Judge: Gary I. Micon, Case: 22STCV14174, Date: 2024-05-15 Tentative Ruling

Case Number: 22STCV14174    Hearing Date: May 15, 2024    Dept: F43

Dept. F-49

Date: 2-15-24

Case # 22STCV14174, Frankie Fuentes, et al., vs. Design Masonry, Inc.

Trial Date: N/A

MOTION FOR APPROVAL OF PAGA SETTLEMENT

MOVING PARTY: Plaintiffs Frankie Fuentes and Melquiades Martinez

RESPONDING PARTY: No response has been filed

RELIEF REQUESTED

Plaintiffs have requested an order from the Court approving a settlement pursuant to the Private Attorneys General Act of 2004

RULING: Motion is granted.

SUMMARY OF ACTION AND ANALYSIS

Plaintiffs Frankie Fuentes and Melquiades Martinez (Plaintiffs) move for an order approving the settlement agreement between them and Defendant Design Masonry, Inc. (Defendant). This is an employment law case that stems from Defendant’s alleged failure to pay minimum wages, overtime wagers, to provide rest periods, to provide meal periods, to pay all wages earned, to indemnify, and to furnish accurate itemized wage statements, as well as violations of California’s unfair competition law.

After discussions and exchange of documents, the parties agreed to settle. They believe that settlement is in the best interest of all parties.

Legal Standard 

“PAGA settlements are subject to trial court review and approval, ensuring that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549, citing Lab. Code § 2699, subd. (l)(2).) The trial court must determine that the settlement is fair, reasonable, and adequate to all concerned. (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 332, 337.)  

There is a presumption that the settlement agreement is fair where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the trial court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small. (Reed, 208 Cal.App.4th at 337.) This standard applies in the context of class actions and qui tam actions alike. (See Gov. Code § 12652(e)(2) [in qui tam action, a state or political subdivision may settle the action with the defendant despite objections of the qui tam plaintiff if the court determines, after a hearing providing the qui tam plaintiff an opportunity to present evidence, that the proposed settlement is fair, adequate, and reasonable under all the circumstances]; see also Iskanian v. CLS Transportation Los Angeles LLC (2014) 59 Cal.4th 348, 382 [a PAGA representative action is a type of qui tam action].)  

Penalties recovered by aggrieved employees must be distributed as follows: 75% to the LWDA and 25% to the aggrieved employees. (Lab. Code § 2699(i).) Civil penalties recovered under section 558(a)(3) shall be paid to the affected employee. A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action. (Lab. Code § 2699(g)(1).) 

Agency Notice Requirement 

“The proposed settlement shall be submitted to the agency at the same time that it is submitted to the court.” (Lab. Code § 2699(l)(2).) Plaintiffs’ counsel has submitted a copy of the proposed settlement to the Labor and Workforce Development Agency (LWDA). (Melmed Decl. ¶ 62; Ex. 4.) 

Terms of the Proposed Settlement 

Under the proposed settlement agreement (the Agreement), Defendants will pay a Settlement Fund of $117,500.00 for a release of all claims, rights, and liabilities by Plaintiffs and other aggrieved employees arising from Plaintiffs’ allegations in this action. (Melmed Decl., Ex. 1.) The Agreement provides that no more than $39,166.67 will be deducted for attorney’s fees, an amount not to exceed $7,500.00 will be deducted for counsel’s costs, and an amount not to exceed $5,000.00 will be used for Settlement Administration costs. (Id.) The Agreement also provides that Plaintiff will be paid an incentive award of $2,000.00. (Id.) The Net Settlement Amount, minus the award of fees and costs, incentive award, and settlement administration costs, shall be distributed 75% to the LWDA and 25% to the Aggrieved Employees. (Id.)  

Plaintiffs seek recovery of attorney’s fees in the amount of $39,166.67 for 49.1 hours billed (for an actual lodestar of $33,215.10), costs of $7,500 (actual costs were $4,636.91), and settlement administration costs of $5,000.00. (Melmed Decl. ¶¶ 51, 60, 61.) After subtracting those amounts from the Settlement Fund, $63,833.33 will remain for distribution, $47,875.00 (75%) to the LWDA, and $15,958.33 (25%) to the Aggrieved Employees. 

Plaintiffs have established a presumption that the Agreement is fair. (Reed, 208 Cal.App.4th at 337.) The settlement was reached following discussions between the parties and document exchanges, which led the parties to conclude that there were substantial benefits to settling this action rather than engaging in extensive litigation. (Melmed Decl. ¶ 15.) Plaintiffs’ counsel represents that the gross PAGA penalty payment is extremely reasonable in light of the risks and uncertainties associated with the PAGA claims in this case. (Melmed Decl. ¶¶ 50.) Plaintiffs’ counsel has extensive experience in litigating class action and PAGA action employment matters in California. (Melmed Decl. ¶ 6.) Finally, there are no objectors to the Agreement.  

Even once the presumption of fairness has been established, the court bears the responsibility to ensure the recovery under the settlement agreement represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.) 

Plaintiffs’ counsel estimated a maximum potential exposure of $1,283,200, and discounted that amount based on factors including the risks of litigation. (Melmed Decl. ¶¶ 44-46.) Weighing the relevant factors, the Court finds that the proposed settlement agreement is fair and reasonable.

Plaintiffs’ motion for approval of PAGA settlement is granted.

Moving party to give notice.