case 1:06-cv-01324-dad-mjs document 226 filed 03/14/17 ......ii. terms of...

PLAINTIFF’S MEMORANDUM IN SUPPORT OF HIS AGREED/UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF COMPROMISE AND DISMISSAL OF THE CLASS’ CLAIMS

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Nicholas J.P. Wagner Law Office of Wagner & Jones 1111 E. Herndon, Suite 317 Fresno, CA 93704 (559) 449-1800 Howard W. Foster, pro hac vice counsel Foster PC 150 N. Wacker Drive, Suite 2150 Chicago, IL 60606 (312) 372-1600 Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

FRESNO DIVISION ROBIN BREWER, individually and on behalf of all others similarly situated, Plaintiff,

vs.

SCOTT SALYER

Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

1:06-cv-01324-DAD-MJS

PLAINTIFF’S MEMORANDUM IN SUPPORT OF HIS AGREED/UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF COMPROMISE AND DISMISSAL OF THE CLASS’ CLAIMS Parties to Appear Telephonically

PLAINTIFF’S MEMORANDUM IN SUPPORT OF HIS AGREED/UNOPPOSED

MOTION FOR PRELIMINARY APPROVAL OF COMPROMISE AND DISMISSAL OF THE CLASS’ CLAIMS

Plaintiff Robin Brewer (“Plaintiff” or “Brewer”), on behalf of himself and the certified

class (“Plaintiffs” or “the class”), by undersigned counsel, hereby submits his memorandum in

support of the parties agreed/unopposed1 motion for preliminary approval of compromise and

dismissal of the Class’ claims. All parties will be attending the status conference via telephone.

1This is styled as an agreed and unopposed motion because Class Counsel has drafted this Motion and

Case 1:06-cv-01324-DAD-MJS Document 226 Filed 03/14/17 of 22


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I. BACKGROUND AND CASE HISTORY

This case has a unique, long, and complicated procedural history, dating back over ten

years. As the Court is aware, this is a RICO class action case against Mr. Salyer that was

originally filed in 2006. After the case was filed, Mr. Salyer brought a Rule 12(b)(6) Motion to

Dismiss, which was denied (in part) on May 16, 2007. Court Doc. 34. In July 2009, the Court

certified a class of all hourly-paid seasonal employees from September 22, 2002 through July 21,

2009.2 Prior to class certification, the parties conducted only discovery related to the issue of

class certification (i.e., discovery was bifurcated and no merits discovery took place. Though

discovery was limited in scope, the volume of class certification discovery was still relatively

substantial).

During this same period of time (around 2009), Mr. Salyer became the target of a federal

investigation into various business practices, and ultimately became a defendant in a federal

criminal case. During or around this same time period, SK Foods also went into involuntary

bankruptcy, and Bradley Sharp was appointed as the Trustee (“Sharp” or “Trustee”). As the

Court is aware, there was extensive litigation between the Trustee, Mr. Salyer, and the various

entities previously owned by SK Foods/Salyer related to this bankruptcy which largely did not

involve Mr. Brewer (or the class) and for which Mr. Brewer (and the class) largely did not

participate. But because of this extensive and related litigation and because of the criminal

proceedings (and other related reasons), since 2009, merits discovery in the present case has been

Memorandum, working in conjunction with Defendant and his counsel. Mr. Salyer agrees with the terms of the settlement/dismissal, and does not oppose any of the remaining relief sought in this Motion. 2 On April 3, 2008, the Magistrate Judge originally recommended that Plaintiff’s Motion for Class Certification be denied. See Court Doc. 92. On May 18, 2009, however, the District Court granted Plaintiff’s Motion for Class Certification. See Court. Docs. 101, 112. No discovery took place during this time while the Court was deciding the Motion for Class Certification.



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severely limited, and all discovery was eventually stayed indefinitely, including discovery from

Mr. Salyer personally. See, e.g., Court Doc. 173.

During this stay, however, the Court permitted Brewer to conduct the process of sending

out class notification. See Court Doc. 172. During this process, class members had an

opportunity to opt-out. That process was completed and according to class counsel’s records, the

class consists of 197 former seasonal workers.

In or around February 2013, Mr. Salyer entered into a plea agreement as part of his

criminal case, and he was sentenced to 72 months of imprisonment. From April 2013 through

November 30, 2016, Mr. Salyer was incarcerated at the Lompac Prison Camp and then a

Halfway House in Fresno, California. But the restitution portion of Mr. Salyer’s criminal

sentencing, however, continued until early-mid 2016, at which point, the Court confirmed that

restitution would not be an effective use of the Court’s resources. This finally concluded the

sentencing phase for Mr. Salyer.

On January 20, 2017, this Court lifted the discovery stay in this case stating, in pertinent

part:

The parties having submitted no authority or other reason for continuing the discovery stay (ECF No. 173, as modified by ECF No. 185), the Court hereby ORDERS that 1) the Stay is hereby lifted; and 2) within sixty (60) days of the date of this Order, Plaintiffs, or the parties jointly, shall file a motion for settlement, voluntary dismissal, or compromise in compliance with the requirements set forth in Fed. R. Civ. P. 23(e) (to include a reasonable plan and schedule to provide adequate notice to allow class members to object or opt-out of the class and attend the class settlement fairness hearing, if desired), file such other motion as they believe in good faith would move the matter promptly towards resolution, or file a joint plan and schedule to move the litigation forward (to include the information required under the Court's September 21, 2006 Mandatory Scheduling Conference Order (ECF No. 7))

Court Doc 224.



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II. TERMS OF SETTLEMENT/COMPROMISE/DISMISSAL

A. Settlement Discussion History

Over the course of the past few years, the parties began discussing the possibility of

settling the case for the following reasons:

The class size is very small (less than 200 class members);

The expense and duration of protracted merits discovery;

The problems with conducting discovery for a relatively old case, including memory

of events/facts that diminish over time;

The need for experts and the time/costs associated with that process;

The threat of any future wide-spread immigration-related violations by Mr. Salyer involving hourly paid workers has likely been eliminated; and

The uncertainty of Mr. Salyer’s criminal proceedings and the possibility of future international criminal investigations that could further stay the case.

From Plaintiffs’ perspective, a major impediment in the past to proceeding with any

possible dismissal or compromise of claims, was Mr. Salyer’s uncertain financial status upon his

release from prison. For the reasons identified below, Class Counsel now believes that Mr.

Salyer has an extreme negative net worth, and that there is no reasonable or realistic potential for

ever recovering, should Plaintiffs continue with the litigation and prevail:

Mr. Salyer’s attorney has represented to this Court that Mr. Salyer is insolvent, has no appreciable assets, and is also subject to numerous multi-million dollar judgments against him. See, e.g. Court Docs. 210, 212, 215, 223.

In 2016, after a lengthy and extensive process to determine whether Mr. Salyer

should be ordered to pay restitution as part of his criminal sentence, District Judge Troy N. Nunley issued an Order confirming that no restitution against Mr. Salyer in the criminal case should be ordered. See Docket No. 685, from criminal case. In



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arriving at this decision, the Court had available to it a full Pre-Sentence Report from United States Probation, including a review of the Defendant’s assets.3

Mr. Salyer has recently provided Class Counsel a declaration in which he confirms his significant negative net worth, lists the major multi-million dollar judgments against him, and also states that he is currently unemployed with no future job prospects. See Salyer Declaration, attached as Ex. B hereto.

In light of all of these factors, Class Counsel is now satisfied that further pursuing this

litigation would waste the resources of the parties, and this Court, with no good-faith basis to

believe there would ever be any class recovery (should the class prevail on the merits).

B. Terms of Agreement: The Parties Agree To A “Walk-Away”, Where The Case Is Dismissed Without Prejudice And Each Side Bears Their Own Costs

Subject to Court approval, the parties agree that the case should be dismissed without

prejudice, with each side bearings their own costs. This is essentially a “walk-away.” To be

clear, neither the named Plaintiff (Mr. Brewer), nor class counsel, will receive any payment or

benefits of any kind as part of, or in connection with, this case/settlement/litigation and/or

from/by Defendant. See Ex. C, Galin Declaration.4

III. PLAINTIFF AND CLASS COUNSEL ARE SEEKING DISMISSAL AND COMPROMISE UNER RULE 23(e)

The parties are seeking voluntary dismissal and compromise of their claim pursuant to

Fed. R. Civ. P. 23(e), which states, in pertinent part:

Settlement, Voluntary Dismissal, or Compromise. The claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval. The following procedures apply to a proposed settlement, voluntary dismissal, or compromise:

3 It is Plaintiffs’ understanding that the presentencing report is sealed. 4 Indeed, as noted in the Galin Declaration, Plaintiffs’ attorneys and law firms have spent over 800 hours on this case over the past 10-plus years and have also spent over $20,000 prosecuting the case. These are costs and expenses that will be borne by the attorneys.



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(1) The court must direct notice in a reasonable manner to all class members who would be bound by the proposal.

(2) If the proposal would bind class members, the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate.

(3) The parties seeking approval must file a statement identifying any agreement made in connection with the proposal.

(4) If the class action was previously certified under Rule 23(b)(3), the court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so.

(5) Any class member may object to the proposal if it requires court approval under this subdivision (e); the objection may be withdrawn only with the court's approval.

For the reasons discussed below, these criteria are met.

With respect to subparagraph (1), Plaintiff proposes that the notice attached as Ex. A will

be sent via first class mail to class members (at their last known address) to inform them about

the compromise of their claims. Plaintiff respectfully requests approval of Ex. A by the Court,

after which time, Class Counsel will send these letters to class members.5 Class Counsel will

also post this Motion, Ex. A, and any related Court order, on its website (www.fosterpc.com) in a

section dedicated to this case.

With respect to subparagraph (2), Plaintiff respectfully requests a date for final fairness

hearing in approximately 90 days (or longer or shorter as agreed to by the parties/Court), which

will give any class members ample time to object if they see fit.

5 After preliminary approval and a date is set for the final fairness hearing, Class Counsel will insert that date into the letter/ notice (Ex.A) being sent to class members.



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With respect to subparagraph (3), the terms of the agreement are stated above in Section

II-B, supra. In considering whether a settlement or compromise is fair, Courts look at a number

of factors, including, but not limited to:

(1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement.

Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575–76 (9th Cir. 2004); see also

7B Wright & Miller, FEDERAL PRACTICE & PROCEDURE, at § 1797.1 (3d ed. 2017):

[T]he following all have been viewed as relevant to approving a dismissal or compromise: the likelihood of the class being successful in the litigation, the points of law on which the settlement is based, the amount proposed as compared to the amount that might be recovered, less litigation costs, if the action went forward…

As discussed above, given the unique procedural history of this case, as well as the financial

status of the Defendant, Class Counsel does not believe that there is a reasonable/realistic

possibility of successfully obtaining monetary relief for the Class and that continuing this

litigation through discovery, expert discovery, summary judgment/trial will be costly and time

consuming, and will needlessly waste the resources of the parties and the Court.

Plaintiff recognizes that, generally, compromises/dismissals in which portions of the class

do not receive any benefit are not favored. See, e.g., Ferrington v. McAfee, Inc., No. 10-CV-

01455-LHK, 2012 WL 1156399, at *8 (N.D. Cal. Apr. 6, 2012). This, however, is typically a

problem in situations in which some class members receive monetary compensation and others

receive non-monetary/compensation or nothing at all, and/or when class counsel receives a

disproportionate share of the recovery as attorneys fees. Compare, e.g., § 13:56 NEWBERG ON



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CLASS ACTIONS, at §13:56 (5th ed. 2016)(“Generally speaking, all of the red flags have at their

heart the concern that the class's attorneys have sold out the class, settling the class members'

claims for too little in return for a guaranteed attorney's fee.”); 7B FEDERAL PRACTICE &

PROCEDURE, at §1797.1 (“the court must be particularly vigilant in evaluating those

recommendations because there may be a bias toward settlements in which the class attorney

agrees to trade off a smaller total award by the defendant for a larger fee.”). Here, there are no

benefits being given to the named plaintiff (Mr. Brewer), or class counsel, at the expense of the

other, unnamed class members, whatsoever. Indeed, as noted above, this is clearly not the case,

as Class Counsel (and the other law firms for the Plaintiffs) have expended over 800 hours of

time and over $20,000 in expenses the past 10-plus years that will not be recovered.

In sum, with respect to the issue of whether the settlement is “fair, adequate, and

reasonable,” the Court must ensure that “the agreement is not the product of fraud, overreaching

by, or collusion among, the negotiating parties.” Ferrington, 2012 WL 1156399, at *8. Here,

none of these red flags are present—the parties simply want to end this litigation after 10-plus

years and conserve resources (of the parties and the Court), now that it is clear that there is no

realistic chance of recovery (should Plaintiffs prevail in uncertain litigation).

With respect to subparagraph (4), Plaintiff believes it is not necessary to provide an

additional opportunity to opt-out (potential class members were given an initial opt-out

opportunity with class notice) since the parties are seeking dismissal without prejudice.6 Plaintiff

also believes that adding this additional opt-out process may also be confusing to class members

6 As stated above, from a practical matter, Class Counsel and Mr. Brewer do not believe that a successful outcome is possible. However, to the extent that the Court is concerned about class members’ second opportunity to opt-out, pursuant to Rule 23(e)(4), Plaintiff believes the dismissal without prejudice would alleviate that concern.



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(and former workers who are not class members) since there was already an opportunity to opt-

out years ago. To be sure, this requirement is not mandatory and is in the discretion of the Court.

See, e.g., Officers for Justice v. Civil Serv. Comm'n of City & Cty. of San Francisco, 688 F.2d

615, 634–35 (9th Cir. 1982)(“we have found no authority of any kind suggesting that due

process requires that members of a Rule 23(b)(3) class be given a second chance to opt out. We

think it does not.”); 7B FEDERAL PRACTICE & PROCEDURE, at §1797.5 (“Since plaintiff was given

notice and an opportunity to opt out at an earlier stage, due process does not require that a second

opportunity be given after the settlement terms are disclosed. At that point the parties' interests

are protected by the Rule 23(e) requirements of court approval of the settlement with notice and

a fairness hearing at which the dissenters can voice their objections.”); accord Klein v. O'Neal,

Inc., 705 F. Supp. 2d 632, 662–63 (N.D. Tex. 2010), as modified (June 14, 2010), judgment

entered (June 18, 2010), enforcement denied, No. 7:03-CV-102-D, 2011 WL 2413318 (N.D.

Tex. June 15, 2011)(class member's due process rights were not violated by not allowing second

opportunity to opt out). To the extent that the Court directs otherwise, Plaintiff has no objection.

With respect to subparagraph (5), the proposed notice (Ex. A), provides directions to

class members on how to object.

Thus, for all of these reasons, it is Plaintiff’s position that Rule 23(e) is satisfied.

IV. CONCLUSION

For the reasons stated herein, Plaintiff respectfully requests an order: a) granting

preliminary approval of this agreement to dismiss the class’ claims; b) approving the proposed

notice to class members, attached as Ex. A hereto; c) and setting a date in approximately 90 days

for a final class fairness hearing.



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Respectfully submitted,

Dated: March 14, 2017

/s/ Howard W. Foster Howard W. Foster, pro hac vice counsel Matthew Galin, pro hac vice counsel Foster PC 150 N. Wacker Drive, Suite 2150 Chicago, IL 60606 (312) 372-1600 [email protected] Nicholas J.P. Wagner Law Office of Wagner & Jones 1111 E. Herndon, Suite 317 Fresno, CA 93704 (559) 449-1800 Attorneys for Plaintiffs

CERTIFICATE OF SERVICE

I, the undersigned, certify that on March 14, 2017 the foregoing PLAINTIFF’S MEMORANDUM IN SUPPORT OF HIS AGREED/UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF COMPROMISE AND DISMISSAL OF THE CLASS’ CLAIMS was filed electronically with the Clerk of Court to be served by operation of the Court’s electronic filing system on all applicable parties.

/s/Howard W. Foster Howard W. Foster, pro hac vice counsel Foster P.C. 150 N. Wacker Drive Suite 2150 Chicago, Illinois 60606 (312) 726-1600


EXHIBIT A


Date: Class Member Name Address City, State Zip Code Re: Compromise and Dismissal of Claims in Brewer v. Salyer, 1:06-cv-01324-DAD-MJS, Eastern District of California Dear [class member]: As you know, we are class counsel for the certified class in Brewer v. Salyer, 1:06-cv-01324-DAD-MJS, Eastern District of California, which means, as a class member, we represent you. We are writing to give you an update about the case and to inform you of our intention to dismiss the case.

Brief Background Of Case:

Since this case was certified as a class action over seven years ago, it has been “stayed” or essentially put “on hold” during this time. As you may know, the Defendant, Mr. Salyer, was facing federal criminal prosecution, pled guilty, and then was sentenced to a number of years of incarceration in prison and then a half-away house. The basis of the federal criminal prosecution did not involve the claims in this case. As you also may be aware, his company, SK Foods, was also involved in an involuntary bankruptcy during this same time period. Now that the bankruptcy and criminal proceedings/sentencing have finally completed, the case can resume again.

Compromise and Dismissal of Class Claims

On [ ], 2017, Class Counsel moved the Court for preliminary approval to compromise and dismiss the class claims. The terms of the compromise and dismissal are: 1) the Class dismisses all of its claims in this case, without prejudice (explained more below); 2) neither party pays any money or compensation to the other side; and 3) You (the class member) would have no responsibility for any costs or attorneys fees.

We recognize that it is unusual for Class Counsel to dismiss the Class’s claims without any compensation to class members. After much thought and discussion with the Court, it is Class Counsel’s firm belief that even if they were successful in this litigation, that there is no realistic possibility of ever collecting any money from Mr. Salyer. In light of the bankruptcy and criminal proceedings, as well as various civil judgments against him, we firmly believe that Mr. Salyer is broke and has a significant negative net worth. Additionally, because the case was “stayed” for many years, there is much discovery that would need to be done to prepare the case


Notice of Compromise and Dismissal of Claims Date Page 2

for trial. Class Counsel believes that it would be a waste of the parties’, and the Court’s, time and resources to engage in this costly discovery when there is no realistic possibility of ever collecting from Mr. Salyer, should the Class ultimately prevail down the line.

Please keep in mind since this case began over 10 years ago (in 2006), Class Counsel has expended hundreds and hundreds of hours of time and thousands of dollars in out-of-pocket expenses, none of which has been repaid or reimbursed and none of which will be repaid or reimbursed. Thus, like you, the lawyers in this case will also be receiving nothing as part of the compromise and dismissal, nor will the named Plaintiff, Mr. Brewer. In short, we believe the time has come to finally resolve this case so that the parties, and the Court, can move on.

What Happens Next?

The Court has scheduled a final fairness hearing for [ ] 2017, at which time, the Court will decide whether to officially approve or deny the compromise and settlement/dismissal on these terms. If you wish to object, or if you believe this compromise and dismissal is not fair, you must send a letter, postmarked by [60 days after the date on this letter], saying you object to the compromise and dismissal in Brewer v. Salyer, 1:06-cv-01324-DAD-MJS, and the reasons why. The letter should include your name, address, telephone number, signature and reasons for objecting, and must be mailed to three different places:

Foster PC 150 N. Wacker Dr. Suite 2150 Chicago, IL 60606 Segal & Associates, PC 400 Capitol Mall, Suite 2550 Sacramento, CA 95814 [Court Information Address]

The Court will consider your views when determining whether to approve the compromise/dismissal. Or, instead of sending a letter, you can appear at the fairness hearing, scheduled for [_____] 2017, and state any objection in person. (If you send a letter within the time frame above, you do not need to appear to object).

Otherwise, if you have no objection, you do not need to appear and you do not need to do anything at all. If the Court approves the compromise and dismissal, the case will be dismissed and over, and you (the class member) will receive nothing and have no responsibility to pay anything.


Notice of Compromise and Dismissal of Claims Date Page 3

Also, we are asking that the case be dismissed without prejudice. This means that, if you wish, you could attempt to refile the case if you so choose. For the reasons stated above, and in the full motion papers posted on our website (www.fosterpc.com), we do not believe that recovery in any subsequent suit would be successful, which is why we are seeking dismissal here. However, that is your decision to make. Class Counsel would not be involved in any subsequent case, nor would Mr. Brewer. You would need to hire or obtain your own lawyer. Additionally, putting the issue of recovery aside, Class Counsel makes no statement about whether any subsequent suit would be legally valid/sufficient, whether any such suit could be maintained as a class action, and/or whether the statute of limitations would not bar such claims. Again, you would need to consult new/independent counsel on such a matter.

Where To Get More Information

All motion papers related to this requested compromise and settlement are posted on our website, www.fosterpc.com. This also includes the declarations submitted by both Class Counsel and Mr. Salyer, and a more in-depth summary of the unique procedural posture of this case, as well as a copy of this letter.

If you have any questions, you can contact Class Counsel at: (312) 726-1600.

Sincerely,

Howard W. Foster Class Counsel


EXHIBIT B


EXHIBIT C


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