Case Number: BC427918 Hearing Date: June 14, 2018 Dept: 31

Plaintiff’s unopposed Motion for Final Approval of Class Action Settlement, and Application for Award of Attorney’s Fees and Expenses, Class Representative Enhancement, and Settlement Administration Costs is GRANTED in its entirety.

This is a wage and hour class action filed by Class Representative Fernando Cubillas against Defendant Dav-El Los Angles, Inc., et al. The operative Third Amended Complaint alleges the following causes of action: (1) Failure to Pay Wages, (2) Failure to Pay Overtime Compensation, (3) Failure to Provide Meal Periods, (4) Denial of Law Rest Breaks, (5) Unfair Business Practices, and (6) Failure to Provide Accurate, Itemized Wage Statements.

Plaintiff now moves the court for final approval of the settlement and for attorneys’ fees.

Under California Rules of Court, rule 3.769(a), “[a] settlement or compromise of an entire class action, or of a cause of action in a class action, or as to a party, requires the approval of the court after hearing.” Courts generally undertake a three-step process in approving class action settlements. First, courts grant preliminary approval of the proposed settlement; second, class members are notified of the settlement and their right to object or opt out; and third, courts grant final approval. (CRC 3.769; see, e.g., In re Cellphone Fee Termination Cases (2010) 186 Cal.App.4th 1380.)

The court must evaluate the fairness of the proposed settlement and independently assess the reasonableness of the settlement’s terms. (CRC 3.769(g); Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130, 133.) The proponent of the settlement bears the burden of establishing the settlement’s fairness and reasonableness. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 245; 7-Eleven Owners for Fair Franchising v. The Southland Corp. (2000) 85 Cal.App.4th 1135, 1165-66.)

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, supra at 245, citing Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802.) Even if a presumption of fairness exists, the court still must “independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interest of those whose claims will be extinguished.” (Kullar, supra at 30.) The following factors guide the Court’s determination:

[T]he 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. 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, supra at 244-245.) Of the relevant factors, the most important is the strength of the plaintiff’s case on the merits balanced against the amount offered in settlement. (Kullar, supra at 130.) In considering the amount offered, the court is mindful that compromise is inherent and necessary in the settlement process. (Wershba, supra at 250.)

A. Order Preliminarily Approving Class Action Settlement

On December 15, 2017, the court entered its order preliminarily approving the class action settlement, finding the settlement appeared to be within the range of reasonableness, appointing CPT Group as the administrator, approving the notice, and setting the remaining deadlines. Plaintiff has complied with all deadlines imposed by the court and sent the required notice. (Declaration of Alan Garrido Decl. ¶¶ 3-15.)

B. Fairness and Reasonableness

Analysis of Settlement Agreement

1. Does a Presumption of Fairness Exist?

a. Was the Settlement reached through arm’s-length bargaining? Yes. According to Article II, section (l) of the Settlement Agreement: “The parties attended a mediation session on July 27, 2017 with attorney Deborah C. Saxe acting as the mediator. The matter did not settle that day, but negotiations continued through September 7, 2017, when the Parties agreed to resolve the matter for $2.8 million. The parties have continued to resolve the details thereof, reaching this Agreement to settle this Action on the terms set forth herein. The settlement discussions were conducted at arm’s-length.”

b. Were investigation and discovery sufficient to allow counsel and the Court to act intelligently? Yes. According to the declaration of attorney Jennifer Kramer filed on October 23, 2017: “Plaintiff and Class Counsel diligently pursued an investigation of the Class Members’ claims against Defendants, including: extensive review of documents; serving extensive interrogatories and requests for production of documents; reviewing and analyzing Defendants’ responses to written discovery; taking depositions of Person Most Knowledgeable of Defendant and Defendants’ current and former employees; analyzing Defendants’ policies and practices and the applicable Labor Code sections and Wage Orders; researching all applicable law and the potential defenses; and reviewing other information provided by Defendants.” (See Oct. 23, 2017 Declaration of Kramer, ¶4, lines 21-28. See also May 14, 2018 Declaration of Kramer ¶ 3.).

c. Is counsel experienced in similar litigation? Yes. (See Oct. 23, 2017 Declaration of Kramer, ¶5, page 3, line 1 through page 8, line 18; May 14, 2018 Declaration of Kramer ¶14; Cordes Decl. ¶ 8; Ackerman Decl. ¶¶ 2-3.)

d. What percentage of class has objected? None of the class has objected and only four have requested exclusion. (Declaration of Alan Garrido, ¶¶ 12-14; May 14, 2018 Declaration of Kramer ¶ 13.) Therefore, the settlement appears well received by the class.

B. Is the settlement fair, adequate and reasonable?

2. Strength of Plaintiffs’ case. “The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130). Here, the settlement appears to be a “fair, adequate, and reasonable” compromise between the parties. The parties agreed to settle this action for $2.8 million following 8-years of litigation.

3. Risk, expense, complexity and likely duration of further litigation. Given the nature of the class claims, the case is likely to be expensive and lengthy to try. As noted in the preliminary approval moving papers: “In the absence of a settlement, Plaintiff was poised to move toward trial, the risk of which stood to drastically alter the landscape of the case for both sides. The parties were facing a potentially lengthy, costly, and complicated trial which, as with all trials, entailed the risk of a loss.” (See Motion for Preliminary Approval, page 16, lines 6-9). Plaintiff also contends he faced risks that class treatment would be found inappropriate, that the court’s successor liability determination would be overturned, that the 20% commission paid to drivers would not be part of their regular rate, and that lawful meal and rest breaks would have been found to have provided to putative class members. (Motion at 15.)

4. Risk of maintaining class action status through trial. There is always a risk of decertification. (Weinstat v. Dentsply Intern., Inc. (2010) 180 Cal.App.4th 1213, 1226 (“Our Supreme Court has recognized that trial courts should retain some flexibility in conducting class actions, which means, under suitable circumstances, entertaining successive motions on certification if the court subsequently discovers that the propriety of a class action is not appropriate.”)).

5. Amount offered in settlement. As indicated above, financially impacted class members will receive a total, non-reversionary cash payment from the $2.8 million settlement. According to the notice of settlement, “[t]he estimated Individual Settlement Payment for a Class Member who worked the entire 6-year Class Period is $15,852 (minus estimated tax withholding of $980).” (See Exhibit E of Dec. 5, 2017 Supplemental Declaration of Kramer, section F, page 4). After assessment of the class data, the settlement administrator indicates that the average payment is $1,813.72, with the highest payment to a participating class member to be $17,323.57. (Declaration of Garrido ¶ 15.)

Uncashed checks will go to Bet Tzedek Legal Services as cy pres. (See Exhibit A, Section 3.06(f) of Dec. 5, 2017 Supplemental Declaration of Kramer).

6. Extent of discovery completed and the stage of the proceedings. As stated above, it appears that Plaintiffs have completed sufficient discovery in order to make an informed decision.

7. Experience and views of counsel. The settlement was negotiated and endorsed by class counsel who, as stated above, is experienced in consumer class actions.

8. Presence of a governmental participant. This factor is not applicable here.

9. Reaction of the class members to the proposed settlement. None of the class has objected and only four have requested exclusion. (Declaration of Alan Garrido, ¶¶ 12-14; May 14, 2018 Declaration of Kramer ¶ 13.) Therefore, the settlement appears well received by the class.

In the circumstances of the case, and in recognition that “[a] settlement need not obtain 100 percent of the damages sought in order to be fair and reasonable” (Wershba, supra, 91 Cal.App.4th at 250), the court determines the settlement is fair and reasonable to the class members.

C. Attorney Fees

California Rules of Court, rule 3.769(b) states: “Any agreement, express or implied, that has been entered into with respect to the payment of attorney fees or the submission of an application for the approval of attorney fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.”

Despite any agreement by the parties to the contrary, “the court had an independent right and responsibility to review the attorney fee provision of the settlement agreement and award only so much as it determined reasonable.” (Garabedian v. Los Angeles Cellular Telephone Company (2004) 118 Cal.App.4th 123, 128.)

Plaintiff approved the division of attorney fees in writing as required by Marks v. Spencer (2008) 166 Cal.App.4th 219, 226-228. (See May 14, 2018 Declaration of Kramer, Exhibit E, section I, page 5).

Here, class counsel seeks $1,120,000.00, of 40% of the total settlement. The trial court has discretion to calculate a fee award in a class action settlement pursuant to the percentage method or lodestar method, “the goal under either the percentage or lodestar approach being the award of a reasonable fee to compensate counsel for their efforts.” (Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 503-504.) California permits courts to award fees based on a percentage of the settlement recovery where the fees are to be drawn from a common fund created by the litigation. (Id. at 503.) The rationale for such an award is that the fee is spread among all the beneficiaries of the common fund. (Ibid.) Recognized advantages of the percentage method include the following: “relative ease of calculation, alignment of incentives between counsel and the class, a better approximation of market conditions in a contingency case, and the encouragement it provides counsel to seek an early settlement and avoid unnecessarily prolonging the litigation.” (Ibid.)

The court may use the lodestar method to cross-check the fee yielded by the percentage method. (Laffitte, supra, 1 Cal.5th at 504.) “ ‘[T]he lodestar method better accounts for the amount of work done, while the percentage of the fund method more accurately reflects the results achieved.’” (Ibid.) To the extent there is a discrepancy between the two methods, the Court may consider whether an implied multiplier accounts for the difference. “If a comparison between the percentage and lodestar calculations produces an imputed multiplier far outside the normal range, indicating that the percentage fee will reward counsel for their services at an extraordinary rate even accounting for the factors customarily used to enhance a lodestar fee, the trial court will have reason to reexamine its choice of a percentage.” (Ibid.)

Class counsel attests to a lodestar fee of $1,706,660.00, based upon over 13,062 hours at hourly rates of $650.00 for Cordes, $610.00 for Ackermann, and $625.00 for Kramer. (Declaration of Cordes ¶¶ 2, 11-34); May 14, 2018 Declaration of Kramer ¶¶ 16-25; Declaration of Ackermann ¶¶ 2-4.) The lodestar calculation does not include the 378 hours billed by Plaintiff’s former counsel, Jennifer Hart. (Mo. at 18 n.5.) In light of the length of this litigation, the settlement achieved, and the skill displayed by counsel, the court finds the 40% attorney fee reasonable and appropriate under the circumstances of this case.

D. Costs

The motion seeks recovery of costs in the amount of $53,739.24, which is far less than the $100,000.00 estimated in the Motion for Preliminary Approval. Class counsel attest to actually incurring the costs claimed. (May 14, 2018 Declaration of Kramer ¶¶ 20, Ex. C, Declaration of Cordes ¶ 21, Ex. B; Declaration of Ackermann ¶ 4, Ex. A.) The court determines that the costs are reasonable and awardable.

E. Settlement Administrator Fee

The $28,500.00 fee to the Settlement Administrator (CPT Group) is reasonable and warranted in this case. The court preliminarily approved a budget of $25,000.00 to be paid to CPT Group, with $10,000.00 coming from the common fund and $15,000.00 paid by Defendants. The additional $3,500.00 was approved by Class Counsel to come from the $100,000.00 cost fund allocated to Class Counsel in the preliminary approval. (Declaration of Garrido ¶ 16; May 14, 2018 Declaration of Kramer ¶ 21.) The increase was due to the expanded class size from 566 based upon pre-certification information to 816 class members after review of Defendants’ records. (Declaration of Garrido ¶¶ 5, 8.) In her declaration, Garrido states the fee represents the cost of completing the settlement administration, including printing and mailing costs, receiving undeliverable notices, searching for additional addresses, mailing settlement payments, and issuing tax forms as required. (Id. ¶ 2.) Based on the declaration, the court determines the administrator fee is reasonable and warranted in this case.

F. Class Representative Enhancement

Finally, incentive payments compensate the expense and risk undertaken by named plaintiffs for the benefit of other class members. (Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 412.) Here, the enhancement payment to Fernando Cubillas is $17,500.00. The size of the payment is justified by the benefit conferred on the other members of the class and the potential risk of retaliation from future or prospective employers for having engaged in this type of legal action. Cubillas put forth considerable individual effort in pursuing this action. (May 14, 2018 Declaration of Kramer ¶¶ 23-24; Declaration of Cubillas ¶¶ 4-7.) Based on the declarations, the court determines that the incentive payment is reasonable and warranted in this case.

Therefore, the unopposed motion for final settlement approval is GRANTED.

Plaintiff is ordered to give notice.