Judge: Theresa M. Traber, Case: 20STCV03772, Date: 2022-08-19 Tentative Ruling
Case Number: 20STCV03772 Hearing Date: August 19, 2022 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: August 19, 2022, TRIAL DATE:
None set
CASE: Allan Castaneto, an individual, and on
behalf of all aggrieved employees pursuant to the Labor Code Private Attorneys
General Act v. Calop Business Systems, Inc.
CASE NO.: 20STCV03772
MOTION FOR APPROVAL OF SETTLEMENT OF CLAIM FOR CIVIL
PENALTIES UNDER THE PRIVATE ATTORNEY GENERAL ACT (LABOR CODE § 2698 ET SEQ.)
MOVING PARTY: Plaintiffs Allen Castaneto,
Antuan Fernandez, and Sam Kimm
RESPONDING PARTY(S): No opposition on
file as of 8/17/22
CASE
HISTORY:
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is an
action for extensive wage and hour violations and civil penalties under the
Private Attorney General Act, Labor Code § 2698, et seq. (PAGA).
Plaintiffs move for an order (1)
approving a proposed PAGA settlement, (2) appointing Phoenix Class Action
Administration Solutions as the Settlement Administrators and approving payment
of $3,500 in administration costs from the settlement sum; (3) directing
disbursement of the Settlement Sum pursuant to the terms of the Agreement; (4),
directing payment of attorney’s fees not to exceed $100,000 and costs in the
amount of $5,184.33; (5) directing payment of an enhancement payment from the
Settlement Sum in the amount of $10,000 to each of the Plaintiffs, and (6)
dismissing this action with prejudice
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TENTATIVE RULING:
Plaintiffs’ motion for approval of
settlement of their claims for civil penalties under PAGA is GRANTED
conditioned on the submission of a revised approval order that reduces the
enhancement payments to the named plaintiffs as outlined below.
DISCUSSION:
Plaintiffs
move for an order (1) approving a proposed PAGA settlement, (2) appointing
Phoenix Class Action Administration Solutions as the Settlement Administrators
and approving administrative costs of $3,500 from the settlement sum; (3) directing
disbursement of the Settlement Sum pursuant to the terms of the Agreement; (4),
directing payment of attorney’s fees not to exceed $100,000 and costs in the
amount of $5,184.33; (5) directing payment of an enhancement payment from the
Settlement Sum in the amount of $10,000 to each of the Plaintiffs, and (6)
dismissing this action with prejudice.
Procedural
Requirements
An application to approve a settlement under PAGA must include a copy
of the proposed settlement agreement, a copy of the predicate letter to the
LWDA seeking an investigation of the claims prior to filing the lawsuit, and a
declaration from counsel explaining the reasonable range of recovery in the
case and the reasons why the settlement is fair and reasonable. Further, “the proposed settlement” must be
given to the LWDA at the same time as the Court receives the request for
approval of the settlement. (Labor Code section 2699(l)(2).)
The motion submitted to the Court satisfies the procedural
requirements for this motion. A copy of
the proposed settlement agreement is included in the
form of an executed Memorandum of Understanding. (Declaration of Michael
Boyamian ISO Mot ¶ 14, Exh. B.) Further,
the declaration of counsel in support of the motion reveals that the settlement
agreement was submitted to the LWDA on July 15, 2022, as is required under the
statute. (Id. ¶ 16, Exh. C.) Plaintiffs have also provided the court with
a copy of the predicate letter sent to the LWDA before filing suit.
(Declaration of Justin Lo ISO Mot. ¶ 6 Exh. B.) Plaintiff has therefore satisfied the
procedural requirements of the motion.
Reasonableness
of Settlement
PAGA was enacted to aid public agencies, which lack adequate funding,
in enforcement of California’s labor laws. Private persons suing under the PAGA
do so as a proxy of the state. (ZB, N.A. v. Superior Court (2019) 8
Cal.5th 175, 185 (Lawson).) Aggrieved employees suing under the PAGA are
authorized to recover civil penalties, which advances a law enforcement
function, designed to protect the public. (Ibid., citing Arias v.
Superior Court (2009) 46 Cal.4th 969, 986 (Arias) and Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian)).)
Labor Code §2699(l)(2) requires courts to “review and approve any settlement of
any civil action filed pursuant to this part.” The California Supreme Court
explains that a PAGA claim is a form of a qui tam action. (Iskanian, supra,
59 Cal.4th 348, 382.)
As such, the Court looks to the standards for evaluating a qui tam
settlement in assessing this settlement, that is, whether the settlement is
“fair, adequate, and reasonable.” (Cf. Cal. Govt. Code § 12652 [In a qui
tam action a state or political subdivision may settle the action with the
defendant notwithstanding the objections of the qui tam plaintiff if the court
determines, after a hearing providing the qui tam plaintiff an opportunity to
present evidence, that the proposed settlement is fair, adequate, and
reasonable under all the circumstances].)
An application for approval of such a settlement must demonstrate that
the proposed settlement is adequate, reasonable, and fair to all those affected
by it. (Williams v. Superior Court (2017) 3 Cal.5th 531,
549.) Those affected by a PAGA settlement include: (1) the LWDA, who
receives 75% of settlement funds (Lab. Code § 2699(i)) and is “bound by the
outcome of the proceeding to adjudicate the employee’s PAGA claim” (Mejia v.
Merchants Building Maintenance, LLC, supra, 38 Cal.App.5th at p. 732); (2)
the aggrieved employees, both party and non-party, who receive 25% percent of
settlement funds and are, like the LWDA, bound by a PAGA action judgment (Lab.
Code § 2699(i); Arias v. Superior Court (2009) 46 Cal.4th 969, 985);
(3) plaintiffs’ counsel, who may be awarded “reasonable attorney’s fees and
costs” (Lab. Code § 2699(g)(1); and (4) the defendant who pays the settlement.
Assessing the fairness and adequacy of any settlement necessitates
decision-making based on unknowns. However, in determining whether a settlement
falls within the parameters of what may be considered reasonable, courts
regularly rely on estimates of potential maximum values weighed against
weaknesses of the claims. Other important indicia of fairness include
arms’-length negotiations, experienced counsel, and an adequate investigation
of the claims. But the potential value of the claims being settled is primary
to any evaluation. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th
1794, 1802; Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th
116, 129-130.)
Plaintiffs have shown the parties
engaged in an arms’-length negotiation by participating in a Mandatory
Settlement Conference with Judge Zaven Simanian on June 23, 2022. (Boyamian
Decl. ¶ 20.) Plaintiffs’ counsel have also provided evidence of their
substantial experience in wage and hour litigation and in PAGA actions. (See
Boyamian Decl. ¶¶ 2-6, Lo Decl. ¶¶ 2-5, Declaration of Daren Le Montree ISO
Mot. ¶¶ 2-4, Declaration of Joel Glaser ISO Mot. ¶¶ 2-4.)
Further, Plaintiffs have provided sufficient evidence regarding the
nature of the PAGA investigation to determine its adequacy. Plaintiffs state
that approximately 54,000 documents were produced following granting of
Plaintiff Fernandez’s Motions to Compel Further Responses, consisting primarily
of (1) employee hours for payroll; (2) check stubs; (3) electronic sign-in
sheets, and (4) attendance sheets. (Boyamian Decl. ¶ 17.). Plaintiffs state
that the records allowed Plaintiffs to ascertain that Defendant had on
average 200 airport employees in any given pay period, estimating that there
were 92 pay periods during the relevant time period of November 19, 2018 to
June 3, 2022, and that, accounting for the downsizing of Defendant’s operations
due to the COVID-19 pandemic, Defendant had, on average, 82 terminal employees
and 90 cargo employees, and, based on a randomized review of various pay
periods during the PAGA period, Plaintiffs estimate that 200 employees worked
on any given time or pay period. (Id. ¶ 18.) The Court finds that, based on
this evidence, the investigation of the PAGA claims was adequate to justify a
settlement.
Plaintiff calculates, based on the number of workweeks and aggrieved
parties, their hourly rates, and the theories of how the Labor Code was
violated, that the maximum value of the claims would be between $1,840,000 and
$3,660,000, dependent on whether the $100-per-pay-period penalty for initial
violations is applied exclusively, or with the $200-per-period penalty for subsequent
violations. (Boyamian Decl. ¶ 19.) Applying the same fee structure as in the
proposed settlement, this would result in a total settlement amount to the
aggrieved parties between $421,625 and $876,625, amounting to an average
recovery between $1,204.64 and $2504.64 for each of the 350 aggrieved parties. Here,
the settlement proposes to distribute $36,625.00 among the 350 aggrieved
parties for an average recovery of approximately $104.64 each. (Boyamian Decl.
Exh. B.) The Court finds that Plaintiffs have offered sufficient evidence to
determine the relative strength of the claims and the range of possible
settlement values.
The Court is concerned about the size of the proposed enhancement
payments to be paid to each of the named Plaintiffs out of the settlement funds.
Under the terms of the settlement agreement, Plaintiffs Castaneto, Fernandez,
and Kimm are to each receive $10,000 each from the settlement funds, totaling
$30,000. The Court does not consider it to be appropriate, when only $66,625 is
available to all aggrieved parties, for the three named litigants to receive 45%
of the total settlement funds, while the remaining 55% must be split between
350 other aggrieved parties. Instead, the Court’s view is that a more
reasonable distribution of the settlement funds, given the relative involvement
of the named parties, is $7,500 for Defendant Fernandez and $6,000 each for
Defendants Castaneto and Kimm, with the remaining $10,500 to be added to the
amount available for distribution to the aggrieved parties pursuant to the terms
of the settlement agreement.
Plaintiffs’ counsel request that $5,184.33 in costs and $100,000 in
attorneys’ fees be paid out of the settlement funds. Plaintiffs justify this
amount as appropriate on the basis that Plaintiffs’ counsel achieved a
favorable result in a case that was heavily litigated. This recovery matches
other awards approved by courts in California for wage and hour claims. (See,
e.g., Martin v. Ameripride Servs. (S.D. Cal. June 9, 2011) 2011 U.S.
Dist. LEXIS 61796, 23 [“courts may award attorney’s fees in the 30-40% range in
wage and hour class actions that result in recovery of a common fund under $10
million.) Plaintiffs also provide verified statements under penalty of perjury showing
that the total amount of actual attorney’s fees billed is $293,950. (Le Montree
Decl. ¶ 12, Glaser Decl. ¶ 12, Boyamian Decl. ¶ 32, Lo Decl. ¶¶ 22-24.) The
Court agrees with Plaintiffs in their characterization of the complexity and
intensity of litigation in this case, as not only did the parties extensively
litigate critical issues such as the manageability of the PAGA claims, but
Plaintiffs’ counsel was also required to litigate extensively regarding the
production of discovery responses from Defendant who claimed that the federal
government needed to review all personnel records to protect national security
interests. In light of the extensive record showing the diligence and
thoroughness with which this case was litigated, and the evidence that
Plaintiffs’ counsel are requesting a reduced amount of fees compared to what
was actually billed, the Court finds that the requested fees are reasonable
based on the evidence provided.
Plaintiffs justify the requested $5,184.33 in costs based on the
actual litigation costs incurred and contends that the $3,500 in administration
costs is also fair and reasonable. Plaintiffs have provided itemized lists of
costs incurred, which total $5,184.33. (Boyamian Decl. Exh. C., Lo Decl. Exh. C,
Le Montree Decl. ¶ 13, Glaser Decl. ¶ 13.) Plaintiffs do not state why Phoenix
was selected as class administrator but have provided evidence that the amount
requested for Phoenix is precisely the amount bid by Phoenix to act as
settlement administrator. (Boyamian Decl. Exh. F.) The Court finds that the
requested costs are also reasonable based on the evidence provided by Plaintiff.
The release to be imposed on aggrieved parties states:
“Each PAGA Member (including Plaintiff) shall, for the Covered Period,
fully release and forever discharge Defendants from claims for PAGA penalties
asserted in the PAGA and Class Lawsuit or any other claims under PAGA, that
could have been asserted in the PAGA and Class Lawsuit based on the facts
alleged, including but not limited to any and all claims for PAGA penalties for
violations of the California Labor Code governing: unpaid wages, including
minimum wages, regular wages, meal and/or rest periods, overtime and double
time wages; wage statement violations; unreimbursed business expense
violations; waiting time violations; and violations for failure to timely pay
wages during employment.”
(Boyamian Decl. Exh. B. § 9.)
In the Court’s view, a reasonable release must focus solely on the
extinguishment of claims for PAGA penalties for the Labor Code violations
alleged in Plaintiffs’ LWDA letter against Defendant. However, a review of the
Complaint as compared to the allegations made in the LWDA letter reveals that
the facts, circumstances, and rights at issue in both documents are identical. (See
generally Complaint; see also Lo Decl. Exh. B.) The Court finds that the
release is appropriately limited to those claims for PAGA penalties for Labor
Code violations alleged in the LWDA letter, on the basis that both the letter
and the Complaint allege essentially the same facts, circumstances, and rights
at issue, including the same enumerated causes of action.
Under these circumstances, the Court finds that the proposed PAGA settlement
is fair, adequate, and reasonable such that it should be approved, contingent
on the reduction of the enhancement payments to the named plaintiffs as
outlined above.
CONCLUSION:
For the reasons above, Plaintiffs’
motion for approval of settlement of their claims for civil penalties under
PAGA is GRANTED conditioned on the submission of a revised approval order that reduces the
enhancement payments to the named plaintiffs as outlined above.
Moving Parties to give notice.
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IT IS SO ORDERED.
Dated: August 19,
2022 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court