Bithell v. E.P. Management Services

Filed 11/30/07 Bithell v. E.P. Management Services CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

APPEAL from an order of the Superior Court of Los Angeles County,
Carl. J. West, Judge. Affirmed.

Walter B. Bithell, in pro. per, for Appellant.

Blecher & Collins, Maxwell M. Blecher and Donald R. Pepperman; Harris & Ruble and Alan Harris for Defendants and Respondents E.P. Management Services, LP, Lawrence Butterworth, Craig Chandler, Colleen Devine, Rachel Flackett, Guy Herman, Julia Jecker, Kenneth R. Leiviska, Orville Lynch, David Roesch, Kathleen Teitsworth and Chris Murray.

Mitchell Silberberg & Knupp, William L. Cole, Lawrence A. Michaels, and Emma Luevano for Defendants and Respondents Aaron Spelling Productions, Inc., Avery Pix, Inc., Deep Impact Productions, LLC, Dream Works Productions, LLC, MCA, Inc., Metro-Goldwyn-Mayer Pictures, Inc., MJY Projections, Inc., New Line Productions, Inc., Paramount Picture Corporation, Rush Hour Production, Inc., Sandscape, Inc., SOF Productions, Inc., Sony Pictures Entertainment Inc., Spikes Up Productions, Inc., The SKPS Company, Torand Payroll Company, Twentieth Century Fox Film Corporations, Universal City Studios, Incorporated, Universal Pictures Company, Inc., Walt Disney Pictures And Television, Warner Bros., A Division of Time Warner Entertainment Company, L.P. (Erroneously Sued As Time Warner, Inc.), and as limited lead counsel for certain additional Defendants and Respondents as executed by and pursuant to the Stipulation filed on February 9, 2007.

King & Ballow, Paul H. Duvall for Defendant and Respondent Young Broadcasting, Inc.

________________________________

INTRODUCTION

Appellant Walter B. Bithell (Bithell) appeals an order approving a class action settlement agreement. Bithell, a purported member of the settlement class, asserts that the settlement agreement violates the California Labor Code, federal law and certain collective bargaining agreements because it inadvertently released claims for missed meal periods, meal period penalties and clams under the collective bargaining agreements.

We affirm. The settlement agreement released only the claims at issue in this litigation. In addition, the class notice was adequate. The claims process to obtain benefits was not unduly burdensome. The settlement agreement did not over-inflate the value of the non-monetary benefits. Class counsel adequately represented the interests of the class.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Claims At Issue In This Litigation

a. The Greenberg Claims

On October 2, 2000, plaintiff Greenberg filed this class action (the Greenberg claims). In the original complaint, plaintiff alleged that a purported defendant class of employers in the motion picture industry violated former Labor Code section 201.5^[1](which the Legislature amended on May 19, 1998) by failing to pay discharged employees wages due and owing within 24 hours after discharge. Plaintiff alleged that the class of defendant employers were therefore liable for statutory penalties, called waiting time penalties, pursuant to section 203.^[2]

With respect to the class allegations, plaintiff alleged that the purported class consisted of all persons employed by members of the defendant class in the production of motion pictures from September 30, 1996 to the filing of the complaint, and who were discharged and not paid their wages within the time provided by section 201.5.

b. The Gregory Claims

The claims resolved by the settlement agreement were not limited to the claims alleged in the Greenberg complaint. Instead, the claims resolved by the settlement agreement were presented in overlapping class action lawsuits. In Gregory v. SCIE LLC dba EPSG Management Services, Case No. BC 256625 (the Gregory action), the plaintiff alleged that class members had not been paid overtime rates for hours worked in excess of 40 hours in one week. The Gregory plaintiffs alleged that in determining the number of hours worked in a week, they could aggregate the hours worked for multiple employers. The Gregory complaint asserted that when an employee worked for multiple productions that used one payroll service, the employments should be combined or aggregated for purposes of determining whether the employee was entitled to overtime wages.

c. The Check Stub Claims

In another companion case, it was alleged that defendants violated section 266, which requires California employers to provide employees, along with a paycheck, a statement showing certain information about the employees pay and withholdings.

2. Trial Court Preliminarily Approves the Proposed Settlement Agreement

On July 15, 2005, the trial court entered an order conditionally certifying settlement classes, granting preliminary approval of the settlement, approving the notice to class members and scheduling a final fairness hearing on the settlement agreement.^[3]

The trial court also gave plaintiff leave to file a second amended consolidated complaint. This pleading was necessary to place at issue the matters resolved by the settlement agreement. The parties stipulated to amend the complaint in order to incorporate the settled claims and settling parties into a single complaint.

There, plaintiff alleged seven causes of action: (1) a cause of action for section 203 waiting time penalties for violations of section 201, 201.5 and 202; (2) a cause of action for violations of overtime laws set forth in sections 510 and 1194, title 29 of the United States Code sections 206 and 207 (Fair Labor Standards Act) (FLSA), and sections 3 and 4 of the California Industrial Welfare Commission Wage Order; (3) a cause of action for damages for alleged violations of section 204 for failure to pay on regularly scheduled paydays; (4) a cause of action for allegedly intentionally violating section 226 by failing to supply required information on check stubs; (5) a cause of action for restitution asserting that defendants alleged violations of sections 201, 201.5, 202, 203, 204, 510 and 1194, and title 29 of the United States Code sections 206 and 207 constituted an unfair business practice pursuant to section 17200; (6) a cause of action also seeking restitution for the alleged unfair business practices and (7) a cause of action for injunctive relief under section 17200 et seq.

3. The Settlement Agreement Releases the Greenberg Claims, the Gregory Claims and the Check Stub Claims

Section 14.2 of the settlement agreement, entitled Releases, provides: Except for the obligations and rights created by this Agreement, the Check Stub Releasing Parties hereby release and absolutely and forever discharge the Released Parties of and from any and all Settled Check Stub Claims. Except for the obligations and rights created by this Agreement, the Greenberg Releasing Parties hereby release and absolutely and forever discharge the Released Parties of and from any and all Settled Greenberg Claims.

a. The Definition of the Check Stub Claims in the Settlement Agreement

Section 2.35 of the settlement agreement provided: Settled Check Stub Claims means and refers to any and all claims, liabilities, rights, demands, suits, matters, obligations, liens, damages, losses, costs, expenses, debts, actions, and causes of action, or every kind and/or nature whatsoever, whether now known or unknown, suspected or unsuspected, asserted or unasserted, latent or patent, regardless of legal theory or type or amount of relief or damages claimed, which any Check Stub Releasing Party now has, at any time ever had, or hereafter may have against any Released Party, and which in any way arises out of, is based on, or relates in any way to any check stub, documentation, information or records which any Released Party provided, delivered or maintained, or failed to provide, deliver or maintain, in connection with any Covered Check Stub Employment. The term Settled Check Stub Claims includes, but is not limited to, claims based on California Labor Code Sections 226 and/or 1174 and claims based on Section 7 of any California Industrial Welfare Commission Wage Order. Without in any limiting the foregoing, Settled Check Stub Claims shall include all claims, liabilities, rights, demands, suits, matters, obligations, liens, damages, losses, costs, expenses, debts, actions and causes of action under the statutes and regulations set forth in this Section 2.35, whether enforced directly or pursuant to Labor Code Section 2699, Business and Professions Code Section 17200, et seq., or any other mechanism.

b. The Definition of the Greenberg and Gregory Claims in the Settlement Agreement

Section 2.37 of the settlement agreement provided: Settled Greenberg Claims means and refers to any and all claims, liabilities, rights, demands, suits, matters, obligations, liens, damages, losses, costs, expenses, debts, actions, and causes of action, of every kind and/or nature whatsoever whether now known or unknown, suspected or, unsuspected, asserted or unasserted, latent or patent, regardless of legal theory or type or amount of relief or damages claimed, which any Greenberg Releasing Party now has, at any time ever had, or hereafter may have against any Released Party, which arises out of or is based on a Covered Greenberg Employment, and which:

(a) Arises out of, is based on, or relates in any way to any violation or alleged violation of California Labor Code Sections 201, 201.5, 202, 204, and/or any other statute or regulation governing the timing of the payment of wages for work performed. (This includes, but is not limited to, any claim based on any theory or allegation that failure to make payment of wages in a timely manner violates California Labor Code Sections 510 or 1194, the federal Fair Labor Standards Act, Sections 3 or 4 of any California Industrial Welfare Commission Wage Order, and/or any other statute or regulation requiring the payment of minimum wages or overtime wages. This also includes, but is not limited to, claims under California Labor Code Section 2699 to the extent that such claims seek to enforce rights to receive payment of wages in a timely manner.); and/or

(b) Seeks to recover penalties or other remedies pursuant to California Labor Code Section 203. (This includes, but is not limited to, any claim for penalties under said Section 203 based on any allegation that payment of wages was late, or that wages were delivered by an improper method or at the wrong location, or that the amount of wages paid was incorrectly calculated or inaccurate.); and/or

(c) Seeks to recover overtime wages under California Labor Code Section 510, the federal Fair Labor Standards Act, Section 3 of any California Industrial Welfare Commission Wage Order, or any other statute or regulation requiring payment of overtime wages, where such claim arises out of or is based on the allegation that hours worked by an employee for two (or more) separate employers during a particular daily or weekly payroll period should be combined or aggregated for purposes of determining the number of overtime hours worked during such payroll period, solely because a single payroll company or advertising agency is alleged to be a joint employer of such employee in connection with both (or all) such employments.

Without in any way limiting the foregoing, Settled Greenberg Claims shall include all claims, liabilities, rights, demands, suits, matters, obligations, liens, damages, losses, costs, expenses, debts, actions, and causes of action under the statutes and regulations set forth in this Section 2.37, whether enforced directly or pursuant to Labor Code Section 2699, Business and Professions Code Section 17200. et seq., or any other mechanism.

4. Trial Court Conducts Final Fairness Hearing

On November 18, 2005, the trial court held a final fairness hearing on the settlement agreement. Three objectors appeared. At the outset, the court noted the plaintiffs class included approximately 140,000 individuals, that 9,200 claims were filed in response to the class notice and that there were approximately 500 opt-outs. The court also summarized the extensive discovery conducted and the difficulties with litigating the matter as a class action.

The court then heard from the objectors. The court approved the settlement agreement as fair and reasonable. Bithell timely filed a notice of appeal from the order approving the settlement.

CONTENTIONS

Bithell contends: (1) the settlement agreement improperly released claims for missed meal periods under the California Labor Code, the FLSA, and applicable collective bargaining agreements; (2) the settlement agreement is not fair, adequate or reasonable because it is too broad and inadvertently released claims; (3) the settlement notice was misleading and incomplete; (4) the process to file for settlement benefits was overly restrictive and burdensome for class members; (5) the value of non-monetary benefits in the settlement agreement were over-inflated; and (6) class counsel failed to adequately represent the interests of the class.

STANDARD OF REVIEW

In this appeal, we apply a de novo standard of review as to the meaning of contractual language in the settlement agreement. (Wagner v. Columbia Pictures Industries, Inc. (2007) 146 Cal.App.4th 586, 589.) Otherwise, we review the order approving the class settlement for abuse of discretion. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801 (Dunk).)^[4]

DISCUSSION

1. The Settlement Agreement Released the Greenberg, Gregory and Check Stub Claims

Bithell asserts that the settlement agreement violated state and federal law because it allegedly released claims not at issue in this litigation. We disagree.

We hold that the settlement released the following claims: (1) The check stub claims; (2) The Greenberg claims; and (3) the Gregory claims.

The settlement agreement does not purport to release any additional claims. In addition, any claims arising under the various collective bargaining agreements could not be affected by the settlement agreement. Any such collective bargaining agreement claims are governed exclusively by section 301 of the federal Labor Management Relations Act (29 U.S.C.  185). Thus, any state claims regarding breach of a term of a collective bargaining agreement are completely preempted. (Allis-Chalmers Corp. v. Lueck (1985) 471 U.S. 202, 220.) Under section 301, the exclusive remedy for alleged violations of collective bargaining agreements is the grievance procedures set forth in the collective bargaining agreement. (Republic Steel Corp. v. Maddox (1965) 379 U.S. 650, 652-653.)^[5]

2. The Settlement Notice was Reasonable

Bithell asserts that the settlement notice was misleading and incomplete. We disagree.

Class notice is subject to court approval. (California Rules of Court, rule 3.765(d).) In this case, class members were given the right to opt-out or request exclusion from the class. Thus, rule 3.766(d) requires that class notice include: (1) A brief explanation of the case, including the basic contentions or denials of the parties; [] (2) A statement that the court will exclude the member from the class if the member so requests by a specified date; [] (3) A procedure for the member to follow in requesting exclusion from the class; [] (4) A statement that the judgment, whether favorable or not, will bind all members who do not request exclusion; and [] (5) A statement that any member who does not request exclusion may, if the member so desires, enter an appearance through counsel.

In this case, the trial court approved a lengthy notice form found at pages 1029 to 1034 of the Appellants Appendix. This notice satisfied the California Rules of Court, rule 3.766(d) requirements. Section I of the notice summarized the case, including the basic contentions and denials of the parties. Section VI explained that class members had the option to exclude themselves from the settlement and advised class members how to exercise that option. Section VI also stated that persons who exclude themselves will not be bound by the settlement agreement. Section VI further stated that persons who did not timely exclude themselves would be bound by the settlement agreement. Section VII explained that those persons who remained in the class had the right to hire an attorney who could make an appearance in the matter.

In addition, certification of a class for settlement purposes triggers an obligation to provide class members with notice of the final approval hearing. California Rules of Court, rule 3.769(f) provides: If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court. 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.

In this case, the class notice approved by the trial court satisfied the requirements of rule 3.769(f) of the California Rules of Court. Section IV set forth the terms of the proposed settlement. Section VII explained that class members could object to the settlement. Section VII also advised class members how to file written objections and how to appear at the final approval hearing.

Bithell asserts, inter alia, that the notice was misleading or inadequate because it did not advise class members who may opt-out about the tolling doctrine and the statute of limitations. We reject this assertion. The applicable rules of court do not require class notice to advise class members of their legal rights should they decide to opt-out of the class settlement.

3. The Claims Process Was Reasonable

Bithell asserts that the process to file for settlement benefits was overly restrictive and burdensome for class members. We disagree.

It is not unreasonable to require class members to submit some proof showing that they qualify for benefits. In this case, the procedure was straight forward. As part of the notice program, the parties provided claim forms to the class members. As the notice explained, class members employed during a specific period of time by a defendant, its affiliate or a payroll company could submit a claim and receive a cash payment based on total amount of wages earned. The notice then required class members to submit a W-2 or other social security records showing the amount of wages earned. The notice also explained how class members could obtain social security records. Importantly, class members were not required to prove that they were not timely paid.

On this record, we cannot conclude that this process was overly restrictive or burdensome to class members.

4. The Value of Non-Monetary Benefits in the Agreement is Reasonable

Bithell asserts that the settlement agreement assigns over-inflated dollar values to certain non-monetary benefits. We disagree.

Section 11 of the settlement agreement is entitled Additional Class Benefits. Its sets forth five benefits to class members: (1) defendants are to modify check stub statements to comply with section 226; (2) each defendant is to designate a person or office to expedite the resolution of claims that an employee has not received timely payment of wages: (3) the payroll company defendants will implement an educational program for production accountants and payroll clerks regarding obligations to make timely payment of wages; (4) a commitment by payroll company defendants to upgrade the payroll systems to improve tracking for deductions so that total deductions will not exceed the requirements of any court garnishment order; and (5) a commitment by a payroll company defendant to permit employees to have deductions taken from their paychecks and delivered daily to an employees designated credit union. The settlement agreement stated that the collective monetary value of the benefits . . . is in excess of $1 million.

Bithell asserts that these non-monetary benefits are over-valued because defendants are only agreeing to comply with current law and are undertaking no new obligations. Bithell also notes that the educational program regarding payment of timely wages is not mandatory for accountants and payroll clerks.

We reject Bithells argument. The non-monetary portions of the settlement gave to class plaintiffs a major portion of the injunctive relief sought in the second amended consolidated complaint. In addition, the record shows that the defendant class took the position that they were already in compliance with California law regarding the timing of wage payments and the information included on check stub payments. Thus, according to defendants, section 11 of the settlement agreement did impose or create new legal obligations.

Moreover, other than Bithells general objections, he has made no showing as to the cost to implement such programs, or how the valuation of these programs is over-inflated.

5. Class Counsel Adequately Represented the Interests of the Class

Bithell contends that class counsel did not adequately represent the interests of the class because counsel inadvertently released claims for earned but unpaid wages. We disagree.

In section 1 of this Discussion, we concluded that the settlement agreement did not release claims for earned and unpaid wages. Thus, we reject the assertion that class counsel failed to adequately represent the interests of the class.

DISPOSITION

The order is affirmed. Costs on appeal are awarded to respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KITCHING, J.

We concur:

KLEIN, P. J.

CROSKEY, J.

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^[1] Unless otherwise indicated, all unspecified statutory reference shall be to the California Labor Code.

^[2] Section 203 provides in pertinent part: If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.

^[3] In the order, the trial court found: The Settlement Agreement is clearly within the range of possible approval as fair, reasonable, and adequate. The Settlement Agreement appears at this stage to be the product of arms-length, serious, informed, non-collusive, and non-overreaching negotiations closely supervised by the Honorable Victoria G. Chaney, which negotiations followed vigorously-contested litigation.

^[4] In Dunk, the court explained: Our task is limited to a review of the trial courts approval for a clear abuse of discretion. [Citations.] We will not substitute our notions of fairness for those of the [trial court] and the parties to the agreement. [Citations.] [Citation.]  So long as the record . . . is adequate to reach an intelligent and objective opinion of the probabilities of success should the claim be litigated and form an educated estimate of the complexity, expense and likely duration of such litigation, . . . and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise, it is sufficient. [Citations.] Of course, such an assessment is nearly assured when all discovery has been completed and the case is ready for trial.  (Dunk, supra, 48 Cal.App.4th at p. 1802.)

^[5] Because the settlement agreement releases do not inadvertently release claims not at issue, we reject Bithells second contention that the settlement agreement is not fair, adequate or reasonable.