SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

PETRA GODINEZ; JOSE RODRIGUEZ; FLORENTINO GAYOSO, Individually and on Behalf of All Other Similarly Situated Employees of Defendants,

Plaintiffs,

vs.

EL POLLO LOCO, INC.; W.K.S. RESTAURANT GROUP, INC.; SUNNYVALE/SANTA CLARA EL POLLO LOCO, LLC; W.K.S. RESTAURANT CORPORATION; and DOES 1 to 100, inclusive,

Defendants.

Case No. 2017-1-CV-317828

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 September 6, 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. Plaintiffs Petra Godinez, Jose Rodriguez, and Florentino Gayoso (collectively, “Plaintiffs”) allege various Labor Code violations in the First Amended Class Action Complaint (“FAC”), filed on November 1, 2017.

The FAC sets forth the following causes of action: (1) Unpaid Wages (Violation of Labor Code §§ 216, 1194, 1197); (2) Failure to Pay Overtime Wages (Violation of Labor Code §§ 204, 510, 1198); (3) Failure to Pay Wages for Rest Periods (Violation of Labor Code § 226.7); (4) Failure to Pay Wages for Meal Periods (Violation of Labor Code §§ 226.7, 512); (5) Failure to Properly Report Pay (Labor Code §§ 226, 1174); (6) Waiting Time Penalties (Labor Code §§ 201, 202, 203); (7) Violation of the UCL – Unlawful Business Acts and Practices (Bus. & Prof. Code § 17200, et seq.); (8) Violation of the UCL – Unfair Business Acts and Practices (Bus. & Prof. Code § 17200, et seq.); (9) Violation of the UCL – Fraudulent Business Acts and Practices (Bus. & Prof. Code § 17200, et seq.); (10) Fraud/Intentional Misrepresentation; and (11) Civil Penalties (Labor Code § 2699). The parties have reached a settlement. Plaintiffs now move for preliminary approval of the settlement.

III. LEGAL STANDARD
IV.
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.)

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

All employees who were employed as exempt General Managers in the restaurants owned and/or operated by Defendants in the state of California during the Class Period (October 20, 2013 up to and including the date of Preliminary Approval), and who have not already released the Settled Claims.

The class is split into two sub-classes. Sub-class 1 includes all class members who worked as General Managers after October 20, 2014 through the date of preliminary approval. (Declaration of Shounak S. Dharap in Support of Motion for Preliminary Approval of Class Action Settlement and Certification of a Settlement Class, Ex. 1 (“Settlement Agreement”), ¶ 4(a).) Sub-class 2 includes all class members, other than those in Sub-class 1, who worked as exempt General Managers from October 20, 2013 up to and including, but not after, October 20, 2014. (Id. at ¶ 4(b).)

Pursuant to the settlement, defendants Sunnyvale/Santa Clara El Pollo Loco, LLC and W.K.S. Restaurant Corporation (collectively, “Defendants”) will pay a total amount of $285,000. (Settlement Agreement, ¶ 29.) The settlement amount includes attorneys’ fees and costs of $94,990.50, a PAGA payment of $10,000 ($7,500 of which will be paid to the LWDA), and claims administration fees of $9,000. (Id. at ¶¶ 29(a)-(c).) Of the remaining net amount of $171,009.50, the parties plan to allocate $150,488.36 (88%) plus the $2,500 PAGA payment to Sub-class 1. (Id. at ¶ 29(d)(i).) The parties plan to allocate $20,521.14 (12%) to Sub-class 2. (Id. at ¶ 29(d)(ii).)

For tax purposes, 40% of the payments will be considered wages and 60% will be considered statutory interest and other miscellaneous income, not subject to income tax withholding and payroll taxes. (Settlement Agreement, ¶ 31.) Checks not cashed within 150 days after mailing will be given to a cy pres recipient – Legal Aid at Work. (Id. at ¶ 36(c).)

C. Fairness of the Settlement
D.
Plaintiff asserts the settlement is the product of arm’s-length negotiations and a full-day mediation. Plaintiffs contend class counsel are experienced and find this settlement is in the best interest of the class. Plaintiffs state the $285,000 recovery represents approximately 75% of the total estimated value of damages and the full amount is non-reversionary.

Overall, 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. Attorneys’ Fees and Costs
F.
The Court 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 $94,990.50 (approximately one-third of the total settlement fund). 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.

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.)

There are 43 class members. Class members can be ascertained from Defendants’ records. There are common issues in this case regarding Defendants’ policies and whether they violated the Labor Code by failing to pay class members for work performed, failing to keep accurate time records, and failing to provide meal and rest breaks. 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.

I. Class Notice
J.
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 Agreement, Ex. A.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notice states objections must be in writing and mailed to the claims administrator. The notice must be modified to make clear that objections are not required to be made in writing; class members may appear at the final approval hearing to make objections without providing any prior notice. The amended notice shall be provided to the Court for approval prior to 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 January 17, 2020, at 9:00 a.m. in Department 5.

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