Anderson v. Safe Streets USA LLC

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 Mark Anderson, No. 2:18-cv-00323-KJM-JDP 12 Plaintiff, ORDER 13 v. 14 | Safe Streets USA, LLC, 1S Defendant. 16 17 Plaintiff Mark Anderson moves for final approval of the parties’ settlement agreement and 18 | for attorneys’ fees, litigation costs, settlement administration costs and enhancement awards to 19 | plaintiff. The motion is unopposed. As explained below, the court grants the motion to the 20 | extent set forth here. 21 | I. BACKGROUND 22 The court incorporates by reference the background of this case from its previous order. 23 | See generally Order (Dec. 20, 2022), ECF No. 65. Anderson filed this action against Safe Streets, 24 | alleging violations of the California Labor Code on behalf of himself and similarly situated 25 | employees. Compl., ECF No. 1. Safe Streets subsequently filed a motion to compel arbitration, 26 | see Mot. Compel Arb., ECF No. 6, which the court granted, see Order (Aug. 29, 2018), ECF 27 | No. 19, staying all representative claims, including those under the California Private Attorneys 28 | General Act (““PAGA”). The arbitrator found Safe Streets failed to retmburse Anderson for work-

1 related expenses, did not pay for all non-productive time and did not provide accurate wage 2 statements. See Settlement Mem. at 9–10, ECF No. 93-1. 3 The court denied Anderson’s previous motion for final approval of settlement for failure 4 to allocate 75 percent of civil penalties to the Labor and Workforce Development Agency, failure 5 to consider the amounts already awarded in arbitration and inclusion of impermissible expert fees 6 in the litigation cost award. See generally Order (Dec. 20, 2022). Anderson renewed his motion 7 for final approval of the settlement agreement. See Settlement Mot., ECF No. 93. The court 8 ordered the parties to submit a status report to determine whether recent amendments to PAGA 9 applied to this proposed settlement. See Min. Order, ECF No. 96. The parties submitted their 10 report, with which the court agrees, saying that the alterations to PAGA only apply to actions 11 filed on or after June 19, 2024. See Joint Status Rep., ECF No. 97; Cal. Lab. Code § 2699(v)(1). 12 II. LEGAL STANDARD 13 “An employee bringing a PAGA action does so as the proxy or agent of the state’s labor 14 law enforcement agencies, . . . who are the real parties in interest.” Sakkab v. Luxottica Retail N. 15 Am. Inc., 803 F.3d 425, 435 (9th Cir. 2015) (citations and quotations omitted). Because a 16 settlement of PAGA claims compromises a claim that could have otherwise been brought by the 17 state, PAGA provides that “court[s] shall review and approve any settlement of any civil action 18 filed pursuant to [PAGA].” Cal. Lab. Code § 2699(s)(2). In a PAGA suit, “[i]f the representative 19 plaintiff prevails, the aggrieved employees are statutorily entitled to 25% of the civil penalties 20 recovered while the LWDA [Labor & Workforce Development Agency] is entitled to 75%.” 21 Urbino v. Orkin Servs. of Cal. Inc., 726 F.3d 1118, 1121 (9th Cir. 2013) (citing Cal. Lab. Code 22 § 2699(i)). PAGA claims “need not satisfy [Federal] Rule [of Civil Procedure] 23 class 23 certification requirements.” Hamilton v. Wal-Mart Stores, Inc., 39 F.4th 575, 583 (9th Cir. 2022). 24 However, in considering a motion for final approval of a PAGA settlement, courts within this 25 circuit utilize a standard similar to Rule 23, evaluating whether the PAGA settlement is 26 “fundamentally fair, reasonable, and adequate.” See Haralson v. U.S. Aviation Servs. Corp., 27 383 F. Supp. 3d 959, 972 (N.D. Cal. 2019) (collecting cases). 1 The court, as it has done in the past, refers to the factors in Hanlon v. Chrysler Corp., 2 150 F.3d 1011, 1026 (9th Cir. 1998), overruled on other grounds, DZ Rsrv. v. Meta Platforms, 3 Inc., 96 F.4th 1223 (9th Cir. 2024), to evaluate the PAGA settlement. See, e.g., Pena v. Taylor 4 Farms Pac., Inc., No. 13-01282, 2021 WL 916257, at *7–8 (E.D. Cal. Mar. 10, 2021); Decker v. 5 AllStates Consulting Servs., LLC, No. 18-03216, 2020 WL 7769842, at *2 (E.D. Cal. Dec. 30, 6 2020). The Hanlon factors, designed for use in evaluating class action settlements, include 7 (1) the strength of a plaintiff’s case; (2) the risk, expense, complexity and likely duration of 8 further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the 9 amount offered in settlement; (5) the extent of discovery completed; (6) the expertise and views 10 of counsel; (7) the presence of government participation; and (8) the reaction of class members to 11 the proposed settlement. See Hanlon, 150 F.3d at 1026. 12 III. ANALYSIS 13 A. Gross Settlement Amount (GSA) 14 The GSA ($1,270,000) is 65 percent of the potential maximum recoverable penalties 15 ($1,945,550). See Settlement Mem. at 17–18; Workman Decl. ¶ 20, ECF No. 93-3. Courts in the 16 Eastern District and otherwise have approved settlement awards in PAGA cases for much smaller 17 percentages of the potential maximum value. See, e.g., Cooks v. TNG GP, No. 16-01160, 2021 18 WL 5139613, at *9 (E.D. Cal. Nov. 4, 2021) (approving amount “roughly 0.158 percent of the 19 maximum recoverable PAGA penalties”). Furthermore, “Anderson and his Counsel view this 20 [as] an excellent Settlement.” Settlement Mem. at 18. Given the risk of further litigation, the 21 high value of the PAGA penalty compared to the total settlement amount, the high value of the 22 settlement amount in relation to the maximum recoverable penalties, the presentation to the 23 government and the lack of negative concerns from aggrieved employees to the proposed 24 settlement, the Hanlon factors weigh in favor of finding the settlement to be reasonable. The 25 court approves the gross settlement award. 26 B. Attorneys’ Fees 27 Anderson requests attorneys’ fees of $419,100. Att’y Fees Mem., ECF No. 93-2. “The 28 court may award reasonable attorney’s fees . . . that are authorized by law or by the parties’ 1 agreement.” Fed. R. Civ. P. 23(h). The court must ensure the agreed-upon award is reasonable. 2 In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011). The Ninth Circuit 3 has set the benchmark for attorney’s fees at 25 percent of the gross settlement amount, see In re 4 Easysaver Rewards Litig., 906 F.3d 747, 754 (9th Cir. 2018), though “courts may adjust this 5 figure upwards or downwards if the record shows special circumstances justifying a departure.” 6 Ontiveros v. Zamora, 303 F.R.D. 356, 372 (E.D. Cal. 2014) (internal quotation marks omitted) 7 (citing In re Bluetooth, 654 F.3d at 942). The court may conduct a lodestar cross-check in 8 evaluating the reasonableness of a percentage recovery of a common fund. Vizcaino v. Microsoft 9 Corp., 290 F.3d 1043, 1050 (9th Cir. 2002). Here, the proposed award for attorneys’ fees equals 10 33 percent of the GSA. See Settlement Mem. at 8. California courts have found attorneys’ fees 11 awards upwards of 33 percent to be reasonable in wage and hour class actions, and federal courts 12 including this one have not rejected out of hand the higher percentage in determining reasonable 13 fee awards. See, e.g., Greer v. Dick’s Sporting Goods, Inc., No. 15-1063, 2019 WL 4034478, at 14 *7 (E.D. Cal. Aug. 27, 2019) (“California courts more often deem awards of up to 33 percent 15 reasonable and less often expressly refer to a 25 percent benchmark.”). Here, as it typically does, 16 the court conducts a lodestar cross-check to evaluate the award request. 17 A lodestar cross-check supports the fees here. In conducting such a cross-check, a court 18 “must start by determining how many hours were reasonably expended on the litigation, and then 19 multiply those hours by the prevailing local rate for an attorney of the skill required to perform 20 the litigation.” Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir. 2008) (citation 21 omitted). “This amount may be increased or decreased by a multiplier that reflects any factors 22 not subsumed within the calculation, such as ‘the quality of representation, the benefit obtained 23 for the class, the complexity and novelty of the issues presented, and the risk of nonpayment.’” 24 Wilson v. Metals USA, Inc., No. 12-568, 2021 WL 516585, at *6 (E.D. Cal. Feb. 11, 2021) 25 (quoting In re Bluetooth, 654 F.3d at 941–42 (citation omitted)). “Foremost among these 26 considerations, however, is the benefit obtained for the class.” In re Bluetooth, 654 F.3d at 942. 1 Here, Anderson’s counsel spent a total of 1208.20 hours litigating this case. Workman 2 Decl. ¶ 36 (billable hours invoice for all work completed in case). The fees requested for the 3 firm’s attorneys, law clerks and paralegals are summarized below: 4  Robin G. Workman (30 years’ experience): 724.73 hours at a rate of $750 per hour, with a 5 pre-multiplier lodestar of $543,547.50; 6  Nancy Coan (30+ years’ experience): 51.70 hours at a rate of $650 per hour, with a pre- 7 multiplier lodestar of $33,605.00; 8  Rachel E. Davey (3 years’ experience): 84.70 hours at a rate of $375 per hour, with a pre- 9 multiplier lodestar of $31,762.50; 10  Suzanne Klotz (30+ years’ experience): 19 hours at a rate of $650 per hour, with a pre- 11 multiplier lodestar of $12,350.00; 12  Kyle W. Thompson (law clerk): 55.65 hours at a rate of $200 per hour, with a pre- 13 multiplier lodestar of $11,130.00; 14  Cheryl Porter (paralegal): 180.27 hours at a rate of $200 per hour, with a pre-multiplier 15 lodestar of $36,054.00; 16  Jonda Miller (paralegal): 78.70 hours at a rate of $200 per hour, with a pre-multiplier 17 lodestar of $15,740.00; and 18  Amie Conklin-Rauch (paralegal): 13.45 hours at a rate of $200 per hour, with a pre- 19 multiplier lodestar of $2,690.00. 20 Id. 21 Having reviewed the billable hours, the court finds the number of hours was reasonable in 22 this case, particularly in light of its six-year duration with extensive motions practice and 23 settlement conferences. See Att’y Fees Mem. at 16 (noting total hours do not include time 24 “assisting the Settlement Administrator with any administration issues and answering Aggrieved 25 Employees’ questions”). In the context of their overall billing and distribution of work, the 26 attorneys’ rates based on their respective years of experience align favorably with the rates 27 generally deemed acceptable by courts in this district, which is the relevant venue for considering 28 acceptable rates. See Smothers v. NorthStar Alarm Services LLC, No. 17-548, 2020 WL 1 1532058, at *9 (E.D. Cal. Mar. 31, 2020) (applying $695 per hour in lodestar calculation for 2 attorney with 30 years’ experience). Multiplying counsel’s hours by their hourly rates yields a 3 lodestar amount of $686,879. Because the arbitrator awarded counsel $78,243.60 in attorneys’ 4 fees, the current lodestar amount is the remaining difference, or $608,635.40. See Att’y Fees 5 Mem. at 16. When compared to the $419,500 fee counsel requests, the lodestar multiplier is 0.61, 6 reflecting the lower amount of fees requested. See Settlement Mem. at 8. This multiplier is 7 reasonable. Cf. Vizcaino, 290 F.3d at 1050–51, 1051 n.6 (noting multiples as high as four “are 8 frequently awarded in common fund cases when the lodestar method is applied” (marks and 9 citation omitted)). 10 C. Litigation and Administrative Costs 11 Anderson seeks $51,183.22 in litigation costs and $9,000 in settlement administration 12 costs. See Att’y Fees Mem. at 15.1 The court must determine whether the proposed award of 13 costs and expenses is appropriate. Fed. R. Civ. P. 23(h). “[I]n evaluating the reasonableness of 14 costs, the judge has to step in and play surrogate client.” Ross v. Bar None Enters., Inc., No. 15 13-234, 2015 WL 1046117, at *11 (E.D. Cal. Mar. 10, 2015) (internal quotation marks, citation 16 omitted). “In keeping with this role, the court must examine prevailing rates and practices in the 17 legal marketplace to assess the reasonableness of the costs sought.” Id. (internal marks and 18 citation omitted). Counsel seeks reimbursement for court and filing costs, photocopying charges, 19 deposition and hearing transcript fees, expert fees, delivery fees, mediation fees, travel expenses 20 incurred to attend depositions and arbitration, claims administrator fees and online research fees. 21 See Settlement Mem. at 19. Courts frequently approve reimbursement for such costs. See, e.g., 22 Barbosa v. Cargill Meat Sols. Corp., 297 F.R.D. 431, 454 (E.D. Cal. 2013) (“[C]osts incurred, 23 which include travel, mediation fees, photocopying, private investigator to locate missing Class 24 Members, and delivery and mail charges . . . are routinely reimbursed.” (citation omitted)). 1 The court notes $51,183.22 is the amount Anderson repeatedly mentions and seeks in his motion; however, in a footnote, counsel states for the first time they are capping costs they seek at $25,000. See Att’y Fees Mem. at 14 & n.12 (“Class Counsel seeks recovery of $25,000 pursuant to the terms of the Settlement Agreement.”). The court assumes $51,183.22 is the correct number since it is what counsel references repeatedly in their memorandum. 1 However, although the Workman declaration suggests the total cost reimbursement sought 2 here excludes costs the arbitrator already awarded, see Workman Decl. ¶¶ 34, 36; Att’y Fees 3 Mem. at 7 & n.1, Anderson still seeks reimbursement for expert fees for its retained expert, 4 compare Prior Att’y Fees Mem. at 26, ECF No. 56-2, with Settlement Mem. at 19; Workman 5 Decl. ¶ 46, despite the court’s explanation in its prior order the Federal Arbitration Act only 6 allows reimbursement for court-appointed experts, see Order (Dec. 20, 2022) at 16. The court 7 thus deducts the expert fees counsel has included, $12,478.75, from the total litigation cost 8 Anderson seeks of $51,183.22, resulting in $38,704.47. 9 Additionally, the court in its prior order noted Anderson cannot be reimbursed for travel 10 expenses associated with the “arbitration,” for which he was already reimbursed by the arbitrator, 11 see id. at 15–16, but Anderson has again included these travel expenses in his instant request, see 12 Att’y Fees Mem. at 19; Workman Decl. ¶ 46 (identifying “travel expenses incurred to attend 13 depositions and arbitration of $6,134.70”). The court will reduce travel expenses to account for 14 those travel expenses awarded by the arbitrator. Because the arbitrator awarded costs of 15 $17,189.36 and the firm’s total costs for the arbitration and litigation is $68,372.58, the court uses 16 the relative ratio of the total costs, or 25 percent, to determine the required reduction in travel 17 expenses. The travel expenses, $6,134.70, reduced by 25 percent, amount to $4,601.03. 18 Deducting the difference from the total costs calculated above after discounting expert fees 19 ($38,704.47), the court’s award for litigation costs is $37,170.79.2 20 In sum, the court finds the request for reimbursement of litigation costs, after discounting 21 the expert fees and travel expenses from arbitration, to be reasonable. The administrative costs 22 also are reasonable. See McClure v. Waveland Servs., Inc., No. 18-01726, 2021 WL 5204151, at 23 *5 (E.D. Cal. 2021) (awarding $12,500 in administration costs for a maximum settlement amount 24 of $290,000).

2 $38,704.47 - $1,533.68 = $37,170.79. 1 D. Enhancement Award 2 Counsel also seeks a $10,000 enhancement award for Anderson. A settlement agreement 3 should “not improperly grant preferential treatment to class representatives or segments of the 4 class[.]” In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078,1080 (N.D. Cal. 2007). 5 Representative plaintiffs may receive reasonable incentive payments, Staton v. Boeing Co., 327 6 F.3d 938, 977 (9th Cir. 2003), and authorization of payments is within the court’s discretion, 7 Adams v. City of Honolulu, No. 12-667, 2017 WL 3880651, at *1 (D. Haw. Sept. 5, 2017). In 8 evaluating the suitability of an incentive payment courts may consider: 9 (1)the risk to the class representative in commencing suit, both 10 financial and otherwise; (2) the notoriety and personal difficulties 11 encountered by the class representative; (3) the amount of time and 12 effort spent by the class representative; (4) the duration of the 13 litigation; and (5) the personal benefit, or lack thereof, enjoyed by 14 the class representative as a result of the litigation. 15 Greer, 2020 WL 5535399, at *3 (citing Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 299 16 (N.D. Cal. 1995)). To determine the amount of time and effort spent by a class representative the 17 court examines “evidence demonstrating the quality of plaintiff’s representative service, such as 18 substantial efforts taken as class representative to justify the discrepancy between [his] award and 19 those of the unnamed plaintiffs.” Flores v. ADT LLC, No. 16-29, 2018 WL 6981043, at *1 (E.D. 20 Cal. Mar. 19, 2018) (citation and internal quotation marks omitted; alteration in original). The 21 court also considers the “proportion of the [representative] payment[s] relative to the settlement 22 amount, and the size of each payment.” In re Online DVD-Rental Antitrust Litig., 779 F.3d, 934, 23 947 (9th Cir. 2015). 24 Here, all but one of the applicable factors weigh in favor of approval. The first factor 25 weighs in favor of approval because plaintiff assumed risk in commencing the suit given his risk 26 of loss of future employment opportunities as prospective employers may conduct background 27 checks and be deterred by plaintiff’s having filed a lawsuit against a former employer. See 28 Settlement Mem. at 24–25. The second factor weighs against approval as the record does not 29 indicate the case resulted in notoriety or personal difficulties for Anderson. See id. The third 30 factor weighs in favor of approval, as Anderson spent significant time assisting with the litigation 1 by “obtain[ing] and provid[ing] documents, provid[ing] information regarding Defendant’s 2 policies and procedures, [being] deposed, travel[ing] from Las Vegas to San Francisco to be 3 present at and participate in the arbitration, always ma[king] himself available when needed, 4 including during the mediation, and timely respond[ing] to inquiries from Class Counsel.” Id. at 5 24; Workman Decl. ¶ 25; Anderson Decl. ¶¶ 8–10, ECF No. 93-5. The fourth factor, duration, 6 weighs in favor of approval as Anderson filed his lawsuit in 2018, see Compl., ECF No. 1, and 7 did not file this motion until 2024, six years later, see Settlement Mem. The fifth factor also 8 weighs in favor of approval because Anderson will derive only a modest personal benefit in 9 comparison to the other class members for the financial risk he faced in filing the action as the 10 only named plaintiff and for agreeing to a general release of all claims. See Settlement Mem. at 11 24–25. In sum, the Van Vranken factors support granting Anderson a $10,00 enhancement 12 award. 13 E. PAGA Penalty 14 Parties seeking approval of a PAGA settlement must submit the proposed settlement to the 15 California LWDA for comment at the same time they submit their motion for preliminary 16 approval of the settlement. Ramirez v. Benito Valley Farms, LLC, No. 16-04708, 2017 WL 17 3670794, at *2 (N.D. Cal. Aug. 25, 2017); Cal. Lab. Code § 2699(s)(2) (“The proposed 18 settlement shall be submitted to the agency at the same time that it is submitted to the court.”). 19 This requirement has been met, as the Workman declaration represents “[a] copy of the 20 Settlement Agreement was provided to the LWDA[,]” see Workman Decl. ¶ 17, Ex. A to 21 Settlement Mem., ECF No. 93-1, and Anderson has provided a copy of the email confirming 22 receipt of the settlement agreement, see LWDA E-Mail at 1, Ex. L to Workman Decl., ECF No. 23 93-3. The parties did not report any comments from the LWDA, and the court has not received 24 comments either. See Conti v. L’Oréal USA S/D, Inc., No. 19-0769, 2023 WL 4600532, at *18 25 (E.D. Cal. July 18, 2023) (finding lack of comments from LWDA supported final approval of 26 PAGA settlement). 27 The court denied Anderson’s previous request for its failure to allocate 75 percent of the 28 civil penalties to LWDA, as required under PAGA. See generally Order (Dec. 20, 2022). Prior 1 to July 1, 2024, the California Labor Code required 75 percent of the PAGA penalty to be paid to 2 the LWDA; however, an amendment changed the distribution to 65 percent to the LWDA and 35 3 percent to the aggrieved employees, effective July 1, 2024. See Cal. Lab. Code § 2699(m). As 4 noted above, the parties agree the amendment does not apply to this proposed settlement because 5 this action was brought before June 19, 2024. See Joint Status Rep., ECF No. 97 (citing 6 California Labor Code § 2699(v)(1)). 7 In his memorandum in support of final approval of the settlement agreement, Anderson 8 states the gross settlement amount (GSA) is $1,270,000, and the LWDA will receive 75 percent 9 of the GSA, $952,500, “minus attorneys’ fees[] ($419,000), costs ($51,183.22), representative fee 10 ($10,000) and administration costs ($9,000),” or $463,316.78.3 Settlement Mem. at 18–19. He 11 does not clearly explain his method in determining the various figures in the settlement award 12 breakdown. See generally Settlement Mem. The court follows the model of other courts 13 calculating the allocation of PAGA settlement awards by subtracting from the GSA the costs and 14 fees first, and subsequently assessing the remaining amount as the total PAGA penalty. 15 Accordingly, the court begins with the GSA ($1,270,000) and subtracts the attorneys’ fees 16 ($419,100), the litigation costs ($37,170.79), the settlement administration costs ($9,000) and 17 plaintiff’s enhancement award ($10,000), which yields a net number of $795,829.21. The total 18 PAGA penalty, or 75 percent of $794,729.21 is $596,046.91. 19 IV. CONCLUSION 20 The court grants the motion for final approval of class settlement. The court approves the 21 gross settlement amount of $1,270,000, which includes $419,100 in attorneys’ fees, $37,170.79 in 22 litigation costs, $9,000 in settlement administration costs, $10,000 as plaintiff’s enhancement 23 award and $794,729.21 remaining for the aggrieved employee and PAGA penalty, which 24 amounts to $198,682.30 and $596,046.91, respectively. The court retains jurisdiction of all 25 matters relating to the interpretation, administration, implementation, effectuation and 26 enforcement of this order and the settlement until all settlement funds are distributed. The parties 3 Anderson mistypes or miscalculates this amount as 493,216.78 in its motion. See Settlement Mem. at 18–19. 1 shall notify the court within seven (7) days after the settlement becomes fully funded. At that 2 point, the court will enter its Final Judgment and Order of Dismissal with Prejudice. 3 This order resolves ECF No. 93. 4 IT IS SO ORDERED. 5 DATED: November 18, 2024.