2017-00222509-CU-OE

Daniel Lange vs. Central Valley Diner, Inc.

Nature of Proceeding: Motion for an Order Approving Settlement

Filed By: Gaines, Daniel F.

Plaintiff Daniel Lange’s(“Plaintiff”) motion for an order approving settlement of the claims brought pursuant to the Private Attorney General Act (“PAGA”) and dismissing action with prejudice is UNOPPOSED and is GRANTED.

Plaintiff was employed by defendant Central Valley Diner, Inc. (“Defendant”), which operates Denny’s restaurants throughout Northern California, from October 2016 through August 2017 as a non-exempt employee.

Plaintiff filed his action on November 20, 2017, alleging a single claim under the California Labor Code Private Attorneys General Act of 2004 (“PAGA”). Plaintiff asserts claims for failure to provide legally complaint meal and rest periods, failure to issue complete wage statements, failure to pay all wages due and owing upon separation of employment, and failure to issue wages by an instrument payable on demand without discount. Plaintiff asserts these claim sunder PAGA, seeking civil penalties for the alleged Labor Code violations.

Defendant denies all of Plaintiffs’ allegations, but the parties engaged in informal and formal discovery and mediation before Jeff Krivis on May 4, 2018, which resulted in the instant settlement reached through negotiations in the weeks following the mediation with the assistance of the mediator.

PAGA permits an aggrieved employee in a civil action to recover any penalty authorized by any provision of the Labor Code. (Lab. Code § 2699.) Settlement of PAGA claims requires Court approval. Labor Code section 2699(l)(2) provides that “[t] he superior court shall review and approve any settlement of any civil action pursuant to this part.” However, unlike a class action, aggrieved employees need not be given notice of a PAGA claim given it is fundamentally a law enforcement action to recover penalties. (E.g., Ochoa-Hernandez v. CJADERS Foods, Inc. (N.D.Cal. April 2, 2010) U.S.Dist.LEXIS 32774, *12; Arias v. Superior Court (2009) 46 Cal.4th 969.) This negates the need to do the two-step preliminary and final approval which is required for a class action settlement. In addition, a release in a PAGA action is limited solely to the penalties alleged in the complaint and any unnamed aggrieved employee is not bound by any judgment as to any remedy other than the PAGA civil penalties. (Arias v. Superior Court (2009) 46 Cal.4th 969, 987.)

Analogizing to the class action context, the trial court has broad powers to determine whether a proposed settlement is fair. (Rebney v. Wells Fargo Bank (1990) 220 Cal.App.3rd 1117, 1138.) The focus on a PAGA settlement is the total settlement amount, not the amount that an aggrieved employee receives, given that the remedy is a civil penalty, not individual or class damages. (Mendez v. Tween Brands, Inc. (E.D.Cal. June 30, 2010) 2010 U.S. Dist. LEXIS 66454, *11.)

The law favors settlement, particularly in class actions and other complex cases where substantial resources can be conserved by avoiding the time, cost, and rigors of formal litigation. (See Newberg on Class Actions 4th (4th ed. 2002) § 11.41 (and cases cited therein); Class Plaintiffs v. City of Seattle (9th Cir. 1992) 955 F.2d 1268, 1276.)

The Court here is guided by the same principle applicable in class actions that, the Court must “satisfy itself that the class settlement is within the ‘ballpark’ of reasonableness.” (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 133.) In making its fairness determination, the Court should consider the relevant factors, such as the strength of the Plaintiffs’ case, the risk, expenses, complexity and likely duration of further litigation, the risk further litigation, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, and the experience and views of counsel. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801.)

With these principles in mind, the Court finds that the PAGA settlement is entitled to be approved. The settlement agreements provides Defendant will pay a total amount of Two Hundred Fifty Thousand Dollars ($250,000.00). (Settlement Agreement ¶ 3.02.) Of that amount, $110,000 will be distributed as attorneys’ fees and costs [as held by the U.S. Supreme Court, “a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” (See Boeing Co. v. Van Gemert (1980) 444 U.S. 472, 478.) ], up to $7,500 as costs of administration, $7,500 as an enhancement award to Plaintiff. A named plaintiff’s “willingness to act as a private attorney general” can justify an award of an incentive payment. (Rodriguez v. West Publishing Corp. (9th Cir. 2009) 563 F.3d 948, 959.) Of the remaining $125,000, 75%, or $93,750 will be distributed to the LWDA and the remaining 25%, or $31,250, will be distributed to the approximately 1,100 aggrieved employees. (Settlement Agreement ¶ 3.02.) The payment to the 1,100 aggrieved employees will be distributed pro rata based on the number of pay periods worked by each during the relevant release period. A rough estimation is each aggrieved employee will receive about $28. (Gaines Decl. at ¶ 23.)

Here, the Court finds that the settlement is entitled to approval. The settlement was the product of arms-length negotiations following a mediation and with the assistance of the mediatory, and was negotiated by counsel with significant experience in wage and hour litigation and occurred after counsel conducted information and formal discovery to evaluate the strength and potential value of the PAGA claims and risks of litigating through trial. (Gaines Decl. ¶¶ 2-7, 13-15, 17, 20, 40-43.) Further, the settlement provides value to the aggrieved employees as it provides them with monetary compensation in a manner approximately commensurate with the potential value of their individual claims in light of the risks of continued litigation. In addition, Plaintiff submitted the proposed settlement to the Labor and Workforce Development Agency at the same time it was presented to the Court as required by Labor Code § 2699(l)(2). (Gaines Decl. at ¶ 43.) Indeed, settlement of PAGA claims requires Court approval. Labor Code § 2699(l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action pursuant to this part.” Thus, the settlement of a PAGA claim requires court approval pursuant to the operative PAGA statute, which states that the “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to this part.” (See Labor Code § 2699(I)(2).) As with any settlement, the Court must be mindful in conducting its inquiry that “[s]ettlement is a compromise, which balances the possible recovery against the risks inherent in litigating further.” (See In re TD Ameritrade Account Holder Litig., 2011 U.S. Dist.

LEXIS 103222, 24 (N.D. Cal. Sept. 12, 2011).) As is noted, “the very essence of a settlement is … ‘a yielding of absolutes and an abandoning of highest hopes’” [Officers for Justice v. Civil Service Com., 688 F.2d 615, 624 (9th Cir., 1982)], as “it is the very uncertainty of outcome in litigation and avoidance of wasteful and expensive litigation that induce consensual settlements.” (See Id., at 625.)

As a result, the Court finds the instant settlement is fair, adequate, and reasonable and it is approved.