Judge: Yvette M. Palazuelos, Case: 22STCV37722, Date: 2024-04-03 Tentative Ruling

Case Number: 22STCV37722    Hearing Date: April 3, 2024    Dept: 9

Final Approval of Class Action Settlement

Department SSC-9

Hon. Elaine Lu

Christian Cruz v. Charles E. Thomas Company, Inc.

Case No.: 22STCV37722

Hearing: April 3, 2024

TENTATIVE RULING

The Court hereby GRANTS final approval and awards/approves the following:

(1) $119,200 (33 1/3%) for attorney fees to Class Counsel, Stansbury Brown Law, PC; (2) $15,844.20 for attorney costs to Class Counsel; (3) an enhancement payment of $7,500 to Plaintiff Christian Cruz; (4) $18,750 (75% of $25,000 PAGA penalty) to the LWDA; and (5) $4,899 for settlement administration costs to Apex Class Action, LLC.

Within two weeks, Plaintiff’s counsel shall file a proposed Order and Judgment, consistent with this ruling containing all requisite terms, including the class definition, release language, and a statement that no class members requested exclusion. The Court orders class counsel to file a final report summarizing all distributions made pursuant to the approved settlement, supported by declaration. The Court will set a non-appearance date for submission of a final report for April 3, 2025.  Class counsel is to file the final report no later than five court days prior to the April 3, 2025 non-appearance. 

BACKGROUND

This is a wage and hour class action. Defendants Charles E. Thomas Company, Inc. is full ­­service general engineering contractor in the city of Gardena, CA, employing individuals to perform construction jobs for various retail and commercial businesses in California, namely gas stations.

Plaintiff filed a class action complaint against Defendant on December 2, 2022, which alleges class wide causes of action for: (1) minimum wage violations (2) failure to pay all overtime wages; (3) meal period violations; (4) rest period violations; (5) waiting time penalties; (6) wage statement violations; and (7) unfair competition.  On March 14, 2023, Plaintiff amended his complaint as a matter of right pursuant to Labor Code Section 2699.3(a)(2)(c) to add an additional cause of action (8) for civil penalties under the Private Attorneys General Act pursuant to Labor Code Sections 2698 et seq.

Plaintiff filed a Second Amended Complaint on September 7, 2023, to redefine the class definition from all current and former non-exempt employees of Defendants to only those non-exempt employees who worked in the positions of: (i) Construction Technician; (ii) Service Technician; (iii) Construction Technician Trainee; (iv) Service Technician Trainee; and/or (v) Superintendent (if such Superintendent was paid on an hourly basis).

Counsel represent that prior to mediation, Defendant informally produced all relevant time and pay records as well as its wage and hour policies and other documents and information relevant to the claims alleged in advance of mediation. Counsel represents that they transmitted Defendant’s mediation production to expert, Bennett Berger, a Partner and Senior Data Analyst at Berger Consulting Group to perform a damages analysis.  

On May 3, 2023, a full-day in-person mediation was held with the Hon. Leo Wagner (ret.), where the Parties ultimately accepted a mediator’s proposal for a class and representative wide settlement. A fully executed copy of the Settlement Agreement was filed with the Court on July 25, 2023, attached to the Declaration of Daniel J. Brown, (“Brown Decl.”) in Support of Preliminary Approval (“ISO Prelim”), as Exhibit 1.

Preliminary approval was granted on September 6, 2023. Notice was given to the Class Members as ordered (see Declaration of Madely Nava (“Nava Decl.”).) Now before the Court is the Motion for Final Approval of the proposed class action settlement.

SETTLEMENT CLASS DEFINITION

·       “Class” means all non-exempt employees who worked for Defendant at any time during the Class Period and held the job title of: (i) Construction Technician; (ii) Service Technician; (iii) Construction Technician Trainee; (iv) Service Technician Trainee; and/or (v) Superintendent (if such Superintendent was paid on an hourly basis). (¶1.5)

o   “Class Period” means the period from December 2, 2018 to November 1, 2023. (¶1.12)

·       “Aggrieved Employee” means all non-exempt employees who worked for Defendant at any time during the PAGA Period and held the job title of: (i) Construction Technician; (ii) Service Technician; (iii) Construction Technician Trainee; (iv) Service Technician Trainee; and/or (v) Superintendent (if such Superintendent was paid on an hourly basis). (¶1.4)

o   “PAGA Period” means the period from December 2, 2021 to November 1, 2023.  (¶1.31)

·       Based on a review of its records to date, Defendant estimates there are 62 Class Members who collectively worked a total of 7,450 Workweeks, and 40 Aggrieved Employees who worked a total of 1,450 PAGA Pay Periods.  (¶4.1)

·       This Settlement Agreement is based on an estimated total of 7,450 Workweeks for the Class Period. If the actual number of Workweeks for the Class Period exceeds 8,195 (representing an increase of 745, or 10%, over the 7,450 estimate), then the Gross Settlement Amount shall automatically increase by $48 for each Workweek that exceeds 8,195. Because the amount of $25,000 allocated to PAGA Penalties is based on a reasonable compromise under Labor Code section 2699(l)(2), there shall be no adjustment to the LWDA PAGA Payment or Individual PAGA Payments. (¶8)

o   At Final Approval, the Administrator declares that Settlement Class Members have worked a collective total of seven thousand nine hundred thirty (7,930) Eligible Workweeks during the Class Period. (Nava Decl., ¶10.) Therefore, the escalator was not triggered.

·       The parties stipulate to class certification for settlement purposes only. (¶12.1.)

TERMS OF SETTLEMENT AGREEMENT

The essential terms are as follows:

·       The Gross Settlement Amount (“GSA”) is $357,600, non-reversionary. (¶3.1)

·       The Net Settlement Amount (“Net”) ($186,751) is the GSA minus the following:

o   Up to $119,200 (33 1/3%) for attorney fees (¶3.2.2);

§  Fee split: 80% to Stansbury Brown Law, PC (“SBL”) and 20% to Panitz Law Group (“PLG”). (Cruz Decl., ¶7.)

o   Up to $18,000 for litigation costs (Ibid.);

o   Up to $10,000 for a Service Payment to the Named Plaintiff (¶3.2.1);

o   Up to $4,899 for settlement administration costs (¶3.2.3); and

o   Payment of $18,750 (75% of $25,000 PAGA penalty) to the LWDA. (¶3.2.5)

·       Defendants will pay their share of taxes seperate from the GSA. (¶3.1)

·       Funding of Settlement: Defendant shall fully fund the Gross Settlement Amount, and also fund the amounts necessary to fully pay Defendant’s share of payroll taxes by transmitting the funds to the Administrator no later than 30 days after the Effective Date.  (¶4.3)

·       There is no claim form requirement. (¶3.1)

·       Individual Settlement Payment Calculation:  An Individual Class Payment calculated by (a) dividing the Net Settlement Amount by the total number of Workweeks worked by all Participating Class Members during the Class Period and (b) multiplying the result by each Participating Class Member’s Workweeks.  (¶3.2.4)

o   Tax Allocation: 20% as wages and 80% as interest and penalties. (¶3.2.4.1)

·       PAGA Payments: The Administrator will calculate each Individual PAGA Payment by (a) dividing the amount of the Aggrieved Employees’ 25% share of PAGA Penalties ($6,250.00) by the total number of PAGA Period Pay Periods worked by all Aggrieved Employees during the PAGA Period and (b) multiplying the result by each Aggrieved Employee’s PAGA Period Pay Periods. Aggrieved Employees assume full responsibility and liability for any taxes owed on their Individual PAGA Payment.  (¶3.2.5.1.)

·       “Response Deadline” means 60 days after the Administrator mails Notice to Class Members and Aggrieved Employees, and shall be the last date on which Class Members may: (a) fax, email or mail Requests for Exclusion from the Settlement, or (b) fax, email or mail his, her, or their Objection to the Settlement. Class Members to whom Notice Packets are resent after having been returned undeliverable to the Administrator shall have an additional 14 calendar days beyond the Response Deadline has expired. (¶1.43) The same deadline and extension applies to challenges to the number of Class Workweeks and PAGA Pay Periods. (¶7.6)

o   If the number of valid Requests for Exclusion identified in the Exclusion List exceeds 10% of the total of all Class Members, Defendant may, but is not obligated to, elect to withdraw from the Settlement. (¶9)

·       Uncashed Settlement Checks: For any Class Member whose Individual Class Payment check or Individual PAGA Payment check is uncashed and cancelled after the void date, the Administrator shall transmit the funds represented by such checks to the California Controller’s Unclaimed Property Fund in the name of the Class Member thereby leaving no “unpaid residue” subject to the requirements of Code of Civil Procedure section 384, subdivision (b). (¶4.4.3)

·       The settlement administrator will be Apex Class Action LLC. (¶1.2)

• Notice of Final Judgment will be posted on the Settlement Administrator’s website. (¶7.8.1)
• The proposed settlement was submitted to the LWDA on July 24, 2023. (Brown Decl. ISO Prelim, Exhibit 4.)
• Scope of the release: Effective on the date when Defendant fully funds the entire Gross Settlement Amount and funds all employer payroll taxes owed on the Wage Portion of the Individual Class Payments, Plaintiff, Class Members, and Class Counsel will release claims against all Released Parties as follows: (¶5)

o   Release by Participating Class Members: All Participating Class Members, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors and assigns, release Released Parties from (i) all claims that were alleged, or reasonably could have been alleged in the Class Period based on the facts stated in the Operative Complaint and ascertained in the course of the Action. Except as set forth in Section 5.3 of this Agreement, Participating Class Members do not release any other claims, including claims for vested benefits, wrongful termination, violation of the Fair Employment and Housing Act, unemployment insurance, disability, social security, workers’ compensation or claims based on facts occurring outside the Class Period. (¶5.2)

o   Release by Non-Participating Class Members Who Are Aggrieved Employees: All Participating Class Members who are Aggrieved Employees and Non-Participating Class Members who are Aggrieved Employees are deemed to release, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors and assigns, the Released Parties from all claims for PAGA penalties that were alleged, or reasonably could have been alleged, during the PAGA Period based on the facts stated in the Operative Complaint and the PAGA Notice. (¶5.3)

o   Released Parties: “Released Parties” means Defendant and each of its former and present directors, officers, shareholders, owners, members, attorneys, insurers, predecessors, successors, assigns, subsidiaries, and affiliates. (¶1.41)

o   Named Plaintiff will also provide a general release and CC § 1542 waiver. (¶5.1)

ANALYSIS OF SETTLEMENT AGREEMENT

A.     Does a presumption of fairness exist? 

The Court preliminarily found in its Order of September 6, 2023, that the presumption of fairness should be applied.  No facts have come to the Court’s attention that would alter that preliminary conclusion.  Accordingly, the settlement is entitled to a presumption of fairness as set forth in the preliminary approval order.

B.     Is the settlement fair, adequate, and reasonable?

The settlement was preliminarily found to be fair, adequate and reasonable.  Notice has now been given to the Class and the LWDA. 

  Reaction of the class members to the proposed settlement.

Number of class members: 66 (Nava Decl. ¶3.)

Number of notice packets mailed: 66 (Id. at ¶5.)

Number of undeliverable notices: 0 (Id. at ¶6.)

Number of opt-outs: 0 (Id. at ¶7.)

Number of objections: 0 (Id. at ¶8.)

Number of participating class members: 66 (Id. at ¶10.)

Average individual payment: $2,767.53 (Id. at ¶12.)

Highest individual payment: $5,781.44 (Ibid.)

Number of Aggrieved Employees: 44 (Id. at ¶14.)

Average individual payment: $142.05 (Ibid.)

Highest individual payment: $212.09 (Ibid.)

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

C.     Attorney Fees and Costs

            Class Counsel requests an award of $119,200 in fees and $15,844.20 in costs. (MFA at 13:27-14:1, 17:7-8.) The Settlement Agreement provides for up to $119,200 (33 1/3%) of the settlement amount in fees and $18,000 in costs (¶3.2.2).

“Courts recognize two methods for calculating attorney fees in civil class actions: the lodestar/multiplier method and the percentage of recovery method.”  (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 254.)  Here, class counsel request attorney fees using the percentage method, as crosschecked by lodestar. (MFA at pp. 13-17.)

In common fund cases, the Court may employ a percentage of the benefit method, as cross-checked against the lodestar. (Laffitte v. Robert Half Int’l, Inc. (2016) 1 Cal.5th 480, 503.) The fee request represents approximately one-third of the gross settlement amount, which 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 whether the percentage method or the lodestar method is used, fee awards in class actions average around one-third of the recovery.”].)

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

(Decl. of Daniel J. Brown ISO Final ¶20, Exhibit C; Decl. of Ethan C. Surls ISO Final, ¶7.)

Counsel’s percentage-based fee request is lower than the unadjusted lodestar and would represent application of a negative multiplier of approximately 0.95.

Fee split: 80% to Stansbury Brown Law, PC (“SBL”) and 20% to Panitz Law Group (“PLG”). (Cruz Decl., ¶7.)

Here, the $119,200 (33 1/3%) fee request represents a reasonable percentage of the total funds paid by Defendant. Notice of the fee request was provided to class members in the Notice, and none objected. (Nava Decl. ¶8, Exhibit A thereto.)

            As for costs, Class Counsel is requesting a cost amount of $15,844.20. This is less than the $18,000 cap estimated at preliminary approval, which was disclosed to Class Members and not objected to. (Nava Decl. ¶8, Exhibit A thereto.) Costs include, but are not limited to: Mediation ($8,775), Filing Fees ($1,730.26), and Expert Data Analysis[1] ($4,320). (Brown Decl. ISO Final ¶18, Exhibit E thereto.) The costs appear to be reasonable in amount and reasonably necessary to this litigation.

Based on the above, the Court awards $119,200 (33 1/3%) in fees and $15,844.20 in costs.

D.    Incentive Award

The class representative, Christian Cruz, seeks an enhancement payment of $10,000 for his contributions to the action. (MFA at pp. 18-19.) 

In connection with the final fairness hearing, named Plaintiffs must submit declarations attesting to why they should be entitled to an enhancement award in the proposed amount.  The named Plaintiffs must explain why they “should be compensated for the expense or risk he has incurred in conferring a benefit on other members of the class.”  (Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 806.)  Trial courts should not sanction enhancement awards of thousands of dollars with “nothing more than pro forma claims as to ‘countless’ hours expended, ‘potential stigma’ and ‘potential risk.’ Significantly more specificity, in the form of quantification of time and effort expended on the litigation, and in the form of reasoned explanation of financial or other risks incurred by the named plaintiffs, is required in order for the trial court to conclude that an enhancement was ‘necessary to induce [the named plaintiff] to participate in the suit . . . .’”  (Id. at 806-807, italics and ellipsis in original.)

Plaintiff represents that his contributions to this litigation include: engaging in phone calls with his attorneys, discussing Defendant’s wage and hour policies, gathering and reviewing employment and non-employment related documents for use in the lawsuit, contacting numerous other class members, and coordinating obtaining other class members’ Declarations. (Declaration of Christian Cruz, ¶¶4-6 [attached as Exhibit G to the Brown Decl. ISO Final].)

Plaintiff’s efforts are commendable, but not exceptional. Based on the above, as well as the benefits obtained on behalf of the class, the Court grants the enhancement payment in the reduced amount of $7,500 to Plaintiff.

E.     Settlement Administration Costs

            The settlement administrator, Apex Class Action, LLC, is requesting $4,899 for the costs of settlement administration. (Nava Decl. ¶15.) This equals the cost of $4,899 provided for in the Settlement Agreement (¶3.2.3) and disclosed to class members in the Notice, to which there were no objections. (Nava Decl. ¶8, Exhibit A thereto.) Based on the above, the Court awards costs in the requested amount of $4,899.