Judge: Bruce G. Iwasaki, Case: 21STCV34040, Date: 2024-07-18 Tentative Ruling
Case Number: 21STCV34040 Hearing Date: July 18, 2024 Dept: 58
Judge
Bruce Iwasaki
Hearing Date: July 18, 2024
Case Name: Alexis Cardoza v. BHFC
Operating, LLC, et al.
Case
No.: 21STCV34040
Motion: Motion
for Approval of PAGA Settlement, Award of PAGA counsel fees, PAGA Counsel
Litigation Expenses Payment, Service Award, and Administration Expenses Payment
Moving
Party: Plaintiff Alexis
Cardoza
Responding Party: None as of July 15, 2024.
Tentative Ruling:
Plaintiff’s Motion for Approval of PAGA Settlement and Award
of PAGA Counsel Fees Payment, PAGA Counsel Litigation Expenses Payment, Service
Award and Administration Expenses Payment is GRANTED in part and DENIED in
part. Plaintiff’s PAGA Settlement is
approved. However, the amount of fees is
reduced from $122,500 to $105,000. The
request for a service award is granted in the amount of $5,000.
Background
On September
15, 2021, Plaintiff filed this action under the Private Attorneys General Act,
California Labor Code §§2698, et seq. (“PAGA”)
On January 28, 2022, Plaintiff filed the operative First Amended
Complaint under PAGA for violations of Labor Code sections 201 to 204, 226,
subdivision (a), 226.7, 510, 512, subdivision (a), 1174(d), 1194, 1197.1, 1198,
2800 and 2802.
Discussion
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. (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].” (Id.)
“The superior court shall review and
approve any settlement of any civil action filed pursuant to this part. The
proposed settlement shall be submitted to the agency at the same time that it
is submitted to the court.” (Lab. Code,
§2699, subds. (l) and (2).)
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.
(Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77; 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 (Arias, supra, 46 Cal.4th at 975), general
principles applicable to class action settlements apply equally in this
context. (Moniz, supra, 72
Cal.App.5th at 77.)
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,
supra, 186 Cal.App.4th at 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
250.)
Plaintiff’s
PAGA Settlement
The
terms of Plaintiff’s PAGA Settlement are as follows:
·
1,100 individual aggrieved employees
·
Gross settlement amount of $350,000
·
PAGA counsel payment of $122,500 (35% of gross
settlement)
·
PAGA counsel litigation expenses of $4,154.75
·
Service award:
$5,000
·
Administration Expenses: $10,000
·
PAGA Penalties:
$208,345.25 of which $156,258.94 (75%) will got to the LWDA and
$52,086.31 (25%) will go to individual employees
·
Individual aggrieved employees will receive
checks for their proportionate amount of the $52,086.31 in penalties based on
number of pay periods. If the actual
number of pay periods during the PAGA period exceeds 13,931 by more than 10%,
i.e. more than 15,324, the Gross Settlement amount will increase by 1%.
Notice
of PAGA Settlement Proper
· Plaintiff
sent a copy of the proposed Settlement to the LWDA via online submission with
the filing of the Motion on June 4, 2024.
(Genish Dec., ¶23.) Plaintiff has
complied with Labor Code section 2699, subsections (1) and (2).
Settlement
Fair, Adequate and Reasonable
· The
settlement is presumptively reasonable because it was the result of significant
investigation to evaluate the strength and value of the PAGA claim and the
risks of litigating it through trial and it was negotiated at great length and
effort by counsel with significant experience in this area. (Genish Dec., ¶¶33, 43.)
· Strength
of Plaintiff’s case. “The most important
factor is the strength of the case for plaintiffs on the merits, balanced
against the amount offered in settlement.”
(Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116,
130.) Plaintiff undertook extensive
investigation to determine the strength of the PAGA claim and Defendant’s
maximum exposure. (Genish Dec., ¶¶34-39.)
· Defendant’s
estimated maximum exposure was calculated as approximately $1,296,800 based on
12,968 PAGA Pay Periods at $100 each.
(Genish Dec., ¶35.)
· Plaintiff
took into account the strength and weakness of the PAGA Claim and Defendant’s
defenses and determined that the Settlement achieves as sizeable benefit. (Genish Dec., ¶¶36-39.)
Distribution
of Penalty Payment Proper
· Penalties
recovered by aggrieved employees must be distributed as follows: (1) 75% to the LWDA and (2) 25% to aggrieved
employees. (Lab. Code, §2699, subd.
(i).) The Settlement Agreement’s
distribution of the penalties is in accordance with Labor Code section 2699,
subsection (i). (Genish Dec., ¶26.)
· Plaintiff
explains that each aggrieved employee will receive a portion of the 25% in
penalties on a pro rata basis based on their number of pay periods worked
during the PAGA period. (Genish Dec.,
¶26.). Plaintiff states there are 1,100
employees who worked 13,931 total pay periods during the PAGA period. (Genish Dec., ¶24.) The Administrator will take the 25% share of
the PAGA Payment and divide it by the total number of pay periods. (Genish Dec., Ex. 3, ¶3.2.4). That amount will be multiplied by each
aggrieved employee’s PAGA Period Pay Periods.
(Id.) Thus, each pay
period will be worth approximately $12.66 using the figures of 13,931 total
periods and 1,100 employees.
PAGA
Service Award is Proper in the amount of $5,000
· Plaintiff
sets forth two separate service award amounts.
Plaintiff indicates she is seeking a service award of $5000 in the
notice of motion but requests a service award of $10,000 in the body of the
motion. (Motion, ii:1-2, 21:17-18.)
· Plaintiff
cites Bell v. Farmers ins. Exch. (2004) 115 Cal.App.4th 715,
726 and Clark v. Am. Residential Servs., LLC (2009) 175 Cal.App.4th
785, 804 in support of her request for a “enhancements,” or what Plaintiff
refers to as a service award. Neither Bell
nor Clark are PAGA cases.
They are class action lawsuits. However,
service or enhancement awards are often included in PAGA settlements. (Turrieta v. Lyft, Inc. (2021) 69
Cal.App.5th 955, 963.)
·
Plaintiff initiated this action by contacting
Plaintiff’s counsel. (Cardoza Dec.,
¶5.) Plaintiff regularly participated in
this litigation and made herself available for inquiries from her
attorneys. (Cardoza Dec., ¶6.) Plaintiff’s request for a service award is granted
in the amount of $5,000.
PAGA Attorneys’
Fees
·
“Courts recognize two methods for calculating
attorney fees in civil class actions:
the lodestar/multiplier method and the percentage of recovery
method.” (Wershba v. Apple Computer,
Inc. (2001) 91 Cal.App.4th 224, 254, disapproved on other grounds in Hernandez
v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.)
·
The requested attorney’s fees are excessive. The fees amount to 35% of the gross
settlement. Counsel’s hourly rates range
from $1,200/hr to $750/hr. (Genish Dec.,
¶¶7, 45-48.) Counsel also claims 250.3
total hours litigating this matter, which has been pending since September 15,
2021. (Id. at ¶48.) Counsel estimates an additional 10 hours to
finalize the settlement by this motion.
(Id. at ¶49.) Six
attorneys worked on the case. (Id.
at ¶48.) Since the action was filed,
there was no law and motion practice apart from the instant motion to approve
settlement.
·
Counsel provides any time-keeping records for
the court’s review or specific descriptions of what tasks were performed by
which attorney. Instead, counsel relies
on very general statements of categories of work performed by counsel. (Genish Dec., ¶48.) Those specific tasks identified include
propounding and responding to discovery (two sets of written discovery served
by Plaintiff, a deposition notice by Plaintiff and one set of written discovery
served by Defendant), attendance at mediation, and drafting and filing the
complaint and FAC. (Genish Dec., ¶¶9-18.)
·
Based on the information provided, $122,500 in
fees is excessive and unreasonable for the work performed. The award is reduced to $105,000 representing
30% of the settlement amount.
PAGA
Litigation Costs Sufficiently Documented
·
Plaintiff seeks reimbursement of $4,154.75 in
litigation costs and expenses.
Plaintiff’s evidence in support of the costs is sufficient. (Genish Dec., Ex. 4.) The costs set forth in Exhibit 4 include
filing fees, mailing costs in connection with records request, a wage and hour
data analysis and mediation. (Id.)
·
The requested costs are proper.
PAGA
Administrator Costs Reasonable
· Plaintiff
estimates administrator costs not to exceed $10,000. (Genish Dec., ¶51.) The costs are based on
the estimated expenses for the administrator to prepare, print and mail the
cover letter and individual PAGA Payment checks to aggrieved employees and
handling any questions or issues from aggrieved employees regarding the
settlement. (Id.)
· The
administrator costs are reasonable for the tasks the administrator will
perform. The Settlement Agreement also
provides for retention of the administrator to handle these necessary
tasks.
Release
of Claims under Settlement is Fair and Reasonable
·
Plaintiff agrees to a general waiver under Civil
Code section 1542. (Genish Dec., Ex. 3,
¶5.1.1.)
·
The waiver required of “aggrieved employees” is limited
to “Released PAGA Claims,” which is defined as “all claims for PAGA penalties
that were alleged, or reasonably could have been alleged, based on the facts
stated in the operative Complaint and the PAGA Notice submitted by Plaintiff to
the LWDA, which occurred during the PAGA period.” (Genish Dec., Ex. 3, ¶5.2.) The release required of aggrieved employees
expressly excludes “all other claims” and “in no event shall the release of the
Released PAGA Claims in this Settlement Agreement release any individual claims
of any individuals.” (Id.)
·
The releases contained in the Settlement
Agreement are therefore reasonable.
Conclusion
Plaintiff’s
Motion for Approval of PAGA Settlement and Award of PAGA Counsel Fees Payment,
PAGA Counsel Litigation Expenses Payment, Service Award and Administration
Expenses Payment is GRANTED in part and DENIED in part. Plaintiff’s PAGA Settlement is approved. However, the amount of fees is reduced from
$122,500 to $105,000. The request for a
service award is granted in the amount of $5,000.