Steven Joseph Thomas v. Boys & Girls Club of South San Luis Obispo County, et al.
Steven Joseph Thomas v. Boys & Girls Club of South San Luis Obispo County, et al.
Case Number
24CV03448
Case Type
Hearing Date / Time
Fri, 03/06/2026 - 10:00
Nature of Proceedings
Motion for Preliminary Approval of Class Action Settlement and Provisional Class Certification for Settlement Purposes Only
Tentative Ruling
Steven Joseph Thomas v. Boys & Girls Club of South San Luis Obispo County, et al.
Case No. 24CV03448
Hearing Date: March 6, 2026
HEARING: Motion for Preliminary Approval of Class Action Settlement and Provisional Class Certification for Settlement Purposes Only
ATTORNEYS: For Plaintiff Steven Joseph Thomas: Todd M. Friedman Adrian R. Bacon, Law Offices of Todd M. Friedman, P.C.
For Defendant Boys & Girls Clubs of the Central Coast: Rafael Gonzalez, Christina M. Behrman, Mullen & Henzell L.L.P.
For Defendant United Boys & Girls Clubs of Santa Barbara County: Dina Glucksman, Alexander K. Spellman, Jiaying Chen, Gordon Rees Scully Mansukhani, LLP
For Defendant Boys & Girls Club of South San Luis Obispo County: No appearance
TENTATIVE RULING:
For the reasons stated herein, the motion of plaintiff for preliminary approval of class action settlement and provisional class certification is continued to April 17, 2026. On or before April 3, 2026, plaintiff shall file and serve a supplemental brief or declaration, and the additional materials described herein.
Background:
On June 18, 2024, plaintiff Steven Joseph Thomas (Thomas or Plaintiff) filed a class action complaint against defendants the Boys & Girls Club of South San Luis Obispo County (the SLO Club), the Boys & Girls Clubs of the Central Coast (the Central Coast Club), and the United Boys & Girls Clubs of Santa Barbara County (the SB Club) (collectively, Defendants), alleging five causes of action: (1) itemized wage statement (check stubs) penalties (Lab. Code, §§ 226, 558 & 558.1); (2) waiting time penalties (Lab. Code, §§ 201-203, 558 & 558.1); (3) meal break violations (Lab. Code, §§ 226.7 & 512, subd. (a)); (4) rest break violations (Lab. Code, § 226.7); and (5) restitution/injunction (unlawful competition in violation of Bus. & Prof. Code, § 17200 et seq. & Lab. Code, § 558.1).
On October 1, 2024, without any response to the complaint having been filed, Plaintiff filed a first amended class action complaint (the FAC), alleging the same five causes of action against Defendants and described above, and adding a sixth cause of action for civil penalties under Labor Code section 2698 et seq. (the Labor Code Private Attorneys General Act of 2004 or PAGA.) As alleged in the FAC:
Defendants own and operate child care and education centers under the name “Boys & Girls Club”. (FAC, ¶ 27.) From 2018 until 2023, Plaintiff was employed by Defendants as a non-exempt employee. (FAC, ¶¶ 19 & 29.) During that employment, Defendants required Plaintiff to care for and supervise children without a rest break, and to work shifts longer than 5 hours without a meal break. (FAC, ¶¶ 30-31.) In addition, Defendants deposited pay checks into Plaintiff’s account without providing accurate pay stubs. (FAC, ¶ 35.) Because Defendants failed to pay Plaintiff all earned wages, Plaintiff ended his employment relationship with Defendants. (FAC, ¶ 36.)
On December 20, the SB Club filed an answer to the FAC, generally denying its allegations and asserting sixty-three affirmative defenses.
Court records reflect that the SLO Club did not file a response to the FAC.
On November 26, the Central Coast Club filed a motion (the arbitration motion) for an order compelling Plaintiff to submit their individual claims to arbitration, and staying these proceedings pending the completion of arbitration. Plaintiff opposed the arbitration motion.
On May 5, the Central Coast Club filed a case management conference statement stating that the parties have reached a tentative settlement and expect to file a motion for preliminary approval. (May 5, 2025, CMS, ¶ 4(a).)
On May 23, pursuant to a stipulation by the parties, the court entered an order continuing the arbitration motion to November 21.
On November 4, Plaintiff filed an unopposed motion for an order: (1) granting class certification for settlement purposes only; (2) granting preliminary approval of a “Class Action and PAGA Settlement Agreement and Class Notice” (the Settlement) between Plaintiff and Defendants; (3) appointing Adrian R. Bacon (attorney Bacon) and Todd M. Friedman (attorney Friedman) of the Law Offices of Todd M. Friedman as “Class Counsel”; (4) appointing Plaintiff as the “Class Representative”; (5) approving the use of a proposed notice procedure and related forms; (6) directing the mailing of a class notice to the class; (7) scheduling a hearing date for a final approval hearing; and (8) approving the “PAGA” settlement.
On November 21, the court issued a minute order adopting its tentative ruling on the arbitration motion as follows:
“The present record reflects that the Settlement for which Thomas seeks the court’s preliminary approval has mooted the arbitration motion. For these reasons, the court will order that motion off-calendar, without prejudice to its re-filing at a future time, if appropriate.”
The motion is supported by a declaration of attorney Bacon, to which a copy of the Settlement is attached. (Bacon Dec., Ex. A.)
The Settlement defines the term “Class” to mean “all non-exempt employees who are or were employed by Defendants in California” from June 18, 2020, until the date the court grants preliminary approval of the Settlement (the Class Period). (Bacon Dec., Ex. A, ¶¶ 1.5, 1.12 & 1.36.) The terms “Class Member” or “Settlement Class Member” refer to the members of the Class. (Bacon Dec., Ex. A, ¶ 1.9.) An “Aggrieved Employee” means “all non-exempt employees who are or were employed by Defendants in California” from June 18, 2023, to the date the court grants preliminary approval (the PAGA Period). (Bacon Dec., Ex. A, ¶¶ 1.4 & 1.30.)
Pursuant to the Settlement, Defendants have agreed to pay the amount of $225,000 (the Gross Settlement Amount), and separately pay all employer payroll taxes. (Bacon Dec., Ex. A, ¶¶ 1.21 & 3.1.) The Settlement requires Defendants to fully fund the GSA, which is non-reversionary, and any amounts necessary to pay Defendants’ share of payroll taxes that may be owed by Defendants, by transmitting those funds to Phoenix Settlement Administrators (the Administrator), whom the parties have jointly selected to administer the Settlement, no later than thirty days after the “Effective Date” as that term is defined in the Settlement. (Bacon Dec., Ex. A, ¶¶ 1.2, 1.17 [“Effective Date”], 3.1, 4.3 & 7.1.) The Administrator will disburse the GSA pursuant to the terms of the Settlement without requiring the submission of any claim as a condition of payment. (Bacon Dec., Ex. A, ¶ 3.1.)
Subject to the court’s final approval of the Settlement (Bacon Dec., Ex. A, ¶¶ 1.18 & 3.2), the Administrator will deduct and pay from the GSA: (1) a “Class Representative Service Payment” to Plaintiff, as the designated “Class Representative”, in the amount of $10,000 (in addition to any amounts Plaintiff is entitled to receive pursuant to the Settlement); (2) a “Class Counsel Fees Payment” to Class Counsel, in an amount equal to one-third of the GSA, which the Settlement estimates to total $75,000; (3) a “Class Counsel Litigation Expenses Payment” to Class Counsel, in an amount not to exceed $10,000; (4) an “Administrator Expenses Payment” to the Administrator, in an amount not to exceed $12,500; (5) the amount of $10,000 for “PAGA Penalties” under Labor Code section 2698 et seq. (the Labor Code Private Attorneys General Act of 2004 or “PAGA”). (Bacon Dec., Ex. A, ¶¶ 1.3, 1.7, 1.13-1.14, 1.31, 1.33, 3.2-3.2.3 & 3.2.5.)
In regard to the PAGA Penalties described above, seventy-five percent or the amount of $7,500 of those penalties will be paid from the GSA to the Labor & Workforce Development Agency or “LWDA” (the LWDA PAGA Payment). (Bacon Dec., Ex. A, ¶¶ 1.25-1.26, 1.33 & 3.2.5.) Twenty-five percent of the PAGA Penalties, or the amount of $2,500, will be paid from the GSA to the Aggrieved Employees in pro rata shares representing an “Individual PAGA Payment” or “Individual PAGA Payments”, which the Administrator will calculate by (a) dividing the amount of $2,500 by the total number of pay periods worked by all Aggrieved Employees during the PAGA Period (the PAGA Pay Period) and (b) multiplying that result by the number of PAGA Pay Periods each Aggrieved Employee worked during the PAGA Period. (Bacon Dec., Ex. A, ¶¶ 1.23, 1.29, 1.33, 3.2.5 & 3.2.5.1.) The Aggrieved Employees are responsible for any taxes owed on their Individual PAGA Payment. (Bacon Dec., Ex. A, ¶ 3.2.5.1.)
The “Net Settlement Amount” or NSA is defined as the GSA less the Class Representative Service Payment, the Class Counsel Fees Payment, the Class Counsel Litigation Expenses Payment, the Administrator Expenses Payment, and the PAGA Penalties (including the LWDA PAGA Payment and the Individual PAGA Payment or Payments) described above. (Bacon Dec., Ex. A, ¶¶ 1.27.) To the extent the court approves payment of the Class Representative Service Payment, the Class Counsel Litigation Expenses Payment, the Class Counsel Fees Payment, the Administrator Expenses Payment, or PAGA Penalties in an amount less than those described above, the Administrator will allocate any remainder to the NSA. (Bacon Dec., Ex. A, ¶¶ 3.2.1-3.2.3 & 3.2.5.2.)
The Settlement defines a “Participating Class Member” (or Members) as a Class Member who does not submit a valid and timely written request (Request for Exclusion), signed by the Class Member, to be excluded from the Settlement. (Bacon Dec., Ex. A, ¶¶ 1.34, 1.41 & 7.5.1 [describing the requirements for a valid Request for Exclusion].) The Settlement provides for the payment of individual shares of the NSA to each Participating Class Member (the Individual Class Payment or Payments), which will be calculated by (a) dividing the NSA by the total number of “Workweeks” (defined as any week during which a Class Member worked for Defendants for at least one day during the Class Period) worked by all Participating Class Members during the Class Period and (b) multiplying the result by each Participating Class Member’s Workweeks. (Bacon Dec., Ex. A, ¶¶ 1.22, 1.44 & 3.2.4.)
Ten percent of each Individual Class Payment will be allocated to the settlement of wage claims (the Wage Portion) and subject to tax withholding and reporting. (Bacon Dec., Ex. A, ¶ 3.2.4.1.) The remaining ninety percent of each Individual Class Payment will be allocated to the settlement of claims for interest and penalties (the Non-Wage Portion), which are not subject to wage withholdings. (Ibid.) The Participating Class Members are responsible for any taxes owed on their Individual Class Payment. (Ibid.)
Those Class Members who elect to opt out of the Settlement by sending a Request for Exclusion (the Non-Participating Class Members) will not receive an Individual Class Payment. (Bacon Dec., Ex. A, ¶¶ 1.28 & 3.2.4.2.) The Administrator will retain amounts equal to those Individual Class Payments in the NSA for distribution to the Participating Class Members on a pro rata basis. (Bacon Dec., Ex. A, ¶ 3.2.4.2.)
The number of Workweeks during the Class Period is estimated in the Settlement to total 43,673 Workweeks. (Bacon Dec., Ex. A, ¶ 9.) The Settlement requires each of the Defendants to fund a pro rata share of the GSA, based on each Defendants’ share of Workweeks reported to the Administrator. (Bacon Dec., Ex. A, ¶ 4.3.) The Settlement includes a Workweeks estimate as follows: (1) as to the Central Coast Club: 20,240 Workweeks and 3,877 PAGA Pay Periods; (2) as to the SLO Club: 7,306 Workweeks and 1,867 PAGA Pay Periods; and (3) as to the SB Club: 16,127 Workweeks and 3,640 PAGA Pay Periods. (Bacon Dec., Ex. A, ¶ 4.1.) If the actual number of Workweeks exceeds 43,673 by more than fifteen percent, each Defendant shall have the option to either end the Class Period as of the first date the number of Workweeks exceeds 15 percent above that party’s respective Workweeks estimate, or increase that party’s pro-rate share of the NSA on a proportional basis above the 15 percent threshold. (Bacon Dec., Ex. A, ¶¶ 4.3 & 9.)
Defendants may also elect to withdraw from the Settlement if the number of Requests for Exclusion exceeds ten percent of the total of all Class Members. (Bacon Dec., Ex. A, ¶¶ 10.)
The Settlement requires Defendants to, no later than 30 days after the court grants preliminary approval of the Settlement, deliver to the Administrator the name, last-known mailing address, Social Security number, and number of Workweeks and PAGA Pay Periods of each Class Member (the Class Data), which the Administrator shall maintain in confidence. (Bacon Dec., Ex. A, ¶¶ 1.8 & 4.2.) Defendants must immediately notify Class Counsel if they discover that the Class Data omits identifying information for any Class Member, and provide corrected or updated Class Data as soon as reasonably feasible. (Bacon Dec., Ex. A, ¶¶ 4.2.)
No later than fourteen days after receipt of the Class Data, the Administrator will mail to all Class Members identified in that data, a “Notice of Pendency of Class Action and Proposed Settlement” (the Class Notice), a copy of which is attached to the Settlement. (Bacon Dec., Ex. A, ¶¶ 1.11, 7.4.1 & exhibit A.) The first page of the Class Notice will prominently estimate the dollar amount of each Individual Class Payment and Individual PAGA Payment payable to the Class Member identified in the Class Notice, as well as that Class Member’s Workweeks and PAGA Pay Periods. (Bacon Dec., Ex. A, ¶ 7.4.1.) Before mailing the Class Notice, the Administrator will update the addresses of each Class Member using the National Change of Address database. (Ibid.)
Class Members who wish to exclude themselves or opt out of the Settlement may send a Request for Exclusion to the Administrator no later than forty-five days after the Administrator mails the Class Notice. (Bacon Dec., Ex. A, ¶ 7.5.1.) A Request for Exclusion may be transmitted to the Administrator by fax, email, or mail; must be signed by the Class Member; must include sufficient identifying information for that Class Member including the last four digits of the member’s Social Security number; and must reasonably communicate that Class Member’s election to be excluded from the Settlement. (Ibid.) If the Administrator can reasonably ascertain from information appearing in a Request for Exclusion, the identity of the person as a Class Member and their desire to be excluded from the Settlement, the Administrator must accept that Request for Exclusion. (Bacon Dec., Ex. A, ¶ 7.5.2.)
The Non-Participating Class Members who submit a valid and timely Request for Exclusion will have no right to object to the class action components of the Settlement. (Bacon Dec., Ex. A, ¶¶ 7.5.5.)
Each Class Member may also, within forty-five days of the date the Class Notice is mailed to that member, submit a dispute of or challenge to the Administrator’s calculation of Workweeks or PAGA Pay Periods for that member, by communicating with the Administrator by fax, email, or mail. (Bacon Dec., Ex. A, ¶ 7.6.) Copies of any such disputes or challenges will be provided to Class Counsel and Defendants’ counsel. (Ibid.) In the absence of contrary documentation, the Administrator is entitled to presume that the Workweeks and PAGA Pay Periods contained in the Class Notice are correct, provided they are consistent with the information appearing in the Class Data. (Ibid.)
Participating Class Members may, no later than 45 days after the Administrator mails the Class Notice, object to the class action components of the Settlement, including as to its fairness, or the amounts requested for the Class Counsel Fees Payment, the Class Counsel Litigation Expenses Payment, or the Class Representative Service Payment, by sending a written objection to the Administrator by fax, email, or mail. (Bacon Dec., Ex. A, ¶ 7.7.1-7.7.2.) Those written objections should include, among other things, a statement of the reasons why the Class Member believes the court should find that the proposed Settlement is not in the best interest of the Class and the reasons why the Settlement should not be approved, including the legal and factual arguments supporting the objection. (Bacon Dec., Ex. A, ¶ 7.7.2.) Participating Class Members may also appear in court to present objections at the final approval hearing. (Ibid.)
To the extent a Class Notice is returned undelivered, the Administrator shall, within three business days after receipt of that returned Class Notice, re-mail that notice using any forwarding address provided. (Bacon Dec., Ex. A, ¶ 7.4.2.) If no forwarding address is provided, the Administrator shall investigate and search for a current mailing address using all reasonably available sources, means, or methods including the National Change of Address database, skip traces, and direct contact with the Class Member; and re-mail the Class Notice to the most current address obtained from that investigation and search. (Bacon Dec., Ex. A, ¶¶ 1.10 & 7.4.2.)
To the extent a Class Notice is re-mailed, all deadlines to submit written objections, challenges to Workweeks or PAGA Pay Periods, or a Request for Exclusion will be extended by an additional 14 days, and the Administrator will inform the Class Member of that extended deadline with the re-mailed Class Notice. (Bacon Dec., Ex. A, ¶ 7.4.3.)
The Settlement provides that, within fourteen days after Defendants fund the GSA and the Administrator has updated each recipient’s mailing address using the National Change of Address database, the Administrator will mail checks for all Individual Class Payments, Individual PAGA Payments, the LWDA PAGA Payment, the Administrator Expenses Payment, the Class Counsel Fees Payment, the Class Counsel Litigation Expenses Payment, and the Class Representative Service Payment, including to all Participating Class Members whose Class Notice was returned undelivered. (Bacon Dec., Ex. A, ¶¶ 4.4 & 4.4.1.) The face of each check will prominently state the date when that check will be voided, which will be not less than one-hundred-eighty days after the date the check is mailed. (Bacon Dec., Ex. A, ¶ 4.4.1.) The Administrator will cancel all checks not cashed by the stated void date. (Ibid.)
As to any checks which are returned undelivered to the Administrator without a forwarding address, the Administrator will conduct the investigation and search described above and, within 7 days of receiving the returned check, re-mail that check to any address ascertained through that investigation and search. (Bacon Dec., Ex. A, ¶ 4.4.2.) As to any check for an Individual Class Payment or Individual PAGA Payment that remains uncashed and is cancelled after the void date, the Administrator will transmit the funds represented by such checks to the State Controller’s Office, Unclaimed Property Division. (Bacon Dec., Ex. A, ¶ 4.4.3.)
The Settlement includes releases which are effective as of the date Defendants fund the GSA and all employer payroll taxes owed on the Wage Portion of the Individual Class Payments. (Bacon Dec., Ex. A, ¶¶ 1.38-1.40 & 5.)
As to the Participating Class Members, the release contained in the Settlement provides: “Participating Class Members, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, generally and fully release and forever discharge Defendants and the Released Parties from all claims debts, liabilities, rights, demands, obligations, guarantees, penalties, costs, expenses, attorneys’ fees, damages, or causes of action arising during the Class Period under state, federal, or local law that were alleged, or reasonably could have been alleged, based on the facts stated in the [FAC] and/or that were ascertained in the course of the Action (the ‘Class Released Claims’).” (Bacon Dec., Ex. A, ¶ 5.1.2.)
As to the Aggrieved Employees, the applicable release provides: “All Aggrieved Employees, regardless of whether they are Participating Class Members or Non-Participating Class Members, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, along with the State of California, fully release and forever discharge the Released Parties from all claims for civil penalties under PAGA arising during the PAGA Period that were alleged, or reasonably could have been alleged, based on the facts stated in the [FAC], the PAGA Notice, and/or ascertained in the
course of the Action (‘the PAGA Released Claims’).” (Bacon Dec., Ex. A, ¶ 5.1.3.)
The term “Released Parties” is defined in the Settlement to include: “Defendants and each of their former and present directors, officers, shareholders, owners, members, attorneys, insurers, representatives, and agents during the Class Period and their respective predecessors, successors, parents, assigns, subsidiaries, and affiliates.” (Bacon Dec., Ex. A, ¶ 1.40.)
The Settlement also requires the Administrator to establish, maintain, and use an internet web site to post information to Class Members including the date, time and location for any final approval hearing; copies of the Settlement and the present motion; any preliminary approval order issued by the court; the Class Notice; any motion for final approval; and any motion for the Class Counsel Fees Payment, among other materials. (Bacon Dec., Ex. A, ¶ 7.8.3.) The Administrator will also maintain and monitor an email address and a toll-free telephone number to receive Class Member calls, faxes, and emails. (Ibid.)
In support of the motion, attorney Bacon explains that Defendants are charitable organizations and joint employers who owned or operated childcare and education centers under the name “Boys & Girls Club”. (Bacon Dec., ¶ 16.) From 2018 to 2023, Plaintiff worked at Defendants’ locations in Oceano, Santa Maria, and Santa Barbara, California. (Bacon Dec., ¶¶ 16-19.)
After preliminary discussions regarding the case, a formal and informal exchange of discovery, and obtaining sworn declarations by two Class Members, attorney Bacon asserts that they were in a good position to evaluate the merits of the claims, including as to issues regarding class certification and damages, and to make informed decisions regarding their resolution. (Bacon Dec., ¶ 6.) After extensive discussions regarding the case and the exchange of discovery, the parties agreed to attend, and on April 29, 2025, attended, a mediation with Mike Strauss (mediator Strauss), who is affiliated with Judicate West. (Bacon Dec., ¶¶ 6, 11 & 24.)
In advance of mediation, Defendants provided to Plaintiff data and documents in regard to the size and composition of the putative Class; Defendants’ timekeeping, payroll, and meal and rest period practices; Defendants’ written wage and hour policies and procedures; and Defendants’ time and payroll records. (Bacon Dec., ¶¶ 7 & 25.) According to attorney Bacon, the sampling of the timekeeping records of the Class was random. (Bacon Dec., ¶ 25.) Counsel also conducted an examination of the legal, factual, and damages allegations at issue. (Bacon Dec., ¶¶ 8 & 26.)
The discovery described in attorney Bacon’s declaration and above revealed significant challenges to the litigation, including as to whether Defendants’ policies regarding timekeeping and payroll complied with California law throughout the Class Period, and whether individualized issues would defeat class certification or render the trial unmanageable. (Bacon Dec., ¶¶ 8 & 26.) Specifically, Defendants contend that their policies in regard to meal and rest periods, and Defendants’ time and payroll records, show substantial compliance and that all Class Members were paid all wages owed. (Bacon Dec., ¶ 9.) Defendants also argued that any missed meal or rest breaks were the result of a voluntary choice, and that any violations for off the clock work or break violations arose from good faith errors and were not willful. (Bacon Dec., ¶ 10.)
Attorney Bacon states that, after a full day of negotiation, the parties asked mediator Strauss to provide a mediator’s proposal. (Bacon Dec., ¶¶ 12-13.) Mediator Strauss’ proposal provided for the Class to receive payment of $225,000 to settle the wage an hour claims. (Bacon Dec., ¶ 14.) On May 2, 2025, the parties agreed to that proposal. (Bacon Dec., ¶ 13.)
The Settlement is based on a class comprised of 935 employees who worked a total of 43,673 Workweeks, which numbers are supported by discovery. (Bacon Dec., ¶ 30.) Attorney Bacon anticipates that the NSA to be paid through Individual Class Payments to the Participating Class Members will total $117,500. (Bacon Dec., ¶ 36.) Assuming 100 percent participation in the Settlement, the Participating Class Members will receive, on average, a payment in the amount of $125.66. (Bacon Dec., ¶ 69.) Attorney Bacon calculated that average payment by taking the current estimate of the NSA ($117,500), and dividing it equally between the 935 members of the Class. (Ibid.) The Settlement also represents an average payment of $2.69 per Workweek. (Ibid.)
To estimate the potential exposure of Defendants in this case and prepare a damages analysis that was used at the mediation, attorney Bacon reviewed the records provided by Defendants during discovery and the course of the mediation, and interviewed Plaintiff and other Class Members who expressed similar experiences. (Bacon Dec., ¶¶ 72-74.) According to attorney Bacon, factual and legal defenses arose which showed there were substantial risks in regard to the merits of the action and class certification. (Bacon Dec., ¶ 76.)
Defendants took the position that they provided meal and rest breaks; that the determination of whether a break was adequately provided or not to any given employee would require an individualized inquiry as to why each employee took a late or short break, or none at all; and that these circumstances would defeat class certification under the predominance standard. (Bacon Dec., ¶ 77.) For these reasons, attorney Bacon states, there was a strong procedural defense to class certification as to the break claims. (Ibid.) Attorney Bacon also states that, due to their derivative nature, the remainder of the claims also carried these same risks. (Ibid.)
Attorney Bacon determined that the potential recoverable amount in this action totals approximately $4,120,000 for all of the claims at issue in the case for the Class, which attorney Bacon asserts warranted a substantial reduction resulting in a realistically achievable figure of $928,000. (Bacon Dec., ¶ 80.)
For unpaid meal and rest break premiums, attorney Bacon calculated a maximum possible recovery of $800,000. (Bacon Dec., ¶ 81.) That potential recovery assumes one meal and rest period violation each day for each employee, that the Class will be certified, and that Plaintiff will prevail on the merits of the meal and rest period claims. (Ibid.) Attorney Bacon states that time records showed a much lower violation rate, and that it became evident during mediation that not every Class Member experienced the same meal and rest period violations, which cast doubt as to the accuracy of attorney Bacon’s calculation. (Ibid.) For these reasons, attorney Bacon asserts, half of that figure represents a more realistic outcome at trial assuming Plaintiff could prevail. (Ibid.)
Attorney Bacon states that there are no other substantive Labor Code claims in the case, and that the remaining claims are derivative of the alleged meal and rest break violations. (Bacon Dec., ¶ 82.) Attorney Bacon calculated the claims made under Labor Code section 226 to total $440,000, and damages under Labor Code section 203 to total $2 million. (Bacon Dec., ¶¶ 83-84.) Those amounts assume that every employee was owed lost wages, that meal and rest break premiums are wages, and that the circumstances present here satisfy the willfulness standard. (Bacon Dec., ¶ 84.) It is attorney Bacon’s opinion that “certifying this claim and winning on willfulness would have been a long shot...” because Defendants’ policies and procedures for providing meal and rest periods “were facially compliant with the law, and the incidents of violations were sporadic.” (Ibid.) For these reasons, attorney Bacon’s calculations did not factor significantly into counsel’s fairness analysis. (Ibid.)
Though attorney Bacon calculated civil penalties under PAGA to total approximately $880,000, counsel believes reductions to that amount are warranted because the violations were not predatory in nature, and PAGA penalties would likely have been reduced by as much as 90 percent at trial if Plaintiff prevailed based on attorney Bacon’s assessment of the facts, the size of Defendants’ operation, the nature of the violations, and review of PAGA judgments where courts have reduced penalties by as much as 98 percent. (Bacon Dec., ¶ 85.)
Attorney Bacon further states that Defendants would likely assert the same defenses to each claim asserted by Class Members, including that Defendants paid each employee for all hours worked, provided compliant meal and rest periods, and properly classified each employee, and that any violations by Defendants resulted from good faith mistakes, among other things. (Bacon Dec., ¶ 52.)
Based on the above, attorney Bacon asserts that the maximum amount of damages that Plaintiff could substantiate at trial on behalf of the Class totals approximately $4,120,000, and that a substantial reduction of this figure is warranted for the reasons described above, resulting in a realistic total damages figure of $928,000. (Bacon Dec., ¶87.) Attorney Bacon also notes that Defendants had arbitration clauses for most of the Class Members, that Plaintiff’s experiences were contradicted by the experiences of other Class Members to whom counsel spoke, that the merits were “in flux”, and that the mediation had to be resolved by the mediator’s proposal described above. (Bacon Dec., ¶¶ 78 & 88.) Adjusting for the risks described in the Bacon declaration and above, attorney Bacon believes an adjusted risk value of 25 percent of the maximum realistic or likely recoverable damages is fair and reasonable. (Bacon Dec., ¶ 89.)
Attorney Bacon asserts that the members of the Class may be identified by reference to Defendants’ records, and based on data obtained from Defendants and counsel’s own investigations, attorney Bacon determined that Defendants’ policies and practices are identical or sufficiently similar to raise the same questions of law and fact in regard to Defendants’ liability as to all Class Members. (Bacon Dec., ¶ 49.) In addition, attorney Bacon asserts that Plaintiff was subject to the same general policies and practices with respect to timekeeping, payroll, and breaks. (Bacon Dec., ¶ 50.)
Attorney Bacon states that Plaintiff has sent letters to the LWDA which satisfy PAGA’s procedural prerequisites, and that, contemporaneous with the filing of the present motion, attorney Bacon’s office will submit all settlement papers to the LWDA through that agency’s online portal. (Bacon Dec., ¶ 22.)
The declaration of attorney Bacon also includes extensive information and evidence purporting to show the qualifications of and adequacy of the representation provided in this action by Class Counsel. (Bacon Dec., ¶¶ 55-68.)
Plaintiff states that their counsel informed them of the responsibilities of a class representative, and that they understand these responsibilities. (Thomas Dec., ¶ 3.) Plaintiff regularly discussed the case with their attorneys; participated in numerous telephone conversations and other communications with their counsel; gathered, reviewed, and provided to their counsel, documents relating to the wage and hour practices of Defendants; assisted counsel in developing settlement discussions; and reviewed the Settlement. (Thomas Dec., ¶¶ 3-4.) Plaintiff estimates that they expended approximately 25 to 30 hours of time in connection with this case. (Thomas Dec., ¶ 4.)
Analysis:
“A settlement or compromise of an entire class action, or of a cause of action in a class action, or as to a party, requires the approval of the court after hearing.” (Cal. Rules of Court, rule 3.769(a).) “Any party to a settlement agreement may serve and file a written notice of motion for preliminary approval of the settlement. The settlement agreement and proposed notice to class members must be filed with the motion, and the proposed order must be lodged with the motion.” (Cal. Rules of Court, rule 3.769(c).)
Plaintiff has filed the Settlement and the proposed Class Notice with the motion, and lodged a proposed order. For these reasons, the court finds that the motion is procedurally sufficient and 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, and after a preliminary settlement hearing, the court may make “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.” (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.)
The available evidence and information presented in the motion and described above is sufficient to show, for present purposes, that there exists a numerous, ascertainable class with a well-defined community of interest consisting of approximately 935 employees of Defendants who were subject to the same policies, practices, and procedures governing meal and rest period violations; a purported failure by Defendants to pay Class Members for all hours worked and to provide accurate wage statements; and other claims alleged in these proceedings and described above. There also appears to be sufficient and reliable means available to identify members of the Class from the records of Defendants. Plaintiff, who has agreed to serve as the Class Representative, appears to have claims typical of the Class and to be able to adequately represent the Class. Based on the above, there appears to be reasonable support for provisional certification of the Class for settlement purposes.
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 [the 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.)
Also relevant here, the court “shall review and approve any settlement of any civil action filed pursuant to” PAGA. (Lab. Code, § 2699, subd. (s)(2).) “[W]hile 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 settlement of PAGA claims. (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.)
The available evidence and information shows that Plaintiff engaged in informal and formal discovery to which Defendants have ostensibly responded by providing relevant data and records to enable Plaintiff’s counsel to develop damages calculations, and assess risks. The Settlement also appears to be the product of adversarial discussions and negotiations by the parties, and a mediation. There is no evidence to suggest that the Settlement is the product of collusion. In addition, Plaintiff has presented evidence of the risks and uncertainty associated with protracted litigation of the claims alleged in this case, including with respect to the defenses asserted by Defendant, and potential difficulties in certifying the class, among other things. The risks described in attorney Bacon’s declaration and above appear to be substantial.
Information appearing in attorney Bacon’s declaration also shows or suggests that Class Counsel has sufficient if not substantial experience with similar wage and hour litigation, and PAGA matters. Noted above, Class Counsel believes that the settlement is fair, adequate, and reasonable.
Though the court has some concerns with the broad definition of Released Parties included in the releases by the Participating Class Members and Aggrieved Employees described above, which includes, without explanation, unidentified “insurers”, “representatives” and “agents”, and other persons or entities who may have separately employed Participating Class Members or Aggrieved Employees, the court understands the releases contained in the Settlement, which include a release of other persons or entities apart from Defendants, to relate only to liability which may attach by virtue of a Participating Class Member or Aggrieved Employee’s employment with Defendants, and not from any claims that may arise from any separate employment or relationships with the Released Parties. The court also understands the release by the Participating Class Members and Aggrieved Employees to be limited to claims based on or reasonably arising from the facts alleged in this action and within the scope of the allegations of the FAC only, including as to those facts which give rise to Plaintiff’s claim for penalties under PAGA. (See Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 538 [general discussion].)
To the extent any party contends that the court’s understanding of the scope of the releases by the Participating Class Members or the Aggrieved Employees contained in the Settlement, as stated herein, is incorrect, that party shall appear at the hearing on the present motion to identify this issue, and to explain why the court’s understanding is incorrect, and the intent of those releases.
The declaration of attorney Bacon also includes counsel’s estimate of the maximum amount of damages counsel believes Plaintiff could substantiate a trial, assuming that Plaintiff were to prevail, and what counsel believes is the realistic value of the viable claims asserted by Plaintiff in this action, after accounting for the risks further discussed above. Attorney Bacon also provides an estimated or average amount that each of the Participating Class Members can expect to receive, including as to the Aggrieved Employees.
The PAGA requires a plaintiff to submit a copy of the proposed settlement to the LWDA “at the same time that it is submitted to the court.” (Lab. Code, § 2699, subd. (s)(2).) Attorney Bacon represents to the court that Class Counsel will submit the Settlement to the LWDA through its online portal at the same time the motion is filed. Absent information showing that the Settlement was not submitted to the LWDA, it is the court’s understanding, based on attorney Bacon’s representation, that the Settlement was submitted to the LWDA on the same day the present motion was filed with the court.
The court must also examine the notice to be provided to class members to determine whether that notice is “legally sufficient...” and satisfies or complies with due process. (Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 694–695.) For the reasons discussed herein, there exist deficiencies in the Class Notice which prevent the court from determining whether that notice is legally sufficient and complies with due process.
Though the Settlement appears to include an attachment entitled “Court Approved Notice of Class Action Settlement and Hearing Date for Final Court Approval” (see Bacon Dec. at pdf pp. 56-64), the court understands the proposed Class Notice at issue here to consist of the document attached to attorney Bacon’s declaration as exhibit B. (See Bacon Dec., ¶ 3 [stating that a “true and correct copy of the proposed Class Notice is attached hereto as Exhibit B.”].)
Though the Settlement requires that the Class Notice “prominently estimate” the dollar amounts of the Individual Class Payment or Individual PAGA Payment payable to the Class member, as well as the number of Workweeks and PAGA Pay Periods (Bacon Dec., Ex. A, ¶ 7.4.1), exhibit B to attorney Bacon’s declaration does not include any blank spaces showing where the Administrator will insert that information.
The proposed Class Notice attached as exhibit B to attorney Bacon’s declaration also references the incorrect case number for this case on its first page. (Bacon Dec. at pdf p. 66 [Section II].) Considering that the terms of the Settlement provide that Class Members may lodge objections at the final approval hearing, among other things, the Class Notice must be sufficient to apprise those members of the correct case number of these proceedings.
In addition, though the Settlement provides that the Class Period begins on June 18, 2020, the proposed Class Notice states that the Class Period begins on June 21, 2020. (Bacon Dec. at pdf p. 67 [Section III].)
Furthermore, and notwithstanding that the release by the Class Members provided in the Settlement includes each member’s “former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns” (Bacon Dec., Ex. A, ¶¶ 5.1.2-5.1.3), the release of claims described in the proposed Class Notice is expanded to include each Class Members “current, former, and future heirs, executors, administrators, attorneys, agents, and assigns” (Bacon Dec. at pdf pp. 67-68 [Class Notice at p. 2, Section IV, ¶ 2]). The proposed Class Notice also expands the definition of “Released Parties” contained in the Settlement to include Defendants’ “partners”, “trusts”, and “all of their employees, ... stockholders, fiduciaries, [and] other service providers....” (Ibid.) For these reasons, the proposed Class Notice is insufficient to apprise Class Members of the terms or scope of the releases contained in the Settlement.
The proposed Class Notice also notifies the Class Member that they may exclude themselves from the Settlement by mailing a letter to the Administrator at the address stated in that notice. (Bacon Dec. at pdf p. 69.) Noted above, the terms of the Settlement provide that a Class Member may submit a Request for Exclusion to the Administrator also by fax or email. (Bacon Dec., Ex. A, ¶ 7.5.1.) The proposed Class Notice does not include that information. In addition, the proposed Class Notice suggests to the Class Member that they may object to the Settlement in writing only, notwithstanding that the express terms of the Settlement permit objections to be made, alternatively, by appearing at the final approval hearing, whether or not a Class Member has submitted a written objection. (See Bacon Dec., Ex. A, ¶ 7.7.2.) For these additional reasons, the proposed Class Notice does not appear to reflect, or apprise Class Members, of the terms of the Settlement.
The proposed Class Notice also states that “unclaimed settlement payments will be distributed to Public Justice as a cy pres award.” (Bacon Dec. at pdf p. 67 [Section IV].) Noted above, the Settlement provides that uncashed and cancelled checks will be transmitted to the California State Controller’s Office.
The examples of the deficiencies in the proposed Class Notice provided above are intended to be illustrative but not exhaustive. Though, apart from the proposed Class Notice, the factors discussed above indicate that the Settlement may be entitled to preliminary approval based on those factors, the deficiencies in the proposed Class Notice prevent the court from determining that the notice plan is sufficient, apprises Class Members of the terms of the Settlement, or complies with due process.
It appears to the court that the deficiencies in the proposed Class Notice are the result of errors in the drafting of that notice. For these and all further reasons discussed herein, the court will continue the hearing on the motion to provide Plaintiff with an opportunity to cure or otherwise explain the deficiencies in the proposed Class Notice and notice plan. Plaintiff may cure or otherwise address those deficiencies in either a supplemental brief or declaration, and by submitting a corrected proposed Class Notice. The court also expects that, to the extent there exist additional deficiencies exist in the proposed Class Notice or notice plan which are not addressed herein, that any such deficiencies will be cured or explained by Plaintiff in their supplemental brief or declaration.