Santino Lopez vs Redstone Residential Inc

Case Number

24CV03557

Case Type

Hearing Date / Time

Mon, 11/25/2024 - 10:00

Nature of Proceedings

Motion: Approval OF CLASS ACTION SETTLEMENT

Tentative Ruling

Santino Lopez v. Redstone Residential, Inc.

Case No.  24CV03557

Hearing Date:         11/25/2024                                                     

HEARING:    Preliminary approval of class action and PAGA settlement

           

ATTORNEYS:           Mehrdad Bokhour of Bokhour Law Group, P.C. and Joshua S. Falakassa of Falakassa Law, PC for plaintiff Santino Lopez and the putative class.

                                    Sue M. Bendavid / Nicholas Kanter of Lewitt, Hackman, Shapiro, Marshall & Harlan for defendant Redstone Residential, Inc.

                       

TENTATIVE RULING:  

The motion is granted, as outlined below.

BACKGROUND: Defendant Redstone Residential, Inc. (Redstone) is an entity which manages and operates student housing and multifamily properties in California. Plaintiff Santino Lopez was employed by Redstone as a non-exempt employee with the title of “Leasing Specialist” from June 15, 2022, to January 13, 2023.

This action was originally filed in Fresno Superior Court on February 10, 2023, and was transferred to the Santa Barbara Superior Court pursuant to stipulation of the parties and order of the Fresno Superior Court, in June, 2024. It was filed as a wage and hour class action, asserting causes of action for (1) failure to pay all overtime wages, (2) failure to pay all sick time, (3) meal period violations, (4) rest period violations, (5) wage statement violations, (6) waiting time penalties, (7) failure to reimburse necessary business expenses, and (8) unfair business practices. Upon the ultimate settlement of the action, the parties agreed to permit the filing of a First Amended Complaint which added a PAGA claim. That pleading was filed on September 11, 2024.

Following mediation, the parties entered into a settlement of the action, and now seek preliminary court approval of that settlement as well as an order provisionally certifying the proposed class for settlement purposes, an order appointing plaintiff as class representative for the class, an order appointing plaintiff’s attorneys as class counsel for the class for purposes of settlement; an order appointing ILYM Group, Inc. to serve as Settlement Administrator, an order approving the Notice being sent to the class, and an order scheduling the hearing for final approval of the settlement, including approval of incentive awards to the representative plaintiff, settlement administration costs, fees and costs to class counsel, and payment of PAGA penalties to the LWDA. The motion is supported by the declarations of class counsel Mehrdad Bokhour and Joshua Falakassa, as well as a declaration by the named plaintiff, Santino Lopez.

The motion asserts that Redstone denied the allegations and vowed to vigorously defend the action. The parties conducted a thorough investigation of the facts underlying the alleged claims, including formal discovery and meet and confer efforts, and disclosure of defendants’ written wage and hour policies and procedure, as well as the payroll and timekeeping records for Settlement Class Members and the PAGA Aggrieved Employees.

On April 16, 2024, the parties mediated the case with Marc Feder, Esq., an experienced class action mediator. As a result of the mediation, the parties reached a settlement, which they later memorialized into a formal Settlement Agreement. The motion represents that the settlement resulted from adversarial and non-collusive negotiations.

Under the terms of the settlement, Redstone has agreed to pay $163,537 on a non-reversionary basis, in order to settle and release all claims asserted by plaintiff in the class action and PAGA action on behalf of the class. The settlement defines the “class” as including all individuals who are or were employed by Redstone as non-exempt hourly employees during the Class Period which, in turn, is defined as the period from February 10, 2019, to June 28, 2024. PAGA Member was defined to include all individuals who are or were employed by Redstone as non-exempt hourly employees in California during the PAGA Period, which was defined to mean the period from January 18, 2022, to June 28, 2024.

The Net Settlement Amount available to distribution to the class is the Gross Settlement Amount of $163,537, from which has been deducted Attorneys’ Fees of $54,512.33, Litigation Costs not to exceed $25,000, Administrator Costs not to exceed $5,000, PAGA Penalties of $10,000, of which $7,500 will be paid to the LWDA, and $2,500 will be paid to the Aggrieved Employees, and a service award to the named plaintiff not to exceed $10,000, for a total Net Settlement Amount of $59,024.67. [Note: The Court notes that the Settlement Agreement provided for Administrator Costs not to exceed $10,000. However, since the motion seeks only to approve fees not to exceed $5,000, it is that figure that controls in the Court’s evaluation of the approval motion.]

The settlement class includes approximately 60 non-exempt employees who worked for Redstone in California during the Class Period, encompassing approximately 3,115 workweeks. Payments will be made on a pro-rata basis based on the number of work weeks worked during the Class Period, with the average payment to each class member totaling approximately $983.74. 80% of each Class Member’s payment will be allocated to interest and penalties, while 20% will be allocated to wages, which will be subject to tax withholding. There are approximately 48 PAGA Members who worked for approximately 792 PAGA Periods. PAGA payments will be determined by dividing the $2,500 PAGA Member share of the total PAGA Penalties by the total number of PAGA Pay Periods worked by all PAGA Members during the PAGA Period, and multiplying that by each PAGA Member’s PAGA Period Pay Periods.

The motion evaluates the defendant’s estimated exposure on the various types of claims, noting the defenses and evidentiary difficulties which each claim presented, and arriving at a risk-adjusted estimate for penalties and damages. It asserts that the settlement was a reasonable compromise of the claims, after taking into account the potential risks and opportunities of both parties. This includes the fact that Redstone possessed significant legal and factual grounds for defending the action, disputes whether plaintiff could obtain class certification, contends that it complied with all applicable law, and that any purported deviations were individual in nature and limited the ability to certify the class. Plaintiff recognizes that, while he believed the case was suitable for certification, there existed significant risks that could limit the claims which could be pursued on a class basis.

The motion seeks certification of the class for settlement purposes only, asserting that the class is ascertainable from defendants' records, sufficiently numerous to warrant class treatment, that there is a well-defined community of interest in the questions of law and fact involving the parties to be represented, that the named plaintiff’s claims are typical of those of the class and his representation is adequate because he is represented by experienced class counsel, and that class treatment for settlement purpose is superior in that it will resolve all claims and foster judicial economy.

The motion attaches the Notice of Proposed Class Action Settlement which will be provided to the class members, which explains the settlement and provides class members with the opportunity to dispute the calculation of their share and produce evidence to support their contention that the information contained in their notice is inaccurate. The Settlement Administrator will evaluate the evidence and resolve disputes. The Notice also explains the manner in which class members may either opt-out from the settlement agreement (advising that they may not opt out of the PAGA settlement, if it applies to them), or object to the settlement agreement, and that they do not have to take any action in order to participate in the class settlement.

The settlement will be administered by ILYM Group, Inc. The details of the manner in which it will mail the notice, process exclusions and objections, and distribute the settlement funds to class members, is detailed in the settlement agreement. To the extent any checks remain uncashed by the deadline, the funds will be transferred to the State Controller’s Unclaimed Property Fund in the name of the Class Member.

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

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

“‘The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.’” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.) The court has broad discretion to determine whether the settlement is fair. (Dunk v. Ford Motor Co.) (1996) 48 Cal.App.4th 1794, 1801.) “The well-recognized factors that the trial court should consider in evaluating the reasonableness of a class action settlement agreement include ‘the strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.’ [Citations.] This list ‘is not exhaustive and should be tailored to each case.’ [Citation.]” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

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

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

The Court has carefully analyzed the terms of the settlement, including the nature and scope of the release it requires of absent class members and the representative plaintiff. The Court finds that it is within the range of acceptable settlements. The class totals approximately 60 members, who will share in the approximately $59,024.67 Net Settlement Amount, according to the formula set forth in the settlement, which is dependent upon the number of pay periods worked by the class member within the class period. The Net Settlement Amount is the amount which will remain after deducting from the $163,537 Gross Settlement Amount attorneys’ fees of $54,512.33 (33.33% of the gross settlement amount), litigation costs of up to $25,000, administration costs not to exceed $5,000, Plaintiff’s Service Award not to exceed $10,000, and the $10,000 settlement of the PAGA claims, $7,500 of which will be paid to the Labor and Workforce Development Agency as required by law, and $2,500 of which will be paid to PAGA Members pursuant to the settlement of the PAGA claims.

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

The motion asks the Court for an order certifying the settlement class. The Court finds that certification of the class for settlement purposes is appropriate, and will grant the motion to provisionally certify the proposed class for settlement purposes. The class is ascertainable from defendants’ records, and is so numerous that joinder of all members is impracticable. There are questions of law or fact common to the proposed class, and there is a well-defined community of interest among its members with respect to the subject matter of the litigation.

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

The Court further approves the PAGA claim class, and approves the PAGA Settlement Payment, finding that the terms of the PAGA settlement are fair and reasonable.

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

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

The Court has reviewed the proposed order submitted by the plaintiff, and intends to execute it, with the final approval hearing date inserted in the blank in ¶¶ 15 and 16, with the hearing time of 10:00 a.m. inserted in ¶ 15.