Judge: Theresa M. Traber, Case: 23STCV26286, Date: 2025-04-28 Tentative Ruling

Case Number: 23STCV26286    Hearing Date: April 28, 2025    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     April 28, 2025                                    TRIAL DATE: NOT SET

CASE:                         Mark Sumaria, et al. v. Sante Health Partners, LLC, et al.

CASE NO.:                 23STCV26286            

MOTION FOR APPROVAL OF PAGA SETTLEMENT

MOVING PARTY:               Plaintiffs Mark Sumaria and Zaydee Mercado

RESPONDING PARTY(S): No response on eCourt as of 04/23/25

CASE HISTORY:

·         10/27/23: Complaint filed.

·         11/09/23: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is a PAGA action. Plaintiffs allege that Defendant has systematically underpaid its employees.

Plaintiffs move for approval of a proposed settlement agreement.

TENTATIVE RULING:

Plaintiffs’ motion for approval of settlement of her claims for civil penalties under PAGA is CONTINUED to June 27, 2025 at 9:00 AM. Any supplemental declarations and/or a revised settlement agreement must be provided to the Court at least five court days prior to the continued hearing.

DISCUSSION:

Plaintiffs move for approval of a proposed settlement agreement in which Defendant will pay $55,000 to settle all claims.

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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 Shoshee Hui ISO Mot Exh. 1.)  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. Exh. 5.) Plaintiffs have also provided a copy of the predicate letter sent to the LWDA before filing suit. (Id. Exh. 2.) Plaintiffs have therefore satisfied the procedural requirements of this 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. In determining whether a settlement falls within the parameters of what may be considered reasonable, however, 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 independently meeting and conferring and participating in mediation with Abraham Melamed, Esq. on August 5, 2024, resulting in this settlement. (Hui Decl. ¶¶ 9-12.)) Plaintiffs’ counsel has also provided evidence of their substantial experience in wage and hour litigation and in PAGA actions. (Id. ¶¶ 17-19.)

Further, Plaintiffs have provided sufficient evidence regarding the nature of the PAGA investigation to determine its adequacy. Plaintiffs state that the corporate Defendant produced a random sampling of time and payroll records for one-third of its employees, as well as wage and hour policies and relevant policy documents in place during the relevant time period. (Hui Decl. ¶ 10.) Plaintiffs state that there were approximately 36 aggrieved employees, including Plaintiffs, during the relevant period of 14 months. (Id. ¶ 14.) The Court finds that, based on this evidence, the investigation of the PAGA claims was adequate to justify a settlement.

Here, the settlement proposes to distribute $6,470.15 (representing 25% of the net Settlement Fund of $25,880.59 after enhancements of $5,000 to each of the two named Plaintiffs; attorney’s fees in the amount of $18,150, and costs of $969.41) among the 36 aggrieved parties for an average recovery of $179.73. (Hui Decl. Exh. 1 § 3.) Plaintiffs calculate, based on the number of workweeks and aggrieved parties, their hourly rates, and the theories of how the Labor Code was violated, that the settlement is approximately 15.36% of the maximum value of the claims, which has a dollar value of $358,072.92. (See Hui Decl. ¶ 13.) Applying the same distribution, not including attorney’s fees, costs, and enhancements, this would result in a net settlement fund for the aggrieved parties of $89,518.22, amounting to an average recovery of $2,486.62. 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 proposed enhancement payment to be paid to Plaintiff out of the settlement funds does not appear reasonable. Under the terms of the settlement agreement, each individual Plaintiff is to receive $5,000 from the settlement funds, amounting to 9.09% of the total settlement funds to each Plaintiff, for a combined total of 18.18%, contrasting with the 47.06% allotted to the net settlement amount and 11.76% allotted to the funds to be distributed to aggrieved employees. It is entirely inappropriate for the Plaintiffs to apportion more than 18% of the settlement funds to themselves while leaving less than 12% to be apportioned among the 36 aggrieved parties. In the Court’s view, a more appropriate enhancement would be $1,000 for each individual Plaintiff, with the remainder to be returned to the settlement fund and distributed pursuant to the terms of the settlement.

Plaintiffs’ counsel request $969.41 in costs and $18.150 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 required thorough investigation and intensive negotiations, and for which there were several potentially meritorious defenses. 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’ counsel provides itemized billing records showing that she incurred more than 100 hours of attorney time in this matter at $850 per hour. (Hui Decl. ¶ 17 Exh. 7.) Plaintiffs’ counsel has thus demonstrated that the fees sought are substantially reduced from what was actually incurred in pursuing this action. In light of this showing, the Court finds that the requested fees are reasonable based on the evidence provided.

Plaintiffs’ counsel has also accounted for the costs requested in this settlement by providing an itemized cost bill. (Id. Exh. 8.) Upon review of these records, the Court finds that this cost request is reasonable.

The release of claims included in the Settlement states that all aggrieved parties shall be deemed to have released Defendant or any related entity from “all claims, transactions, or occurrences that occurred during the PAGA period, including, but not limited to: any claims that were, or reasonably could have been, alleged based on the facts contained in the Operative Complaint and the PAGA Notice.” (Hui Decl. Exh. 1. § 5.1) This release expressly excludes only those claims pending in Plaintiff Sumaria’s separate FEHA action, case No. 23STCV26284, and Plaintiffs’ individual claims in the first through fifth causes of action in this case. (Id. § 5.1.1.) (Moon Decl. Exh. 1 §5.1.)

In the Court’s view, a release must focus solely on the extinguishment of claims for PAGA penalties for the Labor Code violations alleged in Plaintiffs’ LWDA letter against Defendant alone to be reasonable. Instead, the release, as drafted, appears to focus on the extinguishment of claims for PAGA penalties arising out of facts that could have been pled based on the operative Complaint. This language sweeps too broadly, as it goes beyond PAGA claims to encompass any Labor Code violations or other claims, not merely those claims under PAGA that could have been asserted based on the LWDA letter. The release provision must be modified to cover “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.” Thus, the parties must revise their release to limit it to the PAGA claims that the Plaintiffs were authorized to assert and settle in this action.

In light of the issues identified above, the Court cannot grant approval of the settlement at this time. Instead, the Court will order a continuance of this matter to permit the parties to revise the settlement and furnish the Court with the information specified above.

CONCLUSION:

            Accordingly, Plaintiffs’ motion for approval of settlement of her claims for civil penalties under PAGA is CONTINUED to June 27, 2025 at 9:00 AM.  Any supplemental declarations and/or a revised settlement agreement must be provided to the Court at least five court days prior to the continued hearing.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated:  April 28, 2025                                    ___________________________________

                                                                                    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.