Case Name:??? Jose Archilla v. Palo Alto Commons Management Company, LLC, et al.
Case No.:??????? 2015-1-CV-279567
This is a putative employment class action alleging wage and hour, meal and rest period, and other violations by defendants Palo Alto Commons Management Company, LLC, Palo Alto Commons, and Palo Alto Commons Management.? Currently before the Court is plaintiff Jose Archilla?s motion for preliminary approval of class action settlement.
- Factual and Procedural Background
Defendants Palo Alto Commons Management Company, LLC and Palo Alto Commons operate a senior assisted living community at which plaintiff was employed as a janitor.? (Mot., p. 4.)? Plaintiff alleges that defendants employed time shaving and/or rounding policies resulting in a failure to compensate employees for all hours worked at the legal minimum wage and a failure to pay required overtime; did not provide required meal and rest breaks; failed to provide complete and accurate wage statements to employees as a result of these policies and because they did not list the employer?s name and address; and failed to pay wages due at the time of termination or resignation.? (See First Amended Complaint (?FAC?), ?? 13-37.)
Plaintiff filed this action on April 17, 2015.? On June 2, 2015, he filed the operative FAC alleging the following claims: (1) failure to pay wages for all time worked at minimum wage rate in violation of Labor Code sections 1194 and 1197; (2) failure to pay wages for all time worked at overtime rate in violation of Labor Code sections 510 and 1194; (3)?failure to pay wages for workdays defendant failed to provide legally compliant meal periods in violation of Labor Code sections 226.7 and 512; (4) failure to pay wages for workdays defendant failed to provide legally compliant rest periods in violation of Labor Code section 226.7; (5) failure to provide complete and accurate wage statements in violation of Labor Code section 226; (6) failure to timely pay wages due at time of separation of employment in violation of Labor Code sections 201-203; (7) unfair business practices in violation of Business & Professions Code section 17200, et seq.; and (8) civil penalties pursuant to the Private Attorney General Act of 2004, Labor Code section 2698, et seq. (?PAGA?).
The parties have now reached a settlement.? Plaintiff moves for an order preliminarily approving the settlement, provisionally certifying the settlement class, designating class counsel and the claims administrator, approving the form and method for providing notice to the class, and scheduling a final fairness hearing.
- The Proposed Settlement
- Legal Standard for Approving a Class Action Settlement
Generally, ?questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court?s broad discretion.?? (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, citing Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794.)
In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant factors, such as 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 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.
(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at pp.?244-245, internal citations and quotations omitted.)
The list of factors is not exclusive and the court is free to engage in a balancing and weighing of factors depending on the circumstances of each case.? (Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245.)? The court must examine the ?proposed settlement agreement 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.?? (Ibid., quoting Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1801, internal quotation marks omitted.)
The burden is on the proponent of the settlement to show that it is fair and reasonable.? However ?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.?
(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245, citing Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1802.)? The presumption does not permit the Court to ?give rubber-stamp approval? to a settlement; in all cases, it must ?independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished,? based on a sufficiently developed factual record.? (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.)
- Settlement Process
The parties mediated this action before respected class-action mediator Mark Rudy on January 27, 2016.? (Decl. of Jordan D. Bello ISO Mot., ?? 4-5.)? Prior to the mediation, they exchanged information regarding plaintiff?s allegations, including over 8,000 pages of time records for all putative class members, relevant policy documents, defendants? employee handbook,? break documentation, and other data.? (Id. at ? 4.)? Plaintiff?s consultant evaluated the data to assist in determining the frequency of violations and estimated damages.? (Id. at ??7.)? During the full-day mediation, the parties agreed to the basic terms of a settlement, which they later finalized in the settlement agreement that is the subject of this motion.? (Id. at ? 5.)
At the mediation, plaintiff estimated that class members? unpaid minimum wages resulting from defendants? unlawful rounding practices totaled $75,185.? Defendants argued that their rounding policy was proper because it was neutral on its face and did not fail to compensate employees for time worked, any violations were de minimis, and assessing whether employees worked during time that was rounded was an individualized factual issue not amenable to class certification.? (Bello Decl., ?? 8-10.)? Plaintiff estimated the meal period claims at $781,679, with defendants again arguing that meal periods were provided as required by law and the claim presented individualized issues of proof.? (Id. at ?? 11-13.)? The estimated value of the unpaid rest period claims was $38,949, with plaintiff arguing that defendant failed to provide third rest periods when employees worked over 10 hours, and defendants again denying these allegations and contending they raised individualized factual issues.? (Id. at ?? 14-16.)? Plaintiff valued the derivative wage statement and waiting time penalty claims at $420,750 and $925,468, respectively.? (Id. at ?? 17-21.)? Thus, the total maximum value of the claims, not including the PAGA claim, is approximately $2.2 million.? (Id. at ? 22.)
- Provisions of the Settlement
The settlement of $675,000 will result in an average payment of $876.03 to members of the class out of the $405,600 net settlement amount.? (Bello Decl., ?? 22, 24.)? Although the $675,000 is described as a ?maximum settlement amount,? the settlement is a no claims made and non-reversionary settlement.? (Bello Decl., Ex. A, Stipulation of Class Action Settlement and Release, ?? 28, 53, 57.)? Administration expenses estimated at $20,000, attorney fees of up to $225,000 (or 1/3 of the settlement), and litigation costs up to $10,000 will be deducted from the maximum settlement amount.? (Id. at ? 53.)? $10,000 is allocated to PAGA penalties, with $7,500 payable to the Labor & Workforce Development Agency.? (Ibid.)? The settlement will be distributed to class members based on their weeks worked during the applicable period as reflected by defendants? records.? (Id. at ? 58.)? The amount of this potential award will be listed on the class notice for each individual class member, and class members may challenge the number of workweeks reflected, with the administrator resolving such challenges after notifying plaintiffs? counsel and consulting with defendants.? (Id. at ? 69.)
In exchange for the settlement payments, class members will release any claims ?pled in or reasonably related to claims pled in the Action and operative complaint during the Class Period while employed by Defendant in California as a non-exempt employee??.?? (Stipulation, ? 56.)
Plaintiff will receive an incentive award not to exceed $6,900 for his services as class representative and in exchange for a broader general release of his potential claims.? (Stipulation, ? 53.)
- Analysis
In light of the above, it appears that the settlement amount is fair and will be fairly apportioned among class members based on their hours worked.? The settlement was reached through arm?s-length bargaining following sufficient investigation and discovery, and both plaintiffs? counsel and the mediator are experienced in class action litigation.? The recovery of nearly one-third the estimated value of the claims is a good result for the class.? The Court thus deems the settlement fair.
Prior to final approval of the settlement, plaintiff must submit a declaration specifically detailing his participation in the case supporting the stipulated incentive payment. ?The Court also has an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable.? (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) ?While one-third of the common fund for attorney fees is generally considered reasonable, counsel should submit billing records and lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees.
III.? Proposed Settlement Class
Plaintiff requests that the following settlement class be provisionally certified: ?All current and former non-exempt employees of Defendant employed in the State of California between April 17, 2011 through and including the date of preliminary approval of the Settlement.?? (Stipulation, ? 6.)
- Legal Standard
Rule 3.769(d) of the California Rules of Court states that ?[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.? ?California Code of Civil Procedure Section 382 authorizes certification of a class ?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 ?.? ?As interpreted by the California Supreme Court, Section 382 requires the plaintiff to demonstrate by a preponderance of the evidence (1)?an ascertainable class and (2) a well-defined community of interest among the class members. ?(Sav-On Drug Stores, Inc. v. Superior Court (Rocher) (2004) 34 Cal.4th 319, 326, 332.)
The ?community-of-interest? requirement encompasses three factors: (1)?predominant 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.? (Ibid.) ??Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.? ?(Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) ?The plaintiff has the burden of establishing that class treatment will yield ?substantial benefits? to both ?the litigants and to the court.? ?(Blue Chip Stamps v. Superior Court (Botney) (1976) 18 Cal.3d 381, 385.)
In the settlement context, ?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.?? (Luckey v. Superior Court (Cotton On USA, Inc.) (2014) 228 Cal.App.4th 81, 93.)? As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court?s review is more lenient in this respect.? (Id., pp. 93-94.)? However, considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold.? (Id., p. 94.)
- Ascertainable Class
?The trial court must determine whether the class is ascertainable by examining (1) the class definition, (2) the size of the class and (3) the means of identifying class members.?? (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) ??Class members are ?ascertainable? where they may be readily identified without unreasonable expense or time by reference to official records.? ?(Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.)
Here, plaintiff estimated at the time of mediation that there were 463 putative class members.? Class members are easily identifiable from defendants? payroll records.? The Court consequently finds that the class is numerous and ascertainable.
- Community of Interest
With respect to the first community of interest factor, ?[i]n order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.?? (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916.)? The court must also give due weight to any evidence of a conflict of interest among the proposed class members.? (See J.P. Morgan & Co., Inc. v. Superior Court (Heliotrope General, Inc.) (2003) 113 Cal.App.4th 195, 215.)? The ultimate question is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.? (Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at pp. 1104-1105.)? ?As a general rule if the defendant?s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.?? (Hicks v. Kaufman & Broad Home Corp., supra, 89 Cal.App.4th at p. 916.)
Here, common legal and factual issues predominate.? These issues include whether defendants? rounding policy was lawful and whether legally compliant meal and rest periods were provided to class members.
As to the second factor,
The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative?s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.
(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)? Here, like other members of the class, plaintiff was employed as a nonexempt employee and suffered alleged violations due to defendants? rounding policy and failure to provide meal and rest periods.? The anticipated defenses are not unique to plaintiff, and there is no indication that plaintiff?s interests are otherwise in conflict with those of the class.
Finally, adequacy of representation ?depends on whether the plaintiff?s attorney is qualified to conduct the proposed litigation and the plaintiff?s interests are not antagonistic to the interests of the class.? ?(McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.) ?The class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class. ?(Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 238.) ?Differences in individual class members? proof of damages [are] not fatal to class certification.? Only a conflict that goes to the very subject matter of the litigation will defeat a party?s claim of representative status.?? (Ibid., internal citations and quotation marks omitted.)
Plaintiff has the same interest in maintaining this action as any class member would have.? Further, he has hired experienced counsel. ?Plaintiff has sufficiently demonstrated adequacy of representation.
- Substantial Benefits of Class Certification
?
?[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .? ?(Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.) ?The question is whether a class action would be superior to individual lawsuits. ?(Ibid.) ??Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.? ?(Ibid.) ?Generally, ?a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.? ?(Id. at pp. 120-121, internal quotation marks omitted.)
Here, there are an estimated 463 members of the proposed class. ?It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member.? Further, it would be cost prohibitive for each class member to file suit individually, as each member would have the potential for little to no monetary recovery.? It is clear that a class action provides substantial benefits both to the litigants and the Court in this case.
In sum, plaintiff has demonstrated that this action is appropriate for class treatment, and that he and his counsel will adequately represent the class.
- Notice
The content of a class notice is subject to court approval. ?(Cal. Rules of Court, rule 3.769(f).) ??The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.? (Ibid.) ?In determining the manner of the notice, the court must consider: ?(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6)?The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.? ?(Cal. Rules of Court, rule 3.766(e).)
Here, the notice describes the lawsuit, explains the settlement, and instructs class members that they may receive a payment, opt out of the settlement, or object. ?The release language is provided.? The maximum settlement amount is set forth along with itemized estimated deductions resulting in a net settlement fund.? The procedure for a class member to challenge his or her work history information is provided.? Class members will be given 30 days to submit a request for exclusion from the class or an objection.? The claims administrator will be provided with the last known address for class members and will check the National Change of Address database for a more recent address before mailing the class notice.? For returned notices, the claims administrator will take all reasonable steps to locate the class member, such as a skip trace procedure or other independent research, and will re-mail the notice within five business days of obtaining an undated address.
These notice procedures are adequate. ?The notice itself complies with the requirements for class notice. ?It provides basic information about the settlement, including the settlement amount and plan of allocation. ?It also explains what claims will be released by the settlement and the compensation that will be requested by plaintiffs? counsel.? It instructs potential class members how to dispute their work history information and how to opt out of the class. ?The notice makes it clear that class members may appear and object at the final fairness hearing without filing or mailing any written objection with the Court or to counsel.
The Court appoints CPT Group as the claims administrator pursuant to plaintiff?s request. ?Plaintiff is instructed to provide supporting documentation for CPT Group?s administrative costs prior to the final approval hearing.
- Conclusion and Order
Plaintiff?s motion for preliminary approval is GRANTED.? The final approval hearing shall take place on November 18, 2016 at 9:00 a.m. in Dept. 1.