Superior Court, State of California



DATE: JULY 7, 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 |2013-1-CV-244718 |Iron Workers Mid-South Pension Fund v. |See tentative ruling. The Court will |

| | |Bennett, et al. |prepare the final order. |

|LINE 2 |21CV383780 |San Jose Sharks LLC, et al. v. Factory Mutual|CONTINUED to July 21, 2022 at 1:30 p.m. |

| | |Insurance Company, et al. | |

|LINE 3 |21CV390762 |Sakai v. International Technological |See tentative ruling. The Court will |

| | |University Foundation |prepare the final order. |

|LINE 4 |20CV362686 |Bates-Guerrero v. Caliva, et al. (PAGA) |See tentative ruling. (This is the same |

| | | |one the Court sent to the parties on |

| | | |6/27/22.) The Court will prepare the |

| | | |final order once it receives the requested|

| | | |information from the parties. |

|LINE 5 | | | |

|LINE 6 | | | |

|LINE 7 | | | |

|LINE 8 | | | |

|LINE 9 | | | |

|LINE 10 | | | |

|LINE 11 | | | |

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Case Name: Iron Workers Mid-South Pension Fund v. Stephen M. Bennett, et al.

Case No.: 2013-1-CV-244718

Plaintiff Iron Workers Mid-South Pension Fund brings this derivative action against officers and directors of NortonLifeLock Inc. (formerly known as Symantec Corp., referred to herein as the “Company”) to recover losses due to the Company’s alleged violation of the False Claims Act, 31 United States Code section 3729 (the “FCA”) and resulting government investigations and litigation.

The parties reached a settlement, which the Court preliminarily approved in an order filed on May 4, 2022.  The factual and procedural background of the action and the Court’s analysis of the settlement are set forth in that order.    

Now before the Court is Plaintiff’s motion for final approval of the settlement and for approval of its attorney fees, expenses, and incentive award. The motion is unopposed. As discussed below, the Court GRANTS final approval.

I. LEGAL STANDARD FOR APPROVING A DERIVATIVE SETTLEMENT

“A court reviewing a settlement agreement considers whether the proposed settlement is fair and reasonable in light of all relevant factors.  [Citations.]  A court reviews the settlement of a derivative suit as a means of protecting the interests of those who are not directly represented in the settlement negotiations.”  (Robbins v. Alibrandi (2005) 127 Cal.App.4th 438, 445 (Robbins).)  “The duty of a court reviewing a settlement of a class action provides a useful analogy because the court in such cases seeks to protect the members of the class who, like the corporation and non-named shareholders in a derivative suit, may have no independent representation and little control over the action.”  (Id. at p. 449, fn. 2.)  Thus, in evaluating the fairness of this derivative settlement, the Court’s analysis is guided by relevant legal authorities regarding the approval of class action settlements.      

 

Generally, “questions whether a [class action] settlement was fair and reasonable, whether notice to the class was adequate, … 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 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.)

III. TERMS AND ADMINISTRATION OF SETTLEMENT

The non-monetary settlement includes the following governance reforms, described in more detail in Exhibit A to the settlement. The reforms shall be implemented and/or maintained for four years from the effective date of the settlement, subject to the ability of a majority of the Company’s independent directors to adopt a substitute policy as provided in the settlement.

First, the Company is required to maintain a Chief Compliance Officer (“CCO”), who is responsible for developing and annually assessing the adequacy of its compliance procedures. The CCO must meet with the Company’s independent registered public accounting firm at least annually, and discuss any compliance risks that may adversely affect the Company in a material way. The Company must adopt a formal policy for reporting by the CCO to the Audit Committee and the Ethics and Compliance Steering Committee. In the event there is any material compliance issue, the Company shall develop a remediation plan, and the CCO must provide periodic updates on its implementation to the Audit Committee and Ethics and Compliance Steering Committee.

The settlement also requires an annual assessment of the Company’s risk related to government contracting and FCA compliance. The findings will be reported to the CCO, who will report any material information to the Audit Committee and Ethics and Compliance Steering Committee. The CCO will determine whether any additional compliance training is needed. If there is any evolving FCA compliance issue, the CCO will develop a remediation plan, and will provide quarterly updates to the Audit Committee and Ethics and Compliance Steering Committee regarding the implementation of the remediation plan and status of such FCA compliance issue.

The reforms require that the Audit Committee maintain responsibility for Risk Management, which includes reviewing and discussing with management: (i) the Company’s practices concerning risk identification, assessment, monitoring, and risk management and mitigation and (ii) the adequacy and effectiveness of its cyber security and information security policies and practices. The Audit Committee must review with management and members of internal audit: (i) the Company’s business continuity and disaster preparedness planning and (ii) regulatory developments that could impact its risk identification, assessment, monitoring, and risk management and mitigation.

The reforms also require that the Company maintain a management-level Disclosure Committee. The Disclosure Committee is responsible for: (i) establishing the Company’s disclosure controls; (ii) evaluating the effectiveness of these controls; (iii) reviewing the Company’s periodic reports with the United States Securities and Exchange Commission (“SEC”), and attesting that the financial information contained in the periodic report fairly presents in all material respects the financial condition, results of operations, and cash flows of the Company; and (iv) reporting, and providing certifications, to the Company’s Senior Officers regarding the Company’s periodic reports and the effectiveness of its disclosure controls.

In addition, the Company is required to continue to expressly encourage individuals to report potentially improper conduct, and maintain a publicly available ethics hotline for those who wish to ask questions about or report potential violations of the Code of Conduct or other policies, regulations, or laws. The Code of Conduct shall continue to prohibit retaliation of any kind. The CCO will investigate reports under the supervision of the Audit Committee. A log of whistleblower complaints, as well as the results of all investigations of complaints, will be maintained for at least seven years, and shall be made available to the Company’s external auditor, upon request.

In exchange for the settlement, Plaintiff and other Norton stockholders will release any actions, suits, etc.,

which arise out of, or are related to, or based upon, any of the allegations, transactions, facts, matters, events, disclosures, non-disclosures, occurrences, representations, statements, acts or omissions, alleged or referred to in the Action, including the Board of Directors’ oversight of the activities underlying the allegations in the Government Action; or (ii) arise from or relate to the Settlement, provided, however, that the Released Claims shall not include any claims by Norton, any of its current or former directors, officers, employees, or any other Person for coverage under an insurance policy…. Excluded from the term “Released Claims” are: (i) all claims alleged in the Government Action against the Company, but Released Claims includes all derivative claims arising out of or related to the Government Action; and (ii) all derivative claims alleged, or which arise out of or are related to the allegations set forth in the pending derivative action titled, In re Symantec Corporation Stockholder Derivative Litigation, Consol. C.A. No. 2019-0224-JTL (Del. Ch.).

The parties separately agreed to an attorney fee and expense award of $450,000, subject to Court approval. A service award of up to $2,000 shall be paid to the named plaintiff from counsel’s fee and expense award.

The notice process has now been completed.  There were no objections to the settlement.  On or before May 18, 2022: (i) the Summary Notice was published once in Investor’s Business Daily; (ii) Norton filed the Notice and Stipulation with the SEC along with a Form 8-K; and (iii) Norton posted a copy of the Notice and the Stipulation on the investor relations portion of the Company’s website.

At preliminary approval, the Court found that the settlement is a fair a reasonable compromise of the derivative claims.  It finds no reason to deviate from these findings now, especially considering that there are no objections.  The Court thus finds that the settlement is fair and reasonable for purposes of final approval.        

III.   ATTORNEY FEES, COSTS, AND INCENTIVE AWARD  

“[A] court approving a negotiated fee in a derivative suit must determine if the fee is fair and reasonable ….”  (Robbins, supra, 127 Cal.App.4th at pp. 448-449.)  The court should “review the circumstances leading up to the settlement to ensure that the process was fair and free from fraud or collusion” and “consider whether the negotiated fee will result in unwarranted harm to the corporation and the shareholders, such as would be the situation if the cost of the settlement to the corporation [considering, inter alia, increased insurance premiums] far exceeded its value to the corporation and shareholders.”  (Id. at pp. 449-450.)  Here, the process preceding the settlement, described in the Court’s preliminary approval order, was appropriate and appears to have been fair and free from fraud or collusion.  Counsel’s fee was negotiated separately from the substantive terms of the settlement.  These circumstances support approval of the negotiated fee, but the Court must still independently evaluate its fairness in light of the value of the settlement to the Company and its shareholders.

In approving a fee award,

the court considers whether the litigation has conferred a substantial benefit on the corporation, i.e., a benefit that is actual and concrete and not conceptual or doctrinal. [Citations.] The benefit need not be pecuniary [citation], but it must be “ ‘something more than technical in its consequence and ... one that accomplishes a result which corrects or prevents an abuse which would be prejudicial to the rights and interests of the corporation or affect[s] the enjoyment or protection of an essential right to the stockholder’s interest.’ ” (Mills v. Electric Auto–Lite (1970) 396 U.S. 375, 396, 90 S.Ct. 616, 24 L.Ed.2d 593, quoting Bosch v. Meeker Cooperative Light and Power Ass'n (1960) 257 Minn. 362, 101 N.W.2d 423, 427.)

(Robbins, supra, 127 Cal.App.4th at p. 448.) The Court previously found that the governance reforms encompassed by the settlement are meaningful, and address the oversight failures alleged in the complaint and improve oversight more generally. It now finds that these reforms provide substantial benefits to the Company’s shareholders, justifying an award of fees and costs to plaintiff’s counsel.

“[A] court awarding fees under the ‘substantial benefit doctrine’ begins by establishing a ‘lodestar’ amount.” (Robbins, supra, 127 Cal.App.4th at p. 453.) The lodestar figure is “based on the careful compilation of the time spent and reasonable hourly compensation of each attorney involved in the presentation of the case.” (Id. at p. 448.) “The court then has the power and the duty to enhance, or to reduce, the lodestar through the use of multipliers, by taking into consideration factors such as the novelty and complexity of the issues, the skill and expertise of counsel, the extent that the litigation precluded other employment and the contingent nature (or risk) of nonrecovery.” (Ibid.)

Although [a] negotiated fee need not be perfectly consistent with the fees the court would award under the “substantial benefit doctrine,” it must be in the same range. A negotiated fee that clearly is out of that range is not a fair and reasonable settlement of the attorneys’ claim for fees.

(Robbins, supra, 127 Cal.App.4th at p. 451.)

Here, Plaintiff provides a lodestar figure of $461,087.50, based on 913.5 hours spent on the case by counsel billing at $250–975 per hour and other professionals billing at $193–305 per hour.  Counsel also have unreimbursed litigation costs totaling approximately $8,272.97. Plaintiff’s request accordingly results in a negative multiplier.  

Overall, while the Court might make some deductions to counsel’s lodestar if it were directly awarding fees under the substantial benefit doctrine, the negotiated fee is in the same range as the Court would award. The Court will accordingly approve the negotiated fee.

 

Finally, plaintiff requests a service award of $2,000, to be deducted from the $450,000 fee and expense award.  The Court finds that the named plaintiff is entitled to an enhancement award and the amount requested is reasonable.       

IV. CONCLUSION  

       

Plaintiff’s motion for final approval of the settlement, including the attorney fee and expense award of $450,000, is GRANTED.  

The Court will prepare the order.    

***

LAW AND MOTION HEARING PROCEDURES 

Remote hearings are required. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to reschedule the hearing. 

 

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.  

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Case Name: Koji S. Sakai v. International Technological University Foundation

Case No.: 21CV390762

This is a putative class and Private Attorneys General Act (“PAGA”) action. Plaintiff alleges that Defendant International Technological University Foundation (“ITU”) failed to reimburse its lecturers and adjunct professors for home office expenses, failed to compensate them for non-teaching time, and committed wage statement and other wage and hour violations.

Now before the Court is Plaintiff’s motion for preliminary approval of a settlement, which is unopposed. The Court issued a tentative ruling on April 22, 2022, stating that it required more information to evaluate the settlement and directing the parties to meet and confer about whether they could amend the release to conform with Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521 (Amaro). The matter came on for hearing on April 28, 2022 and was submitted to allow the parties to address these issues.

Plaintiff’s counsel filed a supplemental declaration on May 18, 2022, which established that the parties had agreed to an appropriate amended release. However, the supplemental declaration did not fully address the other issues raised by the Court, so the Court issued an order continuing the matter to be heard on July 7, 2022. Plaintiff’s counsel filed a second supplemental declaration on June 14, which the Court has reviewed.

Considering all of the relevant submissions, the Court is prepared to grant preliminary approval based on the parties’ representations that all putative class members executed arbitration agreements.

I. BACKGROUND

ITU is a domestic non-profit organization operating a university in California. (Complaint, ¶ 11.) Plaintiff worked for ITU as an adjunct professor in Santa Clara County. (Id., ¶ 8.)

Plaintiff alleges that ITU failed to state employees’ hours worked and hourly rates on wage statements issued to adjunct professors and part-time lecturers—which it was required to do even though these employees were purportedly salaried, because they did not earn twice the minimum wage. (Complaint, ¶¶ 12–18.) ITU also failed to reimburse expenses for printing, computers, internet and cell phone service plans, cell phones, and other home office expenses, which have only increased during the COVID-19 pandemic. (Id., ¶¶ 19–24.) Defendant failed to pay employees twice a month as required and otherwise failed to pay their wages on time. (Id., ¶¶ 25–27.) It failed to compensate employees for hours worked on tasks including (1) creating course materials; (2) grading assignments, tests and quizzes; (3) assisting students with their coursework outside of class time; (4) advising students in matters relating to academics, vocational goals, attendance, and behavior; (5) conducting student retention and re-entry activities; (6) completing professional development and in-service activities; and (7) attending faculty meetings/mandatory trainings and orientations. (Id., ¶¶ 28–30.) ITU also committed meal and rest break violations. (Id., ¶¶ 31–42.) As a result of these other violations, Defendant failed to pay all wages due at separation of employment. (Id., ¶¶ 43–44.)

Based on these allegations, Plaintiff asserts claims for: (1) failure to provide complete wage statements; (2) failure to reimburse business expenses; (3) failure to pay wages on a timely basis; (4) failure to pay separately and hourly for time spent on non-teaching tasks; (5) failure to provide compliant meal periods and/or pay meal period premiums; (6) failure to provide paid rest periods and/or pay missed rest break premiums; (7) waiting time penalties; (8) Unfair Competition Law violations; and (9) 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, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)

Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76–77.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)

The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)  

III. SETTLEMENT PROCESS

Plaintiff submitted his PAGA letter on October 19, 2020, and the parties entered into a tolling agreement to allow for informal discovery and potential early resolution through mediation. Defendant produced, among other things, information about the number of class members, the total number of pay periods at issue, Defendant’s Faculty Handbook, Defendant’s teaching contracts, Plaintiff’s wage statements, Defendant’s reimbursement and meal and rest period policy documents, and Plaintiff’s personnel file.

On August 16, 2021, the parties attended a full-day, private virtual mediation with Steven G. Mehta, Esq. After a full day of negotiation, they were able to reach the settlement before the Court. Plaintiff then filed this action on November 23, 2021.

IV. SETTLEMENT PROVISIONS

The non-reversionary gross settlement amount is $122,000.  Attorney fees of up to $39,996 (a little under thirty-three percent of the gross settlement), litigation costs not to exceed $10,000, and administration costs of approximately $5,000 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. The named plaintiff will seek an incentive award of $7,500.

The net settlement, approximately $44,504, will be allocated to settlement class members proportionally based on their weeks worked during the class period. The average payment will be $1,011.45 to each of the 44 class members. Class members will not be required to submit a claim to receive their payments. For tax purposes, settlement payments will be allocated 20 percent to wages and 80 percent to non-wages. The employer’s share of taxes will be paid separately from the gross settlement. Funds associated with checks uncashed after 120 days will be tendered to Bay Area Legal Aid.

As reflected in the Second Amended Joint Stipulation of Class Action and PAGA Settlement filed on June 14, 2022, class members will release “[a]ny and all claims alleged in the operative PAGA Letter and forthcoming Complaint, or that reasonably could have been alleged based on the factual allegations in the PAGA Letter and/or Complaint, and arising during the Class Period,” including specified wage and hour claims. As amended, the release is appropriately “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.)  

The Class Period is defined as “[t]he period from October 19, 2017, through October 15, 2021.”

V. FAIRNESS OF SETTLEMENT

Plaintiff submits that the settlement is fair and reasonable to the class, and discusses several risks to full recovery—including Defendant’s contention that all class members signed arbitration agreements with class action waivers.  In his second supplemental declaration, Plaintiff’s counsel confirms that “[a]ccording to Defendant, all individuals, including those who began work for Defendant on October 19, 2019 or later, signed arbitration agreements.”

As reflected in counsel’s first supplemental declaration, Plaintiff applied an 80 percent discount to the non-PAGA claims based on the arbitration agreements, and an additional 80 percent discount to several claims based risks on the merits or at class certification, valuing the wage statement claims at $24,640; the claims for unreimbursed business expenses at $62,688; the claims for unpaid minimum wages (assuming 10 hours of unpaid time per pay period) at $31,344; the meal period claims at $3,134.40 and the rest period claims at $6,268.80.  The claims for failure to timely pay wages were estimated at $22,498.80.  Thus, the total realistic value of the substantive claims was estimated to be $150,574, discounted from $1,455,320.  Plaintiff valued the waiting time penalties at $144,000, discounted to $5,760 due to the added risk associated with proving willfulness.  PAGA penalties were estimated to be worth up to $307,800 discounted 85 percent to $46,170.

By Plaintiff’s estimation, the settlement thus represents about 6 percent of the $1,907,120 maximum value of the case, or almost 60 percent of its realistic value of $202,504. Based on the parties’ representations that all putative class members executed arbitration agreements—which the Court assumes Plantiff has verified through appropriate confirmatory discovery—the Court is prepared to grant preliminary approval. Under the circumstances, the settlement is fair and reasonable to the class, and the PAGA allocation is genuine, meaningful, and reasonable in light of the statute’s purposes.     

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:  

Plaintiff and all individuals who worked for Defendant as adjunct professors or part-time lecturers in California at any time on or between October 19, 2019 through October 15, 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 44 class members are readily identifiable based on Defendant’s records, and the settlement class is defined based on objective characteristics The Court finds that the settlement class is numerous and ascertainable.

In his second supplemental declaration, Plaintiff’s counsel explains that the parties chose to define the class based on the PAGA statute of limitations due to the fact that all adjunct professors and part-time lecturers signed arbitration agreement—whether their employment ended before 2019 or not. This makes sense based on the assumption that employees who worked for Defendant during the PAGA period have the most valuable claims in light of the arbitration agreements, while non-class members whose employment ended outside of the PAGA period have a low chance of any recovery in court. The Court thus finds that the settlement class is 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 adjunct professor 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.

Notably, Plaintiff’s employment ended on August 18, 2019, just outside of the class period. But as explained in counsel’s second supplemental declaration, the class definition specifically includes Plaintiff “as a carved-out exception.” While this is unusual, Plaintiff would have a strong argument that he could still serve as a PAGA representative pursuant to Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5th 924. And as already discussed, the parties appropriately chose to define the settlement class using the PAGA period given the unique circumstances present here. Since his last date of employment is the only issue that appears to be unique to Plaintiff and the parties have agreed to include Plaintiff in the class despite that issue, the Court finds that typicality is satisfied here.

 

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 44 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 workweeks 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.

At the Court’s direction, the notice was modified so that class members’ estimated payments and workweek information are displayed in bold within a box set off from the rest of the text on the first page of the notice. The notice was corrected to state that class members will have 120 days, not 180 days, to cash their settlement checks, and the release language was corrected. The notice was also 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 Social Security Number or other identifying information. And the notice now informs class members that they may appear at the final fairness hearing to make an oral objection without filing a written objection, and that they can contact class counsel to arrange an appearance through CourtCall.

Turning to the notice procedure, the parties have selected CPT Group, Inc. as the settlement administrator. The administrator will mail the notice packet within 30 days of preliminary approval, after updating class members’ addresses using a skip trace. The administrator will search for a more current address for and re-mail any returned notices. These notice procedures are appropriate and will be approved.

VIII. CONCLUSION

  Plaintiff’s motion for preliminary approval is GRANTED. The final approval hearing shall take place on November 17, 2022 at 1:30 p.m. in Dept. 1.  The following class is preliminarily certified for settlement purposes:        

 

Plaintiff and all individuals who worked for Defendant as adjunct professors or part-time lecturers in California at any time on or between October 19, 2019 through October 15, 2021.

 

Prior to final approval, Plaintiff shall lodge any individual settlement agreement he may have executed with Defendant for the Court’s review.    

 

The Court will prepare the order.

***

LAW AND MOTION HEARING PROCEDURES 

Remote hearings are required. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to reschedule the hearing. 

 

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.  

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Case Name: Maile Bates-Guerrero v. Caliva, et al.

Case No.: 19CV354110

This a Private Attorneys General Act (PAGA) action on behalf of employees of defendants Alpha Staffing, LLC, CMG Partners, Inc. d/b/a Caliva, and NC3 Systems.

Before the Court is Plaintiff’s motion for 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) and to address other issues noted below. However, the Court is inclined to reduce the attorney fee award to 1/3 of the common fund.

I. BACKGROUND

Plaintiff was employed by Defendants as an hourly, non-exempt employee in San Jose. (Complaint, ¶ 3.) She alleges that Alpha Staffing, LLC and Caliva were her joint employers, while NC3 Systems was also listed as the employer on documentation issued to her and other aggrieved employees. (Id., ¶¶ 4–6.)

Plaintiff was employed by Defendants beginning in March of 2019. (Complaint, ¶ 12.) She was scheduled to work 5 or 6 days per week, generally working either a 7:30 a.m. through 3:30 p.m. or a 3:30 p.m. through 11:30 p.m. shift. (Ibid.) During the relevant time period Plaintiff worked as (i) a delivery driver throughout the Brisbane, San Francisco and surrounding area, (ii) a clerk, and (iii) a supervisor. (Id., ¶ 13.) As a delivery driver, Plaintiff delivered cannabis-related products and wellness alternatives to those who placed orders through Caliva’s shop. (Ibid.) As a clerk, Plaintiff processed orders, assisted with customer inquiries, and aided other supervisors as necessary. (Ibid.) As a supervisor, Plaintiff’s duties included opening and closing the shop each day, assisting with price overrides, applying discounts, and assisting customers with questions that other staff members could not answer. (Ibid.)

Defendants did not provide or record all required meal periods, and employees were often required to work through meal breaks or take shortened meal breaks to perform work tasks. (Complaint, ¶¶ 15–17.) Employees were sometimes required to remain clocked out during shortened meal breaks, and their meal period start and stop times were otherwise inaccurately recorded. (Id., ¶¶ 17–18.) Defendants did not pay premium pay for each skipped or deficient meal period. (Id., ¶ 19.) Due to these violations, Defendants also failed to pay minimum, overtime, and double time wages as required. (Id., ¶¶ 21–22.) Defendants also committed rest period violations. (Id., ¶¶ 23–24.)

As a result of these other violations, Defendants unlawfully deducted wages owed to employees, failed to pay all wages owed to employees at separation, failed to pay all wages owed to employees twice monthly as required, failed to pay meal and rest period premiums, failed to maintain accurate records of employees’ earned wages and meal periods, and failed to produce timekeeping records in response to Plaintiff’s timely and lawful request. (Complaint, ¶¶ 25–26.)

Based on these allegations, Plaintiff brings PAGA claims for (1) failure to pay minimum wages, (2) failure to pay wages and overtime, (3) meal period liability, (4) rest break liability, (5) failure to provide accurate itemized wage statements and keep accurate payroll records, (6) violation of Labor Code section 221 through unlawful deductions, and (7) failure to timely pay all wages owed during and after employment.

Plaintiff filed this action on January 27, 2020, and it was initially assigned to Department 7. The parties reached a settlement, and Plaintiff filed a motion to approve it in April 2022, to be heard in that Department 7 in June. The matter was subsequently reassigned to Department 1 and the hearing on Plaintiff’s motion was rescheduled. Plaintiff’s motion has now come on for hearing in this department.

II. LEGAL STANDARD FOR APPROVING A PAGA SETTLEMENT

 

Under PAGA, an aggrieved employee may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations.  (Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___, 2022 U.S. LEXIS 2940.)  75 percent of any penalties recovered go to the Labor and Workforce Development Agency (LWDA), leaving the remaining 25 percent for the employees.  (Ibid.)  PAGA is intended “to augment the limited enforcement capability of [LWDA] by empowering employees to enforce the Labor Code as representatives of the Agency.”  (Id. at p. 383.) A judgment in a PAGA action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government.  (Id. at p. 381.)    

 

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.)  “[C]lass certification is not required” in this context as in a class action. (Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 (Haralson).)

 

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 (Moniz).)  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, supra, 383 F. Supp. 3d at p. 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. PLAINTIFF’S INVESTIGATION, SETTLEMENT PROCESS, AND THE PARTIES’ AGREEMENT

  According to Plaintiff, the parties engaged in formal and informal discovery, including the exchange of documents, meeting and conferring, and reviewing and analyzing pay time and records, employment handbooks, Plaintiff’s personnel files, and Defendants’ relevant policies and other documentation. Informal discovery revealed that Plaintiff, as well as many other aggrieved employees, signed arbitration agreements precluding them from pursuing class claims.

The parties engaged in mediation with Hon. Carl West (Ret.) on March 17, 2021. As a result of the mediation, they agreed to the settlement before the Court. The formal settlement agreement was executed in early 2022.

Per the settlement, Defendants will pay a gross amount of $168,750. $67,500 in attorney fees (40 percent of the gross settlement), litigation costs of $9,534.49, and up to $6,000 in administrative costs will be deducted. The net settlement of approximately $85,715.51 will be distributed 75 percent ($64,286.63) to the LWDA and 25 percent ($21,428.88) to the aggrieved employees.

The aggrieved employees are defined as “all current and former non-exempt employees of Defendants who worked in the positions of delivery driver and/or supervisor in California from November 19, 2019 through June 30, 2021.” The parties estimate that there are 230 aggrieved employees. The employees’ share of the net settlement will be distributed based on each employee’s share of the paychecks issued during the PAGA period. By the Court’s calculation, aggrieved employees will receive an average of $93.17 each.

In exchange for the settlement, aggrieved employees will provide “a full release of the PAGA claims for penalties the period of November 19, 2019 through June 30, 2021 for violations of Labor Code §§ 201, 201.3, 202, 203, 204, 204b, 205, 205.5, 210, 218.6, 221, 226, 226.3, 226.7, 510, 512, 558, 1174, 1174.5, 1185, 1194, 1194.1, 1194.2, 1197, 1197.1, 1197.5, 1198, 1198.5, 1199, 2698, 2699, 2699.3, 2699.5, 2926, 2927, California Code of Regulations, Title 8, section 1 1000 et seq., as well as the applicable provisions of the Industrial Wage Orders and for any other PAGA violations that could have been asserted in the Action based on the factual assertions and legal assertions in the Complaint.”

This release is too broad in light of 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.)  A release of PAGA claims should be similarly tailored. Here, the release encompasses claims arising from a plethora of Labor Code provisions, as well as claims that could have been asserted in the action based on the “legal assertions in the Complaint,” rather than claims arising out of facts asserted in the complaint.  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; see also Moniz, supra, 72 Cal.App.5th at pp. 82–84 [release of “all known and unknown claims under PAGA … that were or could have been pled based on the allegations of the Complaint” was appropriately approved].)

The parties shall meet and confer about whether they can amend the release to conform to Amaro. Setting this issue aside for the moment, the Court will address the remainder of the settlement.

IV. DISCUSSION

A. Potential Verdict Value

Plaintiff calculated the maximum penalties in the action to be $490,000, so that the settlement represents approximately 34 percent of the maximum value of the case. The maximum penalties were estimated by multiplying the total pay periods by $100 per violation, based on case law supporting the conclusion that it is inappropriate to “stack” penalties for multiple violations. In the Court’s view, this is a reasonable approach, particularly where all of the alleged violations arise from the core meal and rest period claims. And the settlement is reasonable given the challenges in proving such violations as to hundreds of employees and the presence of arbitration agreements. The Court is thus prepared to find that the PAGA settlement is genuine, meaningful, and reasonable in light of the statute’s purposes.   

B. Attorney Fees

While the PAGA statute does not expressly require judicial review of claimed attorney fees, the Court believes it cannot adequately fulfill its statutory duty to review the penalties associated with PAGA settlements without also considering attorney fees. The Court thus finds that it must scrutinize the attorney fee arrangement associated with a PAGA settlement.  This is consistent with the observation of many courts that PAGA claims are analogous to “qui tam” suits like those under the federal False Claims Act: when reviewing settlements of qui tam claims, courts should and do consider any associated attorney fee arrangement.  (See U.S. v. Texas Instruments Corp. (9th Cir. 1994) 25 F.3d 725, 728 [attorney fee award must be considered by the trial court as part of its review of the “entire settlement arrangement”].)    

 

Here, counsel requests a fee award of $67,500, or 40 percent of the gross settlement. They urge the Court to apply the percentage method to approve a fee award from the common fund created by the settlement. The Court agrees that, as in class actions, the percentage method is an appropriate way to calculate a fee award in connection with a PAGA settlement, particularly when combined with a lodestar cross-check. (See Laffitte v. Robert Half Intern. Inc. (Cal. 2016) 1 Cal.5th 480, 488, 503-504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13] (Laffitte).) Assuming that it approves the settlement, the Court will employ that approach here.

Applying the percentage method, the Court must choose “an appropriate percentage of the fund created.” (Laffitte, supra, 1 Cal.5th at p. 503.) The Court routinely awards one-third of the common fund in wage and hour actions. Counsel’s request for a higher percentage of 40 percent is very unusual, and the Court finds no reason to award such a high percentage of the common fund in this case.[1]

  Here, 1/3 of the common fund is $56,250.  Counsel provides a combined lodestar of $78,097.50, based on 139 hours spent on the case by attorneys billing at $450–750 per hour. Counsel’s lodestar thus results in a negative multiplier.  

Per Laffitte, “[i]f the multiplier calculated by means of a lodestar cross-check is extraordinarily high or low, the trial court should consider whether the percentage used should be adjusted so as to bring the imputed multiplier within a justifiable range, but the court is not necessarily required to make such an adjustment.”  (Laffitte, supra, 1 Cal.5th at p. 505.)  Here, the multiplier is low, but in the Court’s view, the fee award still appropriately compensates counsel for their time spent on this action and provides an adequate incentive for counsel to bring this type of case.

C. Other Costs and Expenses

Counsel’s request for litigation costs of $9,534.49 appears reasonable based on the summaries provided and will be approved.  The $6,000 allocated to administrative costs will also be approved. 

V. ADMINISTRATION PROCESS

The timeline for settlement administration needs to be clarified. The agreement requires that Defendants provide the settlement administrator with a list of aggrieved employees and relevant information within 45 business days of the effective date of the settlement. But it also requires the administrator to remit settlement payments within 10 business days of when Defendants deposit the gross settlement amount—which must be done within 30 days of the effective date. Applying this timeline, it seems likely the administrator would be required to remit settlement payments before receiving the list of aggrieved employees. And in the Court’s view, 45 business days is an unnecessarily long time for Defendants to provide the employee information. The parties shall meet and confer about amending this timeline.

Ultimately, the administrator will send aggrieved employees their checks and an explanatory letter by U.S. First Class mail, after updating their addresses using the National Change of Address Database. The administrator will attempt to locate updated addresses for and re-mail any returned checks. Checks will remain negotiable for 120 days, and funds associated with checks remaining uncashed after that point will be sent to the Indian Health Center of Santa Clara Valley.

In the Court’s view, the unpaid residue should either be remitted to the LWDA, deposited with the Unclaimed Property Division of the State Controller’s Office, or be distributed consistent with Code of Civil Procedure section 384, which governs unpaid residues in class actions. The organization chosen by the parties here does not seem consistent with that approach. The parties shall meet and confer about this issue, as well, and address it with the Court at the hearing.

VI. CONCLUSION

 

As discussed above, the release provided by the settlement is too broad in light of Amaro. So the parties are directed to meet and confer about amending it accordingly. They shall also meet and confer about the timeline for administering the settlement and the disposition of unclaimed funds as discussed above.

Otherwise, the settlement warrants approval. But in the event it approves the settlement, the Court is inclined to reduce the attorney fees to $56,250.

The Court will prepare the order and judgment.

***

LAW AND MOTION HEARING PROCEDURES 

Remote hearings are required. If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall. If a party wants to appear in person, please contact Rowena Walker (rwalker@) to reschedule the hearing. 

 

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.  

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[1] Per paragraph 4(a) of the settlement, “[t]o the extent that the Court approves less than the amount of attorney’s fees and costs that Plaintiff’s counsel requests, any reduced amount shall be allocated to the settlement fund for the Aggrieved Employees.”

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