Judge: Ronald F. Frank, Case: 21TRCV00503, Date: 2022-12-07 Tentative Ruling
Case Number: 21TRCV00503 Hearing Date: December 7, 2022 Dept: 8
Tentative
Ruling¿
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HEARING DATE: December 7, 2022¿¿
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CASE NUMBER: 21TRCV00503
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CASE NAME: Roberto
Rivera, individualy, and on behalf of other aggrieved employees pursuant to the
California Private Attorneys General Act
v.
J.B. Wholesale Roofing and Building Supplies, Inc., et al
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MOVING PARTY: Plaintiff, Roberto Rivera, et al
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RESPONDING PARTY: None
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TRIAL DATE: September
12, 2023
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MOTION:¿ (1) Motion for Preliminary
Approval of Class Action and PAGA Settlement
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Tentative Rulings: (1) Defendant’s Motion for
Preliminary Approval to Strike is GRANTED.
However, the Court request that class counsel assist in locating the proposed
class notice at the hearing, such as by screen sharing or by transmitting the
same through the Court’s exhibit portal at INGDEPT8@lacourt.org.
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I.
BACKGROUNG
On July 12, 2021, Plaintiff, Roberto Rivera (“Plaintiff”)
filed a complaint against J.B. Wholesale Roofing and Building Supplies, Inc.,
and DOES 1 through 100 (“Defendants”). The complaint alleged causes of action
for Violation of California Labor Code § 2698 et seq. Plaintiff alleges that
Defendants failed to pay overtime; provide meal periods; provide rest periods;
pay minimum wages; pay wages upon termination; timely pay wages during
employment; provide complete and accurate wage statements; keep complete and
accurate payroll records; or reimburse necessary business-related expenses and
costs. This is a PAGA case alleging wage and hour violations not only as to the
named plaintiff but also as to members of a claimed class of co-workers.
On September 15, 2021, Defendant filed a Demurrer. On
November 23, 2021, the demurrer was overruled in part and was sustained with
leave to amend as to the issue of expense reimbursement. On December 29, 2021,
Plaintiff filed his first amended complaint. On August 11, 2022, Plaintiff filed a Second
Amended Complaint (“SAC”) which Defendant answered on September 8, 2022.
Motion
Plaintiffs now move for a preliminary approval of a class
action settlement. No opposition has been filed as of December 6, 2022.
II.
ANALYSIS¿
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. California Rules of Court, 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) 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
An executed copy of the Joint Stipulation of Settlement (“Settlement
Agreement” of “Exhibit 1”) is attached as Exhibit 1 to the Declaration of Heather
Davis (“Davis Decl.”)
Plaintiff seeks to provisionally certify the following
class for settlement purposes: “all current and former non-exempt employees of
Defendant who worked for Defendant in the State of California at any time
between May 6, 2020, and July 26, 2022.” (Davis Decl., ¶ 26, Exhibit A.) The
class period begins May 6, 2020, and lasts through July 26, 2022. (Davis Decl.,
¶ 26, Settlement Agreement, ¶ ¶ 4-5.) The PAGA class period appears to be the
same as the aforementioned class period.
The Gross Settlement Amount (GSA) is $750,000.00, subject
to a pro rata increase. (Settlement Agreement ¶ 17). This includes:
·
Up to $250,000.00 or
1/3 of the GSA in attorneys’ fees (Davis Decl., ¶ 54(e)(i).)
·
Up to
$15,000.00 in litigation costs (Ibid.)
·
Up to $7,500.00
Service Payment to Class Representative (Id. at ¶ 54(e)(ii).)
·
$37,500.00 to
the California Labor and Workforce Development Agency, representing the LWDA’s
75% share of the settlement attributable to PAGA penalties. (Id. at ¶
54(e)(iii).)
·
Up
to $12,500.00 to be allocated among the PAGA Members. (Id. at ¶ 54(e)(iv).)
·
Up to $8,250.00 in Settlement
Administration Expenses. (Id. at ¶ 54(e)(v).)
The settlement class is estimated to consist of
approximately 272 individuals. (Davis Decl., ¶ 26-27). The individual
settlement payments will be calculated as follows:
·
The Net
Settlement Amount (NSA) divided by total Workweeks Worked. Settlement members
will be paid on a pro-rata basis based on the number of Workweeks worked during
the Class Period with a 3x multiplier for the Workweeks between May 6, 2020 and
March 24, 2022. (Davis Decl., ¶ 54(e)(ix), 71.) Each Class Settlement Payment
will be allocated 1/3 for wages, 1/3 for interest, and 1/3 for penalties. PAGA
Member Payments will be allocated entirely to penalties (Davis Decl., ¶ 33; Settlement
Agreement ¶62. Employer payroll taxes shall be paid separately from and in
addition to the Gross Settlement Amount. (Davis Decl. ¶ 34; Settlement
Agreement ¶¶ 17, 24, 54(e), 57.)
D. Analysis of Settlement Agreement¿¿
1. Does
a Presumption of Fairness Exist?¿
Was the Settlement reached through arm’s-length
bargaining?
Yes. The parties engaged in a mediation on May 27, 2022,
with Kimberly S. Deck, Esq.. (Davis Decl., ¶ 21.) The settlement was reached
after “extensive informal discovery and investigation and is the product of
hard-fought litigation and extensive arms’ length negotiations.” (Id. at
11.) “After a full day of mediation, and with the help of the mediator, the
parties were able to reach an agreement to resolve this dispute on a class and
representative basis. (Id. at ¶ 22.)
Were investigation and discovery sufficient to allow
counsel and the Court to act intelligently?
Yes. The parties exchanged in informal discovery.
Defendants produced a random 20% sampling of time and payroll records.
Defendant also produced its written policies and extensive data points
regarding the size of the putative class including: (1) the total number of
employees; (2) number of current and former employees; (3) total workweeks
during the class period; (4) total pay periods during the PAGA period; and (5)
number and amount of meal and rest period premiums paid. (Davis Decl., ¶ 42.) Review and analysis of the policy documents
including Defendant’s policies and handbooks, allowed class counsel to determine
whether policies existed that would be clearly capable of class certification.
Plaintiff also utilized a sampling of time and payroll data to analyze
Defendant’s practices and obtain evidence regarding the number and frequency of
all alleged meal period violations in the records, obtain the average rate of
pay to employees during the class period, and investigate whether employees
were being properly compensated. Utilizing the information discovered in their
investigation, Class Counsel were then able to extrapolate this analysis to the
class using the class-wide data points supplied by Defendant in order to
conduct a class-wide assessment and analysis of Defendant’s potential damages.
(Id. at 43.)
Is counsel experienced in similar litigation?
Yes. Counsels have extensive experience in labor and
employment class actions, both as a defense attorney at Littler Mendelson and
over the last half-decade or so as plaintiffs’ counsel in PAGA and other wage
and hour cases. (Davis Decl., ¶ 2-11.)
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.”].)
2. Is the settlement fair, adequate, and reasonable?
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 v. Foot Locker Retail, Inc., 168 Cal.App.4th
116,¿130). Plaintiff contends that approximately $1,587.32
allocated to each member is reasonable. (Motion p.7-11.) Plaintiff contends
that “the reasonableness of the Settlement is underscored by the fact that
Defendant has legal and factual grounds for defending the action. (Id.
at 7.) The Court concludes that a settlement would be appropriate, and that the
proposed settlement is fair, adequate, and reasonable.
Risk, expense, complexity and likely duration of
further litigation.
Further litigation carried the possibility of non-certification and proving
damages more difficult.
Risk of maintaining class action status through trial.
It would have been Plaintiff’s burden to maintain the
class action status through the trial. (Davis Decl., ¶ 48.)
Amount offered in settlement.
As indicated above, Defendant has offered to pay a total of $750,000.00 for the settlement
action. From this, a maximum of $250,000.00 in attorneys’ fees, $15,000 in
attorneys’ costs, $8,250.00 in administration fees and costs, $7,500 to the
named Plaintiff, and $50,000 to resolve the alleged PAGA claims, 75% of which
will be paid to the LWDA ad 25% of which will be distributed to PAGA members.
(Davis Decl., ¶ 29.) The Net Settlement Amount available for disbursement to
the class is $419,250.00. Given the estimated class size of approximately 272 members,
and assuming the amount was divided equally (though, as noted above, the amount
will be distributed based on number of qualifying workweeks) the
average¿pay¿out would be $1,587.32
Extent of discovery completed and the stage of the
proceedings.
As stated above, it appears that Plaintiff has
completed sufficient discovery in order to make an informed decision.¿
Experience and views of counsel.
As stated above, Class Counsel has
extensive experience in labor and employment class actions.¿
Presence of a governmental participant.
This factor is not applicable here, unless counsel so
advised the Court at the hearing on this preliminary approval motion.
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 may become relevant during the fairness hearing.¿
III.
Scope of Release¿
Release of Claims¿¿
Each member, including the named Plaintiff, released, settled,
compromised, relinquished, and discharged all settled claims against any
Released Party. (Davis Decl., ¶ 35-36; Settlement Agreement ¶ 81.) Notice will
be given to each member and that this involves disputed claims. (Davis Decl., ¶
72, Settlement Agreement ¶ 68.)
The Court finds the scope of release to be permissible,
because it is limited to claims arising from the facts alleged in the
Complaint, the Settled Claims.
IV.
Conditional
Class Certification¿¿
A.
Standards¿
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.)¿
B.
Analysis
1.¿Numerosity.
There are approximately¿272¿class members. (Motion, p. 9: 22)
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].) Defendant will provide a list of Class Members and PAGA Members, the
Social Security Numbers, last known addresses, dates of employments, and
workweek numbers and other class members data. (Davis Decl., ¶ 73; Settlement Agreement ¶ 65.)
2.¿Ascertainability.¿
This class definition “is precise, objective and presently
ascertainable.” (Sevidal¿v. Target Corp.¿(2010) 189 Cal.App.4th 905,
919.) Class Members will be identifiable from Defendant’s records. (Settlement
Agreement ¶ 68.)
3. 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.)
The first factor is met because “Defendant denied fully
compliant meal and rest periods to its non-exempt, hourly employees, failed to
properly compensate employees for missed meal or rest periods, required
employees to perform work off-the-clock, and failed to fully compensate
employees for all time worked. These policies and practices meant that
Defendant failed to pay minimum wages, overtime pay, and other related claims.
Plaintiff alleges that Defendant’s policies and practices were uniform as to
all of the Settlement Class Members.” (Motion, p. 13: 8-15.)
The second factor is met because 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.
The third factor is met because the named “Plaintiff
alleges that his claims are similar to that of the other class members. All of
Plaintiff’s claims arise out of the same alleged facts and course of conduct
giving rise to the claims of the other class members. Finally, Plaintiff’s
claims are typical of the class. Plaintiff’s claims are based upon the same
alleged conduct and business practices as those of the potential class members
and he seeks the same relief, accordingly, the typicality requirement has been
satisfied.” (Motion, p. 13:21-25.) Additionally, counsel for Plaintiff includes
accomplished lawyers who are qualified and experienced in employment-related,
class-action litigation, who have appeared to help Plaintiff advocate for his
class.
4. Adequacy of class counsel.
As indicated above, counsel is experienced in class
actions, including cases involving wage and hour violations.
5. Superiority.
Plaintiff claims that proceeding as a class action
is a superior means of resolving this dispute, as the class members and the
court will derive substantial benefits. (Motion, p. 14: 8-9.) Plaintiff argues
that class certification would serve as the only means to deter and redress the
alleged violations. (Id. at 9-10.) Furthermore, Plaintiff asserts that
individual actions arising out of the same operative facts could unduly burden
the courts and give rise to inconsistent results. (Id. at 11-12.)
V.
NOTICE TO
CLASS
A.
Standard
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.”
B.
Form of Notice
The proposed class notice is reportedly attached to the
Settlement Agreement as Exhibit A. However, the Court and its staff could not readily
locate the draft class notice. The
Court request that class counsel assist in locating the proposed class notice at
the hearing, such as by screen sharing or by transmitting the same through the Court’s
exhibit portal at INGDEPT8@lacourt.org.
C.
Method of
Notice
Within 14 days after
the Court grants preliminary approval of the settlement, Defendant will provide
the Class List to the Settlement Administrator including the following
information about each Settlement Class Member: (1) full name; (2) last known
home address; (3) last known telephone number; (4) social security number; (5)
start and end dates of active employment as a non-exempt employee of Defendant
in the State of California; (6) total workweeks worked by each settlement class
member during the Class Period; (7) total workweeks during the PAGA Period; and
(8) any other information required by the Settlement Administrator in order to
effectuate the terms of the Settlement. (Settlement Agreement ¶ 65.) According to the Settlement Agreement, the Class Notice
will be sent via First Class U.S. Mail. Within seven (7) days of obtaining
updated information, the Settlement Administrator will send Class Notices to
each Class Member and PAGA Member via First Class Mail. (Settlement Agreement ¶
68.) Class members will have sixty days to opt out of the Settlement by
providing an Objection, in writing. (Settlement Agreement ¶ 54(f).) The
Settlement Administrator shall also take reasonable steps including skip
tracing to locate any Class Member whose Notice of Settlement is returned as
undeliverable. Individuals who receive a remailed envelopes shall be entitled
to an additional 15 days beyond the response deadline to submit written
objections or opt-out of the settlement. (Settlement
Agreement ¶ 67.)
VI.
ATTORNEY
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 $250,000.00 will be addressed at the fairness hearing when class
counsel brings a noticed motion for attorney 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.)
The following schedule is proposed by the Court:¿
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Preliminary Approval Hearing: December 7, 2022
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Deadline for Serving Notices to Class Members: January 6, 2023
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Deadline for Objecting or Opting Out: February 21, 2023
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Deadline for Class Counsel to File Motion for Final
Approval of Settlement and Motion for Attorney Fees (and respond to any
objections): March 7, 2023¿
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Final Fairness Hearing and Final Approval: April 4, 2023
VII.
CONCLUSION
Based on the foregoing, the motion for Preliminary Approval
of Class Action Settlement is GRANTED.