Judge: Theresa M. Traber, Case: 22STCV03555, Date: 2023-11-20 Tentative Ruling

Case Number: 22STCV03555    Hearing Date: December 21, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     December 21, 2023                TRIAL DATE: NOT SET

CASE:                         Sharon Park v. American Contractors Indemnity Co., et al.

CASE NO.:                 22STCV03555           

MOTION FOR APPROVAL OF PAGA SETTLEMENT

MOVING PARTY:               Sharon Park, on behalf of herself and all aggrieved employees.

RESPONDING PARTY(S): No response on eCourt as of December 18, 2023

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is a PAGA action that was filed on January 28, 2022. Plaintiff alleges that Defendants have systematically underpaid its employees, failed to provide meal and rest breaks and overtime payments, failed to timely pay wages during employment and at the end of employment, and failed to reimburse business expenses. 

Plaintiff moves for an order (1) approving a proposed PAGA settlement; (2) appointing Phoenix Settlement Administrators as the settlement administrator and approving payment of its fees of $4,500 from the settlement sum; (3) directing the settlement administrator to distribute the settlement fund pursuant to the agreement; and (4) awarding Plaintiff’s counsel attorney’s fees and costs from the settlement sum.

TENTATIVE RULING:

Plaintiff’s motion for approval of settlement of their claims for civil penalties under PAGA is GRANTED as modified herein.

The Court orders that the award of costs to Plaintiff’s counsel be reduced to $16,141.19, with the remainder returned to the net settlement amount pursuant to the terms of the settlement agreement.

This ruling is conditioned on Plaintiff serving on all parties and filing with the Court written confirmation that the amended agreement has been provided to the LWDA.

DISCUSSION:

Plaintiff moves for an order (1) approving a proposed PAGA settlement of $130,000; (2) appointing Phoenix Settlement Administrators as the settlement administrator and approving payment of its fees of $4,500 from the settlement sum; (3) directing the settlement administrator to distribute the settlement fund pursuant to the agreement; and (4) awarding Plaintiff’s counsel attorney’s fees and costs from the settlement sum.

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 meets the procedural requirements for this motion.  A copy of the proposed settlement agreement is included.  (Declaration of Justin Lo ISO Mot Exh. D.)  Further, the declaration of counsel in support of the motion reveals that the settlement agreement was simultaneously submitted to the LWDA as is required under the statute, with confirmation of service via online upload.  (Id. ¶ 11, Exh. C.) Plaintiff also provided a copy of the predicate letter sent to the LWDA before filing suit. (Id. Exh. B.) The Court’s November 20, 2023 order instructed the parties to prepare an amended settlement agreement addressing the scope of the release provision. The amended agreement was served and filed on December 12, 2023. (Supplemental Declaration of Justin Lo ISO Mot. Exh. B.) Although Plaintiff’s counsel states under penalty of perjury that the amended agreement was submitted to the LWDA, the attached confirmation of service appears to be for the original version of the agreement. (Lo Supp. Decl. ¶ 4, Exh. C.) As the Court is inclined to approve the amended agreement for the reasons stated infra, the Court will condition its ruling on filing and service of confirmation that the amended agreement has been submitted to the LWDA.

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.)

            Plaintiff has shown the parties engaged in an arms-length negotiation by independently meeting and conferring, as well as participating in mediation with mediator Tripper Ortman. (Lo Decl. ¶¶ 12, 15.) Plaintiff’s counsel has also provided evidence of their substantial experience in wage and hour litigation and in PAGA actions. (Id. ¶¶ 2-5, Exh. A.)

Further, Plaintiff has provided sufficient evidence regarding the nature of the PAGA investigation to determine its adequacy. Plaintiff states that Defendant produced Plaintiffs’ employee files and wage statements, a 1/3 sampling of time and payroll records, as well as wage and hour policies and relevant policy documents in place during the relevant time period. (Lo Decl. ¶ 13.) Plaintiff states that there were approximately 78 aggrieved employees, including Plaintiff, during the relevant time period, for which there were 5,517 pay periods between January 28, 2021 through the present. (Lo Decl. ¶¶ 17, 19 12.) 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 $551,700. (Lo Decl. ¶ 19.) Applying the same fee structure as in the proposed settlement, this would result in a total settlement amount to the aggrieved parties of $90,825.00 amounting to an average recovery of $1,164.42 among the 78 aggrieved parties. Here, the settlement proposes to distribute $16,302.50 (representing 25% of the Settlement Fund after deduction of attorney’s fees, administrator fees, and costs) among the 78 aggrieved parties for an average recovery of approximately $209 each. (See Lo. Decl. Exh. D. § III.5.) The Court finds that Plaintiffs have offered sufficient evidence to determine the relative strength of the claims and the range of possible settlement values.

Plaintiff’s counsel requests $17,000 in costs and $43,290 in attorneys’ fees be paid out of the maximum settlement funds. Plaintiff justifies this amount as appropriate on the basis that Plaintiff’s counsel achieved a favorable result in a case that required thorough investigation and intensive negotiations, and for which there were several potentially meritorious defenses. This recovery constitutes one-third of the total settlement and, thus, 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.) Plaintiff also provides verified statements under penalty of perjury and timesheets contending that the total amount of actual attorney’s fees billed is $34,905. (Lo Decl. ¶ 27, Exh. G.) Plaintiff is essentially requesting a 1.24 times multiplier on the fees actually incurred by Plaintiff, but such a request is justified given the risks involved in taking on a contingency case like this one to enforce important public policies. Accordingly, the Court approves the attorneys’ fees sought as a reasonable award.

Plaintiff justifies the requested $17,000 in costs based on the actual litigation costs incurred in the amount of $16,141.19. (Lo Decl. Exh. E.) The itemized list of costs accounts for the costs actually incurred but does not demonstrate how Plaintiff accounts for the remaining $858.81 in costs. In the Court’s view, the appropriate amount of costs to be awarded should be the costs actually incurred, with the remainder to be returned to the net settlement amount pursuant to the terms of the settlement agreement.

Plaintiff does not state why Phoenix Settlement Administrators was selected as the administrator but has provided a quote from Phoenix to administer the settlement for $4,500, the amount sought in allotment for the settlement administrator. (Lo Decl. Exh. F.) The Court therefore finds that Plaintiff has justified the allotment.

At the initial hearing on this motion on November 20, 2023, the Court ordered that the release agreement be modified to provide that all parties shall be deemed to have released Defendants from “all claims that were pled under the PAGA in the Action, but only to the extent that they were properly asserted in the LWDA predicate letter that dictates the scope of the PAGA claims that can be brought in this action.” (November 20, 2023 Minute Order p. 6.)

The modified release agreement has been revised to provide that all aggrieved parties shall be deemed to have released Defendants from “any and all claims under PAGA that are pled in the PAGA Action, and for violations alleged in Plaintiff’s LWDA letter during the PAGA Period.” (Lo Supp. Decl. Exh. B. § II.13.) This revision satisfies the Court’s concerns regarding the scope of the release agreement.

            As Plaintiff has satisfied the Court’s remaining concerns regarding the settlement, the Court finds that the proposed PAGA settlement is fair, adequate, and reasonable such that it should be approved, subject to the reduction of the award of costs pursuant to the terms of the settlement.

CONCLUSION:

            Accordingly, Plaintiff’s motion for approval of settlement of their claims for civil penalties under PAGA is GRANTED as modified herein.

The Court orders that the award of costs to Plaintiff’s counsel be reduced to $16,141.19, with the remainder returned to the net settlement amount pursuant to the terms of the settlement agreement.

This ruling is conditioned on Plaintiff serving on all parties and filing with the Court, by January 12, 2024, written confirmation that the amended agreement has been provided to the LWDA.   The Court sets a non-appearance case review for January 17, 2024 to review the confirmation.

            Moving Party to give notice, unless waived.

IT IS SO ORDERED.

Dated: December 21, 2023                             ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.