SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

KORBIN WILSON and MATTHEW BURNHAM, as individuals, on behalf of themselves and all others similarly situated and the State of California as a private attorney general,

Plaintiffs,

vs.

DGDG 1, LLC; DGDG 2, LLC; DGDG 3, LLC; DGDG 4, LLC; DGDG 5, LLC; DGDG 6, LLC; DGDG 7, LLC; DGDG 8, LLC; DGDG 9, LLC; DGDG 10, LLC; DGDG 11, LLC; DGDG 12, LLC; DGDG 13, LLC; DGDG 14, LLC; DGDG 15, LLC; DGDG 16, LLC; DGDG 17, LLC; DGDG 18, LLC; DGDG MANAGEMENT, LLC; DEL GRANDE ENTERPRISES, INC.,

Defendants.

Case No. 2018-1-CV-331434

TENTATIVE RULING RE: MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on September 6, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative class action arising out of various alleged wage and hour violations. The Third Amended Class and PAGA Representative Action Complaint, filed on July 22, 2019, sets forth the following causes of action: (1) Failure to Pay for Non-Productive Time; (2) Failure to Provide Paid Rest Periods and Pay Non-Compliant Rest Period Premiums; (3) Failure to Pay Overtime; (4) Meal Period Violations; (5) Violation of Labor Code § 226; (6) Violation of Labor Code §§ 201-203; (7) Violation of Business & Professions Code § 17200; and (8) Penalties Pursuant to Labor Code § 2699.

The parties have reached a settlement. Plaintiffs now move for preliminary approval of the settlement.

III. LEGAL STANDARD
IV.
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.)

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, citing Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc. (9th Cir. 1982) 688 F.2d 615, 624.)

“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, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc., supra, 688 F.2d at p. 625, 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, supra, 48 Cal.App.4th at p. 1802.)

V. DISCUSSION
VI.
A. Provisions of the Settlement
B.
The case has been settled on behalf of the following class:

All current and former non-exempt employees of Defendants DGDG 1-17, LLC; DGDG 18, LLC; Defendant Del Grande Enterprises, Inc.; and any dealership or other entity within the scope of the group of companies known colloquially as the Del Grande Dealer Group, and any other Released Party (as defined hereon) who were paid, in whole or in part, compensation in the form of commissions for work performed during the period from June 1, 2014, through March 31, 2019.

(Declaration of David S. Winston in Support of Motion for Preliminary Approval of Class Settlement (“Winston Decl.”), Ex. 1 (“Settlement Agreement”), § D.)

The settlement states Defendants will pay a total amount of $875,000. (Settlement Agreement, § B.) However, pursuant to an “escalator clause” in the settlement, based on an increase in the number of pay periods, the gross settlement amount has been increased to $1,024,963.71. The settlement amount includes attorneys’ fees of $341,654.57, costs of $25,000, service awards of $20,000 ($10,000 per class representative), claims administration expenses of $14,450, and $20,000 in PAGA penalties ($15,000 of which will be paid to the LWDA). (See Settlement Agreement, § E.) The settlement is non-reversionary and the estimated average net settlement payment to each class member is approximately $479.04. Checks not cashed within 180 days from the date of mailing will be distributed to cy pres beneficiary Make-a-Wish Foundation. (Settlement Agreement, § H(3); Winston Decl., ¶ 78.)

With respect to the cy pres amounts, Code of Civil Procedures section 384, subdivision (b), requires payment “to nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons, or that promote the law consistent with the objectives and purposes of the underlying cause of action, to child advocacy programs, or to nonprofit organizations providing civil legal services to the indigent.” The parties shall appear at the hearing in person or telephonically to explain how Make-a-Wish Foundation meets these requirements, or to state their agreement on an alternative cy pres beneficiary.

C. Fairness of the Settlement
D.
Plaintiff asserts the settlement is the product of arm’s-length negotiations conducted by experienced and informed counsel and represents a favorable resolution of the class claims. Plaintiffs state the settlement was achieved following mediation and after careful evaluation of the records substantiating the amount of damages reasonably likely to be awarded to the class. Overall, the Court finds the settlement is fair. It provides for some recovery for each class member and eliminates the risk and expense of further litigation.

E. Incentive Award, Fees, and Costs
F.
Plaintiffs request class representative incentive awards of $10,000 for each of the two class representatives – Korbin Wilson and Matthew Burnham.

The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.

(Cellphone Termination Fee Cases (2010) 186 Cal. App. 4th 1380, 1394-1395, quotation marks, brackets, ellipses, and citations omitted.)

Prior to the final approval hearing, the class representatives shall submit declarations detailing their participation in the action. Plaintiffs state in the memorandum of points and authorities they are aware of this requirement.

The Court also has an independent right and responsibility to review the requested attorneys’ fees and only award so much as it determines reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) Plaintiffs’ counsel will seek attorneys’ fees of $341,654.57 (one-third of the total settlement fund). While one-third of the common fund for attorneys’ fees is generally considered reasonable, Plaintiff’s counsel should submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees.

G. Conditional Certification of Class
H.
Plaintiffs request the putative class be conditionally certified for purposes of the settlement. Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.” California Code of Civil Procedure Section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .”

As interpreted by the California Supreme Court, Section 382 requires: (1) an ascertainable class; and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.) The “community-of-interest” requirement encompasses three factors: (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and, (3) class representatives who can adequately represent the class. (Id. at p. 326.)

“Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) The plaintiff has the burden of establishing that class treatment will yield “substantial benefits” to both “the litigants and to the court.” (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.)

As explained by the California Supreme Court:

The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. A trial court ruling on a certification motion determines whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.

(Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326, internal quotation marks, ellipses, and citations omitted.)

There are approximately 1,058 class members. Class members can be ascertained from Defendants’ records. There are common issues in this case regarding Defendant’s policies and whether they violated certain Labor Code provisions. No issue has been raised regarding the typicality or adequacy of Plaintiff as class representative. In sum, the Court finds that the proposed class should be conditionally certified.

I. Class Notice
J.
The content of a class notice is subject to court approval. “If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court.” (Cal. Rules of Court, rule 3.769(f).)

The notice generally complies with the requirements for class notice. (See Settlement Agreement, Ex. 2.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notice states objections must be in writing and mailed to the claims administrator. The notice must be modified to make clear that objections are not required to be made in writing; class members may appear at the final approval hearing to make objections without providing any prior notice. The amended notice shall be provided to the Court for approval prior to mailing.

K. Conclusion
L.
The motion for preliminary approval of class settlement is GRANTED, subject to the modification to the notice and resolution of the issues regarding the cy pres beneficiary. The parties shall appear at the hearing either in person or telephonically. The final approval hearing is set for January 17, 2020, at 9:00 a.m. in Department 5.

The Court will prepare the final order if this tentative ruling is not contested.