Judge Holly J. Fujie, Case Number: 21STCV46033, Date: 2023-09-06 Tentative Ruling

MOVING PARTY: Plaintiffs Jose Luis Velasquez (“Velasquez”) and Marvin Glenn Holloway (“Holloway”) (collectively, “Plaintiffs”)

The Court has considered the moving papers. No opposition papers were filed. Any opposition papers were required to have been filed and served at least nine court days before the hearing pursuant to California Code of Civil Procedure (“CCP”) section 1005, subdivision (b).

The currently operative first amended complaint (the “FAC”) alleges ten causes of action arising out of an employment relationship, including a claim arising under the Private Attorneys General Act (“PAGA”).

On September 6, 2023, the Court granted Plaintiffs’ motion for preliminary approval of PAGA and class action settlement (the “PA Motion”). On January 12, 2024, Plaintiffs filed: (1) a motion for final approval of PAGA and class action settlement (the “Settlement Motion”); and (2) a motion for attorney’s fees and costs (the “Fees Motion”).

Approval of class action settlements occurs in two steps. First, the court preliminarily approves the settlement, and the class members are notified as directed by the court. (Cal. Rules of Court (“CRC”), r. 3.769(c), (f); Cellphone Termination Fee Cases (2009) 180 Cal.App.4th 1110, 1118.) Second, the court conducts a final approval hearing to inquire into the fairness of the proposed settlement. (CRC, r. 3.769(e); Cellphone Termination Fee Cases, supra, 180 Cal.App.4th at 1118.)

The trial court has broad discretion to determine whether the settlement is fair. (Cellphone Termination Fee Cases, supra, 180 Cal.App.4th at 1117.) In determining whether to approve a class settlement, the court’s responsibility is to “prevent fraud, collusion or unfairness to the class” through settlement and dismissal of the class action because the rights of the class members, and even named plaintiffs, “may not have been given due regard by the negotiating parties.” (Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2006) 141 Cal.App.4th 46, 60.)

Plaintiffs entered into a settlement agreement (the “Settlement Agreement”) with Defendant Water Damage Rescue, Inc. (“Defendant”) after the parties participated in private mediation. (See Declaration of Jean-Claude Lapuyade (“Lapuyade Decl.”) ¶¶ 3, 10, Exhibit 1.) The Settlement Agreement provides for a gross settlement amount (the “GSA”) of $640,000 to be allocated among 323 class members. (Lapuyade Decl. ¶¶ 10, 20.)

The Parties have agreed to a disbursement of the GSA as follows: (1) attorney’s fees in an amount up to one third of the total GSA and litigation expenses not to exceed $25,000; (2) an incentive award to Plaintiffs in the amount of up to $10,000 each; (3) fees and expenses of administration of the Settlement Agreement to the settlement administrator in an amount not to exceed $10,000; (4) PAGA penalties in the amount of $30,000, with 25 percent to be part of the remaining net settlement amount (the “NSA”) that will be distributed to PAGA class members and the other 75 percent paid to the California Labor and Workforce Development Agency (“LWDA”). (See Lapuyade Decl. ¶¶ 20, 46.) The NSA is approximately $341,667 and will be allocated to participating class members on a pro-rata basis according to the number of weeks each class member worked during the relevant class period, resulting in an average individual payment of $1,077.81. (Lapuyade Decl. ¶ 11.)

Before the court may approve the settlement, the settlement class must satisfy the normal prerequisites for class actions. (Amchem. Products, Inc. v. Windsor (1997) 521 U.S. 591, 625-27.) The party advocating class treatment must demonstrate the: (1) existence of an ascertainable and sufficiently numerous class; (2) well-defined community of interest; and (3) substantial benefits from certification that render proceeding as a class superior to the alternatives. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021.)

When it granted the PA Motion, the Court determined that Plaintiff satisfied the prerequisite showing required for class certification. The Court incorporates its analysis in the PA Motion of the class. On November 2, 2023, notice was sent to the 323 class members. (Declaration of Madely Nava (“Nava Decl.”) ¶ 3.) As of the filing of the Settlement Motion, a total of three notice packets were deemed undeliverable, and the Settlement Administrator had not received any objections to the Settlement Agreement or requests for exclusion. (Nava Decl. ¶¶ 10-13.) The Court finds that no circumstances have arisen that undermine the contours of the class and thus certifies the class.

In determining whether a settlement is fair, the Court considers all relevant factors, including the strength of the plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.) The recovery should represent a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. (Id. at 129.) Nevertheless, the strength of the case on the merits for the plaintiffs is the most important factor, balanced against the amount offered in settlement. (Id. at 130.)

The fact that a proposed settlement may only amount to a fraction of the potential recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate and should be disapproved. (City of Detroit v. Grinnell Corporation (2d Cir. 1974) 495 F.2d 448, 455.) The test is not the maximum amount plaintiff might have obtained at trial on the complaint but, rather, whether the settlement is reasonable under all of the circumstances. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 250.)

A presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small. (Cellphone Termination Fee Cases (2009) 180 Cal.App.4th 1110, 1118.)

The average settlement payment is estimated to be $1,077.81, with the highest payment estimated as being $7,049.13 and the lowest payment estimated as being $3.46. (Nava Decl. ¶ 15.) The average PAGA payment is estimated to be $94.97. (Nava Decl. ¶¶ 17.) The Court incorporates its analysis of the Settlement Agreement set forth in the PA Motion and finds that the terms of the Settlement Agreement are fair.

Labor Code section 2699, subdivision (l)(2) provides that the superior court shall review and approve any settlement of any civil action filed pursuant to PAGA. (Lab. Code § 2699, subd. (l)(2).) Section 2699, subdivision (l)(2) requires submission of the proposed settlement to the Labor Workforce and Development Agency (the “LWDA”) at the same time it is submitted to the court. (Id.) Any settlement of any civil action filed under PAGA must be “fair and adequate in view of the purposes and policies of the statute.” (Flores v. Starwood Hotels & Resorts Worldwide, Inc. (C.D. Cal. 2017) 253 F.Supp.3d 1074, 1077.) Seventy five percent of all PAGA penalties must be paid to the LWDA and the remaining 25 percent must be paid to the aggrieved employees. (Lab. Code, § 2699, subd. (i).)

Based on the terms of the Settlement Agreement and the allocation of the GSA to the LDWA described above, the Court finds that the PAGA Settlement complies with Labor Code section 2699, subdivision (i).

The Settlement Motion seeks approval of an incentive award of $10,000 to Plaintiffs for acting as class representatives in this action. The Court approves this amount based on Plaintiffs’ participation in this litigation. (See Declaration of Jose Luis Velasquez (“Velasquez Decl.”); Declaration of Marvin Glenn Holloway (“Holloway Decl.).)

Under California Rules of Court (“CRC”), rule 3.769, any agreement, express or implied, that has been entered into with respect to the payment of attorney’s fees or the submission of an application for the approval of attorney’s 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. (CRC, r. 3.769(b).) Ultimately, the award of attorney’s 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, 1095-96.) In common fund cases, the court may utilize the percentage method, cross-checked by the lodestar. (Laffitte v. Robert Half Int’l, Inc. (2016) 1 Cal.5th 480, 503.) Despite any agreement by the parties to the contrary, the court has an independent right and responsibility to review the attorney fees 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.)

Plaintiffs seek approval of attorney’s fees in the amount of up to $238,333.33, which represents $213,333.33 in attorney’s fees and up to $25,000 in costs.[1] Based on the evidence set forth in the supporting declarations regarding the qualifications of the attorneys who billed time in this matter, the reasonableness of counsels’ hourly rates, the complexity of negotiating this case, and the results obtained, the Court finds that an attorney’s fee award in the amount of one-third of the GSA is warranted. This amount is reasonable given the facts of this case and is consistent with fee awards in class actions.[2] The Court further finds that the costs incurred were reasonable and necessary to carrying out the representation in this matter.

Based on the foregoing, the Court GRANTS the Settlement Motion and the Fees Motion in their entirety.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

[1] As of the filing of the Fee Motion, Plaintiffs’ counsel had incurred costs in the amount of $22,707.08. The Fees Motion specifies that an updated accounting will be provided at the hearing.

[2] See Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66 n. 11 (“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.”).