Judge Yvette M. Palazuelos, Case Number: 19STCV32364, Date: 2024-04-24 Tentative Ruling

Judge: Yvette M. Palazuelos, Case: 19STCV32364, Date: 2024-04-24 Tentative Ruling

Case Number: 19STCV32364 Hearing Date: April 24, 2024 Dept: 9

Preliminary Approval of Class Action Settlement

Department SSC-9

Honorable Elaine Lu

Carter v. Red Tie, Inc., et al.

Case No. 19STCV32364

Hearing: April 24, 2024

TENTATIVE RULING

The motion for preliminary approval is DENIED. The proposed settlement is for the named Plaintiff on an individual basis – not a class-wide basis. No class settlement exists for the court to review. Therefore, a motion for preliminary approval of a class settlement is unnecessary and improper. If counsel seeks a dismissal of the class claims herein, counsel must file a request for dismissal that complies with CRC 3.770 -- not a motion for preliminary approval.

BACKGROUND

On September 5, 2019, Plaintiff filed a putative class action complaint against Defendants Red Tie, Inc. d/b/a Red Tie Gentlemen’s Club, and Mike Mudaris, (collectively “Defendants”) alleging: (1) failure to pay for all hours worked (Cal. Lab. Code §§ 1182.12, 1194, 1197); (2) failure to provide meal periods (Cal. Lab. Code §§ 226.7, 512); (3) failure to authorize and permit and/or make available rest periods (Cal. Lab. Code § 226.7); and (4) unlawful business practices (Cal. Bus. & Prof. §§ 17200 et seq.

Counsel represent that the parties engaged in informal discovery, as well as settlement negotiations, and entered into an individual settlement agreement on or about June 6, 2023, for $20,000 with Plaintiff Carter.

Plaintiff’s counsel now requests approval of the Court to dismiss the class allegations without prejudice, and dismissal of Plaintiff’s Complaint with prejudice; or in the alternative, seeks preliminary approval of the settlement agreement.

ANALYSIS

California Rules of Court (CRC), rule 3.769(a) requires “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.” Rule 3.769(c) establishes that “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.”

In determining whether to approve a class settlement, the court’s responsibility is to “prevent fraud, collusion or unfairness to the class” through settlement 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.) The class settlement should be scrutinized by the Court to assure itself that it is not the product of fraud, overreaching, or collusion and that “the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.” (Wershba v. Apple Computer (2001) 91 Cal.App.4th 224, 244–45.)

This matter was brought as a class action on September 5, 2019. The court has a fiduciary duty to absent class members to review and approve class action settlements. Here, there is no class settlement. There is only an individual settlement which the individual Plaintiff executed with the guidance of her counsel. Therefore, there is no class-wide settlement for this court to approve, and the motion for preliminary approval is DENIED on that basis.

Counsel should note that the dismissal of an entire class action, or of any party or cause of action in a class action, does require court approval. The court may not grant a request to dismiss a class action if the court has entered judgment following final approval of a settlement. Requests for dismissal must be accompanied by a declaration setting forth the facts on which the party relies. The declaration must clearly state whether consideration, direct or indirect, is being given for the dismissal and must describe the consideration in detail. (CRC 3.770(a)). If the parties request dismissal of class claims without notice to class members, the declaration must also clearly state why the dismissal without notice will not prejudice class members.

CONCLUSION

Therefore, based on the above, Plaintiff’s motion for preliminary approval is DENIED. By virtue of the class representative settling as an individual plaintiff, the class need not be certified, and no class representative with standing will remain. Because the claims are not being settled on a class-wide basis, a Motion for Preliminary Approval of Class Action Settlement is unnecessary and improper.

If counsel now seeks a dismissal of the class claims herein, counsel must comply with CRC 3.770: A copy of the settlement agreement(s) must be attached. Specifically, Plaintiff’s declaration would have to address the following per CRC 3.770:

· A statement setting forth the facts upon which the requesting plaintiff relies upon that justify the dismissal [CRC 3.770(a)];

· A statement whether consideration, direct or indirect is beings given for the dismissal of the class allegations and a description of the consideration in detail [CRC 3.770(a)];

o Note: Compensating counsel and/or class representative(s) more than the amount they would be entitled to on their individual claims may constitute indirect consideration for class action dismissal. Plaintiff must specifically address this point as it pertains to the Settlements;

· A statement setting forth in full the attorney’s fees paid by the defendant for representation of the class and/or or of the class representatives [CRC 3.769(b)]; and

· A statement explaining why dismissal without notice to class members will not prejudice class members [CRC 3.770(c)].

Plaintiff must file her dismissal papers under CRC 3.770 no later than June 3, 2024.

A Non-Appearance Case Review re Filing of Dismissal Papers Under CRC 3.770(a) is set for June 10, 2024, at 8:30 am., Department 9.

The Court’s Judicial Assistant shall give notice to Plaintiffs’ Counsel. Plaintiffs’ Counsel is to give notice of this order to all other parties and file proof of service of such within 10 days.

Date: April 24, 2024 _____________________________

ELAINE LU

JUDICIAL OFFICER