Judge Sarah J. Heidel, Case Number: BC723965, Date: 2024-12-12 Tentative Ruling

Judge: Sarah J. Heidel, Case: BC723965, Date: 2024-12-12 Tentative Ruling

Case Number: BC723965 Hearing Date: December 12, 2024 Dept: V

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES – NORTHEAST DISTRICT

DEPARTMENT V

PATRICK POTE, SANDRA McKENZIE, and JAMES TAYLOR,

Plaintiffs,

vs.

HANDY TECHNOLOGIES, INC. and DOES 1–10,

Defendants.

Case No.: BC723965
Hearing Date: December 12, 2024
Time: 8:30 a.m.

[TENTATIVE] ORDER RE: MOTION FOR APPROVAL OF PAGA SETTLEMENT MOTION FOR FEES, COSTS, AND SERVICE AWARDS

MOVING PARTIES: Plaintiffs PATRICK POTE, SANDRA MCKENZIE, and JAMES TAYLOR

RESPONDING PARTY: Unopposed

The court considered the moving papers.

BACKGROUND

This is a PAGA action. Plaintiff Patrick Pote (Pote) filed the complaint against defendant Handy Technologies, Inc. on October 3, 2024. Pote filed the first amended complaint on November 19, 2018. Pote alleges the following causes of action: (1) declaratory relief – Code of Civil Procedure section 1060 and (2) violations of Labor Code Private Attorneys General Act California Labor Code sections 2698, et seq. Pote alleges that defendant failed to pay him minimum wage and overtime, to provide meal and rest breaks, to reimburse plaintiff for necessary business expenses, and to provide itemized wage statements. Pote also sought penalties for defendant’s alleged practice of collecting portions of plaintiff’s earnings in the form of “fees”.

Plaintiffs Sandra McKenzie and James Taylor filed a separate PAGA case against defendant alleging many of the same claims as well as additional claims. On December 15, 2023, they filed a motion to intervene in Pote’s action which was granted, and the parties were ordered to meet and confer regarding the settlement terms. On October 8, 2024, the court granted Pote’s proposed order to amend his first amended complaint to add plaintiffs McKenzie and Taylor as well as the other related violations alleged in their separate actions. This was a part of the settlement.

The parties entered into a settlement agreement whereby defendant agrees to pay $2,460,000 on a non-revisionary basis in exchange for a release of PAGA claims against it. The PAGA Settlement Group Members will not be required to take any action to receive settlement funds. If this settlement is approved, the members will be paid the worker portion of the net settlement fund within 29 days of the settlement’s effective date, and the State of California will receive the LWDA’s share of the fund.

Plaintiffs filed the motion for approval of PAGA settlement on October 10, 2024. Plaintiffs filed the motion for Attorney’s Fees, Costs, and Service Awards on October 11, 2024. No opposition has been received. The motion was originally set to be heard on November 25, 2024, but the court continued the motion to December 12, 2024.

LEGAL STANDARD

Labor Code § 2699(s)(2) states: “The superior court shall review and approve any settlement of any civil action filed pursuant to this part [Labor Code Private Attorneys General Act of 2004 (“PAGA”)]. The proposed settlement shall be submitted to the [Labor and Workforce Development Agency (“LWDA”)] at the same time that it is submitted to the court.” Any settlement of any civil action filed under PAGA must be “fair and adequate in view of the purposes and policies of the statute.” (Flores v. Starwood Hotels & Resorts Worldwide, Inc. (C.D. Cal. 2017) 253 F.Supp.3d 1074, 1077, quoting O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110, 1135.)

Sixty-five percent of all PAGA penalties must be paid to the LWDA. (See Lab. Code, § 2699(m) [“Except as provided in subdivision (n), civil penalties recovered by aggrieved employees shall be distributed as follows: 65 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 35 percent to the aggrieved employees.”].) However, at the time Pote gave notice of the PAGA claim to the LWDA, seventy-five percent of all PAGA penalties was to be paid to the LWDA, pursuant to the previous version of Labor Code section 2699. Courts have discretion to approve settlements that do not allocate any penalty amount. (Nordstrom Com. Cases (2010) 186 Cal.App.4th 576, 589). Labor Code § 2699(k)(1) provides, in relevant part: “Any employee who prevails in any action shall be entitled to an award of reasonable attorney’s fees and costs . . . .” (Lab. Code, § 2699(k)(1).)

DISCUSSION

A. Motion for Approval of PAGA Settlement

Plaintiff has submitted the proposed settlement to the LDWA and has thus complied with Labor Code section 2699(s)(2). (Tindall Decl., ¶ 18; Exh. D.)

With respect to the distribution of the PAGA settlement, the court finds the parties agreement is reasonable. After Pote participated in mediation on September 1, 2023, and plaintiffs McKenzie and Taylor met and conferred with Pote and defendant regarding the settlement terms, the parties reached a settlement of the action and executed a PAGA settlement agreement. (Tindall Decl., ¶¶ 13, 15, 16; Exh. B.) The parties agreed that defendant would pay a total of $2,460,000 to settle the PAGA claims. (Tindall Decl., ¶ 18; Exh. D.) The parties have agreed to a proposed distribution of the $2,460,000 as follows: (1) settlement administration costs paid to Atticus Administration in an amount up to $59,000; (2) service award of $20,000 per plaintiff intending to compensate plaintiffs for the time and effort in bringing this action and litigating on behalf of both the state of California and their fellow workers; (3) attorney’s fees to plaintiffs’ counsel for not more than one-third of the gross settlement amount, which is presently $820,000, as well as up to $41,000 in litigation costs incurred in litigating both actions; and (4) the remaining amount after the court-approved service awards, court-approved attorneys’ fees and costs, and the settlement administration costs is the PAGA payment which is to be distributed as 75% to the LWDA and 25% to the PAGA settlement group members. (Tindall Decl., ¶ 16; Exh. B Settlement Agreement Part III ¶¶ 8(c), 8(d), 8(b), 8(a)(1).)

Individual PAGA Payments will be distributed to PAGA settlement group members based on the number of hours each worked on defendant’s platform during the liability period as a percentage of the total hours worked by all Group Members during the same period. (Tindall Decl., ¶ 16; Exh. B Settlement Agreement Part III ¶ 8(a).) This percentage will be calculated based on records to be supplied to the Settlement Administrator by defendant. (Tindall Decl., ¶ 16; Exh. B Settlement Agreement Part I ¶ 19.)

With respect to the civil penalties, the Court finds that the distribution complies with Labor Code section 2699, as it was in effect when Pote filed the notice of the PAGA action to the LWDA on September 14, 2018. At the time, Labor Code section 2699 required 75 percent of the amount to be paid to the LWDA and 25 percent of the amount to be paid to the aggrieved employees, which here consists of the PAGA settlement group members, any individual who has performed home services bookings, including but not limited to home cleaning and handyman services through the online referral platform maintained by Handy in California at any time during the PAGA Period (i.e., from September 14, 2017, through March 31, 2023). (Tindall Decl., ¶ 16; Exh. B Settlement Agreement Part I, ¶ 21, Part III ¶ 8(a).) The settlement agreement reflects such a distribution of the civil penalties.

B. Motion for Fees, Costs and Service Awards

1. Attorney’s Fees

The court finds the requested attorney’s fees to be reasonable. Plaintiffs request $820,000 in attorney’s fees. Under the lodestar/multiplier method, plaintiffs’ request is less than the lodestar their counsel incurred as calculated by plaintiffs. Plaintiffs’ counsel incurred over 1,113 hours litigating plaintiffs’ claims. (Tindall Decl., ¶ 36; Crist Decl., ¶18.) Pote’s counsel’s incurred fees are as follows, 754.8 hours for a total of $585,847.50, and McKenzie and Taylor’s counsel’s fees are as follows, 359 hours for a total of $251,300.00, combined they total $837,147.50. (Tindall Decl., ¶ 35.) The requested $820,000 in attorney’s fees is thus, less than counsel’s combined lodestar. Under the percentage method, plaintiffs seek one-third of the gross PAGA settlement amount, which is a reasonable percentage for attorney’s fees.

2. Costs

The settlement agreement authorizes up to $41,000 in litigation costs. (Tindall Decl., ¶ 16; Exh. B Settlement Agreement Part I, ¶ 21, Part III ¶ 8(b).) Here, plaintiffs request reimbursement of a total of $34,985.69 in costs. $25,125.56, of those costs are requested by Pote’s counsel, Gibbs Law Group, as the following: (1) $3,018.14 in filing fees; (2) $13,000 in mediation fees ; (3) $5,274.36 in computer research charges; (4) $267.75 in copying charges and records fees; (5) $1,635 in litigation support; (6) $290.20 in transcripts; (7) $245.53 in postage and delivery; (7) $1,112.46 in travel costs; (8) $282 in CourtCall charges; and (9) $46 in miscellaneous court fees. (Tindall Decl., ¶ 43.) The remaining costs of $9,860.13, The costs appear to be reasonable in amount and reasonably necessary to this litigation.

3. Service Award

The court finds the service awards to be reasonable. Each plaintiff may seek court approval of a service award of $20,000 (Tindall Decl., ¶ 16; Exh. B Settlement Agreement Part III ¶ 8(d).) Plaintiffs argue that it is appropriate for plaintiffs to receive $20,000 as a service award for the following reasons. Pote devoted approximately 51 hours, over the course of six years, to this litigation, including participation in fact development, drafting discovery, and communicating with his counsel through the appeals process and mediation. (Pote Decl., ¶¶ 7-18.) McKenzie and Taylor also devoted time and efforts in their separate, related PAGA case against defendant, searching for documents, gathering information from co-workers, advising their counsel about the industry, answering their questions, and keeping in regular contact with their counsel throughout the case. (Taylor Decl., ¶¶ 12-19; McKenzie Decl., ¶¶ 15-22.)

Based on the foregoing, the court GRANTS plaintiffs’ motions to approve the PAGA settlement and for attorney’s fees, costs, and service awards.