Judge: Douglas W. Stern, Case: 21STCV00169, Date: 2022-09-14 Tentative Ruling

Case Number: 21STCV00169    Hearing Date: September 14, 2022    Dept: 52

Tentative Ruling:

          Plaintiff Jose Martinez’s Motion for an Order Approving PAGA Settlement

Plaintiff Jose Martinez moves for an order to approve the amended settlement agreement with defendants Expression in Wood, Inc., Nathan Covey, and Darrell C. Covey. 

Labor Code § 2699(l)(2) provides, “The superior court shall review and approve any settlement of any civil action filed pursuant to” the Private Attorneys General Act.  Courts review and approve PAGA settlements to “ensur[e] that any negotiated resolution is fair to those affected.”  (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) 

          This settlement is not fair to those affected.  In addition to plaintiff Jose Martinez, his counsel, and defendants, the settlement affects 40 other aggrieved employees (Nava Decl., ¶ 3) and the Labor and Workforce Development Agency (LWDA).  The settlement is for $100,000—$95,000 of which goes to plaintiff and his attorneys, while only $5,000 goes to the LWDA and aggrieved employees as PAGA penalties. 

Plaintiff’s counsel now estimates defendants’ maximum exposure as $11,614,200 in PAGA penalties for 20 violations over 2,978 pay periods.  (Nava Decl., ¶ 3.)  The proposed settlement for $5,000 in PAGA penalties represents 0.04% of the maximum.    

Plaintiff argues the amended settlement is fair because, unlike the initial proposed settlement, it permits employees to opt out and preserve their own claims for PAGA penalties.  (Nava Decl., Ex. B, ¶ 29, p. 8 & Ex. F.)  That is the only change to the proposed settlement. 

Plaintiff’s argument suffers from a fatal problem: “there is no mechanism for opting out of the judgment entered on the PAGA claim.”  (Robinson v. Southern Counties Oil Company (2020) 53 Cal.App.5th 476, 482.)  “Plaintiffs may bring a PAGA claim only as the state’s designated proxy, suing on behalf of all affected employees.”  (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 87.)  The judgment in a PAGA action binds the LWDA and every aggrieved employee—even those who purport to opt out.       

The amount paid to plaintiff Jose Martinez so dramatically eclipses the amount allocated to the LWDA and the other aggrieved employees that this settlement appears to be nothing other collusion to obtain a release of PAGA penalties.  Plaintiff is free to dismiss the PAGA claims without prejudice so the parties can settle the remaining claims.

The motion is denied.