Judge: Thomas D. Long, Case: 21STCV24001, Date: 2024-01-18 Tentative Ruling

Case Number: 21STCV24001    Hearing Date: January 18, 2024    Dept: 48

SUPERIOR COURT OF THE STATE OF CALIFORNIA  

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT 

BACKGROUND

On June 28, 2021, Plaintiff Cornelio Pacheco (“Plaintiff”) filed this action against Defendant Pandro Sokolow Construction, Inc. (“Defendant”) 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 Gross Settlement Amount of $42,500.00.  Of that amount, up to $14,166.66 (33%) will be paid as PAGA Counsel Fees, up to $6,307.93 will be paid as PAGA Counsel Litigation Expenses, up to $3,000.00 will be paid as Administrator Expenses Payment, and $19,025.41 will be paid as PAGA Penalties (75% or $14,269.06 allocated to the LWDA PAGA Payment and 25% or $4,756.35 allocated to Individual PAGA Payments).  (Kevin Mahoney Declaration (“Mahoney Decl.”), Ex. A at p. 4, ¶¶ 3.1-3.2.3.) 

DISCUSSION

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 Has Provided Notice of the Settlement to LWDA. 

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 submitted to LWDA on December 21, 2023.  (Mahoney Decl., ¶ 25 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”].) 

Here, the parties conducted mediation with Mark LeHocky on November 22, 2022; the parties did not resolve the matter at mediation, but the parties continued arm’s length negotiations resulting in the settlement.  (Mahoney Decl., ¶ 5.)  Counsel states: “Prior to mediation, the Parties engaged in discussions of the claims, evidence and defenses. Plaintiff and his counsel had sufficient information prior to mediation to evaluate the potential strengths and weaknesses of the claims and defenses in the action.  During the mediation, the Parties, through the mediator, continued to discuss and evaluate all aspects of the case, including the risks and delays of further litigation, the risks to the Parties of proceeding with trial, the law relating to representative PAGA actions, wage-and-hour enforcement, the evidence produced and analyzed, and the risks of trial and appeals, among other things.”  (Id.)  The settlement was therefore reached through arm’s-length bargaining with sufficient investigation to allow counsel and the Court to act intelligently. 

Counsel further states that the settlement of $42,500.00 represents approximately 200% of the estimated potential first penalties that could be assessed in Plaintiff’s view.  (Id. at ¶  12.)  Counsel also presents evidence of significant experience in wage-and-hour litigation, almost entirely in class and representative actions.  (Id. at  ¶¶ 26-27.)  Counsel is therefore experienced in similar litigation. 

In sum, the Court finds that the settlement is entitled to a presumption of fairness. 

C.        The Release Requires Explanation as to Plaintiff’s Release.

Through the settlement agreement, Plaintiff releases all of his claims against Defendant, including the rights and benefits of Civil Code section 1542; the release is not effective until the Gross Settlement Amount has been funded and distributed.  (Id. at Ex. A at pp. 6-7, ¶ 5.1.)  The Court notes, however, that the release extends to Plaintiff and “his or her respective former and present spouses.”  The Court would like to hear how it would be proper for Plaintiff’s Release to extend to former and present spouses.

Plaintiff also releases, on behalf of all aggrieved employees, “from all claims for PAGA penalties that were alleged, or reasonably could have been alleged, based on the PAGA Period facts stated in the Operative Complaint, and the PAGA Notice”; the release is not effective until the Gross Settlement Amount has been funded and distributed.  (Id. at  Ex. A at p. 7, ¶ 5.3.) 

This release is limited to claims PAGA penalties that arise from or relate to allegations in Plaintiff’s Operative 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 33% of the Gross Settlement Amount for attorney fees ($14,166.66) and up to $6,307.93 in costs and expenses from the Gross Settlement Amount.  (Mahoney Decl., Ex. A at p. 4, ¶ 3.2.1.)  Counsel states in his declaration that 38 hours were spent on this case, totaling $24,009.50 at counsel’s respective hourly rates.  (Id. at  ¶ 15; Ex. F.)  Counsel’s lodestar exceeds the requested attorney fee of 1/3 or $14,166.66 of the Gross Settlement Amount.  The Court finds that the 1/3 requested is reasonable in light of the hours expended, the experience and ability of counsel, and results achieved. 

E.        Unclear Whether Representative Enhancement is Requested.

The motion provides that “a common fund was created from which will be paid…the representative enhancement.”  (Motion at p. 15.)  The Court does not find any other mention of the representative enhancement in the moving papers.  The Court asks Plaintiff to clarify whether there is a representative enhancement. 

CONCLUSION

The motion for approval of PAGA settlement is DENIED without prejudice so that Plaintiff can (1) explain why it would be proper for Plaintiff’s release to extend to former and present spouses; and (2) clarify whether a representative enhancement is requested.  Also, the Settlement Agreement attached to attorney Mahoney’s declaration is not signed by Plaintiff’s counsel.  Any future revised copies must be fully executed by all parties and counsel before the Court can grant approval.

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 18th day of January 2024