Superior Court, State of California
DATE: JANUARY 12, 2023 TIME: 1:30 P.M.
PREVAILING PARTY SHALL PREPARE THE ORDER
UNLESS OTHERWISE STATED (SEE RULE OF COURT 3.1312)
|LINE # |CASE # |CASE TITLE |RULING |
|LINE 1 |19CV353132 |In Re Hewlett Packard Enterprise Co. Shareholder Litigation|See tentative ruling. The Court |
| | |(LEAD CASE; Consolidated With Case No. 19CV359073) |will prepare the final order. |
|LINE 2 |21CV384796 |Hefner v. Solaray, LLC, et al. |See tentative ruling. The Court |
| | | |will prepare the final order. |
|LINE 3 |20CV370922 |Hernandez v. Euromarket Designs, Inc. (Class Action/PAGA) |See tentative ruling. The Court |
| | | |will prepare the final order. |
|LINE 4 |17CV313029 |Arellano v. Lopez & Arteaga, Inc., et al. |See tentative ruling. The Court |
| | | |will prepare the final order. |
|LINE 5 |21CV386574 |Serafica v. HGST, Inc. (Class Action/PAGA) |See tentative ruling. The Court |
| | | |will prepare the final order. |
|LINE 6 |20CV364969 |Spears v. San Jose Country Club, et al. (Class Action) |CONTINUED to March 30, 2023 at the |
| | | |parties’ request. |
|LINE 7 |20CV369854 |Meguro v. Silicon Valley Bank |See tentative ruling. The Court |
| | | |will prepare the final order. |
|LINE 8 |21CV375218 |Ferland v. Comprehensive Spine and Sports Center |See tentative ruling. The Court |
| | | |will prepare the final order. |
|LINE 9 |19CV357070 |In Re Maxar Technologies, Inc. Shareholder Litigation (Lead|See tentative ruling. The Court |
| | |Case) |will prepare the final order. |
|LINE 10 |19CV342788 |Mohammed v. American Airlines, Inc. (Lead Case; |See tentative ruling. The Court |
| | |Consolidated Action) |will prepare the final order. |
|LINE 11 | | | |
|LINE 12 | | | |
|LINE 13 | | | |
Calendar Line 1
Case Name: In re Hewlett Packard Enterprise Co. Shareholder Litigation
Case No.: 19CV353132 (Consolidated with No. 19CV359073)
This consolidated putative class action arises from alleged misrepresentations and omissions in the offering materials issued in connection with an April 2017 transaction for Defendant Hewlett Packard Enterprise Company (“HPE”). The transaction occurred when 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”).
In an order filed on August 8, 2022 (“August Order”), the Court sustained a demurrer by HPE, DXC, and the individual Defendants to each claim in the First Amended Consolidated Complaint (“FAC”). Plaintiffs filed the operative Second Amended Consolidated Complaint (“SAC”) on September 21, 2022. Defendants again demur for failure to state a cause of action, on the ground that “Plaintiffs fail to plead a material misstatement or omission” in support of their claims. (Code Civ. Proc., § 430.10, subd. (e).)
The alleged facts giving rise to this action and the law governing Plaintiffs’ claims are discussed in detail in the August Order, and that discussion is incorporated but not repeated here.[1] The Court will focus on the new facts alleged in the SAC and whether they state a claim under SEC Regulation S-K, 17 C.F.R. § 229.303 (“Item 303”) or SEC Regulation S-K, 17 C.F.R. § 229.105 (“Item 105”), as Plaintiffs argue in their opposition.
I. FACTS ALLEGED IN THE SAC
Plaintiffs’ claims are brought under: (1) Section 11 of the Securities Act of 1933 (against all Defendants); (2) section 12(a)(2) of the Act (against all Defendants); and (3) section 15 of the Act (against all Defendants).
Consistent with the FAC, Plaintiffs allege in the SAC that the Offering Materials misrepresented the nature, extent, and severity of the incoming management team’s touted $1 billion “workforce optimization” plan, characterizing it as targeting “duplicative” employees to “optimize” the Company’s workforce, “improve execution in sales performance, enhance . . . [the Company’s] ability to provide value to its customers through a broader range of resources and expertise,” “retain” workers “with the skills necessary to serve their customers,” and thereby achieve billons in “synergies” and increased goodwill. (SAC, ¶ 4.) But rather than “cutting $1 billion worth of duplicative employees, Defendants planned a $2.7 billion mass layoff of DXC’s older, most essential and experienced employees, offloading their higher salaries to inflate reported earnings ahead of tens of millions of dollars in insider sales.” (Id., ¶ 5.) “[O]ver the months and years following the Merger, the consequences of the undisclosed mass layoff plan were predictable: an impaired workforce without the experience, know-how, capabilities, and customer relationships necessary to effectively service, maintain and develop DXC’s business.” (Id., ¶ 6.) This ultimately resulted in an over 50 percent decline in the value of DXC shares from the time of the Merger. (Id., ¶ 17.)
Plaintiffs allege new details in support of this theory in the SAC. They state that “[a]s former DXC employees would later admit, the actual plan and its undisclosed nature and severe risks were discussed among Company executives before the Merger. Ahead of the Merger, particular senior (i.e., over-40) employees had already been marked for termination, and Defendants had already retained a consulting firm to begin executing the planned mass layoff of older, higher paid employees immediately after the Merger. Indeed, within days of the Merger close, Defendants began disproportionately terminating older, more experienced (but in truth essential) employees en masse.” (SAC, ¶ 9.)
A. Age-Targeted Layoffs at CSC/HPE
Plaintiffs allege that the age-targeted layoff plan for DXC was a continuation of the approach of both CSC and HPE prior to the merger. The Equal Employment Opportunity Commission filed a lawsuit against CSC in December 2020 alleging that between 2012 and 2014, CSC—under its CEO, Defendant Michael Lawrie—engaged in a nation-wide pattern or practice of discharging employees aged 40 and over because of their age. (SAC, ¶ 33.) The lawsuit resulted in a $700,000 settlement and a two-year consent decree requiring DXC, as CSC’s parent company, to review and revise layoff procedures to ensure compliance with federal laws protecting older workers. (Id., ¶ 34.) But according to Plaintiffs, “[i]t is clear that Defendant Lawrie brought this same ageist, cost-cutting strategy to the Merger in 2017.” (Ibid.)
Similarly, Defendant Margaret C. Whitman, the CEO of HPE, “was also personally involved in developing the discriminatory age- and quota-driven mass layoff plans implemented at both HPE and DXC. Across an array of analyst calls and public interviews, Defendant Whitman candidly admitted this objective when discussing the need to change the company’s ‘labor diamond’ into a ‘labor pyramid’ or a ‘quite flat triangle’ with large numbers of young people at its base.” (SAC, ¶ 43; see also id., ¶¶ 44–46.) “Defendant Whitman’s candid admissions have formed the basis of numerous discrimination lawsuits against HPE and DXC before and since the Merger.” (Id., ¶ 47.)
Plaintiffs allege that several HPE or DXC employees over the age of 40 have filed age discrimination lawsuits arising from their termination following the Merger, several of whom claim younger employees in their groups were not targeted or that their position was filled by a younger employee rather than eliminated. (SAC, ¶ 73(a)–(j).) Plaintiffs also include similar allegations about age discrimination lawsuits filed by HPE or CSC employees terminated before the Merger. (See id., ¶ 73(k)–(p), ¶ 74.) And they state that the complaint in a class action lawsuit against HPE, Forsyth, et al. v. HP Inc., et al. (ND. Cal., Civil Case No. 16-cv-04775-EJD), alleges that “the number of employees over 40 years old who were terminated pursuant to a workforce reduction plan from November 2015 to the present, ranges in the hundreds or thousands for California alone.” (Id., ¶ 75.) “A preliminary statistical analysis of workforce reduction forms provided to HPE employees shows that older employees were significantly more likely to be terminated than younger employees….” (Id., ¶ 76.)
Plaintiffs posit: “As alleged by these and other former DXC employees - across an array of age discrimination, employment class action, and other lawsuits filed in the wake of the Merger - DXC’s workforce reduction plan was in truth a scheme to terminate older, more experienced, higher paid employees in favor of younger, less experienced, and thus lower paid employees, all to dramatically cut salaries and other overhead and expenses in the short term regardless of the foreseeably severe and negative impact on operations and revenue going forward.” (SAC, ¶ 77.)
B. DXC’s Layoff and Hiring Policies and Practices
Plaintiffs’ new allegations about age discrimination lawsuits only sometimes involve post-Merger terminations of DXC employees. But the SAC includes additional new allegations about post-Merger layoffs at DXC: “DXC couched the layoffs as occurring on an ostensibly ‘rolling basis’ as purportedly laying off employees on a neutral basis. But, in truth, the companywide plan specifically and disproportionately targeted for termination DXC employees who were 40 years of age or older, not only a protected class under federal law, but also the employees with the experience and customer relationships necessary to service existing clients and business.” (SAC, ¶ 78.) “HPE and DXC used uniform, near-verbatim paperwork when terminating older employees, who all received the same vaguely worded, boilerplate reasons for being terminated, regardless of which entity they worked for after the Merger.” (Id., ¶ 79.) “Upon termination, many positions were temporarily eliminated. But even when a terminated employee’s specific job title or position was not eliminated, those positions were staffed with new, younger hires at both entities.” (Ibid.)
Internal DXC documentation reflects that “DXC placed an emphasis on retaining and attracting as many ‘millennial’ generation employees while terminating or retiring employees from the older generations.” (SAC, ¶ 80.)
When carrying out the undisclosed mass layoff plan, senior management at DXC provided managers throughout the country with two simultaneous orders: (1) terminate a specific number of employees, called “slates,” pursuant to the layoff plan; and (2) hire a specific number of requisitions (“reqs”) to replace them, focusing on new, younger hires. The issuance of these “slates” and “reqs” followed a distinct pattern: an upper-level manager would order a subordinate manager to lay off a designated number of experienced, older, tenured “LT” (meaning “long-term” or “longtailed”) employees, while simultaneously providing that manager a similar number of new “reqs” authorizing the hiring of recent “graduate” or “early career” employees to replace those just fired.
(SAC, ¶ 81; see also id., ¶¶ 93–96 [describing DXC’s policies concerning “graduate”/”early career” hiring].)
[T]he employees selected to be terminated pursuant to the plan are initially and nominally recommended by managerial employees to DXC’s human resource department. The selections are then evaluated by a human resources generalist to assure the selection is the “right fit” for termination, meaning the selection conforms with Defendants’ explicit (yet undisclosed) directive to terminate older, more expensive employees while retaining younger, cheaper employees. These selections are not based on merit, performance, “optimization” for operational effectiveness, or redundancy. Rather, the selections are age- and quota-based, such that as long as the selected employee is old enough (over 40), then the human resource department approves the selection and notifies the Workforce Management Team to prepare the proper paperwork to be delivered to the selected employee by his or her manager(s). Conversely, if the selection happens to be too young (i.e., under 40), then the manager or managers are directed to select another employee.
(SAC, ¶ 82.) “In the wake of the Merger, of all employees terminated by DXC, the rate of employees terminated who were age-protected (i.e., age 40 or older) often exceeded 85%.” (Id., ¶ 83.) “HPE and DXC also implemented bans on hiring employees who were terminated pursuant to any layoff implemented by an HP-related entity. In other words, DXC effectively ‘blacklisted’ employees who were terminated under a mass layoff plan of any HP-related company.” (Id., ¶ 86.) “This blacklisting policy was implemented even though both HPE and
DXC claimed to have a ‘60 Day Preferential Rehire Period’ during which those terminated under the layoff plan were encouraged to apply for new positions within either HPE or DXC (both before and after the name change and spin-off).” (Ibid.) These employees were told they would receive preferential hiring status for 60 days following their termination, but for older employees this was “a farce” in practice. (Ibid.) Both DXC and HPE also implemented nearly the same phased retirement program and similar retirement policies to strongly encourage older employees to leave the company. (Id., ¶¶ 88–89.)
C. Pre-Merger Plans
Setting aside their new theory that the age-targeted layoffs were a continuation of both CSC and HPE’s prior practices, Plaintiffs’ alleged evidence that the age-targeted layoff plan pre-dated the Merger is essentially unchanged from the FAC. According to Plaintiffs, “[t]hat the plan for mass layoffs targeting experienced employees was in place well before the Merger is demonstrated by, inter alia, how quickly after the Merger those layoffs went into effect.” (SAC, ¶ 111.) Older, essential employees began to be laid off immediately after the Merger, and decisions about who to lay off had been made before the Merger closed. (Id., ¶ 113.) A management consulting firm was retained by the Company to assist with its layoff plans, and its representatives were deployed immediately after the Merger. (Ibid.) For example, at McKinsey & Co.’s suggestion, DXC eliminated numerous senior-level employees in Global Delivery with client-specific specialized skills formed during long-term relationships with DXC customers. (Id., ¶ 114.) The termination of these employees was based on age and cutting salaries, not merit or redundancy, and thus predictably resulted in significant customer complaints and loss. (Ibid.)
II. DISCUSSION
The first theory outlined in both the FAC and SAC is under Item 303, which requires “the disclosure of ‘known trends or uncertainties’ that the issuer of a registration statement ‘reasonably expects will have a material … unfavorable impact on … revenues or incomes from continuing operations.’ (17 C.F.R. § 229.303(a)(3)(ii) (2019).)” (City of Warren Police & Fire Retirement System v. Natera Inc. (2020) 46 Cal.App.5th 946, 959 (City of Warren); see FAC, ¶ 11; SAC, ¶ 14.)
“Disclosures required by Item 303 will most often relate to issues in the realm of micro and macroeconomics; for example, a reduction in the registrant’s product prices; erosion in the registrant’s market share; changes in insurance coverage; or the likely non-renewal of a material contract.” (Okla. Law Enf’t Ret. Sys. v. Papa John’s Int’l, Inc. (S.D.N.Y. 2021) 517 F. Supp. 3d 196, 212, citations and quotation marks omitted.) However, “Item 303’s disclosure requirements are intentionally general, reflecting the Commission’s view that a flexible approach elicits more meaningful disclosure and avoids boilerplate discussions….” (Ibid.) Item 303 may encompass information as general as “negative revelations about a company’s executives,” insofar as such future revelations were “both presently known to management and reasonably likely to have material effects on the registrant’s financial conditions or results of operations.” (Ibid.) The key is that alleged nondisclosure pertain to “issues with a direct impact on a company’s financial condition .” (Constr. Laborers Pension Trust v. CBS Corp. (S.D.N.Y. 2020) 433 F. Supp. 3d 515, 541.)[2]
In its August Order, the Court stated:
In theory, it seems that Plaintiffs’ allegations of an undisclosed plan to target key senior employees to temporarily reduce costs could work as an Item 303 claim. But Plaintiffs’ allegations about this plan are so general that they border on “adjectival descriptions” and “unsupported speculation” that the Court need not accept. (Doe v. Roman Catholic Archbishop of Los Angeles (2016) 247 Cal.App.4th 953, 960, internal citations and quotation marks omitted.) In essence, Plaintiffs repeatedly state that Defendants’ undisclosed plan “targeted the most knowledgeable, longer-tenured (and hence more costly) senior personnel.” (FAC, ¶ 11; see also ¶¶ 47, 49, 52, 55, 56, 59.) But nowhere do Plaintiffs identify who these personnel were, or explain what it meant to “target” them. This is particularly important given the disclosures discussed above, which made it clear enough that widespread layoffs would impact employees in general: if Defendants’ plan was nothing more than that, then it was disclosed.
As summarized in Section I(B) above, the SAC provides these details. (See SAC, ¶¶ 78–89.) The SAC now specifically alleges that DXC ordered managers “to lay off a designated number of experienced, older, tenured ‘LT’ (meaning ‘long-term’ or ‘longtailed’) employees, while simultaneously providing that manager a similar number of new ‘reqs’ authorizing the hiring of recent ‘graduate’ or ‘early career’ employees to replace those just fired.” (Id., ¶ 81.) Managers’ selections are then evaluated to ensure they “conform[] with Defendants’ explicit (yet undisclosed) directive to terminate older, more expensive employees,” and “are not based on merit, performance, ‘optimization’ for operational effectiveness, or redundancy.” (Id., ¶ 82.) If managers chose younger employees for termination, “then the manager or managers are directed to select another employee.” (Ibid.) “In the wake of the Merger, of all employees terminated by DXC, the rate of employees terminated who were age-protected (i.e., age 40 or older) often exceeded 85%.” (Id., ¶ 83.)[3] The SAC plausibly alleges that the plan for these age-targeted layoffs was in place before the Merger (see id., ¶¶ 111–114), and such a plan could surely be expected to have material effects on DXC’s financial condition or results of operations.
Defendants focus on the SAC’s allegations concerning age discrimination lawsuits and the asserted histories of age discrimination at DXC’s predecessor companies, urging that these allegations do not themselves establish any plan to implement age-targeted layoffs at DXC. While this may be true, the SAC also directly alleges that there was such a plan, and now provides specific details that make it clear the plan disproportionately targeted older, more experienced workers, without regard to operational effectiveness. This was not disclosed by the Offering Materials’ more general discussion of layoffs addressed in the August Order.
Finally, in footnotes to their memorandum of points and authorities (and a paragraph in their reply brief), Defendants argue that Plaintiffs fail to allege they “had any knowledge of this purported plan, merely pointing to prior out-of-context statements and unrelated employment cases.” But this argument is not properly raised in a footnote. Defendants’ notice of motion is clear that their demurrer is based only on the ground that “Plaintiffs fail to plead a material misstatement or omission” in support of their claims, and their memorandum addresses only this ground in substance. The Court thus will not consider argument regarding knowledge at this time, but its ruling here is without prejudice to Defendants raising this issue through an appropriate future motion.
Plaintiffs’ claims under Item 303 accordingly survive.[4] The Court need not address their alternative theories. (See Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1167 [a demurrer is not properly sustained as to a portion of a cause of action].)
III. CONCLUSION
Defendants’ demurrer is OVERRULED.
The Court will prepare the order.
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LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Calendar Line 2
Case Name: Thomas Hefner v. Solaray, LLC, et al.
Case No.: 21CV384796
This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff alleges that Defendant Solaray, LLC[5] assigned its route employees delivery schedules that were often not possible to complete in the expected time, failed to maintain procedures to ensure they took meal and rest periods or could report missed breaks, failed to pay wages for all hours worked and to pay overtime at the appropriate rate, and committed other wage and hour violations.
The parties reached a settlement, which the Court preliminarily approved in an order filed on August 29, 2022. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court is Plaintiff’s motion for final approval of the settlement and for approval of his attorney fees, costs, and service award. Plaintiff’s motion is unopposed. As discussed below, the Court GRANTS final approval.
I. LEGAL STANDARDS FOR SETTLEMENT APPROVAL
A. Class Action
Generally, “questions whether a [class action] 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 (Wershba), 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, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)
In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.) The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)
B. PAGA
Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (LWDA), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)
Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)
The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)
II. TERMS AND ADMINISTRATION OF SETTLEMENT
The non-reversionary gross settlement amount is $750,000. Attorney fees of up to $250,000 (one-third of the gross settlement), litigation costs not to exceed $16,500, and administration costs of approximately $5,995 will be paid from the gross settlement. $75,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will seek an incentive award of $7,500.
The net settlement will be allocated to settlement class members proportionally based on their weeks worked during the class period, with members of the waiting time subclass receiving credit for an additional six workweeks and PAGA employees receiving a pro rata share of the PAGA portion of the settlement in addition to the class portion. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 1/3 to wages and 2/3 to penalties and interest, while payments to PAGA employees and payments associated with the additional six workweeks allocated to waiting time subclass members will be deemed 100 percent penalties. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 180 days will be issued to the California State Controller in the name of the relevant employee.
At the Court’s direction, the parties agreed to amend the releases to conform with Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521. Per the addendum to the settlement filed on August 16, 2022, class members who do not opt out will release all claims, actions, etc. “reasonably related to or arising from the same set of facts asserted in the operative complaint in the Action or the facts alleged in the related LWDA notice,” including the causes of action alleged in the complaint. PAGA employees will release all such PAGA claims. Consistent with the statute, PAGA employees will not be able to opt out of the settlement.
The notice process has now been completed. There were no objections to the settlement or requests for exclusion from the class. Of the 67 notices mailed by the administrator, 2 were re-mailed to updated addresses and only one was ultimately undeliverable. The administrator estimates that the average payment to class members will be $5,927.38, with a low payment of $457.75 and a high payment of $16,740.74 (not including PAGA payments).
At preliminary approval, the Court found that the settlement is a fair and reasonable compromise of the class claims and that the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court thus finds that the settlement is fair and reasonable for purposes of final approval.
III. ATTORNEY FEES, COSTS, AND INCENTIVE AWARD
Plaintiff seeks a fee award of $250,000, one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $251,581, based on 480.6 hours spent on the case by counsel billing at $400–1,000 per hour and other professionals billing at $185–270 per hour. Plaintiff’s request results in a negative multiplier. The lodestar cross-check supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (Cal. 2016) 1 Cal.5th 480, 488, 503–504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)
Plaintiff’s counsel also request $14,370.22 in litigation costs, below the amount estimated at preliminary approval. Plaintiff’s costs appear reasonable based on the summary provided and are approved. The $5,995 in administrative costs are also approved.
Finally, the named plaintiff seeks an incentive award of $7,500. To support his request, he submitted a declaration describing his efforts on the case at preliminary approval. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.
IV. ORDER AND JUDGMENT
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
The motion for final approval is GRANTED. The following class is certified for settlement purposes:
All non-exempt Route Sales Representatives, Route Service Representatives, and Route Relief Representatives who are employed or have been employed by Defendant and who worked in California at any time from July 27, 2017, through and including August 8, 2022.
No one otherwise included in that definition is excluded from the class. The Court also certifies a waiting time penalty subclass of “[a]ll former employees of Defendant who worked for Defendant in the State of California in the position of Route Sales Representative, Route Service Representative, and/or Route Relief Representative at any time from July 27, 2017, through and including August 8, 2022.”
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for October 19, 2023 at 2:30 P.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted to the Controller; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.
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LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Calendar Line 3
Case Name: Jose Hernandez v. Euromarket Designs, Inc., et al.
Case No.: 20CV370922
This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff alleges that Defendant failed to pay minimum and overtime wages for off-the-clock work, failed to provide required meal and rest breaks or associated premiums, committed reporting time violations, failed to reimburse employees for business expenses, and committed other wage and hour violations.
The parties reached a settlement, which the Court preliminarily approved in an order filed on September 6, 2022. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court are Plaintiff’s motions (1) for final approval of the settlement and (2) for approval of his attorney fees, costs, and service award. Plaintiff’s motions are unopposed. As discussed below, the Court GRANTS final approval.
I. LEGAL STANDARDS FOR SETTLEMENT APPROVAL
A. Class Action
Generally, “questions whether a [class action] 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 (Wershba), 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, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)
In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.) The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)
B. PAGA
Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (LWDA), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)
Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)
The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)
II. TERMS AND ADMINISTRATION OF SETTLEMENT
The non-reversionary gross settlement amount is $1,100,000. Attorney fees of up to $366,667 (one-third of the gross settlement), litigation costs of up to $30,000, and administration costs of approximately $15,000 will be paid from the gross settlement. $100,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will seek an incentive award of $10,000.
The net settlement will be allocated to settlement class members proportionally based on their weeks worked during the class and PAGA periods. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 25 percent to wages, and 75 percent to non-wages. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 180 days will be tendered to California Rural Legal Assistance.
As provided by the Amendment filed on August 22, 2022, in exchange for the settlement, class members who do not opt out will release all claims, rights, etc. “arising from, or reasonably related to, the same set of operative facts as those set forth in the First Amended Complaint during the Class Period, including: (i) all claims for unpaid overtime; (ii) all claims for meal and rest break violations; (iii) all claims for unpaid minimum wages; (iv) all claims for the failure to timely pay wages upon termination based on the preceding claims; (v) all claims for the failure to timely pay wages during employment based on the preceding claims; (vi) all claims for the failure to provide reporting time pay; (vii) all claims for the failure to reimburse for necessary business expenses; (viii) all claims for wage statement violations based on the preceding claims; and (ix) all claims asserted through California Business & Professions Code §§ 17200, et seq., and including all claims, both potential and actual, that could reasonably have been alleged in the Action based on the facts alleged in the First Amended Complaint.”
Aggrieved employees will release “[a]ll claims for civil penalties under [PAGA], including under California Labor Code, sections 558 and/or 2698, et seq., predicated on any Labor Code violations alleged or could reasonably have been alleged in the Action based on the same set of operative facts as those set forth in the First Amended Complaint during the PAGA Period, the October 7, 2020 PAGA Notice submitted on behalf of Plaintiff Hernandez (LWDA-CM-808930-20).” Consistent with the statute, aggrieved employees will not be able to opt out of the PAGA component of the settlement.
The notice process has now been completed. There were no objections to the settlement or requests for exclusion from the class. Of the 1,218 notices mailed by the administrator, 3 were re-mailed to updated addresses and only one was ultimately undeliverable. The administrator estimates that the average payment to class members will be $476.05, with a high payment of $1,950.53 (not including PAGA payments).
At preliminary approval, the Court found that the settlement is a fair and reasonable compromise of the class claims and that the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court thus finds that the settlement is fair and reasonable for purposes of final approval.
III. ATTORNEY FEES, COSTS, AND INCENTIVE AWARD
Plaintiff seeks a fee award of $366,666.67, one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $254,760, based on 390 hours spent on the case by counsel billing at $450–950 per hour and paraprofessionals billing at $200 per hour. Plaintiff’s request results in a reasonable multiplier of 1.44. The lodestar cross-check supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488, 503–504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)[6]
Plaintiff’s counsel also request $30,000 in litigation costs, below their actual costs incurred. Plaintiff’s costs appear reasonable based on the summaries provided and are approved. The $13,500 in administrative costs are also approved.
Finally, the named plaintiff seeks an incentive award of $10,000. To support his request, he submitted a declaration describing his efforts on the case at preliminary approval. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.
IV. ORDER AND JUDGMENT
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
The motion for final approval is GRANTED. The following class is certified for settlement purposes:
All persons who worked for Defendant as non-exempt, hourly paid employees at one of Defendant’s distribution centers in California (to include housewares and furniture buildings located in Tracy (Locations #491 & 499) and an LA cross-dock located in Santa Fe Springs (Location # 591)) at any time from September 28, 2016 to December 31, 2021, inclusive.
No one otherwise included in that definition is excluded from the class.
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for August 17, 2023 at 2:30 P.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted to the cy près recipient; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.
****
LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Calendar Line 4
Case Name: Anay Arellano v. Lopez & Arteaga, Inc., et al.
Case No.: 17CV313029
This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff Anay Arellano alleges that Defendants Lopez & Arteaga, Inc. and Arteaga’s Food Center rounded down employees’ time, including by omitting time for meal and rest periods employees did not take, and committed other wage and hour violations.
The parties reached a settlement, which the Court preliminarily approved in an order filed on September 12, 2022. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court is Plaintiff’s motion for final approval of the settlement and for approval of her attorney fees, costs, and service award. Plaintiff’s motion is unopposed. As discussed below, the Court GRANTS final approval.
I. LEGAL STANDARDS FOR SETTLEMENT APPROVAL
A. Class Action
Generally, “questions whether a [class action] 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 (Wershba), 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, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)
In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.) The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)
B. PAGA
Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (LWDA), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)
Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)
The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)
II. TERMS AND ADMINISTRATION OF SETTLEMENT
The non-reversionary gross settlement amount is $225,000. Attorney fees of up to $75,000 (one-third of the gross settlement) and up to $12,500 in administration costs will be paid from the gross settlement. $10,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will seek an incentive award of $5,000.
The net settlement will be allocated to settlement class members proportionally based on their workweeks during the class period. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 25 percent to wages and 75 percent to penalties and interest, with all PAGA payments allocated to penalties. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 180 days will be transmitted to Legal Aid at Work in San Francisco.
As provided by the revised settlement agreement filed on September 6, 2022, class members who do not opt out will release “all claims that were alleged, or reasonably could have been alleged, based on the Class Period facts stated in the Complaint and ascertained in the course of the Action,” including, but not limited to, for alleged Labor Code violations. The release goes on to expressly include “all claims for unpaid wages, overtime wages, statutory penalties, damages of any kind, interest, attorneys’ fees, costs, injunctive relief, restitution, and any other statutory, compensatory, actual, punitive, restitution, declaratory, injunctive equitable relief under California or federal statute, ordinance, regulation, common law, or other source of law, including but not limited to the California Labor Code, California Business and Professions Code, and California Civil Code, and California Industrial Welfare Commission Wage Orders.”
The PAGA release appropriately encompasses only those claims under PAGA “predicated on any Labor Code violations alleged in the operative Complaint … or that could have been alleged in the operative Complaint based on the facts, policies, practices, occurrences, or acts alleged in the operative Complaint.” Consistent with the statute, aggrieved employees will not be able to opt out of the PAGA portion of the settlement.
The notice process has now been completed. There were no objections to the settlement and only one request for exclusion from the class. Of the 528 notices mailed by the administrator, 72 were re-mailed to updated addresses and 27 were ultimately undeliverable. The administrator estimates that the average payment to class members will be $232.45, with a high payment of $2,502.72.
At preliminary approval, the Court found that the settlement is a fair and reasonable compromise of the class claims and that the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court thus finds that the settlement is fair and reasonable for purposes of final approval.[7]
III. ATTORNEY FEES, COSTS, AND INCENTIVE AWARD
Plaintiff seeks a fee award of $75,000, one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $171,767.50, based on 260.5 hours spent on the case by counsel billing at $595–800 per hour. Plaintiff’s request results in a negative multiplier. The lodestar cross-check supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488, 503–504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)[8]
Plaintiff’s counsel also request $20,059.67 in litigation costs. Plaintiff’s costs appear reasonable based on the summary provided and are approved. The $12,500 in administrative costs are also approved.
Finally, the named plaintiff seeks an incentive award of $5,000. To support her request, she submitted a declaration describing her efforts on the case at preliminary approval. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.
IV. ORDER AND JUDGMENT
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
The motion for final approval is GRANTED. The following class is certified for settlement purposes:
all current and former non-exempt, employees of Defendants who worked in California at any point during the Class Period [(from July 14, 2013 through December 31, 2021)].
Excluded from the class is the one individual who submitted a timely request for exclusion.
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for August 17, 2023 at 2:30 P.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted to the cy près recipient; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.
****
LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Calendar Line 5
Case Name: Nicolas Serafica v. HGST, Inc., et al.
Case No.: 21CV386574
This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff Nicholas Serafica alleges that Defendant HGST, Inc. failed to compensate employees for time spent undergoing security and temperature checks and committed other wage and hour violations.
The parties reached a settlement, which the Court preliminarily approved in an order filed on September 12, 2022. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court is Plaintiff’s motion for final approval of the settlement and for approval of his attorney fees, costs, and service award. Plaintiff’s motion is unopposed. As discussed below, the Court GRANTS final approval, but does not approve an additional incentive award to the named plaintiff in light of his individual settlement.
I. LEGAL STANDARDS FOR SETTLEMENT APPROVAL
A. Class Action
Generally, “questions whether a [class action] 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 (Wershba), 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, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)
In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.) The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)
B. PAGA
Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (LWDA), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)
Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)
The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)
II. TERMS AND ADMINISTRATION OF SETTLEMENT
The non-reversionary gross settlement amount is $1,145,000. Attorney fees of up to $381,666.67 (one-third of the gross settlement), litigation costs of up to $30,000, and up to $12,250 in administration costs will be paid from the gross settlement. $40,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will seek an incentive award of $10,000.
The net settlement will be allocated to settlement class members proportionally based on their workweeks during the class period. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 10 percent to wages and 90 percent to penalties and interest, with 100 percent of the PAGA payments allocated to penalties. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 180 days will be transmitted to Legal Aid at Work.
In exchange for the settlement, class members who do not opt out will release all claims, debts, etc. “that were alleged or that reasonably could have been alleged based on the facts alleged in the Action, as amended, that acc[ru]ed during the Settlement Period, including but not limited to” the causes of action alleged in the FAC. Similarly, the PAGA release encompasses “[a]ll rights to PAGA claims … related to any claims that Plaintiff brought or could have brought under the facts he has alleged in this Action that accrued during the PAGA Period.”
The notice process has now been completed. There were no objections to the settlement or requests for exclusion from the class. Of the 1,565 notices mailed by the administrator, 21 were re-mailed to updated addresses and only 6 were ultimately undeliverable.[9] The administrator estimates that the average payment to class members will be $442.72, with a high payment of $786.20 (excluding PAGA payments).
At preliminary approval, the Court found that the settlement is a fair and reasonable compromise of the class claims and that the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court is thus inclined to find that the settlement is fair and reasonable for purposes of final approval.
III. ATTORNEY FEES, COSTS, AND INCENTIVE AWARD
Plaintiff seeks a fee award of $381,666.67, one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $179,117.50, based on 267.8 hours spent on the case by counsel billing at $500–750 per hour. Plaintiff’s request results in a reasonable multiplier of 2.13. The lodestar cross-check supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488, 503–504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)[10]
Plaintiff’s counsel also request $8,221.12 in litigation costs. Plaintiff’s costs appear reasonable based on the summaries provided and are approved. The $12,250 in administrative costs are also approved.
Finally, the named plaintiff seeks an incentive award of $10,000. To support his request, he submitted a declaration describing his efforts on the case at preliminary approval. The Court has reviewed this declaration, the individual settlement agreement lodged by Plaintiff on December 19, 2022, and the supplemental declaration filed by Plaintiff’s counsel on January 5, 2023. Having considered all of these submissions, the Court believes Plaintiff has been adequately compensated by his individual settlement and does not approve an additional incentive award to Plaintiff. The $10,000 requested shall instead be distributed to the class.
IV. ORDER AND JUDGMENT
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
The motion for final approval is GRANTED. The following class is certified for settlement purposes:
All current and former non-exempt HGST employees in California who worked at any time during the period September 9, 2017 through August 16, 2022.
No one otherwise included in that definition is excluded from the class.
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for August 17, 2023 at 2:30 P.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted to the cy près recipient; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.
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LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Case Name:
Case No.:
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Case Name: Hiromi Meguro v. Silicon Valley Bank, et al.
Case No.: 20CV369854
This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff alleges that Defendant Silicon Valley Bank failed to properly calculate the regular rate of pay used to pay overtime, and issued wage statements that failed to correctly identify the overtime rate and the total hours worked in pay periods that included overtime.
The parties reached a settlement, which the Court preliminarily approved in an order filed on October 3, 2022. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court is Plaintiff’s motion for final approval of the settlement and for approval of her attorney fees, costs, and service award. Plaintiff’s motion is unopposed. As discussed below, the Court GRANTS final approval.
I. LEGAL STANDARDS FOR SETTLEMENT APPROVAL
A. Class Action
Generally, “questions whether a [class action] 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 (Wershba), 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, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)
In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.) The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)
B. PAGA
Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (LWDA), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)
Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)
The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)
II. TERMS AND ADMINISTRATION OF SETTLEMENT
The non-reversionary gross settlement amount is $500,000. Attorney fees of up to $166,666.67 (one-third of the gross settlement), litigation costs of up to $10,000, and up to $9,000 in administration costs will be paid from the gross settlement. $25,000 will be allocated to PAGA penalties, 75 percent of which ($18,750) will be paid to the LWDA. The named plaintiff will seek an incentive award of $10,000.
The net settlement will be allocated to settlement class members proportionally based on their relevant pay periods during the class period. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 5 percent to wages and 95 percent to penalties and interest. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 180 days will be transmitted to the State of California’s Unclaimed Property Fund in the name of the relevant individual.
In exchange for the settlement, class members who do not opt out will release “any and all claims during the Class Period … arising out of the claims expressly pleaded in the Action and all other claims, such as those under the California Labor Code, applicable Wage Orders, the Fair Labor Standards Act, regulations, or other provisions of law, or [sic] that could have been pleaded based on the facts pleaded in the Action for (1) failure to pay overtime wages, (2) failure to provide accurate itemized wage statements, (3) failure to timely pay wages during employment or upon termination, (4) unfair business practices based on these violations, and (5) all claims for injunctive relief, liquidated damages, and penalties.” The PAGA release encompasses “any and all claims during the PAGA Period for civil penalties, fees, and costs pleaded in the Action or that could have been pleaded based on the facts alleged in the Action and preceding PAGA notices to the LWDA.”
The notice process has now been completed. There were no objections to the settlement and only one request for exclusion from the class. Of the 344 notices mailed by the administrator, 20 were re-mailed to updated addresses and three were ultimately undeliverable. The administrator estimates that the average payment to class members will be $815.80, with a high payment of $3,080.15.
At preliminary approval, the Court found that the settlement is a fair and reasonable compromise of the class claims and that the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court thus finds that the settlement is fair and reasonable for purposes of final approval.
III. ATTORNEY FEES, COSTS, AND INCENTIVE AWARD
Plaintiff seeks a fee award of $166,666.67, one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $153,497.50, based on 202 hours spent on the case by counsel billing at $725–800 per hour. Plaintiff’s request results in a modest multiplier of 1.09. The lodestar cross-check supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488, 503–504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)[11]
Plaintiff’s counsel also request $10,015.29 in litigation costs. Plaintiff’s costs appear reasonable based on the summary provided and are approved. The $8,500 in administrative costs are also approved.
Finally, the named plaintiff seeks an incentive award of $10,000. To support her request, she submits a declaration describing her efforts on the case. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.
IV. ORDER AND JUDGMENT
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
The motion for final approval is GRANTED. The following class is certified for settlement purposes:
all hourly, non-exempt employees who are currently or have been employed by Defendant, Silicon Valley Bank, in the State of California and either (i) earned overtime wages and non-discretionary compensation, including incentives, bonuses, and non-cash awards, at any time from April 6, 2016, through January 7, 2022 (the “Class Period”) or (ii) earned overtime wages at any time from April 6, 2019, through January 7, 2022 (the “PAGA Period”).
Excluded from the class is the one individual who submitted a timely request for exclusion.
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for August 17, 2023 at 2:30 P.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted to the Unclaimed Property Fund; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.
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LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Case Name: NormaJean Ferland v. Comprehensive Spine and Sports Center, et al.
Case No.: 21CV375218
This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff NormaJean Ferland alleges that Defendant Navani Pain Management Inc. dba Comprehensive Spine and Sports Center required employees to work off-the-clock, failed to provide compliant meal and rest periods, failed to reimburse employees for business expenses, and committed other wage and hour violations.
The parties reached a settlement, which the Court preliminarily approved in an order filed on June 21, 2022. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court is Plaintiff’s motion for final approval of the settlement and for approval of her attorney fees, costs, and service award. Plaintiff’s motion is unopposed. As discussed below, the Court GRANTS final approval.
I. LEGAL STANDARDS FOR SETTLEMENT APPROVAL
A. Class Action
Generally, “questions whether a [class action] 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 (Wershba), 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, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)
In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.) The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)
B. PAGA
Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (LWDA), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)
Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)
The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)
II. TERMS AND ADMINISTRATION OF SETTLEMENT
The non-reversionary gross settlement amount is $324,658.62, increased from $310,000.[12] Attorney fees of up to $103,333.33 (one-third of the original gross settlement), litigation costs not to exceed $15,000, and administration costs of approximately $9,765 will be paid from the gross settlement. $10,000 will be allocated to PAGA penalties,[13] 75 percent of which will be paid to the LWDA. The named plaintiff will seek an incentive award of $7,500.
The net settlement will be allocated to settlement class members proportionally based on their weeks worked during the settlement period. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 33 percent to wages and 67 percent to penalties and interest. The employer’s share of taxes will be paid separately from the settlement. Funds associated with checks uncashed after 180 days will be redistributed to participating class members, and any of those checks that remain uncashed after another 180 days will be deposited with the State Controller’s Unclaimed Property Fund. But if less than $5,000 remains unclaimed, the unclaimed funds will be paid as a cy près award to the Los Angeles Trial Lawyers’ Charities (“LATLC”).
Under the amended settlement agreement filed on June 16, 2022, class members who do not opt out will release “any and all claims alleged in the Litigation arising during the Settlement Period, and all claims arising in connection with or related to the facts or primary rights alleged in the Litigation arising during the Settlement Period, including, but not limited to,” specified wage and hour claims. The PAGA release similarly encompasses “any and all claims alleged in the PAGA letter to the LWDA and any amendments thereto, any and all claims alleged in the Litigation arising under PAGA during the PAGA Period, and all claims arising from or related to the facts or primary rights as those alleged in the Litigation arising under PAGA during the PAGA Period ….”
The notice process has now been completed. There were no objections to the settlement or requests for exclusion from the class. Of the 176 notices mailed by the administrator, 12 were re-mailed to updated addresses and 5 were ultimately undeliverable. The administrator estimates that the average payment to class members will be $972.79, with a high payment of $4,413.47.
At preliminary approval, the Court found that the settlement is a fair and reasonable compromise of the class claims and that the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court thus finds that the settlement is fair and reasonable for purposes of final approval.
III. ATTORNEY FEES, COSTS, AND INCENTIVE AWARD
Plaintiff seeks a fee award of $103,333.33, one-third of the original gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $100,500, based on 165 hours spent on the case by counsel billing at $450–850 per hour and other professionals billing at $125–150 per hour. Plaintiff’s request results in a modest multiplier of 1.03. The lodestar cross-check supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488, 503–504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)
Plaintiff’s counsel also request $13,282.97 in litigation costs. Plaintiff’s costs appear reasonable based on the summary provided and are approved. The $9,765 in administrative costs are also approved.
Finally, the named plaintiff seeks an incentive award of $7,500. To support her request, she submitted a declaration describing her efforts on the case at preliminary approval. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.
IV. ORDER AND JUDGMENT
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
The motion for final approval is GRANTED. The following class is certified for settlement purposes:
All persons who worked for Defendant in California as an hourly-paid or non-exempt employee during the Settlement Period [from January 14, 2017 through September 26, 2021].
No one otherwise included in that definition is excluded from the class.
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for February 15, 2024 at 2:30 P.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted to the Unclaimed Property Fund or cy près recipient; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.
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LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Case Name: In re Maxar Technologies, Inc. Shareholder Litigation
Case No.: 19CV357070
In October 2017, Defendant Maxar Technologies, Inc.,[14] a satellite manufacturer, acquired and merged with DigitalGlobe, Inc., a satellite imagery company (the “Merger”). This putative class action arises from alleged misrepresentations and omissions in the Offering Materials for the Merger.
Before the Court is Defendants’ unopposed motion to seal portions of Plaintiff’s opposition to their motion to compel and associated exhibits, which were lodged conditionally under seal on October 24, 2022. As discussed below, the Court GRANTS Defendants’ motion.
I. LEGAL STANDARD
Generally, “[t]he court may order that a record be filed under seal only if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.” (Cal. Rules of Court, rule 2.550(d).)
Rule 2.550 does not directly apply to “discovery motions and records filed or lodged in connection with discovery motions or proceedings.” (See Cal. Rules of Court, rule 2.550(a)(3); H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 892–893 (Fuller) [the discovery process would be impeded if a presumptive right of public access to records disclosed under protective orders and filed in connection with routine discovery motions were imposed].) Nonetheless, even in discovery proceedings, a party moving for leave to file records under seal must identify the specific information claimed to be entitled to confidentiality and the nature of the harm threatened by disclosure. (See Fuller, supra, 151 Cal.App.4th at p. 894.)
II. DISCUSSION
Defendants’ motion and supporting declarations describe the nature of the sensitive business information that Defendants seek to maintain under seal and the nature of the harm that would result from its publication. Defendants’ requests are narrowly tailored to these materials, which are appropriately filed under seal in the context of these discovery proceedings. Even if Rule 2.550 directly applied, the factors stated in that rule are satisfied here.
III. CONCLUSION
Defendants’ motion to seal is GRANTED. The following portions of Plaintiff’s October 24, 2022 opposition brief shall be filed under seal: page 5, lines 16–20; page 12, lines 6–8; page 17, lines 17–23, 25–26; page 18, lines 1–12, 17–18. Exhibits 5 and 7–9 to the supporting Declaration of Adam E. Polk shall also be filed under seal.
Within 30 days of the Court’s order, Defendants shall file updated public versions of the documents lodged by Plaintiff that redact only the information that is the subject of this order.
The Court will prepare the order.
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LAW AND MOTION HEARING PROCEDURES
Remote hearings are required. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to make that request.
Effective August 15, 2022, Department 1 will be using Microsoft Teams for all remote hearings, unless otherwise ordered by the court. The Teams link for Department 1 can be found at .
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 hearing remotely 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 13, 2020 Policy Regarding Privately Retained Court Reporters. The court reporter must participate remotely and cannot be present in the courtroom.
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Case Name: Hasim A. Mohammed v. American Airlines, Inc., et al.
Case No.: 19CV342788
This is a putative class action on behalf of employees of Defendant American Airlines, Inc., alleging meal and rest period violations and failure to provide employees with an option to receive paper wage statements.
Before the Court is Plaintiff’s motion to certify several classes of employees who suffered these violations (and another violation not alleged in the Complaint). Defendant opposes the motion in all respects. As discussed below, the Court GRANTS Plaintiff’s motion as to the proposed meal period and electronic wage statement classes, and otherwise DENIES the motion.
I. BACKGROUND
According to the complaint, Plaintiff worked for Defendant as a non-exempt, hourly employee from January 17, 2000 through February 28, 2018. (Complaint, ¶ 19.) Plaintiff and other putative class members were frequently not provided with compliant meal and rest periods due to American’s policies of (1) not scheduling breaks as part of each work shift, (2) chronically understaffing each shift, (3) imposing too much work on employees for them to take breaks, and (4) failing to maintain formal meal and rest period policies to encourage employees to take breaks. (Id., ¶¶ 20, 24.)
When a plane arrived, Plaintiff and other employees were required to interrupt their breaks to immediately perform their job duties. (Complaint, ¶¶ 21, 25.) Plaintiff and the putative class were not instructed or required to clock out for meal periods; rather, Defendant automatically deducted one hour[15] from their hours worked. (Id., ¶ 22.) This allowed Defendant to avoid paying overtime, as Plaintiff and the putative class were seldom, if ever, provided with a one-hour, uninterrupted, duty-free meal period. (Ibid.) As a result of these meal and rest period violations, American failed to provide employees with accurate itemized wage statements reflecting all hours worked and any premiums owed. (Id., ¶¶ 27–29.) Defendant also failed to provide employees who received electronic wage statements with the ability to easily access the associated information and convert the electronic statements into hard copies at no expense. (Id., ¶¶ 82–83.)
Based on these allegations, Plaintiff brings putative class claims for (1) failure to provide meal periods, (2) failure to provide rest periods, (3) failure to pay hourly and overtime wages, (4) failure to provide accurate written wage statements, (5) failure to timely pay all final wages, and (6) unfair competition.
II. LEGAL STANDARD
As explained by the California Supreme Court,
The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. A trial court ruling on a certification motion determines whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.
(Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, internal quotation marks, ellipses, and citations omitted (Sav-on Drug Stores).) “Indeed, at the class certification stage, as long as the plaintiff’s posited theory of liability is amenable to resolution on a classwide basis, the court should certify the action for class treatment even if the … theory is ultimately incorrect at its substantive level….” (ABM Industries Overtime Cases (2017) 19 Cal.App.5th 277, 307–308 (ABM), citation and quotation marks omitted.)
California Code of Civil Procedure section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court ….” As interpreted by the California Supreme Court, section 382 requires: (1) an ascertainable class and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, supra, 34 Cal.4th at p. 326.) “Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.)
The plaintiff has the burden of establishing that class treatment will yield “substantial benefits” to both “the litigants and to the court.” (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.) The court must examine all the evidence submitted in support of and in opposition to the motion “in light of the plaintiffs’ theory of recovery.” (Department of Fish and Game v. Superior Court (2011) 197 Cal.App.4th 1323, 1349.) The evidence is considered “together”: there is no burden-shifting as in other contexts. (Ibid.)
III. PROPOSED CLASSES AND SUBCLASSES
Plaintiff moves to certify the following classes and sub-classes (to exclude flight crews):
Meal Period Class
All non-exempt, hourly employees of American Airlines who worked a shift in excess of five hours for the time period beginning February 19, 2015 through the date of final judgment.
No Meal Period Policy Sub-Class: All Meal Period Class members who worked for American Airlines from February 19, 2015 through July 2017.
Auto-Deduct Sub-Class: All Meal Period Class members who had a half-hour of time deducted from their pay on each shift.
Rest Break Class
All non-exempt, hourly employees of American Airlines who worked a shift in excess of three and one-half hours for the time period beginning February 19, 2015 through the date of final judgment.
Off-the-Clock Class[16]
All non-exempt, hourly employees who clocked in before their scheduled shift, and/or clocked out after their scheduled shift for the time period beginning February 19, 2015 through the date of final judgment.
Electronic Wage Statement Class
All non-exempt, hourly employees who did not receive paper wage statements and/or were unable to elect to receive paper wage statements for the time period beginning February 19, 2015 through the date of final judgment.
IV. MEAL AND REST BREAK CLASSES
Plaintiff’s theory concerning meal and rest break violations is that, while Defendant adopted facially compliant meal and rest break policies (at least for part of the class period),[17] putative class members were frequently unable to take compliant meal and rest periods due to the demands of their jobs. Plaintiff contends that Defendant has a uniform policy of automatically deducting meal periods from employees’ time worked without regard to whether a meal period was actually taken, failing to record the actual time and duration of employees’ meal periods (“automatic deduction policy”). Meanwhile, Defendant puts the onus on employees to fill out an “exception” for any missed, late, or interrupted meal or rest periods. Plaintiff urges that Defendant’s failure to keep records of actual meal periods taken entitles employees to a presumption that meal periods were not provided.
Defendant contends that common issues do not predominate as to these proposed classes. While allowing that the practice of automatically deducting meal periods from employees’ time worked is a policy common to the putative class, Defendant urges that this alone does not establish any meal period violations. Defendant points to evidence that many employees were able to take their breaks, and stresses that the putative class includes 80 different job classifications assigned to 8 different airports in California. It urges that California law does not require employers to record the start and end times of meal breaks, so Plaintiff should not be entitled to any presumption based on its automatic deduction policy.[18]
A. Numerous and Ascertainable Class
A class is ascertainable “when it is defined in terms of objective characteristics and common transactional facts that make the ultimate identification of class members possible when that identification becomes necessary.” (Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 980 (Noel).) A class definition satisfying these requirements
puts members of the class on notice that their rights may be adjudicated in the proceeding, so they must decide whether to intervene, opt out, or do nothing and live with the consequences. This kind of class definition also advances due process by supplying a concrete basis for determining who will and will not be bound by (or benefit from) any judgment.
(Noel, supra, 7 Cal.5th at p. 980, citation omitted.)
“As a rule, a representative plaintiff in a class action need not introduce evidence establishing how notice of the action will be communicated to individual class members in order to show an ascertainable class.” (Noel, supra, 7 Cal.5th at p. 984.) Still, it has long been held that “[c]lass members are ‘ascertainable’ where they may be readily identified … by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal. App. 3d 926, 932, disapproved of on another ground by Noel, supra, 7 Cal.5th 955; see also Cohen v. DIRECTV, Inc. (2009) 178 Cal.App.4th 966, 975-976 [“The defined class of all HD Package subscribers is precise, with objective characteristics and transactional parameters, and can be determined by DIRECTV’s own account records. No more is needed.”].)
Here, the proposed meal and rest break classes are appropriately defined based on objective characteristics (although the putative classes should be limited to California employees, and as discussed below, the Court questions whether the meal period class needs to include subclasses). Members of the putative classes are numerous, with over 500 employees in each class, and are easily identified from Defendant’s records. Defendant does not contest any of these points. Accordingly, the Court finds that the proposed meal and rest break classes are numerous and ascertainable.
B. Community of Interest
The “community-of-interest” requirement encompasses three factors: (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. (Sav-On Drug Stores, supra, 34 Cal.4th at p. 326.) American contests Plaintiff’s showing as to the first factor.
1. Predominant Questions of Law or Fact
For the first community of interest factor, “[i]n order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.” (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916 (Hicks).) The court must also give due weight to any evidence of a conflict of interest among the proposed class members. (See J.P. Morgan & Co., Inc. v. Superior Court (2003) 113 Cal.App.4th 195, 215.) The ultimate question is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1104–1105 (Lockheed Martin).) “As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.” (Hicks, supra, 89 Cal.App.4th at p. 916.)
In the wage and hour context, courts routinely have found suitable for class treatment a claim alleging an employer consistently applied a uniform policy that harmed an identifiable class of employees when the policy and the harm it caused are subject to common proof for all class members. To obtain certification of such a class, the class proponent must “present substantial evidence[19] that proving both the existence of [the employer’s] uniform policies and practices and the alleged illegal effects of [the employer’s] conduct could be accomplished efficiently and manageably within a class setting.”
(Kizer v. Tristar Risk Management (2017) 13 Cal.App.5th 830, 842, italics original, citations omitted [class certification properly denied in misclassification case where there was no evidence that employees other than the named plaintiffs worked any overtime at all].) In other words, “[t]he existence of any common policy is not sufficient to show that common issues predominate. The policy in question must be a means to establish liability on a classwide basis.” (Payton v. CSI Electrical Contractors, Inc. (2018) 27 Cal.App.5th 832, 843, italics original.)
Here, there is no dispute that American has a common policy of automatically deducting meal periods from employees’ time worked without regard to when or whether a meal period was actually taken—failing to record the actual time and duration of employees’ meal periods—and at the same time, putting the onus on employees to fill out an “exception” for any missed, late, or interrupted meal or rest periods.[20] Still, Defendant correctly contends that Plaintiff must show the illegal effect of its policies—denying employees pay and premiums for missed or noncompliant breaks—is susceptible to common proof. The Court turns to that analysis now.
a. the parties’ evidence
Contrary to Defendant’s argument, Plaintiff does submit evidence that American’s policies resulted in a failure to properly compensate employees for missed or noncompliant breaks. First, Plaintiff submits several employee declarations explaining that missed, late, or interrupted breaks were commonplace due to Defendant’s practice of short-staffing and the urgent and unpredictable nature of work at a busy airport. While some of the declarants acknowledge that they did at times submit “exceptions” and receive payment for overtime and/or missed breaks, the declarants explain that in many cases, it was too burdensome to submit an exception and ensure it was approved, or they did not know they could do so or needed to do so. This evidence is supported by a declaration by Plaintiff’s expert James Toney, who explains that in the sample payroll records he reviewed, meal period premiums were paid in connection with only .1 percent of the shifts reflected.
Defendant presents its own employee declarations on opposition.[21] Unsurprisingly, American’s declarants state that they are generally able to take timely, uninterrupted meal and rest breaks, and describe occasionally filling out “exceptions” and having them approved when they are not able to do so. American’s declarants largely state that their meal periods are scheduled in advance each day,[22] and they are generally (but not always) able to take them at the scheduled time. Defendant also submits a declaration by its expert, Ethan S. Singer, who reviewed a sample of putative class members’ wage statements. Mr. Singer declares that “[w]hile only 3.7% of wage statements contained pay codes related to missed or late meal or rest breaks, over one third (35.1%) of employees in the sample had at least one wage statement with a pay code for a missed or late meal or rest break as shown in Exhibit 9, with some employees having numerous instances of such pay codes.” Mr. Singer notes that six of Plaintiff’s declarants “had wage statements with pay codes associated with missed or late meal or rest breaks, including one employee (Anthony Jager) who had 72 wage statements over this period with pay codes associated with missed or late meal or rest breaks.”[23]
The evidence in the record is thus in conflict, at least as to the merits of Plaintiff’s theory that there was a common practice of failing to provide putative class members with compliant meal and rest periods or else to pay required premiums. But the Court need not wade into the merits: rather, it must evaluate whether “the plaintiff’s theory of recovery focuse[s] on uniform policies and practices…” (ABM, supra, 19 Cal.App.5th at p. 309.) Key to the Court’s analysis are ABM and Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286 (Jaimez), two opinions that reversed trial court orders denying certification of “automatic deduction” theories similar to Plaintiff’s theory here.
The Court also considers Plaintiff’s asserted entitlement to an evidentiary presumption based on Defendant’s failure to keep records of meal periods as they were actually taken. As authority for this presumption, Plaintiff cites Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004 (Brinker) and Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58 (Donohue), among other cases. Dohohue’s summary of an employer’s duties with regard to meal periods is also key to bear in mind:
We reiterate the rules set forth in Brinker: An employer is liable only if it does not provide an employee with the opportunity to take a compliant meal period. The employer is not liable if the employee chooses to take a short or delayed meal period or no meal period at all. The employer is not required to police meal periods to make sure no work is performed. Instead, the employer’s duty is to ensure that it provides the employee with bona fide relief from duty and that this is accurately reflected in the employer’s time records. Otherwise, the employer must pay the employee premium wages for any noncompliant meal period.
(Donohue, supra, 11 Cal.5th at p. 78.)
b. ABM
In ABM, the plaintiffs “alleged that ABM applied a uniform payroll policy which compensated employees according to anticipated work schedules rather than for hours actually worked, leading to uncompensated time. … [A]ccording to plaintiffs, the LMS, ABM’s payroll system, automatically deducted 30 minutes of worktime for a meal period whenever an employee was scheduled for a shift of five or more hours, without sufficient documentary evidence that those meals were actually taken.” (ABM, supra, 19 Cal.App.5th at p. 287, italics original.)
In support of their motion for class certification,
plaintiffs submitted declarations from 50 ABM Workers, including four named plaintiffs, stating that the schedules under which employees were paid often bore little relationship to the hours actually worked. For instance, they often worked through meal periods because there was too much work to do. In addition, plaintiffs provided evidence of company practices from various ABM supervisors and officials. Finally, plaintiffs also submitted expert declarations from Aaron Woolfson…. For example, Woolfson determined that, of the 1,141,903 shifts greater than five hours that failed to show any time-out/time-in entries during the scheduled workday, 1,070,517 of those shifts (94 percent) nevertheless showed an automatic 30-minute meal period deduction. Further, there was no indication in the records that premium pay was ever provided for missed meal periods.
(ABM, supra, 19 Cal.App.5th at p. 287.) The defendant urged that its supervisors were supposed to submit exceptions for missed meal periods (the “timesheet maintenance procedure”), but “at least one ABM manager testified that exception reports did not list missed meal breaks and that, in fact, supervisors were not required to report missed meals.” (Id. at p. 288, fn. 4.)[24]
The trial court denied class certification based on lack of commonality, among other grounds. The court of appeal reversed, explaining that the trial court had “improperly focused on the minutiae of each individual [employee]’s personal situation.” (ABM, supra, 19 Cal.App.5th at p. 310.) The court continued: “[W]hen the merits of the ultimate damages issues are set aside…, it becomes clear that numerous common issues predominate in this matter, rendering class certification appropriate.” (Ibid.)
For instance, the legality of ABM’s uniform payroll policy—which assumes each employee works his or her scheduled shift and takes any legally required meal breaks absent some type of exception report—is a legal question that can be determined by reference to facts common to all class members. Certainly, the evidence provided by Woolfson that a mere 5,625 of the 1,836,083 time entries for ABM Workers he investigated (0.3 percent) contained adjustments to pay calls into question the efficacy of ABM’s asserted “timesheet maintenance” procedure, as does the evidence presented by plaintiffs that ABM does not generate exception reports for missed meals periods. Moreover, the legality of ABM’s autodeduct policy for meal breaks in light of the recordkeeping requirements for California employers is also an issue amenable to classwide resolution. (See Cal. Code Regs., tit. 8, § 11050, subd. 7(A)(3).)
(ABM, supra, 19 Cal.App.5th at p. 310.)
Notably, ABM endorsed Plaintiff’s theory of a rebuttable presumption that no meal period was taken based on Defendant’s automatic deduction policy—but found that it was unnecessary to rule on that issue in order to grant class certification:
[A]lthough we do not reach the issue, the trial court’s concern regarding the need for numerous individualized damage inquiries in this case may turn out to be overexaggerated, given existing precedent indicating that the burden of proof shifts to employers “in the wage and hour context when an employer’s compensation records are so incomplete or inaccurate that an employee cannot prove his or her damages.” (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1189 [78 Cal. Rptr. 3d 572]; see also Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 961 [35 Cal. Rptr. 3d 243] [“‘Where the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages.’”].) Thus, for example, since employers have a duty to record their employees’ meal periods, “[i]f an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” (Brinker, supra, 53 Cal.4th at p. 1053 (conc. opn. of Werdegar, J.); see Cal. Code Regs., tit. 8, § 11050, subd. 7(A)(3).) Under such circumstances, a court may award damages, even if they are only approximate and based on statistical sampling. (Bell v. Farmers Ins. Exchange[ (2004) 115 Cal.App.4th 715,] 746–751.)
(ABM, supra, 19 Cal.App.5th at p. 311.)
c. Jaimez
ABM discussed an earlier opinion, Jaimez, at length, deeming Jaimez “[i]n line with [other applicable] precedent, and of particular relevance to the case at hand.” (ABM, supra, 19 Cal.App.5th at p. 309.) In Jaimez, too, “the defendant had a policy and practice of automatically deducting 30 minutes per shift for each employee’s meal break regardless of whether that meal break was actually taken, and the appellate court expressly found that this policy raised common legal and factual issues.” (Ibid.)
Like ABM, Jaimez found that in denying class certification, the trial court had improperly “focus[ed] on the potential conflicting issues of fact or law on an individual basis, rather than evaluating whether the theory of recovery advanced by the plaintiff is likely to prove amenable to class treatment.” (Jaimez, supra, 181 Cal.App.4th at p. 1299, citation and quotation marks omitted, italics original.) The court of appeal summarized some of the common practices and policies evidenced in the record (which included declarations by the named plaintiff and nine other putative class members): “First Choice created routes and delivery schedules which it pressured RSR’s to complete in eight hours; rather than promoting meal and rest breaks, this action had the opposite effect, despite supervisors’ statements or encouragement that RSR’s should take their breaks; and First Choice failed to compensate RSR’s for missed, late, or interrupted meal and rest breaks.” (Id., p. 1300.)
The opinion reasoned:
First Choice’s policy and practice before 2006 of deducting 30 minutes per shift for each RSR, regardless of whether the RSR took a meal break, raises common legal and factual issues. In any event, we decline First Choice’s invitation to consider the merits of the issue; that simply is not our obligation in reviewing the denial of a class certification motion.
As for the predominant common factual issues concerning rest breaks, Jaimez and his declarants allege that First Choice had a policy of failing to permit or authorize RSR’s to take rest breaks, in violation of Labor Code section 226.7, subdivision (b). When it did not provide the rest break, moreover, First Choice failed to pay one hour of wages (as required) for each violation. Jaimez presented evidence of these predominant common factual issues:
—RSR’s often were not able to take their required rest breaks;
—The delivery schedules made it extremely difficult for RSR’s to timely complete the deliveries and take all required rest breaks;
—After First Choice reclassified the RSR’s as hourly employees, RSR’s were told to complete their deliveries within eight hours, making it even more difficult for RSR’s to take all required rest breaks; and
—RSR’s never received compensation for missed rest breaks.
… There may well be, as First Choice argues, reasons why RSR’s chose not to take a rest break. Nevertheless, for purposes of the class certification motion, the predominant common factual issue is whether RSR’s missed meal breaks because First Choice’s policy and practice of designating delivery schedules and routes precluded RSR’s from timely completing their routes and taking the legally required rest breaks.
(Jaimez, supra, 181 Cal.App.4th at p. 1304–1305.)
As in this case, the defendant in Jaimez submitted contrary employee declarations generally averring that breaks were provided. But the court of appeal found these 25 declarations did not support denying class certification:
The First Choice declarations do not constitute substantial evidence that individual inquiries predominate the meal breaks claim. First, as noted, the existence of a small number of objectors is not grounds for denying class certification. [Citations.] In addition, on their face, the declarations fail to establish that any of the meal breaks were (1) uninterrupted, (2) for 30 continuous minutes, or (3) provided within the first five hours of a shift. First Choice’s practices are the predominant common factual issues on the meal and rest break claims.
(Jaimez, supra, 181 Cal.App.4th at pp. 1303–1304.)
Ultimately, the court of appeal found that common issues predominated on the meal and rest break claims, and directed the trial court to certify the proposed subclasses. (Jaimez, supra, 181 Cal.App.4th at p. 1309.)
d. discussion
ABM and Jaimez support certifying a meal break class based on Defendant’s automatic deduction policy, without the need to definitively rule on Plaintiff’s theory that this policy results in a presumption of missed or noncompliant meal periods. (See also Robbins v. Phillips 66 Co. (N.D.Cal. Mar. 29, 2021, No. 18-cv-00292-RS) 2021 U.S.Dist.LEXIS 207742, at *14 [certifying an automatic deduction class and observing that “there is no present need to answer the question of what liability, if any, attaches to Phillips’s failure to track meal breaks with consistency and precision” because what matters at class certification is whether that common question will resolve an issue central to the validity of each class member’s claim].)
Without expressing any opinion on the ultimate merits of Plaintiff’s position, the Court notes that ABM, Donohue, and other authorities discussed in those cases do provide some support for it. For example, Donohue held that a presumption of a meal period violation applies, not only where an employer’s records do not show a meal period was taken, but where time records show short or delayed meal periods. (Donohue, supra, 11 Cal.5th at p. 76.) It reasoned that “[t]he presumption derives from an employer’s duty to maintain accurate records of meal periods. … It is appropriate to place the burden on the employer to plead and prove, as an affirmative defense, that it genuinely relieved employees from duty during meal periods. To place the burden elsewhere would offer an employer an incentive to avoid its recording duty and a potential windfall from the failure to record meal periods. Where the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee.” (Ibid., citations, quotation marks, and other notations omitted; see also id. at p. 81 [“It is the employer’s duty to maintain accurate time records; the law does not expect or require employees to keep their own time records to uncover potential meal period violations.”].) It stands to reason that an employer should bear the same consequences from automatically recording meal periods without regard to whether they were actually taken in a compliant manner, as from failing to record them at all.
Still, Donohue is clear that “[t]he rebuttable presumption does not require employers to police meal periods. Instead, it requires employers to give employees a mechanism for recording their meal periods and to ensure that employees use the mechanism properly.” (Donohue, supra, 11 Cal.5th at p. 77, italics added.) Whether that happened here is a very important issue that the record suggests can be resolved through common proof.
The Court has considered that ABM, Jaimez, and other cases where a class was certified on an automatic deduction theory involved an alleged practice of never or virtually never paying premiums. (See Nguyen v. Baxter Healthcare Corp. (C.D.Cal. 2011) 275 F.R.D. 596, 600–601 (Nguyen); Wilson v. TE Connectivity Networks, Inc. (N.D.Cal. Jan. 25, 2018, No. 14-cv-04872-EDL) 2018 U.S.Dist.LEXIS 220166, at *4 [plaintiff “satisfied the predominance requirement because based on the record presented by the parties it was extremely rare for Defendants to correct employees’ time sheets and Defendants never paid additional compensation to employees in lieu of a missed meal break”].) And some of these cases appear to involve smaller groups of employees in a single job classification/work site. (See Nguyen, supra, 275 F.R.D. at p. 601 [“there appears no basis for finding that any of these actions were taken on an individual case-by-case basis, nor is the putative class so large and disparate that it was subject to a wide variety of supervisory practices which would require separate analysis”].) Notably, though, ABM involved tens of “thousands of janitorial workers at hundreds of jobsites in California.” (ABM, supra, 19 Cal.App.5th at p. 283; see also id. at p. 286 [the putative class was estimated to include approximately 35,000 janitorial employees].) And Jaimez involved 247 putative class members with different delivery routes. (See Jaimez, supra, 181 Cal.App.4th at p. 1292.)
Here, the record is similar to ABM. While there is evidence that putative class members did receive some meal period premiums, there is no dispute that American had a common policy of automatically recording meal periods without attempting to verify they were actually taken in a compliant manner, putting the onus on employees to submit exceptions. And—while the record is in conflict on this point—there is substantial evidence that missed and/or noncompliant meal breaks were common as a result of this policy and the nature of work at an airport, which the Court credits.[25] Due to the state of Defendant’s records, any damages that may be awarded in this case will necessarily be “only approximate and based on statistical sampling.” (ABM, supra, 19 Cal.App.5th at p. 311.) But this would be true whether the case involved a few employees or hundreds, and whether no premiums were ever paid or some occasionally were.
Notably, though, ABM did not involve a rest break class, and Plaintiff does not contend that a presumption of missed or noncompliant rest breaks applies due to Defendant’s recordkeeping practices. This makes sense: while “Labor Code section 512 … sets precise time requirements for meal periods,” so that “[e]ach meal period must be ‘not less than 30 minutes,’ and no employee shall work ‘more than five hours per day’ or ‘more than 10 hours per day’ without being provided with a meal period” (Donohue, supra, 11 Cal.5th at p. 68), the timing of rest periods is more flexible. Plaintiff provides no authority holding that employers have a duty to record rest periods or that failing to do so entitles employees to a presumption.
The Court thus concludes that for the meal period classes, common issues arising from Defendant’s automatic deduction policy outweigh individual issues. But this is not true for the proposed rest period class. While a rest break class was certified in Jaimez, that case involved a single job classification and “the predominant common factual issue” was whether “First Choice’s policy and practice of designating delivery schedules and routes precluded” individuals in that classification “from timely completing their routes and taking the legally required rest breaks.” (Jaimez, supra, 181 Cal.App.4th at p. 1305.) Plaintiff does not articulate any such specific common scheduling or other policy here concerning rest breaks. (See Sotelo v. Medianews Group, Inc. (2012) 207 Cal.App.4th 639, 654 [“[t]he difference between Jaimez and this case is that in Jaimez, the plaintiff actually presented the court with a theory of recovery that specified the uniform policies and practices of the defendant that acted to establish liability for overtime”]; see also Koval v. Pacific Bell Telephone Co. (2014) 232 Cal.App.4th 1050, 1062 [affirming denial of certification where “substantial evidence supports the court’s finding that each supervisor conveyed the policies to class members orally, … result[ing] in diverse practices and differing interpretations as to what the rules required”; “this management practice, combined with the confusing overlay of policy manuals containing different combinations of rules that were applicable to the various job classifications at different times, creates a shifting kaleidoscope of liability determinations that render this case unsuitable for class action treatment”].) So the Court will not certify a rest period class.
2. Adequacy and Typicality
“Adequacy of representation depends on whether the plaintiff’s attorney is qualified to conduct the proposed litigation and the plaintiff’s interests are not antagonistic to the interests of the class.” (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.) The fact that a class representative does not personally incur all of the damages suffered by each different class member does not necessarily preclude the representative from providing adequate representation to the class. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 238, disapproved of on another ground by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.) Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status. (Ibid.)
“Although the questions whether a plaintiff has claims typical of the class and will be able to adequately represent the class members are related, they are not synonymous.” (Martinez v. Joe’s Crab Shack Holdings (2014) 231 Cal.App.4th 362, 375 (Martinez).) “The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.” (Ibid., quoting Seastrom v. Neways, Inc. (2007) 149 Cal.App.4th 1496, 1502.)
Here, Plaintiff introduces evidence that he and his counsel will adequately represent the class, and that his meal period claims are typical of the putative class—which Defendant does not dispute. The Court finds that adequacy and typicality are satisfied as to the meal period class.
C. Superiority
“[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .” (Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.) The question is whether a class action would be superior to individual lawsuits. (Ibid.) “Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.” (Ibid.) Generally, “a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.” (Id. at pp. 120–121, internal quotation marks omitted.)
Here, it would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each of the meal period class members. Further, it would be cost prohibitive for each class member to file suit individually, as each member would have the potential for little to no monetary recovery. The Court is persuaded that a class action would be superior to individual meal period lawsuits here—which American does not dispute.
D. Conclusion
For the reasons discussed above, the Court will certify a meal period class—but not a rest period class.
The meal period class will be limited to California employees. In addition, given that American’s automatic deduction policy is the key to Plaintiff’s meal period theory, the Court believes that the class as a whole should be limited to encompass employees “who had a half-hour of [meal period] time deducted from their pay on each shift.” And the Court is not persuaded that there is a need for a “no meal period policy” subclass.
The Court is thus inclined to define the meal period class as “all non-exempt, hourly California employees of American Airlines who worked a shift in excess of five hours for the time period beginning February 19, 2015 through the date of final judgment, and who had a half-hour of meal period time deducted from their pay on each such shift.” Prior to the hearing on this matter if possible, the parties shall meet and confer about whether this definition makes sense and whether it can be improved.
V. OFF-THE-CLOCK CLASS
Plaintiff’s “off-the-clock” theory is based on Defendant’s practice of paying employees based on their scheduled start and end times, despite the fact that employees routinely clock in several minutes before their shifts begin and clock out several minutes after their shifts end.
Again, American urges that commonality is not satisfied as to this proposed class.[26] It contends that employees are not expected or required to perform any work outside of their scheduled shifts and use this “grace period” time for personal tasks—and employees are instructed to and do in fact submit exceptions if they perform unscheduled work. Defendant urges that employees clock into different systems, at different locations, at varying times, and for a variety of reasons, and use their “grace period” time in a variety of ways, making it impossible to determine whether employees were working off-the-clock during this time on a classwide basis.
A. Analysis
In support of his off-the-clock theory, Plaintiff stresses that any time when an employee is subject to an employer’s control is compensable, whether or not the employee is working. (See Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 588 (Morillion) [holding that time spent on a required shuttle was compensable: “by requiring employees to take certain transportation to a work site, employers thereby subject those employees to its control by determining when, where, and how they are to travel”].) None of this time is considered “de minimis” (at least not for regularly occurring time). (See Troester v. Starbucks Corp. (2018) 5 Cal.5th 829, 847 [“An employer that requires its employees to work minutes off the clock on a regular basis or as a regular feature of the job may not evade the obligation to compensate the employee for that time by invoking the de minimis doctrine.”].)
But in contrast to his meal period theory, Plaintiff does not contend that any presumption applies in this context due to Defendant’s recordkeeping practices. Nor does Plaintiff assert that employees were uniformly within American’s control during their “grace period” time because, for example, they were all required to ride a shuttle to their work sites, as in Morillion. Rather, Plaintiff’s theory is that “there is no formal exception policy,” and because Plaintiff’s declarants testified that they were never trained to submit exceptions, “it stands to reason that in many cases, exceptions are not being submitted when they should be.”
But the record shows that there was an exception policy. Plaintiff’s own declarants consistently acknowledge this. (See Decl. of Alungamonu Manu, ¶¶ 10–11 [“I was told that I could fill out an exception form to be paid for any missing hours from my timesheets.”; “I submitted exception reports occasionally, but most of the time I just stepped in because I was needed or we were understaffed and didn’t take the extra time to submit an exception report.”]; Decl. of Andrei Coval, ¶ 12 [“I always make sure to report this extra time on JetNet, and sometimes (but not always) a supervisor will tell me to do so, but if I didn’t take this extra step I would not end up getting paid for the time…”]; Decl. of Darcy Britton, ¶ 9 [“If I wanted to be paid for any time worked outside of my scheduled time, even if I clocked in early or clocked out late, I would need to sign into a logbook in the break room with my specific start and end times.”]; Decl. of Jasmine R. Brown, ¶ 9 [“If I was specifically asked by a manager to come in early, I would submit an exception report and my time would be adjusted, but normally if I began working less than fifteen minutes before my scheduled start time I would not fill out an exception report.”]; Decl. of Paula Dane, ¶ 12 [“My recollection is that if I badged out a certain amount of time beyond my scheduled shift, … my time would not be automatically recorded and I would need to manually enter a reason for the late badge out. My recollection is that this was
usually approved….”].)
Plaintiff’s declarations do support the conclusion that employees did sometimes work during their “grace period” time without submitting exceptions. But Plaintiff fails to articulate any common policy that caused this, or to otherwise identify predominate common issues that would aid the Court’s resolution of employees’ individual claims in this regard. Meanwhile, a review of Plaintiff’s own declarations shows that employees’ experiences with working during their “grace period” time and with submitting exceptions with regard to this time varied greatly. The Court accordingly finds that individual issues predominate with respect to this theory. (See Meek v. SkyWest, Inc. (N.D.Cal. 2021) 562 F. Supp. 3d 488, 496 [explaining that grace period claims raise individual questions concerning whether employees were actually working and/or under the employer’s control during the grace period, and “Plaintiffs cannot satisfy commonality by proposing to apply … a rounding policy analysis” to a grace period policy], citing See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 909 [stating in dicta that “under California law a grace period (the time during which an employee punches in before his or her compensable pay is triggered) is allowed if the employee is not working or is not under the employer’s control,” so a grace period claim “raises factual questions involving whether the employee was in fact working and/or whether the employee was under the employer’s control during the grace period”].)[27]
B. Conclusion
Because common issues do not predominate as to Plaintiff’s grace period theory, the Court will not certify an off-the-clock class.
VI. ELECTRONIC WAGE STATEMENT CLASS
Labor Code section 226, subdivision (a) requires an employer to furnish “either as a detachable part of the check, draft, or voucher paying the employee’s wages, or separately if wages are paid by personal check or cash, an accurate itemized statement in writing” concerning the employee’s wages. The California Department of Industrial Relations, Division of Labor Standards Enforcement (“DLSE”) has issued an opinion letter stating that furnishing an electronic wage statement suffices if six factors are satisfied—with the first being that “[a]n employee may elect to receive paper wage statements at any time.”[28] (See Derum v. Saks & Co. (S.D.Cal. 2015) 95 F. Supp. 3d 1221, 1226 [“The primary California authority on electronic wage statements appears to be the DLSE opinion letter … approv[ing] the use of electronic wage statements, but only so long as employees retain the right to elect to receive hard-copy statements.”].)
A. Analysis
Plaintiff presents undisputed evidence that American requires employees to receive their pay through direct deposit or a Money Network check or pay card, and does not allow employees to elect to receive paper wage statements. Defendant responds that employees can “convert the electronic wage statement into a paper copy, either by printing the statement at an American computer at the airport, or by printing the statement from their home computer, tablet, or smartphone, just as they could view and print any other website.” According to Defendant, this satisfies the Labor Code. American cites various federal authorities to support this position. (See, e.g., Del Thibodeau v. ADT LLC (S.D.Cal. Apr. 18, 2019, No. 3:16-cv-02680-GPC-AGS) 2019 U.S.Dist.LEXIS 66603, at *28 [holding employers may “issue wage statements electronically so long as employees retain the ability to easily access the information and convert the electronic statements into hard copies at no expense to the employee”].)
Whether the circumstances Defendant describes satisfy the Labor Code is a merits dispute. Defendant urges that Plaintiff’s proposed class is overbroad and unascertainable, because it effectively includes all of American’s non-exempt employees (since all such employees receive their wage statements electronically). But this is appropriate if American applies a policy to all of its employees that may violate the Labor Code.
Defendant also urges that individual issues predominate as to this theory: specifically, “(i) who in the putative class ‘elected to receive’ a paper statement; (ii) how the employees communicated that election to American; (iii) to whom the employee communicated that election; and (iv) how American responded.” But there is no evidence that Defendant offered any employees the option to receive paper statements, so it does not seem that these details would matter. The legality of Defendant’s policy can be assessed based on common evidence.
Finally, Section 226’s injury requirement is minimal and is analyzed under an objective, reasonable person standard, which does not require an individualized showing of harm. (See Lab. Code, § 226, subd. (e) [an employee suffers injury if “the employer fails to provide a wage statement” or if the employee cannot “promptly and easily determine” certain information, meaning “a reasonable person would [not] be able to readily ascertain the information without reference to other documents or information”]; Lubin v. Wackenhut Corporation (2016) 5 Cal.App.5th 926, 959–960 (Lubin) [trial court erred in declining to certify a wage statement class due to the injury requirement].) Defendant fails to persuade that individual issues predominate an assessment of whether employees were injured by its policy.[29]
The Court finds that all of the requirements to certify the wage statement class are satisfied, and resolving these employees’ claims through a class action is clearly superior to litigating a multitude of small individual claims.
B. Conclusion
For the reasons discussed above, the Court will certify an electronic wage statement class. Prior to the hearing on this matter if possible, the parties should meet and confer about whether it would be more straightforward to define the class to encompass “all non-exempt, hourly California employees to whom Defendant did not issue paper wage statements for the time period beginning February 19, 2015 through the date of final judgment.”
VII. CONCLUSION
Plaintiff’s motion for class certification is GRANTED IN PART, as to the first, third, fourth, fifth, and sixth causes of action. The following classes will be certified (subject to meet and confer by the parties about the exact wording of these definitions):
• the Meal Period Class of “all non-exempt, hourly California employees of American Airlines who worked a shift in excess of five hours for the time period beginning February 19, 2015 through the date of final judgment, and who had a half-hour of meal period time deducted from their pay on each such shift.”
• the Electronic Wage Statement Class of “all non-exempt, hourly California employees to whom Defendant did not issue paper wage statements for the time period beginning February 19, 2015 through the date of final judgment”
Plaintiff’s motion is DENIED in all other respects.
The parties shall meet and confer regarding a procedure for providing notice to the class and a form of notice. If they come to agreement, Plaintiff shall file a stipulation along with a statement and proposed order pursuant to California Rules of Court, rule 3.766. If there is any dispute regarding these issues, the parties shall advance their next case management conference to a mutually agreeable date so that the issues may be promptly addressed.
Because Plaintiff’s remaining objections are not material to the outcome of this motion, the Court will not rule on them. (See generally Code Civ. Proc., § 437c, subd. (q) [“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.”].)
The Court will prepare the order.
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[1] The Court also will not repeat its prior discussion of a related federal action, Costanzo v. DXC Tech. Co. (N.D. Cal., No. 5:19-CV-05794-BLF) (“Costanzo”), which was ultimately dismissed with prejudice for failure to state a claim. But it again GRANTS Defendants’ request for judicial notice of relevant orders in Costanzo and other related federal litigation (Exs. 2–4 & 9 to Defendants’ request). (Evid. Code, § 452, subd. (d).) The Court also GRANTS judicial notice of the registration statement associated with the Merger (Ex. 1 to Defendants’ request), as well as other relevant DXC public filings and transcripts (Exs. 5–8 to Defendants’ request), many of which are referenced in the SAC. (Evid. Code, § 452, subds. (c) and (h); StorMedia, Inc. v. Superior Court (1999) 20 Cal.4th 449, 456, fn. 9 [taking judicial notice of proxy statement and registration statement filed with SEC]; Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285 fn. 3 [taking judicial notice of documents that “form the basis of the allegations in the complaint” because “it is essential that [the court] evaluate the complaint by reference to these documents”].)
[2] On reply, Defendants suggest that an undisclosed plan cannot be a “trend” under Item 303, but they cite no authority establishing this proposition. Here, Plaintiffs maintain that the alleged plan was reasonably likely to impact DXC’s ability to service its customers and keep their contracts, which would have a direct impact on its financial condition per the authorities above.
[3] Defendants dismissively characterize these as “vague allegations about unspecified ‘statistical data,’ termination ‘paperwork,’ and ‘documentation,’ and supposed hiring preferences (SAC ¶¶ 76-97).” But these allegations do clearly and specifically describe a plan for age-targeted layoffs.
[4] On reply, Defendants do not appear to dispute Plaintiffs’ argument that the safe harbor, puffery, and opinion doctrines emphasized in their moving papers do not apply to Plaintiffs’ “pure omissions” theory under Item 303. So the Court need not further address these points.
[5] Solaray Sunglass, LLC was also named as a defendant in the complaint, but was dismissed without prejudice after it provided a declaration showing that it did not employ anyone in California and is not related to Solaray, LLC’s business here.
[6] In a supplemental declaration filed on January 3, 2023, Plaintiff’s counsel confirms that the attorney fee award will be tendered 90 percent to Capstone Law APC and 10 percent to James Hawkins, APLC, as disclosed by the settlement agreement.
[7] The Court has also reviewed the individual settlement agreement lodged by Plaintiff, and finds no reason to conclude that it should prevent approval of the class settlement.
[8] Plaintiff has agreed in writing to a fee-sharing agreement, with David Yeremian & Associates, Inc. receiving 65% of the fee awarded and Davtyan Law Firm, Inc. receiving 35%.
[9] In addition, the administrator explains that 35 notices were mailed to addresses that had been mismatched with the wrong class member’s name. Corrected notices were mailed to the impacted individuals on November 14, 2022, and the response deadline was extended to December 29, 2022 for these individuals.
[10] Plaintiff has agreed to a fee-sharing arrangement, with Fitzpatrick & Swanston receiving 40% of the fee awarded and Diversity Law Group, P.C. receiving 60%.
[11] Plaintiff has agreed to a fee-sharing arrangement, with Diversity Law Group, P.C. receiving 65% of the fee awarded and Polaris Law Group receiving 35%.
[12] The settlement consideration was increased by $14,658.62 per the Addendum to Joint Stipulation Re: Class Settlement attached to the December 19, 2022 Declaration of Justin Marquez, to account for the inadvertent omission of seven class members from the class list provided by Defendant.
[13] Plaintiff indicates that $10,076.87 will now be allocated to PAGA penalties, presumably to account for the extra consideration provided to the seven individuals who were initially omitted from the class list. But Plaintiff indicates that only $7,500 will be paid to the LWDA. In the Court’s view, the PAGA allocation should remain $10,000 so that the $7,500 LWDA allocation complies with the statute. The Court sees no issue with allocating a small additional (non-PAGA) individual settlement payment to the seven omitted individuals to put their compensation on equal footing with the rest of the settlement class.
[14] MacDonald, Dettwiler and Associates Ltd. (“MDA”) became Maxar Technologies Ltd. upon its merger with DigitalGlobe in October 2017, and in January 2019, Maxar Technologies Ltd. became Maxar Technologies Inc. (Second Amended Complaint, ¶ 1, fn. 1.) This order refers to all three entities interchangeably as “Maxar.”
[15] The reference in the Complaint to a one-hour meal period appears to be incorrect, as the evidence shows that the automatically deducted meal periods were a half hour long.
[16] This proposed class and theory are not mentioned in the complaint.
[17] There is no dispute that Defendant did not have any formal California meal and rest break policy until September 2017, at which point it adopted the policy still in use today. Defendant asserts that “[b]efore the written Policy was promulgated in September 2017, meal and rest practices varied across stations and workgroups, but the expectation was always that employees would take meal and rest breaks in accordance with” the practices now memorialized in the written policy.
[18] Defendant also notes that class certification was recently denied in a similar case involving its California timekeeping policies. (See Solis v. Am. Airlines, Inc. (C.D.Cal. Sep. 13, 2022, No. CV 19-10181 PSG (AFMx)) 2022 U.S.Dist.LEXIS 172166 (Solis).) While the Court has read the minute order in Solis, it does not find it persuasive or particularly relevant here. Notably, Solis denied certification of a wage statement subclass involving Defendant’s automatic deduction policy, with little analysis. (See id. at *23–25.) And it denied certification of an overtime/off-the-clock class on the ground that superiority was lacking due to difficulties in proving class members’ damages, citing “disparities in how employees perform the badging and clocking/punching-in process”—an issue not raised by Defendant here. (Id. at * 12.)
[19] “Substantial evidence is evidence that “is not ‘qualified, tentative and conclusionary’ [citation] but, rather, ‘ “of ponderable legal significance … reasonable in nature, credible, and of solid value.” ’ ” (Sav-On [Drug Stores], supra, 34 Cal.4th at p. 329.)” (Dailey v. Sears, Roebuck & Co. (2013) 214 Cal.App.4th 974, 996 [noting that evidence “consist[ing] principally of sworn declarations and deposition testimony” satisfied this standard].) In affirming class certification, Sav-On Drug Stores found the plaintiffs’ introduction of policy documents, deposition testimony by defendant’s “person most knowledgeable” designee, interrogatory responses, and a handful of employee declarations sufficed. (Sav-On Drug Stores, supra, 34 Cal.4th at pp. 328–329.)
[20] Defendant urges that the manner in which “exceptions” are submitted differs among the various airports and job classifications at issue (for example, on paper versus electronically), but does not explain why such difference would be material to liability under Plaintiff’s theory.
[21] The Court OVERRULES Plaintiff’s objections that these declarations are wholly irrelevant and prejudicial. Plaintiff is correct that “statements obtained by the class opponent from its employees, to oppose a class certification motion, must be carefully scrutinized for actual or threatened abuse. And, if the trial court concludes the statements were obtained under coercive or potentially abusive circumstances, it has discretion to either strike those statements entirely or discount the evidentiary weight to be given to them.” (Barriga v. 99 Cents Only Stores LLC (2020) 51 Cal.App.5th 299, 308 (Barriga).) “[C]ourts should be cognizant of the imbalance of power and interests when carefully reviewing employee statements.” (Id. at p. 335.) But here—unlike in Barriga—there is no evidence that the declarations submitted by American were obtained through coercion or abuse.
Still, the Court does discount the declarations’ value considering that they were provided to Defendant by its own current employees. And the Court notes Plaintiff’s objection that timekeeping and payroll data was produced for only 19 of the 59 declarants, and Plaintiff has not received contact information for most of the declarants. These circumstances warrant further discounting the declarations’ evidentiary value.
[22] Several declarants do not say how meal periods are scheduled, and a few employees at the Sacramento International Airport and San Jose International Airport say their meal breaks are not pre-scheduled.
[23] Plaintiff objects to Mr. Singer’s declaration on several grounds, including because the documents Mr. Singer relies on were not produced to Plaintiff until November 10, 2022—nearly a month after Defendant filed its opposition—and “[t]o date, these records have not been authenticated nor has Defendant provided any explanation of why these records were omitted or what they comprise.” But Plaintiff’s objections are ultimately immaterial to the Court’s disposition of his motion—so the Court will not rule on them.
[24] The defendant also “submitted declarations from 14 current employees,” but the court of appeal’s opinion did not discuss their content. (Id. at p. 288.)
[25] See also Alberts v. Aurora Behavioral Health Care (2015) 241 Cal.App.4th 388, 406–407 (the trial court was incorrect “to require, at the certification stage, that plaintiffs demonstrate a ‘universal practice’ on the part of management to deny nursing staff the benefit of the Hospital’s written break policy” or to “ask[] whether the evidence was sufficient to establish plaintiffs’ ultimate right to recovery” or “to prove class members missed all breaks to which they were entitled”; “[a]t the certification stage, plaintiffs need only establish that the question of whether the Hospital’s practices or procedures resulted in the denial of lawful breaks can be determined on a classwide basis”—a standard of overwhelming proof on the merits “would prevent certification of virtually any wage and hour class”); Benton v. Telecom Network Specialists, Inc. (2013) 220 Cal.App.4th 701, 725–726 (“evidence showing that some class members’ working conditions permitted them to take breaks, while others did not, was not a sufficient basis for denying certification” where “plaintiffs' theory of liability—that TNS violated wage and hour requirements by failing to adopt a meal and rest period policy—was susceptible to common proof”].)
[26] Defendant does not contest that the other requirements for certification are satisfied as to this proposed class.
[27] In cases relied on by Plaintiff where off-the-clock theories were certified, the common policies at issue were more specific, substantiated, and clearly articulated—and these case did not involve a “grace period” claim. (See Jimenez v. Allstate Ins. Co. (9th Cir. 2014) 765 F.3d 1161, 1165–1166 [plaintiffs raised common questions of whether defendant had an unofficial policy of discouraging overtime reporting, considering it reclassified claims adjusters who often worked overtime without reducing their work loads and required managers to approve exceptions within a limited budget for overtime; defendant’s knowledge that class members were working unpaid overtime “could be shown through either the testimony of managers who saw the class members work schedules or through an analysis of the telephone and computer systems used by class members”]; Rai v. Santa Clara Valley Transp. Auth. (N.D.Cal. 2015) 308 F.R.D. 245, 255–256 [plaintiffs presented substantial evidence that VTA has policies not to compensate operators for “pre-departure time,” when VTA’s policies cause operators to arrive early to locations at which they relieve others from their routes, and “turn-in time,” when operators are required to perform various tasks after they pull into the divisions at which some shifts end].)
[28] The Court GRANTS Plaintiff’s requests for judicial notice of this and other relevant DLSE opinion letters. (Evid. Code, § 452, subds. (c), (h); Morgan v. United Retail Inc. (2010) 186 Cal.App.4th 1136, 1147 [considering DLSE exemplar wage statement; “[a]lthough not binding on a court, the DLSE’s construction of a statute, whether embodied in a formal rule or a less formal representation, is entitled to consideration and respect”].)
[29] The Court respectfully disagrees with the brief analysis on this point set forth in Brown v. Am. Airlines, Inc. (C.D.Cal. 2011) 285 F.R.D. 546, 560—a federal case that predates Lubin.
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