Judge: Joseph Lipner, Case: 23STCV06238, Date: 2024-03-14 Tentative Ruling

Case Number: 23STCV06238    Hearing Date: March 14, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Efrain Jimenez Cornejo (“Plaintiff”) moves for an order approving the settlement in this PAGA case.

The Court GRANTS Plaintiff’s motion subject to the Court reducing the attorney’s fees. The Court approves attorney’s fees in the amount of $79,920.00 which is 33.3% of the recovery.

Background

Plaintiff filed this action on March 31, 2023. The operative complaint is now the Second Amended Complaint (“SAC”), which alleges (1) failure to pay overtime; (2) failure to pay minimum wages; (3) meal period violations; (4) rest break violations; (5) failure to pay vested vacation benefits; (6) failure to allow sick time and benefits; (7) failure to pay wages for all time worked; (8) failure to provide accurate wage statements; (9) failure to timely pay wages at separation; (10) failure to produce employment records; (11) failure to pay regular rate of pay; (12) failure to maintain accurate payroll records; (13) unfair business practices; and (14) violation of labor laws giving rise to a PAGA action.

The parties agreed to a settlement on November 20, 2023.

            Plaintiff filed this motion for approval of the Settlement on February 21, 2024. No party filed an opposition.

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 shown that the proposed settlement was submitted to LWDA. (Mooradian Decl., Ex. D.)

Fairness of Settlement

The PAGA settlement covers roughly 472 employees for the period of March 2, 2022 through the date that the settlement becomes effective. The PAGA settlement covers roughly 472 employees for the period of March 2, 2022 through the date that the settlement becomes effective.

This is the second PAGA settlement that Defendant has entered into. Defendant took the position in this case that the earlier settlement resolved the alleged violations in this case. The liability in this case is based on a set of payroll records that Defendant provided to Plaintiff, which disclosed additional alleged violations.

The parties reached the settlement after a full day’s mediation as well as follow-up negotiations. Plaintiff obtained roughly 70,000 lines of payroll records for the aggrieved employees from Defendant in connection with the mediation.

The gross settlement amount is $240,000.00.

The settlement provides for a 35% attorney fee of $84,000.00 and litigation costs of $5,487.70. $6,500.00 is allocated to Phoenix Class Action Administration Solutions. $5,000.00 is allocated as an enhancement payment to Plaintiff for representing the PAGA class.

These computations leave $139,012.30. 75%, or $104,259.22, will be paid to the LWDA and the remaining 25%, or $34,753.07, will be distributed to the PAGA class. Each aggrieved employee will receive a portion of this amount proportional to the amount of pay periods they worked during the PAGA period out of the total number of pay periods worked by aggrieved employees.

The attorney’s fees in the settlement, $84,000.00, make up 35% of the total recovery. This portion of the recovery is unusually large. Given the recovery and the facts of this case, the Court will not approve a settlement in this amount.  Instead, the Court approves the amount of $79,920.00 which is 33.3% of the recovery.