Judge Kristin S. Escalante , Case Number: 20STCV00647, Date: 2023-06-20 Tentative Ruling

Judge: Kristin S. Escalante , Case: 20STCV00647, Date: 2023-06-20 Tentative Ruling

DEPARTMENT 24 - LAW AND MOTION RULINGS

Submission Instructions.

1. Please notify the courtroom staff by email not later than 4:00 p.m. the day before the hearing if you wish to submit on the tentative ruling rather than argue the motion. The email address is SMCDEPT24@lacourt.org. Please do not use any other email address. You must cc all other parties on the email.

2. Include the word "SUBMISSION" in all caps in the Subject line and include your name, contact information, case name and number, date of hearing and the party you represent in the body of the email. If you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the motions

3. OFF-CALENDAR should appear in all caps in the Subject line where all parties have agreed to have a motion placed off-calendar and parties are ordered to cancel the reservation on CRS.

4. If all parties submit, the tentative ruling will become the final ruling after the hearing date. The moving party shall give notice of the final ruling.

5.Tentative rulings are not invitations or opportunities to file further documents relative to the hearing before the Court. Said document(s) will not be considered by the Court.

NATURE OF PROCEEDINGS: Hearing on Motion for Order Approving Settlement Claims Brought Pursuant to Private Attorneys General Act of 2004, Awarding Attorneys' Fees, Costs, Enhancement Payment and Reimbursement of Settlement Admin Expenses and Dismissing Action with Prejudice

TENTATIVE RULING:

The Court has read the moving papers in the above-captioned motions and announces its tentative rulings in open Court.

The Motion for Order Approving Settlement Claims Brought Pursuant to Private Attorneys General Act of 2004 ID: 477506149335 filed by Plaintiff Felipe Carrera Puente on 05/25/2023 is continued to July 31, 2023, at 8:30 a.m. in Department 24 of Stanley Mosk Courthouse for the reasons set forth below.

Plaintiff is to provide the court with a copy of the email from LWDA confirming the submission of the Settlement, and the notice, if any, the Administrator will send to the PAGA Settlement Members in conjunction with the PAGA payments. Plaintiff should also submit a new proposed judgment reflecting the reduction in Plaintiff’s Enhancement Payment.

Plaintiff is also to provide further explanation of the following: (i) the tax treatment of the PAGA payments to the PAGA Settlement Members, (ii) why the extra code sections not in the initial LWDA Notice are appropriately included in the settlement agreement or an amendment of the Settlement to exclude the additional code sections not provided in the LWDA notice, (iii) why the effective date of the release precedes the payment date, (iv) either the portion of the Settlement each Defendant shall pay or why the Settlement does not include that information, and (v) why the settlement properly encompasses the claims within the related case of Yohan Osorio Genaro Barrera v. Paramount 3582 Inc., et al., Case No. 22STCV06519.

Plaintiff Felipe Carrera Puente (“Plaintiff”) moves for an order approving his PAGA settlement and release agreement (“Settlement”) with Defendants Inglewood 2017 Inc., Paramount 3582 Inc., Ash Hop Inc., Ash Hop II Inc., Ash Hop III Inc., and Norwalk 939 Properties, Inc., (collectively “Defendants”). Specifically, Plaintiff requests the court issue an order (1) approving the parties settlement amount of $135,000; (2) approving PAGA Counsel’s attorneys’ fees in the amount of $45,000.000—one-third of the Settlement, (3) approving PAGA Counsel’s attorneys’ costs of $11,067.62, (4) approving settlement administration costs of $6,500.00 to be paid to the settlement administrator Simpluris Class Action Solutions (“Administrator”), (5) approving a $10,000.00 service fee to Plaintiff, (6) designating the remainder of the payment ($62,432.38) as PAGA Penalties to be allocated between the LWDA (75% or $46,824.28) and Aggrieved Employees (25% or $15,608.09). (Proposed Judgment.)

In January 2020, Plaintiff filed a complaint alleging one cause of action for civil penalties under Labor Code section 2698 et seq., against Defendants. Plaintiff alleged violations of labor code 200, 201, 202, 203, 204, 210, 216, 221, 223, 225.5, 226, 226.3, 226.7, 510, 511, 512, 551, 552, 558, 1174, 1174.5, 1194-1197.1, 1198, 2751, 2802, and 2698 et seq.. (Compl., ¶99.) On October 4, 2019, Plaintiff provided written notice to the LWDA of Defendants’ Labor Code violations. (Compl., ¶56, Ex. 1.)

On May 25, 2023, Plaintiff file an unopposed motion for approval of the Settlement terms and attached the Settlement.

Discussion

“The superior court shall review and approve any settlement of any civil action filed pursuant to this part. The proposed settlement shall be submitted to the [Labor & Workforce Development Agency (“LWDA”)] at the same time that it is submitted to the court.” (Lab. Code, § 2699, subd. (l)(2).) As a threshold matter, Plaintiff has not submitted evidence the parties complied with Labor Code Section 2699 subdivision (1)(2). Plaintiff’s Counsel Michael Boyamian (“Boyamian”) states that Plaintiff concurrently filed the Settlement with the LWDA but does not attach evidence that the LWDA received the Settlement. ((Michael Boyamian Declaration [“Boyamian Decl.”], ¶18.)

The Settlement does not define “Aggrieved Employees,” but instead defines the “PAGA Settlement Members” as “all current and former hourly non-exempt employees of Defendants in California at any time during the PAGA Period.” (Boyamian Decl., ¶16, Ex. 2 [“Settlement”], at p. 1.) It defines the PAGA Period as “January 6, 2019, through the date of approval.” (Settlement, at p. 1.)

Defendants employed Plaintiff during the PAGA Period—they hired Plaintiff in the summer of 2018 until his resignation in or around August 2019. (Compl., ¶10) Plaintiff alleged that throughout his employment Defendants subjected him and other employees to Labor Code violations. The statute of limitations on Plaintiff’s claims was one year. (Code Civ. Proc., §340, subd. (a).) Plaintiff provided notice to the LWDA of Defendant’s Labor Code violations on October 4, 2019 which tolled the statute of limitations for his PAGA claims while he awaited a responses. Plaintiff then filed suit on January 6, 2020. The definitions are proper pursuant to the statute of limitations and the date of notice on the LWDA. Accordingly, Plaintiff plead his claims timely within the statutory period and in accordance with the LWDA notice.

The Settlement defines the “PAGA Released Claims” as any and all claims, transactions or occurrences that were asserted or could have been asserted based on the facts set forth in the operative pleading and notice submitted to the LWDA in connection with the lawsuit for any violations by Defendants of California Labor sections 201, 202, 203, 204, 210, 216, 221, 223,

225.5, 226, 226.3, 226.7, 246, 246.5, 247, 248.5, 510, 511, 512, 551, 552, 1174, 1194-1197.1, 1198, and 2802 and the related applicable IWC Wage Order provisions for the PAGA Period. (Settlement, at p. 2.) The Settlement defines the “Effective Date” as the date when both of the following have occurred “(a) the Court enter a Judgment on its Order Approving the PAGA Settlement and (b) the Judgment is final. The Judgment is final as of the day the Court enters Judgment.” (Settlement, at p. 1.)

The Settlement provides that upon the Effective Date, the PAGA Settlement Members, the LWDA, and PAGA Counsel fully release and forever discharge “Released Parties” from any and all PAGA Released Claims. (Settlement, at p. 10.) The Settlement defines “Released Parties” as Inglewood 2017 Inc., Paramount 3582 Inc., Ash Hop Inc., Ash Hop II Inc., Ash Hop III, Inc., and Norwalk 939 Properties, Inc., (and affiliated entities etc.). (Settlement, at p. 2.) The effective date precedes the payment date, as the Settlement states Defendants shall pay the gross amount “thirty days after the Effective Date.” (Settlement, ¶26.) The Settlement also does not state the portion of the Settlement each Defendant shall pay.

The release does not cover any Non-PAGA claims other than Plaintiff’s putative individual claims. (Settlement, at pp. 5, 10.) Given the release does not apply to PAGA Settlement Members’ individual claims, the release is proper. (See ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175.)

The Settlement states that the release in the present suit will extinguish the claims in the related case of Yohan Osorio Genaro Barrera v. Paramount 3582 Inc., et al., Case No. 22STCV06519. (Settlement, ¶19.)

A superior court must review and approve any penalties sought as part of a proposed settlement agreement pursuant to Labor Code §2699(l). “If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.” (Lab. Code §2699(f)(2).) A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action (Lab. Code §2699(g)(1).) “[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the [LWDA] for enforcement of labor laws and education of employers and employees about their rights and responsibilities under this code to be continuously appropriated to supplement and not supplant the funding to the [LWDA] for those purposes; and 25 percent to the aggrieved employees.” (Lab. Code §2699(i).)

Plaintiffs have not provided the Court with sufficient information to approve the Settlement terms, as discussed below.

Plaintiff has provided the court with the Settlement and information regarding how the terms of the Settlement were reached, but does not provide a copy of the Notice Letter sent to the LWDA. (Boyamian Decl., ¶16, Ex. 2.) Plaintiff also provides a copy of the initial PAGA notice sent to the LWDA, and the settlement in the case Lodge et al v. California Food Management LLC, et al., LASC Case Number 19STCV32348 which is carved out of the present Settlement. (Boyamian Decl., ¶¶9, 46; Ex. 1, 3.) Plaintiff provided information relating to the investigation and work done by Boyamian. (Boyamian Decl., ¶¶8-183.) Plaintiff also provided information suggesting the Settlement is reasonable based on the strengths and weaknesses of Plaintiff’s suit. (Boyamian Decl., ¶¶19-47.) Boyamian declared that based on his review of Defendants’ documents, there was a probability Plaintiff would prevail on his claims, but there were significant risks that the court would exercise its discretion to reduce the penalties under Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504. (Boyamian Decl., ¶¶19-43.)

Additionally, there were risks based on the California Supreme Court’s review of the issue of whether under state law standing principles a plaintiff has standing to pursue a representative action following arbitration of his individual PAGA claims as discussed in Adolph v. Uber Technologies, Inc. (2022) 2022 WL 1073583 and a California ballot initiative to eliminate PAGA. (Boyamian Decl., ¶45) Boyamian declares that the number of affected employees is 1,119 for an aggregate 15,166 pay periods. (Boyamian Decl., ¶23.) Boyamian also submits calculations establishing Defendants’ maximum potential PAGA penalty exposure would be $890,167.25 ($454,980 + $30,332 + 318,486 + 86,369.25), based on the Defendants’ alleged labor code violations, while acknowledging the risks associated with the claims, Defendant’s attempts to create compliant procedures, and the Court’s discretion to not stack penalties or not award altogether made the minimum recovery significantly lower. (Boyamian Decl., ¶¶29, 33, 36, 40, 41.) However, given the risk associated with the claims and the legal issue discussed, Boyamian declares he did not believe the maximum possible settlement was plausible. (Boyamian Decl., ¶47.) Accordingly, Plaintiff provided sufficient information to support the reasonableness of the Settlement.

Plaintiff provides the total amount of the settlement and its manner of its distribution. (Mtn., at p. 5:11-23.)

The Settlement does not set forth the tax treatment of all settlement payments made pursuant to the Settlement, e.g. non-wage income, etc. (Settlement, at p. 11.) It states “PAGA Settlement Members, including Plaintiff, will assume any tax obligations or consequences which may arise from this Settlement.” (Settlement, at p. 11.) The Settlement also states that the Administrator will “prepare and issue any tax forms required by law, including any IRS Form 1099s to PAGA Settlement Members, Plaintiff, and PAGA Counsel.” (Settlement, at p. 10.) This seems to imply the settlement payments will be considered non-wage income, but it is not clear.

The release does not release anything other than claims for penalties, and there is no Civil Code Section 1542 waiver for Aggrieved Employees, and as such, the release appears proper apart from the previously discussed issues. (Settlement, at pp. 2, 5-6 [see ¶29, “Release by Named Plaintiff” includes a Section 1542 waiver which is permissible].)

The Settlement provides that the Administrator will be responsible for the settlement administration and that the individual payment amounts for PAGA Settlement Members are to be determined based on the number of applicable pay periods worked. (Settlement, ¶40.) The Settlement provides that Defendants shall provide the Administrator “with a list of the names, addresses and number of pay periods/paychecks issued to each of the PAGA Settlement Members during the PAGA Period, 15 days after the Court issues an Order approving the Settlement.” (Settlement, ¶41.)

In support of the settlement provision entitling Plaintiff to a $10,000 enhancement payment, Plaintiff argues the award is warranted given Plaintiff expended time and effort assisting Plaintiff’s Counsel with the investigation of the claims and gathering information including discussing his work experience and regularly contacting Plaintiff’s Counsel for updates regarding the case. (Mtn., at p. 20:01-24; Declaration of Felipe Puente [“Puente Decl.”], ¶¶2-11) Plaintiff also states he confronted Defendants regarding the labor practices at great risk to himself. (Puente Decl., ¶¶3-4.) Plaintiff has provided sufficient support for a reduced incentive payment of $5,000.

Boyamian declares the Administrator will mail notice of the settlement. (Boyamian Decl., ¶56.) The Settlement does not explicitly state the Administrator will provide notice of the Settlement to the PAGA Settlement Members. (See Settlement, ¶¶41-50.) Additionally, Plaintiff has not attached what, if any, explanatory letter the PAGA Settlement Members will receive. Accordingly, the court cannot determine if such a notice letter accurately and fairly describes the Settlement.

As the prevailing employee, Plaintiff is entitled to reasonable attorneys’ fees in this action. (Lab. Code §2699(g)(1).) As discussed, the Settlement provides for attorneys’ fees in the amount of $45,000.00, which is 33% of Defendants’ total $135,000.00 payment. (Settlement, ¶30.) Plaintiff submitted support showing that the total attorneys’ fees requested is less than the lodestar amount of attorneys’ fee incurred based on the attorneys’ hours and billing rates. (Boyamian Decl., ¶¶48-52.) Given Boyamian’s hourly rate of $725 and 98.6 hours worked not yet awarded by the court he has a lodestar of $71,485 to date. (Boyamian Decl., ¶51.) The court finds the attorneys fees award is sufficiently supported.

The settlement provides for an award of costs incurred in the amount not to exceed $15,000.00 (Settlement, ¶31.) Plaintiff requests costs in the amount of $11,067.62. (Notice of Mtn., at p. 1.) Plaintiff provided sufficient support demonstrating Plaintiff’s Counsel incurred costs in this amount, including a spreadsheet of costs incurred. (Boyamian Decl., ¶48, Ex. 4.) Plaintiff did not provide invoices supporting the costs incurred. Nevertheless, the court finds the requested costs are reasonable and sufficiently supported.

The Settlement indicates the parties will apply to the court for entry of an order and final judgment approving the Settlement. (Settlement, ¶¶56, 64.) The proposed judgment submitted, and the Settlement, provide that the court will retain jurisdiction pursuant to Code of Civil Procedure section 664.6 (Proposed Judgment; Settlement, ¶64.) The motion states Plaintiff will submit to the LWDA a copy of the court’s judgment and order approving the Settlement within days after entry of judgment or order as required by Labor Code §2699(l)(3).

Based on the foregoing, the court continues the hearing for Plaintiff’s motion for an order approving the settlement to July 31, 2023, so that Plaintiff may submit further information to the court.