Case Number: BC498443??? Hearing Date: September 08, 2016??? Dept: 310
Lutin v. Lerner New York, Inc.
MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND MOTION FOR FEES, COSTS, AND INCENTIVE PAYMENT
TENTATIVE RULING
Conditioned upon a reasonable explanation of the $6,092.52 for court and filing fees and the $4,266.80 for investigation services, the cost request will be granted in the amount of $32,811.45. Otherwise grant.
DISCUSSION
I. Background
This is wage and hour action brought by Takemia Lutin and Sergio Urena on behalf of themselves and similarly situated employees of Lerner New York, Inc. dba New York and Company, and New York and Company, Inc. dba New York & Company.
Lutin originally filed this putative class action on December 31, 2012. On January 29, 2013, Lutin filed the First Amended Complaint to add Urena as an additional named Plaintiff and to plead an additional claim for civil penalties under the Private Attorneys General Act of 2004 (?PAGA?). On May 7, 2015, the Second Amended Complaint was filed, adding Natalia Pereida as a named Plaintiff. Lutin is no longer a named Plaintiff in this action.
The Second Amended Complaint alleges causes of action by Plaintiffs Urena and Pereida, individually and on behalf of the class, for: (1) violation of Labor Code ??510 and 1198 (unpaid overtime); (2) violation of Labor Code ??1194, 1197, 1197.1 (unpaid minimum wages); (3) violation of Labor Code ??226.7 and 512(a); (4) violation of Labor Code ??226.7 (unpaid rest period premiums); (5) violation of Labor Code ??201 and 202 (wages not timely paid upon termination); (6) violation of violation of Labor Code ??2800 and 2802 (unpaid business-related expenses); (7) violation of Labor Code ?226(a) (non-compliant wage statements); (8) violation of Labor Code ??2698, et seq. (PAGA); and (9) violation of Business & Professions Code ??17200, et seq.
Following two separate full days of mediation with John Bates, Esq. of JAMS, on December 3, 2014 and September 30, 2015, Plaintiffs and Defendant entered into a Joint Stipulation of Class Action Settlement and Release (Settlement Agreement). In March, 2016, this Court heard and granted Plaintiffs? motion for preliminary approval. Now before the Court is Plaintiffs? motion for final approval.
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.
Simpluris is acting as claims administrator for this settlement and has submitted evidence about the notice and claims process.
? On March 31, 2016, Simpluris mailed notice packets to all 7,230 class members after first updating the addresses using the NCOA. On April 29, 2016, it mailed postcard reminders to all class members who had not yet responded. (Declaration of Stephen Gomez, ?4).
? As of June 20, 2016, 695 notice packets were returned by the post office. Simpluris performed skip traces and re-mailed a total of 604 notice packets. Ultimately 102 were undeliverable. (Id. at ?5).
? As of June 20, 2016, Simpluris has received 1,945 valid claim forms, constituting claims totaling $745,526.93, or 51.15% of the Net Settlement Amount. To meet the Court-ordered floor of 55% of $801,625, payments were increased proportionally. (Id. at ?6).
? Simpluris received 6 valid requests for exclusion. (Id. at ?6).
? Simpluris received no objections. (Id. at ?6).
It appears from the above that the notice plan outlined in the Settlement Agreement was followed. The Court finds that notice was adequate. The response rate is approximately 27%.
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
Plaintiffs valued their claims in the aggregate, discounting the risks of continued litigation, at approximately $1,500,000 to $3,000,000. (Motion at 12:20-23). The wage statement claim was assessed a value from $550,000 to $1,000,000; the regular rate of pay claim was valued between $10,000 and $50,000; the meal and rest period claims were valued at $750,000 to $1,500,000; off-the-clock claims were assessed at $150,000 to $300,000; and unreimbursed business expense claims at $50,000 to $100,000. (Id. at pp.13-14).
Plaintiffs also believe the $10,000 allocated to PAGA claims is reasonable as this was reached after good-faith negotiations between the parties with input from the mediator. (Id. at p.15).
Given all of these risks, Plaintiffs believe that the $2,340,000 settlement is in their best interest and is fair and reasonable to the class. (Id. at p.14). 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.
Defendant agreed to settle all claims for the gross amount of $2,340,000. This falls within the $1.5 -$3 million estimated range of the value of the claims and is therefore within the ballpark of what is reasonable. After deducting for fees, costs, administrative costs, enhancement awards, and PAGA penalties in the amounts requested, approximately $1,457,500 remains as the Net Settlement Amount, of which 55% must be paid out to class members who submit claims. If all 7,230 class members had filed claims, the average settlement payment would have been $201.60. [$1,457,500 ?7,230 = $201.60] However, the number of claims submitted was 1,945. According to the claims administrator?s calculations, the average recovery to those class members is $396.34. (Gomez Declaration, ?6). The highest is $2,195.78. (Ibid). This factor weighs in favor of final approval.
The extent of discovery completed and the stage of the proceedings
Class Counsel?s investigation included the following: evaluating Plaintiffs? suitability as class representatives; deposing Defendant?s representatives and defending Mr. Urena?s deposition; analyzing a representative sample of time and payroll records; interviewing putative class members; analyzing Defendant?s policies; and performing legal research. (Declaration of Raul Perez, ?6). This factor weighs in favor of final approval.
Experience and views of counsel
Class Counsel has sufficient experience with wage and hour class action litigation. (Id. at ?? 8-12). This factor weighs in favor of final approval.
Reaction of the class members to the proposed class settlement
The class reacted positively, with only 6 of the 7,230 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 $780,000.
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, Capstone Law APC, employed 11 attorneys who worked a total of 902 hours at varying rates for a total of $450,400. (Perez Declaration, ?13). The Supplemental Perez Declaration provides an updated chart regarding the work performed and the attorneys who performed the work, and attaches billing records to support the request. (Supplemental Declaration of Raul Perez, ?? 2 and 3, and Exhibit A thereto). The new lodestar is $453,449.
The Court finds that the hourly rates charged by each attorney are reasonable based on their respective years of experience, and that the total number of hours expended on this litigation is reasonable given the length of time the case has been pending and the size of the class.
It appears that Class Counsel utilized skill in litigating this case, and by all accounts, has a good reputation in the legal community; at the very least, there is no evidence before the Court to indicate that the attorney has a negative reputation 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 1.73.
Based on the $453,499 lodestar, the fee request of $780,000 translates into a positive multiplier of 1.72.
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).
The issues in this case were not particular novelty, 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 $780,000 represents 1/3 of the maximum settlement amount. In their supplemental briefing, Plaintiffs cite the recent California Supreme Court decision in Laffitte v. Robert Half International, Inc. (2016 WL 4238619) as authority for courts to award fees based on a percentage of a common fund. (Notice of New Authority at 1:3-15). The problem with applying Laffitte here is that there is no common fund. The actual gross must be adjusted because the distribution was considerably LESS, and in fact a more realistic estimation would be to use either the 55% floor or the actual percentage of claims paid as the adjusted gross 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].
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 $2,340,000 maximum gross settlement amount that provides an average payout of approximately $400 to those class members who submitted claims.
For the foregoing reasons, the fee request of $780,000 is reduced by applying a reduced multiplier of 1.5 (instead the 1.73 requested) to reflect the reduced adjusted gross settlement. Accordingly, attorneys? fees of $675,600 are awarded.
B. Costs
Class Counsel requests costs in the amount of $33,000 (which is the cap), although actual costs amount to $32,911.45. (Perez Declaration, ?17). Class Counsel?s actual costs consist of copying and printing ($599.25), court fees and filing fees ($6,092.52), court reports and transcripts ($2,314.65), messenger service, document management and production ($1,770.20), Fountain Consulting, Inc. ($1,210), investigation services ($4,266.80), mediation ($8,456.25), postage and mailing ($5,501.32), T.R.S. Consulting ($525), travel ($1,732.91), and other miscellaneous expenses.
The Court?s Checklist requested additional details supporting the requested costs. The Supplemental Perez Declaration lists the costs differently, but reaches the same total. Of particular concern was the claimed $6,092.50 claim for court fees and filing fees, which is not listed in the new declaration. The Court was also concerned about the investigation services, which are again listed as $4,266.80 with no explanation who this was paid to or for what service. It appears that the $5,501.32 claimed cost for postage and mailing may be attributable to the sending of Belaire West notices.
Most of the costs appear reasonable and necessary to the conduct of the litigation. Conditioned upon a reasonable explanation of the $6,092.52 for court and filing fees and the $4,266.80 for investigation services, the cost request will be granted in the amount of $32,811.45.
C. Cost of Administration
Claims administrator Simpluris requests administration costs of $41,000.
Based upon the size of the class and the work performed and yet to be performed, this appears to be reasonable. The $45,000 cap was made known to the class members and none objected. Accordingly, the request for administration costs of $41,000 is granted.
D. Incentive Payment
Finally, Class Counsel seeks an incentive payment of $10,000 to class representative Sergio Urena and $7,000 to class representative Natalia Pereida. (The motion says that the parties negotiated $10,000 to each (Motion at 14:15), but ?10 of the Settlement Agreement provides for $7,000 to Pereida and $10,000 to Urena).
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).
Sergio Urena was employed by Defendant from July, 2008 to February, 2012. (Declaration of Sergio Urena, ?2). He spent approximately 50-60 hours on this litigation: discussing the case with his attorneys; gathering evidence; working on discovery responses; having his deposition taken, remaining on-call during mediation, and reviewing the settlement documents. (Id. at ?? 3-8).
Natalia Pereida worked for Defendant from late 2007 to November, 2012. (Declaration of Natalia Pereida, ?2). She spent 30-40 hours on this litigation performing such tasks as discussing the case with her attorneys, being on-call during settlement negotiations, and reviewing the settlement. (Id. at ??4, 5).
The Court grants the following incentives for the following reasons:
$7,000 to Urena and $5,000 to Pereida for the time they devoted to this litigation, the degree to which their efforts benefitted the class, and the general releases and CC?1542 waivers they provided.