Judge: Upinder S. Kalra, Case: 21STCV27337, Date: 2023-02-28 Tentative Ruling

Case Number: 21STCV27337    Hearing Date: February 28, 2023    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   February 28, 2023                                          

CASE NAME:           Daniel Dominguez Guzman v. National Freight Logistics LLC, et al.

CASE NO.:                21STCV27337

MOTION FOR APPROVAL OF PAGA SETTLEMENT

MOVING PARTY: Plaintiff Daniel Dominguez Guzman

RESPONDING PARTY(S): None as of February 23, 2023.

REQUESTED RELIEF:

1)      An Order and Judgment approving the parties PAGA Settlement.

TENTATIVE RULING:

1)      Motion for Approval of PAGA Settlement is GRANTED.

2)      Request for Plaintiffs’ Attorneys’ Fees Costs is GRANTED.

3)      Request for Plaintiffs Enhancement is GRANTED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On July 26, 2021, Plaintiff Daniel Dominguez Guzman (“Plaintiff”) filed a complaint against National Freight Logistics, LLC and Steve Fregoso (“Defendants.”) The complaint alleged nine causes of action based on various Labor Code violations, including, but not limited to, misclassification as independent contractor, failure to provide meal and rest periods, failure to reimburse business and expenses, and a Violation of Business & Professions Code § 17200 et seq. Plaintiff alleges that they were employed by Defendant as a full-time truck driver. During Plaintiff’s employment, if Plaintiff were to stop to rest or eat, Defendant’s dispatchers would call and order Plaintiff to continue driving. Additionally, Plaintiff alleges that during their employment, Defendant misclassified Plaintiff as an independent contractor rather than an employee.

On September 15, 2021, Defendants National Freight Logistics, LLC and Steve Fregoso each filed an Answer.

On December 27, 2022, Plaintiff filed the current Motion for Order of Approval of Private Attorneys General Act Representative Action Settlement. No Opposition has been filed as of February 23, 2023.

LEGAL STANDARD:

Under Labor Code section 2699(l)(2): “The superior court shall review and approve any settlement of any civil action filed pursuant to this part. The proposed settlement shall be submitted to the agency at the same time that it is submitted to the court.”  (Lab. Code. §2699(l)(2); see Williams v. Superior Court (2017) 3 Cal.5th 531, 549 [noting in passing that “PAGA settlements are subject to trial court review and approval, ensuring that any negotiated resolution is fair to those affected.”].) 

“[N]either the California legislature, nor the California Supreme Court, nor the California Courts of Appeal, nor the [LWDA] has provided any definitive answer as to what the appropriate standard is for approval of a PAGA settlement.” (Haralson v. U.S. Aviation Services Corp. (N.D. Cal. 2019) 383 F.Supp.3d 959, 971].) “In commenting on a proposed PAGA settlement, the LWDA has offered only this guidance:  It is thus important that when a PAGA claim is settled, the relief provided for under the PAGA be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public and, in the context of a class action, the court evaluate whether the settlement meets the standards of being ‘fundamentally fair, reasonable, and adequate’ with reference to the public policies underlying the PAGA.”  (Id.; see also Flores v. Starwood Hotels & Resorts Worldwide, Inc. (C.D. Cal. 2017) 253 F.Supp.3d 1074, 1077 [federal district court approved PAGA settlement where court was satisfied that the parties' settlement was “fair and adequate in view of the purposes and policies of the statute” and the parties “adequately divvied up the civil penalties under Section 2699(i) of the California Labor Code.”]; Nordstrom Com. Cases (2010) 186 Cal.App.4th 576, 589 [a court may exercise its discretion to approve a settlement of a suit that includes a PAGA claim even if no portion of the settlement is allocated toward payment to the LWDA].)  

ANALYSIS:

            Plaintiff Daniel Dominguez Guzman moves the court to approve the proposed settlement claims pursuant to the Private Attorneys General Act. The potential aggrieved employees total 121. (Nader Dec. ¶ 13.)

Terms of the Settlement:

·         Gross Settlement Amount: $254,125

·         Attorneys’ Fees: $83,961.25

·         Litigation Costs: $5,119.35

·         Incentive Award: $10,000

·         Settlement Administration Costs: $5,500

·         Net Settlement Amount/Gross Penalty Amount: $149,644.40

·         Estimated Payments to PAGA eligible employees: $37,411.10

·         Estimated Payment to LWDA – 75% of PAGA Penalties: $112,233.30

Based on these numbers, the aggrieved employees, totaling 121, would each receive approximately $43 dollars. (Dec. Nader ¶ 16.)

1.      Requirement to Send Agency a Copy of Proposed Settlement

“The proposed settlement shall be submitted to the agency at the same time that it is submitted to the court.” (Lab. Code § 2699, subd. (l)(2).) The Declaration of Rana Nader indicates that on December 27, 2022, the Settlement Agreement was submitted to the LWDA. (Dec. Nader ¶ 25, Ex. H.)

2.      Fairness, Reasonableness, and Adequacy of PAGA Settlement

“PAGA settlements are subject to trial court review and approval, ensuring that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549, citing Lab. Code § 2699, subd. (l)(2).) The trial court must determine that the settlement is fair, reasonable, and adequate to all concerned. (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 332, 337.)

There is a presumption that the settlement agreement is fair where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the trial court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small. (Reed, 208 Cal.App.4th at 337.) This standard applies in the context of class actions and qui tam actions alike. (See Gov. Code § 12652, subd. (e)(2) [in qui tam action, a state or political subdivision may settle the action with the defendant despite 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]; see also Iskanian v. CLS Transportation Los Angeles LLC (2014) 59 Cal.4th 348, 382 [a PAGA representative action is a type of qui tam action].)

Penalties recovered by aggrieved employees must be distributed as follows: 75% to the LWDA and 25% to the aggrieved employees. (Lab. Code § 2699, subd. (i).) However, civil penalties recovered under section 558, subdivision (a)(3) shall be paid to the affected employee. A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action. (Lab. Code § 2699, subd. (g)(1).)

Even once the presumption of fairness has been established, the court bears the responsibility to ensure the recovery under the settlement agreement represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129.)

The various factors that courts use to determine if a settlement should be approved indicate that this settlement is fair. First, the parties participated in mediation with mediator Angela J. Reddock-Wright. After negotiations during that mediation, the parties were able to reach a settlement. (Dec. Nader ¶ 15-16.)

Another factor is whether the settlement was a fair and reasonable compromise of the claims. Defendant consistently maintained that they did not misclassify their drivers where Plaintiff’s counsel calculated a potential PAGA exposure penalty of over $580,000. Additionally, the parties conducted formal discovery and have sufficient information to make an “informed decision.” (Motion 15: 16-18.)

Additionally, the settlement serves the purposes of PAGA. The reached settlement adequately punishes Defendants for past violations and the LWDA will recover over $110,000 in civil penalties based on various Labor Code violations. Additionally,

The above factors indicate that this settlement agreement is fair and reasonable. Plaintiff alleged various Labor Code violations, which Defendant denied. After discovery and a mediation, the parties agreed on the gross settlement fund. Further, there is always risk with further litigation. The settlement considers both the strengths and weaknesses of both sides’ arguments.

The above factors indicate that the settlement agreement is fair and reasonable.

3.      Attorney’s Fees and Litigation Costs

The award of attorney fees is made by the court at the fairness hearing using the lodestar method with a multiplier, if appropriate.  (Ketchum III v. Moses (2000) 24 Cal.4th 1122, 1132-36.)  Despite any agreement by the parties to the contrary, the court has an independent responsibility to review the attorney fee provision of the settlement agreement and award an amount that it determines to be reasonable.  (Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 128.) 

Here, Plaintiff seeks $83,961.25 from the Gross Settlement Fund. The lodestar, based on 188.70 hours of work for this case with counsel rates of $700 per hour would have been $132,090, but Plaintiff is requesting less than the lodestar. (Dec. Nader ¶ 19.)

This amount is 33% of the Settlement Fund. The Court finds that this requested amount is reasonable. The percentage, 33.3%, is within the range found to be reasonable. (See Vasquez v. Coast Valley Roofing, Inc. (E.D. Cal. 2010) 266 F.R.D. 482, 491, “The typical range of acceptable attorneys' fees in the Ninth Circuit is 20% to 33 1/3% of the total settlement value, with 25% considered the benchmark.”) Additionally, the hourly rates of $700 is within the range for attorneys with similar years of experience, over 15 years of experience for both Hengameh Safaei and Rana Nader. (Nader Dec. ¶ 2, 19.)

Further, the Settlement Agreement provides reimbursement for costs not to exceed $10,000. (Settlement 3.2.1.) Here, the costs incurred is $5,119.35. The costs are attached to the Nader Declaration, as Exhibit F.

As such, the Court finds these fees to be reasonable.

4.      Incentive Enhancement

Plaintiff requests a service award of $10,000 to Plaintiff. This is requested based on Plaintiff’s time and efforts in prosecuting this matter. Plaintiff made significant “contributions in furtherance of the action, responding to Defendants’ discovery requests, gathering important data and providing valuable factual information, responding to inquiries regarding Defendants’ contentions, and engaging in repeated communications with counsel.” (Motion 10; 18-25; Dominguez Dec. ¶¶ 4-10, Nader Dec. ¶ 20.)

Based on the Motion and Declaration, the enhancement award of $10,000 is reasonable.

Conclusion:

            For the foregoing reasons, the Court decides the pending motion as follows:

1)      Motion for Approval of PAGA Settlement is GRANTED.

2)      Request for Plaintiffs’ Attorneys’ Fees Costs is GRANTED.

3)      Request for Plaintiffs Enhancement is GRANTED.

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             February 28, 2023                   __________________________________                                                                                                                Upinder S. Kalra

                                                                                    Judge of the Superior Court