Judge: Ronald F. Frank, Case: 21STCV38784, Date: 2023-05-05 Tentative Ruling
Case Number: 21STCV38784 Hearing Date: May 5, 2023 Dept: 8
Tentative Ruling¿
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HEARING DATE: May 5, 2023¿¿
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CASE NUMBER: 21STCV38784
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CASE NAME: Ulysses A.
Rivas v. City of Manhattan Beach, et al.
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MOVING PARTY: Plaintiff, Ulysses A. Rivas
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RESPONDING PARTY: None.
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TRIAL DATE: May
24, 2023
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MOTION:¿ (1) Motion for Preliminary
Approval of Class Action Settlement and Certification of the Settlement Class
Tentative Rulings: (1) GRANTED. However, Plaintiff’s counsel should speak to
the issue of the percent of the class
objecting and how many members of the class were given notice (13 or some other
number) and what percentage responded
I. BACKGROUND¿¿
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A.
Factual¿¿
Plaintiff Ulysses A. Rivas (“Plaintiff”) seeks
preliminary approval of the proposed class action settlement, which Defendant
City of Manhattan Beach (“Defendant”) do not oppose. Subject to court approval,
Plaintiff and Defendant have agreed to settle Plaintiff’s and the proposed
Class Members’ claims against Defendant for a total settlement amount of $105,000
with no reversion (the “Proposed Settlement”). 1 In addition to the payments to
class members, the proposed Settlement includes payment of Plaintiff’s
attorneys’ fees and costs, the costs of settlement administration, service
award to the Class Representative and PAGA penalties. Plaintiff also seeks to
provisionally certify the following Class for settlement purposes, which
Defendant also do not oppose:
All persons
employed by the City who worked as a Dial-a-Ride driver in California for the
City from October 20, 2018 to March 10, 2023 (the “Class Period”).
Plaintiff asserts that this proposed Settlement will
resolve all of Plaintiff and the above-defined Class Members’ released claims
against Defendant.
B.
Summary of Settlement Terms
Under the terms of the fully
executed Settlement Agreement, Defendant agree to pay a settlement amount of
$105,000 (“Total Settlement Amount”).
The Net Settlement Amount will be
used to fund payments to Class Members who do not opt out of the Settlement (“Participating
Class Members”). The Net Settlement Amount shall be calculated by deducting the
following amounts from the Gross Settlement Amount, if approved by this Court:
(1) $40,000 to Class Counsel for attorneys’ fees; (2) not to exceed $10,000 to Class
Counsel for litigation costs and expenses; (3) $15,000 in total to the Class
Representative as a service award as approved by the Court; (4) $3,750 to the
California Labor and Workforce Development Agency for PAGA Penalties; and (5)
$2,500 to the Settlement Administrator to administer the settlement.
The Net Settlement Amount shall be
distributed to Participating Class Members who do not opt-out of the
Settlement. No affirmative action is needed by a Class Member to become a
Participating Class Member. The Parties agree that the Net Settlement Amount
shall be used to fund Individual Settlement Payments. The Parties agree that
the Net Settlement Amount shall be divided between all Participating Class
Members based on the number of Shifts they worked for Defendant during the
Class Period as Dial-a-Ride drivers.
An Individual Class Payment will be
calculated by (a) dividing the Net Settlement Amount by the total number of
Shifts worked by all Participating Class Members for Defendant as Dial-a-Ride
drivers and (b) multiplying the result by each Participating Class Member’s
Shifts worked as a Dial-a-Ride drive. The proposed Individual Class Payment
will be included in the Class Members’ Notice Packets.
As to the PAGA Penalties, the
Administrator will calculate each Individual PAGA Payment by (a) dividing the
amount of the Aggrieved Employees’ 25% share of PAGA Penalties $1,250 by the
total number of PAGA Period Pay Periods worked by all Aggrieved Employees
during the PAGA Period and (b) multiplying the result by each Aggrieved
Employee’s PAGA Period Pay Periods.
No amount of the Gross Settlement
Amount shall revert back to Defendant. Each Individual Settlement Payment will
be allocated using the following formula: 25% of each Individual Settlement
Payment will be treated as wages and subject to normal tax withholding and
shall be reported to taxing authorities on an IRS Form W-2 and the remaining
75% of each Individual Settlement Payment will be treated as prejudgment
interest, penalties and statutory non-wage payments on which there will be no
tax withholding and for which an IRS Form 1099 (marked “Other Income”) shall be
issued if the payment is above the minimum threshold required for the issuance
of a Form 1099. Participating Class Members and Aggrieved Employees assume full
responsibility and liability for any taxes owed on their Individual Class
Payment and Individual PAGA Payment received.
Participating Class Members shall
have one hundred eighty (180) days from the date their Individual Settlement Payment
checks are dated to cash their settlement checks. Any checks that are not
cashed upon the expiration of that 180-day time period or for whom the
Settlement Administrator is unable to obtain a valid mailing address through
the provided process shall be distributed to the State of California State
Controller’s Office Unclaimed Property Fund in the name and for the benefit of
the individual Class Member.
II. ANALYSIS
A.
Legal
Standard
California Rules of Court, rule
3.769(a) provides: “A settlement or compromise of an entire class action, or of
a cause of action in a class action, or as to a party, requires the approval of
the court after hearing.” “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.” (See Cal. Rules of Court, rule 3.769(c).)
“In a class action lawsuit, the
court undertakes the responsibility to assess fairness in order to prevent
fraud, collusion or unfairness to the class, the settlement or dismissal of a
class action. The purpose of the requirement [of court review] is the
protection of those class members, including the named plaintiffs, whose rights
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 [internal quotation marks omitted]; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 245, disapproved on another
ground in Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal. 5th 260
(“Wershba”), [Court needs to “scrutinize
the proposed settlement agreement to the extent necessary to reach a
reasoned judgment that the agreement is not the product of fraud or
overreaching by, or collusion between, the negotiating parties, and that the
settlement, taken as a whole, is fair, reasonable and adequate to all
concerned.”] [internal quotation marks omitted]. )
“The burden is on the proponent
of the settlement to show that it is fair and reasonable. However, “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 245 [citing Dunk v. Ford
Motor Co. (1996) 48 Cal.App.4th 1794, 1802 ]. )
Notwithstanding an initial
presumption of fairness, “the court should not give rubber-stamp
approval.” (Kullar v. Foot Locker Retail, Inc. (2008) 168
Cal.App.4th 116, 130 (“Kullar”).) “[W]hen class certification is
deferred to the settlement stage, a more careful scrutiny of the fairness of
the settlement is required.” (Carter v. City of Los Angeles (2014)
224 Cal.App.4th 808, 819.) “To protect the interests of absent class members,
the court must independently and objectively analyze the evidence and circumstances
before it in order to determine whether the settlement is in the best interests
of those whose claims will be extinguished.” (Kullar, 168 Cal.
App. 4th at 130.) In that determination, the court should consider
factors such as “the strength of 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 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.” Id. at 128.
“Th[is] list of factors is not exclusive and the court is free to engage
in a balancing and weighing of factors depending on the circumstances of each
case.” (Wershba, 91 Cal. App. 4th
at 245.)
At the same
time, “[a] settlement need not obtain 100 percent of the damages sought in
order to be fair and reasonable. Compromise is inherent and necessary in the
settlement process. Thus, even if ‘the relief afforded by the proposed
settlement is substantially narrower than it would be if the suits were to be
successfully litigated,’ this is no bar to a class settlement because ‘the
public interest may indeed be served by a voluntary settlement in which each
side gives ground in the interest of avoiding litigation.’” (Id.
at 250.)
B.
Discussion
1.
Presumption
of Fairness
The settlement is entitled to a
presumption of fairness for the following reasons: (1) the settlement was
reached through arm’s length bargaining; (2) The investigation and discovery
were sufficient; (3) Counsel is experienced in similar litigation; and (4)
Percentage of the class objecting.
Plaintiff notes that the settlement
was reached after Class Counsel thoroughly reviewed all available evidence and
after arm’s-length bargaining by the parties, including attendance at the
mediation session. The extensive informal discovery conducted in this case, and
the information exchanged through the parties’ negotiations, are sufficient to
assess reliably the merits of the respective parties’ positions and to
compromise the issues on a fair and equitable basis. Plaintiff contends that
the parties actively litigated both cases since the case was initially filed in
October 2021. There have been ongoing investigations and an exchange of
informal discovery and documents. (Barrera Decl., ¶¶ 15-22.) Furthermore, the
parties engaged in a mediation session with Steve Pearl, Esq., a well-respected
mediator with experience in California class action litigation and extensive
follow-up discussions and negotiations. (Barrera Decl., ¶¶ 20-22.)
Plaintiff asserts that the parties
were well aware of all aspects of the case including the risks and delays of
further litigation, the risks to both parties of proceeding with class
certification, the law relating to the subject claims, the evidence produced
and analyzed, and the possibility of appeals, among other things. (Id.)
During all settlement discussions, the parties conducted their negotiations at
arms’ length in an adversarial position. (Barrera Decl., ¶ 20.) Plaintiff
admits that arriving at a settlement that was acceptable to both parties was
not easy. Plaintiff submits that Defendant and their counsel felt very strongly
about its ability to prevail on the merits and at certification. However, Plaintiff
and Class Counsel believed that they would have obtained class certification
and prevailed at trial. (Id. ¶¶ 10.) The parties litigated the case up
until the settlement in January 2023.
Plaintiff notes that after much
consideration by the parties as to their respective positions and risks in
continued litigation, the parties agreed that this case was well suited for
settlement given the legal issues relating to Plaintiff’s claims, as well as
the costs and risks to both sides that would attend further litigation. (Barrera
Decl., ¶¶ 20-22.) Plaintiff contends that the proposed Settlement takes into
account the strengths and weaknesses of each side’s position and the
uncertainty of how the case might have concluded at certification and/or trial.
(Barrera Decl., ¶¶ 23- 49.) Plaintiff also notes that Class
Counsel also reviewed hundreds of pages of documents produced by Defendant and
provided by the Named Plaintiff and other putative class members, and performed
significant research into the law concerning Defendant’s defenses. (Barrera
Decl., ¶¶ 9-16.) Plaintiff submits that the proposed Settlement was based on
this large volume of facts, evidence, and investigation. (Barrera Decl., ¶¶ 9-49.)
Further, Plaintiff notes Class Counsel has extensive experience in employment
class actions, including extensive experience in California wage-and-hour
litigation. (Barrera Decl. ¶¶ 4-8.)
As such, Plaintiff has demonstrated
all factors besides the percent of the class objecting.
2.
The
settlement may preliminarily be considered fair, adequate, and reasonable.
Notwithstanding
a presumption of fairness, the settlement must be evaluated in its
entirety. The evaluation of any settlement requires factoring
unknowns. “As the court does when it approves a settlement as in good
faith under Code of Civil Procedure section 877.6, the court must at least
satisfy itself that the class settlement is within the ‘ballpark’ of
reasonableness. (See Tech-Bilt, Inc. v. Woodward-Clyde & Associates
(1985) 38 Cal.3d 488, 499–500.) While the court is not to try the case, it is
‘called upon to consider and weigh the nature of the claim, the possible
defenses, the situation of the parties, and the exercise of business
judgment in determining whether the proposed settlement is reasonable.’ (City
of Detroit v. Grinnell Corporation, supra, 495 F.2d at p. 462, italics
added.)” Kullar, 168 Cal.App.4th at 133 (emphasis in original).)
First, the
most important factor in the strength of the case for Plaintiff on the merits,
balanced against the amount offered in settlement. Here the proposed settlement
is for $105,000. Plaintiff contends the proposed
Settlement was calculated using information and data uncovered through informal
discovery, evaluations and computations of payroll and time records, case
investigation and the exchange of data. The proposed Settlement takes into
account the potential risks and reward inherent in any case and in particular
with this case. Moreover, considering all of the facts in this case the
proposed Settlement amount represents a substantial global recovery for all
Class Members.
Plaintiff notes that based on a
review of its records to date, the City estimates there are 13 Class Members
who collectively worked a total of 3546 Shifts, and 9 Aggrieved Employees who
worked a total of 96 PAGA Pay Periods. (See Settlement Agreement at ¶ 4.1.) The
proposed Settlement provides for a Net Settlement Amount of at least $32,400
for the 13 class members that may be paid out to all Class Members that do not
opt-out of the settlement. Each Participating Class Member’s share of the Net
Settlement Amount will be based upon the number of Shifts he or she actually
worked during the Class Period. (Barrera Decl., ¶ 59.) There is no reason to
doubt the fairness of the proposed plan of allocation of the settlement funds
for purposes of preliminary approval. Even at the final approval stage, “[a]n
allocation formula need only have a reasonable, rational basis [to warrant
approval], particularly if recommended by experienced and competent class
counsel.” (In re American Bank Note Holographies, Inc., Securities
Litigation (S.D.N.Y. 2001) 127 F.Supp.2d 418, 429-30.)
Plaintiff notes that in light of the
above considerations, Class Counsel believes that the proposed Settlement as a
whole is fair, reasonable, and in the best interest of the Class Members. (Barrera
Decl., ¶¶ 22, 57.) Plaintiff further notes that although the recommendations of
Class Counsel are not conclusive, the Court can properly take them into
account, particularly if Class Counsel appears to be competent, has experience
with this type of litigation, and significant discovery and investigation has
been completed. (Newberg §11.47.) Accordingly, Plaintiff requests this Court
grant preliminary approval.
3.
Certification
of The Settlement Class
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. 591, 620, 622-627.) The party advocating
class treatment must demonstrate the existence of an ascertainable and
sufficiently numerous class, a well-defined community of interest, and
substantial benefits from certification that render proceeding as a class
superior to the alternatives.” (Brinker Restaurant Corp. v. Superior Court
(2012) 53 Cal.4th 1004, 1021.)
Plaintiff notes that the Defendant
contests the applicability of class certification for purposes of litigation,
but notes that the parties agree that within the context of settlement, the
Settlement Class is ascertainable and numerous as to make it impracticable to
join all members, common questions of law and fact predominate, Plaintiff’s
claims are typical of the claims of the Class Members, a class action is
superior to other available means for the fair and efficient resolution of the
case, Class Counsel will fairly and adequately protect the interests of the
Settlement Class, and that the implementation of separate actions by individual
members of the Settlement Class would create the risk of inconsistent or
varying results.
A.
Numerosity
There are 13 class members involved
in this settlement. (Barrera
Decl., ¶10, Exhibit A.) Thus, numerosity has been
sufficiently established. (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].)
B.
Ascertainability
This class definition “is precise, objective and presently
ascertainable.” (Sevidal¿v. Target Corp.¿(2010) 189 Cal.App.4th 905,
919.) Plaintiff notes that Class Members can and will be identified by
Defendant to the Settlement Administrator through a review of their
employment records for all persons who provided Diala-Ride services to
Defendant in California during the Class Period.
C.
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.)
First, Plaintiff contends that there are common issues of fact
and law sufficiently predominate for purposes of settlement. The settlement
involves certain employment policies and practices that Plaintiff contends
applied to all Class Members. Plaintiff notes that despite same, Defendant have
vigorously denied that certification would be appropriate for litigation given
its contention of compliance of their policies and individualized
implementation issues. (Barrera Decl., ¶¶ 27-49.)
Second,
Plaintiff’s claims involve the contention that there was a common practice of
not providing Class Members lawful meal and rest breaks. (Id., See
Declaration of Class Representative Rivas filed concurrently herewith.) For
these reasons, this case is readily amenable to class certification in the
settlement context and the Court should provisionally certify the Class for
settlement purposes.
Third,
Plaintiff notes that Plaintiff’s claims are typical of the claims of the Class
Members, a class action is superior to other available means for the fair and
efficient resolution of the case, Class Counsel will fairly and adequately
protect the interests of the Settlement Class, and that the implementation of
separate actions by individual members of the Settlement Class would create the
risk of inconsistent or varying results.
D.
Adequacy of
Class Counsel
As indicated above, and in the declaration, counsel is
experienced in class actions.
E.
Superiority
Plaintiff asserts that a class
action is superior to other available means for the fair and efficient
resolution of the case.
4.
Class Notice
California Rules of Court, rule 3.769(e) provides: “If the
court grants preliminary approval, its order must include the time, date, and
place of the final approval hearing; the notice to be given to the class; and
any other matters deemed necessary for the proper conduct of a settlement
hearing.” Additionally, 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.”
Plaintiff notes that the
proposed Class Notice attached as Exhibit “A” to the Settlement Agreement
attached to the Barrera Declaration as Exhibit 1, and provides information on
the meaning and nature of the Settlement, the terms and provisions of the
proposed Settlement, the relief the proposed Settlement will provide to the
Settlement Class Members, the application of Class Counsel for reimbursement of
costs and attorneys’ fees, the date, time, and place of the final settlement
approval hearing; and the procedure and deadlines for participating, electing
not to participate, or submitting objections to the proposed Settlement. The
proposed Class Notice is consistent with class certification notices approved
by numerous state and federal courts and is formatted as proposed as a model
form by the Los Angeles Superior Court’s Complex Panel. Plaintiff also contends
the proposed Class Notice also fulfills the requirement of neutrality in class
notices. (Newberg, at § 8.39.) The Court has reviewed this proposed
class notice and agrees.
5.
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 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.”
An award of attorney fees is made by the Court at the
fairness hearing. (Laffitte v. Robert Half Intern., Inc. (2016) 1
Cal.5th 480.) 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 Co. (2004)
118 Cal.App.4th 123, 128.)
Accordingly, the question of whether Class Counsel is entitled to $40,000
will be addressed at the fairness hearing when Class Counsel brings a noticed
motion for attorney’s fees. With the motion,
counsel must provide an overall summary of the time spent by each attorney or
paralegal who worked on this matter. (Laffitte v. Robert Half Intern., Inc.
(2016) 1 Cal.5th 480, 505 (“The trial court in the present case exercised its
discretion in this manner, performing the cross-check using counsel
declarations summarizing overall time spent, rather than demanding and
scrutinizing daily time sheets in which the work performed was broken down by
individual task.”).) Furthermore, any agreement about how attorney fees will be
paid, including fee splitting and whether the client has given written
approval, should be provided. (Mark v. Spencer (2008) 166 Cal.App.4th
219; Ca. Rules of Professional Conduct, §2-200; Ca. Rules of Court, Rule
3.769.)
6. Approval of Service Award
Plaintiff also requests that the Court preliminarily approve a
service award for the Named Plaintiff Ulysses A. Rivas in the amount of $15,000
payable from the Total Settlement Amount. Plaintiff also contends that the
service awards requested are fair and appropriate since he has spent a
substantial amount of time and effort in producing relevant documents and past
employment records and providing the facts and evidence necessary to prove
Plaintiff’s allegations. (Barrera Decl., ¶¶ 65-69; Decl. of Ulysses A. Rivas.)
This issue will also be addressed in the fairness hearing.
III.
CONCLUSION
Based on the foregoing,
the motion for Preliminary Approval of Class Action Settlement is GRANTED