2018-00232323-CU-OE

Benita Tadena vs. Guaranteed Rate, Inc.

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

Filed By: Spivak, David G.

Plaintiff Benita Tadena’s motion for preliminary approval of class action settlement is UNOPPOSED and provisionally GRANTED, subject to the modifications included below. (See Code Civ. Proc. § 382; Cal. R. Ct. 3.769.)

The notice of motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06(D). Counsel for Plaintiff is directed to contact defense counsel forthwith and advise of Local Rule 1.06 and the Court’s tentative ruling procedure. If counsel for moving party is unable to contact the other counsel prior to the hearing, counsel for Plaintiff shall be available at the hearing, in person or by telephone, in the event any party appears without following the procedures set forth in Local Rule 1.06(B).

Through this motion, Plaintiff’s counsel requests that the Court: (1) provisionally certify the below-defined settlement class for settlement purposes only; (2) preliminarily approve the settlement; (3) provisionally appoint Plaintiff as class representative; (4) appoint David Spivak of The Spivak Law Firm and Walter Haines of United Employees Law Group as class counsel; (5) approve the proposed notice procedures; and (6) schedule a final approval hearing.

The Court is requested to preliminarily certify this matter as a class action on behalf of “all persons who are currently employed, or formerly have been employed, by GRI [Guaranteed Rate, Inc.] in California as divisional managers, regional managers, branch managers (producing and nonproducing), loan officers (senior, junior or otherwise), and in other comparable positions, at any time between March 28, 2018 and the Effective Date, and who do not timely opt out of the Settlement Agreement.” The “Effective Date” means either (a) if no objections are timely filed, the date of final approval of the settlement agreement by the Court; (b) if objections are filed by no appeal is filed, the expiration date of the time for filing notice of any appear from the order granting final class action settlement approval by this Court; or (c) if an appeal is

filed, the latest of (i) the date of final affirmance of an appeal of that Order; (ii) the expiration of the time for a petition for review of writ of certiorari with respect to the order and, if review or certiorari is granted, the date of final affirmance of the order following review pursuant to that grant; or (iii) the date of final dismissal of any appeal from the order or final dismissal of any proceeding on review or certiorari with respect to the order that has the effect of confirming the order.

On March 28, 2017, Plaintiff Benita Tadena, individually and on behalf of all others similarly situated, filed her complaint in Sacramento Superior Court in case no. 34-2017-00210217. On May 26, 2017, GRI removed the action to United States District Court for the Eastern District of California in case no. 2:17-cv-01103-KJM-AC. In the removal notice, GRI stated it employed approximately 417 individuals in branch manager and loan officer roles in California during the relevant time period. Plaintiff filed a first amended complaint on June 2, 2017. On June 30, 2017, GRI filed a motion to compel arbitration. The parties agreed to continue the hearing on the motion to compel arbitration until after mediation of the action.

On January 16, 2018, the parties participated in full-day mediation before Mark S. Rudy. Prior to the mediation, the parties engaged in an informal, voluntary exchange of information in the context of privileged settlement discussions to facilitate mediation. Defendant produced Plaintiff’s entire personnel file, copies of relevant written company policies, and payroll data for a random 10% same of putative class members selected by Plaintiff’s counsel.

On May 2, 2018, Plaintiff dismissed the action in federal court and re-filed the action before this Court. The complaint contains five causes of action: (1) failure to indemnify; (2) wage statement penalties; (3) waiting time penalties; (4) unfair competition; and (5) civil penalties.

The Court concludes that the settlement class satisfies the requirements of numerosity, commonality, and typicality. The settlement class is adequately represented by Plaintiff Tadena and class counsel David Spivak and Walter Haines. It appears to the Court that common questions of law and fact predominate over individual questions in this action for purposes of settlement. The superiority requirement for class certification has also been satisfied. As set out herein, the Court conditionally certifies the class as set forth in the settlement agreement.

Based on the briefing before the Court, it appears the parties engaged in extensive discovery and investigation and full-day mediation with an experienced mediator before reaching a settlement. The putative class at the time of settlement is comprised of approximately 463 class members (as of December 21, 2017). According to the information before the Court, the proposed settlement is the result of extensive arms-length negotiations between the parties’ respective counsel, as well as in mediation, and the parties now seek Court approval.

The essential settlement terms are as follows:

(1) Defendant GRI shall pay a Gross Settlement Amount (“GSA”) of $690,000 to settle all claims of the settlement class.

(2) Plaintiff shall be awarded an incentive award of $10,000.

(3) Class Counsel will apply for attorney’s fees of not more than one-third of the GSA, or $230,000.

(4) Class Counsel’s costs and expenses are not to exceed $20,000.

(5) The claims administrator’s costs are estimated to be $20,000.
(6) Plaintiff will apply for civil penalties under the California Private Attorneys General Act of $25,000, of which 25% or $6,250 will be payable to the settlement class and 75% or $18,750 will be payable to the California Labor and Workforce Development Agency (“LWDA”).
(7) The Net Settlement Amount (“NSA”) is the funds available for distribution to settlement class members after payments have been made from the GSA for (i) Plaintiff’s incentive award; (2) Class Counsel’s attorney’s fees; (3) Class Counsel’s costs and expenses; (4) claims administrator’s costs; and (5) the portion of the PAGA payment payable to the LWDA.

(8) Defendant GRI will bear its share of payroll taxes on the settlement awards paid to settlement class members. Payroll taxes will not be deducted from the GSA.
(9) The settlement awards to settlement class members shall be treated as 50% non-wage penalties and interest reported on a 1099 and 50% wages reported on a W-2.
(10) Each settlement class member who does not timely opt out of the
settlement will be paid a settlement award from the NSA. The settlement share will be a pro rata share of the NSA based on the number of weeks the settlement class member worked for GRI between March 28, 2013 and the Effective Date, divided by the total number of workweeks worked by all settlement class members.

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 Co. (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.)

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 that the settlement was the product of arms -length bargaining between the parties, including mediation, and was reached after sufficient discovery that allowed the parties, and therefore, this Court, to act intelligently with respect to the settlement. Furthermore, Class Counsel has significant experience in class actions, including wage and hour class actions. Accordingly, the settlement is entitled to a presumption of fairness. (Dunk, supra, 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 gives them 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 hereby grants preliminary approval of the settlement and notice provisions.

The Court further finds settlement of the PAGA claim to be reasonable. However, the

parties are reminded of the requirement of Labor Code section 2699(l)(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.” (Emphasis added.) The parties are also reminded of the requirements of section 2699(l)(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.”

KCC LLC is appointed as the claims administrator.

The proposed class notice shall be updated to reflect that preliminary approval was granted by this Department and that the final approval hearing shall be conducted in this Department (and this Department’s address).

The final settlement approval date shall be scheduled for Friday, January 4, 2019 at 2:00 p.m., or such later date as is necessary for the administrator and counsel.

Plaintiff to submit a new formal order for the Court’s signature. The Court notes that the present proposed order submitted omits the monetary terms of the settlement.