Case Name: Pablo Rodriguez Diaz, et al. v. Heavenly Construction, Inc., et al.
Case No.: 16-CV-295143

This is a putative class action by employees of defendant Heavenly Construction, Inc. dba Heavenly Greens. Plaintiffs allege that they were paid on a “piece rate” not based on actual hours worked and suffered other wage and hour violations while employed by defendant to install turf and/or drive trucks. The parties have reached a settlement, which the Court preliminarily approved on April 24, 2017. Plaintiffs now move for final approval of the settlement and approval of their attorney fees, costs, and enhancement awards. Their motion is unopposed.

Plaintiffs’ request for judicial notice of their memorandum of points and authorities in support of their motion for preliminary approval is GRANTED. (Evid. Code, 452, § subd. (d).)

I. 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.)

II. Terms and Administration of the Settlement

The terms of the settlement are as follow. The $750,000 settlement includes a $3,750 payment to the California Labor and Workforce Development Agency associated with the PAGA claims. (Cowan Decl., Ex. A, Joint Stipulation for Class Action Settlement and Release, ¶¶ 42-43.) Attorney fees of $249,750, settlement administration expenses of up to $20,000, and litigation costs of up to $25,000 will also be deducted from the gross settlement amount, pending approval by the Court. (Id. at ¶¶ 36, 40.) The named plaintiffs will petition the Court for incentive awards of $5,000 each. (Id. at ¶ 37.)

The net settlement fund will be distributed among the class members pro rata based on their weeks worked during the class period, on a claims-made basis. (Stipulation, ¶¶ 46, 63.) Each class member’s notice provided the class member’s estimated settlement amount and weeks worked as reflected by defendant’s records, with directions regarding how class members could dispute this information. (Id. at ¶¶ 71-73.) Funds associated with uncashed settlement checks will revert to the Katharine & George Alexander Community Law Center at the Santa Clara University School of Law. (Id. at ¶ 51.)

Defendant will fund the settlement with an initial payment of $400,000, due ten calendar days after final approval, and a second payment of $350,000, due no later than February 15, 2018. (Stipulation, ¶¶ 47-48.) Corresponding to the two payments, an initial distribution to class members will be made 20 days after final approval and a second distribution will be made 30 days after the claims administrator receives the second payment from defendant. (Id. at ¶ 49.) Attorney fees and costs will also be made in two payments. (Id. at ¶¶ 40-41.)

In exchange for the settlement payment, the class will release all claims alleged in this action in addition to claims “of any nature and description whatsoever, known or unknown, in law or in equity, asserted by Plaintiffs on behalf of any Settlement Class Member relating to any compensation allegedly due or earned as a result of their employment with Defendant Heavenly,” including specified wage and hour claims. (Stipulation, ¶ 18.)

Class members who do not submit a claim form or opt out of the class will release their claims, although they will receive no settlement payment. (Stipulation, ¶ 79.) The Court was persuaded by counsel’s argument at preliminary approval that the claims process is intended to ensure that the greatest possible portion of the settlement is distributed to class members rather than through the cy pres process, given that many class members in this action are former rather than current employees and may be difficult to locate.

The notice process has now been completed. There were no objections to the settlement and one request for exclusion from the class. Of 154 notice packets mailed, 13 were re-mailed to updated addresses located through skip tracing and 6 were ultimately undeliverable. The administrator received 67 timely claim forms and one late form, which the parties have agreed to accept. The 68 class members who will receive a settlement payment account for 80.53% of the total class work weeks. The claims administrator estimates that the average class member payment will be $6,153.33, with a minimum payment of $108.76 and a maximum payment of $16,028.39.

At preliminary approval, the Court found that the proposed settlement provides a fair and reasonable compromise to plaintiffs’ 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 Awards

Plaintiffs seek a fee award of $247,500, or approximately 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. Plaintiffs also report that 561.45 hours were expended on the case by attorneys with billing rates of $450 per hour, yielding a lodestar figure of $252,652.50. The fee request is thus slightly below the lodestar figure in this case. As a cross-check, the lodestar supports the 1/3 percentage fee requested, particularly given that there are no 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].)

Plaintiffs also request $21,408.31 in litigation costs, somewhat below the $25,000 estimate that was provided at preliminary approval. This figure, which includes deposition costs and mediation and paralegal fees, is reasonable based on the summary provided by plaintiffs.

Plaintiffs request $20,000 in administrative costs, as estimated at preliminary approval. The Court observed at preliminary approval that this request seems high. Plaintiffs have not provided the Court with an estimate of the administrative costs incurred to date or any detail regarding the $20,000 requested. They are accordingly directed to address this issue in more detail at the hearing on this matter.

Finally, the three named plaintiffs request service awards of $5,000 each, for a total of $15,000. To support these requests, they submit declarations describing their efforts on the case and indicating that they took unpaid time off work to attend meetings and depositions. The Court finds that the named plaintiffs are entitled to representative awards, and the amounts requested are reasonable.

IV. Conclusion and Order

Plaintiffs’ motion for final approval is tentatively GRANTED, subject to plaintiffs’ presentation regarding the administrative costs requested as discussed above.

The following class will be certified for settlement purposes:

All non-exempt hourly employees who are employed or have been employed by Heavenly Construction, Inc. in California as artificial turf installers, laborers, and/or drivers from May 3, 2012 to March 1, 2017.

Alejandro Flores is excluded from the class pursuant to his request.

The Court will prepare the order.