Judge: Teresa A. Beaudet, Case: 21STCV02421, Date: 2024-12-05 Tentative Ruling

Case Number: 21STCV02421    Hearing Date: December 5, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

On January 20, 2021, Plaintiff Fredy Vera Corona (“Plaintiff”) filed this action against Defendants Exquisite Apparel Corp. (“Exquisite Apparel”) and Affluent Staffing, LLC. On March 16, 2023, Plaintiff filed the operative Second Amended Representative Action Complaint, which contains a single cause of action for violation of the Private Attorneys General Act of 2004.

Plaintiff indicates that Plaintiff and Exquisite Apparel have agreed to settle the instant action as to Exquisite Apparel only. (Alami Decl., ¶¶ 7, 31, Ex. 1.)

Plaintiff previously moved for an order for a determination of good faith settlement, and for an order approving the Private Attorneys General Act of 2004 (“PAGA”) settlement. The motion was unopposed. On August 1, 2024, the Court issued an order denying Plaintiff’s motion for approval of PAGA settlement, without prejudice. The Court granted Plaintiff’s motion for determination of good faith settlement. 

Plaintiff now moves again for an order for a determination of good faith settlement, and for an order approving the PAGA settlement. The motion is unopposed.

On October 15, 2024, the Court issued a minute order continuing the hearing on the instant motion to November 4, 2024. The hearing was thereafter continued to December 5, 2024. (See October 30, 2024 Minute Order.) On October 31, 2024, Plaintiff filed a “Supplemental Brief in Support of Amended Motion for Determination of Good Faith Settlement and Approval of Private Attorneys General Act Representative Action Settlement” (the “Supplemental Brief”). On December 3, 2024, Plaintiff filed a Notice of New Authority regarding the issue of the definition of “aggrieved employees.”

Request for Judicial Notice

The Court denies Plaintiff’s request for judicial notice as to Exhibits A and B. 

Discussion

A.    Motion for Approval of PAGA Settlement

A superior court must “review and approve any settlement of any civil action filed pursuant to this part.” (Lab. Code, § 2699, subd. (s)(2).)

The Court notes that though there is no statutory or common law standard for approval of a PAGA settlement, the standard used for approval of class action settlements is instructive. “[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.” (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802.) The last factor, small percentage of objectors, is inapplicable to PAGA claims. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 984-985  [rejecting the argument that representative actions under PAGA violate the due process rights of “nonparty aggrieved employees who are not given notice of, and an opportunity to be heard”].) Additional factors that are useful to consider include the strength of a plaintiff’s case, the risk, expense, complexity and likely duration of further litigation, the amount offered in settlement, the extent of discovery completed, and the experience and views of counsel. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

The Court is persuaded by the points raised by Plaintiff in the Supplemental Brief and the Notice of New Authority. No further changes to the definition of “aggrieved employees” is required.

In the Supplemental Brief, Plaintiff cites to Roos v. Honeywell Internat., Inc. (2015) 241 Cal.App.4th 1472 (disapproved on other grounds as stated in Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260) in support of Plaintiff’s counsel’s request for attorney’s fees. In Roos, the Court of Appeal noted that “[t]he three objectors contend that the trial court abused its discretion in awarding attorney fees because the award amounted to 37.5 percent of the settlement funds. They contend that an award of fees amounting to such a high percentage of the settlement funds is impermissible under certain federal authority, which they urge us to adopt. They also argue that the court abused its discretion in awarding fees because it inadequately reviewed class counsel’s billing records. We are not persuaded by either argument.” (Id. at p. 1488.) In that case, as in this one, the lodestar far exceeded the fees requested. The Court finds Roos persuasive and supportive of Plaintiff’s position on attorney fees. Based thereon, the Court finds that the fees requested by Plaintiff’s counsel are reasonable.   

Finally, paragraph 5 of the proposed order references a “Release of claims by the LWDA, Plaintiff, and all Aggrieved Employees Against Defendant Exquisite Only…” It is unclear why the LWDA is included in this heading, because Plaintiff’s Amended Settlement Agreement only contains releases by Plaintiff and by “Aggrieved Employees.” (See Alami Decl., ¶ 31, Ex. 1, ¶ 5.) In the supplemental brief, Plaintiff notes that “a PAGA claim is an enforcement action between the LWDA and the employer, with the PAGA plaintiff acting on behalf of the government.” (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 86.) But the subject Amended Settlement Agreement does not appear to contain any release of claims by the LWDA. Plaintiff has indicated that it will remove the reference to the release of the LWDA from the proposed order.

Based on the foregoing, and except as to the reference to the LWDA, it appears that the defects identified in the Court’s August 1, 2024 Order have been corrected in the Amended Settlement Agreement and new proposed order.

B.    Motion for Determination of Good Faith Settlement

“[Code of Civil Procedure] Section 877.6 was enacted by the Legislature in 1980 to establish a statutory procedure for determining if a settlement by an alleged joint tortfeasor has been entered into in good faith and to provide a bar to claims of other alleged joint tortfeasors for equitable contribution or partial or comparative indemnity when good faith is shown.” (Irm Corp. v. Carlson (1986) 179 Cal.App.3d 94, 104.)

Code of Civil Procedure section 877.6, subdivision (a)(1) provides, in relevant part, that, on noticed motion, “[a]ny party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors or co-obligors.” (Id., § 877.6, subd. (a)(1).) “The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., § 877.6, subd. (d).)

“A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc., § 877.6, subd. (c).) 

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499, the California Supreme Court identified the following nonexclusive factors courts are to consider in determining if a settlement is in good faith under section 877.6: “a rough approximation of plaintiffs’ total recovery and the settlor’s proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants.” The evaluation of whether a settlement was made in good faith is required to “be made on the basis of information available at the time of settlement.” (Ibid.) 

Significantly, when the good faith nature of a settlement is uncontested, the Court need not consider and weigh the Tech-Bilt factors. (City of Grand Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261.) “[W]hen no one objects, the barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.” (Ibid.)

In support of the motion, Plaintiff submits the declaration of his counsel. Plaintiff’s counsel sets forth a brief background of the case. (Alami Decl., ¶¶ 4-5.) Plaintiff’s counsel states that “[o]n June 5, 2024, the Parties participated in an all-day mediation with Michael D. Young, Esq. Affluent refused to mediate and is a corporation that is no longer represented by counsel. The Parties were able to reach a resolution, which led to this Agreement to settle the Action as to Exquisite only…” (Alami Decl., ¶ 7.) “Prior to attending mediation, the Parties engaged in substantial discovery, including but not limited to providing and evaluating employment policies, employee handbooks, Plaintiff’s personnel file, Plaintiff’s time records, Plaintiff’s wage statements, and time and payroll records for approximately all 283 joint employees.” (Alami Decl., ¶ 8.)

Plaintiff’s counsel asserts that “Plaintiff is entitled to a determination that the settlement with Defendant Exquisite in the sum of $450,000 is made in good faith, in that: (1) Plaintiff will receive an enhancement award in the amount of $20,000 upon approval for his services as the PAGA representative and general release of all claims. Further, the total settlement amount is proportionate given Defendant Exquisite’s alleged liability as a joint employer (not a direct employer) of Plaintiff and other Aggrieved Employees; (2) the amount owed by the Settlement is $450,000; (3) the allocation to Plaintiff, the Aggrieved Employees, and the State of California will be based on the terms outlined in the Settlement, i.e., 75% of the net recovery will be paid to the LWDA and the remaining 25% will be paid to Plaintiff and the Aggrieved Employees based on the proportionate share of pay periods; (4) Defendant Exquisite will pay less in the Settlement than it would if it were found liable after trial, if, Plaintiff prevailed on all counts and successfully proved that Exquisite was a joint employer; (5) the Settlement amount is reasonable due to the financial hardship Defendant will suffer if litigation were to continue and liability was proven at trial since Exquisite could face potential bankruptcy should the Court award the maximum civil penalties, attorneys’ fees, and costs at trial; and (6) there is no existence of collusion, fraud, or tortious conduct aimed to injure the interests of the non-settling Defendant, Affluent Staffing, LLC.” (Alami Decl., ¶ 11.)

The Court finds that the unopposed motion describes the background of this case, details the nature of the proposed settlement, and provides sufficient reasoning as to why the settlement was reached in good faith. All indications are that the settlement was reached as a result of arm’s length negotiations between the settling parties.

            Conclusion

            Based on the foregoing, the Court grants Plaintiff’s amended motion for approval of PAGA settlement. The Court will sign the proposed order and strike the reference to the release by the LWDA.

            The Court grants Plaintiff’s amended motion for determination of good faith settlement.

Plaintiff is ordered to provide notice of this ruling.

DATED:  December 5, 2024                          ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court