Judge: Theresa M. Traber, Case: 23STCV30385, Date: 2025-06-11 Tentative Ruling
Case Number: 23STCV30385 Hearing Date: June 11, 2025 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: June 11, 2025 TRIAL
DATE: NOT SET
CASE: Daolynn Sibounheuang v. Soft Gel
Technologies, Inc.
CASE NO.: 23STCV30385 
MOTION
FOR APPROVAL OF PAGA SETTLEMENT
MOVING PARTY: Plaintiff Daolynn Sibounheuang
RESPONDING PARTY(S): No response on
eCourt as of 06/06/25
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is a PAGA action that was filed on December 13, 2023. Plaintiff
alleges that Defendant has systematically underpaid its employees.
Plaintiff moves for approval of a
proposed settlement agreement.
TENTATIVE RULING:
Plaintiff’s motion for approval
of settlement of her claims for civil penalties under PAGA is CONTINUED to July
11, 2025 at 9:00 AM.
DISCUSSION:
Plaintiff moves for approval of a
proposed settlement agreement in which Defendant will pay $105,000 to settle
all claims.
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 C.E.
Kimberly Lind ISO Mot Exh. C.) 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. E.) Plaintiff has also
provided a copy of the predicate letter sent to the LWDA before filing suit. (Id.
Exh. B.) Plaintiff has 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, 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
and then participating in mediation with mediator Paul Miner. on December 3,
2024, resulting in this settlement. (Lind Decl. ¶¶ 21-22.) Plaintiff’s counsel
has also provided evidence of their substantial experience in wage and hour
litigation and in PAGA actions. (Id. ¶¶ 27-36.)
Further, Plaintiff has offered sufficient evidence regarding the
nature of the PAGA investigation to demonstrate its adequacy. Plaintiff states
that the corporate Defendant produced a random sampling of time and payroll
records for 25 of its employees, as well as wage and hour policies and relevant
policy documents in place during the relevant time period. (Lind Decl. ¶ 14.)
Plaintiff states that there were approximately 98 aggrieved employees,
including Plaintiff, during the relevant time period for a total of 8,711 pay
periods. (Id. ¶ 16.) Plaintiff calculates the maximum potential exposure
for Defendant to be $3,968,950. (Id.) The Court finds that, based on
this evidence, the investigation of the PAGA claims was adequate to justify a
settlement.
Here, Plaintiff proposes the gross settlement of $105,000 be
distributed by allocating $42,000 (or 40 percent) to attorney’s fees, $10,000
for an enhancement for Plaintiff, $2,850 in administration costs to be paid to
ILYM Group, and $7,619.37 in litigation costs, leaving a net Settlement Fund of
$42,530.63. After allotting 75 percent of the net Settlement Fund to the LWDA, a
remainder of $10,632.66 is to be distributed to the 98 aggrieved parties for an
average recovery of $108.50. (Lind Decl. ¶ 24.) Applying the same distribution,
not including attorney’s fees, costs, and enhancements, to the maximum
potential liability of Defendant, this would result in a net settlement fund
for the aggrieved parties of $992,237.50, amounting to an average recovery of $10,124.87.
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, Plaintiff is to receive $10,000 from the settlement funds, amounting
to 9.52% of the total settlement funds to Plaintiff, contrasting with the 40.5%
allotted to the net settlement amount and 10.12% allotted to the funds to be
distributed to aggrieved employees. It is inappropriate for Plaintiff to receive
an amount nearly equivalent to the entire share for all aggrieved parties. In
the Court’s view, a more appropriate enhancement would be $5,000 for
Plaintiff’s enhancement, with the remainder to be returned to the settlement
fund and distributed pursuant to the terms of the settlement.
Plaintiff’s counsel requests $7,619.37 in costs and $42,000.00 in
attorneys’ fees be paid out of the 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 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’s counsel provides
itemized billing records showing that she incurred more than 180 hours of
attorney time and law clerk time in this matter at hours ranging from $175 to
$500. (Lind Decl. ¶¶ 36, 46; Exh. F.) Plaintiff’s counsel has thus demonstrated
that the fees sought are substantially reduced from what was actually incurred
in pursuing this action. Given this showing, the Court finds that the requested
fees are reasonable based on the evidence provided.
Plaintiff’s counsel has also accounted for the costs requested in this
settlement by providing an itemized cost bill. (Id. Exh. G.) 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 Notices.” (Lind Decl. Exh. C. § 65.1)
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 Plaintiff’s 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,
Plaintiff’s motion for approval of settlement of her claims for civil penalties
under PAGA is CONTINUED to July 11, 2025, at 9:00 AM.
Moving
Parties to give notice.
IT IS SO ORDERED.
Dated: June 11, 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.