SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

JOSE FLORES-VAZQUEZ, individually, and on behalf of other members of the general public similarly situated,

Plaintiff,

vs.

LION FOOD CENTER, a business entity of unknown form; LION FOODS LLC, a California limited liability company; LION LEGACY RISK MANAGEMENT I, LLC, a California limited liability company; LION LEGACY RISK MANAGEMENT II, LLC, a California limited liability company; LION LEGACY RISK MANAGEMENT III, LLC, a California limited liability company; LION MARKET STORY, LLC; a California limited liability company; LION MARKETS, INC., a California corporation; LION NEWARK SHOPPING CENTER, a California limited liability company; LION SARATOGA, LLC, a California limited liability company; LION SHOPPING CENTER, a California limited liability company; T.L. LONGCHAMP Corporation, a California corporation; and DOES 1 through 10, inclusive,

Defendants.
Case No. 2017-1-CV-310217

TENTATIVE RULING RE: MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on June 1, 2018, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

This is a putative class action arising out of various alleged Labor Code violations. The Class Action Complaint, filed on May 12, 2017, sets forth the following causes of action: (1) Violation of California Labor Code §§ 510 and 1198 (Unpaid Overtime); (2) Violation of California Labor Code §§ 1182.12, 1194, 1197, 1197.1, and 1198 (Unpaid Minimum Wages); (3) Violation of California Labor Code §§ 226.7, 512(a), and 1198 (Failure to Provide Meal Periods); (4) Violation of California Labor Code §§ 226.7 and 1198 (Failure to Provide Rest Periods); (5) Violation of California Labor Code §§ 226(a), 1174(d), and 1198 (Non-Compliant Wage Statements and Failure to Maintain Payroll Records); (6) Violation of California Labor Code §§ 201 and 201 (Wages Not Timely Paid Upon Termination); (7) Violation of California Business & Professions Code § 17200, et seq. (Unlawful Business Practices); and (8) Violation of California Business & Professions Code § 17200, et seq. (Unfair Business Practices).

The parties have reached a settlement. Plaintiff Jose Flores-Vazquez (“Plaintiff”) moves for preliminary approval of the settlement.

II. 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.)

III. DISCUSSION

A. Provisions of the Settlement

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

[A]ll persons who worked for Defendants in California as a non-exempt employee at any time during the period from May 12, 2013 until the date of Preliminary Approval.

(Declaration of Raul Perez in Support of the Motion for Preliminary Approval of Class Action Settlement, Ex. 1 (“Settlement Stipulation”), ¶ 5.)

Pursuant to the settlement, defendants will pay a total of $750,000. (Settlement Stipulation, ¶ 27.) This amount includes attorneys’ fees and costs of up to $250,000, costs of up to $20,000, an enhancement payment of $5,000 for the class representative, and an estimated amount of $20,000 to the settlement administrator. (Settlement Stipulation, ¶¶ 28-30.) Defendants have also agreed to pay the class representative an additional $5,000 in exchange for a general release. (Settlement Stipulation, ¶ 58.)

B. Fairness of the Settlement

Plaintiff states the settlement was reached through arm’s-length bargaining in which all parties were represented by experienced counsel and participated in mediation. Further, Plaintiff’s counsel engaged in an investigation and evaluation of Plaintiff’s claims and contends the settlement is fair and in the best interests of the class. Plaintiff asserts the average net recovery is approximately $345 for a class consisting of approximately 1,250 members.

Plaintiff will seek a class representative incentive award of $5,000.

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, Plaintiff must submit a declaration specifically detailing his participation in this action.

The settlement also provides for an additional $5,000 payment to the class representative for a general release. Class members, including the class representative, are already releasing all of their claims in this case, as well as claims that could have been raised in this action. (Settlement Stipulation, ¶ 20.) Plaintiff does not have any individual claims and it is not clear what additional claims Plaintiff is releasing to obtain an extra payment beyond what all other class members are receiving. The parties are ordered to appear at the hearing on this motion to provide further explanation regarding this issue.

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.) Plaintiff’s counsel will seek attorneys’ fees of $250,000 (one-third of the total settlement fund), plus up to $20,000 for costs. While one-third of the common fund for attorneys’ fees is generally considered reasonable, Plaintiff’s counsel should submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees.

C. Conditional Certification of Class

Plaintiff requests 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. (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.)
The class is defined as including anyone who worked as a “non-exempt employee” for Defendants. It is unclear based on this definition who is included in the class. There are no job titles or other means of identification used by which a class member could determine whether he or she is in the class. Absent more information about class membership or an amended class definition, the Court cannot determine whether the class should be certified.

D. 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. (See Settlement Stipulation, Ex. A.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notice states that class members who want to object must mail a written objection to the class administrator. While the notice also states class members may appear at the final approval hearing, it does not state class members may make objections at the hearing, with or without prior notice. The notice must be changed to make clear that class members may appear at the final approval hearing to make an oral objection even without mailing any written objection and without providing advance notice.

E. Conclusion

The parties are ordered to appear at the hearing to provide further explanation regarding the additional $5,000 payment to the class representative for a general release. The parties should also be prepared to discuss a possible amendment of the class definition to make clear who is included in the class.

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