Judge: Gregory Keosian, Case: 22STCV00981, Date: 2023-09-14 Tentative Ruling

Case Number: 22STCV00981    Hearing Date: September 14, 2023    Dept: 61

Plaintiff Mark Cervantez’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.)

Plaintiffs Mark Cervantez, Michelle Williams, and Jermell Jackson (Plaintiffs)[1] present the terms of the proposed PAGA settlement as follows. The gross settlement amount is $1.3 million. (Bokhour Decl. ¶ 28.) Up to one third of this amount as allocated to attorney fees, amounting to $433,290.00. (Bokhour Decl. ¶ 31.) The settlement authorizes the recovery of costs up to $25,000.00. (Bokhour Decl. Exh. B., ¶ 4.2.1.) Up to $20,000.00 are allocated to pay settlement administration costs. (Bokhour Decl. Exb. B, ¶ 4.2.3.) Each of the named plaintiffs is to receive $10,000, for a total payment of $30,000. (Bokhour Decl. Exh. B, ¶ 4.2.2.) This leaves $791,710.00 allocated to PAGA penalties, with 75% of this amount ($593,782.50) to be paid to the Labor Workforce Development Agency (LWDA), and 25% ($197,927.50) to go to the aggrieved employees. (Bokhour Decl. Exh. B, ¶ 4.2.4.) The settlement estimates that the class of aggrieved employees numbers 3,125, and the amount of pay periods, according to which the employees are to have their payments calculated, number 89,035. (Bokhour Decl. Exh. B, ¶ 5.1.)

Plaintiffs also submit the declarations of counsel, who state that the present settlement was executed following mediation and informal discovery and exchange of documents. (Bokhour Decl. ¶ 14.) Plaintiffs estimate Defendant’s total potential exposure to be $8,903,500, based on 89,035 violative pay periods. (Bokhour Decl. ¶ 30.) Plaintiffs argue that the factors counseling the settlement’s discounted amount from this estimated exposure include the court’s discretion to reduce any penalty award. (Bokhour Decl. ¶¶ 26–27.) Plaintiffs also contend that Defendant has vigorously contested this litigation, and Plaintiff’s characterization of their conduct as willful. (Motion at p. 9.)

Plaintiffs submit a lodestar calculation of their attorneys’ time expended in this action, to compare their potential recovery of $433,290.00. Four attorneys and one paralegal incurred compensable hours on this case, with rates ranging from $200 per hour (for the paralegal), and from $575 to $900 for the attorneys. (Bokhour Decl. ¶ 37.) The total amount of hours spent on this matter is 414.4, with a lodestar of $269,575. (Bokhour Decl. ¶ 37.) If the hours expended are divided into the $433,390.00 sought in the settlement agreement, this yields an average hourly rate $1,045.58. If the lodestar is divided into the total fees sought, it yields a multiplier of approximately 1.61.

The settlement described by Plaintiffs reasonably furthers the interests of the PAGA statute. This settlement was reached after exchange of information sufficient to identify the class of aggrieved employees and Defendant’s potential exposure. The discounted value of the settlement in relation to this exposure is supported by considerations of the risks of litigation and this court’s discretion to reduce the ultimate amount of penalties.

The fees requested are 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 of the recovery sought is reasonable, and Defendants have further provided an estimated lodestar against which to cross-check the amount of fees sought from this recovery.“ If the multiplier calculated by means of a lodestar cross-check is extraordinarily high or low, the trial court should consider whether the percentage used should be adjusted so as to bring the imputed multiplier within a justifiable range, but the court is not necessarily required to make such an adjustment. Courts using the percentage method have generally weighed the time counsel spent on the case as an important factor in choosing a reasonable percentage to apply.” (Laffitte, supra, 1 Cal.5th at p. 505.) The multiplier resulting from a percentage recovery here is not extraordinarily high.

The motion is therefore GRANTED.