SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

VALERIE COOK, Individually and as Representative Plaintiff on Behalf of Persons Similarly Situated,

Plaintiff,

vs.

A IS FOR APPLE, INC., a California Corporation, and DOES 1 THROUGH 100,

Defendants.
Case No. 2015-1-CV-279579

TENTATIVE RULING RE: MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on October 5, 2018, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

This is a putative class action arising out of various alleged Labor Code violations. According to the allegations of the Third Amended Complaint (“TAC”), filed on March 23, 2017, plaintiff Valerie Cook (“Plaintiff”) and the putative class members were employed by defendant A is for Apple (“Defendant”) as non-exempt paraprofessional therapists. (TAC, ¶ 7.) During the course of their employment, Plaintiff and the putative class members regularly were not compensated while “on-call,” were not compensated for travel to and from Defendant’s autistic patients, were required to purchase toys and other items needed to provide therapy to Defendant’s autistic patients for which they were not reimbursed, were not compensated for their time purchasing therapy toys and other necessary items, and were not compensated for preparing and submitting reports required by Defendant. (TAC, ¶ 10.) Plaintiff and the putative class members were required to execute a training expense reimbursement agreement that required paraprofessional therapists who did not remain employed with Defendant for at least 12 months to pay Defendant $2,400. (TAC, ¶ 16.)

The TAC sets forth the following causes of action: (1) Violation of Labor Code §§ 510 and 1194 – Failure to Properly Pay Overtime Wages; (2) Violation of Labor Code §§ 201, 202, and 203 – Failure to Pay Wages Due and “Waiting Time” Penalties; (3) Violation of Labor Code § 226 – Failure to Provide Accurate Wage Stubs; (4) Violation of Labor Code §§ 203, 226, 226.7, 52, and 1194 – Failure to Provide Meal Periods or Compensation in Lieu Thereof; (5) Labor Code § 2802 – Failure to Reimburse Expenses; (6) Violation of Business and Professions Code § 17200 – Unfair Business Practices; (7) Violation of Labor Code §§ 510 and 558 – Failure to Properly Pay Overtime Wages; (8) Violation of Labor Code §§ 1174 and 1174.5 – Failure to Maintain Records Required; (9) Violation of Labor Code § 204 – Failure to Pay Wages on a Timely Basis; (10) Violation of Labor Code §§ 226 and 226.3 – Failure to Provide Accurate Pay Stubs; (11) Violation of Labor Code § 216 – Willful Withholding of Wages; and (12) Violation of Civil Code §§ 1667 and 1668 and Labor Code § 432.5.)

The parties previously reached a settlement and, on February 16, 2018, the Court granted preliminary approval of the settlement. Following the hearing on that settlement, the parties realized the class was comprised of approximately 620 individuals rather than 200. The parties then engaged in another mediation session and ultimately reached a revised settlement. Plaintiff now moves for preliminary approval of the revised settlement.

II. LEGAL STANDARD

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.)
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, citing Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc. (9th Cir. 1982) 688 F.2d 615, 624.)

“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, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc., supra, 688 F.2d at p. 625, 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, supra, 48 Cal.App.4th at p. 1802.)

III. DISCUSSION

A. Provisions of the Settlement

The case has been settled on behalf of “all non-exempt hourly employees who are employed or have been employed by Defendant, A is for Apple, Inc., in California as non exempt Paraprofessional Therapists during the Class Period.” (Declaration of Kevin C. Bedolla in Support of Unopposed Motion for Preliminary Approval of Class Action Settlement and Provisional Certification of Class (“Bedolla Decl.”), Ex. 2 (Joint Stipulation for Class Action Settlement), ¶ I(2)(d).) The class period is from April 17, 2011, to August 14, 2017. (Id. at ¶ I(2)(f).) There are approximately 620 class members.

Pursuant to the settlement, Defendant will pay a total of $780,000. (Bedolla Decl., ¶ 22.) The settlement amount includes a service award of $10,000 for the class representative, attorneys’ fees of $260,000 (one-third of the total settlement fund), up to $20,000 for costs, and a PAGA payment of $12,000 ($9,000 of which will be paid to the LWDA). (Id. at ¶¶ 23-25.) The parties have allocated $25,000 for the cost of administering the settlement. (Id. at ¶ 33.)

Class members will be paid based on their number of “Qualifying Work Days.” (Bedolla Decl., ¶ 26.) Additionally, to account for the fact that certain alleged violations either ended or were significantly mitigated during the class period, the class period will be split into “tiers” ranging from 0.1X to 1.0X. (Id. at ¶ 27.) For each individual settlement payment, 33% will represent wages, 33.5% will represent interest, and 33.5% will represent penalties. (Id. at ¶ 30.) Money remaining after all distributions are made will be paid as a cy pres payment to the Katharine & George Alexander Community Law Center. (Id. at ¶ 29.)

B. Fairness of the Settlement

Plaintiff asserts the settlement is the product of arm’s-length negotiations assisted by an experienced mediator. Plaintiff contends she engaged in substantial discovery, including written discovery and document requests, a deposition of a person most knowledgeable, interviews of more than 20 putative class members, and numerous “meet and confer” exchanges with Defendant.
The potential recovery in this case if Plaintiff were to prevail on all claims is estimated to be approximately $8,000,000. Plaintiff contends, however, that there is a chance of no recovery for certain claims if Defendant successfully asserts a “good faith” defense. Further, Defendant is a relatively small company owned by one person and Plaintiff asserts Defendant does not have millions of dollars available to spend on a settlement. If the net settlement were divided equally among class members, they would each receive approximately $735.

Overall, the Court finds the settlement is fair. In connection with the prior settlement, however, the Court expressed some concern over the requirement for a claims form despite the fact that the amounts of the payments to class members can be determined from Defendant’s records. At the hearing on the motion for approval of the prior version of the settlement, the parties indicated the claims form was needed to verify addresses. Nevertheless, the parties agreed to modify the process based on a schedule of two payments to each class member. The revised settlement only provides for a single payment to each class member. The parties are ordered to appear at the hearing to discuss whether a claims form is truly necessary.

Plaintiff will seek a class representative incentive award of $10,000.

The 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. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria 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. These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.

(Cellphone Termination Fee Cases (2010) 186 Cal. App. 4th 1380, 1394-1395, quotation marks, brackets, ellipses, and citations omitted.)

Prior to final approval of the settlement, Plaintiff must submit a declaration specifically detailing her participation in this action.

The Court also has an independent right and responsibility to review the requested attorneys’ fees and only award so much as it determines reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) Plaintiff’s counsel will seek attorneys’ fees of $260,000 (one-third of the total settlement fund) plus up to $20,000 for costs. While one-third of the common fund for attorneys’ fees is generally considered reasonable, Plaintiff’s counsel should submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees.

C. Conditional Certification of Class

Plaintiff requests the putative class be conditionally certified for purposes of the settlement. 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: (1) an ascertainable class; and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.) 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. (Id. at p. 326.) “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 (1976) 18 Cal.3d 381, 385.)

As explained by the California Supreme Court,

The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. 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.

(Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326, internal quotation marks, ellipses, and citations omitted.)

Class members can be ascertained from Defendant’s records. There are common issues in this case regarding Defendant’s uniform policies and whether they violated the Labor Code. No issue has been raised regarding the typicality or adequacy of Plaintiff as class representative. In sum, the Court finds that the proposed class should be conditionally certified.

D. Class Notice

The content of a class notice is subject to court approval. “If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court.” (Cal. Rules of Court, rule 3.769(f).)

The notice generally complies with the requirements for class notice. (See Bedolla Decl., Ex. 3.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. The notice is approved.

E. Conclusion

The motion for preliminary approval of class action settlement is GRANTED. However, the parties should appear at the hearing on this motion prepared to discuss whether a claims form is necessary. The final approval hearing is set for January 25, 2019, at 9:00 a.m. in Department 5.

The Court will prepare the final order if this tentative ruling is not contested.