Judge: Mark H. Epstein, Case: 21SMCV00463, Date: 2023-01-19 Tentative Ruling

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Case Number: 21SMCV00463    Hearing Date: January 19, 2023    Dept: R

The court would like to grant the motion approving the PAGA settlement.  There is a small glitch, however.

As all parties know, in a PAGA case the plaintiff is standing in the state’s shoes and brining a public action for the defendant’s alleged failure to abide by certain provisions of the Labor Code.  Statutory penalties are at issue, but not actual damages as they might relate to individuals.  There are procedural requirements in a PAGA case to make sure that the Department of Labor has notice of the proceedings and those strictures were followed here.  Pursuant to statute, any PAGA recovery is shared between the state and the employees who were subject to the alleged misconduct.  The state gets 75% of the recovery and the remainder is divided.  Although there is no “opt out” procedure (as there is in a class action), it is nonetheless to include in a settlement a release that bars all of the affected employees from brining a future PAGA claim based on the same alleged violations.  After all, the state can only sue once for each violation; it would deny defendant due process to subject it to multiple civil penalties brought on the state’s behalf for the same act.  However, a PAGA settlement does not release any employee’s individual claim.  (The named plaintiff can be in a different boat; that plaintiff can release an individual claim for an individual payment.  That is because the named PAGA plaintiff brought the claim voluntarily and presumably is cutting a separate deal for the broader release.  The other employees have no “opt out” right as they would in a class action and they receive no damages—only a share of the penalty.  Thus, it would deny them due process to require that they surrender an individual right.)

However, the brief in support of the settlement here could be read as including a broader release than what is allowed.  The memorandum states that “the PAGA Settlement Members will be unable to bring a claim under, or recover in any other claim brought under, the California Private Attorneys General Act, California Labor Code § 2698 et seq., for any violations of the Released Claims that took place during the PAGA period.  Id.”  The court believes that the proper reading, which is consistent with the actual language in the settlement agreement, is that it is only the PAGA actions that are released and that any individual claim for relief is preserved.  But one might over-read the memorandum as being broader than that. 

Due to that ambiguity, the court will require plaintiff to confirm this fact and to file a written document clarifying that the PAGA Settlement Members (except for plaintiff himself) are not releasing any individual rights they have to bring suit in their own name for any of the underlying violations.  This is somewhat of a belt and suspenders approach, but it is important that the PAGA Settlement Members and the defendant understand the release’s limited scope—especially in light of the small amount of money being paid.

Once that clarifying supplemental memorandum is filed, the Court will approve the settlement.