Department 58

Hearing Date: August 8, 2024

Case Name: Esquivel v. Clean Energy, et al.

Case No.: 22STCV02455

Motion: Stipulation and Order for Approval of PAGA Settlement

Moving Party: Plaintiff Arnulfo Esquivel, Jr.

Responding Party: None [stipulation]

Tentative Ruling: The Court therefore grants approval of the PAGA Settlement.

I. Background

Plaintiff Arnulfo Esquivel, Jr. (Plaintiff) filed a complaint on behalf of himself, other aggrieved employees, and the State of California, against Defendant Clean Energy, a California Corporation (Defendant) for Private Attorneys General Act (PAGA) penalties for wage and hour claims.

On June 10, 2024, Plaintiff filed the instant proposed stipulation and order approving settlement of PAGA claims and entering judgment. The “Aggrieved Employees” consists of 201 individuals who worked for Clean Energy between November 16, 2020 through March 25, 2024. (Compl., ¶¶10-11; Hawkins Decl., ¶11.) The breakdown of the proposed settlement is as follows:

Gross Settlement Amount: $215,000.00

Plaintiff’s Counsel’s Fees: $71,666.66 (33.333%)

Plaintiff’s Counsel’s Litigation Costs: $13,000.00

Plaintiff’s Service Award: $10,000.00

Settlement Administration Costs: $7,500.00

Net Settlement Amount (PAGA Penalties): $112,833.34

PAGA Penalties: $112,833.34

Labor Workforce Development Agency (75%): $84,625.00

Aggrieved Employees (25%): $28,208.34

II. Discussion

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.)

Service on the Labor and Workforce Development Agency

Plaintiff filed proof of service that the proposed settlement and supporting declaration were electronically served on the Labor and Work Force Development Agency on June 5, 2024, in compliance with Labor Code section 2699, subdivision (l)(2). (POS, 6/10/24.)

Fair, Reasonable & Adequate

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.

Here, the parties attended a day-long private mediation on March 25, 2024, with Daniel J. Turner. (Hawkins Decl., ¶8.) Prior to the mediation, the parties exchanged informal discovery. This included information on payroll, time keeping sampling, personnel and employment documents for approximately 35 percent of the purported Aggrieved Employees, along with Defendant’s policies and relevant data points. (Id. at ¶¶7-8.) This demonstrates that the settlement was a result of arms-length bargaining.

Furthermore, Plaintiff’s counsel avers based on the information and documents provided through formal and informal discovery, Plaintiff assessed the maximum value of the PAGA claims to be released by the settlement to be approximately $899,500.00 at the rate of $100.00 penalty for approximately 8,995 pay periods at issue for the Aggrieved Employees. (Hawkins Decl., ¶11.) However, Plaintiff and his counsel concede that the existence of numerous disputes in this case make the outcome uncertain. (Id. at ¶10.) For example, Defendant argued that no penalties prior to the PAGA notification should be awarded because the violations were not intentional. (Id. at ¶19.) Counsel avers this argument presented a risk that some or all of the PAGA penalties sought may not be awarded. (Id. at ¶20.) Counsel also recognizes that “litigating a complex PAGA action is inherently expensive” and “there is a real possibility that Plaintiff would recover nothing” had the case not settled. (Id. at ¶18.)

As to the maximum exposure, Counsel asserts that Defendant argued that PAGA penalties cannot be stacked, and at most just one PAGA penalty can be awarded to an aggrieved employee in any one pay period. (Hawkins Decl., ¶21; Labor Code § 2699, subd. (f)(2).) Counsel avers that Defendant further argued that it is unlikely that a significant number of current and former employees would travel to participate in trial where in aggregating any material exposure, Plaintiff would need to prove each violation as to each person and for each period for which recovery is sought. (Id. at ¶22.) Similarly, even if Plaintiff prevailed at trial, a trial court has considerable discretion to reduce the penalty award. As such, Counsel asserts that Defendant could argue persuasively for the trial court to exercise such discretion. (Id. at ¶23.)

Experience of Counsel

James Hawkins attests to his and his firm’s experience in wage/hour class action litigation since approximately 2003 or 2004. (Hawkins Decl., ¶¶30-31.) Specifically, Counsel avers to having litigated over 200 PAGA actions. (Ibid.) Counsel further avers several of his cases resulted in settlements ranging from six figures to multimillion-dollars. (Id. at ¶32.)

Attorney’s Fees and Litigation Costs

Plaintiff requests $71,666.66 in attorney’s fees and $13,000.00 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. The fee requested, $71,666.66, represents 33.333% of the gross settlement.

As to costs, Counsel provides itemized billing statements. (Hawkins Decl., ¶38, Ex. C.) The total incurred was $10,570.96 including the transcript of Christopher Gate’s deposition ($1,461.96); expert analysis fee ($3,350.00); and mediation services fee (¢2,625.00). The Settlement Agreement indicates that the parties agreed to cap the costs at $13,000.00. (Id. at ¶2, Ex. A.) The Court awards this amount.

Accordingly, the Court awards $71,666.66 in attorney’s fees and $10,570.96 in costs.

Plaintiff’s Service Award

Plaintiff requests $10,000 as a service award for his time and effort exerted on behalf of the aggrieved employees. (Gifford Decl., ¶ 13.) He avers to compiling documents for his attorneys, reviewing many documents with his attorneys, conducting and participating in responding to information for mediation and informal discovery requests, participating in several telephone conferences with his attorneys and their representatives, preparing for his deposition, having his deposition taken, participating in mediation and the settlement approval process, and expended approximately 53 hours prosecuting this case. (Esquivel Decl., ¶¶13-14.)

Given that the original net settlement amount was $28,208.34 to the entire class, the Court find that a $10,000 service award for approximately 53 hours of work is reasonable under these circumstances.

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 $7,500.00 for administration costs. (Hawkins Decl., ¶39, Ex. D.) 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.)

Counsel submits Apex’s bid for settlement administration, reflecting the $7,500.00 in costs, which are capped at that specified amount. The bid contains an itemized statement of the various tasks that Apex will undertake. The Court approves the requested $7,500.00.

Release

The Court finds the release under the Settlement Agreement is fair and reasonable. The release states: “All Aggrieved Employees will be bound by a release of all claims for civil penalties that were alleged or could have been alleged in the Operative Complaint under PAGA for Labor Code claims that arose during the PAGA Period for meal period violations and failure to pay premiums; rest period violations and failure to pay premiums; failing to properly maintain and submit accurate itemized wage statements; failure to maintain accurate records; failure to timely pay wages during employment; failure to pay minimum, regular, and overtime wages; failure to reimburse; and failure to timely pay final wages and waiting time penalties associated therewith..” (Hawkins Decl., ¶2, Ex. A.)

Plaintiff’s counsel release states: “PAGA Counsel release on behalf of their present and former attorneys, employees, agents, successors and assigns the Released Parties from all claims for PAGA Fees incurred in connection with the Operative Complaint and the PAGA Period facts stated in the Operative Complaint and the PAGA Notice.” (Hawkins Decl., ¶2, Ex. A.)

Explanatory Letter

Plaintiff sent an explanatory letter regarding the proposed PAGA Settlement to the Aggrieved Employees. (Hawkins Decl., ¶2, Ex. B.)

III. Conclusion

The Court therefore grants Approval of PAGA Settlement.