SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

JOSE MELVIN ALVARADO, on behalf of himself and all others similarly situated,

Plaintiff,

vs.

TIMBER WORKS CONSTRUCTION, INC. and DOES 1 through 100, inclusive,

Defendants.

Case No. 2014-1-CV-272991

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

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on May 24, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative class action arising out of various alleged Labor Code violations. According to the allegations of the Fourth Amended Class Action Complaint (“4AC”), filed on May 9, 2019, plaintiff Jose Melvin Alvarado (“Plaintiff”) worked for defendant Timberworks Construction, Inc. (“Defendant”) as a laborer from March 2013 to December 2014. (4AC, ¶ 6.) Plaintiff alleges Defendant failed to pay Plaintiff and his co-workers overtime and did not have a meal period policy or rest break policy in effect during Plaintiff’s employment. (4AC, ¶¶ 8-12.) Defendant also required that Plaintiff and his co-workers had to sign two documents prior to receiving their paychecks: one document specifying a false number of hours worked (fewer) and one with the correct number of hours. (4AC, ¶ 13.) Defendant did this so it could bill for the actual hours worked, but pay Plaintiff and his co-workers for fewer hours. (4AC, ¶ 13.)

The 4AC sets forth the following causes of action: (1) Violation of Labor Code Sections 510 , 1194, and 1198 – Unpaid Overtime and/or Double Time; (2) Violation of Labor Code Sections 226.7 and 512 – Denied/Unpaid Meal Periods; (3) Violation of Labor Code Section 226.7 – Denied/Unpaid Rest Periods; (4) Violation of Labor Code Sections 1194 and 1194.2 – Failure to Pay Minimum Wage; (5) Violation of Labor Code Section 226 – Failure to Provide Accurate Written Itemized Statements of Wages; (6) Violation of Labor Code Sections 201, 203, and 218 – Waiting Time Penalties; (7) Violation of California Labor Code Section 2802 – Tool Reimbursement; (8) Violation of Business and Professions Code Sections 17200, et seq. – Unfair Business Practices; and (9) Private Attorney General Act, Labor Code Sections 2698, et seq. (“PAGA”) .

The parties have reached a settlement. Plaintiff now moves for preliminary approval of the settlement.

III. DISCUSSION
IV.
A. Provisions of the Settlement
B.
The case has been settled on behalf of the following class:

[A]ll current and former employees of Timberworks Construction, Inc., who worked in California as non-exempt construction employees at any time between April 17, 2011 and preliminary approval of this Settlement.

(Declaration of Steven M. Tindall in Support of Plaintiff’s Motion for Preliminary Approval of Class Action Settlement and Conditional Class Certification (“Tindall Decl.”), Ex. A (“Settlement Agreement”), ¶ I(1)(b).)

Pursuant to the settlement, Defendant will pay a non-reversionary total of $2,555,000. (Settlement Agreement, ¶ I(1)(m).) The payment of the this amount will be made in four installments – a first installment of $750,000 10 days after final approval, and three installments of $600,000 one of which will be made six months after final approval, one 12 months after final approval, and one 18 months after final approval. (Settlement Agreement, ¶ VI(A)(7).) Payments to class members will be made in two installments – a first payment within seven days of the “Effective Date” equaling approximately 29% of each individual’s total settlement payment and a second payment for the remainder within 14 days after the fourth installment payment of the gross settlement amount. (Settlement Agreement, ¶ VI(A)(8).) If payments uncashed after 90 days total less than 90% of the net settlement fund, the uncashed amounts will be redistributed pro rata to participating class members. (Settlement Agreement, ¶ VI(B)(14)(a).) If the uncashed payments total 90% or more, the uncashed amounts will be given to a cy pres recipient. (Settlement Agreement, ¶ VI(B)(14)(b).)

The total settlement payment from Defendant includes attorneys’ fees of $766,500, costs of $36,000, a class representative incentive award of $15,000, and settlement administration costs of $50,000. (Memorandum of Points and Authorities in Support of Plaintiff’s Motion for Conditional Class Certification and Preliminary Approval of Class Action Settlement, p. 3, fn. 3.)

C. Fairness of the Settlement
D.
Plaintiff states the settlement is the product of informed, arms’-length negotiations conducted by experienced counsel. The parties conducted settlement negotiations over two days of mediation. Plaintiff asserts there is a total potential liability recovery in this case of $13,353,550, so the settlement obtains a recovery of approximately 19.1% of the total potential recovery. (Tindall Decl., ¶ 20.) The average gross recovery for each class member is $375.74. (Id. at ¶ 21.)

The Court finds the settlement is fair. It provides for some recovery for each class member and eliminates the risk and expense of further litigation.

E. Incentive Award, Fees, and Costs
F.
Plaintiff requests a class representative incentive award of $15,000 for plaintiff Alvarado.

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, Alvarado must submit a declaration regarding his participation. The Court will make a determination regarding the incentive award at that time. The Court notes the amount requested is significantly igher than is normally awarded.

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.) Plaintiffs’ counsel requests attorneys’ fees in the amount of $766,500. Plaintiffs’ counsel must submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing so the Court can compare the lodestar information with the requested fees. Plaintiffs’ counsel shall also submit information regarding actual costs incurred.

G. Conditional Certification of Class
H.
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.)

Class members can be ascertained from Defendant’s records. There are common issues in this case regarding whether Defendant’s lack of a meal period or rest break policy violated the law. No issue has been raised regarding the typicality or adequacy of Plaintiff as class representative. In sum, the Court finds the proposed class should be conditionally certified.

I. Class Notice
J.
The content of a class notice is subject to court approval. (Cal. Rules of Court, rule 3.769(f).) The notice generally complies with the requirements for class notice. (Settlement Agreement, Ex. C.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notice states class members who wish to object to the settlement must mail a written objection to the settlement administrator. The notice must be changed to make clear that class members may appear at the final approval hearing to object without filing or serving any papers and without providing any advance notice. The amended notice shall be provided to the Court for approval prior to its mailing.

K. Conclusion
L.
The motion for preliminary approval of class settlement is GRANTED, subject to the modification to the notice. The final approval hearing is set for October 4, 2019, at 9:00 a.m. in Department 5.

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