Judge: Joseph Lipner, Case: 22STCV02245, Date: 2023-09-12 Tentative Ruling

Case Number: 22STCV02245    Hearing Date: September 12, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Nicole Sanchez (“Plaintiff”) moves for an order approving the settlement between Plaintiff and Defendants Praesidium Diagnostics LLC, Sameday Health Inc., Sameday Technologies Inc., Felix Huettenbach (collectively, “Defendants”) for all claims Plaintiff brought in this action against the Defendants under the California Private Attorneys General Act (“PAGA”).

The motion for approval of the PAGA settlement is GRANTED.

Background

            Plaintiff, individually and on behalf of other aggrieved employees pursuant to the California Private Attorneys General Act (“PAGA”), brings this action against Defendants and Does 1 through 100, inclusive, alleging various Labor Code violations.

Legal Standard

“In September 2003, the Legislature enacted [PAGA] (Lab. Code, § 2698 et seq.; Stats. 2003, ch. 906, § 2, eff. Jan. 1, 2004).  The Legislature declared that adequate financing of labor law enforcement was necessary to achieve maximum compliance with state labor laws, that staffing levels for labor law enforcement agencies had declined and were unlikely to keep pace with the future growth of the labor market, and that it was therefore in the public interest to allow aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, with the understanding that labor law enforcement agencies were to retain primacy over private enforcement efforts.  (Stats. 2003, ch. 906, § 1.)’  [Citation.]”  (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 73-74 (“Moniz”).)

“Only an ‘aggrieved employee’ has standing to bring a civil action under PAGA.  [Citation.]  An ‘aggrieved employee’ is ‘any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.’  [Citation.]”  (Moniz, supra, 72 Cal.App.5th at p. 74.) 

“‘An aggrieved employee suing under PAGA ‘does so as the proxy or agent of the state’s labor law enforcement agencies.’  [Citation.]”  (Moniz, supra, 72 Cal.App.5th at p. 74.)  “In a PAGA lawsuit, ‘the employee plaintiff represents the same legal right and interest as state labor law enforcement agencies—namely, recovery of civil penalties that otherwise would have been assessed and collected by the [LWDA].’  [Citation.]”  (Ibid.)  “The ‘government entity on whose behalf the plaintiff files suit is always the real party in interest.’  [Citation.]”  (Ibid.)  “‘Before bringing a civil action for statutory penalties, an employee must comply with Labor Code section 2699.3.’  [Citation.]  That section ‘requires the employee to give written notice of the alleged Labor Code violation to both the employer and the [LWDA], and the notice must describe facts and theories supporting the violation.’  [Citation.]  ‘Proper notice under section 2699.3 is a ‘condition’ of a PAGA lawsuit.’  [Citation.]”  (Uribe v. Crown Building Maintenance Co. (2021) 70 Cal.App.5th 986, 1003.)

Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action pursuant to” PAGA.  The court’s review “ensur[es] that any negotiated resolution is fair to those affected.”  (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) 

“Aside from the requirement that the court ‘review and approve’ a settlement in a civil action filed under PAGA [citation], PAGA itself does not provide a standard for this review and approval in the majority of PAGA cases.  [Citation.]”  (Moniz, supra, 72 Cal.App.5th at p. 75; see also Haralson v. U.S. Aviation Services Corp. (N.D. Cal. 2019) 383 F.Supp.3d 959, 971 [“neither the California legislature, nor the California Supreme Court, nor the California Courts of Appeal, nor the [LWDA] has provided any definitive answer as to what the appropriate standard is for approval of a PAGA settlement”].)

Thus, courts have generally applied the same review standards used for class actions, which inquire “independently whether a PAGA settlement is fair and reasonable.”  (Moniz, supra, 72 Cal.App.5th at p. 77.)  To determine if a PAGA settlement is fair and reasonable, courts consider 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.”  (Ibid.)  Courts will also consider if the settlement is “adequate in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.”  (Ibid.)

Discussion

Plaintiff’s counsel testifies that Plaintiff has entered into a Private Attorneys General Act Settlement Agreement and Release (the “Settlement Agreement”) with the Defendants, on behalf of herself as an individual and on behalf of all “Allegedly Aggrieved Employees.”  (Declaration of Edwin Aiwazian, filed May 9, 2023 (“Aiwazian Decl.”), ¶ 8; Exhibit 1 – a copy of the Settlement Agreement.) 

The “Allegedly Aggrieved Employees” consist of all current and former non-exempt employees who worked for any of the Defendants in the State of California during the “PAGA Period” (i.e., between November 15, 2020, through April 30, 2023).  (Aiwazian Decl., ¶ 9.)  According to Defendants, from November 15, 2020, through September 1, 2022, there were approximately 578 Allegedly Aggrieved Employees who worked approximately 8,345 compensable pay periods.  (Aiwazian Decl., ¶ 9.)  As stated above “[a]n ‘aggrieved employee’ is ‘any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.’  [Citation.]”  (Moniz, supra, 72 Cal.App.5th at p. 74.)  Therefore, here, even though the PAGA Period runs from November 15, 2020, through April 30, 2023, Defendants have only been able to identify 578 employees against whom one or more of the violations Plaintiff alleges in her Complaint were committed.

Defendants have agreed to pay $300,000 as settlement.  (Aiwazian Decl., Exhibit 1.)  The Settlement Agreement outlines how the funds will be allocated. For example, it states that 35 percent of the funds (i.e., $105,000) will be used to pay attorneys’ fees.  (Aiwazian Decl., Exhibit 1, p. 2, Section 3(a)(1).)  

The Court finds that the Settlement Agreement is uncertain to a certain degree by using the words “up to” to imply that the Court can award a lesser amount in some categories.  For example, it states that the parties have agreed for “reimbursement of litigation costs and expenses in the amount of up to [$6000] . . . to Plaintiff’s Counsel, which Defendants will not contest.”  (Ibid. [emphasis added].)  However, counsel testifies that he is only seeking $1,317.62 for litigation costs out of the $6,000.  (Aiwazian Decl., ¶ 11.)  Similarly, the agreement states that the parties have agreed to pay “up to” $6,000 for administration of the settlement.  (Aiwazian Decl., Exhibit 1, p. 2, Section 3(a)(3).)  However, counsel testifies that the administrator has “provided a capped quote of $4,000 for administration of the Settlement.”  (Aiwazian Decl., ¶ 11 [testifying in addition that the parties have agreed to retain Simpluris, Inc. to serve as “PAGA Settlement Administrator”].)

In light of Plaintiff’s Counsel’s declaration, it is the Court’s understanding that the parties are asking for an order approving the following distribution of the settlement funds.

First, the parties will deduct $105,000 for attorney’s fees, $1,317.62 for litigation costs and expenses, $7,500 awarded to Plaintiff, and $4,000 for administration costs, a total of $117,817.62 from the $300,000 settlement, leaving a net settlement of $182,182.38 (the “Net Settlement”).  (Aiwazian Decl., ¶¶ 11, 26; Exhibit 1, p. 2., Section 3(a).)

Next, the parties will distribute that Net Settlement as follows. 75 percent (i.e., 0.75 x $182,182.38 = $136,636.785, rounded up equals $136,636.79) will be given to the California Labor and Workforce Development Agency (“LWDA”), and 25 percent (i.e., 0.25 x $182,182.38 = $45,545.595, rounded up equals $45,545.60) will be distributed among the Allegedly Aggrieved Employees, on a pro rata basis, based on the number of pay periods they each employee worked during the PAGA Period.  (Aiwazian Decl., ¶ 11; Exhibit 1, p. 2, Section 3(a).)  According to the agreement, “[i]f the actual number of Compensable Pay Periods during the PAGA Period is greater than 9,200 or the amount of Alleged Aggrieved Employees is greater than 650, then the Total Settlement Amount [i.e., the $300,000] shall be increased proportionately for each additional Compensable Pay Period worked or Allegedly Aggrieved Employee included, whichever is higher.”  (Exhibit 1, p. 2, Section 3(b).)

Plaintiff’s counsel attests to the following facts in support of the motion.  Prior to reaching a settlement, the parties investigated the strength of their positions and were preparing for trial.  (Aiwazian Decl., ¶ 14.)  “Plaintiff conducted significant investigation and informal discovery regarding the facts of the case, including and not limited to, the exchange, review, and analysis of a large volume of information, documents, and data obtained from Defendants and other sources.”  (Ibid.)  “Based on investigation and information discovered, Plaintiff’s Counsel believes that there is sufficient evidence to support the allegations that Defendants violated the California Labor Code.”  (Aiwazian Decl., ¶ 15.)  On the other hand, “[f]rom the inception of this litigation, Defendants indicated that they would aggressively litigate this case and contended that they would ultimately succeed in the action.  Defendants maintained several defenses to Plaintiff’s allegations, which, if successfully argued and proven, had the potential to eliminate or substantially reduce recovery.”  (Aiwazian Decl., ¶ 17.)  The parties engaged in extensive informal discovery and settlement negotiations to resolve the lawsuit.  (Aiwazian Decl., ¶ 13.)  Those efforts included participating in a mediation on December 5, 2022, conducted by Hon. Howard R. Broadman (ret.), a well-respected mediator experienced in mediating complex labor and employment matters.  (Ibid.)  “In the course of mediation and settlement negotiations, the parties discussed all aspects of the case, including the risks and delays of further litigation, the risks to the parties of proceeding with trial, the law relating to representative PAGA actions, manageability off-the-clock theory, meal and rest breaks, regular rate, wage-and-hour enforcement, waiver, and arbitration agreements, the evidence produced and analyzed, and the possibility of bifurcation of discovery and/or trial and appeals, among other things.  During all settlement discussions, the parties conducted their negotiations at arm’s length in an adversarial position.”  (Ibid.)  With the aid of the mediator, the parties ultimately reached the Settlement Agreement.  (Ibid.) 

Plaintiff’s counsel also testifies that all costs and expenses were reasonable and necessary in the prosecution of this matter to obtain the settlement.  (Aiwazian Decl., ¶ 25; Exhibit 3 – a copy of counsel’s billing statements [detailing the amount of hours counsel’s law firm spent on this lawsuit].)  The attorney’s fees of $105,000 are based on Plaintiff’s counsel’s billing rate of $650 per hour, and are based on a 35-percent contingency fee agreement between Plaintiff and counsel.  (Id. ¶¶ 21, 24.)  Plaintiff’s counsel has extensive experience litigating wage and hour and PAGA cases.  (See Id. ¶ 7 [outlining more than 30 cases the firm has litigated].)

Plaintiff’s counsel explains that the $7,500 awarded to Plaintiff is in “recognition of her efforts and work in spearheading the litigation of this matter, as well as for her broader, general release of claims with a California Civil Code section 1542 waiver, the Settlement provides a General Release Fee to Plaintiff in the amount of $7,500.00 to be paid out of the Total Settlement Amount.”  (Aiwazian Decl., ¶ 26.)  Counsel testifies that the General Release Fee is fair and appropriate because “[b]y initiating and pursuing this matter, Plaintiff stepped into the shoes of the State of California and undertook the responsibilities of serving in a representative capacity.  Plaintiff has spent a substantial amount of time and effort discussing her employment with her counsel, gathering and producing relevant documents and information, and providing the facts and evidence necessary to attempt to prove the allegations. Plaintiff was available whenever her counsel needed her and actively tried to obtain and provide information that would facilitate the pursuit of the PAGA claim.”  (Ibid.)

Counsel further testifies: “Plaintiff … satisfied the prerequisites under California Labor Code section 2699.3(a), including, and not limited to, providing the [LWDA] and the employer with written notice of the specific provisions of the California Labor Code that are alleged to have been violated, including the facts and theories to support the alleged violations, by way of written correspondence on November 15, 2021 (‘PAGA Notice Letter’).  The PAGA Notice Letter was sent to the employer by U.S. Certified Mail and submitted to the LWDA by way of online submission on the LWDA’s website.  A true and correct copy of the PAGA Notice Letter is attached [to counsel’s declaration] as ‘EXHIBIT 2.’  The LWDA did not respond to the letter that was sent on behalf of Plaintiff.”  (Aiwazian Decl., ¶ 10.) 

Plaintiff has filed a proof of service showing that she submitted a copy of the Settlement Agreement to the LWDA in conformity with California Labor Code section 2699(l)(2).  (Motion, p. 4:3-5, fn. 11; Proof of Service, filed May 9, 2023, p. 2, By Online Submission section.)

Given Plaintiff’s counsel’s declaration and the fact that no opposition to the motion or objection to the Settlement Agreement has been filed, Court finds the settlement reasonable and fair.

The Court therefore GRANTS the Motion for Approval of Private Attorneys General Act (Cal. Labor Code § 2698, et seq.)