Leonard Ignacio v. Certified Freight Logistics, Inc.
Case No: 17CV02371
Hearing Date: Tue Jun 25, 2019 9:30

Nature of Proceedings: Preliminary Approval of Class Action; Motion Preliminary Approval of Class Action Settlement

Motion for Preliminary Approval of Class Action Settlement

Attorneys:

For Plaintiff: Sang J. Park (Mathew & George – Los Angeles)

For Defendant: Megan E. Ross (Scopelitis, Garvin, et al. – Pasadena)

Rulings:

1. The settlement appears to be in the range of acceptable settlements and the Court preliminarily approves the settlement pursuant to CRC 8.769(c).

2. The Court conditionally certifies the class, as defined in the settlement agreement: all persons who work or worked for defendant in California as independent contractor owner-operator drivers during the class period—from May 31, 2013, through the date the Court preliminarily approves the settlement, presumably June 25, 2019.

3. A final hearing on the settlement shall be held on November 19, 2019, at 9:30 a.m. in Department 3 of this court, or on such other date as the Court subsequently orders.

4. The Court approves the form and content of the proposed class notice attached as Exhibit B to the Declaration of Sang J. Park (with dates to be inserted).

5. The Court confirms plaintiff Leonard Ignacio as class representative and appoints Abraham Mathew, Jacob George, and Sang J. Park of Mathew & George as class counsel.

6. The Court approves ILYM Group, Inc. as claims administrator.

7. The Court preliminarily approves the claims administration fee of $23,500 and the LWDA payment of $5,000.

8. The Court is preliminarily approving the settlement but is not preliminarily approving attorney’s fees or plaintiff’s enhancement award. Those amounts must be justified in the motion to be filed as required below.

9. No later than July 9, 2019, defendant shall provide the claims administrator with the Class Data List.

10. On July 23, 2019, the claims administrator shall mail, by U.S. First Class, to Class Members the Class Notice, which shall list the individual Settlement Class Member’s total number of workweeks and estimated share of the settlement proceeds.

11. Class members wishing to object to the settlement shall serve written objections with the claims administrator, as set forth in the class notice, postmarked no later than September 23, 2019. The claims administrator shall file all objections with the cCourt no later than October 25, 2019.

12. Class members seeking exclusion from the class shall submit a written statement requesting exclusion from the Class (containing his or her name, address, telephone number, and signature or the signature of an authorized representative) to the settlement administrator, by mail, postmarked no later than September 23, 2019.

13. On or before October 25, 2019, plaintiff shall submit his Motion for Final Approval of Class Action Settlement and Plaintiff’s Motion for Attorney’s Fees and Costs and Class Representative’s Enhancement Payment, with supporting evidence.

14. The Court reserves the right to adjourn or continue the date of the settlement hearing and other dates set forth herein without further notice to the putative class members.

Class counsel shall prepare an order in conformity with the foregoing. The form of the proposed order is acceptable, but counsel must modify it to conform with the foregoing.

Background

On May 31, 2017, plaintiff Leonard Ignacio filed a Class Action Complaint alleging, inter alia, defendant Certified Freight Logistics, Inc.’s failure to: (1) pay all wages; (2) provide required meal periods and rest breaks; (3) pay final wages; and (4) provide accurate wage statements. The complaint also included causes of action for unfair competition (B&P Code §§ 17200, et seq.), and enforcement of the Private Attorney General Act (Cal. Labor Code §§ 2698 et seq.). On May 2, 2018, and as a result of the Darrin Coffen v. Certified Freight Logistics, Inc. class action Settlement, plaintiff filed a First Amended Class Action Complaint narrowing the class to drivers who worked as independent contractor owner-operator drivers, and adding a claim alleging defendant’s failure to reimburse business expenses. Plaintiff alleges that defendant misclassified its drivers as independent contractors.

Motion

Plaintiff moves for preliminary approval of a class action settlement.

1. Settlement Terms: The proposed Settlement Class Members consist of all persons who work or worked for defendant in California as independent contractor owner-operator drivers during the class period—from May 31, 2013, through the date the Court preliminarily approves of the settlement. The parties have agreed to fully resolve the class claims for $525,000, payable in four annual installments: $125,000 on January 31, 2020, and $133,333.33 on January 31 in each of the following three years.

The class settlement amount was calculated with, and is premised on, the understanding that there are 59 class members eligible to participate in the settlement and also premised on the understanding the settlement class period comprised approximately 8,500 workweeks as of April 15, 2019. If either the number of class members or the number of workweeks increases by more than 10% before the Court grants preliminary approval, the class settlement amount shall increase in the same proportion as the greater of the two increases.

The Net Settlement Proceeds payable to class members will be $525,000, less the following: 1) $175,000 in attorney fees (one-third the total settlement amount) and up to $20,000 in litigation costs, both amounts subject to Court approval; 2) a claims administration fee of $23,500; 3) the Labor and Workforce Development Agency (LWDA) payment of $5,000; and 4) a class representative enhancement payment of $25,000 to plaintiff, subject to Court approval. Assuming all these amounts are allowed as set forth above and there is no adjustment to the settlement amount, the class members will receive the Net Settlement Proceeds of $276,500.

The Net Settlement Proceeds will be distributed to class members as follows: Each class member’s share will be proportional to the total number of workweeks he or she worked during the class period. Defendant’s records will determine class members’ number of workweeks, and class members will have an opportunity to challenge those records. The value of each workweek shall be determined by dividing the Net Settlement Proceeds by the total number of workweeks. (Based on the numbers above, each workweek would have a value of $32.53.) The claims administrator (ILYM Group, Inc.) will calculate the number of workweeks in the class period for all class members.

If the total individual settlement payments actually claimed by class members equals less than 100% of the Net Settlement Proceeds, the individual settlement payments will proportionately increase for each class member who has not opted out or excluded him/herself from the class settlement.

All individual settlement payments shall be allocated to interest and penalties and shall be reported on an IRS Form 1099.

The agreement provides that, when the first installment of $125,000 is received, the claims administrator shall pay in full the Court-approved claims administration costs and the LWDA payment and then shall pay participating class members, plaintiff, and plaintiff’s counsel, one-fourth of their pro-rata respective shares. For example, again assuming the above numbers are accurate, out of the $125,000 installment, $28,500 would go to the claims administrator and LWDA and the remaining $96,500 would be divided as follows: $53,740.85 to class members (55.69%); $47,895.55 (39.27%) to counsel; and $4,863.60 (5.04%) to plaintiff.

2. Investigation/Negotiation: Through formal and informal discovery, plaintiff’s counsel received and reviewed documents and data relevant to class-wide liability, including the entire class list; employee handbooks, procedure manuals, and operations manuals addressing defendant’s wage and hour practices, e.g., (i) timekeeping and payroll policies, (ii) meal and rest periods, (iii) wage statements; employee time and payroll records; and employee schedules. Counsel determined the average hourly rate and total number of hours worked by all class members during the class period.

Counsel also researched wage-and-hour class actions involving similar claims, the latest case law bearing on the theories of liability, and settlements in similar cases.

The parties reached the settlement at an all-day mediation with Howard Hay, Esq., a well-regarded mediator with experience in resolving wage and hour class actions. The negotiations were adversarial and non-collusive.

3. Class Certification: The parties have stipulated to class certification and have asked the Court to certify the provisional settlement class pursuant to CRC 3.769(d). A class action may be maintained “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.” CCP § 382. “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.” Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554, 575 (2007) (citations omitted).

There is “no set number required as a matter of law for the maintenance of a class action.” Hebbard v. Colgrove, 28 Cal.App.3d 1017, 1030 (1972), The class action statute “authorizes a representative suit even though it is practicable to join all the parties if those to be represented are ‘many’ and have a common or general interest in the questions presented by the complaint.” Bowles v. Superior Court, 44 Cal.2d 574, 587 (1955) (approving a class of 10 members). Here there are at least 59 class members.

The Court determines that there are numerous members of the purported class and that common questions of law and fact predominate. The Court will certify the provisional settlement class pursuant to CRC 3.769(d).

4. Fairness of the Settlement and the Plan of Allocation: Preliminary approval of a class settlement constitutes a conditional finding that the settlement appears to be in the range of acceptable settlements. “‘The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.’” Kullar v. Foot Locker Retail, Inc., 168 Cal.App.4th 116, 129 (2008). [citation omitted]. The court has broad discretion to determine whether the settlement is fair. Dunk v. Ford Motor Co., 48 Cal.App.4th 1794, 1801 (1996). Factors relevant to the court’s determination include, but are not limited to, 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, and the experience and views of counsel. Id. This list “is not exhaustive and should be tailored to each case.” Id. There is a presumption of fairness 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.” Id. at 1802. (Of course, at the preliminary stage, there are no objectors.)

The Court must independently satisfy itself “that the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” Kullar v. Foot Locker Retail, Inc., supra, 168 Cal.App.4th at 129.

The Court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s-length transaction entered without self-dealing or other potential misconduct. While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. Id. The party seeking approval of a class settlement must demonstrate “sufficient investigation and discovery to allow counsel or the court to act intelligently.” Id. at 128 (2008).

Plaintiff’s counsel thoroughly investigated the claims and experienced counsel reached a settlement in an arm’s length negotiation with an experienced mediator. Plaintiff faces numerous risks in continued litigation, including: (1) losing on liability; (2) the risk of obtaining a lesser amount than the settlement after years of litigation and a lengthy and costly class-action trial; (3) the risk a class certification order or judgment will be held in abeyance by the appellate process; and (4) risk that defendant will be financially unable to pay any class judgment.

The Court finds the settlement is fair and reasonable and in the range of acceptable settlements.

5. Class Representative Fees and Attorney Fees: The Court will approve plaintiff Leonard Ignacio as class representative and the law firm of Mathew & George as class counsel.

In the motion, plaintiffs address the class representative fees and attorney fees. They acknowledge that the Court is not being asked to approve these fees now.

“In a class action, whether the attorneys’ fees come from a common fund or are otherwise paid, the … court must exercise its inherent authority to assure that the amount and mode of payment of attorneys’ fees are fair and proper. This duty of the court exists independently of any objection.” Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1328–1329 (9th Cir. 1999), quoted in Garabedian v. Los Angeles Cellular Telephone Co., 118 Cal.App.4th 123, 127-128 (2004). “‘The primary method for establishing the amount of “reasonable” attorney fees is the lodestar method.” In re Vitamin Cases, 110 Cal.App.4th 1041, 1052 (2003). Courts also recognize the percentage of recovery method of awarding fees in class action cases. Wershba v. Apple Computer, Inc., 91 Cal.App.4th 224, 254 (2001). The preferred method appears to be a lodestar plus or minus multiplier approach. “Once the court has fixed the lodestar, it may increase or decrease that amount by applying a positive or negative ‘multiplier’ to take into account a variety of other factors, including the quality of the representation, the novelty and complexity of the issues, the results obtained, and the contingent risk presented.” Lealao v. Beneficial Cal., Inc., 82 Cal.App.4th 19, 26 (2000). The lodestar with multiplier approach “ameliorates those aspects of the lodestar approach that have come under criticism while avoiding the pitfalls of pure percentage fees.” Id. at 50.

Prior to the final hearing, counsel should address the lodestar and other relevant factors in seeking final approval of fees. Counsel should also address reasons for and present evidence supporting the amount of class representative fee.

6. Proposed Class Notice: Plaintiff asks the Court to approve the proposed notice of the class settlement and the manner of publishing that notice.

“The notice given to the class must fairly apprise the class members of the terms of the proposed compromise and of the options open to dissenting class members.” Trotsky v. Los Angeles Fed. Sav. & Loan Assn., 48 Cal.App.3d 134, 151-152 (1975).

The Court finds that the proposed class notice is adequate, with dates to be filled in based on this preliminary approval. (Also, if there is any adjustment in the settlement amount as provided in Section 2.b. of the settlement agreement that must be reflected in the class notice.)

Court’s Conclusion

The requested orders should be granted.