Judge Marcella O. Mclaughlin, Case 37-2022-00001449-CU-OE-CTL 2023-10-20 Tentative Ruling

Judge: Marcella O. Mclaughlin, Case: 37-2022-00001449-CU-OE-CTL, Date: 2023-10-20 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - October 19, 2023

10/20/2023 01:30:00 PM C-72 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Marcella O McLaughlin

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Civil - Unlimited Other employment Motion Hearing (Civil) 37-2022-00001449-CU-OE-CTL JONES VS MICHAEL STAPLETON ASSOCIATES LTD [E-FILE] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 09/28/2023

Tentative Ruling on Motion for Final Approval of Class Settlement, and for Order Approving Fees, Expenses, Etc.

Jones v. Michael Stapleton Associates, Case No. 2022-01449 October 20, 2023, 1:30 p.m., Dept. 72 1. Overview and Procedural Posture.

This is a wage and hour class action arising out of plaintiff's employment with defendant, a provider of security services. The ten count complaint was filed in January 2022. It was supplanted by the FAC a few months later, which added a claim under PAGA. ROA 9. Defendant answered. ROA 10. In June 2022, the court set a class certification hearing a year later, and continued the CMC to trail the motion.

ROA 16-18. Thereafter, the parties attended mediation and apparently reached a settlement. See ROA 22 at p. 2; see also ROA 23 at p. 4. No one, however, bothered to inform the court. When no moving papers were filed in support of the motion for class certification, the court tentatively set an OSC re sanctions for violation of Local Rule 2.1.20 (the 'phantom motion' rule). ROA 24. The court heard from counsel on June 2, 2023, discharged the OSC, and set a hearing of the preliminary approval motion/approval of PAGA settlement application. ROA 29-30. The court reviewed the ensuing moving papers. ROA 31-36. Preliminary approval was granted on July 21, 2023, and the court set today for the fairness hearing. ROA 40-42.

Presently before the court is the motion for final approval of the settlement, and for approval of fees, disbursements, etc. ROA 43-49. By design, the motion is unopposed. The court has reviewed the moving papers.

2. Applicable Standards.

A. The court incorporates part 2 of the minutes for July 21, 2023. ROA 40.

B. California follows the 'American rule,' under which each party to a lawsuit ordinarily must pay his, her or its own attorney fees. Trope v. Katz (1995) 11 Cal.4th 274, 278; Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504. Code of Civil Procedure section 1021 codifies the rule, providing that the measure and mode of attorney compensation is left to the agreement of the parties '[e]xcept as attorney's fees are specifically provided for by statute.' Here, fees are sought under the Labor Code, Calendar No.: Event ID: TENTATIVE RULINGS

3037012 39 CASE NUMBER: CASE TITLE: JONES VS MICHAEL STAPLETON ASSOCIATES LTD [E-FILE] 37-2022-00001449-CU-OE-CTL which has several fee-shifting provisions.

C. 'The law empowers the court to set the amount of fees independently without disapproving the entire settlement.' Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 129. The benchmark for determining attorney fees is reasonableness. Karton v. Ari Design & Construction, Inc.

(2021) 61 Cal.App.5th 734, 744.

In common fund cases, trial courts have discretion to begin with a percentage-of-recovery approach and then to use the 'lodestar' approach to cross-check the reasonableness of the percentage. Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 503-06. The former method calculates the fee as a percentage share of a recovered common fund or the monetary value of plaintiffs' recovery. Id. at 489.

The latter method calculates the fee by multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate. Id. The lodestar figure may then be adjusted, based on factors specific to the case, to fix the fee at the fair market value for the legal services provided. PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.

3. Discussion of Fairness of Settlement.

A. Strength of Case: The very essence of a settlement is compromise, i.e., the 'yielding of absolutes and an abandoning of highest hopes.' Linney v. Cellular Alaska Partnership (9th Cir. 1998) 151 F.3d 1234, 1242. And so it is here: plaintiff estimates the maximum value of the meal period claims at $1.271 million; the rest period claims at $1.481 million; the minimum wage/OT claims at $190,000; the failure to reimburse claims at $1.851 million; the reporting time pay claims at $57,000; the wage statement claims at $407,000; the failure to pay at separation claims at $627,000; and the PAGA penalties at $3.122 million. Thus, plaintiff claims the total maximum exposure is about $10.4 million.

(Lebe Decl., ¶ 42.) However, plaintiff acknowledges that such a recovery was no sure thing because 'the Court could have significantly reduced an award under the PAGA to almost nothing.' (Id.) B. Avoided Expenses and Other Risks: This is not monetized in the moving papers, but the court can well imagine at least $100,000.00 being spent by plaintiff's counsel getting the case teed up for an opposed class certification motion, and potentially much more.

C. Amount Offered in Settlement: The total amount offered in settlement is $1.8 million, with no reversion. The parties intend to allocate these funds as follows: -Attorneys' fees: $450,000.00 to plaintiff's counsel (substantially less than the $600,000 sought at the time of preliminary approval).

-Litigation costs: $10,574.00 to plaintiff's counsel (less than the $20,000.00 previously sought) -Costs of administration: $10,000.00 to CPT Group (again, less than the $20,000 previously sought -Class representative incentive payment: $10,000 -PAGA payment: $180,000.00, of which $135,000.00 (75%) will go the LWDA, and $45,000.00 (25%) will go to the aggrieved employees The foregoing deductions result in a net settlement of amount of approximately $ 1,139,426 to be distributed among the 295 class members. Based on plaintiff's counsel's calculations, this comes out to an average settlement share per class member of over $3,862.46. (Lebe Decl., ¶ 32.) When factoring the PAGA payments, the average recovery amount increases to approximately $4,105.00. (Id.) D. Extent of Discovery: Written discovery and informal exchange of information. (Lebe Decl., ¶¶ 22-23.) E. Experience and View of Counsel: Counsel is experienced in cases of this type and recommends the settlement. (Lebe Decl., ¶¶ 7-11.) F. Presence of a governmental participant: On June 15, 2023, plaintiff's counsel submitted the Calendar No.: Event ID: TENTATIVE RULINGS

3037012 39 CASE NUMBER: CASE TITLE: JONES VS MICHAEL STAPLETON ASSOCIATES LTD [E-FILE] 37-2022-00001449-CU-OE-CTL settlement to the LWDA. (Lebe Decl., ¶ 28.) G. Reaction of class members to proposed settlement: There are no objectors and no opt-outs.

(Argueta Decl., ¶ 10.) H. Form of Notice. On August 11, 2023, the notice of settlement packets were mailed to the class.

(Argueta Decl., ¶ 7.) A total of just 6 notice packets were deemed undeliverable. (Id. at ¶ 9.) 4. Discussion and Rulings.

A. The court finds that the settlement is fair, reasonable, and adequate. Accordingly, the court approves the parties' proposed settlement, subject to some qualifications discussed below.

B. The litigation costs of $10,574.00, payable to class counsel, and the claims administration costs of $10,000, payable to CPT, are reasonable for a case of this type. Moreover, the costs awarded are less than the amount originally estimated in the preliminary approval papers ($20,000.00). The costs are therefore approved.

C. The proposed class representative incentive payment of $10,000 is reasonable and is approved.

D. Finally, the attorneys' fees proposal of $450,000 represents twenty-five percent of the gross settlement. At first blush, the requested amount – which includes a multiplier of 1.72 – is not out of line with class action fee awards calculated using the percentage-of-the-benefit method. See Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66 fn. 11. However, '[w]here the class settlement is for a very large amount, a percentage fee may be criticized as providing counsel a windfall in relation to the amount of work performed.' Laffitte, supra, 1 Cal.5th at 490. Such is the case here. The court has performed the 'cross-check' using the lodestar method and finds that the requested attorneys' fees are not reasonable.

According to the declaration of class counsel, the attorneys assigned to this matter billed a total of 442 hours. (Lebe Decl., ¶ 55.) This results in a blended hourly rate of approximately $1,018.10 per hour ($450,000 divided by 442), which the court considers higher than what is reasonable for similar work in San Diego County. None of the four Los Angeles-based attorneys who worked on this file have the level of experience or prominence that would command an hourly rate of $1,000. Nor is there evidence suggesting that any of them have ever been awarded anything close to $1,000 per hour. To the contrary, all four attorneys have been practicing for 15 years or less and utilize hourly rates well below the proposed blended hourly rate. (See id. at ¶¶ 4, 13, 15, 17, 53.) A blended rate of over $1,000 per hour is hard to justify in these circumstances. See Cordero-Sacks v. Housing Authority of City of Los Angeles (2011) 200 Cal.App.4th 1267, 1286 ('The trial court is in the best position to determine the reasonableness of the hourly rate of an attorney appearing before the court and the value of the attorney's professional services.').

The fact that four attorneys were utilized suggests to the court that this matter was not properly staffed.

No explanation is provided as to why the services of so many attorneys were necessary on such a straightforward matter. Some courts refer to timekeepers such as this as 'transitory billers,' and there is strong indicia here of inefficiency. Accordingly, the court disallows the time expended by Ms. Edborg and Mr. Tomas, as they collectively billed less than both Mr. Lebe and Mr. Gershman did on an individual basis. See Morris v. Hyundai Motor America (2019) 41 Cal.App.5th 24, 39 ('[I]t is appropriate for a trial court to reduce a fee award based on its reasonable determination that a routine, non-complex case was overstaffed to a degree that significant inefficiencies and inflated fees resulted.').

In sum, the attorneys' fee request is granted, but only to the extent of $424,485. The remainder ($450,000 minus $424,485 equals $25,515) is poured over into the net settlement fund for distribution to the class members.

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3037012 39 CASE NUMBER: CASE TITLE: JONES VS MICHAEL STAPLETON ASSOCIATES LTD [E-FILE] 37-2022-00001449-CU-OE-CTL E. Class counsel must prepare and submit a revised proposed order and proposed final judgment consistent with the foregoing.

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