Judge: Lee W. Tsao, Case: 23NWCV00280, Date: 2024-03-13 Tentative Ruling
Case Number: 23NWCV00280 Hearing Date: March 13, 2024 Dept: C
PETER OUN V. DUNCAN INDUSTRIES, INC.
CASE NO.: 23NWCV00280
HEARING: 3/13/24 @ 10:30 AM
#8
TENTATIVE RULING
Plaintiff Peter Oun’s motion for preliminary approval of class and
representative action settlement is GRANTED subject to the modification
set forth below.
Moving Party to give NOTICE.
The motion is unopposed as of March 12, 2024.
Background
This is a class and
representative action. Plaintiff Peter Oun (Plaintiff) brings this action on
behalf of himself individually and all other aggrieved employees employed by defendant
Duncan Industries, Inc. Plaintiff alleges Defendant violated the following wage-and-hour
Labor Code provisions: (1) failing to pay all wages; (2) failing to provide
meal periods or pay compensation; (3) failing to authorize or permit rest
breaks or pay compensation; (4) willfully failing to provide itemized wage
statements; (5) and failing to pay all wages due upon separation of employment.
Plaintiff also alleges that Defendant violated Business and Professions Code
17200.
Legal
Standard
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, rule 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. (Cal. Rules of Court, rule
3.769(e); Cellphone Termination Fee
Cases, supra, 180 Cal.App.4th at 1118.) “Any party to a settlement agreement may
serve and file a written notice of motion for preliminary approval of the
settlement.” (Cal. Rules of Court, rule
3.769(c).) “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.”
(Cal. Rules of Court, rule 3.769(c).)
“‘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.)
Terms of the Settlement
Pursuant
to the parties’ Joint Stipulation of Settlement (“Settlement Agreement”), the
parties have agreed that the action shall be settled for a total sum of $300,000.00.
(Gaines Decl., ¶ 15, Ex. B, § C(1)(a).) The parties have agreed to a proposed
distribution of the $300,000.00 as follows: (1) attorney’s fees up to $105,000.00;
(2) litigation costs up to $15,000.00; (3) class representative incentive award
up to $10,000.00; (4) settlement administration costs not to exceed $9,000.00;
(5) PAGA penalties in the amount of $20,000.00 (75% to be paid to the Labor and
Workforce Development Agency and 25% to be paid to aggrieved employees/class
members); and (6) the net settlement—i.e., the amount remaining from the gross
settlement after deducting attorney’s fees, litigation costs, settlement
administration costs, the class representative incentive award, and PAGA
penalties—to be distributed to class members. (Gaines Decl., ¶ 15, Ex. B, § C (1).)
Class Certification
Before
the court may approve the settlement, the settlement class must satisfy the
normal prerequisites for class action. (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] a 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. Super. Ct.
(2012) 53 Cal.4th 1004, 1021.)
1.
Ascertainability and
Numerosity
In
determining the existence of an ascertainable and sufficiently numerous class,
courts examine the class definition, the size of the class, and the means of
identifying class members. (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) Class members are ascertainable when they can
be “readily identified without unreasonable expense or time by reference to
official [or business] records.” (Sevidal v. Target Corp. (2010)
189 Cal.App.4th 905, 919.) “The ascertainability requirement is satisfied if
‘the potential class members may be identified without unreasonable expense or
time and given notice of the litigation, and the proposed class definition
offers an objective means of identifying those persons who will be bound by the
results of the litigation . . ..” (Id.
at 919.)
Plaintiff
identifies the class as “all current and former employees of defendant who were
employed in California as a non-exempt employee during the class period.”
(Gaines Decl., ¶ 15, Ex. B, § A (4).) The class period is defined as April 19, 2019,
through August 31, 2023. (Gaines Decl., ¶ 15, Ex. B, § A (5).) Plaintiff
asserts that the class members are identifiable from defendant’s employment and
payroll records. (Motion, pg. 9; Gaines Decl., ¶ 28.) Plaintiff’s counsel
represents that there are approximately 50 class members according to
Defendant’s records. (Gaines Decl., ¶ 28.)
Based
on this, the Court finds Plaintiff has sufficiently established the existence
of an ascertainable and sufficiently numerous class.
2.
Community of Interest
The
community of interest component “embodies 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.” (Sav-On Drug Stores, Inc. v. Super. Ct.
(2004) 34 Cal.4th 319, 326.) “The
‘ultimate question’ for predominance is whether ‘the issues which may be
jointly tried, when compared with those requiring separate adjudication, are so
numerous or substantial that the maintenance of a class action would be
advantageous to the judicial process and to the litigants.’” (Duran
v. U.S. Bank Nat. Assn. (2014) 59 Cal.4th 1, 28.)
Differences
in the amount of individual damages do not defeat class certification so long
as defendant’s liability can be determined by facts common to class members. (Williams
v. Super. Ct. (Allstate Ins. Co.) (2013) Cal.App.4th 1353, 1365.)
a.
Common
Questions
Plaintiff’s
counsel asserts that Defendant violated the same labor code provisions in
connection with each class member’s employment. (Decl. Gaines, ¶ 29.) From the
Court’s review of the complaint, the common question of fact is the denial of
meal and rest periods to non-exempt employees. Based on the foregoing, the
Court finds commonality even though each class member may have incurred
different damages.
b.
Class
Representative
“In
order to be deemed an adequate class representative, the class action proponent
must show it has claims or defenses that are typical of the class, and it can
adequately represent the class.” (J.P. Morgan & Co. v. Super. Ct.
(2003) 113 Cal.App.4th 195, 212.) “Where
there is a conflict that goes to the ‘very subject matter of the litigation,’
it will defeat a party’s claim of class representative status.” (Ibid.)
“Thus, a finding of adequate representation will not be appropriate if
the proposed class representative’s interests are antagonistic to the remainder
of the class.” (Ibid.)
Plaintiff’s
counsel states that class representative Peter Oun is a former non-exempt
employee who worked for defendant during the class period. (Decl. Gaines, ¶ 30.)
He also asserts that the defendant violated the same wage and hour laws when it
came to his employment. (Decl. Gaines, ¶ 30.) Plaintiff’s counsel further
states that Oun has taken an active role in litigation and has no apparent
conflict with the other class members. (Decl. Gaines, ¶ 31.)
Based
on the foregoing, the Court finds Plaintiff has satisfied the community of
interest requirement.
3.
Substantial Benefit
from Certification
Given
there are approximately 50 individuals with potential claims against Defendant
and such claims involve common questions of law, the Court finds there are
substantial benefits from class certification that render proceeding as a class
superior to the alternatives.
As
Plaintiff has satisfied the prerequisites for class certification, the Court certifies
the subject class for the purposes of settlement.
Fairness of Settlement
“‘[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.)
Here,
Plaintiff’s counsel conducted a “thorough” investigation into the facts and law
with respect to this matter, including exchanging informal discovery. (Gaines
Decl., ¶ 11.) This included documents regarding Defendant’s employment and
workplace policies in place during the applicable period, a sample of records
relating to hours worked and wages paid to Defendant’s non-exempt employees
during the relevant time, and statistical data and financial data. (Gaines
Decl., ¶ 11.) In addition, the parties participated in arms-length negotiation
in mediation with Steve Pearl, an experienced wage and hour mediator, on August
11, 2023. (Gaines Decl., ¶ 12.) Further, Plaintiff’s counsel is experienced in
wage and hour class actions. (Gaines Decl., ¶ 5.)
Based
on this, the Court finds that it appears a presumption of fairness of the
settlement exists. The Court notes that, given the percentage of objectors
cannot be determined until the fairness hearing and final approval, the Court’s
finding of a presumption of fairness is provisional.
Apart
from the presumption, the Court finds the settlement otherwise appears to be
fair, adequate, and reasonable. Plaintiff’s counsel provides a detailed basis for
the claims asserted in the complaint. (Gaines Decl., ¶¶ 16 to 23.) In addition,
Plaintiff’s counsel declares that the settlement is fair and reasonable considering
the factual and legal disputes among the parties, the defenses raised by the
defendant as to class certification and the merits of Plaintiff’s claims, the
risk the Court would reduce or eliminate any award of penalties, and the fact
that the defendant has a limited ability to pay any judgment due to financial
constraints. (Gaines Decl., ¶ 24.) Thus, weighing all relevant factors,
including the risks and expenses of pursuing the litigation, the Court finds
the proposed settlement agreement is fair, reasonable, and adequate to all
concerned.
Release
Pursuant
to the parties’ settlement agreement, Plaintiff and participating class members
who do not timely opt out of the settlement agree to release defendant, all
entities affiliated with it, officers, directors, representatives, owners,
partner, subsidiaries, parent companies, joint ventures, clients, joint
employers, predecessors, managers, servants, successors-in-interest, assigns,
current and former employees from any and all claims that were or could have
been alleged in Plaintiff’s complaint during the class period. (Gaines Decl., ¶ 15, Ex. B, § D (1).) Additionally,
PAGA group members/class members agree to release any claims asserted during
the PAGA period under PAGA against Defendant based on the facts alleged in
Plaintiff’s complaint. (Gaines Decl., ¶ 15,
Ex. B, § D (2).) Plaintiff has also agreed to a general release and waiver of
any claim, right, or benefit under Code of Civil Procedure section 1542. (Gaines
Decl., ¶ 15, Ex. B, § D (5).)
The
Court finds the releases with respect to class members and PAGA members are
appropriately limited to only the claims that were or could have been alleged
in Plaintiff’s complaint during the relevant class period and to the PAGA
claims during the relevant PAGA period.
Notice
“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.” (Cal. Rules of Court, rule
3.769(f).) “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.” (Cal. Rules of Court, rule 3.769(f).)
California
Rules of Court, rule 3.766(d) specifically provides the following:
The content of the class notice is subject to
court approval. If class members are to be given the right to request exclusion
from the class, the notice must include the following:
(1)
A
brief explanation of the case, including the basic contentions or denials of
the parties;
(2)
A
statement that the court will exclude the member from the class if the member
so requests by a specific date;
(3)
A
procedure for the member to follow in requesting exclusion from the class;
(4)
A
statement that the judgment, whether favorable or not, will bind all members
who do not request exclusion; and
(5)
A
statement that any member who does not request exclusion may, if the member so
desires, enter an appearance through counsel.
(Cal.
Rules of Court, rule 3.766(d).)
Plaintiff’s
proposed notice contains a brief explanation of the case with basic contentions
or denials of the parties and a summary of the terms of the proposed
settlement. (Gaines Decl., ¶ 15, Ex. B,
§ E (2), Ex. 1, pgs. 1, 2.) The proposed notice provides that individuals have
the right to exclude themselves from the settlement class, provides the
procedure for doing so, and a place to indicate the date the request for
exclusion should be submitted. (Gaines Decl., ¶ 15, Ex. B, § E (2), Ex. 1, pg.
2.) The proposed notice further sets out the procedures for objecting to the
settlement and information about appearing at the final settlement
hearing. (Gaines Decl., ¶ 15, Ex. B, § E
(2), Ex. 1, pgs. 2, 6.) The proposed notice includes statements that class
members who do not request exclusion will have released claims against the
defendant. (Gaines Decl., ¶ 15, Ex. B, § E (2), Ex. 1, pgs. 2, 4.) However, Paragraph
2 of proposed notice refers to overtime wages, and based on Plaintiff’s
complaint, Plaintiff did not allege overtime wages. Therefore, the Court
strikes reference to overtime wages from the proposed notice.
The
Court finds the proposed notice does not sufficiently satisfy California Rules
of Court, rules 3.766(d) and 3.769(f). The
Court cures the defect by striking reference to overtime wages from the
proposed notice.
PAGA Settlement
Labor Code section
2699, subdivision (l)(2) provides “[t]he superior court shall review and
approve any settlement of any civil action filed pursuant to [Labor Code
Private Attorneys General Act of 2004 (“PAGA”)]”. (Lab. Code, § 2699, subd. (l)(2).) Labor Code section 2699, subdivision (l)(2)
requires submission of the proposed settlement to the LWDA at the same time it
is submitted to the court. (Lab. Code, § 2699, subd. (l)(2).) 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
twenty-five percent to the aggrieved employees.
(Lab. Code, § 2699, subd. (i).)
Here, the
settlement agreement indicates that $20,000.00 will be distributed as PAGA
penalties, with $15,000.00 to be paid to the LWDA and $5,000.00 to be paid to
all aggrieved employees/class members. (Gaines Decl., ¶ 15, Ex. B, § C (1)(e).) This
complies with Labor Code section 2699, subdivision (i).
Plaintiff has also
submitted a copy of the proposed settlement to the LWDA in compliance with
Labor Code section 2699, subdivision (l)(2). (Gaines Decl., ¶ 15, Ex. B.)
Class Representative
Plaintiff
seeks to be appointed as the class representative in this action. As Plaintiff’s claims are typical of the
class and Plaintiff has no conflicts and can adequately represent the class,
the Court approves Plaintiff’s request and appoints Plaintiff as class
representative in this action.
Class Counsel
Plaintiff
seeks the appointment of Gaines & Gaines, APLC as class counsel. The Court finds Plaintiff’s counsel is
sufficiently experienced in litigating wage and hour and employment class
actions. (Gaines Decl., ¶ 5, Ex. A.) The
Court thus approves Plaintiff’s request and appoints Gaines & Gaines, APLC
to act as class counsel in this action.
Settlement Administrator
Plaintiff
seeks the appointment of Phoenix Settlement Administrators as the settlement
administrator. Plaintiff has provided a
declaration from Jodey Lawrence from Phoenix Class Action Administration
Solutions setting forth his experience with administering class action
settlements. The Court approves Plaintiff’s request.
Attorney’s Fees and Costs
“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 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.” (Cal. Rules of Court, rule
3.769(b).)
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,
1095-96.) 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 ha[s] 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. L. A.
Cellular Telephone Company (2004) 118 Cal.App.4th 123, 128.)
Plaintiff seeks
preliminary approval of attorney’s fees of up to $105,000.00 and litigation
costs of up to $15,000.00. The Court
preliminarily approves these amounts.
The Court notes
that the actual amount of attorney’s fees and litigation costs awarded to
counsel will be determined at the final approval hearing. Counsel should submit evidence justifying the
requested attorney’s fees and litigation costs with the motion for final
approval of the settlement.
Incentive Award
Plaintiff
seeks preliminary approval of an incentive award up to $10,000.00 for acting as
the class representative in this action.
The Court preliminarily approves this amount.
The
Court will determine the actual amount Plaintiff will be awarded for service as
the class representative in this action at the final approval hearing. Plaintiff should submit a declaration
justifying the requested amount of incentive award with the motion for final
approval of the settlement. (Clark v. American Residential Services LLC
(2009) 175 Cal.App.4th 785, 804-07.)
Settlement Administrator Fees
Per
the proposed order, Plaintiff seeks preliminary approval of settlement
administration fees in an amount not to exceed $5,950.00. Given that the
settlement agreement provides for payment of the settlement administration
costs in an amount not to exceed $9,000.00, the Court preliminarily approves
these costs.
The
Court will determine the actual amount the settlement administrator will be
awarded for costs at the final approval hearing. Plaintiff should submit a declaration from
the settlement administrator justifying the final amount that is requested with
the motion for final approval of the settlement.
Leave
to File First Amended Class and Representative Complaint
Plaintiff
also seeks leave to file a first amended complaint.
The courts have a strong policy of
allowing motions for leave to amend. “If the motion to amend is timely made and
the granting of the motion will not prejudice the opposing party, it is error
to refuse permission to amend….” (Morgan v. Super. Ct. (1959) 172
Cal.App.2d 527.)
Given
that Plaintiff states that the parties have stipulated on this matter and given
that the motion is unopposed, the Court grants leave to file the amended
complaint. However, the amended
complaint is not deemed filed as of this date.
Plaintiff shall separately file and serve the amended complaint within 5
days of this order.