Judge: Joseph Lipner, Case: 23STCV02326, Date: 2025-01-21 Tentative Ruling

Case Number: 23STCV02326    Hearing Date: January 21, 2025    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Shawnette Snowden (“Plaintiff”) moves for an order approving the settlement in this Private Attorney General Act (“PAGA”) case.

The Court requests that Plaintiff provide a concise memorandum of costs showing the costs that have been expended thus far so that it can determine their reasonableness.

Additionally, the Court reduces the services award to Plaintiff from $10,000.00 to $5,000.00.

The Court is tentatively prepared to approve the settlement once these issues are resolved.

Background

On November 28, 2022, Plaintiff served Defendant and Labor and Workforce Development Agency (“LWDA”) with a Notice of Violations and draft complaint specifying the PAGA claims raised against Defendant in this action. The 65-day waiting period on Plaintiff’s right to file a PAGA action passed. LWDA has not notified Plaintiff that it intended or intends to investigate the claims in the PAGA notice.

Plaintiff filed this action on February 22, 2023 as a class action. The Complaint claims for (1) unfair competition; (2) failure to pay minimum wages; (3) failure to pay overtime wages; (4) failure to provide required meal periods; (5) failure to provide required rest periods; (6) failure to reimburse employees for required expenses; (7) failure to provide wages when due; (8) failure to provide accurate itemized statements; (9) failure to provide gratuities; and (10) violation of PAGA.

Defendant subsequently produced an arbitration which purportedly barred Plaintiff’s class action claims. Plaintiff filed a request for dismissal of the class action claims.

On June 26, 2023, Plaintiff filed the First Amended Complaint (“FAC”), raising a single cause of action for civil penalties under PAGA.

On May 2, 2024, the parties participated in an all-day mediation presided over by Steve Mehta. (Lapuyade Decl. ¶ 14.) In advance of the mediation, Defendant produced the total number of Aggrieved Employees and pay periods, the employ employee handbooks, and a 52% sample of the Aggrieved Employees time and payroll data. (Lapuyade Decl. ¶ 15.)

The mediation resulted in the settlement of the PAGA claims (the “Settlement”). (Lapuyade Decl. ¶ 16.) The settlement was the result of arm’s-length negotiations with the assistance of the mediator. (Lapuyade Decl. ¶ 16.)

On December 9, 2024, Plaintiff filed this motion for approval of the Settlement.

Legal Standard

Settlement

The PAGA is “a procedural statute allowing an aggrieved employee to recover civil penalties—for Labor Code violations—that otherwise would be sought by state labor law enforcement agencies.” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.)  The statute provides a mechanism for private enforcement of Labor Code violations for the public benefit. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 986; Ochoa-Hernandez v. Cjaders Foods, Inc. (N.D.Cal. 2010) 2010 WL 1340777, at p. *4.)   

To incentivize employees to bring PAGA actions, the statute provides aggrieved employees 25 percent of the recovered civil penalties. (Lab. Code § 2699, subd. (i).) The remaining 75 percent is distributed to the Labor and Workforce Development Agency (“LWDA”) “for enforcement of labor laws and education of employers and employees about their rights and responsibilities under [the Labor Code].” (Id.) 

In reviewing the terms of a settlement agreement, courts determine whether the settlement is fair, reasonable, and adequate to all concerned, and not the product of fraud, collusion, or overreaching. (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 322, 337; Nordstrom Commission Cases (2010) 186 Cal.App.4th 576, 581.) Although a PAGA plaintiff need not satisfy class action requirements (see Arias v. Superior Court (2009) 46 Cal.4th 969, 975), general principles applicable to class action settlements apply equally in this context.

In the context of a class action settlement, courts consider various factors including whether (1) the settlement is the result of 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. (Nordstrom, supra, 186 Cal.App.4th at 581; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 245.) The final factor is not applicable to PAGA. (See Arias, supra 46 Cal.4th at p. 984 [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”].) “Because many of the factors used to evaluate class action settlements bear on a settlement's fairness—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—these factors can be useful in evaluating the fairness of a PAGA settlement.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77.) Furthermore, “a trial court should … determine whether [the settlement] 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.” (Ibid.)

In considering the amount of settlement, courts must be mindful that compromise is inherent and necessary in the settlement process. (Wershba, supra, 91 Cal.App.4th at 250.) 

A proposed PAGA settlement must be submitted to LWDA at the same time that it is submitted to the court for review and approval.  (Lab. Code § 2699, subd. (l)(2).)

Attorney’s Fees Under Settlement

California Rules of Court, rule 3.769(b) requires that “[a]ny agreement… with respect to the payment of attorney fees or the submission of an application for the approval of attorney fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.” Despite any agreement by the parties to the contrary, “the court ha[s] an independent right and responsibility to review the attorney fee provision of the settlement agreement and award only so much as it determined reasonable.” (Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 128.)

Discussion

Notice to LWDA

Plaintiff has submitted the proposed settlement to LWDA and will submit a copy of the Court’s judgment and order approving the settlement within 10 days of each. (Lapuyade Decl. ¶ 18.)

Fairness of Settlement

The Settlement is intended to release the PAGA claims of the Aggrieved Employees, Plaintiff, the LWDA, and the State of California. This is only a settlement of the PAGA claims for civil penalties and is not a class settlement. The Settlement does not release any individual wage claims that the Aggrieved Employees may have.

The PAGA settlement covers roughly 132 employees for the period of November 28, 2021 to June 1, 2024 (the “PAGA Period”).

The parties reached the settlement after a full day’s mediation as well as follow-up negotiations. As discussed above, Plaintiff obtained substantial informal discovery in advance of the mediation, including the pay records for over half of the Aggrieved Employees.

The gross settlement amount is $135,000.00. (Lapuyade Decl. ¶ 19.) Based on the data and information provided in mediation, Plaintiff estimated that Defendant’s theoretical maximum PAGA liability exposure is approximately $640,500.00, or $961,200.00 if the Court were to allow Plaintiff to stack both Labor Code penalties and civil PAGA penalties. (Lapuyade Decl. ¶¶ 20-21.) Given the costs and risks of litigation, as well as the Court’s statutory power to reduce PAGA awards where the full penalty would be unjust (Lab. Code, § 2699, subd. (e)(2)), the gross settlement amount represents a fair compromise of the PAGA claims.

The Settlement provides for a 33.33 percent attorney fee of $45,000.00 and litigation costs not to exceed $20,000.00. (Lapuyade Decl., Ex. 1 (“Settlement”) at § 3.2.1.) $6,000.00 of the gross amount is allocated to claims administration costs. (Settlement at § 3.2.2.) The Settlement also provides for a $10,000.00 service award to be provided to Plaintiff. (Settlement at § 3.2.) If the Court approves a lower amount, the remainder will be retained by the settlement administrator for distribution.

After these deductions, it is estimated that the remaining amount will be $54,00.00 (the “PAGA Penalties Payment”).

            Of the PAGA Penalties payment, 75 percent shall be paid to the LWDA. (Settlement at § 1.12.) The remaining 25 percent shall be paid to the Aggrieved Employees on a pro rata basis according to the number of pay periods each Aggrieved Employee worked during the PAGA Period. (Settlement at § 1.13.)

            Plaintiff’s lodestar value for attorney’s fees is $31,122.00. Thus, the fee award is relatively close to the lodestar. Plaintiff provides the billing records of her attorneys in this matter. (Zakay Decl., Ex. 2.) Plaintiff also provides a “firm resume” setting forth her attorneys’ experience. (Zakay Decl., Ex. 1.) The Court finds the attorney fee to be reasonable.

It is unclear exactly what figure in costs Plaintiff’s attorneys expect to claim. Plaintiff variously states that cost figures of $13,881.63 and $16,065.00. In any event, this figure is not final, because there are expected to be some additional costs that accrue. This costs figure appears unusually large. The Court requests that Plaintiff provide a concise memorandum of the costs expended thus far so that the Court can determine their reasonableness.

            The $10,000.00 service award to Plaintiff is too large given the scope of this litigation and the size of the gross settlement. The Court reduces this amount to $5,000.00.