Judge: Elaine Lu, Case: 22STCV02417, Date: 2024-10-16 Tentative Ruling

Case Number: 22STCV02417    Hearing Date: October 16, 2024    Dept: 9

[TENTATIVE] RULING RE: MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT

Diego Alfredo Vicente Chay v. Yen-Nhai, Inc. dba Nathan Anthony Furniture

Case No.: 22STCV02417

Department SSC-9

Hon. Elaine Lu

Hearing Date: October 16, 2024

The Parties’ Motion for Final Approval of Class Action Settlement is GRANTED as the settlement is fair, adequate, and reasonable.

The essential terms are:

The Gross Settlement Amount (“GSA”) is $400,000, non-reversionary. (¶3.1)

The Net Settlement Amount (“Net”) is the GSA minus the following:

o   Up to $133,333.33 (33%) for attorney fees to Class Counsel, Protection Law Group, LLP and Payne Nguyen, LLP (¶3.2.2);

o   $17,180.74 for litigation costs (Ibid.);

o   $7,500 for a Service Payment to the Named Plaintiff (¶3.2.1);

o   $7,000 for settlement administration costs to Phoenix Settlement Administrators (¶3.2.3); and

o   Payment of $20,000 PAGA penalty ($15,000 or 75% to the LWDA; $5,000 or 25% to the aggrieved employees). (¶3.2.5)

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

Plaintiffs’ release of Defendants from claims described herein.

Within 14 days, 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 December 16, 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 January 16, 2026, Class Counsel must file a Final Report re: Distribution of the settlement funds.

The Court hereby sets a Non-Appearance Case Review for January 23, 2026, 8:30 a.m., Department 9.

BACKGROUND

Plaintiff Diego Alfredo Vicente Chay sues his former employer, Defendant Yen-Nhai, Inc. dba Nathan Anthony Furniture, for alleged wage and hour violations. Defendant is a luxury furniture and upholstery designer and manufacturer. Plaintiff seeks to represent a class of Defendant’s current and former non-exempt employees.

On January 20, 2022, Plaintiff filed a class action complaint alleging causes of action for: (1) Unpaid Overtime; (2) Unpaid Meal Period Premiums; (3) Unpaid Rest Period Premiums; (4) Unpaid Minimum Wages; (5) Final Wages Not Timely Paid; (6) Wages Not Timely Paid During Employment; (7) Failure to Provide Accurate Wage Statements; (8) Failure to Reimburse Necessary Business Expenses; (9) Violation of Business and Professions Code § 17200, et seq., and (10) Private Attorney General Act, Labor Code § 2698, et seq.

            On February 2, 2023, the parties attended a full day mediation before Eve Wagner, Esq., which resulted in settlement. The terms of settlement are finalized in the long-form Class Action and PAGA Settlement Agreement (“Settlement Agreement”), a copy of which was filed with the Court on July 21, 2023. 

On August 15, 2023, the Court issued a “checklist” to the parties pertaining to deficiencies in the proposed settlement. In response, the parties filed further briefing, including a revised Settlement Agreement on December 13, 2023.

On February 15, 2024, after the parties filed a further revised Settlement Agreement to address concerns raised by the Court, preliminary approval of the settlement was granted. All references below are to the agreement attached to the Further Supplemental Declaration of Cody Payne filed February 8, 2024.

Notice was given to the Class Members as ordered (see Declaration of Jarrod Salinas (“Salinas Decl.”)). Now before the Court is the Motion for Final Approval of the settlement.

SETTLEMENT CLASS DEFINITION

·       “Class” means all current and former non-exempt employees of Defendant within the State of California at any time during the Class Period. (¶1.5)

·       “Class Period” means the period starting on and including January 20, 2018 up to and including July 17, 2023. (¶1.12)

·       “Aggrieved Employee” means all current and former non-exempt employees of Defendant in the State of California at any time during the PAGA Period. (¶1.4)

·       “PAGA Period” means the period starting on and including November 4, 2020 up to and including July 17, 2023. (¶1.31)

·       “Participating Class Member” means a Class Member who does not submit a valid and timely Request for Exclusion from the Settlement. (¶1.35)

TERMS OF SETTLEMENT AGREEMENT

            The essential terms are as follows:

·       The Gross Settlement Amount (“GSA”) is $400,000, non-reversionary. (¶3.1)

o   Escalator Clause: The Gross Settlement Amount is based on Defendant’s estimate that the Class Members worked a total of 10,000 Workweeks during the Class Period. If the actual number of Workweeks encompassed within the Class Period increases by more than 10% [i.e., by more than 11,000 workweeks], then Defendant shall increase the Gross Settlement Amount by a pro-rata dollar value for the weeks in excess of the escalation margin. For example, if the number of Workweeks increases by 11%, the Gross Settlement Amount will increase by 1%. The Gross Settlement Amount plus any applicable employer-side payroll taxes shall be the maximum amount Defendant is required to pay under the Settlement. (¶8)

o   At final approval, the settlement administrator represents that Participating Class Members worked a collective total of 10,497 Workweeks during the Class Period. (Salinas Decl. ¶11.) Accordingly, the escalator clause was not triggered.

·       The Net Settlement Amount (“Net”) ($195,500) estimated at preliminary approval is the GSA minus the following:

o   Up to $140,000 (35%) for attorney fees (¶3.2.2);

o   Up to $30,000 for litigation costs (Ibid.);

o   Up to $7,500 for a Service Payment to the Named Plaintiff (¶3.2.1);

o   Up to $7,000 for settlement administration costs (¶3.2.3); and

o   Payment of $20,000 PAGA penalty ($15,000 or 75% to the LWDA). (¶3.2.5)

·       Defendant will separately pay any and all employer payroll taxes owed on the Wage Portions of the Individual Class Payments. (¶3.1)

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

·       Individual Settlement Payment Calculation: Each Participating Class Member will receive 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) Non-Participating Class Members will not receive any Individual Class Payments. The Administrator will retain amounts equal to their Individual Class Payments in the Net Settlement Amount for distribution to Participating Class Members on a pro rata basis. (¶3.2.4.2)

o   PAGA Payments: The Administrator will calculate each Individual PAGA Payment by (a) dividing the amount of the Aggrieved Employees’ 25% share of PAGA Penalties ($5,000) by the total number of PAGA Pay Periods worked by all Aggrieved Employees during the PAGA Period and (b) multiplying the result by each Aggrieved Employee’s PAGA Pay Periods. (¶3.2.5.1)

o   Tax Allocation: Participating Class Member’s Individual Class Payments will be allocated as follows: 10% as wages, 90% as interest and penalties. (¶3.2.4.1) The Administrator will report the Individual PAGA Payments on IRS 1099 Forms. (¶3.2.5.2)

·       Response Deadline: “Response Deadline” means 60 days after the Administrator mails Notice to Class Members and Aggrieved Employees, 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 14 calendar days beyond the Response Deadline has expired. (¶1.43) The same deadlines apply to the submission of challenges to estimated payment amounts. (¶7.6)

o   Because future PAGA claims are subject to claim preclusion upon entry of the Judgment, Non-Participating Class Members who are Aggrieved Employees are deemed to release the claims identified in Paragraph 5.3 of this Agreement and are eligible for an Individual PAGA Payment. (¶7.5.4)

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

·       Funding of Settlement: The Gross Amount shall be paid in two payments. The first payment of $200,000.00 of the Gross Settlement Amount shall be due within 30 days of the Effective Date or 12 months after mediation provided the Court grants Final Approval and the Judgment is final as set forth in Paragraph 1.18, whichever is later. The second payment of the remaining $200,000.00 of the Gross Settlement Amount, as well as any and all employer payroll taxes owed on the Wage Portions of the Individual Class Payments, shall be due within 7 months of the first payment. The Administrator shall hold the Gross Settlement Amount or any portion of it in bank accounts insured by the Federal Deposit Insurance Corporation. The Administrator shall deposit the settlement payments into federally insured bank accounts so that all money is insured by the Federal Deposit Insurance Corporation (i.e., FDIC). (¶4.2) 

·       Disbursement: Within 7 days after Defendant funds the Gross Settlement Amount, the Administrator will mail checks for all Individual Class Payments, all Individual PAGA Payments, the LWDA PAGA Payment, the Administration Expenses Payment, the Class Counsel Fees Payment, the Class Counsel Litigation Expenses Payment, and the Class Representative Service Payment. Disbursement of the Class Counsel Fees Payment, the Class Counsel Litigation Expenses Payment and the Class Representative Service Payment shall not precede disbursement of Individual Class Payments and Individual PAGA Payments. (¶4.3)

·       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. The Administrator will cancel all checks not cashed by the void date. (¶4.3.1) For any Class Member whose Individual Class Payment check is uncashed and cancelled after the void date, the Administrator shall transmit the funds represented by such checks to the California Controller's Unclaimed Property Fund in the name of the Class Member thereby leaving no "unpaid residue" subject to the requirements of California Code of Civil Procedure Section 384, subd. (b).]. (¶4.3.3)

·       The settlement administrator will be Phoenix Settlement Administrators. (¶1.2)

• Notice of Final Judgment will be posted on the Settlement Administrator’s website. (¶7.8.2)
• The proposed Settlement Agreement was submitted to the LWDA on February 8, 2024. (Further Supp. Payne Decl. ISO Prelim, Exhibit 3.)
• Release of Claims. Effective on the date when Defendant fully funds the entire Gross Settlement Amount, Plaintiff, Class Members, and Class Counsel will release claims against all Released Parties as follows: (¶5)
• Release by Participating Class Members: As of the date of the order granting Final Approval, and only after the Settlement has been fully funded by Defendant, all Participating Class Members (which specifically includes Plaintiff) shall fully and finally release Released Parties of the Released Class Claims. The “Released Class Claims” include any and all claims, wage and hour claims, rights, demands, liabilities and causes of action of any nature or description alleged/asserted in the Action arising from and/or related to the facts and claims alleged/asserted in the Action, that could have been alleged/asserted in the Action based on the facts and claims alleged in the Action, and the facts and claims asserted in, arising from or related to, or could have been alleged in the PAGA Notice submitted to the LWDA. (¶5.2) Upon entry of Judgment, Participating Class Members are precluded from filing a wage and hour action under the Fair Labor Standards Act against the Released Parties for claims and/or causes of action encompassed by the Released Class Claims which are extinguished and precluded pursuant to the holding in Rangel v. PLS Check Cashers of California, Inc., 899 F.3d 1106 (2018). This release excludes the release of claims not permitted by law. (Id.)
• Release by Aggrieved Employees: As of the date of the order granting Final Approval, and only after the Settlement has been fully funded by Defendant, all Aggrieved Employees (which specifically includes Plaintiff) and the State of California shall fully and finally release Released Parties of the Released PAGA Claims. All Aggrieved Employees, including those who timely and effectively exclude themselves from the Class, shall nevertheless be bound by the Released PAGA Claims and shall receive an Individual PAGA Payment. Aggrieved Employees who timely and effectively exclude themselves from the Class shall have their Released PAGA Claims released only for the PAGA Period. The Released PAGA Claims include any and all claims asserted in the Action, and wage and hour claims, rights, demands, liabilities and causes of action of any nature or description arising from or related to the facts and claims alleged in the Action, or that could have been alleged in the Action based on the facts and claims alleged in the Action, and/or Plaintiff’s PAGA Notice submitted to the LWDA, including, without limitation, Labor Code sections 201, 202, 203, 204, 210, 218, 221, 226, 226.3, 226.7, 510, 512, 558, 1174, 1174.5, 1194, 1194.2, 1197, 1197.1, 1198, 1198.5, 1199, 2698 et seq., 2699, et seq., 2699.3, 2699.5, 2800, 2802, and the applicable Industrial Welfare Commission Wage Order(s). (¶5.3)
• “PAGA Notice” means Plaintiff’s November 4, 2021 letter to Defendant and the LWDA providing notice pursuant to Labor Code section 2699.3, subd.(a). (¶1.33)
• “Released Parties” means: Defendant and its past, present, and future parents, subsidiaries, affiliated companies, agents, managing agents, employees, servants,  officers, directors, owners (whether direct or indirect), general partners, limited partners, trustees, representatives, shareholders, stockholders, members, mortgagees or ground lessors, attorneys, parents, subsidiaries, equity sponsors, related companies/corporations and/or partnerships, divisions, assigns, predecessors, successors, insurers, consultants, joint venturers, joint employers, potential and/or alleged joint employers, temporary staffing agencies, dual employers, potential and/or alleged dual employers, co-employers, potential and/or alleged co-employers, common law employers, contractors, affiliates, service providers, alter-egos, potential and/or alleged alter-egos, vendors, affiliated organizations, any person and/or entity with potential or alleged to have joint liability, and all of their respective past, present and future employees, directors, officers, members, owners, agents, representatives, payroll agencies, attorneys, stockholders, fiduciaries, parents, subsidiaries, other service providers, and assigns and any and all persons and/or entities acting under, by, through or in concert with any of them. (¶1.41)
• 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 February 15, 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. 

  Reaction of the class members to the proposed settlement.

Number of class members: 151 (Salinas Decl. ¶3.)

Number of notice packets mailed: 151 (Id. at ¶5.)

Number of undeliverable notices: 11 (Id. at ¶7.)

Number of opt-outs: 1 (Id. at ¶8.)

Number of objections: 0 (Id. at ¶9.)

Number of participating class members: 150 (Id. at ¶11.)

Average individual payment: $1,388.80 (Id. at ¶15.)

Highest individual payment: $5,695.69 (Ibid.)  

The Court finds that the notice was given as directed and conforms to due process requirements.  Given the reactions of the Class Members to the proposed settlement and for the reasons set for 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 $140,000 (35%) in fees and $17,180.74 in costs. (MFA at 1:18-21.) The Settlement Agreement provides for up to $140,000 (35%) of the GSA for attorney fees and up to $30,000 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. 9-18.)

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 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:

(Declaration of Cody Payne ISO Final ¶¶45-50; Declaration of Heather Davis ISO Final ¶¶27-30, Exhibit 1.)

Counsel’s percentage-based fee request is higher than the unadjusted lodestar, and would represent application of a multiplier of approximately 1.14x. Notice of the fee request was provided to class members in the notice packet and no one objected. (Salinas Decl. ¶9, Exhibit A thereto.)

No facts are presented suggesting a fee award at 35% of the GSA is appropriate. There is nothing to suggest this case involved novel legal issues or particularly difficult facts. Plaintiff’s counsel is experienced in wage and hour cases (see Payne Decl. at ¶9, Davis Decl. at ¶9) and do not show they took any risk in excess of that normally taken in any other contingent fee case of this type.

Fees are instead set at 33 1/3% of the GSA or $133,333.33, resulting in a multiplier of 1.09x, which is ample given that the risks in this case are not shown to be any greater than any similar contingent fee wage and hour case.

Fee Split: Attorneys’ fees awarded in this case will be split between Payne Nguyen, LLP

(40%), Protection Law Group, LLP (40%), and Oracle Law Firm, APC (20%). Plaintiff gave

written approval and consent to this fee splitting agreement on February 11, 2022. (Supp. Payne Decl. ISO Prelim ¶6.)

            As for costs, Class Counsel is requesting a cost amount of $17,180.74. This is less than the $30,000 cap estimated at preliminary approval, which was disclosed to Class Members in the Notice and not objected to. (Salinas Decl. ¶9, Exhibit A thereto.) Counsel’s costs include, but are not limited to: Mediation ($9,950), Expert ($3,430), and Filing Fees ($2,270.83). (Payne Decl. ISO Final, Exhibit 4; Davis Decl. ISO Final, Exhibit 2.) These costs appear to be reasonable in amount and reasonably necessary to this litigation.

Based on the above, the Court hereby awards $133,333.33 in fees and $17,180.74 in costs.

D.    Incentive Award

The class representative, Diego Alfredo Vicente Chay, seeks an enhancement payment of $7,500 for his contributions to the action. (MFA at 16:25-27.)  

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 his contributions to this litigation include: meeting with his attorneys regarding the case, discussing Defendant’s policies, practices, procedures and operations with them, searching for documents for his attorneys, being available during mediation, and reviewing the settlement. (Declaration of Diego Alfredo Vicente Chay ISO Final ¶¶6-10.) He does not provide an estimate of his time spent on the case.  

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.

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E.     Settlement Administration Costs

            The settlement administrator, Phoenix Settlement Administrators, is requesting $7,000 for the costs of settlement administration. (Salinas Decl. ¶16.) This equals the cost of $7,000 estimated at preliminary approval (¶3.2.3) and disclosed to the Class on the Notice form, to which there were no objections. (Salinas Decl. ¶9, Exhibit A thereto.) Based on the above, the Court hereby awards administration costs in the requested amount of $7,000.

THE PLAINTIFF IS ORDERED TO DOWNLOAD THE INSTANT SIGNED ORDER FROM THE COURT’S WEBSITE AND TO GIVE NOTICE TO ALL OTHER PARTIES.

IT IS SO ORDERED.

DATED:  October 16, 2024                                                   ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court