California Court of Appeals, Second District, Seventh Division
[REVIEW GRANTED BY CAL. SUPREME COURT]
[As modified Nov. 21, 2014.]
APPEAL from an order of the Superior Court of Los Angeles County, No. BC321317 Mary Strobel, Judge
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Law Office of Lawrence W. Schonbrun and Lawrence W. Schonbrun for Plaintiff and Appellant.
Law Offices of Kevin T. Barnes, Kevin T. Barnes and Gregg Lander for Plaintiffs and Respondents.
Paul Hastings, Judith M. Kline and M. Kirby C. Wilcox for Defendants and Respondents.
This appeal arises from an order overruling objections to a settlement of several wage and hour class actions, and approving the settlement. We hold that rule 3.769 of the California Rules of Court, not rule 23 of the Federal Rules of Civil Procedure (28 U.S.C.), establishes the requirements in California for settlement notices to class members. We also confirm that the percentage of recovery method for calculating an award of attorneys' fees is still viable in common fund cases. Finally, we hold that the presence of a
clear sailing provision in a class action settlement does not, without more, invalidate the agreement as collusive.
Plaintiff Mark Laffitte, on behalf of himself and other class members, settled a class action lawsuit against defendants Robert Half International Inc., Robert Half of California, Inc., Robert Half Incorporated, and Robert Half Corporation doing business as RHC (collectively Robert Half or the Robert Half defendants) for $19 million. David Brennan, a member of the class, objected to the settlement. The trial court overruled his objections and approved the settlement, which included an award of attorneys’ fees to class counsel of one-third of the settlement, or approximately $6.3 million. Brennan appeals from the order approving the settlement and entering final judgment, challenging both the class action settlement notice regarding the award of attorneys’ fees and the amount of attorneys’ fees awarded. Laffitte asks that we affirm the trial court’s order. The Robert Half defendants state that the attorneys’ fees issue does not affect them directly because class counsel will receive their fees from the common fund the Robert Half defendants agreed to pay to settle the case, but they ask that we affirm the order “in order to bring this lawsuit to closure.” We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On September 10, 2004 Laffitte filed a wage and hour class action suit against Robert Half. The complaint alleged five causes of action based on violations of the Labor Code: misclassification of staffing professionals as exempt and failure to pay statutorily mandated wages, failure to provide adequate meal periods (premium wages), failure to provide rest periods, failure to furnish timely and accurate wage statements, and “waiting time” penalties. The complaint also alleged unfair business practices in violation of Business and Professions Code section 17200 et seq.
On March 13, 2006 the trial court denied Robert Half’s motion for summary judgment or in the alternative for summary adjudication. On September 18, 2006 the court denied Robert Half’s motion to strike the class allegations, and granted Laffitte’s motion for class certification with respect to the wage, wage statements, waiting time, and unfair business practices causes of action. The court denied Robert Half’s subsequent motion for reconsideration of the class certification order.
The parties participated in a mediation. After a second session of the mediation on June 18, 2012 Laffitte and the class representatives in two other
class actions against Robert Half involving similar claims and allegations reached a settlement of the three class actions.
On September 5, 2012 the class representatives filed a joint motion for conditional certification of the class and preliminary approval of the settlement. The trial court, after relating the three class actions, granted the motion, conditionally certified the class, and preliminarily approved the settlement. The court also approved the proposed class notice and related materials, appointed a settlement administrator, and scheduled a hearing for final approval on October 19, 2012.
On November 13, 2012 the trial court granted the parties’ ex parte application for an order amending the settlement agreement, class notice, and claim form. Among other things, the amended settlement agreement provided that Robert Half would pay a gross settlement amount of $19 million. Subject to court approval, the settlement agreement provided that the following payments would be made from the gross settlement amount: class counsel attorneys’ fees of not more than $6, 333, 333.33 (33.33 percent of the gross settlement amount) and costs not to exceed counsel’s actual costs, class representative payments not to exceed $80, 000, settlement administrator fees not to exceed $79, 000, civil penalties owed to California's Labor and Workforce Development Agency, and applicable payroll taxes on the employees’ recovery. The amended settlement agreement also included a “clear sailing” provision stating that class counsel would apply for their attorneys’ fees “and Robert Half will not oppose their request.”
On January 28, 2013 Brennan objected to the proposed settlement. Relying in part on rule 23 of the Federal Rules of Civil Procedure (28 U.S.C.), Brennan made the following objections: (1) the attorneys’ fee request was excessive; (2) “[m]oney to charity should not be a part of the Court’s attorneys’ fee award calculation”; (3) information necessary for class members to intelligently object to or comment on the proposed settlement was missing from the notice and the pleadings; (4) the clear sailing provision warranted the appointment of a class guardian; (5) the notice to the class was deceptive regarding the responsibility for payment of attorneys’ fees; (6) class counsel and counsel for Robert Half had not filed a report, as required by the
amended settlement agreement; (7) the notice did not disclose that unclaimed funds would be donated to a charity of the Robert Half defendants’ choice; and (8) certain other provisions of the settlement were improper.
On February 28, 2013 the class representatives and Robert Half filed a joint motion for final approval of the class action settlement and a response to Brennan’s objections. The class representatives reported that they had sent class notices to 3, 996 class members and had received only two objections: an objection from Brennan and an “objection” that was actually a dispute over the amount the individual class member was to receive. The class representatives also filed a motion for attorneys’ fees, costs, and class representative enhancements. The motion requested $6, 333, 333.33 in attorneys’ fees for class counsel, $127, 304.08 in costs, $79, 000 in settlement administrator expenses, and $80, 000 in class representative enhancement payments. The class representatives explained that class counsel were requesting as attorneys’ fees one-third of the gross settlement, which constituted a common fund for the benefit of class members, and argued that this amount was reasonable and appropriate. Class counsel asserted that their hourly rates and number of hours worked were fair and reasonable and that the successful result, the difficulty of the issues in the case, the quality of their representation, the contingency risk, and the preclusion of other employment justified a lodestar multiplier.
In support of their motion for attorneys’ fees, class counsel submitted declarations from the attorneys in each of the three law firms serving as class counsel. The attorneys did not submit detailed time records. The declarations stated that Kevin T. Barnes, who served as lead counsel and supervised and handled all aspects of the litigation, worked 2, 259.5 hours on the case at an hourly rate of $750, and his partner, Gregg Lander, worked 807.3 hours at an hourly rate of $600. Joseph Antonelli worked 709.3 hours on the case at an hourly rate of $750, and his partner, Janelle Carney, worked 14.4 hours at an hourly rate of $600. Finally, Mika Hilaire worked 423 hours on the case at her hourly rate of $500. Barnes determined that class counsel worked a total of 4, 263.5 hours on the case (and anticipated working 200 hours on the appeal) and, using the hourly rate for each attorney, ...