Case Name: Francisco Zendejas Sanchez v. A & S Painting & Plastering, Inc., et al.
Case No.: 18CV331651
This is a putative class and Private Attorneys General Act (“PAGA”) action on behalf of employees of defendant A & S Painting & Plastering, Inc., alleging wage statement violations. The parties have reached a settlement, which the Court preliminarily approved in an order filed on December 17, 2019. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.
Before the Court is plaintiff’s motion for final approval of the settlement and for approval of his attorney fees, costs, and service awards. Plaintiff’s motion is unopposed.
- Legal Standards for Approving a Class Action/PAGA 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, disapproved of on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.)
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.)
In general, the most important factor is the strength of plaintiffs’ case on the merits, balanced against the amount offered in settlement. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.) Still, 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., supra, 168 Cal.App.4th at p. 130.)
Finally, Labor Code section 2699, subdivision (l) provides that “[t]he superior court shall review and approve any penalties sought as part of a proposed settlement agreement pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (Marshall’s of CA, LLC) (2017) 3 Cal.5th 531, 549.) Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (“LWDA”), leaving the remaining twenty-five percent for the aggrieved employees. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380.) “[T]here is no requirement that the Court certify a PAGA claim for representative treatment” as in a class action. (Villalobos v. Calandri Sonrise Farm LP (C.D. Cal., July 22, 2015, No. CV122615PSGJEMX) 2015 WL 12732709, at *5.) “[W]hen a PAGA claim is settled, the relief provided … [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ….” (Id. at *13.) The settlement must be reasonable in light of the potential verdict value (see O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110, 1135 [rejecting settlement of less than one percent of the potential verdict]); however, it may be substantially discounted given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial (see Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8-9).
- Terms and Administration of the Settlement
The non-reversionary gross settlement amount is $90,000, to be paid in monthly installments due to defendant’s financial condition. Attorney fees of up to $30,000.00 (one-third of the gross settlement), litigation costs not to exceed $20,000, and administration costs of approximately $5,850 will be paid from the gross settlement. $5,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will also seek an enhancement award of $5,000.
Defendant will fund the settlement with an initial payment of $25,000, and, beginning within 60 days of the effective date of the settlement, twelve monthly payments of $5,416.67. The administrator shall disburse these funds pursuant to the settlement within 15 calendar days of full funding. The net settlement will be distributed to individual class members pro rata based on their wage statements issued during the class period. At preliminary approval, the average payment was estimated to be approximately $122.92 to each of 240 class members. Class members will not be required to submit a claim to receive their payments. Settlement awards will be allocated 100 percent to penalties. Funds associated with checks uncashed after 180 days will be distributed to Legal Aid at Work.
Class members who do not opt out of the settlement will release “any and all individual and class claims, debts, liabilities, demands, obligations, penalties, guarantees, court/legal costs, expenses, attorneys’ fees, damages, action or causes of action of whatever kind or nature, whether known or unknown, that are alleged in, or that could have been alleged in, Plaintiffs’ notice letter to the LWDA (submitted on or about April 30, 2018), the Complaint (filed July 16, 2018), arising out of wage statements furnished by Defendant to its employees.”
The notice process has now been completed. There were no objections to the settlement or requests for exclusion from the class. Of 181 notice packets, 13 were re-mailed to updated addresses, and 2 were ultimately undeliverable. The administrator estimates that the average payment to class members will be $214.20, with a maximum payment of $733.02.
At preliminary approval, the Court found that the proposed settlement provides a fair and reasonable compromise to plaintiff’s claims, and that the PAGA settlement is genuine and meaningful. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court consequently finds that the settlement is fair and reasonable for purposes of final approval.
III. Attorney Fees, Costs, and Incentive Award
Plaintiff seeks a fee award of $30,000, or one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $93,525, based on 124.7 hours spent on the case by counsel with billing rates of $750 per hour, resulting in a negative multiplier. As a cross-check, the lodestar supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (Cal. 2016) 1 Cal.5th 480, 488, 503-504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].)
Plaintiff’s counsel also request $6,629.67 in costs, well below the estimate provided at preliminary approval. Plaintiff’s costs appear reasonable based on the summaries provided and are approved. The $5,850 in administrative costs are also approved.
Finally, plaintiff requests a service award of $5,000. To support his request, he submitted a declaration describing his efforts on the case. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.
- Order and Judgment
In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
Plaintiff’s motion for final approval is GRANTED. The following class is certified for settlement purposes:
All current and former California employees who received a wage statement from Defendant at any time during the period of time from July 16, 2017, through November 11, 2019.
No individuals have opted out of the settlement.
Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.
The Court sets a compliance hearing for November 5, 2021 at 10:00 A.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted pursuant to Code of Civil Procedure section 384, subdivision (b); the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing remotely.
The Court will prepare the order and judgment.