Judge: Teresa A. Beaudet, Case: 23STCV22625, Date: 2025-05-20 Tentative Ruling

Case Number: 23STCV22625    Hearing Date: May 20, 2025    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background

On September 19, 2023, Plaintiff Hayden Harrell, , individually, and on behalf of aggrieved employees pursuant to the Private Attorneys General Act (“Plaintiff”) filed this action against Defendant Reinhold Industries, Inc. (“Defendant”) alleging a sole cause of action for Violation of Labor Code sections 2698, et seq. (“PAGA”).

Plaintiff’s counsel states that “Under the auspices of the mediator and after a full day of mediation, the Parties reached a settlement when considering the additional costs and risks.” (Han Decl., ¶15.)

Legal Standard

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.)

            Discussion

Plaintiff’s counsel indicates that the parties entered into a Settlement Agreement and Release (herein the “Settlement Agreement”). (Han Decl., ¶8, Ex. 2.)

The Court finds that the parties reached the settlement through private mediation after sufficient investigation and informal exchange of information. Specifically, analyzing personnel records, employee handbooks, relevant correspondence, and sampling of time and pay records. (Han Decl., ¶14.) Furthermore, the parties participated in a private mediation on September 19, 2024 with Tagore Subramaniam, wherein they discussed risks and delays of further investigation, risks of proceeding with a representative trial, laws relating to the PAGA claim, and evidence produced and analyzed. (Han Decl., ¶15.) Plaintiff’s counsel states that these risks included Plaintiff not being deemed an aggrieved employee, new developments in the law, and losing on the merits at trial. (Id.)

The Court further finds that Plaintiff was represented by competent counsel with over 20 years of employment representative and class action law experience in the Los Angeles area. (Han Decl., ¶¶2-7, Ex. 1.) Although there is no evidence presented attesting to the competence and experience of defense counsel, Fisher & Phillips, there also no evidence of the contrary. As such, the proposed Settlement Agreement is entitled to a presumption of fairness.

“The proposed settlement shall be submitted to the [Labor and Workforce Development Agency] at the same time that it is submitted to the court.” (Lab. Code § 2699, subd. (l)(2).) The Court finds that the notice of proposed settlement was provided to the LWDA on or about December 19, 2024. (Gonzalez Decl., ¶3, Ex. 1.)

“[C]ivil 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.” (Lab. Code, § 2699, subd. (m).) This amendment to Labor Code Section 2699, however, “shall not apply to a civil action with respect to which the notice required by subparagraph (A) of paragraph (1) of subdivision (a), paragraph (1) of subdivision (b), or subparagraph (A) of paragraph (1) of subdivision (c) of Section 2699.3 was filed before June 19, 2024.” (Lab. Code, § 2699, subd. (v)(2).) Plaintiff’s PAGA notice was sent to the Labor and Workforce Development Agency on July 14, 2023. (Han Decl., ¶10.) Therefore, the 75% to the Labor and Workforce Development Agency and 25% to the aggrieved employee distribution for civil penalties applies in this instant case and not the amended 65/35 split.

The proposed Settlement Agreement is for $350,000.00, inclusive of payments to the LWDA and PAGA Employees, attorneys’ fees and costs, and settlement administration costs. (Han Decl., ¶¶16-17.) Plaintiff’s counsel will be paid $122,250.00 for fees and $17,033.09 for litigation costs. (Han Decl., ¶16.) The settlement administrator ILYM Group, Inc. costs shall not exceed $5,500.00. (Id.) Plaintiff’s representative enhancement award is for $5,000.00. (Id.) After deducting these amounts, a net settlement amount (“PAGA Penalties Fund”) of $199,966.91 will be disbursed to the LWDA and to the Settlement Group Members who consist of all current and former hourly-paid or non-exempt employees employed by Defendant between July 16, 2022 through October 19, 2024 (“Settlement Period”). (Han Decl., ¶9.) Specifically, 75% or $149,975.18 will be paid to the LWDA, and 25% or $49,991.73 will be paid to the Settlement Group Members based on each member’s proportionate share of the weeks worked during the Settlement Period. (Han Decl., ¶17.)

Thus, the Court finds that the proposed Settlement Agreement terms conform with the requirements set forth Labor Code Section 2699, subdivision (m).

Additional factors that are useful to consider in determining whether to approve the settlement 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. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)  

Although Plaintiff contends that here is sufficient evidence to support the allegations that Defendant violated the Labor Code and owes statutory penalties, Plaintiff also acknowledges that Defendant maintained several defenses to the PAGA claim, which if successful had the potential to eliminate or substantially reduce recovery. (Han Decl., ¶¶19-22.) Thus, Plaintiff has demonstrated that the proposed Settlement Agreement merits approval.  

A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action. (Lab. Code, § 2699, subd. (g)(1).) California Rules of Court, rule 3.769, subdivision (b) requires that “[a]ny agreement… with respect to the payment of attorney’s fees or the submission of an application for the approval of attorney’s fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.” Despite any agreement by the parties to the contrary, “the court ha[s] an independent right and responsibility to review the attorney fee provision of the settlement agreement and award only so much as it determined reasonable.” (Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 128.) Plaintiff’s counsel attests to expending approximately 242.5 hours litigating this case, which includes “(i) locating and interviewing putative aggrieved employees to corroborate the allegations; (ii) employees working for Defendant through temporary employment agencies, which initially made it difficult to locate and interview putative aggrieved employees; (iii) difficulties in pinning down job responsibilities, wages paid, breaks taken; (iv) number of documents that had to be reviewed and analyzed; (v) shifting wage-and-hour laws; and (vi) Defendant’s initial firm resistance to the relief.” (Han Decl., ¶29.) Further, Plaintiff’s counsel attests to his hourly rate being $900.00, $800.00 for his associate Shunt Tatavos-Gharajeh, and $500.00 for his former associate Lawrence Ball, which amounts to $187,670.00 of attorney’s fees incurred during the litigation of this action plus a negative multiplier of 0.65. (Han Decl., ¶34.) Likewise, Plaintiff’s counsel attests to incurring $17,033.09 in litigation costs and expenses. (Han Decl., ¶35, Ex. 7.) The requested fees and costs are lower than what is provided for in the Settlement Agreement, i.e., $122,500.00 in attorney’s fees and $20,00.00 costs. Therefore, the Court finds that requested fees and costs pursuant to the Settlement Agreement is reasonable.

Finally, Plaintiff requests $5,000.00 as an enhancement service award for the time and effort exerted on behalf of the Settlement Members. (Harrell Decl., ¶12.) Plaintiff attests to expending over 35 hours meeting with her attorneys concerning the case, gathering employment documents, reviewing documents, answering pertinent questions, providing names and contact information for putative aggrieved employees, speaking with current and former employees, making herself available for mediation, and providing input throughout the litigation of this case. (Harrell Decl., ¶¶6-12.) Provided that the original net settlement amount is $$199,966.91, the Court finds that a $5,000.00 service award for approximately 35 hours of work is reasonable under these circumstances.

Conclusion

 Based on the foregoing, the Court grants Plaintiff’s motion for approval of Private Attorney General Act settlement. The Court orders Plaintiff to file and serve a proposed judgment within 10 days of this order.

Plaintiff is ordered to provide notice of this ruling.

DATED:  May 20, 2025                                

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court