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David A. Lowe (State Bar #178811) John T. Mullan (State Bar # 221149) RUDY, EXELROD & ZIEFF, L.L.P. 351 California Street, Suite 700 San Francisco, CA 94104 Telephone: (415) 434-9800 Facsimile: (415) 434-0513 Email: dal@rezlaw.com Email: jtm@rezlaw.com Attorneys for Plaintiffs UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

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RICHARD PRENTICE, CHRISTIAN MILLER, and TIFFINEY PETHERBRIDGE, on their own behalf and on behalf of classes of those similarly situated, Plaintiff, vs. FUND FOR PUBLIC INTEREST RESEARCH, INC., Defendant.

Case No. C-06-7776 SC PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR ORDER: (1) PROVISIONALLY CERTIFYING SETTLEMENT CLASS; (2) PRELIMINARILY APPROVING CLASS ACTION SETTLEMENT AND PLAN OF DISTRIBUTION; (3) DIRECTING DISTRIBUTION OF NOTICE OF THE SETTLEMENT; AND (4) SETTING A SCHEDULE FOR THE FINAL SETTLEMENT APPROVAL PROCESS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: February 6, 2009 Time: 10:00 a.m. Court: Courtroom 1 Judge: Hon. Samuel Conti

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NOTICE OF MOTION AND MOTION NOTICE IS HEREBY GIVEN that Plaintiffs Rich Prentice, Christian Miller, and Tiffiney Petherbridge hereby do move the Court as follows: (1) (2) To preliminarily approve the Settlement and Agreement; To certify named Plaintiffs Rich Prentice, Christian Miller, and Tiffiney

Petherbridge as representatives of the FLSA Collective Action Class and the California Class, and Plaintiff Christian Miller as representative of the New York Class (“Class Representatives”); (3) To make appropriate findings regarding the previously conditionally certified

FLSA Collective Action and to preliminarily certify the California and New York Classes for purposes of settlement; (4) Class Counsel; (5) To approve, and direct mailing of, the proposed Class Notice (including notice of To appoint David A. Lowe, and John T. Mullan of Rudy, Exelrod & Zieff, LLP as

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the right to opt-out of the Classes); (6) To schedule a fairness hearing on the question of whether the proposed settlement

should be finally approved as fair, reasonable, and adequate as to the members of the Settlement Classes; and (7) To preliminarily approve service payments to the Class Representatives and costs

of administration payable to the Claims Administrator. This motion is based on the Complaint, the Stipulation of Settlement and Release, the Memorandum of Points and Authorities, and the Declaration of David A. Lowe filed herewith in support of this Motion; the other records, pleadings, and papers filed in this action; and upon such other documentary and oral evidence or argument as may be presented to the Court at the hearing of this Motion. Respectfully submitted, Dated: December 10, 2008 By: /s_David A. Lowe David A. Lowe Attorneys for Plaintiffs

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TABLE OF CONTENTS Page(s) NOTICE OF MOTION AND MOTION..........................................................................................1 MEMORANDUM OF POINTS AND AUTHORITIES..................................................................1 I. II. III. IV. INTRODUCTION................................................................................................................1 HISTORY AND STATUS OF THE CASE.........................................................................2 SUMMARY OF SETTLEMENT TERMS ..........................................................................3 CLASS CERTIFICATION OF PLAINTIFFS’ CLAIMS UNDER RULE 23 IS APPROPRIATE ...................................................................................................................6 A. The California and New York Classes Each Meet the Requirements of Rule 23(a). ................................................................................................................7 1. 2. 3. 4. Numerosity ...................................................................................................7 Commonality ................................................................................................7 Typicality......................................................................................................8 Adequacy......................................................................................................8

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The Proposed Settlement Classes Meet the Requirements of Rule 23(b)(3). ........10 The Previously-Certified FLSA Collective Action Should be Limited to those who Filed Consents to Join the Litigation and who Worked for Fund Prior to May 7, 2007, and This Court Should Toll the Statute of Limitations for Those Individuals who Filed Consents to Join the Litigation and who Worked for Fund After May 7, 2007. .....................................10

PLAINTIFFS’ COUNSEL SHOULD BE APPOINTED AS CLASS COUNSEL. ..........12 THE PROPOSED SETTLEMENT MERITS PRELIMINARY APPROVAL..................12 A. The Terms of the Proposed Settlement Are Fair....................................................13 1. 2. 3. The Settlement Is The Product of Serious, Arms-Length, Informed Negotiations................................................................................................14 The Payments to the Named Representatives For Their Service to the Class Are Reasonable and Routinely Awarded....................................14 The Proposed Plan of Distribution is Fair and Reasonable........................15

27 28 B. The Settlement Falls Within the Range of Reasonableness. ..................................17 i
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1. 2. VII.

The Work Performed by Class Counsel Supports the Settlement..............17 Liability Is Contested, and the Settlement Provides for Reasonable Compensation for Class Members’ Damages. ...........................................17

THE PROPOSED CLASS NOTICE AND SETTLEMENT DISTRIBUTION PROCESS ARE APPROPRIATE......................................................................................18 A. B. The Class Notice Satisfies Due Process. ................................................................18 The Notice Plan and Claims Process are Appropriate. ..........................................20

VIII. IX.

THE COURT SHOULD SET A FINAL SETTLEMENT APPROVAL SCHEDULE. ......................................................................................................................20 CONCLUSION ..................................................................................................................21

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TABLE OF AUTHORITIES CASES American Pipe & Const. Co. v. Utah, 414 U.S. 538 (1974) .......................................................................................................... 11 Armstrong v. Martin Marietta Corp., 138 F.3d 1374 (11th Cir. 1998) ......................................................................................... 11 Barnhill v. Saunders, 125 Cal.App.3d 1 (1981) ................................................................................................... 17 Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975) ............................................................................................. 10 Torrisi v. Tucson Electric Power Co., 8 F.3d 1370 (9th Cir. 1993) ............................................................................................... 20 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) ................................................................................... 8, 9, 10 Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909 (9th Cir. 1964) ............................................................................................... 7 Ingram v. The Coca-Cola Co., 200 F.R.D. 685 (N.D. Ga. 2001) ....................................................................................... 14 In re Vitamins Antitrust Litig., 2001 WL 856292 (D.D.C. July 25, 2001) ......................................................................... 13 Lightbourn v. County of El Paso, Tex., 118 F.3d 421 (5th Cir. 1997) ............................................................................................... 8 McNamara v. Bre-X Minerals Ltd., 214 F.R.D. 424 (E.D. Tex. 2002) ...................................................................................... 13 Mendoza v. United States, 623 F.2d 1338 (9th Cir. 1980) ........................................................................................... 19 In re Michael Milken & Associates Sec. Litigation, 150 F.R.D. 57 (S.D.N.Y. 1993)......................................................................................... 20 Morelock Enterprises, Inc. v. Weyerhaeuser Co., 2004 WL 2997526 (D. Or. Dec. 16, 2004)........................................................................ 12 Murray v. Local 2620, District Council 57, AFSCME, AFL-CIO, 192 F.R.D. 629 (N.D. Cal. 2000) ........................................................................................ 7 iii
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Rosario v. Livaditis, 963 F.2d 1013 (7th Cir. 1999) ............................................................................................. 8 Sorenson v. Concannon, 893 F.Supp. 1469 (D. Or. 1994).......................................................................................... 7 In re United Energy Corp. Solar Power Modules Tax Shelter Investments Sec. Lit., 122 F.R.D. 251 (C.D. Cal. 1988) .................................................................................... 8, 9 Van Bronkhorst v. Safeco Corp., 529 F.2d 943 (9th Cir. 1976) ............................................................................................. 12 Van Vranken v. Atlantic Richfield Co., 901 F.Supp. 294 (N.D. Cal. 1995)..................................................................................... 14 STATUTES, RULES AND REGULATIONS Federal Rules of Civil Procedure, Rule 23.............................................................................passim California Business and Professions Code Section 17200 ...................................................................................................................... 8 California Labor Code §§ 201-203......................................................................................................................... 16 OTHER AUTHORITIES 4 Newberg on Class Actions § 11.25 ............................................................................................................................... 13 4 Newberg on Class Actions § 11.41 (4th ed. 2002) ....................................................................................................... 13 Manual for Complex Litigation – Fourth § 21.632 ............................................................................................................................. 13

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MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiffs Rich Prentice, Christian Miller, and Tiffiney Petherbridge, on behalf of present and former Canvassers and Field Managers employed throughout the country by The Fund for Public Interest Research, Inc. ( “Fund”), seek preliminary approval of a proposed settlement of this action, which asserts claims for 1) FLSA Overtime and Minimum Wage Violations; and, as to present and former California Canvassers and Field Managers, (2) Violations of California Overtime and Minimum Wage Provisions; (3) California Waiting Period Penalties; (4) Violations of California Record-Keeping Provisions; (5) Violations of California Meal and Rest Period Provisions; (6) Violations of the California Unfair Competition Law; (7) Conversion; and, as to present and former New York Canvassers and Field Managers, (8) Violations of New York Overtime Provisions, and (9) Violations of New York “Spread of Hour” Provisions. The proposed Joint Stipulation of Settlement and Release (“Settlement”)1 resolves all of the named plaintiffs’ and Class Members’ stated claims for overtime compensation and related penalties against Defendant Fund in exchange for the payment by Defendant of $2.15 million. The proposed Settlement and plan of distribution were the product of non-collusive negotiations by informed counsel and fall well within the range of possible approval. Accordingly, Plaintiffs request that the Court: (1) preliminarily approve the settlement; (2) certify Plaintiffs Rich Prentice, Christian Miller, and Tiffiney Petherbridge as the Class Representatives; (3) make appropriate findings regarding the previously conditionally certified FLSA Collective Action and preliminarily certify a California Class and New York Class for purposes of settlement (the state law classes are in addition to the previously certified FLSA collective action); (4) appoint David A. Lowe, and John T. Mullan of Rudy, Exelrod & Zieff, LLP as Class

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A copy of the fully executed Joint Stipulation of Settlement and Release is attached as Exhibit 1 to the [Proposed] Order Granting Plaintiffs’ Motion For Order: (1) Provisionally Certifying Settlement Class; (2) Preliminarily Approving Class Action Settlement and Plan of Distribution; (3) Directing Distribution of Notice of the Settlement; and (4) Setting a Schedule for the Final Settlement Approval Process. 1
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Counsel; (5) approve, and direct mailing of, the proposed Class Notice (including notice of the right to opt-out of the Classes); (6) schedule a fairness hearing on the question of whether the proposed settlement should be finally approved as fair, reasonable, and adequate as to the members of the Settlement Classes; and (7) preliminarily approve service payments to the three Class Representatives, in the amount of $10,000 each, and costs of administration payable to the Claims Administrator, in the estimated amount of $119,370. II. HISTORY AND STATUS OF THE CASE On December 19, 2006, Rich Prentice, Christian Miller and Tiffiney Petherbridge (“Plaintiffs”) on behalf of themselves and current and former Canvassers and Field Managers filed an alleged FLSA collective action and state law class actions lawsuit against Fund entitled Rich Prentice, et al. v. The Fund for Public Interest Research, Inc., Case No. C 06-7776 SC in the United States District Court for the Northern District of California (“the Action”). Before and during the pendency of this Action, Class Counsel has conducted a thorough investigation into the facts of this action, including a review of relevant documents, and has diligently pursued an investigation of Plaintiffs’ and the Classes’ claims against Fund. Lowe Decl., ¶ 17. During the litigation, Class Counsel has successfully pursued a Motion for Leave to Send Hoffmann-La Roche Notice. Id. at ¶ 18. Pursuant to Plaintiffs’ motion, this Court conditionally certified Plaintiffs’ claims for violations of the FLSA as an FLSA collective action, and ordered that notice of the pendency of the FLSA collective action, along with a “Consent to Join” form, be mailed to all current and former Fund employees who held a covered position at any time in the three years prior to the date of the notice mailing. Notice of this Action was sent to thousands of present and former Fund Canvassers and Field Managers (most of whom worked for Fund for one week or less). Approximately 770 present and former Fund Canvassers and Field Managers filed consents to join this Action. Id. Subsequent to the close of the opt-in period, Class Counsel learned that, as of May 7, 2007, Fund began paying its canvassing staff for overtime and observation days. Id. This unilateral reclassification simultaneously limited Fund’s exposure for continuing overtime violations and also accomplished one of Plaintiffs’ major objectives in bringing this suit. 2
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Accordingly, while approximately 770 present and former Fund Canvassers and Field Managers filed consents to join this Action, only approximately 550 of those opt-ins worked for Fund prior to the May 7, 2007 date when Fund began paying its canvassing staff for overtime and observation days. The remaining 220 opt-ins who worked only after reclassification are not properly included in this case, as discussed below. During discovery, Fund has provided, and Class Counsel have reviewed, thousands of documents related to the claims asserted on behalf of the FLSA collective action class and putative state classes; Fund has produced, and Class Counsel have deposed a corporate representative of Fund who had knowledge regarding the facts relating to the litigation; Class Counsel has defended the depositions of the named Plaintiffs and a number of FLSA collective action opt-ins; Fund has also produced, and Class Counsel has reviewed, data on FLSA collective action class and putative state class members, including salary, position worked, and dates of hire and termination. Id. at ¶ 17. The parties also litigated Fund’s Motion to Compel Certain Information and Documents. Id. at ¶ 18. After a mediation, conducted on June 24, 2008 by an experienced mediator, Honorable Edward R. Infante (Magistrate, Retired), together with continuing discussions and negotiations thereafter, this Settlement was reached after arms-length negotiations by and among the parties. Id. at ¶ 19. III. SUMMARY OF SETTLEMENT TERMS The Settlement provides that Defendant will fund a non-reversionary Settlement Payment of $2.15 million to compensate Plaintiffs Prentice, Miller and Petherbridge and the FLSA Collective Action and state classes (collectively, the “Class” or “Settlement Class”) for their damages, inclusive of attorneys’ fees and costs, notice, and administration expenses, and payment to the three named Plaintiffs for their service to the Class.2 At the time of the Settlement, $2.15 million was approximately one half of Defendant’s net worth. On top of the $2.15 million, Pursuant to Fed. R. Civ. P. 23(h), Plaintiff will make a separate motion for attorneys’ fees and reimbursement of costs. 3
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Defendant will pay the employer portion of payroll taxes (including, but not limited to, FICA and FUTA) due on the payments of wages to Plaintiffs Prentice, Miller and Petherbridge and the Settlement Class. Of the $2.15 million settlement fund, approximately $1,350,000 will be allocated for distribution directly to Class members as compensation for their lost wages and other damages, and $30,000 will be sought as the total service payments to the three named Plaintiffs. Those amounts, plus settlement administration expenses of approximately $119,3703 and Class Counsel’s request for a 25% common fund fee ($537,000) and reimbursement of expenses in the amount of up to $115,000,4 comprise the total $2.15 million Settlement Payment. The Settlement includes a proposed settlement payment distribution plan, based on a formula carefully designed by counsel who are experienced and accomplished in this type of nationwide, multi-state wage and hour litigation to most fairly and accurately compensate qualified claimants. Each member of the FLSA Collective Action Class and each state law Class Member who does not opt out of the settlement will receive a proportionate share of the net settlement payment. The calculation of each Class Member’s share of the net settlement payment will be pursuant to a formula that takes into account days worked during the applicable class period and whether the Class member worked in California or New York. The state class multiplication factors recognize that the California and New York state law claims released by those class members provide for broader remedies than does the FLSA. /// /// In the present motion, Plaintiffs seek payment of up to $119,370 in Settlement administration expenses. This estimate of settlement administration costs is premised on information that there are several thousand putative class members in each state law class. Lowe Decl., ¶ 25, Exh. 1. However, as specified in the Settlement, if the reasonable expenses of the claims administrator exceed $119,370, such additional reasonable expenses may be paid upon a showing to and approval by the Court. As Plaintiffs’ counsel will detail in their separate motion for attorneys’ fees and reimbursement of costs, they have already incurred out-of-pocket expenses in the amount of $112,107.30 in litigating this matter. 4
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The Settlement also provides for appointment of The Garden City Group, Inc. as Claims Administrator to verify amounts due to claimants, and otherwise administer the settlement process under the supervision of the parties and the Court. The settlement process set forth in the Settlement provides for prompt notice to the proposed Settlement Class and an opportunity to opt out of the claims subject to the Settlement or object to the Settlement. As part of the Settlement, Class Members shall release and discharge Defendant from any claims which arose on or before May 7, 2007 (the reclassification date) that were averred or could have been averred based upon the facts alleged in the Complaint, including all claims related to misclassification of exempt status, missed meal periods; failure to provide timely accurate wage statements and maintain required payroll records; waiting time penalties; interest and other penalties under federal and state law, including but not limited to the California Labor Code, New York overtime and “spread of hour” provisions, the UCL, and the FLSA. Members of the FLSA Collective Action Class and state law Class Members who do not opt-out of the Settlement will not be required to submit a claim form in order to participate in the Settlement. The fund is non-reversionary – after payment of fees and costs, all of the remainder will be paid to Class members, with no portion reverting to Defendant. The proceeds of any improperly or untimely negotiated Settlement fund checks will, after the costs of administration, the payment of attorneys fees and costs, and the Class Representatives’ service fees, be paid to the designated cy pres recipient, the San Francisco Legal Aid Society – Employment Law Center. Defendant denies any liability or wrongdoing of any kind associated with the claims alleged in this case. Defendant further contends, among other things, that it has complied with the FLSA, California and New York state wage and hour laws, and the UCL. Plaintiffs believe that they have filed meritorious actions based on alleged violations of the FLSA, California and New York state wage and hour laws, and California Business and Professions Code Section 17200. /// /// /// 5
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IV.

CLASS CERTIFICATION OF PLAINTIFFS’ CLAIMS UNDER RULE 23 IS APPROPRIATE In addition to the previously certified FLSA collective action class (“Sub-class A”),

through this motion, the parties jointly request the Court to make appropriate findings and to certify the California (“Sub-class B”) and New York (“Sub-class C”) state law sub-classes. In sum, the three sub-classes shall be defined as follows: (1) Sub-class A which shall be the previously certified FLSA collective action class who filed consents to join the Litigation and who worked for Fund as a Canvasser or Field Manager in any state other than California or New York during the FLSA Class Period (i.e., three years back from the date of each person’s consent to join the Litigation through May 7, 2007). (2) Sub-class B which shall be the “California Class” comprised of anyone identified in Fund’s payroll records as having worked for Fund in California as a Canvasser or Field Manager during the California Class Period (i.e., December 19, 2002 through May 7, 2007), who are sent notice of the Litigation and who do not optout. (3) Sub-class C which shall be the “New York Class” comprised of anyone identified in Fund’s payroll records as having worked for Fund in New York as a Canvasser or Field Manager during the New York Class Period (i.e., December 19, 2000 through May 7, 2007), who are sent notice of the Litigation and who do not optout. The state law Classes independently meet all four prerequisites of Rule 23(a) necessary to class certification; numerosity, commonality, typicality, and adequacy of representation. Fed. R. Civ. P. 23(a). In addition, the Classes each satisfy the requirements of Rule 23(b)(3): predominance of common issues and superiority of the class action device. /// ///

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A.

The California and New York Classes Each Meet the Requirements of Rule 23(a). 1. Numerosity

Rule 23(a)(1) requires that the proposed class be so numerous that joinder of all class members is impracticable. Plaintiffs need not, however, show that the number is so large that it would be impossible to join every class member. Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913-914 (9th Cir. 1964); Murray v. Local 2620, Dist. Council 57, AFSCME, AFLCIO, 192 F.R.D. 629, 631 (N.D. Cal. 2000). Here, the Classes are clearly large enough to make joinder impracticable. The California and New York Classes are each comprised of several thousand current and former Canvassers and Field Managers.5 Each proposed Class therefore satisfies Rule 23(a)(1)’s numerosity requirement. 2. Commonality

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Under Fed. R. Civ. P. 23(a)(2), Plaintiffs must show that there is a question of law or fact common to the class. Where a common nucleus of operative facts exists, commonality is usually met. See Sorenson v. Concannon, 893 F. Supp. 1469, 1479 (D. Or. 1994) (where system-wide procedures are at issue, commonality exists). Here, the requirement of a common question of law or fact is met as to the state law Classes. The proposed California and New York Class Members’ claims all stem from the same source: the allegation that they were misclassified as exempt and therefore not paid overtime wages. Questions of law and fact common to the California and New York Classes include: • Whether Fund’s policy and practice of classifying the Class Members as exempt from overtime entitlement and failing to pay overtime to the Class Members violates applicable California and/or New York law, including applicable statutory and regulatory authority; and Whether Fund unlawfully failed to pay compensation to Class members for missed meal and rest periods in violation of the UCL and applicable California wage and hour laws; and

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Fund’s payroll records produced in the course of discovery indicate that the majority of its employees were employed by Fund for less than two weeks. Lowe Decl., ¶ 17. 7
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Whether Fund unlawfully failed to keep and furnish employees with records of hours worked, in violation of applicable law.

As the Plaintiffs need only establish one common question of law or fact in order to meet the low threshold set by Rule 23(a)(2), Plaintiffs’ above showing of common issues far surpasses what is required. 3. Typicality

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The named Plaintiffs’ claims are also typical of those of the Classes that they seek to represent. Fed. R. Civ. P. 23(a)(3). Typicality gauges the similarity between the class representative’s legal theories and those of the proposed class members. Lightbourn v. County of El Paso, Tex., 118 F.3d 421, 426 (5th Cir. 1997). Courts have held that a representative plaintiff’s claim is typical if it arises from the same course of conduct that gives rise to other class members’ claims and is based on the same legal theory as the claims of the other class members. See In re United Energy Corp. Solar Power Modules Tax Shelter Invs. Sec. Lit., 122 F.R.D. 251, 256 (C.D. Cal. 1988) (“United Energy”); Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1999). Factual differences may exist between the class representatives and the class members so long as the claims arise from the same events or course of conduct and are based on the same legal theories. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). Plaintiffs Prentice, Miller and Petherbridge’s California claims are typical of those of the California Class, and Plaintiff Miller’s New York claims are typical of those of the New York Class because they all arise out of Fund’s uniform policy of classifying Canvassers and Field Managers as exempt, and of refusing to pay Canvassers and Field Managers overtime compensation for overtime hours worked. 4. Adequacy

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The proposed Class Representatives have and will continue to “fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). The adequacy requirement has two prongs: “(1) [t]hat the representative party’s attorney be qualified, experienced, and generally able to conduct the litigation; and (2) that the suit not be collusive and plaintiff’s interests not be 8
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antagonistic to those of the remainder of the class.” United Energy, 122 F.R.D. at 257. Both elements are satisfied here. First, Plaintiffs have retained counsel who are qualified and experienced to litigate this action. The law firm of Rudy, Exelrod & Zieff, LLP have represented plaintiffs in numerous wage and hour and other employment class actions.6 Second, Plaintiffs Prentice, Miller and Petherbridge have no interests antagonistic to the interests of the proposed Settlement Classes. As noted above, under the proposed Settlement, the named representatives will receive a supplemental service payment for their efforts on behalf of the Class. Other than this specific payment, all of the Class members will receive a portion of the balance of the Settlement fund based on days worked during the applicable class period and whether the class member worked in California or New York. These allocations reflect the legal and factual strengths of each claim and provide compensation to all class members based on their time within the company and the strength of their legal claims. Thus, no “settlement allocation” questions are raised. Hanlon, 150 F.3d at 1020. Moreover, “[p]otential plaintiffs are not divided into conflicting discrete categories,” since they all claim overtime wages and related damages for work they performed as canvassing workers for Defendant. Id. at 1021. Furthermore, there is no “structural conflict of interest based on variations in state law,” since the California and New York state law claims are segregated into separate Classes, and the differences in state law are compensated for in the plan of distribution. Id. Finally, any state Class member who wishes to “opt out” of the Settlement may do so and is provided ample notice of that right. See id. There is therefore no conflict of interest between the named representatives and the Class members. /// /// See Lowe Decl. in Support of Plaintiffs’ Notice of Motion and Motion For Order: (1) Provisionally Certifying Settlement Classes; (2) Preliminarily Approving Class Action Settlement and Plan of Distribution; (3) Directing Distribution of Notice of the Settlement; and (4) Setting a Schedule for the Final Settlement Approval Process. 9
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B.

The Proposed Settlement Classes Meet the Requirements of Rule 23(b)(3).

Common issues of law or fact “predominate over any questions affecting only individual members.” Fed. R. Civ. P. 23(b)(3). Defendant’s conduct is equally relevant to each proposed Class member’s claims and damages. The proposed Classes in this case are sufficiently cohesive to warrant adjudication by representation. Hanlon, 150 F.3d at 1022. The representative Plaintiffs and all of the proposed Class members seek overtime pay and related damages for work performed as Canvassers and Field Managers; common questions about the exempt or non-exempt nature of the work performed by the Class members predominate over individual questions, and the Class members’ potential legal remedies are identical within each Class. Any variation in damages is plainly insufficient to defeat class certification. Blackie v. Barrack, 524 F.2d 891, 905-06 (9th Cir. 1975). Thus, the proposed Classes may be certified for settlement purposes. The class action device proposed here “is superior to other available methods for the fair and efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). This action allows all of the Settlement Class members’ claims to be fairly, adequately, and efficiently resolved to a degree that no other mechanism or forum would provide. As in Hanlon, the alternative methods of resolution are individual claims for a relatively small amount of damages. See 150 F.3d at 1023. These claims “would prove uneconomic for potential plaintiffs” because “litigation costs would dwarf potential recovery.” Id. For this reason, a class action is the superior method of resolution. There are no issues of manageability under the Settlement that would preclude class certification. As discussed below, the proposed plan of distribution and settlement process is efficient and manageable. C. The Previously-Certified FLSA Collective Action Should be Limited to those who Filed Consents to Join the Litigation and who Worked for Fund Prior to May 7, 2007, and This Court Should Toll the Statute of Limitations for Those Individuals who Filed Consents to Join the Litigation and who Worked for Fund After May 7, 2007.

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Sub-class A, the previously certified FLSA Collective Action class who filed consents to join the Litigation, should be limited to those Canvassers and Field Managers who worked for 10
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Fund at some point during the period beginning three years back from the date of each person’s consent to join the Litigation through May 7, 2007, the date when Fund began paying its canvassing staff for overtime and observation days. That is, this Court should find that because Fund’s canvassing staff began receiving overtime and observation day wages after the May 7, 2007 reclassification date, those Canvassers and Field Managers who previously filed consents to join the FLSA Collective Action and who worked only after May 7, 2007 (approximately 220 opt-ins), are not “similarly situated” to the pre-May 7, 2007 Collective Action members who did not receive pay for overtime and observation days, and are therefore not members of the FLSA Collective Action.7 Moreover, the statute of limitations for the unpaid overtime and minimum wage claims alleged in the Complaint should be tolled for those Canvassers and Field Managers who previously filed consents to join the Litigation and who worked only after May 7, 2007. American Pipe & Const. Co. v. Utah, 414 U.S. 538, 552-553 (1974) (commencement of class action tolls the statute of limitations for the purported class members until certification denied). See also Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1379 (11th Cir. 1998) (applying American Pipe tolling where purported collective action members were dismissed because they were not similarly situated to the balance of the class). In a collective action, the statute of limitations is tolled from the date the plaintiff files his or her consent to join form and begins to run again on the date the court later decertifies in whole or in part the collective action. Armstrong, 138 F.3d at 1385. Accordingly, this Court should toll the statute of limitations for those approximately 220 Canvassers and Field Managers who previously filed consents to join the Litigation and who only worked after May 7, 2007 from the date they filed their consents to join this action through the date upon which the Court enters its Order finding that they are not

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The Notice of Collective Action approved by the Court in this matter and mailed to putative FLSA collective action members on or about November 16, 2007 informed the potential opt-ins that filing a “Consent to Join” form did not guarantee that they would be able to participate in this lawsuit, and such depended upon a final ruling from the Court that they are “similarly situated” under the law. (See Dkt. No. 75, p. 3). 11
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similarly situated and therefore not members of the FLSA collective action. (That is, the date upon which the Court enters its Order Provisionally Certifying the Settlement Class and Preliminarily Approving the Class Action Settlement). V. PLAINTIFFS’ COUNSEL SHOULD BE APPOINTED AS CLASS COUNSEL. Fed. R. Civ. P. 23(g) requires that courts consider the following four factors when appointing class counsel: whether (1) counsel has investigated the class claims, (2) counsel is experienced in handling class actions and complex litigation, (3) counsel is knowledgeable regarding the applicable law, and (4) counsel will commit adequate resources to representing the class. Morelock Enterprises, Inc. v. Weyerhaeuser Co., 2004 WL 2997526, *5 (D. Or. Dec. 16, 2004). Plaintiffs’ counsel is well qualified and easily meets the standards of Rule 23(g), as set forth in the Lowe Declaration. Lowe Decl., ¶¶ 2-15. Prior to and during this litigation, Counsel conducted an extensive investigation of the class claims. Id. at ¶ 17. In addition, as set forth above, in Section IV, Plaintiffs’ counsel is very experienced and knowledgeable regarding complex federal and state overtime class actions. Id. at ¶¶ 2-15. Finally, Plaintiffs’ counsel have committed significant resources to representing the classes, including over $112,000 in out-of-pocket expense, and have a demonstrated ability to represent classes throughout complex litigation, as discussed above and in the Lowe Declaration. Accordingly, appointment of Plaintiffs’ counsel as Class Counsel is appropriate. VI. THE PROPOSED SETTLEMENT MERITS PRELIMINARY APPROVAL The law favors settlement, particularly in class actions and other complex cases where substantial resources can be conserved by avoiding the time, cost, and rigors of formal litigation. Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976). These concerns apply with particular force in a case such as this, where an allegedly illegal practice affected thousands of employees. To grant preliminary approval of this class action settlement, the Court need find only that the settlement is non-collusive and within the range of possible final approval, also described as “the range of possible judicial approval.” In re Vitamins Antitrust Litig., WL 856292, at *4-5 12
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(D.D.C. July 25, 2001); see also 4 Newberg on Class Actions § 11.41 (4th ed. 2002). A. The Terms of the Proposed Settlement Are Fair.

As long as “preliminary evaluation of the proposed settlement does not disclose grounds to doubt its fairness or other obvious deficiencies, such as unduly preferential treatment of class representatives or of segments of the class, or excessive compensation for attorneys, and appears to fall within the range of possible approval,” the court should preliminarily approve the settlement. In re Vitamins, 2001 WL 856292, at *4-5 (quoting Manual for Complex Litigation, Third (FJC 1995). The court may also direct the giving of notice to the class members of a final approval hearing, “at which arguments and evidence may be presented in support of and in opposition to the settlement.” McNamara v. Bre-X Minerals Ltd., 214 F.R.D. 424 (E.D. Tex. 2002) (quoting Manual for Complex Litigation, Third, at 237; 4 Newberg § 11.25 (quoting same).8 Here, the parties negotiated the proposed Settlement in good faith and at arms length. As noted above, extensive discovery has allowed Class Counsel – who are very experienced wage and hour class action attorneys – to assess the strengths and weaknesses of the claims against Defendant and the benefits of the proposed Settlement under the circumstances of this case. Counsel for both parties have conducted a thorough investigation into the facts of the case and diligently investigated the Class Members’ claims against Defendant. Counsel for the Class Members believe that the settlement is fair, reasonable, and adequate and is in the best interest of the Class Members in light of all known facts and circumstances, including the risk of significant delay and Defendant’s asserted defenses. The total settlement fund is significant in light of the Defendant’s limited resources and its non-profit status. /// /// The Fourth edition of the Manual for Complex Litigation was released in 2004, and does not include this precise language, but instead suggests that if a court has “reservations” about any of the issues described, it should “raise questions . . . and perhaps seek an independent review . . . .” Manual 4th § 21.632. The end result is the same. 13
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1.

The Settlement Is The Product of Serious, Arms-Length, Informed Negotiations.

The Settlement resulted only after extensive, arms-length settlement negotiations that were conducted after rigorous discovery regarding the merits and damages of the disputed claims, and under the supervision of experienced mediator Judge Infante. Lowe Decl., ¶¶ 17-19. The negotiations were protracted, and the mediation itself required numerous follow up phone calls on the part of Judge Infante. Id. at ¶ 19. For example, when the parties were unable to agree on a cy pres beneficiary, the issue was briefed and submitted to Judge Infante, who selected the Employment Law Center. Id. at ¶ 19. In sum, the proposed Settlement is the non-collusive product of hard-fought litigation. 2. The Payments to the Named Representatives For Their Service to the Class Are Reasonable and Routinely Awarded.

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The payment of $10,000 to each of the Class Representatives is intended to recognize the time and effort they expended on behalf of the Class. Indeed, “[c]ourts routinely approve incentive awards to compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation.” Ingram v. The Coca-Cola Co., 200 F.R.D. 685, 694 (N.D. Ga. 2001), quoting In Re S. Ohio Correctional Facility, 175 F.R.D. 270, 272 (S.D. Ohio 1997)). In Coca-Cola, the court approved incentive awards of $300,000 to each named plaintiff in recognition of the services they provided to the class by responding to discovery, participating in the mediation process and taking the risk of stepping forward on behalf of the class. Coca-Cola, 200 F.R.D. at 694; see also Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294 (N.D. Cal. 1995) (approving $50,000 participation award). See also Lowe Decl., ¶¶ 5-13 (listing Plaintiffs’ counsel’s cases in which the courts awarded class representative service payments of between $10,000 and $50,000). In this case, the Class Representatives performed important services for the benefit of the class: they provided information regarding the structure of the company and Canvassers’ and Field Managers’ job duties during lengthy interviews, they produced relevant documents, and worked with Plaintiffs’ counsel throughout the case. They responded to significant discovery propounded by Fund, and all three traveled to San Francisco to be deposed. Lowe Decl., ¶ 20. 14
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Accordingly, the payments to the Class Representatives are appropriate and justified as part of the overall Settlement in light of their services to and risks taken on behalf of the Class.9 3. The Proposed Plan of Distribution is Fair and Reasonable.

As described above, the proposed plan of distribution takes into account a variety of factors to ensure that the ultimate division of the settlement proceeds among Class members is fair and accurate, while at the same time preserving the intended efficiencies of class action litigation. To balance the goals of fairness and efficiency, the parties have agreed on the following method of distribution: A. The distribution formula shall assign ten points to those members of the three subclasses (that is, the FLSA Collective Action, the California Class and the New York Class) who were employed as Canvassers or Field Managers for less than five days during the applicable class period. Class members who were employed for five days or longer will receive ten points, plus an additional five points for each workweek that the class member was employed as a Canvasser or Field Manager during the applicable class period up through May 7, 2007. In addition, the distribution formula shall assign a factor of one and one-half (1.5) to New York sub-class members for weeks worked as a Canvasser or Field Manager in New York during the applicable class period up through May 7, 2007, and a factor of three (3) to members of the California sub-class for weeks worked as a Canvasser or Field Manager in California during the applicable class period up through May 7, 2007. The state class multiplication factors recognize that the California and New York state law claims released by those class members provide for broader remedies than does the FLSA. Each Class Member’s points will be multiplied by the appropriate multiplication factor, if any, to arrive at their assigned Points Total. In addition to the service payments, the three named Plaintiffs will be authorized to participate in the Settlement as Class Members. 15
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B.

Based on the above principles, each class member’s proportional share of the whole set of individual amounts calculated shall be determined. That is, each Class Member’s assigned Points Total will be divided by the sum of all Class Members’ Points Total to arrive at each class member’s proportional share of the Net Settlement Fund. If the total of the above amounts exceeds the available Net Settlement Fund, then individual settlement amounts shall be proportionally adjusted downward until the amount to be distributed equals the Net Settlement Fund. If the total of the above amounts is less than the available Net Settlement Fund, then individual settlement amounts shall be proportionally adjusted upward until the amount to be distributed equals the Net Settlement Fund.

C.

Any amount remaining in the Settlement Fund after distribution to the members of the Class as set forth above based upon the agreed upon formula (for example due to settlement checks returned undeliverable or the failure of Class members to negotiate settlement checks), will be paid by or on behalf of Fund as a cy pres charitable contribution to The Legal Aid Society of San Francisco—Employment Law Center.

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These factors mean, for example, that if a Minnesota employee who opted into the FLSA collective action, a California employee and a New York employee each worked for five days plus one additional workweek during the relevant class periods, the Minnesota employee would receive fifteen points, the California employee would receive 45 points and the New York employee would receive 22.5 points. These state law multipliers are a mechanism whereby California and New York employees, who had stronger arguments to recover higher overtime premium payments and other damages, receive a larger share of the Net Settlement Fund than their out of state counterparts. For example, in California an employer is liable for waiting time penalties when an employee is severed from employment and wages that have been earned are not timely paid. Cal. Labor Code §§ 201-203. Penalty wages accrue based on the employee’s daily wage for each day that they are due for a maximum of 30 working days. Cal. Labor Code § 203. No evil motive or intent to 16
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defraud the employee of wages is required in order for waiting time penalties to be assessed. Barnhill v. Saunders, 125 Cal. App. 3d 1 (1981). This plan of distribution is fair, objective and will reasonably approximate the relative damages suffered by Class members. B. The Settlement Falls Within the Range of Reasonableness. 1. The Work Performed by Class Counsel Supports the Settlement.

As noted above, Class Counsel has vigorously investigated the claims asserted against Fund. Class Counsel reviewed thousands of documents related to the claims asserted on behalf of the FLSA collective action and putative state law classes; Fund has produced, and Class Counsel has deposed, a corporate representative of Fund who had knowledge regarding the facts relating to the litigation; Fund has produced, and Class Counsel has reviewed, data on putative class members, including salary, position worked, and dates of hire and termination. Lowe Decl., ¶ 17. Furthermore, in the context of mediation, Class counsel received information from Defendant related to the appropriate damages in this action including a detailed database of payroll information. Using that data, as well as information collected by Plaintiffs’ counsel from opt-ins regarding the average length of canvassers’ workdays, and the average number of days a week a canvasser working in California was unable to take a thirty minute meal break, Plaintiffs hired an expert who created damages estimates under federal and state law that relied on the work location and work periods of class members. Id. Class counsel completed substantial investigation and formal discovery in this case and thus negotiated the proposed Settlement with ample knowledge as to the strengths and weaknesses of this case and the amounts necessary to compensate Class members for their damages. 2. Liability Is Contested, and the Settlement Provides for Reasonable Compensation for Class Members’ Damages.

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Of particular relevance to the reasonableness of the proposed Settlement is the fact that Defendant will vigorously contest Plaintiffs’ claims if the case does not settle. Defendant denies both that the exempt classification of its employees was improper and that Defendant owes any 17
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of its current and former employees overtime pay. Notwithstanding these arguments, the Settlement commits Defendant to pay $2.15 million toward compensating Class Members for their damages and efforts in the litigation; an amount reflecting a substantial percentage of Defendant’s net worth.10 By any measure, the relief obtained is substantial. Assuming that the Court awards attorneys’ fees of 25% of the Settlement Fund, litigation costs of up to $115,000, named plaintiffs service payments totaling $30,000, and settlement administrative costs of approximately $119,370, the Net Settlement Fund to be distributed to the class members – most of whom worked for less than two weeks11 – will be approximately $1,350,000.12 In addition, the Settlement requires Defendant to pay the employer’s share of the payroll taxes. Although Plaintiffs believe that their claims have merit, they recognize that they would face significant legal, factual, and procedural obstacles to recovering. In light of the strengths and weaknesses of the case and Defendant’s limited means, Class Counsel believe that the Settlement easily falls within the range of reasonableness because it achieves a significant benefit for the Class in a case where failure before or at trial is possible. Class Members will also receive their Settlement benefit far faster than if they pursued their claims through trial and appeal. VII. THE PROPOSED CLASS NOTICE AND SETTLEMENT DISTRIBUTION PROCESS ARE APPROPRIATE. A. The Class Notice Satisfies Due Process.

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Rule 23(c)(2)(B) provides that the court must direct to class members the best notice practicable under the circumstances, including individual notice to all members who can be ///

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Lowe Decl., ¶ 19. Lowe Decl., ¶ 17.

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identified through reasonable effort. The notice must concisely and clearly state in plain, easily understood language: • • • • • the nature of the action, the definition of the class certified, the class claims, issues, or defenses, that a class member may enter an appearance through counsel if the member so desires, that the court will exclude from the Rule 23 classes any member who requests exclusion, stating when and how members may elect to be excluded, and the binding effect of a class judgment on class members under Rule 23(c)(3).

Fed. R. Civ. P. Rule 23(c)(2)(B). The content of the Proposed Notice13 fully complies with due process and Rule 23. It provides the definition of the Classes, the time period covered by the Class and Collective Action, describes the nature of the action, including the Class claims, and explains the procedure for making comments and objections. The Notice provides specifics regarding the date, time, and place of the Final Approval Hearing, and informs Settlement Class members that they may enter an appearance through counsel. The Notice also informs Class members how to exercise their rights and make informed decisions regarding the proposed Settlement, and tells the putative state Class members that if they do not opt out, the judgment will be binding upon them. The Notice informs the Class about the application of Plaintiffs’ Counsel for reimbursement of costs and attorneys’ fees from the Settlement Fund. Moreover, the Class Notice describes the terms of the Settlement and informs Class Members how individual recoveries will be determined. Courts have approved class notices even when they have provided only general information about a settlement. See, e.g., Mendoza v. United States, 623 F.2d 1338, 1351 (9th Cir. 1980) (“very general description of the proposed The Notice of Proposed Class Action Settlement and Settlement Hearing is attached as Exhibit 2 to the Proposed Order. 19
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settlement” satisfies standards); In re Michael Milken & Assocs. Sec. Litig., 150 F.R.D. 57, 60 (S.D.N.Y. 1993) (Class Notice “need only describe the terms of the settlement generally.”). B. The Notice Plan and Claims Process are Appropriate.

The Settlement contemplates that the Notice will be mailed individually by the Claims Administrator to the last known address of the FLSA Collective Action members14 and California and New York putative Class members as identified through Defendant’s records within ten (10) calendar days of the entering of an Order granting preliminary approval of the Settlement and Notice. Such a notice plan satisfies due process and Rule 23(c)(2)(B). FLSA Collective Action members who worked during the covered time period and state Class members who do not opt-out need do nothing to secure their share of the Settlement. As directed in the Class Notice, payment will be made to him or her based on Defendant’s records and pursuant to the Settlement Formula. Skip tracing and other practicable methods will be used to ensure that the Class Notice is sent to the Class Members. State Class members will have forty (40) days from the date of Notice mailing to submit opt-out requests or to comment on or object to the settlement. This is sufficient time to give Settlement Class members the opportunity to comment on the Settlement. Cf. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993) (approving Notice sent 31 days before the deadline for objections and 45 days before the hearing). The Notice and opt-out process are set forth in detail in Section 9 of the Joint Stipulation of Settlement and Release. VIII. THE COURT SHOULD SET A FINAL SETTLEMENT APPROVAL SCHEDULE. The last step in the settlement approval process is the formal hearing, at which the Court may hear all evidence and argument necessary to evaluate the proposed Settlement. At that hearing, proponents of the Settlement may explain and describe its terms and conditions and offer

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The Notice will also be mailed to those Canvassers and Field Managers who filed Consents to Join the FLSA Collective Action but who worked only after May 7, 2007, the date upon which Fund began paying its employees overtime and observation day wages. The Notice informs these post-May 7, 2007 people that they fall outside the scope of the Class, and provides them with an explanation as to the reasons why they fall outside the scope of the Class. 20
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argument in support of Settlement approval, and members of the Settlement Class, or their counsel, may be heard in support of or in opposition to the Settlement Agreement. Class Counsel recommends the following schedule which is based on the Order Granting Motion For Preliminary Approval of Class Action Settlement and Class Certification that Plaintiffs respectfully request be entered on February 6, 2009: February 16, 2009 March 30, 2009 April 10, 2009 Last Day for Claims Administrator to mail Settlement Notice to FLSA Collective Action members, and the California and New York Putative Class Members. Last Day for Objections and Comments in Favor of Settlement and Last Day for state Class Opt Outs

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Last Day To File Moving Papers in Support of Final Approval of Settlement; Last Day To File Plaintiffs’ Application for Attorneys’ Fees, Costs and Expenses May 1, 2009 Last Day To File Replies in Support of Settlement, Plaintiffs’ Attorneys Fees, etc. May 15, Final Approval Hearing and hearing of Plaintiff’s 2009 Applications for Attorneys’ Fees, Costs and Expenses. A proposed order following this schedule is attached. CONCLUSION For all of the foregoing reasons, Plaintiffs respectfully request that the Court: (1) preliminarily approve the settlement; (2) certify Plaintiffs Rich Prentice, Christian Miller and Tiffiney Petherbridge as Class Representatives; (3) make appropriate findings regarding the previously conditionally certified FLSA Collective Action and preliminarily certify the California and New York Classes for purposes of settlement; (4) appoint David A. Lowe, and John T. Mullan of Rudy, Exelrod & Zieff, LLP as Class Counsel; (5) approve, and direct mailing of, the proposed Class Notice (including notice of the right to opt-out of the Classes); (6) schedule a fairness hearing on the question of whether the proposed settlement should be finally approved as fair, reasonable, and adequate as to the members of the Settlement Classes; and (7) preliminarily /// /// /// 21
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approve service payments to the three Class Representatives, in the amount of $10,000 each, and costs of administration payable to the Claims Administrator, in an amount of up to $119,370.

Respectfully submitted, Dated: December 10, 2008 By: /s_David A. Lowe David A. Lowe Attorneys for Plaintiffs

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David A. Lowe (State Bar #178811) John T. Mullan (State Bar # 221149) RUDY, EXELROD & ZIEFF, L.L.P. 351 California Street, Suite 700 San Francisco, CA 94104 Telephone: (415) 434-9800 Facsimile: (415) 434-0513 Email: dal@rezlaw.com Email: jtm@rezlaw.com

LAW OFFICES OF

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PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR PRELIMINARY SETTLEMENT APPROVAL CASE NO. C-06-7776 SC

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