Motion for Approval of Settlement (Judge Marc Marmaro)


Case Number: BC596892??? Hearing Date: June 13, 2016??? Dept: 37

CASE NAME: Resendez v. Bridgestone Retail Operations, LLC

CASE NO.: BC596892

HEARING DATE: 6/13/16

DEPARTMENT: 37

CALENDAR NO.: 9

TRIAL DATE: 2/14/17

NOTICE: OK

SUBJECT: Motion for Approval of Settlement of Claims Brought Under the Private Attorneys General Act

MOVING PARTY: Plaintiff Sophia P. Resendez, on behalf of herself and all others similarly situated

OPPOSING PARTY: None

COURT?S TENTATIVE RULING

The unopposed motion is granted. Counsel for Plaintiff to give notice.

STATEMENT OF THE CASE

This is an action for civil penalties under the Private Attorneys General Act of 2004 (PAGA), which is codified in the Labor Code (Lab. Code, ? 2698 et seq.). Defendant Bridgestone Retail Operations, LLC operates a chain of auto care and tire stores and employed Plaintiff Sophia P. Resendez from August 18, 2013 until May 14, 2015. Plaintiff alleges that Defendant failed to include its address on employee wage statements in violation of Labor Code section 226, subdivision (a)(8), and that Defendant paid meal period premiums to non-exempt employees pursuant to Labor Code section 226.7, thereby acknowledging that it had violated Labor Code section 512 regarding the provision of meal periods. Plaintiff filed suit on October 5, 2015, and the parties settled the matter during mediation with the Honorable Ronald M. Sabraw (Ret.) on February 25, 2016.

DISCUSSION

I. General Legal Principles Applicable to PAGA Settlements

A. The PAGA

Plaintiff moves the court to review and approve the civil penalties sought as part of the settlement of her PAGA claims. (Lab. Code, ? 2699, subd. (l).) The PAGA is ?a procedural statute allowing an aggrieved employee to recover civil penalties?for Labor Code violations?that otherwise would be sought by state labor law enforcement agencies.? (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.) The statute provides a mechanism for private enforcement of Labor Code violations for the public benefit. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 986; Ochoa-Hernandez v. Cjaders Foods, Inc. (N.D.Cal. 2010) 2010 WL 1340777, at p. *4.) To incentivize employees to bring PAGA actions, the statute

provides aggrieved employees 25 percent of the recovered civil penalties. (Lab. Code, ? 2699, subd. (i).) The remaining 75 percent is distributed to the Labor and Workforce Development Agency (LWDA) ?for enforcement of labor laws and education of employers and employees about their rights and responsibilities under [the Labor Code].? (Ibid.)

B. Settlement Generally

In reviewing the terms of a settlement agreement, the court determines whether the settlement is fair, reasonable, and adequate to all concerned, and not the product of fraud, collusion, or overreaching. (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 322, 337; Nordstrom Commission Cases (2010) 186 Cal.App.4th 576, 581.) In the context of a class action settlement, the court considers various factors including whether (1) the settlement is the result of 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. (Nordstrom, at p. 581; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 245.) In considering the amount of settlement, the court is mindful that compromise is inherent and necessary in the settlement process. (Wershba, at p. 250.)1

II. Application of General Principles

A. Terms of the Settlement

The settlement provides for Defendant to pay a Gross Settlement Amount (GSA) of $950,000. After deducting one-third of the GSA ($316,666.66) for attorney fees, attorney costs ($7,005.82), an enhancement award for Plaintiff ($10,000), and settlement administration costs ($30,000), the settlement provides for distribution of a PAGA penalty fund of no less than $585,833.34, with no less than $439,375 to be paid to the LWDA, and no less than $146,458.34 to be paid to the aggrieved employees. The parties have agreed to use CPT Group, Inc. (CPT) as the third-party settlement administrator. In that capacity, CPT will attempt to notify the aggrieved employees based on information provided by Defendant and distribute payments to the
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1 As Plaintiff points out, a PAGA settlement is different from a class action settlement in at least two respects. First, in considering a PAGA settlement, the court considers whether the total settlement amount achieves the PAGA?s objective. Civil penalties are not meant to compensate employees but to serve law enforcement purposes by deterring unlawful conduct. Second, because the PAGA does not create property or substantive rights, aggrieved employees represented by the PAGA representative need not be given notice of the PAGA claim and cannot ?opt out? of such a claim. Notwithstanding these difference, the general principles applicable to class action settlements apply equally in this context.

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employees.2 Aggrieved employees will not be required to submit claim forms to participate, will automatically receive the share of the settlement, and will have 180 days to cash their settlement checks. The amount of any checks that are returned as undeliverable or not cashed within 180 days shall be tendered to a fund benefitting Defendant?s employees with personal or family emergencies.

B. Analysis of the Civil Penalties

The settlement represents a compromise with respect to the strength of Plaintiff?s claims and Defendant?s defenses to those claims. For instance, while Plaintiff contends that Defendant violated Labor Code section 226 by failing to include its address on wage statements, she acknowledges that Labor Code section was amended shortly before she filed suit to permit employers to ?cure? such a violation by providing compliant wage statements to affected employees. The parties dispute whether Defendant timely cured the defective wage statements. Similarly, while Plaintiff contends that Defendant violated Labor Code section 512, which obligates employers to provide meal periods, Defendant maintains that it provided employees an extra hour of pay as a ?meal period premium? pursuant to Labor Code section 226.7. Although Plaintiff disagrees, it is Defendant?s position that it should not be penalized twice for the same violation. After considering the parties? respective positions before and during mediation, Plaintiff calculated civil penalties of $842,511 for the failure to include an address on wage statements and $178,145 for the failure to provide meal periods. The GSA represents about 93 percent of Plaintiff?s projected total recovery of $1,020,656.

The parties arrived at the settlement amount with the benefit of informal discovery and experienced counsel. For instance, Defendant provided Plaintiff with payroll data and calculations for aggrieved employees, including the number of deficient wage statements and the number of pay periods in which meal period premiums were paid. Plaintiff?s counsel is experienced in wage-and-hour class actions, who believes the settlement to be fair and adequate for all involved. In addition, the parties reached their agreement with the benefit of a neutral mediator. These circumstances demonstrate that the agreement represents an arm?s length transaction untainted by fraud, collusion, or self-dealing. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.) Accordingly, for these reasons, the court determines that the settlement is fair, adequate, and reasonable.

C. Attorney Fees and Costs

The PAGA contains a fee-shifting provision providing the prevailing party recovery of attorney fees and costs. (Lab. Code, ? 2699, subd. (g).) Here, the one-third fee award is reasonable and consistent with fee awards in class action cases. (See Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66, fn. 11 [? ?Empirical studies show
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2 Plaintiff represents that based on the latest information, there are 3,002 persons who fall into the definition of ?aggrieved employees? in this case. The estimated average payment for each aggrieved employee is $48.23.

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that, regardless whether the percentage method or the lodestar method is used, fee awards in class actions average around one-third of the recovery? ?.) In addition, the GSA exceeds other PAGA awards that have been approved by courts in this state. (E.g., Aguirre v. DSW, Inc. (C.D.Cal. 2012) 2012 WL 11875296, at p. *3 [approving $10,000 PAGA payment]; Boyd v. Bank of America Corp. (C.D.Cal. 2014) 2014 WL 6473804, at p. *8 [approving $18,750 PAGA payment].) The success of the litigation and the experience of counsel in handling similar matters also favors an award of one-third of the recovery.

The reimbursement of costs of $7,005.82 is also warranted. Plaintiff presents an itemization of costs, which consists of (1) copying, postage, and research costs; (2) mediation fees; (3) filing and jury fees; (4) CourtCall fees; and (5) parking and mileage. (Declaration of Paul K. Haines, Exh. F.) Similarly, Plaintiff demonstrates that the $30,000 of administrative costs for CPT is reasonable and warranted. CPT is experienced as a settlement administrator (Declaration of Julie Green ?? 4-7), and Plaintiff represents that the bid of $30,000 was low and discounted. Accordingly, the attorney and administrative costs are approved as well.

D. Enhancement Award

Finally, Plaintiff?s enhancement award of $10,000 is reasonable. The purpose of such an award is to incentive aggrieved employees to undertake the risks associated with serving in a representative capacity. (See Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 726 [?service payments? compensate named plaintiff ?for their efforts in bringing the action?]; Ingram v. The Coca-Cola Co. (N.D.Ga. 2001) 200 F.R.D. 685, 694 [? ?Courts routinely approve incentive awards to compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation? ?].) Here, Plaintiff provided factual information and documentation to Plaintiff?s counsel, assisted in identifying potential witnesses, and attended meetings with counsel. She estimates that she has spent at least 15 hours on these activities to help move the case forward. (Declaration of Sophia Resendez ? 5.) In addition, Plaintiff has agreed to a broader release of all known and unknown claims, including those that are not wage and hour related, subject to a waiver of Civil Code section 1542. Given Plaintiff?s participation in the case and the broader waiver she has agreed to, the enhancement award is reasonable.

In sum, the settlement is fair, reasonable, and adequate for those concerned. The unopposed motion is granted.