2018-00241855-CU-OE

Adam J. Harmoning vs. Homestreet Bank

Nature of Proceeding: Motion for Preliminary Approval of Class Action Settlement

Filed By: Han, Douglas

Effective September 23, 2019, official court reporters will not be available in Departments 53 and 54, with exceptions listed in the Court’s Policy Regarding Availability and Unavailability of Official Court Reporters. Additional information regarding this policy can be found on the Court’s website at www.saccourt.ca.gov.

Plaintiffs Adam J. Harmoning, Araz Parseghian, and Darlene Dravis’ (collectively, “Plaintiffs”) motion for preliminary approval of class action settlement is UNOPPOSED and is GRANTED.

On June 12, 2018, Plaintiff Araz Parseghian filed a class action complaint against Defendant HomeStreet Bank (“Defendant”) in the Superior Court for the State of California, County of Alameda, entitled Araz Parseghian, individually, and on behalf of other members of the general public similarly situated V. HomeStreet Bank, a Washington corporation; and DOES I through 100, inclusive, Case No. RG 18908477 (the “Parseghian Action”). Parseghian sought to represent all persons employed by Defendant within California in hourly-paid or non-exempt positions at any time during the period from four years preceding the filing of the Complaint to final judgment. The Parseghian Action alleged causes of action for: 1) violation of California Labor Code §§ 510 and 1198; 2) violation of California Labor §§ 226.7 and 512(a) (unpaid meal period premiums); 3) violation of California Labor Code § 226.7 (unpaid rest period premiums); 4) violation of California Labor Code §§ 1194, 1197, and 1197.1 (unpaid minimum wages); 5) violation of California Labor Code §§201 and 202 (final wages not timely paid); 6) violation of California Labor Code § 226(a) (non-compliant wage statements); and 7) violation of California Business & Professions Code § 17200, et seq.

The Parseghian Action was later transferred to the Los Angeles County Superior Court and was assigned the case number 19STCV02559.

On May 2, 2018, Araz Parseghian provided notice to the LWDA regarding the various alleged violations under the California Labor Code sections providing facts and theories of liability.

On August 10, 2018, Plaintiff Parseghian filed a second amended notice including plaintiff Darlene Dravis as an additional PAGA representative.

On November 20, 2018, plaintiffs Parseghian and Dravis filed a PAGA action in Los Angeles County Superior Court Case No. 18STCV05776 (the “PAGA Action”), alleging claims under the PAGA.

On October 3, 2018, plaintiff Adam Harmoning filed a class action complaint against Defendant in the Superior Court of California for the County of Sacramento (the “Harmoning Action”). The Harmoning Action sought relief on behalf of all Loan Officers for allegedly unreimbursed business expenses in violation of California Labor Code section 2802 and violation of California Business & Professions Code § 17200, et seq. Together, the Harmoning Action, the PAGA Action, and the Parseghian Action are referred to as the “Actions”).

Following mediation of the three actions, for purposes of settlement, the Parties agreed to stipulate to consolidate the Actions into one action in Sacramento County Superior Court, under Plaintiff Harmoning’s case name and number, with Plaintiffs Parseghian and Dravis added as additional Class Representatives and added causes of action for violation of Fair Credit Reporting Act under 15 U.S.C. § 1681(b(B)(2)(A), violation of Investigative Consumer Reporting Agencies Act under California Civil Code §§ 1786 et seq., and violation of Consumer Credit Reporting Agencies Act §§ 1785 et seq.

The parties participated in a private mediation before David A. Rotman, Esq. on May 1, 2019. With the aid of the mediator’s evaluation and continued efforts, the parties reached a settlement.

Settlement Class Definition

Plaintiffs seek to confirm certification of the following proposed class for settlement purposes:

“All non-exempt employees and all Mortgage Loan Officers employed by HomeStreet Bank in the State of California at any time during the period June 12, 2014 through and including the date on which the Court grants preliminary approval of the Stipulation of Settlement.”

The class involves approximately 870 class members. The parties have stipulated that all of the elements of class certification have been met. (CCP § 382; Joint Stipulation of Class Action Settlement and Release (“Settlement Agreement”) ¶ 46.) The Court preliminarily approves this proposed settlement class definition.

Class Representative

Plaintiffs Adam J. Harmoning, Araz Parseghian, and Darlene Dravis are preliminarily appointed as class representatives (the “Named Plaintiffs”).

Class Counsel

Clayeo C. Arnold, APLC, The Darren Guez Law Firm, and Justice Law Corporation are preliminarily appointed as class counsel for purposes of settlement only (“Class Counsel”).

Fair, Adequate, and Reasonable Settlement

Before approving a class action settlement, the Court must find that the settlement is “fair, adequate, and reasonable.” (Wershba v. Apple Computer (2001) 91 Cal. App. 4th 224, 244-245.) “[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.” (Dunk v. Ford Motor Company (1996) 48 Cal. App. 4th 1794, 1802.) The Court considers such factors 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 class members to the proposed settlement.” (Id. at 1801.)

Here, the settlement provides, among other things, that in order to settle the matter, Defendant will pay up to $3,500,000, inclusive of attorney’s fees and costs, enhancement awards to the Named Plaintiffs, costs of claims administration, the PAGA award, and the employer’s share of payroll taxes for the wage portion of the individual settlement payments (the “Net Settlement Amount”). (Settlement Agreement, ¶ 31, 53-58.)

The “Net Settlement Amount,” from which individual settlement payments shall be paid, shall be calculated by deducting the following amounts from the Maximum Settlement Amount:

(1) up to $1,225,000 in attorney’s fees (35% of the Maximum Settlement Amount);

(2) up to $35,000 in Class Counsel’s costs in prosecuting this action;
(3) enhancement awards to the Named Plaintiffs of $10,000 each ($30,000 total);
(4) administration costs of up to $20,000;
(5) a $37,500 PAGA payment (75% of $50,000); and
(6) standard employer payroll taxes for the wage portion of the individual settlement payments. (Settlement Agreement, ¶ 31, 53-58.)

The Net Settlement Amount will be divided and distributed pro rata to class members who submit timely and valid claim forms. Defendant is required to pay at least 50% of the Net Settlement Amount, less a maximum of $200,000 of settlements paid to Class Members during the Class Period as a result of individual Severance and/or Separation Agreements. (Settlement Agreement ¶ 32.) If the total Individual Settlement Payments to the Claimants would equal less than 50% of the Net Settlement Amount, less up to $200,000 of Credited Settlement Payments, the Claims Administrator will proportionately increase the Individual Settlement Payment for each Claimant to ensure that total Individual Settlement Payments equal 50% of the Net Settlement

Amount. With regard to Class Members who, previous to the Effective Date of this Agreement, received Credited Settlement Payments, such Class Members will have their Individual Settlement Payment reduced by the amount of Credited Settlement Payment previously received by such Class Members, to a maximum of the Class Member’s Individual Settlement Payment amount. (Ibid.)

Individual Settlement Payments will be allocated as follows: 20% of each Individual Settlement Payment will be allocated as wages, 30% will be allocated as interest, 20% will be allocated as penalties, and 30% will be allocated as reimbursement for business expenses. (Settlement Agreement ¶ 81.)

The settlement provides that Simpluris, Inc. will act as the Settlement Administrator, which will provide the Notice of Settlement to the Class. (Stralen Decl. ¶ 16 .) The Notice Packet provides all of the information necessary to apprise Class Members of the terms of the Settlement Agreement and their rights and options with respect thereto. (Settlement Agreement, Exhs. A and B.) The Notice Packet indicates all documents filed with the Court related to the settlement will be accessible on a website.

The Court preliminarily finds, subject to the final fairness hearing, that the settlement is entitled to a presumption of fairness and that all relevant factors support preliminary approval. The moving papers demonstrate the settlement was the product of arms-length bargaining between the parties and was reached after a private mediation and after sufficient formal and informal discovery, which allowed the parties, and, therefore, this Court, to act intelligently with respect to the settlement. (Stralen Decl. ¶ 11-12, Han Decl. at ¶¶ 8-9, 14-15.) During the mediation, the parties exchanged information and discussed all aspects of the case including the risks and delays of further litigation, the risks to both parties of proceeding with class certification, the evidence produced and analyzed, and the possibility of appeals, among other things. (Ibid.)

The parties engaged in substantial negotiation, formal, and informal discovery, and Class Counsel is experienced in this type of class action litigation, evaluated the strengths and weaknesses of the case, and views the settlement as favorable to the class. (Stralen Decl. ¶ 2-7; Han Decl. at ¶¶ 5-6; Guez Decl. at ¶ 4.) Class Counsel believes the proposed settlement is in the best interest of the putative class based on formal and informal discovery, investigations, negotiations, and a detailed knowledge of the issues in this case. (Stralen Decl. ¶ 23; Han Decl. ¶56; Guez Decl. ¶5.) The settlement is entitled to a presumption of fairness. (Dunk, 48 Cal.App.4th at 1802.)

There is nothing before the Court which would overcome the presumption of fairness. Indeed, the settlement provides value to the Class Members as it provides them with monetary compensation in a manner approximately commensurate with the potential value of their individual claims in light of the risks of continued litigation.

The Court is granting preliminary approval of the settlement.

Proposed Notice of Class Action Settlement

The proposed notice of settlement (Settlement Agreement, Exh. A) is approved. The notice shall be disseminated to the Class as provided in the Settlement Agreement.

Claims Administrator

Simpluris, Inc. is appointed as the Settlement Administrator to administer the settlement of this matter, as more specifically set forth in the Settlement Agreement. Nothing before the Court indicates Simpluris, Inc. should not be approved.

Final Approval Hearing

The Court will again review and consider the terms of this settlement at the time of the final approval hearing.

The final approval hearing will be scheduled for February 19, 2020, at 2:00 p.m. in Department 53, or such later date as is necessary for the administrator and counsel. The moving, opposing, and reply papers shall be filed and served in conformity with Code of Civil Procedure section 1005.

Finding no objection thereto, the Court will sign the formal order submitted with the moving papers.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)