Judge Elaine Lu, Case Number: 22STCV34521, Date: 2025-02-04 Tentative Ruling

Judge: Elaine Lu, Case: 22STCV34521, Date: 2025-02-04 Tentative Ruling

Case Number: 22STCV34521 Hearing Date: February 4, 2025 Dept: 9

Final Approval of Class Action Settlement

Department SSC-9

Hon. Elaine Lu

Uvaldo Chavez v. Borrmann Metal Center

Case No.: 22STCV34521

Hearing Date: February 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 $900,000, non-reversionary. (¶I.P)

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

o $300,000 (33 1/3%) for attorney fees Class Counsel, JCL Law Firm, APC, Zakay Law Group, APLC and Lawyers For Justice, PC (¶I.G);

o $20,195.70 for litigation costs to Class Counsel (Ibid.);

o $7,500 for a Service Award to the Named Plaintiff Uvaldo Chavez (¶I.HH);

o $8,000 for settlement administration costs to Apex Class Action LLC (¶I.JJ); and

o $40,000 PAGA Penalty (75% or $30,000 to the LWDA; 25% or $10,000 to aggrieved employees). (¶¶I.S, I.Z)

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. (¶III.A.4)

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

No later than February 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 April 3, 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 May 21, 2026, Class Counsel must file a Final Report re: Distribution of the settlement funds.

The Court hereby sets a Non-Appearance Case Review for May 28, 2026, 8:30 a.m., Department 9.

BACKGROUND

Plaintiff Uvaldo Chavez sues his former employer, Defendant Borrmann Metal Center, for alleged wage and hour violations. Defendant is a metal distributor in the State of California. Plaintiff seeks to represent a class of Defendant’s current and former non-exempt employees.

On October 27, 2022, Plaintiff filed a class action complaint against Defendant alleging causes of action for: (1) Violation of California Labor Code §§ 510 and 1198 (Unpaid Overtime); (2) Violation of California Labor Code §§ 226.7 and 512(a) (Unpaid Meal Period Premiums); (3) Violation of California Labor Code § 226.7 (Unpaid Rest Period Premiums); (4) Violation of California Labor Code §§ 1194, 1197, and 1197.1 (Unpaid Minimum Wages); (5) Violation of California Labor Code §§ 201 and 202 (Final Wages Not Timely Paid); (6) Violation of California Labor Code § 204 (Wages Not Timely Paid During Employment); (7) Violation of California Labor Code § 226(a) (Non-Compliant Wage Statements); (8) Violation of California Labor Code § 1174(d) (Failure To Keep Requisite Payroll Records); (9) Violation of California Labor Code §§ 2800 and 2802 (Unreimbursed Business Expenses); (10) Violation of California Business &

Professions Code §§ 17200, et seq.

On November 29, 2023, the parties participated in mediation presided over by Honorable Brian C. Walsh (Ret.), at which the parties accepted the mediator’s settlement proposal.

On March 20, 2024, Plaintiff filed a First Amended Complaint which added causes of action for Violation of California Labor Code § 221 (Unlawful Deductions From Wages) and Violation of the Private Attorneys General Act Labor Code §§ 2698 et seq. (“PAGA”), among other amendments.

The terms of settlement are finalized in the long-form Class Action and PAGA Settlement Agreement (“Settlement Agreement”), a copy of which was initially filed with the Court on May 7, 2024. Counsel subsequently filed a fully-executed copy of the agreement on May 9, 2024. All references below are to that agreement.

On July 18, 2024, after the parties filed further briefing and a revised notice form to address concerns raised by the Court, preliminary approval of the settlement was granted.

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

SETTLEMENT CLASS DEFINITION

· “Class” or the “Class Members” means all non-exempt employees who are or previously were employed by Borrmann Metal Center and performed work in California at any time during the Class Period. (¶I.E)

· “Class Period” means the period beginning October 27, 2018 through February 29, 2024. (¶I.J)

· “Aggrieved Employees” means all non-exempt employees who are or previously were employed by Borrmann Metal Center and performed work in California at any time during the PAGA Period. (¶I.C)

· “PAGA Period” means the period beginning on November 30, 2022 through February 29, 2024. (¶I.Y)

· “Settlement Class Members” or “Settlement Class” means all Class Members who have not submitted a timely and valid request for exclusion as provided in this Agreement and determined by the Settlement Administrator. (¶I.LL)

TERMS OF SETTLEMENT AGREEMENT

The essential terms are as follows:

· The Gross Settlement Amount (“GSA”) is $900,000, non-reversionary. (¶I.P)

o Escalator Clause: Defendants represent that, at the time of mediation, the Class was comprised of approximately 234 class members who collectively worked no more than 22,881 Workweeks between October 27, 2018, to September 13, 2023. If there is a more than 10% increase in the number of weeks worked by the Settlement Class Members during the Class Period above (more than 25,169 workweeks), it will trigger an escalator provision where the Gross Settlement Amount shall increase by 1% for every 1% increase in workweeks over the 10% threshold. (¶III.A.2)

o At final approval, the settlement administrator represents that the total number of workweeks worked by Participating Class Members during the Class Period is 22,581.00. (Rovertoni Decl. ¶14.) Accordingly, the escalator clause was not triggered.

· The Net Settlement Amount (“Net”) ($512,000) estimated at preliminary approval is the GSA minus the following:

o Up to $300,000 (33 1/3%) for attorney fees (¶I.G);

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

o Up to $10,000 for a Service Award to the Named Plaintiff (¶I.HH);

o Up to $8,000 for settlement administration costs (¶I.JJ); and

o Payment of $40,000 PAGA Penalty (75% or $30,000 to the LWDA). (¶¶I.S, I.Z)

· Defendants’ share of employer-side payroll taxes shall be calculated by the Settlement Administrator and paid into the QSF in addition to the Gross Settlement Amount on the Funding Date. (¶III.A.4)

· There is no claim form requirement. (Notice p. 2)

· Individual Settlement Payment Calculation: Individual Settlement Payments shall be paid from the Net Settlement Amount and shall be paid pursuant to the formula set forth herein. Using the Class Data, the Settlement Administrator shall add up the total number of Workweeks for all Class Members. The respective Workweeks for each Class Member will be divided by the total Workweeks for all Class Members, resulting in the Class Payment Ratio for each Class Member. Each Class Member’s Class Payment Ratio will then be multiplied by the Net Settlement Amount to calculate each Class Member’s estimated Individual Settlement Payments. Each Individual Settlement Payment will be reduced by any legally mandated employee tax withholdings (e.g., employee payroll taxes, etc.). Individual Settlement Payments for Class Members who submit valid and timely requests for exclusion will be redistributed to Settlement Class Members who do not submit valid and timely requests for exclusion on a pro rata basis based on their respective Class Payment Ratios, resulting in an average Settlement Payment of approximately Two Thousand One Hundred and Eighty-Eighty Dollars and Three Cents ($2,188.03). (¶III.P.1)

o PAGA Payments: Using the Class Data, the Settlement Administrator shall add up the total number of PAGA Workweeks for all Aggrieved Employees during the PAGA Period. The respective PAGA Workweeks for each Aggrieved Employees will be divided by the total PAGA Workweeks for all Aggrieved Employees, resulting in the “PAGA Payment Ratio” for each Aggrieved Employee. Each Aggrieved Employee’s PAGA Payment Ratio will then be multiplied by Ten Thousand Dollars and Zero Cents ($10,000.00) (i.e., 25% of the PAGA Payment that is to be allocated to Aggrieved Employees pursuant to PAGA), to calculate the individual’s Aggrieved Employee Payment. (¶III.P.2)

o Tax Allocation: Class Members’ Individual Settlement Payments will be allocated as follows: 20% as wages, 80% as interest and penalties. (¶III.P.3) The Administrator will report the Aggrieved Employee Payments on IRS 1099 Forms. (¶III.P.4)

· Response Deadline: “Response Deadline” means the date forty-five (45) calendar days after the Settlement Administrator mails Notice Packets to Class Members and the last date on which Class Members may submit requests for exclusion or objections to the Settlement. Neither side shall encourage any Class Member to opt out. (¶I.GG) The same deadline applies to the submission of workweek disputes. (¶III.L) Class Members who received a re-mailed Notice Packet shall have their Response Deadline extended ten (10) days from the original Response Deadline. (¶III.K.4)

o Defendants retain the right, in the exercise of its sole discretion, to revoke the settlement and its stipulation to class certification prior to the final fairness hearing in the event that five percent (5%) or more of Settlement Class Members opt out of the settlement. (¶III.N)

· Funding of Settlement: “Funding Date” shall mean the date by which Defendants pay the Gross Settlement Amount to the Settlement Administrator in accordance with the terms of this Agreement. Defendants will pay the Gross Settlement Amount to the Settlement Administrator within (3) calendar days after the Effective Date. (¶I.O)

· Disbursement: Individual Settlement Payments and Aggrieved Employee Payments shall be mailed by regular First-Class U.S. Mail to Settlement Class Members’ and/or Aggrieved Employees’ last known mailing address no later than fifteen (15) business days after the Funding Date. The Settlement Administrator may, in its discretion, distribute Individual Settlement Payments and Aggrieved Employee Payments by way of a single check that combines both payments. (¶III.P.7)

· Uncashed Settlement Checks: Any checks issued to Settlement Class Members and Aggrieved Employees shall remain valid and negotiable for one hundred and eighty (180) days from the date of their issuance. If a Settlement Class Member and/or Aggrieved Employees does not cash his or her settlement check within ninety (90) days, the Settlement Administrator will send a letter to such persons, advising that the check will expire after the 180th day, and invite that Settlement Class Member and/or Aggrieved Employees to request reissuance in the event the check was destroyed, lost, or misplaced. In the event an Individual Settlement Payment and/or Aggrieved Employees’ individual share of the PAGA Payment check has not been cashed within one hundred and eighty (180) days, all funds represented by such uncashed checks, plus any interest accrued thereon, shall be transmitted to the State Controller’s Unclaimed Property Fund in the name of the Class Member who did not claim the funds. (¶III.P.8)

· The settlement administrator will be Apex Class Action LLC. (¶I.KK)

· Notice of Final Judgment will be posted on the Settlement Administrator’s website. (Notice p. 6.)

· The proposed Settlement Agreement was submitted to the LWDA on May 7, 2024. (JCL Decl. ISO Prelim, Exhibit 3.)

· Release by Settlement Class Members. To be clear, the scope of the release is limited to the Released Class Claims. Upon funding by Defendants of the Gross Settlement Amount, Plaintiff and the Settlement 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 Class Claims. The Parties understand and specifically agree that the scope of the release described in this paragraph is a material part of this settlement and without it Defendants would not have agreed to the consideration provided; and is narrowly drafted and necessary to ensure that Defendants are obtaining peace of mind regarding the resolution of claims that were or could have been alleged based on the facts, causes of action, and legal theories contained in the Operative Complaint. (¶III.B)

o “Released Class Claims” shall mean all causes of action and factual or legal theories that (i) are alleged in the Operative Complaint or (ii) reasonably could have been alleged based on the facts and legal theories contained in the Operative Complaint including all of the following claims for relief: (a) failure to pay all and overtime wages due; (b) failure to provide proper meal periods, and to properly provide premium pay in lieu thereof; (c) failure to provide proper rest periods, and to properly provide premium pay in lieu thereof; (d) failure to pay all minimum wages due: (e) failure to pay all wages timely during employment; (f) failure to pay all wages timely at the time of termination; (g) failure to provide complete, accurate or properly formatted wage statements; (h) failure to reimburse business expenses; (i) unfair business practices that could have been premised on the claims, causes of action or legal theories of relief described above or any of the claims, causes of action or legal theories of relief pleaded in the operative complaint; (j) failure to keep requisite payroll records; (k) any other claims or penalties under the wage and hour laws pleaded in the Action; and (1) all damages, penalties, interest and other amounts recoverable under said claims, causes of action or legal theories of relief (collectively, the "Released Class Claims"). (¶I.DD)

o The Released Class Claims expressly exclude claims for penalties under the Private Attorney General Act (PAGA). The period of the Release shall extend to the limits of the Class Period. The res judicata effect of the Judgment will be the same as that of the Release. Defendants shall be entitled to a release of Released Claims which occurred during the Class Period only during such time that the Settlement Class Member was classified as non-exempt, and expressly excluding all other claims, including claims for vested benefits, wrongful termination, unemployment insurance, disability, social security, workers' compensation, claims while classified as exempt, and claims outside of the Class Period. (Ibid.)

o Release by Plaintiff and State of California. Upon funding by Defendants of the Gross Settlement Amount, Plaintiff and the State of California will be deemed to have fully, finally, and forever released, settled, compromised, relinquished, and discharged the Released Parties of all Released PAGA Claims. However, to be clear, the scope of this release is limited to the Released PAGA Claims. By virtue of this Agreement, Plaintiff and the State of California 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 PAGA Claims. (¶III.C)

§ “Released PAGA Claims” shall mean all causes of action and factual or legal theories for civil penalties under the California Labor Code Private Attorneys General Act of 2004 against any of the Released Parties that (i) were alleged in the Operative Complaint and in Plaintiff's notice of claims to the LWDA, or (ii) reasonably could have been alleged based on the facts and legal theories contained in the Operative Complaint and in Plaintiffs notice of claims to the LWDA (collectively, the "Released PAGA Claims"). The period of the Release shall extend to the limits of the PAGA Covered Period. The res judicata effect of the Judgment will be the same as that of the Release of Released PAGA Claims. Defendants shall be entitled to a release of Released PAGA Claims which occurred during the PAGA Covered Period only during such time that the Settlement Class Member was classified as non-exempt, and expressly excluding all other claims, including claims for vested benefits, wrongful termination, unemployment insurance, disability, social security, workers' compensation, claims while classified as exempt, and claims outside of the Covered Period. (¶I.EE)

§ Any Class Member that submits a valid Request for Exclusion that is also an Aggrieved Employee will still receive his/her Aggrieved Employee Payment, and in consideration, will be bound by the Release by the PAGA Class as set forth herein. (¶III.N)

o “Released Parties” shall mean Defendants Borrmann Metal Center, Inc., Contractors Steel Holding, LLC, Contractors Steel Company, UPG Enterprises, LLC and UP Investment Holdings, LLC, and each of their past, present and/or future, direct and/or indirect, officers, directors, members, managers, employees, agents, representatives, attorneys, insurers, partners, investors, shareholders, owners, administrators, parent companies, subsidiaries, affiliates, divisions, predecessors, successors, assigns, and joint venturers. (¶I.FF)

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

ANALYSIS OF SETTLEMENT AGREEMENT

A. Does a presumption of fairness exist?

The Court preliminarily found in its Order of July 18, 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: 213 (Rovertoni Decl. ¶5.)

Number of notice packets mailed: 213 (Id. at ¶7.)

Number of undeliverable notices: 5 (Id. at ¶10.)

Number of opt-outs: 0 (Id. at ¶11.)

Number of objections: 0 (Id. at ¶12.)

Number of participating class members: 213 (Id. at ¶13.)

Average individual payment: $2,403.76 (Id. at ¶15.)

Highest individual payment: $6,394.05 (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 $300,000 in fees and $20,195.70 in costs. (Memo ISO Attorneys’ Fees at 6:3-6, 14:14-16.) The Settlement Agreement provides for up to $300,000 (33 1/3%) of the GSA for attorney fees and up to $30,000 in costs (¶I.G).

“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. (Memo ISO Attorneys’ Fees at pp. 2-14.)

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:

Firm	Rates	Hours	Totals
JCL Law Firm, APC	$225-700	177.7	$106,440.00
Zakay Law Group, APLC	$	83.6	$50,180.00
Lawyers For Justice, PC		73.8	$62,730.00
Totals		335.1	$219,350.00

(Declaration of Jean Claude Lapuyade ISO Final ¶37, Exhibit 2; Declaration of Shani O. Zakay ISO Final ¶4, Exhibit B; Declaration of Vartan Madoyan ISO Final ¶¶11-12, Exhibit A.)

Counsel’s percentage-based fee request is higher than the unadjusted lodestar, and would represent application of a multiplier of approximately 1.37x.

Fee Split: Payment for attorneys’ fees will be divided between Class Counsel in the following percentages: 32.50% to JCL Law Firm, APC, 32.50% to Zakay Law Group, APLC, and 35% to Lawyers for Justice, PC, subject to court approval. (Settlement Agreement ¶I.G).

Here, the $300,000 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 packet and no one objected. (Rovertoni Decl. ¶12, Exhibit A thereto.)

As for costs, Class Counsel is requesting a cost amount of $20,195.70 (incurred as follows: JCL Law Firm, APC - $8,404.78; Zakay Law Group, APLC - $8,810.74; Lawyers for Justice, PC - $2,980.18 – JCL Decl. ISO Final ¶40). 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. (Rovertoni Decl. ¶12, Exhibit A thereto.) Counsel’s costs include, but are not limited to: filing fees; copying; postage; research charges; mediation fees; and expert costs. (JCL Decl. ISO Final ¶40, Exhibit 3; Zakay Decl. ISO Final ¶6, Exhibit C; Madoyan Decl. ISO Final ¶19, Exhibit B.) These costs appear to be reasonable in amount and reasonably necessary to this litigation.

Based on the above, the Court hereby awards $300,000 in fees and $20,195.70 in costs.

D. Incentive Award

The class representative, Uvaldo Chavez, seeks an enhancement payment of $10,000 for his contributions to the action. (Memo ISO Attorneys’ Fees at 2:11-12.)

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: being in regular contact with his attorneys, reviewing court filings, spending time on the issues presented during litigation and the settlement process, being available during the mediation and reviewing the settlement. He estimates spending approximately 20-25 hours on the case. (Declaration of Uvaldo Chavez ISO Final ¶¶10-13.)

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, Apex Class Action, LLC, is requesting $8,000 for the costs of settlement administration. (Rovertoni Decl. ¶18.) This equals the cost of $8,000 estimated at preliminary approval (¶3.2.3) and disclosed to the Class on the Notice form, to which there were no objections. (Rovertoni Decl. ¶12, Exhibit A thereto.) Based on the above, the Court hereby awards administration costs in the requested amount of $8,000.

CONCLUSION AND ORDER

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

The essential terms are:

C. The Gross Settlement Amount (“GSA”) is $900,000, non-reversionary. (¶I.P)

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