Case Name: Alfonso Diaz v. WeDriveU, Inc., et al.
Case No.: 17-CV-306547

This is a putative wage and hour class action by employees of defendant WeDriveU, Inc. Before the Court is plaintiff’s unopposed motion for preliminary approval of a class action settlement.

I. Factual and Procedural Background

Plaintiff alleges that defendant had a policy and practice of failing to reimburse employees for cellular phone expenses incurred during the course of performing work duties; failing to provide proper itemized wage statements; and failing to pay all wages in a timely manner. (First Amended Class Action Complaint (“FAC”), ¶¶ 20-21.) Like other employees, plaintiff was required to use his personal cell phone to communicate with defendant throughout the work day. (Id. at ¶ 24.) He was required to check in with dispatchers at the beginning of the day and report the number of passengers he transported throughout the day. (Ibid.) He also received text messages with work-related information such as changes to pick-up locations, information about company meetings, and the like. (Ibid.) However, he was not reimbursed for any work-related charges to his personal cell phone. (Ibid.) Further, plaintiff’s wage statements failed to identify the start date of the payroll period and he received his wages more than 7 days after the close of the pay period, both in violation of the Labor Code. (Id. at ¶¶ 24, 47.)

Based on these allegations, plaintiff asserts claims on behalf of the putative class for (1) violation of Labor Code section 2802 by failing to reimburse cell phone expenses; (2) violation of Labor Code section 226 by providing inadequate wage statements; (3) violations of Business & Professions Code section 17200, et seq. (the “UCL”); and (4) violation of Labor Code section 2698, et seq. (“PAGA”).

In addition, plaintiff asserted individual disability claims under the Fair Employment and Housing Act (the fifth through seventh causes of action) and individual claims under the Labor Code for meal and rest period violations and failure to pay straight time (the eighth through tenth causes of action). Plaintiff indicates that these claims “have already been resolved/dismissed.”

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

II. Legal Standard for Approving a Class Action 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.)

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.)

III. Settlement Process

According to a declaration by plaintiff’s counsel, the parties discussed the possibility of settlement before this action was filed. Defendant provided plaintiff with certain payroll data and the parties engaged in robust discussion but were not able to settle. Plaintiff subsequently filed this action, and the parties again attempted settlement discussions, this time with the assistance of a mediator. In connection with that process, defendant produced substantially more class data that enabled plaintiff to conduct a full damage analysis, and plaintiff estimated that defendant’s liability would be approximately $1.2 million. The parties agreed to the $410,000 settlement before the Court as a result of the mediation.

Counsel estimates that the settlement will result in an average payment of $585 to each of the approximately 300 class members.

IV. Provisions of the Settlement

The non-reversionary settlement includes a $60,000 payment to the California Labor and Workforce Development Agency associated with plaintiff’s PAGA claim (seventy-five percent of the $80,000 allocated to PAGA penalties). Attorney fees of up to $136,666 (one-third of the gross settlement), litigation costs estimated at $20,000, and administration costs of approximately $7,750 will also be paid from the gross settlement. The named plaintiff will seek an enhancement award of $10,000.

The remaining net settlement of approximately $175,583 will be distributed to class members pro rata based on the number of pay periods worked by each class member during the class period. Class members will not be required to submit a claim to receive their payments. Checks uncashed after 6 months will be deposited with the State of California Department of Industrial Relations, Unclaimed Wages Fund in the class member’s name.

Class members who do not opt out of the settlement will release any and all claims, etc. “arising from, or related to Defendant’s alleged violations of California Labor Code sections 204, 226 and 2802 that accrued during the Released Claims Period,” along with PAGA and UCL claims predicated on the same.

V. Fairness of the Settlement

Counsel believe that the settlement provides a fair and reasonable recovery to the class, citing the general risks and costs of litigation as well as substantial risks related to certifying the class in this case. Given these considerations and the presumption of fairness to which the settlement is entitled, the Court is inclined to agree. However, it requires further information on a few issues.

First, plaintiff’s evaluation of his claims is lacking in detail. While he references a level of risk related to certifying the class and estimates the total value of the case at $1.2 million, he provides no separate valuations or discussions of his three different theories of recovery. He also does not address whether it is equitable to distribute the settlement among class members pro rata, without regard for the potential subclasses suggested by these different theories. Further, plaintiff does not indicate whether his $1.2 million estimate represents a likely recovery, a maximum recovery, or something else. Plaintiff’s counsel must address these issues in a supplemental declaration. The declaration shall also address the reasoning supporting the allocation of $80,000 to PAGA penalties.

The Court also requires further information about the resolution of plaintiff’s individual claims, which do not appear to have been “dismissed” as indicated by plaintiff’s brief. While the Court is not called upon to approve any settlement of these claims, it does view their outcome as relevant to its evaluation of the proposed class settlement. Counsel’s supplemental declaration shall accordingly address the outcome of plaintiff’s individual claims and explain whether there was any relationship between the resolution of those claims and the proposed class settlement.

Finally, the incentive award requested by plaintiff is somewhat higher than usual in similar settlements. Prior to final approval, plaintiff shall provide a declaration detailing his participation in the case supporting the stipulated 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 1/3 of the common fund for attorney fees is generally considered reasonable, counsel should submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].)

VI. Proposed Settlement Class

Plaintiff requests that the following settlement class be provisionally certified: “All current and former employees who were employed by Defendant as drivers in the State of California at any time from February 10, 2013, through October 27, 2016 and who received a wage statement during that time period.”

A. Legal Standard for Certifying a Class for Settlement Purposes

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. at 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. at 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, the estimated 300 class members are easily identified based on defendant’s records, and the class definition is clear. 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. Plaintiff’s claims all arise from defendant’s wage and hour practices applied to the similarly-situated class members.

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.)

Like other members of the class, plaintiff was employed by defendant and was subject to its wage and hour policies at issue. The anticipated defenses are not 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, he 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 an estimated 300 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.

VI. 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).)

Plaintiff has not provided the Court with the form of notice that he proposes. The proposed notice shall also be submitted with counsel’s supplemental declaration.

Turning to the notice procedure, the parties have selected Phoenix Class Administrators as the settlement administrator. The administrator will mail the notice packet within approximately 30 days of preliminary approval, after using the National Change of Address Database to locate updated addresses for class members. Any notice packets returned as undeliverable will be re-mailed promptly to any forwarding address provided or new address located through a skip trace. Class members will have 45 days to file a written objection to or request exclusion from the settlement. Those class members who receive a re-mailed notice packet shall have an additional 15 days to respond. These notice procedures are appropriate and are approved.

VII. Conclusion and Order

Plaintiff’s counsel must file a supplemental declaration addressing the issues discussed in section V above and attaching the proposed form of notice to the class. Counsel should file these materials on or before WEDNESDAY, DECEMBER 20 to enable the Court to proceed with the currently-scheduled preliminary approval hearing.