Judge: Salvatore Sirna, Case: 20PSCV00789, Date: 2023-01-03 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on the tentative rulings by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 20PSCV00789    Hearing Date: January 3, 2023    Dept: G

Plaintiff Jimmy Arroyo’s Motion for Final Approval of Class Action Settlement, Attorney Fee Award, Cost Award, and Class Representative Enhancement Payment

Respondent: NO OPPOSITION

TENTATIVE RULING

Plaintiff Jimmy Arroyo’s Motion for Final Approval of Class Action Settlement, Attorney Fee Award, Cost Award, and Class Representative Enhancement Payment is GRANTED.

BACKGROUND

This is a wage and hour action. Plaintiff Jimmy Arroyo worked for Defendant Bentley Mills, Inc. as an hourly non-exempt employee. On November 13, 2020, Brianna Guzman filed a PAGA complaint against Defendant and Does 1-100. On November 10, 2021, Plaintiff filed a First Amended Class Action Complaint and PAGA Complaint against Defendant and Does 1-100, alleging (1) violation of Labor Code sections 510 and 1198; (2) violation of Labor Code section 226.7 and 512, subdivision (a); (3) violation of Labor Code section 226.7; (4) violation of Labor Code sections 1194, 1197.1, and 1197; (5) violation of Labor Code sections 201, 202, and 203; (6) violation of Labor Code section 226, subdivision (a); (7) violation of Labor Code sections 2800 and 2802; (8) violation of Labor Code sections 2698 et seq. including failure to pay minimum and overtime wages, failure to provide meal periods and rest breaks, failure to timely pay wages during employment, failure to timely pay wages upon termination, failure to provide complete and accurate wage statements, failure to reimburse business expenses, and penalties; and (9) violation of Business and Professions Code sections 17200 et seq.

On March 22, 2022, Plaintiff filed a motion for preliminary approval of class action settlement, conditional certification, approval of class notice, and setting of final approval hearing date. On July 25, the court granted Plaintiff’s motion in part by preliminarily granting approval for settlement but reserving the issue of attorney fees.  

On December 2, 2022, Plaintiff filed the present motion. A hearing on the motion is set for January 3, 2023.

LEGAL STANDARD

California Rules of Court Rule 3.769, subdivision (g) provides that the court must conduct an inquiry into the fairness of a proposed class action settlement prior to final approval. The court has broad powers to determine whether a proposed settlement is fair. (Mallick v. Superior Court (1979) 89 Cal.App.3d 434, 438.) The standard for approval of class settlements is that the settlement be fair, reasonable, and adequate for class members overall. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801 (Dunk).) 

To determine the fairness of a settlement, the court must consider certain factors, as set forth in Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 244-45 (Wershba), disapproved on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260, 270). “[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, quoting Dunk, supra, 48 Cal.App.4th at p. 1802.) “[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.)

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.) The recovery should represent a “reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation.” (Id., at p. 129.) Nevertheless, the strength of the case on the merits for the plaintiff is the most important factor, “balanced against the amount offered in settlement.” (Id., at p. 130, quoting City of Detroit v. Grinnell Corp. (2d Cir. 1974) 495 F.2d 448, 455.)ANALYSIS

Order Preliminarily Approving Class Action Settlement 

On July 25, 2022, the Court entered its order preliminarily approving the class action settlement while reserving the issue of attorney fees. For settlement purposes, and in accordance with Plaintiff’s request, the Court conditionally certified the Settlement Class and approved the settlement notice. The Settlement Class consists of all persons who were employed by Defendant as non-exempt employees in the State of California during the Class Period of September 8, 2019, to December 31, 2021. 

Terms of the Settlement Agreement

An executed copy of the Settlement Agreement is attached as Exhibit 2 to the Declaration of Douglas Han submitted in support of Plaintiff’s motion for preliminary approval. Each member, including the named Plaintiff, released all claims against any Released Party during the Class Period. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part I(GG).). Notice will be given to each member. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(K)(2).). The release includes any claim alleged in the operative complaint, listed in Brianna Guzman or Plaintiff’s letter to the Labor and Workforce Development Agency (LWDA), or that could have been alleged based on the facts pleaded. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part I(GG).).

The Gross Settlement Amount (GSA) is $750,000, not including payroll taxes. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(A).). Uncashed checks will be sent to the Unclaimed Property Fund. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(K)(10).). The settlement also provides for: up to $262,500 in attorney fees from the GSA not to exceed 35% (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(2).); up to $20,000 in costs (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(2).); up to $10,000 in settlement administration fees and costs (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(5).); up to $10,000 as a class representative enhancement payment to Plaintiff (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(1).); and $50,000 to PAGA payment, with $37,500 (75%) going to the LWDA and the remaining $12,500 (25%) to eligible aggrieved employees (Mot. For Prelim. Approval, Han Decl., Ex. 2, part I(BB).).

The final Net Settlement Amount is $418,336.16. (Mitzner Decl., ¶ 14.) The settlement class consists of 434 individuals with 431 eligible for a portion of the net settlement amount and 434 eligible for PAGA payments as aggrieved employees. (Mitzner Decl., ¶ 13.) The individual settlement payments are calculated as follows: total number of weeks worked by an individual during the class period divided by the total number of weeks worked by all class members collectively, then multiplied by the Net Settlement Amount (NSA). (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(G)(1)(a).) PAGA payments to employees are determined by the total number of eligible pay periods during Class Period divided by PAGA payment to employees then multiplied by individual employee’s number of pay periods. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(G)(1)(b).)

The final average settlement payment per class member is $992.71 with an estimated highest payment being $1,992.34. (Mitzner Decl., ¶ 158.) Defendant is responsible for any employer payroll taxes. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(A).).

The settlement administrator is Phoenix Class Action Administration Solutions (Phoenix). (Mot. For Prelim. Approval, Han Decl., Ex. 2, part I(KK).) Phoenix shall issue the individual settlement payments within 14 days of the funding for the Settlement by Defendant. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(K)(9)(b).)

The Settlement is Fair and Reasonable 

In granting the preliminary approval of class settlement, the Court previously considered and determined that many of the factors enumerated in Wershba demonstrate a presumption that the settlement is fair and reasonable. The parties engaged in a mediation on August 31, 2021, with the Hon. Carl J. West and negotiated a settlement agreement. (Han Decl., ¶ 7.) At times, the parties’ negotiations were adversarial and non-collusive. (Han Decl., ¶ 7.) The settlement occurred after Defendant responded to Plaintiff’s propounded discovery which included one set of special interrogatories, one set of form interrogatories, one set of requests for production of documents, and one set of requests for admissions. (Han Decl., ¶ 4.) Thus, the settlement followed sufficient investigation and discovery. Plaintiff’s counsel has extensive experience in litigating employment matters and class actions. (Han Decl., ¶ 15-20.)  Finally, after service of the Court approved notice, there were only three requests for exclusion from Victriann A. Fitzpatrick, Alberto C. Flores, and Tayron Perez. (Mitzner Decl., ¶ 12.)

The Court finds that the notice was given as directed and conforms to due process requirements. Considering the reactions of the Class Members to the proposed settlement and for the reasons set for in the Preliminary Approval order, the Court finds the settlement is fair, adequate, and reasonable. 

Attorneys’ Fees and Costs 

Class Counsel requests an award of $250,000 in attorney fees and $11,663.84 in costs. The Settlement Agreement provides for up to $262,500 in attorney fees from the GSA not to exceed 35% and up to $20,000 in costs. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(2).).

“Courts recognize two methods for calculating attorney fees in civil class actions: the lodestar/multiplier method and the percentage of recovery method.” (Wershba, supra, 91 Cal.App.4th at p. 254.) Here, class counsel request attorney fees using the percentage method, as crosschecked by lodestar.

In common fund cases, the Court may employ a percentage of the benefit method, as cross-checked against the lodestar. (Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 503.) The fee request represents approximately one-third of the gross settlement amount (33.33% exactly), which the court finds is the average generally awarded in class actions. (See In re Consumer Privacy Cases (2009) 175 Cal.App.4th 545, 558, fn. 13 (“Empirical studies show that, regardless of whether the percentage method or the lodestar method is used, fee awards in class actions average around one-third of the recovery.”).)  

Class Counsel provided information, summarized below, from which the lodestar may be calculated: 

(Han Decl., ¶ 10-11.)

Counsel’s percentage-based fee request is lower than the unadjusted lodestar. Thus, the $250,000 fee request represents a reasonable percentage of the total funds paid by Defendants. Notice of the fee request was provided to class members in the notice packet and no one objected. (Han Decl., ¶ 3; Mitzner Decl., ¶  10-11.)

Class Counsel also request $11,663.84 in costs. This is less than the $20,000.00 cap estimated at preliminary approval, for which Class Members were given notice and did not object. The costs include, but are not limited to, expenditures for filing fees, copies, postage, and mediation fees. (Han Decl., Ex. 5.) The Court finds these costs are reasonable. 

Based on the above, the Court awards $250,000 in attorneys’ fees and $11,663.84 in costs. 

Settlement Administrator Fee

The settlement administrator, Phoenix, requests $10,000.00 for the costs of settlement administration. (Mitzner Decl., ¶ 17.) This is the same amount estimated in the settlement agreement and disclosed to class members in the notice. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(5).) The Court finds the settlement administrator fee reasonable and awards $10,000.00 in costs for settlement administration.

Enhancement Award

The settlement provides for a $10,000 class settlement enhancement award to be awarded to Plaintiff. (Mot. For Prelim. Approval, Han Decl., Ex. 2, part III(I)(1).

Enhancement awards compensate the expense and risk undertaken by named plaintiffs for the benefit of other class members. (Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 412.) The motion is accompanied by Plaintiff’s declaration. (See Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 806.) Plaintiff estimates spending over 65 hours assisting in the litigation, including meeting with counsel, responding to questions, searching for documents, and reviewing the settlement. (Arroyo Decl., ¶ 6.)

The Court finds as reasonable an enhancement award to Plaintiff in the amount of $10,000. 

CONCLUSION

Based on the foregoing, Plaintiff’s motion for Final Approval of Class Action Settlement is GRANTED.

The Court approves and awards the following: (1) $250,000 for attorney fees to Class Counsel - Justice Law Corporation; (2) $11,663.84 in costs to Class Counsel; (3) an enhancement payment in the amount of $10,000.00 to Plaintiff Jimmy Arroyo; (4) $37,500 (75% of $50,000 PAGA penalty) to LWDA; and (5) $10,000 for settlement administration costs to Phoenix Class Action Administration Solutions. 

The court will set a date by which Class Counsel is ordered to lodge a proposed Order consistent with this ruling and a separate judgment containing the class definition, release language, and a statement that no class members opted out of the settlement.