Judge: Robert B. Broadbelt, Case: 21STCV36654, Date: 2022-08-04 Tentative Ruling
Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.
Case Number: 21STCV36654 Hearing Date: August 4, 2022 Dept: 53
Superior Court of California
County of Los Angeles – Central District
Department
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[Tentative]
Order RE: plaintiff’s motion for preliminary approval
of class action AND PAGA settlement |
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MOVING PARTY: Plaintiff Daniel Analco
RESPONDING PARTY: Unopposed
Plaintiff’s Motion for Preliminary Approval
of Class Action and PAGA Settlement
The
court considered the moving papers. No
opposition to the motion was filed.
BACKGROUND
Plaintiff Daniel Analco
(“Plaintiff”) seeks an order approving the settlement of the class action
claims and claims under the Labor Code Private Attorney General Act of 2004 (Labor
Code § 2698, et seq.) (“PAGA”) set forth in the Joint Stipulation of Class
Action and PAGA Settlement (the “Settlement”) entered into by and between
Plaintiff, on behalf of himself, the State of California, and the settlement
class members, on the one hand, and defendant Felix Chevrolet, LP
(“Defendant”), on the other hand.
On October 5, 2021, Plaintiff
filed this PAGA action against Defendant.
On May 5, 2022, Plaintiff filed the operative First Amended Class Action
Complaint for Damages and Enforcement under PAGA, asserting wage and hour
claims against Defendant. Plaintiff
alleges that Defendant violated the Labor Code by, among other things, failing
to pay overtime and minimum wages, failing to provide meal and rest periods,
and failing to timely pay wages during employment and upon termination.
Plaintiff
and Defendant (collectively, the “Parties”) have agreed to settle this action
for $337,500.
LEGAL STANDARD
As a “fiduciary” for 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. Southland Corp. (2000) 85 Cal.App.4th 1135, 1151,
citing Dunk v. Ford Motor Co. (1996)
48 Cal.App.4th 1794, 1802.)
California Rules of Court,
rule 3.769 governs settlements of class actions. “Any party to a settlement agreement may
serve and file a written notice of motion 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.”
(Cal. Rules of Court, Rule 3.769(c).)
Similarly, under PAGA, an aggrieved employee may bring a civil action
personally and on behalf of other current or former employees to recover civil
penalties for Labor Code violations. (Iskanian
v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380.) Under PAGA, 75 percent of any penalties
recovered go to the Labor and Workforce Development Agency (“LWDA”), leaving
the remaining 25 percent for the employees.
(Ibid.) PAGA is intended
“to augment the limited enforcement capability of [LWDA] by empowering
employees to enforce the Labor Code as representatives of the Agency.” (Id. at p. 383.) A judgment in a PAGA action binds all those,
including nonparty aggrieved employees, who would be bound by a judgment in an
action brought by the government. (Id.
at p. 381.)
Labor Code section 2699, subdivision (l)(2) provides that “[t]he
superior court shall review and approve any settlement of any civil action
pursuant to” PAGA. The court’s review
“ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3
Cal.5th 531, 549.) “[T]here is no
requirement that the Court certify a PAGA claim for representative treatment”
as in a class action. (Villalobos v.
Calandri Sonrise Farm LP (CD. Cal., July 22, 2015, No. CV122615PSGJEMX)
2015 WL 12732709, at *5.)
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, 244-245 (disapproved
on other grounds), 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.” (Id. at p. 245.) “[T]he test is not the maximum amount
plaintiffs might have obtained at trial on the complaint, but rather whether
the settlement is reasonable under all of the circumstances.” (Id. at p. 250; see also City of Detroit v. Grinnell Corp. (2d
Cir. 1974) 495 F.2d 448, 455 [stating that a proposed settlement that amounts
to a fraction of the potential recovery does not in itself render the proposed
settlement grossly inadequate].)
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, supra, 48 Cal.App.4th at
p. 1801.)
Conditional Certification of
the Class
The Settlement Class Members (the “Class”) is comprised of (1) all
PAGA members and (2) all individuals who worked for Defendant as hourly-paid
and/or non-exempt employees, but excluding those employed as commissioned
vehicle salespeople in California at any time during the period from March 3,
2018 through May 2, 2022 (the “Class Period”).
(Genish Decl., Ex. B, Settlement, ¶¶ 38, 6.) “PAGA Members” means all individuals who
worked for Defendant as hourly-paid and/or non-exempt employees, but excluding
those employed as commissioned vehicle salespeople in California at any time
during the period from October 5, 2020 through May 2, 2022 (the “PAGA Period”). (Genish Decl., Ex. B, Settlement, ¶¶ 22, 25.)
Plaintiff requests the court certify the Class for settlement purposes
on the ground that the Class meets all requirements for class certification as
set forth by Code of Civil Procedure section 382. (See Dunk, supra, 48 Cal.App.4th at p. 1807,
fn. 19 [finding that the court may use a lesser standard to determine the
appropriateness of a settlement class for settlement purposes].)
Plaintiff asserts the following.
First, the Class consists of 122 members, making it sufficiently
numerous. (Genish Decl.,
¶ 15.) Second, Plaintiff contends
that his claims are typical of the Class and present common issues of law and
fact, since Plaintiff has alleged that Defendant denied compliant meal and rest
periods to employees, required employees to work off-the-clock, and failed to
properly and fully compensate its employees.
Plaintiff asserts that these alleged violations were uniformly suffered
by all members of the Class. Third,
Plaintiff submits that he has proven to be an adequate Class
representative. Plaintiff states that he
regularly conferred with counsel regarding his responsibilities as a class
action and PAGA representative and assisted in litigating this matter. (Analco Decl., ¶ 4.) For example, Plaintiff states that he
provided documents regarding his employment with Defendant; helped develop a
strategy as to what documents and information to be obtained from Defendant; met
with counsel; and contacted and referred several potential witnesses and class
members to Plaintiff’s attorneys.
(Analco Decl., ¶¶ 4-5.) Finally,
Plaintiff contends that a class action is superior in this instance, particularly
in light of the risk that individual actions arising out of the same set of operative
facts would burden the courts and result in inconsistent rulings.
The court agrees and therefore proceeds with the analysis of the
reasonableness of the Settlement in light of the conditional certification of
the Class for settlement purposes.
Terms of the Settlement
Agreement
A copy of the Settlement is attached as Exhibit B to the Declaration
of Jonathan M. Genish, filed July 13, 2022.
Under the terms of the Settlement, Defendant agrees to pay a Gross
Settlement Payment of $337,500 to be allocated as follows:
·
$25,000:
PAGA penalties, of which 75% or $18,750 will be paid to the Labor and
Workforce Development Agency (“LWDA”) and 25% or $6,250 will be distributed
among PAGA Members;
·
Up to $7,500: Class representative enhancement
award to Plaintiff;
·
Up to $112,500:
attorney’s fees to Plaintiffs’ counsel (defined in the Settlement as
allowing attorney’s fees of up to one-third of the Gross Settlement Payment);
·
Up to $30,000:
costs and expenses to Plaintiff’s counsel;
·
Up to $10,000:
payment to Settlement Administrator; and
·
Remainder of approximately $152,500 to be paid
to Class members who do not opt out of the Settlement (the “Participating Class
Members”). The remaining $6,250 will be
distributed to PAGA Members on a pro rata basis.
(Genish Decl., Ex. B, Settlement, ¶¶ 15, 50, 49, 48, 36.)
The Settlement Administrator is ILYM Group, Inc. (the
“Administrator”). (Genish Decl., Ex. B,
Settlement, ¶ 37.)
As to the PAGA settlement, the remaining 25 percent, or $6,250, will
be distributed on a pro rata basis to PAGA members based on the total
number of workweeks worked by each PAGA member during the PAGA Period (i.e.,
October 5, 2020 through May 2, 2022).
(Genish Decl., Ex. B, Settlement, ¶ 50.)
As to the class action settlement, all Settlement Class Members who do
not opt out of the Settlement will receive an Individual Settlement Share based
on the following calculations. The
Administrator will determine the workweek of each Class member, divide the net
settlement fund by the workweeks of all Class members, and multiply each Class
member’s workweeks by the estimated workweek value. (Genish Decl., Ex. B, Settlement, ¶ 52,
subd. (A)(i).) Each payment to a Class
member shall be allocated as follows: 20 percent to wages and 80 percent to penalties
and interest. (Genish Decl., Ex. B,
Settlement, ¶ 53.) Plaintiff
estimates that Participating Class Members will receive an average payment of $1,300. (Genish Decl., ¶ 17.)
A Class member can request to be excluded from the Settlement;
however, no PAGA Member has the right to exclude himself or herself from the
release of the settled PAGA claims.
(Genish Decl., Ex. B, Settlement, ¶ 61.) A Class Member wishing to opt-out of the
Settlement must sign and postmark a written Request for Exclusion to the
Administrator by the response deadline, and must include (1) the Class member’s
name, address, phone number, and the last four digits of his or her Social
Security number and/or Employee ID number and (2) a clear statement requesting
exclusion from the Settlement. (Genish
Decl., Ex. B, Settlement, ¶¶ 61, 32 [defining response deadline as 60
calendar days from the initial mailing of the Class Notice by the
Administrator].) Similarly, a
Participating Class Member may object to the Settlement by postmarking an
objection to the Administrator on or before the response deadline which includes
the objecting member’s name, address, phone number, last four digits of his or
her Social Security number and/or Employee ID number, and the specific reason
for the objection. (Genish Decl., Ex. B,
Settlement, ¶¶ 60, 32].) Settlement
Class Members will have the opportunity to dispute the information provided in
the Class Notice, including the number of workweeks and/or pay periods credited
to the Class member. (Genish Decl., Ex.
B, Settlement, ¶ 56.)
Analysis of Settlement
Agreement
A. Does
a Presumption of Fairness Exist?
1. Was
the Settlement reached through arm’s-length bargaining? The parties attended a formal mediation with
Steven G. Pearl, engaged in settlement discussions, and engaged in arms-length negotiations. (Genish Decl., ¶¶ 11, 25; Genish Decl.,
Ex. B, Settlement, ¶ 45.)
2. Were
investigation and discovery sufficient to allow counsel and the court to act
intelligently? The parties agreed to
resolve this action by means of a private mediation and agreed to exchange
informal discovery as part of the mediation process. (Genish Decl., ¶ 10.) Defendant produced pay records and other
documents relating to Defendant’s wage and hour, meal and rest, and business
expense policies. (Ibid.; Genish
Decl., ¶ 26.)
3. Is
counsel experienced in similar litigation?
Counsel is experienced in wage-and-hour class action litigation. (Genish Decl., ¶¶ 2-8.)
4. What
percentage of class has objected? This
factor will be determined at the final fairness hearing.
B. Is the settlement fair, adequate, and
reasonable?
1.
Strength
of the plaintiff’s case. The
strength of the case on the merits for the plaintiff is the most important
factor, balanced against the amount offered in settlement. (Kullar, supra, 168 Cal.App.4th at p. 130.) Plaintiff’s counsel analyzed Defendant’s
maximum potential exposure to be approximately $4,443,700, assuming that
Plaintiff succeeded on all claims at trial.
(Genish Decl., ¶ 27.) This
amount consisted of the following estimated damages: $369,600 (meal break
damages); $369,600 (rest break damages); $645,150 (unpaid wages); $1,900
(waiting time penalties); and $2,285,250 (wage statement penalties). (Ibid.) As to the PAGA claims, Plaintiff’s counsel
estimated $402,600 in potential PAGA penalties.
(Ibid.)
2. Risk,
expense, complexity, and likely duration of further litigation. Plaintiff’s counsel asserts that Defendant
raised several defenses that would have impacted Plaintiff’s recovery,
including defenses to class certification and to the merits of Plaintiff’s
claims. (Genish Decl., ¶¶ 28, 30.) In particular, Plaintiff identified
difficulties in proving the rest period violations in light of the fact that
Defendant is not required to record rest breaks. (Genish Decl., ¶ 32.) Plaintiff also recognized that there would be
difficulties in proving the unpaid wages claims as they were “based on
unrecorded, off-the-clock work performed” both before and after shifts. (Genish Decl., ¶ 33.) Based on these challenges, Plaintiff’s counsel
reduced Defendant’s estimated liability by approximately 50 percent. (Genish Decl., ¶ 39.)
3. Risk
of maintaining class action status through trial. It would have been Plaintiff’s burden to
maintain the class action through trial.
4. Amount
offered in settlement. Defendant has
offered to pay $337,500 (of which $25,000 is to be allocated to the PAGA
claims) to settle the class action and PAGA claim.
5. Extent
of discovery completed and the stage of the proceedings. As stated above, the Parties have completed
sufficient discovery in order to make an informed decision.
6. Experience
and views of counsel. As stated
above, counsel is experienced in class actions.
(Genish Decl., ¶¶ 2-8.)
Moreover, Plaintiff’s attorney endorses this settlement and considers
it to be fair, reasonable, and adequate.
(Genish Decl., ¶ 39.)
7. Presence
of a governmental participant. This
factor is not applicable here.
8. Reaction
of the class members to the proposed settlement. The class members’ reactions will not be known
until they receive notice and are given an opportunity to object or opt-out. This factor becomes relevant during the
fairness hearing.
Scope of Release
Upon the funding of the Gross Settlement Payment and all applicable
taxes by Defendant, every Participating Class Member will be deemed to have
fully released all settled class claims.
(Genish Decl., Ex. B, Settlement, ¶ 67.) The Settlement defines settled class claims
to mean any and all claims that are alleged or reasonably could have been
alleged based on the factual allegations and the claims asserted in this
action, including claims for unpaid overtime and minimum wages, meal and rest
period violations, wages not timely paid during employment or upon termination,
failure to provide accurate wage statements, failure to maintain accurate
payroll records, failure to reimburse necessary business expenses, and unlawful
business practices under the Labor Code and/or the Business and Professions
Code. (Genish Decl., Ex. B, Settlement,
¶ 33.)
Upon the funding of the Gross Settlement Payment and all applicable
taxes by Defendant, every PAGA member will be deemed to have fully released all
settled PAGA claims. (Genish Decl., Ex. B, Settlement, ¶ 68.) The Settlement defines settled PAGA claims to
be all claims that are alleged or reasonably could have been alleged based on
the factual allegations and the claims asserted in the action and/or the PAGA
Notice, including any and all claims, rights, or causes of action for civil
penalties, attorneys’ fees, and costs pursuant to PAGA that are based on
violations of Labor Code sections 201 through 204, 226, 226.7, 510, 512,
subdivision (a), 1174, subdivision (d), 1194, 1197, 1197.1, 1198, 2800 and 2802. (Genish Decl., ¶ 34.)
The court finds that the scope of the releases is reasonable.
Notice to Class
A. Standard
“If the court grants preliminary approval, the order must include the
time, date, and place of the final approval hearing; notice to be given to the
class; and any other matters deemed necessary for the settlement hearing.” (Cal. Rules of Court,
Rule 3.769(e).) In addition, Rule
3.769(f) states: “If the court has
certified the action as a class action, notice of the final approval hearing
must be given to the class members in the manner specified by the court. The notice must contain an explanation of the
proposed settlement and procedures for class members to follow in filing
written objections to it and in arranging to appear at the settlement hearing
and state any objections to the proposed settlement.”
B. Form
of Notice
The proposed Notice of Class Action Settlement (“Notice”) is attached
to the Settlement as Exhibit 1. It
contains all necessary information, including a definition of the class, a
discussion of the litigation and the terms of the settlement and summary of the
released claims, the different options for responding to the notice, including
directions regarding how to exclude themselves from or object to the Settlement,
and information about when and where the fairness hearing will be held. Class members are also informed about the
attorney’s fees and other deductions that will be requested from the settlement
fund, and it states the names and contact information for class counsel. (Genish Decl., Ex. B, Settlement, Ex. 1,
Notice, ¶ 5 [providing a summary of the settlement], ¶ 10 [information for
class counsel].)
C. Method
of Notice
Within 21 calendar days of preliminary approval, Defendant will
provide the Class List to the Administrator.
(Genish Decl., Ex. B, Settlement, ¶ 59, subd. (b).) Based on information in the Class List and
the terms of the Settlement, the Administrator will confirm the number of
workweeks and/or pay periods and estimated Individual Settlement Share for
every Class member to be included in the Notice to that Class member. (Genish Decl., Ex. B, Settlement, ¶ 59,
subd. (c).) Within 14 calendar days
after receiving the Class List from Defendant, the Administrator will mail the
Notice to all Class members via First Class U.S. Mail, using the most current,
known mailing address identified in the Class List. (Genish Decl., Ex. B, Settlement, ¶ 59,
subd. (d).) All Class members will be
mailed a Notice. (Genish Decl., Ex. B,
Settlement, ¶ 59, subd. (e).)
The court finds that the proposed means of providing notice appears to
provide the best possible means for giving actual notice to the putative class
members.
D. Cost
of Notice
Prior to the time of 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.
Attorney’s Fees and Costs
California Rules of Court, Rule 3.769(b)
states: “Any
agreement, express or implied, that has been entered into with respect to the
payment of attorney’s fees or the submission of an application for the approval
of attorney’s 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.”
Ultimately, the award of attorney fees is made by the court at the
fairness hearing, using the lodestar method with a multiplier, if appropriate. (Ketchum v. Moses (2001) 24 Cal.4th 1122,
1132-1136; 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.) Despite any agreement by the parties to the
contrary, the court has an independent responsibility to review the attorney
fee provision of the settlement agreement and award an amount that it
determines to be reasonable. (Garabedian v. Los Angeles Cellular Telephone
Co. (2004) 118 Cal.App.4th 123, 128.)
The question of whether Class Counsel is entitled to one-third of the
Gross Settlement Payment, or $112,500, will be addressed at the fairness
hearing when Class Counsel brings a noticed motion for attorney fees. The court might use the lodestar method to
determine attorney fees and cross-check it against the percentage-of-recovery
method. (In re Consumer Privacy Cases (2009) 175
Cal.App.4th 545, 557.) Counsel is
advised that they must provide the court with sufficient evidence so that it
can properly apply the lodestar method and indicate what modifier, if any, they
are seeking as to each attorney. Counsel
also should be prepared to justify any costs sought by detailing how such costs
were incurred.
Service Award to Class
Representative
The Settlement Agreement provides for an enhancement award of up to $7,500
to plaintiff Daniel Analco. (Genish
Decl., Ex. B, Settlement, ¶ 49.) In
connection with the final fairness hearing, Plaintiff must
submit his declaration attesting to why he should be entitled to an enhancement
award in the proposed amount. (Clark v.
American Residential Services LLC (2009) 175 Cal.App.4th 785, 806.)
ORDER
The court grants plaintiff Daniel
Analco’s motion for preliminary approval of the class action and PAGA
settlement set forth in the Joint
Stipulation of Class Action and PAGA Settlement.
The court will sign and file the
“[Proposed] Order Granting Preliminary Approval of Class Action and PAGA
Settlement” lodged by Plaintiff on July 13, 2022.
The court sets a Final Approval
Hearing on the class action settlement on ____________ 2022, at 10:00 a.m., in Department
53.
Plaintiff Daniel Analco is ordered
to give notice of this order.
IT
IS SO ORDERED.
DATED:
_____________________________
Robert
B. Broadbelt III
Judge
of the Superior Court