Judge: Monica Bachner, Case: 19STCV36863, Date: 2022-10-18 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 19STCV36863    Hearing Date: October 18, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Plaintiffs Luis Pantoja Trujillo’s, Jesus Santos’s, and Alex Siu Lemus’s motion for an order approving a settlement pursuant to Labor Code §2698 et seq. is continued to November 15, 2022 at 8:30 a.m.  Plaintiffs are ordered to provide the Court with the following 5 court days before the continued hearing:

(1) a revised Settlement indicating (a) that Defendant will fund the Gross Settlement Amount by transmitting the funds to the Administrator (b) the name of the Administrator and that the Administrator agrees to be bound by this agreement and to perform as a fiduciary all duties specified in the agreement in exchange for the payment of administration expenses, (c) how the Administrator will handle the  Settlement Funds (ie the Administrator shall establish a Qualified Settlement Fund into which the funds will be deposited), and (d) how the Administrator will provide PAGA Settlement Members with the “Notice Packet;”

(2) further information on the investigation conducted by counsel;

(3) further information regarding counsel’s hourly rates.

          Plaintiffs Luis Pantoja Trujillo (“Trujillo”), Jesus Santos (“Santos”), and Alex Siu Lemus (“Lemus”) (collectively, “Plaintiffs”) move for an order approving their Settlement Agreement and Release of PAGA Claims (“Settlement”) with Defendant Uma Enterprises, Inc. (“Defendant”).  (Motion, pg. 2; Decl. of Mahoney ¶20, Exh. A (“Settlement”); Supp-Decl. of Alemzadeh, Exh. A.) 

Plaintiffs request the Court issue an order approving the following: (1) the Settlement along with the Parties’ proposed Notice of Settlement to be disseminated to PAGA Settlement Group Members pursuant to the Settlement Agreement; (2) the Settlement’s Released Claims; (3) an award to Plaintiffs of $5,000.00 each for a total of $15,000.00 as PAGA Representative Enhancement awards; (4) an award to Plaintiff’s Counsel Plaintiff’s Counsel (“Plaintiff’s Counsel”) for attorneys’ fees in the amount of $61,666.66 and for actual costs in the amount of $10,811.24; (5) an award to the Settlement Administrator $4,000.00 in administration costs; (6) 75% of the remaining amount to the LWDA, and 25% of the remaining amount to the PAGA Members on a pro rata basis, reflecting a total settlement payment of $185,000.00; (7) checks for Settlement shares shall be valid for 180 days after issuance; (8) nothing in the Order and Judgment or Settlement shall be construed as an admission or concession by any party; (9) that Plaintiffs shall submit a copy of the Order and Judgment to the LWDA within 10 calendar days after their entry; (10) that the court retain exclusive and continuing jurisdiction over this action for purposes of supervising and enforcing the final judgment as well as settlement; and (11) within 210 days of the Order and Judgment, Parties are directed to file a joint status report regarding the status of distribution of settlement payments, and upon the Court’s satisfaction, the Court will close this case.  (See Decl. of Mahoney, Exh. B.) 

Labor Code §2699(l)(2) provides, as follows: “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 [Labor & Workforce Development Agency (“LWDA”)] at the same time that it is submitted to the court.” 

As a threshold matter, Plaintiffs submitted evidence the parties complied with Labor Code section 2699(l)(2) by submitting a copy of the Settlement and instant motion to the LWDA on the same day it submitted the instant motion to this Court on August 29, 2022. (Supp.-Decl. of Alemzadeh ¶4, Ex. B.)   

On September 23, 2019 (Trujillo), December 9, 2019 (Santos), and May 13, 2020 (Lemus), prior to commencing their lawsuits, as required by California Labor Code section 2699.3, Plaintiffs provided the LWDA and Defendant with written notice of their intent to assert claims under PAGA and the basis for those claims, which the LWDA did not provide notice within sixty-five (65) days of its intention to investigate the alleged violations.   (Decl. of Mahoney ¶2, Exh. C.)  On October 16, 2019, Trujillo and Santos filed a complaint, entitled Luis Pantoja Trujillo and Jesus Santos v. UMA Enterprises, Inc., case number 19STCV36863, and on July 14, 2020, Lemus filed a complaint, entitled Alexis Siu Lemus v. UMA Enterprises, Inc., case number 20STCV26458.  (Decl. of Mahoney ¶3.)  After amending their respective Complaints, Plaintiffs’ actions were brought on a representative basis under PAGA on behalf of themselves, the State of California and other allegedly aggrieved employees, based on violations of unpaid wages (minimum and overtime), meal and rest break violations, failure to reimburse for business expenses, failure to provide compliant wage statements, failure to pay all final wages timely, failure to keep accurate records, and unlawful deductions from pay.  (Decl. of Mahoney ¶3.)

On August 29, 2022, Plaintiffs filed the instant motion and supporting documents indicating the parties reached a settlement in continued settlement negotiations after participating in the June 15, 2021, Mediation with mediator Hon. Carl J. West (Ret.).  (Decl. of Mahoney ¶4.)

The Settlement defines “Aggrieved Employees” all persons currently or formerly employed by Defendant in California as a non-exempt employee during the Release Period (“PAGA Settlement Members”).  Defendant represents that, as of June 15, 2021, the number of PAGA Settlement Members was approximately 192, who worked a total of 5,817 pay periods during the Release Period.  (Settlement, pg. 1.) The Settlement defines “Release Period” as December 7, 2018, through the Effective Date, which is defined as the date this Court enters an order approving the settlement of the PAGA penalties as described in the Settlement. (Settlement, pg. 2.)  The definitions are proper pursuant to the statute of limitations and the date of notice on the LWDA. 

The Settlement defines “Released Claims” all claims for PAGA civil penalties, which occurred during the Release Period, pursuant to Labor Code Section 2698 et seq. alleged or that could have been alleged based on the allegations asserted in the Complaint and notice to the LWDA on behalf of the PAGA Settlement Members including, but not limited to, claims for the failure to pay all wages, the failure to pay minimum wage, the failure to pay overtime wages, unreimbursed business expenses, failure to provide compliant meal periods and/or pay meal period premiums, failure to authorize and permit compliant rest periods and/or pay rest period premiums, failure to provide and maintain accurate wage statements, failure to pay timely wages at termination of employment, failure to timely pay wages during employment, including but not limited to claims arising under California Labor Code sections 201-204, 205, 206, 206.5, 210, 212, 216, 218, 218.5, 218.6, 221-224, 225.5, 226, 226.2, 226.3, 226.6, 226.7, 227.3, 232.5, 233-234, 245-248.5, 256, 432.5, 432.7, 510, 512, 551, 552, 558, 558.1, 1024.5, 1102.5, 1153, 1174, 1174.5, 1182.12, 1194, 1194.2, 1197-1198, 1199, 2698 et seq., 2751, 2802, 2810.5, 6401, 6403; and the applicable Industrial Welfare Commission Wage Orders; Cal. Code Regs. Title 8, § 11070.  (Settlement, pg. 2.)  As such, the Settlement provides that Released Claims only include claims for civil penalties under PAGA and does not apply to any individual claims and is proper.   (Settlement Agreement, pg. 2; see ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175.) 

The Settlement defines “Released Parties” as Defendant and all its present and former parent corporations, subsidiaries, divisions, predecessors, insurers, successors, and assigns, and their current and former employees, attorneys, officers, directors, and agents thereof, both individually and in their business capacities, and their employee benefit plans and programs and the trustees, administrators, fiduciaries, and insurers of such plans and programs, and any other individual or entity which could be liable for any of the Released Claims in the Action.  (Settlement, pg. 2.)

The terms of the Settlement’s release imply that only in exchange for the consideration set forth in the Settlement (i.e., the individual PAGA payments) do PAGA Settlement Members release Released Parties from Released Claims.  As such, the release is accordingly effective after the payment date, which is proper.   (See Settlement, pg. 6.)

The Settlement does not designate a Settlement Administrator; however, Mahoney’s Declaration indicates parties’ intent to retain Phoenix Settlement Administrators to handle administration of the Settlement.  (Decl. of Mahoney ¶22.)  Although Plaintiffs’ motion indicates parties’ intent to distribute $92,500.00 (one half of the total settlement amount) to the Settlement Administrator via wire transfer, and the second payment of $92,500.00 within 180 days of the Order the Settlement does not indicate how Settlement Administrator will acquire the Settlement funds.  (Cf. Motion, pg. 3, Settlement pg. 4.) Also, although the motion indicates that there will be a proposed notice of settlement to the PAGA Settlement Group members, neither the settlement agreement nor the declaration explains how the notice will be disseminated.

The Settlement provides that no later than fourteen (14) calendar days of the Effective Date, Defendant will provide to the Administrator a list in Microsoft Excel format containing each PAGA Settlement Member’s (i) full name, (ii) last known address, (iii) Social Security Number, and (iv) dates worked for Defendant in California during the Release Period (“Settlement List”).  (Settlement, pg. 5.) Within ten (10) business days of receipt of the Settlement List, the Administrator will perform a National Change of Address check and will mail the individual settlement payments to the PAGA Settlement Members.  (Settlement, pg. 5.)  The Settlement Administrator will skip-trace return mail and remail within five (5) calendar days. Concurrently, the settlement administrator shall mail the required payment to the LWDA.  (Settlement, pg. 5.)

The expiration date on the settlement checks will be one hundred eighty (180) calendar days from the date the settlement checks are issued.  (Settlement, pg. 5.)  If any Aggrieved Employee does not cash or deposit his/her settlement check within one hundred eighty (180) calendar days, the check will be void and the uncashed funds will escheat to the State Controller to be deposited in the California Unclaimed Property Fund in the Aggrieved Employee’s name.  (Settlement, pg. 5.)

A superior court must review and approve any penalties sought as part of a proposed settlement agreement pursuant to Labor Code section 2699(l).  “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(f)(2).)  A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action (Lab. Code § 2699(g)(1).)  “[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the [LWDA] for enforcement of labor laws and 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 [LWDA] for those purposes; and 25 percent to the aggrieved employees.”  (Lab. Code § 2699(i).) 

Plaintiffs have not provided the Court information relating to the investigation done by their counsel.  (See Motion, pg. 2; Mahoney Declaration, ¶ 4.)

Plaintiffs provided the Court with the Settlement, Plaintiffs’ Notice Letter and Amended Notice Letter sent to the LWDA. (Decl. of Mahoney ¶¶20-21; Exh. A [Settlement], Exh. B [Notice Letters].)  Plaintiffs also provided information suggesting the Settlement is reasonable based on Plaintiffs’ counsels’ detailed analysis of Plaintiffs’ claims and their potential value if Plaintiffs were successful at trial prior to mediation.  (Decl. of Mahoney ¶11.)  Plaintiffs provided sufficient information to support the reasonableness of the Settlement and how the terms of the settlement were reached.  (Decl. of Mahoney ¶¶4-5.)

Plaintiffs provide the total amount of the settlement and the manner of its distribution from a Settlement Sum.  (Settlement, pgs. 1, 4.)  The Settlement also sets forth the tax treatment of all settlement payments.  (Settlement, pg. 5.) 

As discussed above, to the extent the release of claims for PAGA penalties is based only on underlying allegations in this action, and as such it only releases claims alleged in the Notice Letters sent to the LWDA, the release does not release anything other than claims for penalties, and there is no Civil Code section 1542 waiver, and as such, the release is proper.  (Settlement, pg. 6.) 

The Settlement provides that the designated Administrator will be responsible for settlement administration and that the individual payment amounts for PAGA Settlement Members are to be determined based on the number of applicable pay periods worked by each employee during the Covered Period according to Defendants’ records.  (Settlement, pg. 6.) 

The Settlement does not include a provision that PAGA Settlement Members will receive an explanatory letter of the instant Settlement along with their payment checks; however, Plaintiffs’ motion contemplates a “Notice Packet,” which is to be sent to PAGA Settlement Members “within fourteen calendar days after receiving their second and final [payment of the settlement amount] [sic],” which is attached as Exhibit A to the Settlement as Notice of Settlement.  (Motion, pg. 3; Decl. of Mahoney, Exh. A.)   

The Settlement properly provides that checks that remain uncashed after 180 days will be forwarded to the California Unclaimed Property Fund in the name of the Aggrieved Employee.  (Settlement, pg. 5.)

As the prevailing employee, Plaintiffs are entitled to reasonable attorneys’ fees in this action.  (Cal. Lab. Code § 2699(g)(1).)  The PAGA Settlement provides for attorneys’ fees.  (Settlement, pg. 5.)  Plaintiffs’ Counsel requests $61,666.66, or 1/3 of the total settlement amount of $185,000.00.  (Motion, pg. 8; Settlement, pg. 5.)  Plaintiffs submitted support in the form of a list of tasks performed by attorneys. (Settlement, Exh. D.)  However, Counsel Mahoney does not provide his and Counsel Alemzadeh’s hourly rates in his declaration.  (Decl. of Mahoney ¶¶15-17.)  Counsel Mahoney declares Plaintiffs’ Counsel worked 104.5 hours for a total lodestar of $60,960.50 and includes a calculation of the lodestar.  (Decl. of Mahoney ¶¶14-15, Exh. D.)  The Court finds the attorneys’ fees award is not sufficiently supported as Plaintiffs has not provided any information about counsels’ hourly rates.

The Settlement also provides for an award of costs incurred for $11,000.00.  (Settlement, pg. 4.)  Plaintiffs’ Counsel submitted evidence in support of their request for incurred costs totaling $10,811.24. (Decl. of Mahoney ¶ 23, Exh. E.)  The Court finds the requested costs are reasonable and supported.  

The Settlement indicates that the upon approval of the Settlement, the Court shall approve a Judgment.  (Proposed Order ¶16; Settlement, pg. 5.)  The Settlement and [Proposed] Judgment submitted by the parties provides for a final judgment with the Court retaining jurisdiction pursuant to C.C.P. section 664.6.  (Proposed Order ¶15; Settlement, pg. 8.)

Based on the foregoing, Plaintiffs’ motion for an order approving the Settlement is continued.   

Dated: October _____, 2022

Hon. Monica Bachner

Judge of the Superior Court