Superior Court, State of California



DATE: NOVEMBER 5, 2020 TIME: 1:30 P.M.

PREVAILING PARTY SHALL PREPARE THE ORDER

(SEE RULE OF COURT 3.1312)

|LINE # |CASE # |CASE TITLE |RULING |

|LINE 1 |19CV358066 |Robinson v. Inter-Con Security Systems, |CLICK ON LINE 1 FOR RULING. |

| | |Inc. | |

|LINE 2 |19CV353132 |In Re Hewlett Packard Enterprise Co. |CLICK ON LINE 2 FOR RULING. |

| | |Shareholder Litigation (LEAD CASE; | |

| | |Consolidated With Case No. 19CV359073) | |

|LINE 3 |2015-1-CV-284956 |Staats v. City of Palo Alto |CLICK ON LINE 3 FOR RULING. |

|LINE 4 |16CV298379 |Mendoza v. City Sports Club, et al. |CLICK ON LINE 4 FOR RULING. |

|LINE 5 | | | |

|LINE 6 | | | |

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Case Name: Nicholas Robinson v. Inter-Con Security Systems, Inc., et al.

Case No.: 19CV358066

  This is an action under the Private Attorneys General Act (“PAGA”), alleging that defendant Inter-Con Security Systems, Inc. failed to pay employees on a weekly basis and to reimburse them for business expenses as required by the Labor Code. Before the Court is Inter-Con’s motion for judgment on the pleadings and/or demurrer, which plaintiff opposes.

I. Factual and Procedural Background

According to the operative complaint, plaintiff was hired by defendant to work as a security guard/officer in October 2018. (Complaint, ¶ 6.) He alleges that defendant is a licensed private patrol operator and that he and other aggrieved employees are licensed security guards required to be paid on a weekly basis pursuant to Labor Code section 201.3 (Id., ¶ 16.) Plaintiff further alleges that he and other aggrieved employees were not assigned to work for any particular client for over 90 consecutive days, but were assigned to work for different clients at different locations on a regular basis. (Ibid.) In addition, although plaintiff and other aggrieved employees were required to drive their own vehicles to different posts at defendant’s sole discretion, they were not reimbursed for their mileage. (Ibid.) Plaintiff filed this action on November 6, 2019, asserting a single claim for PAGA penalties based on the two theories described above.

Before this action commenced, another security guard employed by Inter-Con (and represented by plaintiff’s counsel herein) filed suit under PAGA for defendant’s alleged failure to pay employees on a weekly basis. This Court granted summary judgment in that action, Singh v. Inter-Con Security Systems, Inc. (Super. Ct. Santa Clara County, 2019, No. 17CV313202), based on defendant’s showing that the plaintiff’s employment—which consisted of one assignment to a single client—was subject to the 90-day exemption to Labor Code section 201.3’s weekly pay requirement. Judgment was entered in Singh on August 13, 2019. The plaintiff appealed, and his appeal remains pending.

Inter-Con now moves for judgment on the pleadings and/or demurs on the grounds that, in light of Singh, plaintiff lacks standing to prosecute his weekly pay claim and is barred from doing so by “collateral estoppel/claim preclusion.” As to plaintiff’s allegations regarding failure to reimburse employees for mileage, Inter-Con urges that a third PAGA action, Renata Stewart v. Inter-Con Security System, Inc. (Super. Ct. L.A. County, No. 19STCV31142), is pending between the parties on that theory, and this action must be abated in favor of that one.[1]

II. Legal Standard

Under Code of Civil Procedure section 438, a defendant may move for judgment on the pleadings on the ground that a pleading fails to state facts sufficient to constitute a cause of action.  (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).)  The motion may be made as to the entire complaint or “as to any of the causes of action stated therein.”  (Id. at subd. (c)(2)(A).)  

 

“A motion for judgment on the pleadings, like a general demurrer, confines the court’s consideration to the face of the pleading under attack and to matters outside the pleading that are judicially noticeable.  No extrinsic evidence can be considered.” (Jayasinghe v. Lee (1993) 13 Cal.App.4th Supp. 33, 36.)  On such motions, “[t]he court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.”  (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.)

III. The Impact of Singh

Inter-Con urges that, given the judgment in Singh, plaintiff is barred from prosecuting his claim for weekly pay violations based on “collateral estoppel/claim preclusion,” and lacks standing as a PAGA plaintiff because the state is bound by the ruling in Singh.

Collateral estoppel precludes the relitigation of an issue where  

 

(1) the issue is identical to an issue decided in a prior proceeding; (2) the issue was actually litigated; (3) the issue was necessarily decided; (4) the decision in the prior proceeding is final and on the merits; and (5) the party against whom collateral estoppel is asserted was a party to the prior proceeding or in privity with a party to the prior proceeding.    

 

(Zevnik v. Superior Court (Rayonier Inc.) (2008) 159 Cal.App.4th 76, 82.)  “The party asserting collateral estoppel bears the burden of establishing these requirements.” (Lucido v. Superior Court (People) (1990) 51 Cal.3d 335, 341.)    

 

Several of these requirements are not satisfied here. As an initial matter, “[t]he final judgment prerequisite requires that the time for seeking a new trial or appealing the judgment has expired and any appeal is final.” (People v. Burns (2011) 198 Cal.App.4th 726, 731.) Because the appeal in Singh remains pending, the decision in that action is not final. Moreover, the issues raised by this action are not identical to those decided in Singh, and were not actually litigated or necessarily decided in that case. In Singh, the Court held that “[b]ecause, in his sole assignment during his employment with defendant, plaintiff was assigned to work for a client for over 90 days, he was not required to be paid on a weekly basis under Labor Code section 201.3.” Since this was the only violation alleged in the complaint, the plaintiff lacked standing to prosecute his PAGA action. (See Huff v. Securitas Security Services USA, Inc. (2018) 23 Cal.App.5th 745, 754 [PAGA plaintiff must have been “employed by the alleged violator and affected by at least one of the violations alleged in the complaint” to have standing under the statute].) Here, plaintiff specifically alleges that he and other aggrieved employees were not assigned to work for any particular client for over 90 consecutive days, but were assigned to work for different clients at different locations on a regular basis. Whether the 90-day exemption applies under these circumstances is an issue that was not addressed in Singh.

The claim preclusion doctrine, formerly called res judicata, prohibits a second suit between the same parties on the same cause of action. Claim preclusion arises if a second suit involves (1) the same cause of action (2) between the same parties (3) after a final judgment on the merits in the first suit. The doctrine rests upon the ground that the party to be affected, or some other with whom he is in privity, has litigated, or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again to the harassment and vexation of his opponent.

(Robinson v. Southern Counties Oil Company (2020) 53 Cal.App.5th 476, 481–482, internal citation and quotations omitted.)

Neither party addresses the issue of whether and how claim preclusion, as opposed to collateral estoppel/issue preclusion, applies in a PAGA action in which the plaintiff was found to lack standing to prosecute the action. Nor do they address whether the claim at issue here is the same as the one at issue in Singh under the primary right doctrine. (See Consumer Advocacy Group, Inc. v. ExxonMobil Corp. (2008) 168 Cal.App.4th 675, 686 [explaining that California follows the primary right theory to determine whether the cause of action asserted in two actions is identical for purposes of claim preclusion].) These unaddressed issues are key to a determination of whether the first two requirements of claim preclusion are satisfied. In any event, the third requirement clearly is not satisfied: as with issue preclusion, finality for purposes of claim preclusion requires the exhaustion of any appeal, and the appeal in Singh is ongoing. (See Starks v. Vortex Industries, Inc. (2020) 53 Cal.App.5th 1113, 1134–1135 [in California, a judgment is not final when it is on appeal].)

Inter-Con’s argument that “collateral estoppel/claim preclusion” bars this action accordingly lacks merit. Its argument that plaintiff lacks standing under PAGA due to the judgment in Singh fails for similar reasons. It is true that “[b]ecause collateral estoppel applies not only against a party to the prior action in which the issue was determined, but also against those for whom the party acted as an agent or proxy [citations], a judgment in an employee’s action under [PAGA] binds not only that employee but also the state labor law enforcement agencies” and any aggrieved employee not a party to the proceeding. (Arias v. Superior Court (Angelo Dairy) (2009) 46 Cal.4th 969, 986; see also Julian v. Glenair, Inc. (2017) 17 Cal.App.5th 853, 866–867 [stating that Arias “explained that the doctrine of collateral estoppel, rather than the statutory scheme, shields the employer from an abusive ‘one-way intervention,’ that is, a series of PAGA actions by different employees that would continue until some employee prevailed”], quotations omitted.) Again, though, the issues raised by this action were not determined in Singh, which addressed the application of the 90-day exemption to an employee assigned to work for a single client for over 90 days. Put differently, the issue determined in Singh was whether the plaintiff in that case had standing to prosecute a weekly pay claim against Inter-Con where he was assigned to work for a single client for over 90 days. The issue of whether a different plaintiff assigned to work for multiple clients for shorter periods would have standing was not addressed.[2]

For all these reasons, Inter-Con’s arguments based on Singh lack merit.

IV. The Impact of Stewart

Inter-Con demurs to plaintiff’s claim regarding unreimbursed mileage on the ground that “[t]here is another action pending between the same parties on the same cause of action.” (Code Civ. Proc., § 430.10, subd. (c).)   “The pendency of another earlier action growing out of the same transaction and between the same parties is a ground for abatement of the second action.”  (Leadford v. Leadford (1992) 6 Cal.App.4th 571, 574.)  A defendant may assert the pending action as a bar either by demurrer, or where fact issues must be resolved, by answer and subsequent motion pursuant to Code of Civil Procedure section 597.  (Ibid.)  In either case, if the court determines a pending action raises substantially the same issues between the same parties, it must enter the interlocutory judgment specified in Code of Civil Procedure section 597. (Ibid.) “[A]bsolute identity of parties” is required to support the statutory plea in abatement.

(Plant Insulation Co. v. Fibreboard Corp., supra, 224 Cal.App.3d 781, 788.) “In determining whether the causes of action are the same for purposes of pleas in abatement, the rule is that such a plea may be maintained only where a judgment in the first action would be a complete bar to the second action.”  (Id. at pp. 787–788.)    

The parties do not cite, and the Court is unaware of, any authority addressing the application of the statutory plea of abatement to parallel PAGA claims filed by different representative plaintiffs.  As urged by plaintiff, California and federal authorities have held that “separate but similar actions by different employees against the same employer” are generally permissible under the PAGA statutory scheme.[3]  (Julian v. Glenair, Inc., supra, 17 Cal.App.5th at p. 866 [where one representative plaintiff had already filed a PAGA action, subsequent agreements to arbitrate PAGA claims executed by other employees were unenforceable as against those employees], citing Tan v. GrubHub, Inc. (N.D. Cal. 2016) 171 F.Supp.3d 998, 1012–1013; see also Starks v. Vortex Industries, Inc., supra, 53 Cal.App.5th at p. 1119 [noting in dicta that a trial court had rejected a demurer under Code of Civil Procedure section 430.10, subdivision (c) based on the pendency of a parallel PAGA action].)  Federal courts have accordingly denied requests to stay parallel PAGA actions based on a claimed “first-to-file” rule and under the Colorado River abstention doctrine.  (See Tan v. GrubHub, Inc., supra, 171 F.Supp.3d at pp. 1012–1016 [noting that defendants cited no case holding that “two PAGA representatives cannot pursue the same PAGA claims at the same time” and “declin[ing] to be the first [court] to so hold”].)    

 

 The courts have emphasized that “the doctrine of collateral estoppel … shields the employer from an abusive one-way intervention, that is, a series of PAGA actions by different employees that would continue until some employee prevailed.”  (Julian v. Glenair, Inc., supra, 17 Cal.App.5th at pp. 866-867, internal quotations omitted.)  Under this doctrine, “a judgment unfavorable to the employee binds the government, as well as all aggrieved nonparty employees potentially entitled to assert a PAGA action.”  (Id. at p. 867, italics added.)  As federal courts have noted, concerns with protecting employers from duplicative PAGA suits do not “compel a bar to filing a PAGA claim because of the mere pendency of another PAGA suit on the same issue by someone else.”  (Tan v. GrubHub, Inc., supra, 171 F.Supp.3d at p. 1013.)  However, the analysis would differ where “the earlier-filed PAGA claim [had] already been decided, since any judgment would be binding on government agencies and any aggrieved employee not a party to the proceeding ….”  (Ibid.; see also Canela v. Costco Wholesale Corporation (N.D. Cal., May 23, 2018, No. 13-CV-03598-BLF) 2018 WL 2331877, at *7 [“Tan recognizes that a judgment in one PAGA action may bar another pending PAGA action.  As such, there would be no inconsistent judgments even if there were concurrent suits at an earlier time.”], internal citation omitted.)

Inter-Con fails to address these authorities in its reply brief. The Court finds them persuasive, and concludes that parallel PAGA plaintiffs are not the “same parties” for purposes of the statutory plea in abatement. (See also Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 592 [rejecting contention that “the State of California is, as a legal matter, the actual plaintiff” in a PAGA action].)

V. Conclusion and Order

Defendant’s motion for judgment on the pleadings and/or demurrer is DENIED and/or OVERRULED.

The Court will prepare the order.

COVID-19 LAW AND MOTION HEARING PROCEDURES

Pursuant to the Judicial Council’s Emergency Rule 3(a)(1) and (3), all law and motion hearings will be conducted remotely through CourtCall until further notice. Please see the General Order re: COVID-19 Emergency Order Regarding Complex Civil Actions, and in particular sections 7 and 10, available at

general_info/news_media/newspdfs/GENERALORDER_RECOVID-19_

EMERGENCY_ORDER_REGARDING_COMPLEXCIVILACTION.pdf. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing should contact CourtCall.

Public access to remote hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a remote hearing or listening in on a public access line. No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 19, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter will participate remotely and will not be present in the courtroom.

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Case Name: In re Hewlett Packard Enterprise Co. Shareholder Litigation

Case No.: 19CV353132 (lead case)

This consolidated putative class action arises from alleged misrepresentations and omissions in the Offering Materials issued in connection with the April 2017 transaction by which defendant Hewlett Packard Enterprise Company (“HPE”)’s Enterprise Services business segment was spun off and merged with Computer Sciences Corporation, Inc. (“CSC”) to form defendant DXC Technology Company (“DXC”) (the “Merger”).

Before the Court is a demurrer by HPE, DXC, and the individual defendants on the grounds that each cause of action in the operative Consolidated Complaint fails to state a claim. (Code Civ. Proc., § 430.10, subd. (e).) Plaintiffs oppose the demurrer.

On July 15, 2020, the Court denied defendants’ motion to stay this action in favor of a related federal action, Costanzo v. DXC Tech. Co. (N.D. Cal., No. 5:19-CV-05794-BLF). The Court observed that a motion to dismiss had been heard in the federal action and was under submission with the federal court. After weighing the relevant factors governing its evaluation of defendants’ motion, the Court concluded that “informal coordination” with the federal action was preferable to a formal stay and noted that it expected to “have the benefit of Judge

Freeman’s ruling [on the motion to dismiss the federal action] before any demurrer is heard in this case.” Judge Freeman issued her ruling on July 27, 2020, granting the motion to dismiss with leave to amend. (See Costanzo v. DXC Technology Company (N.D. Cal., July 27, 2020, No. 19-CV-05794-BLF) 2020 WL 4284838.) Assuming that an amended complaint is filed in the federal action, any subsequent motion to dismiss is scheduled to be fully briefed by January 21, 2021.

The Court wishes to have the benefit of a final ruling from Judge Freeman on the dismissal of the federal action before ruling on defendants’ demurrer in this case. Defendants’ demurrer is therefore CONTINUED to April 8, 2021 at 1:30 p.m. in Department 1, to be further continued if necessary in light of proceedings in the federal action. The parties shall meet and confer regarding any amendment that plaintiffs may wish to make to their complaint in light of Judge Freeman’s initial ruling, as well as with regard to a schedule for supplemental or further briefing to address any such amendment and any further ruling by the federal court.

The Court will prepare the order.

COVID-19 LAW AND MOTION HEARING PROCEDURES

Pursuant to the Judicial Council’s Emergency Rule 3(a)(1) and (3), all law and motion hearings will be conducted remotely through CourtCall until further notice. Please see the General Order re: COVID-19 Emergency Order Regarding Complex Civil Actions, and in particular sections 7 and 10, available at

newspdfs/GENERALORDER_RECOVID-19_EMERGENCY_ORDER_REGARDING_

COMPLEXCIVILACTION.pdf. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing should contact CourtCall.

Public access to remote hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a remote hearing or listening in on a public access line. No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 19, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter will participate remotely and will not be present in the courtroom.

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Case Name: Eileen A. Staats v. City of Palo Alto

Case No.: 2015-1-CV-284956

This is a class action alleging that the City of Palo Alto unlawfully imposed a Utility Users Tax (“UUT”) on customers of telephone service providers. Before the Court is plaintiff’s motion for preliminary approval of a settlement, which is unopposed.

I.  Factual and Procedural Background

According to the allegations of the Class Action Complaint (“Complaint”), in 1987, the City adopted an ordinance establishing the UUT, which authorizes a local tax for telephone services. (Compl., ¶¶ 8-9.) The UUT is automatically charged to City taxpayers each month by telephone providers as part of their normal billing practice on behalf of the City. (Id. at ¶¶ 1, 9.)

For purposes of the UUT ordinance, the City adopted the definition of taxable telephone services prescribed by federal statute in relation to excise taxes. (Compl., ¶ 10.) Beginning in 2005, five federal appellate courts held the federal excise tax statute did not permit the Internal Revenue Service (“IRS”) to tax telephone services for which there is a toll charge that varies with elapsed transmission time and not distance. (Id. at ¶ 12.) The IRS subsequently issued a notice reflecting the same in May 2006, and announced it would cease collecting the federal excise tax on amounts paid for time-only service after July 31, 2006. (Id. at ¶¶ 13, 72.)

Based on these authorities, Plaintiff’s telephone services are not taxable under federal law. (Compl., ¶ 12.) And since the City adopted the definition of taxable telephone services under the federal excise tax statute, after 2006, it could no longer apply the UUT to mobile phone service among others. (Id. at ¶ 14.) Yet the UUT was still charged and collected thereafter relative to exempt services. (Id. at ¶¶ 1, 16.) It was not until late 2014 that the UUT ordinance was amended to remove any reference or connection to the federal excise tax. (Id. at ¶ 26.)

Plaintiff claims she and other similarly situated persons have been unlawfully subject to the UUT, such that they are entitled to a refund for taxes collected after at least August 1, 2006. (Compl., ¶¶ 1, 27.) The Complaint, filed August 27, 2015, asserts the following causes of action: (1) declaratory relief; (2) money had and received; (3) unjust enrichment; (4) writ of mandamus; (5) invalidity of tax under Government Code section 53723; and (6) violation of California Constitution Article XIII, C § 2 and invalidity of tax due to failure to obtain voter approval.

The City answered on December 18, 2015. The parties proceeded with discovery, and plaintiff moved to certify the class on May 5, 2017. The hearing on the class certification motion was rescheduled after the City amended its answer to assert an equitable setoff defense, and again to permit the parties to submit supplemental briefing directed by the Court. In an order filed on June 12, 2018, the Court granted plaintiff’s motion for class certification in part as to the following class and four subclasses:

All persons, including individuals, non-corporate entities, and corporations, who have paid the City of Palo Alto Utility Users Tax (“UUT”) imposed by Palo Alto Municipal Code § 2.35.090 on the following services between August 1, 2006 to December 18, 2014: (1) “flat-rate” mobile telephone service that entitles the subscriber, upon payment of a periodic charge determined as a flat amount or upon the basis of total minutes, to an unlimited number of calls in an identified region; (2) “flat-rate,” separately billed long distance landline telephone service that entitles the subscriber, upon payment of a periodic charge determined as a flat amount or upon the basis of total minutes, to an unlimited number of calls in an identified region; (3) per-minute mobile telephone service; and/or (4) per-minute long distance landline telephone service. Not included in the class are persons who have paid the UUT only for separately billed local landline telephone services or local landline services “bundled” with mobile or long distance landline services in a plan that does not separately state the charge for the local service.

Notice issued to the class, with an opt-out deadline of January 14, 2019.[4] In an order filed on May 20, 2019, the Court granted the City’s motion for summary adjudication “as to all causes of action alleged in the complaint challenging the collection of telephone users tax that accrued on or before December 23, 2013.” Thus, only the claims of class members who paid the UUT between December 24, 2013 and December 18, 2014 remain at issue.

The parties have reached a settlement. Plaintiff now moves for an order preliminarily approving the settlement, approving the form and method for providing notice to the class, and scheduling a final fairness hearing.

II. Legal Standards for Approving a Class Action Settlement

 Generally, “questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court’s broad discretion.”  (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, citing Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, disapproved of on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.)      

 

In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant 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 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.      

 

(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at pp. 244-245, internal citations and quotations omitted.)         

 

  In general, the most important factor is the strength of plaintiffs’ case on the merits, balanced against the amount offered in settlement. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.) Still, the 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 v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245.)  The court must examine 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.”  (Ibid., quoting Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1801, 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 v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245, citing Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1802.)  The presumption does not permit the Court to “give rubber-stamp approval” to a settlement; in all cases, it 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,” based on a sufficiently developed factual record.  (Kullar v. Foot Locker Retail, Inc., supra, 168 Cal.App.4th at p. 130.)

III. Plaintiff’s Investigation and Settlement Process

Before filing this action, plaintiff obtained relevant documents from the City pursuant to a Public Records Act request. Plaintiff subsequently served and obtained responses to written discovery requests, including two sets of requests for production of documents. The parties engaged in lengthy meet and confer communications regarding the City’s responses and document productions. Plaintiff also took several depositions, including those of the City’s person most qualified designee and three other City employees. Meanwhile, the City deposed plaintiff and her expert, obtained responses to written discovery requests including requests for production of documents, and served subpoenas for the production of business records on numerous third-party telephone service providers, who produced responsive documents and declarations.

Following the Court’s rulings on plaintiff’s motion for class certification and the City’s motion for summary adjudication, the parties engaged in mediation with Hon. Bonnie Sabraw (Ret.) between September 16 and October 23, 2019, reaching an agreement in principle. They continued to negotiate the terms of the settlement agreement, the payment structure, and the notice plan. On May 28, 2020, they stipulated to continue the five-year dismissal deadline so they could finalize their settlement agreement, which was fully executed on August 11, 2020.

Plaintiff’s counsel declares that her team has now reviewed many thousands of pages of documents, including taxpayer telephone bills, investigation materials, technical data, and other business records pertaining to their expert’s analysis. They evaluated the merits of the action by looking to other cases challenging utility users taxes, including Ardon v. City of Los Angeles (Super. Ct. L.A. County, 2016, Case No. BC363959), which was also resolved through a settlement. Ultimately, plaintiff agreed to settle the action for $1,275,000, representing 44 percent of the $2,878,671 in allegedly unlawful UUT the City collected during the relevant period.

IV. Provisions of the Settlement

Attorney fees and costs of up to $425,000 (one-third of the gross settlement) will be paid from the settlement fund. The named plaintiff will also seek an enhancement award of $10,000. The approximately $115,535 in administration costs will be borne half by plaintiff’s attorneys from their fee and cost award and half by the City.

The net settlement, approximately $840,000 by the Court’s calculation, will be distributed to individual class members through a claims process as follows:

• Five or Fewer Phone Lines. Claimants with five or fewer phone lines can seek a refund of $8.50 per phone line.

• Six to Ten Phone Lines. Claimants with six to ten phone lines can seek a refund of $8.50 per phone line for the first five phone lines and $7.50 per phone line for the remaining phone lines.

• More than Ten Phone Lines. Claimants with more than ten phones lines can seek a refund of $8.50 per phone line for the first five phone lines, $7.50 per phone line for the next five phone lines, and $6.50 per phone line for the remaining phone lines.

Claimants must submit the following documentation to secure a refund:

• One Phone Line. If a Claimant is seeking a refund for one phone line, the Claimant must submit: (1) a Claim Form signed under penalty of perjury, indicating that the Claimant had a landline in the City or a wireless line with a place of primary use (as defined by the Mobile Telecommunications Sourcing Act, 4 U.S.C. §§ 116-126) in the City during the Claim Period; and (2) evidence of a Palo Alto address, such as a current phone bill, utility bill, property tax bill, W-2 form, paystub, or other similar document.

• Two to Ten Phone Lines. If a Claimant is seeking a refund for two to ten phone lines, the Claimant must submit: (1) a Claim Form signed under penalty of perjury, identifying the number of landlines the Claimant had in the City or the number of wireless lines the Claimant had with a place of primary use in the City during the Claim Period; and (2) a phone bill or multiple phone bills, from any time period, sufficient to specifically identify each phone line. Each phone bill must show a Palo Alto address.

• More Than Ten Phone Lines. If a Claimant is seeking a refund for more than ten phone lines, the Claimant must submit: (1) a Claim Form signed under penalty of perjury, identifying the number of landlines the Claimant had in the City or the number of wireless lines the Claimant had with a place of primary use in the City during the Claim Period; and (2) a phone bill or multiple phone bills, from the Claim Period, sufficient to specifically identify each phone line. Each phone bill must show a Palo Alto address.

Class members will have 120 days from the date of mailing to return their claim forms with supporting documentation. If a claim is rejected, the administrator will mail a notice to the claimant, who will have 45 days to request reconsideration and remedy any unsubstantiated portion of the claim. Unclaimed funds will revert to the City.

 

Class members will release the City from “any and all claims, obligations, promises, demands, rights, actions, causes of action, costs, legal fees, expert fees, consultant fees, expenses, damages, and liability of any kind whatsoever, known or unknown, arising from, concerning, or relating to the Action….”

V. Fairness of the Settlement

Plaintiff submits that the $1,275,000 settlement fund represents approximately 44 percent of the estimated $2,878,671 in allegedly unlawful UUT that the City collected during the claim period. In light of the Court’s ruling on the City’s motion for summary adjudication, only the subset of the class who paid the UUT between December 24, 2013 and December 18, 2014 will be eligible to submit a claim, which is appropriate.[5] The Court agrees that the settlement represents a good result for the class, considering the risks on the merits as well as the challenges of proof addressed at class certification and the associated risk of decertification. Plaintiff explains that a claims process is necessary because class members themselves rather than the City possess the knowledge and proof as to whether they paid the UUT, presumably because the UUT was billed and collected by telephone service providers rather than the City.

The Court retains an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable.  (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.)  Here, counsel submits that while the $425,000 combined fee and cost award represents 1/3 of the settlement fund, considering their costs, the attorney fee portion of the award will constitute only about 21.5 percent of the gross settlement. Still, counsel shall submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].) Counsel shall also submit an accounting of their costs.

VI.  Notice 

 

The content of a class notice is subject to court approval.  (Cal. Rules of Court, rule 3.769(f).)  “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.” (Ibid.)  In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.”  (Cal. Rules of Court, rule 3.766(e).)      

 

  Here, the notices describe the lawsuit and the Court’s ruling on summary adjudication, explain the settlement, and instruct class members that they may object or submit a claim.  The gross settlement and refund amounts are provided, along with the estimated fee and cost award (on the full and publication notices only). Class members will be given 120 days to submit a claim.

The short-form notice must be modified to state the amount of the fee and cost award that will be requested. In addition, the notices must be modified to instruct class members that they may appear at the final fairness hearing and make an oral objection even if they do not submit a written objection.  With regard to appearances at the final fairness hearing, the notices shall be modified to instruct class members as follows:      

 

Due to the COVID-19 pandemic, hearings before the judge overseeing this case are currently being conducted remotely with the assistance of a third-party service provider, CourtCall.  If that remains the case at the time of the final fairness hearing, class members who wish to appear at the final fairness hearing should contact class counsel to arrange a remote appearance through CourtCall, at least three days before the hearing if possible.  Any CourtCall fees for an appearance by an objecting class member shall be paid by class counsel.      

 

Turning to the notice procedure, the parties have selected JND Legal Administration as the settlement administrator.  The administrator will mail the short-form notice and claim form directly to City residents, based on its own search using skip trace databases and then the United States Postal Service National Change of Address database to update addresses. JND staff will track all notices returned as undeliverable and will promptly re-mail notices that are returned with a forwarding address. To supplement direct notice, JND will cause over 103,000 impressions targeted to Adults 18+ in Palo Alto, CA to be delivered over 30 days via the largest digital network (Google Display Network) and the top social media platform (Facebook). These digital ads will contain an embedded hyperlink to the case website. Notice will also be published in the Palo Alto Daily Post and be distributed as a press release to over 11,000 media outlets nationwide. The long-form notice will be posted on a case website maintained by the administrator, along with the claim form and other materials. These notice procedures are appropriate and are approved.

VII. Conclusion and Order

Plaintiff’s motion for preliminary approval is GRANTED, subject to the modifications to the class notices directed above. The final approval hearing shall take place on April 29, 2021, at 1:30 p.m. in Department 1.

The Court finds that Alexandra T. Steele, formerly of Girardi Keese and counsel of record for plaintiff and the class at the time this Court granted class certification, naming Girardi Keese class counsel, continues to be class counsel at her new firm, Steele Cooper Law.

The Court will prepare the order.

 

COVID-19 LAW AND MOTION HEARING PROCEDURES

Pursuant to the Judicial Council’s Emergency Rule 3(a)(1) and (3), all law and motion hearings will be conducted remotely through CourtCall until further notice. Please see the General Order re: COVID-19 Emergency Order Regarding Complex Civil Actions, and in particular sections 7 and 10, available at

general_info/news_media/newspdfs/GENERALORDER_RECOVID-19_

EMERGENCY_ORDER_REGARDING_COMPLEXCIVILACTION.pdf. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing should contact CourtCall.

Public access to remote hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a remote hearing or listening in on a public access line. No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 19, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter will participate remotely and will not be present in the courtroom.

 

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Calendar Line 4

Case Name: Ruben Mendoza v. City Sports Club, et al.

Case No.: 16CV298379

These cross-actions arise from an accident on a construction worksite in which plaintiff Ruben Mendoza was injured. Cross-defendant Jesmar Mechanical, Inc. moves for judgment on the pleadings on the cross-complaint filed by defendants and cross-complainants Dollinger Properties, Exstra-Arques LLC, DP Ventures, LLC, and DPM Property Management (collectively, “Dollinger” or “cross-complainants”), on the ground that Jesmar’s work was completed and accepted by DPM prior to Mendoza’s accident. Dollinger opposes this motion. Jesmar also moves for leave to amend its answer to Dollinger’s cross-complaint to assert a defense based on the completed and accepted doctrine. The motion for leave to amend is unopposed.

I.  Background

Plaintiff filed the original complaint in this action on August 2, 2016, alleging that he was injured when he fell into a hole in the ground on his Sunnyvale worksite on August 6, 2014. He named cross-complainants Dollinger Properties and Exstra-Arques LLC among other defendants. Cross-complainants DP Ventures, LLC and DPM Property Management were subsequently named as Doe defendants. Plaintiff asserts claims for general negligence and premises liability against the defendants.

On August 14, 2018, Dollinger filed a cross-complaint against several entities, alleging claims for (1) implied contractual indemnity, (2) total indemnity, (3) equitable indemnity, (4) express indemnity, (5) breach of contract, (6) negligence, (7) contribution, and (8) declaratory relief. Jesmar was named as a Roe defendant to the cross-complaint on January 2, 2019 and filed an answer on March 13, 2019.

On December 17, 2019, Jesmar filed a motion for summary judgment to be heard on March 6, 2020, on the grounds that the undisputed evidence establishes Jesmar did not create, maintain or supervise the hole plaintiff fell into, which was outside its scope of work and was dug by defendant Preston Pipelines, Inc. The motion was subsequently taken off calendar at Jesmar’s request.

Jesmar filed the instant motion for judgment on the pleadings on August 3, 2020. After the Court granted its ex parte application for an order shortening time, Jesmar moved for leave to amend its answer to Dollinger’s cross-complaint on October 9, 2020.

II. Motion for Leave to File Amended Answer

 Section 473, subdivision (a)(1) of the Code of Civil Procedure states in pertinent part: “[t]he court may ... , in its discretion after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars ....” (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 760.)  In considering a motion for leave to amend, “courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial.”  (Id. at p. 761.)  “[I]t is a rare case” in which a court will be justified in denying a party leave to amend his pleadings.  (Morgan v. Superior Court (Morgan) (1959) 172 Cal.App.2d 527, 530.)  “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.”  (Ibid.)

Here, Jesmar introduces evidence that its motion for leave to amend was timely filed after it discovered facts supporting its defense based on the completed and accepted doctrine and attempted to negotiate its dismissal from this action. There is no evidence that any party will be prejudiced by the amendment, and no party opposes it.[6]

Jesmar’s motion for leave to file an amended answer is accordingly GRANTED. The Amended Answer attached as Exhibit D to the Declaration of Angela Allard supporting Jesmar’s motion is deemed filed as of the date this order is filed.

III. Motion for Judgment on the Pleadings

Under Code of Civil Procedure section 438, a cross-defendant may move for judgment on the pleadings on the ground that a pleading fails to state facts sufficient to constitute a cause of action.  (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).)  The motion may be made as to the entire cross-complaint or “as to any of the causes of action stated therein.”  (Id. at subd. (c)(2)(A).)

“A motion for judgment on the pleadings, like a general demurrer, confines the court’s consideration to the face of the pleading under attack and to matters outside the pleading that are judicially noticeable.  No extrinsic evidence can be considered.” (Jayasinghe v. Lee (1993) 13 Cal.App.4th Supp. 33, 36.)  On such motions, “[t]he court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.”  (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.)

Here, Jesmar seeks judicial notice of its subcontract with DPM, several invoices and agreements entitled “Conditional Waiver and Release on Progress Payment,” and related documents including a “Warranty of Completed Work” executed on July 31, 2014 (Exs. 4–24 to Jesmar’s request). In support of its request (which is not opposed), Jesmar cites Evidence Code section 452, subdivision (h). However, the subject documents are not recorded or even properly authenticated, and Jesmar does not explain how their contents are “capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code, § 452, subd. (h).)  “[A] court cannot simply look at a piece of paper and conclude as a matter of law it is a contract between the parties.”  (See Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1146 [denying defendant’s request for judicial notice of a purported written contract between the parties contradicting the terms of the oral agreement alleged by the plaintiff].) Moreover, Jesmar asks the Court to take judicial notice not only of the content of these documents, but of the truth of purported facts they reflect, such as the fact that “Jesmar completed its work pursuant to the terms of the Subcontract and final payment was made by DPM for Jesmar’s performance in July 2014,” and the fact that Jesmar’s work “was accepted as defect-free by DPM as confirmed when DPM made final payment.” Such facts are not appropriate subjects of judicial notice. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564–1568 [court cannot take judicial notice of the truth of hearsay statements or facts set forth in otherwise judicially noticeable documents].) Jesmar’s request for judicial notice is accordingly DENIED as to these documents.[7]

Given that the facts underlying Jesmar’s motion are not subject to judicial notice, its motion must fail. However, even accepting the facts asserted by Jesmar, the “completed and accepted” doctrine applies only to defects that are patent, and not to latent defects. (See Sanchez v. Swinerton & Walberg Co. (1996) 47 Cal.App.4th 1461, 1466–1470; Neiman v. Leo A. Daly Co. (2012) 210 Cal.App.4th 962, 969.) While Jesmar’s motion assumes the defect here was patent, there is no evidence of this fact before the Court, and this is also not a proper subject of judicial notice.

Moreover, Dollinger correctly argues that Jesmar’s defense based on the completed and accepted doctrine does not apply to the contractual cross-claims at issue, and therefore does not apply to the entire cross-complaint. The doctrine provides that when a contractor completes work that is accepted by an owner or general contractor, “the contractor is not liable to third parties injured as a result of the condition of the work, even if the contractor was negligent in performing the contract, unless the defect in the work was latent or concealed.” (Neiman v. Leo A. Daly Co., supra, 210 Cal.App.4th at p. 969, internal citations and quotations omitted, emphasis added.) “The rationale for this doctrine is that an owner has a duty to inspect the work and ascertain its safety, and thus the owner’s acceptance of the work shifts liability for its safety to the owner ….” (Ibid., internal citations and quotations omitted.) “Stated another way, when the owner has accepted a structure from the contractor, the owner’s failure to attempt to remedy an obviously dangerous defect is an intervening cause for which the contractor is not liable.” (Ibid., internal citations and quotations omitted.) Based on this rationale, the doctrine might apply to Dollinger’s claim against Jesmar for equitable indemnity, in addition to a direct claim by a third party such as plaintiff (although this is another issue that Jesmar does not address). (See C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700 [equitable indemnity requires no contractual relationship and is premised on a joint legal obligation to another for damages; it requires a showing of fault on the part of the indemnitor and resulting damages to the indemnitee for which the indemnitor is equitably responsible].) However, there is no apparent basis to apply it to contractual claims for indemnity. (See Markley v. Beagle (1967) 66 Cal.2d 951, 961 [affirming judgment against contractor in favor of third party where owners were negligent in failing to discover dangerous condition created by contractor; “[s]ince the parties expressly contracted with respect to the contractors’ duty to indemnify the owners, the extent of that duty must be determined from the contract and not from the independent doctrine of equitable indemnity”].)

For all these reasons, Jesmar’s motion for judgment on the pleadings is DENIED.

The Court will prepare the order.

COVID-19 LAW AND MOTION HEARING PROCEDURES

Pursuant to the Judicial Council’s Emergency Rule 3(a)(1) and (3), all law and motion hearings will be conducted remotely through CourtCall until further notice. Please see the General Order re: COVID-19 Emergency Order Regarding Complex Civil Actions, and in particular sections 7 and 10, available at

general_info/news_media/newspdfs/GENERALORDER_RECOVID-19_

EMERGENCY_ORDER_REGARDING_COMPLEXCIVILACTION.pdf. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing should contact CourtCall.

Public access to remote hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a remote hearing or listening in on a public access line. No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 19, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter will participate remotely and will not be present in the courtroom.

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Case Name:

Case No.:

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Case Name:

Case No.:

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[1] Inter-Con’s request for judicial notice of the operative complaints in Singh and Stewart and of the Court’s order granting summary judgment in Singh is GRANTED. (Evid. Code, §452, subd. (d).)

[2] For the first time on reply, Inter-Con urges that it would be a violation of its due process rights to allow this action to proceed, citing Arias. As an initial matter, the Court ordinarily will not consider an entirely new ground for a motion raised for the first time on reply.  (See Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764 [points raised for the first time in reply brief will not ordinarily be considered, because such consideration would deprive respondent of an opportunity to counter the argument].) In any event, Arias held that PAGA does not give rise to due process concerns because the judgment in such an action is binding on the state and other aggrieved employees pursuant to the doctrine of collateral estoppel, the requirements of which are not satisfied here. Thus, Arias does not support Inter-Con’s argument.

[3] This is in contrast to the other major qui tam statute in California, the False Claims Act.  (See Gov’t Code § 12652(c)(10); Canela v. Costco Wholesale Corporation (N.D. Cal., May 23, 2018, No. 13-CV-03598-BLF) 2018 WL 2331877, at *7; Gonzalez v. Corecivic of Tennessee, LLC (E.D. Cal., Aug. 1, 2018, No. 16-CV-01891-DAD-JLT) 2018 WL 3689564, at *4 (contrasting PAGA with federal False Claims Act).

[4] It appears that only three individuals opted out of the class.

[5] Class members were permitted to opt-out of the class prior to summary adjudication, and will not be afforded a second opportunity to do so.

[6] On October 27, 2020, Dollinger filed a conditional non-opposition to Jesmar’s motion for leave to amend.

[7] Jesmar’s request for judicial notice is GRANTED as to certain filings in this action (Exs. 1–3 to Jesmar’s request). (Evid. Code, § 452, subd. (d).)

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