Judge Holly J. Fujie, Case Number: 21STCV31959, Date: 2024-03-28 Tentative Ruling

This action arises out of an employment relationship. On August 30, 2021, Plaintiff filed a complaint asserting representative claims on behalf of himself and other aggrieved employees pursuant to the Private Attorneys General Act (“PAGA”) against Defendant Parkway Motorcars Valencia Inc. dba Parkway Buick GMC Cadillac (“Defendant”).

On January 5, 2023, the Court granted in part Defendant’s motion to compel arbitration and ordered Plaintiff’s individual PAGA claims to be sent to arbitration. The Court further stayed the action as it pertained to Plaintiff’s representative PAGA claims.

On April 25, 2023, the Court lifted the stay in this action based on Defendant’s failure to timely pay arbitration fees.

Now, Plaintiff requests the Court to approve the settlement reached between the parties pursuant to Labor Code § 2699(1)(2)

Under PAGA, an aggrieved employee may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 380.) Under PAGA, 75 percent of any penalties recovered go to the Labor and Workforce Development Agency (“LWDA”), leaving the remaining 25 percent for the employees. (Ibid.) PAGA is intended “to augment the limited enforcement capability of [LWDA] by empowering employees to enforce the Labor Code as representatives of the Agency.” (Id. at p. 383.) A judgment in a PAGA action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government. (Id. at p. 381.) A superior court must “review and approve any settlement of any civil action filed pursuant to this part.” (Lab. Code, § 2699, subd. (l)(2).)

Though there is no statutory or common law standard for approval of a PAGA settlement, the standard used for approval of class action settlements is instructive. “[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.” (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802.) The last factor, small percentage of objectors, is inapplicable to PAGA claims. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 984-985 [rejecting the argument that representative actions under PAGA violate the due process rights of “nonparty aggrieved employees who are not given notice of, and an opportunity to be heard”].) Additional factors that are useful to consider include the strength of a plaintiff’s case, the risk, expense, complexity and likely duration of further litigation, the amount offered in settlement, the extent of discovery completed, and the experience and views of counsel. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

The proposed $160,000.00 settlement (for PAGA penalties only) breaks down to a net settlement of $84,711.72 following the deduction of $53,333.33 in attorney’s fees, $10,454.00 in costs, a $5,000.00 incentive award, and $6,500.00 in settlement administration costs. (Motion at pg. 5; Szamet Decl. ¶13, Exh. 1 at ¶ 3.)

The parties propose the standard¿distribution of 75% to the State ($63,533.79) and 25% to the aggrieved employees ($21,177.93). (Ibid.) The parties have not provided an estimated average payment to each employee, but the settlement provides that each employee shall be paid on a pro rata basis. (Ibid.) The parties gave the LWDA notice of the settlement. (Szamet Decl., Exh. 6.)

The requested attorney’s fees are acceptable under the common fund doctrine and are substantially less than the pre-multiplier lodestar amount of $72,615.00 that Plaintiff’s counsel would otherwise receive for their work. (Consumer Privacy Cases (2009) 175 Cal. App. 4th 545, 557; Szamet Decl. ¶¶ 71-74.) In light of the work completed by Plaintiff’s counsel on this case (e.g., legal research, discovery, damages analysis, mediation, etc.), the Court finds that the fee award is reasonable.

The settlement is non-reversionary. Mailed checks will remain valid for 180 days, after which the value of any uncashed checks will be distributed to the California Controller’s Unclaimed Property Fund in the name of the aggrieved employee. (Szamet Decl., Exh. 1 at ¶¶ 4.4.1, 4.4.3.)

The Aggrieved Employee’s Releases are Narrow, and Plaintiff’s Release is Broad

In exchange, Plaintiff will provide Defendant with a general release of all PAGA, underlying, and other claims, including a waiver of Civil Code section 1542, but aggrieved employees will only be releasing their PAGA penalty claims.¿ (Szamet Decl., Exh. 1 at ¶ 5.)

The parties reached the proposed settlement through arms-length mediation following a review of Defendant’s records and in spite Defendant’s denial of liability. The parties reached this settlement after extensive mediation efforts. Accordingly, the settlement is entitled to a presumption of fairness.

Moreover, the terms of the settlement are fair, reasonable, and adequate in light of the gamut of Plaintiff’s claims, Defendants’ potential defenses, possible reductions in any eventual PAGA award, and the posture of this case. (Motion at pp. 6-9, Szamet Decl. ¶¶ 16-27; See Kullar v. Foot Locker Retail, Inc. (2008)168 Cal. App. 4th 116, 130 [“The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.”].) The proposed fee, cost, and incentive awards appear to be reasonable as well. Ultimately, there appears to be no other reason countenancing denial of the motion.

Based on the foregoing, Plaintiff’s motion for approval of PAGA settlement is GRANTED.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court