Judge: Teresa A. Beaudet, Case: 21STCV15773, Date: 2024-09-20 Tentative Ruling

Case Number: 21STCV15773    Hearing Date: September 20, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

On April 27, 2021, Plaintiff Cy Kishiyama, an individual, on behalf of himself, all other aggrieved employees, and the general public (“Plaintiff”) filed this action against Defendants Guckenheimer Enterprises Inc. (“Guckenheimer Enterprises”) and Guckenheimer Services, LLC (“Guckenheimer Services”). Plaintiff filed the operative First Amended Complaint on October 25, 2021, alleging one cause of action for civil penalties under the Private Attorneys General Act.

On September 29, 2023, the Court issued an Order of Dismissal in this action indicating that the action is dismissed without prejudice as to Guckenheimer Services.

Plaintiff and Guckenheimer Enterprises have reached a settlement, and jointly request Court approval of the representative PAGA settlement.

On June 25, 2024, the Court issued an Order in this action identifying certain defects with the joint stipulation requesting approval of representative PAGA settlement. The Court ordered the parties to file supplemental papers, including declaration(s), to address the identified issues. The parties have since filed several supplemental papers.

Discussion

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

In the June 25, 2024 Order, the Court noted that “it appears that the ‘PAGA Period’ exceeds the one-year statute of limitations by nineteen days. The statute of limitations for PAGA claims is one year. ((Code Civ. Proc., § 340, subd. (a).) The Complaint in this action was filed on April 27, 2021. One year prior to this date is April 27, 2020. After the filing of the LWDA notice, the statute of limitations is tolled for a maximum of 65 days. ((Lab. Code, § 2699.3, subd. (a)(2)(A).) Therefore, adding an additional 65 days to the limitations period results in a cut-off date of February 22, 2020. However, the settlement agreement here defines the ‘PAGA Period’ as ‘the period from February 3, 2020, to the earlier of the date the settlement is approved by the court, or March 29, 2024.’” (June 25, 2024 Order at p. 2:19-26.) On July 9, 2024, the parties filed a “Joint Supplemental Filing in Support of Request for Approval of Representative PAGA Settlement” indicating, inter alia, that “[t]he Court is correct regarding the temporal scope of the PAGA period. The Parties have no objection to having the PAGA Period reflect the starting period as February 22, 2020 instead of February 3, 2020 – the date when Plaintiff submitted his PAGA notice letter to the Labor Workforce & Development Agency (‘LWDA’).” (July 9, 2024 Joint Suppl. Filing at p. 2:7-10.) However, the parties do not appear to indicate that they revised the settlement agreement to address the foregoing issue.

In the June 25, 2024 Order, the Court also noted that “the ‘Aggrieved Employee’ is not defined in accordance with Labor Code section 2699, subdivision (c), which provides, ‘[f]or purposes of this part, ‘aggrieved employee’ means any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.’ The settlement agreement here defines ‘Aggrieved Employee’ as ‘a person employed by Guckenheimer in California and classified as non-exempt, hourly employee who worked for Guckenheimer during the PAGA Period.’” (June 25, 2024 Order at p. 3:1-6.) On July 29, 2024, Plaintiff’s counsel filed a second supplemental declaration indicating, inter alia, that the parties executed an Addendum to the Settlement Agreement. (Second Suppl. Boyamian Decl., ¶ 2.) The Addendum to Settlement Agreement provides, inter alia, “1.4 ‘Aggrieved Employee’ means any person who was employed by the alleged violator and against whom one or more of the alleged violations committed [sic] and would include any person employed by Guckenheimer in California and classified as non-exempt, hourly employee who worked for Guckenheimer during the PAGA Period.” (Second Suppl. Boyamian Decl., ¶ 2, Ex. 1.) Thus, Plaintiff has corrected this issue.

In the June 25, 2024 Order, the Court also noted that “the proposed order filed with the joint stipulation provides, inter alia, that “[i]n his supporting declaration, Plaintiff’s counsel states that ‘[p]ursuant to California Labor Code Section 2699(1), Plaintiff provided a copy of the Settlement Agreement and this motion to the LWDA on June 12, 2024. Attached hereto as Exhibit 3 is an e-mail Your Declarant received following submission of the Settlement Agreement to the LWDA.’” (June 25, 2024 Order at p. 3:11-14.) The Court noted in the June 25, 2024 Order that Plaintiff did not appear to provide evidence that no objection was received to the settlement or joint stipulation. On July 9, 2024, Plaintiff’s counsel filed a supplemental declaration stating, inter alia, “[c]ounsel for Plaintiff submitted the Settlement Agreement on June 12, 2024 with the Labor Workforce and Development Agency…Below is a screenshot from the Labor and Workforce Development Agency’s website. The statute presumes that the LWDA will have an opportunity to file a response to the proposed settlement. To date, Your Declarant has not been contacted by the LWDA regarding any opposition towards the proposed settlement and has not received any notice concerning an objection or response to the proposed settlement.” (Suppl. Boyamian Decl., ¶ 2.)

In addition, in the June 25, 2024 Order, the Court noted that “the proposed order references a ‘Net Settlement Amount.’ The settlement agreement defines the ‘Net Settlement Amount’ as ‘the Gross Settlement Amount, less the following payments in the amounts approved by the Court: Individual PAGA Payments, the LWDA PAGA Payment, PAGA Counsel Fees Payment, PAGA Counsel Litigation Expenses Payment, and the Administration Expenses Payment. The remainder is to be paid to Aggrieved Employees as Individual PAGA Payments.’…This definition does not appear to include Plaintiff’s enhancement award of $10,000.” (June 25, 2024 Order at p. 3:19-25.) The parties’ Addendum to Settlement Agreement provides, inter alia, “1.15 ‘Net Settlement Amount’ means the Gross Settlement Amount, less the following payments in the amounts approved by the Court: the LWDA PAGA Payment, PAGA Counsel Fees Payment, PAGA Counsel Litigation Expenses Payment, Plaintiff’s Enhancement Award, and the Administration Expenses Payment. The remainder is to be paid to Aggrieved Employees as Individual PAGA Payments.” (Second Suppl. Boyamian Decl., ¶ 2, Ex. 1.) Thus, Plaintiff has corrected this issue.

The Court also notes that on September 3, 2024, Plaintiff’s counsel filed a third supplemental declaration indicating, inter alia, that an “additional 53,518 pay periods were unaccounted for during the PAGA period which must be included into the Parties’ Settlement. This raised the new total pay period count to 143,243. The Parties calculate that the inclusion of these additional pay periods results in the new Gross Settlement Amount to be $392,580 for settlement purposes and distribution.” (Third Suppl. Boyamian Decl., ¶ 5.) The parties executed a Second Addendum to Settlement Agreement to make changes to the settlement agreement based on the new Gross Settlement Amount. (Third Suppl. Boyamian Decl., ¶ 4, Ex. 1.)

The Court notes that the Second Addendum to Settlement Agreement does not revise paragraph 3.1 of the original settlement agreement, which provides, inter alia, that “[e]xcept as otherwise provided by Paragraph 9 below, Guckenheimer promises to pay $270,000.00 and no more as the Gross Settlement Amount.” (Boyamian Decl., ¶ 13, Ex. 2, ¶ 3.1, emphasis added.)

In addition, in light of the new “Gross Settlement Amount” of $392,580.00, it appears that the monetary amounts listed in paragraphs 3.2.4 and 3.2.4.1 of the settlement agreement (payments to the LWDA and Aggrieved Employees) will need to be revised. (See Boyamian Decl., ¶ 13, Ex. 2, ¶¶ 3.2.4- 3.2.4.1.)

In the June 25, 2024 Order, the Court noted that “the release language in the proposed order does not appear to match the release provisions in the settlement agreement.” (June 25, 2024 Order at p. 3:17-18.) It appears Plaintiff corrected this deficiency in the second amended proposed order submitted on September 3, 2024. 

The Court notes that the second amended proposed order references “Defendants’ funding of the Gross Settlement Amount of $392,580…” (Second Amended Proposed Order, p. 1:23.) The second amended proposed order refers to Defendants Guckenheimer Enterprises Inc. and Guckenheimer Services LLC jointly as “Defendants.” (Second Amended Proposed Order, p. 1:1-2.) However, the settlement agreement provides that “Guckenheimer promises to pay $270,000.00 and no more as the Gross Settlement Amount.” (Boyamian Decl., ¶ 13, Ex. 2, ¶ 3.1, emphasis added.) Paragraph 1.28 of the settlement agreement provides that “Guckenheimer” means “named Defendant Guckenheimer Enterprises, Inc.” (Boyamian Decl., ¶ 13, Ex. 2, ¶ 1.28.)

Lastly, the Court notes that the second amended proposed order provides that “[t]he Net Settlement Amount shall be allocated and distributed as set forth in the procedures outlined in the Settlement Agreement, Addendum, and Second Addendum to the Settlement Agreement in accordance with Labor Code section 2699(i).” (Second Amended Proposed Order at p. 2:10-13.) Labor Code section 2699, subdivision (i) provides that “[a]n aggrieved employee shall not collect a civil penalty for any violation of Sections 201, 202, 203, of the Labor Code, or for a violation of Section 204 that is neither willful or intentional, or a violation of Section 226 that is neither knowing or intentional nor a failure to provide a wage statement, that is in addition to the civil penalty collected by that aggrieved employee for the underlying unpaid wage violation. Nothing in this part or in paragraph (2) of subdivision (e) shall prevent a court, in awarding a civil penalty, from reducing the penalty for any alleged violation if the same conduct or omission resulted in multiple violations of this code.” Thus, it appears that the second amended proposed order cites to Labor Code section 2699, subdivision (i) in error.

Conclusion

Based on the foregoing, the parties are ordered to file by ____________, 2024 supplemental papers, including declaration(s), that address the above issues, with a courtesy copy delivered to Department 50.

Plaintiff is ordered to provide notice of this Order.

DATED:  September 20, 2024                       ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court