Judge: Bruce G. Iwasaki, Case: 23STCV08293, Date: 2025-01-22 Tentative Ruling

Case Number: 23STCV08293    Hearing Date: January 22, 2025    Dept: 58

Judge Bruce G. Iwasaki

Hearing Date:             January 22, 2025

Case Name:                Sterling v. Dothan Security, Inc.

Case No.:                    23STCV08293

Motion:                       Motion to Approve PAGA Settlement

Moving Party:             Plaintiffs Monet Sterling, Miguel Ruiz, Andrew Tarigan, Carlton McGee, and Ricardo Wendell

Responding Party:      Unopposed

Background

            On April 14, 2023, Plaintiff Monet Sterling, individually and behalf of all aggrieved employees, filed a representative action complaint against Defendant Dothan Security, Inc (Defendant DSI). The Complaint alleges a violation of the California Labor Code Private Attorneys General Act (PAGA) based on allegations that Defendant DSI violated various wage and hour laws. The Complaint was later amended to add Plaintiffs Miguel Ruiz, Andrew Tarigan, Carlton McGee, and Ricardo Wendell.

            On December 23, 2024, Plaintiffs filed a motion to approve a settlement under PAGA. The Settlement Agreement defines “aggrieved employees” as “all current and former nonexempt employees employed by [Defendant] in California during the PAGA Period.” (Ardestani Decl., Ex. 1 [PAGA Settlement Agreement], ¶ 1.4.) The “PAGA Period” is defined as “means the period from February 7, 2022 through June 11, 2024 (or 8 weeks after the date of the mediation on April 16, 2024 ).” (Ardestani Decl., Ex. 1 [PAGA Settlement Agreement], ¶ 1.19.) The breakdown of the settlement is as follows:

Gross Settlement Amount:                                         $830,000.00 

Plaintiff’s Counsel’s Fees:                                          $276,666.67 (33%)

Plaintiff’s Counsel’s Litigation Costs:                       $27,653.56

Plaintiff’s Service Award:                                          $2,500.00 (Each) 

Settlement Administration Costs:                               $4,000.00 

Net Settlement Amount (PAGA Penalties):               $509,179.77

Labor Workforce Development Agency (75%):             $381,884.83

Aggrieved Employees (25%):                                    $127,294.94

            Plaintiffs now seek 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

            Plaintiffs assert that the proposed settlement was electronically served on the Labor and Work Force Development Agency. (Ardestani Decl., ¶ 33, Ex. 5.)

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 Gig Kyriacou, Esq, an experienced mediator with wage-and-hour class and representative actions. (Ardestani Decl., ¶ 15; Tran Decl., ¶9.)  Prior to the mediation, the parties exchanged informal discovery. (Ardestani Decl., ¶ 14.) This discovery included the number of alleged aggrieved employees, the number of aggregate pay periods, payroll information and time records for a sampling of alleged aggrieved employees, employee handbooks and manuals, and other policy documents regarding Defendant’s timekeeping and reporting policies. (Ardestani Decl., ¶ 14.) The matter settled at mediation as the parties were able to reach an arms-length settlement following extensive negotiations, by and through the mediator. (Ardestani Decl., ¶ 15.) This satisfies the requirement that the settlement was a result of arms-length bargaining.

            Plaintiffs’ counsel also avers that he thoroughly investigated the facts and risks associated with the case. He concedes the risks with the case. (Ardestani Decl., ¶¶ 15, 20-31, 36.)  Specifically, Defendant, at all times, denied the claims. (Ardestani Decl., ¶ 21.) Additionally, with respect to the meal periods claims, Defendant argues that Plaintiffs and the alleged Aggrieved Employees were security guards, a position that is generally exempted from off-duty meal periods. (Ardestani Decl., ¶ 25.) Defendant also asserted that even to the extent any late or short meal periods occurred, such were outliers, merely the result of human error and/or the employee’s choice, and in violation of company policy. (Ardestani Decl., ¶ 26.) As to the reimbursement claim, Defendant argues that the phone reimbursement claim was without merit because the phones used were for personal convenience and was neither required nor necessary to perform their job duties; similarly, Defendant argue that uniforms were provided to Plaintiffs. (Ardestani Decl., ¶ 28.)

            Plaintiff also provides a detailed breakdown of the potential exposure. Defendant estimated there were 928 non-exempt employees during the applicable PAGA period, and these individuals worked approximately 30,000 pay periods during that time. Based on the data and information provided, Plaintiffs estimated Defendant’s maximum PAGA exposure at approximately $15,069,500. (Ardestani Decl., ¶¶ 23-24.)

The Court finds that Plaintiffs’ counsel has conducted adequate investigation and use of discovery. Based on the risks of establishing the case on the merits, the amount offered in settlement is reasonable.

Payment Procedures

            Within 30 days of the effective date, Defendant shall pay the $830,000 with the Settlement Administrator. (Ardestani Decl., ¶ 18, Ex. 1, ¶ 4.3.) Within 14 days of receiving the gross amount, the Settlement Administrator will mail a Notice and settlement check to all Aggrieved Employees via regular First-Class U.S. Mail, using the most current, known mailing addresses identified in Defendant’s records. (Ardestani Decl., ¶ 18, 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. (Ardestani Decl., Ex. 1, ¶¶ 4.4.1, 4.4.4)

            The Settlement Administrator will issue IRS Form 1099s for each settlement payment.  (Ardestani Decl., Ex. 1, ¶ 3.2.3.2.)

Experience of Counsel

            All of Plaintiffs’ respective counsel are experienced class and representative action litigators, and have achieved several approved PAGA settlements. (Ardestani Decl., ¶¶ 37-46; Tran Decl., ¶¶ 3-7; Marquez Decl, ¶¶ 13-17; Young Decl., ¶¶ 10-15.)   

Attorney’s Fees and Litigation Costs

            Plaintiff requests $276,666.67in attorney’s fees and $27,653.56 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 Plaintiffs were represented by experienced counsel and that the requested attorney fee award is fair, adequate, and reasonable. The fee requested, $276,666.67, 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. Further, Plaintiffs’ counsel submit its lodestar hours showing they incurred 386.1 total attorney hours litigating the case – resulting in a $271,493.40 in attorney fees. (Ardestani Decl., ¶¶ 37-51.) The Court finds that $276,666.67in attorney’s fees is appropriate.

            As to costs, the Settlement Agreement authorizes litigation costs not to exceed $32,000. The total incurred was $27,653.56, which includes cost incurred in the amount of $11,690.05 for Crosner Legal, PC, $6,565.75 for Lavi & Ebrahimian, LLP, $3,385.71 for Wilshire Law Firm, and $6,012.05 for Mahoney Law Group. (Ardestani Decl., ¶¶ 53-54; Tran Decl., ¶ 19; Marquez Decl., ¶ 9, Ex. A; Young Decl., ¶ 9, Ex. B.)

Plaintiff’s Service Award

            Plaintiffs also each request $2,500 as a service award for the time and effort they exerted on behalf of the aggrieved employees. Plaintiffs assert that they have been actively involved in the case by engaging in regular communication with their attorneys by discussing litigation strategy, witnesses, and updates. (Sterling Decl., ¶¶ 2-11; Ruiz Decl., ¶¶ 2-9; Tarigan Decl., ¶¶ 2-14; McGee Decl., ¶¶ 2-16; Wendell Decl., ¶¶ 2-15.) 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 Simpluris, Inc. as the third-party settlement administrator and requests court approval of $4,000.00 for administration costs.  (Ardestani Decl., ¶ 18.) Plaintiffs submits Simpluris’ bid for settlement administration, which contains an itemized statement of the various tasks that Simpluris will undertake; Simpluris will conduct data analysis, perform skip-tracing as necessary, calculate and disburse payments, provide tax reporting, re-issue checks, and perform other administrative tasks. (Springer Decl., ¶¶ 6, 9, Ex. C.)

            The Court approves the requested $4,000.

Release

            The Court finds the release under the Settlement Agreement is fair and reasonable.  (Ardestani Decl., ¶ 19, Ex. 1, ¶ 5.) 

Conclusion

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