Judge Elaine Lu, Case Number: 21STCV09625, Date: 2025-03-04 Tentative Ruling

Judge: Elaine Lu, Case: 21STCV09625, Date: 2025-03-04 Tentative Ruling

Case Number: 21STCV09625 Hearing Date: March 4, 2025 Dept: 9

Final Approval of Class Action Settlement

Department SSC-9

Hon. Elaine Lu

Mitzi Castillo v. Able Freight Services, LLC

Case No.: 21STCV09625

Hearing: March 4, 2025

TENTATIVE RULING

The Parties’ Motion for Final Approval of class action settlement is GRANTED as the settlement is fair, adequate, and reasonable.

The essential terms are:

A. The Gross Settlement Amount (“GSA”) is $1,200,000, non-reversionary. (¶3.1)

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

o $400,000 (1/3) for attorney fees to Class Counsel, Lawyers for Justice, PC (¶3.2.2);

o $12,356.93 for attorney costs to Class Counsel (Ibid.);

o $7,500 incentive award to the Named Plaintiff, Mitzi Castillo (¶3.2.1);

o $12,000 for settlement administration costs to ILYM Group, Inc. (¶3.2.3); and

o $150,000 (75% of $200,000 PAGA penalty) to the LWDA and $50,000 (25% of $200,000 PAGA penalty) to the Aggrieved Employees. (¶3.2.4)

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. (¶3.1)

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

No later than March 14, 2025, Plaintiff’s counsel shall file a single document that constitutes both a proposed Order and Judgment, consistent with this ruling containing all requisite terms, including the class definition, release language, and a statement of the number and identity of class members who requested exclusion.

By May 5, 2025, Class Counsel must give notice to the class members pursuant to California Rules of Court, Rule 3.771(b) (which may be effected by posting on the Administrator’s website if consistent with the parties’ Class Action Settlement) and to the LWDA, if applicable, pursuant to Labor Code §2699 (1)(3).

By July 6, 2026, Class Counsel must file a Final Report re: Distribution of the settlement funds.

The Court hereby sets a Non-Appearance Case Review for July 13, 2025, 8:30 a.m., Department 9.

BACKGROUND

This is a wage and hour class action. On March 11, 2021, Plaintiff commenced this action by filing a Class Action Complaint for Damages, which alleged ten causes of action against Defendant for: (1) failure to pay overtime wages pursuant to California Labor Code sections 510, 1194, and 1198 and the IWC Wage Orders; (2) failure to provide meal periods and associated premiums pursuant to California Labor Code sections 226.7 and 512 and the IWC Wage Orders; (3) failure to provide rest periods and associated premiums pursuant to California Labor Code sections 226.7 and 512 and the IWC Wage Orders; (4) failure to pay all minimum wages owed pursuant to California Labor Code sections 1194, 1194.2, 1197, and 1197.1 and the IWC Wage Orders; (5) failure to pay all wages owed at termination pursuant to California Labor Code sections 201-203 and the IWC Wage Orders; (6) failure to timely pay wages during employment pursuant to California Labor Code section 204 and the IWC Wage Orders; (7) failure to furnish accurate itemized wage statements pursuant to California Labor Code section 226 and the IWC Wage Orders; (8) failure to keep complete or accurate payroll records pursuant to California Labor Code section 1174(d) and the IWC Wage Orders; (9) failure to reimburse all necessary business expenses pursuant to California Labor Code sections 2800 and 2802 and the IWC Wage Orders; and (10) Violations of California Business & Professions Code sections 17200, et seq. On January 4, 2023, Plaintiff filed a First Amended Class Action Complaint for Damages and Enforcement Under the Private Attorneys General Act, California Labor Code § 2698, Et Seq., adding a PAGA cause of action (i.e., Operative Complaint).

Counsel represents that prior to the mediation, investigation and informal discovery included the exchange, review, and analysis of a volume of documents and data obtained from Defendant, Plaintiff, and other sources. The volume of data and documents that Class Counsel reviewed and analyzed included and was not limited to: employment records of Plaintiff, a sampling of Class Members’ time and pay data, multiple iterations of Defendant’s Employee Handbook, forms (including but not limited to the Handbook Acknowledgement and Agreement), new hire checklist, earning statements, payroll reports, among other information and documents.

Counsel represents that on February 15, 2022, they requested a 50% random sampling of time records from Defendant for the period from March 11, 2017 to February 15, 2022. Defendant provided a sampling of Class Members’ time and pay data, which consisted of approximately 10% class-wide sampling of time and payroll records for the period from June 8, 2018 to the agreed upon pre-mediation exchange date, approximately August 26, 2022. Counsel further represents that they used their past experience and expertise to review and analyze the data and concluded that the sampling was statistically reliable to be extrapolated to the Class.

On October 24, 2022, the Parties participated in an all-day mediation presided over by Hon. Howard Broadman, Ret. which led to this Agreement to settle the Lawsuit. A fully executed copy of the Settlement Agreement was filed with the Court on September 18, 2022 attached to the Declaration of Yasmin Hosseini (“Hosseini Decl.”), as Exhibit A.

On October 18, 2023, the Court issued a checklist for Counsel to address and continued preliminary approval. On January 30, 2024, Counsel file supplemental briefing and an Amended Settlement Agreement addressing the Court’s concerns attached to the Supplemental Declaration of Yasmin Hosseini (“Hosseini Supp. Decl.”).

Preliminary Approval was originally granted on March 27, 2024, and Notice was given to class members as ordered. However, on September 10, 2024, the Parties filed a Joint Stipulation to Modify the Payment Plan (“Joint Stipulation”). On September 12, 2024, the Court denied the Joint Stipulation without prejudice, reset the Hearing on Motion for Final Approval on October 9, 2024 at 10:00 a.m. as a Hearing on Motion for Preliminary Approval for the same date and time, and requested that the Parties file supplemental papers to resolve the issues raised in the Order no later than September 23, 2024.

In response, Counsel filed an amended Settlement Agreement and Revised Notice. (See Amendment No. 1 to the First Amended Class Action & PAGA Settlement Agreement; Further Supplemental Declaration of Yasmin Hosseini (“Hosseini 2^nd Supp. Decl.”), Exhibit B.) The amendments to the settlement are incorporated below. (See ¶¶4.3, 4.4, 7.4.6.)

Further, Defendant filed evidence of its financial condition under seal, justifying the payment plan. (See Decl. of Robert J. Adams; Defendant’s Unredacted Audited Financial Statement.)

The Court granted Preliminary Approval on October 9, 2024. Notice was given again to the Class Members as ordered (see Declaration of Supplemental Declaration of Nathalie Hernandez (“Hernandez Supp. Decl.”).) Now before the Court is the Motion for Final Approval of the proposed class action settlement.

SETTLEMENT CLASS DEFINITION

· “Class” or “Class Member(s)” means all current and former hourly-paid or non- exempt employees who worked for Defendant in the State of California at any time during the Class Period. (¶1.4)

o “Class Period” means the period from June 9, 2018 through January 22, 2023. (¶1.10)

· “Aggrieved Employee(s)” means all current and former hourly-paid or non-exempt employees who worked for Defendant in the State of California at any time during the PAGA Period. (¶1.3)

o “PAGA Period” means the period from October 31, 2021 through January 22, 2023. (¶1.32)

· Based on a review of its records, Defendant estimates there are 506 Class Members who collectively worked a total of 48,495 Workweeks, and there are 280 Aggrieved Employees who worked a total of 11,823 PAGA Pay Periods. (¶4.1)

· Based on its records, Defendant estimated that: (1) during the period from June 9, 2018, to October 24, 2022 (“relevant time period”) there were 49,171 Workweeks and approximately five hundred and six (506) Class Members. If it is determined that the total number of Workweeks during the relevant time period actually exceeds 49,171 by more than ten percent (10%), then the Gross Settlement Amount will be increased on a proportional basis by the same number of percentage points above ten percent (10%) (e.g., if the number of Workweeks during the Class Period actually exceeds 49,171 by 11% to 54,579 Workweeks, the Gross Settlement Amount will increase by 1%). Defendant recently discovered that approximately 38 employees who worked in Hawaii and not in the state of California were inadvertently included in the estimate of Class Members who worked during the relevant time period. Such employees have been excluded from the calculations set forth in Paragraph 4.1. (¶8)

o At Final Approval the Administrator represents that the total number of Workweeks during this period is 48,855, which does not exceed the Escalator Clause. Therefore, the Escalator Clause was not triggered, and the Gross Settlement Amount remains $1,200,000.00. (Hernandez Decl., ¶22.)

· 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 $1,200,000, non-reversionary. (¶3.1)

· The Net Settlement Amount (“Net”) ($539,000) is the GSA minus the following:

o Up to $456,000 (38%) for attorney fees (¶3.2.2);

o Up to $25,000 for litigation costs (Ibid.);

o Up to $15,000 for a Service Payment to the Named Plaintiff (¶3.2.1);

o Up to $15,000 for settlement administration costs (¶3.2.3); and

o Payment of $150,000 (75% of $200,000 PAGA penalty) to the LWDA. (¶3.2.4)

· Defendants will pay their share of taxes separate from the GSA. (¶3.1)

· Funding of Settlement: Defendant shall fund the Gross Settlement Amount in three (3) separate payments: (1) an initial payment of thirty percent (30%) of the “Gross Settlement Amount” and the funds necessary to fully pay Defendant’s share of payroll taxes by no later than fifteen (15) calendar days after final approval is granted and judgment is entered, currently anticipated to fall on October 24, 2024 (“Payment 1”); (2) a second payment of forty percent (40%) of the “Gross Settlement Amount” by no later than March 31, 2025 (“Payment 2”); and (3) a third and final payment of thirty percent (30%) of the “Gross Settlement Amount” by no later than June 30, 2025 (“Payment 3”). (¶4.3)

o Distribution: Within fifteen (15) calendar days after Defendant funds Payment 1, the Administrator will mail checks for the PAGA Penalties, which include 75% to the LWDA and 25% to the Aggrieved Employees for their Individual PAGA Payments. Within fifteen (15) calendar days after Defendant funds Payment 2, the Administrator will mail checks for the Individual Settlement Payments to Class Members and the Class Representative Service Payment to Plaintiff. Within fifteen (15) calendar days after Defendant funds Payment 3, the Administrator will mail checks for the Class Counsel Fees Payment to Class Counsel, Class Counsel’s Litigation Expenses to Class Counsel, and the Administration Costs to the Administrator. (¶4.4)

· There is no claim form requirement. (¶3.1)

· Individual Settlement Payment Calculation: Individual Settlement Shares will be calculated and apportioned from the Net Settlement Amount based on the Class Members’ Workweeks, as follows: (a) After Preliminary Approval of the Settlement, the Administrator will divide the Net Settlement Amount by the total number of Workweeks worked by all Class Members to yield the “Estimated Workweek Value,” and multiply each Class Member’s individual Workweeks by the Estimated Workweek Value to yield his or her estimated Individual Settlement Share that he or she may be eligible to receive under the Class Settlement; and (b) After Final Approval of the Settlement, the Administrator will divide the final Net Settlement Amount by the Workweeks of all Participating Class Members to yield the “Final Workweek Value,” and multiply each Participating Class Member’s individual Workweeks by the Final Workweek Value to yield his or her Individual Settlement Share. (¶3.2.5)

o Tax Allocation: 20% as wages, 40% as interest, and 40% as penalties. (¶3.2.7)

· PAGA Payments: Individual PAGA Payments will be calculated and apportioned from the 25% share of the PAGA Penalties based on the Aggrieved Employees’ PAGA Pay Periods, as follows: The Administrator will divide the 25% portion of the PAGA Penalties attributed to Aggrieved Employees, i.e. $50,000.00, by the PAGA Pay Periods worked by all Aggrieved Employees during the PAGA Period (“Total PAGA Pay Periods”) resulting in the PAGA Pay Period Value and then multiplying the PAGA Pay Period Value by the number of PAGA Pay Periods worked by each individual Aggrieved Employee during the PAGA Period. (¶3.2.6)

o Tax Allocation: 100% penalties. (¶3.2.8)

· “Response Deadline” means sixty (60) calendar days after the Administrator mails the Class Notice to Class Members and Aggrieved Employees, and shall be the last date on which Class Members may: (a) fax or mail Requests for Exclusion from the Class Settlement, or (b) mail his or her Objection to the Class Settlement. The Response deadline shall be extended by fifteen (15) calendar days for those Class Members to whom Class Notices are resent after having been returned undeliverable to the Administrator. (¶1.43) This deadline applies to challenges to calculation of workweeks (¶7.6)

o If the number of valid Requests for Exclusion from the Class Settlement identified in the Exclusion List exceeds five percent (5%) of the total of all Class Members, Defendant may, but is not obligated, elect to withdraw from the Settlement. (¶9)

· Uncashed Settlement Checks: The face of each check shall prominently state the date (not less than one hundred eighty (180) calendar days after the date of mailing) when the check will be voided. (¶4.4.1) For any Class Member whose Individual Settlement 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 Employment Rights Project of Bet Tzedek, a nonprofit organization or foundation consistent with Code of Civil Procedure Section 384, subd. (b) (the “Cy Pres Recipient”). 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)

· The settlement administrator will be ILYM Group. (¶1.1)

Notice of Final Judgment will be posted on the Settlement Administrator’s website. (¶7.8.1)
The proposed settlement was submitted to the LWDA on September 18, 2023. (Proof of Service filed on September 18, 2023.)
Scope of the release: Upon the Effective Date and full funding of the Gross Settlement Amount (including all employer payroll taxes owed on the Wage Portion of the Individual Settlement Shares), Plaintiff, all Participating Class Members (i.e., Class Members who do not submit a valid and timely Request for Exclusion), and Aggrieved Employees will release claims against all Released Parties as follows: (¶5)

Release by Participating Class Members: All Participating Class Members, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, release Released Parties from all claims that were alleged, or reasonably could have been alleged, in the Operative Complaint and ascertained in the course of the Lawsuit, including, any and all claims, actions, and causes of action, arising during the Class Period, for: (1) failure to pay overtime wages pursuant to California Labor Code sections 510, 1194, and 1198 and the IWC Wage Orders; (2) failure to provide meal periods pursuant to California Labor Code sections 226.7 and 512 and the IWC Wage Orders; (3) failure to provide rest periods pursuant to California Labor Code sections 226.7 and 512 and the IWC Wage Orders; (4) failure to pay all minimum wages owed pursuant to California Labor Code sections 1194, 1194.2, 1197, and 1197.1 and the IWC Wage Orders; (5) failure to pay all wages owed at termination pursuant to California Labor Code sections 201-203 and the IWC Wage Orders; (6) failure to pay all wages in a timely manner during employment pursuant to California Labor Code section 204 and the IWC Wage Orders; (7) failure to furnish accurate itemized wage statements pursuant to California Labor Code section 226(a) and the IWC Wage Orders; (8) failure to maintain adequate payroll records pursuant to California Labor Code section 1174(d) and 1174.5 and the IWC Wage Orders; (9) failure to reimburse all necessary business expenses pursuant to California Labor Code sections 2800 and 2802 and the IWC Wage Orders; and (10) violations of California Business & Professions Code sections 17200, et seq. Except as set forth in Section 5.3 of this Agreement, Participating Class Members do not release 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. (¶5.2)
Release by Aggrieved Employees: The State of California and all Aggrieved Employees, including Non-Participating Class Members who are Aggrieved Employees, are deemed to release, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, the Released Parties from all claims for PAGA penalties that were alleged, or reasonably could have been alleged, in the Operative Complaint, the PAGA Notice, and ascertained in the course of the Lawsuit for Violations of California Labor Code sections 201, 202, 203, 204, 226(a), 226.7, 510, 512(a), 551, 552, 558, 1174(d), 1194, 1197, 1197.1, 1198, 2800 and 2802, and Industrial Welfare Commission Wage Orders. (¶5.3)
Released Parties: “Released Parties” means all entities defined as “Defendant” in Paragraph 1.15, above, and each of their respective current and former members, owners, investors, parent companies, subsidiaries, shareholders, lenders, officers, partners, directors, managing agents, attorneys, insurers, predecessors, management-level employees, representatives, heirs, trustees and successors and assigns, and each of their respective current and former members, owners, investors, officers, partners, directors, agents, shareholders, employees, representatives, insurers, and attorneys. (¶1.43)
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 October 9, 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: 501 (Hernandez Supp. Decl. ¶5.)

Number of notice packets mailed: 501 (Id. at ¶5.)

Number of undeliverable notices: 11 (Id. at ¶10.)

Number of Additional Class Notice packets mailed: 501 (Id. at ¶15.)

Number of undeliverable Additional Class Notice notices: 2 (Id. at ¶18.)

Number of opt-outs: 0 (Id. at ¶¶11, 19.)

Number of objections: 0 (Id. at ¶¶12, 21.)

Number of participating class members: 501 (Id. at ¶21.)

Average individual payment: $982.04 (Id. at ¶24.)

Highest individual payment: $2,416.95 (Ibid.)

Average PAGA payment: $99.80 (Id. at ¶26.)

Highest PAGA payment: $264.61 (Ibid.)

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 $400,000 (1/3) in fees and $12,356.93 in costs. (MFA at 33:5-6, 33:10-11.) The Settlement Agreement provides for up to $456,000 (38%) of the settlement amount in fees and $25,000 in costs (¶3.2.2).

“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. 27-33.)

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:

Attorney	Rate	Hours	Totals
Lawyers for Justice, PC	$850 (blended)	352.10	$299,285
Totals		352.10	$299,285

(Decl. of Yasmin Hosseini ISO Final ¶¶16-17.)

Counsel’s percentage-based fee request is higher than the unadjusted lodestar, and would represent application of a multiplier of approximately 1.34x.

Here, the $400,000 (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. (Hernandez Supp. Decl. ¶¶12, 21, Exhibits A-B thereto.)

As for costs, Class Counsel is requesting a cost amount of $12,356.93. This is less than the $25,000 cap estimated at preliminary approval, which was disclosed to Class Members and not objected to. (Hernandez Supp. Decl. ¶¶12, 21, Exhibits A-B thereto.) Costs include, but are not limited to: Mediation ($6,000), Attorney Service ($4,367.90), and Filing Fees ($1,780). (Hosseini Decl. ISO Final ¶24 and Exhibit B.) The costs appear to be reasonable in amount and reasonably necessary to this litigation.

Based on the above, the Court hereby awards $400,000 (1/3) in fees and $12,356.93 in costs.

D. Incentive Award

The class representative, Mitzi Castillo, seeks an enhancement payment of $15,000 for Castillo’s contributions to the action. (MFA at 34:11-13.)

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 Plaintiff’s contributions to this litigation include: engaging in communications with Plaintiff’s attorneys, gathering and reviewing documents, providing input on discovery strategy, providing witnesses to Plaintiff’s attorneys to interview, and reviewing the settlement. Plaintiff estimates spending 63 hours on the case. (Declaration of Mitzi Castillo ¶¶3-6.)

Plaintiff’s contributions are commendable but not exceptional. Based on the above, as well as the benefits obtained on behalf of the class, the Court hereby grants the enhancement payment in the reduced amount of $7,500 to Plaintiff.

E. Settlement Administration Costs

The settlement administrator, ILYM Group, Inc., is requesting $12,000 for the costs of settlement administration. (Hernandez Supp. Decl. ¶27.) This is less than the cost of $15,000 provided for in the Settlement Agreement (¶3.2.3) and disclosed to class members in the Notice, to which there were no objections. (Hernandez Supp. Decl. ¶¶12, 21, Exhibits A-B thereto.) Based on the above, the Court hereby awards costs in the requested amount of $12,000.

CONCLUSION AND ORDER