Case Name: Lee Webster v. Platinum Parking Management, LLC, et al.

Case No.: 2015-1-CV-283977

This is a class and Private Attorneys General Act (“PAGA”) action on behalf of employees of defendants Platinum Parking Management, LLC, Platinum Parking Mgmt LLC, and/or Anthony Carchedi, alleging a number of wage and hour violations. Before the Court is plaintiff’s motion for preliminary approval of a settlement, which is unopposed.

I. Factual and Procedural Background

As alleged in the operative complaint, plaintiff was employed by defendants as a parking attendant at the Shoreline Amphitheater in Mountain View during the class period. (First Amended Class Action Complaint (“FAC”), ¶ 11.) During her employment, she and other employees routinely worked five hours or more without receiving compliant rest and meal periods. (Id., ¶ 15.) They also worked over eight hours in a day and forty hours in a week without receiving overtime pay, and were required to attend training for which they were not compensated. (Id., ¶ 16.)

Plaintiff alleges that defendant Platinum Parking Mgmt, LLC is a dissolved corporation that is the successor to defendant Platinum Parking Management, LLC and was formed to evade the latter entity’s liabilities and debts, specifically any judgment in this action. (FAC, ¶ 23.) Defendant Carchedi is the alter ego of these entities and was the employer or joint employer of the class members. (Id., ¶¶ 24-26.)

Based on these allegations, plaintiff brings class claims for (1) failure to pay wages, (2) failure to provide meal and rest periods or pay meal and rest period premiums, (3) failure to pay wages on termination, (4) failure to provide accurate itemized wage statements, and (5) unfair business practices, as well as (6) a claim for recovery under PAGA.

On September 25, 2017, the Court granted plaintiff’s motion to certify a class of “[a]ll non-exempt parking directors, traffic controllers, and valet attendants employed by defendant PLATINUM PARKING MANAGEMENT, LLC, within the State of California at any time from August 5, 2011 to the present.”

The parties have now reached a settlement. Plaintiff moves for an order preliminarily approving the settlement, provisionally certifying the settlement class, approving the form and method for providing notice to the class, and scheduling a final fairness hearing.

II. 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).

III. Settlement Process

According to a declaration by plaintiff’s counsel, plaintiff deposed defendant Anthony Carchedi as Platinum Parking Management, LLC’s person most knowledgeable on June 8, 2017. Plaintiff discovered that Platinum had ceased employing class members near the end of 2015 and that its corporate charter had been suspended by the California Franchise Tax Board.

On September 25, 2017, the Court granted class certification, and notice was subsequently distributed to the class. Plaintiff filed a Doe amendment naming Carchedi and Platinum Parking Mgmt, LLC as defendants and propounded additional discovery requests aimed at merits and liability issues for trial. Trial was scheduled for May of 2020.

The parties attempted direct settlement negotiations beginning in late 2019, and defendants provided financial records including Carchedi’s personal tax returns and Platinum Parking Management, LLC’s corporate tax returns. Platinum Parking Mgmt, LLC cancelled its corporate charter in October 2018 and never employed any of the class members. After a month of negotiations, the parties were able to reach the settlement before the Court.

IV. Provisions of the Settlement

The non-reversionary gross settlement amount is $140,000, to be paid in nineteen monthly installment payments. Attorney fees of up to $49,000 (thirty-five percent of the gross settlement), actual litigation costs estimated at $10,000, and administration costs of approximately $11,500 will be paid from the gross settlement. $4,000 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 $10,000.

The net settlement, approximately $56,500 by the Court’s estimate, will be distributed to individual class members pro rata. The average settlement payment will be approximately $141.60 to each of the 399 class members. Due to the passage of time since class members were employed by defendants and the anticipated difficulty in locating them, class members will be asked to submit a claim in order to receive their settlement payments. Settlement awards will be allocated 20 percent to wages and 80 percent to penalties and interest. Defendants’ share of payroll taxes will be paid separately from the gross settlement. The settlement provides that funds associated with checks uncashed after 180 days will be paid to Katharine & George Alexander Community Law Center.

Class members who do not opt out of the settlement will release “the causes of action alleged in the Complaint, as well as those wage and hour class claims which could [have] been brought based on the specific factual allegations giving rise to those claims, during the Class Period.”

V. Fairness of the Settlement

Plaintiff’s counsel estimates that the possible recovery in this action is between $450,000 to $2 million, with the lower estimate assuming meal and rest period violations for almost every shift during the class period plus an hour of overtime per shift and the higher estimate including penalties under PAGA and the Labor Code. Counsel explains that Platinum Parking Management, LLC never made much profit and appears to have no assets to satisfy a judgment. While there was some evidence to support alter ego or joint employer liability as to defendant Carchedi, he also does not appear to have assets sufficient to satisfy a substantial judgment. Counsel believes that the payment plan achieved through this settlement represents the best recovery possible from a practical standpoint. Based on this analysis, the Court agrees that the settlement is fair and reasonable to the class. The Court also finds that the PAGA allocation provided by the settlement is genuine and meaningful.

Still, plaintiff states that the defendants have not employed any class members since the end of 2015, but the parties’ settlement extends the class period to December 31, 2019. Plaintiff offers no reasoning to support the parties’ requested modification of the class period, and the Court intends to retain the original class definition unless the issue is addressed to its satisfaction in a supplemental filing by plaintiff.

Finally, the Court retains an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) Counsel shall submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees, which represent a higher percentage of the common fund than it typically approves in wage and hour settlements. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].) Counsel shall also submit a detailed summary of his requested costs.

Prior to final approval, plaintiff shall provide a declaration detailing her participation in the case supporting the stipulated incentive payment, and shall lodge with the Court any individual settlement agreement she may have executed with regard to her employment with the defendants. Plaintiff shall also address the results of the notice and opt-out process that was previously conducted in this action.

VI. Notice

The content of a class notice is subject to court approval. (Cal. Rules of Court, rule 3.769(f).) “The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Ibid.) In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.” (Cal. Rules of Court, rule 3.766(e).)

Here, the notice describes the lawsuit, explains the settlement, and instructs class members that they may opt out of the settlement or object. The gross settlement amount and estimated deductions are provided, along with the estimated payment per class member. Class members are given 45 days to request exclusion from the class or submit a written objection.

The notice is generally adequate, but must be modified to reflect the accurate estimated net settlement and class member payment amounts. In addition, the notice must be modified to highlight (1) that class members must return a claim form to receive their estimated individual payments of $141.60 and (2) that class members must inform the settlement administrator of any change in their mailing addresses because payments will not be distributed until October 2020 at the earliest. This information must be displayed in bold within a box set off from the rest of the text on the first page of the notice.

Turning to the notice procedure, the parties have selected Simpluris Inc. as the settlement administrator. The administrator will mail the notice packet within 20 days of preliminary approval, after using the National Change of Address Database and a skip trace to locate updated addresses for class members. Any notice packets returned as undeliverable will be re-mailed promptly to any forwarding address provided, and class members whose notice packets are re-mailed shall have at least 14 days to respond. These notice procedures are appropriate and are approved.

VII. Conclusion and Order

Plaintiff’s motion for preliminary approval is GRANTED, subject to the modifications to the class notice stated above. The Court intends to retain the original class definition unless plaintiff explains the rationale for extending the class period in a supplemental filing submitted prior to the hearing on this matter.

The final approval hearing shall take place on June 19, 2020 at 9:00 a.m. in Dept. 1.

The Court will prepare the order.