Judge: Joseph Lipner, Case: 20STCV33377, Date: 2023-09-26 Tentative Ruling

Case Number: 20STCV33377    Hearing Date: September 26, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES 

DEPARTMENT 72 

TENTATIVE RULING 

 Plaintiff Alison Andrade, as class representative, brings Motion for Final Approval of Class Action Settlement in a scheduled fairness hearing.

The Motion for final approval is GRANTED.

Background

            On September 1, 2020, Plaintiff Alison Andrade (“Class Representative” or “Plaintiff”) filed a complaint against Defendant Urban Outfitters for wage and hour action allegations in violation of California State Law. The Complaint alleged (a) failure to accurately pay overtime wages, (b) failure to pay minimum wages, (c) failure to provide meal periods and failure to pay an additional hour’s pay in lieu of providing a meal period, (d) failure to authorize and permit rest breaks for every four hours or major fraction thereof worked and failure to pay an additional hour’s of pay in lieu of providing a rest period, (e) failing to pay all wages earned, (f) failing to pay all wages owed upon separation of employment, (g) failing to provide accurate itemized wage statements, and (h) knowingly or intentionally failing to maintain accurate and complete records.

            On December 9, 2020, Plaintiff filed a First Amended Complaint. 

            As part of settlement, Plaintiff has submitted a Second Amended Complaint asserting class and representative action claims under California law for (1) failure to pay minimum wage, (2) failure to pay overtime or pay overtime at the correct rate of pay, (3) failure to pay for all hours worked (off-the-clock work), (4) failure to provide meal periods, (5) failure to provide rest periods, (6) failure to pay premiums at the correct rate of pay, (7) failure to timely pay final wages and wages earned during employment, (8) failure to provide accurate itemized wage statements, and (9) failure to maintain accurate and complete records.

TERMS OF SETTLEMENT AGREEMENT

            An executed copy of the Settlement Agreement is attached as Exhibit A to the Declaration of Daniel Bass.

            The class consists of all individuals employed by Urban as non-exempt employees who worked at an Urban Outfitters retail store in California between June 28, 2019, and the earlier of the Preliminary Approval Date or August 31, 2022, who do not timely opt out. (Bass Decl., ¶ 13.)

            The Settlement Amount is $2,500,000, which includes:

·       Up to $875,000 in attorneys’ fees. (Bass Decl., Exhibit A ¶ 53(a).)

·       Up to $25,000 in attorneys’ cost. (Bass Decl., Exhibit A ¶ 53(a).)

·       Up to a $15,000 enhancement award to Named Plaintiff Andrade. (Bass Decl., Exhibit A ¶ 53(b).)

·       Up to $30,000 for settlement administration costs.  (Bass Decl., Exhibit A ¶ 53(c).)

·       $100,000.00 for PAGA penalties, $75,000 payable to the LWDA for 75% share of the settlement attributable to PAGA, and $25,000 to the settlement class. (Bass Decl., Exhibit A ¶ 53(d)-(e).)

The settlement class is estimated to consist of 3,892 members. (Bass Decl., ¶ 20.) The Settlement Administrator shall calculate pro rata Class Settlement Payments out of the Net Settlement Amount to Class Members based on Urban Outfitter’s internal records.

If any of the funds go unclaimed, the remaining funds will be distributed to the Controller of the State of California to be held pursuant to the Unclaimed Property Law. (Bass Decl., Exhibit A ¶ 84.)

            50% of the individual settlement awards will be allocated as unpaid wages and 50% as non-wage recovery including interest and penalties. (Bass Decl., Exhibit A ¶ 63.)

            The Settlement Administrator is CPT Group, Inc. (Bass Decl., Exhibit A ¶ 33.)

ANALYSIS OF SETTLEMENT AGREEMENT 

A.    Standards for Final Fairness Determination 

In evaluating the fairness of the settlement, courts should not “reach any ultimate conclusions on the¿issues of fact and law which underlie the merits of the dispute.  It is well settled that in the judicial consideration of proposed settlements, ‘the [trial] judge does not try out or attempt to decide the merits of the controversy,’ [citation] and the appellate court ‘need not and should not reach any dispositive conclusions on the admittedly unsettled legal issue.’  (Citation omitted.)”  See 7-Eleven Owners for Fair Franchising v. Southland Corp., 85 Cal.App.4th 1135, 1146 (2000). 

In Clark v. American Residential Services LLC, 175 Cal.App.4^th 785 (2009), however, the Second District Court of Appeal held that the trial court erred in granting final approval of a settlement where “the trial court lacked sufficient information to make an informed evaluation of the fairness of the settlement.”  See Id., at p. 790.  The Clark court reiterated at length the principles applicable to a court’s final approval of a class settlement as follows: 

The trial court must determine whether a class action settlement is fair and reasonable, and has broad discretion to do so.  That discretion is to be exercised through the application of several well-recognized factors. The list, which “‘is not exhaustive and should be tailored to each case,’” includes “‘the strength of 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.’ (Citations omitted.)  “ ‘ “The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.” ’ ” (Citation omitted.) While the court “‘must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case,’ ” it “ ‘must eschew any rubber stamp approval in favor of an independent evaluation.’” (Ibid.) 
 
In Dunk [v. Ford Motor Co. (1996) 48 Cal.App.4^th 1794], the court observed that “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.” (Citation omitted.) But Kullar [v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4^th 116] makes clear that this is only an initial presumption. The point is cogently made in Kullar, where the trial court's approval of a class action settlement was vacated because the court “[was] not provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Citation omitted.)(Emphasis added.) 
 
In Kullar, the court pointed out that “neither Dunk … nor any other case suggests that the court may determine the adequacy of a class action settlement without independently satisfying itself that the consideration being received for the release of the class members' claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Citation omitted.)  Kullar continues: “The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm's-length transaction entered without self-dealing or other potential misconduct.  While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents 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. ‘The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.’” (Citation omitted.) (Italics in original.) 
 
Kullar further explains that, while there is usually an initial presumption of fairness when a proposed class action settlement was negotiated at arm's length by counsel for the class, “‘to protect the interests of absent class members, the court must independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished.’” (Citation omitted.) To make that determination, “‘the factual record before the … court must be sufficiently developed,’ ” and the initial presumption to which Dunk refers “‘must then withstand the test of the plaintiffs’ likelihood of success.’ ” (Ibid.) Again, “ ‘ “The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.” ’ ” (Ibid.) In Kullar, because the trial court was not presented with data permitting it to review class counsel's evaluation of the sufficiency of the settlement, the order approving the settlement was vacated. (Citation omitted.) As we shall see, the same result is required here. 
 
Kullar points out that, while Dunk asserts there is a presumption of fairness where the four factors it identifies are established, in fact Dunk is fully consistent with “this recognition of the court's responsibility”; there was a “voluminous record” before the Dunk trial court, which “was made aware of the maximum damages that each class member had sustained and the value of the coupons that each class member would receive under the settlement, as well as of the particular issues that the plaintiffs needed to overcome in order to prevail in the litigation.” (Citation omitted.) 
 
“Whatever information may have been exchanged during the mediation, there was nothing before the court to establish the sufficiency of class counsel's investigation other than their assurance that they had seen what they needed to see. The record fails to establish in any meaningful way what investigation counsel conducted or what information they reviewed on which they based their assessment of the strength of the class members' claims, much less does the record contain information sufficient for the court to intelligently evaluate the adequacy of the settlement.  Assuming that there is a ‘presumption’ such as Dunk asserts, its invocation is not justified by the present record.” (Citation omitted.) See Clark, at p. 799-800. 
 

            In finding that the trial court abused its discretion in approving the settlement before it, the Clark court emphasized that “an informed evaluation of a proposed settlement cannot be made without an understanding of the amount that is in controversy and the realistic range of outcomes of the litigation.  (Citation omitted.)”  See Clark, at p. 801.  The court also emphasized that “it is the trial court’s duty, whether or not there are objectors, to employ those [Dunk presumption of fairness] factors to evaluate independently the fairness of a proposed settlement.”  See Id.  The Court must have data before it to make such an independent assessment.  See Id.  

B.    Clark / Kullar Factors In Evaluating the Fairness, Adequacy and Reasonableness of the Settlement Agreement 

a.      Strength of Plaintiff’s case and risks of further litigation  

Plaintiff alleges that Defendant violated Labor Code by not complying with labor and employment laws and the failure to retain Plaintiff and Class Members.  (Bass Decl., ¶ 29.) Plaintiff counsel understood and appreciated the defenses and position of Defendant, and believes the parties negotiated a fair settlement considering the risks of continued litigation. (Bass Decl., ¶ 30.)  Plaintiff and counsel argue they took into consideration the time and costs required for trial, and possibility of a worse result in the discission to settle. (Bass Decl., ¶¶ 30, 31.) 

b.     Strength of Plaintiff’s Case versus The Amount Offered in Settlement

                 Class counsel declares that the settlement is reasonable given the amount of time spent and is favorably comparable for similar class actions of this type. (Bass Decl., ¶¶ 30, 31.)  Class counsel estimates that the total potential recovery without penalties was $10,377,924.10.  (Bass Decl., ¶34.)  Thus, the settlement represents over 24% of Defendant’s non-penalty exposure based on Plaintiff’s analysis.  The settlement takes into account the risks of litigation, including certifying the class, litigating the merits, and determining damages.  Defendant denied any wrongdoing and contended that it was not liable at all.  The settlement agreement resulted from a mediator’s proposal that included the total settlement amount.  (Bass Decl., ¶ 11.)   The percentage of recovery appears appropriate to the Court under the circumstances.

c.      Responses and Objections to Notice of Class Settlement  

The class members’ responses are set forth in the declaration of William Argueta of CPT Group, Inc., the Settlement Administrator.

                 The highest individual award is $1,724.11, with an average settlement payment of $374.42.  (Argueta Decl., ¶¶ 9,10,13.) The lack of objections or requests for exclusion indicates that the class members strongly support the settlement terms.  The class members’ response, therefore, supports a finding that the settlement is fair, adequate, and reasonable.

d.     Conclusion 

The settlement is granted final approval as fair, adequate and reasonable.  The motion provides an explanation of the strengths and weaknesses of the parties’ claims and defenses and demonstrates that the class members are receiving full compensation for the claims alleged.  Finally, the class members’ response strongly supports a finding that the settlement is a good result for the class. 

C.    Attorneys’ Fees and Costs 

Class Counsel seeks $875,000.00 in attorneys’ fees and $17,284.79 in litigation costs. (Bass Decl., ¶¶ 60.) Whether an attorney fee is fair, the primary factor for determination is whether the fee bears a reasonable relationship to the value of the attorney’s work.  See Robbins v. Alibrandi, 127 Cal. App. 4^th 438, 451 (2005).  Courts have adopted a practice of cross-checking the lodestar against the value of the class recovery because the award is then anchored in the time spent by counsel.  See Lealao v. Beneficial California, Inc., 82 Cal. App. 4^th 19, 45, fn. 12 (2000).  

The attorneys’ fees sought equals 35% of the total settlement award. Comparing that with the lodestar method, Class Counsel expended a total of 532.4 hours at reasonable rates between $750.00-$850.00 per hour, amounting to a total of $435,947.50. (Bass Decl., ¶ 56.)  Class Counsel requests a modest multiplier of about 2.0 for a fee of $875,000.00. (Bass Decl., ¶ 57.)  The Court concludes the requested amount is appropriate. 

            Class Counsel represents $17,284.79 in costs. (Bass Decl., ¶ 59.) 

Based on the reasonable number of hours billed, and the reasonable hourly rates applied, as well as an appropriate sum of costs, Class Counsel is awarded a total of $875,000.00 in attorneys’ fees and $17,284.79 in costs.   

D.    Incentive Award / Enhancement Fee to Named Plaintiff 

In Clark, supra, the court said: 

[A]n incentive award is appropriate “if it is necessary to induce an individual to participate in the suit,” and have noted ‘relevant factors’ to consider in deciding whether such an award is warranted. (Cook v. Niedert (7th Cir.1998) 142 F.3d 1004, 1016 (Cook).) Those factors include “the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefited from those actions, and the amount of time and effort the plaintiff expended in pursuing the litigation.” 

The trial court is not bound to, and should not, accept conclusory statements about “potential stigma” and “potential risk,” in the absence of supporting evidence or reasoned argument explaining why, under the particular circumstances, an actual-not a negligible-risk existed, or why it might be difficult to get plaintiffs to come forward to prosecute a particular case.  See Clark, at p. 804 and 807. 

Under the settlement, Plaintiff requests an enhancement award of $15,000.  This is a reasonable enhancement award. In acting as the class representative, Plaintiff has been instrumental in assisting with prosecuting this matter without compensation.

E.     Costs of Claims Administration 

The declaration of William Argueta demonstrates the work performed by CPT Group, Inc. as Settlement Administrator and reveals the results achieved in communicating with class members and obtaining claims with no objections and no opt-outs.  CPT Group, Inc. will charge a total of $27,750.00 in administration costs.  The administration costs are reasonable in this case.  The court grants final approval of payment of these costs. 

Conclusion

Based on the foregoing, the motion for final approval is GRANTED.