Case Name: Gerardo Segura v. San Jose, LLC, et al.

Case No.: 17CV304860

This is a putative class and Private Attorneys General Act (“PAGA”) action alleging wage and hour violations by defendants San Jose, LLC and Regional Medical Center of San Jose. The parties have reached a settlement, which the Court preliminarily approved in an order filed on October 22, 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 $2,713,500. Attorney fees of up to $904,500 (one-third of the gross settlement), litigation costs not to exceed $25,000, and administration costs of approximately $35,000 will be paid from the gross settlement. $50,000 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 $5,000.

The net settlement of approximately $1,706,500 will be distributed to individual class members pro rata based on their weeks worked during the class period. Class members will not be required to submit a claim to receive their payments. Settlement awards will be allocated 1/3 to wages and 2/3 to interest and penalties, and defendants will pay their share of payroll taxes separately from the gross settlement.

Class members who do not opt out of the settlement will release claims “of any nature or description arising from or related to the facts and claims alleged in the Action, or that could have been alleged in the Action based on the facts and claims alleged in the Complaint, as amended,” including specified wage and hour claims.

The notice process has now been completed. There were no objections to the settlement and only seven requests for exclusion from the class. In addition, there was one dispute of workweek information that has been resolved, and one individual self-identified as a class member and was added to the class. Of 3,295 notice packets, 97 were re-mailed to updated addresses and 21 were ultimately undeliverable. The administrator estimates that payments to class members will range from $3.66 to $1,304.42, with an average payment of $518.85.

At preliminary approval, the Court found that the proposed settlement provides a fair and reasonable compromise to plaintiff’s claims, and that the PAGA settlement is genuine and meaningful. It finds no reason to deviate from these findings now, especially considering that there are no objections. The Court consequently finds that the settlement is fair and reasonable for purposes of final approval.

One issue remains to be addressed at the hearing. The settlement provides that funds associated with checks uncashed after 180 days will be tendered to the Controller of the State of California to be held pursuant to the Unclaimed Property Law. However, counsel in other actions have informed the Court that the California State Controller’s Office is no longer accepting funds associated with wage and hour settlements for deposit as unclaimed property. Unless the parties have a different understanding, they shall meet and confer regarding the appropriate disposition of unclaimed funds in this matter pursuant to Code of Civil Procedure section 384 and shall select a recipient of such funds prior to final approval.

III. Attorney Fees, Costs, and Incentive Award

Plaintiff seeks a fee award of $904,500, 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 $329,158.50, based on 439.9 hours spent on the case by counsel with billing rates of $695 and $700 per hour, resulting in a multiplier of 2.7. 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 incurred $17,176.44 in costs, below the estimate provided at preliminary approval. Plaintiff’s costs appear reasonable based on the summaries provided and are approved. The $33,500 in administrative costs are also approved.

Finally, plaintiff requests a service award of $5,000. To support his request, he submits 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

In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:

Plaintiff’s motion for final approval is GRANTED. The following class is certified for settlement purposes:

All persons employed in California by Defendants as hourly paid employees from January 5, 2013 through October 22, 2019.

Excluded from the class are the seven individuals who submitted a timely request for exclusion.

Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiffs and the members of the class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.

The Court sets a compliance hearing for September 4, 2020 at 10:00 A.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted pursuant to Code of Civil Procedure section 384, subdivision (b); the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing telephonically.

The Court will prepare the order.