Lainez v. Epicurean Group

II. LEGAL STANDARDS FOR SETTLEMENT APPROVAL

A. Class Action

Generally, “questions whether a [class action] 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 (Wershba), 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. 3 Former plaintiff Luis Orlando Lainez (“Lainez”) settled directly with Defendant and the parties stipulated to allow the filing of the second amended complaint (“SAC”), which substituted in Plaintiff Ortiz as the named plaintiff.

(Wershba, supra, 91 Cal.App.4th at pp. 244-245, internal citations and quotations omitted.)

In general, the most important factor is the strength of the 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 (Kullar).) But the trial court is free to engage in a balancing and weighing of relevant factors, depending on the circumstances of each case. (Wershba, supra, 91 Cal.App.4th at p. 245.) The trial 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., citation and internal quotation marks omitted.)

The trial court also must independently confirm that “the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation.” (Kullar, supra, 168 Cal.App.4th at p. 129.) Of course, before performing its analysis the trial court must be “provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.” (Id. at pp. 130, 133.)

B. PAGA

Labor Code section 2699, subdivision (s)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) 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, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639.)

Similar to its review of class action settlements, the Court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76-77, disapproved on another ground in Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664, 710.) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson v.

U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ....”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)

The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But, a permissible settlement 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 U.S.Dist.LEXIS 140759, at *23-24].)

III. SETTLEMENT PROCESS

Lainez initiated this action on October 13, 2023, with the filing of a class action complaint asserting seven different causes of action on behalf of California consumers. On November 15, 2023, Lainez filed a first amended complaint adding a PAGA claim. The parties subsequently engaged in extensive discovery, with Plaintiff obtaining from Defendant: (1) the number of current/former employees, number of Class Workweeks and PAGA Pay Periods; (2) a 20% sampling of time and payroll records; (3) Defendant’s employee handbooks and standalone policy documents; and (4) Plaintiff’s personnel records and wage statements.

To prepare for mediation, class counsel consulted with an expert data scientist to create a detailed exposure analysis based on the data provided by Defendant. On August 26, 2025, the parties attended a full-day mediation session with Tagore Subramaniam, Esq. a well-respected wage and hour class action mediator. The parties reached the instant settlement agreement during mediation.

IV. SETTLEMENT PROVISIONS

The non-reversionary settlement amount is $1,300,000.00 to be paid by Defendant.4 Attorney fees of $455,000.00 (or 35 percent of the gross settlement), litigation costs of up to $25,000.00 and administrative costs not to exceed $15,950.00 will be paid from the gross settlement amount. Plaintiff will seek a class representative service payment of not more than $10,000. The PAGA payment will be $70,000.00, of which $17,500.005 is reserved for the individual aggrieved employees. The net settlement amount of $724,050.00 will be allocated to those of the approximately 1,242 class members who do not opt out, resulting in a projected average payment of $582.97. The approximately 781 aggrieved employees will each receive an average of approximately $22.41.

Funds associated with checks uncashed after 180 days will be distributed to the California Controller’s Unclaimed Property Fund in the name of the participating class member and/or aggrieved employee, leaving no “unpaid residue” subject to the requirements of Code of Civil Procedure section 384, subdivision (b). In exchange for settlement, class members who do not opt out will release:

[The] Released Parties from all claims, rights, demands, liabilities, and causes of action that were alleged in the Action or reasonably could have been alleged based on the facts and legal theories contained in the Operative Complaint, arising during the Class Period, including all of the following claims for relief:

4 The settlement agreement contains and escalator clause. However, Defendant’s counsel declares that the escalator clause, which was tied to the number of workweeks, was not triggered. (Declaration of Lonnie D. Giamela in Support of Motion for Preliminary Approval, ¶ 2.) 5 The motion inaccurately indicates that $20,000 will be set aside for individual PAGA payments but the settlement agreement provides that $17,500 will be designated for individual PAGA payments. (See Motion for Preliminary Approval of Class Action and PAGA Settlement, p. 7:1-6; Declaration of William C. Sung in Support of Motion for Preliminary Approval of Class Action and PAGA Settlement (“Sung Decl.”), Ex. 1 (“Settlement Agreement”), ¶ 1.33, 3.2.5.)

(1) Minimum Wage Violations; (2) Overtime Wage Violations; (3) Meal Period Violations; (4) Rest Period Violations; (5) Wage Statement Penalties; (6) Waiting Time Penalties; and (7) Unfair Competition (“Released Class Claims”). Except as set forth in Section 5.3 of this Agreement, Participating Class Members do not release any other claims, including claims for vested benefits, wrongful termination, violation of the Fair Employment and Housing Act, unemployment insurance, disability, social security, workers’ compensation, or claims based on facts occurring outside the Class Period.

(Settlement Agreement, ¶ 5.2.) The PAGA release similarly provides:

All Aggrieved Employees and the LWDA are deemed to release, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, the Released Parties from all causes of action and claims for civil penalties, attorneys’ fees and costs under the PAGA that were alleged or reasonably could have been alleged based on the facts and legal theories contained in the Operative Complaint and PAGA Notice, arising during the PAGA Period, including PAGA penalties for: (1) Minimum Wage Violations; (2) Overtime Wage Violations; (3) Meal Period Violations; (4) Rest Period Violations; (5) Wage Statement Penalties; (6) Waiting Time Penalties; and (7) violations of California Labor Code sections 201, 202, 203, 204, 210, 216, 218.6, 226, 226.3, 226.7, 246, 510, 512, 516, 558, 1174, 1182.12, 1194, 1194.2, 1197, 1197.1, 1198, 1199, 2698, et seq., 2699, et seq., and 2802 (“Released PAGA Claims”).

(Settlement Agreement, ¶ 5.3.)

The foregoing release is appropriately tailored to the allegations at issue. (See Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 537.)

V. FAIRNESS OF SETTLEMENT

Class Counsel worked with an expert to create an exposure analysis for Plaintiff’s claims. (Sung Decl., ¶ 19.) The maximum realistic recovery for the class was determined at $2,594,059.00. (Id., ¶ 31.) The settlement amount of $1,300,000.00 thus represents approximately 50 percent of the forecasted reasonable recovery for the class. (Ibid.) Defendant presented multiple defenses on the merits and to class certification and proceeding to trial would involve significant risk and expense. (Id., ¶ 24.) Considering these factors, the settlement achieves a good result for the class. For purposes of preliminary approval, the Court finds that the settlement is fair and reasonable to the class.

The Court has an independent right and responsibility to review the requested attorney fees and only award so much as it determines reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) “Courts recognize two methods for calculating attorney fees in civil class actions: the lodestar/multiplier method and the percentage of recovery method.” (Wershba, supra, 91 Cal.App.4th at p. 254.) Class Counsel seeks $455,000 in attorneys’ fees, 35 percent of the gross settlement amount. The benefits achieved by the settlement justify an award of attorney fees to class counsel. Class Counsel contends “[t]he requested fee is fair compensation for undertaking complex, risky,

expensive, and time-consuming litigation on a purely contingent fee basis. Class Counsel have incurred substantial attorneys’ fees and costs conducting pre-filing investigation, analyzing Plaintiff’s claims, conducting legal research, overcoming Defendant’s efforts to pick off the original plaintiff and [current] Plaintiff, conducting discovery, analyzing Class Members’ time and payroll records, creating a comprehensive damages model, preparing for and attending mediation, negotiating and preparing the long-form Agreement, preparing this Motion, and otherwise litigating the case.” (Sung Decl., ¶ 23.)

The Court preliminarily finds that the requested attorney fee award is reasonable as a percentage of the common fund. However, prior to the final approval hearing, Plaintiff’s counsel shall submit lodestar information (including hourly rate and hours worked) as well as evidence of actual litigation costs incurred and settlement administration costs. Plaintiff seeks a $10,000 service award. He provides a declaration indicating that he spent a total of 20 hours working on this case including providing and reviewing documents and discussing litigation strategy. (Declaration of David Isaac Tobar Ortiz in Support of Motion for Preliminary Approval of Class Action and PAGA Settlement (“Ortiz Decl.”), ¶ 5.)

VI. PROPOSED SETTLEMENT CLASS

Plaintiff requests that the following settlement class be provisionally certified: “all current and former employees who are or were employed as non-exempt, hourly employees by Defendant and worked for Defendant within the State of California during the Class Period.” (Settlement Agreement, ¶ 1.6.) “Class Period” means the period from October 17, 2019 through October 25, 2025. (Id. at ¶ 1.12.)

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.” 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 ....” Code of Civil Procedure 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 (2004) 34 Cal.4th 319, 326, 332 (SavOn Drug Stores).) “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 (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 (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.) But 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

A class is ascertainable “when it is defined in terms of objective characteristics and common transactional facts that make the ultimate identification of class members possible when that identification becomes necessary.” (Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 980 (Noel).) A class definition satisfying these requirements puts members of the class on notice that their rights may be adjudicated in the proceeding, so they must decide whether to intervene, opt out, or do nothing and live with the consequences. This kind of class definition also advances due process by supplying a concrete basis for determining who will and will not be bound by (or benefit from) any judgment. (Noel, supra, 7 Cal.5th at p. 980, citation omitted.)

“As a rule, a representative plaintiff in a class action need not introduce evidence establishing how notice of the action will be communicated to individual class members in order to show an ascertainable class.” (Noel, supra, 7 Cal.5th at p. 984.) Still, it has long been held that “[c]lass members are ‘ascertainable’ where they may be readily identified ... by reference to official records.” (Rose v. City of Hayward (1981) 126 Cal. App. 3d 926, 932, disapproved of on another ground by Noel, supra, 7 Cal.5th 955; see also Cohen v. DIRECTV, Inc. (2009) 178 Cal.App.4th 966, 975-976 [“The defined class of all HD Package subscribers is precise, with objective characteristics and transactional parameters, and can be determined by DIRECTV’s own account records. No more is needed.”].)

Here, the estimated 1,242 class members are identifiable based on Defendants’ records. The settlement class is appropriately defined based on objective characteristics. The Court finds that the settlement class is numerous, ascertainable, and appropriately defined.

C. Community of Interest

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. (Sav-On Drug Stores, supra, 34 Cal.4th at pp. 326, 332.) For 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 (Hicks).) The court must also examine evidence of any conflict of interest among the proposed class members. (See J.P. Morgan & Co., Inc. v. Superior Court (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 good for the judicial process and to the litigants. (Lockheed Martin Corp. v.

Superior Court (2003) 29 Cal.4th 1096, 1104-1105 (Lockheed Martin).) “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, supra, 89 Cal.App.4th at p. 916.)

Here, common legal and factual issues predominate. Plaintiff’s claims all arise from Defendant’s alleged wage and hour policies and practices, which purportedly resulted in class members working off the clock and failing to receive meal and rest breaks, resulting in inaccurate wage statements.

As for 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 the other members of the class, Plaintiff asserts that he was subject to Defendant’s purportedly improper wage and hour practices, including frequently working off the clock during meal breaks without pay, and frequently failing to receive compliant meal and rest breaks. (Ortiz Decl., ¶ 4.)

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, supra, 91 Cal.App.4th at p. 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, Plaintiff 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 approximately 1,242 class members. 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 to both the litigants and the Court in this case.

VII. 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).)

Here, the notice, which will be mailed to each class member and/or aggrieved employee and posted on a website maintained by the administrator, describes the lawsuit, explains the settlement, and instructs class members that they may exclude themselves from or object to the class settlement but not the PAGA settlement. The gross settlement amount and estimated deductions are provided. Class members are given 45 days from email notice to exclude themselves, or “opt out”, of the Settlement. The form of notice is generally adequate, but must be modified to instruct Class members that they may opt out of or object to the settlement simply by providing their name, without the need to provide their phone number or other personal information.

Regarding appearances at the final fairness hearing, the notice shall be modified to instruct class members as follows: “Although class members may appear in person, the judge overseeing this case encourages remote appearances. Class members who wish to appear remotely should contact class counsel at least three days before the hearing if possible. Instructions for appearing remotely are provided at https://santaclara.courts.ca.gov/onlineservices/remote-hearings and should be reviewed in advance. Class members may appear remotely using the UDC link for Department 22 or by calling the toll free conference call number for Department 22.”

Turning to the notice procedure, the parties have selected Phoenix Settlement Administrators as the settlement administrator. No later than 14 days after Defendant delivers the class data to Phoenix, it will mail the notice packet to the class members and/or aggrieved employees, subsequent to updating class members’ and aggrieved employees’ addresses using the National Change of Address Database. Any returned notices will be re-mailed to any forwarding address provided or a better address located through a skip trace or other search. Class members and aggrieved employees who receive a re-mailed notice will have an additional 14 days to respond. These notice procedures are appropriate and are approved.

VIII. CONCLUSION

The motion for preliminary approval is GRANTED.

The final approval hearing shall take place on December 17, 2026 at 1:30 in Dept.

22.

The following class is preliminarily certified for settlement purposes: “all current and former employees who are or were employed as non-exempt, hourly employees by Defendant and worked for Defendant within the State of California during the Class Period [of October 17, 2019 through October 25, 2025].”

The Court will prepare the final order.

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