Cecilia Perez vs Sansum Clinic

Case Number

23CV01312

Case Type

Hearing Date / Time

Mon, 11/18/2024 - 10:00

Nature of Proceedings

Motion Preliminary Approval

Tentative Ruling

Cecilia Perez v. Sansum Clinic                                           

Case No. 23CV01312

           

Hearing Date: November 18, 2024                                                    

HEARING:              Motion For Preliminary Approval Of Class Action And PAGA Settlement

ATTORNEYS:        For Plaintiff Cecilia Perez: Edwin Aiwazian, Joanna Ghosh, Vartan Madoyan,  Lawyers for Justice, PC, S. Emi Minne, Jill J. Parker, Parker & Minne, LLP

For Defendant Sansum Clinic: Jeffrey A. Dinkin, Jared W. Speier, Adam Bouka, Stradling Yocca Carlson & Rauth, A Professional Corporation

TENTATIVE RULING:

The motion of plaintiff for an order granting preliminary approval of class action and PAGA 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 March 27, 2023, plaintiff Cecilia Perez (Perez) filed a class action complaint for damages and enforcement under Labor Code section 2698 et seq. (the Private Attorneys General Act of 2004 or PAGA) against Sansum Clinic (Sansum), alleging eleven causes of action: (1) violation of Labor Code sections 510 and 1198; (2) violation of Labor Code sections 226.7 and 512, subdivision (a); (3) violation of Labor Code section 226.7; (4) violation of Labor Code sections 1194, 1197, and 1197.1; (5) violation of Labor Code sections 201 and 202; (6) violation of Labor Code section 204; (7) violation of Labor Code section 226, subdivision (a); (8) violation of Labor Code section 1174, subdivision (d); (9) violation of Labor Code sections 2800 and 2802; (10) violation of Business and Professions Code section 17200 et seq.; and (11) violation of PAGA. As alleged in the complaint:

Sansum employed Perez as an hourly-paid, nonexempt employee from February 2020 to September 2022. During the period Perez was employed by Sansum, Sansum failed to pay Perez and other class members for regular and overtime wages, failed to provide and pay for uninterrupted and missed meal and rest periods, rounded work time recorded by Perez and other class members in a manner that was not fair or neutral on its face, required Perez and other class members to perform health and safety checks related to Covid-19 while off the clock, failed to pay wages due upon discharge or resignation, failed to provide complete and accurate wage statements that included the total number of hours worked by Perez and other class members, failed to keep complete and accurate payroll records for Perez and other class members, failed to reimburse Perez and other class members for necessary business-related expenses.

Sansum answered the complaint on June 9, 2023, generally denying its allegations and asserting twenty affirmative defenses.

On September 13, 2024, Perez filed a motion for an order granting preliminary approval of a Joint Stipulation of Class Action and PAGA Settlement and Release (the Settlement Agreement) entered between Perez and Sansum. Perez also moves for preliminary approval of: (1) a proposed Notice of Pendency of Class Action and PAGA Settlement and Final Hearing (the Class Notice) and deadlines for the settlement administration process; (2) the manner and method for members of the proposed class to opt-out from or object to the settlement set forth in the Settlement Agreement and the Class Notice; (3) directing the mailing of the Class Notice to members of the proposed class; (4) provisionally certifying the proposed class for settlement purposes only; (5) appointing Perez as the class representative for settlement purposes; (6) appointing S. Emi Minne (Minne) and Jill J. Parker (Parker) of the law firm Parker & Minne, LLP, and Arby Aiwazian (Aiwazian), Joanna Ghosh (Ghosh), and Vartan Madoyan (Madoyan) of Lawyers for Justice, PC, as class counsel for settlement purposes; (7) appointing Simpluris, Inc., (Simpluris) as the settlement administrator; (8) directing Sansum to, no later than thirty days after the Court grants preliminary approval of the Settlement Agreement, furnish the information necessary for Simpluris to calculate the number of compensable workweeks worked during the class and PAGA periods for all members of the class; and (9) setting a date and time for a final approval hearing.

On October 30, 2024, Sansum filed a notice stating that it does not oppose the present motion.

The Declaration of S. Emi Minne:

In support of the preliminary approval motion, Perez submits the declaration of her counsel, S. Emi Minne (Minne), who declares that the law firms of Parker & Minne, LLP, and Lawyers for Justice, PC, (collectively, Class Counsel) worked together to achieve a global, class-wide resolution of the claims alleged by Perez in this action. (Minne Decl., ¶ 2.) A copy of the Settlement Agreement and proposed Class Notice are attached to the Minne declaration as exhibit 1.

Minne further declares that Sansum is a non-profit outpatient healthcare organization, and that Perez is a former non-exempt, hourly-paid employee of Sansum who was employed as an Ophthalmic Assistant and Scribe from approximately February 2020 to September 2022. (Minne Decl., ¶ 4.)

Minne states that on May 4, 2023, Perez served written discovery requests on Sansum consisting of a first set of form and specially prepared interrogatories and a request for production of documents, and a second set of specially prepared interrogatories. (Minne Decl., ¶ 8.) On May 18, 2023, Sansum served its first set of written discovery requests on Perez which consisted general and employment law form interrogatories, specially prepared interrogatories, requests for admission, and requests for production of documents. (Id. at ¶ 9.) On July 11, 2024, Sansum served its responses to the discovery requests of Perez. (Id. at ¶ 10.)

After the initiation of formal discovery, Class Counsel and counsel for Sansum met and conferred regarding the potential for resolution of the action. (Minne Decl., ¶ 11.) Pursuant to these discussions, the parties agreed to stay formal discovery, exchange informal discovery, and engage in private mediation. (Ibid.) Sansum provided Class Counsel with extensive informal discovery which included the production of complete time and payroll records up to September 7, 2023, all versions of employee handbooks in use during the class period, and other documents evidencing its relevant wage and hour policies and procedures. (Id. at ¶ 12.) Sansum also provided Class Counsel with data points regarding the size and composition of the class including the number of current and former class members and employees who worked during the relevant time period, the total number of workweeks and pay periods worked by class members during the relevant time periods, and the average rate of pay for the class. (Ibid.)

Prior to mediation, Class Counsel thoroughly reviewed the informal discovery produced by Sansum, consulted with a data analysis expert to analyze the time and payroll records provided by Sansum, engaged in extensive independent investigation, and conducted legal research regarding the merits of Perez’s claims and the potential defenses of Sansum. (Minne Decl., ¶ 13.) Based on the investigation of Class Counsel and the informal discovery, Class Counsel prepared an assessment of Sansum’s potential liability prior to the mediation as well as a detailed brief addressing Perez’s claims and Sansum’s anticipated defenses, which were provided to the mediator for consideration. (Ibid.)

On November 7, 2023, the parties attended a formal mediation with David A. Rotman, who Minne describes as a neutral mediator with extensive experience in complex wage and hour matters. (Minne Decl., ¶ 14.) The Parties engaged in a full day of settlement discussions, during which the parties extensively and vigorously advanced and debated their respective positions and exchanged views regarding the strengths and weaknesses of their claims and defenses. (Ibid.) Minne asserts that the settlement discussions were conducted at arm’s length and adversarial, and that Perez remained prepared to aggressively litigate her claims through class certification, trial, and appeal. (Ibid.)

Though the parties were unable to reach an agreement to resolve the action during the November 7, 2023, mediation, the mediator facilitated further arms-length negotiations which culminated in the acceptance of a mediator’s proposal on November 30, 2024, and the execution of a memorandum of understanding reflecting the terms of the mediator’s proposal on April 18, 2024. (Minne Decl., ¶ 14.) After months of further negotiations, the Settlement Agreement was executed on September 11, 2024. (Id. at ¶ 14 & Exh. 1.)

Minne states that Simpluris was selected by the parties to serve as the settlement administrator because it provided the lowest estimate, which would result in the highest net recovery to members of the class. (Minne Decl., ¶ 29.) Minne also provides a basic summary of the terms of the Settlement Agreement, which are discussed in further detail below. (Id. at ¶¶ 17-28.)

Minne asserts that, based on an analysis of available data and information, Class Counsel determined that if all class claims were certified and adjudicated in favor of the class at trial, Sansum would face a maximum potential class-wide liability of approximately $36,947,381.88, inclusive of amounts due for unpaid minimum wage and overtime compensation, unpaid meal and rest period premiums, unreimbursed business expenses, and waiting time and wage statement penalties. (Minne Decl., ¶ 30.) Minne provides a breakdown with respect to each of the direct class claims or categories for which Sansum would face liability which includes the amount of damages for which Sansum would face liability for each claim together with an explanation of the calculations. (Id. at ¶¶ 30-36.)

Class Counsel also separately analyzed the potential exposure of Sansum for the PAGA claim, and estimates that if all PAGA claims were adjudicated in favor of Perez and all available civil penalties were awarded, Sansum faced a potential exposure of $26,573,800. (Minne Decl., ¶ 37.) Minne provides a breakdown of liability amounts with respect to unpaid overtime and minimum wage violations, meal and rest period violations, failure to timely pay wages and to maintain required payroll records, and failure to reimburse business expenses. (Ibid.) The calculations provided by Minne do not include civil penalties that Class Counsel believed would likely be considered duplicative of statutory penalties recoverable as part of Perez’s claims, such as waiting time penalties under Labor Code section 203 and wage statement penalties under Labor Code section 226. (Ibid.)

Minne further declares that the calculations described above and in the Minne declaration assume that Perez prevailed on all causes of action at every stage of this litigation. (Minne Decl., ¶ 38.) Sansum denied liability and asserted several defenses including to class certification. (Ibid.) Though Class Counsel believes the claims of Perez are meritorious, counsel also recognized and considered the significant risk and uncertainty associated with protracted litigation, and applied appropriate adjustments to determine a realistic range of recovery. (Ibid.)

By way of example, with respect to overtime and minimum wage claims, Sansum denied that employees were required to do any work off-the-clock, and asserted that if employees performed such work it was done without the knowledge of Sansum. (Minne Decl., ¶ 39.) Sansum also argued that individual liability issues predominated, including whether each employee worked off-the-clock and whether Sansum knew or should have known about any work performed off-the clock. (Ibid.) Because these claims were based on off-the-clock work not reflected in employee time records, Sansum argued that proving damages at trial would not be manageable. (Ibid.) Class Counsel also recognized that certification of the off-the-clock claims is an extremely uncertain proposition due to potential for individualized issues and lack of records. (Ibid.) Therefore, Class Counsel applied an 80 percent reduction for risks associated with class certification and an 80 percent reduction for risks associated with prevailing on the merits at trial, which resulted in an adjusted estimated liability of $285,824.93 for claims relating to unpaid overtime and minimum wages. (Ibid.)

Minne provides a similar explanation of adjustments applied by Class Counsel to claims for missed meal and rest periods, unreimbursed business expenses, and waiting time and wage statement penalties, which were based on the defenses asserted by Sansum to each claim as well as the risks associated with class certification and prevailing on the merits at trial with respect to each claim. (See Minne Decl., ¶¶ 40-43.)

Based on the adjustments discussed above and in the Minne declaration, Class Counsel estimates that Sansum faced a total risk-adjusted liability of $2,678,851.79 with respect to the class claims of Perez. (Minne Decl., ¶ 44.) Minne further contends that the same defenses and merit-based risks associated with the direct claims applies to the claims brought under PAGA. (Minne Decl., ¶ 45.)

In addition, Class Counsel anticipates that Sansum will attempt to challenge Perez’s standing as an aggrieved employee under PAGA which raised potential issues associated with bringing the PAGA claims to trial. (Minne Decl., ¶ 45-46 [also discussing recent decisions of the California Supreme Court with respect to PAGA claims].) Minne also cites challenges arising from Sansum’s assertions that it made a good faith effort to comply with its legal obligations such that heightened penalties under PAGA may be unavailable to the extent they are considered by the Court to be inappropriate or unjust. (Id. at ¶ 48.)

Considering the risk and expense of continued litigation which Minne asserts would delay or reduce recovery by members of the class, and challenges that Perez may face with respect to class certification, Minne contends that the Settlement Agreement is fair, reasonable, adequate, and in the best interest of the proposed class, and that the amount of the settlement, including the allocation of funds towards a payment under PAGA as further discussed below, falls within an acceptable range of recovery given the strengths and weakness of the case. (Minne Decl., ¶¶ 50-52.)

The Settlement Agreement:

The term “Settlement Class” is defined in the Settlement Agreement to include “all current and former non-exempt employees employed by [Sansum] in California at its California facilities at any time from March 27, 2019 through … July 17, 2024.” (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 2(B).) The term “Class Member” is defined as a member of the Settlement Class including those employees who worked between January 19, 2022, and July 17, 2024 (the PAGA Period). (Id. at ¶ 2 (F) & (EE).) The “Class Period” covered by the Settlement Agreement commences on March 27, 2019, and ends on July 17, 2024. (Id. at ¶ 2(I).)

Minne asserts that, based on information provided by Sansum prior to mediation, it is estimated that there are approximately 2,355 potential Class Members. (Minne Decl., ¶ 18.)

The Settlement Agreement also defines and includes a subgroup of “PAGA-Eligible Employees” which is defined to include all current and former non-exempt employees who are members of the Settlement Class and who have been employed by Sansum in non-exempt positions during the PAGA Period. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 2(CC) & EE.) Minne asserts that, based on information provided by Sansum prior to mediation, it is estimated that there are approximately 1,650 PAGA-Eligible Employees. (Minne Decl., ¶ 20.)

Subject to the Court’s approval, the parties have agreed to settle the claims alleged in this action for the sum of $2,975,000 (the Maximum Settlement Amount), which is non-reversionary and exclusive of any employer-side payroll taxes to be paid separately by Sansum. (Minne Decl., Exh. 1 [Settlement Agreement], ¶¶ 2(X), 11, 48.) The Maximum Settlement Amount will be funded by Sansum within thirty days after the Settlement Agreement becomes final. (Id. at ¶ 45.)

The Maximum Settlement Amount will be allocated as follows: (1) attorney’s fees to be paid to Class Counsel and not to exceed the amount of $1,041,250, or 35 percent of the Maximum Settlement Amount; (2) litigation costs and expenses to be paid to Class Counsel and not to exceed $60,000; (3) a class representative service award to be paid to Perez, who is designated as the “Class Representative”, in the amount of $10,000; (4) costs to administer the settlement (the Settlement Administration Costs) to be paid to Simpluris and not to exceed $20,000; (5) payment in the amount of $300,000 (the PAGA Payment) in full settlement of claims for civil penalties under PAGA, of which $225,000 or 75 percent will be paid to the California Labor and Workforce Development Agency (the LWDA) and of which $75,000 or 25 percent will be distributed to PAGA Eligible Employees. (Minne Decl., Exh. 1 [Settlement Agreement], ¶¶ 2(D), (K), (L), (DD), (MM) & (NN); 12-15.)

The “Net Settlement Amount” is defined to mean the Maximum Settlement Amount, less the amounts awarded for Class Counsel’s fees and costs, the service award to the Class Representative, the PAGA Payment, and the Settlement Administration Costs described above. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 2(Y).) After the amounts described above are deducted from the Maximum Settlement Amount by Simpluris, the “Participating Class Members”, defined to include those class members who do not submit a valid and timely request for exclusion from the Settlement Agreement, will share in a Net Settlement Amount of approximately $1,543,750. (Id. at ¶¶ 2(Y), 16.)

The Net Settlement Amount will be distributed as individual payments to Participating Class Members by Simpluris on a pro-rata basis based on the number of “Compensable Workweeks”, which is defined to mean the number of calendar weeks that a Class Member was employed by [Sansum] as a non-exempt employee at any time in California at its California facilities during the Class Period, including the PAGA Period.” (Minne Decl., Exh. 1 [Settlement Agreement], ¶¶ 2(M) & (T), 16.) Minne asserts that this method of distribution is commonly used in wage and hour class actions because it relies upon objective evidence of the length of employment which Class Members can easily review and confirm for themselves, allows for a distribution that corresponds closely to the alleged damages which are directly related to the amount of time Class Members were employed, and because this information is readily available from the records of Sansum such that Simpluris can apply the formula in a fair and transparent manner. (Minne Decl., ¶ 24.)

Minne estimates that, based on information provided by Sansum, the average individual payment to Participating Class Members will be approximately $593.75. (Minne Decl., ¶ 25.) Individual payments made to Participating Class Members will be allocated as 10 percent wages and 90 percent interest and penalties. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 18.) Simpluris will issue appropriate tax forms to each Participating Class Member. (Ibid.)

In addition to the individual class payments described above, the PAGA-Eligible Employees will receive a pro-rata share of the 25 percent portion of the PAGA Payment allocated for distribution to PAGA-Eligible Employees. (Minne Decl., Exh. 1 [Settlement Agreement], ¶¶ 2(U), 15, 17.) Individual PAGA payments will be distributed based on the number of Compensable Workweeks worked by PAGA-Eligible Employees during the PAGA Period, which will be calculated by Simpluris. (Ibid.) Based on information provided by Sansum, Minne estimates that the average individual payment to be made to PAGA-Eligible Employees will be approximately $45.45. (Minne Decl., ¶ 27.)

Individual payments to be made to participating Class Members and PAGA-Eligible Employees will be made within fifteen days after Sansum has wired the amount necessary to fund the Maximum Settlement Amount. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 46.) Simpluris will determine eligibility for, and the amounts of, each individual payment to be made under the terms of the Settlement Agreement. (Id. at ¶¶ 16-17, 29 & 32.)

The Settlement Agreement requires Sansum to, within thirty days after the Court grants preliminary approval, provide to Simpluris data and other information more fully described in the Settlement Agreement (the Class Data), sufficient to permit Simpluris to calculate the number of workweeks or pay periods worked by each Class member during the Class Period and PAGA Period. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 29.) Before mailing the Class Notice, Simpluris will provide Class Counsel with the total Compensable Workweeks during the Class Period and the PAGA Period. (Ibid.)

Within twenty days after receiving the Class Data from Sansum, Simpluris will mail copies of the Class Notice as approved by the Court. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 30.) Before mailing the Class Notice, Simpluris will perform a search based on the National Change of Address Database for information to update and correct for any known or identifiable address changes. (Ibid.)

In the event a Class Notice is returned or not deliverable within 45 days after the Class Notice is mailed to the Class Members, Simpluris will, within five calendar days of receipt of the returned Class Notice, either re-mail the Class Notice to the forwarding address affixed thereto or use skip-tracing or another type of automated search to re-mail the Class Notice to that Class Member. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 31.) Any deadlines to object or request exclusion from the Settlement Agreement or to challenge Compensable Workweeks will be extended an additional seven days from the date of the re-mailing. (Ibid.)

Class Members may challenge calculation of their individual payment and the number of eligible Compensable Workweeks by submitting a written statement to Simpluris by the “Response Deadline”, which is defined to mean “45 days after the [Simpluris] mails the Class Notice to the Class Members, … unless the Response Deadline is extended by up to seven days as the result of a re-mailing of the Class Notice”, and by setting forth the number of Compensable Workweeks the Class Member believes should be credited within the Class Period or PAGA Period, together with supporting documentation. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 2(KK), 33.) Simpluris will consult with counsel for the parties and review pertinent records to be made available by Sansum, to resolve the dispute. (Ibid.) Any disputes with respect to an individual settlement payment or Compensable Workweeks is subject to final resolution by the Court if necessary. (Ibid.)

Participating Class Members who have not requested exclusion from the settlement may also submit written objections to the Settlement Agreement by the Response Deadline, and may appear at the final approval hearing to have their objection heard. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 34.) Simpluris must transmit any objections to counsel for the parties within three days of receipt, and must attach any objections to a declaration of due diligence to be filed with the Court prior to the final approval hearing. (Ibid.) The Court will rule on any objections to the Settlement Agreement at the final approval hearing. (Ibid.)

Class Members may also request to exclude themselves, or opt-out, of the Settlement Agreement by submitting a signed, written request to Simpluris by the Response Deadline. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 35.) Class members who request exclusion will not be entitled to receive individual class payments under the Settlement Agreement, and will not be bound by its terms. (Ibid.) To the extent a Class Member requesting exclusion is a PAGA-Eligible Employee, that Class Member will still receive an individual PAGA Payment, and will be precluded from bringing any claims released under PAGA. (Ibid.) Class Members who do not request exclusion will be deemed to be participating Class Members bound by the terms and conditions of the Settlement Agreement. (Ibid.)

Simpluris will provide the parties’ counsel with weekly reports following the mailing of the Class Notice, which will include the number of mailed, returned, and re-mailed Class Notices, any requests for exclusions from or objections to the Settlement Agreement, and challenges to the number of Compensable Workweeks received and resolved. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 38.)

Unclaimed amounts of the Net Settlement Amount will not revert to Sansum. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 48.) Amounts that would otherwise be paid to Class Members who elect not to participate in the settlement will be redistributed to other Class Members who elect to participate in the settlement. (Ibid.) To the extent the Court does not approve the full amount of attorney’s fees, litigation costs, Class Representative service award, or administration costs, the Net Settlement Amount will increase accordingly. (Ibid.) In addition, any checks for individual payments which are not cashed within 180 days of issuance will be voided by Simpluris, with the total amount of any uncashed settlement checks to paid to Legal Aid at Work, a non-profit organization supporting projects that will benefit Class Members. (Id. at ¶ 49.)

The Settlement Agreement includes releases by Perez and by members of the class who do not elect to be excluded from the settlement. (Minne Decl., Exh. 1 [Settlement Agreement], ¶¶ 20-23.)

Analysis:

Plaintiff’s request to file an overlength opening memorandum:

In the notice of the present motion, Perez requests that the Court extend the page limit for the supporting memorandum under California Rules of Court, rule 3.1113(e), which provides that “[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), italics added.)

Perez was required to apply to the Court for permission to file a longer opening memorandum before filing the motion, but failed to do so. In addition, apart from asserting in a general and conclusory manner that a longer memorandum is necessary so that Perez can provide the Court with sufficient information, wholly absent from the motion or supporting papers is any information or evidence stating the reasons why Perez could not make the arguments asserted in the memorandum within the limit stated in California Rules of Court, rule 3.1113(d), which prohibits the filing of a memorandum which exceeds 15 pages. For example, Perez offers no information or evidence to show why the motion or this relatively uncomplicated litigation raises or implicates complex, difficult, novel, or time consuming factual or legal issues.

Though there exists no information or evidence stating a specific reason why a longer memorandum is necessary, Perez has submitted a 24 page memorandum which exceeds the page limit under California Rules of Court, rule 3.1113(d), by approximately 50 percent. In addition, the Court’s review of the memorandum shows that it was prepared using a font size smaller than 12 points, and includes numerous single-spaced footnotes which are prepared using a 10 point font size, in violation of California Rules of Court, rules 2.104 and 2.108(1). The single-spaced footnotes occupy approximately 27 lines of text. The Court’s rough calculations demonstrate that the use of single-spaced footnotes and a smaller font size than permitted by court rules throughout the memorandum results in a memorandum which exceeds the page limits by more than 50 percent.

“A memorandum that exceeds the page limits of these rules must be filed and considered in the same manner as a late-filed paper.” (Cal. Rules of Court, rule 3.1113(g).) Considering that Perez has failed to apply to the Court ex parte for permission to file a longer memorandum prior to filing the motion, the Court may, in its discretion, refuse to consider the memorandum. (Cal. Rules of Court, rule 3.1300(d).)

Furthermore, the absence of any stated reasons why the arguments presented in the memorandum could not be made within 15 pages suggests to the Court that there may exist inefficiencies in the preparation of a concise memorandum in support of the positions advanced by Perez. To the extent the longer memorandum indicates the present of inefficiencies in preparing the motion, this raises questions with respect to whether or not there also exist inefficiencies in any other aspect of this litigation and the overall reasonableness of the attorney’s fees for which Perez seeks preliminary approval. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132 [“inefficient … efforts” are not subject to compensation].)

Notwithstanding that the request of Perez to file a longer memorandum is procedurally and substantively inappropriate, as the Court has no record of prior violations of court rules by Perez or her counsel and as the motion is unopposed, the Court will, for present purposes, exercise its discretion to permit Perez to file a longer opening memorandum. However, counsel for Perez is reminded of their obligation to comply with court rules. Future violations may result in the Court refusing to consider the papers, among other things.

The motion:

“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).)

The Settlement Agreement and the proposed Class Notice are each submitted with the motion, and Perez has lodged a proposed order with the Court. Apart from the procedural deficiencies noted above, the motion is otherwise 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.)

Available information shows that the proposed class is estimated to include 2,355 class members which Class Counsel ascertained from the payroll records of Sansum. (Minne Decl., ¶ 18 & Memo. at p. 17.) The information further indicates that the 2,355 members of the proposed class, including Perez, were subject to the purported policies or practices of Sansum alleged in the complaint, which allegedly required the members of the class to perform work before and after clocking in for work shifts, to experience interrupted or missed meal and rest periods, and to pay for work-related expenses out of pocket, and which resulted in a failure of Sansum to pay minimum and overtime wages and other necessary business expenses, among other things. (Id. at ¶¶ 30-34.)

Perez has presented evidence that there is a numerous, ascertainable class with a well-defined community of interest consisting of at approximately 2,355 employees of Sansum who were purportedly 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, the payment of necessary business expenses, and other matters. There also appears to be sufficient and reliable means available to identify class members from the payroll records of Sansum. Perez appears to have claims typical of the class and appears to be able to adequately represent the class. (See, e.g., Perez Decl., ¶¶ 4 & 6.) For these reasons, 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 (Microsoft).)

With regard to settlements of claims brought under 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 Perez submitted the Settlement Agreement to the LWDA on September 13, 2024, the same day Perez filed the present motion. (Minne Decl., ¶ 66 & Exh. 4.) There is no information to suggest or demonstrate that the LWDA has indicated its objection to the Settlement Agreement or an intent to intervene.

Available information also shows that Perez has engaged in informal investigations and discovery to which Sansum has responded and provided relevant data and records. Perez has presented evidence further detailed above regarding the approximate amount of individual payments to be issued to the Class Members and PAGA-Eligible Employees. In evaluating the adequacy of the settlement, counsel for Perez has accounted for potential difficulties associated with achieving class certification and prevailing on the merits of the claims alleged in this action, in particular with regard to whether the Class Members worked in different job positions with different job duties presenting individualized questions of fact, whether Sansum knew that employees were working without compensation, whether employees voluntarily elected to miss meal or rest periods, whether Sansum’s conduct includes inadvertent good faith mistakes, whether Sansum’s written policies complied with applicable law, and whether any unpaid expenses claimed by Perez constitute a necessary business expense. (See, e.g., Minne Decl., ¶¶ 39-42.)

The Settlement Agreement appears to be the product of an adversarial, arms-length mediation and the parties’ negotiations. The claims released by the Class Members are limited to those which “arise out of or are reasonably related to the factual allegations that were alleged or could have been alleged based on the factual allegations in [the complaint] relating to [Perez’s] claims”, and the claims released by PAGA-Eligible Employees is limited to claims for “PAGA civil penalties arising during the PAGA Period arising out of [PAGA], based on any of the underlying claims and factual allegations that were alleged, or reasonably could have been alleged in” the complaint or in the notice letter provided to the LWDA by Perez. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 20.) Perez has presented evidence of the risks of uncertainty associated with litigation with respect to the defenses asserted by Sansum and potential difficulties in certifying the class. These risks appear to be substantial.

Based on the information provided in the Minne declaration, and the declarations of Madoyan, also counsel for Perez in this action, Class Counsel appear to have substantial experience with wage and hour and PAGA matters. (See Minne Decl., ¶¶ 55-61; Madoyan Decl., ¶¶ 2-7.) 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, which 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 proposed Class Notice complies with due process. (Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 694-695.)

The Settlement Agreement also provides that any checks for individual class or PAGA Payments which are not cashed within 180 days will voided, and that the unpaid residue resulting from the voided checks will be paid to Legal Aid at Work, which is a non-profit organization that supports projects that will benefit Class Members. (Minne Decl., Exh. 1 [Settlement Agreement], ¶ 49.) Perez, Sansum, and the parties’ counsel certify in the Settlement Agreement that they have no connection to or relationship with Legal Aid at Work. (Ibid.; see also Minne Decl., ¶ 63; Madoyan Decl., ¶ 15; Perez Decl., ¶ 14.)

The distribution of any unpaid residue to Legal Aid at Work as provided in the Settlement Agreement is authorized under Code of Civil Procedure section 384, and appears to be the product of the parties’ negotiated compromise. (Code Civ. Proc., § 384, subds. (a) & (b); Microsoft, supra, 135 Cal.App.4th at pp. 724-725 [general discussion].) There is no information to suggest that the agreed upon distribution of the unpaid residue is the product of fraud or collusion, or is in any respects not fair or appropriate. Subject to any objections that may be asserted by any members of the class with respect to the proposed distribution of the residue to Legal Aid at Work, the proposed distribution of residue appears to be reasonable, fair, and adequate.

Based on the evidence and information presented by Perez and further discussed above, 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 its terms as well as the date and location of the final approval hearing. Therefore, the Court determines that the Settlement Agreement is entitled to preliminary approval, that the settlement class should be provisionally certified, that counsel for Perez should be appointed as counsel for the settlement class, that Perez should be appointed as class representative for settlement purposes, that Simpluris 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.