Filed 1 / 6 / 21 Morrow

- Meadows Wage and Hour Cases CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 publish ed, 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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIX

MORROW

- MEADOWS WAGE AND HOUR CASES. 2d Civ. No. B298816 JCCP No. 4858 (Los Angeles County Super. Ct. No. BC590427, San Diego County Super. Ct. No. 37

- 2015

- 00033224

- CU

- OE

- CTL )

This appeal involves a pair of complex civil actions
that were coordinated for trial. T he first was a class action brought against the Morrow

- Meadows Corporation by Marie Pacheco and Rafael Robinson (collectively, Appellants) that alleged violations of various Labor Code and Business and Professions Code provisions. It did not seek relief p ursuant to the Private Attorney General Act (PAGA). The second was brought by Araceli Noriega. In contrast to the Pacheco action, the Noriega action did not seek classwide relief, but did seek
PAGA relief.

After the actions were coordinated for trial, N oriega amended her complaint to encompass the claims set forth in the2

Pacheco complaint. She then entered into a settlement agreement with Morrow

- Meadows that released all claims against the company. The trial court certified the class action, approved t he settlement, and entered judgment accordingly. Appellants contend the court erred when it: (1) deemed Noriega an adequate class representative, and (2) approved the settlement. Because we agree with Appellants’ first contention,
we do not reach the se cond. We reverse.

FACTUAL AND PROCEDURAL HISTORY

The complaints
Morrow

- Meadows is an electrical contractor. A bout
95 percent of its hourly employees are unionized field workers

. T he other five percent are nonunionized office workers.

Pacheco is a for mer Morrow

- Meadows employee. I n August 2015, she filed a class action complaint on behalf of all current and former hourly employees who had worked for
Morrow

- Meadows in California since August 2011. In it, she alleged that Morrow

- Meadows did not: (1) p ay minimum wages, (2) pay overtime wages, (3) timely pay wages, (4) reimburse business expenses, (5) provide meal and rest periods, (6) provide compliant wage statements, or (7) keep the requisite payroll
records. She also alleged that Morrow

- Meadows enga ged in unlawful business practices

. She sought classwide damages for unpaid wages, premium wages, actual damages, restitution of unpaid wages, statutory penalties, interest, and attorney fees

, but did not seek PAGA relief. Robinson was added as a named

p laintiff the following year.

Noriega filed her complaint in October 2015. She alleged causes of action for minimum wage violations, overtime violations, failure to reimburse business expenses, meal and rest3

period violations, wage statement violations, and failure to pay wages upon separatio n. Noriega brought her complaint as a representative of the State of California pursuant to PAGA, not

as a class action

. S he sought unpaid wages, statutory civil penalties, interest, and attorney fees on behalf of M orrow

Meadows’s employees who had worked for the company during the previous year.

Morrow

- Meadows petitioned for coordinat ion of the

two actions. (Code Civ. Proc., § 404 et seq.; Cal. Rules of Court, rule 3.501 et seq.) Noriega opposed coordination , cla iming that
her case was “a purely PAGA action” requiring only limited discovery. Her attorney also stated that he did not intend to represent unionized employees. The actions were coordinated over Noriega’s objections.

Noriega settles with Morrow

- Meadow s In mid

- 2017, Noriega and Morrow

- Meadows entered into a $1.1 million settlement that released all claims against the company, including the classwide claims asserted in the Pacheco
action. The settlement provided that 75 percent of the net proceeds woul d go to the employees delineated in Noriega’s original complaint, with the remaining 25 percent going to the additional employees delineated only in the original Pacheco complaint. Before seeking approval of the settlement, Noriega requested leave to fil e an amended complaint. The proposed amended complaint asserted class action allegations on behalf of the same putative class delineated in the Pacheco complaint, including most of the same Labor Code violations. It did not include allegations related to Morrow

- Meadows’s alleged failure4

to maintain requisite payroll records, however, nor did it include
all of the theories on which Appellants sought recover y

.

After a series of amendments, Noriega and Morrow

Meadows executed the operative fourth amended s ettlement agreement

. Appellants objected on a number of grounds, including that Noriega was an inadequate class representative.

Preliminary approval proceedings Noriega moved for preliminary approval of the
settlement and certification of a settlement class. In support of
the motion , Noriega’s counsel submitted a declaration stating that the $1.1 million settlement was fair and reasonable because
the best

- case recovery was $1.8 million while the wo rst case was a defense verdict. Appellants objected th at the claims include d in
counsel’ s declaration totaled $2

. 5 million, not $1.8 million. They also complained that counsel’s valuation ignored several claims in their original complaint, including those made on behalf of unionized employees. They continue d to object that Noriega was an inadequate class representative.

The trial court prelimina rily approv ed the
settlement

, and preliminarily certified the matter as a class
action with two subclasses: a PAGA subclass and a non

- PAGA
subclass . It found that Noriega’s claims were “ typical of the
claims of the members of the [s] ettlement [c] lass ” and appointed
her as class representative, finding that she was “ qualified and
suitable ” to serve in that role because she would “ fairly and adequately protect the in terests of the

. . . [c] lass .”

Final approval proceedings After mailing out class notices, the claims administrator reported that only Appellants had objected to the settlement. Noriega moved for final approval. Attached to her5

motion was another decla ration from counsel valuing the claims in settlement, this one with a best

- case recovery of slightly more than $1.8 million. The valuation excluded claims made by unionized employees f or everything but the wage statement claim. Appellants’ counsel counte red with a valuation of more than $312 million for the settled claims plus penalties.

At the final approval hearing, Appellants complained that the settlement grossly undervalued the class claims and was reached without adequate discovery, without pursui ng claims on behalf of 95 percent of the class members, and without providing
the court with accurate information about the nature and magnitude of the claims. They also claimed that Noriega was not an adequate class representative.

The trial court gra nted final approval of the
settlement. The court deemed the settlement fair and reasonable, the product of good

- faith negotiations after adequate discovery. It found the difference in the amounts paid to PAGA
class members and non

- PAGA class members to b e fair. Its order
stated that it resolved all claims asserted in the coordinated proceeding. 1
DISCUSSION

Appellants contend the trial court erred when it certified the class action and approved the settlement because it

1 After Appellants timely filed their notice of appeal, M orrow

- Meadows moved to dismiss the appeal for lack of standing. We denied the motion. Morrow

- Meadows and Noriega ask that we now reconsider our denial. We decline to do so: Appellants were parties of record in the coordinated action, and thus have stan ding to appeal. ( Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260, 2 69.)6

did so without setting forth its reasons for concluding that Noriega was an adequate class representative

. We agree

.

“ Code of Civil Procedure s ection 382 authorizes class
actions ‘ when the question is one of a common or general interest, of many persons, or when the parties are numerou s, and it is impracticable to bring them all before the court. ’ ” ( Sav

- On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 ( Sav

- On Drug Stores ).) “ The party seeking certification has the burden to
establish the existence of both an ascertain able class and a well

defined community of interest among class members. ” ( Ibid. ) A “community of interest” requires proof of “ predominant common questions of law or fact ,” “ class representatives with claims or defenses typical of the class ,” and “ class representatives who can adequately represent the class. ” ( Ibid. )

We review the trial court’s finding that Noriega was an adequate class representative for abuse of discretion. ( Sav

- On Drug Stores

, supra , 34 Cal.4th at p. 326.) We will not disturb
that finding “‘“unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3) it rests on erroneous legal assumptions.”’ [Citation.]” ( Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 530 ( Ayala ) .) In

contras t to ordinary appellate review, “[w]e review the trial
court’s actual reasons for granting or denying certification.” ( Ibid. , emphasis added.) “[I]f they are erroneous, we must reverse, whether or not other reasons not relied upon might have supported th e ruling

. ” ( Ibid. )

Here, we cannot determine whether the trial court’s reasons for certifying the coordinated cases as a class action were erroneous because the court did not articulate any basis for its finding that Noriega could adequately represent th e settlement7

class. Though the court “ parroted the ultimate finding needed to [grant class] certification ,” it “ did not provide any insight into its analytic route in reaching that finding. ” ( Myers v. Raley ’ s (2019) 32 Cal.App.5th 1239, 1247 ( Myers ).) W hen it preliminarily granted certification, the court stated that Noriega was “ qualified
and suitable ” to serve as class representative because she would

“ fairly and adequately protect the interests of the

. . . [c] lass

. ” But it did not explain why it rea ched that conclusion. Nor did the court provide an explanation at the final approval hearing. The court’s “ failure to explain itself is fatal. ” ( Ibid. )

Neither Morrow

- Meadows nor Noriega point to anything in the record to support a contrary conclusion. Morrow

Meadows notes that Noriega submitted a declaration detailing the work she had done in the case, while her attorney’s declaration noted his experience in class action litigation. Were this case subject to normal appellate review standards, these
d eclarations might provide support for the trial court’s finding that Noriega would be an adequate class representative. But this is an appeal of a class action. “ To turn to the record to concoct some basis for the trial court’s [grant] of certification i s to abolish
the relevant standard of review

. . . and apply ordinary appellate review contrary to the legion of cases that prohibit appellate
revisionism

. ” ( Myers

, supra , 32 Cal.App.5th at p. 1251.)

Noriega similarly urges us to rely on her declaration, noting that the trial court cited it when it concluded that she was
entitled to an incentive award. This again ignores the standard of review in class action appeals, and instead would require us to infer a basis for the court’s determination that Norieg a would have fairly and adequately represented the class where no explanation was given. “ This we cannot do. ” ( Myers

, supra , 328

Cal.App.5th at p. 1251.) The trial court abused its discretion when it failed to explain why Noriega was an adequate class

re presentative. Reversal is therefore required. ( Id. at p. 1252;
see also Ayala

, supra , 59 Cal.4th at p. 530.)
DISPOSITION
The orders certifying the coordinated cases as a class action and granting final approv al of the settlement, entered March 6 and 27, 2019, are vacated, and the judgment is reversed.
The matter is remanded to the trial court with directions to articulate a statement of reasons for approving or denying class certification. Appellants shall recover their costs on appeal.

NOT TO BE PUBL ISHED.

TANGEMAN, J.

We concur:

GILBERT, P. J.

YEGAN, J.Yvette M. Palazuelos, Judge

Superior Court County of Los Angeles

______________________________ Lawyers for Justice, Edwin Aiwazian, Arby Aiwazian
and Joanna Ghosh for Plaintiffs and Appellants.

Stuart Kane, Bruce D. May, Shane P. Criqui and Patricia H. Jun for Defendant and Respondent.

Sullivan Law Group, William Bransfield Sullivan and Eric Keith Yaeckel for Respondent.