Judge: Thomas D. Long, Case: 19STCV41220, Date: 2023-07-20 Tentative Ruling

Case Number: 19STCV41220    Hearing Date: July 20, 2023    Dept: 48

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

On November 15, 2019, Plaintiff Lymayre Sanchez filed this action against Defendant Kava Holdings, LLC for penalties under the Private Attorney General Act (“PAGA”).

The parties have agreed on the terms of a settlement.  Under the proposed settlement, Defendant will pay a total of $195,000.00.  Of that amount, up to $65,000.00 will be paid as attorney fees, $6,321.01 will be paid as costs, up to $6,689 will be paid to a settlement administrator, and $15,000.00 will be paid to Plaintiff.  Of the remaining amount, 75-percent ($76,492.49) will be paid to the Labor and Workforce Development Agency (“LWDA”) and 25-percent ($25,497.50) will paid to the aggrieved employees on a pro rata basis, based on the number of pay periods each employee worked for Defendant during the covered period. 

A court must review and approve any penalties sought as part of a proposed settlement agreement pursuant to Labor Code section 2699.  (Lab. Code, § 2699, subd. (l).)  “[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws and 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 25 percent to the aggrieved employees.”  (Lab. Code, § 2699, subd. (i).)

A.        Plaintiff Gave Notice to LWDA of the Settlement.

A proposed PAGA settlement must be submitted to LWDA at the same time that it is submitted to the court for review and approval.  (Lab. Code, § 2699, subd. (l)(2).)  Counsel declares the settlement agreement has already been served on LWDA, and the motion was also served on it.  (Adams Decl. ¶ 32 & Ex. D.)

Accordingly, the Court finds that this requirement is satisfied.

B.        The Settlement is Entitled to a Presumption of Fairness.

A presumption of fairness¿for a settlement agreement 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 final factor does not apply to PAGA.  (See Arias v. Superior Court (2009) 46 Cal.4th 969, 984 [representative actions under PAGA do not violate the due process rights of “nonparty aggrieved employees who are not given notice of, and an opportunity to be heard”].)

The parties participated in a full-day mediation before neutral mediator Chris Barnes on May 10, 2022.  (Adams Decl. ¶ 19.)  They did not reach a settlement that day, but “after continued litigation and settlement negotiations,” the parties accepted a mediator’s proposal.  (Adams Decl. ¶ 19.)  The settlement was therefore reached through arm’s-length bargaining.

Prior to litigation, Defendant produced Plaintiff’s personnel files and wage statements, and in anticipation to mediation, Defendant produced information about its policies, time records, job descriptions, and number of employees.  (Adams Decl. ¶ 17.)  Plaintiff’s counsel used this information to analyze the merits of the case and the damages.  (Adams Decl. ¶ 18.)  Accordingly, there was sufficient investigation to allow counsel and the Court to act intelligently.

Plaintiff’s counsel has significant experience labor and employment disputes, including those involving wage-and-hour violations (individual and class action).  (Adams Decl. ¶¶ 5-9.)  Counsel is therefore experienced in similar litigation.

The Court finds that the settlement is entitled to a presumption of fairness.

C.        The Release is Permissible.

Through the settlement agreement, Plaintiff waives the benefits of Civil Code section 1542.  (Adams Decl., Ex. A, § III(4).)

Plaintiff also releases, on behalf of herself and all aggrieved employees, “any and all PAGA Released Claims defined in Section I.20 herein or claims that could have reasonably could have been alleged, based on the PAGA Period facts stated in the Operative Complaint and the PAGA Notice.  This release of claims only covers those civil penalties which are recoverable under PAGA, and does not otherwise cover individual, underlying claims or causes of action that Aggrieved Employees may have under the law against Released Parties for violations of the California Labor Code.”  (Adams Decl., Ex. A, § III(5).)

This release is limited to claims for civil penalties that arise from or relate to allegations in Plaintiff’s PAGA letter or Complaint in this action, and it is permissible.

D.        The Attorney Fees and Costs are Reasonable.

A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action.  (Lab. Code, § 2699, subd. (g)(1).)  Plaintiff’s counsel will receive up to $65,000.00 in attorney fees and $6,321.01 in costs from the Gross Settlement Amount of $195,000.00.

Counsel declares that the thirty-three percent attorney fees award is less than the actual invoiced attorney fees of $106,666.67.  (See Adams Decl. ¶ 26 & Ex. C.)  Based on the total settlement, type of case, and complexity of the case, the Court concludes that $65,000.00 is a reasonable amount of attorney fees and $6,321.01 is a reasonable amount of costs.

E.        Conclusion

The motion for approval of PAGA settlement is GRANTED.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit.  If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

         Dated this 20th day of July 2023