Judge: Monica Bachner, Case: 20STCV41061, Date: 2022-09-30 Tentative Ruling
Case Number: 20STCV41061 Hearing Date: September 30, 2022 Dept: 71
Superior
Court of California
County
of Los Angeles
DEPARTMENT 71
TENTATIVE RULING
|
JORGE MONTES
aka JORGE MONTES SILVA, individual, and as a representative of other
aggrieved employees, et al., vs. A G
CONSTRUCTION, et al. |
Case No.:
20STCV41061 Hearing Date: September 30, 2022 |
Plaintiff’s motion for
preliminary approval of class action settlement is approved, contingent upon
counsel submitting an Amended Proposed Order that
attaches a Third Amended Class Notice making the corrections described in this
order.
Plaintiff Edgar Montes (“Montes” or “Plaintiff”) moves for an
order granting preliminary approval of the proposed settlement with Defendant AG
Construction aka AG Construction, Inc. (“Defendant”) on the terms and
conditions set forth in the Amended Settlement Agreement (“Amended Settlement”)
between Plaintiff and Defendant. (Notice
of Motion, pgs. 1-2; Supp-Decl. of Hamner, Exh. A [Amended Settlement].) [The Court notes the initial motion was
brought by Plaintiffs Montes and Jorge Montes aka Jorge Montes Silva (“Silva”);
however, the instant motion is brought by Montes alone. (Compare Notice of
Motion and Notice of Amended Motion.)]
On May 27, 2022, the Court continued the initial hearing on the
instant motion in light of errors in the originally filed proposed order; Plaintiffs
filed a revised proposed order on July 12, 2022. On July 21, 2022, the Court held a hearing on
the motion and ordered Plaintiffs to submit an amended settlement correcting and/or
addressing the following issues: (1) the
time frame of the Class Period as set forth in Paragraph 9; (2) the amount of
administration costs set forth in Paragraph 49(c); (3) the amount of NSA and
estimated net per class member in light of the increased request for
administration costs [Paragraph 49(f)]; (4) service enhancement award set forth
in Paragraph 34; (5) the time frame of the PAGA Period as set forth in
Paragraph 23; (5) the general release’s application to Plaintiff only; (6) the
date of the release of the Released PAGA Claims; (7) releases that do not
precede the payment date; and (8) incorrect references to “Plaintiffs” so as to
not create inconsistencies in the Settlement terms. The Court also ordered
Plaintiffs to submit an amended proposed order: (1) specifying that the LWDA
Penalty Amount of $15,000 and the PAGA Employee Payment of $5,000 together
comprise the $20,000 PAGA Payment to be deducted from the GSA to not suggest
double counting; (2) specifying the accurate time frame of the Class Period [in
the Proposed Order and Class Notice]; (3) revising the request for attorneys’
fees in the amount of $161,700 based on 33% of the GSA [in both Proposed Order
and Class Notice]; and (4) specifying the time frame of the PAGA Period [in the
Notice].
On August
29, 2022, Plaintiff filed an Amended Motion, and on August 31, 2022, Plaintiff
filed a Supplemental Declaration of Plaintiff’s counsel Christopher Hamner
(“Hamner”) and a Corrected Proposed Order in which a text-searchable Amended
Settlement Agreement (“Amended Settlement”) signed by Montes and Defendant on
August 30, 2022, and August 31, 2022, respectively, is attached. (Supp-Decl. of Hamner, Exh. A.) In addition, an Amended Class Notice is
attached to the Hamner Declaration as Exhibit B.
On September
8, 2022, this Court continued Plaintiff’s motion for preliminary approval of class
action settlement to September 27, 2022, and ordered Plaintiff to file the following: (1) a
declaration attaching a copy of the Amended Settlement with a revised Second
Amended Class Notice that corrects the typos discussed in the ruling; and (2) an
Amended Proposed Order that (a) corrects its language relating to the LWDA Payment,
as discussed in the ruling, and (b) attaches the aforementioned Second Amended
Class Notice. This Court continued the
hearing on the instant motion to September 30, 2022.
On September 20, 2022, Plaintiff filed a Further Declaration of Plaintiff’s counsel
Christopher Hamner (“Hamner”) and on September 27, 2022, filed an Amended
Proposed Order with a text-searchable Notice of Proposed Class Action
Settlement (“Amended Class Notice”), attached as Exhibit A. (Amended Proposed Order, Exh. A.) In addition, an Amended Settlement Agreement
is attached to the Further Declaration of Hamner as Exhibit B. (Further Decl. of Hamner, Exh. B.)
The Amended Proposed Order sets forth the following timeline: (1)
within 20 days from Preliminary Approval, Defendant will provide Administrator
with employee data; (2) within 35 days from Preliminary Approval, Administrator
will mail Class Notice to Class Members; (3) the deadline for Class Members to
respond shall be 60 days from the date of mailing the Class Notice to Class
Members; (4) Plaintiffs shall thereafter file the motion for final approval,
where the hearing shall be set no less than 16 Court days from the date of
filing. (Amended Proposed Order.)
As
a preliminary matter, the Class Notice attached as Exhibit A to the Amended Proposed
Order, and as Exhibit A to the Amended Settlement, has several additional typos
that must be corrected prior to entry of the order of preliminary
approval. On page 6, in the Class
Notice’s attached Request For Exclusion Form, the exclusion statement
incorrectly refers to the instant action as “MOMTES V. AG CONSTRUCTION.” Further,
on page 7, the prompt “Where should this be mailed to?” includes the direction “mail
this completed form” and incorrectly refers to the instant action as “Monts v
AG Construction et al.” Plaintiff is instructed to file an amended Proposed
order attaching an Amended Class Notice correcting these typos.
Background
This settlement involves a wage and hour class action
against Plaintiffs’ employer, Defendant, a cement masonry contractor, based on
Labor Code violations that occurred during their employment as cement workers. On October 26, 2020, Silva filed his initial
complaint in the instant action, and on January 21, 2021, Silva filed his first
amended complaint (“FAC”) alleging causes of action for Labor Code violations
including: (1) failure to pay wages, (2) failure to provide rest breaks or
compensation in lieu thereof; (3) failure to provide meal periods or
compensation, (4) failure to pay overtime wages; (5) wage statement violations,
(6) failure to pay wages of terminated or resigned employees, (7) unfair
business practices, and (8) violation of the PAGA. On September 9, 2021, the Court approved the
parties’ joint stipulation to file a second amended complaint (“SAC”) which
added Edgar as a second plaintiff and proposed class representative. On December 21, 2021, Plaintiffs filed the
operative SAC, asserting the same eight causes of action as in the FAC. On February 2, 2022, Plaintiffs filed the
instant motion for preliminary approval of class action PAGA settlement.
Prior
to filing this action, Class Counsel conducted an investigation of Plaintiffs’
claims. In connection with Class
Counsel’s investigation, Defendant provided a significant amount of pay and
time data from the summer months, when construction contractors are most busy. (Decl.
of Hamner ¶6.) Class Counsel retained an
outside expert to analyze this data, and after thoroughly reviewing the documents
themselves, Class Counsel prepared a comprehensive mediation brief which set
forth the relevant factual and legal issues, contained a detailed analysis of Defendant’s
time and payroll records, and presented a complete breakdown of the liability
exposure for Defendant. (Decl. of Hamner ¶6.) Prior to mediation, Defendant
provided extensive data to Class Counsel including (1) payroll reports for June
2017, June 2018, June 2019, June 2020 and June 2021; (2) Daily Time Reports for
June and July 2017 to 2021 for multiple jobs Defendant had contracted to work
on; and (3) thousands of time entries and corresponding pay records. (Decl. of
Hamner ¶4.) Class Counsel declared data was sufficient to analyze the alleged Labor
Code violations and make an informed decision about the resolution of the case.
(Decl. of Hamner ¶4.) Class Counsel also
employed damages expert, James Toney (“Toney”), to assist in preparing damages
models by reviewing and analyzing the relevant time and pay records and based
on Class Counsel’s calculations of the number of shifts worked per pay period,
the average number of employees employed at any given time, the class members’
average rates of pay, wages and owed, and the estimated violation rates for
meal and rest period claims. (Decl. of Hamner ¶4.) Class Counsel’s evaluation of the case is
premised on an extensive analysis of the scope and applicability of Defendant’s
potential defenses. (Decl. of Hamner ¶6.)
The parties
agreed to private mediation to attempt to resolve the claims. On July 20, 2021,
the parties attended an all-day mediation with Steve Cerveris, Esq., a mediator
experienced in class action wage and hour matters; however, the parties were
unable to resolve the case at that time. (Decl. of Hamner ¶4.) The parties
continued engaging in in negotiations with the mediator over the following
weeks, until they reached an initial version of the Settlement in September
2021. (Decl. of Hamner ¶4.)
The parties
now move for preliminary approval of the proposed class action settlement.
As noted in the Court’s prior ruling,
Plaintiff submitted evidence the parties complied with Labor Code §2699(l)(2) by submitting a copy of the
proposed Settlement and instant motion for approval to the LWDA at the same
time they were submitted to the Court. (Decl. of Hamner ¶12.)
Discussion
A.
Preliminary
Approval of Class Action Settlement
As a “fiduciary” of the absent class members, the trial
court’s duty is to have before it sufficient information to determine if the
settlement is fair, adequate, and reasonable.
(7-Eleven Owners for Fair Franchising
v. The Southland Corp. (2000) 85 Cal.App.4th 1135, 1151 [citing Dunk v. Ford Motor Co. (1996) 48
Cal.App.4th 1794, 1801, 1802 (“Dunk”)].)
California Rules of Court, Rule 3.769 governs settlements
of class actions. Any party to a
settlement agreement may submit a written notice 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.
(CRC Rule 3.769(c).)
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.)
B. Fairness of the Settlement Agreement
In an effort to aid the Court in the determination of the
fairness of the settlement, Wershba v.
Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 244-45 (“Wershba”), discusses factors that the
Court should consider when testing the reasonableness of the 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. (Wershba
at 245, citing Dunk, at 1802.) The test is not the maximum amount plaintiff
might have obtained at trial on the complaint but, rather, whether the
settlement is reasonable under all of the circumstances. (Wershba
at 250.)
In making this determination, the Court considers all
relevant factors including “the strength of [the] plaintiffs’ case, the risk,
expense, complexity and likely duration of further litigation, the risk of
maintaining class action status through trial, the amount offered in
settlement, the extent of discovery completed and the stage of the proceedings,
the experience and views of counsel, the presence of a governmental
participant, and the reaction of the class members to the proposed
settlement.’” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128
(“Kullar”), citing Dunk at 1801.)
“The fact that a proposed settlement may only amount to a
fraction of the potential recovery does not, in and of itself, mean that the
proposed settlement is grossly inadequate and should be disapproved.” (City
of Detroit v. Grinnell Corp. (2d Cir. 1974)
C.
Terms of the
Settlement Agreement
Plaintiff
asserts the Amended Settlement defines the Class Members as all employees who
worked as construction workers for Defendant, in the State of California,
during the Class Period which as defined as October 26, 2016, to the Date of
Preliminary Approval the Amended Settlement, and includes a total of
approximately 337 individuals and consists of all class members who do not
submit valid requests to opt out as outlined in the Amended Settlement. (Motion,
pg. 3; Amended Settlement ¶¶8-9, 51.) The
Court notes Plaintiff’s amended filings resolved the previously conflicting definitions
of Class Period.
Defendant
will pay a Gross Settlement Amount (“GSA”) of $490,000. (Amended Settlement ¶49.) According to the Amended Settlement, the Net
Settlement Amount (“NSA”) is $264,300, or approximately $784.27 per class
member. (Amended Motion, pg. 3; Amended Settlement ¶49(f).) In addition, Class Members
will receive their pro rata share of the NSA, which will be apportioned equally
among all participating class members based on the number of qualifying workdays
they worked during the Class Period. (Amended Settlement ¶62.) Settlement administration costs are not to
exceed $9,000. (Motion, pg. 3; Settlement ¶49(c).) The Amended Settlement
revises issues addressed in the Court’s prior ruling.
Plaintiff
requests he be awarded a class representative service award in the amount of $20,000.
(Settlement ¶49(b).) The Court notes the Amended Settlement corrects the issues
with Paragraph 34, which defines “Service Enhancement.”
Plaintiff
asserts Attorneys’ fees in the amount of $161,700 or 33% of the GSA ($490,000) and
litigation costs of $15,000 are to be awarded to Plaintiffs’ counsel. (Amended Motion,
pg. 3; Amended Settlement ¶49(a).) The
Amended Settlement, Corrected Proposed Order, and Notice attached as Exhibit B
to the Amended Settlement correct the attorneys’ fees request. However,
the Corrected Proposed Order attaches a Notice that incorrectly refers to the
attorneys’ fees request as $163,333, and the revised Notice must also correct
this issue. (Corrected Proposed Order,
Exh. A [Notice], pg. 3.)
A PAGA
payment in the amount of $20,000 is to be deducted from the NSA, where 75% or $15,000
is to be paid to the LWDA and 25% or $5,000 is to be paid to Class Members on a
pro rata basis based on the number of pay periods PAGA employees were
employed. (Amended Settlement ¶49(e).)
Plaintiff
asserts the Amended Settlement provides that the PAGA liability period shall be
from November 17, 2019, to the date of Preliminary Approval. (Amended Motion, pg. 3.) In his amended filings, Plaintiff corrected
the previous discrepancies in the PAGA Period time frame as the Amended Notice,
Amended Motion, Amended Settlement all indicate a PAGA Period of November 17,
2019, to the date of Preliminary Approval.
(Amended Motion, pg. 3, Amended Settlement ¶23, Amended Notice, pg.
3.)
Pursuant
to the Amended Settlement, Defendant shall provide the Settlement Administrator
the number of pay periods worked by PAGA Employees during the PAGA Period which
shall be determined based on Defendant’s employment records. (Amended Settlement
¶49(e).) The PAGA Employee Payment shall be treated as miscellaneous income,
which shall be reported on an IRS 1099 without withholdings. (Amended Settlement
¶49(e).)
The Amended
Settlement provides that Class Members will be sent their Class Settlement
Payments [net amount paid to each Class Member on a pro rata basis in exchange
for Released Class Claims] and PAGA Employee Payments [25% of the PAGA Payment,
i.e., $5,000, to be paid to PAGA Group members on a pro rata basis for Released
PAGA Claims] seven Court days after Defendant funds the Settlement, which is to
be within 10 Court days after the Effective Date. (Amended Motion, pg. 4; Amended
Settlement, ¶¶13, 29, 30, 31 64, 65.) [The Court notes the Amended Motion
incorrectly refers to Defendant funding within five days of the effective
date.] The “Effective Date” is defined
as the later of (i) 15 calendar days after entry of Final Order and Judgment if
no appeal is filed; or (ii) if an appeal/motion to intervene has been filed,
the date of final resolution of any challenge to the Final Order and Judgment
where resolution affirms the final approval order and judgment. (Amended Settlement ¶14.)
The Amended
Settlement provides that if a settlement check is not cashed or deposited
within 180 calendar days after mailing, it will be voided, and the funds
associated with voided checks will be transmitted to the State Controller’s
Office Unclaimed Property Fund in the name of the Settlement Class Member(s)
whose checks were voided. (Amended Settlement
¶67.)
The
Administrator will calculate pro rata Class Settlement Payments to
Participating Class Members based on the relative percentage of eligible
employee work weeks in the Class Period as reflected in Defendant’s records and
this percentage will also be used to determine the pro rata share of the PAGA
Employee Payment to the PAGA Employees based on the shorter PAGA Period of
November 17, 2019 to the date of preliminary approval. (Amended Settlement ¶62.) Class Settlement
Payments are to be allocated as 25% wages and 50% as penalties, and 25% as interest,
with the wage-portion reduced by any mandated deductions for payroll taxes and
Participating Class Members shall be liable for any and all tax liability other
than for employer tax contributions.
(Amended Settlement ¶63.) PAGA
Employee Payments will be allocated entirely to penalties. (Amended Settlement ¶63.)
Class Members, PAGA Employees, and the Plaintiff will
release certain claims against Defendant. The Amended Settlement states that
the releases are to be upon the Effective Date and provided Defendant has fully
funded the GSA. (Amended Settlement
¶52.) Plaintiffs assert that only Plaintiff
will provide a general release of claims per Civil Code §1542. (Amended Motion,
pg. 5; Amended Settlement ¶¶72-77.) Plaintiff’s
amended filings correctly identify Plaintiff as the only party bound by the
general release.
Plaintiff asserts a limited release of all class action
wage and hour claims brought or that could have been brought in this matter
applies to Class Members who do not opt out (i.e., “Participating Class
Members”), while the PAGA release is for PAGA claims only. (Amended Motion, pg. 5; Amended Settlement
¶¶28-31, 78-81, 82-83.) The Amended Settlement
provides that Participating Class Members shall release the Released Parties
from the Released Class Claims as of the Effective Date. (Amended Settlement ¶78.) The Amended Settlement provides that Plaintiff
on behalf of himself, the State of California, and all PAGA Employees, releases
the Released Parties from the Released PAGA Claims on the Effective Date
provided Defendant has fully funded the GSA.
(Amended Settlement ¶¶82-83.) Plaintiff’s
Amended Settlement complies with the Court’s request that the releases do not
precede the payment date.
D.
Analysis of
Settlement Agreement
1. Presumption of Fairness
b. Were investigation and discovery
sufficient to allow counsel and the Court to act intelligently? Yes. As discussed above, Plaintiff’s Counsel
investigated and researched the facts and law at issue in the claims and
defenses asserted in the action. (Amended
Motion, pg. 7; Decl. of Hamner ¶6.) The
investigation permitted Plaintiff’s Counsel to assess the value of the class
claims and intelligently engage defense counsel in settlement discussions that
culminated in the Amended Settlement given Counsel carefully analyzed the scope
and applicability of Defendant’s potential defenses and believes the
information exchanged was sufficient for the parties to make an informed
decision about a fair resolution of the action. (Supp-Decl. of Hamner ¶6.)
Plaintiff’s Counsel asserts that during mediation and
weeks of negotiation thereafter, he carefully considered the strengths and
weaknesses of the case versus the amounts offered for settlement as well as the
risk, expense, complexity, and likelihood of class certification and success at
trial. (Supp-Decl. of Hamner ¶9.) Plaintiff asserts the proposed settlement is
within the range of reasonableness as it will provided class members with
significant financial recovery and extinguish the risks of continued litigation,
including any appeals which could result in a delay of several years before the
case’s resolution. (Amended Motion, pg.
8; Supp-Decl. of Hamner ¶9.)
c. Is counsel experienced in similar
litigation? Yes. Plaintiff’s Counsel is experienced with wage
and hour class actions with over 15 years of experience litigating California
wage and hour class actions. (Decl. of Hamner
¶¶6, 8.)
d. What percentage of class has objected? This cannot be determined until the fairness
hearing. (See Weil & Brown,
Cal. Practice Guide: Civil Procedure
Before Trial (The Rutter Group 2011) ¶ 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.”].)
Based
on the foregoing, the Amended Settlement is entitled to a presumption of
fairness.
2. Is the settlement fair, adequate and
reasonable?
a. Strength of Plaintiff’s Case. “The most important factor is the strength of
the case for plaintiffs on the merits, balanced against the
amount offered in settlement.” (Kullar at 130.)
Here, Plaintiff does not submit an estimates
Defendant’s maximum potential exposure based on the causes of action alleged;
however, Plaintiff’s counsel asserts the $490,000 settlement for the 337 member
class is a significant recovery and, based on a review of facts and evidentiary
record and the relative strength of the claims, is an excellent result for the
class. (Supp-Decl. of Hamner ¶¶6-7.)
The potential total settlement amount
appears to be a fair, adequate, and reasonable compromise of Plaintiff’s claims.
b. Risk,
expense, complexity, and likely duration of further litigation. Further litigation carried the possibility of
non-certification and unfavorable rulings on the merits on the legal issues
raised by Plaintiff’s Counsel in determining strength of Plaintiff’s case.
c. Risk
of maintaining class action status through trial. It would have been Plaintiffs’ burden to
maintain the class action through trial.
d. Amount
offered in settlement. Defendant has
offered to pay a total of $490,000 for the settlement of this action, which
includes $269,300, (amount to be distributed to class) plus $20,000
(representative payment) plus $161,700 in attorneys’ fees, plus up to $15,000
in attorney costs, plus up to $9,000 in administration costs, plus $15,000 to
be paid to the LWDA. If all requested deductions are taken, $264,300 will be
available for disbursement to Participating Class Members and $5,000 to PAGA
Employees. Given the estimated class size of 337 class members, the average pay
out will be $799.10 per Class Member.
[The Court notes this is an estimate, as actual payments will be based
on each Class Member’s number of eligible pay periods worked, as discussed
above.]
e. Extent
of discovery completed and the stage of the proceedings. As stated above, it appears Plaintiff has completed
sufficient discovery in order to make an informed decision.
f. Experience
and views of counsel. As indicated
above, Plaintiff’s Counsel is experienced in class actions, including cases
involving wage and hour violations. Plaintiff’s
Counsel endorses the settlement and believes it is fair, reasonable, and in the
best interests of all class members. (Supp-Decl.
of Hamner ¶7.)
g. Presence
of a governmental participant. This
factor is not applicable here.
h. 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 or
opt-out. This factor becomes relevant
during the fairness hearing.
The Court finds that potential total settlement amount
appears to be a fair, adequate, and reasonable compromise of Plaintiffs’ claims
in light of the risks of further litigation and maintaining class action status
through trial.
E.
Scope of the
Release
The Amended Settlement’s Releases
of Claims are as follows:
VI. Releases
by Participating Settlement Employees
72. General
Release by Plaintiff. [Plaintiff’s releases shall include] a release of
Released Parties from all claims… known or unknown, which against the Released
Parties, the Plaintiff… may now have or hereafter later determine that they
have or had upon, or by reason of, any cause or thing whatsoever relating to
their employment or termination of employment, including, but not limited to…
[various types of claims].
73.
Thus, for the purpose of implementing a full and complete release and discharge
of the Released Parties, Plaintiff expressly acknowledges that this General
Release is intended to include in its effect, without limitation, all claims
which Plaintiff does not know or suspect to exist in Plaintiff’s favor at the
time of execution hereof, and that this General Release contemplates the
extinguishment of any such claim or claims. […]
75.
It is further understood and agreed that as a condition of this General
Release, Plaintiff Edgar Montes hereby expressly waives and relinquishes any
and all claims, rights or benefits that she may have under California Civil
Code Section 1542, which provides as follows:
A
general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing
the release and that, if known by him or her, would have materially affected
his or her settlement with the debtor or released party.
78. Release by Participating Class Members.
As of the Effective Date and provided Defendant has fully funded Gross
Settlement Amount, in exchange for the consideration set forth in this
Agreement, Plaintiff and Participating Class Members release the Released
Parties from the Released Class Claims. Released Class Claims include all wage
and hour claims, rights, demands, liabilities and causes of action of every
nature and description related to the claims litigated in the Action, or claims
that were or could have been brought as part of the Action against Defendants
based on the factual allegations in SAC, including, without limitation,
statutory, constitutional, contractual or common law for wages, damages, unpaid
costs, penalties, liquidated damages, punitive damages, interest, restitution,
equitable relief, or any other relief, including, but not limited to, claims
based on following categories of allegations during the Class Period: (a) all
claims for unpaid overtime; (b) all claims for meal and rest period violations;
(c) all claims for unpaid minimum wages; (d) all claims for failure to timely
pay wages upon termination; (e) all claims for failure to timely pay wages
during employment, including at or after termination of employment; (f) all
claims for failure to pay (g) all claims for failure to provide accurate,
itemized, or otherwise proper wage statements; (h)all for failure to reimburse
business expenses; (i) all claims asserted through [PAGA] arising out of the
aforementioned claims; (j) all claims asserted through the [FLSA] arising out
of the aforementioned claims; (k) all claims asserted through California
Business & Professions Code § 17200 et seq. arising out of the
aforementioned claims; and (l) all other claims for penalties, liquidated
damages, punitive damages, interest, attorneys' fees, litigation costs,
restitution, equitable relief, or additional damages that allegedly arise out
of the aforementioned claims.
79.
The Released Class Claims specifically include any and all claims arising under
the California Labor Code, including, without limitation, 201-204, 210, 21
226,226.3, 226.7,227.3,510,512,558, 1174, 1174.5, 1175, 1182.12, 1194, 1194.2,
1197, 1197.1,2802, 2698-2699.5, Cal. Business & Professions Code 17200, et
seq., and Cal. Code of Civil Procedure § 1021.5, any derivative claims based on
such alleged violations, including those under any applicable California
Industrial Welfare Commission Wage Order.
80.
All Participating Class Members will any and all causes of action under the
FLSA relating to claims alleged or which could have been alleged in the Action
based on the factual allegations in the SAC. (See Rangel v. PLS Check
Cashers of California, Inc., 899 F.3d 1106 (9th Cir. 2018).
81.
The period of the Released Class Claims shall extend to the limits of the Class
Period. The judgment entered as a result of this settlement shall have res
judicata effect to the fullest extent allowed by law. The definition of
Released Class Claims shall not be limited in any way by the possibility that
Plaintiff or Participating Members may discover new facts, legal theories or
legal arguments not alleged in the Action as to Defendant but which serve as an
alternative basis for pursuing the same claims, causes of action, or legal
theories of relief falling within the definition of Released Class Claims. Any
Class Member who submits a timely and valid request for exclusion to the
settlement of the Class Claims will not be bound by the release of the Released
Class Claims. However, he/she will still be bound by the release of the
Released PAGA Claims.
82. Release
of PAGA Claims. On the fully funded the Gross Settlement Amount, Plaintiff,
on behalf of himself, the State of California and all PAGA Employees, the
Released Parties from the Released PAGA Claims for the PAGA Period of November
17, 2019 to the date of preliminary approval. No PAGA Employee may opt out of
this release. The Released PAGA Claims include all claims against Defendant
during the PAGA Period.
83.
The period of the Released PAGA Claims shall extend to the limits of the PAGA
Period. The judgment entered as a result of this settlement shall have res
judicata effect to the fullest extent allowed by law. The definition of Released
PAGA Claims shall not be limited in any way by the possibility that Plaintiff
may discover new facts, legal theories or legal arguments not alleged in the
Action which might serve as an alternative basis for pursuing the same claims,
causes of action, or legal theories of relief falling within the definition of
Released PAGA Claims.
(Amended
Settlement, pgs. 17-20.)
The Release accordingly provides that Class Members do not
release claims until Defendant has funded the settlement and there is no
Section 1542 waiver as to putative class members.
The Amended Settlement defines “Released Class Claims” as
all Class Claims that Participating Class Members are fully and irrevocably
releasing the Released Parties from in exchange for the consideration provided
by this Settlement Agreement, whether arising at law, in contract, or in
equity, and whether for economic or non-economic damages, restitution,
injunctive relief, penalties, or liquidated damages. (Amended Settlement ¶30.)
The Amended Settlement defines “Released PAGA Claims” as the
PAGA Claims that Plaintiff, on behalf of [himself], the State of California and
PAGA Employees, are fully and irrevocably releasing the Released Parties from
provided by this Settlement Agreement for the PAGA Period of November 17, 2019
to the date of preliminary approval. (Amended
Settlement ¶31.)
The Amended Settlement defines “Released Parties” as Defendant
and its affiliates, specifically including Alberto Garcia Construction
Services, Inc., and each of their divisions, subsidiaries, parents,
predecessors, any merged entity or merged entities and/or its or their present
and former officers, partners, directors, managers, supervisors, employees,
attorneys, agents, shareholders and/or successors, assigns, trustees, heirs,
administrators, executors, representatives and/or principals thereof. (Amended Settlement
¶32.)
As noted above, Plaintiff will provide a general release and
Section 1542 waiver. (Amended Settlement ¶75.)
F.
Conditional Class Certification
1.
Applicable Law
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 at 1807, FN19.) Because a settlement eliminates the need for
a trial, when considering whether to certify a settlement class, the court is
not faced with the case management issues present in certification of a
litigation class. (Global Minerals & Metals Corp. v. Superior Court (2003) 113
Cal.App.4th 836, 859.)
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 at 240.)
2. Numerosity. Plaintiff estimates there are approximately 337
class members. (Motion, pgs. 7, 9.) (See
Rose v. City of Hayward (1981) 126
Cal.App.3d 926, 934 [stating that “[n]o set number is required as a matter of
law for the maintenance of a class action” and citing examples wherein classes
of 10 [Bowles v. Superior Court (1955) 44 Cal.2d 574] and 28 [Hebbard
v. Colgrove (1972) 28 Cal.App.3d 1017] were upheld].) Thus, numerosity has been sufficiently
established.
3. Ascertainability. The class is defined in paragraph 8 of the Amended
Settlement. (Amended
Settlement ¶8.) This 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. (Decl. of Hamner ¶10;
Motion, pg. 9.)
4. 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 for the first factor, the class members
share common questions of law and fact regarding whether Defendant engaged in
various wage and hour violations.
Second, it appears the class representative has claims typical of the
class, as his claims are based on the same legal theories and arise out of the
same allegedly unlawful policies and practices.
Finally, it appears Plaintiff can adequately represent the class because
his interests in this action do not appear to be antagonistic to the interests
of the class. (Amended Motion, pgs. 9-10.)
5. Adequacy of class counsel. As indicated above, class counsel is
experienced in class actions, including cases involving wage and hour
violations. (Supp-Decl. of Hamner ¶11.)
6. Superiority. Given the relatively small size of the
individual claims, a class action appears to be superior to separate actions by
the class members. (Amended Motion, pg. 11.)
The Court grants conditional class certification,
assuming Counsel corrects the additional errors noted.
G. Sufficiency of the Notice
1. Content
of Class Notice. The content of the proposed
Class Notice filed with the court on August 31, 2022, as Exhibit B to Supplemental
Declaration of Hamner and referred to in the Amended Settlement as Exhibit A
appears to be acceptable. (Supp-Decl. of
Hamner ¶2, Exh. B; Amended Settlement ¶11.) It includes: 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 award, and claims 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. (Supp-Decl. of Hamner, Exh. B; Motion, pgs.
11-12.) However, as discussed above, the Amended Class Notice includes typos of
the instant action’s case name. Plaintiff
is to file a Third Amended Class Notice correcting these typos.
2. Method
of Class Notice. Notice will be by
direct mail. No more than 20 calendar days after entry of the Preliminary
Approval Order, Defendant will provide the Administrator with the “Settlement
Employee Data,” which is defined as all identifying information Defendant is to
provide to the Administrator for purposes of identifying Settlement Employees
including, without limitation, their names, addresses, phone numbers, email
addresses, employee numbers, and social security numbers as well as the
respective number of workweeks and pay periods each Settlement Employee worked
during the Class Period and PAGA period. (Amended Settlement ¶¶39, 68, 85.) After receiving the Settlement Employee Data,
the Administrator will update the data by performing a search on the National
Change of Address database and other means and resources that comply with due
process requirements and constitute best practices under the circumstances. (Amended
Settlement ¶¶70-71.) Within 35 days
after Preliminary Approval, a minimum of 15 days after the Administrator’s
receipt of Settlement Employee Data, the Administrator will have completed any
skip trace or other address search and updated contact information and mail the
Class Notice to all Class Members and PAGA Members by First-Class U.S. Mail. (Amended Settlement ¶90.) Class Members to whom Class Notices are
re-mailed after having been returned as undeliverable to the Administrator
shall have 14 calendar days from the date of remailing, or until the Response
Deadline has expired, whichever is later, to submit an Objection, Request for
Exclusion, or dispute. (Amended Settlement ¶59.)
3. Cost
of Class Notice. As indicated above,
claims administration costs are estimated not to exceed $9,000. Prior to 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.
H. Attorney Fees and Costs
CRC 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.”
The award of attorneys’ 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 Plaintiff’s
Counsel is entitled to $161,700 in attorney fees will be addressed at the final
fairness hearing when Plaintiff’s Counsel brings a noticed motion for attorney
fees. Plaintiff’s 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.
At the final fairness hearing, Plaintiff’s
Counsel should also be prepared to justify the costs sought (capped at $15,000)
by detailing how they were incurred.
I. Incentive Award to Class Representative
The Settlement provides for an enhancement award of $20,000
for Plaintiff, the class representative. Plaintiff has not submitted a
declaration supporting his entitlement to an enhancement award. The named Plaintiff must explain why he
“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
plaintiffs, 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 award at the time of final
approval, and Plaintiff and Plaintiff’s Counsel are instructed to submit
declarations supporting the award requested.
Conclusion
Plaintiff’s motion for preliminary approval
of class action settlement is granted, conditioned on
Plaintiff filing an Amended
Proposed Order attaching a Third Amended Class Notice making the corrections
described in this order.
Dated: September _____, 2022
Hon. Monica Bachner
Judge of the Superior Court