ALBERTO GATICA-CASTRO V. SPECIALTY TEAM PLASTERING, INC.

Case Number

22CV01120

Case Type

Hearing Date / Time

Mon, 01/29/2024 - 22:00

Nature of Proceedings

Preliminary approval of class action and PAGA settlement

Tentative Ruling

Case No. 22CV01120 

Alberto Gatica-Castro v. Specialty Team Plastering, Inc.

                        Hearing Date:         1/22/2024                                                        \

HEARING:    Preliminary approval of class action and PAGA settlement

           

ATTORNEYS:          Matthew J. Matern / Matthew W. Gordon / Vanessa M. Rodriguez of Matern Law Group PC for plaintiff and the class

                                    Kenneth P. Roberts / Ryan P. Tish of K.P. Roberts & Associates for defendant

                       

TENTATIVE RULING:  

The motion is granted.

Background: Defendant Specialty Team Plastering, Inc. (STP) is a construction firm that specializes in drywall, plastering, and other construction services. Plaintiff worked for STP as a non-exempt employee from March 2018 to September 2021. On January 13, 2022, plaintiff gave notice to the California Labor and Workforce Development Agency (LWDA) and to defendant. He subsequently filed this action on March 21, 2022, alleging wage and hour claims against STP including: (1) failure to provide required meal periods, (2) failure to provide required rest periods, (3) failure to pay overtime wages, (4) failure to pay minimum wages, (5) failure to pay all wages due to discharged and quitting employees, (6) failure to furnish accurate itemized wage statements, (7) failure to maintain required records, (8) failure to indemnify employees for necessary expenditures incurred in discharge of duties, and (9) unfair and unlawful business practices; as well as (10) a representative action for penalties under the Private Attorneys General Act.

In lieu of formal discovery, the parties agreed to attend a private mediation and to informally exchange the information and documents necessary to evaluate the claims. Prior to the mediation, STP provided plaintiff with a 25% random sampling of time and payroll records for the period of March 21, 2018 to January 8, 2023. Plaintiff then retained an expert to analyze the data sample for missed, short, and late meal periods, unpaid meal and rest period premiums, and overtime issues. STP also provided plaintiff with its relevant written policies in effect during the putative class period.

The parties participated in an all-day mediation on February 16, 2023, with experienced mediator Lisa Klerman, Esq. At the mediation, the parties signed a Memorandum of Understanding, which contemplated that they would enter into a comprehensive written agreement. That agreement was executed on September 1, 2023, and was amended on November 16, 2023 to change the payment schedule.

The proposed Class, for purposes of the class action settlement, consists of “all current and former non-exempt employees of STP in the State of California at any time within the period from March 21, 2018 through April 27, 2023.” The class is estimated to consist of 426 class members. For purposes of the settlement of the PAGA claims, “PAGA Employees” means all class members that worked during the PAGA Period, from January 15, 2021 through April 27, 2023. There are estimated to be 190 PAGA Employees.

In return for the Release of all Class Member claims and PAGA claims, defendant will pay a non-reversionary Gross Settlement Amount of $645,000, to be funded by defendant by the payment of $400,000 within 15 days after the Effective Date (as defined in the agreement), $150,000 by June 30, 2024, and $95,000 by December 31, 2024. The Gross Settlement Amount will be allocated to (1) individual settlement payments made automatically to all class members who do not timely request to be excluded (totaling approximately $352,500), (2) a class representative service award of $7,500 to plaintiff, for his time and effort in bringing and prosecuting the action, and for his release of all claims against defendant, (3) attorney fees not to exceed one-third of the Gross Settlement Amount ($215,000) and costs not to exceed $25,000; (4) settlement administration costs not to exceed $15,000, (5) PAGA Penalties totaling $30,000, of which 75% ($22,500) shall be paid to the LWDA, and the remaining 25% ($7,500) will be distributed to PAGA employees. The amount of the first payment is sufficient to cover all class member settlement payments and PAGA employee payments, and the fact that the remaining payments are not made until later dates will not impact the timing of the payments made to the class members and PAGA employees.

Each class member’s share of the class action settlement will be determined by dividing the Net Settlement Amount by the total number of workweeks worked by settlement class members during the class period, and multiplying the result by each settlement class member’s number of workweeks. The payments will be allocated to 10% wages, subject to and reduced by applicable tax withholdings, and 90% as non-wage penalties and interest not subject to withholding. The payments will be mailed to each settlement class member’s last known mailing address within 14 days after the first installment payment of $400,000 is deposited with the Settlement Administrator. If a check remains uncashed after 180 days from issuance, the Settlement Administrator will void the check, and the funds from the check will be transmitted to the California State Controller’s Office Unclaimed Property Fund in the name of the class member.

The $7,500 in PAGA Settlement Payments will be distributed to the PAGA employees by dividing that amount by the total number of PAGA pay periods worked by all PAGA employees during the PAGA period, and multiplying the result by each PAGA employee’s number of PAGA pay periods. Again, if any PAGA settlement payment check remains uncashed after 180 days from issuance, the Settlement Administrator will void the check and transmit the funds to the California State Controller’s Office Unclaimed Property Fund in the name of the PAGA Employee. Even those class members who request to be excluded from the class will receive a PAGA settlement payment, if they qualify as PAGA employees.

Under the terms of the settlement, upon the settlement’s effective date and payment by defendant of all funds due under the settlement, plaintiff, PAGA employees, and Class Members who have not submitted a valid and timely request for exclusion will release all claims against defendant (and its affiliates, as described in the agreement), with respect to any claims which were or could have been asserted based on the facts and circumstances alleged in the complaint and arising at any time during the class period. Upon the effective date, the class members who do not submit a timely and valid request for exclusion will be preclude from filing a wage and hour action under the Fair Labor Standards Acts for claims or causes of action encompassed by the released claims, which will be extinguished. All class members employed during the released PAGA claims period, whether or not they have requested exclusion from the class action settlement, will release claims arising under the Private Attorneys General Act of 2004, Labor Code § 2698 et seq., to the extent asserted in plaintiff’s administrative exhaustion letter submitted to the LWDA and any complaint in this matter.

Within 14 court days after the grant of preliminary approval, defendant shall provide the Settlement Administrator with a class database containing the name, last known address, social security number, dates of employment in California, and number of workweeks and PAGA pay periods for each class member. Upon receipt of the database, the Settlement Administrator will update class member addresses through the U.S. Postal Service National Change of Address List, and will mail a copy of the Class Notice, in English and Spanish, to all class members within 14 days. Any notice returned as undeliverable will be remailed to any forwarding address provided within 3 business days. If there is no forwarding address, the Settlement Administrator will perform an additional computer search using social security or other information, and where a notice is remailed the mailing must be completed within 3 business days. For re-mailed notices, the class member will have to respond by the original response deadline or 14 calendar days after the remailing, whichever is later.

The Response Deadline is 45 days after the initial mailing of the class notice, and is the last day on which class members may submit a Request for Exclusion or written objection to the settlement. The Notice sets forth the manner in which any putative class member could request to be excluded form the settlement class, and explains the consequences of doing so. It also sets forth the manner in which any class member may object to the settlement, either by submitting a written objection by the response deadline, or appearing at the final approval hearing to do so. It also provides a means for class members to dispute the amounts the Settlement Administrator determines that they will receive pursuant to the Class Settlement, and as a PAGA payment.

Motion: Plaintiff has moved for orders (1) granting preliminary approval of the Class Action and PAGA Settlement, (2) provisionally certifying, for settlement purposes only, the class of “all current and former non-exempt employees of Defendant Specialty Team Plastering, Inc. in the State of California at any time within the period from March 21, 2018 through April 17, 2023”; (3) appointing plaintiff Alberto Gatica-Castro as the Class Representative; (4) appointing Matern Law Group, PC as Class Counsel, (5) appointing Xpand Legal Consulting LLC as the Settlement Administrator, (6) approving the proposed Notice of Class and PAGA Action Settlement, and (7) scheduling a Final Approval Hearing.

The motion is supported by the declaration of attorney Matthew J. Matern, from the law firm of proposed class counsel Matern Law Group, PC, and the declaration of plaintiff and proposed Class Representative Alberto Gatica-Castro.

ANALYSIS:  The Court 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 426 class members, and there are approximately 190 PAGA employees. The action has settled for a non-reversionary Gross Settlement Amount of $645,000.00. 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 $215,000, costs not to exceed $25,000, settlement administration costs not to exceed $15,000, a Class Representative Service Award of $7,500 to the named plaintiff, and $30,000 in settlement of the PAGA claims, of which 75% ($22,500) shall be paid to the LWDA, and the remining 25% ($7,500) 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 90% to penalties (not subject to withholding). Payments to fund the settlement are to be made by defendant according to a schedule set forth in the Amendment to the agreement.

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 extensive arms’-length negotiations, and was not collusive.

The motion asks the Court for an order certifying the settlement class. As noted above, the class is comprised of “all current and former non-exempt employees of Defendant Specialty Team Plastering, Inc. in the State of California at any time within the period from March 21, 2018 through April 17, 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 Xpand Legal Consulting LLC as the third-party settlement claims administrator.

The Court further approves the PAGA claim class, consisting of "all Class Members that worked during the PAGA Period, from January 15, 2021 through April 17, 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 Class and PAGA 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 requests that plaintiff submit a revised order forthwith for execution by the Court, which: (a) inserts the final approval hearing date in the appropriate blanks in ¶¶ 13 and 15; (b) inserts a date 16 court days prior to the final approval hearing date as the deadline for filing the motion for final approval (¶ 15, page 5, line 9); (c) revises the deadline for provision of the database to the Settlement Administrator to remove the blank and specify that the deadline is 14 days after entry of the Preliminary Approval Order (¶ 15, page 5, line 1); (d) revises the deadline for settlement administrator to mail the Class Notice to Class Members to remove the blank, and specify that the deadline is 14 days after receiving the class database from defendant (¶ 15, page 5, line 4); and (e) revises the deadline for class members to submit an objection or Request for Exclusion to remove the blank, and specify that the deadline is 45 days after Class Notice is mailed by the Administrator to Class Members.