Judge: Monica Bachner, Case: 20STCV41061, Date: 2023-04-17 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 20STCV41061    Hearing Date: April 17, 2023    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Plaintiff Edgar Montes’ unopposed motion for a final order approving the class action and PAGA penalty settlement is granted.

           Plaintiff Edgar Montes (“Montes”) (“Plaintiff”) moves for a final order approving the class action and PAGA penalty settlement with A G Construction aka AG Construction, Inc. (“AG Construction”) (“Defendant”).  (Notice of Motion, pg. 1.) 

           Motion to Approve Class Action and PAGA Settlement

Plaintiff requests the Court issue an order stating: (1) All terms as defined in the Second Amended Class Action and PAGA Settlement Agreement and Release (“Settlement Agreement”); (2) Class Members shall mean 388 persons who make of the class of all employees who worked as hourly construction workers for Defendant, in the State of California, during the Class Period of October 26, 2016 through October 13, 2022 (the date of preliminary approval); (3) the Court’s jurisdiction over the subject matter of this action and over all Parties thereto, including all Participating Settlement Employees; (4) the Settlement Class is properly certified as a class for settlement purposes only; (5) the Class Notice provided to the Settlement Class conforms with the requirement of C.C.P. §382, Civil Code §1781, C.R.C. Rules 3.766 and 3.769, the California and United States Constitutions, and any other applicable law, and constitutes the best notice practicable under the circumstances, by providing individual notice to all Settlement Class Members who could be identified through reasonable effort, and by providing due and adequate notice of the proceedings and of the matters set forth therein to the other Settlement Class Members; (6) the Class Notice fully satisfied the requirements of due process; (7) the Settlement was entered in good faith and is fair, reasonable, and adequate under appliable law; (8) no Settlement Class Members have objected to the terms of the Settlement; (9) one Settlement Class Member requested exclusion from the Settlement Class; (10) upon entry of this Order, payment to the Participating Class Members shall be effectuated pursuant to the terms of the Settlement Agreement; (11) in addition to any recovery that the Plaintiff may receive under the Settlement as Settlement Employee, and in recognition of Plaintiffs efforts on behalf of the Settlement Class and PAGA Employees, the Court approves the payment of a service fee award to Plaintiff Montes in the amount of $20,000; (12) the Court approves the payment of attorneys’ fees to Class Counsel in the sum of $161,700, which shall be paid to Class Counsel, Hamner and Garay; (13) the Court also approves reimbursement of the total combined sum of $10,901.20 in litigation expenses, which shall be paid to attorneys Hamner and Garay, pursuant to the terms of the Settlement Agreement; (14) The Court approves and orders payment in the amount of $9,000 to Phoenix Class Action Solutions for performance of its settlement administration services, pursuant to the terms of the Settlement Agreement; (15) the Court approves the settlement of claims under the Labor Code Private Attorneys General Act of 2004 (“PAGA”) (Lab. Code §§2698 et seq.) in the total amount of $20,000, and orders payment in the amount of $15,000 to the State of California Labor and Workforce Development Agency (“LWDA”) in compromise of claims under the PAGA, and the remaining $5,000 shall be distributed to the PAGA class; (16) in accordance with C.R.C. Rule 3.771(b), the Parties are ordered to give notice of this final Order and Judgment to all Settlement Class Members through the website established by the Settlement Administrator for this Settlement; (17) upon the Effective Date, Plaintiff and Participating Class Members release the Released Parties from the Released Class Claims; (18) The expiration date of any instruments of payment issued by the Settlement Administrator to Participating Class Members will be one hundred eighty (180) days from the date such instruments are issued and sent, and any settlement checks remaining uncashed after one hundred eighty (180) days shall cause that Participating Class Member’s payment, plus interest that has accrued thereon, to be distributed to the Controller of the State of California to be held pursuant to the Unclaimed Property Law, (Civ. Code §§1500 et seq.), for the benefit of that class member; and (19) the Judgment is intended to be a final disposition of the instant case in its entirety, and is intended to be immediately appealable and this Court reserves exclusive and continuing jurisdiction over this action, the Plaintiff, Settlement Class Members, and Defendants, for the purposes of: (a) supervising the implementation, enforcement, construction, and interpretation of the Settlement, the Preliminary Approval Order, the plan of allocation, the Final Approval Order, and the Judgment, and (b) Supervising distribution of amounts paid under this Settlement.  (Proposed Order.)

California Labor Code section 2699(l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to this part. The proposed settlement shall be submitted to the [Labor & Workforce Development Agency (“LWDA”)] at the same time that it is submitted to the court.” 

As a threshold matter, Plaintiff submitted evidence the parties complied with Labor Code section 2699(l)(2) by submitting a copy of the Settlement and instant motion to the LWDA at the same time they were submitted to the Court.  (Supp.-Decl. of Hamner ¶4, Exh. B.)

On October 26, 2020, Plaintiff filed his initial complaint in the instant action.  On January 21, 2021, Plaintiff filed his first amended complaint (“FAC”).  On December 21, 2021, Plaintiff filed the operative second amended complaint (“SAC”) alleging eight causes of action, including a PAGA cause of action for civil penalties pursuant to Labor Code §§2698, et seq., seeking to represent a class, pursuant to C.C.P. §382, defined as “all persons who have worked for Defendant as an hourly laborer, or any similar job title, in California during the Liability Period of October 26, 2020 to the present, and continuing.”  (SAC ¶8.)  On May 21, 2020, Plaintiff provided the LWDA and Defendant written notice of claims for PAGA penalties.  (SAC ¶6.)

On October 13, 2022, this Court granted preliminary approval to a class and PAGA settlement in this matter.  (Amended Order Granting Preliminary Approval of Class Action and PAGA Settlement.)  On March 30, 2023, this Court continued the instant motion.  On April 6, 2023, Plaintiff submitted a supplemental declaration in support of this motion.  The Court notes the Settlement at issue in the instant hearing for final approval is the same Settlement the Court previously considered in granting preliminary approval.  The parties now move for final approval of the proposed Class Action and PAGA Settlement.

           Discussion

A.   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.)

           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. discusses factors that the Court should consider when testing the reasonableness of the settlement.  (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 244-245.)

           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, 91 Cal.App.4th at pg. 245, citing Dunk, 48 Cal.App.4th at pg. 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.  (Id. at pg. 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, citing Dunk, 48 Cal.App.4th at pg. 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) 495 F.2d 448, 455; see also Linney v. Cellular Alaska Partnership (9th Cir. 1998) 151 F.3d 1234, 1242 [“[I]t is the very uncertainty of outcome in litigation and avoidance of wasteful and expensive litigation that induce consensual settlements.  The proposed settlement is not to be judged against a hypothetical or speculative measure of what might have been achieved by the negotiators.”].)

C.   Terms of the Settlement Agreement

The Settlement defines “Class Members” as all employees who worked as hourly construction members for Defendant in the state of California during the Class Period, which is a total of approximately 337 individuals.  (Supp.-Decl. of Hamner, Exh. A [“Settlement”] ¶8.)  The Settlement defines “Participating Class Members” as those Class Members who do not opt out or otherwise exclude themselves from the Settlement of the Class Claims portion of this Settlement.  (Settlement ¶28.)  “Participating Settlement Employees” means all Participating Class Members and PAGA Employees.  (Settlement ¶29.)   The Settlement defines “Class Period” as October 26, 2016, to the Date of Preliminary Approval.  (Settlement ¶8.)  The definitions are proper pursuant to the statute of limitations and the date of notice on the LWDA. 

The Settlement defines “Released PAGA Claims” as the PAGA Claims that Plaintiff, on behalf of herself [sic], the State of California and PAGA Employees, are fully and irrevocably releasing the Released Parties from provided by this Settlement Agreement for the Class Period.  (Settlement ¶31.)  As such, the Settlement provides that Released PAGA Claims only include claims for civil penalties under PAGA.  The terms of the Settlement’s release imply that only in exchange for the consideration set forth in the Settlement (i.e., the individual PAGA payments) do PAGA Settlement Members release Released Parties from Released Claims.  As such, the release is accordingly effective after the payment date and does not apply to any individual claims and is therefore proper.  (See Settlement ¶¶82-83; ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175.) 

The Settlement defines “Released Class Claims” as the Class Claims that Participating Class Members are fully and irrevocably releasing the Released Parties from in exchange for the consideration provided by this Settlement, whether arising at law, in contract, or in equity, and whether for economic or non-economic damages, restitution, injunctive relief, penalties, or liquidated damages.  (Settlement ¶30.)  The Settlement provides a limited release of all Class Claims brought in this matter or could have been brought by Participating Class Members.  (Settlement ¶¶78-81.)  The Settlement provides that any Participating Class Member who may discover new facts, legal theories or legal arguments not alleged in the SAC as to Defendant but 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 Class Claims and timely submits a valid request for exclusion to the Settlement of Class Claims will not be bound by the release of the Released Class Claims.  (Settlement ¶81.)

The Settlement states that only Plaintiff will provide a general release of claims per Civil Code §1542.  (Settlement ¶¶72-77.)

The Settlement defines “Released Parties” as Defendants and its affiliates, including Alberto Garcia Construction Services, Inc., and each of their divisions, subsidiaries, parents, predecessors, any merged entity or merged entities and/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.  (Settlement ¶32.)

Defendant will pay a Gross Settlement Amount (“GSA”) of $490,000. (Settlement ¶49.)  The Net Settlement Amount (“NSA”) is $264,300.  (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. (Settlement ¶62.)  The Settlement Administrator is Phoenix Class Action Solutions.  (Settlement ¶35.)  Settlement administration costs are not to exceed $9,000 and are supported by invoices. (Settlement ¶49(c); Decl. of Mitzner ¶16, Exh. B.) 

The Settlement defines “Service Enhancement” as the incentive payment to Plaintiff, not to exceed $20,000.  (Settlement ¶34.)  Plaintiff requests he be awarded a class representative service award in the amount of $20,000.  (Settlement ¶49(b); Decl. of Montes ¶¶3-6.)  In recognition of Plaintiff’s efforts on behalf of the Settlement Class and PAGA Employees and for the additional risk and inconvenience he assumes from his general release of claims, the Court approves the payment of a service fee award to Plaintiff in the amount of $20,000.

Pursuant to the 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.  (Settlement ¶49(e).)  The PAGA Employee Payment shall be treated as miscellaneous income, which shall be reported on an IRS 1099 without withholdings.  (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 does not include the PAGA Employee Payment to PAGA Employees] 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. (Settlement ¶¶13, 14, 25, 29, 30, 31, 63-65.)  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.  (Settlement ¶14.) 

The 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.  (Settlement ¶67.)

The Settlement 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.  (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.  (Settlement ¶63.)  PAGA Employee Payments will be allocated entirely to penalties.  (Settlement ¶63.)    

Plaintiff provided the Court with the Settlement, Plaintiff’s Notice Letters, and information regarding how the terms of the settlement were reached.  (Decl. of Hamner ¶3; Supp.-Decl. of Hamner ¶2, Exh. A [Settlement]; Decl. of Mitzner ¶5, Exh. A [Notice Letters].)  Plaintiff provided information relating to the investigation done by their counsel.  (Decl. of Hamner ¶3.)  Plaintiff also provided information suggesting the Settlement is reasonable based on Plaintiffs’ counsels’ investigation and the range of recovery.  (Decl. of Hamner ¶¶3, 5.) Plaintiffs provided sufficient information to support the reasonableness of the Settlement. 

As the prevailing employee, Plaintiffs are entitled to reasonable attorneys’ fees in this action.  (Cal. Lab. Code § 2699(g)(1).)  The PAGA Settlement provides for attorneys’ fees, allowing for a maximum of $161,700, or 33% of the GSA, in addition to costs up to $15,000.  (Settlement ¶49(a).)  Plaintiff’s Counsel Christopher Hamner declares his hourly rate is $725 per hour and Counsel Jose Garay declares his hourly rate is $850.  (Decl. of Hamner ¶7; Decl. of Garay ¶¶3-4.)  Counsel Hamner declares he incurred a total of 106.6 hours on this matter and Counsel Garay declares he incurred a total of 93.9 hours.  (Decl. of Hamner ¶7; Decl. of Garay ¶3.)  Based on the Court’s experience, Plaintiff’s Counsels’ hourly rates and billed hours appear reasonable in relationship to Counsels’ community of practice and experience.  Plaintiff’s Counsel declares the total amount of attorneys’ fees in this matter is $157,100 but requests the maximum amount of $161,700 in Plaintiff’s Proposed Order.  (Compare Decl. of Hamner ¶7 with Proposed Order ¶12.)  The Court finds that payment in the reduced amount of $157,100 is reasonable and supported and awards Plaintiffs’ counsel $157,100 in attorneys’ fees.  (Decl. of Hamner ¶7; Decl. of Garay ¶3.)  Per the terms of the settlement, the amount of disallowed Attorneys’ Fees requested be added to the NSA and apportioned equally to Participating Class Members.  (Settlement ¶49(d).)

Plaintiff’s Counsel requests $10,901.20 in costs for filing fees, mediation costs, and attorney service and copying costs.  (Decl. of Hamner ¶13.)  While Plaintiff does not provide invoices to support the amount of costs requested, the requested amount is less than the maximum permitted by the Settlement and is therefore permitted.

The Settlement indicates that the upon approval of the Settlement, the Court shall approve a Judgment. (Settlement, pg. 5; Proposed Order, Ex. A.)  The Settlement and [Proposed] Judgment submitted by the parties provides for a final judgment with the Court retaining jurisdiction pursuant to C.C.P. §664.5 for the purposes of supervising the implementation, enforcement, construction, and interpretation of the Settlement, the Preliminary Approval Order, the plan of allocation, the Final Approval Order, and the Judgment; and (b) Supervising distribution of amounts paid under this Settlement.  (Proposed Order ¶19; Settlement ¶88(d)(3).)

Based on the foregoing, Plaintiff’s motion for an order approving the Settlement is granted.   

Dated:  April _____, 2023

Hon. Daniel M. Crowley

Judge of the Superior Court