Judge: Bruce G. Iwasaki, Case: 21STCV35039, Date: 2024-01-18 Tentative Ruling

Case Number: 21STCV35039    Hearing Date: January 18, 2024    Dept: 58

Judge Bruce G. Iwasaki

Hearing Date:             January 18, 2024

Case Name:                Etemad v. Raymond James & Associates, Inc.

Case No.:                    21STCV35039

Motion:                       Motion to Approve PAGA Settlement

Moving Party:             Plaintiff Nancy Etemad

Responding Party:      Unopposed

Background

            Plaintiff Nancy Etemad, individually and on behalf of other aggrieved employees, filed a class and representative action complaint against Raymond James & Associates, Inc. (Defendant). The Complaint alleges violations of the Labor Code for failure to pay minimum wages, provide meal and rest periods, indemnify business expenses, timely pay final wages upon termination, provide accurate wage statements and civil penalties under the Private Attorney’s General Act of 2004 (PAGA).  

            On December 13, 2023, Plaintiff filed a motion to approve a settlement under PAGA. The Settlement Agreement defines “aggrieved employees” as “a person employed by Raymond James in California and classified as a non-exempt employee who worked for Raymond James during the PAGA Period.”  (Saunders Decl., Ex, 1 [PAGA Settlement Agreement], ¶ 1.4.)  The “PAGA Period” is defined as from July 18, 2020 through the date of settlement approval. (Saunders Decl., Ex, 1, ¶ 1.20.) The breakdown of the settlement is as follows:

Gross Settlement Amount:                                         $340,000.00 

Plaintiff’s Counsel’s Fees:                                          $113,333.33 (33%)

Plaintiff’s Counsel’s Litigation Costs:                       $10,028.42

Plaintiff’s Service Award:                                          $5,000.00 

Settlement Administration Costs:                               $3,990.00 

Net Settlement Amount (PAGA Penalties):               $207,548.25 

PAGA Penalties:                                                         $101,500.00

Labor Workforce Development Agency (75%):             $155,736.19

Aggrieved Employees (25%):                                    $51,912.06

            Plaintiff seeks court approval of the PAGA settlement. 

Legal Standard

            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.)

Discussion

Service on the Labor and Workforce Development Agency

            Plaintiff submitted an e-mail confirmation that the proposed settlement was electronically submitted to the Labor and Work Force Development Agency on December 13, 2023, in compliance with Labor Code section 2699, subdivision (l)(2). (Saunders Decl., ¶ 27, Ex. 3.)

Fair, Reasonable & Adequate

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

            Here, the parties attended a full-day, private mediation, with Louis Marlin, Esq., an experienced mediator with wage-and-hour class and representative actions. (Saunders Decl., ¶ 9.)  Prior to the mediation, the parties exchanged informal discovery. (Saunders Decl., ¶ 8.) This included information on policies, pay stubs, time records, and the number of potential aggrieved employees and pay periods. (Saunders Decl., ¶ 9.) This satisfies the requirement that the settlement was a result of arms-length bargaining.

            Plaintiff’s counsel also avers that he thoroughly investigated the facts and risks associated with the case. He concedes the risks with the case. (Saunders Decl., ¶¶ 19-26, 29-30.) Specifically, Defendant, at all times, denied the claims. (Saunders Decl., ¶ 7.) Further, Defendant raised several defenses to the meal and rest break claims. (Saunders Decl., ¶ 20.) Defendant also raised a “good faith” defense with respect to wage statement and waiting time penalty claims. (Saunders Decl., ¶ 23.)

            Plaintiff also provides a detailed breakdown of the potential exposure. Defendant estimated there were 198 employees affected during the PAGA period, constituting approximately 7,300 pay periods. (Saunders Decl., ¶ 17.) Counsel multiplied this amount by the statutory penalty of $100 per pay period, resulting in Defendants’ estimated exposure of approximately $3,660,000 (Saunders Decl., ¶ 18.) Based on the risks of establishing the case on the merits, the amount offered in settlement is reasonable

The Court finds that Plaintiff’s counsel has conducted adequate investigation and use of discovery.

Payment Procedures

            Within 30 days of the effective date, Defendants shall pay the $340,000 with the Settlement Administrator. (Saunders Decl., Ex. 1, ¶ 4.3.) Within 14 days of receiving the gross amount, the Settlement Administrator will distribute the 25% of the PAGA fund to aggrieved employees. (Saunders Decl., Ex. 1, ¶ 4.4.) Checks will be valid for 180 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. (Saunders Decl., Ex. 1, ¶¶ 4.4.1, 4.4.4)

            The Settlement Administrator will issue IRS Form 1099s for each settlement payment.  (Saunders Decl., Ex. 1, ¶ 3.2.4.1.)

Experience of Counsel

            Saunders attests to his firm’s experience in class actions and labor and employment cases.  (Saunders Decl., ¶¶ 31-41.) Saunders also attests that he has been involved in class action litigation since 2009. (Saunders Decl., ¶¶ 32-33.)       

Attorney’s Fees and Litigation Costs

            Plaintiff requests $113,333.33in attorney’s fees and $10,028.42 in costs.

            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 and that the requested attorney fee award is fair, adequate, and reasonable. The fee requested, $113,333.33, represents one-third of the gross settlement, an amount routinely awarded in California courts in class and PAGA actions. (Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 66, fn. 11.) None of the parties have objected to this amount. The Court finds that $113,333.33 in attorney’s fees is appropriate.

            As to costs, Plaintiff provides an itemized statement. (Saunders Decl., ¶ 49.) The total incurred was $10,028.42, of which the bulk was the mediation fee ($9,000). The Settlement Agreement indicates that the parties agreed to cap the costs at $15,000.00. (Saunders Decl., Ex. 1, ¶¶ 3.2.1.)

            Given the estimated realistic exposure amount, the Court finds the $340,000 offered in settlement is fair, adequate, and reasonable. The distribution of the net settlement also complies with Labor Code section 2699(i), which requires 75 percent of the amount to be paid to the LWDA and 25 percent of the amount to be paid to the aggrieved employees.

Plaintiff’s Service Award

            Plaintiff requests $5,000 as a service award for her time and effort exerted on behalf of the aggrieved employees. (Etemad Decl., ¶ 8.) She asserts that she has been actively involved in the case by engaging in regular communication with the attorneys by discussing litigation strategy, witnesses, and updates. (Etemad Decl., ¶ 7.) The Court finds that this amount is reasonable in exchange for a general release of claims.

Settlement Administration Costs

            The parties have agreed to engage Apex Class Action LLC (Apex) as the third-party settlement administrator and requests court approval of $3,990.00 for administration costs.  (Saunders Decl., Ex. 1, ¶ 3.2.3.) Apex will conduct data analysis, perform skip-tracing as necessary, calculate and disburse payments, provide tax reporting, re-issue checks, and perform other administrative tasks. (Saunders Decl., Ex. 1, ¶¶ 4.4, 7.)

            Sean Hartranft, the Chief Executive Officer at Apex, submits a declaration as to the qualifications of Apex. He asserts that Apex “has been directly involved with settlement administration for a combined 15 years and has successfully managed numerous class & PAGA actions during that time.” (Hartranft Decl., ¶ 2.) In addition, Apex asserts that “has implemented a comprehensive process to identify, assess, and mitigate risks in all areas of its operations, regularly evaluating the effectiveness of its security measures” and, additionally, “[a]ccess to aggrieved employee information is limited to employees, agents, or subcontractors who require it to perform their duties, and Apex Class Action conducts background checks on all personnel with access to sensitive personal information, to ensure they do not pose a threat to the security of client or aggrieved employee information.” (Hartranft Decl., ¶ 5.) Lastly, Apex maintains Professional Liability and Cyber Liability Insurance coverage, which would provide protection in the event of a data breach or misappropriation. (Hartranft Decl., ¶ 5.)

            Plaintiff submits Apex’s bid for settlement administration, reflecting the $4,990 in costs, which are capped at $3,990.00.  The bid contains an itemized statement of the various tasks that Apex will undertake. The Court approves the requested $3,990.00.

Release

            The Court finds the release under the Settlement Agreement is fair and reasonable.

The release states: “Plaintiff and the Settlement Aggrieved Employees shall be deemed to have, and by operation of the final judgment approved by the Court, shall have, fully, finally, and forever settled and released all legal claims and factual or legal theories/allegations that were alleged in the operative complaint in the Action, including but not limited to, all of the following claims for civil penalties under PAGA for: (a) failure to pay all wages owed, including as a result of miscalculation of applicable rates of pay; (b) failure to authorize and permit meal periods; (c) failure to authorize and permit rest periods; (d) failure to furnish accurate itemized wage statements; (e) failure to maintain accurate, itemized payroll records; (f) failure to pay all wages earned and unpaid at separation; (g) failure to pay wages timely during employment; (h) refusal to pay wages pursuant to Labor Code section 216; (i) payment of secret lower wage rate pursuant to Section 223; (j) failure to reimburse necessary business expenses; (k) unlawful background checks pursuant to Labor Code sections 1024.5, 432.5, and 432.7. The period of the Release shall extend to the date that the Court enters the order granting approval of the settlement or 60 days from July 6, 2023, whichever occurs sooner. The res judicata effect of the Judgment will be the same as that of the Release.” (Saunders Decl., Ex. 1, ¶ 5.) 

Conclusion

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