Judge: Anne Richardson, Case: 22STCV08285, Date: 2023-10-11 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: 22STCV08285    Hearing Date: October 11, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Carlos Morales, as an aggrieved employee, and on behalf of all other aggrieved employees under the Labor Code Private Attorneys’ General Act of 2004 (the PAGA), sues Defendants Green Land Metals, Inc. (Green Land), Sergio Mejia (Green Land’s CEO), and Does 1 through 30 pursuant to a May 24, 2022 First Amended Complaint alleging claims of (1) Disability Discrimination in Violation of FEHA [Fair Employment and Housing Act], (2) Failure to Prevent Discriminatory Practices in Violation of FEHA, (3) Wrongful Termination In Violation of Public Policy, (4) Failure to Provide Reasonable Accommodations in Violation of FEHA, (5) Failure to Engage In A Good Faith Interactive Process, (6) Retaliation, (7) Failure to Pay Wages, (8) Failure to Pay Overtime Wages, (9) Failure to Compensate for Missed Meal Periods, (10) Failure to Compensate for Missed Rest Periods, (11) Failure to Pay Earned Wages Upon Separation, (12) Failure to Furnish Accurate Wage Statements, (13) Violation of Business & Professions Code § 17200, (14) Failure to Reimburse Business Expenses, and (15) Civil Penalties Under Labor Code Section 2699, et seq.

On February 14, 2023, the parties initiated settlement discussions concerning Plaintiff’s PAGA claim. Defendant agreed to share records and data with Plaintiff’s counsel, and the parties continued with negotiations through June 30, 2023, at which time the parties reached a settlement.

On September 15, 2023, Plaintiff Carlos Morales moved for an order approving settlement under California Labor Code PAGA and entering judgment thereon. The motion attaches the settlement agreement as Exhibit B to the declaration of Michael C. Robinson.

The motion is unopposed and is now before the Court.

Motion to Approve PAGA Settlement

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, with Modifications.

I. Summary of Settlement

The terms of the settlement involve approximately 30 aggrieved employees, with a PAGA period of March 6, 2023 through the entry of the Court’s order, a gross settlement amount of approximately $180,950 (subject to an escalator clause), with reductions of $63,332.50 in Plaintiff’s counsel’s fees (subject to an escalator clause), $2,026.50 in Plaintiff’s counsel’s costs, and $4,000 in settlement administrator costs, for a net settlement of $111,591. The net settlement will be distributed 75% to be paid to the California Labor and Workforce Development Agency (LWDA) and 25% to the aggrieved employees, for commensurate payment amounts of $83,693.25 and $27,897.75. The distribution to the aggrieved employees is to be made on a pro rata basis according to the number of pay periods worked by each PAGA member from March 6, 2021 to the date of the Court’s entry of an order approving the settlement (the PAGA period), with the aggrieved employees comprised of all current and former hourly-paid, non-exempt employees who were employed by Defendant in the State of California at any time during the PAGA period. The funding of the settlement amount will take place no later than 14 days after the Court enters Plaintiff’s proposed order and the judgment is final. Any section 1542 waiver is only extended to Plaintiff Morales. (Mot., p. 4; Mot., Robinson Decl., ¶¶ 9-26, Ex. B, Settlement Agreement, §§ 1, 3-5.) According to the escalator clause, should the PAGA Pay periods increase by more than 10% by the date of the entry of the Approval Order, Defendant will have the option to either increase the gross settlement amount by 10% of shorten the release period to alleviate any increase in the gross settlement amount.

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

Plaintiff argues that the settlement should be found to be fair and reasonable for various reasons: Plaintiff complied with the necessary Labor Code administrative requirements; the settling parties reached a compromise through arms-length negotiations; sufficient investigation and discovery by experienced counsel to act competently in negotiating settlement; the settlement is reasonable in light of the parties’ legal positions, the risk of continued litigation, and the underlying purpose of the PAGA. (Mot., pp. 9-14; see Mot., Robinson Decl., ¶¶ 27-37.)

No opposition is on file.

The Court finds that the settlement before the Court is a result of arms-length bargaining. A declaration from Plaintiff’s counsel explains the parties’ negotiations. The negotiations included, among other things, a determination by Plaintiff’s counsel that Defendants faced a maximum statutory penalty estimated at $500,000 and a consideration of the risks of litigation and viability of defenses to Plaintiff’s claims, to determine that the gross settlement of $180,950 was fair and reasonable. (Mot., Robinson Decl., ¶¶ 30-34.)

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).)

Here, Plaintiffs provide a copy of an electronically filed September 13, 2023 Notice to the LWDA Regarding Proposed PAGA Settlement, thus satisfying this statutory section. (Mot., Robinson Decl., Ex. C.)

IV. Administrator Appointment and Costs

The proposed settlement contemplates using the services of Phoenix Class Action Administration Solutions (Phoenix) as the neutral party that will administer the settlement. (See Mot., Robinson Decl., Ex. B, Settlement Agreement, §§ 1.2-1.3, 7.1-7.4.) Phoenix is allocated $4,000 for its services per the terms of the settlement agreement. (Id. at § 3.2.2.)

 Pheonix itself has provided a declaration from Jodey Lawrence, Phoenix’s President of Business Development, which explains the qualifications and experience of Phoenix to be an administrator, the protection of class data, and procedures for notice preparation and distribution. Such distribution would include identification of the addresses of the aggrieved employees (including by skip tracing if necessary), mailing a notice of settlement to the aggrieved employees, and providing court-approved notices and translations to aggrieved employees. (Mot., Lawrence Decl., ¶¶ 1-16, Exs. A-B [respectively, Phoenix’s company curriculum vitae, and breakdown of fee not to exceed $2,195].

The Court GRANTS the settlement insofar as it seeks appointment of Phoenix Class Action Administration Solutions as the settlement administrator. Phoenix Class Action Administration Solutions is ORDERED APPOINTED as settlement administrator.

Because Phoenix will only charge $2,195 for its services, the Court ORDERS $1,805 of the administrator fee allocation of $4,000 returned to the net settlement amount and to be factored in recalculating the payments to the LWDA and aggrieved employees. (Mot., Robinson Decl., Ex. B, Settlement Agreement, § 3.2.2; see Proposed Order, § 6.c.)

V. Enhancement Award

The motion seeks no enhancement award.

VI. Attorney’s Fees and Costs

Plaintiff’s motion seeks confirmation of $63,332.50 of the settlement agreement’s gross settlement to Plaintiff’s counsel’s fees and $2,026.50 to Plaintiff’s counsel’s costs. Counsel’s declaration provides grounds in support of the requested fees and costs, including counsel’s extensive experienced in class action and PAGA actions, counsel’s aggressive litigation approach and sponsorship of settlement discussions, counsel’s procedural litigation efforts, counsel’s skill and time expended on necessary tasks, the contingent nature of the case, and other grounds for reasonability. Counsel’s declaration provides that the applicable fee rate is $500 per hour and that counsel worked over 280 hours in this action, totaling $140,000 in possible fees, but only seeking $63,332.50 instead, thus supporting reasonableness. Counsel also explains that the $2,026.50 in costs are comprised of filing fees, expert witness fees, and other costs associated with the action, including $500 in future costs that will be necessary in order to successfully resolve this action, costs associated with the filing of this motion, and additional costs for filing declarations following distribution of the gross settlement amount. (Mot., Robinson Decl., ¶¶ 38-51.)

The Court finds that the fees sought are reasonable in light of the representations by Plaintiff’s counsel, which are entitled to deference and adequately explain the grounds for the fees request here. (See Sommers v. Erb (1992) 2 Cal.App.4th 1644, 1651 [fees awarded based on attorney’s representation as to hours actually spent on contingency fee representation where no time records were available].) The fee rate of $500 per hour is reasonable for a practitioner of more than thirty years in the Los Angeles area. (Mot., Robinson Decl., ¶ 31.) The Court notes that at a rate of $500 per hour, $63,332.50 in fees yields 126.665 total hours expended by Plaintiff counsel in this PAGA action. Such hours are reasonable for recovery in light of the 11 or so months litigated in this action on behalf of nearly 30 aggrieved employees under the Labor Code, with a reasonable return on the civil penalties that could be imposed on Defendants. (See Sections I and II above.)

The Court thus GRANTS the settlement insofar as it relates to attorney’s fees and costs related to Plaintiff’s counsel’s work.

VII. Discussion Conclusion

The motion to approve PAGA settlement is thus GRANTED, with Modifications, as stated above. 

Conclusion

Plaintiff Carlos Morales’s Motion for an Order Approving Settlement Under California Labor Code Private Attorneys General Act and Entering Judgment is GRANTED, with Modifications, as stated above.

The Court would be inclined, subject to oral argument, to sign Plaintiff Morales’s proposed order with two modifications: changing the net settlement amount figure to $113,396 ($111,591 plus $1,805); and changing the administrator fees to $2,195. (See Proposed Order, ¶¶ 6-6(c).)

The Court will inquire at oral argument as to the remaining claims and parties in the action after this Order is signed.