Judge: Gregory Keosian, Case: 18STCV06603, Date: 2023-09-07 Tentative Ruling

Case Number: 18STCV06603    Hearing Date: September 7, 2023    Dept: 61

Plaintiff Joshua Kouchi’s Motion to Approve PAGA Settlement is GRANTED.

I.                   MOTION TO APPROVE SETTLEMENT

Under PAGA, “t[t]he 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.” (Lab. Code, § 2699, subd. (l)(2).)

“[A] trial court should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in view of PAGA's purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77.)

Federal courts have compared and contrasted PAGA settlements to class action settlements:

In the class action context, where PAGA claims often also appear, a district court must independently determine that a proposed settlement agreement is “fundamentally fair, adequate and reasonable” before granting approval. [Citations.] However, as the parties rightly point out and as noted above, this is not a class action lawsuit, and PAGA claims are intended to serve a decidedly different purpose-namely to protect the public rather than for the benefit of private parties. [Citation.] In one recent district court case, the LWDA provided some guidance regarding court approval of PAGA settlements. [Citations.] In that case, where both class action and PAGA claims were covered by a proposed settlement, the LWDA stressed that “when a PAGA claim is settled, the relief provided for under the PAGA be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public and, in the context of a class action, the court evaluate whether the settlement meets the standards of being “fundamentally fair, reasonable, and adequate” with reference to the public policies underlying the PAGA.”

(Salazar, supra, 2017 WL 1135801 at pp. 3–4.) A number of these 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,” have been recognized as useful in the analysis of PAGA settlements. (Moniz, supra, 72 Cal.App.5^th at p. 77.)

Plaintiff Joshua Kouchi (Plaintiff) presents the terms of the proposed PAGA settlement here as follows. The gross settlement amount is $92,000.00. (Motion Exh. A, § I(W).) The settlement allows Plaintiff’s counsel to seek fees of up to $30,666.66, representing one third of the total settlement amount. (Id. at § III(G).) Additionally, Plaintiff’s counsel may seek up to $5,000.00 in costs. (Ibid.) $3,000.00 of the gross settlement is allocated to pay the fees and expenses of the settlement administrator. (Id. at § III(E).) Plaintiff himself is to receive a $5,000.00 payment for his role in bringing the case. (Id. at § III(H).)

This leaves a net settlement amount of $48,333.34. From this amount, 75% is to go to the Labor Workforce Development Agency (LWDA), while 25% is to go to PAGA settlement group members, who will receive a per-pay-period payment in proportion to the number of pay periods worked for Defendant during the covered period. (Id. at § III(J).)

Plaintiff submits the declaration of his counsel, George Singer, in support of the motion. Singer states that the parties have exchanged extensive discovery, including several rounds of written discovery and depositions of Defendant’s persons most qualified. (Singer Decl. ¶ 3.) Assuming that Plaintiff was able to obtain $100 civil penalties for each first violation, and $200 penalties for each subsequent alleged violation, Plaintiff estimates the total exposure of Defendant would be $1,671,350.00. (Singer Decl. ¶ 10.) Singer contends the settlement value of $92,000.00 is justified by the court’s discretion to reduce the penalty amount, Defendant’s probable argument that $200 penalties would only be available after a prior citation by the LWDA, the denial of class certification in Plaintiff’s class action case in federal court, and the ordinary risks and incidents of litigation. (Singer Decl. ¶¶ 9–10.) The total number of employees in the settlement class is estimated to be 29 current and former employees. (Motion Exh. A at § I(P).)

Singer states that Plaintiff’s counsel spent 145.7 hours working on this matter, which yields a total fee lodestar of $71,890.50, at hourly rates of $100 to $750 per hour. (Singer Decl. Exh. C.) If the hours are applied to the fees requested in the settlement, they yield an average hourly rate of $210.48.

The settlement described by Plaintiff reasonably furthers the interests of the PAGA statute. This settlement was reached after exchange of information regarding the class of aggrieved employees and potential violations. The analysis of Plaintiff’s counsel regarding the value of the claims is reasonable in light of the analysis of Defendant’s total exposure and the factors limiting potential recovery, discussed in Singer’s declaration.

The fees requested are likewise reasonable. The calculation of attorney fees from a percentage of a common fund created by a settlement agreement is a permissible mode of fee calculation. (See Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 503.) The one-third percentage figure is not excessive, and Plaintiff’s counsel presents testimony as to his qualifications and the amount of hours spent on the case, as well as an estimated lodestar which exceeds the fees sought. (Singer Decl. ¶¶ 22–23.)

The motion to approve settlement is therefore GRANTED.