Case Number: BC722251 Hearing Date: December 10, 2019 Dept: 37

HEARING DATE: December 10, 2019

CASE NUMBER: BC722251

CASE NAME: Ryan Walters, an individual, on behalf of the State of California, as a private attorney general v. U.S. Concepts LLC, et al.

MOVING PARTY: Plaintiff Ryan Walters, an individual, on behalf of the State of California, as a private attorney general

RESPONDING PARTY: No Opposition

TRIAL DATE: None

PROOF OF SERVICE: October 31, 2019 (as to supplemental declarations, still no proof of service as to original moving papers.)

MOTION: Plaintiff’s Motion for Approval of Representative Action Settlement

OPPOSITION: No Opposition

REPLY: No Reply

TENTATIVE: Plaintiff’s motion for approval of representative settlement is GRANTED upon filing a proof of service of the moving papers upon defendant. Plaintiff to prepare and lodge an appropriate judgment and to give notice.

Background

On September 18, 2018, Plaintiff Ryan Walters, an individual, on behalf of the State of California, as private attorney general (“Plaintiff”), filed a representative action against Defendants U.S. Concepts, LLC and MKTG, Inc. (collectively “Defendants”). Plaintiff alleged Defendants’ pay policies and practices violate Labor Code §204, which requires that employees paid on a weekly, biweekly, or semimonthly basis be paid no later than seven calendar days following the close of the payroll period. (Complaint ¶22.) Plaintiff alleged Defendants have, for at least one year prior to the date of the letter sent to the Labor & Workforce Development Agency and Defendants giving notice of these PAGA claims and continuing until present, violated Labor Code §204(d) with respect to Plaintiff and all aggrieved employees. Plaintiff alleged Defendants issued their California employees, including Plaintiff, their wages more than seven days following the close of the payroll period. (Complaint ¶23.) Plaintiff seeks, among other things, penalties under Labor Code §2699 et seq. (Complaint ¶¶25-27.)

On November 19, 2018, Defendants filed an answer to the complaint.

On April 25, 2019, Plaintiff filed a Notice of Settlement, stating “the Parties…have reached a settlement in this matter and executed a long-form settlement agreement.” The Notice also states “Plaintiff anticipates filing a motion to approve the representative action settlement within 30 to 60 days from the date of this filing.”

On August 28, 2019, Plaintiff filed the instant motion to approve the PAGA settlement, which was heard on October 18, 2019. After considering Plaintiff’s moving papers and oral argument, the court denied Plaintiff’s motion without prejudice due to various deficiencies in the moving papers.

Discussion

I. Legal Standard

Labor Code §2699 provides, in pertinent part, as follows:

(a) Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.

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(l)

(1) For cases filed on or after July 1, 2016, the aggrieved employee or representative shall, within 10 days following commencement of a civil action pursuant to this part, provide the Labor and Workforce Development Agency with a file-stamped copy of the complaint that includes the case number assigned by the court.

(2) The superior court shall review and approve any settlement of any civil action filed pursuant to this part. The proposed settlement shall be submitted to the agency at the same time that it is submitted to the court.

(3) A copy of the superior court’s judgment in any civil action filed pursuant to this part and any other order in that action that either provides for or denies an award of civil penalties under this code shall be submitted to the agency within 10 days after entry of the judgment or order.

(4) Items required to be submitted to the Labor and Workforce Development Agency under this subdivision or to the Division of Occupational Safety and Health pursuant to paragraph (4) of subdivision (b) of Section 2699.3, shall be transmitted online through the same system established for the filing of notices and requests under subdivisions (a) and (c) of Section 2699.3.

(See Arias v. Superior Court (2009) 46 Cal.4th 969, 975 (holding “that an employee who, on behalf of himself and other employees, sues an employer under the unfair competition law [Citation] for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee’s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004”).)

II. Discussion

Plaintiff moves for an order granting approval of Representative Action Settlement.

The parties entered into a settlement agreement with Defendants. Defendants agreed to pay a total settlement of $405,037.50. The settlement payment will include: (1) $3,500.00 – litigation enhancement to Plaintiff; (2) $7,500.00 – settlement administration costs; (3) $135,012.50 – attorneys’ fees (subject to approval by the court – 33.33% fee); (4) $8,500.00 – costs; and (5) $250,525.00 – PAGA penalties, with $187,893.75 (75%) going to the LWDA and $62,631.25 (25%) going to the Aggrieved Employees. (Declaration of Szamet ¶¶4, 13; Exhibit A.)

As a preliminary matter, Plaintiff did not file proofs of service showing Defendants were timely and properly served with the motion and declaration of Kelsey M. Szamet. On October 31, 2019, Plaintiff filed a proof of service showing that Defendants were served by mail with the following documents: (1) second supplemental declaration of Kelsey M. Szamet, (2) declaration of Sean Hartranft of Ilym Group, Inc. regarding Settlement Administration, and (3) declaration of Ryan Walters in support of Motion. To date, Plaintiff has not filed a proof of service indicating service of the original motion and supporting documents on Defendants.

On October 18, 2019, Plaintiff’s motion was denied without prejudice so that Plaintiff may address several issues the court found. The court has reviewed the additional documents Plaintiff filed in support of his motion and find that issues remain.

The court previously found that Plaintiff did not comply with Labor Code §2699(l)(2). Plaintiff submitted a copy of the settlement agreement to the LWDA on September 23, 2019, almost a month after Plaintiff filed the instant motion. (Supplemental Declaration of Szamet ¶¶30-32; Exhibit C.) Although this is still the case as of the date of this ruling, the court finds that this is a sufficiently de minimis error given that additional time has now elapsed for the LWDA to review Plaintiff’s settlement agreement and submit its objections, if any. Given that LWDA has not submitted any objections, the court will not decline to enter judgment on this basis.

Second, the court previously noted that Plaintiff did not submit sufficient support for his requested $3,500 in litigation enhancement. The court previously found that settlement agreement provides for a $3,500.00 litigation enhancement to Plaintiff, but that Plaintiff did not cite to case law or authority to show that litigation enhancements are appropriate. Although Plaintiff still has not done so, Plaintiff has now provided his own declaration in support of his request for litigation enhancement. Plaintiff declares that he has actively worked to further this action by compiling relevant documents and providing his attorneys with “helpful information.” (Declaration of Ryan Walters (“Walters Decl.”), ¶ 5.) Plaintiff attests that he also participated in many phone meetings with his attorneys. (Walters Decl., ¶ 6.) In conclusion, Plaintiff contends that $3,500 is a fair and adequate enhancement in light of the work he personally performed and in light of his willingness to accept the potential risk of being liable for Defendant’s attorneys’ fees and costs if Defendants prevailed. (Walters Decl., ¶ 11.) Further, the settlement agreement, signed by both parties, provided that $3,500 was to be Plaintiff’s enhancement. (Szamet Decl., ¶ 26, Exhibit A.) Given the foregoing, the court finds that Plaintiff has now sufficiently demonstrated entitlement to the $3,500 he requests in enhancement.

Third, the court previously found that Plaintiff’s request for costs exceeded the maximum amount allowed pursuant to the settlement agreement and that Plaintiff did not provide the court with a list identifying the costs and/or documentation to support same. According to the Second Supplemental Szamet Declaration, Plaintiff now only requests $8,500, the maximum amount allowed pursuant to the settlement agreement. (Second Supplemental Declaration of Szamet, ¶13.) Szamet’s declaration states under penalty of perjury that more than $8,500 in costs were incurred. Therefore, the court approves the cost request even without a detail of the costs incurred.

Plaintiff has now provided the court with the Declaration of Sean Hartranft Regarding Settlement Administration. Hartranft declares that he is the Senior Vice President of Sales for Ilym Group, Inc. (“Ilym Group”), a firm that has extensive experience in disseminating PAGA settlements. (Declaration of Sean Hartranft (“Hartranft Decl.”), ¶ ¶ 1-2.) Hartranft attests that upon appointment as the settlement administrator, Ilym Group’s would obtain data from Defendants on contact information for aggrieved employees and would process the employees’ names through the United States Postal Service (“USPS”) database to build a contact list. (Id., ¶ 3.) Ilym Group would then include: (a) applying for case EIN; (b) establishing Qualified Settlement Fund ((QSF) Escrow Account), with administering tasks including but limited to overview and reconciliation of account; (c) calculating the individual settlement amounts; (d) preparing, administrating and distributing settlement award checks to the Participating Aggrieved Employees, including necessary tax forms 2 (W2 and/or I 099); (e) calculating and withholding all applicable state and federal taxes. (Id., ¶ 4, Exhibit B.) Hartranft attests that Ilym Group’s fees associated with this administration would be $7,500. Given the foregoing, the court finds that Plaintiff has now sufficiently demonstrated entitlement to the $7,500 he requests in settlement administration fees.

Plaintiff has also now provided additional support for the requested $135,012.50 in attorneys’ fees. According to the Second Supplemental Szamet Declaration, the aggregate loadstar amounts to $70,030.00. (Second Supplemental Szamet Decl., ¶¶ 7-12.) The total attorney time breaks down as follows:

Eric Kingsley: 20.50 hours at $750/hour = $15,375.00

Kelsey M. Szamet: 94.10 hours at $500/hour = $47,050.00

Justin Aufderhar: 23.40 hours at $325/hour = $7,605.00

Szamet attests that the attorney time was recalculated since the October 18, 2019 hearing to include attorney time spent at the hearing and old billing time that was not fully captured when the law firm moved to new billing software. (Second Supplemental Szamet Decl., ¶¶ 8-9.) Szamet now also requests a lodestar of 1.93. (Second Supplemental Szamet Decl., ¶ 10.) Szamet contends that the total attorney’s fee amount is reasonable “because counsel’s diligent litigation efforts and experience led to an outstanding settlement.” (Id., ¶ 12.) The court previously found that an enhancement of the lodestar in this amount would be acceptable.

Conclusion

Plaintiff’s motion for approval of representative settlement is GRANTED upon filing a proof of service of the moving papers on Defendant. Plaintiff is to provide an appropriate judgment and to gifve notice.