Judge Bruce G. Iwasaki, Case 20STCV17917 2023-01-31 Tentative Ruling

Department 58

Tentative Ruling: The Motion for an Order Approving Settlement of Claims brought pursuant to the Private Attorney General’s Act of 2004 is granted as modified.

Plaintiff Debbie Gifford, on behalf of other aggrieved employees, filed a single count complaint against Defendant Regent Aerospace Corporation for violation of California Labor Code section 2698, the Private Attorney General Act of 2004 (PAGA). The Complaint alleged numerous Labor Code violations including failures to: pay overtime, provide meal/rest periods, timely pay wages upon termination/during employment, provide wage statements, and keep accurate business records.

The parties have settled the case and Plaintiff moves for approval of the settlement. The “Aggrieved Employees” are defined as approximately 131 individuals who worked for Regent Aerospace Corporation in California between March 4, 2019 and March 31, 2021. (Szeto Decl., ¶ 5.) The breakdown of the proposed settlement is as follows:

The Private Attorneys General Act 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.) The statute incentivizes aggrieved employees by providing 25 percent of the recovered civil penalties, while the remaining 75 percent is distributed to the Labor and Workforce Development Agency (LWDA) “for enforcement of labor laws…and for education of employers and employees about their rights and responsibilities under [the Labor Code].” (Lab. Code, § 2699, subd. (i).)

“The superior court shall review and approve any settlement of any civil action filed pursuant to this part [Labor Code Private Attorneys General Act of 2004].” (Lab. Code, § 2699, subd. (l)(2).)

“[A] trial court should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77.) A court should consider factors used in evaluating class action settlements, such as the strength of the plaintiff’s case, the risk, the stage of the proceeding, the complexity and likely duration of further litigation, and the settlement amount. (Ibid.) Other factors that may be useful in determining fairness include 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 Com. Cases (2010) 186 Cal.App.4th 576, 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, supra, 91 Cal.App.4th at p. 250.)

Plaintiff submitted an e-mail confirmation that the proposed settlement was electronically submitted to the Labor and Work Force Development Agency on January 9, 2023, in compliance with Labor Code section 2699, subdivision (l)(2). (Szeto Decl., Ex. 5.)

The Court finds the overall proposed settlement is fair, reasonable, and adequate to all concerned parties and is not the product of fraud, collusion, or overreaching. The Court makes adjustments to the amounts within the gross settlement.

Here, the parties attended an early private mediation on September 24, 2021, with Eve Wagner, Esq. (Szeto Decl., ¶ 5.) Prior to the mediation, the parties exchanged informal discovery. This included information on time and pay data, Defendant’s operations, and employment policies and procedures. (Ibid.) This satisfies that the settlement was a result of arms-length bargaining.

Plaintiff’s counsel avers to conducting significant investigation and review of the documents to evaluate potential recovery. The parties arrived at the resolution of this case through awareness of the “mutual risks and costs of further litigation” and consideration of Defendant’s financial condition. (Szeto Decl., ¶ 5.) Counsel concedes that Defendant maintained several defenses, which, if successful, could eliminate or substantially reduce any recovery. For example, Defendant maintains that its policies were compliant, that this lawsuit is not appropriate for representative treatment, and there can be no stacking of PAGA penalties. (Id. at ¶ 7.) Counsel also recognizes that “litigating a complex PAGA action is inherently expensive” and “there is a real possibility that Plaintiff would recover nothing.” (Id. at ¶ 8.)

As to the maximum exposure, Plaintiff’s counsel asserts that Defendant argued that “recent case law prohibits use of the subsequent violation rate and that penalties cannot be stacked.” (Szeto Decl., ¶ 11; Gunther v. Alaska Airlines, Inc. (2021) 72 Cal.App.5th 334, 356 [“the increased $200 civil penalty for ‘subsequent violation[s]’ does not apply unless [plaintiff] presents evidence that the Labor Commission or a court notified [defendant] that it was in violation of the Labor Code”].) Similarly, even if Plaintiff prevailed at trial, a trial court has considerable discretion to reduce the penalty award. Therefore, counsel avers that the maximum exposure is 131 (aggrieved employees) times $100 penalty violation, equals $13,100.00. The proposed net settlement is $10,000, which is 76.33% of $13,100.

Defendant shall pay $100,000 to the Settlement Administrator in twelve equal, monthly payments. (Szeto Decl., Ex. 1, ¶ 15.) Within five business days of the Final Order and Judgment, Defendant will provide the aggrieved employees’ information to the Settlement Administrator. Within five business days after receipt of Defendant’s last monthly payment, the Settlement Administrator will distribute the prorated payment to each employee. (Id. at ¶ 21.) Checks will be valid for 120 days and any uncashed amount will be sent to the Unclaimed Property division of the California State Controller’s office in the name of the aggrieved employee. The settlement payments will be treated as civil penalties and no taxes shall be withheld or taken out. The Settlement Administrator will issue IRS Form 1099s for each settlement payment. (Szeto Decl., Ex. 1, ¶ 22.)

Kitty Szeto attests to her firm’s experience in class actions and labor and employment cases. (Szeto Decl., ¶ 6, Ex. 2.) The firm has been involved in at least 15 class action litigations since 2004 and which have all settled. The firm has also participated in at least 11 jury trials, albeit in the personal injury context. (Ibid.)

Labor Code section 2699, subdivision (g)(1) provides “[a]ny employee who prevails in any action shall be entitled to an award of reasonable attorney’s fees and costs . . . .” (Lab. Code, § 2699(g)(1).)

The Court finds that Plaintiff is represented by experienced counsel. The fee requested, $35,000.00, represents 35% of the gross settlement.

Plaintiff’s counsel provides an alternative calculation under the lodestar method. The itemized entries indicate 218.55 hours expended for a total amount of $131,130.00. (Szeto Decl., Ex. 3.) This results in an hourly rate of $600. The Court finds that some of the billing entries are vague and general. For example, 10.80 hours was reportedly spent on “Review of Local Rules, Standing Orders and Trial Dates” without specifying any actual work. Thus, the Court awards $30,000.00 in attorney’s fees. This is in line with other class action fee awards. (Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66, fn. 11.)

As to costs, Plaintiff provides an itemized statement. (Szeto Decl., Ex. 4.) The total incurred was $9,950.23 of which the bulk was the mediation fee ($7,450.00). The Settlement Agreement indicates that the parties agreed to cap the costs at $10,000.00. (Id., Ex. 1, ¶ 16.) The Court awards this amount.

Accordingly, the Court awards $30,000 in attorney’s fees and $10,000 in costs.

Plaintiff requests $10,000 as a service award for her time and effort exerted on behalf of the aggrieved employees. (Gifford Decl., ¶ 13.) She avers to spending numerous hours on various duties: three hours in the initial discussions with her attorneys, eight hours gathering information from co-workers, three hours answering questions from her attorneys throughout the lawsuit, five hours discussing her experience with the employer, ten hours communicating with counsel during investigations, between three to four hours answering questions relating to her job duties, and five hours attending the mediation and post-mediation discussions. (Id. at ¶¶ 3-11.) In addition, she executed a general release with the employer as part of the settlement. (Id. at ¶ 13.)

Given that the original net settlement amount was only $10,000 to the entire class, the Court does not find that a $10,000 service award for approximately 35 hours of work is reasonable under these circumstances. The Court exercises its discretion and awards $2,500 as a service fee.

The parties have agreed to engage Phoenix Class Action Administration Solutions (Phoenix) as the third-party settlement administrator and requests court approval of $5,000.00 for administration costs. (Szeto Decl., Ex. 6.) Phoenix will conduct data analysis, perform skip-tracing as necessary, calculate and disburse payments, provide tax reporting, re-issue checks, and perform other administrative tasks. (Ibid.)

Plaintiff submits Phoenix’s bid for settlement administration, reflecting the $6,302.61 in costs, which are capped at $5,000.00. The bid contains an itemized statement of the various tasks that Phoenix will undertake. The Court approves the requested $5,000.00.

The Court finds the release under the Settlement Agreement is fair and reasonable. The release states: “Upon Defendant’s payment of the last monthly payment of the Maximum Settlement Amount to the Settlement Administrator, all Aggrieved Employees (including Plaintiff) and all persons purporting to act on their behalf or purporting to assert a claim under or through any of them, including, but not limited to, their dependents, heirs, assigns, beneficiaries, devisees, legatees, executors, administrators, agents, trustees, conservators, guardians, personal representatives, and successors-in-interest will be forever barred from pursuing against Defendant and the Released Parties any and all Settled Claims during the PAGA Period. Aggrieved Employees other than Plaintiff will not be deemed to have released any individual wage and hour claims by virtue of this Settlement.” (Szeto Decl., Ex. 1, ¶ 29.)

Plaintiff’s individual release is considerably broader and is a general release of “any and all relief,” and, she will be “deemed to have waived all rights and benefits afforded by California Civil Code section 1542. (See generally, Szeto Decl., Ex. 1, ¶ 28.)

Because the payment structure is spread out over a year, Plaintiff has not submitted an explanatory letter. However, five business days after Defendant’s final payment, the Settlement Administrator will provide an explanatory letter, which will be mutually approved by the parties.

The motion to approve settlement of claims brought under the Private Attorneys General Act is granted as modified herein.

The request for attorney’s fees is granted in the amount of $30,000 and Plaintiff’s service award is modified to $2,500. Therefore, an additional $12,500 shall be added to the net settlement amount of $40,000, for a total of $52,500. The LWDA shall receive $39,375, while the aggrieved employees shall receive $13,125.