Johnson v. SCK Ilara Investors, LLC

VI. LEGAL STANDARD FOR SETTLEMENT APPROVAL

B. 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.

(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.)

VII. SETTLEMENT PROCESS

On January 18, 2021, Plaintiff initiated the instant action. Defendant denied liability and asserted affirmative defenses. The parties engaged in formal discovery including requests for production and interrogatories. Plaintiff reviewed Defendant’s discovery responses and documents, which included rental agreements, rent ledgers, security deposit itemizations. Based on the foregoing, Plaintiff’s counsel created a damage model for the class based on the documents.

On January 17, 2024, the Court issued its order which granted Plaintiff’s motion for class certification; appointed Plaintiff as the Class Representative; and appointed Plaintiff’s counsel as Class Counsel.

VIII. SETTLEMENT PROVISIONS

The non-reversionary gross settlement amount is $300,000. Attorneys’ fees of up to 33% the gross settlement amount ($99,000), litigation costs of up to $20,000, and settlement administration costs of up to $12,000. 4 Plaintiff will seek a Class Representative award of up to $15,000.

The net settlement amount will be allocated to Class Members who are defined as “all former tenants at the Premises who paid security deposits and to whom Defendants did not return more than $125 of the security deposits within 21 days of the vacation of the apartment.” Funds associated with checks uncashed after 180 days will be transmitted to Bay Area Legal Aid.

In exchange for settlement, Class Members who do not opt out will release:

[A]ny and all actions, causes of action, claims, demands, rights, injuries, debts, obligations, liabilities, contracts, duties, damages, costs, attorneys’ fees, expenses or losses of every kind, nature, character, or description whatsoever, arising from the claims alleged in the Action.

4 If redistribution is necessary, the settlement administration costs will increase by $2,972.96.

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.) IX. FAIRNESS OF SETTLEMENT

Based on available data provided by Class Counsel calculated the full potential value of the claims to be approximately $279,000. The gross settlement amount represents 107% of the estimated maximum exposure, which is well above the range of recoveries typically approved by California courts. (See Cavazos v. Salas Concrete, Inc. (E.D. Cal., Feb 18, 2022, No. 1:19- cv-00062-DAD-EPG) 2022 U.S.Dist. LEXIS 30201, at *41-42 [citing cases approving settlements in the range of 5 to 35 percent of the maximum potential exposure].)

Considering the multiple, dependent contingencies that Plaintiff would have had to overcome to prevail on the claims, 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.

X. 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 provided in English, informs the Class Members of the nature of the lawsuit and their rights under the terms of the Settlement and applicable law. It includes: a detailed explanation of the case, including the basic contentions or denials of the Parties and the basic terms of the Settlement; a statement that the court will exclude the member from the Settlement if they request so by a specified date; a procedure for the member to follow in requesting exclusions from the Settlement; an explanation that members of the Class can participate in the Settlement by doing nothing; a statement that the judgment, whether favorable or not, will bind all members who do not request exclusion; and a statement that any member who does not request exclusion may, if the member so desires, enter an appearance through counsel.

Class Members are given 60 days to exclude themselves or object. The form of notice is adequate.

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. Remote appearances must be made through UDC, unless otherwise arranged with the Court. Please go to https://santaclara.courts.ca.gov/online-services/remote-

hearings to find the appropriate link. Also, please note that that you must register in advance to appear remotely..

Turning to the notice procedure, as articulated above, the parties have selected Simpluris, Inc. (“Simpluris”) as the Settlement administrator. No later than 14 days after preliminary approval, Defendant will deliver the Class data (i.e., Class list and related qualifying workweeks and contact information) to Simpluris. Simpluris, in turn, will mail the notice packets within 14 days of receiving the Class data. Any returned notices will be re-mailed to any forwarding address provided. If no forwarding address is found, Simpluris shall conduct an investigation for one and if one is found, Simpluris shall re-mail the notice within 7 days. These notice procedures are appropriate and are approved.

XI. SERVICE AWARD, FEES, AND COSTS

Plaintiff requests an enhancement payment of $15,000. The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation.

These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit. (Cellphone Termination Fee Cases (2010) 186 Cal.App.4th 1380, 1394-1395, internal punctuation and citations omitted; see also Covillo v. Specialty’s Café (N.D. Cal. 2014) 2014 U.S.Dist.LEXIS 29837, at *29 [incentive awards are particularly appropriate where a plaintiff undertakes a significant “reputational risk” in bringing an action against an employer].)

Prior to final approval, Plaintiff shall submit her declaration detailing her efforts in this matter and any other factors she would like the Court to consider.

The request for administrative costs in the amount of $12,000 is supported by the declaration of Andrew Wolff. Thus, it is approved.

The Court also 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.) Class Counsel will seek attorneys’ fees of up to one-third of the gross settlement amount (currently estimated to be $99,000), and litigation costs for up to $20,000. Prior to any final approval hearing, Class Counsel shall submit lodestar information (including hourly rate and hours worked) as well as evidence of actual litigation costs incurred.

XII. CONCLUSION

Plaintiff’s motion for preliminary approval is GRANTED.

The final approval hearing shall take place on December 10, 2026 at 1:30 in Department 22.

The Court will prepare the order.

- oo0oo -

- oo0oo -

5