This is a putative wage and hour class action on behalf of employees of Defendant Quantum Global Technologies, LLC (“Defendant”). Before the Court is Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement.

I. Factual and Procedural Background

Plaintiffs Shirley Foley and Gondelino DeGuzman (“Plaintiffs”) filed this putative class action against Defendant on February 21, 2017 alleging the following: (1) failure to pay overtime wages; (2) failure to provide meal periods; (3) failure to provide rest periods; (4) failure to pay all wages due upon separation of employment; and (5) violation of California Business and Professions Code Section 17200 for unfair business practices. Plaintiffs bring this action individually and on behalf of similarly situated individuals who worked as non-exempt employees employed by Defendant at any time between February 21, 2013 and January 11, 2019.

Following the inception of the lawsuit, the parties conducted some preliminary discovery which included the production of several thousand pages of documents, including class member contact information, policies, procedures, time and payroll records, and communications relevant to Plaintiffs’ claims. As discovery continued, the parties agreed to attend a mediation in October of 2018 with Lynn Frank serving as the mediator. After a full day of mediation, the parties accepted the mediator’s proposal and signed a Memorandum of Understanding. After reaching an agreement, the parties negotiated and drafted a long-form settlement agreement which is the subject of the instant motion seeking preliminary approval.

Plaintiffs now move for an order preliminarily approving the settlement (including the PAGA claim), provisionally certifying the settlement class, approving the form and method for providing notice to the class, and scheduling a final fairness hearing.

II Legal Standards for Approving a Class Action 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.)

III. Settlement Process

As noted above, the parties conducted discovery for several months before proceeding to mediation. Extensive documents were produced and reviewed prior to mediation including payroll records, policies and procedures, and class contact information. According to the moving papers, class members were interviewed and a PMK deposition was taken by Plaintiffs’ counsel.

After several month of discovery, audits, and analysis, a mediation was held with the assistance of Lynn Frank in October, 2018. An agreement regarding the amount of the settlement was apparently reached at that time. Thereafter, the parties continued to negotiate the remaining terms of the settlement agreement. After the settlement was finalized, plaintiffs brought the instant motion.

IV. Provisions of the Settlement

According to the moving papers, the Settlement Agreement (“Agreement”) provides for a Gross Settlement Amount of $1,261,500 less the credit for funds already paid in the amount of $61, 500.00 to approximately 391 Class Members. The Gross Settlement Amount includes (1) individual payment to all Members; (2) attorney’s fees to Class Counsel of up to one-third of the Gross Settlement Amount; (3) reimbursement of Class Counsel’s litigation costs and expenses up to $20,000; (4) Class representative enhancement awards of $10,000 to Plaintiff Foley and $5000 to Plaintiff DeGuzman; (5) settlement administration fees of no more than $6900 and (6) a payment of $20,000 to the LWDA for the PAGA claim.

The settlement provides that the net settlement fund will be divided among participating class members pro rata by comparing the total amount of weeks for the class to each Class member’s number of weeks worked during the class period. For those Class Members who signed individual settlement agreements, their payment will be reduced by $500 and their respective remaining shares shall be 90% of such amount. Given the fact that there are approximately 391 Class Members, Plaintiffs estimate the average recovery per Class Member will be $1933.76 from the Net Settlement Amount. If the number of workweeks exceeds 54,853 by more than 10%, the Gross Settlement Amount will increase by $17.71 for each additional workweek. The settlement payments to Class Members will be allocated for tax purposes as 30% allocated to wages, 10% allocated to interest, and 60% allocated to penalties. Class Members will have 180 days from the date their payment checks are dated to cash their settlement checks.

Class members who do not opt out of the settlement will release all claims for relief that were alleged or reasonable could have been alleged based on the facts alleged in the action for specified wage and hour violations, “any other claims or penalties under the wage and hour laws pleaded in the Action,” and all damages and other amounts “recoverable under said causes of action ….”

V. Fairness of the Settlement

In the instant case, Plaintiffs contend that their claims are based on Defendant’s common, class-wide policies and procedures, and that liability could be determined on a class-wide basis without dependence on individual assessments of liability. According to the moving papers, the meal period claim was potentially worth about $2 million, but also note that the total exposure analysis was challenged by Defendant who claims they implemented compliant policies during the relevant class period. The moving papers highlight the legal and factual strengths of the respective claims and some of the challenges presented by continuing to litigate this matter rather than accepting the current settlement.

The Declaration of Jessica L. Campbell (“Campbell Declaration”) declares that while plaintiffs’ damages analysis provided a starting point for negotiations, there were defenses raised to the damage analysis which resulted in Plaintiffs accepting a lower overall amount than the total amount claimed. The Declaration sets forth the potential damages for not only the meal period claim referenced above, but also the rest period claim, the non-discretionary bonus claim and the PAGA claim. The Court will not repeat the various strengths and weaknesses presented by each claim, but is satisfied for purposes of preliminary approval that the settlement achieves a good result for the class.

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. 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).

VI. Proposed Settlement Class

Plaintiff requests that the following settlement class be provisionally certified:

All current and former non-exempt employees who are and/or were employed by Defendant in California at any time from February 21, 2013 through January 11, 2019.

A. Legal Standard for Certifying a Class for Settlement Purposes

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 the plaintiff to demonstrate by a preponderance of the evidence (1) an ascertainable class and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (Rocher) (2004) 34 Cal.4th 319, 326, 332.)

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. (Ibid.) “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 (Botney) (1976) 18 Cal.3d 381, 385.)

In the settlement context, “the court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled.” (Luckey v. Superior Court (Cotton On USA, Inc.) (2014) 228 Cal.App.4th 81, 93.) As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court’s review is more lenient in this respect. (Id. at pp. 93-94.) However, considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold. (Id. at p. 94.)

B. Ascertainable Class

“The trial court must determine whether the class is ascertainable by examining (1) the class definition, (2) the size of the class and (3) the means of identifying class members.” (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) “Class members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.)

Here, the estimated 391 class members have already been identified based on defendant’s records, and the class is clearly defined. The Court finds that the class is numerous and ascertainable.

C. Community of Interest

With respect to the first community of interest factor, “[i]n order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.” (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916.) The court must also give due weight to any evidence of a conflict of interest among the proposed class members. (See J.P. Morgan & Co., Inc. v. Superior Court (Heliotrope General, Inc.) (2003) 113 Cal.App.4th 195, 215.) The ultimate question is 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. (Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at pp. 1104-1105.) “As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.” (Hicks v. Kaufman & Broad Home Corp., supra, 89 Cal.App.4th at p. 916.)

Here, common legal and factual issues predominate. Plaintiffs’ claims all arise from defendant’s wage and hour practices applied to the similarly-situated class members.

As to the second factor,

The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.

(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)

Finally, adequacy of representation “depends on whether the plaintiff’s attorney is qualified to conduct the proposed litigation and the plaintiff’s interests are not antagonistic to the interests of the class.” (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.) The class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 238.) “Differences in individual class members’ proof of damages [are] not fatal to class certification. Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status.” (Ibid., internal citations and quotation marks omitted.)

Plaintiffs have the same interest in maintaining this action as any class member would have. Further, they have hired experienced counsel. The Campbell Declaration sets for the experience and qualifications of counsel in handling similar putative class action lawsuits. Plaintiffs have sufficiently demonstrated adequacy of representation.

D. Substantial Benefits of Class Certification

“[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .” (Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.) The question is whether a class action would be superior to individual lawsuits. (Ibid.) “Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.” (Ibid.) Generally, “a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.” (Id. at pp. 120-121, internal quotation marks omitted.)

Here, there are an estimated 391 members of the proposed class. It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member. Further, it would be cost prohibitive for each class member to file suit individually, as each member would have the potential for little to no monetary recovery. It is clear that a class action provides substantial benefits to both the litigants and the Court in this case.

VII. Notice

The content of a class notice is subject to court approval. (Cal. Rules of Court, rule 3.769(f).) “The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Ibid.) In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.” (Cal. Rules of Court, rule 3.766(e).)

The Court has reviewed the Proposed Notice to Class Members attached as an exhibit to the Stipulation of Settlement. Here, the notice describes the lawsuit, explains the settlement, and instructs class members that they may opt out of the settlement or object. The gross settlement amount and estimated deductions are provided, along with each class member’s estimated payment. Class members are informed of their qualifying work weeks as reflected in defendant’s records and instructed how to dispute this information. Class members are given 45 days from the date of the mailing to request exclusion from the class, dispute their workweek information, or submit a written objection.

For purposes of preliminary approval, the Court approves the Proposed Notice. At the Final Fairness Hearing, counsel should provide a detailed declaration from the Settlement Administrator on the issue of notice to class members and the specific process by which class members were provided notice and how notice was effected on the class members.

VIII. Attorney’s Fees and Incentive Awards: Counsel is advised that the issue of attorney’s fees will be adjudicated at the Final Fairness Hearing. Counsel has requested up to one-third of the Gross Settlement Award as reasonable attorney’s fees. Counsel is instructed to provide information about the specific time and resources allocated so that the Court can conduct a lodestar cross-check on the amount of attorney’s fees requested.

Regarding the incentive awards to the two class representatives, the Court requests that each individual provide a detailed declaration regarding their involvement in the litigation and the time and resources invested by each individual prior to making any final determination on incentive awards.

IX. Conclusion and Order

Plaintiffs’ motion for preliminary approval is GRANTED. The final approval hearing shall take place on September 26, 2019 at 9:00 a.m. in Dept. 19.

The following class is provisionally certified for settlement purposes:

All current and former non-exempt employees who are and/or were employed by Defendant in California at any time from February 21, 2013 through January 11, 2019.