Judge: Peter Wilson, Case: 30-2021-01226692, Date: 2023-07-27 Tentative Ruling
The hearing on the Motion for Preliminary Approval is CONTINUED to September 28, 2023 at 2:00 p.m. in department CX101 to permit the parties to respond to the following issues. A supplemental briefing shall be filed at least 9 days before the continued hearing and respond where necessary to the points raised below. Redlined versions of the revised proposed Class Notice and proposed order are to be provided. If required, an amendment to the settlement agreement is directed, rather than ‘amended settlement agreement’, to avoid use of limited Court time and resources.
As to the Settlement
1. The end date for the Class Period and PAGA Period is the earlier of March 31, 2023 or Closing. Since the Class Notice and proposed Order use the March 31, 2023 date, it appear that Closing has not yet occurred. What is the status of Closing? If Closing has not yet occurred, is there an estimated date? Relatedly, if Defendant has begun to collect Cash Recoveries, is there an estimate on the potential Escalator Payments?
2. How will the $720,000 Minimum Settlement Payment be funded? If the $720,000 is going to be funded through the 40% of Cash Recoveries, how will Defendant ensure that it collects enough funds to meet its obligation to pay the $720,000?
3. Related to 2. above, Paragraphs 3.b, 3.c, and 3.e of the settlement contain provisions which potentially conflict and thereby create ambiguity.
3.b: “Defendant’s obligation to pay Cash Recoveries shall terminate on the date upon which the Court enters the Final Approval Order, and, accordingly, Plaintiff shall have no interest in any Cash Recoveries collected by Defendant from and after such date.” Do the parties contemplate that the full Minimum Settlement Payment will have been made and received before entry of the Final Approval Order?
3.c: “Commencing on the tenth (10th) day of the first full calendar month following the Closing, and continuing through and including the tenth (10th) day of the first full month following the entry of the Final Approval Order, Defendant shall pay to the Escrow the Settlement Payments required hereunder on account of the Cash Recoveries collected by Defendant during the prior calendar month” This appears to contradict 3.b?
3.e: “Defendant’s payment of the $720,000 Minimum Settlement Payment is an absolute, non-contingent obligation of Defendant payable by Defendant in accordance with the terms of this Stipulation, subject only to the effectiveness of the Settlement, regardless of the amount of Cash Recoveries by Defendant.” Again, is this based on the assumption that full payment will be made before the Final Approval Order? If not, why should Cash Recoveries not continue to be a source of revenue for the settlement until full payment is made?
4. How did the parties determine that it was appropriate to set aside 40% of the Cash Recoveries for the Escalator Payments and Secured Claims and 60% of the Cash Recoveries for the Unsecured Claims?
5. The Class and PAGA releases are overbroad and should be simplified. The relevant language includes claims “arising from or relating to the claims or causes of action alleged by Plaintiff by the Amended Complaint, or which could have been alleged by Plaintiff based upon the facts, causes of action and legal theories stated by Plaintiff by the Amended Complaint”. There needs to be a qualifier, such as “reasonably” before “relating to” and “could have been alleged”. See Settlement, ¶¶35.a and d. Additionally, the phrase “for all time” in the Class release may create ambiguity since the definition of Class Claims and PAGA Claims limits the time period to the Class Period and the PAGA Period.
6. The Response Deadline for exclusion requests, objections and disputes is 45 days. The Court prefers 60 days. Why should the Response Deadline be shorter? Also, is the deadline extended for remailed notices?
7. The method for submitting Exclusion Requests varies in the Settlement from mailing and email to only mailing. See Settlement, ¶¶1.vv and 19. The method of submitting the Exclusion Requests should be consistent throughout the Settlement, Class Notice, and Exclusion Form.
8. Similarly, the method for submitting written objections varies from mailing and email to only mailing in the Settlement. See Settlement, ¶¶1.kk and 20. The method of submitting the Objections should be consistent throughout the Settlement, Class Notice, and Exclusion Form. Additionally, the Court will consider any objections at the final approval hearing regardless of whether a written objection is submitted.
9. The Settlement does not provide a specific method for submitting Disputes. See Settlement, ¶18. The dispute procedure should be revised so that parties file with the Court all disputes submitted by class members, the evidence submitted, and the resolution of those disputes. Although the Settlement Administrator may make the initial decision, the Court shall have the right to review any decision made by the Settlement Administrator regarding a claim dispute.
10. The Settlement permits Plaintiff’s counsel to seek up to 1/3 of the Gross Settlement Amount. Settlement, ¶7. However, the Han Declaration at ¶62 appears to state that Plaintiff’s counsel’s request for fees will not exceed $240,000.00. What is the correct not-to-exceed amount sought for attorney fees?
11. The Settlement permits the Settlement Administrator to seek fees and costs not to exceed $30,000. Settlement, ¶9. However, the Han Declaration indicates the Settlement Administrator’s fees and costs are $15,500. ROA 68, Han Decl., ¶27. What is the correct not-to-exceed amount sought for the Settlement Administrator’s fees and costs?
12. The Settlement gives Class Members 120 days to cash their checks before they become void. Settlement, ¶24. The Court prefers 180 days. Why should the check-cashing period be shorter?
13. The October 21, 2022 PAGA Notice letter to the LWDA should be submitted to the Court.
Issues re Class Notice
14. The Class Notice is to be revised consistent with the issues addressed above.
15. The title of the Class Notice should also reference the PAGA Action.
16. In the Class Notice, Plaintiff's counsel is entitled to up to 35% of the Gross Settlement Amount, but the Settlement Agreement only provides up to 1/3 of the Gross Settlement Amount. Ex. A, Class Notice, §V.C.1, p. 7.
17. The Class Notice should provide more detailed directions on how to obtain documents from the Court's website. Ex. A, Class Notice, §XV, p. 16.
18. The Settlement Administrator's website should post key documents in this matter, including the operative Complaint, Settlement Agreement and any amendments thereto, the Class Notice, Exclusion Request and Objection Forms, the Orders for Preliminary and Final Approval and the Judgment.
Issues re Proposed Order
19. The proposed order is to be revised consistent with the issues addressed above.
20. The Settlement, Class Notice, Objection Form and Request for Exclusion Form should be attached to the proposed order as exhibits.
21. In paragraph 6, line 7 insert "conditionally" between "is" and "appointed".
22. In paragraph 7, line 8 insert "conditionally" between "is" and "appointed".
23. The preliminarily approved disbursement amounts should be included in the proposed Order.
At Final Approval, the parties are ordered to include the following:
1. Plaintiff must present a full report to the Court on all exclusions, objections and disputes received. The Court will consider any objections at the final approval hearing.
2. The Court has wide discretion on assessing the reasonableness of fees, including basing fees on the percentage of fund method, conducting a lodestar cross-check on a percentage fee, or foregoing a lodestar cross-check and using other means to evaluate the reasonableness of a requested percentage fee. (Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 506.) However, the parties must include sufficient information in the Motion for Final Approval to permit the Court to conduct a lodestar cross-check, such as billing records in support of fees and documentation of costs.
3. Plaintiff’s counsel must disclose whether they have any fee-splitting arrangement with any other counsel, including the exact percentages, or confirm none exist. (Barnes, Crosby, Fitzgerald & Zeman, LLP v. Ringler (2012) 212 Cal.App.4th 172, 184; Cal. R. Ct. 3.769(b).)
4. In order for the Court to determine the appropriate amount of Plaintiff’s enhancement at final approval, Plaintiff should submit a declaration addressing the factors set forth in Golba v. Dick’s Sporting Goods, Inc. (2015) 238 Cal.App.4th 1251, 1272 and Clark v. Am. Residential Servs. LLC (2009) 175 Cal.App.4th 785, 804, including an estimate of the hours spent on this litigation.
5. Along with the Motion for Final Approval, the Settlement Administrator should provide an estimated high and low for individual settlement payments, along with Plaintiff’s individual payouts.
Plaintiff is ordered to give notice, including to the LWDA, and file a proof of service. All supplemental papers in response to this Order must also be served on the LWDA, with a proof of service filed with the Court.