Judge: David S. Cunningham, Case: 23STCV10311, Date: 2025-02-25 Tentative Ruling

Case Number: 23STCV10311    Hearing Date: February 25, 2025    Dept: 11

Kilgore (23STCV10311)

 

Tentative Ruling Re: Supplemental Declarations Re:

Motion to Approve Private Attorneys General Act (“PAGA”) Settlement

 

Date:                         2/25/25

Time:                        11:00 am

Moving Party:          Jeffrey Kilgore and Haley Moore (collectively “Plaintiffs”)

Opposing Party:       None

Department:             11      

Judge:                       David S. Cunningham III

________________________________________________________________________

 

TENTATIVE RULING

 

Plaintiffs’ motion to approve PAGA settlement is granted.

 

BACKGROUND

 

This is a wage-and-hour action.

 

In February 2024, the parties participated in mediation and eventually reached a PAGA-only settlement.

 

On December 20, 2024, Plaintiffs’ motion to approve the settlement came on for hearing.  The Court ordered the parties to file supplemental declarations to address four issues:

 

* the gross settlement amount;

 

* the releases;

 

* notice to the Labor & Workforce Development Agency (“LWDA”); and

 

* the mediation.

 

Here, the Court considers the supplemental declarations.

 

LAW

 

PAGA permits an “aggrieved employee” to recover Labor Code civil penalties on the LWDA’s behalf, if the LWDA declines to collect the penalties itself.  (Cal. Lab. Code, § 2699, subd. (a); see also Mejia v. Merchants Building Maintenance, LLC (2019) 38 Cal.App.5th 723, 732-733.)  The California Supreme Court has distinguished between Labor Code “civil penalties” that are “intended to ‘punish the employer’ for wrongdoing, often ‘without reference to the actual damage sustained’” and “statutory damages” that “primarily seek to compensate employees for actual losses incurred” – a PAGA action can recover only the former.  (Z.B., N.A. v. Superior Court (2019) 8 Cal.5th 175, 182, 198 [holding that Labor Code section 558 “amount sufficient to recover unpaid wages” is not a “civil penalty” recoverable via PAGA].) “A PAGA action is ‘fundamentally a law enforcement action designed to protect the public and not to benefit private parties.’”  (Mejia, supra, 38 Cal.App.5th at 732; see also Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 381.)

 

PAGA requires a court to “review and approve any settlement of any civil action filed” under PAGA, but it does not provide review and approval standards or guidelines. (Cal. Lab. Code, § 2699, subd. (l)(2).)  The California Supreme Court has interpreted PAGA as requiring courts to ensure that “any negotiated [PAGA] resolution is fair to those affected.”  (Williams v. Superior Court (2017) 3 Cal.5th 531, 549, emphasis added).)  The parties affected by a PAGA settlement include: (1) the LWDA, who receives 75% of settlement funds and is “bound by the outcome of the proceeding to adjudicate the employee’s PAGA claim” (Mejia, supra, 38 Cal.App.5th at 732); (2) the aggrieved employees, both party and non-party, who receive 25% percent of settlement funds and are, like the LWDA, bound by a PAGA action judgment; (3) plaintiffs’ counsel, who may be awarded reasonable attorney fees and costs; and (4) defendant, who pays the settlement. 

 

Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56 provides greater detail about the standard courts should apply when evaluating PAGA settlements.  The opinion adopts the “fair, reasonable, and adequate” standard used in class settlements.

 

DISCUSSION

 

Gross Settlement Amount

 

The December 20th ruling states:

 

The parties agreed to the gross settlement amount ($1,100,000.00) via arm’s-length mediation after investigation and discovery.

 

Nevertheless, the Court finds that the hearing should be continued.  Plaintiffs’ counsel’s declaration states two vastly different maximum possible exposures – $76,239,550.00 and $12,081,000.00.  [Citation.]  The gross settlement amount constitutes approximately 1.4% of the former and approximately 9% of the latter.  [Citation.]  Similarly, Plaintiffs’ counsel’s declaration states two different discounted exposure amounts – $7,767,535.00 and $3,020,250.00.  [Citation.]  The gross settlement amount is approximately 14% of the former and approximately 36.4% of the latter.  Plaintiffs’ counsel also fails to provide a minimum estimate in his declaration, so it is unclear whether the gross settlement amount exceeds the minimum estimate.  The Court orders Plaintiffs’ counsel to provide a supplemental declaration to explain why there are multiple maximum and discounted exposure amounts and to state a minimum estimate.

 

(12/20/24 Ruling, p. 3.)

 

Plaintiffs’ counsel’s supplemental declaration is sufficient.  As requested, it offers a minimum estimate ($3,020,250.00).  More importantly, it reveals the reason for the two different maximum estimates and two different discounted estimates.  Two analyses were performed.  The first was a claim-by-claim analysis, which resulted in the higher maximum and discounted estimates, and the second was a catch-all analysis, which resulted in the lower maximum and discounted estimates.  Given existing law, Plaintiffs’ counsel believes the catch-all analysis is the more reasonable, accurate analysis.  (See Moon Supp. Decl., ¶ 5, pp. 2-5.)

 

The Court approves the gross settlement amount ($1,100,000.00).  To repeat, it is approximately 9% of the catch-all maximum estimate and approximately 36.4% of the catch-all discounted estimate.  It is fair, reasonable, and adequate.

 

The net settlement amount ($691,333.33) is also fair, reasonable, and adequate.  (See 12/20/24 Ruling, p. 4 [noting that “[w]hether the net settlement amount . . . is fair, reasonable, and adequate depends on whether the gross settlement amount ends up being found fair, reasonable, and adequate”].)

 

Releases

 

The December 20th ruling states:

 

The Court is concerned about overbreadth.  First, do Plaintiffs have standing to release claims on behalf of heirs, successors, etc.?  Second, is the definition of “Released Parties” overinclusive?  At the hearing, counsel needs to address the scope of the releases.

 

(Id. at p. 5, footnote omitted.)

 

The Court approves the releases.  Plaintiffs’ counsel declares that the parties removed “heirs” from the releases and removed “brands,” “concepts,” “heirs,” “estates,” and “and any individual or entity which could be jointly liable with Defendants” from the “Released Parties” definition.  (See Moon Supp. Decl., 5, pp. 6-8.)  The changes are appropriate.

 

Notice to the LWDA

 

The December 20th ruing states:

 

The Court sees a notice issue.  Plaintiff Kilgore’s pre-suit notice, sent in May 2023, named a single Defendant.  [Citation.]  Plaintiff Moore’s pre-suit notice, sent in June 2023, named five Defendants.  [Citation.]  On November 21, 2024, Plaintiffs submitted a joint, amended notice, which names over 50 Defendants.  [Citations.]  Given the numerous new Defendants, it seems, in effect, to be a substantively new notice.  However, instead of affording the LWDA an opportunity to respond, Plaintiffs went ahead and filed the second amended complaint on the same day.  [Citation.]  Does the 65-day period govern amendments?  The Court’s inclination is to continue the hearing long enough to ensure that the LWDA receives the full 65 days.

 

(12/20/24 Ruling, p. 5.)

 

This issue is resolved.  The LWDA has now had more than 65 days to respond to the joint, amended notice.  (See Moon Supp. Decl., 5, pp. 8-11.)   There is no response.  There is no indication that the LWDA intends to investigate or intervene.  

 

Mediation

 

The December 20th ruling states:

 

Plaintiffs should clarify whether the mediation involved the 50+ Defendants, whether the mediator knew about the 50+ Defendants, and whether the gross settlement amount accounts for the claims against all 50+ of them.  The mediation took place in February 2024 when there were merely six Defendants at issue.  The parties signed the settlement months later in late November 2024, the same week when Plaintiffs sent the amended notice to the LWDA and filed the SAC.  In light of the timing difference, and the substantial increase in the number of Defendants, it is necessary for Plaintiffs to answer these questions.

 

(12/20/24 Ruling, pp. 5-6.)

 

This issue is resolved.  Defense counsel declares:

 

4. During the mediation, with the assistance of Mediator Rottman, the Parties began discussing a larger, global release for all facilities affiliated with the entities at issue. This included the 51 Defendants named in the operative complaint, which are comprised either of skilled nursing care facilities or their affiliated entities. During the mediation, Defendants provided an estimated pay period count during the PAGA Period for all these entities, subject to confirmatory data, and confirmed the applicable policy documents for the entities. Despite Defendants’ position that these are separate legal entities, the Parties then began negotiating a PAGA resolution on behalf of all entities. As a result, the mediation was focused significantly on a global resolution on behalf of all 51 entities. 

 

5. At the end of the mediation, with the assistance of Mediator Rottman, the Parties reached a tentative agreement to resolve the PAGA claims as to all these 51 entities for a total of $1.1 million, subject to confirmatory data regarding the exact amount of PAGA Pay Periods.

 

6. Subsequently, Defendants confirmed the amount of PAGA Pay Periods to be 120,810 through April 8, 2024, and the Parties were then able to finalize the PAGA settlement. As a result, the Gross Settlement Amount has always been negotiated as to all 51 entities, and the contemplated release was to include all 51 entities. 

 

(Johnson Decl., ¶¶ 4-6.)  The statements suffice to answer the Court’s questions and to show that the mediation covered the 50+ entities.

 

Conclusion

 

Accordingly, the Court grants Plaintiffs’ motion and approves the PAGA settlement as modified.