Francisco Javier Mendoza vs Duncan Family Farms LLC

Case Number

22CV00779

Case Type

Hearing Date / Time

Fri, 02/23/2024 - 10:00

Nature of Proceedings

Preliminary Approval

Tentative Ruling

The Court will grant the motion, as outlined below.

BACKGROUND: This is a wage and hour action, filed February 25, 2022, alleging causes of action for (1) failure to pay minimum wages, (2) failure to pay overtime compensation, (3) failure to provide meal periods, (4) failure to authorize and permit rest breaks, (5) failure to indemnify necessary business expenses, (6) failure to timely pay final wages at termination, (7) failure to provide accurate itemized wages statements, and (8) unfair business practices.

By stipulation filed May 6, 2022, the parties stipulated to permit plaintiff to file a First Amended Complaint. The First Amended Complaint (found in the court file only as an attachment to the stipulation permitting its filing), reasserted the first eight causes of action, and added a ninth cause of action for civil penalties under PAGA.

Defendant Duncan Family Farms, LLC, operates six farms in four states, including two farms in California that grow organic herbs. Plaintiff was employed by defendant from December 2015 to April 2021.

The parties agreed to mediate the action. In preparation for the mediation, they parties informally exchanged data and documents, including the time and payroll records of a statistically significant sample of the members of the putative class, the employee handbooks in effect during the putative class period, the total number of putative Class Members and PAGA Employees, and the total number of workweeks and pay periods worked by the putative class members and PAGA employees. Evaluation of this data enabled class counsel and its expert to evaluate plaintiff’s claims in light of relevant law, and estimate the probability of class certification, plaintiff’s success on the merits, and defendant’s mandatory monetary exposure for all claims and penalties.

The parties mediated the action with professional, neutral mediator, Hon. Carl West (Ret.) on July 11, 2023. The mediation was adversarial and conducted at arm’s length. It was successful, and a settlement was reached.

Pursuant to the terms of the settlement, defendant will make a gross settlement payment of $300,000, except that, to the extent that any portions of the class members’ settlement payments constitute wages, defendant will also separately be responsible for any employer payroll taxes required by law. The net settlement amount which will be paid to class members under the settlement, consists of the gross settlement amount, from which will be deducted attorneys fees not to exceed 33 1/3% of the gross settlement amount ($100,000.00), reasonable litigation costs not to exceed $18,000.00, a Service Payment not to exceed $7,500.00 to be paid to the named plaintiff, a PAGA penalty payment in the amount of $30,000.00 (which is 75% of the total PAGA allocation of the settlement, of $40,000.00; the allocation which will be distributed to the employees will be included in the net settlement amount), and costs of settlement administration, not to exceed $9,000.00.

For purposes of the Class Action settlement, the proposed class consists of “All current and former non-exempt employees of defendant who worked in California during the Class Period” of February 25, 2018 through September 25, 2023. There are estimated to be 180 class members. Neither the motion nor any of its supporting declarations provide any explanation or information with respect to the manner in which individual class member payments under the settlement will be calculated. However, after reading the underlying Joint Stipulation of Class Action Settlement, the Court was able to discern that each settlement class member will be paid a pro-rata share of the net settlement amount, less the PAGA settlement payments, as calculated by the settlement administrator. That share will be determined by taking the number of workweeks the class member was employed in California during the class period, divided by the total of all covered workweeks worked by all settlement class members, time the net settlement amount. The settlement agreement provides for an escalator clause, in the event of an increase of more than 10% from the original estimate of 7,000 workweeks in the class period, the settlement amount will be increased by the percentage that the actual number of workweeks exceeds a 10% increase from the original estimates; alternatively, defendant may elect to end the class period on the day on which the number of workweeks reaches the escalator trigger point. Settlement Class Payments will be allocated 10% to wages, 85% to penalties, and 5% to interest. With respect to the wage allocation, each settlement class member will be responsible to pay appropriate taxes due on the settlement payments they receive. The average benefit to the class members will be approximately $697.22. There is no requirement that a Class Member submit a claim, in order to receive a settlement payment.

For purposes of the PAGA settlement, the “aggrieved employees” entitled to compensation under the settlement include all current and former non-exempt employees of defendant who worked in California between February 19, 2021 through the sooner of September 25 2023, or the date upon which preliminary approval is granted. There are estimated to be 98 PAGA Employees. Each PAGA employee will be paid a pro-rata share of the PAGA Employees’ PAGA Settlement Payment; they are not permitted to exclude themselves from this portion of the settlement. The pro-rata share will be determined by comparing the individual employee’s PAGA pay periods during the PAGA period to the total PAGA pay periods of all of the PAGA employees during the PAGA period. The PAGA Settlement Payment shares to PAGA Employees is entirely allocated to penalties.

In exchange for the Class Representative Service Payment, the named plaintiff has agreed to release all claims, whether known or unknown, under federal or state law against the releasees, to the extent permitted by law, through the class period. As to the named plaintiff, this include a waiver of the rights and benefits afforded by Civil Code section 1542.

Upon final approval and payment of all sums due, each settlement class member and each PAGA employee will release defendant and all related companies and individuals, as identified in the agreement. Unless a class member has submitted a valid request for exclusion, he or she will, upon cashing their settlement payment, release for the class period all claims stated in the operative complaint, or that could have been stated based on the facts alleged in the action. PAGA employees will be deemed to have released their PAGA claims, regardless of whether they have requested exclusion from the settlement.

Within 15 calendar days from the date of preliminary approval, defendant shall provide to the Settlement Administrator a class database containing the name, last known address, social security number, number of applicable work weeks at defendant’s locations in California during the class period, and number of applicable pay periods for work performed at defendant’s locations in California during the PAGA Period. Upon receipt of the database, the Settlement Administrator will update class member addresses through the U.S. Postal Service National Change of Address List. Within 30 calendar days of preliminary approval, the Settlement Administrator will mail the Class Notice to Class Members, in both English and Spanish, by First Class United States mail. Any notice returned as undeliverable will be remailed to any forwarding address provided. If there is no forwarding address, the Settlement Administrator will perform an additional computer search using social security or other information. For any remailed notice, the Settlement Administrator will include a letter stating an extended response deadline.

Each class member will have until expiration of the Response Deadline (45 days after initial mailing), or Extended Response Deadline (for remailed notices, the later of 45 calendar days after initial mailing or 14 calendar days from re-mailing), to submit to the Settlement Administrator any dispute or challenge to the covered workweek information on the notice. The class member must submit information or documents supporting his or her position to the Settlement Administrator by this deadline. The Settlement Administrator will review any such information and issue a non-appealable decision regarding the dispute.

Within the same Response Deadline or Extended Response Deadline, any class member may request to be excluded from the class, or may submit a written objection to the settlement. A class member may also object to the settlement by appearing at the Final Approval Hearing to explain any objection, or have an attorney object for the class member. If a class member submits an objection, any Request for Exclusion also submitted by the class member will be deemed withdrawn.

Defendant will fund the settlement account by depositing the Gross Settlement Amount and any employer payroll taxes on or before 20 days after the Effective Date. Within 14 calendar days of receipt of the gross settlement amount from the defendant, the Settlement Administrator will issue and send out the Settlement Payment checks to the class members. For each check which remains uncashed after 180 days from the date of issuance, the funds shall be transmitted to the California Controller’s Unclaimed Property Fund in the name of the Settlement Class Member. The Court will have continuing jurisdiction over the terms and conditions of the settlement until all payments and obligations contemplated by the settlement have been fully carried out.

Motion: Plaintiff has moved for orders (1) granting preliminary approval of the class action and PAGA settlement, (2) certifying the putative Class for settlement purposes, (3) approving the proposed Class Notice and plan for distribution of the Class Notice to Class Members, (4) appointing Francisco Javier Mendoza as Class Representative for settlement purposes, (5) appointing Moon Law Group, PC as Class Counsel for settlement purposes; (6) appointing ILYM Group, Inc. as the Settlement Administrator for settlement purposes; and (7) scheduling a final fairness hearing. The motion is supported by the declaration of attorney Kane Moon of the Moon Law Group, PC, and the declaration of plaintiff and proposed Class Representative Francisco Javier Mendoza.

ANALYSIS: The Court will grant the motion, as outlined below.

The purpose of the preliminary approval hearing is to determine whether the settlement is within the range of reasonableness for preliminary approval and to approve or deny certification of a provisional settlement class. A full inquiry into the fairness of the proposed settlement occurs at the final approval hearing. (Rules of Court, rule 3.769, subd. (g).)

“‘The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.’” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.) The court has broad discretion to determine whether the settlement is fair. (Dunk v. Ford Motor Co.) (1996) 48 Cal.App.4th 1794, 1801.) “The well-recognized factors that the trial court should consider in evaluating the reasonableness of a class action settlement agreement include ‘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 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.’ [Citations.] This list ‘is not exhaustive and should be tailored to each case.’ [Citation.]” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

A PAGA action is therefore a type of qui tam action, in which a private party is authorized to bring an action to recover a penalty on behalf of the government, and receive part of the recovery as compensation. (Huff v. Securitas Sec. Servs. USA, Inc. (2018) 23 Cal.App.5th 745, 753.) In doing so, the employee acts as proxy for the state labor law enforcement agency; the proceeding is designed to protect the public, not to benefit private parties. (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.) The dispute is between the employer and the state. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 81.) The purpose of PAGA is not to recover damages, restitution, or redress the employees’ injuries, but to recover civil penalties to remediate present violations and deter future ones. (Id. at p. 86.) While a PAGA case is representative in nature, it is not a class action, and may be brought without the procedural requirements involved in class actions.

Labor Code section 2699(k) mandates that PAGA civil penalties be allocated 75% to the LWDA, for enforcement of labor laws and education of employers and employees about their rights and responsibilities under the code, and 25% to the aggrieved employees. Section 2699(l)(2) requires that the superior court review and approve any penalties sought as part of a proposed settlement agreement, pursuant to that part of the code.

The Court has carefully analyzed the terms of the settlement, including the nature and scope of the release it requires of absent class members and the representative plaintiff. The Court finds that both the class action settlement and the PAGA penalty settlement are within the range of acceptable settlements. The Class consists of approximately 180 class members, and there are approximately 98 aggrieved PAGA employees. The action has settled for a non-reversionary Gross Settlement Amount of $300,000.00. The class will share in the Net Settlement Amount according to the formula set forth in the Settlement Agreement, totaling approximately $352,500, after deduction from the Gross Settlement Amount the claimed attorneys’ fees of up to $100,000, costs not to exceed $18,000, settlement administration costs not to exceed $9,000, a Class Representative Service Payment of $7,500 to the named plaintiff, and $40,000 in settlement of the PAGA claims, of which 75% ($30,000) shall be paid to the LWDA, and the remining 25% ($10,000) will be distributed to PAGA employees pursuant to the formula set forth in the Agreement. The proceeds of the class action payments are allocated 10% to wages (subject to withholding), and 85% to penalties (not subject to withholding), and 5% to interest.

Substantial investigation and informal discovery were conducted, giving rise to an informed settlement, in light of the risks of further litigating the action through trial. The case involves experienced class counsel, who believe the settlement is fair, reasonable, and in the best interests of the class members. The settlement was achieved through arms’-length negotiations, and was not collusive.

The motion asks the Court for an order certifying the settlement class. As noted above, the approximately 180-member class is comprised of “all current and former non-exempt employees of defendant who worked in California during the Class Period” of February 225, 2018 through September 25, 2023. The Court finds that certification of the class for settlement purposes is appropriate, and will grant the motion to provisionally certify the proposed class for settlement purposes. The class is ascertainable from defendants’ records, and is so numerous that joinder of all members is impracticable. There are questions of law or fact common to the proposed class, and there is a well-defined community of interest among its members with respect to the subject matter of the litigation.

It appears to the Court that the claims of the Class Representative are typical of the claims of the members of the proposed class, and that he has fairly and adequately protected the interests of the class members. It also appears to the Court that proposed class counsel is experienced and qualified in wage and hour class litigation, and will properly and adequately represent the interests of the absent class. The court will appoint the named plaintiff as class representative for the class, will appoint plaintiff’s attorneys as class counsel for the class, and will approve ILYM Group, Inc., as the third-party settlement claims administrator.

The Court further approves the PAGA claim aggrieved employees, consisting of approximately 98 current and former non-exempt employees of defendant who worked in California between February 19, 2021 and September 25, 2023. It further approves the PAGA settlement payment, finding that the terms of the PAGA settlement are fair and reasonable.

The motion further seeks approval of the proposed Notice of Proposed Class Action Settlement to be provided to the absent class members. Under Trotsky v. Los Angeles Fed. Sav. & Loan Assn. (1975) 48 Cal.App.3d 134, 151-152, the notice provided to a class must fairly apprise the class members of the terms of the proposed compromise and of the options open to dissenting class members. The Court has analyzed the contents of the Notice, and finds that it meets the standard for approval, in clearly outlining what the recipient must do in order to object to the settlement, or to opt out of the settlement, and the time within which each must be accomplished. The Notice of Proposed Class Action Settlement is therefore approved.

The motion seeks a hearing date for the court’s consideration of final approval of the settlement, at which time the Court will also consider counsel’s application for an award of attorneys’ fees and reimbursement of costs, and the incentive award to the representative plaintiff. The Court requests that counsel propose an appropriate date or dates upon which the Final Approval hearing could be held, which will allow sufficient opportunity for the notice, claims, objection, and/or exclusion procedures to conclude. The Court will then designate such date at the hearing. All documents related to the final approval, fees, costs, and enhancement award, shall be filed no later than 16 court days prior to the final approval hearing date which will be set by the Court.

The Court has reviewed the proposed order submitted by the plaintiff, and intends to execute it, after inserting the date and time of the Final Fairness Hearing in the appropriate blanks set forth in ¶ 10 of the Proposed Order.