Case Name: Christina Mendoza v. Planned Parenthood Mar Monte, Inc., et al.

Case No.: 18CV329544

This is a putative class and Private Attorneys General Act (“PAGA”) action on behalf of employees of defendant Planned Parenthood Mar Monte, Inc., alleging a number of wage and hour violations. Before the Court is plaintiff’s motion for preliminary approval of a settlement, which is unopposed.

I. Factual and Procedural Background

As alleged in the operative complaint, plaintiff was employed by defendant as a non-exempt employee for approximately 16 years, until her employment was terminated on April 18, 2018. (Second Amended Class Action Complaint for Damages (“SAC”), ¶ 8.) During her employment, defendant had a time rounding policy that resulted in the underpayment of wages; did not properly compensate employees for time spent travelling for work or properly reimburse them for travel costs such as mileage; did not properly factor non-discretionary incentive pay into employees’ regular rates of pay for purposes of calculating overtime wages; routinely short-staffed its workforce, so that employees were unable to take off-duty meal and rest breaks; and failed to provide compliant wage statements, including because wage statements failed to accurately state the total hours worked when employees were paid “Bilingual” wages. (Id., ¶¶ 9, 46.)

Based on these allegations, plaintiff brings claims for (1) failure to pay minimum, regular, and overtime wages, (2) violation of Labor Code section 226.7 (rest period violations), (3) violation of Labor Code sections 226.7 and 512 (meal period violations), (4) violation of Labor Code section 2802 (failure to reimburse business expenses), (5) violation of Labor Code section 226 (wage statement violations), (6) violations of Business & Professions Code section 17200 et seq., and (7) penalties under the Private Attorneys General Act (“PAGA”), Labor Code section 2698 et seq.

The parties have now reached a settlement. Plaintiff moves for an order preliminarily approving the settlement, 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/PAGA 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.)

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).

III. Settlement Process

According to a declaration by plaintiff’s counsel, the parties agreed to attempt mediation after the initial complaint in this action was filed. Defendant produced time and payroll data, including each class member’s start and stop times for each shift and wages paid by workday. This data allowed plaintiff to conduct a full damage analysis. The parties participated in a mediation with experienced class action mediator Steve Serratore on November 26, 2019, and were able to reach the settlement before the Court.

IV. Provisions of the Settlement

The non-reversionary gross settlement amount is $2,350,000. Attorney fees of up to $783,333.33 (one-third of the gross settlement), litigation costs not to exceed $40,000, and administration costs of approximately $13,950 will be paid from the gross settlement. $20,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will also seek an enhancement award of $10,000.

The net settlement of approximately $1,487,716 will be distributed to individual class members pro rata based on their weeks worked during the class period. The average settlement payment will be approximately $885 to each of the 1,680 class members, and class members will not be required to submit a claim to receive their payments. Settlement awards will be allocated 20 percent to wages and 80 percent to interest, penalties and reimbursement of expenses. Defendant’s share of payroll taxes will be paid from the gross settlement. The settlement provides that funds associated with checks uncashed after 180 days will be paid to Legal Aid at Work.

Class members who do not opt out of the settlement will release all claims, wages, etc. “which were alleged or could have been alleged arising out of the facts, circumstances, and primary rights at issue in the operative complaint in the Action and any amendments thereto, that arose during the Settlement Class Period, including those set forth in the Plaintiff’s operative complaint or any amendments thereto, for” specified wage and hour violations.

V. Fairness of the Settlement

Plaintiff estimates that the maximum potential value of the case is $16.9 million for the meal and rest break claims, $300,000 for the unpaid wages claim associated with travel time, $125,000 for the unpaid wages claim associated with rounding, $50,000 for the claim for unreimbursed travel expenses, $3.1 million in potential wage statement penalties, and $2,851,200 in waiting time penalties, for a total of $23,326,200. The settlement thus represents about ten percent of the maximum value of the case. Plaintiff asserts that the settlement is fair and reasonable to the class in light of defendant’s denials of liability and the general risks of litigation, and the Court is inclined to agree, particularly considering the percentage of the maximum valuation attributable to uncertain penalties. Still, plaintiff does not address the potential value of her claim for failure to include non-discretionary incentive pay in employees’ regular rates of pay for purposes of calculating overtime wages, and must provide a supplemental declaration by her counsel addressing this claim prior to the hearing on this matter.

The Court retains an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) While 1/3 of the common fund for attorney fees is generally considered reasonable, counsel shall submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].)

The Court will also scrutinize the requested litigation costs, which appear high, at final approval.

VI. Proposed Settlement Class

Plaintiff requests that the following settlement class be provisionally certified:

All current and former non-exempt, hourly employees of Defendant Planned Parenthood Mar Monte, Inc. (“Defendant”), who worked in the State of California at any time between June 13, 2014, to the date the Court grants preliminary approval of [the parties’] settlement or February 24, 2020, whichever is earlier.

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 1,680 class members have already been identified based on defendant’s records, and the settlement class is clearly defined. The Court finds that the settlement class is numerous, ascertainable, and appropriately defined.

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. Plaintiff’s claims all arise from defendants’ 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.)

Like other members of the class, plaintiff was employed by defendant as a non-exempt employee and alleges she experienced the violations at issue. The anticipated defenses are not unique to plaintiff, and there is no indication that her interests are otherwise in conflict with those of the class.

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.)

Plaintiff has the same interest in maintaining this action as any class member would have. Further, she has hired experienced counsel. Plaintiff has 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 1,680 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).) Plaintiff has not submitted a proposed form of notice for the Court’s review, and must do so prior to the hearing on this matter.

Turning to the notice procedure, the parties have selected Phoenix Settlement Administrators as the settlement administrator. The administrator will mail the notice packet within 10 days of receiving class members’ information from defendant, after updating class members’ addresses using the National Change of Address database. Any notice packets returned as undeliverable will be re-mailed to any forwarding address provided or located through skip tracing. These notice procedures are appropriate and are approved.

VIII. Conclusion and Order

Subject to plaintiff’s submission of a proposed form of notice for the Court’s review and a supplemental declaration addressing the potential value of her claim regarding incentive pay, her motion for preliminary approval is GRANTED. The final approval hearing shall take place on May 29, 2020 at 9:00 a.m. in Dept. 1. The following class is preliminarily certified for settlement purposes:

All current and former non-exempt, hourly employees of Defendant Planned Parenthood Mar Monte, Inc. (“Defendant”), who worked in the State of California at any time between June 13, 2014, to the date the Court grants preliminary approval of [the parties’] settlement or February 24, 2020, whichever is earlier.

Prior to final approval, plaintiff shall lodge for the Court’s review any individual settlement agreement she may have executed in connection with her employment with defendant.

The Court will prepare the order.