Re: Morelock v. Ronsin Litigation Support Services, Inc.
Case No. 17CECG00186
Hearing Date: February 15, 2018 (Dept. 502)
Motion: Plaintiff’s Motion for Preliminary Approval of Settlement
Tentative Ruling:

To deny without prejudice.

Explanation:

Certification of Class for Settlement:

Settlements preceding class certification are scrutinized more carefully to make sure that absent class members’ rights are adequately protected, although there is less scrutiny of manageability issues. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 240; see Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1803, fn. 9, 19.a) The trial court has a “fiduciary responsibility” as the guardian of the absentee class members’ rights to decide whether to approve a settlement of a class action. (Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 95.)

A precertification settlement may stipulate that a defined class be conditionally certified for settlement purposes. The court may make an order approving or denying certification of a provisional settlement class after the preliminary settlement hearing. (Cal. Rules of Court, rule 3.769(d).) Before the court may approve the settlement, however, the settlement class must satisfy the normal prerequisites for a class action. (Amchem Products, Inc. v. Windsor (1997) 521 US 591, 625-627.)

“Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. In turn, the community of interest requirement embodies three factors: (1) predominant common 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.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 313.)

One requirement under community of interest is that the class representative must be able to represent the class adequately. (Caro v. Procter & Gamble (1993) 18 Cal.App.4th 644, 669.)

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Usually, in wage and hour class actions or PAGA class claims, the distinctive feature that permits class certification is that the employees have the same job title or perform similar jobs, and the employer treats all in that discrete group in the same allegedly unlawful fashion. “No evidence of common policies or means of proof was supplied, and the trial court therefore erred in certifying a subclass.” (Brinker Restaurant v. Superior Court (2012) 53 Cal.4th 1004.)

Here, we have no declaration from plaintiff, much less one that addresses the typicality requirement. Aside from counsel’s conclusory declaration (Tipton Dec. ¶ 22(c)), there is no evidence of a practice applicable to all employees. This is an element that should be addressed in a declaration from plaintiff, or in admissible evidence obtained through discovery attached to counsel’s declaration.

The adequacy of representation component of the community of interest requirement for class certification comes into play when the party opposing certification brings forth evidence indicating widespread antagonism to the class suit. “ ‘The adequacy inquiry … serves to uncover conflicts of interest between named parties and the class they seek to represent.’ [Citation.] ‘… To assure “adequate” representation, the class representative’s personal claim must not be inconsistent with the claims of other members of the class. [Citation.]’ [Citation.]” (J. P. Morgan & Co., Inc. v. Superior Court (2003) 113 Cal.App.4th 195, 212.)

Again, we have no declaration from plaintiff, and no evidence other than counsel’s conclusory declaration (Tipton ¶ 22(d).)

Settlement Approval:

“[I]n the final analysis it is the Court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing litigation. The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.) “[T]o protect the interests of absent class members, the court 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 … [therefore] the factual record must be before the … court must be sufficiently developed.” (Id. at 130.)

Here, there is no discussion of the actual merits of any of the claims asserted in the complaint. Nor is there any real discussion of the weaknesses of the claims.

There is no evidence of the value of any of the claims. Counsel states in her declaration that “[i]n reviewing payroll data informally produced by Defendant, the total exposure for Defendant for allegedly unpaid wages and penalties is less than $30,000.00.” (Tipton Dec. ¶ 18.) However, there is no information as to how counsel came up with that figure. There is no discussion or analysis of any of the multiple Labor

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Code violations alleged in the complaint, the strength of the evidence supporting those claims, or of their valuation.

Moreover, the settlement seems to fail to account for the claims based on class members’ use of personal vehicles and cell phones. (See FAC ¶¶ 8, 24.) There is no mention of these claims in the moving papers. The memorandum in support of the motion only mentions the claims for failure to pay minimum wages and allow meal/rest periods, and failure to pay wages when due.

The amount of attorneys’ fees is not addressed in the motion or supporting declaration, other than to note the amount that will be sought. (See Tipton Dec. ¶ 24(g).) Based on the amount sought, plaintiffs’ counsel is seeking 1/3 of the gross settlement. This is within the ballpark of what is typically awarded in class actions (20-50% of the fund). While the court cannot award a simple percentage of the class fund, attorneys’ fees as a percentage of class recovery can be taken into account in deciding what multiplier to use. (Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19.) This is fine for purposes of preliminary approval, but in any future final approval motion, plaintiff should address in detail the lodestar method.

An attorney’s fees motion must be filed and available (such as by posting on counsel’s website or that of the administrator) prior to the due date for objections. The notice to the class should provide a link for the fees motion so that class members can view it to determine if they wish to object. (See Allen v. Bedolla (9th Cir. 2015) 787 F.3d 1218, citing In re Mercury Interactive Crop. Securities Litigation (9th Cir. 2010) 618 F. 3d 988, 993.) To do otherwise “borders on a denial of due process because it deprives objecting class members of a full and fair opportunity to contest class counsel’s fee motion.” (Id.) Here, the class notice does not provide a link for the fees motion.

Case law requires that releases in class cases be limited to claims arising from the same factual predicate. (Strube v. Am. Equity Inv. Life Ins. Co. (M.D. Fla. 2005) 226 F.R.D. 688, 700; Class Plaintiffs v. Seattle (9th Cir. 1992) 955 F.2d 1268, 1287.) The language of the settlement agreement is overbroad. (See Settlement Agreement ¶ 19.) Plaintiff Morelock executed such a broad release, but the release as to the class members should be limited to claims arising from the facts alleged in the FAC.

Pursuant to California Rules of Court, rule 3.1312, subdivision (a) and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling
Issued By: DSB on 02/09/18
(Judge’s initials) (Date)