Judge: Frank M. Tavelman, Case: 23BBCV02645, Date: 2024-11-01 Tentative Ruling

Case Number: 23BBCV02645    Hearing Date: November 1, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION FOR APPROVAL OF PAGA SETTLEMENT

NOTICE:

The Court is not requesting oral argument on this matter.  The Court is guided by California Rules of Court, Rule 3.1308(a)(1) whereby notice of intent to appear is requested.  Unless the Court directs argument in the Tentative Ruling, no argument is requested and any party seeking argument should notify all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no argument is received.  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

This action is brought by Crescencio Gonzalez (Plaintiff), on behalf of himself and other aggrieved employees, against Above All Property Management, LLC & Abe Bak. Plaintiff alleges that Defendants violated numerous sections of the California Labor Code (Cal. Lab. Code) and continue to do so. As part of this action, Plaintiff seeks to recover civil penalties authorized by the statutory scheme commonly referred to as the Private Attorneys General Act (PAGA).

Before the Court is Plaintiff’s unopposed Motion for Approval of PAGA settlement. This approval is required in any action filed pursuant to PAGA as per Cal. Lab. Code § 2699(s)(2). Plaintiff previously requested ex parte relief to advance the hearing of this motion, which was originally set for November 15, 2024. The Court granted the request but was concerned about the disparity between Plaintiff’s projected recovery and the settlement amount. The Court requested the parties submit additional briefing, which it appears they have done jointly. Having reviewed the initial submissions and subsequent briefs, the Court now issues the following ruling.

ANALYSIS: 

I.                    LEGAL STANDARD 

“The superior court shall review and approve any settlement of any civil action filed pursuant to this part.” (Cal. Lab. Code § 2699(s)(2).) “Because many of the factors used to evaluate class action settlements bear on a settlement’s fairness—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—these factors can be useful in evaluating the fairness of a PAGA settlement.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56.)

In determining whether to approve a class settlement, the court’s responsibility is to “prevent fraud, collusion or unfairness to the class” through settlement and dismissal of the class action because the rights of the class members, and even named plaintiffs, “may not have been given due regard by the negotiating parties.” (Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2006) 141 Cal.App.4th 46, 60.)

A presumption of fairness exists where: 1) the settlement is reached through 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. (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 244-245.) The test is not the maximum amount plaintiff might have obtained at trial on the complaint but, rather, whether the settlement is reasonable under all of the circumstances. (Id. at 250.)

In making this determination, the Court considers all relevant factors including “the strength of [the] plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.’“ (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

II.                 MERITS

Discussion

This hearing results from the Court’s request that the parties provide additional briefing as to the amount of the settlement. The Court had concerns about the disparity between Plaintiff’s assessment of $284,900 in initial civil penalties and the $20,000 settlement. In order to assess this disparity, the Court finds its necessary to examine the relevant statutory and case law governing the assessment of PAGA penalties by trial courts.

Cal. Lab. Code § 2699(a) authorizes the recovery of civil penalties assessed under PAGA in a representative action brought by an aggrieved employee in civil court. Cal. Lab. Code § 2699(e)(1) authorizes a trial court to exercise the same direction is assessing these penalties as may be exercised by the Labor and Workforce Development Agency.

Cal. Lab. Code § 2699(e)(2) expounds on the previous section, stating in relevant part:

In any action by an aggrieved employee seeking recovery of a civil penalty…a court may award a lesser amount than the maximum civil penalty amount specified by this part…or may, notwithstanding the limitations set forth in subdivisions (g) and (h) exceed the limitations set forth in those subdivisions, if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.

The landmark California Court of Appeal discussing the reduction of Civil Penalties under PAGA is Amaral v. Cintas Corp. No. 2. In Amaral, the trial court declined to exercise its discretion to reduce the amount of the civil penalties assessed. (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1213.) On appeal, the defendant argued the trial court abused its discretion under Cal. Lab. Code § 2699(e)(2) when it considered the remedial purpose of PAGA in determining the amount of penalties. (Id.) The defendant reasoned that the remedial purpose of PAGA had no bearing on a determination of whether the penalties were “unjust, arbitrary and oppressive, or confiscatory.” (Id.)

The Amaral court conceded that Cal. Lab. Code § 2699(e)(2) is vague in its provision of judicial discretion. The court observed that the statute did not specify guidelines for exercising discretion in general with regard to the amount of penalties. (Id.) Regardless, the court held that this discretion was limited in that the penalties could not be assessed as zero. (Id. at 1214.) The Amaral court reasoned that because Cal. Lab. Code §§ 210 & 225.5 states violators shall be subject to a civil penalty, a trial court cannot exercise its discretion to reduce the award to nothing. (Id. at 1210, 1213.)

As concerned the trial court’s finding that the penalties were incongruous, the Amaral court affirmed that there was insufficient evidence to suggest this was the case. (Id. at 1214.) The court stated the evidence showed the defendant made no attempt to comply with the ordinances and that defendant’s violations were willful. (Id.) The court further observed that the $258,900 penalty was not confiscatory in light of evidence that defendant’s parent company accrued $272 million in profits the year the violations occurred. (Id.) This finding is contrasted by those in favor of reduction by the trial courts in Thurman v. Bayshore Transit Management, Inc. and Carrington v. Starbucks Corp.

In Thurman, the trial court reduced the civil penalties in light of evidence that the defendant sought in good faith to remedy their violations after first receiving notice. (Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112, 1136, disapproved of on other grounds by ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175.) The Court of Appeal affirmed that these considerations were proper in the trial court’s exercise of discretion. (Id.) The court also affirmed the trial court’s consideration of defendant’s inability to pay the penalties from ongoing revenues. (Id.) Similarly, the court in Carrington affirmed the reduction of civil penalties based on consideration of the defendant’s good faith attempts to comply with meal break obligations after notice of the initial violations. (Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 529.)

Applying the logic of Amaral and its progeny to this case, the Court finds that a reduction in civil penalties is warranted.

Plaintiff states that his counsel’s exposure estimates were based on a projection of 60 aggrieved employees working a total of 1,568 from August 23, 2022 to the present. (Donabedian Decl. ¶ 11.) From these numbers, Plaintiff extrapolated a total of $284,900 in initial civil penalties and $1,652,000 in subsequent penalties (those deriving from violations alleged to have occurred after Plaintiff provided initial notice). (Donabedian Decl. ¶ 12.) In both his initial and subsequent briefing, Plaintiff presents several factors which he contends justifies a reduction in civil penalties from these projected amounts to the proposed settlement $20,000.

First, Plaintiff’s counsel states in his declaration that there is no evidence of any “subsequent violations, citations, or judgments related to wage & hour violations against Defendants.” (Donabedian Decl. ¶ 20.) In essence, despite the fact that Plaintiff’s counsel projected $1,652,000 in subsequent penalties, they uncovered no evidence to support that projection.

Second, Plaintiff states, without waiving the mediation privilege, that evidence was presented in mediation which would have barred the presentation of a “substantial amount” of Plaintiff’s PAGA claims. (Mot. p. 4.) Plaintiff states, “…it was evident amongst the Parties that the damage calculations were not accurate based on the liability in the case.” (Mot. p. 4.) In other words, the projected $284,900 in initial penalties was also heavily inflated.

In considering the factors above, the Court is satisfied that the $20,000 settlement is appropriate. Imposition of the maximum civil penalty in this case simply makes no sense where Plaintiff has admitted that the vast majority of his PAGA claims are without factual/legal support. Given there is no evidence of subsequent violations, it stands to reason that a reduced award of $20,000 is fair and reasonable in light of PAGA’s remedial and deterrent purposes. (See Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77.)

Accordingly, the Motion for Approval of PAGA Settlement is GRANTED.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Crescencio Gonzalez’s Motion for Approval of PAGA Settlement came on regularly for hearing on November 1, 2024, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION FOR APPROVAL OF PAGA SETTLEMENT IS GRANTED.

PLAINTIFF TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  November 1, 2024                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles