Motion for Preliminary Approval of Settlement (Thomas E. Kuhnle)

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on December 7, 2018, at 9:00 a.m. in Department 5.? The Court now issues its tentative ruling as follows:

1. ???? INTRODUCTION

This is a putative class action arising out of various alleged wage and hour violations.? The First Amended Complaint, filed on October 16, 2018, sets forth the following causes of action:? (1) Failure to Provide Meal Periods; (2) Failure to Provide Rest Periods; (3) Failure to Pay Hourly Wages; (4) Failure to Indemnify/Forced Purchases; (5) Failure to Provide Accurate Written Wage Statements; (6) Failure to Timely Pay All Final Wages; (7) Unfair Competition; and (8) Civil Penalties.

The parties have reached a settlement.? Plaintiffs Nelly Zelaya and Leteesia Bishop (?Plaintiffs?) now move for preliminary approval of the settlement.

1. ???? LEGAL STANDARD

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, citing Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com?n, etc. (9th Cir. 1982) 688 F.2d 615, 624.)

?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, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com?n, etc., supra, 688 F.2d at p. 625, 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, supra, 48 Cal.App.4th at p. 1802.)

• DISCUSSION

1. Provisions of the Settlement

The case has been settled on behalf of the following class:

All persons who worked at any Foot Locker Retail, Inc. store, including Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports and/or Footaction, in California in a non-exempt position at any time from November 16, 2015 through the Release Date, including non-exempt managers.? There are an estimated 10,517 members in the Settlement Class.

(Stipulation of Settlement of Class Action, ??I(38).)

Pursuant to the settlement, Defendant will pay a total of $4,500,000.? (Stipulation of Settlement of Class Action, ??III(A).)? The settlement payment includes up to $1,500,000 for attorneys? fees, up to $35,000 for costs, $7,500 as an incentive award for each class representative ($15,000 total), and up to $42,500 for settlement administrator fees and costs.? (Id.?at ???III(B)-(C).)? An amount of $100,000 out of the settlement is allocated to PAGA, with $75,000 of that amount to be paid to the LWDA.? (Id. at ???III(D).)? Checks that are not cashed within 180 calendar days will be void and the amounts of those checks will be distributed as follows 😕 50% to San Francisco Court Appointed Special Advocates and 50% to Court Appointed Special Advocates of Contra Costa County.? (Id. at ???I(42), V(F).)

1. Fairness of the Settlement

Plaintiffs state the proposed settlement is the result of arms?-length negotiations by experienced counsel, with the assistance of a highly regarded mediator, after sufficient discovery was exchanged to assess the relative strengths and weaknesses of the claims.? Plaintiffs contend the amount recovered in settlement is approximately 43.64% of the total value of the claims.? Overall, the Court finds the settlement is fair.? It provides for some recovery for each class member and eliminates the risk and expense of further litigation.

1. Incentive Award, Fees, and Costs

Each Plaintiff requests a class representative incentive award of $7,500.

The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. ?An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: ?1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. ?These ?incentive awards? to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.

(Cellphone Termination Fee Cases (2010) 186 Cal. App. 4th 1380, 1394-1395, quotation marks, brackets, ellipses, and citations omitted.)

Prior to final approval of the settlement, the class representatives must submit declarations specifically detailing their participation in this action.? The Court will make a determination regarding the incentive awards at that time.

The Court also has an independent right and responsibility to review the requested attorneys? fees and only award so much as it determines reasonable.? (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.)? Plaintiffs? counsel requests attorneys? fees in the amount of $1,500,000 (one-third of the total settlement) and costs of up to $35,000.? Plaintiffs? counsel should submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing so the Court can compare the lodestar information with the requested fees. ?Plaintiffs? counsel should also submit information regarding actual costs incurred.

1. Conditional Certification of Class

Plaintiffs request the putative class be conditionally certified for purposes of the settlement.? 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: (1) an ascertainable class; and (2) a well-defined community of interest among the class members.? (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.)

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.? (Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326.)? ?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 (1976) 18 Cal.3d 381, 385.)

As explained by the California Supreme Court,

The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious.? A trial court ruling on a certification motion determines 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.

(Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326, internal quotation marks, ellipses, and citations omitted.)

There are approximately 10,517 class members.? Class members can be ascertained from Defendant?s records.? There are common issues in this case regarding whether Defendant had certain policies or practices that resulted in wage and hour violations, such as a failure to provide legally compliant meal and rest breaks.? No issue has been raised regarding the typicality or adequacy of Plaintiffs as class representatives. ?In sum, the Court finds the proposed class should be conditionally certified.

1. Class Notice

The content of a class notice is subject to court approval.? (Cal. Rules of Court, rule 3.769(f).)? The notice generally complies with the requirements for class notice.? (See Stipulation of Settlement of Class Action, Ex. 1.)? It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion.? However, the notice states objections must be written and sent to the claims administrator prior to a certain date.? The notice must be changed to make clear that class members may appear at the final approval hearing to object without filing or serving any papers and without providing any advance notice. ?The amended notice shall be provided to the Court for approval prior to its mailing.

1. Conclusion

The motion for preliminary approval of class settlement is GRANTED, subject to the modification to the notice.? The final approval hearing is set for April 5, 2019, at 9:00 a.m. in Department 5.

The Court will prepare the final order if this tentative ruling is not contested.