Judge: Lon F. Hurwitz, Case: 20-01166961, Date: 2023-08-18 Tentative Ruling
1. Motion for Final Approval
2. Order to Show Cause re: Monetary Sanctions
Motion for Final Approval of Class Action and PAGA Action Settlement
Moving Party: Plaintiff Antonio Hernandez, on behalf of himself and all other aggrieved
Responding Party: None
SERVICE: August 2, 2023, by electronic transmission
RELIEF SOUGHT: Plaintiff seeks an Order for: (1) final certification of Settlement Class; (2) final approval of Plaintiff as Class Representative; (3) final approval of Class Counsel; (4) final approval of Settlement Agreement; (5) final approval of Gross Settlement Amount; (6) final approval of disbursements; and (7) entry of Final Judgment.
UPCOMING EVENTS: None
FACTS/OVERVIEW: This is a putative wage-and-hour class and PAGA action. On October 23, 2020, Plaintiff Antonio Hernandez, on behalf of himself and all other aggrieved (“Plaintiff”), filed the original Complaint against Defendants SC Commercial, LLC dba SC Fuels, and Southern Counties Oil Co. (collectively, “Defendants”). (ROA 2).
On October 27, 2021, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants. (ROA 46). The FAC asserts causes of action for:
1. Failure to Pay Overtime Wages;
2. Failure to Pay Minimum Wages;
3. Failure to Provide Meal Periods;
4. Failure to Provide Rest Periods;
5. Waiting Time Penalties;
6. Wage Statement Violations;
7. Violation of Labor Code § 2802;
8. Unfair Competition;
9. PAGA Penalties;
10. Violation of the Fair Credit Reporting Act (FCRA);
11. Violation of the California Investigative Consumer Reporting Agencies Act (ICRAA)
Plaintiff was a non-exempt employee who worked as a forklift operator for Defendants. The FAC defines the Class as: “All current and former non-exempt employees of Defendants within the State of California at any time commencing during the Class Period of January 28, 2018 through October 1, 2021.” [FAC, ¶ 38.]
On March 3, 2023, at the third hearing on the matter, the Motion for Preliminary Approval was granted. (ROA 98). The Order Granting Preliminary Approval was filed on April 25, 2023. (ROA 123). Papers related to the final approval were due no later than May 19, 2023, but they were untimely filed on May 22, 2023. (ROA 123).
At the hearing on June 2, 2023, the Court noted the untimely filing was the second time in the approval process that counsel had failed to meet Court-ordered deadlines. (ROA 138). Even more concerning for the Court was that the administrator attested that the deadline for all requests for exclusion, objections, and disputes would not occur until June 26, 2023, as notices were not mailed until May 12, 2023. The Court then found that although the motions and declarations relied on a woefully deficient set of facts in seeking final approval, a continuance was not voluntarily sought, and Plaintiff’s counsel expected the Court to grant final approval on that record. As a result, the Court stated, “This is not only patently absurd, it is a frivolous request and a frivolous motion.” (Ibid.) The Court then continued the hearing and ordered counsel to “file a complete set of new papers no later than 14 calendar days prior to the continued hearing.” (Ibid.) In addition, the Court set an OSC re monetary sanctions against Plaintiff’s counsel pursuant to CCP § 117.5. (Ibid.)
On August 2, 2023, Plaintiff filed a new Motion for Final Approval of Class Action and Representative Action Settlement. (ROA 142). Plaintiff also filed supporting declarations from counsel (ROA 143, 144), and a supplemental declaration from the settlement administrator. (ROA 146).
TERMS OF PRELIMINARILY APPROVED SETTLEMENT:
The Settlement Agreement provided at preliminary approval is found attached to the Declaration of Vedang J. Patel, ROA 84, Exhibit 2.
Proposed Settlement Class Definition: “All current and former hourly paid, non-exempt employees who are or were employed by defendants SC Commercial, LLC, d.b.a. SC Fuels and Southern Counties Oil Co. (collectively, ‘Defendants’) in the State of California from January 28, 2019 through October 1, 2021 (‘Class Period’) in California (‘Class Members’).”
Proposed FCRA/ICRAA Settlement Class Definition: “All current and former employees who are or were employed by Defendants from January 28, 2018 through October 1, 2021 (‘FCRA/ICRAA Class Period’) in California (‘FCRA/ICRAA Class Members’).”
Proposed Aggrieved Employee Definition: “All Settlement Class Members employed by Defendants from July 28, 2019 up to and including October 1, 2021.”
Class Size: 854 Class Members (estimated), and 854 FCRA/ICRAA Class Members (estimated). [Patel Decl. (ROA 84), ¶ 7.] Workweeks are estimated at 56,050 during the Class Period. [Prelim. Settlement Agreement, ¶ 18.] No estimate given for estimated number of Aggrieved Employees.
Gross Settlement Amount (“GSA”): $450,400.00, plus employer taxes which will be paid by Defendants separate and apart from the GSA. [Prelim. Settlement Agmt., ¶ 1.O.]
$ 157,640.00 Attorneys’ fees (not to exceed 35% of GSA) [Id., ¶ 13.]
$ 25,000.00 Litigation costs (not to exceed) [Id., ¶ 13.]
$ 7,500.00 Enhancement (not to exceed) [Id., ¶ 14.]
$ 8,950.00 Administration costs [Id., ¶ 8.]
$ 25,000.00 PAGA penalties (75% or $18,750.00 to LWDA; 25% or $6,250.00 to Participating Class Members) [Id., ¶ 16.]
$ 20,400.00 FCRA/ICRAA settlement allocation (designated as penalties) [Id., ¶ 11.A.]
$ 205,910.00 Net Settlement Amount (“NSA”)
There is an escalator clause that provides that if the number of Workweeks increases by more than 10%, or 5,605 Workweeks, then the GSA will be increased “proportionally by the Workweek Value.” The Workweek Value is the GSA divided by 56,050 and equals $8.03. The amount of the GSA increase is calculated by determining the difference between the actual number of Workweeks and 56,050 Workweeks, and multiplying that number by $8.03. [Id., ¶ 18.]
Payments to Class:
How Calculated? Individual Settlement Share - pro rata (minus the FCRA/ICRAA allocation) based on number of Workweeks.
FCRA/ICRAA Settlement Share – equally between FCRA/ICRAA Settlement Class Members.
Individual PAGA Payments – pro rata to Aggrieved Employees based on number of Workweeks.[Prelim. Settlement Agmt., ¶ 11.]
Reversion? No.
Claims Made? No.
Taxation? Individual Settlement Shares – 20% wages, 80% penalties and interest.
FCRA/ICRAA Settlement Shares –100% penalties. [Id., ¶ 15.A.]
No information provided about PAGA Payments.
Uncashed Checks? Within 7 days after expiration of 180-day period, residue from uncashed Checks, plus accrued interest, will be transmitted to cy pres recipient, Legal Aid at Work, for use in Orange County. [Id., ¶ 12.A.]
Average Pymt: $243.68 per Class Member; $23.88 per FCRA/ICRAA Class Member. [Counsel Decl. (ROA 84), ¶ 7.]
ANALYSIS OF SETTLEMENT AND FINAL APPROVAL MOTION: (ROA 142, 143, 144)
1. Release Language
There are several parts to the Release in the Agreement. Generally, it is divided into two parts—the Release by all Participating Class Members, and a “General Release.”
a. The Release by Participating Class Members is comprised of “global” release language and specific release language for the three types of claims—FCRA/ICRAA claims, Class claims, and PAGA claims. It provides as follows:
“Upon the Effective Final Settlement Date and payment by Defendants to the Settlement Administrator of the Gross Settlement Amount and Employers’ Taxes necessary to effectuate the Settlement, Plaintiff and all Participating Class Members waive, release, discharge and promise never to assert in any forum against the Released Parties all claims against the Released Parties asserted in the Operative Complaint, in the letter submitted to the LWDA dated July 28, 2020, claims raised at medication including FCRA/ICRAA violations, or any and all claims that could be asserted against the Released Parties based on the factual allegations in the Operative Complaint and letter submitted to the LWDA dated July 28, 2020.” [Settlement (ROA 144), ¶ 7.A.]
“For FCRA/ICRAA Settlement Class Members employed during the FCRA/ICRAA Class Period, the release includes, for the duration of the FCRA/ICRAA Class Period, all claims that could have been asserted in the Operative Complaint pursuant to the Fair Credit Reporting Act (…) and the Investigative Consumer Reporting Agencies Act (…) (the ‘Released Claims’).” [Id., ¶ 7.A.1.]
“For Settlement Class Members employed during the Class Period, the release includes, for the duration of the Class Period, all claims asserted in the Operative Complaint, or that could have been asserted in the Operative Complaint based on the facts alleged there, including, without limitation, (1) failure to pay overtime and double time, including failure to pay overtime and double time at the proper rate, (2) failure to pay all hours worked at the minimum wage, including reporting time pay, time in connection with split shifts, and on-call time, (3) failure to provide meal breaks, or compensation in lieu thereof, (4) failure to provide rest breaks, or compensation in lieu thereof, (5) failure to comply with itemized employee wage statement, (6) failure to pay all wages due at the time of termination of employment, (7) failure to reimburse employees for expenses incurred, (8) failure to reimburse for deposits made, (9) failure to pay timely wages; and (10) failure to comply with FCRA/ICRAA.” [Id., ¶ 7.A.2.]
“For Aggrieved Employees employed during the PAGA Period, the release includes, for the duration of the PAGA Period, all claims asserted in the letter submitted to the LWDA dated July 28, 2020, or any and all claims that could be asserted against the Released Parties based on the factual allegations therein and/or in the Operative Complaint, including, without limitation: (1) failure to pay overtime and double time, including failure to pay overtime and double time at the proper rate, (2) failure to pay all hours worked, including on call pay, (3) failure to pay for reporting time pay, (4) failure to pay split shift premiums, (5) failure to provide meal breaks, or compensation in lieu thereof, (6) failure to provide rest breaks, or compensation in lieu thereof, (7) failure to provide cooldown rest periods, (8) failure to keep adequate or accurate time and payroll records, (9) failure to provide payroll and personnel records upon request, (10) failure to comply with itemized wage statement, (11) failure to pay all wages due at the time of termination of employment, (12) failure to comply with notice requirements of the Wage Theft Protection Act, (13) failure to reimburse employees for expenses incurred, (14) failure to reimburse for deposits made, (15) failure to provide sick leave and associated pay in compliance with the law, and (16) failure to pay timely wages. The release also includes a release from the State of California (to the extent Plaintiff is permitted to provide such a release for the State of California for the PAGA period) of all PAGA claims alleged in the Operative Complaint which occurred during the PAGA Period.” [Id., ¶ 7.A.3.]
b. The General Release pertains to the Named Plaintiff, and provides in relevant part:
“Upon the Effective Final Settlement Date, and payment by Defendants to the Settlement Administrator of the Gross Settlement Amount and Employers’ Taxes necessary to effectuate the Settlement, in addition to the Released Claims, Plaintiff makes the additional following General Release: Plaintiff, for himself and his respective spouse, heirs, successors and assigns, fully and finally releases the Released Parties from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts, penalties and expenses of any nature and description whatsoever, known or unknown, suspected or unsuspected, asserted or that might have been asserted, whether in tort, contract, equity, or otherwise, arising out of Plaintiff’s respective employment with Defendants, payment of wages during that employment and the cessation of that employment and/or violation of any federal, state or local statute, rule, ordinance or regulation. Such claims include but are not limited to all claims for unpaid wages; failing to provide meal and/or rest breaks and payments for violations; wage statements; failure to pay all wages due to non-exempt employees; unfair business practices; penalties, including, but not limited to, wage statement penalties, minimum-wage penalties, and waiting-time penalties; and attorneys’ fees and costs. Plaintiff’s Released Claims also include, but are not limited to, all claims arising under the Labor Code (…); all claims arising under: the Wage Orders of the California Industrial Welfare Commission; the California Private Attorneys General Act of 2004 (PAGA) that may be released by way of this Agreement; California Business and Professions Code §§ 17200, et seq.; California Civil Code, to include §§ 3287, 3336 and 3294; 12 CCR § 11040; 8 CCR § 11060; California Code of Civil Procedure § 1021.5; California common law of contract; 29 CFR § 778.223; 29 CFR § 778.315; federal common law and the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001, et seq. (ERISA) § 778.315 (…); federal common law; the Fair Credit Reporting Act (…); and the Investigative Consumer Reporting Agencies Act (…). Plaintiff’s Released Claims also include, but are not limited to, all claims for lost wages and benefits, emotional distress, retaliation, punitive damages, and attorneys’ fees and costs arising under federal, state, or local laws for discrimination, harassment, retaliation, and wrongful termination . . . ; and the law of contract and tort. This release excludes the release of claims not permitted by law. [¶] Plaintiff’s released claims include, all claims released in the General Release, whether known or unknown. Even if Plaintiff discover [sic] facts in addition to or different from those that he now knows or believes to be true with respect to the subject matter of Plaintiff’s General Release, those claims will remain released and forever barred. Thus, as of the Effective Final Settlement Date, Plaintiff shall be deemed to have, expressly waived and relinquished, to the fullest extent permitted by law, the provisions, rights and benefits of Section 1542 of the California Civil Code, or any other similar provision under federal or state law, . . . . The foregoing release is intended to be as broad as the Parties can possibly create and includes but is not limited to any liability whatsoever:
- which arises directly or indirectly out of or is in any manner related to Plaintiff’s employment by Defendants;
- which arises directly or indirectly out of or is in any manner related to the causes of action or injuries or damages alleged in the Action or Operative Complaint; or
- which arises directly or indirectly out of or is in any manner related to any of the matter, occurrences or transactions which were raised or could have been raised in the Action or Operative Complaint, including without limitation, any and all claims for compensatory, economic, non-economic, punitive, or other damages.
To the extent permitted by law, if any claim is not subject to release, Plaintiff waives any right or ability to be a class, representative or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a claim in which Defendants or any of the other Released Parties identified in this Settlement Agreement is a party.” [Id., ¶ 7.B.]
2. Results of Class Notification
Actual Class Size: 784 Class Members. [Admin. Supp. Decl. (ROA 146), ¶ 3.] 715 Aggrieved Employees. [Id., ¶ 14.]
Mailing Success: On May 12, 2023, Administrator mailed Notice via U.S. Mail to 784 Class Members. As of August 2, 2023, 19 Notices were returned without a forwarding address. Administrator conducted a skip trace on all 19 Notices, and obtained updated address for all of them. The Notice was “promptly re-mailed” via U.S. Mail. [Id., ¶ 6.]
Opt Outs: As of August 2, 2023, Administrator has received one (1) timely and valid Request for Exclusion from Guadalupe Acevedo. One (1) late Request for Exclusion was received, but the parties advised that the late request should not be accepted, and the Administrator contacted the Class Member to advise of same. Deadline for opt out requests was June 26, 2023. [Id., ¶ 7.]
Objections: As of August 2, 2023, Administrator had not received any objections. [Id., ¶ 8.]
Disputes: As of August 2, 2023, Administrator had not received any Workweek disputes. [Id., ¶ 9.]
783 of 784 Class Members have not opted out, and therefore are deemed Settlement Class Members, which is 99.87% of the Class. [Id., ¶ 10.]
Workweeks: Settlement Class Members have worked a total of 61,059 Workweeks. Each Workweek is valued at approximately $3.57. [Id., ¶ 10.] Escalator clause was not triggered. [Id., ¶ 11.]
Aggrieved Employees worked a total of 48,131 Workweeks. [Id., ¶ 14.]
Net Settlement Amount: $218,075.90 ($450,500.00 GSA minus $157,640.00 attorneys’ fees, $12,834.10 litigation costs, $7,500.00 enhancement, $25,000.00 PAGA penalties, and $8,950.00 Administration costs. [Id. at ¶ 12.] Parties will allocate $20,000.00 (or $20,400.00) of NSA toward FCRA/ICRAA Settlement Payment as penalties. [Id., ¶ 11.A.]
Average Payment: $278.51 average Individual Settlement Share (highest amount approx. $446.45, lowest amount approx. $3.57). [Id., ¶ 13.]
$8.74 average Individual PAGA Payment. Highest amount approx. $12.99. [Id., ¶ 14.]
ISSUE: The results of the Class Notification are excellent. This supports a finding that the Settlement is reasonable, fair, and adequate. However, there is a discrepancy in the amount of the FCRA/ICRAA Settlement Payment. Counsel needs to clarify whether the FCRA/ICRAA Settlement Amount is $20,000.00 or $20,400.00. There are references to both numbers in the First Amended Settlement Agreement, while Counsel’s declaration and the Proposed Order only refer to the $20,000.00 amount. This MUST be corrected throughout all documents. Counsel was previously advised of this discrepancy during preliminary approval.
3. Notice of Judgment
Settlement Administrator will post notice of Final Judgment on its website. [Settlement, ¶ 19.]
ISSUE: Proposed Order must state that Final Judgment will be posted on Administrator’s website and for how long it will be posted.
4. Final Accounting
ISSUE: Plaintiff has not proposed a date for the Final Accounting. This date needs to be included in the Proposed Order.
Should the Settlement be approved, the Court will hold a status conference for a final accounting. The final accounting should occur after the deadline for Class Members to cash their settlement checks. Counsel shall submit a final report at least 14 calendar days prior to that conference regarding the status of the settlement administration. The final report must include all information necessary for the Court to determine the total amount actually paid to Class Members and any amount tendered to the cy pres recipient.
5. Service on LWDA
Documents submitted in support of final approval of the Settlement were submitted to LWDA on or about August 2, 2023. [Patel Decl., ¶ 61, Exh. 4.]
6. Fee-Splitting Arrangements
At preliminary approval, Class Counsel, Bibiyan Law Group, P.C., attested that it had entered into a fee-splitting arrangement with Jacob & Meyers, P.C., in which 85% of the attorneys’ fees would be allocated to Bibiyan Law Group, P.C., and 15% to Jacob & Meyers, P.C. (ROA 84, ¶ 14.)
ISSUE: Class Counsel has not included this information in either of the supporting declarations filed with motion for final approval.
DISBURSEMENTS:
Assuming the parties can show the settlement is fair, reasonable, and adequate, below is an analysis of the requested disbursements.
1. Representative Enhancement
Named Plaintiff seeks a $7,500.00 enhancement. Class Counsel generally attests that the Named Plaintiff risked retaliation and decided to forego a larger recovery in order to benefit the Class. In addition, Class Counsel generally attests that the Named Plaintiff provided first-hand knowledge and documentation, provided “key details,” and answered “key questions” throughout the litigation and at mediation. [Patel Decl., ¶ 38.]
ISSUE: Amount of requested enhancement exceeds usual amount of $5,000.00. Named Plaintiff has not provided a declaration attesting to the time spent on the litigation, and Class Counsel’s declaration fails to provide a detailed account of the time spent by Named Plaintiff. Enhancement should be reduced to $5,000.00.
2. Attorneys’ Fees
Class Counsel, Bibiyan Law Group, P.C., seeks attorneys’ fees in the amount of $157,640.00, which is 35% of the GSA. [Patel Decl., ¶¶ 42, 47.] Class Counsel is an experienced employment class action and PAGA action law firm. [Declaration of David D. Bibiyan (“Bibiyan Decl.”) (ROA 143), ¶¶2, 8-9.]
Through August 2, 2023, Class Counsel expended a total of 396.2 hours in litigating this action. This amounts to a total lodestar of $286,028.00. [Id., ¶¶ 12, 13.] There is no multiplier. [Id., ¶ 17.]
A summary of the hours expended is as follows:
Attorney Hours Hourly Rate Total
David D. Bibiyan, Partner 133.2 $950 $126,540.00
Diego Aviles 154.8 $750 $116,100.00
Vedang J. Patel 39.7 $500 $ 19,850.00
Iona Levin 15.6 $400 $ 6,240.00
Sarah Ehsani-Nia 38.4 $400 $ 15,360.00
Paralegals 8.5 $175 $ 1,487.50
Legal Assistants 6.0 $75 $ 450.00
TOTAL $286,027.50
ISSUE: The lodestar amount of $286,027.50 exceeds the amount of $157,640.00 which was approved during preliminary approval. In addition, one counsel declaration includes the “new” lodestar amount, and the other counsel declaration includes the amount approved during preliminary approval. This discrepancy of $128,388.00 is not explained by counsel, and counsel has not provided any billing records to support this 80% increase in attorneys’ fees.
Although 35% of GSA is higher than usual 33.33%, the Court did apparently approve this percentage during preliminary approval.
To the extent there is a fee-splitting arrangement, Class Counsel has not provided any information about fees incurred by Jacob & Meyers, P.C.
As to an eventual attorneys’ fees award, it should not exceed 30%, subject to further reduction depending upon the need for future continuances, the completeness of forthcoming papers, and the issuance of any monetary sanctions. It is noted that there is currently an OSC re monetary sanctions pending because of counsel’s prior filing of a final approval motion only days after the class notices were mailed. (ROA 138).
3. Litigation Costs
Class Counsel incurred $12,834.10 in litigation costs. [Bibiyan Decl., ¶ 18; Patel Decl., ¶ 47.] A breakdown of the costs is provided in counsel’s declaration. [See, Bibiyan Decl., ¶ 18.] Primarily, the costs incurred are for mediation, expert data consulting fees, filing and messenger fees, and CourtCall fees. Less than $300 went for postage, service of process, and copying charges. [Ibid.]
This amount is considerably less than the $25,000.00 approved at preliminary approval. The Court will award the reduced amount of $12,834.10 for litigation costs.
4. Administration Costs
Administrator attests that its costs associated with this litigation are $8,950.00, and that this amount includes all costs incurred to date as well as estimated costs to complete administration of the settlement. [Admin. Supp. Decl., ¶ 16.]
ISSUE: Settlement Administrator must provide updated invoice of total costs for services and fees before final approval of Settlement.
RE PROPOSED ORDER: (ROA 140)
1. The Proposed Order is to be revised consistent with the issues addressed above.
2. The Proposed Order (ROA 140) and Proposed Judgment (ROA 147) should be combined into one document entitled “[Proposed] Order and Judgment Granting Final Approval of Class Action and Representative Action Settlement.”
3. Proposed Order must identify the location of the Preliminary Approval Order and operative Settlement Agreement by ROA numbers.
4. In first line of Proposed Order, “final fairness hearing” should be changed to “final approval hearing.”
5. A definition for Aggrieved Employees (PAGA Members) should be included.
6. Paragraph 9 must be corrected to read: “One (1) Class Member ….” It should also include the number of disputes.
7. The Proposed Order must include a provision specifying how notice of the judgment will be provided to the Class, and for how long. (CRC Rule 3.771(b).) The Court favors 180 days.
8. Paragraph 16 should be changed to state that the declarations and other papers for the Final Accounting must be filed at least 14 calendar days before the hearing.
9. Paragraph 17 should also reference CCP § 664.6.
RULING:
The hearing on the Motion for Final Approval is CONTINUED to October 20, 2023, at 1:30 p.m. in Department CX103 so that counsel may address the issues identified above.
Counsel must file supplemental papers addressing the Court’s concerns no later than fourteen (14) calendar days prior to the continued hearing date. Counsel must also provide red-lined versions of all revised papers, and an explanation of how the pending issues were resolved.
Clerk to give Notice.
OSC re Monetary Sanctions
FACTS/OVERVIEW: This is a putative wage-and-hour class and PAGA action. The original Complaint was filed on October 23, 2020. (ROA 2). On October 27, 2021, the operative First Amended Complaint (“FAC”) was filed, alleging 11 causes of action for wage-and-hour claims, a PAGA claim, and claims for violations of the Fair Credit Reporting Act and the Investigative Consumer Reporting Agencies Act. (ROA 46).
On May 26, 2022, at the first hearing for preliminary approval of the class/PAGA action settlement, the Court ordered Plaintiff to address several issues, and continued the hearing to September 2, 2022. (ROA 77). Counsel was ordered to submit supplemental papers on or before August 22, 2022. However, the supplemental papers were not filed until the afternoon of August 25, 2022. As a result, at the September 2, 2022 hearing, the Court continued the hearing to December 23, 2022. (ROA 89). Subsequently, on its own motion, the Court continued the hearing to March 3, 2023. (ROA 94).
On March 3, 2023, at the third hearing for preliminary approval, the Court granted the motion for preliminary approval (ROA 98), subject to the following issues:
• Counsel claimed that a Proposed Order had been filed, but it could not be located by the Court. In addition, it was noted counsel’s declaration incorrectly identified the ROA of the operative amended settlement agreement. The Court ordered counsel to ensure the Proposed Order was correct before submission. Since it was unknown what date had been selected for the Final Approval hearing, the Court set the hearing for June 2, 2023.
• For final approval as to the proposed enhancement, counsel had to state the amount the Plaintiff was expected to recover as a class member, as well as other factors pertinent to the enhancement request. Counsel was also ordered to state the actual high, low, and average payments for class members.
• For final approval as to the request for attorneys’ fees and litigation costs, counsel was ordered to present evidence as to the services provided, including time records, so the Court could evaluate the lodestar. Counsel was also ordered to state how time records were kept, and to provide supporting documentation for all claimed costs.
• Counsel was ordered to file all papers for the Final Approval hearing no later than 14 calendar days before the hearing.
The Order Granting Preliminary Approval was signed and filed on April 25, 2023. (ROA 123).
At the Final Approval hearing on June 2, 2023, the Court first noted that for the second time in the approval process, counsel had failed to meet Court-ordered deadlines. (ROA 138). The motion and supporting papers were due no later than May 19, 2023, but they were not filed until May 22, 2023.
Notably, the Court then stated it was more concerned about the “woefully deficient set of facts” relied upon by counsel in seeking final approval. The Court noted that the settlement administrator had attested that the Class Notices were not mailed until May 12, 2023, and as a result, the deadline for opt outs, objections, and disputes would not occur until June 26, 2023. Of course, at the time the motion and supporting papers were filed, only 10 days had elapsed since the Notices had been mailed. The Court noted that, nevertheless, counsel did not seek a continuance of the hearing and “obviously expects the Court to grant final approval on this record.” The Court went on to state,” This is not only patently absurd, it is a frivolous request and a frivolous motion.” (ROA 138). The Court then continued the hearing to August 18, 2023, and counsel was ordered to file “a complete set of new papers” no later than 14 calendar days prior to the continued hearing. (Ibid.)
Finally, the Court stated that it was setting an OSC re monetary sanctions since this was the second time untimely papers had been filed in the approval process; and counsel had failed to follow the Court’s orders regarding timeliness, procedures such as redlining, and requesting a continuance if a motion was not ready to proceed. (The Court noted it should have been obvious to counsel that final approval could not be granted on the documents provided.)
On August 2, 2023, one of the attorneys acting as Class Counsel, Vedang J. Patel, filed a declaration in response to the OSC. (ROA 145).
ANALYSIS:
Statement of the Law
Code of Civil Procedure section 177.5 provides in relevant part:
A judicial officer shall have the power to impose reasonable money sanctions, not to exceed fifteen hundred dollars ($1,500), notwithstanding any other provision of law, payable to the court, for any violation of a lawful court order by a person, done without good cause or substantial justification. Sanctions pursuant to this section shall not be imposed except … on the court’s own motion, after notice and opportunity to be heard. An order imposing sanctions shall be in writing and shall recite in detail the conduct or circumstances justifying the order.
Merits
The declarant, Mr. Patel, is a senior attorney at Bibiyan Law Group, P.C.—the firm serving as Class Counsel in this litigation. [Declaration of Vedang J. Patel (“Patel Decl.”) (ROA 145), ¶ 1.] Patel attests he is “lead counsel” on this matter, and has led the approval process on several class and PAGA action settlements. Patel notes, however, that this is the first time he has handled a final approval before this Court. [Id., ¶ 3.]
Regarding the deficiencies in the final approval motion and papers, Patel attests to the following:
• For the March 3, 2023 hearing on the motion for preliminary approval, both Plaintiff’s and Defendants’ counsel submitted on the tentative ruling, which indicated that the final approval hearing was set for June 2, 2023. [Id., ¶ 5.]
• The Court signed the Order Granting Preliminary Approval on April 25, 2023. [Ibid.]
• On April 26, 2023, Patel emailed the Order to the settlement administrator to being the Class Notice process. [Id., ¶ 6.]
• On May 9, 2023, the settlement administrator emailed the parties and indicated the mailing of the Class Notices would be ready to proceed on May 12, 2023. [Ibid.]
• Patel was out of the country on a planned vacation from May 7, 2023, through May 13, 2023. [Id., ¶ 8.]
• On May 12, 2023, the settlement administrator advised Plaintiff’s and Defendants’ counsel that the response deadline would fall after the date of
the final approval hearing. As a result, the settlement administrator inquired if the parties had obtained a new final approval hearing date. [Id., ¶ 7.]
• Another attorney at Patel’s firm purportedly informed the settlement administrator that the mailing should take place. [Ibid.]
• Since Patel was out of the country, he was unable to respond in time to direct “the other, less experienced attorney” to halt the mailing of the Class Notice and stipulate to a new final approval hearing date instead. [Id., ¶ 8.]
• The mailing of the Class Notices proceeded on May 12, 2023. The Notices stated that the final approval hearing was on June 2, 2023, and that Class Members could appear at the hearing if they wished. [Id., ¶ 9.]
• Pursuant to the Court’s Order Granting Preliminary Approval, dated April 25, 2023, the final approval motion and supporting papers were to be filed by May 19, 2023. [Id., ¶ 10.]
• After Patel returned from vacation, he realized that the Class Notices had been mailed and the response deadline would fall after the final approval hearing. [Ibid.] He also realized that Class Members had been told the final approval hearing would take place on June 2, 2023, and could appear at the hearing to object to the settlement. [Id., ¶ 11.]
• Patel believed that in determining whether or not to continue the final approval hearing, the Court might consider that Class Members had been told they could appear at the hearing to state their objections to the settlement. [Id., ¶ 12.] Patel states that based on his experience, some courts will continue the final approval hearing in this situation, while others will allow the hearing to go forward to determine if any class members will appear. [Ibid.]
• Patel attests the did not know the preference of this Court in this situation.
• Patel made the “more risk averse decision” in choosing to go ahead and file the final approval motion based on the June 2, 2023 hearing date. [Id., ¶ 14.] Patel further attests: “I could not take the risk that the Court declined to continue the hearing if stipulated to by the Parties, and no motion was filed ahead of the hearing.” [Ibid.] He believed the Court would probably continue the hearing on its own motion, but if it did not, at least the final approval motion was on file and in compliance with the Court’s order. [Ibid.]
As for the untimeliness of the motion and supporting papers, Patel attests as follows:
• On May 15, 2023, he emailed the settlement administrator, advised that the final approval motion was due, and stated that he required the administrator’s declaration by May 19, 2023—the deadline to file. [Patel Decl., ¶ 19.]
• Patel was informed the administrator would begin preparing the declaration, with the understanding that Patel would provide information for the final calculations regarding the costs incurred for final approval. Patel provided the requisite information. [Ibid.] However, Patel does not state when he provided the information.
• The settlement administrator was not able to provide the declaration until late afternoon on
May 19, 2023. But Patel was not able to input all the calculations into the final approval motion and papers by the end of the day for filing. [Ibid.]
• Patel “promptly” filed the papers the next court day, which was May 22, 2023. [Id., ¶ 21.]
Patel has not provided substantial justification for the failure to timely file the final approval papers. As noted above, counsel had already failed to timely file papers during the preliminary approval process. Therefore, one would think that counsel would be exceedingly diligent in obtaining the information necessary to prepare and file the final approval papers in a timely fashion. However, Patel waited until May 15, 2023—four days before the filing deadline—to contact the settlement administrator about submitting his declaration. Although it is understood that Patel was out of the office the week of May 8, 2023, he should have (and could have) delegated this responsibility to one of the four other attorneys handling this litigation during his absence. (See, Declaration of David D. Bibiyan (ROA 143), filed in support of Motion for Final Approval [in addition to Patel, four other attorneys incurred fees in handling this matter]). Therefore, there is no excuse for the untimely filing.
Regarding the substantive deficiency of the final approval motion, the problem seems to be two-fold. First, counsel did not timely file a proposed Order indicating the proposed date for the final approval hearing. As a result, the Court sua sponte set the date. But, although preliminary approval was not granted until the March 3, 2023 hearing, the Court set the hearing for final approval for June 2, 2023—only 90 days later. By the time the Order Granting Preliminary Approval was entered on April 25, 2023, only 38 days remained before the scheduled final approval hearing.
Nevertheless, the ultimate responsibility lies with counsel. It is noted that counsel submitted on the March 3, 2023 tentative ruling. Counsel should have noted the extremely tight timeline for entry of the Order Granting Preliminary Approval, submission of the class list to the settlement administrator, and preparation and mailing of the Class Notices. It should have been clear to counsel that a June 2, 2023 final approval hearing date would leave little to no time for the expiration of the response deadline. Therefore, counsel either: (1) should not have submitted on the tentative and requested a different final approval hearing date at the time of the March 3, 2023 hearing; or, (2) based on the settlement administrator’s advisement, requested a continuance at the time Class Notices were mailed. If counsel had taken either of these steps, the Class Notices could have been revised with the new hearing date before they were mailed to the Class Members, thus avoiding any concern that Class Members would appear for a June 2, 2023 hearing that would likely be continued.
Patel’s absence from the office the week of May 8, 2023, is not an excuse. As found in the declaration in support of the final approval motion, there are four other attorneys in Patel’s office that billed fees on this litigation. (See, Bibiyan Decl. (ROA 143), ¶¶ 12, 13.) All but one billed more hours than Patel. (Ibid.) Therefore, as a preliminary matter, Patel’s claim of being “lead counsel” on this matter is questionable. That being said, there were clearly other attorneys familiar with this matter who could have handled these issues in Patel’s absence. Patel’s claim that an unnamed “less experienced attorney” is to blame for allowing the mailing of the Class Notices to move forward despite the clear timing issue must be rejected.
The lack of diligence exhibited by Patel, and more broadly by Bibiyan Law Group, P.C., is evident. Substantial justification has not been provided for the untimely filing of the final approval motion. Not only was the motion untimely because it was filed after the Court-ordered deadline, but it was untimely because the issues clearly were not ripe for adjudication since the response deadline had not yet expired.
RULING:
In response to the OSC re Monetary Sanctions pursuant to CCP section 177.5, counsel has failed to provide substantial justification for the deficient Motion for Final Approval and its untimely filing. Therefore, sanctions in the amount of $500.00 are imposed against Bibiyan Law Group, P.C., payable to the Court within ten (10) calendar days.
The Court thus imposes what it considers to be a minimal, non-reportable sanction based upon Counsel’s representation that this was his first matter before this Court. The Court admonishes the Firm to be more diligent in the future.
Please inform the clerk by emailing her before 12:00 p.m. on the day of the hearing at CX103@occourts.org if counsel intends to submit on the tentative.
Clerk to give Notice.