Judge: Marcella O. Mclaughlin, Case: 37-2021-00020557-CU-OE-CTL, Date: 2023-10-20 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - October 19, 2023

10/20/2023  01:30:00 PM  C-72 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Marcella O McLaughlin

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Civil - Unlimited  Other employment Motion Hearing (Civil) 37-2021-00020557-CU-OE-CTL CARNES VS THE SALVATION ARMY [E-FILE] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 08/14/2023

Tentative Ruling on Motion for Approval of PAGA Settlement Carnes v. Salvation Army, Case No. 2021-20557 Oct. 20, 2023, 1:30 p.m., Dept. 72 1. Overview and Procedural Posture.

This is a PAGA action challenging the employment practices of defendants, for which the plaintiff worked as a cashier in 2019 and 2020. The complaint was filed in May 2021; the defendant answered seasonably. ROA 11, 27-28. The focus of the case is defendants' failure to provide seating. Since the case was filed, the Court of Appeal in Los Angeles decided LaFace v. Ralphs Grocery Company (2022) 75 Cal.App.5th 388. There, the court held, in a matter of apparent first impression, that no right to jury trial existed for PAGA action, and that a grocery store employer was not required to provide its cashiers with seating under an Industrial Welfare Commission (IWC) Wage Order because sitting when they had no customers in their checkout lines would interfere with their expected other duties such as cleaning, restocking, assisting in other departments, and there was no showing that such expectations were unreasonable.

At a continued CMC, the court set the case for trial in February of 2024 (an uncommonly generous schedule). ROA 22-26.

Defendant sought an order compelling arbitration based on the decision of the US Supreme Court in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __, 142 S.Ct. 1906. Following full briefing and a hearing on Sept. 30, 2022, the court denied the motion in a detailed ruling. ROA 51.

The parties reached a settlement, and now seek approval of same. ROA 58-64. By design, the motion is unopposed. The court has reviewed the papers; no further submissions are authorized in connection with this motion.

2. Applicable Standards.

A. Two decades ago, the California Legislature enacted PAGA to address a perceived deficit in the enforcement of the Labor Code. Viking River, supra, 142 S.Ct. at 1913. By its terms, PAGA authorizes Calendar No.: Event ID:  TENTATIVE RULINGS

3036901  42 CASE NUMBER: CASE TITLE:  CARNES VS THE SALVATION ARMY [E-FILE]  37-2021-00020557-CU-OE-CTL any 'aggrieved employee' to initiate an action against a former employer 'on behalf of himself or herself and other current or former employees' to obtain civil penalties that previously could have been recovered only by the State in an LWDA enforcement action. Lab. Code Ann. § 2699(a). The non-party aggrieved workers in a PAGA case are entitled to no notice and have no opt out rights. See Arias v. Superior Court (2009) 46 Cal.4th 969, 985-86.

B. PAGA settlements are subject to trial court review and approval. Lab. Code § 2699(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. Many of the same factors used to evaluate the fairness of a class action settlement – i.e., 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 – can be 'useful' in evaluating the fairness of a PAGA settlement. Id. C. 'The law empowers the court to set the amount of fees independently without disapproving the entire settlement.' Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 129. The benchmark for determining attorney fees is reasonableness. Karton v. Ari Design & Construction, Inc.

(2021) 61 Cal.App.5th 734, 744. The determination of what constitutes a reasonable fee generally begins with the lodestar, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154. The lodestar figure may then be adjusted, based on factors specific to the case, to fix the fee at the fair market value for the legal services provided. PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.

3. Discussion and Ruling.

A. The court discusses the factors from Section 2B as follows: 1. Strength of plaintiff's case: Plaintiff's counsel acknowledges that LaFace, supra, changed 'the legal landscape' regarding seating requirements. (Spencer Decl., ¶ 13.) The very essence of a settlement is compromise, i.e., the 'yielding of absolutes and an abandoning of highest hopes.' Linney v. Cellular Alaska Partnership (9th Cir. 1998) 151 F.3d 1234, 1242.

2. Expense associated with taking the case to trial, i.e., the avoided cost of further litigation: Although not expressly monetized in the moving papers, the court can easily imagine attorneys' fees and costs exceeding $100,000 per side just to prepare the matter for trial.

3. Amount or value offered in settlement: The total amount offered in settlement is $150,000.00, with no reversion. The parties intend to allocate these funds as follows: -Attorneys' fees: $50,000 to plaintiff's counsel -Litigation costs/expenses: $5,000 to plaintiff's counsel -Administration costs: $12,000 to Simpluris -Enhancement payment to plaintiff: $5,000 These deductions result in a net settlement amount of $78,000. After sending 75%, or $58,500, to the LWDA, the 3,072 aggrieved employees will receive a total of $19,500. This comes out to an average payment of approximately $6.35 for each aggrieved employee.

4. Extent of discovery completed and state of proceedings: Written discovery and informal exchange of information. (Spencer Decl., ¶¶ 15-16.) 5. Experience and views of counsel: Plaintiff's counsel claim to have significant experience litigating wage and hour actions, including claims seeking PAGA penalties, and recommend the settlement.

(Spencer Decl., ¶¶ 2-5, 24, 32.) Calendar No.: Event ID:  TENTATIVE RULINGS

3036901  42 CASE NUMBER: CASE TITLE:  CARNES VS THE SALVATION ARMY [E-FILE]  37-2021-00020557-CU-OE-CTL 6. Presence of a governmental participant: Plaintiff's counsel provided notice of the settlement to the LWDA at the same time the instant motion was filed with the court. (Spencer Decl., ¶ 22.) Based on the foregoing, the court finds that the PAGA settlement is fair, adequate, and reasonable in light of PAGA's policies and purposes (and in light of the substantial doubts the court has regarding the viability of the case in light of LaFace, supra). Accordingly, the court approves the parties' proposed settlement.

B. As for the attorneys' fees, the proposal of $50,000 represents one-third of the total settlement amount. According to the supporting declaration submitted with the moving papers, plaintiff's counsel expended a total of 238.25 hours prosecuting this action. (Spencer Decl., ¶ 41.) This results in a blended hourly rate of approximately $209.86 ($50,000 divided by 238.25), which is lower than what the court would expect for attorneys with similar skills and experience in the San Diego community.

Moreover, the requested fee award is over $100,000 less than counsel's theoretical lodestar of $165,975 (using their design hourly rates, which are significantly higher than the one calculated by the court immediately above). (See id.) Accepting for these purposes the validity of the design rates, the requested fees represent, in effect, a negative multiplier. Accordingly, the court finds that $50,000 is reasonable under the circumstances and is hereby granted. See Nemecek & Cole v. Horn (2012) 208 Cal.App.4th 641, 651 ('The amount to be awarded as attorney fees is left to the sound discretion of the trial court, which is in the best position to evaluate the services rendered by an attorney in his courtroom.').

C. The litigation costs of $5,000, payable to plaintiff's counsel, and the administration costs of $12,000, payable to Simpluris, are reasonable for a case of this type and are hereby approved.

D. The request for a $5,000.00 'enhancement' payment to plaintiff is denied. The Legislature's 'sole purpose' in enacting PAGA was to ensure effective enforcement of the Labor Code. Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 86-87. As such, '[p]laintiffs may bring a PAGA claim only as the state's designated proxy, suing on behalf of all affected employees.' Id. at 87. Awarding an incentive payment to the state's designated proxy is, in the court's view, inconsistent with PAGA's statutory purpose. Although incentive payments are well-established in the class action setting,* plaintiff has not cited, nor has the court located, any authority holding that such payments are authorized in a PAGA-only action. Accordingly, the $5,000 set aside for the enhancement award will be poured over into the net settlement fund for distribution to the LWDA and the aggrieved employees in accordance with the statutory 75/25 split. This results in a very modest increase in the already modest result for the aggrieved employees.

E. Counsel must prepare and submit a revised proposed order consistent with the foregoing.

__________________________ *They are not, however, without detractors. See, e.g., Johnson v. NPAS Solutions (11th Cir. 2020) 975 F.3d 1244, 1255.

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