Case Name: Alivia Stricklin v. First Alarm Security & Patrol, Inc., et al.

Case No.: 18CV323753 (lead case)

These consolidated actions allege violations of the Private Attorneys General Act (“PAGA”) and other statutes on behalf of employees of defendant First Alarm Security & Patrol, Inc. The parties have reached a settlement, which the Court preliminarily approved in an order filed on October 1, 2019. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.

Before the Court is plaintiffs’ motion for final approval of the settlement and for approval of their attorney fees, costs, and service awards. Plaintiffs’ motion is unopposed.

I. 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).

II. Terms and Administration of the Settlement

The non-reversionary gross settlement amount is $7,250,000. Attorney fees of up to $2,416,666.67 (one-third of the gross settlement), litigation costs not to exceed $30,000, and administration costs of approximately $37,000 will be paid from the gross settlement. $350,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiffs will also seek enhancement awards of $10,000 each ($80,000 in total).

The net settlement will be distributed to individual class members pro rata based on their qualifying workweeks, with individuals eligible for waiting time penalties allotted an additional 6 workweeks. Class members will not be required to submit a claim to receive their payments. Settlement awards will be allocated 22 percent as wages and 78 percent as interest and penalties (with waiting time penalties allocated 100 percent as penalties), and defendant will pay its share of payroll taxes separately from the gross settlement. Funds associated with checks uncashed after 180 days shall be redistributed to the class as long as the costs do not exceed 50 percent of the unclaimed funds, and will otherwise be paid to Legal Aid at Work.

Class members who do not opt out of the settlement will release all claims “known or unknown, that accrued during the Class Period for all of the Labor Code sections alleged in Plaintiffs’ operative Complaints and/or the [TAC], that could have been brought based on the same set of facts during the Class Period,” including specified wage and hour claims.

The notice process has now been completed. There were no objections to the settlement and only nine requests for exclusion from the class. Of 6,026 notice packets, 140 were re-mailed to updated addresses and 424 were ultimately undeliverable. In addition, 16 individuals self-identified as class members and were added to the class. The administrator estimates that, given the net settlement of $4,429,469.62, the average payment to class members will be $734.27 and the maximum individual payment will be $3,398.86.

The Court notes that at preliminary approval, the parties estimated that there were 5,500 individuals in the class and the average payment to class members would be $804.33. Now, it appears that there are over 6,000 class members, and they will consequently receive an average payment of only $734.27. While the Court remains inclined to find the settlement is fair and reasonable to the class for purposes of final approval, plaintiffs’ counsel must file a supplemental declaration addressing this discrepancy prior to the hearing on this matter. The declaration shall specifically confirm whether there is any basis to increase the gross settlement amount pursuant to paragraph 4.2 of the stipulation of settlement.

III. Attorney Fees, Costs, and Incentive Award

Plaintiffs seek a fee award of $2,416,666.67, or one-third of the gross settlement, which is not an uncommon contingency fee allocation in a wage and hour class action. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiffs also provide a lodestar figure of $1,186,110.50, based on 2,158.7 hours spent on the case by counsel with billing rates of $360 to $899 per hour, as well as staff. Plaintiffs’ request results in a multiplier of 2.038. As a cross-check, the lodestar supports the percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (Cal. 2016) 1 Cal.5th 480, 488, 503-504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].) Plaintiffs’ counsel also requests $24,363.71 in costs, below the estimate provided at preliminary approval. Plaintiffs’ costs appear reasonable based on the summaries provided and are approved. The $37,000 in administrative costs are also approved.

Finally, plaintiffs request service awards of $10,000 each. To support their requests, they submit declarations describing their efforts on the case. The Court finds that the class representatives are entitled to enhancement awards and the amount requested is reasonable.

IV. Conclusion and Order

Prior to the final fairness hearing, plaintiffs’ counsel shall submit a supplemental declaration as described above. Assuming the declaration addresses the issues identified by the Court to its satisfaction, the Court will grant final approval and enter judgment accordingly.

The Court will prepare the order.