Judge: Monica Bachner, Case: 20STCV38668, Date: 2022-09-02 Tentative Ruling

Case Number: 20STCV38668    Hearing Date: September 2, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Plaintiff’s unopposed motion for an order approving the settlement pursuant to Labor Code § 2698 et seq. is GRANTED.  A status conference regarding a final accounting is set for March 30, 2023 at 8:30 a.m.

           Plaintiff Shimon Broshinsky, individually and on behalf of other aggrieved employees, moves for an order approving parties’ March 28, 2022, Private Attorneys General Act Claims Settlement Agreement and Release with Defendants First Motor Group of Encino, LLC, and Trophy Automotive Dealer Group, LLC.  (Notice of Mot. pp. 1, 5; Boyamian Decl., Ex. B [Settlement].)

           Motion to Approve PAGA Settlement

Plaintiff requests the Court issue an order: (1) approving the parties’ Settlement in the total Gross Settlement Amount of $250,000; (2) appointing Phoenix Class Action Administration Solutions as the third-party settlement administrator and approving an award of up to $2,750 to it; (3) directing distribution of the Gross Settlement Amount pursuant to the Settlement’s terms; (4) approving Plaintiff’s enhancement payment in the amount of $20,000; (5) approving Plaintiff’s Counsel’s attorneys’ fees in the amount of $83,333.33; (6) approving an award of $7,627.25 in litigation expenses to Plaintiff’s Counsel; (7) approving the payment of $95,000 (75% of the Net Settlement Amount) to the LWDA; and (8) approving payment of $31,667 (25% of the Net Settlement Amount) to the PAGA Settlement Members.  (Proposed Order; Boyamian Decl. ¶ 23.)

California Labor Code section 2699(l)(2) provides that “[t]he 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, Plaintiff 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 at the same time they were submitted to the Court. (Boyamian Decl. ¶ 10, Ex. C.)   

On October 8, 2020, Plaintiff filed his initial complaint in the instant action alleging a single PAGA cause of action for civil penalties pursuant to Labor Code sections 2698, et seq. (Compl. ¶¶ 58–100.) On July 23, 2020, Plaintiff provided the LWDA and Defendants written notice of Defendants’ alleged Labor Code violations. (Compl. ¶ 56, Ex. 1.)  Plaintiff alleges the LWDA did not respond to this notice within 60 days. (Compl. ¶ 57.)  On February 8, 2021, Defendants filed answers denying all liability.  (Answer.)

On April 26, 2022, Plaintiff filed this motion and supporting documents indicating the parties reached a stipulated settlement shortly after participating in an October 25, 2021-Mediation with mediator Marc J. Feder.  (Boyamian Decl. ¶¶ 9–10.)

The Settlement defines “PAGA Group” as all persons employed by the Defendant First Motor Group of Encino, LLC within the state of California, who are paid, in whole, or in part, on a commission basis at any time within the PAGA Period.”  (Settlement, p. 4.) The Settlement defines “PAGA Period” as from August 29, 2017, to October 25, 2021. (Settlement, p. 4.)  The definitions are proper pursuant to the statute of limitations and the date of notice on the LWDA. 

The Settlement defines “PAGA Released Claims” as any and all claims and causes of action for civil penalties against Defendants including any allegations or claims that could be based upon facts set forth in the PAGA Letters and instant action under any legal theory of liability, including claims that Defendant failed to pay all wages owed (including minimum wage, overtime, and double time), failed to provide meal periods, failed to provide accurate, itemized wage statements, failed to pay wages upon termination, or any other violation under Labor Code sections 201, 202, 203, 204, 210, 216, 221, 223, 225.5, 226, 226.3, 226.7, 510, 511, 512, 551, 552, 553, 558, 1174, 1174.5, 1182.1–1182.3, 1194–1197.1, 1198, 2802, and 2698 et seq., and all applicable Wage Orders.  (Settlement, pp. 8–9.)  As such, Settlement provides that Released Claims only include claims for civil penalties under PAGA and does not release individual claims, other than the individual claims of the named Plaintiff.  The Settlement defines “Released Parties” as Defendants; named Defendants First Motor Group of Los Angeles, LLC (FMGLA), and First Motor Group of Encino, LLC (Encino); Defendants’ parents, owners, subsidiaries, affiliates, their insurers, attorneys, and all agents thereof.  (Settlement, p. 8.)  In addition, there is a general release for Plaintiff only pursuant to California Civil Code section 1542.  (Settlement, p. 9-11.)  

The Settlement defines “Effective Date” as the later of the following events: (a) five (5) calendar days after Defendants’ receipt of a notice of entry of the Court’s order approving the Settlement if there are no objections to the Settlement or intervenors in the Litigation; or (b) if any appeal, writ, or other appellate proceeding opposing the Settlement has been filed, then fourteen (14) calendar days after when any appeal, writ, or other appellate proceeding with respect to the Settlement has been resolved finally and conclusively with no right to pursue further remedies or relief.  (Settlement, pp. 2–3.)

The terms of the Settlement’s release make clear 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.   (Settlement, p. 13.)  As such, the release is accordingly effective after the payment date, which is proper. 

The Settlement provides that within 30 days after the Effective Date [the Settlement’s approval becoming final], Defendant First Motor Group shall provide to the Administrator  a “PAGA List” consisting of PAGA Settlement Members’ names, last known home addresses, number of pay periods as a PAGA Group member during the PAGA Period, and social security numbers, and the Administrator will run a check of all PAGA Settlement Members’ addresses through the United States Postal Service NCOA database.  (Settlement, p. 13.)

The Settlement provides that within fifteen (15) business days after the Administrator’s receipt of the PAGA List, the Settlement Administrator will mail Notice of Resolution together with a settlement payment to all PAGA Group members by first-class United States mail, postage prepaid, with directions to the Postmaster to forward the Notice and return all undeliverable Notices to the Settlement Administrator.  (Settlement, p. 13.)  For each Notice of PAGA Settlement and settlement payment that is returned as undeliverable, the Settlement Administrator shall promptly attempt to locate the Aggrieved Employee by performing an additional skip trace and shall re-mail the Notice and settlement check no later than ten (10) calendar days following receipt of the undeliverable Notice.  (Settlement, p. 13.)

The Settlement does not cover any non-PAGA claims as Plaintiff only asserted a PAGA claim. As such, the Release does not apply to any individual claims, and the release is proper.  (See ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175.) 

A superior court must review and approve any penalties sought as part of a proposed settlement agreement pursuant to Labor Code § 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).) 

Plaintiff provided the Court with sufficient information to approve the Settlement, as discussed below.

Plaintiff provided the Court with the Settlement, Plaintiff’s Notice Letter and Amended Notice Letter sent to the LWDA, and information regarding how the terms of the settlement were reached. (Boyamian Decl. ¶¶ 10–20; Ex. A [Notice Letter], Ex. B [Settlement].)  Plaintiff provided information relating to the investigation done by his counsel.  (Boyamian Decl. ¶¶ 14–18.)  Plaintiff also provided information suggesting the Settlement is reasonable based on Plaintiff’s counsel’s investigation, the range of recovery, risk of potential adverse ruling based on the case Viking River Cruises, Inc. v. Moriana, and details as to why the settlement is fair.  (Boyamian Decl. ¶¶ 18–21.)  Boyamian declared that given the eligible pay periods for assessing PAGA Penalties and the approximate number of aggrieved employees, the maximum recovery based on the alleged violations could have been up to $884,400.  (Boyamian Decl. ¶ 20.)  Boyamian declared the Settlement is fundamentally fair, reasonable, and adequate taking into consideration all the factors. (Boyamian Decl. ¶¶ 14–24.)  Accordingly, Plaintiff provided sufficient information to support the reasonableness of the Settlement. 

Plaintiff provides the total amount of the settlement and the manner of its distribution.  (Boyamian Decl. ¶ 23; Settlement, pp. 13–14.)  The Settlement also sets forth the tax treatment of all settlement payments.  (Settlement, p. 17.) 

As discussed above, to the extent the release of claims for PAGA penalties is based only on underlying allegations in this action, and only releases claims alleged in the Notice Letters sent to the LWDA, Plaintiff’s release does not release anything other than claims for penalties, and there is no Civil Code section 1542 waiver.  (Settlement, pp. 8­–9.)  Therefore, Plaintiff’s release is proper. 

In support of the provision entitling Plaintiff to an Enhancement Award of up to $20,000 payment, Plaintiff argues the award is warranted to recognize his actions in conferring a benefit upon the State of California and Plaintiff’s effort and work in prosecuting the litigation on behalf of the PAGA Group.  (Settlement, p. 4; Broshinsky Decl. ¶¶ 6–8.)  Plaintiff estimates that he spent a total of twenty (20) hours assisting his attorneys with preparation for this case, primarily contacting other employees following Plaintiff’s separation from the company, “doing work and investigation of the facts independent from [his] attorneys both before and during this case.” (Broshinsky Decl. ¶ 7.) Before litigation commenced and throughout its course, Plaintiff estimates he spent three (3) hours gathering, organizing, and reviewing documents and information for the lawsuit. (Broshinsky Decl. ¶ 8.)  In addition, Plaintiff asserts he took on risks by filing this lawsuit, both professionally and financially.  (Broshinsky Decl. ¶ 9.)  Plaintiff declares that he was a stable and top salesperson at Mercedez-Benz of Encino for many years, and he believes he will face future reputational harm and future employers will likely avoid hiring him based on the stigma associated with suing his employer.  (Broshinsky Decl. ¶ 9.)  Plaintiff’s individual release of claims further supports his Enhancement Award. Plaintiff provided sufficient support for the payment. 

The Settlement provides that the designated Administrator will be responsible for settlement administration and that the individual payment amounts for PAGA Group members are to be determined based on the total number of pay periods worked by all members of the PAGA Group during the Settlement Period, multiplied by number of pay periods worked by the individual PAGA Group member.  (Settlement, p. 13.)  The Settlement also includes an escalator clause in the event that the actual number of pay periods in the PAGA Period exceeds Defendant’s estimated number of pay periods by 5%, increasing the amount of the Gross Settlement Amount by the same percentage by which the number of pay periods exceeds the actual PAGA Period by 5%.  (Settlement, p. 15.)  The Settlement provides that PAGA Settlement Members will receive an explanatory letter of the instant Settlement (“Settlement Notice”) along with their payment checks, which is noted as attached as Exhibit A to the Settlement but was not included in the filing of Boyamian’s Declaration.  (See Settlement, p. 12.)  The Court finds the description of the Settlement Notice accurately and fairly describes the Settlement, but Plaintiff should submit a supplemental brief attaching the Settlement Notice for the Court’s final approval.  The Settlement properly provides that checks that remain uncashed after 180 days will be forwarded to the California State Controller’s Office Unclaimed Property Fund in the name of the Aggrieved Employee.  (Settlement, p. 14.)  

As the prevailing employee, Plaintiff is entitled to reasonable attorneys’ fees in this action.  (Lab. Code §2699(g)(1).)  As discussed above, the PAGA Settlement provides for attorneys’ fees in the amount $83,333.33, which is 33-1/3% of the Settlement Amount for all past and future attorneys’ fees necessary to prosecute, settle, resolve any appeals, and administer this litigation and resolution.  (Settlement, p. 13.)  Plaintiff submitted support a collective lodestar amount of $55,160 in attorneys’ fees in prosecuting this action based on Counsel Michael Boyamian’s 67.8 hours incurred at billing rate of $700 per hour and Associate Heather Zermeno’s 22 hours at a billing rate of $350 per hour.  (Boyamian Decl. ¶ 28.) Counsel’s collective lodestar is in line with the requested fee amount, which is a reasonable fee under the circumstances because the rate is within a range of reasonableness of fees in similar cases, and because a cross-check of Counsel’s lodestar confirms that the fee request here is reasonable. (Boyamian Decl. ¶¶ 29–30, Ex. E.) Given the instant action did not involve any individual wage claims and only involved a claim for PAGA penalties, all the fees incurred were related to the PAGA claim.  The Court finds the attorneys’ fees award is sufficiently supported.

The Settlement also provides for an award of litigation costs incurred in the amount of not to exceed $15,000.  (Settlement, p. 16) Counsel Boyamian’s affidavit indicates that the amount of out-of-pocket costs Plaintiff’s Counsel incurred totaled $7,627.25, including filing fees, mediation fees, expert fees, photocopy fees, service of process fees, travel expenses, research expenses, and mailing charges. (Boyamian Decl. ¶ 25, Ex. D.) Plaintiff has not provided sufficient support demonstrating Plaintiff’s counsel incurred costs in an amount greater than $7,627.25. Therefore, this Court grants a Settlement award for $7,627.25 to reflect the actual costs supported by the attached invoice.

The Settlement indicates that upon approval of the Settlement, the matter is stayed in its entirety except for any filings and/or motion work necessary to attain Court approval of the Settlement. (Settlement, p. 18.)  The Settlement specifically provides that, simultaneous with filing a joint stipulation and/or motion for Approval of the Settlement by the Court, Plaintiff’s Counsel shall submit a copy of the Settlement to the LWDA as required by Labor Code section 2699(l)(2).  (Settlement, p. 18.)  Accordingly, Plaintiff is entitled to an order approving the Settlement.

Based on the foregoing, Plaintiff’s motion for an order approving the Settlement is granted. 

Dated:  September _____, 2022

Hon. Monica Bachner

Judge of the Superior Court