Judge: Ronald F. Frank, Case: 22TRCV00559, Date: 2024-08-01 Tentative Ruling
Case Number: 22TRCV00559 Hearing Date: August 1, 2024 Dept: 8
Tentative
Ruling¿
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HEARING DATE: August 1, 2024
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CASE NUMBER: 22TRCV00559
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CASE NAME: Rhonda Mims v. South Bay Home Care, Inc.,
et al.
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MOVING PARTY: Plaintiff,
Rhonda Mims, individually, and on behalf of other aggrieved employees pursuant
to the California Private Attorneys General Act
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RESPONDING PARTY: Defendant,
South Bay Home Care, Inc. (Non- Opposition)
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TRIAL DATE: Not
Set.
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MOTION:¿ (1) Motion for Approval of PAGA Settlement
Tentative Rulings: (1) APPROVED.
I. BACKGROUNG
A.
Factual
On
October 26, 2022, Plaintiffs, Eric Beckman, Carmelina Capital Management, LLC,
Beckman-Mansour Partnership, Breakwater Management LP, Breakwater Credit
Opportunities Fund II GP LP, Breakwater Acquisition Corp. I, Breakwater Equity
Partners LP, Breakwater Credit Opportunities Fund II GP LP, Breakwater
Acquisition Sponsor I LLC, Breakwater Investment Management LLC (“Plaintiffs”)
filed a motion against Defendant, Erika Mansour, as Executor of the Estate of
Saif Mansour. The Complaint alleges causes of action for: (1) Declaratory
Relief; (2) Breach of Partnership Agreement; (3) Breach of the Duty of Loyalty
and Duty of Care; (4) Unjust Enrichment; and (5) Breach of Contract.
Now,
Plaintiff files a Motion for Approval of PAGA Settlement.
B.
Procedural
On July 8, 2024, Plaintiff filed a stipulation regarding settlement. To date, no opposition has
been filed. On July 24, 2024, Defendant, South Bay Home Care, Inc. filed a
notice of non-opposition.
II. ANALYSIS
A. Legal Standard
The
Private Attorneys General Act (PAGA) is "a procedural statute allowing an
aggrieved employee to recover civil penalties–for Labor Code violations–that
otherwise would be sought by state labor law enforcement agencies." (Amalgamated
Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993,
1003.) The statute provides a mechanism for private enforcement of Labor Code
violations for the public benefit. (See Arias v. Superior Court (2009)
46 Cal.4th 969, 986.)
To incentivize employees to
bring PAGA actions, the statute provides aggrieved employees 25 percent of the
recovered civil penalties. (Lab. Code § 2699, subd. (i).) The remaining 75
percent is distributed to the Labor and Workforce Development Agency (LWDA)
"for enforcement of labor laws and education of employers and employees
about their rights and responsibilities under [the Labor Code]." (Lab.
Code § 2699, subd. (i).)
Labor
Code section 2699 provides in pertinent part: (2) 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; (3) A copy of the superior court’s judgment
in any civil action filed pursuant to this part and any other order in that
action that either provides for or denies an award of civil penalties under
this code shall be submitted to the agency within 10 days after entry of the
judgment or order. (Lab. Code, § 2699, subds. (l)(2),
(l)(3).)¿
While PAGA requires court review
and approval of settlements, it does not specify the standard or criteria for
such review. (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 75.)
Thus, “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.” (Id., at p. 77.) To determine if a PAGA settlement is
fair, reasonable and adequate, courts consider factors “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.” (Id.,
at p. 75.) Lastly, courts will also consider if the settlement is
“adequate in view of PAGA's purposes to remediate present labor law violations,
deter future ones, and to maximize enforcement of state labor laws.” (Ibid.)
In considering the amount of settlement, the court is mindful that compromise is
inherent and necessary in the settlement process. (Wershba v. Apple
Computer, Inc. (2001) 91 Cal.App.4th 224, 250.)
B.
Discussion
Here, Plaintiff has brought this motion
to approve PAGA settlement. Plaintiff notes that on September 14, 2023, the
parties attended a formal mediation with Henry J. Bongiovi, Esq., and engaged
in intensive settlement discussions during which they debated their respective
positions and exchanged views regarding the strengths and weaknesses of the
alleged claims. Although Plaintiff notes that the parties did not reach an
agreement to settle the action at the mediation, they agreed to a mediator’s
proposal on September 18, 2023. Following the mediation, Plaintiff notes that
the parties worked diligently to negotiate and memorialize the terms in a long
form settlement agreement. On December 19, 2023, Plaintiff contends the
settlement agreement was fully executed, and now, Plaintiff seeks approval of
the proposed settlement, which would resolve all representative claims alleged
in the complaint.
Gross
Settlement Amount and Allocation
Plaintiff notes that the parties
have agreed to settle the PAGA claims at issue in the complaint and the PAGA
notice for a non-reversionary Gross Settlement Amount of Four Hundred
Forty-Three Thousand dollars ($443,000).
Plaintiff notes that the gross
settlement amount (“GSA”) is a common fund and thus includes all requested
costs, fees, and other allocations. Specifically, it allocates: (1) Plaintiff’s
Counsel’s fees in the amount of thirty-five percent (35%) of the Gross
Settlement Amount, equaling One Hundred Fifty-Five Thousand Fifty Dollars and
Zero Cents ($155,050.00); (2) Plaintiff’s Counsel’s actual litigation costs of
Ten Thousand Six Hundred Sixty-Seven Dollars and Seventeen Cents ($10,667.17);
(3) Incentive Payment to Plaintiff of Ten Thousand Dollars and Zero Cents
($10,000.00); and (4) Settlement Administration Costs in the amount of Seven
Thousand Dollars and Zero Cents ($7,000.00). (Settlement Agreement, ¶¶ 10,
33(a)-(c)). Although the Settlement Agreement allows for Settlement
Administration Costs of up to Ten Thousand Dollars and Zero Cents ($10,000.00),
Plaintiff’s Counsel was able to obtain an agreement from the Settlement
Administrator to administer the settlement for Seven Thousand Dollars and Zero
Cents ($7,000.00). This savings of $3,000.00 will become part of the Net
Settlement Amount to be allocated between the LWDA and the Aggrieved Employees.
After the above estimated amounts are deducted from the Gross Settlement
Amount, Plaintiff notes that the Net Settlement Amount will amount to Two
Hundred Sixty Thousand Two Hundred Eight-Two Dollars and Eighty-Three Cents
($260,282.83.)
Plaintiff further notes that
Seventy-five percent (75%) of the Net Settlement Amount will be paid to the
LWDA. Twenty-five percent (25%) of the Net Settlement Amount will be
distributed and paid to Aggrieved Employees on a pro-rata basis based on the
number of Pay Periods worked during the PAGA Period. (Settlement Agreement, ¶¶
34(c), 42.) Moreover, Plaintiff asserts that payments to the aggrieved
employees will be allocated as 100% penalties.
Fairness
Determination
Next, Plaintiff contends that the
settlement is presumed fair as it was reached after arm’s-length bargaining. As
noted above, this settlement was reached after mediation, a mediator’s
proposal, and further discussions between the parties. Plaintiff confirms that
the parties discussed all aspects of the case, including the risk and delays of
further litigation, the risk to the parties of proceeding with trial, the law
relating to representative PAGA actions, wage-and-hour enforcement, and the
evidence produced and analyzed by the parties.
Further, Plaintiff notes that the
settlement was also reached after the parties conducted sufficient
investigation and discovery. Based on the declaration submitted, the Court
finds that sufficient investigation and discovery has been conducted by the
parties prior to reaching this settlement.
Counsel’s
Experience
Plaintiff includes the declaration
of her counsel which confirms that she has extensive experience in claims
management and administration of class and collective action matters.
Fairness,
Reasonableness, and Adequacy of the Settlement in Light of the Parties’
Respective Legal Positions
Plaintiff notes that the strength of
her argument and allegations was strong, and alleged that Defendant systematically
violated the Labor Code by failing to properly pay overtime and minimum wages,
failing to provide compliant meal and rest periods and associated premiums,
failing to timely pay wages during employment and upon termination of
employment, failing to provide complete and accurate itemized wage statements,
failing to keep and maintain complete and accurate payroll records, and failing
to reimburse necessary business expenses. However, Plaintiff also recognizes
that Defendant maintained several defenses to Plaintiff’s theories of
liability, which, if successfully argued and proven, had the potential to
eliminate or substantially reduce recovery. As such, the Court notes that this
settlement was reached after the parties fully determined the strength and
weaknesses of their arguments.
Further, Plaintiff notes that although
she believes Defendant faced significant exposure, substantial barriers to
recovery still remained. As such, the parties determined that settling the case
would be in the best interest of them both.
Third, Plaintiff asserts that the
amount offered in settlement is a compromise of highly disputed claims, noting
the result achieved in this case and the monetary recovery provided by the
settlement are well within the range of an acceptable settlement under the
circumstances, especially when compared to the settlement of PAGA claims in
other cases.
Attorneys’
Fees and Costs
Plaintiff next argues that the
requested attorneys’ fees are fair and reasonable. The Court agrees that under
the Lodestar method, and without any opposition from Defendant, the requested
fees are reasonable. The Court further finds that the requested reimbursement
for litigation costs is also fair and reasonable for similar reasons.
Incentive
Payment
The Court finds that an incentive
payment for Plaintiff in the amount of $10,000 is appropriate as Plaintiff
initiated this case and has been the named party litigating this case since its
inception in 2022.
Settlement
Administration Costs
The Court also notes that the fees
and expenses estimated in the amount of $7,000, which is well below the $10,000
originally allocated to settlement administration costs under the Settlement
Agreement. The costs include, but are not limited to: expenses for preparing,
printing, and mailing the Settlement Cover Letter and Individual PAGA Payment
checks (i.e., “PAGA Settlement Package”) to the Aggrieved Employees, re-mailing
the returned PAGA Settlement Packages to any new addresses obtained, and
handling inquiries from Aggrieved Employees regarding the Settlement, among
other things. Accordingly, the Court should grant approval of Settlement
Administration Costs of $7,000.00 to Phoenix Settlement Administrators, a
necessary third-party for handling the settlement process. Here, the Court
finds that the $7,000 allocation is reasonable.
Party Notice
Lastly, Plaintiff indicates the
parties have jointly drafted a settlement cover letter for this Court’s
approval, which will be delivered to the aggrieved employees along with their
individual PAGA payment checks. Plaintiff confirms that the notice includes
information regarding the nature of the lawsuit and a summary of the terms of
the settlement. Plaintiff notes that no later than fourteen (14) days after
this Court grants approval, Defendant will provide a list to the settlement
administrator containing he following information for each aggrieved employee: (1)
full name; (2) last known home address; (3) last known telephone number; (4)
social security number; (5) start and end dates of active employment as a
non-exempt employee of Defendant in the State of California; (6) the number of
Pay Periods worked during the PAGA Period; and (7) any other information
required by the Settlement Administrator in order to effectuate the terms of
the Settlement (the “Aggrieved Employees List”). (Settlement Agreement, ¶
43(a).) Plaintiff further contends that the settlement administrator would
perform any searches necessary to confirm the aggrieved employees’ addresses,
and no later than fourteen (14) calendar days after receipt of the gross
settlement amount from Defendant, the settlement administrator would mail the
settlement cover letter and individual PAGA payment checks to all aggrieved
employees via first class mail.
Based on the above factors, this
Court determines that the PAGA settlement can be approved.
III. CONCLUSION
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The PAGA settlement can be approved.
Plaintiff is ordered to provide
notice.