Judge Lon F. Hurwitz, Case 17-00949763 2023-08-18 Tentative Ruling

Judge: Lon F. Hurwitz, Case: 17-00949763, Date: 2023-08-18 Tentative Ruling

Motion for Preliminary Approval of Class Settlement

FACTS/OVERVIEW: This is a putative wage-and-hour class and PAGA action. On October 13, 2017, Plaintiff Joel Hernandez, on behalf of himself and all other similarly situated (“Plaintiff”), filed the original Complaint against Defendants BC Rentals, Inc. dba BC Traffic Specialist, Inc., and Clear Water Services, Inc. (ROA 2). The Complaint asserted six wage-and-hour causes of action. On September 18, 2019, Plaintiff filed the First Amended Complaint, adding a PAGA cause of action. (ROA 94). On January 6, 2023, by stipulation and order, Plaintiff filed the Second Amended Complaint (ROA 220) asserting the following causes of action:

1. Failure to Pay Lawful Wages;

2. Failure to Provide Lawful Meal Periods or Compensation in Lieu Thereof;

3. Failure to Provide Lawful Rest Periods or Compensation in Lieu Thereof;

4. Failure to Timely Pay Wages;

5. Knowing and Intentional Failure to Comply with Itemized Employee Wage Statement Provisions;

6. Violations of the Unfair Competition Law;

7. Labor Code Private Attorneys General Act; and

8. Failure to Reimburse Employee Expenses.

On January 30, 2023, Plaintiff filed the Motion for Preliminary Approval of Class Action Settlement. (ROA 227). At the hearing on March 17, 2023, the Court continued the hearing and ordered counsel to file supplemental papers addressing the Court’s concerns, as set forth below. (ROA 237).

On May 23, 2023, the parties entered a stipulation to request a continuance of the preliminary approval hearing. (ROA 243). The parties noted that Defendants intended to file a Notice of Related Case as to Carson Kotinek v. BC Rentals, San Bernardino Superior Court Case No. CIVSB2132261. In addition, the parties stated their intention to dismiss the San Bernardino Superior Court action and file an amended complaint in the current litigation adding Kotinek as a named plaintiff.

ANALYSIS:

On August 3, 2023, Plaintiff filed a supplemental brief and supporting declaration addressing the following concerns identified by the Court on March 17, 2023 (ROA 248, 254). Counsel has provided a redlined version of the revised Settlement Agreement and a fully executed copy of the First Amended Settlement Agreement. The analysis of the outstanding issues is as follows:

1. No settlement which includes a PAGA claim will be approved absent submission of all pre-filing notice(s) provided to the LWDA. Counsel touts the breadth and depth of their experience in similar cases, yet fails to comply with this basic requirement.

2. The parties have not, as they must, indicated whether there are any pending cases that could be affected by the settlement of claims in this matter. For example, counsel must investigate and provide a declaration(s) explaining the investigation and whether there are any other pending class or representative claims, including PAGA, whether in a court or in the pre-filing LWDA waiting period, that could be affected by this settlement.

RESOLVED. On August 10, 2023, Plaintiff filed the operative Third Amended Complaint (“TAC”) adding Carson Kotinek as a Named Plaintiff and adding a ninth cause of action for Failure to Maintain Required Records. (ROA 259). It is noted that the San Bernardino Superior Court Register of Actions shows that Kotinek v. BC Rentals has only been stayed—not dismissed. The Amended Settlement Agreement states that within 7 days after Kotinek has been notified that the Third Amended Complaint has been filed in this litigation, Kotinek will file a request for dismissal in the San Bernardino action. (Amended Settlement, Sec. V.D.) Counsel states they do not expect any negative treatment of the Kotinek case since it has been incorporated into this litigation. Counsel also states that this settlement does not affect any other pending cases. (Counsel Supp. Decl., ¶ 4).

3. As defined in the Settlement (§ I(D)), Class Member is “[a]ll persons who were employed by BC TRAFFIC and/or CLEAR WATER and who are/were not classified as ‘Exempt’ or primarily employed in executive, professional, or administrative capacities within four (4) years prior to the date this lawsuit was filed until resolution of this lawsuit.” The latter phrasing is not only unacceptably vague, it is inconsistent with definitions elsewhere in which the class period extends through 11-08-22.

RESOLVED. As revised, the Class Member definition provided in Sec. 1.D. of the Amended Settlement is: “All persons who were employed by Defendants in the State of California and who are/were not classified as ‘Exempt’ or primarily employed in executive, professional, or administrative capacities within the Class Period.” (Counsel Supp. Decl., Exh. 3).

4. Provide figures for high and low individual class recoveries. (See Procedural Guideline No. 3.) If the Settlement Administrator is unable to calculate a high and low figure prior to the continued hearing, Plaintiffs must provide a declaration explaining why and a projected date for calculating these figures.

ISSUE: Counsel states that since the proposed settlement administrator has not yet been approved by the Court, class data has not been provided to the settlement administrator. Accordingly, counsel states that after the Court approves the settlement administrator, the class data will be provided and the amounts to be received by Class Members and the Named Plaintiffs will be calculated. (Counsel Supp. Decl., ¶ 5). Counsel states that after expiration of the notice period, the settlement administrator will have the requisite information to determine the high, average, and low payment amounts, and this information will be provided with the motion for final approval. (Id.)

However, while counsel’s statements are accurate, it ignores the fact that it is common for counsel to calculate estimates of the high, low, and average individual recoveries during the preliminary approval process based on information provided by Defendants during the settlement negotiations. Counsel needs to provide a supplemental declaration with these estimates.

5. The class release is overbroad to the extent it includes “all other related civil and statutory penalties.” (Agr. V(A).) This applies to the notice as well.

RESOLVED. (See, Counsel Supp. Decl., ¶ 3; Amended Settlement, Sec. V.A.; Amended Class Notice, Sec. III.C.)

6. The Court will not approve the procedure in which class members “opt-in” to the FLSA portion of the settlement by cashing checks. (Agr. V(A).) This procedure is unnecessary in an opt-out settlement under California class action procedural law. The release here is otherwise sufficient to extend to FLSA claims arising from the facts alleged in the pleading using an opt-out procedure under California law. (See Rangel v. PLS Check Cashers of California, Inc. (9th Cir. 2018) 899 F.3d 1106, 1110-11.) This procedure should also not be printed on the checks or contained in the Notice.

RESOLVED. (See, Counsel Supp. Decl., ¶ 3; Amended Settlement, Sec. V.A.; Amended Class Notice, Sec. III.C.)

7. The PAGA Release should include only those violations for which Plaintiff provided notice to the LWDA and is overbroad otherwise.

RESOLVED. (See, Counsel Supp. Decl., ¶ 3; Amended Settlement, Sec. V.B.)

8. Are there any fee-sharing, referral fee, or like agreements related to this action? If so, explain.

ISSUE. Counsel states that Plaintiff Hernandez is party to a referral fee agreement, and that agreement was included in his retainer agreement with counsel. In addition, counsel states there is a Joint Prosecution Agreement between Plaintiffs Hernandez and Kotinek. Counsel states neither of these agreements affect the amount the Plaintiffs are to receive from the Settlement. (Counsel Supp. Decl., ¶ 6.) However, counsel should provide details about the referral fee agreement—i.e., the percentage or amount of attorney’s fees to be paid to the referring entity. Counsel should also state whether the Joint Prosecution Agreement includes a fee-splitting arrangement with Kotinek’s counsel in the San Bernardino case, Matern Law Group, or any other attorney(s).

9. Does the Notice need to be provided in any language other than English? Explain.

RESOLVED. Counsel attests that the Class Notice will be provided in both English and Spanish. (Counsel Supp. Decl., ¶ 7.)

10. The Notice reflects an incorrect Department number. (§ V.)

RESOLVED.

11. Counsel must provide proof the SAC and Preliminary Approval papers were timely served on the LWDA.

RESOLVED. Counsel has provided copies of the pre-filing notices provided to the LWDA by Hernandez and Kotinek, as well as the notices for the SAC, Settlement Agreement, and Motion for Preliminary Approval. (Counsel Supp. Decl., ROA 254, Exhs. 1, 1A, and 2). It is noted that the Third Amended Complaint was not filed until after counsel submitted his supplemental declaration. Therefore, counsel has not provided proof the Third Amended Complaint was timely served on the LWDA. Proof of service must be provided.

12. Provide an estimate or invoice from the Administrator.

RESOLVED. The proposed settlement administrator, Simpluris, provided an invoice showing estimated fees of $10,773.00. (Counsel Supp. Decl., Exh. 4.)

13. As to the Proposed Order, attach the Notice as Ex. 1. (¶ 6.)

ISSUE: Although Paragraph 6 of the Proposed Order indicates that the Class Notice is attached as Exhibit 1, the exhibit is not actually attached to the Proposed Order filed with the Court.

RULING:

The hearing on the Motion for Preliminary Approval of Class Action Settlement is CONTINUED to October 20, 2023, at 1:30 p.m. in Department CX103.

Although Plaintiffs and Plaintiffs’ counsel have resolved most of the issues identified by the Court in the March 17, 2023 Ruling, the following issues remain outstanding:

PRIOR ISSUE No. 4: Provide figures for high and low individual class recoveries. (See Procedural Guideline No. 3.) If the Settlement Administrator is unable to calculate a high and low figure prior to the continued hearing, Plaintiffs must provide a declaration explaining why and a projected date for calculating these figures.

Although counsel correctly states that the settlement administrator will provide this information at final approval, counsel ignores the fact that it is common for class counsel to calculate estimates of the high, low, and average individual recoveries during the preliminary approval process based on information provided by Defendants during the settlement negotiations. Counsel needs to provide a supplemental declaration with these estimated amounts.

PRIOR ISSUE No. 8: Are there any fee-sharing, referral fee, or like agreements related to this action? If so, explain.

Counsel states that Plaintiff Hernandez is party to a referral fee agreement, and that agreement was included in his retainer agreement with counsel. In addition, counsel states there is a Joint Prosecution Agreement between Plaintiffs Hernandez and Kotinek. Counsel states neither of these agreements affect the amount the Plaintiffs are to receive from the Settlement. (Counsel Supp. Decl., ¶ 6.) However, counsel should provide details about the referral fee agreement—i.e., the percentage or amount of attorney’s fees to be paid to the referring entity. Counsel should also state whether the Joint Prosecution Agreement includes a fee-splitting arrangement with Kotinek’s counsel in the San Bernardino case, Matern Law Group, or any other attorney(s).

PRIOR ISSUE No. 11: Counsel must provide proof the SAC and Preliminary Approval papers were timely served on the LWDA.

Although counsel has provided this information, the Third Amended Complaint was filed after counsel submitted his supplemental declaration. Therefore, counsel now needs to provide proof the Third Amended Complaint was timely served on the LWDA.

PRIOR ISSUE No. 13: As to the Proposed Order, attach the Notice as Ex. 1. (¶ 6.)

Although Paragraph 6 of the Proposed Order indicates that the Class Notice is attached as Exhibit 1, the exhibit is not actually attached to the Proposed Order filed with the Court. Counsel must provide the Court with a copy of the Proposed Order with the amended Class Notice attached as Exhibit 1.

Counsel is ORDERED to file supplemental papers addressing the Court’s concerns no later than fourteen (14) calendar days prior to the continued hearing date. Counsel is ORDERED to provide red-lined versions of all revised papers, and provide the Court with an explanation of how the pending issues were resolved, with precise citation to any corrections or revisions. A supplemental declaration or brief that simply asserts the issues have been resolved, or does not clearly state a specific concern has been resolved, is insufficient and will result in a continuance.

Plaintiff to give notice of this Court’s ruling, including to the LWDA, and file proof of service.