Judge: Melvin D. Sandvig, Case: 22CHCV00766, Date: 2024-05-09 Tentative Ruling

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Case Number: 22CHCV00766    Hearing Date: May 9, 2024    Dept: F47

Dept. F47

Date: 5/9/24

Case #22CHCV00766

MOTION FOR APPROVAL OF PAGA SETTLEMENT

Motion filed on 3/13/24.

MOVING PARTY: Plaintiff Cam Luu

RESPONDING PARTY: Defendants JV Property Management & Brokerage, Inc. and Noble Property Services, LLC

NOTICE: ok

RELIEF REQUESTED: An order approving the PAGA Representative Action Settlement in this case. 

RULING: The hearing will be continued.

SUMMARY OF FACTS & PROCEDURAL HISTORY

This action arises out of Plaintiff Cam Luu’s (Plaintiff) employment as a non-exempt employee with Defendants JV Property Management & Brokerage, Inc. (JVPM) and Noble Property Services, LLC (NPS) (collectively, Defendants) as an hourly leasing agent and concierge from approximately May 2021 until February 2022.  (Complaint ¶1). 

On 3/2/22, Plaintiff gave written notice to the Labor Workforce and Development Agency (LWDA) and to Defendants of Plaintiff’s intent to pursue Private Attorney General Act (PAGA) civil penalties pursuant to Labor Code sections 2698, et seq. for failure to pay all wages, including minimum, regular, and overtime wages; failure to provide meal and rest periods; failure to provide accurate itemized wage statements; failure to provide paid sick leave; failure to pay all wages due during and upon termination of employment; and failure to reimburse necessary business expenses.  (Kazandjian Decl. ¶5, Ex.2). 

The LWDA did not notify Plaintiff of its intention to investigate the allegations contained in the PAGA Notice and Defendants did not serve Plaintiff with a notice of intent to cure the alleged defects pursuant to Labor Code 2699.3.  (Kazandjian Decl. ¶¶6, 9). 

On 9/19/23, Plaintiff filed this representative PAGA complaint on behalf of himself and all other aggrieved employees.  (Kazandjian Decl. ¶7).  Thereafter, the parties engaged in litigation.  (Id.  ¶8).  On 10/18/23, the parties engaged in mediation which resulted in a settlement subject to Court approval.  (Id. ¶10, Ex.1). 

On 3/13/24, Plaintiff filed and served the instant motion seeking an order approving the PAGA Representative Action Settlement in this case.  Defendants have filed a limited opposition to the motion and Plaintiff has filed a reply to the limited opposition. 

ANALYSIS 

Pursuant to the terms of the PAGA Settlement, Defendants will pay $85,000.00 from which $32,000.00 will be disbursed pursuant to the PAGA, i.e. $24,00.00 (75%) will be paid to the LWDA, and $8,00.00 (25%) will be paid to PAGA Members.  Labor Code  2699(i).  Accordingly, subject to Court approval, Plaintiff proposes the $85,000.00 Settlement Payment be distributed as follows:  

GROSS PAGA SETTLEMENT:                                $ 85,000.00

PAGA Counsel’s Fees:                                              -$ 34,000.00

PAGA Counsel’s Litigation Costs:                           -$ 5,000.00

Plaintiff’s General Release/Enhancement:               -$ 10,000.00

Administration Payment:                                         -$ 4,000.00

PAGA PENALTIES:                                                $ 32,000.00

Labor Workforce & Development Agency: 75%    -$ 24,000.00

Aggrieved Employees: 25%                                    -$ 8,000.00

Pursuant to the PAGA, 25% of PAGA penalties estimated at $8,000.00 will be distributed proportionately to the 12 Aggrieved Employees who worked for JVPM and the 26 Aggrieved Employees who worked for NPS during the Covered Period (3/2/21 through the date the Court grants approval of the settlement) based on the number Pay Periods each worked during the Covered Period.  (Kazandjian Decl. ¶11, Ex.1).  The PAGA Settlement provides for a release of only claims alleged in the operative complaint and/or PAGA Notice.  (Id. ¶12, Ex.1 ¶5).

No later than 10 calendar days after the Effective Date (“Effective Date” means the date by when both of the following have occurred: (a) the Court enters a Judgment on its Order Approving the PAGA Settlement and (b) the Judgment is final.  The Judgment is final as of the day the Court enters Judgment. Settlement Agreement (SA), ¶1.11), Defendants shall provide the Claims Administrator, Simpluris, Inc., a list of Aggrieved Employees (“Aggrieved Employee List”) containing their (1) name; (2) last known home address and telephone number; (3) social security number; and (4) the number of pay periods for each Aggrieved Employee during the Covered Period.  (Kazandjian Decl. ¶13, Ex.1 ¶4.2).  No later than 10 calendar days after the Effective Date, Defendants will provide the Claims Administrator with a total of $85,000.00 (“Settlement Payment”).  (Kazandjian Decl. ¶13, Ex.1 ¶4.2).

Not later than 10 calendar days after the Settlement Payment has been funded, the Claims Administrator will cause payment of checks for: (1) $10,000.00 to Plaintiff as his general release and enhancement payment; (2) $34,000.00 paid to PAGA Counsel for attorneys’ fees; (3)

$5,000.00, for costs incurred paid to PAGA Counsel for costs; (4) $4,000.00 paid to the Claims Administrator for administrative costs for distributing monies to the Aggrieved Employees; (5) 75% of the PAGA Penalty Fund (as defined in paragraph 3.3.4 in the Settlement Agreement) to the LWDA; and (6) 25% of the PAGA Penalty Fund (as defined in paragraph 28 in the Settlement Agreement to the Aggrieved Employees in accordance with the formula set out in paragraph 3.3.4 in the Settlement Agreement.  (Kazandjian Decl. ¶14, Ex.1, ¶4.4).

Plaintiff proposes that concurrently with sending each Aggrieved Employee their share of the Settlement Amount, the Claims Administrator will include a “Notice of PAGA Action Settlement” along with each Aggrieved Employee’s check.  (Kazandjian Decl., Ex.3).  The Claims Administrator shall send each Aggrieved Employee their check via U.S. First Class mail to each Aggrieved Employee’s address with directions to the Postmaster to return all undeliverable mail to the Claims Administrator.  For each returned check/notice that is returned as undeliverable, the Claims Administrator shall promptly attempt to locate the Aggrieved Employee’s by using an address refresher database.  (Kazandjian Decl. ¶15, Ex.1, ¶4.4.1).

Settlement checks will remain valid and negotiable for 180 calendar days from the date of their issuance.  If there are uncashed checks following this period, the Claims Administrator will send the uncashed funds to the State of California Department of Industrial Relations Unclaimed Wages Fund in the name of the Aggrieved Employee who did not cash his or her check. (Kazandjian Decl. ¶16, Ex.1 ¶4.4.1).

The Court finds that the terms of the settlement are reasonable.

The only issue in dispute is whether the “Notice of Settled Representative Action” should be sent to the Aggrieved Employees along with their settlement checks.  (See Opposition, generally).  Defendants contend that the notice exceeds the scope of the Settlement Agreement and should not be sent as the Aggrieved Employees are not entitled notice or the opportunity to opt-out of the settlement.

Because a PAGA action is brought on behalf of the government, a “judgment [ ] is binding not only on the named employee plaintiff but also on government agencies and any aggrieved employee not a party to the proceeding.”  Arias (2009) 46 C4th 969, 986.  Because non-party aggrieved employees are not given notice, or an opportunity to opt-out or object, they are not bound by the judgment except as to civil penalties.  Id. at 987; See also Labor Code 2699(g)(l) (non-party aggrieved employees retain all rights “to pursue or recover other remedies available under state or federal law, either separately or concurrently with an action taken under this part”).

While the non-party, Aggrieved Employees were not entitled to notice of this PAGA action nor an opportunity to opt-out of the settlement, they will ultimately receive notice of the settlement upon receipt of checks for their portion of the settlement.  The Court finds that it is in the best  interests of the parties, the Aggrieved Employees and the court to provide some type of notice to the Aggrieved Employees along with the checks to explain what the checks represent.  If no explanation is provided by way of a letter or “Notice,” the Aggrieved Employees may question the validity of the checks (i.e., whether they could be part of a scam) leading to the checks being disregarded and the Aggrieved Employees not receiving the benefit of the PAGA settlement.    

However, the Court finds that certain language in the proposed “Notice of Settlement Representative Action” to be unclear and may incorrectly cause the Aggrieved Employees to believe they have the right to opt-out of or object to the settlement.  For example, the language in Section VI of the Notice regarding the effect of the settlement on the Aggrieved Employees’ rights does not make clear that by the time the settlement check is received the settlement will have been approved and the Aggrieved/Covered Employee’s claims as therein defined will have already been released.  (See Kazandjian Decl., Ex.3 ¶VI).  Additionally, it appears that the title of Section I should refer to the purpose of the “Notice,” not the purpose of the settlement. 

The Court also finds that the Administrator of the settlement, Simpluris, Inc., must provide information/evidence regarding the procedures it has in place to protect employee data and insurance for any data breach.

CONCLUSION

The hearing on the motion will be continued. 

The parties are ordered meet and confer regarding the language in a notice/letter to be sent to the Aggrieved Employees along with the settlement checks and for Simpluris, Inc. to provide information regarding the procedures it has in place to protect employee data and insurance for any data breach. 

Supplemental papers regarding the foregoing are due to be filed and served at least 10 court days before the continued hearing date.