Judge: Joseph Lipner, Case: 22STCV37612, Date: 2025-01-07 Tentative Ruling

Case Number: 22STCV37612    Hearing Date: January 7, 2025    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

            Plaintiff Frank Galeas (“Plaintiff”) moves for preliminary approval of the class action settlement between Plaintiff and Defendant Syncreon Technology (USA) LLC (“Defendant”), conditional certification, approval of class notice, and setting of final approval hearing date.

The Court tentatively GRANTS the motion, contingent on the parties’ provision of direct evidence of the class size or a reasonable estimate of that size to establish the numerosity requirement as to class certification.

The Court leaves the issues of attorney’s fees, costs, and the service award to Plaintiff for the final hearing.

Background

This is an employment law class action.

Defendant is a supply chain and logistics company. Plaintiff and the putative class members were employed by Defendant during the class period of September 26, 2018 through 27, 2024.

Plaintiff filed this action on December 1, 2022. The operative complaint is now the First Amended Complaint (“FAC”), which raises claims for (1) failure to pay all straight time wages; (2) failure to pay all overtime wages; (3) failure to provide meal periods; (4) failure to authorize and permit rest periods; (5) failure to adopt a compliant sick pay/paid time off policy; (6) knowing and intentional failure to comply with itemized employee wage statement provisions; (7) failure to pay all wages due at the time of termination of employment; (8) failure to reimburse/illegal deductions; (9) failure to maintain required records; and (10) unfair competition. The FAC withdrew Plaintiff’s PAGA claim which was included in the original Complaint.

On November 5, 2024, Plaintiff filed this motion for preliminary approval.

Legal Standard

“(a) Court approval after hearing

A settlement or compromise of an entire class action, or of a cause of action in a class action, or as to a party, requires the approval of the court after hearing.

(b) Attorney's fees

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.

(c) Preliminary approval of settlement

Any party to a settlement agreement may serve and file a written notice of motion for preliminary approval of the settlement. The settlement agreement and proposed notice to class members must be filed with the motion, and the proposed order must be lodged with the motion.

(d) Order certifying provisional settlement class

The court may make an order approving or denying certification of a provisional settlement class after the preliminary settlement hearing.

(e) Order for final approval hearing

If the court grants preliminary approval, its order must include the time, date, and place of the final approval hearing; the notice to be given to the class; and any other matters deemed necessary for the proper conduct of a settlement hearing.

(f) Notice to class of final approval hearing

If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.

(g) Conduct of final approval hearing

Before final approval, the court must conduct an inquiry into the fairness of the proposed settlement.

(h) Judgment and retention of jurisdiction to enforce

If the court approves the settlement agreement after the final approval hearing, the court must make and enter judgment. The judgment must include a provision for the retention of the court's jurisdiction over the parties to enforce the terms of the judgment. The court may not enter an order dismissing the action at the same time as, or after, entry of judgment.”

(Cal. Rules of Court, rule 3.769(a).)

Discussion

SETTLEMENT CLASS DEFINITION

·        “Class Members” or “Settlement Class” means all persons employed by Defendant in California as non-exempt employees during the Class Period (defined as September 26, 2018 through 27, 2024). (Mara Decl., Ex. 1 (“Settlement”) ¶¶ 1.4, 1.11.) It shall be an opt-out class. (Settlement ¶ 1.25.) The parties estimate that there are 414 class members. (Mullins Decl., Ex. C at p. 1.)

·        “Class Period” means the period of September 26, 2018 through 27, 2024. (Settlement ¶ 1.11.)

·        “Participating Class Member” means a Class Member who do not submit a valid and timely Request for Exclusion. (Settlement ¶ 1.26.)

TERMS OF SETTLEMENT AGREEMENT

The essential terms are as follows:

·        The Gross Settlement Amount is $520,000.00, non-reversionary. (Settlement ¶ 3.1.)

o   Escalator Clause: Defendant certifies that the number of Workweeks for all class members during the Class Period is 24,546. If the number of Workweeks during the Class Period should exceed the Certified Workweek Amount by more than ten percent (10%), the Gross Settlement Amount shall be increased by the percent difference in excess of 10%. (Settlement ¶ 4.1.) For example, if there is a 12% increase in the total Workweeks, the Gross Settlement Amount will increase by 2%. (Ibid.)

·        The Net Settlement Amount (“Net Settlement”) (estimated to be $296,666.67) is the Gross Settlement Amount minus the following:

o   Up to $173,333.33 (33 1/3%) for attorney fees (Settlement ¶ 3.2.2);

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

o   Up to $10,000 for a Class Representative Service Payment to Plaintiff (Settlement ¶ 3.2.1); and

o   Up to $10,000 for settlement administration costs (Settlement ¶ 3.2.3).

·        Defendant pay the employer payroll taxes on the portion of the Individual Settlement Awards that constitutes wages and these taxes shall be paid by the Defendant in addition to the Gross Settlement Amount. (Settlement ¶ 3.1.)

·        There is no claim form requirement. (Settlement ¶¶ 7.5.1, 7.5.2.)

·        Individual Settlement Payment Calculation: From the Net Settlement Amount, the Administrator will calculate each Individual Settlement Award by dividing the Net Settlement Amount by the total number of and then multiplying the resulting value by the number of Workweeks worked by each Class Member. (Settlement ¶ 3.2.4.) Defendant will provide the total number of Workweeks for each Class Member to the Administrator. (Settlement ¶ 4.2.) The Administrator will issue checks for the Individual Class Payments. (Settlement ¶ 4.4.1.)

o   Should any of the following occur, the Administrator will proportionately increase the estimated Individual Settlement Award of each Participating Class Member to ensure that the entire Net Settlement Amount is distributed to Participating Class Members: (1) any Class Member submits a timely and valid, or otherwise accepted, Request for Exclusion following the provision of Settlement Notices and expiration of the Response Deadline; (2) the Court approves the Class Representative Service Award in an amount less than those requested by Plaintiff, as detailed herein; (3) the Court approves a Class Counsel Award in an amount less than that requested by Plaintiff, as detailed herein; and/or (4) the Court approves Settlement Administration Costs in an amount less than that requested by Plaintiff. (Settlement ¶ 3.2.1, 3.2.2, 3.2.3, 3.2.6.)

o   Tax Allocation: Each Participating Class Member’s Individual Class Payments will be allocated as follows: 20% as wages, 80% as interest and penalties. The Wage Portion will be subject to wage withholdings. (Settlement ¶ 3.2.5.)

·        Response Deadline: The deadline by which Class Members must postmark or fax to the Administrator a valid Request for Exclusion, objection, or Workweeks dispute will be forty-five (45) calendar days from the initial mailing of the Settlement Notices by the Administrator. (Settlement ¶ 1.33.) Class Members who are sent a re-mailed Settlement Notice shall have their Response Deadline extended by 14 calendar days from the date the Administrator re-mails the Settlement Notice. (Settlement ¶ 7.4.4.)

o   If 10% or more of Class members opt-out of the Class, Defendant shall have option to withdraw from Settlement Agreement within 7 days after receiving from the Administrator the final list of optouts. (Settlement ¶ 9.)

·        Funding of Settlement: The Gross Settlement Amount and Defendant’s portion of the payroll taxes shall be paid by Defendant in one lump sum payment within thirty (30) calendar days after the Effective Date. (Settlement ¶ 4.3.)

·        Disbursement: Promptly after payment of the Gross Settlement Amount, but no later than 14 calendar days of receipt of the payment, the Administrator will mail checks for: (1) the awarded Class Counsel Award to Plaintiff’s Counsel; (2) the awarded Administrator Costs to the Administrator; (3) the Service Award to Plaintiff; and (4) the Individual Settlement Awards to the Participating Class Members. (Settlement ¶ 4.4.) The Individual Class Payments shall not be preceded by any of the other payments. (Ibid.)

·        Uncashed Settlement Checks: Individual Settlement Award payments and Individual PAGA Payments shall expire after 180 days. The total amount of any uncashed settlement checks will be transmitted by the Administrator to the California Controller’s Office Unclaimed Property Fund, with an identification of the Participating Class Member to whom the funds belong, in accordance with California Code of Civil Procedure section 384. (Settlement ¶¶ 4.4.1, 4.4.3.)

·        The Administrator will be ILYM Group, Inc. (Settlement ¶ 1.2.)

·        Participating class members and the named Plaintiff will release certain claims against Defendant. (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? On October 24, 2023, the parties mediated before Steve Serratore, which ultimately resulted in settlement. (Mara Decl. ¶ 6.) 

2. Were investigation and discovery sufficient to allow counsel and the court to act intelligently? The parties engaged in informal discovery where Defendant produced policy documents covering employees’ employment with Defendant, as well as wage and hour records. Defendant produced its wage and hour policies, including its meal and rest period policies. Defendant produced wage and hour records for a 20 percent random sampling of the Class Members, which Plaintiff’s counsel had an expert analyze. The sample was selected by sorting employees based upon their date of hire and selecting every fifth name. Defendant produced Plaintiff’s personnel file and wage and hour records. Defendant produced data surrounding the number of current and former employees, as well as the number of workweeks worked by Class Members during the relevant time period to establish a potential exposure model. (See generally Mara Decl. ¶ 5.)

3. Is counsel experienced in similar litigation? Yes. Class Counsel is experienced in class action litigation, including wage and hour class actions. (Mara Decl. ¶¶ 2-13; Solouki Decl. ¶¶ 3-10.)

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 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.) Here, Defendant vigorously disputes all of Plaintiff’s claims. (See generally Mara Decl. ¶¶ 7-25.)

Here, Class Counsel has provided information, summarized below, regarding the estimated values of the class claims alleged:

(Mara Decl. ¶ 31.)

            Once accounting for the risks of litigation, the realistic expected damages would be significantly lower.

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 estimated Defendant’s potential maximum damages at $4,196,144.00. Plaintiff’s counsel obtained a $520,000.00 non-reversionary settlement. This is approximately 12.4% of Plaintiff’s potential maximum recovery which, given the uncertain outcomes, is within the ballpark of reasonableness.

The settlement amount, after reduced by the requested deductions, leaves approximately $296,666.67 to be divided among approximately 414 class members. Assuming full participation, the resulting payments will average approximately $716.59 per class member.

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

Release by All Participating Class Members. All Participating Class Members, including Plaintiff, shall be deemed to have released their respective Released Claims against the Released Parties on the date on which the payment of the Gross Settlement Amount and required payroll taxes is made by Defendant. Plaintiff and Class Members who do not Request Exclusion will be deemed to have fully, finally, and forever released, settled, compromised, relinquished, and discharged with respect to all of the Released Parties for any and all Released Claims that accrued during the Released Claims Period. (Settlement ¶ 5.)

·        “Released Claims” means all claims that were alleged, or reasonably could have been alleged, based on the facts stated in the operative complaint, or could have been discovered during this litigation, including all claims under California Labor Code sections 201-204, 218, 218.5, 222, 223, 224, 226, 226.3, 226.7, 233(c), 233(e), 234, 246, 246(a)(1), 246(c), 246.5, 510, 512, 558, 1174, 1175, 1194, 1194.2, 1197, 1198, and 2802. Participating Class Members shall also waive claims under California Business and Professions Code section 17200 and California’s Private Attorneys General Act based on violations of the California Labor Code sections in the preceding sentence including injunctive relief, liquidated damages, interest, fees, and costs. (Settlement ¶ 5.2.)

·        “Released Parties” means Defendant and all of its present and former parent companies, subsidiaries, divisions, concepts, related or affiliated companies, shareholders, officers, directors, employees, agents, attorneys, insurers, reinsurers, successors and assigns, and any individual or entity which could be liable for any of the Released Class Claims, and Defendant’s counsel of record in the Action. (Settlement ¶ 1.31.)

·        Plaintiff additionally provides general release of his claims against Defendant. (Settlement ¶ 5.1.) Plaintiff provides a Civil Code, section 1542 waiver. (Settlement ¶ 5.1.1.)

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 v. Ford Motor Co. (1996) 48 Cal.App.4^th 2794, 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 v. Apple Computer, Inc. (2001) 91 Cal.App.4^th 224, 240, disapproved on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5^th 260.)

2. Analysis

a. Numerosity. The parties state and estimate that there are 414 class members, but the Court does not discern any direct evidence of this number or estimate in a declaration.  The parties should either point out such evidence to the Court at the hearing or provide such evidence to the Court.

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. (Mara Decl. ¶ 5.)

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.) ]

As to commonality, Plaintiff contends that the main issues involve the legality of Defendant’s employment policies regarding Plaintiff’s claims for failure to pay all wages, failure to provide meal periods, failure to authorize and permit rest periods. failure to adopt a compliant sick pay and paid time off policy, intentional failure to comply with itemized employee wage statement provisions, failure to pay all wages due at termination, failure to reimburse expenses, failure to maintain required records, and unfair competition. Plaintiff contends that his claims are typical of the class because he was employed during the Class Period. (Galeas Decl. ¶ 13.)

As to adequacy, Plaintiff represents that he is aware of the duties and risks of serving as class representative and has participated in the litigation. (Galeas Decl. ¶¶ 6-10, 12.)

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 to the Settlement as Exhibit A. 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 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.

Notice will be given in English and Spanish.

2. Method of class notice.

Within 14 calendar days of entry of the Preliminary Approval Order, Defendant shall provide the Administrator with the Class Data for purposes of mailing the Settlement Notices to Class Members. (Settlement ¶ 4.2.) The Administrator shall not be permitted to share any Class Information included in the Class Lists with Plaintiff or Class Counsel absent express approval by Defendant or Defense Counsel. (Ibid.) Within 3 business days after receipt of the Class Data, the Administrator shall mail out the Class Notice to the Class Members identified in the Class Data. (Settlement ¶ 7.4.2.) Before sending the notices, the Administrator shall perform a search based on the National Change of Address Database maintained by the United States Postal Service to update and correct any known or identifiable address changes. (Ibid.)

Any Settlement Notice returned to the Administrator as non-deliverable on or before the Response Deadline shall be re-mailed to the forwarding address affixed thereto within 3 business days of receipt of the returned Settlement Notice by the Administrator. If no forwarding address is provided, the Administrator shall conduct a Class Member Address Search, including searching the National Change of Address database, skip traces, and direct contact by the Administrator with Class Members. The Administrator shall then re-mail the notice to the new Class Member addresses obtained. The Administrator has no obligation to make further attempts to send a Class Notice to Class Members whose Class Notice is returned a second time. (Settlement ¶ 7.4.3.)

Class Members who are sent a re-mailed Settlement Notice shall have their Response Deadline extended by 14 calendar days from the date the Administrator re-mails the Settlement Notice. (Settlement ¶ 7.4.4.)

3. Cost of class notice.

As indicated above, settlement administration costs are estimated not to exceed $10,000. Prior to the time of the final fairness hearing, the 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

California Rules of Court, 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 $173,333.33 (33 1/3% of the Gross Settlement Amount) 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 $30,000) by detailing how they were incurred.

7. Incentive Award

The Settlement Agreement provides for an enhancement award of up to $10,000 to the named Plaintiff. In connection with the final fairness hearing, named Plaintiffs each must submit a declaration attesting to why he or she should be entitled to an enhancement award in the proposed amount. The named Plaintiff must explain why he or she “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 plaintiff, 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 awards at the time of final approval.

Here, Plaintiff has provided only limited, generic statements about the time expended and the risks of class action litigation in general. The Court requests that Plaintiff provide further explanation of why the award is justified.