Judge: Elaine Lu, Case: 23STCV14962, Date: 2025-01-22 Tentative Ruling

Case Number: 23STCV14962    Hearing Date: January 22, 2025    Dept: 9

Preliminary Approval of Class Action Settlement

Department SSC-9

Plummer v. Pelican Parts, LLC

Case No. 23STCV14962

Hearing: January 22, 2205 

TENTATIVE RULING

Plaintiff’s Motion for Preliminary Approval of Class Action Settlement is CONDITIONALLY GRANTED CONTINGENT ON Counsel adequately addressing the following items:

The Settlement Agreement and Notice to Class Members are not internally consistent throughout as to the deadline for Defendant to fund the settlement.  Paragraph 4.3 states that the deadline is “no later than 60 calendar days after the court signs the Order for Final Approval.” (¶4.3 [italics added].)  By contrast, paragraph 3.1 provides that “Defendant has no obligation to pay the Gross Settlement Amount (or any payroll taxes) prior to the deadline stated in Paragraph 6.1 of this Agreement.” (¶3.1)  Paragraph 6.1 in turn deals only with Plaintiff’s individual release. Finally, the class notice states, “Assuming the Court grants Final Approval, Defendant will fund the Gross Settlement not more than 14 days after the Judgment entered by the Court becomes final.” (Notice, ¶3.1)

The parties must resolve these inconsistencies as to the settlement funding date before the Court will grant preliminary approval.

If the Settlement Agreement is modified pursuant to this checklist, please submit both a red-lined copy showing changes made as well as a clean final version signed by all parties. Please do not submit an addendum in lieu of a full amended settlement agreement including all operative settlement terms.  The Court requests that any revised Settlement and any revised Notice be submitted in two formats: (1) a clean version signed by all parties, and (2) a redlined version highlighting changes made from the current Settlement and Notice.  Both formats should be fully text-searchable.

Please modify notice to match any alterations to the Settlement Agreement.

Counsel must file and serve text searchable supplemental documents correcting the above issues no later than February 24, 2025.

A Non-Appearance Case Review is set for March 3, 2025, at 8:30 a.m., Department 9.

If Counsel resolve the above discrepancies, the Court will grant preliminary approval unconditionally.

BACKGROUND

This is a wage and hour class action. On June 27, 2023, Plaintiff Joyce Plummer filed a putative class action on behalf of non-exempt employees asserting the following causes of action: (1) failure to pay minimum wages; (2) failure to pay overtime wages; (3) failure to provide meal periods; (4) failure to permit rest breaks; (5) failure to provide accurate itemized wage statements; (6) Failure to Pay Wages Timely During Employment (7)failure to pay all wages due upon separation of employment; and (8) violation of Business and Professions Code § 17200, et seq. for the preceding claims.

On September 8, 2023, Plaintiff Joyce Plummer filed a First Amended Complaint adding a cause of action for enforcement of Labor Code § 2698 et seq.

Counsel represents that through informal discovery, Defendant produced documents and information, including its employee handbooks, policies, and all of Class Members’ timekeeping and pay records. 

On February 12, 2024, the Parties attended a mediation session with Jill R. Sperber, and were able to come to an agreement.

A fully executed long form Settlement Agreement was filed with the court on December 5, 2024 attached as Exhibit 1 to the Declaration of Lisa Iturriaga (“Iturriaga Decl.”).  

The Parties now move for preliminary approval of the proposed class action settlement.

SETTLEMENT CLASS DEFINITION

·       “Class” means all non-exempt employees employed by Defendant in California at any time during the Class Period. (Settlement Agreement, ¶1.5.)

o   “Class Period” means the period from December 31, 2018 to February 12, 2024. (¶1.12)

·       Aggrieved Employee” means all non-exempt employees employed by Defendant in California at any time during the PAGA Period. (¶1.4)

o   “PAGA Period” means the period from June 27, 2022 to February 12, 2024. (¶1.31) 

·       Based on a review of its records to date, Defendant estimates there are 222 Class Members who collectively worked a total of 16,500 Workweeks, and 109 of Aggrieved Employees who worked a total 2,966 of PAGA Pay Periods. (¶4.1)

·       The parties agree to class certification for the purposes of settlement. (¶12.1)

TERMS OF SETTLEMENT AGREEMENT

The essential terms are as follows:

·       The Gross Settlement Amount (“GSA”) is $700,000, non-reversionary. (¶3.1)

o   If the number of Class Members during the Class Period exceeds 222 or the number of Total Workweeks during the Class Period exceeds 16,500 by more than 10%, the Gross Settlement Amount will increase pro rata per additional Class Member or additional Workweek, whichever is greater. (¶9)

·       The Net Settlement Amount (“Net”) ($411,316.67) is the GSA minus the following:

o   Up to $233,333.33 (33%) for attorney fees (¶3.2.2);

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

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

o   Up to $7,850 for settlement administration costs (¶3.2.3);

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

·       Defendant will also pay employer-side taxes. (¶3.1)

·       Funding of Settlement: Defendant shall fully fund the Gross Settlement Amount, and also fund the amounts necessary to fully pay Defendant’s share of payroll taxes by transmitting the funds to the Administrator no later than 60 calendar days after the court signs the Order for Final Approval. (¶4.3)

o   Contradiction: Defendant has no obligation to pay the Gross Settlement Amount (or any payroll taxes) prior to the deadline stated in Paragraph 6.1 of this Agreement. (¶3.1)

o   Contradiction: Assuming the Court grants Final Approval, Defendant will fund the Gross Settlement not more than 14 days after the Judgment entered by the Court becomes final. (Notice, ¶3.1.)

·       Payments from the Gross Settlement Amount: Within 14 calendar 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. (¶4.4)

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

·       Participating Class Member Payment:  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   Tax Allocation: 20% as wages and 80% as interest and penalties. (¶3.2.4.1)

·       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 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. (¶3.2.5.1)

o   Tax Allocation: 100% penalties. (¶3.2.5.2)

·       “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 workweek challenges. (¶8.6)

·       Uncashed Settlement Checks: The Administrator will cancel all checks not cashed by the void date (not less than 180 days after the date of mailing). (¶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 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). (¶4.4.3)

·       The settlement administrator will be ILYM Group, Inc. (¶1.2)

·       The Settlement was submitted to the LWDA on May 20, 2024. (Exhibit 2 to Iturriaga Decl.)

·       Participating class members and the named Plaintiff will release certain claims against Defendants.  (See further discussion below)

ANALYSIS OF SETTLEMENT AGREEMENT

1.     Does a presumption of fairness exist? 

1.                   Was the settlement reached through arm’s-length bargaining?  Yes. On February 12, 2024, the Parties attended a mediation session with Jill R. Sperber, and were able to come to an agreement. (Iturriaga Decl., ¶6.)

2.                  Were investigation and discovery sufficient to allow counsel and the court to act intelligently?  Yes. Counsel represents that through informal discovery, Defendant produced documents and information, including its employee handbooks, policies, and all of Class Members’ timekeeping and pay records. (Id. at ¶5.)

3.                  Is counsel experienced in similar litigation?  Yes. Class Counsel is experienced in class action litigation. (Id. at ¶¶24-36.)

4.                  What percentage of the class has objected?  This cannot be determined until the fairness hearing.  See Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2014) ¶ 14:139.18, (“Should the court receive objections to the proposed settlement, it will consider and either sustain or overrule them at the fairness hearing.”).

            CONCLUSION:  The settlement is preliminarily entitled to a presumption of fairness.

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

1.                       Strength of Plaintiff’s case.  “The most important factor is the strength of the case for plaintiff on the merits, balanced against the amount offered in settlement.”  (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.)         

        Counsel provided the following estimated recovery:

(Iturriaga Decl., ¶¶15-20)

              2.   Risk, expense, complexity and likely duration of further litigation.  Given the nature of the class claims, the case is likely to be expensive and lengthy to try.  Procedural hurdles (e.g., motion practice and appeals) are also likely to prolong the litigation as well as any recovery by the class members.

3.   Risk of maintaining class action status through trial.  Even if a class is certified, there is always a risk of decertification.  (See Weinstat v. Dentsply Intern., Inc. (2010) 180 Cal.App.4th 1213, 1226 (“Our Supreme Court has recognized that trial courts should retain some flexibility in conducting class actions, which means, under suitable circumstances, entertaining successive motions on certification if the court subsequently discovers that the propriety of a class action is not appropriate.”).)

4.   Amount offered in settlement.

Plaintiff’s Counsel obtained a $700,000 non-reversionary settlement. This is approximately 15% to 98% of Plaintiff’s estimated recovery, which is within the “ballpark” of reasonableness.

The $700,000 settlement amount, after reduced by the requested deductions, leaves approximately $411,316.67 to be divided among approximately 222 class members. Assuming full participation, the resulting payments will average approximately $1,852.78  per class member. [$411,316.67 /222=$1,852.78 ]

5.   Extent of discovery completed and stage of the proceedings.  As indicated above, at the time of the settlement, Class Counsel had conducted sufficient discovery.

6.   Experience and views of Counsel.  The settlement was negotiated and endorsed by Class Counsel who, as indicated above, is experienced in class action litigation, including wage and hour class actions. 

7.   Presence of a governmental participant.  This factor is not applicable here.

8.   Reaction of the class members to the proposed settlement. The class members’ reactions will not be known until they receive notice and are afforded an opportunity to object, opt-out and/or submit claim forms.  This factor becomes relevant during the fairness hearing.

      CONCLUSION:  The settlement can be preliminarily deemed “fair, adequate, and reasonable.”

3.                       Scope of the release

Effective on the date when Defendant fully funds the entire Gross Settlement Amount and funds all employer payroll taxes owed on the Wage Portion of the Individual Class Payments, Plaintiff, Class Members, and Class Counsel will release claims against all Released Parties as follows: (¶6)

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, based on the facts stated in the Operative Complaint arising during the Class Period. Except as set forth in Section 6.3 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.  (¶6.2)

All 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, based on the facts stated in the Operative Complaint, and the PAGA Notice arising during the PAGA Period. (¶6.3)

The named Plaintiff will also provide a general release and 1542 waiver. (¶6.1.)

4.                       May conditional class certification be granted?

1.         Standards

A detailed analysis of the elements required for class certification is not required, but it is advisable to review each element when a class is being conditionally certified (Amchem Products, Inc. v. Winsor (1997) 521 U.S. 620, 622-627.)  The trial court can appropriately utilize a different standard to determine the propriety of a settlement class as opposed to a litigation class certification.  Specifically, a lesser standard of scrutiny is used for settlement cases.  (Dunk at 1807, fn 19.)  Finally, the Court is under no “ironclad requirement” to conduct an evidentiary hearing to consider whether the prerequisites for class certification have been satisfied. (Wershba at 240.)

2.     Analysis

a.              Numerosity.  There are approximately 222 putative class members. (Iturriaga Decl., ¶ 8.) This element is met.

b.              Ascertainability.  The proposed class is defined above.  The class definition is “precise, objective and presently ascertainable.”  (Sevidal v. Target Corp. (2010) 189 Cal.App.4th 905, 919.) The class members are identifiable from Defendant’s records. (Iturriaga Decl., ¶ 8.)

c.              Community of interest.  “The community of interest requirement involves three factors: ‘(1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.’”  (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.)

Class Counsel contends that commonality is met because Plaintiff’s allegations present common legal and factual questions of, inter alia, whether Defendant applied the same scheduling, timekeeping, minimum and overtime pay, meal period, and rest break policies to all Class Members; whether these policies and practices resulted in Labor Code violations; whether Defendant’s conduct was intentional; and whether Class Members are entitled to penalties. (MPA, 6:22-26.)

Further, counsel contends that here, Plaintiff’s claims are typical of the Class because their claims arise from same employment practices and the same legal theories as those applicable to other Class Members. (MPA, 7:6-15.)   

Finally, Counsel contends that Plaintiff is an adequate class representative because her interests are coextensive with the interests of the class, and she is represented by adequate counsel. (MPA, 7:21-8:3; Declaration of Plaintiff Plummer, passim.)  

d.              Adequacy of Class Counsel.  As indicated above, Class Counsel has shown experience in class action litigation, including wage and hour class actions.

e.              Superiority.  Given the relatively small size of the individual claims, a class action appears to be superior to separate actions by the class members.

      CONCLUSION:  The class may be conditionally certified since the prerequisites of class certification have been satisfied. 

5.                       Is the notice proper?

1.     Content of class notice.  The proposed notice is attached Settlement Agreement. Its content appears to be acceptable.  It includes information such as:  a summary of the litigation; the nature of the settlement; the terms of the settlement agreement; the proposed deductions from the gross settlement amount (attorney fees and costs, enhancement awards, and claims administration costs); the procedures and deadlines for participating in, opting out of, or objecting to, the settlement; the consequences of participating in, opting out of, or objecting to, the settlement; and the date, time, and place of the final approval hearing.

2.     Method of class notice.  Notice will be by direct mail. Not later than 15 calendar days after the Court grants Preliminary Approval of the Settlement, Defendant will simultaneously deliver the Class Data to the Administrator, in the form of a Microsoft Excel spreadsheet. (¶4.2) Using best efforts to perform as soon as possible, and in no event later than 14 days after receiving the Class Data, the Administrator will send to all Class Members identified in the Class Data, via first-class United States Postal Service (“USPS”) mail, the Class Notice with Spanish translation. Before mailing Class Notices, the Administrator shall update Class Member addresses using the National Change of Address database.  (¶8.4.2) Not later than 3 business days after the Administrator’s receipt of any Class Notice returned by the USPS as undelivered, the Administrator shall re-mail the Class Notice using any forwarding address provided by the USPS. If the USPS does not provide a forwarding address, the Administrator shall conduct a Class Member Address Search, and re-mail the Class Notice to the most current address obtained. The Administrator has no obligation to make further attempts to locate or send Class Notice to Class Members whose Class Notice is returned by the USPS a second time. (¶8.4.3) If the Administrator, Defendant or Class Counsel is contacted by or otherwise discovers any persons who believe they should have been included in the Class Data and should have received Class Notice, the Parties will expeditiously meet and confer in person or by telephone, and in good faith in an effort to agree on whether to include them as Class Members. If the Parties agree, such persons will be Class Members entitled to the same rights as other Class Members, and the Administrator will send, via email or overnight delivery, a Class Notice requiring them to exercise options under this Agreement not later than 14 days after receipt of Class Notice, or the deadline dates in the Class Notice, which ever are later. (¶8.4.5) Notice of Final Judgment will be posted on the Settlement Administrator’s website. (¶8.8.1)

3.     Cost of class notice.  As indicated above, claims administration costs are estimated not to exceed $7,850. Prior to the time of the final fairness hearing, the claims administrator must submit a declaration attesting to the total costs incurred and anticipated to be incurred to finalize the settlement for approval by the Court.

6.     Attorney fees and costs

CRC rule 3.769(b) states: “Any agreement, express or implied, that has been entered into with respect to the payment of attorney fees or the submission of an application for the approval of attorney fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.”

            Ultimately, the award of attorney fees is made by the court at the fairness hearing, using the lodestar method with a multiplier, if appropriate.  (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095-1096; Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615, 625-626; Ketchum III v. Moses (2000) 24 Cal.4th 1122, 1132-1136.)  Despite any agreement by the parties to the contrary, “the court ha[s] an independent right and responsibility to review the attorney fee provision of the settlement agreement and award only so much as it determined reasonable.” (Garabedian v. Los Angeles Cellular Telephone Company (2004) 118 Cal.App.4th 123, 128.)

            The question of whether Class Counsel is entitled to $233,333.33 in attorney fees will be addressed at the fairness hearing when class Counsel brings a noticed motion for attorney fees.  Class Counsel must provide the court with billing information so that it can properly apply the lodestar method and must indicate what multiplier (if applicable) is being sought as to each counsel.    

            Class Counsel should also be prepared to justify the costs sought (capped at $25,000)   by detailing how they were incurred.

7.     Incentive Award to Class Representative

The Settlement Agreement provides for an enhancement award of up to $7,500 to the named Plaintiff.  In connection with the final fairness hearing, the named Plaintiff 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 she 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.)  The Court will decide the issue of the enhancement award at the time of final approval.

CONCLUSION AND ORDER

Plaintiff’s Motion for Preliminary Approval of Class Action Settlement is CONDITIONALLY GRANTED CONTINGENT ON Counsel adequately addressing the following items:

The Settlement Agreement and Notice to Class Members are not internally consistent throughout as to the deadline for Defendant to fund the settlement.  Paragraph 4.3 states that the deadline is “no later than 60 calendar days after the court signs the Order for Final Approval.” (¶4.3 [italics added].)  By contrast, paragraph 3.1 provides that “Defendant has no obligation to pay the Gross Settlement Amount (or any payroll taxes) prior to the deadline stated in Paragraph 6.1 of this Agreement.” (¶3.1)  Paragraph 6.1 in turn deals only with Plaintiff’s individual release. Finally, the class notice states, “Assuming the Court grants Final Approval, Defendant will fund the Gross Settlement not more than 14 days after the Judgment entered by the Court becomes final.” (Notice, ¶3.1)

The parties must resolve these inconsistencies as to the settlement funding date before the Court will grant preliminary approval.

If the Settlement Agreement is modified pursuant to this checklist, please submit both a red-lined copy showing changes made as well as a clean final version signed by all parties. Please do not submit an addendum in lieu of a full amended settlement agreement including all operative settlement terms.  The Court requests that any revised Settlement and any revised Notice be submitted in two formats: (1) a clean version signed by all parties, and (2) a redlined version highlighting changes made from the current Settlement and Notice.  Both formats should be fully text-searchable.

Please modify notice to match any alterations to the Settlement Agreement.

Counsel must file and serve text searchable supplemental documents correcting the above issues no later than February 24, 2025.

A Non-Appearance Case Review is set for March 3, 2025, at 8:30 a.m., Department 9.

If Counsel resolve the above discrepancies, the Court will grant preliminary approval unconditionally.

The Judicial Assistant is to give notice to Counsel for Plaintiff who is ordered to give further and formal notice to all parties.

IT IS SO ORDERED.

DATED: January 22, 2025                                                     ___________________________

                                                                                    Elaine Lu

                                                                                    Judge of the Superior Court