Case Name: Patricia Teruel v. Sky Chefs, Inc., et al.
Case No.: 2014-1-CV-268343

In this putative class action, plaintiff alleges that her employer, defendant Sky Chefs, Inc., violated the Labor Code by failing to issue final paychecks in a timely manner and failing to provide all required information, including employees’ employee identification numbers or the last for digits of their social security numbers, on these paychecks. (Complaint, ¶ 3.) Plaintiff asserts three causes of action for (1) violation of Labor Code sections 201-203, (2) violation of Labor Code section 226, subdivision (a), and (3) penalties pursuant to Labor Code section 2698.

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

I. Legal Standard for Approval of a Class Action Settlement

Generally, “questions whether a settlement was fair and reasonable, whether notice to the class was adequate, … 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 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.)

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. (2008) 168 Cal.App.4th 116, 130.)

II. The Proposed Settlement

A. Settlement Process and Considerations

Since this action was filed on July 22, 2014, the parties have engaged in discovery and defendant has produced significant numbers of documents and class payroll records, including policies and practices pertaining to the alleged violations. (Decl. of Larry W. Lee ISO Mot., ¶¶ 3-4.) The parties agreed to participate in private mediation, and plaintiff obtained a list of putative class members and their dates of employment, rates of pay, and final paycheck dates. (Id. at ¶ 6.) Based on this information, plaintiff estimated that defendant’s potential exposure in this action is $600,000. (Id. at ¶ 7.)

On February 19, 2016, the parties conducted a mediation with Michael J. Loeb, a well-regarded wage and hour mediator. (Lee Decl., ¶ 8.) They did not reach agreement on the day of the mediation, but continued negotiations with Mr. Loeb’s assistance and ultimately agreed to settle the action for $225,000. (Ibid.)

B. Provisions of the Settlement

The non-reversionary net settlement will be distributed proportionally among participating class members. (Joint Stipulation of Settlement, ¶ 6.3(e).) In exchange, class members who do not opt out of the settlement will release “all claims alleged in the Lawsuit with respect to the Settlement Class only arising during the Class Period,” specifically, all claims “arising out of (1) the alleged late payment of wages due upon separation of employment” and “(2) the alleged inaccurate final wage statement or alleged manual wage statements.” (Id. at ¶ 15.1.)

Class counsel will petition the Court for fees not to exceed one-third of the gross settlement, plus costs not to exceed $12,500. (Stipulation, ¶ 6.3(a).) The settlement administration costs are estimated to be $15,625. (Id. at ¶ 6.3(b).) Class counsel may apply for an incentive award on behalf of the named plaintiff not to exceed $5,000. (Id. at ¶ 6.3(c).) Finally, a $5,000 payment will be made to the California Labor & Workforce Development Agency in connection with plaintiff’s claim for penalties. (Id. at ¶ 6.3(d).)

C. Analysis

In light of the above, it appears that the settlement amount is fair and will be fairly apportioned among class members. The settlement was reached through arm’s-length bargaining following sufficient investigation and discovery, and both plaintiff’s counsel and the mediator are experienced in employment litigation. Accounting for the deductions described above, the net settlement will result in an average recovery of $150 to each of the 1,500 class members.

Plaintiff has submitted a declaration specifically detailing her participation in the case in support of the requested incentive payment. The Court also has 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.) While one-third of the common fund for attorney fees is generally considered reasonable, counsel should submit billing records and lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees. The settlement administrator, Simpluris, should also submit a declaration detailing its actual expenses associated with the settlement.

III. Proposed Settlement Class
Plaintiff requests that the following settlement class be provisionally certified: all persons whose employment with Sky Chefs ended at any time during the class period, and who were not class members in two specified federal class actions. (Stipulation, ¶ 1.8.)

A. Legal Standard

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 the plaintiff to demonstrate by a preponderance of the evidence (1) an ascertainable class and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (Rocher) (2004) 34 Cal.4th 319, 326, 332.)

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. (Ibid.) “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 (Botney) (1976) 18 Cal.3d 381, 385.)

In the settlement context, “the court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled.” (Luckey v. Superior Court (Cotton On USA, Inc.) (2014) 228 Cal.App.4th 81, 93.) As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court’s review is more lenient in this respect. (Id., pp. 93-94.) However, considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold. (Id., p. 94.)

B. Ascertainable Class

“The trial court must determine whether the class is ascertainable by examining (1) the class definition, (2) the size of the class and (3) the means of identifying class members.” (Miller v. Woods (1983) 148 Cal.App.3d 862, 873.) “Class members are ‘ascertainable’ where they may be readily identified without unreasonable expense or time by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 932.)

Here, there are an estimated 1,500 members of the clearly-defined proposed class. Class members are easily identifiable from defendant’s payroll records. The Court consequently finds that the class is numerous and ascertainable.

C. Community of Interest

With respect to the first community of interest factor, “[i]n order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.” (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916.) The court must also give due weight to any evidence of a conflict of interest among the proposed class members. (See J.P. Morgan & Co., Inc. v. Superior Court (Heliotrope General, Inc.) (2003) 113 Cal.App.4th 195, 215.) The ultimate question is 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. (Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at pp. 1104-1105.) “As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.” (Hicks v. Kaufman & Broad Home Corp., supra, 89 Cal.App.4th at p. 916.)

Here, common legal and factual issues predominate. These issues include whether defendant failed to issue final paychecks in a timely manner and failed to include required information on paychecks.

As to the second factor,

The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.

(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.) Here, like other members of the class, plaintiff suffered the alleged Labor Code violations. There are no anticipated defenses unique to plaintiff, and there is no indication that plaintiff’s interests are otherwise in conflict with those of the class.

Finally, 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.” (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.) The class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 238.) “Differences in individual class members’ proof of damages [are] not fatal to class certification. Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status.” (Ibid., internal citations and quotation marks omitted.)

Plaintiff has the same interest in maintaining this action as any class member would have. Further, she has hired experienced counsel. Plaintiff has sufficiently demonstrated adequacy of representation.

D. Substantial Benefits of Class Certification

“[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .” (Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.) The question is whether a class action would be superior to individual lawsuits. (Ibid.) “Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.” (Ibid.) Generally, “a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.” (Id. at pp. 120-121, internal quotation marks omitted.)

Here, there are over a thousand members of the proposed class. It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member. Further, it would be cost prohibitive for each class member to file suit individually, as each member would have the potential for little to no monetary recovery. It is clear that a class action provides substantial benefits both to the litigants and the Court in this case.

In sum, plaintiff has demonstrated that this action is appropriate for class treatment, and that she and her counsel will adequately represent the class.

IV. 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 release language is provided. The gross settlement amount is set forth along with itemized estimated deductions. Class members are informed of their expected settlement payments. The notice must be modified to state that class members may appear and object at the final fairness hearing without submitting any written objection, but is otherwise adequate.

To administer notice to the class, defendant will provide the settlement administrator with the name, last known mailing address, social security number, and dates of employment for each class member. (Stipulation, ¶ 9.1.) The settlement administrator will perform a search using the United States Postal Service National Change of Address List to update each class member’s address, and will mail the notices within 30 days of preliminary approval. (Id. at ¶¶ 10.1-10.2.) If any notice is returned as undeliverable, the administrator will promptly have data searches conducted and will re-send the notice no later than 30 days following the initial mailing unless “agreed by the parties.” (Id. at ¶ 10.2.) Opt-out requests must be postmarked no later than 45 days from initial mailing of the notice. (Id. at ¶ 11.1.)

The notice procedure is generally adequate, but it is unclear why the parties have retained the option to agree that the administrator will not attempt to re-send any returned notices. It is hereby ordered that the administrator will re-send any returned notices if an updated address can be located.

Subject to these changes, the notice and notice procedures are adequate.

V. Conclusion and Order

Plaintiff’s motion for preliminary approval is GRANTED subject to the above modifications. The final approval hearing shall take place on January 27, 2017 at 9:00 a.m. in Dept. 1.