Judge: Anne Richardson, Case: 22STCV21691, Date: 2024-07-10 Tentative Ruling

Case Number: 22STCV21691    Hearing Date: July 10, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Julio Lopez, 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 Steven Label LLC, a Delaware Limited Liability Company, Steven Label Corporation, Steven Label, LLC, a California Limited Liability Company (collectively, Defendants), and Does 1 through 100 pursuant to a July 5, 2022 Complaint alleging the sole cause of action for Violation of the Private Attorneys General Act, Labor Code §§ 2698, et seq. Plaintiff alleges Defendants committed the following violations: (1) failure to keep accurate records in violation of Labor Code § 1174; (2) failure to produce records in violation of Labor Code §§ 226, 1198.5, and 432; (3) failure to comply with meal period requirements under Labor Code § 512; (4) failure to comply with rest period requirements under Labor Code § 226.7; (5) failure to comply with minimum wage and overtime wage requirements under Labor Code §§ 510 and 1197; (6) failure to comply with statute wage requirements under Labor Code § 223; (7) failure to pay wages when due pursuant to Labor Code § 216; (8) failure to indemnify employee’s business expenses pursuant to Labor Code § 2802; (9) failure to comply with wage statement violations pursuant to Labor Code § 226; (10) failure to provide suitable seating pursuant to IWC Wage Orders, § 14(A-B); (11) standard conditions of labor violations pursuant to Labor Code §§ 1198 and 1199; (12) failure to comply with sick leave requirements under Labor Code §§§ 233-234, 245-248.5; (13) failure to provide supplemental paid sick leave as required under Labor Code § 248.2; (14) failure to timely pay final wages pursuant to Labor Code § 201(a); (15) unlawfully inquiring into salary histories in violation of Labor Code § 432.3; (16) failure to comply with Labor Code §§ 432.5 and 1024.5; (17) failure to comply with Labor Code § 432.7, and (18) failure to comply with Labor Code § 432.5.

On September 8, 2023, the parties indicated to the Court that the case had settlement at mediation and that they were working in good faith to finalize a settlement agreement concerning Plaintiff’s PAGA claim. initiated settlement discussions concerning Plaintiff’s PAGA claim.

On December 20, 2023, the parties represented that they were still working out the finalities of the settlement agreement.

On June 5, 2024, Plaintiff moved for an order approving settlement under California Labor Code PAGA and entering judgment thereon. The motion attaches the settlement agreement as Exhibit 1 to the declaration of Michael Jones. A separate proof of service was filed on June 5, 2024 indicating service by mail of the motion and supporting papers on June 5, 2024 on the Defendants and via online filing on the California Labor & Workforce Development Agency.

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.

I. Summary of Settlement

The terms of the settlement involve approximately 328 aggrieved employees, with a PAGA period of May 1, 2021 through July 18, 2023, a gross settlement amount of approximately $325,000, with reductions of $108,333.33 in Plaintiff’s counsel’s fees (representing one-third of the gross settlement amount), $10,017.82 in litigation costs, and $4,000 in settlement administrator costs, for a net settlement of $202,649.39. 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 $151,987.04 and $50,662.35, respectively. 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 May 1, 2021 through July 18, 2023 (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. The release under the settlement agreement narrowly applies to the civil penalty claims brought under PAGA. (Mot., pp. 3-4; Jones Decl., ¶¶ 3, 13-15, Ex. 1, Settlement Agreement, §§ 1, 3-5.) Plaintiff Julio Lopez also represents that he entered into a separate settlement in connection with his personal claims, and as a result, he is not seeking a service award. (Jones Decl. ¶ 12.)

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. 4-9; see Mot., Jones Decl., ¶¶ 16-28.)

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 estimate of $3.66 million and a consideration of the risks of litigation and viability of defenses to Plaintiff’s claims to determine that the gross settlement of $325,000 was fair and reasonable. (Mot., Jones Decl., ¶¶ 19-28.)

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 June 3, 2024 Notice to the LWDA Regarding Proposed PAGA Settlement, thus satisfying this statutory section. (Mot., Jones Decl. ¶ 29, Ex. 5.)

IV. Administrator Appointment and Costs

The proposed settlement contemplates using the services of Simpluris Inc. (Simpluris) as the neutral party that will administer the settlement. (See Mot., Jones Decl. ¶ 14, Ex. 1, Settlement Agreement, §§ 1.2, 7.1-7.4.) Simpluris is allocated $4,000 for its services per the terms of the settlement agreement. (Id. at § 3.2.2.)

 Simplurs itself has provided a declaration from Eric Springer, Simpluris’ Director of Client Services, which explains the qualifications and experience of Simpluris 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., Springer Decl., ¶¶ 1-9, Exs. A-C.)

The Court GRANTS the settlement insofar as it seeks appointment of Simpluris as the settlement administrator. Simpluris is ORDERED APPOINTED as settlement administrator.

V. Enhancement Award

The motion seeks no enhancement award.

VI. Attorney’s Fees and Costs

Plaintiff’s motion seeks confirmation of $108,333.33 of the settlement agreement’s gross settlement to Plaintiff’s counsel’s fees and $10,017.82 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 his firms applicable fee rate ranges from $650 to $800 per hour and that his firm worked 162.1 hours in this action, totaling $109,880 in possible fees, which is less than the requested amount, thus supporting reasonableness. Counsel also explains that the $10,017.82 in costs are comprised of filing fees, expert witness fees, mediation costs, and other costs associated with the action. (Mot., Jones Decl., ¶¶ 30-49; Ex. 6.)

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 range provided of the various attorneys that worked on this matter is reasonable for practitioners with extensive experience in the Los Angeles area. (Mot., Jones Decl., ¶ 43-45.) The Court notes that the hours spent on this action are reasonable for recovery in light of the amount of time litigated on behalf of nearly 328 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.

Conclusion

Plaintiff Julio Lopez’s Motion for Approval of Settlement Under California Labor Code Private Attorneys General Act is GRANTED.