Judge: Stuart M. Rice, Case: 23STCV02717, Date: 2024-11-05 Tentative Ruling

Case Number: 23STCV02717    Hearing Date: November 5, 2024    Dept: 1

Moving Party:             Plaintiff Mayeli Becerra and Defendant BluSky Restoration Contractors, LLC
Ruling: GRANT                   

Plaintiff Mayeli Becerra (Plaintiff) and defendant BluSky Restoration Contractors, LLC (Defendant) jointly request that the Court approve their stipulation to settle Plaintiff’s claims under the Private Attorney General Act (PAGA).  Plaintiff’s operative First Amended Complaint (FAC) asserts that Defendant violated sections 201, 202, 203, 204, 206, 206.5, 207, 210, 216, 218, 218.6, 221, 223, 226, 226.7, 256, 510, 512, 558, 1174, 1174.5, 1194, 1197, 1197.1, and 1198 of the Labor Code. 

Legal Standards

Under Labor Code section 2699(l)(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.”  (Lab. Code. §2699(l)(2); see Williams v. Superior Court (2017) 3 Cal.5th 531, 549 [noting in passing that “PAGA settlements are subject to trial court review and approval, ensuring that any negotiated resolution is fair to those affected.”)  However, “[t]he standards for review [for court approval of a representative PAGA action settlement] are unclear, however, because the trial court does not have a fiduciary responsibility to any absent class members as it does in reviewing class action settlements.”  (The Rutter Group, Cal. Prac. Guide Civ. Proc. Before Trial, Ch. 14-D, ¶12:250; see also Haralson v. U.S. Aviation Services Corp. (N.D. Cal. 2019) 383 F.Supp.3d 959, 971 [“[N]either the California legislature, nor the California Supreme Court, nor the California Courts of Appeal, nor the [Labor and Workforce Development Agency (the “LWDA”)] has provided any definitive answer as to what the appropriate standard is for approval of a PAGA settlement.”].)  A court may exercise its discretion to approve a settlement of a suit that includes a PAGA claim even if no portion of the settlement is allocated toward payment to the LWDA. (See Nordstrom Com. Cases (2010) 186 Cal.App.4th 576, 589.)   

Given that California case authority on the issue is somewhat sparse, the Court looks to a federal district court case, Haralson v. U.S. Aviation Services Corp. (N.D. Cal. 2019) 383 F.Supp.3d 959, for guidance on court approval of PAGA settlements.  In Haralson, the court noted that the rationale behind the statute’s court approval requirement is that settlement of PAGA claims compromises a claim that could otherwise be brought by the state.  (See Haralson, supra, 383 F.Supp.3d at 971.)  The court noted that the LWDA has provided the following guidance:  “It is thus important that when a PAGA claim is settled, the relief provided for under the PAGA be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public and, in the context of a class action, the court evaluate whether the settlement meets the standards of being ‘fundamentally fair, reasonable, and adequate’ with reference to the public policies underlying the PAGA.  (Haralson, supra, 383 F.Supp.3d at 971.) 

The courts have also considered payment of civil penalties as a factor in approval of PAGA settlements.  (See Flores v. Starwood Hotels & Resorts Worldwide, Inc. (C.D. Cal. 2017) 253 F.Supp.3d 1074, 1077 [federal district court approved PAGA settlement where court was satisfied that the parties' settlement was “fair and adequate in view of the purposes and policies of the statute” and the parties “adequately divvied up the civil penalties under Section 2699(i) of the California Labor Code.”].)  However, payment of civil penalties is not dispositive.  (See Nordstrom Com. Cases, supra, at 589.)  

Background

This case was originally a class action.  On September 13, 2023, the Court granted Plaintiff’s request for dismissal of her class claims, leaving only claims for statutory penalties under PAGA.  This stipulation for settlement approval followed. 

Discussion

The proposed settlement is for a gross amount of $260,000, divided as follows:

1.      Notice to the LWDA

Labor Code section 2699(l)(2) requires that the settlement be provided to the Labor Workforce Development Agency (LWDA) at the same time it is presented to the court.  Plaintiff apparently provided notice to the LWDA on October 11, 2024.  (Koulloukian Decl., ¶ 25, Ex. 3.) 

2.      Fairness of the Settlement

a.      Presumption of Fairness

Under Dunk v. Ford Motor Co. (1996) 48 Cal.App.4^th 1794, a presumption of fairness exists where “(1) the settlement is reached through arm's-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”  (Id. at 1802.) 

The settlement agrees to have been reached through arm’s-length bargaining.  The settlement was reached following an all-day mediation with Eve Wagner, Esq., in preparation for which the parties exchanged various documents and information and Plaintiff consulted an expert.  (Koulloukian Decl., ¶ 10.)  Specifically, Plaintiff obtained Defendant’s employee handbooks, written policies, and a random 20% sample of time and pay records for the aggrieved employees, as well as data on all aggrieved employees overall.  (Id., ¶ 13.)  The settlement is presumptively fair.

b.      Breadth of Release

The release in the settlement agreement applicable to aggrieved employees reads:

5.2. Release by Settlement Group Members and State of California: In consideration for their awarded portions of the Settlement Group Allocation, as of the date the Settlement becomes Final and is fully funded as set forth in Paragraph 4.3, the State of California and all Settlement Group Members release any and all claims under PAGA for civil penalties against BLUSKY and the other Released Parties that arise out of or reasonably relate to the allegations asserted in the Operative Complaint and the PAGA Notice submitted by Plaintiff to the LWDA pursuant to PAGA that, during the PAGA Period, BLUSKY failed to: pay all wages due, including minimum wages and overtime; provide meal and rest periods; pay meal and rest period premiums at the regular rate of pay; maintain accurate records; furnish accurate itemized wage statements; timely pay all wages due during employment; and pay all wages due upon separation of employment (the “Released PAGA Claims”). The Released PAGA Claims include but are not limited to claims brought under California Labor Code sections 200-204, 206, 207, 210, 216, 218, 218.5, 221, 223, 226, 226.7, 256, 510, 512, 558, 1174, 1174.5, 1194, 1197, 1197.1, 1198, and 2698 et seq. All Settlement Group Members will release the Released PAGA Claims and receive a Settlement Share.

This release is appropriately narrow to include only claims under PAGA, and only those based on or reasonably relating to the allegations of the LWDA notice and the FAC, which bound the scope of this litigation.  The Court will approve it.

c.       Amount of Attorney Fees and Costs

The settlement provides for $86,658 in attorney fees, approximately one-third (33.33%) of the gross settlement amount.  This is appropriate considering the result achieved and the Court will approve it. 

Counsel requests the capped amount of $15,000 in litigation costs.  These costs appear reasonably incurred and reasonable in amount, and the Court will approve them. 

The settlement allocates up to $4,000 for settlement administration costs to Phoenix Class Action Administration Solutions.  This is reasonable in amount and the Court will approve it. 

d.      Gross Settlement Amount

The $260,000 settlement represents penalties for 7,405 pay periods worked by 223 employees.  This is a little more than $35.11 per pay period and approximately $1,165.91 per employee, prior to attorney fees and costs.  This appears a reasonable amount.

e.       Division of Civil Penalties

“[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 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 25 percent to the aggrieved employees.”  (Labor Code § 2699(i).)

For the reasons discussed above, the amount of civil penalties does not appear to be correct.  The Court expects that a further settlement agreement will correctly allocate the penalties between the LWDA and aggrieved employees.

f.        Funding of Settlement

Under the settlement, Defendant will fund the settlement within 15 days of the administrator’s transmission of the wiring instructions, which will be about 18 days after the Court enters judgment.  (Kolloukian Decl., Ex. 1, ¶¶ 1.7, 4.3.)  Payments will be made to aggrieved employees and for other disbursements within 7 days after that.  (Id., ¶ 4.4.)  Uncashed checks will be canceled and the funds transmitted to the Unclaimed Property Fund of the State Controller in the name of the aggrieved employee payee.  These are all acceptable terms and will be approved.

g.      Service Awards and Individual Settlements

Plaintiff requests a service award of $7,500.  This is reasonable in amount considering the length of this case and the work by Plaintiff and will be approved.

Conclusion

For the foregoing reasons, the stipulation for approval of PAGA settlement is granted. No appearance is required on November 5, 2025.  Plaintiff’s proposed order and judgment will be entered forthwith with a non- appearance date of May 5, 2025 for receipt of final report reflecting that all settlement funds have been disbursed.