Cody Parker vs The Clary Group LLC et al

Case Number

22CV00417

Case Type

Hearing Date / Time

Mon, 10/07/2024 - 10:00

Nature of Proceedings

Hearing Approval of Class Action Settlement

Tentative Ruling

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

Case No. 22CV00417

           

Hearing Date: October 7, 2024                                   

HEARING:              Motion For Final Approval Of Class Action Settlement

ATTORNEYS:        For Plaintiff Cody Parker: Jonathan Melmed, Kyle D. Smith, 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:

(1) The motion of plaintiff for final approval of class action settlement is granted, in part, as to the following. Subject to exceptions with respect to plaintiff’s claim for attorney’s fees and costs as further discussed herein, and for settlement purposes only, the Court approves the Settlement Agreement and Release of Class Action attached as Exhibit A to the supporting declaration of Jonathan Melmed, and approves certification of the class described therein. The Court also approves the allocation of $10,000 of the gross settlement amount to penalties under Labor Code section 2698 et seq. (the Private Attorneys General Act of 2004 or PAGA), and payment of the amount of $7,500 to the California Labor and Workforce Development Agency as provided herein. The Court further approves payment of settlement administration costs to ILYM Group, Inc. in the amount of $8,250. The Court affirms named plaintiff Cody Parker as the class representative, and approves an incentive payment to plaintiff in the amount of $10,000. The Court reserves jurisdiction over the parties for the purposes of implementing, enforcing, and administering the settlement or enforcing the terms of the judgement.

(2) The motion of plaintiff for final approval of class action settlement is continued in part to December 16, 2024, as to plaintiff’s request for an award of attorney’s fees and costs. On or before December 2, 2024, plaintiff shall file a supplemental brief addressing the matters further discussed herein.

(3) Plaintiff’s counsel, Jonathan Melmed and Kyle D. Smith, are each ordered to appear on December 16, 2024, at 10:00 a.m. in this Department, and to show cause why monetary sanctions not to exceed $1,500 should not be imposed against them for violating California Rules of Court, rule 3.1113(d) and (e), as further described in this ruling. Plaintiff’s counsel shall file and serve a written response to the Court’s order to show cause on or before December 2, 2024.

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:

Plaintiff brings this matter 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, ¶¶ 2-4 & 14.) Plaintiff also alleges a 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. (Id. at ¶¶ 5-7 & 16.)

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.) During the time periods alleged in the complaint, defendants failed to provide rest and meal periods, to pay wages earned and unpaid at separation, to indemnify employees for necessary business expenditures, to furnish itemized wage statements, and violated Business and Professions Code section 17200 et seq. (Id. at ¶ 4.)

On November 29, 2022, JBS filed an answer to the SAC generally denying its allegations and asserting twenty-nine affirmative defenses, and 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.

After a hearing held on March 11, 2024, the Court granted the motion of plaintiff for preliminary approval of a class action settlement, provisionally finding the settlement to be fair, adequate, reasonable, in the best interests of the putative class, and within the range of acceptable settlements that could be ultimately given final approval by the Court. In granting the motion, the court preliminarily approved a non-reversionary gross settlement amount of $177,500 (the gross settlement amount) to settle and release all claims asserted by plaintiff on behalf of a class of individuals employed by defendants as non-exempt employees from February 1, 2018, through October 18, 2023, and with respect to the PAGA claims, individuals employed by defendants from February 1, 2021, through October 18, 2023. Of the gross settlement amount, Clary Group will pay the amount of $20,000, and JBS the amount of $157,500.

The court also appointed ILYM Group, Inc. (ILYM) as the third-party settlement administrator.

The Court noted that the net settlement amount available for distribution to the proposed class is the gross settlement amount described above less: (1) administrative costs not to exceed $10,000.00; (2) each employee’s share of any federal, state, or local payroll taxes to be withheld from the individual settlement amounts; (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; (4) litigation expenses to be paid to class counsel and not to exceed $10,000; (5) an incentive award to be paid to the class representative 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 (the PAGA payment). With respect to the PAGA payment, the amount of $7,500 will be distributed to the Labor and Workforce Development Agency (the LWDA) and the amount of $2,500 will be distributed to the PAGA settlement class. The Court further noted that, pursuant to the terms of the settlement, ILYM will calculate the net settlement amount based on the estimated values described above before sending notice to the class members.

In the motion for preliminary approval, plaintiff presented evidence that there exists a numerous, ascertainable class with a well-defined community of interest consisting of at approximately 151 employees subject to the purported violations and unlawful policies or practices alleged in the SAC and that, after all court-approved deductions are made from the gross settlement sum, at least $82,538.33 will be available to pay individual settlement amounts to the class members. The Court found that the class representative appears to have claims typical of the class and to be able to adequately represent the class such that there exists reasonable support for provisional certification of the settlement class. Plaintiff also made a sufficient showing that plaintiff’s counsel has substantial experience with wage and hour and PAGA matters.

The Court also approved the notice to be provided and distributed to the class members.

The Court set a hearing for final approval of the class action settlement on August 5, 2024, which was continued to October 7, 2024, pursuant to a stipulation of the parties.

On September 13, 2024, plaintiff filed a motion for an order finally and for purposes of settlement: certifying the settlement class as defined in the settlement agreement; approving plaintiff (Cody Parker) as class representative; appointing Jonathan Melmed (Melmed) and Kyle D. Smith (Smith) of Melmed Law Group P.C. (the Melmed Group) as class counsel; finding that the notice of the settlement was properly provided to the class members in accordance with the Court’s March 13, 2024, Minute Order (the Preliminary Order); approving the settlement as fair, adequate, and reasonable, based upon the terms set forth in the settlement agreement including the payment by defendants of the gross settlement amount plus the employer’s portion of applicable payroll taxes; and approving the allocation for attorneys’ fees of one-third of the gross settlement amount ($59,166.67), plus necessary litigation costs of $7,164.52;

The present motion is unopposed.

Analysis:

After preliminary approval of a class action settlement and notice to the class, the final approval hearing is the final step in the approval process. During the final approval hearing, the court conducts a more detailed inquiry into the fairness of the proposed settlement. (Cal. Rules of Court, Rule 3.769(g).) If the court approves the settlement agreement at the final approval hearing, the court must make and enter a judgment that includes a provision for the court to retain jurisdiction over the parties to enforce the terms of the settlement. (Cal. Rules of Court, Rule 3.769(h) * (f).)

“[A] trial court has broad powers to determine whether a proposed settlement in a class action is fair.” (Mallick v. Superior Court (1979) 89 Cal.App.3d 434, 438.) A class action settlement is presumptively fair if it was reached through arm’s-length negotiations between experienced counsel after extensive investigation, litigation, and discovery. (Dunk v. Ford Motor Company (1996) 48 Cal.App.4th 1794, 1802.) A presumption of fairness exists where (1) the settlement is reached through arm’s-length bargaining, (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently, (3) counsel is experienced in similar litigation, and (4) the percentage of objectors is small. (Wershba v. Apple Computer (2001) 91 Cal.App.4th 224, 245.) With regard to settlements of claims brought under PAGA, though the statute “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; Lab. Code, § 2699.)

The first three elements which give rise to the presumption of fairness were established at the time of preliminary approval. No evidence has been presented which would alter the Court’s preliminary determination of each of these elements.

With respect to the fourth element, plaintiff presents evidence that, after receiving a class data file from counsel for defendants, ILYM processed the names and addresses of the 159 individuals identified on the class list, who worked a total of 3,780 work weeks, against the National Change Of Address (NCOA) database maintained by the United States Postal Service. (Castro Decl., ¶¶ 5-6.) To the extent an updated address was found in the NCOA database, that address was used to mail the Notice of Proposed Class Action Settlement (the notice packet) to that class member. (Id. at ¶ 6; see also Exh. A.) If no updated address was found in the NCOA database, the address provided by defendants was used to mail the notice packet to each class member. (Ibid.)

On July 17, 2024, the notice packet was mailed by ILYM to all 159 individuals identified in the class list provided by defendants. (Castro Decl., ¶ 7 & Exh. A.) Of the notice packets mailed on July 17, 2024, ten were returned to ILYM as undeliverable and without a forwarding address. (Id. at ¶ 8.) ILYM performed a computerized skip trace on these ten returned notice packets in an effort to obtain updated addresses. (Ibid.) As a result of this skip trace, three updated addresses were obtained and the notice packets were promptly re-mailed to those class members. (Ibid.) In addition, a total of seven notice packets have been deemed by ILYM to be undeliverable because no updated addresses were found notwithstanding the skip tracing performed by ILYM. (Id. at ¶ 9.)

The deadline to request exclusion from or file objections to the settlement was September 3, 2024. (Castro Decl., ¶¶ 11-12.) As of September 12, 2024, ILYM has not received any requests for exclusion from or objections to the settlement. (Ibid.)

To determine a participating class member’s individual settlement award payment, the net settlement fund of $82,918.81, which is the amount remaining after deductions for Court approved payments, will be divided by the total number of workweeks worked by all settlement class members during the class period, multiplied by the number of workweeks worked by that participating claimant. (Castro Decl., ¶ 13.) Based on these calculations, ILYM asserts that the participating settlement class members will receive an estimated average gross payment of $524.80, with the estimated highest gross payment being $3,180.75, and the estimated lowest gross payment being $21.94. (Ibid.)

ILYM states that its fees and costs for services rendered in connection with the administration of the settlement, which includes fees and costs already incurred as well as anticipated fees and costs for completion of the settlement administration, total $8,250, and that its work will continue with the calculation of settlement award payments, issuing of settlement award checks, necessary tax filing and reporting on settlement payments, and any other tasks mutually agreed to by the parties or ordered by the Court. (Castro Decl., ¶ 14.)

The court must determine the adequacy of a class action settlement by independently satisfying itself that the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.) The Court has reviewed the evidence and arguments presented and is satisfied that the settlement is fair and reasonable in light of the strengths and weakness of the claims and the uncertainties of protracted litigation. In addition, as ILYM received no objections to or requests for exclusion from the settlement, the factors present here give rise to a presumption that the settlement was fair.

Plaintiff has also presented evidence that the settlement was based on extensive investigation and analysis of the factual records of this case including employee handbooks, wage statements, and time records from a sample size of class members and aggrieved employees, which permitted class counsel to evaluate the strengths and weaknesses of the case as well as to calculate damages and penalties. (Melmed Decl., ¶¶ 15-16 & 25-28.) In addition, plaintiff has presented evidence that the risks of complex and lengthy litigation are substantial. (Id. at ¶¶ 24 & 30-31.) Counsel for plaintiff has substantial experience with wage and hour class action matters and is satisfied that the terms and conditions of the settlement are fair, adequate, and reasonable and in the best interests of the class in light of the risks of significant delay and uncertainty associated with litigation and the defenses asserted by defendants. (Id. at ¶ 24, 26, 29, & 30-31.)

Based on the information and evidence presented in the motion and under the totality of circumstances present here, it appears to the Court that the settlement preliminarily approved was reached through an arm’s-length bargaining process between the parties, that investigation and discovery were sufficient to permit the attorneys and the Court to act intelligently, that counsel has substantial experience litigating class actions such as the present action, and that there were no objectors to the settlement. The Court also finds that the distribution of the notice packet by ILYM to class members meets due process requirements and was adequate. Therefore, and subject to exceptions further discussed below, the Court finds that the settlement is fair, adequate, reasonable, and in the best interests of the class. Therefore, for all reasons discussed above, the Court will grant the motion for final approval, in part.

The Court affirms and approves the settlement and certification of the class for settlement purposes. The Court also affirms and approves the allocation of $10,000 of the gross settlement amount to the PAGA penalties and affirms and approves the payment of the amount of $7,500 to the LWDA, as required by law. The Court further affirms payment of administration costs to ILYM in the amount of $8,250.

Plaintiff also requests approval of a service award payment in the amount of $10,000 in addition to payment plaintiff is otherwise entitled to receive as a class member and aggrieved employee. In light of the time and efforts expended by plaintiff to assist class counsel in pursuing this matter, at substantial reputational risk and with a small financial interest in the outcome of the litigation, the Court finds that the incentive award of $10,000 to plaintiff is reasonable. The Court will therefore approve an incentive payment to plaintiff in the amount of $10,000. The Court further affirms named plaintiff Cody Parker as class representative.

The Court will reserve jurisdiction over the parties for the purposes of implementing, enforcing, and administering the settlement or enforcing the terms of the judgement.

Request for an award of attorney’s fees and costs:

For all reasons discussed below, the Court will continue the hearing as to plaintiff’s request for an award of attorney’s fees and costs.

Plaintiff’s request for an award of attorney’s fees is made under the “common fund” doctrine. (See Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 488-489 (Laffitte) [general discussion].) The attorney’s fees sought in the motion total $59,166.67, which counsel asserts represents one-third of the gross settlement sum. Plaintiff also seeks an award of litigation costs in the amount of $7,164.52. The settlement agreement provides for an award of class attorney’s fees not to exceed $59,166.67 or one-third of the gross settlement amount, and an award of costs up to an additional $10,000. (Melmed Decl., Exh. A at § 5.7.)  

“[T]he court’s task in a negotiated settlement of fees is to determine if the negotiated fee is fair. That task requires the court to review the settlement as a whole, including the fee award, to ensure that it was fairly and honestly negotiated, is not collusive and adequately protects the interests of the [parties].” (Robbins v. Alibrandi (2005) 127 Cal.App.4th 438, 444.) In cases where a settlement agreement provides a non-reversionary common fund with all net settlement proceeds used to pay class member claims, the trial court “may determine the amount of a reasonable fee by choosing an appropriate percentage of the fund created.” (Laffitte, supra, 1 Cal.5th at p. 503.) “The choice of a fee calculation method is generally one within the discretion of the trial court, the goal under either the percentage or lodestar approach being the award of a reasonable fee to compensate counsel for their efforts.” (Id. at p. 504.) The court may also “double check the reasonableness of the percentage fee through a lodestar calculation.” (Ibid.)

“The trial court has broad discretion to determine the amount of a reasonable fee, and the award of such fees is governed by equitable principles.” (EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770, 774.) To determine a reasonable fee, the court considers “the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623-624.)

For all reasons discussed below, though the fees sought in the motion are within the range of an appropriate award from a common fund obtained on behalf of all class members and aggrieved employees, the Court questions the reasonableness of these fees.

In the notice of the present motion, plaintiff asserts that a longer supporting memorandum is necessary because the nature of the motion is “complex”. (Notice at p. iii, ¶ 12.) However, plaintiff offers no information or evidence to show why the motion or this relatively uncomplicated litigation are complex. Plaintiff also offers no reasoned argument to show that the motion, or the litigation, raised or implicated difficult, novel, or time consuming factual or legal issues. Though there exists no information or evidence to show that the motion or this litigation is complex as stated in the notice, plaintiff has submitted a 27 page memorandum in support of the present motion. The Court further notes that, although the memorandum exceeds the page limit stated under California Rules of Court, rule 3.1113(d), wholly absent from the memorandum are any stated reasons demonstrating why the arguments presented could not be made in in 15 pages.

In addition, the arguments presented in the memorandum are unnecessarily duplicative and repetitive. For example, information and argument regarding the number of class members who objected to or requested exclusion from the settlement agreement and the rate of participation in the settlement appears in several sections of the memorandum, including at pages 3, 6, 9 through 11, and 13 through 14. By way of further example, duplicative and repetitive information regarding the manner in which the settlement was negotiated following discovery and mediation appears at pages 3, 5, and 13 through 15. The same repetition and duplication exists with respect to information regarding counsel’s experience in litigating similar matters. (See Memo. at pp. 14-16.) These examples are intended to be illustrative but not exhaustive, and to show that there exists no apparent or stated reason why plaintiff’s arguments in support of the motion could not have been made in a more concise and efficient manner.

Though the Court would typically consider the unauthorized submission of a memorandum which exceeds the page limits set forth in rule 3.1113(d) an inadvertent oversight, the previous memorandum submitted in support of plaintiff’s motion for preliminary approval of the settlement agreement also exceeded 15 pages. In its Preliminary Order, the Court noted that plaintiff had failed to state, either in the supporting memorandum or in an application filed before submitting the memorandum, any reasons why the arguments in support of the motion for preliminary approval could not be made within 15 pages.

The manner in which plaintiff has repeatedly presented the factual and legal arguments further described above suggests to the Court that there exists inefficiency rather than oversight in the preparation of a concise memorandum in support of the position advanced by plaintiff. The ostensible inefficiency and duplication described above also implicate and raise concerns with respect to whether or not there also exists any inefficiency or duplication in any other aspect of this litigation and the overall reasonableness of the attorney’s fees sought by plaintiff. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132 [“inefficient or duplicative efforts” are not subject to compensation].)

Considering the implications and issues further discussed above, the Court will continue the hearing as to plaintiff’s request for attorney’s fees to permit plaintiff to file and serve a supplemental brief addressing the reasonableness of the fees requested in the motion in light of the issues and concerns raised herein. To ensure judicial efficiency, the Court will also continue the hearing as to plaintiff’s request for an award of costs.

Order To Show Cause:

“In addition to any other sanctions permitted by law, the court may order a person, after written notice and an opportunity to be heard, to pay reasonable monetary sanctions to the court or an aggrieved person, or both, for failure without good cause to comply with the applicable rules. For the purposes of this rule, “person” means a party, a party’s attorney, a witness, and an insurer or any other individual or entity whose consent is necessary for the disposition of the case. If a failure to comply with an applicable rule is the responsibility of counsel and not of the party, any penalty must be imposed on counsel and must not adversely affect the party’s cause of action or defense thereto.” (Cal. Rules of Court, rule 2.30(b).) (Note: Undesignated rule references shall be to the California Rules of Court.)

Subject to exceptions not applicable here, “no opening or responding memorandum may exceed 15 pages.” (Cal. Rules of Court, rule 3.1113(d).) As further discussed above, the memorandum submitted in support of the motion is 27 pages, which exceeds the 15 page limit set forth in rule 3.1113(d) by 12 pages, or nearly 100 percent of the page limit.

“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).) In the notice of the present motion, plaintiff requests an order granting approval to file an overlength brief. (Notice at p. iii, ¶ 12.) However, under rule 3.1113(e), plaintiff is required to apply to the court for permission to file a longer opening memorandum before filing the motion. Plaintiff failed to do so. In addition, and as further noted above, wholly absent from the supporting memorandum is any reasoned argument showing why the motion is “complex” or why plaintiff’s arguments could not be made within the page limited stated in rule 3.1113(d).

In addition, there exists a record in this Court of prior violations of rule 3.1113(d) and (e) by counsel for plaintiff. As further discussed above, plaintiff previously requested an order granting approval to file a memorandum in support of the motion for preliminary approval which exceeded 15 pages, but failed to apply to the Court for permission to file a longer memorandum. Though the Court granted plaintiff’s previous request notwithstanding plaintiff’s failure to show why the arguments could not be made within the page limit stated in rule 3.1113(d), the Court reminded counsel of their obligation to comply with court rules. (See Preliminary Order.) Notwithstanding the Court’s reminder, counsel has again failed to comply with the requirements of rule 3.1113(d) and (e).

Further, Melmed and the Melmed Group are also identified as counsel of record for a different plaintiff in an unrelated case numbered 23CV03928 and entitled Henry Fredy Castillo Cabell v. West Covina Wholesale Nursery, LLC (the Cabell matter). In the Cabell matter, Melmed and the Melmed Group filed a similar motion for preliminary approval of a class action and PAGA settlement (the Cabell motion). The memorandum submitted in support of the Cabell motion consisted of 23 pages, exceeding the 15 page limit by 8 pages, or by over 50 percent of the page limit set forth in rule 3.1113(d). In the notice of the Cabell motion, the Melmed Group, on behalf of the plaintiff in the Cabell matter, requested leave to file a 23 page memorandum but failed to submit any application for permission to file a longer opening memorandum before filing the Cabell motion, and failed to offer any reasons why the arguments asserted could not be made within the page limit stated in rule 3.1113(d). (See Sept. 23, 2024, Minute Order [Cabell Matter].) 

Plaintiff’s submission of an opening memorandum in support of the present motion that exceeds 15 pages and failure to apply to the Court for permission to file a longer memorandum, with written notice to other parties and at least 24 hours before the memorandum was filed, appears to violate rule 3.1113(d) and (e). Therefore, the Court will order plaintiff’s counsel, Jonathan Melmed and Kyle D. Smith, to appear and show cause why monetary sanctions not to exceed $1,500 should not be imposed against them for violating rule 3.1113(d) and (e). The hearing on the order to show cause shall be set for December 16, 2024, at 10:00 a.m. in this Department. On or before December 2, 2024, plaintiff’s counsel shall file and serve a written response to the Court’s order herein.