Judge Lynne M. Hobbs, Case Number: 23STCV00705, Date: 2025-04-03 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 23STCV00705, Date: 2025-04-03 Tentative Ruling

Case Number: 23STCV00705 Hearing Date: April 3, 2025 Dept: 61

JOANNA HOLCOMBE vs SWH MIMI'S CAFE, LLC, et al.

Tentative

Plaintiff Joanne Holcombe’s Motion to Approve PAGA Settlement is GRANTED.

Judicial Assistant is to calendar OSC re Proof of Distribution of Funds.

Moving party to provide notice.

Analysis:

I. MOTION TO APPROVE SETTLEMENT

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 Joanna Holcombe (Plaintiff) presents the terms of a proposed PAGA settlement as follows. Defendant Beyond Limits Strategies, Inc. (Defendant) is to pay a gross settlement amount of $260,000.00. (Otkupman Decl. Exh. 2, § 3.1.) From this amount, 33.3%, or $86,658.00, is to be paid to Plaintiff’s counsel in attorney fees, plus $20,000.00 in costs and expenses. (Id. at § 3.2.1.) Plaintiff is to receive a $5,000.00 enhancement payment. (Id. at § 3.2.2.) The PAGA administrator is to be paid up to $20,000, although the parties have obtained a not-to-exceed bid of $3,500.00 to administer the settlement. (Otkupman Decl. ¶ 40.) Any difference between the $20,000 apportioned to the administrator and the amounts actually incurred are to be distributed to aggrieved employees as part of the net settlement amount. (Otkupman Decl. Exh. 2, § 3.2.3.)

Those amounts not distributed as above are — $128,342.00 — are to be distributed 75% ($96,256.50) to the Labor Workforce Development Agency and 25% ($32,085.50) to aggrieved employees. (Otkupman Decl. Exh. 2, § 3.2.4.) Aggrieved employee payments are to be distributed to each employee according to the number of pay periods worked by that employee. (Id. at § 3.2.4.1.) The parties estimate that the class of aggrieved employees numbers 774, who worked approximately 20,232 pay periods between them. (Otkupman Decl. ¶ 21.) This yields an average per-employee payment of $41.45, which becomes $62,77 if the excess amount apportioned to the administrator is distributed to employees.

Plaintiff estimates the maximum potential valuation of the PAGA claims at $2,023,200.00, based on the 20,232 pay periods at issue, using the $100 per violation penalty attributable to violations occurring prior to LWDA warnings. (Otkupman Decl. ¶ 26.) The gross settlement amount of $260,000 is roughly 13% of this valuation. (Ibid.) Plaintiff notes that the court would have the authority to reduce any penalty award from the maximum permitted by statute. (Id. at ¶ 22.) Plaintiff’s counsel states that such discretionary reductions would have been likely in this case because of the technical nature of the violations and the relatively small amount of resulting damages suffered by the employees in relation to the penalty amounts. (Id. at ¶ 25.)

Plaintiff’s counsel also presents a proposed lodestar figure for attorney fees, amounting to $100,415.00 for 105.7 hours worked, greater than the fee award provided by the settlement agreement.(Otkupman Decl. Exh. 5.) The settlement comports with the purposes of PAGA and is fair and reasonable. Plaintiff makes a persuasive showing for the amount and allocation of the settlement award, and presents evidence showing the reasonableness of the attorney fee request, calculated as a percentage of the settlement. 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 therefore GRANTED.