Tentative Ruling

Judge Pauline Maxwell
Department 6 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION
Trevor Kennedy vs Curbstand Inc
Case No: 17CV02761
Hearing Date: Wed Feb 05, 2020 9:30

Nature of Proceedings: Preliminary Approval of Class Action Settlement; Case Management Conference

TENTATIVE RULING: The motion is granted, as outlined below.

Motion: Defendant Curbstand, Inc. is an investor-backed startup based in Los Angeles, which launched in October 2013. It introduced a mobile payment and specialty services platform for the valet and parking industries. The company delivers a cashless, concierge-style valet service for customers to find, pay, and tip for parking and for businesses and their valet companies to better manage parking.

This putative class action is a wage and hour case which was filed by plaintiffs Trevor Kennedy and Karim Ebeid in Santa Barbara Superior Court on June 22, 2017. Its operative complaint alleges causes of action for (1) willful misclassification of employees as independent contractors, (2) unpaid overtime wages, (3) failure to allow and pay for meal periods, (4) failure to allow and pay for rest periods, (5) failure to pay wages at time of termination, (6) failure to provide proper wage statements, (7) failure to keep proper payroll records, and (8) unfair business practices.

A similar case was filed by plaintiff Maximo Reyes in Los Angeles Superior Court on February 15, 2018. Its operative complaint alleges causes of action for (1) failure to pay overtime wages, (2) failure to pay minimum wage, (3) failure to allow and pay for rest periods, (4) failure to allow and pay for meal periods, (5) failure to pay wages at time of termination, (6) failure to provide proper wage statements, (7) failure to maintain payroll records, (8) failure to reimburse business expenses, (8) unlawful business practices, and (9) unfair business practices.

Defendant denies all allegations, and contends that it has complied with all applicable laws with respect to all employees.

The current motion seeks preliminary approval of the joint settlement of both the Santa Barbara and Los Angeles putative class action wage and hour cases against defendant Curbstand, Inc.

The parties conducted significant investigation of the facts and law prior to and during prosecution of the litigation, including pre-mediation exchange of information, including payroll records; numerous communications between the parties; and interviews of putative class members and potential witnesses. The parties investigated the applicable law as applied to the facts discovered regarding the claims and potential defense thereto, and the damages claimed by plaintiffs. Damages were also projected by a former Senior Deputy Labor Commissioner who is a designated expert witness for the California Division of Labor Standards Enforcement.

The Kennedy plaintiffs and defendant first attempted to resolve that lawsuit in a day-long mediation before Jeff Krivis with First Mediation, on April 6, 2018. Although a settlement was reached, it was subject to approval by defendant’s Board of Directors, which did not approve its terms.

On October 2, 2018, the parties in both the Kennedy suit and the Reyes suit participated in a second mediation with Mr. Krivis, but were unable to reach a settlement at that time. They continued negotiating privately for several months thereafter. The negotiations during and after the mediation were adversarial and conducted at arm’s length. Eventually, the parties reached the settlement that is the subject of this motion. They assert that the settlement is the result of an informed and detailed analysis of the Released Parties’ potential liability and total exposure in relation to the costs and risks associated with continued litigation. They believe it is a reasonable compromise of the disputed claims, given the maximum amount that could have been recovered, discounted by the defenses asserted by defendant, as well as legal authority in similar cases.

The Settlement Class is defined as: “All persons who worked for Defendants as Valet Parking Attendants in California at any time during the period from June 22, 2013 to the Preliminary Approval Date, and who do not timely opt out of participation in the action.” There are approximately 700 current or former employees who worked for defendant during the last four years and are eligible to participate in the settlement. Defendant has agreed to class certification for purposes of settlement, but reserves its rights to contest certification if the settlement is not preliminarily or finally approved.

Under the settlement defendant is obligated to pay a Maximum Settlement Amount of up to $375,000. The amount to be distributed to Participating Class Members is the Maximum Settlement Amount, less:

(1) Claims administration costs of up to $15,000.00;

(2) Class Representative Enhancement awards of up to $5,000.00 for each named Plaintiff;

(3) Class Counsel attorneys’ fees of up to $125,000.00 (1/3 of the Maximum Settlement Amount);

(4) Class counsel costs not to exceed $20,000.00;

(5) Payment to the Labor and Workforce Development Agency of up to $10,000.00. Pursuant to PAGA 75% ($7,500) will be paid to the California Labor and Workforce Development Agency, and 25% ($2,500) will be included in the Net Settlement Amount;

(6) Each eligible Participating Class Member will be entitled to a settlement payment calculated as follows: (a) The Net Settlement Proceeds will be distributed pro-rata amongst the Participating Class Members based on the number of weeks employed within the class period, subject to a 55% floor. (b) If the total payments to Participating Class Members would equal less than 55% of the Net Settlement Proceeds, the Claims Administrator shall proportionately increase the payment to each Participating Class Member based on the number of workweeks employed by the Participating Class Member to ensure that the total amount of all payments to Participating Class Members equals 55% of the Net Settlement Proceeds. Subject to the 55% floor, any unclaimed portion of the Net Settlement Proceeds shall be retained by Defendant; and

(7) Any funds issued to Participating Class Members but not cashed, shall be sent by the Claims Administrator to the California State Controller’s Office, Unclaimed Property Division.

Class counsel estimated that a trial on the merits would have resulted in a recovery of approximately $400,000 to $700,000. As a result, achieving a settlement of $375,000 on hotly contested issues is believed to be a substantial benefit to the Class Members.

Should the settlement obtain preliminary approval, Class Members will receive a Class Notice and a Claim Form. Class Members who wish to participate in the settlement must submit the Claim Form to the Settlement Administrator by mail, facsimile, or electronic submissions. The Notice provides Class Members with the information necessary to apprise them of their rights and options, explaining who is a Class Member, who is eligible for payment, how to participate in the settlement, how to object to the settlement, and how to request exclusion from the settlement. The Claim Form will list the Class Member’s amount of the minimum settlement payment he or she is eligible to receive, and explains that the Class Member has the right to submit evidence to the Claims Administrator if he or she disagrees with the information on the Claim Form.

Plaintiffs assert that the settlement meets the criteria for preliminary approval, noting that the settlement is not to be judged against the hypothetical measure of what plaintiffs could have achieved had they prevailed at trial. By this motion, plaintiffs request that the court grant preliminary approval to the Settlement Agreement, approve the proposed Class Notice, Claim Form, and Mailing Envelope attached to the Settlement Agreement, certify the proposed Settlement Class for settlement purposes only, and schedule a hearing on Final Approval of the Settlement and Plaintiffs’ application for an award of fees and litigation costs, at which time Class Members may be heard.

ANALYSIS: The Court will grant preliminary approval of the settlement, as outlined below.

The purpose of the preliminary approval hearing is to determine whether the settlement is within the range of reasonableness for preliminary approval and to approve or deny certification of a provisional settlement class. A full inquiry into the fairness of the proposed settlement occurs at the final approval hearing. (Rules of Court, rule 3.769, subd. (g).)

“‘The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.’” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.) The court has broad discretion to determine whether the settlement is fair. (Dunk v. Ford Motor Co.) (1996) 48 Cal.App.4th 1794, 1801.) “The well-recognized factors that the trial court should consider in evaluating the reasonableness of a class action settlement agreement include ‘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 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.’ [Citations.] This list ‘is not exhaustive and should be tailored to each case.’ [Citation.]” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

The Court has carefully analyzed the terms of the settlement, including the nature and scope of the release it requires of absent class members and representative plaintiffs. The Court finds that it is within the range of acceptable settlements. The class totals approximately 700 members, who will share in the approximately $192,500 in Net Settlement Proceeds, according to the formula set forth in the settlement, which is dependent upon the number of weeks worked by the class member within the class period. The Net Settlement Proceeds are the amount which will remain after deducting from the $375,000 Maximum Settlement Amount attorneys’ fees of up to $125,000, costs of up to $20,000, administration costs of approximately $15,000, class representative enhancement awards totaling $15,000 ($5,000 each for the three named plaintiffs), and $7,500 to be paid to the Labor and Workforce Development Agency under the $10,000 settlement of any PAGA claims (the remaining $2,500 of the PAGA payment is included in the Net Settlement Amount).

Substantial investigation and discovery were conducted, giving rise to an informed settlement, in light of the risks of further litigating the action through trial. The case involves experienced class counsel, who believe the settlement is fair, reasonable, and in the best interests of the class members. The settlement was achieved through extensive arms’-length negotiations, and was not collusive.

The motion asks the Court for an order certifying the settlement class. As noted above, the class is estimated to be comprised of 700 current and former employees of defendant it is defined as:

“All persons who worked for Defendants as Valet Parking Attendants in California at any time during the period from June 22, 2013 to the Preliminary Approval Date, and who do not timely opt out of participation in the action.” The Court finds that certification of the class for settlement purposes is appropriate. The class is ascertainable from defendant’s records, and is so numerous that joinder of all members is impracticable. There are questions of law or fact common to the proposed class, and there is a well-defined community of interest among its members with respect to the subject matter of the litigation. It appears to the Court that the claims of the Class Representatives are typical of the claims of the members of the proposed class, and that they will fairly and adequately protect the interests of the class members.

The motion further seeks approval of the proposed Class Notice, Claim Form, and Mailing Envelope attached to the Settlement Agreement. Under Trotsky v. Los Angeles Fed. Sav. & Loan Assn. (1975) 48 Cal.App.3d 134, 151-152, the notice provided to a class must fairly apprise the class members of the terms of the proposed compromise and of the options open to dissenting class members. The Court has analyzed the contents of the Notice, and finds that it meets the standard for approval, in clearly outlining what the recipient must do in order to participate in the settlement, to object to the settlement, or to opt out of the settlement, and the time within which each must be accomplished. The Class Notice is therefore approved. Similarly, the Claim Form appears to clearly inform the recipient how to make a claim, and how to contest the number of workweeks which will be used in the calculation of the employee’s settlement payment. The Claim form is therefore approved.

The motion seeks a hearing date for the court’s consideration of final approval of the settlement, as well as counsel’s application for an award of attorneys’ fees and reimbursement of costs, and the incentive awards to the representative plaintiffs, as well as for final entry of judgment. The Court requests that counsel propose an appropriate date or dates upon which the Final Approval hearing can be held, which will allow sufficient opportunity for the notice, claims, objection, and/or exclusion procedures to conclude.

The Court will request that the motion for final approval of the settlement, and the motion for approval of attorneys’ fees, expenses, and the incentive awards to the named plaintiffs, be filed no later than 3 weeks prior to the date upon which the final approval hearing will be set.