Case Number: BC537989 Hearing Date: August 04, 2015 Dept: 310
Martinez v. Shapiro-Gilman-Shandler Co., etc.
Case No.: BC537989
Hearing Date: 8/4/2015
Department 310

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

TENTATIVE RULING

Grant as prayed.

DISCUSSION

I. Background

This is a wage and hour class action and PAGA representative action brought by Plaintiff Luis E. Martinez (“Plaintiff”) on behalf of himself and similarly situated employees of Shapiro-Gilman-Shandler Co. and S-G-S Produce. The First Amended Complaint alleges the following causes of action: (1) failure to pay wages for all time worked at minimum wage, in violation of Labor Code §§1194 and 1197; (2) failure to provide meal periods, in violation of Labor Code §§512, 226.7; (3) failure to authorize or permit rest periods, in violation of Labor Code §226.7; (4) failure to provide complete and accurate wage statements, in violation of Labor Code §226; (5) failure to timely pay all earned wages and final paychecks due at time of separation of employment, in violation of Labor Code §§201, 202, and 203; (6) unfair business practices, in violation of Business & Professions Code §17200, et seq.; and (7) civil penalties pursuant to the Private Attorneys General Act of 2004, Labor Code §2698, et seq.

Plaintiff’s Motion for Preliminary Approval was heard and granted on March 17, 2015. (Exhibit A to Declaration of Joseph Lavi.)

II. Notice and Claims Process

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, citing Cartt v. Superior Court (1975) 50 Cal.App.3d 960, 974.) 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 should be found effective.

Simpluris was appointed as Settlement Administrator and after being so appointed, it set up a toll free number (which was included in the Class Notice), which was available to Class Members 24 hours a day with both English and Spanish representatives. (Declaration of Christina Francisco, ¶¶3, 4.) On March 27, 2015, Defendant provided Simpluris with contact information and pertinent employment information for the Class, which Simpluris then updated using the NCOA database. (Id. at ¶¶6, 7.) On April 28, 2015, Notice Packets were sent to 71 Class Members. (Id. at ¶8.) Of those that were returned, Simpluris performed skip-tracing and re-mailed the packets, but ultimately 2 packets were undeliverable. (Id. at ¶10.)

There have been no objections or requests for exclusion. (Id. at ¶¶13, 14.)

Seventy one Class Members will share the Net Settlement Fund of $144,915.10. The average settlement check will be $2,040.09, and the highest is approximately $2,675.47. (Id. at ¶12.)

Based on the fact that Simpluris provided Notice to the Class in the manner provided for in the Court’s Order and that only two Notice Packets were undeliverable, the Court finds that the Class was sufficiently provided with notice of this settlement.

III. 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, citing Officers for Justice v. Civil Service Com’n, etc. (9th Cir. 1982) 688 F.2d 615, 625; 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, supra, 91 Cal.App.4th at 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.)

With these standards in mind, the Dunk/Wershba factors are addressed in turn.

1. Strength of the plaintiff’s case

Plaintiff’s counsel calculated the value of the claims to be $731,981 ($44,032 for rounding + $424,949 for shortened or skipped meal periods + $47,000 for waiting time penalties + $216,000 for wage statement violations). Against this, Plaintiff had to weigh Defendant’s defenses (that rounding was performed in a permissible manner; that Plaintiffs may not have been able to establish the meal period claim; that Plaintiffs would not be able to show that Defendant’s conduct was willful) in deciding whether to settle this action. (Lavi Declaration, ¶¶12-17.)

This factor weighs in favor of final approval.

2. 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.

3. 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.

4. Amount offered in settlement

As part of the Court’s analysis of this factor, the Court takes 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.

Defendant agreed to settle this action for $265,000. Plaintiff took into consideration the fact that litigation is uncertain and the Class might have received nothing if this case had gone to trial. In light of Defendant’s defenses and the uncertainties of litigation, Plaintiff’s counsel contends that $265,000 is in the best interest of the Class. The settlement equates to approximately 36.2% of what Plaintiff’s counsel had calculated as the maximum recovery. (Lavi Declaration, ¶¶17, 18.)

This factor weighs in favor of final approval.

5. Extent of discovery completed and stage of the proceedings

Plaintiff’s counsel indicates that he has undertaken significant investigation of the facts and law, and has analyzed approximately 9,000 pages of documents, including the employee handbook and collective bargaining agreement, as well as timecards and payroll information. The parties also engaged in discussions regarding the strengths and weakness of the case and participated in mediation before Steve Rottman. (Id. at ¶¶7, 8.)

This factor weighs in favor of final approval.

6. Experience and views of counsel

Class Counsel, Lavi & Ebrahimian, LLP, has extensive experience with employment law and class actions. (Lavi Declaration, ¶20.) Plaintiff’s counsel has handled hundreds of such cases, has settled dozens of wage and hour actions, and is currently representing plaintiffs in many others. (Id. at ¶¶21-23.) It is the opinion of Plaintiff’s counsel that the settlement is “in the best interest of the Class Members,” and is well within the ball park of reasonableness. (Id. at ¶¶17, 18.) The settlement results in a real benefit to the Class, and is fair and reasonable as it will not require employees to file their own actions. (Id. at ¶19.)

This factor weighs in favor of final approval.

7. Presence of a governmental participant

This factor is not applicable here.

8. Reaction of the class members to the proposed class settlement

None of the Class Members have objected or opted out. (Francisco Declaration, ¶¶13, 14.)

Conclusion on Dunk Factors

On balance, this is a fair settlement that satisfies the Dunk factors, such that final approval is warranted.

IV. Attorneys’ Fees, Costs, and Incentive Payments

A. Attorneys’ Fees

Class counsel requests attorney fees of $88,324, which is 33.33% of the Gross Settlement Amount.

1. Determining the Lodestar Amount and Calculating Counsel’s Hourly Rate and Fees

The Court employ the lodestars method in awarding fees, as opposed to a percentage of the common fund method. This amount would reflect the actual work performed, plus a multiplier (if applicable) to recognize counsel’s efforts.

The Court appointed Joseph Lavi and Jordan Bello of the law firm of Lavi & Ebrahimian and Sahag Majarian, II of the Law Offices of Sahag Majarian II as Class Counsel. (Exhibit A to Lavi Declaration.) At the time of preliminary approval, Class Counsel provided evidence that the client agreed in writing to the fee-splitting agreement. (See February 12, 2015 Declaration of Jordan Bello, ¶7, filed in connection with the supplemental briefing for preliminary approval.)

Lavi worked 74 hours at $650/hour ($48,100); Bello worked 33.05 hours at $450/hour ($14,872.50); Majarian worked 39.80 hours at $700/hour ($27,860) for a total lodestar of $90,832.50. (The Lavi Declaration at paragraphs 27-29, along with Exhibit C provides evidence supporting the fee requested by the Lavi & Ebrahimian firm. The Majarian Declaration and Exhibit A thereto provide evidence of the fees for his firm.) The hourly rates charged by these attorneys is reasonable, as are the total number of hours expended on this action in the year and a half that this case has been pending. It appears that the attorneys 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 any one of the attorneys 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.

2. The attorney fee request ($88,324) would require application of a negative multiplier to the lodestar ($90,832.50).

Once the Court has calculated the lodestar figure, it may consider other relevant factors that could increase or decrease that figure. “The court expresses these factors as a number (or as an equivalent percentage), and the lodestar is multiplied by that number. Thus, the number is referred to as the ‘multiplier.’” (Pearl, California Fee Awards (2006 Supp.), §13.1.) Although there are some objective standards governing what factors may be used to decide whether to apply a multiplier, the trial courts have considerable discretion in determining the size of the multiplier, as long as they consider the proper factors. (Ibid.) Indeed, “there is ‘no mechanical formula [that] dictate[s] how the [trial] court should evaluate all these factors….[Citations.]’” (Lealao v. Beneficial Cal., Inc. (2000) 82 Cal.App.4th 19, 41, citing Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 639.)

“[The lodestar] may be adjusted by the court based on factors including… (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132, citing Serrano v. Priest (1977) 20 Cal.3d 25, 49.) However, the Court cannot consider the same factors twice when setting the multiplier and the lodestar as it could amount to double counting. (Ketchum, supra, 24 Cal.4th at 1138; see also Flannery v. CHP (1998) 61 Cal.App.4th 629, 647, reversing the application of a 2.0 multiplier to a fee award, in part because “the skill and experience of counsel” and “the nature of the work performed” factors were duplicative of factors the trial court had explicitly considered in setting the lodestar.)

The issues in this case were not particularly novel, but Class Counsel displayed some skill in quickly resolving this litigation. Further, Class Counsel accepted this case on a contingent fee basis, and the percentage (33.33%) is within the realm of what is normal in wage and hour cases. As in all contingency cases, Class Counsel risked no payment and was required to advance costs.

3. Cross-check

As a “cross-check,” the fee request of $88,324 represents 33.33% 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 $88,324 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.” (Ibid.) As for the third factor, Class Counsel has 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 $265,000 gross settlement amount that provides an average payout of approximately $2,040.09. For the foregoing reasons, the fee request of $88,324 is granted. The Court notes that the notice advised class members of the maximum fee request, and not a single class member objected to it (or to any other aspect of the settlement agreement for that matter).

B. Costs

Class counsel requests costs in the amount of $7,677.15, which is lower than the settlement cap of $10,000. Class Counsel’s actual costs consist of filing fees, legal services fees, data analysis fees, and mediation. (Lavi Declaration, ¶35, Exhibit D.) These costs appear reasonable and necessary to the conduct of the litigation. Further, as with the fee request, the maximum cost request was disclosed to class members and deemed unobjectionable. For these reasons, the cost request is granted in the amount of $ 7,677.15.

C. Costs of Administration

Claims administrator Simpluris requests administration costs of $6,794. (Francisco Declaration, ¶16.) Simpluris has not provided an invoice or breakdown of these costs. However, the Francisco Declaration provides evidence of the work Simpluris performed. The cost requested appears reasonable for a class of this size. Based upon the reasonableness of the costs and the fact that this amount was agreed to and made known to the class with no objections being received thereto, the request for administration costs of $6,794 is granted.

D. Incentive Payment

Finally, Class Counsel seeks an incentive payment of $3,900 to the Class Representative, Luis Martinez.

The Court considers the following factors, among others, in determining whether to pay an incentive or enhancement award to the Class Representative(s):

• Whether an incentive was necessary to induce the class representative to participate in the case;
• Actions, if any, taken by the class representative to protect the interests of the class;
• The degree to which the class benefited from those actions;
• The amount of time and effort the class representative expended in pursuing the litigation;
• The risk to the class representative in commencing suit, both financial and otherwise;
• The notoriety and personal difficulties encountered by the class representative;
• The duration of the litigation; and
• The personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation.
(California Practice Guide, Civil Procedure Before Trial, ¶14:146.10 (The Rutter Group 2012), citing Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804; Bell v. Farmers Ins. Exch. (2004) 115 Cal.App.4th 715, 726; In re Cellphone Fee Termination Cases (2010) 186 Cal.App.4th 1380, 1394; Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 412).

The Court grants the requested $3,900 incentive for the following reasons:
¿ Luis Martinez actively assisted in this litigation from November, 2013, before the case was filed;
¿ He alone undertook the risks involved with the litigation and in so doing assisted in procuring a real benefit for each Class Member;
¿ He spent in excess of 50 hours on this litigation.