Judge Lynne M. Hobbs, Case Number: 22STCV20161, Date: 2024-07-16 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 22STCV20161, Date: 2024-07-16 Tentative Ruling

Case Number: 22STCV20161 Hearing Date: July 16, 2024 Dept: 61

YOSHITAKA TAKEUCHI vs SELECT 7 LLC

TENTATIVE

Plaintiff Yoshitaka Takeuchi’s Motion to Approve PAGA Settlement is GRANTED.

Plaintiff to give notice.

DISCUSSION

Under PAGA, “t[t]he 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 agency at the same time that it is submitted to the court.” (Lab. Code, § 2699, subd. (l)(2).)

“[A] trial court should evaluate a PAGA settlement to determine whether it 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.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77.)

Federal courts have compared and contrasted PAGA settlements to class action settlements:

In the class action context, where PAGA claims often also appear, a district court must independently determine that a proposed settlement agreement is “fundamentally fair, adequate and reasonable” before granting approval. [Citations.] However, as the parties rightly point out and as noted above, this is not a class action lawsuit, and PAGA claims are intended to serve a decidedly different purpose-namely to protect the public rather than for the benefit of private parties. [Citation.] In one recent district court case, the LWDA provided some guidance regarding court approval of PAGA settlements. [Citations.] In that case, where both class action and PAGA claims were covered by a proposed settlement, the LWDA stressed that “when a PAGA claim is settled, the relief provided for under the PAGA be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public and, in the context of a class action, the court evaluate whether the settlement meets the standards of being “fundamentally fair, reasonable, and adequate” with reference to the public policies underlying the PAGA.” (Salazar, supra, 2017 WL 1135801 at pp. 3–4.) A number of these factors, “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,” have been recognized as useful in the analysis of PAGA settlements. (Moniz, supra, 72 Cal.App.5th at p. 77.)

Plaintiff Yoshitaka Takeuchi (Plaintiff) presents the terms of a proposed PAGA settlement here as follows. Defendant Select 7, LLC (Defendant) agrees to pay a gross settlement amount of $270,000.00. (Motion Exh. A, ¶ 1.10.) Plaintiff’s counsel is to be paid fees not to exceed 33.3% of this amount, up to $90,000.00 and up to $1,000.00 in expenses. (Id.at ¶ 3.2.1.) Plaintiff The settlement also includes administrative fees of up to $9,000.00. (Id. at ¶ 3.2.2.) Plaintiff is to receive an individual enhancement fee of $6,500.00. (Id. at ¶ 3.2.3.)

This leaves a net settlement amount of $163,500.00, to be paid in penalties to the Labor Workforce Development Agency (LWDA) and the aggrieved employees. The LWDA is to receive 75% ($122,625.00), and the aggrieved employees 25% ($40,875.00), allocated to each individual employee on a per-pay-period basis by the settlement administrator. (Motion Exh. A, ¶¶ 3.2.3.13.2.3.2.) The parties estimate that there are 45 aggrieved employees, and 700 PAGA pay periods (Id. at ¶ 4.1), yielding a mean payment of about $908.33 per aggrieved employee.

The settlement is to be paid in five installments: an initial installment of $30,000.00 within 30 days of an order approving the settlement, following by four annual payments of $60,000.00 due on January 15 in the years 2025 through 2028. (Id. at ¶ 4.3.) The first installment is to pay administration costs, litigation expenses, and then individual PAGA payments. (Id. at ¶ 4.4.) The remaining installments are to be paid as individual PAGA payments, then as Plaintiff’s enhancement payment, then the remainder equally divided between payments to the LWDA and Plaintiff’s counsel. (Id. at ¶ 4.4.)

Plaintiff presents the following breakdown on Defendant’s estimated total exposure. Plaintiff estimates the total exposure to be approximately $245,000.00, plus attorney fees, based on a hypothetical award of penalties for meal and rest break violations for all 700 pay periods at issue. (Motion at p. 10.) Plaintiff notes that certain employees worked part-time days, not entitling them to meal breaks, and that the actual violations on the time cards produced by Defendant would allow for only $79,450.00 in penalties. (Motion at p. 11.)

Plaintiff also presents a cross-check of the $90,000 attorney fee award with a proposed lodestar award based on hours actually worked. Plaintiff’s counsel states that he has spent 255.4 hours on this litigation, and, with an hourly rate of $650 per hour, this yields a lodestar of $166,010, substantially more than the actual fee award. (Kajioka Decl. ¶¶ 21–22.) Even if work on Plaintiff’s individual claims is removed, a 47.2 hour reduction, Plaintiff still presents a fee lodestar of $135,460.00. (Kajioka Decl. ¶¶ 21–23.)

In light of the above, the overall settlement amount furthers the purposes of PAGA. The settlement is reasonable in light of the strength and complexity of Plaintiffs’ claims, and the risks posed by litigation. Plaintiffs’ request for fees, representing one third of the gross settlement amount, is reasonable in light of the proposed lodestar presented by Plaintiffs’ counsel. The calculation of attorney fees from a percentage of a common fund created by a settlement agreement is a permissible mode of fee calculation. (See Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 503.) Courts may evaluate the reasonableness of any percentage-based attorney fee award through a “cross-check” with a lodestar calculation, as Plaintiff presents here. (See Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 505.)

The motion is GRANTED.