Case Number: BC497456 Hearing Date: May 19, 2014 Dept: 310

JIMENEZ v. OPI PRODUCTS, INC.
Case No.: BC497456
Hearing Date: May 19, 2014
Department 310

MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND MOTION FOR FEES, COSTS, AND INCENTIVE PAYMENT

TENTATIVE

1) Grant motion for final approval

2) Grant attorney fees in the amount of $131,030.45

3) Grant attorney costs in the amount of $8,969.55

4) Grant claims administration costs in the amount of $14,000

5) Grant request for an incentive payment in the amount of $5,000
6) Order class counsel to provide class members with notice of the final judgment

DISCUSSION

1. Background. This is a wage and hour class action filed by Plaintiff Saul A. Jimenez, individually and on behalf of similarly situated hourly employees of Defendant OPI Products, Inc.

The operative complaint—the complaint filed on 12/13/12—asserts the following causes of action: (1) failure to provide meal periods; (2) failure to provide rest periods; (3) failure to pay overtime compensation; (4) failure to pay minimum wages; (5) failure to pay compensation at time of termination; (6) failure to provide accurate wage statements; (7) failure to pay all wages twice each month; (8) failure to pay vacation compensation at time of termination; (9) conversion; (10) unlawful business practices; and (11) civil penalties pursuant to California Private Attorneys General Act (PAGA).

Subsequently, the parties scheduled a mediation with Jeff Krivis for 9/3/13. [Sokolowski Decl. Re: Preliminary Approval, ¶10]. At the commencement of the mediation, Defendant revealed that, in response to Plaintiff’s lawsuit, it obtained releases from 525 current employees and paid them between $75 and $300 depending on their length of service with the company. [Id., ¶13].

Ultimately, the parties entered into a Stipulation of Settlement and Release (“settlement agreement”) for a gross settlement amount of $400,000. [Id., ¶16]. The settlement agreement included the prior payments to the 525 current employees as a component of the gross settlement amount. Subsequently, Plaintiff filed a motion for preliminary approval of the settlement agreement, which the Court granted on 12/18/13. [Order Granting Preliminary Approval of Class Action Settlement (filed 12/18/13)].

Plaintiffs have submitted the declaration of Tim Cunningham of CPT Group, Inc. (“CPT”). Mr. Cunningham attests to the following:

On 12/30/13, CPT received a class list containing 687 class members. [Cunningham Decl. (attached to Sokolowski Decl. Re: Final Approval as Exhibit D), ¶5]. CPT then processed and updated the class members’ mailing addresses using the National Change of Address database. [Id., ¶6].

On 1/17/14, CPT mailed English and Spanish versions of the notice packets (consisting of the notice, claim form, and Business Reply Mail envelope ) via first class U.S. mail to all class members. [Id., ¶7].

Only one notice packet was ultimately undeliverable. [Id., ¶9].

CPT has received the following responses:
• 361 claims;
• Zero requests for exclusion; and
• Zero objections. [Id., ¶¶10-11, 13].

The 361 claims include 10 deficient claims awaiting cure and 3 late claims. [Id., ¶¶14, 16].

If the deficient claims are cured and the late claims are accepted, there will be a total of 361 valid claims. [Id., ¶17]. These claims are claiming $68,159.72 (or 60.94% ) of the net settlement amount of $111,850. Id.

2. Notice. In California, the notice must have “a reasonable chance of reaching a substantial percentage of the class members.” Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 251 (emphasis added). Importantly, however, the plaintiff need not demonstrate that each member of the class has received notice. As long as the notice had a “reasonable chance” of reaching a substantial percentage of class members, it is found effective. Here, the notice easily meets this standard. Based on the figures in the Cunningham Declaration, notice packets were delivered to all but one (or 99.85%) of the 687 class members. Under these circumstances, notice was effective.

3. Dunk Factors. It is the duty of the Court, before finally approving the settlement, to conduct an inquiry into the fairness of the proposed settlement. California Practice Guide, Civil Procedure Before Trial, The Rutter Group, ¶14:139.12 (2012). The trial court has broad discretion in determining whether the settlement is fair. In exercising that discretion, it normally considers the following factors: strength of the plaintiff’s case; the risk, expense, complexity and likely duration of further litigation; the risk of maintaining class action status through trial; amount offered in settlement; extent of discovery completed and stage of the proceedings; experience and views of counsel; presence of a governmental participant; and reaction of the class members to the proposed class settlement. Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801; In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 723. This list is not exclusive and the Court is free to balance and weigh the factors depending on the circumstances of the case. Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 244-245.

The proponent bears the burden of proof to show the settlement is fair, adequate, and reasonable. 7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135, 1165-1166; Wershba, supra, 91 Cal.App.4th at 245. There is a presumption that a proposed fairness is fair and reasonable when it is the result of arm’s-length negotiations. 2 Herbert Newburg & Albert Conte, Newburg on Class Actions §11.41 at 11-88 (3d ed. 1992); Manual for Complex Litigation (Third) §30.42.

a. Strength of the plaintiff’s case. The $400,000 gross settlement amount appears to be a fair, adequate, and reasonable compromise in light of the following considerations: First, as indicated above, Defendant obtained releases from 525 class members (out of 687 class members) in exchange for the total consideration of $125,400. Had this case proceeded to trial, it is expected that Defendant will argue that the releases bar those class members’ claims. Second, although analysis of a 50% sampling of Defendant’s records revealed 166,000+ possible meal period violations, Plaintiffs state that the violation rate is “significantly” reduced if a 5-minute grace period is applied, [Sokolowski Decl. Re: Preliminary Approval, ¶24]. Third, it is Defendant’s position that its employment policies and practices did not violate applicable wage and hour laws, and that, even assuming that they did, the facts surrounding them varied from employee to employee. Thus, in Defendant’s view, class certification is uncertain. [Id., ¶27]. Lastly, a prior class action entitled Madrid v. OPI Products, Inc. (BC451489) potentially overlaps with the claims in this case. Indeed, Defendant contends that Madrid “extinguished” certain of Plaintiffs’ claims. [Id., ¶8].. This factor weighs in favor of final approval.

b. The risk, expense, complexity and likely duration of further litigation. Had this case not settled, there would have been additional risks and expenses associated with continuing to litigate. Procedural hurdles (e.g., motion practice and appeals) are also likely to prolong the litigation as well as any recovery by the class members. This factor weighs in favor of final approval.

c. The 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.”)]. This factor weighs in favor of final approval.

d. Amount offered in settlement. As part of the Court’s analysis of this factor, the Court should take into consideration the admonition in Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 133. In Kullar, objectors to a class settlement argued the trial court erred in finding the terms of the settlement to be fair, reasonable, and adequate without any evidence of the amount to which class members would be entitled if they prevailed in the litigation, and without any basis to evaluate the reasonableness of the agreed recovery. The Court of Appeal agreed with the objectors that the trial court bore the ultimate responsibility to ensure the reasonableness of the settlement terms. Although many factors had to be considered in making that determination, and a trial court was not required to decide the ultimate merits of class members’ claims before approving a proposed settlement, an informed evaluation could not be made without an understanding of the amount in controversy and the realistic range of outcomes of the litigation. The gross settlement amount is $400,000. It appears from the figures in the Cunningham Declaration that the net settlement amount is $111,850. [Cunningham Decl., ¶17 (stating that the claimed amount “is $68,159.72, which represents 60.94% of the amount available to the Class”)]. To be accurate, the amount of a class member’s settlement shares depends on whether he/she belongs to Class #1 or Class #2 and the number of his/her workweeks in relation to the total workweeks of the entire Class #1 or Class #2, whichever applies. [Settlement Agreement, ¶35(c) and (d)]. However, for simplicity’s sake, the 361 claimants will receive an average settlement share of approximately $188.81 ($68,159.72 ¿ 361 claimants). [Cunningham Decl., ¶18]. This factor weighs in favor of final approval.

e. Extent of discovery completed and stage of the proceedings. Prior to settlement, class counsel, inter alia: reviewed case law, Wage Orders, and statutes applicable to Plaintiffs’ claims; with the assistance of a technical consultant (Zac Beckman), reviewed and analyzed the 50% sample of payroll documents of the class members provided by Defendant; reviewed and analyzed the details and scope of Madrid v. OPI Products, Inc.; reviewed and analyzed the releases signed by Class #1 members; and prepared a mediation brief. [Sokolowski Decl. Re: Preliminary Approval, ¶28]. This factor weighs in favor of final approval.

f. Experience and views of counsel. Class counsel is experienced in class actions, including wage and hour cases. [Id., ¶¶34-36 and Exhibits B-D]. It is class counsel’s opinion that the settlement is a “favorable settlement for the class.” [Id., ¶31].This factor weighs in favor of final approval.

g. Reaction of the class members to the proposed class settlement. Out of 687 class members, 361 (52.55%) submitted valid claims, none (0%) opted out, and none (0%) objected. Overall, the response is positive.This factor weighs in favor of final approval.

On balance, this is a fair settlement that satisfies the Dunk factors. The motion for final approval is granted.

4. Attorneys’ Fees. Class counsel requests a total of $140,000 for attorney fees and costs (or, specifically, $131,030.45 for fees + $8,969.55 for costs). [Sokolowski Decl. Re: Attorney Fees, ¶¶6-7].

The lodestar calculations are as follows:

Timekeeper Hours Hourly Rate Total Lodestar
THE LAW OFFICES OF RHETT T. FRANCISCO
• Rhett T. Francisco
(Admitted 2004)
• Joshua Maxman
(Paralegal)

91.00
5.80

$500
$125

$ 45,500.00
$ 725.00
THE LAW OFFICE OF ANDREW J. SOKOLOWSKI
• Andrew J. Sokolowski
(Admitted 2003)

95.70

$550

$ 52,635.00
THE LAW OFFICE OF PAWEL R. SASIK
• Pawel R. Sasik
(Admitted 2005)

30.70

$500

$ 15,350.00
TOTAL 223.20 $114,210.00

Based on a review of the attached billing records, 223.20 hours of attorney and paralegal time appear to be reasonable for the tasks performed in this 1½-year-old case.
The hourly rates charged also appear to be reasonable and in line with the prevailing market rates in the community. It appears that class counsel utilized skill in litigating this case, and by all accounts, have good reputations in the legal community (at the very least, there is no evidence before the Court to indicate that either attorney has a “negative” reputation in the legal community). It also appears that class counsel spent appreciable time on the case, which time could have been spent on other meritorious fee-generating cases.

On balance, the lodestar figure of $114,210 is reasonable.
Based on the $114,210 lodestar, the attorney fee request of $131,030.45 results in a positive multiplier of 1.15. Considering the factors in assessing the multiplier, this case was of “medium difficulty” to litigate. The issues here were not particularly novel or difficult in this wage and hour case. However, class counsel displayed skill in obtaining a decent settlement amount against a corporate Defendant represented by able counsel (Ballard Rosenberg Golper & Savitt, LLP). Further, class counsel accepted this case on a contingency basis. [Sokolowski Decl. Re: Attorney Fees, ¶23]. As a result, class counsel has risked nonpayment of the 200+ hours of attorney and paralegal time worked and the thousands of dollars in costs advanced.

As a “cross-check,” the fee request of $131,030.45 represents 32.76% of the gross settlement amount. The determination of what constitutes an appropriate percentage “is somewhat elastic and depends largely on the facts of a given case, but certain factors are commonly considered. Specifically, the court may address the percentage likely to have been negotiated between private parties in a similar case, percentages applied in other class actions, the quality of class counsel, and the size of the award.” [In re Ikon Office Solutions, Inc., Securities Litigation (E.D. Pa. 2000) 194 F.R.D. 166, 193]. These factors favor the 32.76% award. As for the first factor, private contingency fee agreements are routinely 30% to 40% of the recovery. [Id. at 194]. As for the second factor, although the median percentage of attorney fees in class actions is 25%, “most fees appear to fall in the range of nineteen to forty-five percent.” [Id]. As for the third factor, class counsel has extensive experience in class actions, including wage and hour cases. Most importantly, class counsel achieved good results for the class as evidenced by the class members’ reaction to the settlement. As for the fourth factor, class counsel negotiated a decent gross settlement amount that provides an average payout of approximately $188.81 to participating class members.

For the foregoing reasons, the request for $131,030.45 in attorney fees is granted. It should also be noted that the notice expressly advised class members that “Class Counsel will ask for attorney’s fees and costs of up to $140,000 . . . ,” and not a single class member objected to the fee request (or to any other aspect of the settlement agreement for that matter).

5. Costs. Class counsel requests costs in the total amount of $8,969.55. [Sokolowski Decl. Re: Attorney Fees, ¶7 and Exhibit D]. The costs are straightforward and consist of charges for filing, copying/printing, mediation, data analysis, and File & ServeXpress. [Id]. Since they appear reasonable and necessary to the litigation, the requested amount of $8,969.55 may be granted.

6. Costs of Administration. CPT is requesting claims administration costs of $14,000. [Cunningham Decl., ¶19 and Exhibit A]. Based on the class size and CPT’s responsibilities (i.e., printing and mailing of English and Spanish versions of the notice packets, processing undeliverable mail and locating updated addresses, receiving communications regarding the settlement, providing status reports to the parties, establishing and maintaining a toll-free hotline, calculating and mailing checks, and reporting payments to the appropriate tax agencies ), the requested claims administration costs appear to be reasonable. The request is also the amount estimated at the time of preliminary approval and that was subsequently disclosed to class members. [Notice, “What are the terms of the Settlement.”] For the foregoing reasons, the requested claims administration costs may be granted.

7. Incentive Payment. The sole class representative requests $5,000 as an incentive payment. [Jimenez Decl. Re: Final Approval, ¶8]. In support of the request, the named Plaintiff submitted a declaration stating, inter alia, that he has spent “more than fifty (50) hours” performing tasks such as: communicating with class counsel; reviewing pleadings, documents provided by Defendant, and settlement-related documents; gathering documents; preparing for mediation; and preparing this declaration. [Jimenez Decl. Re: Final Approval, ¶7].

Considering these contributions of time and effort, the named Plaintiff’s execution of a general release and assumption of potential liability for Defendant’s costs, and the benefits obtained on behalf of the class, $5,000 is a reasonable inducement for the named Plaintiff’s participation in this case.

CONCLUSION

The settlement appears to be fair, adequate, and reasonable. The motion for final approval is granted. The following amounts may be approved: $131,030.45 for attorney fees; $8,969.55 for attorney costs; $14,000 for claims administration costs; and $5,000 for an incentive payment to the named Plaintiff.