Case Number: BC557207??? Hearing Date: May 10, 2016??? Dept: 310
RAMIREZ V. KIRKHILL-TA CO.
MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND MOTION FOR FEES, COSTS, AND INCENTIVE PAYMENT
TENTATIVE RULING
Contingent upon the submission of evidence of Plaintiff?s written consent to the fee splitting agreement between counsel, motion is granted.
DISCUSSION
I. Background
This is a wage and hour class action brought by Plaintiff Mauro Ramirez (?Plaintiff?) on behalf of himself and similarly situated employees of Kirkhill-TA Co. (?Defendant?).
In connection with this settlement, and at the time of preliminary approval, Plaintiff filed a Second Amended Complaint alleging the following causes of action: (1) Failure to Pay Hourly Wages; (2) Failure to Pay Minimum Wages; (3) Failure to Pay Overtime Wages; (4) Failure to Provide Meal Periods or Compensation in Lieu Thereof; (5) Failure to Provide Rest Periods or Compensation in Lieu Thereof; (6) Failure to Provide Accurate Wage Statements; (7) Failure to Pay Wages to Terminated or Resigned Employees; (8) Violation of Unfair Competition Law; (9) Statutory Penalties (Labor Code ??558, 2699); and (10) Fair Labor Standards (FLSA collection action).
Following mediation, Plaintiff and Defendant entered into a settlement and sought Court approval. The Court highlighted some areas for further briefing, the parties agreed to certain amendments, and the motion for preliminary approval was granted on November 2, 2015. A fully executed copy of the Amended Class Action Settlement Agreement and Joint Stipulation (Settlement Agreement) is attached to the Declaration of Isam C. Khoury as Exhibit 1.
II. Notice and Claims Process
In California, the notice must have ?a reasonable chance of reaching a substantial percentage of the class members.? Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 251 (emphasis added). Importantly, however, the plaintiff need not demonstrate that each member of the class has received notice. As long as the notice had a ?reasonable chance? of reaching a substantial percentage of class members, it should be found effective.
Rust Consulting is acting as the claims administrator for this settlement and has provided evidence of the notice process. On November 3, 2015, Rust received the text for the notice and related documents. (Declaration of Amy Tadewald, ?6). On November 17, 2015, Rust received the class list; it contained 587 names. (Id. at ?7). Rust updated the addresses using the NCOA database and on December 17, 2015, mailed notice packets to all 587 class members. (Id. at ??8, 9). Twelve notice packets were returned; Rust was able to obtain more current addresses for all but two. (Id. at ?10). Two notice packets remain undeliverable. (Ibid). Rust received requests from seven individuals who self-identified as class members. (Id. at ?15). After research by Defendant, it was determined that one of these is a class member and that person was added to the class list. (Ibid). Defendant continues to research as to one other. The other five were determined not to be class members. (Ibid). Based on the above, the Court finds that notice to the class was adequate and complies with due process requirements. Rust has received two requests for exclusion. (Id. at ?12). Rust has not received any objections. (Id. at ?13). Of the 586 participating class members (587 minus two opt outs, plus one self-identifier), the average settlement payment will be $1,140.88. (Id. at ?18).
III. Dunk Factors
It is the duty of the Court, before finally approving the settlement, to conduct an inquiry into the fairness of the proposed settlement. California Practice Guide, Civil Procedure Before Trial, The Rutter Group, ?14:139.12 (2012). The trial court has broad discretion in determining whether the settlement is fair. In exercising that discretion, it normally considers the following factors: 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; amount offered in settlement; extent of discovery completed and stage of the proceedings; experience and views of counsel; presence of a governmental participant; and reaction of the class members to the proposed class settlement. Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801; In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 723. This list is not exclusive and the Court is free to balance and weigh the factors depending on the circumstances of the case. Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 244-245.
The proponent bears the burden of proof to show the settlement is fair, adequate, and reasonable. 7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135, 1165-1166; Wershba, supra, 91 Cal.App.4th at 245. There is a presumption that a proposed fairness is fair and reasonable when it is the result of arm?s-length negotiations. 2 Herbert Newburg & Albert Conte, Newburg on Class Actions ?11.41 at 11-88 (3d ed. 1992); Manual for Complex Litigation (Third) ?30.42.
Strength of the plaintiff?s case
At the time of preliminary approval, Class Counsel presented evidence regarding the strength of Plaintiff?s claims. Class Counsel analyzed Plaintiff?s employment data and extrapolated therefrom in order to calculate Defendant?s potential exposure in this action. For the meal break violations, the potential damage was calculated to be $722,856.02; for wage statement violations, $314,100; for waiting time penalties, $363,283.20. (Khoury Declaration re Preliminary Approval, ??51-59). Weighed against these calculations are Defendant?s legal arguments and defenses, including the risk of an unfavorable class certification ruling, an unfavorable summary judgment ruling, and judicial discretion in awarding certain damages. Taking all of these into consideration, the $1,100,000 gross settlement appears to be reasonable. This factor weighs in favor of final approval.
The risk, expense, complexity and likely duration of further litigation.
Had this case not settled, there would have been additional risks and expenses associated with continuing to litigate. Procedural hurdles (e.g., motion practice and appeals) are also likely to prolong the litigation as well as any recovery by the class members. This factor weighs in favor of final approval.
The risk of maintaining class action status through trial.
There is always a risk of decertification. [Weinstat v. Dentsply Intern., Inc. (2010) 180 Cal.App.4th 1213, 1226 (?Our Supreme Court has recognized that trial courts should retain some flexibility in conducting class actions, which means, under suitable circumstances, entertaining successive motions on certification if the court subsequently discovers that the propriety of a class action is not appropriate.?).] This factor weights in favor of final approval
The amount offered in settlement
As part of the Court?s analysis of this factor, the Court should take into consideration the admonition in Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 133. In Kullar, objectors to a class settlement argued the trial court erred in finding the terms of the settlement to be fair, reasonable, and adequate without any evidence of the amount to which class members would be entitled if they prevailed in the litigation, and without any basis to evaluate the reasonableness of the agreed recovery. The Court of Appeal agreed with the objectors that the trial court bore the ultimate responsibility to ensure the reasonableness of the settlement terms. Although many factors had to be considered in making that determination, and a trial court was not required to decide the ultimate merits of class members’ claims before approving a proposed settlement, an informed evaluation could not be made without an understanding of the amount in controversy and the realistic range of outcomes of the litigation.
The $1,100,000 settlement constitutes 58% of the major Labor Code components. (Khoury Declaration re Preliminary Approval, ?15). The settlement is non-reversionary, and no claim form is required. As noted, the 586 participating class members will receive an average settlement payment of $1,140.88. This factor weighs in favor of final approval.
The extent of discovery completed and the stage of the proceedings
In anticipation of mediation, Defendant produced information regarding class size, the average difference between rounded entries and actual punch time for a random sample of 33 class members, the total number of shifts exceeding 10 hours and 12 hours from December 16, 2013, through November 30, 2014, the total number of wage statements issued to class members from September 11, 2013 to the date of production, and the number of class members who had resigned or been terminated since September 11, 2011. (Khoury Declaration, ?26). Defendant later produced additional information, including hourly wage, estimate of total shifts, number of class members for whom wage statements were issued, an explanation of Defendant?s shift premium policy; Defendant also produced employee handbook materials. (Id. at ?? 27, 28). This factor weighs in favor of final approval.
Experience and views of counsel
Class Counsel has extensive experience with wage and hour class action litigation. (Khoury Declaration, ??1-8). Class Counsel is convinced the proposed settlement is in the best interest of the class. (Id. at ?47). [Also see Declaration of Sahag Majarian at ??1-6 (qualifications), and ?10 (endorsement of settlement).] This factor weighs in favor of final approval.
Reaction of the class members to the proposed class settlement
The class reacted very positively, with only two out of 587 class members opting out, and none objecting.
Conclusion on Dunk factors: On balance, this is a fair settlement that satisfies the Dunk factors, such that final approval is warranted.
IV. Attorney?s Fees, Costs, and Incentive Payments
A. Attorneys? Fees
Class counsel requests attorney fees of $366,666.
1. Determining the Lodestar Amount and Calculating Counsel?s Hourly Rate and Fees
The Court employs the lodestars method in awarding fees, as opposed to a ?percentage of the common fund? method. This amount would reflect the actual work performed, plus a multiplier (if applicable) to recognize counsel?s efforts.
Class Counsel Khoury states that the attorneys at his firm working on this case have spent at least 355.6 hours on this case. (Khoury Declaration, ?50, and Exhibits 2 and 3A thereto). Timothy Cohelan bills at $850/hour and spent 3.6 hours on this case for a lodestar of $3,060. Isam Khoury bills at $750/hour and spent 20.4 hours on this case for $15,300. Michael D. Singer bills at $750/hour and spent 58.1 hours on this case, for a total of $43,575. Diana Khoury bills at $650/hour and spent 88.5 hours on this case, for $57,525. Kimberly Neilson bills at $550/hour and spent 85.9 hours on this case for a lodestar of $47,245. Amber Worden (paralegal) bills at $200/hour and spent .7 hours for $140, and Matthew Atlas (paralegal) bill sat $170/hour and spent 15.6 hours for a total of $2,652. Class Counsel Majarian spent 52.80 hours and anticipates another 5; at his $700/hour billing rate, Majarian?s lodestar is $40,460. (Majarian Declaration, ?9 and Exhibit B thereto). All told, these individual amounts add up to $209,957. Khoury expects that another 25 hours will be expended on this litigation; at a blended rate of $450/hour, this would add $11,250 and bring the total lodestar to $221,207. The hourly rates charged by each attorney are reasonable for attorneys with their respective years of experience, and the hours spent is reasonable for this case, which has been pending since September, 2014. It appears that Class Counsel utilized skill in litigating this case, and by all accounts, have good reputations in the legal community; at the very least, there is no evidence before the Court to indicate that the attorneys have negative reputations in the legal community. It also appears that Class Counsel spent appreciable time on the case, which time could have been spent on other meritorious fee-generating cases.
2. The attorney fee request results in a positive multiplier of 1.65.
Based on the $221,207 lodestar, the fee request of $366,666 translates into a positive multiplier of 1.65.
Once the Court has calculated the lodestar figure, it may consider other relevant factors that could increase or decrease that figure. ?The court expresses these factors as a number (or as an equivalent percentage), and the lodestar is multiplied by that number. Thus, the number is referred to as the ?multiplier.?? Pearl, California Fee Awards (2006 Supp)., ?13.1. Although there are some objective standards governing what factors may be used to decide whether to apply a multiplier, the trial courts have considerable discretion in determining the size of the multiplier, as long as they consider the proper factors. Id. Indeed, ?there is ?no mechanical formula [that] dictate[s] how the [trial] court should evaluate all these factors?.[Citation.]?? Lealao v. Beneficial Cal., Inc. (2000) 82 Cal.App.4th 19, 41.
?[The lodestar] may be adjusted by the court based on factors including? (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action.? Ketchum v. Moses, supra, 24 Cal.4th at 1132. See also Serrano III, supra, 20 Cal.3d at 49. However, the Court cannot consider the same factors when setting both the multiplier and the lodestar. See Ketchum, supra, 24 Cal.4th at 1138; see also Flannery v. CHP (1998) 61 Cal.App.4th 629 (reversing the application of a 2.0 multiplier to a fee award, in part because ?the skill and experience of counsel? and ?the nature of the work performed? factors were duplicative of factors the trial court had explicitly considered in setting the lodestar).
Here, the issues in this case were not particular novel, but Class Counsel displayed some skill in quickly resolving this litigation. Further, Class Counsel accepted this case on a contingent fee basis, and the percentage is within the realm of what is normal in wage and hour cases. As in all contingency cases, Class Counsel risked no payment and was required to advance costs.
3. Cross-check
As a ?cross-check,? the fee request of $366,666 represents 1/3 of the gross settlement amount. The determination of what constitutes an appropriate percentage ?is somewhat elastic and depends largely on the facts of a given case, but certain factors are commonly considered. Specifically, the court may address the percentage likely to have been negotiated between private parties in a similar case, percentages applied in other class actions, the quality of class counsel, and the size of the award.? [In re Ikon Office Solutions, Inc., Securities Litigation (E.D. Pa. 2000) 194 F.R.D. 166, 193.]
These factors favor the $366,666 award. As for the first factor, private contingency fee agreements are routinely 30% to 40% of the recovery. [Id. at 194.] As for the second factor, although the median percentage of attorney fees in class actions is 25%, ?most fees appear to fall in the range of nineteen to forty-five percent.? [Id.] As for the third factor, Class Counsel has experience in class actions, including wage and hour cases. Most importantly, Class Counsel achieved good results for the class as evidenced by the class members? reaction to the settlement. As for the fourth factor, Class Counsel negotiated a $1,100,000 gross settlement amount that provides an average payout of approximately $1,140.88. For the foregoing reasons, the fee request of $366,666 is granted. The Court notes that the notice advised class members of the maximum fee request and not a single class member objected to it.
There is a lack of evidence of Plaintiff?s written consent to any fee splitting agreement, and granting of this motion is contingent upon the submission of such evidence. (Rule of Professional Conduct 2-200).
B. Costs
Class Counsel request costs in the amount of $8,778.36, which is less than the settlement cap of $15,000. Cohelan Khoury & Singer have costs of $5,459.50. (Khoury Declaration, ?59 and Exhibit 7 thereto). Included in this firm?s costs are filing fees, mediation ($3,525), CaseAnywhere, attorney service, mileage, and court reporter fees. Law Offices of Sahag Majarian II has costs of $3,318.86. (Majarian Declaration, ?9 and Exhibit C thereto). These costs include filing and jury fees, Case Anywhere, mediation ($1,762), photocopies and FedEx. $5,459.50 + $3,318.86 = $8,778.36.
These costs appear reasonable and necessary to the conduct of the litigation. Further, as with the fee requests, the maximum cost request was disclosed to class members and deemed unobjectionable. For these reasons, the cost request is granted in the amount of $8,778.36.
C. Cost of Administration
Claims administrator Rust Consulting requests administration costs of $21,000. (Tadewald Declaration, ?20, and Exhibit C thereto).
The costs are detailed as follows: database development ($2,447.90); initial mailing ($1,794.34), follow-up mailing ($599.08); telephone support ($1,028.63); processing ($536.3); project management ($7,684.91); technical consulting ($3,133.60); other expenses ($516.27). Costs yet to be incurred include $2,058 for telephone support, $2,434.03 for fund distribution, $2,500 for tax reporting, and $2,415 for project completion.
All of the costs appear to be reasonable. The reference materials demonstrate that the total actual costs are $27,148.07 and were reduced to the $21,000 cap. Based upon the reasonableness of the costs and the fact that this amount was agreed to and made known to the class with no objections being received thereto, the request for administration costs of $21,000 is granted.
D. Incentive Payment
Finally, Class Counsel seeks an incentive payment of $10,000 to the class representative.
The Court considers the following factors, among others, in determining whether to pay an incentive or enhancement award to a class representative:
Whether an incentive was necessary to induce the class representative to participate in the case;
? Actions, if any, taken by the class representative to protect the interests of the class;
? The degree to which the class benefited from those actions;
? The amount of time and effort the class representative expended in pursuing the litigation;
? The risk to the class representative in commencing suit, both financial and otherwise;
? The notoriety and personal difficulties encountered by the class representative;
? The duration of the litigation; and
? The personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. California Practice Guide, Civil Procedure Before Trial, ?14:146.10 (The Rutter Group 2012) (citing Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804; Bell v. Farmers Ins. Exch. (2004) 115 Cal.App.4th 715, 726; In re Cellphone Fee Termination Cases (2010) 186 Cal.App.4th 1380, 1394; Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 412).
Plaintiff was employed by Defendant from 2007 through May, 2014. (Declaration of Mauro Ramirez, ?2). After speaking to his attorneys, providing them with information and documents, and learning about the risk and obligations of being a class representative, Ramirez decided to bring this class action lawsuit. (Id. at ?? 4, 5). Ramirez was prepared by his attorneys to have his deposition taken, although it was not ultimately taken. (Id. at ?6). Ramirez answered questions, searched for documents, provided his attorneys with earnings statements, stayed in contact with his attorneys, attended mediation, and reviewed and signed the settlement agreement and amended agreement. (Id. at ?? 7-11). Ramirez provided a general release, even though he believes he was discriminated against and wrongly terminated. (Id. at ?12).
The Court grants $5,000 to Plaintiff Ramirez the following incentive(s) for the following reasons:
Ramirez performed important work in assistance of this litigation, which has resulted positively for class members;
Ramirez willingly exposed himself to the risks associated with being a class representative, including employment stigma;
Ramirez provided a general release while other class members were only required to provide a narrow release relating to the claims asserted in this action.