Judge: Michael P. Linfield, Case: 22STCV17280, Date: 2023-11-14 Tentative Ruling

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Case Number: 22STCV17280    Hearing Date: January 8, 2024    Dept: 34

SUBJECT:        Motion for Approval of PAGA Settlement

Moving Party: Plaintiff Calyndra Davis 

Resp. Party:    None 

The Supplemental Unopposed Motion for Approval of PAGA Settlement is GRANTED.

BACKGROUND:

        On May 25, 2022, Plaintiff Calyndra Davis filed her Complaint against Defendants KAM Enterprises LLC and Leeza Jayne Brazier on causes of action arising from Plaintiff’s employment with Defendants.

        On August 17, 2022, Defendants filed their Answer to the Complaint.

        On July 28, 2023, Plaintiff filed her Judicial Council Form CM-200, Notice of Settlement of Entire Case.

        On October 20, 2023, Plaintiff filed her Unopposed Motion for Approval of PAGA Settlement (“Motion”). In support of her Motion, Plaintiff concurrently filed: (1) Declaration of Lisa Mullins; (2) Declaration of Harout Messrelian; and (3) Proposed Order.

On November 14, 2023, the Court denied without prejudice Plaintiff’s Motion.

On December 11, 2023, Plaintiff filed her Supplemental Unopposed Motion for Approval of PAGA Settlement (“Supplemental Motion”). In support of her Supplemental Motion, Plaintiff concurrently filed: (1) Supplemental Brief; and (2) Supplemental Declaration of Harout Messrelian.

ANALYSIS:

I.          Legal Standard

“This part shall be known and may be cited as the Labor Code Private Attorneys General Act of 2004.” (Lab. Code, § 2698.)

“Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.” (Lab. Code, § 2699, subd. (a).)

In bringing an action pursuant to the Labor Code Private Attorneys General Act of (2004) (“PAGA”), “the aggrieved employee acts as the proxy or agent of state labor law enforcement agencies, representing the same legal right and interest of those agencies, in a proceeding that is designed to protect the public, not to benefit private parties.” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Super. Ct. (2009) 46 Cal.4th 993, 1003, citations omitted.)

        PAGA claims, as well as settlements of PAGA claims, involve multiple statutory requirements. (Lab. Code, § 2699, et seq.)

II.       Discussion

The Court considers below the various statutory requirements of PAGA, as well as whether the settlement meets the fair, reasonable, and adequate standard.

A.          Proof of Service on the Labor and Workforce Development Agency Prior to Commencement of Action, at Commencement of Action, and Prior to Settlement of Action

1.          Legal Standard

“A civil action by an aggrieved employee pursuant to subdivision (a) or (f) of Section 2699 alleging a violation of any provision listed in Section 2699.5 shall commence only after the following requirements have been met:

“(1)

“(A) The aggrieved employee or representative shall give written notice by online filing with the Labor and Workforce Development Agency and by certified mail to the employer of the specific provisions of this code alleged to have been violated, including the facts and theories to support the alleged violation.

“(B) A notice filed with the Labor and Workforce Development Agency pursuant to subparagraph (A) and any employer response to that notice shall be accompanied by a filing fee of seventy-five dollars ($75). The fees required by this subparagraph are subject to waiver in accordance with the requirements of Sections 68632 and 68633 of the Government Code.”

(Lab. Code, § 2699.3, subd. (a)(1)(A)–(B).)

“The provisions of subdivision (a) of Section 2699.3 apply to any alleged violation of the following provisions: subdivision (k) of Section 96, Sections 98.6, 201, 201.3, 201.5, 201.7, 202, 203, 203.1, 203.5, 204, 204a, 204b, 204.1, 204.2, 205, 205.5, 206, 206.5, 208, 209, and 212, subdivision (d) of Section 213, Sections 221, 222, 222.5, 223, and 224, paragraphs (1) to (5), inclusive, (7), and (9) of subdivision (a) of Section 226, Sections 226.7, 227, 227.3, 230, 230.1, 230.2, 230.3, 230.4, 230.7, 230.8, and 231, subdivision (c) of Section 232, subdivision (c) of Section 232.5, Sections 233, 234, 351, 353, and 403, subdivision (b) of Section 404, Sections 432.2, 432.5, 432.7, 435, 450, 510, 511, 512, 513, 551, 552, 601, 602, 603, 604, 750, 751.8, 800, 850, 851, 851.5, 852, 921, 922, 923, 970, 973, 976, 1021, 1021.5, 1025, 1026, 1101, 1102, 1102.5, and 1153, subdivisions (c) and (d) of Section 1174, Sections 1194, 1197, 1197.1, 1197.5, and 1198, subdivision (b) of Section 1198.3, Sections 1199, 1199.5, 1290, 1292, 1293, 1293.1, 1294, 1294.1, 1294.5, 1296, 1297, 1298, 1301, 1308, 1308.1, 1308.7, 1309, 1309.5, 1391, 1391.1, 1391.2, 1392, 1683, and 1695, subdivision (a) of Section 1695.5, Sections 1695.55, 1695.6, 1695.7, 1695.8, 1695.9, 1696, 1696.5, 1696.6, 1697.1, 1700.25, 1700.26, 1700.31, 1700.32, 1700.40, and 1700.47, Sections 1735, 1771, 1774, 1776, 1777.5, 1811, 1815, 2651, and 2673, subdivision (a) of Section 2673.1, Sections 2695.2, 2800, 2801, 2802, 2806, and 2810, subdivision (b) of Section 2929, and Sections 3073.6, 6310, 6311, and 6399.7.” (Lab. Code, § 2699.5.)

“For cases filed on or after July 1, 2016, the aggrieved employee or representative shall, within 10 days following commencement of a civil action pursuant to this part, provide the Labor and Workforce Development Agency with a file-stamped copy of the complaint that includes the case number assigned by the court.” (Lab. Code, § 2699, subd. (l)(1).)

“The 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).)

2.          Discussion

Plaintiff filed causes of action for various labor code violations, including violations of Labor Code sections 201, 202, 203, 1174, subdivision (d), and others. These sections are covered by Labor Code section 2699.5, and thus the pre-complaint notice requirement to the Labor Workforce Development Agency (LWDA) applies here. (Lab. Code, § 2699.3, subd. (a).)

Plaintiff’s Counsel declares that Plaintiff sent a notice letter to LWDA on November 19, 2021. (Decl. Messrelian, ¶ 5.) The Court finds that this meets the notice requirement under Labor Code sections 2699.3 and 2699.5.

Plaintiff’s Counsel declares that a copy of the Complaint has since been filed with the LWDA on November 13, 2023. (Supp. Decl. Messrelian, ¶ 4 and Exh. 1.) The Court finds that this meets the notice requirement under Labor Code section 2699, subdivision (l)(1).

Plaintiff provides email evidence of submission of a copy of the proposed settlement to LWDA at the same time that it submitted the proposed settlement to the Court. (Lab. Code, § 2699, subd. (l)(2); Decl. Messrelian, Exh. 2.) The Court finds that this meets the notice requirement under Labor Code section 2699, subdivision (l)(2).

B.          The PAGA Settlement

1.          Legal Standard

“For all provisions of this code except those for which a civil penalty is specifically provided, there is established a civil penalty for a violation of these provisions, as follows: . . . (2) If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.” (Lab. Code, § 2699, subd. (f)(2).)

“For purposes of this part, whenever the Labor and Workforce Development Agency, or any of its departments, divisions, commissions, boards, agencies, or employees, has discretion to assess a civil penalty, a court is authorized to exercise the same discretion, subject to the same limitations and conditions, to assess a civil penalty.” (Lab. Code, § 2699, subd. (e)(1).)

“In any action by an aggrieved employee seeking recovery of a civil penalty available under subdivision (a) or (f), a court may award a lesser amount than the maximum civil penalty amount specified by this part if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” (Lab. Code, § 2699, subd. (e)(2).)

“Except as provided in subdivision (j), civil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes; and 25 percent to the aggrieved employees.” (Lab. Code, § 2699, subd. (i).)

“Except as provided in paragraph (2), an aggrieved employee may recover the civil penalty described in subdivision (f) in a civil action pursuant to the procedures specified in Section 2699.3 filed on behalf of himself or herself and other current or former employees against whom one or more of the alleged violations was committed. Any employee who prevails in any action shall be entitled to an award of reasonable attorney’s fees and costs, including any filing fee paid pursuant to subparagraph (B) of paragraph (1) of subdivision (a) or subparagraph (B) of paragraph (1) of subdivision (c) of Section 2699.3. Nothing in this part shall operate to limit an employee’s right to pursue or recover other remedies available under state or federal law, either separately or concurrently with an action taken under this part.” (Lab. Code, § 2699, subd. (g)(1).)

2.          Highlights of the Proposed PAGA Settlement

Among other things, the following are the highlights of the proposed PAGA settlement:

(1)       Defendant KAM Enterprises LLC will pay a gross settlement amount of $25,000.00 (the “Gross Settlement Amount”).

(2)       PAGA Counsel (who are Plaintiff’s Counsel) will be paid up to 33.33% of the Gross Settlement Amount (which would be $8,333.33), plus up to $2,000.00 in costs (the “Costs”), which is an additional 8% of the Gross Settlement Amount.

(3)       ILYM Group, Inc. (the “PAGA Administrator”) will be paid up to $2,900.00, except for a showing of good cause and as approved by the Court. This is 11.6% of the Gross Settlement Amount.

(4)       LWDA and the Aggrieved Employees (including Plaintiff, who will be receiving her pro rata share of the PAGA penalties) will receive 75% and 25%, respectively, of the remaining $11,766.67.

(5)       The settlement agreement does not clearly address the issue of whether Plaintiff’s non-PAGA claims have also been settled, whether as part of this agreement or as part of a separate agreement.

(6)       There are estimated to be 142 Aggrieved Employees who worked a total of 1,109 of PAGA-relevant pay periods. The Aggrieved Employees will receive payments from the PAGA Administrator based on a division of the employee share of the PAGA penalties that is multiplied by each employee’s number of PAGA-relevant pay periods.

(7)       Aggrieved Employees will have up to 180 days to cash their settlement checks, after which those checks will be voided, and the funds represented by such checks will be sent to the California State Controller’s Office — Unclaimed Property Fund. Defendant has agreed to not receive any reversion from the Gross Settlement Amount.

(Decl. Messrelian, Exh. 1.)

        The proposed PAGA settlement also includes other terms, such as for distribution of the settlement and release from claims. (Ibid.)

3.          Attorneys’ Fees and Attorneys’ Costs

PAGA Counsel requests $8,333.33 in attorneys’ fees, which is approximately 33.33% of the Gross Settlement Amount. PAGA Counsel further requests $1,641.25 in costs, which is an additional 6.57% of the Gross Settlement Amount.

PAGA Counsel explains that $8,333.33 in attorneys’ fees is less than the reasonable amount of attorney’s fees incurred in this matter, which is approximately $12,375.00 (22.5 hours at $550.00 per hour). (Supp. Decl. Messrelian, ¶ 5.)

PAGA Counsel further outlines the costs incurred, which are: (1) $462.27 in case filing costs; (2) $75.00 in initial PAGA notice costs; (3) $1,000.00 in expert data analyst costs; (4) $61.54 in motion filing costs; and (5) $42.33 in miscellaneous court filing costs. (Supp. Decl. Messrelian, ¶ 6.)

The Court finds that the fees and costs requested are reasonable here.

4.          PAGA Administrator Costs

PAGA Counsel requests that the PAGA Administrator be paid up to $2,900.00 (which is 11.6% of the Gross Settlement Amount) for expenses incurred in administering the settlement.

PAGA Counsel has provided an invoice that shows the expected costs for administering the settlement. (Decl. Mullins, Exh. C.) The total expect amount is $2,773.00, which is close to the $2,900.00 requested.

The Court finds this amount of administration costs to be reasonable. The Court also finds it appropriate that the agreement contains a provision in which any unused portion of this amount would go to LWDA and Aggrieved Employees in their proportionate amounts.

5.          Remaining Civil Penalties for LWDA and Aggrieved Employees

PAGA Counsel requests that LWDA and the Aggrieved Employees receive 75% and 25%, respectively, of the “Net Settlement Amount (i.e., the Gross Settlement Amount, less the Attorneys’ Fees, Attorneys’ Costs, and PAGA Administrator Costs).

This division of the civil penalties is required pursuant to Labor Code §2699(i).

PAGA Counsel claim that the Net Settlement Amount is estimated to be $11,766.67.

A division of $8,825.00 to LWDA (i.e., 75% of the Net Settlement Amount), and $2,941.67 (i.e., 25% of the Net Settlement Amount) would be appropriate, with any further savings from the PAGA Administrator’s Costs being split similarly.

6.          Reversion of Funds

The settlement agreement gives Aggrieved Employees up to 180 days to cash their settlement checks, after which those checks will be voided. Further, the funds represented by such checks will be sent to the California State Controller’s Office — Unclaimed Property Fund. Defendant KAM Enterprises LLC has forgone any reversion interest.

The Court finds that these terms are appropriate.

7.          Enhancement Award

The Court is unaware of any provision in the settlement agreement that awards (or does not award) Plaintiff any “bonus” or enhancement award for bringing this case.

However, Plaintiff’s Counsel declares that Plaintiff has made a separate settlement with Defendant KAM Enterprises LLC that covers her non-PAGA claims. (Decl. Messrelian, ¶ 22.) According to Plaintiff’s Counsel, this amount was in the four figures and did not in any way impact the amount allocated to the PAGA claims. (Ibid.)

The Court finds that this separate settlement agreement and foregoing of a bonus or enhancement award to be reasonable.

8.          Notice of Release of Claims

PAGA Counsel provide a revised proposed notice to the Aggrieved Employees, which includes the following notice. (Supp. Decl. Messrelian, Exh. 2.)

The Court is satisfied with the revised proposed notice.

C.          The Fair, Reasonable, and Adequate Standard

1.          Legal Standard

The Court of Appeal has held “that 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, citations omitted.)

“Despite the fact that a representative action under PAGA is not a class action, and is instead a type of qui tam action, a standard requiring the trial court to determine independently whether a PAGA settlement is fair and reasonable is appropriate. . . . Because many of the factors used to evaluate class action settlements bear on a settlement’s fairness—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—these factors can be useful in evaluating the fairness of a PAGA settlement.” (Moniz, supra, at pp. 76–77.)

2.          Discussion

PAGA Counsel provide a detailed explanation of the Parties’ settlement negotiations, including: (1) the discovery and investigation that occurred in this matter; (2) the Parties’ negotiations; and (3) consideration of the merits of the case. (Decl. Messrelian, ¶¶ 20.)

Upon the Court’s request, PAGA Counsel provide a supplemental explanation regarding the settlement. (Supp. Motion, pp. 5–8; Supp. Decl. Messrelian, ¶¶ 8–10.)

The Court finds that the settlement meets the fair, reasonable, and adequate standard.

II.        Conclusion

The Supplemental Unopposed Motion for Approval of PAGA Settlement is GRANTED.