Opinion
SUMMARY
Tom Munoz and Phillip Eichten filed a class action lawsuit against BCI Coca-Cola Bottling Company of Los Angeles (BCI), seeking damages and penalties for allegedly unpaid overtime wages, missed meal and rest period wages, and other Labor Code violations and unfair business practices. The proposed class consisted of production supervisors and merchandising supervisors who were allegedly misclassified by BCI as exempt employees. After
The objector, Greg (Tony) Greenwell, appeals. He argues the trial court abused its discretion in approving the settlement, principally because the parties did not provide the court with the information necessary to make a finding that the settlement was reasonable and fair. We find no merit in Greenwell’s contentions and affirm the trial court’s order approving the settlement.
FACTUAL AND PROCEDURAL BACKGROUND
In June 2008, Munoz and Eichten (collectively, Munoz) filed a class action complaint against BCI. Munoz asserted causes of action for failure to pay overtime wages, waiting time penalties (penalties for late payment of wages to terminated employees), failure to provide or authorize meal and rest periods, failure to provide accurate itemized wage statements, and unfair business practices. The proposed class consisted of persons employed by BCI in salaried positions as production supervisors or merchandising supervisors in the State of California at any time during the four-year period preceding the filing of the complaint. Central to Munoz’s action was the claim that production and merchandising supervisors were intentionally misclassified as exempt employees by BCI, which used the misclassification scheme to justify failure to pay overtime wages and provide meal and rest periods to those employees.
The Munoz class action followed earlier class action litigation against BCI, prosecuted by the same counsel representing Munoz in this case (and defended by the same counsel representing BCI here), styled Costanza v. BCI Coca-Cola Bottling Company of Los Angeles (Costanza). The Costanza class action, filed in April 2006, asserted the same causes of actions as in this case, and initially defined the class as all persons employed by BCI as salaried supervisors in California. By the time of the fifth amended complaint (filed May 3, 2007), the Costanza class was refined to consist of full-service supervisors, warehouse supervisors, and delivery (or distribution) supervisors, and no longer included production or merchandising supervisors.
The Costanza case, with 377 class members, was settled in November 2007, with BCI paying $2.25 million. No one opted out or objected, and final approval by the trial court was granted March 18, 2008.
Several months later, on June 9, 2008, this case was filed, asserting the same causes of action as in Costanza. Some discovery was conducted: BCI propounded form interrogatories and requests for production of documents to Munoz and Eichten, and special interrogatories to Munoz, and verified responses were provided; Munoz propounded requests for admission and form interrogatories to BCI, and BCI provided verified responses. BCI obtained declarations from 30 class members from several California facilities. These declarations described the declarant’s job duties; amounts of time spent performing various duties; his or her authority (or not) to hire, fire, or discipline; the number of hours he or she worked each week and each day; and whether or not he or she took meal and rest breaks. On November 5, 2008, BCI produced payroll data for each production supervisor and merchandising supervisor during the relevant time period.
On November 15, 2008, the parties participated in a mediation (with the same mediator who conducted the Costanza mediation); the mediation was unsuccessful, but the parties continued to work with the mediator and agreed to settlement terms on December 1, 2008: $1.1 million (none of which would revert to BCI if unclaimed, but rather would be distributed pro rata to class members who made claims), from which deductions would be made for attorney fees (30 percent), $10,000 in incentive awards for the class representatives ($5,000 each), costs (up to $10,000), and administrative costs.
The parties moved for preliminary approval of the settlement on December 15, 2008. A supporting declaration from class counsel (James P. Stoneman)
Greenwell filed a notice of objection and his opposition to final approval of the settlement. He argued, among other things, that the release to be given by the class was overly broad; 2 the parties failed to provide the total potential value of the claims being released; the settlement sum was “relatively low”; there was “a lack of meaningful pre-trial discovery” making it difficult to intelligently evaluate the value of the claims and compare it to the settlement amount; and the notice to class members did not provide sufficient information to allow members to calculate how much they could expect to receive for their claims. A supplemental brief from Greenwell also pointed out that the notice to the class had not included the “request for exclusion” form ordered by the court, instead stating that class members could exclude themselves by submitting a signed letter stating their intent to opt out of the settlement.
Munoz moved for final approval of the class action settlement in March 2009. The Munoz motion was supported by declarations from both lawyers for the class (Mark Haddon and James Stoneman), repeating the information given in the previous Stoneman declaration. Haddon also provided the rationale for the change from use of an exclusion form to use of a letter for opt-out purposes; stated that the gross and net benefit amounts that each class member would receive for each workweek (assuming 100 percent participation) would be $74.25 and $41.29, respectively; and reported that there were only two opt outs and one objection to the settlement.
A week later, Munoz filed his opposition to the Greenwell objection, again supported by declarations from Haddon and Stoneman. Haddon explained
BCI also opposed Greenwell’s objection. BCI submitted copies of all the discovery in Costanza and in this case (as previously described), including the payroll data for all production and merchandising supervisors and the 30 declarations from class members containing testimony relevant to certification and exempt/nonexempt issues. BCI pointed out, among other things, that Greenwell cited no authority for his claim the release was overly broad and that the very same release language was approved in the Costanza case. 4
At the hearing on final approval, Greenwell argued the court did not have the information necessary “to understand the amount in controversy” or “the potential recovery they would have obtained” had the matter gone to trial,
The trial court approved the settlement, stating: “[I]t seems to me that this case—you know, it may not be certifiable from the standpoint that the complaint alleges that BCI had, in effect, misclassified production and merchandising supervisors who were, therefore, entitled to overtime premiums, waiting time[] penalties and meal and rest period violation payments, penalties for failure to provide accurate itemized wage statements, injunctive [and] declaratory relief, interest and attorney fees. [j[] Because of the standing of each one of these individuals in the particular facts of each case, I think it would be extremely difficult to try this case. [j[] So after reviewing this and listening to Mr. Glugoski’s presentation and reading your papers, I think you did a very good job on it. The objections of the objector are overruled, [f] In my opinion, the final settlement in this case is fair, reasonable, adequate, considering the claimants are going to receive some $4,300 each of the class. And I think that is a good deal in this case. It is as good a deal as you can get.”
On April 7, 2009, the trial court signed the order approving the settlement and overruling Greenwell’s objection. The court found the settlement fair, reasonable and adequate; ordered payment of attorney fees and costs of $339,001; found the enhancements for the representative plaintiffs were fair, reasonable and appropriate given their services rendered in the case; approved the payment of claim administration costs of $35,353, the employer’s share of employment taxes of $84,205.32, and late claims and unanticipated expenses of $20,000; and ordered BCI to transfer $611,440.68 to the settlement fund for payments to the class members. The court approved the release
DISCUSSION
Greenwell argues, as he did in the trial court, that the lack of information on the “amount in controversy” prevents any finding that the settlement is fair and reasonable; that class counsel failed to conduct the requisite degree of discovery to evaluate the claims; that the release is overbroad; and that the parties failed to provide class members with sufficient information to make an informed decision and failed to comply with the class notice procedure (the exclusion form) ordered by the trial court at the time preliminary approval was given. These defects, Greenwell says, mirror those in
Kullar v. Foot Locker Retail, Inc.
(2008)
We recount first the legal principles governing the approval of a class action settlement, and then turn to the particulars in this case.
A. The applicable principles.
Our review of the trial court’s approval of a class action settlement is limited in scope. We make no independent determination whether the settlement terms are “fair, adequate and reasonable,” but only determine whether the trial court acted within its discretion.
(Kullar, supra,
168 Cal.App.4th at pp. 127-128.) The trial court’s discretion is broad, and is to be exercised through the application of several well-recognized factors.
(Clark, supra,
Some cases state that 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.”
(Dunk, supra,
B. The settlement in this case.
Applying the principles enunciated in
Kullar,
we find no merit in Greenwell’s claim that the trial court abused its discretion in finding the settlement fair and reasonable (or, as the trial court observed, “as good a deal as you can get”). The crux of Greenwell’s claim is that the record before the trial court contained no evidence of “the potential value of the claims” in the case, and that this defect violates the teaching of
Kullar,
which observed that “an informed evaluation cannot be made without an understanding of the amount that is in controversy and the realistic range of outcomes of the litigation.”
(Kullar, supra,
We entertain no doubt that the trial court had “an understanding of the amount ... in controversy”
(Kullar, supra,
Greenwell also asserts there wfis no evidence as to “whether adequate investigation was conducted” and as to the strength of the claims at issue; Greenwell complains at length about the lack of discovery conducted by class counsel, points out that nlost of the documentation was submitted by BCI, and considers the
Costanza
discovery “of no real value in the context of
Munoz.”
7
But there is no reason why, in the circumstances here, class counsel could not rely on the
Costanza
discovery, and Greenwell cites no authority to
As a final observation on this topic, we note that the evidentiary records in
Kullar
and
Clark,
upon which Greenwell relies so heavily, are significantly different from this case. In
Kullar
(which did not involve the misclassification of exempt employees), there was no discovery at all on meal period claims that were added in an amended complaint and were the focal point of the objections to the settlement.
(Kullar, supra,
168 Cal.App.4th at pp. 121-122.) While
Kullar
class counsel argued that the relevant information had been exchanged informally and during mediation
(id.
at p. 126), nothing was presented to the court—no discovery, no declarations, no time records, no payroll data, nothing
(id.
at pp. 128-129, 132)—to allow the court to evaluate the claim. And in
Clark,
the problem was that the trial court was not given sufficient information on a core legal issue affecting the strength of the plaintiffs’ case on the merits, and therefore could not assess the reasonableness of the settlement terms.
(Clark, supra,
In sum, we can see no basis for finding an abuse of discretion. As we have seen, the record contains sufficient information from which the trial court could gain an adequate understanding of the amount in controversy, and there
Greenwell makes several other contentions.
First, Greenwell argues the release given by the class members was unreasonably broad, because the class members released claims for any position they may have held at BCI during the class period. (Greenwell also asserts, wrongly, that class members will forfeit any title VII and workers’ compensation claims.) Greenwell cites no authority suggesting that the release (which was also used in the Costanza settlement) is improper, and BCI points out that, while the release is indeed broad, the settlement is nonreversionary so that BCI is giving something in return for the broader release. Under these circumstances, we see no basis for finding the release is improper as a matter of law.
Second, Greenwell points out that the parties violated the court’s preliminary approval order when the notice to the class stated that members could exclude themselves from the class by writing a letter, rather than (as the preliminary approval order stated) including an exclusion form for that purpose. (The claims administrator recommended the change because of its prior experience with class members submitting both claim and exclusion forms.) Again, we cannot say that the trial court abused its discretion when, in its final order, it approved the procedure used after the fact. The trial court obviously was of the view that the change was immaterial, and we have no basis upon which to reach a contrary conclusion.
Third, Greenwell criticizes the notice given to the class because it did not estimate the amount class members would receive under the settlement. BCI explains that, because the settlement is nonreversionary, the amount each member would receive cannot be known in advance (unlike a claims-made,
Finally, Greenwell complains about the $5,000 enhancement payments to each of the two class representatives, citing
Staton
v.
Boeing Co.
(9th Cir. 2003)
The order approving the class action settlement agreement and entering judgment is affirmed. The respondents shall recover their costs on appeal.
Bigelow, P. J., and Flier, J., concurred.
A petition for a rehearing was denied August 2, 2010, and appellant’s petition for review by the Supreme Court was denied September 29, 2010, S185342.
Notes
The Munoz brief states the class was narrowed in the Costanza case “due to problems regarding adequacy of the class representatives . . . .”
The release covered “all individual and class wage and hour claims that were asserted or could have been asserted” in the complaint, including claims relating to any position a class member held at BCI during the class period, not just claims relating to the merchandising and production supervisor positions.
In
Brinker,
the Court of Appeal held that employers need only provide meal and rest periods, not ensure they are taken, so that individual issues predominated and the meal and rest period claims were not amenable to class treatment.
(Brinker Restaurant Corp.
v.
Superior Court
(2008)
BCI also pointed out that, the day before the trial court preliminarily approved the settlement in this case, Attorney John Glugoski (who represents Greenwell in this case), filed a class action lawsuit against BCI on behalf of Jose Daguna, a production supervisor and one of the two persons who later opted out of this action, making the same allegations as in this action.
Kullar
continues: “The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s-length transaction entered without self-dealing or other potential misconduct. While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. ‘The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.’ ”
(Kullar, supra,
Indeed, the standard list of factors a trial court should consider in determining whether a settlement is fair and reasonable does not expressly include specification of the maximum amount of recoverable damages (see
Kullar, supra,
Greenwell points out that the
Costanza
discovery shows BCI objected to (rather than admitting or denying) a request that BCI admit that production supervisors do not have the independent authority to hire and terminate employees as part of their job duties. Greenwell
Greenwell also complains that the settlement assumed, in calculating compensable workweeks for class members, that one year of employment was equal to 48 workweeks, rather than 52 workweeks; he says that, even assuming “the standard 2 weeks vacation per year,” “employees are cheated out of two to four workweeks per year.” Greenwell does not explain the significance of this point; the same standard was applied to all class members and it is hard to see how the use of a different number (48, 50 or 52) would change a class member’s proportionate share in the settlement fund.
