Judge Alison Mackenzie, Case Number: 21STCV35865, Date: 2023-11-21 Tentative Ruling

Judge: Alison Mackenzie, Case: 21STCV35865, Date: 2023-11-21 Tentative Ruling

Case Number: 21STCV35865 Hearing Date: November 21, 2023 Dept: 55

NATURE OF PROCEEDINGS: Plaintiff’s Motion for Approval of PAGA Settlement.

The motion is granted, as prayed. Because the parties' settlement includes that the Court will retain jurisdiction to enforce the settlement under CCP Section 664.6, the Court will be asking the parties if they agree to dismiss the case after the Court signs the order approving the PAGA settlement.

On 11/19/21, KARLA SANTIAGO (“Plaintiff”) filed a First Amended PAGA Complaint, alleging that defendants employed her to care for their young child and their pets, purchase groceries, cook, run errands, and perform other household duties, while committing various wage-and-hour violations, as to Plaintiff and other aggrieved employees. Plaintiff further alleges that Defendants did not pay overtime compensation at one-and-one-half times her regular rate, provide meal and rest breaks, provide itemized wage statements, or reimburse for cell phone expenses.

On 4/20/23, Plaintiff filed a Request for Dismissal, dismissing causes of action 1 through 11, but not the 12^th Cause of Action, “Private Attorneys General Act.”

Plaintiff has filed a motion for approval of a PAGA settlement with defendants.

Judges are to apply an appropriate standard of review of PAGA case settlements, by inquiring whether settlements are “ ‘fair, adequate, and reasonable’ ” and “meaningful and consistent with the purposes of PAGA….” Moniz v. Adecco USA, Inc. (2021) 72 Cal. App. 5th 56, 64.

“If parties in a PAGA lawsuit agree to settle, the ‘proposed settlement shall be submitted to the [LWDA],’ and the ‘court shall review and approve [the] settlement.’ ” (§ 2699, subd. (l)(2).) Although our Supreme Court has stated that this provision ensures that ‘any negotiated resolution is fair to those affected’…, California courts have not determined the standards by which a trial court reviews and approves a proposed settlement.” Starks v. Vortex Indus., Inc. (2020) 53 Cal.App.5th 1113, 1124. Accord Williams v. Sup. Ct. (2017) 3 Cal. 5th 531, 549 (“PAGA settlements are subject to trial court review and approval, ensuring that any negotiated resolution is fair to those affected.”).

In that regard, settling parties commonly advocate grafting class-action rules onto the legislative procedure, which is somewhat analogous. Fundamentally, a PAGA representative action is not a class action, because there is no collection of individual claims in a PAGA action, but instead a representative action on behalf of the state. Kim v. Reins Int'l California, Inc. (2020) 9 Cal. 5th 73, 87.

Here, according to Plaintiff, the material settlement terms are as follows:

¶ 1.9. Defendants to pay $7,500.00 (“PAGA Settlement Amount” or “PSA”) in settlement of the PAGA claims.

¶ 1.2, 3.2.2. Settlement Administrator: Settlement payments shall be distributed by the third-party settlement administrator whose costs are not to exceed $900.00.

¶ 1.18. The relevant settlement period for the PAGA claims is from September 10, 2020, through the date of court approval (“PAGA Period”).

¶ 1.4, 5.1. Aggrieved Employees are the four individuals consisting of all current and former nannies who worked at least one pay period for Defendants in California at any time during the PAGA Period.

¶ 3.2.1. Attorneys’ Fees and Costs: Defendants shall pay to Plaintiff’s Counsel thirty-three percent (33%) of the PSA, and shall pay up to $900.00 for litigation costs and expenses.

¶ 1.14. “Net Settlement Amount” means the balance after deducting the following from the PSA: attorneys’ fees, costs, and settlement administration costs. The Net Settlement Amount is to be paid to the LWDA (75%) and to the Aggrieved Employees (25%).

¶ 4. Non-Monetary Consideration. As consideration for entering into the agreement, Defendants agree to pay their Personal Attendants overtime at the rate of one and one half times their regular rate of pay for all hours worked over nine hours in any workday and for all hours worked more than 45 hours in the workweek.

¶ 5.1. PAGA Released Claims: “Upon Court approval of the Settlement and entering of judgment thereon, and upon Defendants’ funding of the Gross Settlement Amount, Plaintiff and Aggrieved Employees will fully and finally release and discharge Defendants and each of its past, present, and future parent companies, subsidiaries (direct or indirect), divisions, predecessors, concepts, related or affiliated companies, insurers, reinsurers, successors, and assigns, and each of their current and former shareholders, officers, directors, employees, attorneys, and agents thereof, both individually and in their business capacities, and each of their employee benefit plans and programs and the trustees, administrators, fiduciaries, and insurers of such plans and programs, both individually and in their business capacities (“Released Parties”), from any and all PAGA claims, that were asserted as set forth in the operative pleading in the Action and/or notice submitted to the LWDA (LWDA-CM-844314-21), to recover civil penalties pursuant to PAGA for any alleged violations by Defendants with respect to work performed for Defendants during the PAGA Period (“PAGA Released Claims”), and all claims for attorneys’ fees and costs and statutory interest in connection therewith, which arose during the PAGA Period. The release of claims outlined above is binding on Plaintiff, the LWDA, the State of California, and all Aggrieved Employees of Defendants during the PAGA Period once approved by the Court and the Settlement has been fully funded.”

(Mot., pp. 1-2.)

Analyzing the matter at hand, the Court now finds that Plaintiff sufficiently shows:

1. Given the foregoing potential award of $78,090 in penalties, if successful at trial, the settlement of $7,500 for this small PAGA group is a fair result, to avoid the uncertainties of trial, litigation, and changes in PAGA law. (Mot., 6:19-22.)

2. The PAGA lawsuit was an intended catalyst for defendants to comply with the Labor Code and start to pay their nannies overtime wages. (Mot., 7:17-18.)

3. The PAGA Settlement Agreement allocates only $2,925 in attorney’s fees (mot, ex. A, ¶ 3.2.1), which is a fair compromise under the lodestar method, and under the percentage method, would represent 39 percent of the PAGA Settlement.

4. Plaintiff’s counsel expended $1,280.81 in litigation costs. (Gutierrez Decl. ¶ 21.)

5. Allocated settlement administration costs of up to $900 are reasonable. (Mot., 10:9-10.)

6. A clear notice of the reason for the settlement payments, and the settlement effect, will be sent to the Aggrieved Employees. (Mot, ex. B.)

The Court finds that the subject PAGA settlement is fair, adequate, and reasonable, meaningful and consistent with the purposes of PAGA, as to all subject, affected employees, and grants the motion.

Although all of the amounts involved are unusually small as compared to other PAGA settlements seen in this Court, it is explained by there being only four aggrieved employees, working since 9/10/20 (Matthew Gutierrez decl., ex. A (PAGA Settlement Agreement, p. 7). Also, defendants have argued that the aggrieved employees are exempt from entitlement to meal and rest breaks (mot., 6:8-9). Thus, the law applies that, “[t]here is no willful failure to pay wages if the employer and employee have a good faith dispute as to whether and when the wages were due.” Nordstrom Com. Cases (2010) 186 Cal. App. 4th 576, 584. Given that, and Court discretion as to the amounts of possible penalties, the settlement is reasonable considering some uncertainty as to the extent of possibly prevailing at a trial.