Case Name: Ewald v. Aveda Services, Inc.
Case No.: 2014-1-CV-268393

This is a putative class action arising out of alleged Labor Code violations. Plaintiff Angela Ewald (“Plaintiff”) alleges that defendant Aveda Services, Inc. (“Defendant”) has had a policy of (1) requiring non-exempt retail employees, including Plaintiff and the class members, to remain at work after completion of these workers’ ordinary duties without paying for all compensable time; (2) requiring non-exempt retail employees to submit to security checks of their persons and/or belongings without paying compensation; (3) willfully failing to pay compensation owing in a prompt and timely manner to employees whose employment has terminated; (4) willfully failing to provide accurate semimonthly itemized statements of the total number of hours worked, deductions, and applicable hourly rates; (5) willfully failing to provide meal and/or rest periods; and (6) failing to reimburse Plaintiff and the class members to business expenses. (Complaint, ¶ 3.)

The Complaint, filed on July 23, 2014, sets forth the following causes of action: [1] Failure to Provide Meal and Rest Periods; [2] Unlawful Failure to Pay Overtime Wages; [3] Failure to Provide Accurate Itemized Wage Statements; [4] Failure to Pay Wages on Termination; [5] Failure to Reimburse Expenses and/or Prohibited Cash Bond; [6] Unfair Business Practices Under the Unfair Competition Act; and [7] Private Attorneys General Act Claim. Following mediation on December 9, 2015, and several months of further negotiations, the parties reached a settlement. Plaintiff now moves for preliminary approval of the class action settlement.

I. Plaintiff’s Motion for Preliminary Approval of Class Action Settlement

A. 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.)

B. Analysis

i. The Proposed Settlement

The case is being settled on behalf of a class defined as follows: “All persons who are and/or were employed as non-exempt employees by Aveda Services, Inc., in one or more of Aveda’s California retail stores from July 23, 2010 through the date the Court preliminarily approves this Settlement Agreement.” (Declaration of Scott Edward Cole, Esq. in Support of Plaintiff’s Motion for Preliminary Approval of Class Action Settlement (“Cole Decl.”), Exhibit A, ¶ 7.) Plaintiff estimates there are over 1400 class members.

Under the terms of the settlement, Defendant agrees to pay $262,000. (Cole Decl., Exhibit A, ¶ 25.) This amount includes: (1) payments to the class members; (2) an enhancement award to the class representative of up to $5000; (3) $2500 for the release of any PAGA claims that could be asserted; (4) fees and expenses of the Settlement Administrator; (5) attorney’s fees of up to $87,333.33; and litigation costs. (Ibid.) If the Court does not approve the entire amount of attorney’s fees, the difference will be paid to a cy pres beneficiary, The Breast Cancer Research Foundation, or another beneficiary approved by the Court. (Ibid.)

After subtracting the enhancement award, PAGA release, and attorney’s fees, the amount remaining for distribution is 167,166.67. If this amount is divided by 1400 (the approximate number of class members), the average distribution per class member is $119.40. This appears to be a low recovery for the class members. It is not apparent, however, what the potential recovery is for the class based on the claims asserted. Plaintiff has not provided this information and therefore it is not known what discount from the potential recovery Plaintiff is accepting to obtain a settlement. Accordingly, the hearing on this motion will be CONTINUED to July 8, 2016. Plaintiff is directed to file a supplemental brief of no more than three pages informing the Court of the potential recovery for the case by 5:00 p.m. on June 24, 2016.

As stated above, Plaintiff will seek a class representative incentive payment of $5000. In support of the request, Plaintiff has provided a declaration stating that she spent many hours on this litigation and listing the tasks that she performed. The Court finds that Plaintiff has properly supported the request for an incentive award and that it is justified.

The Court also has an independent right and responsibility to review the requested attorney’s 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.) Plaintiff’s counsel will seek attorney’s fees of $87,333.33 (1/3 of the gross settlement amount. While 1/3 of the common fund for attorney’s fees is generally considered reasonable, Plaintiff’s counsel should provide billing records and lodestar information prior to the final approval hearing so the Court can compare that information to the requested fee amount.

ii. Provisional Certification of Class

Plaintiff requests that the putative class be 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. (Id. 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.)

Class members can be ascertained from Defendant’s personnel and payroll records. Common issues in this case relate to whether Defendant had uniform policies and procedures of (1) requiring non-exempt retail employees, including Plaintiff and the class members, to remain at work after completion of these workers’ ordinary duties without paying for all compensable time; (2) requiring non-exempt retail employees to submit to security checks of their persons and/or belongings without paying compensation; (3) willfully failing to pay compensation owing in a prompt and timely manner to employees whose employment has terminated; (4) willfully failing to provide accurate semimonthly itemized statements of the total number of hours worked, deductions, and applicable hourly rates; (5) willfully failing to provide meal and/or rest periods; and (6) failing to reimburse Plaintiff and the class members to business expenses. No issue has been raised regarding the typicality or adequacy of Plaintiff as class representative. In sum, the Court finds that the proposed class should be conditionally certified.

iii. Class Notice

The content of a class notice is subject to court approval.

If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court.

(Cal. Rules of Court, rule 3.769(f).)

The notice generally complies with the requirements for class notice. (Cole Decl., Exhibit A.) It provides basic information about the settlement, including the class definition and the settlement terms. In section V. of the notice, however, it states that objections must be in writing, state the basis for the objection and be filed with the Court and mailed or delivered to class counsel and counsel for Defendant. (Ibid.) The notice also states that if a class member or the class member’s attorney wants to speak at the hearing, a notice of appearance must be filed. (Ibid.) The class notice must be modified to state that class members may appear and object at the final approval hearing without mailing or filing any written objection or notice of appearance.

In sum, Plaintiff’s motion for preliminary approval of class action settlement is CONTINUED to July 8, 2016. Plaintiff is directed to file a supplemental brief of no more than three pages informing the Court of the potential recovery for the case by 5:00 p.m. on June 24, 2016.