Judge: Ronald F. Frank, Case: 23TRCV03022, Date: 2024-11-20 Tentative Ruling
Case Number: 23TRCV03022 Hearing Date: November 20, 2024 Dept: 8
Tentative Ruling
HEARING DATE: November 20, 2024
CASE NUMBER: 23TRCV03022
CASE NAME: Thamar Freeman, et al. v. Areas Skyview LAX JV, LLC, et al.
MOVING PARTY: Plaintiff, Thamar Freeman, as an individual and for those similarly situated.
RESPONDING PARTY: Areas Skyview LAX JV, LLC and Areas USA LAX, LLC (No Opposition)
TRIAL DATE: Not Set.
MOTION: (1) Motion for Preliminary Approval of Class Action Settlement and Certification of the Settlement Class
Tentative Rulings: (1) GRANTED
I. BACKGROUND
A. Factual
Plaintiff Thamar Freeman (“Plaintiff”) seeks preliminary approval of the proposed class action settlement, which Defendant Areas Skyview LAX JV, LLC and Areas USA LAX, LLC (collectively, “Defendant”) do not oppose. Subject to court approval, Plaintiff and Defendants have agreed to settle Plaintiff’s and the proposed Class Members’ claims against Defendants for a total settlement amount of $375,000 with no reversion (the “proposed Settlement”). 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 represent a class of individuals defined as: “All current and former nonexempt, hourly employees of Defendants employed in California during the Class Period (the “Class” or “Class Members”).” The settlement defines the “Class Period” as occurring between March 4, 2019 to July 23, 2024. Plaintiff also seeks to represent a group of individuals defined as: all current and former employees of Areas Skyview LAX JV, LLC and Areas USA LAX, LLC employed in California during the PAGA Period (“Aggrieved Employees”).” The PAGA Period is defined as “the period between September 25, 2022, and either July 23, 2024, or the date of Preliminary Approval, whichever is earlier.
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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’ and Aggrieved Employees released claims against Defendants.
B. Summary of Settlement Terms
Under the terms of the fully executed Settlement Agreement, Defendants agree to pay a settlement amount of $375,000 (“Gross Fund Value” or “GFV”).
The Net Fund Value (“NFV”)(approximately $137,000) will be used to fund payments to Class Members who do not opt out of the Settlement (“Participating Class Members”). However, as for the Aggrieved Employees, Plaintiff notes that for the avoidance of doubt, no Aggrieved Employee may opt out of the Settlement with respect to the PAGA Released Claims. The NFV shall be calculated by deducting the following amounts from the GFV, if approved by this Court: (1) a Service Award payment to Plaintiff as the Class Representative of up to $10,000; (2) an Attorneys’ Fees and Cost Award of one-third of the GFV, or $125,000 for attorneys’ fees, in addition to a cost award of up to $15,000; (3) a Settlement Administration Costs payment of up to $13,000; and (4) a PAGA Allocation of $75,000, 75% of which will be paid to the LWDA ($56,250) and 25% of which will be allocated as Individual PAGA Payments ($18,750) to the Aggrieved Employees.
The NFV shall be distributed to Participating Class Members who do not affirmatively request exclusion from the class action part of the Settlement. The Class Members shall receive their pro rata share of the NFV as Individual Settlement Payments calculated by multiplying his or her Total Workweeks times the amount allocated to each Workweek. An individual class payment will be calculated by using the NFV of $137,000 and dividing it by 1,293 estimated Class Members. Plaintiff contends the average individual settlement payment per class member is approximately $105.96.
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 $18,750, by using a distribution formula based on the number of Pay Periods each Aggrieved Employee worked during the PAGA period and multiplying the result by the number of each Aggrieved Employee.
No amount of the GFV shall revert back to Defendants. Each Class Member’s Individual Settlement Payment will be allocated using the following formula: (a) 20% as wages; and (b) 80% as interest and penalties. The portion allocated to wages shall be reported on an IRS Form W-2 and the portions allocated to interest and penalties shall be reported on an IRS Form-1099 by the Settlement Administrator. Any checks issued by the Settlement Administrator to Settlement Members shall be negotiable for one hundred and eighty (180) calendar days. Those funds represented by Settlement checks returned as undeliverable and those Settlement checks remaining uncashed for more than one hundred and eighty (180) days after issuance shall be distributed to the Controller of the State of California to be held pursuant to the Unclaimed Property Law, CCP section 1500 et seq. for the benefits of those Settlement Members who did not cash their checks until such time they claim their property. This disposition will result in no “unpaid residue” under CCP section 384, as the entire NFV and the PAGA Allocation attributable to the Aggrieved Employees will be paid out to Settlement Members, whether or not they all cash their settlement checks.
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 via informed, non-collusive negotiations and reflects a fair compromise of claims and risk factors. Plaintiff states, The Settlement also resulted after extensive arms’ length settlement negotiations between counsel through direct negotiation after the Parties attended a mediation presided over by an experienced wage and hour mediator, Michael Loeb, Esq. Plaintiff emphasizes that the Settlement came about after extensive informal discovery, investigation and research, thorough calculations and risk evaluation, substantial exchanges of documents, and an exchange of other information required to evaluate the claims at issue, and that the Settlement came only after the case was thoroughly investigated by Class Counsel.
Plaintiff acknowledges the inherent risks of continued litigation, including that Defendant has available legal and factual grounds for defending this action. Specifically, Plaintiff identifies that in Defendant’s responsive pleadings, it asserted a multitude of affirmative defenses, each of which is still claimed as a valid defense. Moreover, the moving papers indicate that in addition to disputing the merits of Plaintiff’s claims, Defendant would strongly challenge any request for class certification. Plaintiff admits that arriving at a settlement yields a prompt, certain, and substantial recovery for the Class, which also benefits the Parties and Court.
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 $375,000. Plaintiff contends the proposed Settlement was calculated using information and data uncovered during the informal discovery process including, payroll data and time records, and had conducted an adequate investigation to allow them to make educated and informed analysis and conclusions. 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.
Based on the data provided by Defendant and using a conservative approach, Plaintiff maintains there are 11,641 pay periods worked by the aggrieved employees. 11,641 multiplied by $10 per pay period based on prior court decisions, discounted by 65% for a potential finding of lack of liability on the underlying claim amounts to $40,743.50. Based on the foregoing, Plaintiff provided a summary of Defendant’s maximum exposure of liability and damages owed to Plaintiff and the Class totaling $461,330.06. 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.)
In light of the above considerations, this court believes that the proposed Settlement as a whole is fair, reasonable, and in the best interest of the Class Members.
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 acknowledges that the Defendants contest 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
So far, there are approximately 1,293 class members Plaintiff states are similarly situated to Plaintiff. 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.) The approximately 1,293 Class Members were identified through Defendant’s records.
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.)
The court finds that there is a commonality of interest between Plaintiff and the other Class Members.
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 here because there will be a global resolution of all claims at once, which fosters judicial economy. Further, Plaintiff argues class certification is also vastly superior to litigation of numerous individual claims because most of the claims are too small to litigate outside of the class context
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. Participating Class Members will be provided with notice of the Settlement via the Class Notice. Further, each Class Notice will provide: a) information regarding the nature of the Action; (b) a summary of the Settlement’s principal terms; (c) the Class Member definition; (d) the total number of Workweeks and/or Pay Periods the Class Member worked for Defendant during the Class Period and PAGA Period; (e) the Class Member’s estimated Individual Class Payments and Individual PAGA Payments and the general formula for calculating individual settlement payments; (f) the dates which comprise the Class Period and the PAGA Period; (g) instructions on how to submit Requests for Exclusion or Notices of Objection; (h) the deadlines by which the Class Member must postmark Requests for Exclusions or postmark Notices of Objection to the Settlement; (i) the claims to be released; and (j) the date for the Final Approval Hearing set by the Court as of the date the Notice of Settlement is mailed.
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.
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 approximately $125,000 will be addressed at the fairness hearing when Class Counsel brings a noticed motion for attorneys 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, Thamar Freeman, in the amount of $10,000 payable from the GFV. 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. 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