Judge: Anne Richardson, Case: 21STCV35414, Date: 2023-08-10 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 21STCV35414    Hearing Date: August 10, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Geovanny Romero, on behalf of himself and all other aggrieved employees, sues Defendants The Nu Paradigm House LLC (NPH) and Does 1 through 50 pursuant to a September 27, 2021 Complaint alleging a single claim of Civil Penalties under the Private Attorneys General Act (PAGA).

The claim arises from allegations that NPH failed to provide to its employees meal periods, rest periods, and complete and accurate wage statements, failed to pay overtime wages and minimum wages, failed to timely pay wages during employment, failed to pay all wages due to discharged and quitting employees, and failed to reimburse business expenses.

On July 28, 2023, Plaintiff Romero filed a motion to approve a PAGA settlement between the parties in this action.

The motion is unopposed and is now before the Court.

Motion to Approve PAGA Settlement

Preliminary Note

Plaintiff Romero and counsel are admonished for filing a memorandum of points and authorities that is 22 pages long, where 15 pages is the limit for this type of motion, absent advance leave of court. (See Cal. Rules of Court, rule 3.1113, subd. (d) and (e).)

Legal Standard

The PAGA is “a procedural statute allowing an aggrieved employee to recover civil penalties—for Labor Code violations—that otherwise would be sought by state labor law enforcement agencies.” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.) The statute provides a mechanism for private enforcement of Labor Code violations for the public benefit. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 986.)  

 To incentivize employees to bring PAGA actions, the statute provides aggrieved employees 25 percent of the recovered civil penalties. (Lab. Code § 2699, subd. (i).) The remaining 75 percent is distributed to the Labor and Workforce Development Agency (LWDA) “for enforcement of labor laws and education of employers and employees about their rights and responsibilities under [the Labor Code].” (Lab. Code § 2699, subd. (i).)

 In reviewing the terms of a settlement agreement, the court determines whether the settlement is fair, reasonable, and adequate to all concerned, and not the product of fraud, collusion, or overreaching. (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 322, 337; Nordstrom Commission Cases (2010) 186 Cal.App.4th 576, 581.) Although a PAGA plaintiff need not satisfy class action requirements (see Arias v. Superior Court, supra, 46 Cal.4th at p. 975), general principles applicable to class action settlements apply equally in this context. In the context of a class action settlement, the court considers various factors including whether (1) the settlement is the result of arm’s length bargaining, (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently, (3) counsel is experienced in similar litigation, and (4) the percentage of objectors is small. (Nordstrom Commission Cases, supra, at p. 581; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 245.) In considering the amount of settlement, the court is mindful that compromise is inherent and necessary in the settlement process. (Wershba v. Apple Computer, Inc., supra, at p. 250.)

Order Approving PAGA Settlement: GRANTED.

I. Summary of Settlement

The settlement agreement provides that Defendant will pay a total settlement amount of $135,000. (Mot., Alemzadeh Decl., Ex. B, § 3.1.) The net settlement amount ($64,000) is proposed to be the total settlement ($135,000) amount minus: (1) attorney’s fees of up to $45,000.00, representing one third of the settlement amount for all past and future attorneys’ fees necessary to prosecute, settle and administer the litigation and this resolution; (2) actual litigation costs to Plaintiff’s counsel not to exceed $15,000; (3) settlement administration costs not to exceed $6,000; and (4) a representative enhancement award for Plaintiff not to exceed $5,000. (Mot., Alemzadeh Decl., Ex. B, §§ 3.2.1 [fees and costs], 3.2.2 [administrator costs], 3.2.4 [enhancement award].) The net settlement of a proposed $64,000 would be paid out 75% percent to the LWDA ($48,000) and 25% to NPH’s qualifying employees ($16,000). (Mot., Alemzadeh Decl., Ex. B, § 3.2.3.)

II. Fairness, Reasonableness, and Adequacy & Fraud, Collusion, and Overreaching

The Court first finds that the settlement agreement appears to be one that was reached through arm’s length bargaining. On or around November 29, 2022, the parties attended a full day of mediation with Steven Serratore. On or around November 30, 2022, with the assistance of the mediator, the parties were ultimately able to come to a global resolution on this matter. (Mot., p. 2; see Mot., Alemzadeh Decl., ¶¶ 3-4.)

Plaintiff’s briefing also allows this Court to determine that investigation and discovery by Plaintiff supports the settlement. Plaintiff’s counsel explains that if Plaintiff prevailed on the claims as alleged in the Complaint, the potential exposure for civil penalties for NPH would be approximately $82,200 for the first violation, calculated at a rate of $100 per employee for the first pay period starting from March 22, 2020, as well as additional exposure for the six remaining Labor Code violations alleged in the Complaint in the amount of $4,679,800, calculated at $200 to be applied to each subsequent pay period for each employee. (Mot., Alemzadeh Decl., ¶ 23.) Plaintiff’s counsel further explains that employers often argue that the “subsequent violation” penalty of $200 can only be assessed after the employer has been cited by the LWDA and the conduct continues, for which reason, the gross settlement of $135,000 represents an adequate compromise, i.e., 100% of Plaintiff’s estimated potential initial penalties that could be assessed, and 25% of Plaintiff’s potential subsequent penalties that could be assessed. (Mot., Alemzadeh Decl., ¶ 23.) The Court notes that 25% of $4,679,800 is $1,169,950, where $52,800—the difference between $135,000 and $82,200 in initial penalties estimated by Plaintiff—is closer to 1.13% of $4,679,800 (Plaintiff’s estimated additional exposure) and 39.11% of $135,000 (the gross settlement). However, there are considerable risks with litigation including proceedings at trial and appeal, and unsettled legal issues, as detailed in counsel’s declaration. The Court overall finds that though the settlement could arguably be on the low side, the settlement is well supported.

The Court next finds that counsel appears to be experienced in similar litigation. (Mot., Alemzadeh Decl., ¶¶ 8, 10.)

Last, the Court notes that no objections to the proposed settlement appear in Plaintiffs’ papers.

Neither does the Court find evidence indicating fraud, collusion, or overreach.

The Court thus finds that the proposed settlement is fair, reasonable, and adequate to all concerned.

III. Proof of Service

A proposed PAGA settlement must be submitted to the LWDA at the same time that it is submitted to the court for review and approval. (Lab. Code, § 2699, subd. (l)(2).)

Exhibit E to the Alemzadeh declaration shows service of the proposed settlement with the LDWA, thus satisfying this requirement. (See Mot., Alemzadeh Decl., ¶ 38, Ex. E.)

IV. Administrator Appointment and Costs

The proposed settlement proposes apportioning $6,000 in administrator costs to Phoenix Class Action Administration Solutions. (Mot., Alemzadeh Decl., Ex. B, § 3.2.2; see Mot., Alemzadeh Decl., ¶ 36.)

No estimate of costs from Phoenix is attached to the motion.

Based on its experience with administrator costs, the Court finds that such costs are reasonable and fair in light of the proposed settlement.

V. Enhancement Award

The proposed settlement seeks to apportion a $5,000 enhancement award to Plaintiff. (Mot., Alemzadeh Decl., Ex. B, § 3.2.4.)

The Court first notes that the Labor Code does not specifically provide for enhancement awards. Labor Code section 2699, subdivision (i) provides that “[e]xcept as provided in subdivision (j), civil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes; and 25 percent to the aggrieved employees.” Subdivision (j), in turn, provides that “[c]ivil penalties recovered under paragraph (1) of subdivision (f) shall be distributed to the Labor and Workforce Development Agency for enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes.”

Plaintiff cites to various authorities for support of the proposition that incentive awards/enhancement payments are routinely awarded in class action cases. (Mot., p. 21, citing, e.g., Rodriguez v. West Publishing Corp. (9th Cir. 2009) 563 F.3d 948, 958.)

Based on the lack of opposition to this proposed settlement, the parties’ agreement to an enhancement award, and the lack of clear authority on this question, the Court exercises its discretion to find that the enhancement award agreed to by the parties is proper.

VI. Attorney’s Fees and Costs

An aggrieved employee who prevails in a PAGA action may recover reasonable attorney’s fees and costs. (Labor Code, § 2699, subd. (g)(1).) Whether a plaintiff established entitlement to an award of fees under PAGA is a question best decided by the trial court. (San Diego Municipal Employees Assn v. City of San Diego (2016) 244 Cal.App.4th 906.)

Here, Plaintiff’s counsel seeks an award of $45,000—one third of the gross settlement—in compensation for 108.55 hours expended in this action at a rate of $500 per hour, totaling approximately $54,275 in accrued fees, as supported by time records. (See Mot., Alemzadeh Decl., ¶ 39, Ex. F [verified time records]; see also Mot., pp. 17-20.)

Plaintiff’s counsel also seeks $15,000 in costs, supported by time records. (See Mot., Alemzadeh Decl., ¶ 39, Ex. G [verified costs summary totaling $14,530.43].)

The Court first finds that a fee rate of $500 per hour is reasonable for counsel per his and his firm’s experience (see Mot., Alemzadeh Decl., ¶¶ 8, 10) and based on fee rates in the Los Angeles market.

The Court next finds that counsel reasonably expended approximately 108.55 hours in the nearly two years this action has been pending, as supported by verified time records. (See Mot., Alemzadeh Decl., ¶ 39, Ex. F; see also Horsford v. Board of Trustees of Calif. State Univ. (2005) 132 Cal.App.4th 359, 397 [“[T]rial court abused its discretion in rejecting wholesale counsels’ verified time records” where “verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous”].)

Last, the Court finds that costs of $15,000 are reasonable in light of the verified costs summary attached to the motion, and despite the upward difference in favor of counsel.

VII. Discussion Conclusion

In light of the above determinations, the Court GRANTS this motion. 

Conclusion

Plaintiff Geovanny Romero’s Motion to Approve PAGA Settlement is GRANTED.

The Court ENTERS the proposed order filed by Plaintiff Romero.

Phoenix Class Action Administration Solutions is APPOINTED the settlement administrator entitled to administration fees of up to $6,000.

Plaintiff is AWARDED a $5,000 enhancement award.