34-2013-00145259

Lamberto Montero vs. Empire Today LLC

Nature of Proceeding: Motion for Final Approval of Class Action Settlement

Filed By: Chang, Daniel H.

Plaintiff Lamberto Montero’s unopposed motion for final approval of class action
settlement is tentatively granted pending the required final fairness hearing. (CCP §
382, CRC, Rule 3.769.)

The law favors settlement, particularly in class actions and other complex cases where
substantial resources can be conserved by avoiding the time, cost, and rigors of formal
litigation. (See Newberg on Class Actions 4th (4th ed. 2002) § 11.41 (and cases cited
therein); Class Plaintiffs v. City of Seattle (9th Cir. 1992) 955 F.2d 1268, 1276; Van
Bronkhorst v. Safeco Corp. (9th Cir. 1976) 529 F.2d 943, 950; see also Potter v.
Pacific Coast Lumber Co. (1951) 37 Cal.2d 592, 602.) The trial court has broad
powers to determine whether a proposed settlement in a class action is fair. (Rebney
v. Wells Fargo Bank (1990) 220 Cal. App. 3d 1117, 1138.) In approving a class action settlement, the Court must “satisfy itself that the class settlement is within the ‘ballpark’
of reasonableness.” (Kullar v. Foot Locker Retail, Inc., (2008) 168 Cal.App.4th 116,
133.) In making its fairness determination, the Court should consider the relevant
factors, such as the strength of the Plaintiffs’ case, the risk, expenses, 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, and the experience and views of counsel. (Dunk v. Ford Motor Co.
(1996) 48 Cal. App. 4th 1794,1801.)

While the Court’s ruling indicates that it will give its final approval to the class action
settlement and approve class counsel’s fee requests and the class representative
service fee, the Court must still hold the final fairness hearing to allow potential class
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members the opportunity to be heard. (Dunk, supra, 48 Cal.App.4 at p. 1802.)

Plaintiff filed the instant action on behalf of himself and other similarly situated
individuals contending that Defendant Empire Today, LLC and Today Sales, LLC
improperly classified sales representatives as independent contractors as opposed to
employees and therefore failed to reimburse for business related-expenses and failed
to provide wage statements at the time the representatives were paid commissions.
Plaintiff alleged causes of action for violation of Labor Code § 2802 (unreimbursed
business expenses) and § 226 (recordkeeping). Plaintiff also alleged that Defendant
violated Business and Professions Code § 17200. Finally, Plaintiff sought remedies
pursuant to the Private Attorney General Act (“PAGA”). The parties ultimately reached
a settlement following mediation.

The Court preliminarily approved the class action settlement and the class notice on
December 6, 2013. Consistent with the Court’s order, notice of the settlement was
provided to approximately 1,500 class members. Defendant has agreed to pay a
maximum of $1,400,000 into a settlement fund pursuant to which class members will
receive settlement payments based upon the number of sales leads provided to each
member. From that maximum settlement amount, attorneys’ fees (up to 33% or
$466,666.00 of the maximum settlement amount), litigation costs up to $75,000, claims
administration costs, and a $10,000 service award to Plaintiff will be deducted. In
addition the settlement provides for a $20,000 payment for Labor Code § 2698
penalties, 75% of which is payable to the California Labor and Workforce Development
Agency and 25% payable to the settlement fund.

Before finally approving a class action settlement, the Court must find that the
settlement is “fair, adequate, and reasonable.” ( Wershba v. Apple Computer (2001) 91
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Cal.App.4 224, 244, 245.) “[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.” (Dunk v.
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Ford Motor Company (1996) 48 Cal.App.4 1794, 1802.) The Court considers such
factors 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 class members to the proposed settlement.” (Id. at
1801.)

Here, the Court tentatively finds that the settlement is entitled to final approval. The
moving papers demonstrate that the settlement was the product of arms-length
bargaining between the parties and was reached after sufficient discovery and
investigation which allowed the parties, and therefore, this Court, to act intelligently
with respect to the settlement. (Chang Decl. ¶ 3; Lee Decl. ¶¶ 3, 15-16) Further, class
counsel is experienced in wage and hour class action litigation, having litigated
numerous wage and hour class actions and believes that the settlement is fair and in
the best interests of the class. (Chang Decl. ¶ 11, 14, 30; Lee Decl. ¶¶ 17-20, 29.)
Moreover, the class reaction is overwhelmingly positive as the claims submitted to
date represent approximately 70% of the net settlement fund, and no objections and
only five opt outs were received. (Morales Decl. ¶¶ 12, 13.)

The settlement in this action provides value to the class members as it provided them
monetary compensation in a manner approximately commensurate with the potential
value of their individual claims in light of the risks of continued litigation.

In addition, the Court tentatively approves Class Counsel’s request for attorneys’ fees
and costs. Specifically, the Court approves Counsel’s request for attorneys’ fees in the
amount of $466,666.00 and costs in the amount of $36,197.57 (the settlement allowed
for a maximum of $75,000 in costs). Given that these amounts were disclosed in the
class notice, no objections to the settlement were received, and the contingent nature
of class counsel’s representation and the associated risks, the Court finds the
requested fees and costs to be an appropriate award. In addition, the Court tentatively
approves the claims administration fees in the amount of $25,500. Finally, the Court
tentatively approves the $10,000 class representative enhancement award to Plaintiff
for his time and efforts serving as the class representative. This is an appropriate
award.

In sum, and subject to the final fairness hearing, the Court concludes that the
settlement is entitled to final approval and that the various fee requests are appropriate
and also entitled to approval.

The Court anticipates that it will sign the proposed final order approving class action
settlement and judgment at the conclusion of the final fairness hearing in the event that
it adopts the findings set forth above which given the lack of objections to the
settlement the Court anticipates it will do.