Case Name: Teresa Perez v. Ferma Greenbox, Inc., et al.
Case No.: 18-CV-328847

This is a putative class action on behalf of employees of defendant Ferma Greenbox, Inc., alleging wage statement violations. The parties have reached a settlement, which the Court preliminarily approved in an order filed on December 18, 2018. The factual and procedural background of the action and the Court’s analysis of the settlement and settlement class are set forth in that order.

Before the Court is plaintiff’s motion for final approval of the settlement and for approval of her attorney fees, costs, and service award. Plaintiff’s motion is unopposed.

I. 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.)

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.)

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. 75 percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (“LWDA”), leaving the remaining 25 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).

II. Terms and Administration of the Settlement

The non-reversionary $137,500 settlement includes a $3,750 payment to the California Labor and Workforce Development Agency associated with plaintiff’s PAGA claim (seventy-five percent of the $5,000 allocated to PAGA penalties). Attorney fees of up to $45,833 (one-third of the gross settlement), litigation costs not to exceed $10,000, and administration costs not to exceed $4,000 will also be paid from the gross settlement. The named plaintiff will seek an enhancement award of $7,500.

The net settlement fund will be divided among participating class members pro rata based on their wage statements issued during the class period. Class members will not be required to submit a claim to receive their payments. Settlement awards will be treated as penalties for tax purposes. Funds associated with checks uncashed after 180 days will be issued to the California Department of Industrial Relations Unclaimed Wages Fund in the class member’s name. Based on the estimated 29 individuals in the putative class at preliminary approval, the average payment to class members was projected to be $2,290.24.

Class members who do not opt out of the settlement will release “all claims and penalties, including penalties under [PAGA], costs and attorneys’ fees related thereto, that could have been brought under the facts and allegations made in the operative Complaint for violation of Labor Code section 226, that accrued … during the Class Period.”

The notice process has now been completed. There were no objections or requests for exclusion from the class. None of the 38 notice packets were returned as undeliverable. The administrator estimates that the average class member payment will be $1,747.82, with a maximum payment of $2,700.62 and a minimum payment of $45.77.

At preliminary approval, the Court found that the proposed settlement provided a fair and reasonable compromise to plaintiff’s claims based on a class size of 29 individuals. It appears that several additional class members have been discovered since then, resulting in an increase to the class size that is significant in light of the small group at issue. The average class member payment has decreased by 25 percent in light of this change; however, plaintiff does not address or even acknowledge this issue in her motion. Plaintiff must submit a supplemental declaration addressing this issue before the Court will grant final approval to the settlement. Specifically, plaintiff shall address why no additional consideration was provided in connection with the settlement given the discovery of a relatively large number of additional class members.

III. Attorney Fees, Costs, and Incentive Award

Plaintiff seeks a fee award of $45,833, or 1/3 of the gross settlement, which is not an uncommon contingency fee allocation. This award is facially reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney fees from the fund itself. Plaintiff also provides a lodestar figure of $43,140, based on 78 hours spent on the case by attorneys with billing rates of $600 to $700 per hour. The fee request results in a reasonable multiplier of 1.07. As a cross-check, the lodestar supports the 1/3 percentage fee requested, particularly given the lack of objections to the attorney fee request. (See Laffitte v. Robert Half Intern. Inc. (Cal. 2016) 1 Cal.5th 480, 488, 503-504 [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13].) However, the Court will evaluate the fee request in light of plaintiff’s supplemental declaration.

Plaintiff also requests $1,892.25 in costs, below the estimate provided at preliminary approval. The costs are reasonable based on the summaries provided and are approved. The $4,000 in administrative costs are also approved.

Finally, plaintiff requests a service award of $7,500. To support her request, she submits a declaration in which she describes he efforts on the case. The Court finds that the class representative is entitled to an enhancement award and the amount requested is reasonable.

IV. Conclusion and Order

Prior to final approval, plaintiff shall submit a supplemental declaration explaining why the class size increased relative to the estimate provided at preliminary approval and addressing why no additional consideration was provided for the settlement in light of the significant impact to class members’ payments that resulted. The Court will evaluate the settlement’s fairness for purposes of final a