Judge: Timothy B. Taylor, Case: 37-2021-00017374-CU-OE-CTL, Date: 2023-09-08 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

DEPT.:

EVENT DATE:

EVENT TIME:

HALL OF JUSTICE

TENTATIVE RULINGS - September 07, 2023

09/08/2023  01:30:00 PM  C-72 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Timothy Taylor

CASE NO.:

CASE CATEGORY:

EVENT TYPE:

CASE TITLE: CASE TYPE:

Civil - Unlimited  Other employment Motion Hearing (Civil) 37-2021-00017374-CU-OE-CTL GONZALEZ VS A M CASTANEDA INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Approval of Class Settlement, 10/05/2022

Tentative Ruling on Motion for Final Approval of Class Action/PAGA Settlement Gonzalez v. AM Castaneda, Case No. 2021-17374 Sept. 8, 2023, 1:30 p.m., Dept. 72 1. Overview and Procedural Posture.

This is a class action alleging various wage and hour violations arising out of plaintiff's 2016-2021 employment with defendant (which operates Mexican restaurants). The 8 count complaint was filed in April of 2021. It was superseded by the FAC, which added PAGA allegations, in June. ROA 8. The FAC was not promptly served, leading to a continuance of the CMC. ROA 13. Defendant answered the FAC in October, 2021. ROA 18.

At the continued CMC, the court heard from the parties and set Nov. 4, 2022 for the class certification hearing. ROA 23-26. The parties reached a deal, and converted that hearing to one seeking preliminary approval of the settlement. ROA 28-31. The court granted the motion, and set the fairness hearing for February 17, 2023. ROA 34-36. Due to problems with class member data, the parties have agreed three times to continue the fairness hearing. ROA 39, 42, 43. Most recently, on May 26, 2023, the court was prepared to deny final approval, but indulged the parties in one last continuance. ROA 44-49.

The court has reviewed the long-awaited moving papers. ROA 50-55. By design, the motion is unopposed.

2. Applicable Standards.

A. The court incorporates part 2 of the minutes for Nov. 4, 2022. ROA 34.

B. California follows the 'American rule,' under which each party to a lawsuit ordinarily must pay his, her or its own attorney fees. Trope v. Katz (1995) 11 Cal.4th 274, 278; Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504. Code of Civil Procedure section 1021 codifies the rule, providing that the measure and mode of attorney compensation is left to the agreement of the parties '[e]xcept as attorney's fees are specifically provided for by statute.' Here, fees are sought under the Labor Code, Calendar No.: Event ID:  TENTATIVE RULINGS

2980005  31 CASE NUMBER: CASE TITLE:  GONZALEZ VS A M CASTANEDA INC [IMAGED]  37-2021-00017374-CU-OE-CTL which has several fee-shifting provisions.

C. 'The law empowers the court to set the amount of fees independently without disapproving the entire settlement.' Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 129. The benchmark for determining attorney fees is reasonableness. Karton v. Ari Design & Construction, Inc.

(2021) 61 Cal.App.5th 734, 744.

In common fund cases, trial courts have discretion to begin with a percentage-of-recovery approach and then to use the 'lodestar' approach to cross-check the reasonableness of the percentage. Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 503-06. The former method calculates the fee as a percentage share of a recovered common fund or the monetary value of plaintiffs' recovery. Id. at 489.

The latter method calculates the fee by multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate. Id. The lodestar figure may then be adjusted, based on factors specific to the case, to fix the fee at the fair market value for the legal services provided. PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.

3. Discussion of Fairness of Settlement.

A. Strength of Case: The court incorporates part 3A of the minutes from November 4, 2022 (ROA 34).

B. Avoided Expenses and Other Avoided Risks: The court incorporates part 3B of the minutes from November 4, 2022 (ROA 34) C. Amount Offered in Settlement/Settlement Fund: The total amount offered in settlement is $488,372.97, with no reversion. This is a much higher amount than what was presented in the preliminary approval papers ($350,000) because the 'escalator' clause in the Settlement Agreement was triggered. (Polites Decl., ¶ 5.) As set forth in paragraph 27(g) of the Settlement Agreement, the parties intend to allocate the settlement funds as follows: -Attorneys' fees: $170,930.54 to plaintiff's counsel (an increase of nearly $50,000 from the preliminary approval papers) -Litigation costs: $14,003.65 to plaintiff's counsel -Costs of administration: $10,990 to ILYM Group -Class rep incentive payment: $7,500.00 to plaintiff -LWDA Payment: $22,500 (75% of $30,000 PAGA allocation) The foregoing deductions result in a net settlement of amount of approximately $262,448.78 to be distributed among the 494 class members. This comes out to an average settlement share per class member of approximately $531.27 (not including the PAGA allocation to the aggrieved employees).

D. Extent of Discovery: The court incorporates part 3D of the minutes from November 4, 2022 (ROA 34) E. Experience and Views of Counsel: The court incorporates part 3E of the minutes from November 4, 2022 (ROA 34) F. Presence of a governmental participant: The court incorporates part 3F of the minutes from November 4, 2022 (ROA 34) G. Reaction of class members to proposed settlement: No objections or requests for exclusion.

(Polites Decl., ¶¶ 8, 10.) H. Form of Notice: On June 2, 2023, the notice of settlement packets were mailed to the class. (Polites Decl., ¶ 7.) A total of 22 notice packets were deemed undeliverable. (Id. at ¶ 12.) Calendar No.: Event ID:  TENTATIVE RULINGS

2980005  31 CASE NUMBER: CASE TITLE:  GONZALEZ VS A M CASTANEDA INC [IMAGED]  37-2021-00017374-CU-OE-CTL 4. Rulings.

A. As an initial matter, the court notes that the supporting memorandum of points and authorities is 24 pages long. This easily exceeds the page limits set forth in CRC 3.1113(d) and 3.764(c)(2). Although plaintiff did not seek permission to file a longer memorandum (CRC 3.1113(e)), the court exercises its discretion and will consider the entire document. See CRC 3.1113(g), 3.1300(d). Going forward, however, plaintiff is directed to comply with the applicable page limitations requirements.

B. Turning to the merits, the court finds that the settlement is fair, reasonable, and adequate.

Accordingly, the court approves the parties' proposed settlement, subject to some qualifications discussed below.

C. The litigation costs of $14,003.65, payable to class counsel, and the claims administration costs of $10,990, payable to ILYM, are reasonable for a case of this type. Moreover, the costs awarded are less than the amounts originally estimated in the preliminary approval papers ($17,000.00 and $15,000.00, respectively). The costs are therefore approved.

D. The proposed class representative incentive payment of $7,500 is reasonable and is approved.

E. Finally, the attorneys' fees proposal of $170,930.54 represents thirty-five percent of the gross settlement amount. At first blush, the requested amount – which includes a multiplier of 1.23 – appears not out of line with class action fee awards calculated using the percentage-of-the-benefit method. See Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66 fn. 11. However, '[w]here the class settlement is for a very large amount, a percentage fee may be criticized as providing counsel a windfall in relation to the amount of work performed.' Laffitte, supra, 1 Cal.5th at 490. And this is exactly what we have here.

The court has performed the 'cross-check' using the lodestar method and finds that the requested attorneys' fees are not reasonable.

According to the declarations of class counsel, they attorneys assigned to this matter billed a total of 226.4 hours. (Moon Decl., ¶ 58.) This results in a blended hourly rate of approximately $754.99 per hour ($170,930.54 divided by 226.4), which the court considers higher than what is reasonable for similar work in San Diego County. By contrast, the blended hourly rate without the requested multiplier is a much more reasonable $606.33 (lodestar fees of $137,272.50 divided by 226.4 hours). (See id.) The court makes these observations having practiced law in San Diego for over 20 years before being appointed to the bench in 2005. Since that time, the court has ruled on hundreds of fee applications in a variety of settings. This experience has allowed the court to gain and retain an understanding of fees charged by attorneys in the community. In the court's view, the typical billing rates for junior and senior attorneys working on wage and hour cases in the San Diego legal community during the relevant time period range between $400-$650 per hour, respectively. A blended rate of over $750 per hour is hard to justify in these circumstances. See Cordero-Sacks v. Housing Authority of City of Los Angeles (2011) 200 Cal.App.4th 1267, 1286 ('The trial court is in the best position to determine the reasonableness of the hourly rate of an attorney appearing before the court and the value of the attorney's professional services.').

The classic situation justifying an upward adjustment of the lodestar figure was seen in a trilogy of California Supreme Court cases from the 1970s. See Serrano v. Priest (1971) 5 Cal. 3d 584 (Serrano I); Serrano v. Priest (1976) 18 Cal. 3d 728 (Serrano II); Serrano v. Priest (1977) 20 Cal.3d 25 (Serrano III).

The litigation there revolved around California's system for financing public schools. The plaintiffs succeeded in overturning the existing system, but the litigation resulted in no fund of money from which attorney fees might be paid, nor did it result in any monetary recovery by the plaintiffs. The plaintiffs were also under no obligation to pay their attorneys for their efforts and (critically for our purposes) there was no clear statutory authority for shifting attorney fees to the defendant. Accordingly, application of a multiplier was appropriate.

Calendar No.: Event ID:  TENTATIVE RULINGS

2980005  31 CASE NUMBER: CASE TITLE:  GONZALEZ VS A M CASTANEDA INC [IMAGED]  37-2021-00017374-CU-OE-CTL Two decades later, the Court of Appeal in Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128 declined to award a multiplier and distinguished Serrano III as follows: '[T]he present case is in essence a personal injury action, brought by a single plaintiff to recover her own economic damages. Weeks and her attorneys had a fee agreement by which her attorneys were assured of a portion of any recovery. In addition, because of the availability of attorney fees under the FEHA, the attorneys had reason to assume that the amount of Weeks's recovery would not limit the amount of fees they ultimately received. Thus, the risk that Weeks's attorneys would not be compensated for their work was no greater than the risk of loss inherent in any contingency fee case; however, because of the availability of statutory fees the possibility of receiving full compensation for litigating the case was greater than that inherent in most contingency fee actions.' Weeks, 63 Cal.App.4th at 1174. The court finds this case is more like Weeks than Serrano III, and therefore declines to award the requested multiplier. The action was neither novel nor particularly complex. Although Mr. Moon's firm took the case on a contingency basis, there is no evidence suggesting that its representation of plaintiff precluded other employment. To the contrary, the court has had several cases involving Mr. Moon's firm over the past two years. Moreover, given the fee-shifting provisions in the Labor Code, the case was not risky from the standpoint of Mr. Moon having a source for payment. In sum, the attorneys' fee request is granted, but only to the extent of $137,272.50. The remainder ($170,930.54 minus $137,272.50 equals $33,658.04) is poured over into the net settlement fund for distribution to the class members.

F. Class counsel must prepare and submit a revised proposed order and proposed final judgment consistent with the foregoing.

Calendar No.: Event ID:  TENTATIVE RULINGS

2980005  31