SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

DARA McCLELLAN, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

BRADLEY CHIBOS; LORI KAY STOUT; GLYN STOUT; LUPIN HEIGHTS, INC.; MICHAEL FJELSTAD; CHARLIE PERKINS; and DOES 1 through 100, inclusive,

Defendants.
Case No. 2015-1-CV-286902

TENTATIVE RULING RE: MOTION TO APPROVE SETTLEMENT UNDER THE PRIVATE ATTORNEY GENERAL ACT OF 2004

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on August 31, 2018, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

This is a putative class action. According to the allegations of the First Amended Class Action Complaint (“FAC”), plaintiff Dara McClellan has been an employee of Lupin Lodge since August 2007. (FAC, p. 3:15-18.) Defendants are comprised of members of the Advisory Board of Lupin Lodge, the proprietors of Lupin Lodge, and Lupin Heights, Inc., a California corporation (collectively, “Defendants”). (Id. at pp. 3:19-4:11.)

Lupin Lodge is in the hospitality business. It sells resort memberships, and provides a resort style hotel and dining room for members of the public and its own membership. (FAC, p. 5:17-21.) Lupin Lodge occupies a 110 acre lot in a remote area in the City of Los Gatos. (Id. at p. 5:21-22.) Because of its remote location, most workers live at the resort and are provided meals. (Id. at p. 22-23.)

Plaintiff alleges Defendants engaged in various Labor Code violations. (FAC, p. 2:12-25.) The FAC sets forth the following causes of action: (1) Failure to Pay Overtime Wages; (2) Failure to Pay Minimum Wages; (3) Failure to Provide Meal and Rest Breaks; (4) Failure to Reimburse Business Related Expenses; (5) Failure to Provide Accurate Wage Statements; (6) Waiting Time Penalties; (7) Breach of Implied Warranty of Habitability; (8) Violation of Employee Housing Act – Health and Safety Code § 17001, et seq.; (9) Violation of Health and Safety Code § 17031.5; (10) Nuisance in Violation of California Civil Code § 3479; (11) Breach of Lease Agreement; (12) Negligence; (13) Unfair Competition; (14) Declaratory Relief; and (15) Penalties and Wages for Labor Code Violations Pursuant to Labor Code §§ 2698, et seq. and 558).

On October 2, 2017, the Court denied Plaintiff’s motion for class certification. The parties have now reached a settlement. Plaintiff moves for approval of the settlement with regard to penalty claims under the California Private Attorneys General Act (California Labor Code section 2698, et seq.) (“PAGA”).

II. DISCUSSION

Following mediation, the parties have settled for a total amount of $44,000, payable as a $20,000 lump sum payment and payments of $400 a month over 60 months. Out of the settlement, $800 is being allocated to the PAGA claim.

Plaintiff asserts the potential PAGA recovery in this case is $1,256,550. Plaintiff states the potential recovery for the individual claims is $100,869.79. In addition, Plaintiff asserts her counsel has expended $8,000 in costs and billed $200,000 in legal fees.

Plaintiff acknowledges the amount allocated to the PAGA claim is very small, but contends public policy weighs in favor of providing Plaintiff with a higher individual settlement amount. Plaintiff states she has not been paid wages for eight years and is now homeless living with her son and daughter in a recreational vehicle. Plaintiff argues approval of the settlement will further the public policy goals of protecting workers, lessening the need for society to provide a social safety net to workers, and ensuring that competing businesses are not at economic disadvantage because of exploitation. Plaintiff’s counsel states the case settled primarily based on concerns that any judgment obtained would be uncollectable. (Declaration of Tomas E. Margain in Support of Plaintiff’s Motion to Approve PAGA Settlement at Fairness Hearing, ¶¶ 17-19.)

The Court recognizes that the amount of the settlement allocated to the PAGA claim is extremely small. It would normally not qualify for approval. Nevertheless, there are a number of factors in this case that weigh in favor of approval of the settlement. Notably, the apparent difficulty of collecting on a judgment means that a settlement is a highly preferable outcome because it allows for some recovery by Plaintiff. Moreover, Plaintiff is settling the case for a significantly reduced amount in light of the fact that she was purportedly not paid wages for eight years.

Ultimately, the Court finds the unique circumstances of this case warrant approval of the settlement. Accordingly, Plaintiff’s motion is GRANTED.

The Court will prepare the final order if this tentative ruling is not contested.

NOTICE: The Court does not provide court reporters for proceedings in the complex civil litigation departments. Parties may arrange for a private court reporter to provide services, but those arrangements must be consistent with the local rules and policies posted on the Court’s website.