Civ. P. 23(b)(3)(A)-(D). 6 As noted in the Court’s discussion of the commonality requirement, the legal and 7 factual issues underlying this action are common to all members of the proposed settlement 8 class, in that all members were subject to the same employment policies, practices, and 9 procedures of Defendants. However, the predominance criterion “is far more demanding” 10 than the commonality requirement. Amchem, 521 U.S. at 624. The Court must also consider 11 whether there are any factual or legal questions that differ among class members that might 12 undermine class cohesion, and “caution” is warranted “when individual stakes are high and 13 disparities among class members great.” Id. at 624-25. 14 Here, the record does not give rise to any concern that there are disparities among 15 the putative members of the settlement class to such an extent that common questions of 16 law and fact among class members no longer predominate over questions affecting only 17 individual members, or that pursuing litigation on an individual basis would be superior to 18 a class action. Given that the putative settlement class has approximately 5,750 members, 19 a class action is a superior method of adjudication to thousands of individual lawsuits, 20 particularly where the claims of most of the class members would be too small to justify 21 the cost and risk of litigation. See Spivak Decl. ¶ 89. The average class member’s hourly 22 wage is $19.07, and the average estimated individual class payment to class members is 23 equivalent to approximately 19.18 hours of unpaid wages, or $365.80. Id. ¶ 96. For those 24 class members who are also Aggrieved Employees under PAGA, the average individual 25 PAGA payment will be only $23.77, and the highest possible individual PAGA payment 26 will be $136.72. Id. ¶ 98. Therefore, it would not be practical or economically feasible for 27 the average class member to pursue his or her claims on an individual basis. These barriers 28 to individual litigation far outweigh any difficulties in managing a class action, particularly 1 where, as here, the members of the settlement class are readily ascertainable from 2 Defendants’ records, the parties have already reached a tentative settlement on a class-wide 3 basis, and Plaintiffs have a clear plan in place to provide appropriate notice of the 4 settlement and an opportunity to object and/or to opt out of the settlement to all class 5 members. 6 Moreover, the proposed settlement is structured in such a way that each class 7 member will receive a pro rata distribution of the settlement proceeds proportionate to the 8 number of workweeks he or she worked for Defendants during the class period, compared 9 to the total estimated number of 289,537 workweeks worked by all class members during 10 the class period. As explained by Plaintiffs’ counsel, “this method compensates Class 11 Members based on the extent of their potential injuries, in that Class Members who worked 12 for Defendants longer would have been subject to more alleged violations.” Spivak Decl. 13 ¶ 97. Thus, although differing numbers of workweeks among class members is a relevant 14 disparity, the same disparity would affect the potential recoveries of individual class 15 members if they were to bring separate individual actions against Defendants instead. 16 Other potential disparities the Court has considered are that members of the 17 settlement class worked at different O’Reilly distribution centers in California and held 18 different positions. However, under the class definition, all class members worked hourly 19 positions, and there is nothing in the record to indicate that any of these positions earned 20 much higher pay than the other positions. Additionally, the named Plaintiffs each held 21 different positions to one another—Pipich worked as a driver and warehouse worker, Storm 22 worked as a picker, Cull worked as a materials handler, Kolakowski worked as a materials 23 handler and custodian, Lopez worked as a materials handler and maintenance specialist. 24 Id. ¶¶ 30-34. Therefore, Plaintiffs collectively represent a wide range of workers who fit 25 within the class definition. Plaintiffs also allege that the same or similar relevant 26 employment policies related to their claims of wage and labor violations were in place at 27 all of the distribution centers covered by the class definition. See 4AC ¶¶ 15-18, 20-21, 24, 28 28, 36-64. Therefore, the Court finds these disparities do not defeat a finding of 1 predominance. 2 Finally, the Court has considered “the extent and nature of any litigation concerning 3 the controversy already begun by or against class members” under 23(b)(3)(B). Plaintiffs’ 4 counsel’s inquiries into whether any similar actions against Defendants exist have 5 uncovered only two similar cases bringing class and PAGA claims for unpaid minimum 6 wages, overtime wages, meal and rest period violations, and off-the-clock COVID-19 and 7 security screenings against Defendant O’Reilly. Spivak Decl. ¶ 36. Both of these matters 8 have already settled on an individual basis. Id. Given that these cases have already settled, 9 the Court finds they do not weigh against a finding of predominance. 10 For these reasons, the Court finds that questions of law or fact common to class 11 members predominate over any questions affecting only individual members, and a class 12 action is superior to other available methods for fairly and efficient adjudicating the 13 controversy. Accordingly, Rule 23(b)(3) is met. 14 V. PRELIMINARY FAIRNESS DETERMINATION UNDER RULE 23(e) 15 Next, the Court must make a preliminary determination regarding whether the 16 proposed settlement is “fair, reasonable, and adequate” pursuant to Fed. R. Civ. P. 23(e)(2). 17 Preliminary approval of the settlement is appropriate if the settlement (1) appears to be the 18 product of serious, informed, non-collusive negotiations; (2) has no obvious deficiencies; 19 (3) does not improperly grant preferential treatment to class representatives or segments of 20 the class; and (4) falls within the range of possible approval. In re Tableware Antitrust 21 Litig., 484 F. Supp. 2d at 1079; Sciortino v. PepsiCo, Inc., Case No. 14-cv-00478, 2016 22 WL 3519179, at *4 (N.D. Cal. June 28, 2016). 23 In assessing the Settlement Agreement, “[i]t is the settlement taken as a whole, rather 24 than the individual component parts, that must be examined for overall fairness.” Hanlon, 25 150 F.3d at 1026. The Court must balance the following factors in making this assessment: 26 [T]he strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status 27 throughout the trial; the amount offered in settlement; the extent of discovery 28 completed and the stage of the proceedings; the experience and views of 1 class members to the proposed settlement. Id. 2 “At the preliminary approval stage, a full fairness analysis is unnecessary. Closer 3 scrutiny is reserved for the final approval hearing.” Hawkins v. Kroger Co., Case No. 15- 4 cv-2320, 2021 WL 2780647, at *3 (S.D. Cal. July 2, 2021) (internal quotations and 5 citations omitted). See also Alberto v. GMRI, Inc., 252 F.R.D. 652, 665 (E.D. Cal. 2008) 6 (“Given that some of these factors cannot be fully assessed until the court conducts its 7 fairness hearing, a full fairness analysis is unnecessary at this stage[.] The court, therefore, 8 will simply conduct a cursory review of the terms of the parties’ settlement for the purpose 9 of resolving any glaring deficiencies before ordering the parties to send the proposal to 10 class members.”) (internal quotations and citation omitted). 11 Upon initial review, the Court finds preliminary approval of the Settlement 12 Agreement is appropriate. First, the Settlement Agreement appears to be the product of 13 serious, informed, non-collusive negotiations. As discussed, the parties reached the 14 agreement following multiple mediations, including two separate settlement conferences 15 facilitated by Judge Burkhardt in February 2024. The parties ultimately settled during the 16 second settlement conference before Judge Burkhardt on February 21, 2024. ECF No. 70. 17 Prior to mediation, the parties exchanged significant informal discovery, including 18 Defendants’ written policies applicable to the claims at hand, the personnel files of dozens 19 of employees including Plaintiffs, information regarding similar claims against 20 Defendants, data regarding the class size, the aggrieved employees under PAGA, the 21 number of paychecks and workweeks at issue, and a random sampling of the time and 22 payroll records of 169 employees that Plaintiffs’ retained data analyst determined was 23 statistically reliable to inform the parties’ settlement negotiations. ECF No. 89-1 at 21-24. 24 The use of a mediator on three separate occasions to negotiate settlement and the exchange 25 of discovery beforehand both support a conclusion that Plaintiffs were appropriately 26 informed in negotiating a settlement, and that the settlement was not the result of collusion 27 or bad faith by the parties or counsel. See Bellinghausen v. Tractor Supply Co., 303 F.R.D. 28 1 some concerns about a fee-driven agreement or preferential treatment being granted to 2 Plaintiff Pipich, the Court does not at this juncture have reason to find the settlement 3 negotiations were collusive or that the parties did not approach their negotiations seriously 4 and with the interests of the absent putative class members in mind. 5 Second, the Court finds the Settlement Agreement has no obvious deficiencies and 6 falls within the range of possible approval. With respect to the factors concerning the 7 strength of Plaintiffs’ case and the risk of continued litigation, as detailed in the Court’s 8 discussion of the adequacy requirement, Plaintiffs have provided a thorough accounting of 9 the risks attendant in continued litigation and the potential weaknesses of their case. ECF 10 No. 89-1 at 50-59. Taking these risks into account, the Court finds that the proposed gross 11 settlement amount of $4.1 million—which represents 28.39% of counsel’s estimate of the 12 likely awards at trial should Plaintiffs prevail on all claims—appears fair, adequate, and 13 reasonable. See Spivak Decl. ¶ 78. The parties have completed significant discovery since 14 the initial Case Management Conference in June 2022 and, prior to reaching a settlement, 15 were slated to proceed to a Final Pretrial Conference on December 9, 2024. ECF No. 62. 16 The Court agrees that given the age and complexity of the case, and the risks and expenses 17 involved in pursuing continued litigation, the $4.1 million settlement amount represents a 18 fair, reasonable, and adequate recovery for Plaintiffs and the absent class members. 19 Turning to the experience and views of counsel, class counsel all have significant 20 class action experience. Mr. Spivak has prosecuted wage and hour class actions since 2007 21 and provided a list to the Court of over 20 cases in which he was appointed class counsel 22 in California. Spivak Decl. ¶ 50. Mr. Haines has been practicing law for over 40 years and 23 has represented over 1,500 clients in wage and hour disputes, of which more than 300 cases 24 were class actions with settlements totaling over $400 million. Haines Decl. ¶ 2. 25 Ms. Piazza, submitting a declaration on behalf of proposed class counsel Berger Montague, 26 has been appointed class counsel in dozens of actions nationwide, and is a shareholder in 27 Berger Montague’s Employment & Unpaid Wage Group, which has been appointed class 28 counsel in numerous wage and hour class actions in California and across the country. 1 Piazza Decl. ¶¶ 2, 4-8. Plaintiffs’ counsel are all in agreement that the proposed Settlement 2 Agreement represents a fair and reasonable settlement for the class members in light of the 3 complexities of the case and uncertainties of class certification and litigation. Mr. Spivak 4 describes the settlement as an “outstanding result” and Ms. Piazza calls it an “excellent 5 settlement.” See Spivak Decl. ¶ 94; Haines Decl. ¶ 4; Piazza Decl. ¶ 10. “Because the 6 parties’ counsel are the ones most familiar with the facts of the litigation, courts give ‘great 7 weight’ to their recommendations. Therefore, plaintiffs’ counsel’s recommendations 8 ‘should be given a presumption of reasonableness.’” Shannon v. Sherwood Mgmt. Co., No. 9 19-CV-01101-BAS-JLB, 2020 WL 2394932, at *10 (S.D. Cal. May 12, 2020) (citations 10 omitted). The Court finds it appropriate to afford a presumption of reasonableness to 11 counsel’s views that the proposed Gross Settlement Amount represents a fair and 12 reasonable result for the class members. 13 The Court is not yet in a position to gauge the reactions of class members to the 14 proposed settlement, and there is no governmental participant in the case. Accordingly, 15 based on the factors that are currently applicable to the Court’s review, the Court 16 preliminarily finds the proposed settlement fair, reasonable, and adequate under Rule 17 23(e)(2). 18 Despite finding the Settlement Agreement to be fair upon preliminary review, the 19 Court notes that “[s]ettlement adequacy should be scrutinized when there is evidence of 20 fee-driven settlements, exorbitant service payments, or collusion between the parties.” 21 Alberto, 252 F.R.D. at 663 (citing Hanlon, 150 F.3d at 1022). Here, Plaintiffs request an 22 attorney fee award of one-third of the Gross Settlement Amount. ECF No. 89-1 at 26-27. 23 This amount exceeds the Ninth Circuit’s benchmark attorney fee award of 25% of the 24 common fund in class action cases. See, e.g., Hanlon, 150 F.3d at 1029; Paul, Johnson, 25 Alston & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989). Indeed, even in cases where 26 the fee award requested does not exceed the 25% benchmark rate, the Ninth Circuit has 27 cautioned that this rate, “although a starting point for analysis, may be inappropriate in 28 some cases. Selection of the benchmark [of 25%] or any other rate must be supported by 1 findings that take into account all of the circumstances of the case.” Vizcaino v. Microsoft 2 Corp., 290 F.3d 1043, 1048 (9th Cir. 2002). See also Alberto, 252 F.R.D. at 667-69 3 (rejecting a request for an attorney fee award of 22% of the gross settlement amount on the 4 basis that, although the record “shows no evidence of bribery or collusion in reference to 5 the requested attorneys’ fees, it is nonetheless devoid of any direct support for plaintiff’s 6 counsel’s requested fee amount[,]” exercising its discretion to employ the lodestar method 7 to calculate reasonable attorney fees instead, and requiring plaintiff’s counsel to file “a 8 thorough fee award petition prior to the fairness hearing” to aid in that calculation). Also 9 raising some concern for the Court, Plaintiffs request a service award of $22,500 for named 10 Plaintiff Jeffrey Pipich (who was the only named Plaintiff the case between the time it was 11 first filed in 2021 and the filing of the 4AC in May 2024), which is higher than typical 12 service awards granted to class representatives in similar class actions. 13 The Court recognizes that Plaintiffs’ counsel in this case have provided detailed 14 arguments in support of the requested fee award, including a discussion of the risks they 15 took in bringing the case, the extensive time, effort, and expense dedicated to the case, the 16 skill and determination shown by class counsel, the results achieved, and the other cases 17 class counsel turned down to devote to this matter. ECF No. 89-1 at 62; Spivak Decl. ¶ 81. 18 Plaintiffs have also cited to other cases in this Circuit and before the California Supreme 19 Court where fee awards equal to or greater than 33% of the common fund were approved. 20 ECF No. 89-1 at 62 (citing Laffitte v. Robert Half Int’l, Inc., 1 Cal. 5th 480, 503 (Cal. 21 2016); In re Pacific Enterprises, 47 F.3d 373, 379 (9th Cir. 1995); and In re Activision, 22 723 F. Supp. 1373, 1375 (N.D. Cal. 1989)). Additionally, there is no “clear sailing” 23 provision on attorney fees in the Settlement Agreement, and no reversion of unawarded 24 funds to Defendants, which might reflect collusion or a fee-driven settlement. See In re 25 Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 947-48 (9th Cir. 2011). 26 Plaintiffs have also provided an explanation for why they believe the requested 27 service awards to the named Plaintiffs are fair, including that they “have been exposed to 28 significant risks, including the risk of an order to pay Defendants’ attorneys’ fees and costs 1 if this action had been unsuccessful[,]” and have each devoted many hours to active 2 participation in the litigation. ECF No. 89-1 at 63-64. Plaintiffs point to many cases in 3 California in which wage-and-hour plaintiffs and putative class representatives were 4 ordered to pay substantial attorney fee awards for unsuccessful claims. Spivak Decl. ¶ 87. 5 Finally, Plaintiffs’ counsel makes the point that, without the service awards, the named 6 Plaintiffs’ individual shares of the settlement fund will in many cases be less than that of 7 some absent class members, due to the way the pro rata distribution to class members is 8 structured based on number of workweeks. Id. ¶ 88. Counsel argues it would be unfair to 9 limit the class representatives’ service payments to an amount not much greater than an 10 absent class members’ share of the recovery, in light of the work they have done to actively 11 participate in the litigation, and that the Court should award something substantial to 12 Plaintiffs “[t]o encourage employees like Plaintiffs to don the helm of class champions 13 (and thereby advance the important public policies behind class actions)[.]” Id. 14 Nonetheless, counsel’s request for a fee award representing a disproportionate 15 distribution of the settlement fund compared to the 25% benchmark, in addition to the 16 relatively high service award requested for one of the class representatives, require further 17 scrutiny. “Prior to formal class certification, there is an even greater potential for a breach 18 of fiduciary duty owed the class during settlement. Accordingly, such agreements must 19 withstand an even higher level of scrutiny for evidence of collusion or other conflicts of 20 interest than is ordinarily required under Rule 23(e) before securing the court’s approval 21 as fair.” Id. at 946. 22 Accordingly, although the Court grants preliminary approval at this time, class 23 counsel are cautioned that they will be required to submit detailed information to support 24 the service payment request for Plaintiff Pipich and the attorney fee request in the 25 anticipated Motion for Fees, Litigation Expenses and Service Award, including a detailed 26 description of the hours Mr. Pipich has spent actively participating in the litigation, 27 comprehensive billing records of Plaintiffs’ counsel, and an explanation of counsel’s 28 hourly rate, so that the Court may carefully consider whether Mr. Pipich’s service payment 1 should be reduced and/or the attorney fee award should be reduced. See Laffitte, 1 Cal. 5th 2 at 506 (explaining that courts “have discretion to conduct a lodestar cross-check on a 3 percentage fee”). 4 Finally, the Court preliminarily finds that the requested Administration Expenses 5 Payment of $40,000 to the Administrator is reasonable. The parties sought and reviewed 6 bids from other reputable third-party administrators prior to agreeing to the $40,000 bid 7 from Xpand Legal Consulting LLC, and all other administrators provided higher bids. ECF 8 No. 89-1 at 64; Spivak Decl. ¶¶ 120-21; Exs. 16-19 to the Spivak Decl. 9 VI. PROPOSED SETTLEMENT NOTICE 10 Rules 23(c)(2)(B) and (e)(1) generally require that a Rule 23(b)(3) settlement class 11 should receive notice in a reasonable manner, and that the notice be “the best notice that is 12 practicable under the circumstances, including individual notice to all members who can 13 be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B); see also Amchem, 521 14 U.S. at 617. Regular mail, electronic mail, and other appropriate means should all be 15 considered. See Fed. R. Civ. P. 23(c)(2)(B). The Rule further states that the notice must 16 clearly and concisely state in plain, easily understood language: 17 (i) the nature of the action; (ii) the definition of the class certified; 18 (iii) the class claims, issues, or defenses; 19 (iv) that a class member may enter an appearance through an attorney if the member so desires; 20 (v) that the court will exclude from the class any member who requests 21 exclusion; (vi) the time and manner for requesting exclusion; and 22 (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 23 24 Fed. R. Civ. P. 23(c)(2)(B)(i)-(vii). 25 Upon review of the proposed Class Notice (Exhibit A to the Settlement Agreement), 26 the Court finds the notice complies with all requirements of Rule 23. The notice provides 27 all of the information required by Rule 23(c)(2)(B) in plain, easily understood language, 28 and fairly apprises class members of the terms of the settlement and the options open to 1 dissenting class members. 2 As for the manner of notice, the Settlement Agreement provides that Defendants will 3 deliver all available class data to the Administrator after the Court grants preliminary 4 approval of the settlement. Settlement Agreement ¶ 4.2. Within 14 calendar days of 5 receiving the class data, the Administrator will send the Class Notice via first-class United 6 States Postal Service mail to all class members identified in the class data, along with a 7 Spanish translation of the Class Notice, if applicable. ECF No. 89-1 at 33. The first page 8 of the Class Notice shall prominently state the estimated dollar amounts of any individual 9 class payment and/or individual PAGA payment payable to the class member, and the 10 number of workweeks and PAGA workweeks used to calculate these amounts. Before 11 mailing the Class Notice, the Administrator shall update the class member addresses using 12 the National Change of Address database. Id. If any Class Notice is returned as undelivered 13 to the Administrator by the USPS, the Administrator shall re-mail the Class Notice using 14 any forwarding address provided by the USPS within three business days after receipt of 15 the undelivered notice. If the USPS does not provide a forwarding address, the 16 Administrator shall conduct a Class Member Address Search and re-mail the Class Notice 17 to the most current address obtained. Id. at 34. For any class members whose notice has to 18 be re-mailed, the deadline for written objections, challenges to workweeks, and requests 19 for exclusion will be extended an additional 14 days beyond the 60 days otherwise provided 20 in the Class Notice, and the Administrator shall inform any such class member of the 21 extended deadline with the re-mailed Class Notice. Id. 22 If the Administrator, Defendants, or class counsel are contacted by or otherwise 23 discover any persons who believe they should have been included in the class and received 24 the Class Notice, the parties will expeditiously and in good faith meet and confer to 25 determine whether to include them as class members. If the parties agree, such persons will 26 be class members entitled to the same rights as other class members, and the Administrator 27 will send them a Class Notice via email or overnight delivery, requiring them to exercise 28 their options under the Settlement Agreement not later than 14 calendar days after receipt 1 of the Class Notice, or the deadline dates in the Class Notice, whichever are later. Id. 2 The Court finds the parties’ proposed notice and means of delivery of the notice to 3 the class members constitutes “the best notice that is practicable under the circumstances, 4 including individual notice to all members who can be identified through reasonable 5 effort.” Fed. R. Civ. P. 23(c)(2)(B). Therefore, the Court approves the Class Notice. The 6 Court appoints Xpand Legal Consulting LLC (“Xpand”) as the third-party Settlement 7 Administrator. Xpand must distribute the Class Notice Packet by regular mail to all class 8 members for whom such addresses are known within 21 days of the entry of this 9 preliminary approval order. 10 VII. CONCLUSION AND ORDER 11 1. The Court GRANTS preliminary approval of the Settlement and the 12 Settlement Class based upon the terms set forth in the Settlement filed as an Exhibit to the 13 Motion for Preliminary Approval. All terms herein shall have the same meaning as defined 14 in the Settlement. The Court has determined only that there is sufficient evidence to support 15 a preliminary finding that the proposed settlement is fair, adequate, and reasonable. The 16 Court will make a definitive determination at the hearing on the motion for final approval 17 of class action settlement (the “Final Approval Hearing”) as to whether the Settlement is 18 fair, adequate and reasonable to the Settlement Class. 19 2. For purposes of this Preliminary Approval Order, the “Settlement Class” 20 means all individuals employed by Defendants as non-exempt, hourly employees, either 21 directly or indirectly through staffing agencies, at one of Defendant O’Reilly Auto 22 Enterprises, LLC’s distribution centers in California at any time between July 5, 2018 and 23 May 22, 2024. 24 3. Based on its records, Defendants estimate that, as of November 30, 2023, 25 (1) there are 5,750 Class Members and 289,537 Total Workweeks during the Class period; 26 and (2) there were 4,312 Aggrieved Employees who worked 78,609 Workweeks during 27 the PAGA Period. “Effective Date” means the date when both of the following have 28 occurred: (a) the Court enters a Judgment on its Order Granting Final Approval of the 1 Settlement; and (b) the Judgment is final. The Judgment is final as of the latest of the 2 following occurrences: (a) if no Participating Class Member objects to the Settlement, the 3 day the Court enters Judgment; (b) if one or more Participating Class Members objects to 4 the Settlement, the day after the deadline for filing a notice of appeal from the Judgment; 5 or if a timely appeal from the Judgment is filed, the day after the appellate court affirms the 6 Judgment and issues a remittitur. 7 4. This action is provisionally certified pursuant to Rule 23 of the Federal Rules 8 of Civil Procedure as a class action for purposes of settlement only with respect to the 9 proposed Settlement Class. 10 5. Not later than June 17, 2024,3 Defendants will simultaneously deliver the 11 Class Data to the Administrator, in the form of a Microsoft Excel spreadsheet. To protect 12 Class Members’ privacy rights, the Administrator must maintain the Class Data in 13 confidence, use the Class Data only for purposes of the Settlement and for no other purpose, 14 and restrict access to the Class Data to Administrator employees who need access to the 15 Class Data to effect and perform under the Settlement Agreement. Defendants have a 16 continuing duty to immediately notify Class Counsel if they discover that the Class Data 17 omitted class member identifying information and to provide corrected or updated Class 18 Data as soon as reasonably feasible. Without any extension of the deadline by which 19 Defendant must send the Class Data to the Administrator, the Parties and their counsel will 20 expeditiously use best efforts, in good faith, to reconstruct or otherwise resolve any issues 21 related to missing or omitted Class Data. 22 6. No later than June 20, 2024, the Administrator shall notify Class Counsel that 23 the list has been received and state the number of Class Members, PAGA Members, 24 Workweeks in the Class Data. 25 7. Using best efforts to perform as soon as possible, and in no event later than 26

27 28 3 The parties should take note that the timeline set forth herein differs somewhat from the 1 July 1, 2024, the Administrator will send to all Class Members identified in the Class Data, 2 via first-class United States Postal Service (“USPS”) mail, the Class Notice with Spanish 3 translation, if applicable, substantially in the form attached to this Order as Exhibit A. The 4 first page of the Class Notice shall prominently estimate the dollar amounts of any Individual 5 Class Payment and/or Individual PAGA Payment payable to the Class Member, and the 6 number of Workweeks and PAGA Workweeks (if applicable) used to calculate these amounts. 7 Before mailing Class Notices, the Administrator shall update Class Member addresses using 8 the National Change of Address database. 9 8. Not later than three (3) business days after the Administrator’s receipt of any 10 Class Notice returned by the USPS as undelivered, the Administrator shall re-mail the Class 11 Notice using any forwarding address provided by the USPS. If the USPS does not provide 12 a forwarding address, the Administrator shall conduct a Class Member Address Search, 13 and re-mail the Class Notice to the most current address obtained. The Administrator has 14 no obligation to make further attempts to locate or send Class Notice to Class Members 15 whose Class Notice is returned by the USPS a second time. 16 9. Class Counsel’s contact information is David Glenn Spivak, Esq., The Spivak 17 Law Firm, 8605 Santa Monica Bl, PMB 42554, West Hollywood, CA 90069, and 18 Alexandra K. Piazza, Esq., Berger Montague PC, 8241½ La Mesa Blvd. La Mesa, CA 19 91942. Defense Counsel’s contact information is James M. Peterson and Derek W Paradis, 20 Esq., Higgs Fletcher & Mack, 401 West A Street, Suite 2600, San Diego, CA, 92101. 21 10. The deadlines for Class Members’ written objections, challenges to 22 workweeks (disputes), and requests for exclusion will be extended an additional fourteen 23 (14) days beyond the sixty (60) days otherwise provided in the Class Notice for all Class 24 Members whose notice is re-mailed. The Administrator will inform the Class Member of 25 the extended deadline with the re-mailed Class Notice. 26 11. If the Administrator, Defendants or Class Counsel is contacted by or 27 otherwise discovers any persons who believe they should have been included in the Class 28 Data and should have received Class Notice, the Parties will expeditiously meet and confer 1 in person or by telephone, and in good faith, in an effort to agree on whether to include 2 them as Class Members. If the Parties agree, such persons will be Class Members entitled 3 to the same rights as other Class Members, and the Administrator will send, via email or 4 overnight delivery, a Class Notice requiring them to exercise options under the Settlement 5 Agreement not later than fourteen (14) days after receipt of Class Notice, or the deadline 6 dates in the Class Notice, whichever are later. 7 12. Requests for Exclusion. Class Members who wish to exclude themselves from 8 the Class Settlement must send to the Administrator, by fax, email, or mail, a signed written 9 Request for Exclusion not later than 60 days after the Administrator mails the Class Notice 10 (plus an additional 14 days for Class Members whose Class Notice is re-mailed). A Request 11 for Exclusion is a letter from a Class Member that reasonably communicates the Class 12 Member’s election to be excluded from the Settlement and includes the Class Member’s 13 name, address and email address or telephone number. To be valid, a Request for 14 Exclusion must be timely faxed, emailed, or postmarked by the Response Deadline. 15 13. The Administrator may not reject a Request for Exclusion as invalid because 16 it fails to contain all the information specified in the Class Notice. The Administrator shall 17 accept any Request for Exclusion as valid if the Administrator can reasonably ascertain the 18 identity of the person as a Class Member and the Class Member’s desire to be excluded. 19 The Administrator’s determination shall be final and not appealable or otherwise 20 susceptible to challenge. If the Administrator has reason to question the authenticity of a 21 Request for Exclusion, the Administrator may demand additional proof of the Class 22 Member’s identity. The Administrator’s determination of authenticity shall be final and 23 not appealable or otherwise susceptible to challenge. 24 14. Every Class Member who does not submit a timely and valid Request for 25 Exclusion is deemed to be a Participating Class Member under the Settlement Agreement, 26 entitled to all benefits and bound by all terms and conditions of the Settlement, including 27 the Participating Class Members’ Releases under Paragraphs 6.2 and 6.3 of the Settlement, 28 regardless of whether the Participating Class Member actually receives the Class Notice or 1 objects to the Settlement. 2 15. Every Class Member who submits a valid and timely Request for Exclusion 3 is a Non-Participating Class Member and shall not receive an Individual Class Payment or 4 have the right to object to the class action components of the Settlement. Aggrieved 5 Employees cannot opt out of the PAGA portion of the Settlement. Plaintiffs, on behalf of 6 themselves and the State of California, and the Aggrieved Employees, release all claims 7 for civil penalties that could have been sought by the Labor Commissioner for the 8 violations identified in Plaintiffs’ pre-filing letter to the LWDA; Plaintiffs do not release 9 any claim for wages or damages of any Aggrieved Employee unless such Aggrieved 10 Employee is a Participating Class Member. 11 16. Challenges to Calculation of Workweeks. Each Class Member shall have 12 sixty (60) days after the Administrator mails the Class Notice (plus an additional fourteen 13 (14) days for Class Members whose Class Notice is re-mailed) to challenge the number of 14 Class Workweeks and PAGA Workweeks (if any) allocated to the Class Member in the 15 Class Notice. This is also known as a dispute. The Class Member may challenge the 16 allocation by communicating with the Administrator via fax, email, or mail. The 17 Administrator must encourage the challenging Class Member to submit supporting 18 documentation. In the absence of any contrary documentation, the Administrator is entitled 19 to presume that the Workweeks contained in the Class Notice are correct so long as they 20 are consistent with the Class Data. The Administrator’s determination of each Class 21 Member’s allocation of Workweeks shall be final and not appealable or otherwise 22 susceptible to challenge. The Administrator shall promptly provide copies of all challenges 23 to calculation of Workweeks along with the Administrator’s determination of the 24 challenges to Defense Counsel and Class Counsel. 25 17. Objections to Settlement. Only Participating Class Members may object to the 26 Settlement, including contesting the fairness of the Settlement, and/or amounts requested 27 for the Class Counsel Fees Payment, Class Counsel Litigation Expenses Payment and/or 28 Class Representative Service Payments. Participating Class Members may send written 1 objections to the Administrator, by fax, email, or mail. To be valid, the written objection 2 must state the factual and legal grounds for the objection to the Settlement. The written 3 objection must be signed by the Class Member submitting it, and it must state the person’s 4 full name, address, telephone number, and email address (if applicable). A Participating 5 Class Member who elects to send a written objection to the Administrator must do so not 6 later than sixty (60) days after the Administrator’s mailing of the Class Notice (plus an 7 additional fourteen (14) days for Class Members whose Class Notice was re-mailed). The 8 Participating Class Member who has submitted a timely objection may attend the Final 9 Approval Hearing (or personally retain a lawyer to object and attend at their own cost). 10 18. Non-Participating Class Members have no right to object to any of the class 11 action components of the Settlement. 12 19. Not later than seven (7) days before the date by which Plaintiffs are required 13 to file the Motion for Final Approval of the Settlement, the Administrator will provide to 14 Class Counsel and Defense Counsel, a signed declaration suitable for filing in Court 15 attesting to its due diligence and compliance with all of its obligations under the Settlement 16 Agreement, including, but not limited to, its mailing of the Class Notices, the Class Notices 17 returned as undelivered, the re-mailing of Class Notices, attempts to locate Class Members, 18 the total number of Requests for Exclusion it received (both valid or invalid), the number 19 of written Objections, and attach the Exclusion List. The Administrator will supplement 20 its declaration as needed or requested by the Parties and/or the Court prior to the Final 21 Approval Hearing. Class Counsel is responsible for filing the Administrator’s 22 declaration(s) in Court. 23 20. The Court approves, as to form and content, the Class Notice in substantially 24 the form attached as Exhibit A to this Order. 25 21. The Court approves, for settlement purposes only Berger Montague PC, The 26 Spivak Law Firm, and United Employees Law Group as Class Counsel. 27 22. The Court approves, for settlement purposes only, Jeffrey Pipich, Eve Storm, 28 Gary Cull, Melissa Kolakowski, and Daniel Lopez as the Class Representatives. 1 23. The Court approves Xpand Legal Consulting LLC as the Administrator. 2 24. The Court preliminarily approves Class Counsel’s request for attorneys’ fees 3 and costs subject to final review by the Court. Class Counsel shall file a Motion for 4 Approval of Attorneys’ Fees and Costs fourteen (14) days before the Response Deadline. 5 25. The Court preliminarily approves the estimated Administrator costs payable 6 to the Administrator subject to final review by the Court. 7 26. The Court preliminarily approves Plaintiffs’ Class Representative Service 8 Payment subject to final review by the Court. 9 27. A Final Approval Hearing shall be held on September 23, 2024 at 9:30 a.m. 10 in Courtroom 2B of the United States District Court, Southern District of California, 11 located at the Edward J. Schwartz United States Courthouse, 221 West Broadway, San 12 Diego, CA 92101 to consider the fairness, adequacy and reasonableness of the proposed 13 Settlement preliminarily approved by this Preliminary Approval Order, and to consider the 14 application of Class Counsel for attorneys’ fees and costs and the Class Representative 15 Service Payments to the Class Representatives. The notice of motion and all briefs and 16 materials in support of the motion for final approval of class action settlement and motion 17 for attorneys’ fees and litigation costs shall be served and filed with this Court on or before 18 September 16, 2024.4 Plaintiffs’ counsel must give notice to any objecting party of any 19 continuance of the hearing of the motion for final approval. 20 28. If for any reason the Court does not execute and file a Final Approval Order 21 and Judgment, or if the Effective Date, as defined in the Settlement, does not occur for any 22 reason, the proposed Settlement that is the subject of this order, and all evidence and 23 proceedings had in connection therewith, shall be without prejudice to the status quo ante 24 rights of the Parties to the litigation, as more specifically set forth in the Settlement. 25

26 27 4 The Court recognizes that the Administrator Declaration in support of the motion for final approval may need to be supplemented depending on whether some notices need to be re- 28 mailed. If so, Plaintiffs may supplement their motion with any new information received 1 29. The Court expressly reserves the right to adjourn or continue the Final 2 || Approval Hearing from time to time without further notice to members of the Class. 3 IT IS SO ORDERED. 4 || Dated: June 7, 2024 5 _ Sebo H. Kolar Ht. Honorable Allison H. Goddard 6 United States Magistrate Judge 7 8 9 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

34

1 2 3 4 5 6 7 EXHIBIT A 8 9 10 11

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28 1 COURT APPROVED NOTICE OF CLASS ACTION SETTLEMENT AND

HEARING DATE FOR FINAL COURT APPROVAL

2

3 Jeffrey Pipich, et al. v. O'Reilly Auto Enterprises, LLC, et. al. 3:21-CV-01120-L-JLB (S.D. Cal.) 4

5 The United States District Court for the Southern District of California authorized this Notice. Read it carefully! 6 It is not junk mail, spam, an advertisement, or solicitation by a lawyer. 7 You are not being sued. You may be eligible to receive money from an employee class action lawsuit 8 (“Action”) against O’Reilly Auto Enterprises, LLC (“O’Reilly”) and Express Services, Inc. 9 dba Express Employment Professionals (together, “Defendants”) for alleged violations of California’s labor laws. The Action was filed by five employees Jeffrey Pipich, Eve Storm, 10 Gary Cull, Melissa Kolakowski, and Daniel Lopez (collectively “Plaintiffs”) and seeks 11 payment of (1) wages and other relief for a class of all individuals employed by either or both Defendants as non-exempt, hourly employees, either directly or indirectly through 12 staffing agencies, and who worked at one of Defendant O’Reilly Auto Enterprises, LLC’s 13 distribution centers in California at any time between July 5, 2018 and May 22, 2024 (“Class Members”); and (2) penalties under the California Private Attorney General Act 14 (“PAGA”) for all individuals employed by either or both Defendants as non-exempt, hourly 15 employees, either directly or indirectly through staffing agencies, and who worked at one of Defendant O’Reilly Auto Enterprises, LLC’s distribution centers in California at any 16 time between May 11, 2020 and May 22, 2024 (“Aggrieved Employees”). July 5, 2018 and 17 May 22, 2024 is the “Class Period.” May 11, 2020 and May 22, 2024 is the PAGA Period.

18 The proposed Settlement has two main parts: (1) a Class Settlement requiring 19 Defendant O’Reilly to fund Individual Class Payments, and (2) a PAGA Settlement requiring Defendant O’Reilly to fund Individual PAGA Payments and pay penalties to the 20 California Labor and Workforce Development Agency (“LWDA”). 21 Based on Defendant’s records, and the Parties’ current assumptions, your 22 Individual Class Payment is estimated to be $<> 23 (less withholding) and your Individual PAGA Payment is estimated to be $<>. The actual amount you may receive likely will 24 be different and will depend on a number of factors. (If no amount is stated for your 25 Individual PAGA Payment, then according to Defendants’ records you are not eligible for an Individual PAGA Payment under the Settlement because you didn’t work during the 26 PAGA Period.) The individual payments amounts will vary. However, the average 27 Individual Class Payment to a Class Member is estimated to be <<$Average Individual Class Payment Amount>>. The average Individual PAGA Payment to a Class Member is 28 1 Class Payment to a Class Member is estimated to be <<$Highest Individual Class Payment Amount>> and the lowest is estimated to be <<$Lowest Individual Class Payment 2 Amount>>. The highest Individual PAGA Payment to a Class Member is estimated to be 3 <<$Highest Individual PAGA Payment Amount>> and the lowest is estimated to be <<$Lowest Individual PAGA Payment Amount>>. 4

5 The above estimates are based on Defendants’ records showing that you worked <<___>> Workweeks during the Class Period and you worked <<___>> Workweeks 6 during the PAGA Period. If you believe that you worked more Workweeks during either 7 period, you can submit a challenge by the deadline date. See Section 4 of this Notice.

8 The Court has already preliminarily approved the proposed Settlement and approved 9 this Notice. The Court has not yet decided whether to grant final approval. The Court has determined only that there is sufficient evidence to suggest that the proposed settlement 10 might be fair, adequate, and reasonable, and that any final determination of those issues 11 will be made at the Final Approval Hearing. Your legal rights are affected whether you act or not act. Read this Notice carefully. You will be deemed to have carefully read and 12 understood it. At the Final Approval Hearing, the Court will decide whether to finally 13 approve the Settlement and how much of the Settlement will be paid to Plaintiffs and Plaintiffs’ attorneys (“Class Counsel”). The Court will also decide whether to enter a 14 judgment that requires Defendant O’Reilly to make payments under the Settlement and 15 requires Class Members and Aggrieved Employees to give up their rights to assert certain claims against Defendant. 16

17

SUMMARY OF YOUR LEGAL RIGHTS AND OPTIONS IN THIS

18 SETTLEMENT

19 You Don’t Have to If you do nothing, you will be a Participating Class Member, 20 Do Anything to eligible for an Individual Class Payment and an Individual 21 Participate in the PAGA Payment (if any). In exchange, you will give up your right Settlement to assert the claims against Defendants that are covered by this 22 Settlement (Released Claims). 23 You Can Opt-out of If you don’t want to fully participate in the proposed Settlement, the Class you can opt-out of the Class Settlement by sending the 24 Settlement but not Administrator a written Request for Exclusion. Once excluded, 25 the PAGA you will be a Non-Participating Class Member and no longer Settlement eligible for an Individual Class Payment. Non-Participating 26 Class Members cannot object to any portion of the proposed 27 The Opt-out Settlement. See Section 6 of this Notice. Deadline is 28 1 DEADLINE>> Settlement. Defendant O’Reilly must pay Individual PAGA Payments to all Aggrieved Employees and Plaintiffs release 2 Defendants from civil penalties it may owe to the Aggrieved 3 Employees. 4 Participating Class All Class Members who do not opt-out (“Participating Class Members Can Members”) can object to any aspect of the proposed Settlement 5 Object to the Class by submitting a signed, written statement to the Settlement 6 Settlement but not Administrator stating the basis for your objection. the PAGA 7 Settlement 8 Written Objections 9 Must be Submitted 10 by <

DEADLINE>>

11 You Can The Court’s Final Approval Hearing is scheduled to take place 12 Participate in the on September 23, 2024. You don’t have to attend but you do September 23, 2024 have the right to appear (or hire an attorney to appear on your 13 Final Approval behalf at your own cost), in person, by telephone or by using the 14 Hearing Court’s virtual appearance platform (if available and permitted by the Court). 15 You Can Challenge The amount of your Individual Class Payment and PAGA 16 the Calculation of Payment (if any) depend on how many Workweeks you worked Your Workweek / at least one day during the Class Period and how many 17 Workweeks Workweeks you worked at least one day during the PAGA 18 Period, respectively. The number Class Period Workweeks and Written Challenges number of PAGA Period Workweeks you worked according to 19 Must be Submitted Defendants’ records is stated on the first page of this Notice. If 20 by <> by <>. See Section 4 of this 21 Notice. 22 23 Defendants will not retaliate against you for any actions you take with respect to the proposed Settlement. 24

25 1. WHAT IS THE ACTION ABOUT? 26 Plaintiffs are former employees of Defendant O’Reilly’s California distribution centers. 27 The Action accuses Defendants of violating California labor laws by failure to pay wages, unauthorized and unlawful wage deductions, failure to provide meal periods, failure to 28 authorize and permit rest periods, failure to indemnify for business expenses, failure to 1 issue proper wage statements, failure to timely pay wages, failure to maintain required payroll records, and related violations of the Labor Code. Based on the same claims, 2 Plaintiffs have also asserted a claim for civil penalties under the PAGA (Labor Code 3 section 2698 and sections that follow) (“PAGA”).

4 O’Reilly and Express strongly deny violating any laws or failing to pay any wages and 5 contends that at all times they treated workers fairly and in compliance with all applicable laws. 6

7 2. WHAT DOES IT MEAN THAT THE ACTION HAS SETTLED? 8 So far, the Court has made no determination whether Defendants or Plaintiffs are correct 9 on the merits. During the course of this litigation, which has spanned almost three years, the Parties have participated in several arm’s length settlement conferences, including most 10 recently, two virtual settlement conferences before a United States District Court 11 Magistrate Judge in an effort to resolve the Action by negotiating an to end the case by agreement (settle the case) rather than continuing the expensive and time-consuming 12 process of litigation. The negotiations were successful. By signing a lengthy written 13 settlement agreement (“Agreement”) and agreeing to jointly ask the Court to enter a judgment ending the Action and enforcing the Agreement, Plaintiffs and Defendants have 14 negotiated a proposed Settlement that is subject to the Court’s Final Approval. Both sides 15 agree the proposed Settlement is a compromise of disputed claims. By agreeing to settle, Defendants do not admit any violations or concede the merit of any claims. 16

17 The Parties, Class Counsel and Defense Counsel are not aware of any other pending matter or action asserting claims that will be extinguished or affected by the Settlement other than 18 the following: 19 Stephanie Perez v. O’Reilly Auto Enterprises, LLC, Superior Court of the 20 State of California for County of San Joaquin, case no. STK-CV-UOE-2023- 21 7289, filed on July 14, 2023, and amended on September 23, 2023. This is a class and PAGA action for (1) Failure To Provide Duty-Free Meal Periods; 22 (2) Failure To Provide Duty-Free Rest Periods; (3) Failure To Pay Minimum 23 Wages; (4) Failure To Pay Overtime Wages; (5) Unfair, Competition; (6) Failure To Provide Accurate Wage Statements; (7) Failure To Pay All Wages 24 Owed Upon Termination; and (8) Civil Penalties Under PAGA. 25 Sally Fonseca v. O’Reilly Auto Enterprises, LLC, Superior Court of the State 26 of California for County of San Joaquin, case no. STK-CV-UOE-2024-354, 27 filed on January 11, 2024. This is a class and PAGA action for (1) Failure To Pay Minimum Wages; (2) Failure To Pay Overtime Wages; (3) Meal Period 28 1 Employee Wage Statements; (6) Violation Of Labor Code Section 1174; (7) Violation Of Labor Code Sections 2102 And 2103; (8) Failure To Pay Wages 2 Timely And Upon Separation Of Employment; And (9) Violation Of Unfair 3 Competition Law.

4 Plaintiffs and Class Counsel strongly believe the Settlement is a good deal for you because 5 they believe that: (1) Defendant O’Reilly has agreed to pay a fair, reasonable, and adequate amount considering the strength of the claims and the risks and uncertainties of continued 6 litigation; and (2) Settlement is in the best interests of the Class Members and Aggrieved 7 Employees. The Court preliminarily approved the proposed Settlement as fair, reasonable, and adequate, authorized this Notice, and scheduled a hearing to determine Final Approval. 8

9 3. WHAT ARE THE IMPORTANT TERMS OF THE PROPOSED 10 SETTLEMENT?

11 A. Gross Settlement Amount. Defendant O’Reilly Will Pay $4,100,000.00 as the 12 Gross Settlement Amount (“Gross Settlement”). Defendant O’Reilly has agreed to deposit 13 the Gross Settlement into an account controlled by the Administrator of the Settlement. The Administrator will use the Gross Settlement to pay the Individual Class Payments, 14 Individual PAGA Payments, Class Representative Service Payments, Class Counsel’s 15 attorney’s fees and expenses, the Administration Expenses Payment, and penalties to be paid to the California Labor and Workforce Development Agency (“LWDA”). Assuming 16 the Court grants Final Approval, Defendant O’Reilly will fund the Gross Settlement not 17 more than 14 days after the Judgment entered by the Court become final. The Judgment will be final on the date the Court enters Judgment, or a later date if Participating Class 18 Members object to the proposed Settlement or the Judgment is appealed. 19 20 B. Court Approved Deductions from Gross Settlement. At the Final Approval Hearing, Plaintiffs and/or Class Counsel will ask the Court to approve the following 21 deductions from the Gross Settlement, the amounts of which will be decided by the Court 22 at the Final Approval Hearing:

23 1. Attorney Fees and Costs. Up to $1,366,666.67 (33 and 1/3% of the 24 Gross Settlement to Class Counsel for attorneys’ fees and up to $120,000.00 for their 25 litigation expenses. To date, Class Counsel have worked and incurred expenses on the Action without payment. 26

27 2. Class Representative Service Awards. Up to $55,000.00 for Class Representative Service Awards for filing the Action, working with Class Counsel and 28 1 Plaintiffs will receive other than Plaintiffs’ Individual Class Payment and any Individual PAGA Payment. Plaintiffs seek to divide the $55,000 Class Representative Service Awards 2 as follows: (1) $22,500.00 to Jeffrey Pipich; (2) $10,000.00 to Eve Storm; (3) $7,500 to 3 Gary Cull; (4) $7,500 to Melissa Kolakowski; and (5) $7,500 to Daniel Lopez.

4 3. Administration Expenses Payment. Up to $40,000.00 to the 5 Administrator for services administering the Settlement.

6 4. PAGA Penalties. Up to $410,000.00 for PAGA Penalties, allocated 7 75% to the LWDA PAGA Payment and 25% in Individual PAGA Payments to the Aggrieved Employees based on their PAGA Workweeks. 8

9 Participating Class Members have the right to object to any of these deductions. The Court will consider all objections. 10

11 Based on their records, Defendants estimated that, as of the date of the Settlement, (1) there are 5,750 Class Members and 289,537 total Workweeks during the Class period 12 and (2) there were 4,312 Aggrieved Employees who worked 78,609 Workweeks during 13 the PAGA Period. If the Workweeks and/or Class Members as of May 22, 2024 exceeds the referenced 289,537 Workweeks and/or 5,750 Class Members by more than 10.00%, 14 the Gross Settlement Amount, including the Class Counsel Fees Payment, the Class 15 Representative Service Payments, and the LWDA payment, will increase proportionally according to the number of additional Workweeks or Class Members, whichever results in 16 a higher increase in the Gross Settlement Amount. 17 18 C. Net Settlement Distributed to Class Members. After making the above deductions in amounts approved by the Court, the Administrator will distribute the rest of 19 the Gross Settlement (the “Net Settlement”) by making Individual Class Payments to 20 Participating Class Members based on their Class Period Workweeks.

21 D. Taxes Owed on Payments to Class Members. Plaintiffs and Defendants are 22 asking the Court to approve an allocation of 10.00% of each Individual Class Payment to taxable wages (“Wage Portion”) and 90.00% to interest and penalties (“Non-Wage 23 Portion.). The Wage Portion is subject to withholdings and will be reported on IRS W-2 24 Forms. Defendant O’Reilly will separately pay employer payroll taxes it owes on the Wage Portion. The Individual PAGA Payments are counted as penalties rather than wages for tax 25 purposes. The Administrator will report the Individual PAGA Payments and the Non-Wage 26 Portions of the Individual Class Payments on IRS 1099 Forms.

27 Although Plaintiffs and Defendants have agreed to these allocations, neither side is 28 giving you any advice on whether your Payments are taxable or how much you might owe 1 taxes) on any Payments received from the proposed Settlement. You should consult a tax advisor if you have any questions about the tax consequences of the proposed Settlement. 2

3 E. Need to Promptly Cash Payment Checks. The front of every check issued for Individual Class Payments and Individual PAGA Payments will show the date when the 4 check expires (the void date). If you do not cash it by the void date, your check will be 5 automatically cancelled, and the monies will irrevocably lost to you because they will be paid to a non-profit organization or foundation, the San Diego County Bar Foundation (“Cy 6 Pres”). 7 F. The Proposed Settlement Will be Void if the Court Denies Final Approval. It 8 is possible the Court will decline to grant Final Approval of the Settlement or decline to 9 enter a Judgment. It is also possible the Court will enter a Judgment that is reversed on appeal. Plaintiffs and Defendants have agreed that, in either case, the Settlement will be 10 void: Defendant O’Reilly will not pay any money and Class Members will not release any 11 claims against Defendants.

12 G. Administrator. The Court has appointed a neutral company, Xpand Legal 13 Consulting LLC (the “Administrator”) to send this Notice, calculate and make payments, and process Class Members’ Requests for Exclusion and Objections. The Administrator 14 will also decide Class Member challenges of Workweeks, mail and re-mail settlement 15 checks and tax forms, and perform other tasks necessary to administer the Settlement. The Administrator’s contact information is contained in Section 9 of this Notice. 16

17 H. Participating Class Members’ Release. After the Judgment is final and Defendant O’Reilly has fully funded the Gross Settlement (and separately paid all 18 employer payroll taxes), Participating Class Members will be legally barred from asserting 19 any of the claims released under the Settlement. This means that unless you opted out by validly excluding yourself from the Class Settlement, you cannot sue, continue to sue, or 20 be part of any other lawsuit against Defendants or their parents, subsidiaries, affiliated 21 entities, franchisors, franchisees, officers, employees, and agents for wages based on the Class Period facts and PAGA penalties based on PAGA Period facts, as alleged in the 22 Action and resolved by this Settlement. 23 The Participating Class Members will be bound by the following release: 24

25 All Participating Class Members, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and 26 assigns, release Released Parties from all claims stated in the Operative Complaint and 27 those based solely upon the facts alleged in the Operative Complaint. Upon entry of Judgment and funding of the Gross Settlement Amount, the Defendants and their parents, 28 1 shall be entitled to a release from the Settlement Class members of all class claims, actions, demands, causes of action, suits, debts, obligations, damages, penalties, rights or liabilities, 2 of any nature and description whatsoever, that are either asserted in the Action, or could 3 have been asserted in the Action based on the facts, claims, and theories plead in the Operative Complaint on file at the time of final approval, including but not limited to, 4 Labor Code sections 90.5(a), 201, 201.3, 202, 203, 204, 210, 218, 218.5, 218.6, 223, 226, 5 226.3, 226.7, 246, 510, 512, 1174, 1174.5, 1182.12, 1194, 1194.2, 1197, 1197.1, 1197.2, 1198, 1682, 2102, 2103, 2350, 2802, and 6404, and the applicable IWC Wage Orders 6 which occurred during the Class Period. (“Released Class Claims”) Except as set forth in 7 Section 6.3 of this Agreement, Participating Class Members do not release any other claims, including claims for vested benefits, wrongful termination, violation of the Fair 8 Employment and Housing Act, unemployment insurance, disability, social security, 9 workers’ compensation, or claims based on facts occurring outside the Class Period. Released Class Claims also includes all claims that were or that could have been alleged in 10 the Action based on the facts stated in the Operative Complaint, including but not limited 11 to any claims for violations of the California Labor Code, and the relevant Wage Orders. The term “Released Class Claims” also includes Plaintiffs’ claim that Defendants are liable 12 for the attorneys’ fees incurred to prosecute this Action on behalf of Class Members, 13 including fees incurred for the services of Class Counsel, and any claim that Defendants are liable for any other remedies, civil penalties, statutory penalties, or interest under 14 California law based on the facts alleged in the Operative Complaint. The term “Released 15 Class Claims” also includes all claims that the Class Members may have against the Released Parties relating to (i) the payment, taxation and allocation of attorneys’ fees and 16 costs to Class Counsel pursuant to this Agreement, and (ii) the payment, taxation, and 17 allocation of the Class Representative Service Payments pursuant to this Settlement Agreement. Class Members may discover facts in addition to or different from those they 18 now know or believe to be true with respect to the subject matter of the Released Class 19 Claims, but upon the Effective Date, shall be deemed to have, and by operation of the Final Approval Order shall have, fully, finally, and forever settled and released any and all of the 20 Released Claims, whether known or unknown, suspected or unsuspected, contingent or 21 non-contingent, which now exist or have existed, upon any theory of law or equity now existing. It is the intent of the Parties that the Final Approval Order and Judgement entered 22 by the Court shall have full res judicata and collateral estoppel effect and be final and 23 binding upon Class Members regarding the Released Class Claims.

24

I. The PAGA Release. After the Court’s Judgment is final, and Defendant

25 O’Reilly has paid the Gross Settlement (and separately paid the employer-side payroll taxes), Plaintiffs, on behalf of themselves and the State of California, and the Aggrieved 26 Employees fully releases and discharges Defendants and their parents, subsidiaries, 27 affiliated entities, officers, franchisors, franchisees, employees, and agents, from any and all claims for relief under the PAGA, based on the claims for penalties that could have been 28 1 alleged in the Operative Complaint at the time of final approval (with the inclusion of the facts and claims mentioned in paragraph 6 above) by Plaintiffs in the Action and Plaintiffs’ 2 notice letters to the LWDA including, but not limited to, Labor Code sections 90.5(a), 201, 3 201.3, 202, 203, 204, 210, 218, 218.5, 218.6, 223, 226, 226.3, 226.7, 246, 510, 512, 1174, 1174.5, 1182.12, 1194, 1194.2, 1197, 1197.1, 1197.2, 1198, 1682, 2102, 2103, 2350, 2802, 4 and 6404, and the applicable IWC Wage Orders, and any resulting claim for attorneys’ fees 5 and costs under the PAGA, which occurred during the PAGA Period. Plaintiffs do not release the claim for wages or damages of any Aggrieved Employee unless such Aggrieved 6 Employee is a Participating Class Member. 7 8 4. HOW WILL THE ADMINISTRATOR CALCULATE MY PAYMENT? 9 A. Individual Class Payments. The Administrator will calculate Individual Class Payments by (a) dividing the Net Settlement Amount by the total number of Workweeks 10 worked by all Participating Class Members, and (b) multiplying the result by the number 11 of Workweeks worked by each individual Participating Class Member.

12 B. Individual PAGA Payments. The Administrator will calculate Individual 13 PAGA Payments by (a) dividing $102,500.00 by the total number of PAGA Workweeks worked by all Aggrieved Employees and (b) multiplying the result by the number of PAGA 14 Period Workweeks worked by each individual Aggrieved Employee. 15 C. Workweek Challenges. The number of Class Workweeks you worked during 16 the Class Period and the number of PAGA Workweeks you worked during the PAGA 17 Period, as recorded in Defendants’ records, are stated in the first page of this Notice. You have until <> to challenge the number of Workweeks credited 18 to you. You can submit a workweek challenge by signing and sending a letter to the 19 Administrator by email, fax or regular U.S. mail outlining the basis for your challenge.

20 You need to support your challenge by submitting copies of pay stubs or other 21 records. The Administrator will accept Defendants’ calculation of Workweeks based on Defendants’ records as accurate unless you send copies of records containing contrary 22 information to the Administrator. You should send copies rather than originals because the 23 documents will not be returned to you. The Administrator will resolve Workweek challenges based on your submission. The Administrator’s decision is final. You cannot 24 appeal or otherwise challenge its final decision. 25 26 5. HOW WILL I GET PAID? 27 A. Participating Class Members. The Administrator will send, by U.S. mail, a single check to every Participating Class Member (i.e., every Class Member who does not 28 1 combine the Individual Class Payment and the Individual PAGA Payment.

2 B. Non-Participating Class Members. The Administrator will send, by U.S. mail, 3 a single Individual PAGA Payment check to every Aggrieved Employee who opts out of the Class Settlement (i.e., every Non-Participating Class Member). 4

5 Your check will be sent to the same address as this Notice. If you change your address, be sure to notify the Administrator as soon as possible. Section 9 of this 6 Notice has the Administrator’s contact information. 7 8 6. HOW DO I OPT-OUT OF THE CLASS SETTLEMENT?

9 Email, fax, or mail a written and signed letter with your name, present address, 10 telephone number, and a simple statement that you do not want to participate in the Settlement. The Administrator will exclude you based on any writing communicating your 11 request be excluded. Be sure to personally sign your request, identify the Action as Jeffrey 12 Pipich et al. vs. O'Reilly Auto Enterprises, LLC, Case No. 3:21-cv-01120-L-JLB, and include your identifying information (full name, address, telephone number, approximate 13 dates of employment, and social security number for verification purposes). You must 14 make the request yourself. If someone else makes the request for you, it will not be valid. You should send your Request for Exclusion to the Administrator by email, fax, or regular 15 U.S. mail. You must send to the Administrator your request to be excluded by 16 <>, or it will be invalid. Section 9 of the Notice has the Administrator’s contact information. If you are an Aggrieved Employee, you will still 17 receive an Individual PAGA Payment. 18 19 7. HOW DO I OBJECT TO THE SETTLEMENT? 20 Only Participating Class Members have the right to object to the Settlement. Before 21 deciding whether to object, you may wish to see what Plaintiffs and Defendants are asking 22 the Court to approve. At least fourteen (14) days prior to the Response Deadline, Plaintiffs will file in Court a Motion for Fees, Litigation Expenses and Service Award stating (i) the 23 amount Class Counsel is requesting for attorneys’ fees and litigation expenses; and (ii) the 24 amount Plaintiffs are requesting as a Class Representative Service Award. At least seven (7) days before the Final Approval Hearing, Plaintiffs will file in Court a Motion for Final 25 Approval that includes, among other things, the reasons why the proposed Settlement is 26 fair. You may view these documents and the Settlement Agreement on the Administrator’s Website <> or the Court’s website <

WEBSITE>>.

28 1 DEADLINE>>. Be sure to tell the Administrator what you object to, why you object, and any facts that support your objection. Make sure you identify the Action, Jeffrey Pipich et 2 al. vs. O'Reilly Auto Enterprises, LLC, case no. 3:21-cv-01120-L-JLB, and include your 3 name, current address, telephone number, and approximate dates of employment for Defendants and sign the objection. Section 9 of this Notice has the Administrator’s contact 4 information. You should send your objection to the Administrator by email, fax, or regular 5 U.S. mail. A Participating Class Member who has submitted a timely objection may attend the Final Approval Hearing (or personally retain a lawyer to object and attend at your own 6 cost). You (or your attorney) should be ready to tell the Court what you object to, why you 7 object, and any facts that support your objection. See Section 8 of this Notice (immediately below) for specifics regarding the Final Approval Hearing. 8

9 8. CAN I ATTEND THE FINAL APPROVAL HEARING? 10 You can, but don’t have to, attend the Final Approval Hearing on <> at <> in Courtroom 5140 of the United States District Court, Southern District of California, located at Edward J. 12 Schwartz United States Courthouse, 221 West Broadway, San Diego, CA 92101 (the 13 Honorable Allison H. Goddard, United States Magistrate Judge). At the Hearing, the judge will decide whether to grant Final Approval of the Settlement and how much of the 14 Gross Settlement will be paid to Class Counsel, Plaintiffs, and the Administrator. The 15 Court will invite comment from objectors, Class Counsel and Defense Counsel before making a decision. You can attend (or hire a lawyer to attend). Check the Court’s website 16 for the most current information. 17 It’s possible the Court will reschedule the Final Approval Hearing. You should check the 18 Administrator’s website <> beforehand or contact 19 Class Counsel to verify the date and time of the Final Approval Hearing.

20 9. HOW CAN I GET MORE INFORMATION? 21 The Agreement sets forth everything Defendants and Plaintiffs have promised to do under 22 the proposed Settlement. The easiest way to read the Agreement, the Judgment, or any 23 other Settlement documents is to go to the Administrator’s website at <>. You can also telephone or send an email to the 24 Administrator using the contact information listed below, or consult the Court website by 25 going to (http://www.<< COURT’S WEBSITE>>.aspx) and entering the Case Number for the Action, Case No. 3:21-cv-01120-L-JLB. You can also make an appointment to 26 personally review court documents in the Clerk’s Office at the United States District Court, 27 Southern District of California, located at Edward J. Schwartz United States Courthouse, 221 West Broadway, San Diego, CA 92101 by calling <

DO NOT TELEPHONE THE COURT TO OBTAIN INFORMATION ABOUT THE

2

SETTLEMENT.

3 4 Class Counsel: 5 David Glenn Spivak, Esq. The Spivak Law Firm 6 8605 Santa Monica Bl 7 PMB 42554 West Hollywood, CA 90069 8 david@spivaklaw.com 9 Telephone: (213) 725-9094

10 Alexandra K. Piazza, Esq. 11 Berger Montague PC 12 8241 La Mesa Blvd, Suite A La Mesa, CA 91942 13 apiazza@bm.net 14 Telephone: (619) 489-0300

15 Administrator: 16

17 Name of Company: Xpand Legal Consulting LLC 18 Email Address: ___ Mailing Address: ___ 19 Telephone: ___ 20 Fax Number: ___

21 O’Reilly Counsel: 22 James M. Peterson. Esq. 23 Derek W. Paradis, Esq. 24 HIGGS FLETCHER & MACK LLP 401 West “A” Street, Suite 2600 25 San Diego, California 92101-7913 26 peterson@higgslaw.com paradisd@higgslaw.com 27 Telephone: 619.236.1551 28 1 Express Counsel: 2 Morgan Forsey, Esq.

ARENTFOX SCHIFF LLP

3 555 West Fifth Street 4 48th Floor Los Angeles CA 90013 5 mforsey@sheppardmullin.com 6 Telephone: (213) 443-7538

7 10. WHAT IF I LOSE MY SETTLEMENT CHECK? 8

9 If you lose or misplace your settlement check before cashing it, the Administrator will replace it as long as you request a replacement before the void date on the face of the 10 original check. If you do not request a replacement by the void date, you will have no way 11 to recover the money.

12 11. WHAT IF I CHANGE MY ADDRESS? 13 To receive your check, you should immediately notify the Administrator if you move or 14 otherwise change your mailing address. 15 16 17 18 19 20 21 22 23 24 25 26 27 28