Case Name:   Villa v. United Site Services of California

Case No.:       1-12-CV-237060

 

This is a putative class action for unpaid wages, missed meal and rest breaks and penalties by plaintiff Nelson Gonzalez Villa (“Plaintiff”) on behalf of himself and similarly-situated individuals employed by defendant United Site Services of California, Inc. (“Defendant”) as service technicians and/or pick-up and deliver drivers.  Plaintiff alleges that Defendant is a provider of portable restroom services, as well as temporary power, storage, fence and sweeping.[1]  Plaintiff alleges that Defendant’s policies denied him and the putative class all rest and meal breaks to which he was entitled under California law.

 

The case was originally filed on January 2, 2013.  On March 8, 2013, Defendant filed a notice of removal to the United States District Court, Northern District of California, San Jose Division.  The case was remanded on or about June 12, 2013.

 

The operative First Amended Complaint (“FAC”), filed January 14, 2014, asserts six causes of action for: (1) failure to provide and/or authorize valid rest periods under California law (Cal. Lab. Code, § 226.7 and applicable Wage Orders); (2) failure to provide and/or authorize valid meal periods under California law (Cal. Lab. Code, § 226.7 and applicable Wage Orders); (3) failure to pay overtime under the Fair Labor Standards Act (“FLSA”) of 1938 (29 U.S.C. § 207); (4) failure to provide accurate check stub itemizations (Cal. Lab. Code, § 226, subds. (a) and (e)); (5) waiting time penalties (Cal. Lab. Code, §§ 201-203); and (6) violation of California Unfair Competition Law.

 

Plaintiff now moves for preliminary approval of class action settlement.

 

According to the preliminary approval papers, he originally filed a complaint against Defendant on January 20, 2012 in federal court for unpaid overtime under the FLSA, as well as state law claims for unpaid wages, missed meal and rest breaks and penalties.[2]  On November 13, 2012, the federal court granted Plaintiff’s motion for conditional class certification and authorized notice to the FLSA class.[3]  On November 13, 2012, the federal court denied Plaintiff’s FRCP Rule 23 motion for motion for class certification, but granted leave to amend as to a subclass of San Jose employees under the supervision of Jose Cortez for the time period of January 20, 2008 and March 1, 2011 with respect to alleged state law meal break violations and re-file a motion for class certification as to the subclass.[4]  Accordingly, Plaintiff filed the instant state law action, which was removed and remanded from federal court.

 

Plaintiff submits that on June 26, 2013, a global settlement was reached for both the federal and state causes of action on June 26, 2013.  On November 26, 2013, the U.S. District Court in the federal action invited the parties to seek global settlement approval in the state court action because most of the settlement share proceeds were attributable to Plaintiff’s state court claims.[5]

 

The terms of the settlement are set forth in the Stipulation of Settlement and Release of Claims.[6]  The net settlement amount to the putative Settlement Class[7] is $256,800.00.  Of this amount, $52,500 shall be disbursed to the Subclass Members – those Class Members working at the San Jose location under the supervision of Jose Cortez (approximately 70 individuals) from January 20, 2008 until March 1, 2011.  Another $22,500 shall be disbursed to Class Members who did not work at the San Jose location under Mr. Cortez but timely opted into the conditionally certified FLSA collective action (approximately 55 members).  The remaining $181,800 shall be divided equally by the number of all Class Members during the Class Period (approximately 303 individuals).  Defendant also agrees to pay Plaintiff an enhancement of $7,000.00, the employer portion of employment taxes applicable to the settlement ($50,875.00), the costs of settlement ($20,000.00) and Plaintiff’s counsel’s lodestar fees up to $254,765.00 and costs of up to $65,435.00.

 

Discussion

 

“The well-recognized factors that the trial court should consider in evaluating the reasonableness of a class action settlement agreement include ‘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.’ [Citations.]  This list ‘is not exhaustive and should be tailored to each case.’ [Citation.]”  (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)  “[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.  [Citation.]”  (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802.)

Here, it appears the global settlement of the federal and state actions was reached through arm’s-length bargaining.  The parties participated in two formal mediation sessions in September and October of 2012, and settlement discussions continued thereafter.  The record also demonstrates that investigation and discovery were sufficient to allow counsel to act intelligently.  According to Plaintiff’s counsel, the parties exchanged more than 50,000 pages of documents and served and responded to multiple sets of discovery;[8] Plaintiff took the depositions of three corporate representatives of Defendant as well as the corporate manager of the San Jose yard, and Defendant deposed Plaintiff;[9] and the parties exchanged informal discovery in connection with mediation, including Defendant’s payroll data and punch details, which Plaintiff’s counsel reviewed and provided to an expert.[10]  Plaintiff’s counsel’s declaration supports the experience of all participating attorneys in similar litigation.[11]

 

“Although [t]here is usually an initial presumption of fairness when a proposed class settlement … was negotiated at arm’s length by counsel for the class, … it is clear that the court should not give rubber-stamp approval.  Rather, to protect the interests of absent class members, the court 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.  To make this determination, the factual record before the … court must be sufficiently developed… . The proposed settlement cannot be judged without reference to the strength of plaintiffs’ claims.  The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.  The court must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case, but nonetheless it must eschew any rubber stamp approval in favor of an independent evaluation.”  (Kullar, supra, 168 Cal.App.4th at p. 130, internal citations and quotation marks omitted.)

Regarding the merits of the case, Plaintiff’s counsel first notes that as a result of this litigation, as of September 17, 2012, Defendant ceased its practice of automatic deductions for meal breaks statewide and changed its written rest break policy to comport with Brinker Rest. Corp. v. Superior Court (2012) 53 Cal.4th 1004, thus providing prospective relief to all employees statewide affected by Defendant’s practices.  Plaintiff’s counsel candidly evaluates the merits of the claims in this case.  He discusses how members of the proposed subclass had a strong argument in favor of certification, and how the law favors certification based on automatic meal break deduction policies similar to the one implemented by defendant.  However, Plaintiff’s counsel also points to Defendant’s substantial evidence in opposition to the motion for class certification, as well as significant credibility issues that many subclass members would face based on their meal break logs.  Plaintiff argues further litigation would have required discovery battles, more depositions and extensive motion practice, and a prolonged certification battle.  The Court finds that the settlement amount, balanced against the strengths and weaknesses of Plaintiff’s case, is a reasonable compromise.  It provides payment of $600 to each class member for alleged violations of California’s rest break provisions, and enhancements of between $50 and $1,286 to the subclass members at the San Jose location, and $50 to $950 for class members who opted into the FLSA collective action prior to the expiration of the opt-in deadline.  The settlement provides adequate payment to class members, given the time, risks and costs of additional litigation.

 

The Court also has an independent right and responsibility to review the attorney fee provision of the settlement agreement and award only so much as it determines reasonable.  (Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.)  Plaintiff seeks $254,765.00 in attorney’s fees on a lodestar basis.  Plaintiff’s counsel provides a rough estimate of the hours incurred by all of the attorneys for Plaintiff in this case, as well as his personal billing rate.[12]  The Court will preliminarily approve the fee award, but in advance of the final approval hearing, Plaintiff’s counsel must submit detailed evidence for all related counsel and their respective billing rates to support the lodestar.  (See Lealao v. Beneficial Cal. Inc. (2000) 82 Cal.App.4th 19, 46-47.)  The $65,435.00 cost award must be supported by documentation as well.

Regarding class representative awards, “‘[t]he 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.’ [Citation.]  An incentive award is appropriate ‘“if it is necessary to induce an individual to participate in the suit[.]” … [Citation.]’  [Citation.]  ‘[C]riteria 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. [Citations.]’ [Citation.]  These ‘incentive awards’ to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit. [Citation.]”  (Cellphone Termination Fee Cases (2010) 186 Cal.App.4th 1380, 1394-1395.)  Other than general statements in the moving brief regarding Plaintiff’s assistance in the case, Plaintiff does not provide any evidence supporting the amount of time and effort spent.  However, because the amount of the award is not facially unreasonable, the Court will preliminarily approve of the class representative award, but some detailed evidence must be submitted in advance of the final approval hearing.

Regarding the class notice procedures, the Stipulation of Settlement calls for notice by first class U.S. Mail to the last known address of each class member.  The Stipulation of Settlement and Release also calls for the appointment of Rust Consulting, Inc. (“Rust”) as Claims Administrator, with claims administration costs quoted at $20,000.[13]  Rust will obtain a spreadsheet with the Class Members’ names and contact information from Defendant within 10 days of preliminary approval and will run a check of the addresses against those on file with the U.S. Postal Service’s National Change of Address List.[14]  Within 20 days of the delivery of the spreadsheet, Rust will mail a copy of the Notice, Opt-Out Form, and FLSA release to each Class Member by first class mail.[15]  The Court finds the proposed notice procedure has a reasonable chance to reach a substantial percentage of the Settlement Class Members.

 

The content of a class notice is subject to court approval.  If class members are to be given the right to request exclusion from the class, the notice must include the following:

 

A brief explanation of the case, including the basic contentions or denials of the parties;
A statement that the court will exclude the member from the class if the member so requests by a specified date;
A procedure for the member to follow in requesting exclusion from the class;
A statement that the judgment, whether favorable or not, will bind all members who do not request exclusion; and
A statement that any member who does not request exclusion may, if the member so desires, enter an appearance through counsel.

 

(Cal. Rules of Court, rule 3.766(d).)  Here, the Notice is Exhibit A to the Stipulation of Settlement and Release and it complies with rule 3.766(d) in most respects.  However, it does not appear to contain a statement that class members can enter an appearance through counsel and must be amended accordingly.

Plaintiff also moves for provisional certification of a settlement class.  “The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members.  [Citations.]  The ‘community of interest’ requirement embodies three factors: (1) predominant common 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.  [Citation.]  [¶]  The certification question is ‘essentially a procedural one that does not ask whether an action is legally or factually meritorious.’  [Citation.]  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.’  [Citations.]”  (Sav-On, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.)

A class is ascertainable if it can be readily identified without unreasonable time and expense.  (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.)  The numerosity requirement requires that it is impracticable to join all of the class members all before the court.”  (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.)  “Adequacy of representation depends on whether the plaintiff’s attorney is qualified to conduct the proposed litigation and the plaintiff’s interests are not antagonistic to the interests of the class.  [Citations.]”  (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450-451.)  “The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.”  (Seastrom v. Neways, Inc. (2007) 149 Cal.App.4th 1496, 1502.)  The party moving for class certification must also establish “by a preponderance of the evidence that the class action proceeding is superior to alternate means for a fair and efficient adjudication of the litigation.”  (Washington Mutual Bank v. Superior Court (Briseno) (2001) 24 Cal.4th 906, 914 [class treatment must “provide substantial benefits both to the courts and the litigants”].)

Here, the proposed class is ascertainable from Defendant’s employment records, and the approximate class size of 303 (and 70 in the subclass) is sufficiently numerous to make joinder impracticable.  As discussed above, Plaintiff’s counsel’s experience in similar litigation supports his adequacy to represent the class, and there is no reason to suggest that Plaintiff’s interests are antagonistic to the interests of the class, or that his wage and rest/meal period claims are not typical of the proposed class.  Plaintiff submits that common issues of law and fact predominate because the proposed class members’ claims all stem from the same alleged policies of Defendant in violation of the same laws and regulations.  Regarding the 55 class members who joined the previously certified FLSA collective action, the Court finds that based on the substantial amount of litigation and discovery in the federal and state cases, as well as the conflicts in legal authority on automatic meal break deductions, the instant settlement results from an actual controversy, not a mere waiver of employee rights.

For all of these reasons, the motion for preliminary approval of the settlement agreement, conditional certification of the settlement class, and appointment of Rust as Claims Administrator is GRANTED.  Preliminary approval of the proposed notice procedure is also GRANTED subject to amendment of the Notice as discussed above.

 

The final approval hearing is set for November 21, 2014.