Case Name: Foaad Hanna v. Equinix LLC, et al.

Case No.: 18CV339365

This is a putative wage and hour class and Private Attorneys General Act (“PAGA”) action by employees of defendant Equinix LLC. The parties have reached a settlement, which the Court preliminarily approved in an order filed on September 24, 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 plaintiff’s motion for final approval of the settlement and for approval of his attorney fees, costs, and service award. Plaintiff’s 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 $360,000. Attorney fees of up to $120,000 (one-third of the gross settlement), litigation costs not to exceed $20,000, and administration costs of approximately $8,500 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 will be distributed to individual class members pro rata based on their qualifying wage statements including overtime and shift differential and/or non-discretionary bonus wages in the same pay period (for the “Overtime Class”) and those including any shift differential wages (for the “Wage Statement Class”). Class members will not be required to submit a claim to receive their payments. Settlement awards will be allocated twenty percent to wages and eighty percent to interest and 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 paid to Legal Aid at Work.

Class members who do not opt out of the settlement will release claims “that could have been brought under the facts and allegations made in the operative Complaint” for violations of the UCL and Labor Code sections 226, 510, 558, and 1194 that accrued during the applicable limitations periods, as well as claims for PAGA penalties “predicated on the violation of Labor Code sections 226, 510, 558, and 1194 based on the facts alleged in the operative Complaint” that accrued during the applicable limitations period.

The notice process has now been completed. There were no objections to the settlement and only one request for exclusion from the class. Of 271 notice packets, eight were re-mailed to updated addresses and one was ultimately undeliverable. The administrator estimates that, given the net settlement of $199,388.03, the average payment to class members will be $738.47.

The Court notes that at preliminary approval, the parties estimated that there were 222 individuals in the class and the average payment to class members would be $840. Now, it appears that there are 271 class members, and they will consequently receive an average payment of only $738.47. While the Court remains inclined to find the settlement is fair and reasonable to the class for purposes of final approval, plaintiff’s 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 52 of the stipulation of settlement.

III. Attorney Fees, Costs, and Incentive Award

Plaintiff seeks a fee award of $120,000, 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. Plaintiff also provides a lodestar figure of $118,760, based on 149.5 hours spent on the case by counsel with billing rates of $650 and $750 per hour, resulting in a multiplier of 1.01. 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].) Plaintiff’s counsel also requests $7,111.97 in costs, below the estimate provided at preliminary approval. Plaintiff’s costs appear reasonable based on the summary provided and are approved. The $8,500 in administrative costs are also approved.

Finally, plaintiff requests a service award of $10,000. To support his request, he submitted a declaration describing his efforts on the case. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.

IV. Conclusion and Order

Prior to the final fairness hearing, plaintiff’s 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.