Judge: Joseph Lipner, Case: 23STCV21155, Date: 2025-02-27 Tentative Ruling

Case Number: 23STCV21155    Hearing Date: February 27, 2025    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Maria del Carmen Chan Cujuy (“Plaintiff”) moves for an order approving the settlement agreement (the “Settlement”) with Defendant Aesthetic Maintenance Corporation (“Defendant”) in this Private Attorney General Act (“PAGA”) case.

The costs that are attributable to the prior class action, rather than this case, must be deducted. With the exception of the issue noted as to costs of litigation, the Court is prepared to approve the Settlement. Because costs must be recalculated, the amounts allocated to LWDA and the Aggrieved Employees will also need to be recalculated, as they are determined based on the remainder.

Background

Plaintiff and other aggrieved employees were employed with Defendant. Plaintiff alleges that Defendant failed to compensate her and other aggrieved employees for all hours worked due to its practice of rounding time down to the nearest hour and automatically deducting a 30 minute meal period from time records regardless of whether a compliant meal period was actually taken. Plaintiff also alleges that Defendant failed to provide compliant meal and rest periods.

On June 26, 2023, Plaintiff submitted a letter to the Labor and Workforce Development Agency (“LWDA”) to notify LWDA of Plaintiff’s intent to seek civil penalties under PAGA for the alleged Labor Code violations at issue in this action. (Clark Decl. ¶ 9.)

Plaintiff filed this action on September 1, 2023, raising one claim for civil penalties pursuant to PAGA, Labor Code sections 2698, et seq. Plaintiff seeks penalties for (1) failure to pay wages for all hours worked at the legal minimum wage; (2) failure to pay wages to hourly non-exempt employees for workdays that Defendants failed to provide legally required and compliant meal periods; (3) failure to timely pay earned wages during employment; (4) failure to provide complete and accurate wage statements; and (5) failure to pay all wages due and at time of termination/resignation.

Prior to filing this action, Plaintiff filed a class action for the alleged Labor Code violations on June 26, 2023. Plaintiff subsequently stayed her individual claims in that action pending arbitration and dismissed the class allegations without prejudice.

On July 11, 2024, the parties attended an all-day mediation presided over by the Honorable Lisa Hart-Coles (Ret.) and reached an agreement in principle to resolve the action. The parties subsequently negotiated and finalized the terms of the full Settlement agreement.

In preparation for mediation, Plaintiff obtained, through informal discovery, time and pay records for Plaintiff and the Aggrieved Employees, as well as documents establishing Defendant’s policies, procedures, and practices. (Clark Decl. ¶ 14.) Plaintiff also received the number of aggrieved employees and a sample of payroll data for Defendant’s potentially aggrieved employees during the PAGA period. (Clark Decl. ¶ 15.) Plaintiff’s counsel and Plaintiff’s counsel’s expert analyzed the production. (Clark Decl. ¶ 14.)

On January 16, 2025, 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

On January 15, 2025, Plaintiff’s counsel filed the Settlement with LWDA. (Clark Decl. ¶ 62, Ex. 3.)

Fairness of Settlement

Plaintiff provides a copy of the Settlement. (Clark Decl., Ex. 1.)

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 (Plaintiff does not pursue class claims in this action, although she did pursue class claims in a prior action before dismissing them without prejudice). The Settlement does not release any individual claims of the Aggrieved Employees.

The Aggrieved Employees covered by the Settlement are non-exempt hourly employees employed by Defendant in California from June 26, 2022 to September 8, 2024 (the “PAGA Period”). The parties estimate that there are 57 aggrieved employees over approximately 2,332 pay periods. (Clark Decl. ¶ 24.)

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 $80,000.00. (Settlement § 1.11.) Based on the data and information provided in media, Plaintiff’s counsel estimates that the maximum PAGA exposure, if a violation could be proven for each claim during each period, is $1,279,750.00. (Clark Decl. ¶ 24.) Here, Defendant denies liability on each of the claims. Plaintiff’s counsel anticipates that Defendant will argue that any incorrect time records are due to the Aggrieved Employees’ failure to properly report their time and to take meal and rest breaks. 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 deductions from the gross settlement amount for (1) attorney’s fees; (2) costs of litigation; (3) administration costs; and (4) a service award to Plaintiff. Of the remaining amount, 75 percent will be paid to LWDA and 25 percent will be distributed pro rata among the Aggrieved Employees according to the number of pay periods each Aggrieved Employee worked.

The Settlement provides for a 33.33 percent attorney fee of $26,664.00. Plaintiff’s counsel estimates the lodestar to be $57,050.00. (See Clark Decl. ¶¶ 49-57.) The proposed fee amount is significantly lower than the lodestar. The Court deems it reasonable.

Plaintiff provides a record of the costs incurred by her counsel. (Clark Decl. ¶ 60, Ex. 2.) This record includes substantial costs from the class action – a different case for which there has not been a recovery. The costs that are attributable to the class action, rather than this case, must be deducted.

The Settlement provides that the administration costs payment will not exceed $3,250.00 unless the Court approves a greater expenditure. Any unused amount will be retained in the net settlement amount. The Court deems this amount to be reasonable.

            The $1,000.00 service award to Plaintiff is only a small portion of the settlement. The Court deems this amount reasonable.

            With the exception of the issue noted as to costs of litigation, the Court is tentatively prepared to find that the Settlement is fair, reasonable, and adequate in light of PAGA’s purposes. Because costs must be recalculated, the amounts allocated to LWDA and the Aggrieved Employees will also need to be recalculated, as they are determined based on the remainder.