Judge Christian R. Gullon, Case Number: 23STCV00906, Date: 2024-10-01 Tentative Ruling

Judge: Christian R. Gullon, Case: 23STCV00906, Date: 2024-10-01 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling.

Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

On January 13, 2023, Plaintiff GEORGINA ARCEO, on behalf of herself and all others similarly situated, filed suit against Ozzo, Inc. for (1) FAILURE TO PAY OVERTIME WAGES; (2) FAILURE TO PAY MINIMUM WAGE; (3) FAILURE TO PAY ALL WAGES UPON TERMINATION; (4) FAILURE TO PROVIDE ACCURATE WAGE STATEMENTS and (5) Unfair Competition.

On April 13, 2023, Plaintiff filed a First Amended Class Action Complaint for Damages and Restitution adding a sixth COA for CIVIL PENALTIES LABOR CODE §2699.

On May 25, 2023, Plaintiff dismissed only the class claims in her complaint, without prejudice, and proceeded against Defendant for her individual Labor Code violations in arbitration and concurrently pursued her representative claim under the Private Attorneys General Act (“PAGA”) in state court.

Labor Code section 2699, subdivision (l)(2) states:¿“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.” “A copy of the superior court’s judgment in any civil action filed pursuant to this part and any other order in that action that either provides for or denies an award of civil penalties under this code shall be submitted to the agency within 10 days after entry of the judgment or order.” (Lab. Code, §2699, subd. (l)(3).)

While PAGA requires court review and approval of settlements, it does not specify the standard or criteria for such review. (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 75 (Moniz).) Thus, courts have generally applied the same review standards used for class actions, which inquire “independently whether a PAGA settlement is fair and reasonable.” (Id., at p. 77.) To determine if a PAGA settlement is fair and reasonable, courts consider factors “including 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.) Lastly, courts will also consider if the settlement is “adequate in view of PAGA's purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Ibid.)

Plaintiff moves for court approval of PAGA settlement pursuant to Labor Code section 2699, subdivision (l)(2).

Defendants have agreed to settle the matter for the gross amount of $125,000. From this, the following would be deducted: attorney fees ($43,750, or 35% of gross settlement amount), litigation costs (up to $1,885.12), general release fee payment to Plaintiff ($10,000.00); settlement administration costs ($2,950.00). This will yield a net settlement amount of about $66,414.88. From the net settlement amount, further reductions in the following amounts will be made: $49,811.16 (paid to the LWDA (75%)) and $16,603.72 (25%) which will be distributed to the 54 aggrieved employees.

Here, the court finds that the civil penalties agreed upon are fair and reasonable.

While the total award results in only about $86 in penalties per pay period ($125,000 award divided by 1,448 pay periods in the PAGA period), the court finds this appropriate as it takes into account the legal issues in this case and the risk to parties in proceeding. The court also finds this settlement is adequate under the PAGA, as other courts have imposed even smaller penalties. (See Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 517 [where violations were minimal and compliance was attempted, court imposed a penalty of $5 per violation].)

As for the requested general release fee of $10,000 for Plaintiff, a plaintiff may receive reasonable enhancement payments as a class representative. Courts must balance such an award between the interests of compensating the plaintiff for the expense or risk they incurred in bringing the suit while avoiding creating a perverse incentive for the plaintiff to accept suboptimal settlements in exchange for a higher enhancement payment. (See Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 412.) Courts routinely grant approval of class action settlement agreements containing service awards for the class representatives, which are "intended to compensate class representatives for work performed on behalf of the class to make up for financial or reputational risk undertaken in bringing the action, and to recognize their willingness to act as a private attorney general.” (Motion p. 14, quoting Cellphone Fee Termination Cases (2010) 186 Cal.App.4th 1380, 1393-94.) In support of this request, Plaintiff submitted a declaration, stating Plaintiff spent approximately 40 hours meeting with attorneys over the case and remaining actively involved in the litigation and settlement process. Thus, the court approves the requested general release fee.

As for attorney fees, pursuant to Labor Code section 2699, subdivision (g), an employee who prevails in a PAGA action is entitled to an award of attorney fees and costs. Though in some cases it may be appropriate to cross-check the percentage of recovery against Counsel’s lodestar, it is not required. (Consumer Privacy Cases (2009) 175 Cal.App.4th 545, 557.) Though the lodestar method provides for “better accountability,” a percentage method also has its advantages as it “establishes reasonable expectations on the part of plaintiffs' attorneys as to their expected recovery; and it encourages early settlement, which avoids protracted litigation.” (Lafitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 490.)[1] Here, the court elects to use a percentage method for its primary calculation of the fee award, which is a matter of discretion. (Id. at pp. 503-504.) And empirical studies show that fee awards in class actions average around one-third of the recovery. (Ibid, fn. 13.)[2] Therefore, Plaintiff’s claimed fee of 35% is reasonable.[3]

Based on the foregoing, the motion is granted. (A proposed order has been filed.)

[1] The case was cited by Plaintiff on page 11 of the motion.

[2] The case was cited by Plaintiff on page 11 of the motion.

[3] Notwithstanding, Plaintiff cites to the declaration of a Richard Pearl to show the reasonableness of their fees should the Lodestar have been used. (See Exhibit C of Motion.) Pearl’s opinion, however, is irrelevant as it is from 2011, from a different case, and, most importantly, based on attorney fees in San Francisco and San Diego, not Los Angeles. It is well established that attorney fees are based upon those in the same community. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.) Thus, should the court have used the Lodestar method, Plaintiff’s Counsel has not met its burden to show how Counsel Nourmand’s hourly fee of $750 and Counsel De Sario’s hourly fee $500 are reasonable.