Superior Court, State of California
DATE: FEBRUARY 10, 2022 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 |21CV376344 |KT4 Partners LLC, et al. v. Palantir Technologies |See tentative ruling. The Court will |
| | |Inc., et al. |prepare the final order. |
|LINE 2 |18CV322871 |Guzman v. Mandarich Law Group, LLP |See tentative ruling. The Court will |
| | | |prepare the final order. |
|LINE 3 |19CV348681 |Cevallos, et al. v. Tupaz Homes LLC, et al. |See tentative ruling. The Court will |
| | | |prepare the final order. |
|LINE 4 |19CV353132 |In Re Hewlett Packard Enterprise Co. Shareholder |Off calendar. |
| | |Litigation (LEAD CASE; Consolidated With Case No. | |
| | |19CV359073) | |
|LINE 5 |20CV370603 |Carrillo Diaz v. Recon360, LLC |See tentative ruling. The Court will |
| | | |prepare the final order. |
|LINE 6 |16CV301867 |SinCo Technologies PTE LTD v. Soon, et al. |See tentative ruling. The Court will |
| | | |prepare the final order. |
|LINE 7 |21CV376099 |Pacific Lodging Group LP dba Bodega Coast Inn & |See tentative ruling. The Court will |
| | |Suites v. Sequoia Insurance Company |prepare the final order. |
|LINE 8 | | | |
|LINE 9 | | | |
|LINE 10 | | | |
|LINE 11 | | | |
|LINE 12 | | | |
|LINE 13 | | | |
Calendar Line 1
Case Name: KT4 Partners LLC, et al. v. Palantir Technologies Inc., et al.
Case No.: 21CV376344
In an order filed on June 18, 2021, the Court granted in part and denied in part Defendants Palantir Technologies, Inc., Alexander Karp, Peter Thiel, and Stephen Cohen’s motion to seal portions of the original complaint in this action (June 2021 Order). On October 8, 2021, Plaintiffs lodged the operative Amended Complaint, which contains many allegations that are essentially identical to those the Court previously authorized to be maintained under seal.
Defendants now move to seal portions of the Amended Complaint consistent with the Court’s prior order, and submit a redacted public version of the Amended Complaint consistent with their request. Plaintiffs filed a statement of non-opposition to Defendants’ motion on January 26, 2022. For the same reasons discussed in the June 2021 Order, the Court GRANTS Defendants’ motion.
Within 20 calendar days of the filing of this order, Defendants shall file the redacted Amended Complaint as a standalone document on the Court’s docket.
The Court will prepare the order.
***
LAW AND MOTION HEARING PROCEDURES
The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at
RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.
Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).
State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a 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 may participate remotely and need not be present in the courtroom.
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 may participate remotely and need not be present in the courtroom.
- oo0oo -
Calendar Line 2
Case Name: Lorie Ann Guzman v. Mandarich Law Group, LLP, et al.
Case No.: 18CV322871
This is a class action under the Rosenthal Fair Debt Collection Practices Act (“RFDCPA” or “Rosenthal Act”). Plaintiff won a judgment in favor of the class following a jury trial and significant pre-trial motion practice. She now moves for attorney fees pursuant to Civil Code section 1788.17, which incorporates 15 U.S.C. § 1692k(a)(3) and requires the Court to award costs and a “reasonable attorney’s fee” to the successful Rosenthal Act plaintiff.
Plaintiff seeks a total of $486,843.75 in fees. Defendant Mandarich Law Group, LLP opposes her motion, acknowledging that an award of fees and costs is required but urging the Court to award a reduced amount of fees and costs, totaling no more than $160,174.92.
As discussed below, the Court GRANTS Plaintiff’s motion in the reduced amount of $269,325.75. It DENIES Defendant’s untimely request to tax costs claimed by Plaintiff.
I. LEGAL STANDARD
The parties agree that a reasonable fee award under the RFDCPA should be calculated using the lodestar method.
The use of the lodestar method for calculating attorney fees was established in California in [Serrano v. Priest (1977) 20 Cal.3d 25(Serrano III)] … The lodestar (or touchstone) is produced by multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate. Once the court has fixed the lodestar, it may increase or decrease that amount by applying a positive or negative “multiplier” to take into account a variety of other factors, including the quality of the representation, the novelty and complexity of the issues, the results obtained, and the contingent risk presented.
(Thayer v. Wells Fargo Bank, N.A. (2001) 92 Cal.App.4th 819, 833, internal citations and quotation marks omitted; see also PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096.)
The party seeking attorney fees bears the burden of establishing its entitlement thereto and documenting the hours its attorneys appropriately expended on the matter and their hourly rates. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1020 (“ComputerXpress”); City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 784 (“City of Colton”).) The court may require the moving party to produce records establishing a proper basis for determining how much time was spent on particular claims, and may reduce compensation based on a failure to maintain appropriate time records. (ComputerXpress, supra, 93 Cal.App.4th at p. 1020; City of Colton, supra, 206 Cal.App.4th at p. 784.)
When evaluating an attorney fees application, a trial court is permitted to rely, at least in part, on its experience. (See Marshall v. Webster (2020) 54 Cal.App.5th 275, 287.) After all, an “experienced trial judge is the best judge of the value of professional services rendered in his [or her] court.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132 (Ketchum).)
II. ATTORNEY FEES
Plaintiff’s fee request is summarized as follows:
[pic]
A. Hourly Rates
Mandarich contends that counsel’s hourly rates are not reasonable for the practice area at issue here, citing Bidwal v. Unifund CCR Partners (N.D. Cal. Aug. 27, 2019, No. 3:17-cv-02699-LB) 2019 U.S.Dist.LEXIS 147004 (Bidwal) for the proposition that a lower rate is appropriate in non-complex cases under the RFDCPA and the similar federal Fair Debt Collection Practices Act (“FDCPA”). In 2019, Bidwal surveyed market rates in Northern California for counsel in such cases and concluded that $475 per hour was a reasonable market rate for an attorney with 28 years of experience and $375 per hour was a reasonable market rate for an attorney with approximately 20 years of experience. (Id. at *10, 12, 22–23.) The Court notes that Bidwal was not a class action, but it agrees with Defendant that attorneys’ practice area should be considered in determining an appropriate hourly rate. While Plaintiff submits a declaration by an expert in California attorney billing rates who concludes that the claimed rates are reasonable, the expert does not cite rates awarded in similar cases under the RFDCPA or FDCPA.
Defendant notes that “at least one court has recently increased rates awarded to Mr. Schwinn, Mr. Roulston, and Mr. Salmonsen to $550, $500, and $350 respectively, to account for the passage of time since Bidwal.” (See Decl. of June D. Coleman ISO Opp. Ex. 8.) The Court finds these rates to be appropriate for this practice area, with the exception that the Court will calculate Mr. Salmonsen’s rate at $400 per hour and Mr. Schwinn’s rate at $575 per hour. The Court will similarly reduce Mr. Simons’s rate to $700 per hour, but finds this rate is warranted given his experience litigating jury trials, representing parties on both sides of matters like these, and at the appellate level.
B. Hours Billed
Having reviewed the time records and summaries submitted by Plaintiff, the Court finds that the hours billed to this matter are reasonable. Mandarich argues that, consistent with the principle that a party may not generally recover for work on unsuccessful causes of action, Plaintiff should not be able to recover for time spent on unsuccessful motion and discovery practice. But Mandarich cites no authority for this distinct proposition, and the Court finds the time at issue was reasonably necessary to the litigation.
Mandarich then spends several pages attacking specific time entries. The Court’s review of this argument only confirms the reasonableness of the time billed by Plaintiff’s counsel. Without addressing every item point-by-point, the Court finds that it is reasonable for counsel to bill tenths of an hour to arguably administrative tasks that it would take counsel just as long to instruct support staff to perform; it is often necessary for multiple counsel to review the same documents and emails; and it does not concern the Court for multiple counsel to bill slightly different time to their attendance of the same event, since attorneys’ preparation, travel, and attendance time may vary.
Mandarich also contends that it was unreasonable to bring Mr. Simons on as trial counsel and for Plaintiff’s original counsel to spend so much time communicating with him. The Court disagrees, and finds Mr. Simons’s participation was reasonably necessary to trying the case and the hours he billed are reasonable.
C. Multiplier
Plaintiff requests a multiplier of 1.5. While multipliers in Rosenthal Act cases are permissible, see Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324, 349, the Court, which observed the entire trial and ruled on various motions before trial, does not believe that any multiplier is appropriate here. In particular, the Court believes, based on its experience, that the market rates (as defined previously) for Plaintiff’s attorneys adequately compensate for the attorneys’ contingency risk and skill. As a result, applying a multiplier would be “unfair double counting” and “unreasonable.” (Ketchum, supra, 24 Cal.4th at p. 1139.)
D. Conclusion
The Court approves the hours billed to the case[1], but not Plaintiff’s proposed multiplier of 1.5. It reduces counsel’s hourly rates to the following: $400 per hour for Mr. Salmonsen; $500 per hour for Mr. Roulston; $575 per hour for Mr. Schwinn; and $700 per hour for Mr. Simons.
The Court will accordingly approve $269,325.75 in attorney fees (79.7 hrs. x $400/hr. for Mr. Salmonsen; 202.3 hrs. x $500/hr. for Mr. Roulston; 68.4 hrs. x $575/hr. for Mr. Schwinn; 138.1 hours x $700/hr. for Mr. Simons; and 1.3 hours of paralegal time at $227.50 per hour).
III. COSTS
Finally, Defendant attacks a number of the items of costs claimed by Plaintiff. But while styled a motion for attorney fees “and costs,” Plaintiff’s motion seeks a total award of $486,843.75, all of which constitutes attorney fees.
Plaintiff filed a memorandum of costs on August 16, 2021, to which the parties refer in their briefing. But “[a]ny notice of motion to strike or to tax costs must be served and filed 15 days after service of the cost memorandum. … If the cost memorandum was served electronically, the period is extended [by two court days] as provided in Code of Civil Procedure section 1010.6 (a)(4).” (Cal. Rules of Court, rule 3.1700(b)(1).) Defendant never filed a motion to tax costs, and to the extent its opposition to Plaintiff’s motion for attorney fees could be construed as one, it is untimely.
The failure to file a timely motion to tax costs constitutes a waiver of the right to object. (Douglas v. Willis (1994) 27 Cal.App.4th 287, 289–290; Jimenez v. City of Oxnard (1982) 134 Cal.App.3d 856, 859 [“By not filing said motion within the period specified in [former] section 1033, plaintiffs waived the right to object to the costs claimed by the city.”].) Defendant’s request that the Court tax costs claimed by Plaintiff at this juncture is therefore DENIED as untimely.
IV. CONCLUSION
The Court GRANTS Plaintiff’s motion for attorney fees in the reduced amount of $269,325.75, and DENIES Defendant’s untimely request to tax Plaintiff’s costs.
The Court will prepare the order.
***
LAW AND MOTION HEARING PROCEDURES
The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at
RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.
Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).
State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a 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 may participate remotely and need not be present in the courtroom.
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 may participate remotely and need not be present in the courtroom.
- oo0oo -
Calendar Line 3
Case Name: Gloria Cubangbang Cevallos, et al. v. Tupaz Homes LLC, et al.
Case No.: 19CV348681
This is a putative class and Private Attorneys General Act (PAGA) action. Plaintiffs allege that Defendants failed to pay employees overtime and double time wages when they worked at multiple facilities and committed other wage and hour violations.
Now before the Court is Plaintiffs’ motion for preliminary approval of a settlement, which is unopposed. As discussed below, the Court is inclined to grant preliminary approval, subject to the parties’ agreement to amend the release to conform with Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521 (Amaro).
I. BACKGROUND
Defendants Tupaz Homes, LLC; Tupaz Day Care Services Inc.; Rosario Tupaz; and Beebe Tupaz own and operate several care homes, intermediate care facilities for the developmentally disabled, and adult health day care facilities in Santa Clara County. (Third Amended Complaint (TAC), ¶ 9.) Plaintiffs and other similarly situated individuals were employed by Defendants as caregivers. (Ibid.) Plaintiffs allege that Defendants failed to pay caregivers required overtime and double time wages, to pay minimum wages for all hours worked, to provide compliant meal and rest periods, and to furnish accurate itemized wage statements. (Id., ¶ 20.)
Based on these allegations, Plaintiffs asserts claims for the following: (1) failure to pay overtime wages, (2) failure to pay minimum wages, (3) liquidated damages under Labor Code section 1194.2, (4) liquidated damages under Labor Code section 1197.1, (5) failure to provide meal periods, (6) failure to provide accurate itemized wage statements, (7) violation of the Unfair Competition Law, and (8) PAGA penalties.
The parties have now reached a settlement. Plaintiffs move for an order preliminarily approving the settlement of the class and PAGA claims, provisionally certifying the settlement class, approving the form and method for providing notice to the class, and scheduling a final fairness hearing.
II. 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 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 burden is on the proponent of the settlement to show that it is fair and reasonable. However “a presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”
(Wershba, supra, 91 Cal.App.4th at p. 245, citation omitted.) The presumption does not permit the Court to “give rubber-stamp approval” to a settlement; in all cases, it must “independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished,” based on a sufficiently developed factual record. (Kullar, supra, 168 Cal.App.4th at p. 130.)
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.)
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.)
III. SETTLEMENT PROCESS
According to Plaintiffs, Defendants own and operate 13 Intermediate Care Facilities for the Developmentally Disabled — Nursing (“ICF/DD-N” or “‘facilities”), and two Adult Health Day Care centers (“AHDC” or “centers”) in the San Jose area. Plaintiffs contend that Defendants employed a non-neutral rounding system that disadvantaged employees and did not record meal breaks, even though caregivers who worked overnight and on weekends received an automatic deduction to their wages for meal breaks of a half hour to an hour. Moreover, some caregivers would work multiple shifts in a row at different facilities, but because they were paid by two different entities, they were underpaid overtime and double time wages.
Since this action was filed, the parties propounded written discovery requests. Defendants produced Plaintiffs’ personnel files and over four thousand pages of relevant employee handbooks and payroll and time records for Plaintiffs and a sampling of 15 other employees. The parties engaged in a full-day mediation with Michael Loeb of JAMS on October 25, 2021. They were able to reach the settlement now before the Court.
IV. SETTLEMENT PROVISIONS
The non-reversionary gross settlement amount is $615,000. Attorney fees of up to $205,000 (thirty-three percent of the gross settlement), litigation costs not to exceed $11,000, and administration costs of up to $10,000 will be paid from the gross settlement. $20,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. Plaintiff Gloria Cubangbang Cevallos will seek an incentive award of $19,500 and Plaintiff Virginia Visperas will seek an incentive award of $7,000.
The net settlement, approximately $347,500 by the Court’s calculation, will be allocated to settlement class members proportionally based on their weeks worked during the class period. The average payment will be $1,646.92 to each of the 211 class members. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated thirty percent to wages and seventy percent to premiums, penalties, and interest. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 90 days will redistributed to participating class members.
In exchange for the settlement, class members who do not opt out will release “all claims or causes of action arising any time during the Class Period that are based on or reasonably relate to the claims asserted in the Complaint by Plaintiffs pursuant to the terms stated in this Agreement, to include” specified claims for “unpaid overtime and minimum wages, failure to provide meal breaks, failure to provide proper itemized wage statements, unlawful business practices, waiting time penalties” and related claims, including claims for PAGA penalties. Consistent with the statute, employees will not be able to opt out of the PAGA portion of the settlement.
In the Court’s view, the release is a bit too vague and/or broad in light of the recent opinion in Amaro. Amaro instructs that a release of class claims “must be tied to the factual allegations in the complaint, not the claims or theories of liability asserted.” (Amaro, supra, 69 Cal.App.5th at p. 538, italics original.) Here, the release encompasses claims based on the “claims” alleged in the complaint, rather than the underlying facts alleged. Prior to the hearing on this matter if possible, the parties shall meet and confer about whether they can amend this release to conform with Amaro. (See id. at pp. 539–539.)
V. FAIRNESS OF SETTLEMENT
Plaintiffs estimate the total potential meal period liability to be $751,431.18, based on the alleged failure to provide meal periods of one-half hour to one hour that were nonetheless deducted from employees’ wages. But Plaintiffs determined during discovery that Defendants did not fail to provide meal periods. The overtime liability was estimated at $1,456,000 based on the assumptions that for four years, 260 work days per year, at each of the two Tupaz Day Care centers, there were 5 caregivers who worked at a Tupaz Home on the same day, with the total hours worked for each day exceeding 8 hours (but not 12 hours), at an average hourly rate of $14.00. Wage statement penalties were estimated to be $48,000 over 24 pay periods. Derivative PAGA penalties were estimated at $316,000, for a total of $2,571,431.18 in potential liability.
The settlement accordingly represents about 24 percent of the maximum value of the case, including penalties. The Court agrees with Plaintiffs that the settlement is fair and reasonable to the class in light of the risks on the merits and at class certification. The Court also finds that the PAGA allocation is genuine, meaningful, and fair to those impacted considering the purposes of the statute.
Assuming preliminary approval is granted, the Court retains an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127–128.) While 1/3 of the common fund for attorney fees is generally considered reasonable, counsel shall submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].)
VI. PROPOSED SETTLEMENT CLASS
Plaintiffs request that the following settlement class be provisionally certified:
All current and former non-exempt employees of Defendants in the State of California who worked as caregivers for Tupaz Day Care Services, Inc. and/or Tupaz Homes, LLC at any time during the Class Period who do not opt out of this Settlement.
A. Legal Standard for Certifying a Class for Settlement Purposes
Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.” 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 ….”
Section 382 requires the plaintiff to demonstrate by a preponderance of the evidence: (1) an ascertainable class and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, 332 (Sav-On Drug Stores).) “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.)
In the settlement context, “the court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled.” (Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 93.) As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court’s review is more lenient in this respect. (Id. at pp. 93–94.) But considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold. (Id. at p. 94.)
B. 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 estimated 211 class members are readily identifiable based on Defendants’ records, and the settlement class is appropriately defined based on objective characteristics. The Court finds that the settlement class is numerous, ascertainable, and appropriately defined.
C. 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 pp. 326, 332.)
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 examine evidence of any 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 good for 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.)
Here, common legal and factual issues predominate. Plaintiffs’ claims all arise from Defendants’ wage and hour practices applied to the similarly-situated class members.
As to the second factor,
The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.
(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)
Like other members of the class, Plaintiffs were employed by Defendants as caregivers and allege that they experienced the violations at issue. The anticipated defenses are not unique to Plaintiffs, and there is no indication that Plaintiffs’ interests are otherwise in conflict with those of the class.
Finally, 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 class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class. (Wershba, supra, 91 Cal.App.4th at p. 238.) “Differences in individual class members’ proof of damages [are] not fatal to class certification. Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status.” (Ibid., internal citations and quotation marks omitted.)
Plaintiffs have the same interest in maintaining this action as any class member would have. Further, they have hired experienced counsel. Plaintiffs have sufficiently demonstrated adequacy of representation.
D. Substantial Benefits of Class Certification
“[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, there are an estimated 211 class members. It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member. 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. It is clear that a class action provides substantial benefits to both the litigants and the Court in this case.
VII. NOTICE
The content of a class notice is subject to court approval. (Cal. Rules of Court, rule 3.769(f).) “The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Ibid.) In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.” (Cal. Rules of Court, rule 3.766(e).)
Here, the notice describes the lawsuit, explains the settlement, and instructs class members that they may opt out of the settlement or object. The gross settlement amount and estimated deductions are provided. Class members’ estimated payments are stated, and they are informed of their qualifying workweeks as reflected in Defendants’ records and instructed how to dispute this information. Class members are given 45 days to request exclusion from the class or submit a written objection to the settlement.
The form of notice is generally adequate, but the notice must be modified so that class members’ estimated payments and work week information is displayed in bold within a box set off from the rest of the text on the first page of the notice. For legibility, the text on the first page of the notice should use standard capitalization rather than appearing in all capital letters. The estimated litigation costs and service awards should be corrected to reflect the amounts stated above, and the county in which this action is pending should be corrected at page 7. The notice must be modified to instruct class members that they may request to be excluded from the class by simply providing their name, without the need to provide their address or other identifying information. The notice shall be modified to instruct class members that they may appear at the final fairness hearing to make an oral objection without filing a written objection or notice of intent to appear.
And concerning appearances at the final fairness hearing, the notice shall be further modified to instruct class members as follows:
Hearings before the judge overseeing this case are again being conducted in person. However, remote appearances are still permitted, and are offered with the assistance of a third-party service provider, CourtCall. If that remains the case at the time of the final fairness hearing, class members who wish to appear at the final fairness hearing remotely should contact class counsel to arrange an appearance through CourtCall, at least three days before the hearing if possible. Any CourtCall fees for an appearance by an objecting class member shall be paid by class counsel.
Turning to the notice procedure, the parties have selected Simpluris, Inc. as the settlement administrator. The administrator will mail the notice packet within 21 calendar days of preliminary approval, after updating class members’ addresses using the National Change of Address database. It will re-mail any returned notices to any updated address located through data searches.
These notice procedures are appropriate and will be approved.
VIII. CONCLUSION
Prior to the hearing on this matter if possible, the parties shall meet and confer about whether they can amend the release to conform with Amaro.
Assuming that Plaintiffs’ motion for preliminary approval is granted, the final approval hearing shall take place on May 5, 2022 at 1:30 p.m. in Dept. 1. The following class will be preliminarily certified for settlement purposes:
All current and former non-exempt employees of Defendants in the State of California who worked as caregivers for Tupaz Day Care Services, Inc. and/or Tupaz Homes, LLC at any time during the Class Period who do not opt out of this Settlement.
Prior to final approval, Plaintiffs shall lodge any individual settlement agreements they may have executed with Defendants in connection with their employment for the Court’s review.
The Court will prepare the order.
***
LAW AND MOTION HEARING PROCEDURES
The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at
RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.
Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).
State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a 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 may participate remotely and need not be present in the courtroom.
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 may participate remotely and need not be present in the courtroom.
- oo0oo -
Calendar Line 4
Case Name:
Case No.:
- oo0oo -
Calendar Line 5
Case Name: Carlos Humberto Carrillo Diaz v. Recon360, LLC, et al.
Case No.: 20CV370603
This is a putative class and Private Attorneys General Act (PAGA) action. Plaintiff allege that Defendant failed to provide compliant meal and rest breaks, failed to reimburse employees for their work-related use of personal cellphones and mileage, and consequently failed to pay all wages due at separation.
Now before the Court is Plaintiff’s motion for preliminary approval of a settlement, which is unopposed. As discussed below, the Court GRANTS preliminary approval.
I. BACKGROUND
Plaintiff alleges that he and Defendant’s other non-exempt employees were not provided with compliant meal and rest breaks or informed or their right to the same. (First Amended Complaint (FAC), ¶¶ 24–27.) They were not reimbursed for expenses for their use of personal cellphones and mileage incurred to complete their job duties. (Id., ¶ 28.) And Defendant willfully failed to pay wages and compensation due when putative class members quit or were discharged. (Id., ¶ 29.)
Based on these allegations, Plaintiffs asserts claims for the following: (1) failure to provide meal periods, (2) failure to allow rest periods, (3) failure to reimburse expenses, (4) waiting time penalties, (5) unfair competition, and (6) PAGA penalties.
The parties have now reached a settlement. Plaintiff moves for an order preliminarily approving the settlement of the class and PAGA claims, provisionally certifying the settlement class, approving the form and method for providing notice to the class, and scheduling a final fairness hearing.
II. 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 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 burden is on the proponent of the settlement to show that it is fair and reasonable. However “a presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”
(Wershba, supra, 91 Cal.App.4th at p. 245, citation omitted.) The presumption does not permit the Court to “give rubber-stamp approval” to a settlement; in all cases, it must “independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished,” based on a sufficiently developed factual record. (Kullar, supra, 168 Cal.App.4th at p. 130.)
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.)
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.)
III. SETTLEMENT PROCESS
According to Plaintiff, Recon360 is a construction company that provides services such as maintenance, roofing, painting, and electrical work. Plaintiff worked for Defendant in Santa Clara County from 2018 to April 4, 2020.
After Plaintiff filed this action, the parties engaged in informal discovery. Plaintiff sought documents including requests for time and wage records for the putative class, policies and practices in place during the class period (including concerning meal breaks, rest breaks, the payment of wages, and employee training), as well as data showing the number of current and former employees. Defendant provided Plaintiff with pertinent documents and data so that the parties could fully investigate the claims at issue. The parties then attended a full-day mediation with Hon. Jamie Jacobs-May (Ret.) on May 13, 2021. They were able to reach a tentative settlement that day, and continued negotiating the terms and conditions of the full settlement agreement now before the Court.
IV. SETTLEMENT PROVISIONS
The non-reversionary gross settlement amount is $700,000. Attorney fees of up to $233,333.33 (thirty-three percent of the gross settlement), litigation costs not to exceed $10,000, and administration costs of approximately $15,000 will be paid from the gross settlement. $25,000 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, approximately $417,916.67 excluding the LWDA payment, will be allocated to settlement class members proportionally based on their compensable workweeks during the class period. The average payment will be $1,577.04 to each of the 265 class members. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated one-third to wages, one-third to penalties, and one-third to 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 Office of the Controller Unclaimed Property Fund.
In exchange for the settlement, class members who do not opt out will release all claims, debts, etc. “whether known or unknown, contingent or accrued, that are alleged, or that reasonably could have arisen out of the same facts alleged in the Action, including, but not limited to: (1) Failure to Provide Meal Breaks Pursuant to Labor Code §§ 226.7 and 512; (2) Failure to Provide Rest Breaks Pursuant to Labor Code §§ 226.7; (3) Failure to Reimburse Expenses Pursuant to Labor Code § 2802; (4) Penalties Pursuant to Labor Code § 203; (5) Violation of Business & Professions Code § 17200; (6) Penalties Pursuant [PAGA].” The scope of the release is appropriately tied to the factual allegations in the complaint. (See Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 538.)
V. FAIRNESS OF SETTLEMENT
Plaintiff explains that it appears Defendant did not maintain a valid written meal period policy from September 2016 to July 2017. After that, time records show clock in and clock out times that Plaintiff contends are suspiciously uniform, but Plaintiff acknowledges that proving violations during this period would raise risks for both sides. Plaintiff also contends that Defendant’s requirement that employees keep their cellphones on and be available during meal and rest periods rendered the breaks that were provided noncompliant. The reimbursement claim is based on Defendant’s requirement that employees use personal cellphones for work purposes including (1) downloading and using the “Paylocity” application for time clock purposes and (2) being available and participating in calls and texts throughout the day. In addition, Plaintiff contends employees were required to use his personal vehicles for work. The waiting time and PAGA penalty claims are derivative of these other claims.
Plaintiff estimates the maximum value of the meal and rest period claims is $1,044,051.20, based on a daily violation for each employee. Plaintiff values the reimbursement claim at $25 per month per class member, for a total of $30,650. Waiting time penalties could be worth $1,360,022.40 and PAGA penalties would be worth a maximum of $302,400 without “stacking” penalties, or $822,583.33 if penalties were “stacked.” The maximum value of the claims is thus $4,361.358.13, with the settlement representing sixteen percent of that figure.
The Court agrees with Plaintiffs that the settlement is fair and reasonable to the class in light of the risks on the merits and at class certification. The Court also finds that the PAGA allocation is genuine, meaningful, and fair to those impacted considering the purposes of the statute.
The Court retains an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127–128.) While 1/3 of the common fund for attorney fees is generally considered reasonable, counsel shall submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].)
VI. PROPOSED SETTLEMENT CLASS
Plaintiff requests that the following settlement class be provisionally certified:
all persons who are employed or have been employed as hourly, non-exempt employees by RECON360, LLC, in the State of California during the Covered Period [(September 22, 2016 to July 30, 2021)].
A. Legal Standard for Certifying a Class for Settlement Purposes
Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.” 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 ….”
Section 382 requires the plaintiff to demonstrate by a preponderance of the evidence: (1) an ascertainable class and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, 332 (Sav-On Drug Stores).) “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.)
In the settlement context, “the court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled.” (Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 93.) As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court’s review is more lenient in this respect. (Id. at pp. 93–94.) But considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold. (Id. at p. 94.)
B. 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 estimated 265 class members are readily identifiable based on Defendant’s records, and the settlement class is appropriately defined based on objective characteristics. The Court finds that the settlement class is numerous, ascertainable, and appropriately defined.
C. 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 pp. 326, 332.)
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 examine evidence of any 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 good for 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.)
Here, common legal and factual issues predominate. Plaintiff’s claims all arise from Defendant’s wage and hour practices applied to the similarly-situated class members.
As to the second factor,
The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.
(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)
Like other members of the class, Plaintiff was employed by Defendant as an hourly employee and alleges that he experienced the violations at issue. The anticipated defenses are not unique to Plaintiff, and there is no indication that Plaintiff’s interests are otherwise in conflict with those of the class.
Finally, 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 class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class. (Wershba, supra, 91 Cal.App.4th at p. 238.) “Differences in individual class members’ proof of damages [are] not fatal to class certification. Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status.” (Ibid., internal citations and quotation marks omitted.)
Plaintiff has the same interest in maintaining this action as any class member would have. Further, he has hired experienced counsel. Plaintiff has sufficiently demonstrated adequacy of representation.
D. Substantial Benefits of Class Certification
“[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, there are an estimated 265 class members. It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member. 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. It is clear that a class action provides substantial benefits to both the litigants and the Court in this case.
VII. NOTICE
The content of a class notice is subject to court approval. (Cal. Rules of Court, rule 3.769(f).) “The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Ibid.) In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.” (Cal. Rules of Court, rule 3.766(e).)
Here, the notice describes the lawsuit, explains the settlement, and instructs class members that they may opt out of the settlement or object. The gross settlement amount and estimated deductions are provided. Class members are informed of their qualifying pay periods as reflected in Defendant’s records and instructed how to dispute this information. Class members are given 60 days to request exclusion from the class or submit a written objection to the settlement, and are instructed that they can opt out by simply providing their name. The notice informs class members that they may appear at the final fairness hearing to make an oral objection without filing a written objection.
The form of notice is generally adequate, but the notice must be modified so that class members’ estimated payments and pay period information is displayed in bold within a box set off from the rest of the text on the first page of the notice.
Regarding appearances at the final fairness hearing, the notice shall be further modified to instruct class members as follows:
Hearings before the judge overseeing this case are again being conducted in person. However, remote appearances are still permitted, and are offered with the assistance of a third-party service provider, CourtCall. If that remains the case at the time of the final fairness hearing, class members who wish to appear at the final fairness hearing remotely should contact class counsel to arrange an appearance through CourtCall, at least three days before the hearing if possible. Any CourtCall fees for an appearance by an objecting class member shall be paid by class counsel.
Turning to the notice procedure, the parties have selected ILYM Group, Inc. as the settlement administrator. The administrator will mail the notice packet within 15 days of preliminary approval, after updating class members’ addresses using the National Change of Address database. It will re-mail any returned notices to any forwarding address provided or updated address located through skip-tracing. Class members who receive a re-mailed notice will have an additional 20 days to respond.
These notice procedures are appropriate and are approved.
VIII. CONCLUSION
Plaintiff’s motion for preliminary approval is GRANTED. The final approval hearing shall take place on June 9, 2022 at 1:30 p.m. in Dept. 1. The following class is preliminarily certified for settlement purposes:
all persons who are employed or have been employed as hourly, non-exempt employees by RECON360, LLC, in the State of California during the Covered Period [(September 22, 2016 to July 30, 2021)].
Prior to final approval, Plaintiff shall lodge any individual settlement agreement he may have executed with Defendant in connection with his employment for the Court’s review.
The Court will prepare the order.
***
LAW AND MOTION HEARING PROCEDURES
The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at
RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.
Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).
State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a 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 may participate remotely and need not be present in the courtroom.
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 may participate remotely and need not be present in the courtroom.
- oo0oo -
Calendar Line 6
Case Name: SinCo Technologies PTE LTD v. XingKe Electronics (Dongguan) Co., Ltd., et al.
Case No.: 16CV301867
This action for breach of contract, business torts, and related claims was filed by Plaintiff and Cross-Defendant SinCo Technologies PTE LTD (“SinCo”) in 2016. Defendants and Cross-Complainants XingKe Electronics (Dongguan) Co., Ltd. (“XingKe”), Liew Yew Soon aka Mark Liew, Ng Cher Yong aka Cy Ng, and Mui Liang Tjoa aka ML Tjoa (collectively, “Defendants”) demur to several claims asserted in the operative Fifth Amended Complaint (“5AC”) and also move to strike dozens of specific allegations concerning (1) damages and (2) trademark infringement and “passing off.” Plaintiff opposes both motions.
As discussed below, the Court SUSTAINS Defendants’ demurrer to the third cause of action without leave to amend, but otherwise OVERRULES the demurrer. It DENIES the motion to strike.
I. BACKGROUND
A. Factual
SinCo alleges that, beginning in 2015, customers visited its contract manufacturer in China, “where they were met by SinCo’s embedded employees, who unknown to SinCo began diverting … projects directly to the contract manufacturer,” SinCo Electronics (Dongguan) Co., Ltd., now known as XingKe. (5AC, ¶ 1.) SinCo alleges that Defendant Jin Shao Ping and Defendant and Cross-Complainant Mr. Tjoa approached its embedded employees, Defendants and Cross-Complainants Mr. Liew and Mr. Ng, and enticed them to breach their employment agreements and duties of loyalty to SinCo, including by traveling to the United States under the guise of a personal vacation in order to interfere with SinCo’s business relationships here. (Id., ¶ 5.) Mr. Ping and Mr. Tjoa were affiliated with Defendant JinLong Machinery & Electronics Co., Ltd., which was attempting to acquire XingKe. (Id., ¶ 3.) Mr. Ng and Mr. Liew used the fact that SinCo’s US clients knew them as employees of SinCo to trick SinCo’s customers into thinking SinCo and XingKe were the same company. (Id., ¶ 6.) And Defendants used confidential pricing, project detail, and customer contact information to perpetrate their scheme. (Id., ¶ 7.)
SinCo alleges that XingKe, JinLong, and related entities (collectively, “DG,” currently known as XingKe) have used its trademarks in commerce with US customers. (5AC, ¶¶ 28, 55.) Mr. Liew and Mr. Ng both work for XingKe now, and acted as DG’s agents even while still employed by SinCo. (Id., ¶¶ 36–47.) SinCo alleges on information and belief that Mr. Ping and Mr. Tjoa agreed to a valuation for XingKe of twice the value of its tangible assets, on the understanding that they could convert SinCo’s customers using this entity. (Id., ¶ 59.) Mr. Tjoa, as head of XingKe, negotiated agreements with SinCo’s US customers for less than they previously paid SinCo on projects that SinCo had already contracted on—but these contracts were actually entered into with JinLong. (Id., ¶¶ 63–65.) Mr. Tjoa, Mr. Liew, and Mr. Ng met with several of SinCo’s US customers as detailed in the 5AC and presented themselves as acting for SinCo. (Id., ¶¶ 66–75, 97–104.) They also interfered with the contracts of other former SinCo employees. (Id., ¶¶ 105–107.)
The o5AC, filed on December 2, 2021, sets forth the following causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) unfair business practices; (4) intentional interference with contractual relations; (5) intentional interference with prospective economic advantage ; (6) negligent interference with prospective economic advantage; (7) misappropriation of trade secrets; (8) civil conspiracy; (9) breach of duty of loyalty; and (10) aiding and abetting breach of duty of loyalty.
SinCo also sued in federal court for trademark infringement and related claims. (SinCo Technologies PTE, Ltd. v. SinCo Electronics (Dongguan) Co., Ltd., et al. (N.D. Cal., No. 5:17-cv-05517), the “Federal Action.”) Recently, it obtained a jury verdict in the Federal Action against Defendants in the amount of $11 million (plus statutory damages).[2]
B. Procedural
In an order filed on November 22, 2021 (“November 2021 Order”), the Court granted SinCo’s motion for leave to file the 5AC over Defendants’ opposition. As that order summarized:
The … Fourth Amended Complaint (“4AC”) was filed on May 18, 2020. On April 30, 2021, Defendants moved for summary adjudication of most of the claims in the 4AC. On August 2, the Court granted summary adjudication of the 4AC’s claims for breach of the covenant of good faith and fair dealing as to all Defendants. It held that the claims, as alleged in the 4AC, were based solely on the “SinCo/DG Agreements,” and Singapore law does not recognize a duty of good faith and fair dealing arising from commercial contracts such as these. [Citation.] SinCo now seeks leave to file a 5AC that would add allegations concerning a duty of good faith and fair dealing arising from Mr. Liew, Mr. Ng, and Defendant Quek Seow Eng’s employment agreements with SinCo.
In the November 2021 Order, the Court rejected Defendants’ argument “that the proposed amendment would be futile because ‘any duty of loyalty owed to an employer by employees under Singapore law is subsumed within the duty of good faith and fidelity. . .,’ so the proposed amendment would merely duplicate SinCo’s existing claims for breach of the duty of loyalty.” The Court found that “Defendants’ expert declaration seems to allow for the possibility that the duty of good faith [arising from employment contracts] is somewhat different or broader than the duty of loyalty,” so it was “worthwhile to permit the amendment so to make plain that SinCo is asserting a claim (or claims) under the full scope of the duty (or duties) recognized by Singapore law.”[3]
II. DEMURRER
Defendants demur to the second, third, and eighth through tenth causes of action asserted in the 5AC. They also demur to certain allegations concerning (1) damages and (2) trademark infringement and “passing off,” as an alternative to their motion to strike the same allegations. The Court OVERRULES the demurrer as to these allegations and will address Defendants’ attack on them in the more appropriate procedural context of their motion to strike.
On opposition, SinCo states that it “agrees to withdraw its third cause of action for unfair competition-unfair business practices under Business and Professions Code section 17200, et seq.” The Court therefore SUSTAINS the demurrer to that claim without leave to amend. SinCo opposes the demurrer as to the other claims.
A. Legal Standard
A demurrer tests the legal sufficiency of the complaint. (Chen v. PayPal, Inc. (2021) 61 Cal.App.5th 559, 568.) Consequently, it “reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.” (Weil v. Barthel (1955) 45 Cal.2d 835, 837; see also Code Civ. Proc., § 430.30, subd. (a).) “It is not the ordinary function of a demurrer to test the truth of the plaintiff’s allegations or the accuracy with which he describes the defendant’s conduct. … [T]he facts alleged in the pleading are deemed to be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.)
In ruling on a demurrer, the Court must liberally construe the allegations of the complaint, with a view to substantial justice between the parties. (Glennen v. Allergan, Inc. (2016) 247 Cal.App.4th 1, 6 (Glennen).) Nevertheless, while “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact.” (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.) A demurrer will succeed where the allegations and matters subject to judicial notice clearly disclose a defense or bar to recovery. (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183.)
B. The Second Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing
Defendants demur to the second cause of action on the ground that “there is a ‘duty of good faith and fidelity’ under Singapore law that arises from employment contracts, but—despite the similar nomenclature—this is not the same as the California concept of a ‘duty of good faith and fair dealing’ in nature or scope.” They urge that “while it might be permissible for Defendants to assert a cause of action for breach of the ‘duty of good faith and fidelity’ against Ng and Liew, the cause of action styled as a ‘breach of the duty of good faith and fair dealing’ must be dismissed.”
Defendants’ argument that Plaintiff used the wrong word to describe its claim under Singapore law does not warrant sustaining a demurrer. In ruling on a demurrer, the Court must liberally construe the allegations of the complaint, with a view to substantial justice between the parties. (Glennen, supra, 247 Cal.App.4th at p. 6.) So the Court construes the second cause of action as one for breach of the duty of good faith and fidelity. Defendants do not argue that Plaintiff fails to state a claim for the breach of this duty. “If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.)
The Court OVERRULES the demurrer to the second cause of action.
C. The Eighth Cause of Action for Conspiracy
Defendants demur to the eighth cause of action on the ground that “[c]onspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510–511.) But Defendants do not address the merits of the underlying tort claims on which SinCo’s conspiracy theory is based. Again, Plaintiff’s choice of words in labeling this theory a “cause of action” is not a basis to sustain Defendants’ demurrer.
The Court accordingly OVERRULES the demurrer to this claim.
D. The Ninth Cause of Action for Breach of the Duty of Loyalty
Similar to their argument regarding the second cause of action, Defendants demur to the ninth cause of action for breach of the duty of loyalty “to the extent it is construed as a tort cause of action because there is no tort cause of action for breach of the duty of loyalty (or any similar duty) under Singapore law.” They urge that “under Singapore law, the duty of good faith and fidelity ‘covers’ the duty of loyalty.” And “such a duty is ‘implied by law into the contract of employment’ and ‘does not arise from (Singapore) tort law.’ ”
Again, Defendants do not contend that the claim, liberally construed as it must be, fails to state a cause of action under any theory. The Court OVERRULES the demurrer to this claim.
E. The Tenth Cause of Action for Aiding and Abetting a Breach of the Duty of Loyalty
As to the tenth cause of action, Defendants argue that because the duty of loyalty under Singapore law is contractual in nature, there can be no claim for aiding and abetting arising from this duty. In opposition, Plaintiff disputes Defendants’ conclusion on this point and urges that both California and Singapore law recognize a claim for aiding and abetting a breach of fiduciary duty.
Defendants’ expert declares that the duty of loyalty arises from “the contract of employment” under Singapore law and not “from (Singapore) tort law.” But the expert says nothing about whether there is a claim for aiding and abetting this breach of duty under Singapore law. This issue appears to be disputed, and thus is not properly resolved on demurrer via judicial notice. The Court OVERRULES the demurrer to the tenth cause of action.
F. Conclusion
The Court SUSTAINS Defendants’ demurrer to the third cause of action without leave to amend, but otherwise OVERRULES the demurrer.
III. MOTION TO STRIKE
Defendants move to strike SinCo’s damages allegations and references to alleged trademark infringement and passing off, on the grounds that SinCo (1) is collaterally estopped from relitigating its claims in the Federal Action, and (2) is judicially estopped from obtaining lost profits from its customers and related disgorgement as damages in this case because it claimed in the Federal Action that these damages were caused by trademark infringement and passing off.
A Legal Standard
“The court may, … upon terms it deems proper,” strike out “irrelevant, false or improper” matters from a complaint. (See Code Civ. Proc, § 436, subd. (a).) Irrelevant matter includes (1) an allegation that is not essential to the statement of a claim or defense, (2) an allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense, and (3) a demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint. (See id., § 431.10, subds. (b), (c).)
The motion “is traditionally used to reach pleading defects that are not subject to demurrer” because they impact only a portion of a cause of action. (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The motion is properly employed in this context “when a substantive defect is clear from the face of a complaint, such as a violation of the applicable statute of limitations or a purported claim of right which is legally invalid,” and “is widely used to challenge portions of causes of action seeking punitive damages.” (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682–1683 (PH II).) However, “such use of the motion to strike should be cautious and sparing.” (Id. at p. 1683.) The motion does not “creat[e] a procedural ‘line item veto’ for the civil defendant.” (Ibid.)
B. Damages Allegations
Defendants urge that in the Federal Action,
SinCo [] and its damages expert presented a claim for damages for all of its lost profits from all customers, and it characterized those damages as entirely caused by the alleged trademark infringement and passing off. It likewise sought disgorgement of unjust enrichment in the form of profits obtained by Defendants relating to the same customers.
Defendants contend that given this position in the Federal Action, Plaintiff cannot now seek these same damages here on the theory that they were caused by other types of wrongdoing by Defendants.[4] But even assuming Defendants’ characterization of SinCo’s position in the Federal Action is correct, the Court cannot simply strike all of SinCo’s damages allegations in this action as a result as Defendants request.
To explain, “[j]udicial estoppel prevents a party from taking a position inconsistent with a position previously asserted in the same or prior proceeding.” (California Amplifier, Inc. v. RLI Ins. Co. (2001) 94 Cal.App.4th 102, 117–118 (California Amplifier).) It is an equitable doctrine aimed at preventing fraud on the courts. (Furia v. Helm (2003) 111 Cal.App.4th 945, 958.) “Although not all of these elements are always necessary, the doctrine generally applies when (1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” (Ibid., internal citations and quotation marks omitted.)
“[N]umerous decisions have made clear that judicial estoppel is an equitable doctrine, and its application, even where all necessary elements are present, is discretionary.” (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 449, italics original, internal citations and quotation marks omitted.) “Moreover, because judicial estoppel is an extraordinary and equitable remedy that can impinge on the truth-seeking function of the court and produce harsh consequences, it must be applied with caution and limited to egregious circumstances, that is, when a party’s inconsistent behavior will otherwise result in a miscarriage of justice.” (Ibid.) “For these reasons, judicial estoppel is usually limited to cases where a party misrepresents or conceals material facts.” (California Amplifier, supra, 94 Cal.App.4th at p. 118.) “[C]hanging legal arguments,” by contrast, are more likely to be deemed “a reasonable litigation tactic [that] does not undermine the integrity of the judicial process.” (Ibid.)
As an initial matter, the Court questions whether the third and fourth elements of judicial estoppel are satisfied here, since SinCo was not awarded the full amount of damages it sought in the Federal Action, and it does not seem “totally inconsistent” to claim damages caused by one type of wrongdoing (such as “passing off”) were also caused by related or overlapping types of wrongdoing (such as breaching employment contracts, etc. by “stealing” an employer’s customers under false pretenses). And the Court is not convinced that it would undermine the integrity of the judicial process to allow SinCo a second chance at damages it sought, but did not obtain, in the Federal Action. In any event, it is not clear from the face of the 5AC that the damages Plaintiff seeks here include nothing but the exact same damages claimed in the Federal Action. So it is not appropriate to strike all of Plaintiff’s damages allegations even if judicial estoppel has some application here.
Contrary to Plaintiff’s argument in opposition, it may be appropriate to resolve the application of judicial estoppel on demurrer in some circumstances. (See The Swahn Group, Inc. v. Segal (2010) 183 Cal.App.4th 831, 843.) But this is not one of those cases. The Court accordingly declines to strike Plaintiff’s damages allegations.
C. References to Trademark Infringement and Passing Off
Finally, Defendants contend that Plaintiff’s claims for trademark infringement and passing of were already litigated in the Federal Action, so collateral estoppel bars their re-litigation here. But Plaintiff has never pursued such claims in this action. Rather, the 5AC refers to them as background. While this may be unnecessary, the Court exercises its discretion to deny Defendants’ request that it line-edit the 5AC by excising these references. (See PH II, supra, 33 Cal.App.4th at p. 1683 [“use of the motion to strike should be cautious and sparing,” and the motion does not “creat[e] a procedural ‘line item veto’ for the civil defendant”].)
D. Conclusion
Defendants’ motion to strike is DENIED.
The Court will prepare the order.
***
LAW AND MOTION HEARING PROCEDURES
The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at
RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.
Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).
State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a 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 may participate remotely and need not be present in the courtroom.
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 may participate remotely and need not be present in the courtroom.
- oo0oo -
Calendar Line 7
Case Name: Pacific Lodging Group LP v. Sequoia Insurance Company
Case No.: 21CV376099
This action arises from an insurance dispute between Plaintiff Pacific Lodging Group LP d/b/a Bodega Coast Inn (PLG) and its insurer, Defendant Sequoia Insurance Company. In an order filed on September 10, 2021 (September 2021 Order), the Court sustained Sequoia’s demurrer to the original complaint on the ground that PLG failed to state a cause of action because its policy (the Policy) does not cover the losses at issue, which resulted from the COVID-19 pandemic and associated public health orders.[5] The Court held that PLG’s interpretation of covered “direct physical” loss of or damage to its property “to encompass indirect, economic loss is unreasonable; inconsistent with related portions of the Policy; and contrary to California authorities, including [MRI Healthcare Center of Glendale, Inc. v. State Farm General Ins. Co. (2010) 187 Cal.App.4th 766 (MRI Healthcare)], that have construed this language to require a physical impact on the insured property.”
The September 2021 Order granted PLG leave to amend, and on October 8, 2021, it filed the operative First Amended Complaint (FAC). Sequoia now demurs to the FAC on the ground that it still fails to state a claim by alleging any loss covered by PLG’s policy. As discussed below, the Court again SUSTAINS Sequoia’s demurrer, this time without leave to amend.
I. BACKGROUND
The FAC includes many of the same allegations that were set forth in the original Complaint. Those allegations are detailed in the September 2021 Order and are not repeated here.
The FAC adds new background allegations about the COVID-19 pandemic and emphasizes its “physical” nature, stating, for example, that
[e]pidemiologists have determined that individuals with COVID-19 alter the physical characteristics of surfaces and the air of occupied spaces where those individuals are present with respiratory secretions and aerosols. As a result, those altered surfaces and air become vehicles for COVID-19 transmission. The Public Health Orders therefore aimed to reduce the spread of COVID-19 through aerial transmission.
(FAC, ¶ 24.) “[T]he Public Health Orders required businesses to shut down because of the direct and immediate risk of airborne transmission and airborne contamination of COVID-19 on Plaintiff’s property that would result if the properties remained open to the public.” (Id., ¶ 27.) PLG’s hotel “accordingly was forced to shut down its property to account for the virus’s widespread presence in the community and the constant threat of transmission on-site.” (Id., ¶ 58.)
The FAC also emphasizes the operational changes that PLG has made at its hotel “to comply with all applicable government orders to reduce the likelihood of contamination and transmission of coronavirus from happening at its hotel,” some of which have an arguably “physical” component. (FAC, ¶ 59.) Specifically,
a. For instance, the hotel engages in frequent cleaning and sanitizing of all public spaces with an electrostatic sprayer with EPA-registered products that continuously disinfect for 24 hours.
b. The hotel has also increased the frequency of cleaning high touch surfaces including entrance door handles, desk check-in counters, stair handrails, seating areas, and public toilets.
c. Bodega Coast has expended resources to train their staff on safety and social distancing protocols.
d. Wearing protective masks in all indoor public spaces is mandatory for all guests and associates.
e. Bodega Coast has also purchased signage to remind guests to maintain social distancing protocols.
f. In the guest rooms, Bodega Coast has also installed electrostatic sprayer with EPA registered products that continuously disinfect for 24 hours.
g. Bodega Coast has implemented proven cleaning and sanitizing protocols to keep the guestrooms clean and safe, and special attention is paid to cleaning frequently-touched items including televisions, remote controls, toilet seats, water faucet handles, door and furniture handles, telephones, and in-room control panels.
h. All bed linen and laundry is now washed at a high temperature as per the CDC guidelines.
i. Additionally, to follow the CDC guidelines and California public health authorities, Bodega Coast temporarily suspended breakfast service.
j. Furthermore, no ‘in-stay’ housekeeping services are allowed.
k. Finally, the hot tub is closed until such time it can be safely reopened.
(FAC, ¶ 59.)
Like the original complaint, the FAC asserts claims for: (1) declaratory judgment; (2) breach of contract; and (3) breach of the implied covenant of good faith and fair dealing. PLG seeks a declaration that its losses are covered under the Policy, and alleges that Sequoia breached the Policy and the implied covenant of good faith and fair dealing by failing to provide coverage.
II. DISCUSSION
The September 2021 Order discussed the relevant legal standards and authorities and Policy language at length, and that discussion is not repeated here. Suffice it to say that PLG’s new allegations about the “physical” nature of the COVID-19 pandemic and “physical” changes it has made to its operations in response still do not describe any “direct physical” loss of or damage to its property.
That conclusion is now affirmed by published California authority, which the Court is bound to follow. Inns-by-the-Sea v. California Mutual Ins. Co. (2021) 71 Cal.App.5th 688 (“Inns-by-the-Sea”) addresses this “issue of first impression for a California appellate court” (at p. 692), and concludes that lost business income resulting from the COVID-19 pandemic is not “direct physical loss of or damage to” property under an insurance policy indistinguishable from the one at issue here. The opinion specifically addressed allegations consistent with those PLG emphasizes here. (See id. at p. 693 [noting allegation that “COVID-19 strains physically infect and can stay alive on surfaces for extended periods, a characteristic that renders property exposed to the contagion potentially unsafe and dangerous”].) It reasoned:
the lack of causal connection between the alleged physical presence of the virus on Inns’ premises and the suspension of Inns’ operations can be best understood by considering what would have taken place if Inns had thoroughly sterilized its premises to remove any trace of the virus after the Orders were issued. In that case, Inns would still have continued to incur a suspension of operations because the Orders would still have been in effect and the normal functioning of society still would have been curtailed. As explained in the context of a lawsuit brought by a restaurant to recover for business losses during the pandemic: “[T]he property did not change. The world around it did. And for the property to be useable again, no repair or change can be made to the property—the world must change. Even if a cleaning crew Lysol-ed every inch of the restaurant, it could still not host indoor dining at full capacity. Put simply, Plaintiff seeks to recover from economic losses caused by something physical—not physical losses.” (Town Kitchen LLC v. Certain Underwriters at Lloyd's, London (S.D. Fla. 2021) 522 F.Supp.3d 1216, 1222.)
(Inns-by-the-Sea, supra, 71 Cal.App.5th at p. 704.)
The same is true in this case. And while PLG presents lengthy argument in an attempt to distinguish the MRI Healthcare case the Court relied on in its September 2021 Order, it essentially concedes that Inns-by-the-Sea is directly on point. That published California authority conclusively ends this case.[6]
III. CONCLUSION
The Court SUSTAINS Sequoia’s demurrer without leave to amend.
The Court will prepare the order. Sequoia shall prepare and lodge a proposed judgment with PLG’s input as to form.
***
LAW AND MOTION HEARING PROCEDURES
The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access. Remote appearances for complex civil matters are still permitted, but are no longer mandatory. (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at
RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.) If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.
Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).
State and local rules prohibit recording of court proceedings without a court order. These rules apply while in court and also while participating in a 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 may participate remotely and need not be present in the courtroom.
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 may participate remotely and need not be present in the courtroom.
- oo0oo -
Calendar Line 8
Case Name:
Case No.:
- oo0oo -
Calendar Line 9
Case Name:
Case No.:
- oo0oo -
Calendar Line 10
Case Name:
Case No.:
- oo0oo -
Calendar Line 11
Case Name:
Case No.:
- oo0oo -
Calendar Line 12
Case Name:
Case No.:
- oo0oo -
Calendar Line 13
Case Name:
Case No.:
- oo0oo -
-----------------------
[1] The Court declines to award the additional 15.5 hours Plaintiff’s counsel spent on their reply brief, since their moving papers did not provide notice that they would seek these additional fees.
[2] Defendants’ request for judicial notice of filings in the Federal Action is GRANTED. (Evid. Code, § 452, subd. (d).) Plaintiff objects that these filings may not be considered for the truth of matters asserted therein, but this is not the purpose of Defendants’ request.
[3] Defendants’ request for judicial notice of filings associated with the motion for leave to amend and the motion for summary adjudication discussed in the November 2021 Order is GRANTED. (Evid. Code, § 452, subd. (d).) Plaintiff opposes the request to the extent Defendants seek judicial notice of the truth of statements by Defendants’ expert in Singapore law, but the Evidence Code authorizes the Court to take judicial notice of Singapore law by relying on an expert declaration. (Evid. Code, § 454, subd. (b) [“Where the subject of judicial notice is the law of an organization of nations, a foreign nation, or a public entity in a foreign nation and the court resorts to the advice of persons learned in the subject matter, such advice, if not received in open court, shall be in writing.”].)
[4] SinCo acknowledges that there may be some overlap, stating, “[t]o the extent that Defendants establish that damages awarded in both cases overlap, SINCO agrees that a credit for damages awarded against XingKe may apply.”
[5] Sequoia requests judicial notice of several documents, and PLG does not oppose its request. Sequoia’s request for judicial notice of the full Policy (Ex. 1 to Sequoia’s Compendium of Evidence) is GRANTED, since the Policy is incorporated by reference into the FAC. (Evid. Code, § 452, subd. (h); Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285, fn. 3 [“Since the contents of the letter and media release form the basis of the allegations in the complaint, it is essential that we evaluate the complaint by reference to these documents.”].) The Court similarly GRANTS judicial notice of the various public health orders discussed in the FAC (Exs. 2–14). (Ibid.)
[6] Consistent with its position in opposition to Sequoia’s original demurrer, PLG does not cite any coverage provision other than the Business Income and Extra Expense provision addressed above and by the September 2021 Order, and acknowledges that all of the claims it asserts stand or fall together on this coverage issue.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- state of california municipal bonds
- state of california treasurer checks
- state of california check verification
- state of california education dept
- state of california gis data
- state of california real estate license
- state of california treasury department
- state of california unclaimed money
- state of california department of consumer affairs
- state of california department of education
- state of california department of aging
- state of california department of real estate