SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES CENTRAL CIVIL WEST MICHELLE COX, individually and on behalf of all others similarly situated; MARYANNE TIERRA, individually and on behalf of all others similarly situated, vs. Plaintiffs, DOWNEY SAVINGS AND LOAN ASSOCIATION, a California corporation; and DOES 1 through 100, inclusive, Defendants. CASE NO. BC318964 NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED SETTLEMENT AND HEARING DATE FOR COURT APPROVAL Complaint Filed: July 23, 2004 ATTENTION: THIS NOTICE IS DIRECTED TO ALL CURRENT AND FORMER EMPLOYEES OF DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A., WHO WORKED AT ANY DOWNEY SAVINGS CALIFORNIA BANK BRANCH WITHIN A GROCERY STORE AT ANY TIME BETWEEN JULY 23, 2000 AND SEPTEMBER 30, 2002, AS A BRANCH SALES MANAGER, CUSTOMER SALES MANAGER AND/OR BRANCH SALES SUPPORT. PLEASE READ THIS NOTICE CAREFULLY. YOU MUST FILE THE ENCLOSED PROOF OF CLAIM FORM OR REQUEST FOR EXCLUSION FORM ON OR BEFORE SEPTEMBER 16, 2005, TO EITHER RECEIVE PAYMENT OR BE EXCLUDED FROM THE SETTLEMENT. Pursuant to the Order of the Superior Court of the State of California for Los Angeles County entered on July 13, 2005, YOU ARE HEREBY NOTIFIED THAT: A settlement has been reached between the parties in the above-referenced lawsuit, Case No. BC 318964, on behalf of all current and former employees of Downey Savings and Loan Association, F.A. ( Downey Savings, who worked at any one or more of Downey Savings California bank branches within a grocery store ( in-store branch as a Branch Sales Manager, Customer Sales Manager and/or Branch Sales Support at any time between July 23, 2000 and September 30, 2002. You received this notice because Downey Savings records indicate that you worked in at least one of these job classifications at an in-store branch within this time period. This notice describes how you can either participate in this settlement or be excluded from the settlement. I. BACKGROUND OF THE CASE On July 23, 2004, this lawsuit was filed on behalf of all individuals employed by Downey Savings in the State of California as exempt managers at in-store branches between July 23, 2000 and
September 30, 2002. The lawsuit seeks damages for unpaid overtime wages, penalties for meal and rest period violations, failure to furnish timely and accurate wage statements, failure to keep required payroll records, waiting time penalties, and restitution for unlawful business practices under California Business and Professions Code, sections 17200, et seq. Two former employees (Representative Plaintiffs of Downey Savings filed this lawsuit alleging that Downey employees should have been paid overtime for their work as Branch Managers, Customer Sales Managers, and/or Branch Sales Support, between July 23, 2000 and September 30, 2002. The two former employees claim that Downey Savings improperly classified these positions as exempt from overtime during this period. The lawsuit also alleges that Downey employees were not given legally required meal and rest periods. Downey Savings denies that its overtime and meal and rest period policies have ever violated California law, and has denied any liability or wrongdoing in the lawsuit. In approximately October 2002, Downey Savings voluntarily reclassified the positions of Branch Sales Manager, Customer Sales Manager, and Branch Sales Support as non-exempt from overtime. The case has been actively litigated. Attorneys for both parties conducted investigations and extensive reviews of personnel and payroll records. The parties participated in extensive settlement discussions, including a full-day mediation conference before a widely respected neutral mediator with considerable experience resolving these types of lawsuits. The parties entered into a Class Action Settlement Agreement which the Court has preliminarily approved. The Settlement Class consists of those individuals who, as verified by Downey Savings personnel and payroll records, worked at any one of Downey Savings California in-store branches as a Branch Sales Manager, a Customer Sales Manager and/or Branch Sales Support between July 23, 2000 and September 30, 2002. If you are part of the Settlement Class as defined above, you may participate in the settlement. Each individual member of the Settlement Class is referred to as a Class Member, and the time period from July 23, 2000 through September 30, 2002, is referred to as the Relevant Time Period. II. SUMMARY OF THE PROPOSED SETTLEMENT The settlement provides for the following: A. Settlement Formula: Based on Downey Savings records, the total amount paid by Downey Savings to the Settlement Class, if all Class Members submit valid and timely claims and do not optout of the settlement, will be One Million Six Hundred Eighty One Thousand Five Hundred Dollars ($1,681,500, plus the employer s share of payroll taxes. Downey Savings will pay to Qualified Claimants (as defined in paragraph B, below a sum of money calculated as follows: $125.79 for each week that the Qualified Claimant worked as a Branch Sales Manager during the Relevant Time Period, less deductions required by law; $86.37 for each week that the Qualified Claimant worked as a Customer Sales Manager during the Relevant Time Period, less deductions required by law; and $71.35 for each week that the Qualified Claimant worked as a Branch Sales Support during the Relevant Time Period, less deductions required by law. The recovery for each Qualified Claimant is separately calculated from the attorneys fees, class representative enhancements, and costs, including costs of administration and the costs of this notice that Downey Savings will pay in connection with this settlement. If the Court approves attorneys fees, class representative enhancements, or costs in an amount less than set forth herein, the remainder will be equally 2
divided amongst the Qualified Claimants. However, if less than all Class Members submit valid and timely claim forms, Downey Savings has no obligation to make a payment to any person on account of such unclaimed amount. B. Qualified Claimant Defined: Qualified Claimants will include only those Class Members who submit a timely and fully-completed Proof of Claim Form (attached hereto, verifying that they worked overtime during the relevant time period. C. Calculations: Downey Savings records have been used to determine the number of weeks worked by a Class Member as a Branch Sales Manager, Customer Sales Manager and/or Branch Sales Support during the Relevant Time Period. If you are a qualified claimant you will be paid for each full week worked as either a Branch Sales Manager, a Customer Sales Manager, or Branch Sales Support. Partial weeks and weeks during which you were on a leave of absence will be excluded. For example, if you worked as a Downey Savings Branch Sales Manager from January 1, 2001 through January 20, 2001, you will be credited with two weeks worked. D. Release: If the Court grants final approval of the Settlement Agreement, Downey Savings and its agents, subsidiaries and others will be released from any and all claims of Class Members that were brought as part of the lawsuit by the Representative Plaintiffs. The release includes all claims and causes of action set forth in and/or related to the Complaint on file in this lawsuit, from the beginning of time up through the date of the final approval by the Court. E. Arbitration of Disputes: If a claimant (whether Class Member or not disputes the accuracy of Downey Savings records, or if Downey Savings believes a claim is invalid, the matter first will be discussed among the attorneys for the parties in a good faith effort to resolve the parties disagreement. If the parties are unable to resolve this dispute, the matter will be referred to a neutral arbitrator who will talk to the claimant and representatives of Downey Savings, and issue a non-appealable decision as to the total amount due, if any, to the claimant. Any dispute must be submitted to arbitration within forty-five (45 days after either the settlement payment or notice of denial of a claim is mailed to a claimant. Any party (claimant and/or Downey Savings representative may, at their option, meet with the neutral arbitrator telephonically or in person. If in person, the party (claimant and/or Downey Savings representative will bear all of their own travel expenses to the neutral arbitrator s office. If the claimant elects to proceed telephonically, the representatives of Downey Savings will also be interviewed telephonically. At least seven (7 calendar days prior to any arbitration, Downey Savings will notify the claimant what facts are in dispute, so that both parties will have the opportunity to present relevant evidence and testimony to the neutral arbitrator. Facts in dispute may include (a job positions actually held by the claimant; (b the time periods in which various job positions were held; (c the number of weeks the claimant worked; and/or (d whether a claimant made a sufficient showing of hardship to allow for late submission of a claim. Any party may retain an attorney for the arbitration at the party s own expense. Any claimant who fails to obtain from the arbitrator an award more favorable than the initial award, will be responsible for the arbitrator's fees in an amount not to exceed five-hundred dollars ($500. F. Class Representatives: The two former employees who brought this lawsuit are known as the Class Representatives. Their names are Michelle Cox and Maryanne Tierra. Under the settlement, Downey Savings will pay Ms. Cox twenty-two thousand five hundred dollars ($22,500 and Ms. Tierra twentyseven thousand five hundred dollars ($27,500, as an enhancement for their services as class representatives and their taking the risk of paying attorneys fees and the costs of the defendants in the event of an unsuccessful outcome, as well as for their substantial assistance to their counsel in prosecuting this action on behalf of the absent Class Members. These enhancements are in addition to what each may receive as a Class Member. 3
G. Total Settlement Value and Attorneys Fees: The total value of the settlement will be two million three hundred fifty thousand dollars ($2,350,000. This figure includes attorneys fees, costs, settlement administration costs and class representative enhancements, if all Class Members submit claims and do not opt-out of the settlement. The attorneys for the Settlement Class have requested attorneys fees in the amount of five hundred eighty-seven thousand five hundred dollars ($587,500, which represents 25% of $2,350,000. The attorneys for the Settlement Class will also seek eleven thousand dollars ($11,000 in costs. The costs of administering this settlement are estimated not to exceed twenty thousand dollars ($20,000. All attorneys for the parties to this action believe the amount for attorneys fees, costs and enhancements requested are fair and reasonable. The Class Representatives and the attorneys for the Settlement Class support this settlement. Among the reasons given for support includes the inherent risk of trial on the merits, the risk of denial of class certification, and the delays associated with litigation. III. WHAT ARE YOUR RIGHTS AS A CLASS MEMBER? return it to: A. Submitting a Claim Anyone who wishes to submit a claim must complete and sign the Proof of Claim Form and Downey Savings and Loan Settlement Administrator P.O. Box 91025 Seattle, WA 98111-9125 The Proof of Claim Form must be postmarked no later than September 16, 2005. No Proof of Claim Forms will be honored if postmarked after September 16, unless the claimant makes a written showing of hardship to the satisfaction of the Settlement Administrator. In the event of a sufficient showing of hardship, the claimant will be so notified and permitted an additional 15 days from the date of notification to perform all necessary acts, if any. Proof of Claim Forms may be mailed to the Settlement Administrator either by U.S. Mail or Certified Mail with Return Receipt Requested. If a Proof of Claim Form is mailed other than certified and return receipt requested, the claim form will be accepted if actually received timely by the Settlement Administrator and the Proof of Claim Form is otherwise valid. No claimant will be permitted to pursue his or her portion of the settlement on the grounds that a Proof of Claim Form was submitted timely and lost, destroyed, misplaced or otherwise not received by the Settlement Administrator unless the claimant has adequate proof that the Proof of Claim Form was sent certified and return receipt requested. Claimants who submit a deficient Proof of Claim Form will be so notified, and will receive an additional 15 days from the date of notification to cure the deficiency (even if the fifteenth day extends beyond the Proof of Claim Form filing deadline. No claimants shall be entitled to more than two deficiency notices and opportunities to cure the deficiency(ies. If you lost, misplaced, or need another Proof of Claim Form or a Request for Exclusion Form, you may contact the Settlement Administrator or the attorneys for the Settlement Class listed herein. If you are a current employee of Downey Savings you may participate in this settlement without fear of retaliation. Downey Savings will not retaliate against any employee who participates in this settlement. Your interests as a Class Member are represented by the Class Representatives and the attorneys for the Settlement Class. You may contact the attorney for the Settlement Class at the address listed below. Daniel Chaleff Rehwald Rameson Lewis & Glasner 5855 Topanga Canyon Blvd., Suite 400 Woodland Hills, CA 91367 (818 703-7500 4
Unless you opt-out of the Settlement Class, you are a part of the Settlement Class, and you will be bound by the terms of the settlement agreement and any order or final judgment that may be entered by the Court and will be deemed to have released certain claims against Downey Savings as described in this notice and the Proof of Claim Form. As a Class Member you will not need to pay any attorneys fees or reimbursement of litigation expenses unless you retain your own counsel, in which case you will be responsible for your own attorneys fees and costs. B. Excluding Yourself from the Settlement Any person that does not wish to participate in the settlement may exclude themselves (i.e., optout by completing the Request for Exclusion Form which is also enclosed. The Request for Exclusion Form must be signed, dated, completed, and returned to: Downey Savings and Loan Settlement Administrator P.O. Box 91025 Seattle, WA 98111-9125 The Request for Exclusion Form must be postmarked no later than 5:00 p.m. on September 16, 2005. All Exclusion Forms may be mailed to the Administrator either by U.S. Mail or Certified and Return Receipt Requested. In the event an Exclusion Form is mailed other than Certified and Return Receipt Requested, the Exclusion Form will be accepted if actually received timely by the Administrator and the Exclusion Form is otherwise valid. No Class Member may claim that an Exclusion Form was submitted timely and was lost, destroyed, misplaced or otherwise not received by the Administrator unless the Class Member has adequate proof that the exclusion Form was sent Certified and Return Receipt Requested. Any person who files a complete and timely Request for Exclusion Form shall, upon receipt, no longer be a member of the Settlement Class, will not be bound by the release, will be barred from participating in any portion of the settlement, and will receive no benefits from the settlement. Do not submit both the Proof of Claim Form and Request for Exclusion Form. If you submit both, the Request for Exclusion Form will be invalid and you will be included in the settlement, subject to the normal process of validating the amount of your allowed claim. If you do not submit either a Proof of Claim Form or a Request for Exclusion Form, you will be considered a Class Member, your rights will be released by this settlement, and you will not receive any payment under the terms of the settlement. C. Objection to Settlement You can object to the terms of the settlement before final approval. However, if the Court rejects your objection you will still be bound by the terms of the settlement. To object, you must file a written objection and a notice of intention to appear with the Clerk of the Superior Court of the State of California, for the County of Los Angeles, located at 600 S. Commonwealth Avenue, Los Angeles, California 90012, and send copies to the following: 5
To Attorneys for the Settlement Class: Daniel R. Chaleff, Esq. Rehwald Rameson Lewis & Glasner 5855 Topanga Canyon Blvd., Suite 400 Woodland Hills, California 91367 (818 703-7500 To Attorneys for Downey Savings: Glenn L. Briggs, Esq. Hodel Briggs Winter LLP 8105 Irvine Center Drive, Suite 1400 Irvine, California 92618 With a copy to: General Counsel Downey Savings and Loan Association, F.A. Legal Department 3501 Jamboree Road P.O. Box 6000 Newport Beach, CA 92658 Any written objections shall state each specific reason in support of your objection and any legal support for each objection. Your objection must also state your full name, address, and the dates of your employment at Downey Savings. To be valid and effective, any objections to approval of the settlement must be filed with the Clerk of the Court and served upon and received by all of the above-listed attorneys no later than September 6, 2005. DO NOT TELEPHONE THE COURT, DOWNEY SAVINGS OR THE ATTORNEYS FOR DOWNEY SAVINGS. If you file an objection to the terms of this settlement, you may choose to represent yourself or retain your own attorney (at your own expense to represent you at the hearing to approve the settlement. To appear at the hearing, you must file an entry of appearance with the Clerk of the Los Angeles County Superior Court, and deliver copies to each of the attorneys listed above no later than September 6, 2005. You will then continue as a settlement class member either representing yourself or through your own attorney and will be solely responsible for the fees and costs of your attorney. The final fairness hearing at which the Court will be asked to approve the settlement is scheduled for September 30, 2005. However, the hearing may be continued without further notice to Class Members. IF YOU INTEND TO OBJECT TO THE SETTLEMENT, BUT WISH TO RECEIVE YOUR SHARE OF THE SETTLEMENT FUNDS, YOU MUST TIMELY SUBMIT YOUR CLAIM FORM AS STATED ABOVE. IF THE COURT APPROVES THE SETTLEMENT DESPITE ANY OBJECTIONS, AND YOU DO NOT HAVE A CLAIM FORM ON FILE, YOU WILL NOT RECEIVE ANY PAYMENT FROM THE SETTLEMENT PROCEEDS. IV. EFFECT OF THE SETTLEMENT A. Released Rights and Claims The settlement is intended to fully, finally, and forever settle, compromise, and discharge disputes and claims arising from or related to this lawsuit which exist or may exist between Downey Savings and each Class Member. Each Class Member waives all rights and benefits afforded by Section 1542 of the 6
Civil Code of the State of California as to the claims enumerated below only, and does so understanding the significance of that waiver. Section 1542 provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. To achieve a full and complete release of Downey Savings and all of its present, former and future parents, subsidiaries, affiliates, affiliated entities, shareholders, directors, officers, employees, agents, servants, registered representatives, insurers, successors, assigns, and attorneys (collectively, the Downey Released Parties, each Class Member acknowledges that this settlement is intended to include in its effect all claims arising from or related to this lawsuit which each Class Member does not know or suspect to exist in his or her favor at the time that he or she signs his or her Proof of Claim Form. This settlement is further intended to constitute a full and complete settlement and release of all known and unknown claims, debts, liabilities, demands, obligations, guarantees, costs, expenses, attorneys fees, damages, penalties, interest or any other claim at law whether statutory, common law rule, regulation or otherwise, arising out of or related to this action that the Settlement Class and each Class Member thereof has or may have against the Downey Released Parties, including all claims under the California Labor Code (including Sections 200, 201, 202, 203, 204, 210, 215, 216, 218, 226, 226.6, 226.7, 510, 512, 553, 558, 1174, 1174.5, 1194, 1194.2, 1197, 1197.1, 1198, 1199, 2699, the California Industrial Welfare Commission Wage Orders, California Business and Professions Code sections 17200, et seq., and federal law, including all claims under the Fair Labor Standards Act (including all claims for liquidated damages thereunder. Any claim set forth in the action entitled Margie Holman, et al. v. Downey Savings and Loan Association, LASC Case No. BC323796, which a Class Member has or may have relating to their employment with Downey Savings, if any, as a Customer Service Representative and/or a Customer Service Supervisor, is expressly excluded from any of the releases set forth in the Settlement Agreement. For example, if you have a claim for working off the clock hours as a Customer Service Representative or Customer Service Supervisor, you may participate in this Class Action Settlement and still pursue that claim. This Class Action did not include a claim for working off the clock overtime hours after the Branch Sales Manager, Customer Sales Manager and Branch Sales Support positions were reclassified as nonexempt in approximately October 2002. By participating in this Class Settlement you are waiving any known and unknown claims for hours worked off the clock after September 30, 2002, through the date of final approval of this case. If you have claims for off the clock hours worked after September 2002 and wish to pursue those claims in court, you must exclude yourself from this settlement. This lawsuit did include claims for penalties related to meal and rest period violations, failure to furnish timely and accurate wage statements, failure to keep required payroll records, and waiting time penalties. By participating in this settlement you are releasing all of these claims through the date of final approval of this case. If you wish to individually pursue an overtime claim or any claim outlined above and not participate in this settlement, you must exclude yourself from this settlement. If you submit a claim and chose to participate in this lawsuit, please be advised that if you later initiate a lawsuit against Downey Savings based on any claim that you have released, and the court invalidates the release, you must return to Downey Savings all payments that you have received under this settlement within five (5 days of Downey Savings request. 7
Furthermore, if you are a Class Member and do not elect to exclude yourself from the settlement, you will be deemed to have entered into this release and to have released the above-described claims. If the settlement is approved by the Court and becomes final, the settlement will be consummated. If the settlement is not approved by the Court or does not become final for some other reason, the lawsuit will continue. B. Payment to Claimants Your settlement payment will be made within approximately seventy (70 days after the court has issued its final approval of this settlement and all rights to appeals or further appeals are exhausted. You should not expect to receive a payment until after December 9, 2005. You will receive an IRS Form W-2 for three-fourths of the payment you receive, and taxes will be withheld from this portion of the payment at the applicable rate required by law. You will receive an IRS Form 1099 for the other one-fourth of this payment. Do not call the Settlement Administrator, the attorneys for the Settlement Class, the attorneys for Downey Savings, or the Court about the amount withheld for taxes. Questions regarding taxes should be directed to your accountant or tax advisor. The attorneys for the Settlement Class believe that further proceedings in this case, including a trial and probable appeals, would be expensive and protracted. No one can confidently predict how the various legal questions at issue, including the amount of damages, would ultimately be resolved. Therefore, upon careful consideration of all of the facts and circumstances of this case, the attorneys for the Settlement Class believe that the proposed settlement is fair, reasonable and adequate. V. FINAL SETTLEMENT APPROVAL HEARING The Court will hold a hearing in Department 323 of the Superior Court of the State of California for Los Angeles County, in the Central Civil West Courthouse located at 600 S. Commonwealth Avenue, Los Angeles, California, 90005, on September 30, 2005, at 10:30 a.m. to determine whether the settlement should be finally approved as fair, reasonable, and adequate. The Court will also be asked to approve the Settlement Class attorneys request for attorneys fees and reimbursement of costs and expenses and the enhancements and other payments paid to the Class Representatives. The hearing may be continued without further notice to the settlement class. It is not necessary for you to appear at this hearing unless you have timely filed an objection. VI. ADDITIONAL INFORMATION The above is a summary of the basic terms of the settlement. For the precise terms and conditions of the settlement, you are referred to the detailed Settlement Agreement and Release Between Plaintiffs and Defendant, which is on file with the Clerk of the Court. The pleadings and other records in this litigation, including the Settlement Agreement and Release Between Plaintiffs and Defendant, may be examined at any time during regular business hours at the Office of the Clerk of the Superior Court, County of Los Angeles, 600 S. Commonwealth Avenue, Los Angeles, California, 90005. You are bound by all of the terms set forth in the Settlement Agreement and Release Between Plaintiffs and Defendant. PLEASE DO NOT TELEPHONE THE COURT OR THE OFFICE OF THE CLERK FOR INFORMATION REGARDING THIS SETTLEMENT OR THE CLAIM PROCESS! Dated: July 13, 2005 BY ORDER OF THE SUPERIOR COURT HONORABLE CAROLYN B. KUHL 8