Judge: William D. Claster, Case: 21-01225463, Date: 2022-10-28 Tentative Ruling
1. Defendant Nexgen Air
Conditioning and Heating, Inc.'s Notice of Motion and Motion to Enforce
Settlement Pursuant to CCP Section 664.6 ROA 43
2. Status Conference
Defendant NexGen Air Conditioning and Heating, Inc. moves to enforce a settlement agreement with Plaintiff Ruben Tamayo pursuant to CCP § 664.6. The Court will GRANT this motion, conditioned on Defendant confirming on the record at the hearing that granting this motion will not affect the ability of other employees or the State of California to pursue claims for civil penalties based on the acts Plaintiff complains of.
Defendant’s request for judicial notice is GRANTED.
I. Background
A. Procedural History
Plaintiff, represented by the Kingsley firm, filed this case in October 2021. (ROA 2.) It was originally a class action, with claims for meal breaks, rest breaks, reimbursement, wage statements, waiting time, and UCL. In December 2021, Plaintiff amended his complaint to add a PAGA claim. (ROA 12.) The FAC is the operative complaint.
In January 2022, Plaintiff sent Defendant a demand of $105,000 to settle his claims. This email was sent by different counsel, the Abramson firm. (Klepper Decl., ¶ 3 & Ex. 2.) Negotiations continued for several months, and on April 19, 2022, Plaintiff (through the Abramson firm) and Defendant agreed to settle for $20,000. (Id., ¶ 4 & Ex. 3.) The parties went through several rounds of edits to the settlement agreement. (Id., ¶¶ 5-6 & Exs. 4-5.) The settlement agreement was fully executed by May 3, 2022. (Id., Ex. 1.) It appears the Kingsley firm had no involvement in any of this.
Three days later, on May 6, Defendant’s counsel contacted the Kingsley firm asking Plaintiff to dismiss his individual claims and consent to being removed as the class and PAGA representative. The Kingsley firm took the position this wouldn’t affect the PAGA claim. (Id., ¶ 7 & Ex. 6.) On May 13, 2022, the Kingsley firm agreed Plaintiff would dismiss his individual and class claims, but argued that under Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, his PAGA claim was unaffected. (Id., ¶ 8.)
Defendant filed this motion on August 5, 2022. On August 10, Plaintiff requested dismissal of his class claims. The Court granted this request on August 12. (ROA 57.)
B. Relevant Portions of Agreement
Defendant agreed to pay Plaintiff $20,000 in three separate checks. Defendant’s human resources manager, Rey Garcia, declares that Defendant made the payments required. He attaches canceled copies of the checks to his declaration. (Garcia Decl., Ex. 8.) Plaintiff does not dispute receipt of the payments.
In exchange for the payment, Plaintiff gave a general release with a Civil Code § 1542 waiver. (See Klepper Decl., Ex. 1, ¶¶ 3-4.) The general release expressly covers claims under “the California Labor Code (including claims for civil penalties thereunder).” (Id., Ex. 1, at ¶ 3.) The agreement also includes a covenant not to sue that provides:
Tamayo agrees not to institute or participate in any administrative proceeding, suit, or action, at law or in equity, against the Releasees arising out of or relating to any claim released in this Agreement. Tamayo agrees to take all actions necessary to cause any pending proceeding, suit, or action relating to any claims released by this Agreement to be promptly dismissed in its entirety as to Tamayo, with prejudice and without costs or fees. (Id., Ex. 1, at ¶ 8.)
Finally, “Tamayo expressly denies that he suffered any violations under the Labor Code in connection with his employment at NexGen.” (Id., Ex. 1, at ¶ 10.)
II. Discussion
“If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court . . . for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement.” (CCP § 664.6.) Defendant asks the Court to dismiss Plaintiff’s PAGA claim pursuant to the terms of the settlement.
The PAGA claim falls within the language of the release, and as a result it falls within the covenant not to sue. Absent some reason to the contrary, the PAGA claim must be dismissed.
A. Kim v. Reins
Plaintiff first argues that Kim, supra, bars dismissal of the PAGA claim. The Court disagrees for two reasons. First, Plaintiff argues that settlement of his individual claims does not strip him of aggrieved employee status or PAGA standing. As that case explains: “The Legislature defined PAGA standing in terms of violations, not injury. Kim became an aggrieved employee, and had PAGA standing, when one or more Labor Code violations were committed against him. (Citation.) Settlement did not nullify these violations.” (Kim, supra, 9 Cal.5th at p. 84.)
But as Defendant points out, the settlement agreement in this case was different from the CCP § 998 offer in Kim. In that case, Reins moved to compel arbitration of Kim’s individual claims. The trial court granted the motion and stayed Kim’s PAGA claim. (Id., at p. 82.) While the case was pending before the arbitrator, Reins issued a 998 offer: $20,000 plus fees and costs in exchange for Plaintiff “dismiss[ing], with prejudice, his individual claims against Reins in their entirety.” (Klepper Decl., Ex. 9, at internal page 83.) Kim returned an acceptance agreeing to “dismiss, with prejudice, his individual claims against Reins in their entirety.” (Id., at internal page 85.)
Here, on the other hand, the release covers claims under “the California Labor Code (including claims for civil penalties thereunder),” and the covenant not to sue requires Plaintiff to dismiss any pending lawsuit involving “claims released by this Agreement.” Plaintiff agreed to dismiss any pending PAGA claim, unlike Kim. As a result, the Court need not reach the question of whether Plaintiff has standing: even if he does, he agreed to dismiss his claim.
Second, if the Court needs to reach the issue of standing, then Plaintiff lacks standing under Kim. It holds that an employee gains PAGA standing when one or more Labor Code violations are committed against him. In the settlement agreement, Plaintiff expressly denied he had suffered any Labor Code violations during his employment. This deprives Plaintiff of PAGA standing.
B. Ineffectiveness of Waivers
Relying on Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, Plaintiff contends an employee’s right to bring a PAGA action is unwaivable, and any such waiver is contrary to public policy. (Id., at p. 383.) The question presented in Iskanian was whether a predispute PAGA waiver was enforceable. This case concerns a postdispute waiver. The distinction matters, because case law recognizes “the boundary between an unenforceable predispute waiver and an enforceable postdispute waiver.” (Julian v. Glenair, Inc. (2017) 17 Cal.App.5th 853, 870.) Under Julian, posdispute waivers like the one here may be enforced.
C. Public Policy
Finally, Plaintiff argues it would be contrary to public policy to allow employers to “pick off” PAGA plaintiffs with individual settlements that would bind the State and the aggrieved employees. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 985 [“[T]he judgment in such an action is binding not only on the named employee plaintiff but also on government agencies and any aggrieved employee not a party to the proceeding.”].) Here, the Court believes Plaintiff has a point. If Defendant expects this settlement to have a binding effect on the State and the aggrieved employees, then the settlement must be approved by the Court under the standards set forth in Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56. Of course, no approval motion has been filed, only a motion to enforce the agreement. The Court will not permit Defendant to achieve through this motion what can only be achieved through a motion for settlement approval.
At page 4 of its reply, Defendant appears to concede this settlement would not bind the State or the aggrieved employees: “The State of California may freely pursue a PAGA action on behalf of aggrieved employees if it so chooses, and any other employee may do likewise if they otherwise meet PAGA’s standing requirements. Plaintiff’s settlement only affects PAGA claims relating to him and precludes his ability to continue to assert claims against NexGen (as the state’s representative under PAGA or otherwise).” Accordingly, provided Defendant confirms on the record at the hearing that dismissal of Plaintiff’s PAGA claim will not bind the State or the other aggrieved employees, the Court will grant Defendants’ motion.