Case Name: Shannon Sanchez v. Examination Management Services, Inc., et al.
Case No.: 17-CV-309248

This is a putative wage and hour class action on behalf of employees of defendant Examination Management Services, Inc. The parties have reached a settlement, which the Court preliminarily approved in an order filed on April 2, 2019. 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 is plaintiff’s motion for final approval of the settlement and for approval of her attorney fees, costs, and service award. Plaintiff’s motion is 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.)

In general, the most important factor is the strength of plaintiffs’ case on the merits, balanced against the amount offered in settlement. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.) Still, 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., supra, 168 Cal.App.4th at p. 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” 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 at 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 Settlement

The non-reversionary gross settlement amount is $400,000. Attorney fees of up to $133,000 (one-third of the gross settlement), litigation costs not to exceed $10,000, and administration costs of up to $10,000 will be paid from the gross settlement. $20,000 will be allocated to PAGA penalties, 75 percent of which will be paid to the LWDA. The named plaintiff will also seek an enhancement award of $10,000.

From the net settlement of approximately $217,000, participating class members will receive an average payment of $700, with payments calculated based on class members’ qualifying wage statements. Class members will not be required to submit a claim to receive their payments. Settlement awards will be allocated 1/3 to wages and 2/3 to interest and penalties, and both the employee’s and the employer’s share of payroll taxes will be paid from the gross settlement. Funds associated with checks uncashed after 180 days will be tendered to the California Unclaimed Wages Fund in the name of the class member.

Class members who do not opt out of the settlement will release all claims “encompassed in the Complaint or that were at issue in the Action, including any claims relating to or arising out of the alleged failure of Defendant to properly pay wages to Plaintiff and Class Members in compliance with California Law during the Class Period,” and also including several more specific wage and hour claims.

The notice process has now been completed. There were no objections and only one request for exclusion from the class. Of 304 notice packets, 13 were re-mailed to updated addresses and 4 were ultimately undeliverable. The administrator estimates that the average class member payment will be $742.24, with a maximum payment of $2,501.19 and a minimum payment of $41.69.

At preliminary approval, the Court found that the proposed settlement provides a fair and reasonable compromise to plaintiff’s claims and a genuine, meaningful, and reasonable allocation to PAGA penalties. It finds no reason to deviate from these findings 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 $133,000, or 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. Plaintiff also provides a lodestar figure of $107,060, based on 171.20 hours spent on the case by counsel at billing rates of $600 and $700 per hour. The fee request results in a reasonable multiplier of 1.25. 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].)

Plaintiff also requests $7,101.42 in costs, below the estimate provided at preliminary approval. The costs are reasonable based on the summary provided and are approved. The $10,000 in administrative costs are also approved.

Finally, plaintiff requests a service award of $10,000. 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. Order and Judgment

In accordance with the above, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:

Plaintiff’s motion for final approval is GRANTED.

The following class is certified for settlement purposes:

EMSI’s current and former employees, regardless of specific title, who completed mobile drug screens, breath alcohol testing, clinical trial or insurance exams for EMSI’s clients and were paid on a per visit/per exam/per service basis in California any time from March 12, 2016 through September 15, 2018.

Excluded from the class is the one individual who submitted a timely request for exclusion.

Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the members of the settlement class shall take from their complaint only the relief set forth in the settlement agreement and this order and judgment. Pursuant to Rule 3.769(h) of the California Rules of Court, the Court retains jurisdiction over the parties to enforce the terms of the settlement agreement and the final order and judgment.

The Court sets a compliance hearing for April 3, 2020 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 Unclaimed Wages Fund, 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.