Lagunas v. Young Adult Institute, Inc.

Background

Joana Rios Lagunas filed a wage-and-hour class action under state law on behalf of herself and employees who worked for Young Adult Institute, Inc. (YAI). The opinion states that YAI owns and operates facilities in California serving people with intellectual and developmental disabilities. Lagunas alleged that YAI failed to pay for required off-the-clock work, reimburse work-related expenses, provide adequate meal and rest breaks, provide adequate wage statements, maintain adequate payroll records, and provide sick pay.

Before mediation, the parties engaged in informal discovery. YAI produced time and pay records that Lagunas used to assess the value of the class claims. The parties mediated on September 1, 2023, and agreed shortly afterward to the arbitrator’s proposed settlement.

Proposed Settlement

The proposed Settlement Class consists of all current and former hourly, non-exempt YAI employees who worked in California between February 14, 2019, and December 23, 2023. The group entitled to payments under the California Private Attorneys General Act (PAGA) consists of all non-exempt YAI employees who worked in California between January 29, 2022, and December 23, 2023.

YAI would pay a non-reversionary gross settlement of $850,000 for approximately 299 class members. The proposed deductions include $283,333.33 in attorney fees, up to $12,000 in counsel’s costs, up to $12,000 in settlement administration fees, a $10,000 service award to Lagunas, and $20,000 in PAGA payments. Of the PAGA amount, $15,000 would go to the California Labor and Workforce Development Agency and $5,000 would be distributed to the affected employees. The estimated net settlement amount for class members is approximately $512,616.67, or about $1,714.60 per class member.

The proposed release covers claims raised, or that could have been brought based on the facts alleged, during the relevant class period. It excludes claims including vested benefits, wrongful termination, Fair Employment and Housing Act violations, unemployment insurance, disability, Social Security, workers’ compensation, and claims based on facts outside the class period. The opinion states that Lagunas, unlike the other class members, would generally release all known and unknown claims.

Court’s Analysis

Under Federal Rule of Civil Procedure 23, the court evaluated whether the proposed settlement class met the requirements for class certification and whether the settlement appeared fair, adequate, and reasonable. The court found numerosity because the class included approximately 299 employees. It found commonality because the claims involved YAI’s common wage-and-hour policies, typicality because Lagunas was allegedly subject to the same policies as other class members, and adequacy because no apparent conflicts existed between Lagunas, class counsel, and the other class members. The court also found that common questions predominated and that a class action was a superior method for resolving the claims.

The court concluded that the settlement amount fell within the range that courts have accepted, despite representing a relatively small percentage of YAI’s potential exposure. It considered the risks and expense of further litigation, including class certification, discovery, motions, and trial. The court also noted that the settlement was reached through arm’s-length negotiations with an experienced mediator and did not return unclaimed funds to YAI. The court identified a provision under which YAI would not object to the requested 33.3% attorney-fee award, noting that such provisions are disfavored, but did not reject the settlement on that basis.

The court did not finally decide whether the requested attorney fees or $10,000 service award were justified. It stated that those requests would be examined at the final approval stage and that counsel would be expected to provide supporting evidence, including a lodestar calculation for the fee request.

Ruling

The court granted Lagunas’s motion for preliminary approval. It preliminarily approved the settlement, preliminarily certified the Settlement Class for settlement purposes, preliminarily appointed Lagunas as class representative, appointed the identified attorneys as class counsel, and appointed Phoenix Class Action Administration Solutions as settlement administrator.

The court approved the proposed class notice and notice procedures subject to corrections. The notice needed to state that class members could appear through an attorney, comply with the district’s requirements for sending objections, list all class claims, and correct other identified omissions. The court ordered that notice be distributed only after those deficiencies were corrected.

A final approval hearing was scheduled for September 5, 2024. The order established deadlines for distributing notice, opting out or objecting, filing fee and final-approval motions, funding the settlement, and making payments. The opinion does not state that final approval was later granted.