Judge Lon F. Hurwitz, Case 2019-01064397 2022-11-04 Tentative Ruling

Judge: Lon F. Hurwitz, Case: 2019-01064397, Date: 2022-11-04 Tentative Ruling

Motion for PAGA Approval

RULING:

The hearing on this motion is continued to February 3, 2023 at 1:30 p.m. in Department CX103 so that plaintiff may address the issues identified below.

It is not necessary for plaintiff to resubmit briefing which has already been filed with the court. Supplemental declarations or other supplemental materials shall be filed at least nine (9) court days prior to the hearing. If a revised settlement, declaration(s), and/or proposed Notice are submitted, a redlined version showing all changes, deletions, and additions must also be submitted electronically to the Court.

The Request for Judicial Notice is denied as moot, as the materials were not necessary for the disposition of this motion.

1. The court is concerned about the adequacy of the Gross Settlement Amount. Further information is needed regarding counsel’s valuation of the case. Although the maximum valuation is calculated, and Plaintiffs discuss various factors which could reduce any potential award, Plaintiffs do not provide the court with a reasoned realistic expected value for the claims. Counsel must provide a calculation of maximum and reasonable expected penalties for each separate violation..

2. Counsel must address whether there are potentially overlapping cases. (See Guideline 10).

The hearing has been continued to the first available date. There are no earlier dates available.

The court does not require any physical or remote appearance at the hearing scheduled for November 4, 2022.

PAGA SETTLEMENT CHECKLIST

ITEM SUMMARY

Operative Pleading: First Amended Complaint filed 8/13/20 (ROA 77).

Potentially Overlapping Cases: Not discussed as required by Court’s Procedural Guideline for Prelim. Approv. No. 10.

Nature of claims: Nature of claims PAGA Civil Penalties (Labor Code §§ 2698, et seq.) based on the following violations of Labor Code sections 201-204, 210, 226, 226.7, 510, 512, 1174, 1174.5, 1194, 1194.2, 1197, 1198, 2800, and 2802:

(a) failing to pay all wages to non-exempt employees, including the minimum wage for all hours worked, and overtime wages for all overtime hours worked;

(b) (failing to include non-discretionary bonuses, commissions, and other incentive payments in calculating employees’ overtime rates, thus paying non-exempt employees overtime wages at the incorrect rate of pay;

(d) failing to authorize or permit rest breaks or provide compensation in lieu thereof;

(e) willfully failing to provide non-exempt employees with accurate semi-monthly itemized wage statements;

(f) failing to maintain payroll records accurately stating the hours that non-exempt employees worked and the wages they earned;

(g) failing to timely pay non-exempt employees all wages due during their employment; (h) failing to timely pay non-exempt employees all wages due upon the separation of their employment with Defendant; and

(i) failing to reimburse non-exempt employees for all necessary expenses and losses they incurred in discharging their job duties.

LWDA letter: Yes. Ex. 5 to Connolly Decl.

Investigation and analysis: Defendant produced data and documents for Plaintiff to evaluate the PAGA. (Connolly Decl. ¶14).

Valuation: The Gross Settlement Amount of $235,000 is a penalty of approximately $111 per employee. The penalties were not calculated per individual claim. Not enough information has been provided at this point to justify the low Gross Settlement Amount. The following is from the Connolly Decl. ¶¶19-22:

Max. PAGA Penalties: $10,882,800.

Reasonable Penalties: $235,900.

Reasons For Discounting: Risk of reduction or elimination of civil penalties and likelihood of recovery for subsequent violations.[No percentage given].

Maximum PAGA Penalties: 2,100 initial violations x $100) + (53,364 subsequent violations x $200) = $10,882,800 However, Plaintiff will likely only recover initial violations, or $5,546,400 (55,464 pay periods x $100 per pay period). At the time of the settlement, Viking River Cruises had not been decided, and there was a risk that Plaintiff would not be able to recover any penalties on behalf of the state. Also, the court has discretion to reduce PAGA penalties.

Location and execution of settlement agreement: Exhibit 1 to Connolly Decl. Yes.

Definition of “aggrieved employees?”: “Plaintiff and all current and former non-exempt employees who worked for Defendant within the State of California during the PAGA Period.” (Exh. 1 to Connolly Decl. ¶10).

Number of Aggrieved Employees: 2,100 (Connolly Decl. ¶19).

Amount of settlement: $235,900 (Connolly Decl. ¶19).

Fees (Includes Lodestar Analysis): $78,333.33 (1/3 of GSA) (Stip. ¶27). The lodestar is $91,477.50 (Connolly Decl. ¶39). The multiplier is negative.

Lodestar Calculation:

Attorney Rate Hours Total

Kashif Haque $825 21.7 $17,902.50 Jessica L. Campbell $700 17.6 $12,320.00 K. Connolly $450 74.4 $33,480.00 Suren N. Weerasuriya $550 50.5 $27,775.00

Totals 164.20 $91,477.50

The hourly rates are reasonable for the experience level of each attorney, as are the hours spent by partners/associates and tasks performed by each, particularly in light of the negative lodestar multiplier. The fee is fair and reasonable.

Costs: $14,800.47

Administrative costs: $11,000 (up to)

Any additional deductions: N/A

Net amount: $130,866.20 (Mtn. at 4:9-12).

Method of calculating: Pro rata based on pay periods worked during the PAGA period.

Individual awards: (Exhibit 1 to Connolly Decl. [Release] ¶¶28, 30).

Tax treatment (including tax treatment of unpaid wages, if any): None—all penalties. (Exhibit 1 to Connolly Decl. [Release] ¶31).

75/25% allocation?: Yes.

Any additional amount received by named Plaintiff: None discussed.

Changes in policy or practices?: None requested in FAC and none discussed in moving papers.

Disposition of unclaimed funds: State of California Controller, Unclaimed Property Division. (Exhibit 1 to Connolly Decl. [Release] ¶43).

Release (unpaid wages?): “Upon the Effective Date, Plaintiff, the State of California, and each PAGA Employee, shall fully release and forever discharge Released Parties from the Released Claims during the period from April 22, 2018, through April 7, 2022. It is understood and agreed that this Agreement neither releases the Released Parties from liability, if any, to PAGA Employees for violations of any predicate statutes other than for civil penalties under PAGA, nor effects a waiver of claims by PAGA Employees against the Released Parties for the same.”

(Exhibit 1 to Connolly Decl. [Release] ¶¶34, 35). “Released Claims” means and refers to any and all civil penalties under PAGA based on any act, omission, event, or occurrence reasonably related to, alleged in, or that could have been alleged based on the facts asserted in the operative Complaint and/or any letter provided by the Plaintiff to the LWDA, which arose during the PAGA Period, including but not limited to penalties for alleged violations of California Labor Code sections 201-204, 210, 226, 226.3, 226.7, 245-249 (the Healthy Workplaces, Healthy Families Act of 2014), 510, 512, 558, 1174, 1174.5, 1194, 1194.2, 1197, 1197.1, 1198, 2800, and 2802, the corresponding sections of IWC Wage Order 7, and all penalties based on the foregoing under PAGA.

Different release for Plaintiff?: No.

Notice to aggrieved employees (copy submitted): Yes.

Service on LWDA: Yes.

664.6 provision?: Yes.

Explanation of why award is less than maximum: Risk of reduction or elimination of civil penalties and likelihood of recovery for subsequent violations.

Proposed Order: Yes.

Other Issues: None.