Case Name: Asya Pereltsvaig v. The Board of Trustees of the Leland Stanford Junior University, et al.
Case No.: 17-CV-311521

This is a putative wage and hour class action by teachers in the Continuing Studies program offered by Stanford University. The parties have reached a settlement, which the Court preliminarily approved on August 20, 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 are plaintiff’s motions for final approval of the settlement and for approval of her attorney fees, costs, and service award. Plaintiff’s motions are 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” the Private Attorneys General Act (“PAGA”). Seventy-five percent of any penalties recovered under PAGA go to the Labor and Workforce Development Agency (“LWDA”), leaving the remaining twenty-five 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 a 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 Court preliminarily approved an $850,000 settlement in this action based on an estimated 364 class members. Defendant subsequently located an additional 34 class members, triggering an escalator clause in the parties’ agreement that increased the gross settlement amount to $886,890. As indicated at preliminary approval, the non-reversionary settlement includes a $12,750 payment to the California Labor and Workforce Development Agency associated with plaintiff’s PAGA claim (seventy-five percent of the $17,000 allocated to PAGA penalties). Attorney fees of up to $295,630 (one-third of the increased gross settlement), litigation costs not to exceed $20,000, and administration costs not to exceed $10,500 will also be paid from the gross settlement. The named plaintiff will seek an enhancement award of $7,500.

The $4,250 in PAGA penalties to be retained by the class will be distributed on a per capita basis. The remaining net settlement will be distributed to class members pro rata based on the pay periods when their monthly salary was less than two times the minimum wage for full time employment. Class members will not be required to submit a claim to receive their payments, and plaintiff estimates that the average net recovery will be $1,417. Twenty-five percent of each individual payment will be deemed wages for tax purposes, with the remainder treated as interest and penalties. Stanford will pay the employer’s share of payroll taxes. Funds associated with checks uncashed after 90 days will be directed to a cy prés fund to benefit the Law Foundation of Silicon Valley.

Class members who do not opt out of the settlement will release claims, including unknown claims, “for acts that are either or both (1) alleged in the Action or (2) arise out of the facts, matters, transactions or occurrences set forth in the operative Complaint and could have been alleged as separate claims, causes of action, or other theories of relief.” The release includes, but is not limited to, claims for failure to issue accurate itemized wage statements, unpaid wages, waiting time penalties, meal and rest break violations, restitution for unpaid wages under the UCL, and PAGA penalties. The settlement further provides that plaintiff will withdraw her appeal in a previously settled class action against Stanford, Lagos v. The Board of Trustees of the Leland Stanford Junior University (Super. Ct. Santa Clara County, No. 2015-1-CV-284784). The final approval of the Lagos settlement over plaintiff’s objection precluded her from asserting a claim for the violation of Labor Code section 226, subdivision (a)(8) in this case.

The notice process has now been completed. There were no objections or requests for exclusion from the class. Of 398 notice packets, 7 were re-mailed to updated addresses and 13 were ultimately undeliverable. 12 class members disputed their work weeks, but none of these individuals provided evidence supporting their disputes. The disputes were rejected after the claims administrator concluded that all 12 resulted from class members’ confusing their qualifying weeks worked with their total weeks worked during the class period. The administrator estimates that the average class member payment will be $1,378.39, with a maximum payment of $9,448.90.

At preliminary approval, the Court found that the proposed settlement provides a fair and reasonable compromise to plaintiff’s claims. It finds no reason to deviate from this finding now, especially considering that there are no objections. The Court consequently finds that the settlement is fair and reasonable for purposes of final approval.

III. Attorney Fees, Costs, and Incentive Award

Plaintiff seeks a fee award of $295,630, or 1/3 of the increased 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 $339,433.50, based on 582.7 hours spent on the case by attorneys with billing rates of $495 to $825 per hour. The fee request results in a negative multiplier. 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].) Due to the increased gross settlement, the award is above the $283,333 that the class was notified would be requested; however, the notice reflected that the award would represent up to 1/3 of the total settlement. The class was thus adequately notified of the fee award.

Plaintiff also requests $11,909.83 in costs, below the $20,000 estimate provided at preliminary approval. The costs are reasonable based on the summaries provided and are approved. The $10,500 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 her 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

Plaintiff’s motion for final approval is GRANTED.

The following class is certified for settlement purposes:

All individuals who are or have been employed as teachers in the Continuing Studies program in California during the Class Period, and who earned less than the monthly salary equivalent to two times the state minimum wage for full time employment during one or more pay periods in the Class Period, excepting those persons who affirmatively opt out.

The Class Period is defined as the period beginning on June 8, 2013 and ending on February 28, 2018.

The Court sets a compliance hearing for June 28, 2019 at 10:00 A.M. in Department 1. At least ten court days before the hearing, class counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein, the number and value of any uncashed checks, amounts remitted to the cy prés recipient, the status of any unresolved issues, and any other matters appropriate to bring to the Court’s attention. Counsel shall also submit an amended judgment as described in Code of Civil Procedure section 384, subdivision (b). Counsel may appear at the compliance hearing telephonically.

The Court will prepare the order.