Judge: Monica Bachner, Case: 21STCV21110, Date: 2022-11-07 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: 21STCV21110    Hearing Date: November 7, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Plaintiff Zebulon Neff’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 August 11, 2023, 2023 at 8:30 a.m.  The Administrator is ordered to submit a report five court days in advance of the hearing.

          Plaintiff Zebulon Neff (“Neff”) (“Plaintiff”) moves for an order approving his Settlement Agreement and Release of PAGA Claims (“Settlement”) with Defendant Oakhurst Industries, Inc. (“Oakhurst”) (“Defendant”).  (Notice of Motion, pg. 2.) 

          Motion to Approve PAGA Settlement

Plaintiff requests the Court issue an order: (1) approving the parties’ Settlement in the total Gross Settlement Amount of $380,000.00; (2) settlement administrator costs not to exceed $6,000.00; (3) PAGA Counsel’s Attorneys’ Fees in the amount of $126,666 (one-third of the Gross Settlement Amount (“GSA”)); and (4) PAGA Counsel’s Attorneys’ Expenses in the amount of $12,392.14.  (Proposed Order.)

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. (Nordrehaug Decl. ¶13, Exh. 7.)   

On June 4, 2021, Plaintiff filed his complaint in the instant action alleging a single PAGA cause of action for civil penalties pursuant to Labor Code sections 2698, et seq. On March 11, 2021, Plaintiff provided the LWDA and Defendants written notice of Defendants’ alleged Labor Code violations.  (Decl. of Nordrehaug ¶13, Exh. 5.)  Plaintiff alleges the LWDA did not respond to this notice within 60 days. (Motion, pg. 6.)

On October 3, 2022, Plaintiff filed this motion and supporting documents indicating the parties reached a stipulated settlement after participating in an all-day mediation April 26, 2022, with mediator Jeffrey Krivis.  (Decl. of Nordrehaug ¶3.)

The Settlement defines “Aggrieved Employees” as all persons employed by Defendant Oakhurst Industries, Inc. in California and classified as non-exempt employees during the PAGA Period.  (Decl. of Nordrehaug, Exh. 1 [Settlement, pg. 1].)  The Settlement defines “PAGA Period” as from June 4, 2020, to April 26, 2022.  (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 PAGA Claims” as all “PAGA claims for civil penalties under California Labor Code §§2698 et seq., predicated on the California Labor Code claims that are asserted in the LWDA Notice and operative complaint which includes, but is not limited to, PAGA claims for civil penalties pursuant to Labor Code section 2699, et seq. for violations of Labor Code sections §§201, 202, 203, 204, 226(a), 226.7, 226.8, 510, 512, 558, 1194, 1197, 1198, 2802 and applicable Industrial Welfare Commission Wage Orders. The Released PAGA Claims does not include underlying wage and hour claims, claims for wrongful termination, discrimination, unemployment insurance, disability, and workers’ compensation, and claims outside of the PAGA Period. The Released PAGA Claims do not include any claims that cannot be released as a matter of law. In no event shall the release of the Released PAGA Claims in this Settlement Agreement release any individual claims of any individuals.”  (Settlement, pg. 5.)  The Settlement defines “Released Parties” as Defendant and any of its agents, officers, directors, employees, stockholders, members, parent corporations, subsidiaries, affiliates, partners, predecessors and successors in interest, insurers, and assigns of the foregoing.  (Settlement, pg. 2.)  In addition, there is a general Representative PAGA Release for Plaintiff and Defendant has agreed to separately settle Plaintiff’s individual claims pursuant to a separate Individual Settlement Agreement.  (Settlement, pg. 5.) 

The Settlement defines “Effective Date” as the date on which the PAGA Settlement is approved through entry of an Order and Judgment and either (i) the California Court of Appeal or California Supreme Court has rendered a final decision or order affirming the Order and Judgment, or (ii) sixty-one (61) calendar days have passed since notice of entry of the Order and Judgment has been given to the Parties and no timely appeal or request for review has been made.  (Settlement, pg. 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 Aggrieved Employees release Released Parties from Released PAGA Claims.   (Settlement, pg. 5.)  As such, the release is accordingly effective after the payment date, which is proper. 

“Aggrieved Employees List” means the spreadsheet containing the list of Aggrieved Employees with their social security numbers, last known addresses, and their dates of employment and/or pay periods worked as an Aggrieved Employee during the PAGA Period.  (Settlement, pg. 1.)  Phoenix Class Action Administration Solutions is identified as the Settlement Administrator.  The Settlement provides that within 15 days after the Effective Date, Defendant shall pay the Settlement Administrator $190,000.00 as half of the Gross PAGA Settlement Amount and provide the Aggrieved Employees List to the Settlement Administrator.  (Settlement, pgs. 2-3.)  The remaining $190,000 shall be provided six months thereafter. 

Phoenix Class Action Administration Solutions is identified as the Settlement Administrator.  Within thirty (30) days after receipt of the Gross PAGA Settlement Amount from Defendant, the Settlement Administrator will issue to each Aggrieved Employee a check for their Individual PAGA Payment at their last known home address along with an explanatory letter which will be mutually approved by the Parties. Checks will remain negotiable for one hundred eighty (180) days. Any checks returned as non-deliverable on or before the check cashing deadline will be sent promptly via regular First-Class U.S. Mail to the forwarding address affixed thereto. If no forwarding address is provided, the Settlement Administrator will promptly attempt to determine the correct address using a skip-trace, or other search using the name, address, Social Security number, phone number, credit reporting and social media of the Aggrieved Employee involved and will then perform a re-mailing.  (Settlement, pgs. 5-6.)

The Settlement does not cover any non-PAGA claims, as Plaintiff’s individual claim will be settled separately pursuant to a separate confidential Individual Settlement Agreement. The individual claims exist independent and apart from the PAGA claims at issue before the Court.  (Motion, pg. 9 n.2.)  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.)  Indeed the settlement agreement states “In no event shall the release of the Released PAGA Claims in this Settlement Agreement release any individual claims of any individuals.”  (Settlement Agreement, ¶ 23(a).)

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 had not 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 sent to the LWDA, and information regarding how the terms of the settlement were reached.  (Decl. of Nordrehaug ¶¶2, 3, 13; Exh. 1 [Settlement], Exh. 5 [Notice Letter].)  Plaintiff provided information relating to the investigation done by his counsel.  (Decl. of Nordrehaug ¶3.)  Plaintiff provided information suggesting the Settlement is reasonable based on Plaintiff’s counsel’s investigation, the range of recovery, and details as to why the settlement is fair. (Motion, pgs. 15-16.) 

   Nordrehaug 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 $3,155,100.00.  (Decl. of Nordrehaug ¶6.)  Nordrehaug declared the Settlement is fundamentally fair, reasonable, and adequate taking into consideration all the factors. (Decl. of Nordrehaug ¶¶6-7.)  Accordingly, Plaintiff provided sufficient information to support the reasonableness of the Settlement. 

Plaintiff provides the “Gross PAGA Settlement Amount” ($380,000.00), the “PAGA Payment” ($232,334.00), and the manner of its distribution.  (Decl. of Nordrehaug ¶4; Settlement, pgs. 3, 6-7.)  The Settlement also sets forth the tax treatment of all settlement payments.  (Settlement, pg. 7.) 

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.  The Settlement explicitly states that the released PAGA claims do not “release any individual claims of any individuals.” (Settlement, pg. 5; Motion, pg. 9 n.2.)  Defendant has separately settled Plaintiff’s individual claims.  Therefore, Plaintiff’s release is proper. 

The Settlement provides that the designated Settlement Administrator, Phoenix Class Action Administrative Solutions, will be responsible for settlement administration.  (Settlement, pg. 2.)   The Settlement also provides that Individual PAGA Payments are the amount to be paid to each of the Aggrieved Employees out of 25% of the PAGA Payment under Labor Code §2699 with such individual shares to be based on the number of pay periods during which an individual worked as an Aggrieved Employee during the PAGA Period divided by the total number of pay periods worked by all Aggrieved Employees during the PAGA Period.  (Settlement, pg. 1.)  The Settlement provides that PAGA Settlement Members will receive an explanatory letter of the instant Settlement (“Settlement Notice”) along with their payment checks. (Settlement, pgs. 6-7.) Plaintiff includes a copy of the Settlement Notice to be sent to an Aggrieved Employee with their payment check.  (Supp. Decl. of Nordrehaug ¶1, Exh. 1.)

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, pg. 7.)  

As the prevailing employee, Plaintiff is entitled to reasonable attorneys’ fees in this action.  (Lab. Code §2699(g)(1).)  The PAGA Settlement provides for attorneys’ fees in the amount $126,666.00, which is one-third of the Gross PAGA Settlement Amount ($380,000.00).  (Settlement, pg. 4.)  Plaintiff submitted evidence to support a collective lodestar as of October 3, 2022, in amount of $86,296.25 in attorneys’ fees for more than 146 hours of work prosecuting the claims being resolved with this Settlement with a multiplier of less than 1.5, not including work to be performed to complete the approval and settlement process, which will ultimately yield a lodestar less than 1.2.  (Decl. of Nordrehaug ¶8.)  Plaintiff’s Counsel estimates time incurred after the billing was finalized and the time spent managing the completion of the settlement, which is estimated to add between $25,000.00 to $30,000.00 in additional lodestar.  (Decl. of Nordrehaug ¶8.)  The Court finds that this case is typical PAGA case, and counsel have worked 146 hours of work.  No multiplier is appropriate for this case.  Given that determination, the Court finds that attorney’s fees in the total amount of $111,296.25 are reasonable.

The Settlement also provides for an award of litigation costs incurred in the amount of not to exceed $15,000.  (Proposed Order pg. 5; Settlement, pg. 4.) Counsel Nordrehaug’s affidavit indicates that the amount of out-of-pocket costs Plaintiff’s Counsel incurred totaled $12,392.14, including filing fees, messenger fees, mediation fees, and consulting fees.  (Decl. of Nordrehaug ¶9, Exhs. 2, 3.) The Court finds that the $12,392.14 in fees are properly awarded.

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 until the entry of the final approval order and judgement.  (Settlement, pg. 11.)  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, pg. 6.) 

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

Dated:  November _____, 2022

Hon. Monica Bachner

Judge of the Superior Court