Cody Parker vs The Clary Group LLC et a

Case Number

22CV00417

Case Type

Hearing Date / Time

Mon, 03/11/2024 - 10:00

Nature of Proceedings

Motion: Approval re MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

Tentative Ruling

Cody Parker v. The Clary Group, L.L.C., et al. 

Case No. 22CV00417      

Hearing Date: March 11, 2024                                               

HEARING:              Motion For Preliminary Approval Of Class Action Settlement

ATTORNEYS:        For Plaintiff Cody Parker: Jonathan Melmed, Megan E. Ross, Hannah Becker, Melmed Law Group P.C.

For Defendant The Clary Group, L.L.C.: Douglas J. Farmer, Allison J. Fernandez, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For Defendant JBS Energy Solutions California LLC: David D. Cardone, Bradley A. Lebow, Adam J. Yarbrough, Dunn DeSantis Walt & Kendrick

TENTATIVE RULING:

Plaintiff’s motion for an order granting preliminary approval of class action settlement is granted. Counsel shall appear at the hearing on the motion and shall be prepared to discuss scheduling for the final settlement hearing and any other matters remaining for the court at this time.

Background:

On October 28, 2022, with leave of court and pursuant to a stipulation of the parties, plaintiff Cody Parker filed his operative second amended complaint (SAC) against defendants The Clary Group, L.L.C. (Clary Group) and JBS Energy Solutions California LLC (JBS) (collectively, defendants), alleging ten causes of action: (1) failure to provide rest periods and pay missed rest period premiums; (2) failure to provide meal periods and pay missed meal period premiums; (3) failure to pay all wages earned and unpaid at separation; (4) failure to indemnify all necessary business expenditures; (5) failure to furnish accurate itemized wage statements; (6) violations of California’s Unfair Competition Law; (7) violations of Labor Code section 970; (8) wrongful termination; (9) whistleblower retaliation; and (10) penalties pursuant to Labor Code section 2698 et seq. (the Private Attorneys General Act of 2004 or PAGA). As alleged in the SAC:

Clary Group is a labor contracting company that placed plaintiff to work running an excavator and other construction equipment at JBS within the State of California. (SAC, ¶ 17, 25, 27.) Though Clary Group is listed on plaintiff’s paystubs, plaintiff was employed by both Clary Group and by JBS who are jointly liable for the wage violations described in the SAC. (Id. at ¶¶ 18, 19.)

Plaintiff brings this matter as a class action on behalf of himself and a class of individuals who are or were employed by defendants as non-exempt employees from four years prior to the filing of this action continuing to the present. (SAC, ¶¶ 2, 3, 14.) The class action is alleged against defendants for defendants’ failure to provide, during the relevant period, rest and meal periods including meal and rest period premiums, failure to pay wages earned and unpaid at separation, failure to indemnify for business expenditures, failure to furnish itemized wage statements, and violations of Business and Professions Code section 17200 et seq. (Id. at ¶ 4.)

Plaintiff alleges the representative action under PAGA on behalf of himself, the State of California, and aggrieved individuals who are or were employed by defendants from February 1, 2021, to the present. (SAC, ¶¶ 5-7, 16.)

On November 29, 2022, JBS filed an answer to plaintiff’s SAC generally denying its allegations and asserting twenty-nine affirmative defenses. On the same date, JBS filed a cross-complaint for indemnity and contribution against Clary Group.

On March 6, 2023, Clary Group filed an answer to the SAC generally denying its allegations and asserting thirty-eight affirmative defenses. The court has no record of  Clary Group having filed an answer to the cross-complaint of JBS.

On February 15, 2024, plaintiff filed a motion for preliminary approval of a proposed settlement agreement and release and for preliminary certification of the settlement class. Plaintiff also moves for preliminary approval of: (1) plaintiff and his counsel as, respectively class representative and class counsel for settlement purposes; (2) payment from the gross settlement amount of attorney’s fees to class counsel not to exceed $ $59,166.67 or one-third of the gross settlement amount, of litigation costs not to exceed $10,000, and of a class representative incentive payment to plaintiff not to exceed $10,000; (3) a proposed allocation of penalties under PAGA (75 percent to the California Labor and Workforce Development Agency (the LWDA) and 25 percent to aggrieved employees); (4) the settlement administrator and administration costs to be paid to the settlement administrator and estimated to be $8,250; (5) the distribution of the class notice by the settlement administrator; and (6) the proposed deadlines for the notice and administrative process. Plaintiff further requests an order setting the date for a final fairness hearing and granting plaintiff leave to file an overlength memorandum in support of the present motion. (See Notice at pp. ii-iii.)

In support of the motion, plaintiff submits the declaration of his counsel, Jonathan Melmed, who declares that he conducted significant informal discovery and investigation in this matter which included numerous telephonic conferences with plaintiff, inspection and analysis of hundreds of pages of documents and other information produced by defendants, analysis of work-related data from a sample of the class members and aggrieved employees, an analysis of the legal positions taken by defendants, investigation into the viability of class treatment of the claims asserted in this action, an analysis of potential class-wide damages including information sufficient to understand defendants’ potential defenses to plaintiff’s claims, research of applicable law with respect to the claims asserted in the complaint and potential defenses to those claims, and assembling and analyzing of data to calculate damages. (Melmed Decl., ¶¶ 19, 51.)

Plaintiff also obtained from defendants the wage statements and time records for class members during the applicable class period in order to obtain a statistically significant sample size with a high degree of confidence for the statistical analysis. (Melmed Decl., ¶ 20.) From these records, plaintiff was able to craft a damages model for each category of claims alleged for which the data would reflect violations. (Ibid.)

The parties attended a full day private mediation on July 18, 2023, before a full-time mediator and retired judge with extensive experience in wage and hour class action lawsuits. (Melmed Decl., ¶¶ 19, 21, 62.)

The issues in this matter were “hotly” contested both legally and factually. (Melmed Decl., ¶ 50.) Defendants have persistently denied all liability associated with the claims alleged in the complaint, and denied that plaintiff or any other employees were entitled to any relief. (Id. at ¶¶ 24-49 [setting forth defendants’ specific responses and defenses to each claim alleged by plaintiff].) By way of example, defendants argued that they took no action to prevent employees from taking meal periods and that any missed meal periods were, at most, sporadic. (Id. at ¶¶ 29-30.) Defendants also asserted that they did not receive an initial citation under Labor Code section 226.3 such that penalties were inapplicable, and that any discrepancies in defendants’ payroll records were inadvertent mistakes. (Id. at ¶ 34.) Defendants further argued that any purported violations were not willful and therefore would not trigger waiting time penalties for any underpayments under Labor Code section 203. (Id. at ¶ 40.) Defendants further contend that the allegations asserted by plaintiff are not appropriate for class or representative treatment outside of settlement. (Id. at ¶ 24.)

After analyzing the data provided by defendants and the viability of defendants’ asserted defenses, plaintiff’s counsel applied appropriate discounts to the maximum settlement values calculated by plaintiff with respect to each claim alleged in the complaint which also account for significant risks associated with defendants’ ability to prevail with respect to each defense to each claim including whether defendants’ payroll records were accurate and complete. (See Melmed Decl., ¶¶ 27, 31, 34, 50.) Plaintiff asserts that, based on the defenses asserted in this matter and other factors further discussed above, defendants’ realistic exposure in this matter is $257,673.05. (Id. at ¶ 50.)

The parties agreed to settle this matter for the gross settlement sum of $177,500.00. (Melmed Decl., ¶ 59.) Counsel asserts that the settlement sum represents a recovery of 68.9 percent of the estimated settlement value of the claims alleged in this matter. (Id. at ¶ 50.) After all court-approved deductions are made from the gross settlement sum, counsel estimates that at least $82,538.33 will be available to pay individual settlement amounts to the class members. (Id. at ¶ 61.)

The settlement agreement was reached after comprehensive arm’s-length discussions between the parties and their counsel and during what counsel describes as a contentious mediation. (Melmed Decl., ¶¶ 4, 12.) Counsel believes that the settlement is fair, adequate, and reasonable considering the nature of the claims, the realistic risk adjusted value of the damages alleged by plaintiff, the complexities of the case, the state of the law, and uncertainties that exist with respect to class certification and litigation. (Id. at ¶ 66.) In addition, Melmed has no knowledge of any conflicts of interest between his firm, plaintiff, or any other class member. (Id. at ¶ 7.)

Plaintiff also submits a copy of the proposed “Settlement Agreement and Release of Class Action” between plaintiff, Clary Group, and JBS (the settlement agreement) which is attached as Exhibit A to the Melmed declaration. (Note: For ease of reference, the court will cite or refer to the settlement agreement as Exhibit A.)

Under the settlement agreement, the “class period” is defined as the period from February 1, 2018, through the earlier of October 18, 2023, or the date of preliminary approval of the settlement. (Exh. A, ¶ 1.10.) The “settlement class” include individuals who were employed by defendants as non-exempt employees during the class period. (Id. at ¶ 1.39.) A “class member” is defined as any person who is a prospective member of the settlement class, or that person’s guardian, executor, heir, or successor-in-interest. (Id. at ¶ 1.7.) “Class participants” include all members of the settlement class who do not timely request exclusion from the settlement. (Id. at ¶ 1.9.)

The “PAGA period” is defined as the period from February 1, 2021, through the earlier of October 18, 2023, or the date the court approves the settlement agreement. (Exh. A, ¶ 1.29.) The “PAGA settlement class” includes individuals who are or were employed by defendants as non-exempt employees in California during the PAGA period. (Id. at ¶ 1.30.)

The settlement agreement identifies plaintiff as the class representative and plaintiff’s counsel, Megan E. Ross and Hannah Becker of Melmed Law Group P.C., as class counsel. (Exh. A, ¶¶ 1.6, 1.11, 4.) The settlement administrator agreed to by the parties is ILYM Group, Inc. (ILYM), who will be responsible for administering the settlement. (Id. at ¶ 1.38.)

Under the settlement agreement, defendants have agreed to pay the amount of $177,500 (the gross settlement amount) in full settlement of the claims released under the settlement agreement. (Exh. A, ¶ 1.21, 5.1.) Of the gross settlement amount, Clary Group shall pay the amount of $20,000, and JBS shall pay the amount of $157,500. (Id. at ¶ 1.21.) The gross settlement amount is non-reversionary. (Id. at ¶¶ 1.21, 5.1.)

The gross settlement amount includes and will be allocated to: (1) payment of costs and expenses to ILYM associated with administration of the settlement and not to exceed $10,000.00) (the administrative expenses); (2) each employee’s share of any applicable federal, state, or local payroll taxes to be withheld from the individual settlement amounts (the employee’s taxes); (3) attorney’s fees to be paid to class counsel in an amount not to exceed one-third of the gross settlement amount or $59,166.67, as approved by the court (the fee award); (4) litigation expenses to be paid to class counsel and not to exceed $10,000 (the cost award); (5) an incentive award to be paid to the class representative in addition to any distribution to which the class representative might otherwise be entitled as a class participant and not to exceed $10,000 (the incentive award); and (6) penalties pursuant to PAGA to settle the PAGA claims asserted in this matter in the amount of $10,000 which the parties agree represents a reasonable sum for penalties under PAGA (the PAGA payment). (Exh. A, ¶¶ 1.2, 1.5, 1.7, 1.9, 1.18, 1.19, 1.21, 1.23, 1.28, 1.39, 5.1, 5.2, 5.4, 5.7, 6.1, 8.1.)

With respect to the PAGA payment, the amount of $7,500 or 75 percent of the PAGA payment will be distributed to the LWDA and the amount of $2,500 or 25 percent of the PAGA payment will be distributed to the PAGA settlement class. (Exh. A, ¶ 1.28.)

Defendants agree not to objection to any application by class counsel for court approval of the fee award and cost award. (Exh. A, ¶ 5.7.) If class counsel reduces the amount requested in the fee award or cost award, or if the court’s award of attorney’s fees or litigation costs to class counsel is less than the amounts set forth above, the net settlement amount further discussed below will be recalculated to reflect the actual amount of the fee award and cost award. (Id. at ¶ 5.7.)

The net settlement amount is the gross settlement amount minus the administrative expenses, the fee award, the cost award, the incentive award, and the 75 percent share of the PAGA payment to be paid to the LWDA as further discussed above. (Exh. A, ¶ 1.25.) ILYM will calculate the net settlement amount based on the estimated values described above before sending notice to the class members. (Id. at ¶ 8.1.) Before final distribution, ILYM shall recalculate the final net settlement amount based on the actual values of the amounts in each category described above. (Id. at ¶ 8.1.)

Each class participant will be eligible to receive a share of the net settlement amount based on the pro rata number of weeks worked by the class participant during the class period, calculated as a proportion of all weeks worked by all class members (the individual settlement amount). (Exh. A, ¶ 5.3.) Of each individual settlement amount, 20 percent will constitute payment in the form of wages for which each class participant will be issued an IRS Form W-2, and 80 percent will constitute penalties and interest for which each class participant will be issued an IRS Form 1099. (Id. at ¶ 5.5.) Each individual settlement amount to be paid to individual class participants will be paid from the net settlement amount, which shall be distributed pro rata on a “checks cashed” basis. (Id. at ¶ 5.3, 8.2.)

Each class member who does not timely request exclusion from the settlement shall be eligible to receive payment of the individual settlement amount. (Exh. A, ¶ 5.3.) Defendants will provide ILYM with any information necessary to calculate the number of workweeks for each class member and any other information ILYM requests in order to perform the calculations required under the settlement agreement. (Id. at ¶ 8.2.) Defendants will have no responsibility for deciding the validity of the individual settlement amount or any other payments made pursuant to the settlement agreement and no involvement in or responsibility for the determination or payment of the employee’s taxes. (Id. at ¶ 8.2.)

ILYM will calculate and pay the employee’s taxes on the portion of the individual settlement amounts which constitute wages. (Exh. A, ¶ 8.2.) The employee’s taxes will be withheld from and paid out of the individual settlement amount. (Id. at ¶ 1.18.) The individual settlement amount will be distributed to each class participant less the employee’s taxes, and will exclude any portion of the PAGA payment. (Id. at ¶ 1.24.) Each class participant is responsible for payment of the employee’s taxes. (Exh. A, ¶¶ 5.3, 5.5, 8.2.)

Defendants’ share of any payroll taxes will be separately paid by defendants and not from the gross settlement amount or net settlement amount. (Exh. A., ¶¶ 1.19, 1.21, 5.1.) ILYM will calculate employer taxes due on the wage portion of each individual settlement amount and issue instructions to defendants to separately fund these tax obligations. (Id. at ¶ 5.5.)

In addition, the portion of the PAGA payment allocated to the PAGA settlement class (i.e., 25 percent) shall be distributed to the PAGA settlement class based on the pro rata number of pay periods worked by each PAGA settlement class member during the PAGA period, to be calculated as a proportion of all pay periods worked by all members of the PAGA settlement class. (Exh. A, ¶¶ 5.4, 8.3.) Payments made to members of the PAGA settlement class will be treated as payments owing for penalties and interest and will not be considered wages. (Id. at ¶ 5.5.) ILYM will issue to members of the PAGA settlement class an IRS Form 1099 reflecting the individual PAGA payment. (Id. at ¶ 5.5.) Each member of the PAGA settlement class shall be responsible for the payment of the employee’s taxes with respect to that member’s share of the PAGA payment. (Id. at ¶ 8.3.) Defendants will provide ILYM with all information necessary to calculate the number of pay periods worked for each PAGA settlement class member. (Id. at ¶ 8.3.)

Payments made under the settlement agreement will not modify any previously credited time of service under any employee benefit plan, policy, or bonus program sponsored by defendants. (Exh. A, ¶ 5.6.)

A copy of the class notice is attached to the settlement agreement as Exhibit 1. In addition to the duties described above, ILYM will be responsible for mailing the class notice and a “share form”, attached as Exhibit 2 to the settlement agreement, to class members. (Exh. A, ¶ 7.1 & Exhs. 1 & 2.) The share form identifies the number of workweeks worked by each class member and the estimated individual settlement amount the class member can expect to receive. (Id. at ¶ 5.1 & Exh. 2.) Within 14 days after preliminary approval of the settlement agreement, defendants will provide ILYM with an updated list of class members and members of the PAGA settlement class, which will include each member’s dates of employment, last known addresses, and other identifying information. (Id. at ¶ 7.2.)

Within twenty-eight days following preliminary approval of the settlement agreement, ILYM will determine the number of workweeks worked by each class member, populate the data for each class member accordingly, and send each class member the class notice via first-class mail. (Exh. A, ¶ 7.2.)

The class notice will also inform class members of their estimated individual settlement amount and the number of workweeks they worked during the class period. (Exh. A, ¶¶ 5.1, 7.2.) Class members may dispute their workweeks if they believe they worked more weeks in the class period than shown in defendants’ records. (Id. at ¶ 5.1, 7.2.) To dispute the number of workweeks, class members may submit information to ILYM no later than forty-five days after the date of mailing of the class notice and share form (the response deadline). (Id. at ¶ 7.2.) ILYM will jointly work with plaintiff and defendants to resolve any disputes in good faith. (Ibid.) If plaintiff and defendants cannot agree to the number of workweeks to be credited, ILYM will make the final decision based on the information presented by the class member and by defendants. (Ibid.)

If, prior to the response deadline, a class notice mailed to a class member is returned as undelivered by the United States Postal Service, ILYM will perform a skip trace and seek an address correction for any such class member. (Exh. A, ¶ 7.3.) ILYM will thereafter mail a second class notice to any new or different address that may be obtained by ILYM. (Ibid.) If an envelope containing a class notice to a class member is not returned within 30 days of the date of mailing the class notice, it will be presumed that class member received the class notice. (Ibid.)

Not later than 21 days prior to any final approval hearing, ILYM shall provide class counsel and defendants’ counsel with a declaration of due diligence and proof of mailing of the class notice, which shall be filed with the court by class counsel and which shall set forth all attempts to locate class members, the number of class members to whom the class notice was sent, and the number of class members to whom the class notice was not delivered, as well as information relating to the number of class members who have opted out or objected to the settlement agreement. (Exh. A, ¶ 7.3.)

The class notice informs class members that they may request exclusion from (i.e., “opt out” of) the settlement in accordance with the terms of the class notice no later than the response deadline. (Exh. A, ¶ 1.27.) Class members may opt out by submitting a letter or postcard to ILYM by the response deadline. (Id. at ¶ 7.3.) If ILYM determines that a request to opt out of the settlement is deficient, ILYM shall mail a deficiency letter to that class member identifying the deficiency. (Ibid.) If the deficiency is not corrected, the opt out request will be disregarded, the class member’s claim will be paid, and the class member will become bound by the judgment. (Ibid.) Class members who do not timely opt out will be deemed to participate in the settlement and will become class participants without having to submit a claim form or take any other action. (Ibid.)

A request to opt out of the settlement does not serve to exclude a class member from participation in the PAGA settlement class, and such members will still be entitled to their share of the PAGA payment. (Exh. A, ¶ 7.3.)

The class notice will also inform class members of their right to object to the settlement if they do not opt out. (Exh. A, ¶ 7.4.) Class members may object to the settlement by submitting a written objection to ILYM no later than the response deadline. (Ibid.)

The settlement agreement includes a release by the settlement class of claims which “aris[e] out of or related to the allegations set forth in the [complaint] and/or PAGA notice to the [LWDA] that arose during the Class Period and/or PAGA Period, including claims for: (1) failure to provide compliant rest periods and pay missed rest break premiums in violation of Labor Code section 226.7 and the applicable IWC Wage Order(s); (2) failure to provide compliant meal periods and pay missed meal period premiums in violation of Labor Code sections 226.7 and 512, and the applicable IWC Wage Order(s); (3) failure to pay all wages due and owing at separation in violation of Labor Code sections 201, 202, and 203; (4) failure to reimburse business expenses in violation of Labor Code sections 2802 and 2804; (5) failure to provide complete and accurate wage statements in violation of Labor Code sections 226 and 226.3; (6) deceptive, fraudulent, or otherwise unlawful business practices based on the foregoing in violation of California’s Unfair Competition Law (Bus. & Prof. Code, §§ 17200–17210); (7) statutory penalties based on the foregoing pursuant to PAGA (Lab. Code, §§ 2698-2699.6); and (8) all claims for liquidated damages, penalties, interest, fees, costs based on the foregoing. [] No other claims are released other than those claims specifically plead in the Complaint or otherwise specifically identified herein.” (Exh. A, ¶¶ 1.34, 1.35., 1.36, 11.1.)

Upon the court’s preliminary approval of the settlement agreement, ILYM will distribute the class notice and the share form to the class members. (Exh. A, ¶ 5.1.)

Defendants will deposit the gross settlement amount as a lump sum payment plus the defendants’ share of payroll taxes to ILYM within 7 days that the settlement agreement becomes effective, which will occur upon the court’s entry of a final order and judgment approving the settlement agreement and the later of the expiration period for filing an appeal, the dismissal of any appeal, or the issuance of a final appellate order upholding the court’s final order as described in paragraph 1.17 (the effective date). (Exh. A, ¶ 6.2.)

No later than 14 days after the effective date of the settlement agreement, ILYM will distribute the incentive award, the portion of the PAGA payment to be paid to the LWDA, and to class counsel any attorney’s fees and expenses approved by the court. (Exh. A, ¶¶ 8.4-8.6.) ILYM will make every effort to mail the individual settlement amount to each class participant no later than 14 days after the effective date of the settlement agreement. (Id. at ¶ 8.7.)

If any class participant is deceased, payment shall be made payable to the estate of that class member or to a declarant under Probate Code section 13101.  (Exh. A, ¶ 8.7.) Any funds associated with checks that have not been cashed within one hundred eighty days will become void and the individual settlement amount associated with the uncashed check will be remitted pursuant to Code of Civil Procedure section 384 to the California State Controller for deposit in the Unclaimed Property Fund in the name of the individual whose check was uncashed. (Id. at ¶ 8.8.)

Within two 210 days of mailing checks for the individual settlement amount to class participants, ILYM will file with the court and provide to class counsel a declaration of payment. (Exh. A, ¶ 8.7.) Within seven days after the final approval hearing approving the settlement agreement and the entry of a final order certifying the class for settlement purposes only, ILYM will post a copy of the court’s order and final judgment on its website at a web address to be included in the class notice. (Id. at ¶ 7.5.)

Counsel declares that plaintiff has submitted a copy of the settlement agreement to the LWDA. (Melmed Decl., ¶ 73 & Exh. D.)

Plaintiff also submits his declaration in support of the motion in which plaintiff describes the services plaintiff provided in this litigation and the risks undertaken by plaintiff in pursuing this matter. (See Parker Decl., ¶¶ 6-10.) Plaintiff further asserts that he has agreed to a general release of all claims which plaintiff contends is broader than the release of claims that class members will agree to if they participate in the settlement. (Id. at ¶ 10.)

No party has filed an opposition to the present motion.

Analysis:

“A settlement or compromise of an entire class action, or of a cause of action in a class action, or as to a party, requires the approval of the court after hearing.” (Cal. Rules of Court, rule 3.769(a).) “Any party to a settlement agreement may serve and file a written notice of motion for preliminary approval of the settlement. The settlement agreement and proposed notice to class members must be filed with the motion, and the proposed order must be lodged with the motion.” (Cal. Rules of Court, rule 3.769(c).)

As plaintiff has filed the settlement agreement and the proposed class notice, and lodged a proposed order with the court, the motion is procedurally appropriate.

California Rules of Court, rule 3.769, sets forth the procedure for settlement of a class action before class certification. “In that case, certification and settlement approval occur simultaneously.” (Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 93 (Luckey).) Under this procedure, a party to the settlement files a motion for preliminary approval which must include the settlement agreement and proposed notice to the class members, and lodges a proposed order. (Cal. Rules of Court, rule 3.769(c).) After a preliminary settlement hearing, the court makes “an order approving or denying certification of a provisional settlement class….” (Cal. Rules of Court, rule 3.769(d).) If the court grants preliminary approval of the settlement, the court’s order must include “the time, date, and place of the final approval hearing; the notice to be given to the class; and any other matters deemed necessary for the proper conduct of a settlement hearing.” (Cal. Rules of Court, rule 3.769(e).)

Code of Civil Procedure section 382 authorizes class actions “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, one or more may sue or defend for the benefit of all.” (Code Civ. Proc., § 382.) “Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. [Citation.]” (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.)

To determine whether a class is ascertainable, the court examines “(1) the class definition, (2) the size of the class, and (3) the means available for identifying class members. [Citation.]” (Reyes v. San Diego County Bd. of Supervisors (1987) 196 Cal.App.3d 1263, 1271.) “A related inquiry is manageability of the proposed class[.]” (Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 849.) “The community of interest requirement embodies three factors: (1) predominant common 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.” (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) “The burden is on the party seeking certification to establish the existence of both an ascertainable class and a well-defined community of interest among the class members.” (Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 913.)

“Because a court evaluating certification of a class action that settled prior to certification is considering certification only in the context of settlement, 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. In some ways, the court’s review of certification of a settlement-only class is lessened; as no trial is anticipated in a settlement-only class case, ‘the case management issues inherent in the ascertainable class determination need not be confronted.’ [Citation.] However, other certification issues, ‘those designed to protect absentees by blocking unwarranted or overbroad class definitions’ require heightened scrutiny in the settlement-only class context ‘for a court asked to certify a settlement class will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold.’ [Citation.]” (Luckey, supra, 228 Cal.App.4th at pp. 93-94.) To protect absent class members whose rights may not have been considered by the settling parties, and to ensure the absence of fraud and collusion, heightened scrutiny is required if there has been no adversary certification. (Ibid.)

In the memorandum submitted in support of the motion, plaintiff asserts that defendants have represented that the proposed class consists of approximately 151 class members. The number of class members was ascertained through defendants’ records. (Motion at p. 20, Section “B”.) In addition, available information demonstrates that the 151 class members were subject to the purported violations and unlawful policies or practices alleged in the SAC. Based on plaintiff’s analysis of the claims and defenses asserted in this matter and as further described above, the policies and practices were applied to all employees who are members of the proposed class. (See Parker Decl., ¶ 4.)  

Plaintiff has presented evidence that there is a numerous, ascertainable class with a well-defined community of interest consisting of at approximately 151 employees of defendants who were subject to meal and rest break violations, and unlawful employment policies and practices with respect to payment of wages, the furnishing of accurate wage statements, and other matters. There also appears to be sufficient and reliable means available to identify class members from defendants’ records. The class representative appears to have claims typical of the class and appears to be able to adequately represent the class. Based on the above, there appears to be reasonable support for provisional certification of the settlement class.

To protect the rights of class members including the named plaintiff, the court must determine if the proposed class action settlement is fair, adequate, and reasonable. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1800–1801 (Dunk).) The court considers relevant factors including “the strength of [plaintiff’s] 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.” (Id. at p. 1801.) The court’s inquiry is limited “ ‘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.’ [Citation.]” (Ibid.)

“[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.” (Dunk, supra, 48 Cal.App.4th at p. 1802.) “Public policy generally favors the compromise of complex class action litigation.” (In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 723, fn. 14.)

With regard to settlements of claims brought under Labor Code section 2699 (the Private Attorneys General Act of 2004 or PAGA), “while PAGA does not require the trial court to act as a fiduciary for aggrieved employees,” the court applies the same factors and standards of review to evaluate the fairness of a PAGA settlement. (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76-77 (Moniz); Lab. Code, § 2699.) The court’s review and approval of a PAGA settlement acts as a “safeguard” to ensure the negotiated resolution is fair and protects the interests of the public and the LWDA in maximizing the enforcement of state labor laws in consideration of PAGA’s purposes and policies. (Moniz, supra, 72 Cal.App.5th at pp. 76-77.) Factors useful in evaluating the fairness of a PAGA settlement include “the strength of the plaintiff’s case, the risk, the stage of the proceeding, the complexity and likely duration of further litigation, and the settlement amount….” (Id. at p. 77.)

A copy of the proposed settlement must be provided to the LWDA at the same time it is submitted to the court. (Lab. Code, § 2699, subd. (l)(2).) Available information demonstrates that plaintiff submitted the settlement agreement to the LWDA on February 14, 2024, the day before plaintiff filed the present motion. (Melmed Decl., Exh. D.) There is no information to suggest or demonstrate that the LWDA has indicated its objection to the agreement or an intent to intervene.

Plaintiff has engaged in informal investigations and discovery to which defendant has responded and provided relevant data and records. Plaintiff has presented evidence further discussed above regarding the approximate amount of the payments to be issued to the class members and PAGA settlement class members. In evaluating the adequacy of the settlement, plaintiff’s counsel also accounted for potential difficulties associated with achieving class certification and prevailing on the merits of plaintiff’s claims in this action, in particular with regard to whether any inaccuracies in defendants’ payroll records constitute inadvertent good faith mistakes, whether missed meal or rest periods were sporadic or known by defendants, and whether defendants prevented employees from taking meal or rest breaks. (See, e.g., Melmed Decl., ¶¶ 27, 30 & 34.)

The settlement is the product of a contentious mediation and the parties’ negotiations. The release by class participants is limited to claims based on or related to the facts alleged in this action only, including facts underlying plaintiff’s claim for penalties under PAGA. Plaintiff has presented evidence of the risks of uncertainty associated with litigation with respect to the defenses asserted by defendants and potential difficulties in certifying the class. These risks appear to be substantial.

Based on the information provided in the Melmed declaration, plaintiff’s counsel has substantial experience with wage and hour and PAGA matters. (See Melmed Decl., Section “I”.) Class counsel believes that the settlement is fair, adequate, and reasonable. Based on the above and the evidence presented in the moving papers, it appears to the court that the settlement is fair, adequate, and reasonable, and in the best interests of the class members, including members of the PAGA settlement class, in light of known facts and circumstances. There is no evidence to suggest that the settlement agreement is the product of collusion.

The court has reviewed the proposed class notice. The class notice is easy to understand, apprises class members of the pendency of and the claims and defenses asserted in the present action, explains the rights and obligations of the class members in connection with the proposed settlement, and notifies class members of their right and opportunity to opt out or present objections to the settlement agreement. For these reasons, the court finds that the class notice complies with due process. (Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 694-695.)

Based on the evidence presented, the court finds that the settlement agreement is in all respects fair, reasonable, adequate and in the best interests of the putative class. The court further finds that the notice plan set forth in the settlement agreement constitutes sufficient notice to the class members of the present action and the terms of the settlement agreement as well as the date and location of the final settlement hearing. Therefore, the court determines that the settlement agreement is entitled to preliminary approval, that the settlement class should be provisionally certified, that plaintiff’s counsel should be appointed as counsel for the settlement class, that plaintiff should be appointed as class representative for settlement purposes, that ILYM should be appointed as the settlement administrator, and that the notice to the class and settlement administration deadlines should be approved as set forth in the motion. Accordingly, the motion for preliminary approval of class action settlement will be granted.

The court will determine the reasonableness of attorney’s fees and costs, the incentive award, and the administrative expenses upon noticed motion at the final settlement hearing. Counsel shall appear at the hearing of the motion and shall be prepared to discuss scheduling for the final settlement hearing and any other matters remaining at this time.

Plaintiff’s request to file an overlength opening memorandum:

In the notice of the present motion, plaintiff requests an order granting plaintiff approval to file an opening memorandum that exceeds 15 pages. (See Cal. Rules of Court, rule 3.1113(d).) “A party may apply to the court ex parte but with written notice of the application to the other parties, at least 24 hours before the memorandum is due, for permission to file a longer memorandum. The application must state reasons why the argument cannot be made within the stated limit.” (Cal. Rules of Court, rule 3.1113(e).)

Pursuant to court rules, plaintiff was required to apply to the court for permission to file a longer opening memorandum before filing the memorandum, but failed to do so. In addition, wholly absent from the motion or supporting papers are any stated reasons why plaintiff could not make the arguments asserted in the memorandum within the limit stated in California Rules of Court, rule 3.1113(d).

Notwithstanding that plaintiff’s request to file a longer memorandum is procedurally and substantively inappropriate, as no party has opposed plaintiff’s request, the court will grant plaintiff permission to file a longer opening memorandum. However, plaintiff’s counsel is reminded of their obligation to comply with court rules.