Opinion
G059681
03-23-2022
JORGE LUIS ESTRADA et al., Plaintiffs and Appellants, v. ROYALTY CARPET MILLS, INC., Defendant and Respondent.
Ginez, Steinmetz & Assoc., Rudy Ginez, Jr.; CE Smith Law Firm and Clifton E. Smith for Plaintiffs and Appellants. Baker & Hostetler, Daniel F. Lula, Vartan S. Madoyan and Joseph S. Persoff for Defendant and Respondent.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. 30-2013-00692890, Randall J. Sherman, Judge. Reversed and remanded.
Ginez, Steinmetz & Assoc., Rudy Ginez, Jr.; CE Smith Law Firm and Clifton E. Smith for Plaintiffs and Appellants.
Baker & Hostetler, Daniel F. Lula, Vartan S. Madoyan and Joseph S. Persoff for Defendant and Respondent.
OPINION
MOORE, ACTING P. J. 1
This is a wage and hour class action and representative action under the Private Attorneys General Act (PAGA; Lab. Code § 2698, et seq.). A more complete summary of the facts is contained in the consolidated companion opinion to this appeal (G058397, G058969; the companion opinion). Generally, plaintiffs alleged their employer, Royalty Carpet Mills, Inc. (Royalty), which is now known as Royalty Carpet Mills, LLC, failed to provide compliant meal and rest breaks. They asserted claims against Royalty for meal and rest break violations as well as several derivative claims. At trial, they prevailed on a fraction of their claims, and the trial court awarded them a $630,348.31 judgment.
The court's order awarding attorney fees states the judgment is in the amount of $630,348.31. However, in adding together the various components of the court's judgment, we arrive at $623,484.53. Regardless, this discrepancy is immaterial to this appeal.
Plaintiffs then filed a motion for attorney fees and costs, seeking $2,097,150 in fees and $130,052.33 in costs under Code of Civil Procedure section 1021.5, PAGA (Lab. Code, § 2699, subd. (g)(1)), and the common fund and substantial benefit doctrines. The court awarded $465,379.15 in fees to be paid by Royalty and $130,052.33 in costs to be paid from the judgment.
Typically, in class action settlements, the parties settle for a gross amount, known as a common fund, and plaintiffs request a percentage of the common fund (frequently one-third) as attorney fees. (See Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 486; Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66, fn. 11.) Here, though the award of attorney fees was to be paid directly by Royalty and not taken from the judgment, the court still awarded fees based primarily on a common fund percentage calculation. Specifically, the court reverse-engineered a common fund using two components: (1) two-thirds of the fund would consist of the total monetary benefit 2 provided to Royalty's employees (total employee benefit) as a result of the lawsuit; and (2) the remaining one-third would be the allowable amount of attorney fees.
The court started its common fund calculation by determining the total employee benefit was $930,758.31. It arrived at this sum by adding together (1) the $630,348.31 judgment awarded to plaintiffs, and (2) the $300,410 in total settlements that Royalty paid to individual putative class members after this lawsuit was filed. Since the court concluded two-thirds of the common fund would consist of the total employee benefit, it appears to have derived the amount of the common fund by dividing the total employee benefit ($930,758.31) by two-thirds. This resulted in a common fund of $1,396,167.47. The court then calculated attorney fees as one-third of this amount, leading to a fee award of $465,379.15.
As the court explained using rounded numbers at oral argument, "if you say that they got a judgment of [$]630, 000 and . . . settlements of [$]300, 000, that's [$]930, 000. And then if the attorneys' fees are [$]465, 000, and you add those numbers together, you get $1,395,000. [¶] If you say a third of that is attorneys' fees and two-thirds of that goes to the class members, that's [$]465, 000 attorneys' fees, one-third, and [$]930, 000 goes to the class members, two-thirds." The court noted that a $465,379.15 attorney fee award was roughly 33.3 percent of plaintiffs' lodestar fees. It found this award "reasonable and appropriate" considering "the degree of success that plaintiffs achieved in [the] action." In particular, it noted that "plaintiffs did not prevail on large parts of their claims," which we addressed in the companion opinion.
Plaintiffs appeal the court's award of attorney fees and costs, arguing they are entitled to a higher amount. We cannot address their arguments due to the rulings made in the companion opinion. First, we found the trial court incorrectly failed to apply the relation back doctrine to the meal period claim of Royalty's employees at its location in Porterville, California. The court calculated damages on this claim based on meal break violations occurring between November 17, 2012 through June 14, 2017. We 3 reversed this portion of the judgment and ordered the court on remand to recalculate damages for this claim using a longer timeframe (from October 22, 2010 through June 14, 2017). This meal period claim accounted for $555,752 of the $630,348.31 judgment (nearly 90 percent). Therefore, the amount of damages awarded to plaintiffs will almost certainly increase materially on remand, necessitating a recalculation of attorney fees by the trial court.
Second, we found the court erred by decertifying the meal period class claims of its Orange County employees and by dismissing their related PAGA claim as unmanageable. We ordered a new trial be held on these claims on remand. This new trial could result in a significantly higher judgment and, in turn, materially affect the court's calculation of attorney fees.
Due to these rulings, we reverse the court's order. On remand, plaintiffs may file a new motion for attorney fees and costs following the new trial. At that point, the trial court shall recalculate an appropriate amount of attorney fees and costs. Plaintiffs may appeal again if they believe the court's new award is unreasonable. The parties shall bear their own costs on this appeal.
WE CONCUR: GOETHALS, J., ZELON, J. [*] 4
[*] Retired Justice of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.