Judge: Elaine Lu, Case: 21STCV09412, Date: 2024-09-23 Tentative Ruling

Case Number: 21STCV09412    Hearing Date: September 23, 2024    Dept: 9

Final Approval of Class Action Settlement

Department SSC-9

Hon. Elaine Lu

Moya v. Valassis Direct Mail, Inc. et al.

Case Number: 21STCV09412

Hearing: September 23, 2024

TENTATIVE RULING

The Parties’ Motion for Final Approval of Class Action Settlement is CONDITIONALLY GRANTED as the settlement is fair, adequate, and reasonable.  Specifically, the Parties’ Motion for Final Approval of Class Action Settlement is GRANTED CONTINGENT on Counsel submitting declaration(s) that adequately address the following:

·       The Administrator’s declaration states that “seven hundred forty-five (745) Class Members […] did not submit timely and valid Requests for Exclusion and are therefore deemed Settlement Class Members, representing 99.65% of the Class.” (Islas Decl. ¶13.) There are zero opt outs represented (Id. at ¶8), which would appear to total 100% representation.  Please submit a supplemental declaration from the Administrator confirming whether this discrepancy is a typographical error, otherwise explaining further.

·       Class Counsel must submit a declaration identifying the name of the expert and attaching a cost ledger or invoices if possible to justify their request for reimbursement for expert fees of $4,860.00. 

Only if Plaintiffs’ Counsel adequately addresses the above will the Parties’ Motion for Final Approval of Class Action Settlement be UNCONDITIONALLY GRANTED.  If Class Counsel file the supplemental papers by 12 noon on September 20, 2024, then the Court will review the supplemental papers prior to the September 23, 2024 hearing, and the Court will rule on the Parties’ Motion for Final Approval of Class Action Settlement at the September 23, 2024 hearing.  Otherwise, the Court will allow the parties additional time to submit the supplemental papers and set the matter for a non-appearance case review in 2-3 weeks.

The essential terms are:

A.         The Gross Settlement Amount (GSA) is $1,575,000, non-reversionary. (¶3.1.)

B.         The Net Settlement Amount is the GSA minus the following:

(1)        $525,000 (33 1/3% of GSA) for attorney fees to Class Counsel, Bibiyan Law Group;

(2)        $21,760.15 for attorney costs to Class Counsel contingent on Class Counsel providing a sufficient explanation for expert witness fees ($4,860.00);

(3)        an enhancement payment of $7,500 to Plaintiff Camila Moya;

(4)        $14,100 for settlement administration costs to Phoenix Settlement Administrators; and

(5)        $75,000 (75% of $100,000 PAGA penalty) to the LWDA and $25,000 (25% of $100,000 PAGA penalty) to the Aggrieved Employees.

C.         Employer’s share of the payroll taxes on the taxable portion of the settlement payments shall be paid separately from the GSA by Defendant.

D.         Plaintiffs’ release of Defendants from claims described herein.

No later than October 7, 2024, Plaintiff’s counsel shall file a proposed Order and Judgment, consistent with this ruling containing all requisite terms, including the class definition, release language, and the names of any class members who requested exclusion.

By November 25, 2024, Class Counsel must give notice to the class members pursuant to California Rules of Court, Rule 3.771(b) and to the LWDA, if applicable, pursuant to Labor Code §2699 (1)(3).

By March 25, 2025, Class Counsel must file a Report re: Distribution of the settlement funds.

The Court hereby sets a Non-Appearance Case Review for April 1, 2025, 8:30 a.m.,  Department 1.

BACKGROUND

This is a wage and hour class action. On March 10, 2021, Plaintiff commenced this Action by filing a Complaint alleging causes of actions against Defendants for: (1) failure to pay overtime wages; (2) failure to pay minimum wages; (3) failure to provide meal periods; (4) failure to provide rest periods; (5) waiting time penalties; (6) wage statement violations; and (7) unfair competition. (“Action”).

On June 24, 2021, Plaintiff filed a First Amended Complaint adding a cause of action for civil penalties under the Private Attorneys’ General Act (“PAGA"). 

On October 13, 2023, Plaintiff filed a Second Amended Complaint alleging new facts and information against the remaining defendants and adding an additional cause of action for failure to reimburse necessary business expenses based on information Plaintiff obtained during her pre-mediation investigation. Along with the Second Amended Complaint, Plaintiff concurrently filed a request for dismissal of individual defendant John Jenkins from the Action without prejudice. The Second Amended Complaint is the operative complaint in the Action (the “Operative Complaint”).

On March 2, 2023, the Parties participated in an all-day mediation presided over by Mark Rudy, Esquire, where the Parties agreed to globally resolve all class and PAGA claims in the Action. A fully executed copy of the Amended Class and PAGA Settlement Agreement (“Settlement Agreement”) is attached as Exhibit 1 to the Declaration of Vedang J. Patel (“Patel Decl.”) ISO Prelim.

The Court granted Preliminary Approval on April 26, 2024. Notice was given to the Class Members as ordered (see Declaration of Lluvia Islas (“Islas Decl.”).) Now before the Court is the Motion for Final Approval of the proposed class action settlement.

SETTLEMENT CLASS DEFINITION

“Class” means all persons employed by Defendants in California and classified as a nonexempt, hourly-paid employee who worked for Defendants during the Class Period.    (Settlement Agreement, ¶1.5.)

·       “Class Period” means the period from March 10, 2017, through March 31, 2023.  (¶1.12.)

·       “Aggrieved Employee” means a person employed by Defendants in California and classified as a non-exempt, hourly-paid employee who worked for Defendants during the PAGA Period. (¶1.4.)

·       “PAGA Period” means the period from February 1, 2020, through the end of the pay period in which March 31, 2023, falls. (¶1.31.)

The parties stipulate to class certification for settlement purposes only. (¶12.1.)

TERMS OF SETTLEMENT AGREEMENT

The essential terms are as follows:

·       The Gross Settlement Amount (GSA) is $1,575,000, non-reversionary. (¶3.1.)

o   Based on its records, Defendants estimate that, as of the date of this Settlement Agreement, (1) there are 688 Class Members and 105,000 Total Workweeks during the Class Period and (2) there are 467 Aggrieved Employees who worked 26,354 Pay Periods during the PAGA Period. (¶8) Defendants represent that there are approximately 105,000 Workweeks worked during the Class Period.  In the event the number of Workweeks worked by Class Members during the Class Period increases by more than 10%, or 10,500 Workweeks, then the Gross Settlement Amount shall be increased proportionally by the Workweeks in excess of 115,500 Workweeks (105,000 Workweeks + 10,500 Workweeks) multiplied by the Workweek Value.  The Workweek Value shall be calculated by dividing the originally agreed-upon Gross Settlement Amount ($1,575,000.00) by 105,000, which amounts to a Workweek Value of $15.00.  Thus, for example, should there be 120,000 Workweeks in the Class Period, then the Gross Settlement Amount shall be increased by $67,500.00 ((120,000 Workweeks – 115,500 Workweeks) x $15.00 per Workweek). (¶8.1)

§  The total workweeks were 113,056 -- under the 10% threshold.  Thus, the escalator clause was not triggered. (Islas Decl. ¶11)

·       The Net Settlement Amount (Net) ($884,650.00) is the GSA minus the following:

o   Up to $525,000 (33 1/3%) for attorney fees (See Amended Order Granting Preliminary Approval ¶7);

o   Up to $40,000 for litigation costs (Ibid.);

o   Up to $7,500 for a Class Representative Enhancement Payment to the Named Plaintiff (See Amended Order Granting Preliminary Approval ¶7.); and

o   Up to $14,100 for settlement administration costs (¶3.2.3.) and

o   Payment of $75,000 (75% of $100,000 PAGA Payment) to the LWDA. (¶3.2.5.)  

·       Defendant will pay their share of taxes in addition to the GSA. (¶3.1.)

·       No claim form is required. (Ibid.)

·       Funding of Settlement: Defendants shall fully fund the Gross Settlement Amount and the amounts necessary to fully pay Defendants’ share of payroll taxes by transmitting the funds to the Administrator no later than 15 days after the Effective Date. (¶4.3.)

·       Individual Settlement Payment Calculation:  An Individual Class Payment calculated by (a) dividing the Net Settlement Amount by the total number of Workweeks worked by all Participating Class Members during the Class Period and (b) multiplying the result by each Participating Class Member’s Workweeks. (¶3.2.4.)

o   Tax Allocation: 20% wage claims; 80% interest and penalties. (¶3.2.4.1.)

·       PAGA Payments: The Administrator will calculate each Individual PAGA Payment by (a) dividing $25,000.00 by the total number of PAGA Period Pay Periods worked by all Aggrieved Employees during the PAGA Period and (b) multiplying the result by each Aggrieved Employee’s PAGA Period Pay Periods.  Aggrieved Employees assume full responsibility and liability for any taxes owed on their Individual PAGA Payment. (¶3.2.5.1.)

o   Tax Allocation: IRS 1099 Forms. (¶3.2.5.2) 

·       Response Deadline: “Response Deadline” means forty-five (45) days after the Administrator mails Notice to Class Members and shall be the last date on which Class Members may: (a) fax, email, or mail Requests for Exclusion from the Settlement or (b) fax, email, or mail his or her Objection to the Settlement.  Class Members to whom Notice Packets are resent after having been returned undeliverable to the Administrator shall have an additional 15 calendar days beyond the date the Response Deadline has expired. (¶1.40.) The deadline and extension also apply to workweek challenges. (¶7.6.)

o   If the number of valid Requests for Exclusion identified in the Exclusion List exceeds 3% of the total of all Class Members, Defendants may elect to withdraw from the Settlement. (¶9.)

·       Uncashed Settlement Checks: The face of each check shall prominently state the date (not less than 180 days after the date of mailing) when the check will be voided. (¶4.4.1.) For any Class Member whose Individual Class Payment check or Individual PAGA Payment check is uncashed and cancelled after the void date, the Administrator shall transmit the funds represented by such checks to the cy pres recipient, Legal Aid at Work, for use in Los Angeles County.  The Parties, Class Counsel, and Defense Counsel represent that they have no interest or relationship, financial or otherwise, with the intended cy pres recipient. (¶4.4.3.)

o   Legal Aid at Work, 180 Montgomery Street, Suite 600, San Francisco, California 94104, is a nonprofit legal services organization that assists low-income, working families.

·       The settlement administrator will be Phoenix Class Action Administration. (¶7.1.)

• The proposed settlement was submitted to the LWDA on November 30, 2023. (Patel Decl. ISO Prelim, Exhibit 3 thereto)

• Notice of Final Judgment will be posted on the Settlement Administrator’s website. (¶7.8.1.)

• Scope of the release: Release of Claims. Effective on the date when Defendants fully fund the entire Gross Settlement Amount and all employer payroll taxes owed on the Wage Portion of Individual Class Payments, Plaintiff, Class Members, and Class Counsel will release claims against all Released Parties as follows: (¶5.)

o   Release by Participating Class Members: For the duration of the Class Period, all Participating Class Members, on behalf of themselves and their respective former and present spouses, representatives, agents, attorneys, heirs, administrators, successors, and assigns, release and discharge Released Parties from all claims, debts, liabilities, demands, obligations, guarantees, actions, or causes of action of whatever kind or nature, whether known or unknown,  that were alleged in the Operative Complaint or that reasonably could have been alleged, based on the facts stated in the Operative Complaint and that were ascertained in the course of the Action, including those arising out of or related to: (1) all claims for failure to pay overtime wages; (2) all claims for failure to pay minimum wages; (3) all claims for failure to provide compliant meal periods or compensation in lieu thereof; (4) all claims for failure to authorize and permit compliant rest periods or compensation in lieu thereof; (5) all claims for failure to pay overtime, meal and/or rest period compensation, and/or sick pay at the regular rate of pay; (6) all claims for failure to pay wages due upon termination or resignation of employment; (7) all claims for failure to pay wages due upon regularly-scheduled paydays; (8) all claims for non-compliant wage statements; (9) all claims for failure to reimburse necessary business expenses; and (10) all claims asserted through California Business & Professions Code section 17200, et seq. arising out of the Labor Code violations referenced in the Operative Complaint (the “Released Claims”).  The Released Claims include all related claims of any kind for premium pay, liquidated damages, statutory penalties, civil penalties, restitution, interest, injunctive relief, punitive damages, and other damages, costs, expenses, and attorneys’ fees arising from the alleged violation of any provision of common or statutory law that were or reasonably could have been raised as part of Plaintiff’s claims in the Operative Complaint, including but not limited to claims under California Labor Code sections 96, 98.6, 200, 201, 202, 203, 204, 210, 226, 226.3, 226.7, 227.3, 232, 232.5, 246 et seq., 404, 432, 510, 512, 558, 1102.5, 1174, 1174.5, 1194, 1194.2, 1197, 1197.1, 1197.5, 1198.5, 2699, 2802, and 2810.5, all provisions of the California Industrial Welfare Commission Wage Orders that provide the same or similar protections, and sections 16600 et seq., 16700 et seq., and 17200 et seq. of the California Business and Professions Code. (¶5.2.)

§  Except as set forth in Section 5.4 of this Agreement, Participating Class Members do not release by virtue of this Agreement any other claims, including claims for vested benefits, wrongful termination, violation of the Fair Employment and Housing Act, unemployment insurance, disability, social security, workers’ compensation, or claims based on facts occurring outside the Class Period.  This provision shall have no effect on the releases of claims that Class Members and Aggrieved Employees have agreed to in other executed agreements. (¶5.3)

§  Plaintiff and each Participating Class Member acknowledge that the Released Claims in Paragraph 5.2 immediately above are also intended to include in their effect the release of all Released Claims whether or not Plaintiff and each Participating Class Member knows or suspects them to exist.  With respect to the Released Claims, Plaintiff and Participating Class Members may hereafter discover facts or legal arguments in addition to or different from those they now know or currently believe to be true with respect to the claims and causes of action in this case which are the subject matter of the Released Claims.  Regardless, the discovery of new facts or legal arguments shall in no way limit the scope or definition of the Released Claims and, by virtue of this Agreement, Plaintiff and Participating Class Members shall be deemed to have, and by operation of the final judgment approved by the Court shall have, fully, finally, and forever settled and released all of the Released Claims as defined above. (¶5.5)

o   Release by Aggrieved Employees: For the duration of the PAGA Period, all Aggrieved Employees, on behalf of themselves and their respective former and present spouses, representatives, agents, attorneys, heirs, administrators, successors, and assigns, are deemed to release and discharge the Released Parties from all claims for any and all PAGA remedies that were alleged in, or reasonably could have been alleged in, or that were based on, arise from, or relate to the facts stated in the Operative Complaint, the PAGA Notice, and that were ascertained in the course of the Action, including any right, claim, or demand for civil penalties pursuant to Labor Code sections 210, 226.3, 558, 1174.5, 1197.1, and 2699 in connection with alleged violations of Labor Code sections 96, 98.6, 200, 201, 202, 203, 204, 210, 226, 226.3, 226.7, 227.3, 232, 232.5, 246 et seq., 404, 432, 510, 512, 558, 1102.5, 1174, 1174.5, 1194, 1194.2, 1197, 1197.1, 1197.5, 1198.5, 2699, 2802, and 2810.5 and of California Business and Professions Code sections 16600 et seq., 16700 et seq., and 17200 et seq.  Plaintiff and Aggrieved Employees will be bound by this release of PAGA claims even if they, or any of them, request to be excluded from the Settlement in accordance with Paragraph 7.5, below. (¶5.4.)

o   “Released Parties” means: Defendants and each of their respective former, present, and future owners, parents, affiliates, and subsidiaries, and all of their current, former, and future officers, directors, members, managers, employees, consultants, partners, shareholders, joint venturers, agents, predecessors, successors, assigns, accountants, insurers, reinsurers, and/or legal representatives, including but not limited to John Jenkins (“Jenkins”). (¶1.38.)

o   Named Plaintiff will also provide a general release and CC § 1542 waiver. (¶5.1)

ANALYSIS OF SETTLEMENT AGREEMENT

A.     Does a presumption of fairness exist? 

The Court preliminarily found in its Order of April 26, 2024 that the presumption of fairness should be applied.  No facts have come to the Court’s attention that would alter that preliminary conclusion.  Accordingly, the settlement is entitled to a presumption of fairness as set forth in the preliminary approval order.

B.     Is the settlement fair, adequate, and reasonable?

The settlement was preliminarily found to be fair, adequate and reasonable.  Notice has now been given to the Class and the LWDA. 

  Reaction of the class members to the proposed settlement.

Number of class members: 282 (Islas Decl. ¶3.)

Number of notice packets mailed: 745 (Id. at ¶5.)

Number of undeliverable notices: 6 (Id. at ¶7.)

Number of opt-outs: 0 (Id. at ¶8.)

Number of objections: 0 (Id. at ¶9.)

Number of participating class members: 745 (Id. at ¶13.)

Average individual payment: $1,216.97 (Ibid.)

Highest individual payment: $2,542.15 (Ibid.)

Lowest individual payment: $8.02 (Ibid.)

Number of Aggrieved Employees: 499 (Id. at ¶14)

Average PAGA payment: $50.10 (Ibid.)

Highest PAGA payment: $83.89 (Ibid.)

Lowest PAGA payment: $1.01 (Ibid.)

The Administrator’s declaration states that “seven hundred forty-five (745) Class Members […] did not submit timely and valid Requests for Exclusion and are therefore deemed Settlement Class Members, representing 99.65% of the Class.” (Islas Decl. ¶13.) There are zero opt outs represented (Id. at ¶8), which would appear to total 100% representation.  Please submit a supplemental declaration from the Administrator confirming whether this discrepancy is a typographical error, otherwise explaining further.

The Court finds that the notice was given as directed and conforms to due process requirements.  Given the reactions of the Class Members and the LWDA to the proposed settlement and for the reasons set forth in the Preliminary Approval order, the settlement is found to be fair, adequate, and reasonable.

C.     Attorney Fees and Costs

            Class Counsel requests an award of $525,000 (33 1/3%) in fees and $21,760.15 in costs. (MFA at 22:13-19.) The Settlement Agreement provides for up to $525,000 (33 1/3%) of the settlement amount in fees and $40,000 in costs (¶3.2.2; See also Amended Order Granting Preliminary Approval ¶7).

“Courts recognize two methods for calculating attorney fees in civil class actions: the lodestar/multiplier method and the percentage of recovery method.”  (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 254.)  Here, class counsel request attorney fees using the percentage method, as crosschecked by lodestar. (MFA at pp. 22-29.)

In common fund cases, the Court may employ a percentage of the benefit method, as cross-checked against the lodestar. (Laffitte v. Robert Half Int’l, Inc. (2016) 1 Cal.5th 480, 503.) The fee request represents approximately one-third of the gross settlement amount, which is the average generally awarded in class actions.  (See In re Consumer Privacy Cases (2009) 175 Cal.App.4th 545, 558, fn. 13 [“Empirical studies show that, regardless whether the percentage method or the lodestar method is used, fee awards in class actions average around one-third of the recovery.”].)

Class Counsel has provided information, summarized below, from which the lodestar may be calculated:

(MFA at 23:15-23.)

Counsel’s percentage-based fee request is higher than the unadjusted lodestar, and would represent application of a multiplier of approximately 1.36.

Here, the $525,000 (33 1/3%) fee request represents a reasonable percentage of the total funds paid by Defendant. Notice of the fee request was provided to class members in the Notice, and no one objected. (Islas Decl. ¶9, Exhibit A thereto.)

            As for costs, Class Counsel is requesting a cost amount of $21,760.15. This is less than the $40,000 cap estimated at preliminary approval, which was disclosed to Class Members and not objected to. (Islas Decl. ¶9, Exhibit A thereto.) Costs include, but are not limited to: Mediation ($12,500), Filing Fees ($2,268.80), Case Anywhere ($1,668) and Expert Fees ($4,860). (Bibiyan Decl. ISO Final ¶20.)  Provided that Class Counsel provide adequate supplemental documentation to justify the expert fees (including the identity of the expert and an invoice or cost ledger), the costs appear to be reasonable in amount and reasonably necessary to this litigation.

Based on the above, the Court hereby awards $525,000 (33 1/3%) in fees and $21,760.15 in costs (contingent on Class Counsel providing adequate supplemental documentation relating to the expert fees).

D.    Incentive Award

The class representative, Camila Moya, seeks an enhancement payment of $7,500 for her contributions to the action. (MFA at 15:20-22.) 

In connection with the final fairness hearing, named Plaintiffs must submit declarations attesting to why they should be entitled to an enhancement award in the proposed amount.  The named Plaintiffs must explain why they “should be compensated for the expense or risk he has incurred in conferring a benefit on other members of the class.”  (Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 806.)  Trial courts should not sanction enhancement awards of thousands of dollars with “nothing more than pro forma claims as to ‘countless’ hours expended, ‘potential stigma’ and ‘potential risk.’ Significantly more specificity, in the form of quantification of time and effort expended on the litigation, and in the form of reasoned explanation of financial or other risks incurred by the named plaintiffs, is required in order for the trial court to conclude that an enhancement was ‘necessary to induce [the named plaintiff] to participate in the suit . . . .’”  (Id. at 806-807, italics and ellipsis in original.)

Plaintiff represents that her contributions to this litigation include: engaging in communications with her attorneys, gathering and reviewing documents, remaining available for mediation, and reviewing the settlement. She estimates spending 23 hours on the case. (Declaration of Camila Moya ¶¶15-18.)

Based on the above, as well as the benefits obtained on behalf of the class, the Court hereby grants the enhancement payment in the amount of $7,500 to Plaintiff.

E.     Settlement Administration Costs

            The settlement administrator, Phoenix Settlement Administrators, is requesting $14,100 for the costs of settlement administration. (Islas Decl. ¶15.) This equals the cost of $14,100 provided for in the Settlement Agreement (¶3.2.3) and disclosed to class members in the Notice, to which there were no objections. (Islas Decl. ¶9, Exhibit A thereto.) Based on the above, the Court hereby awards costs in the requested amount of $14,100.