Case Number: BC6617205 Hearing Date: May 03, 2018 Dept: 50

Superior Court of California

County of Los Angeles

Department 50

daniel rosales,

Plaintiff,

vs.

kelly paper company, et al.,

Defendants.

Case No.:

BC 617205

Hearing Date:

May 3, 2018

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

MOTION FOR APPROVAL OF PRIVATE ATTORNEYS GENERAL ACT REPRESENTATIVE ACTION SETTLEMENT

Factual Background

Plaintiff Daniel Rosales (“Rosales”) initiated this action individually and on behalf of the general public on April 14, 2016 against Defendant Kelly Paper Company (“Kelly Paper”). Rosales’s Complaint alleges one cause of action for civil penalties under Labor Code section 2698 et seq. (“PAGA”) by failing to pay proper overtime wages, failing to provide proper meal and rest periods, failing to provide accurate itemized wage statements, and failing to pay all wages due within the required time and upon separation of employment. (Campbell Decl., ¶ 4.)

On October 12, 2017, the parties participated in mediation, where the parties ultimately reached a settlement. (Campbell Decl., ¶ 7.)

Rosales now moves for approval of the settlement between him and Kelly Paper of his PAGA claims. No opposition to the motion was filed.

Evidence

The Court grants Rosales’s Request for Judicial Notice as to Exhibits A, B, and C.

Discussion

A superior court must “review and approve any settlement of any civil action filed pursuant to this part.” (Labor Code section 2699(l)(2).) “The proposed settlement shall be submitted to the [Labor and Workforce Development Agency] at the same time that it is submitted to the court.” (Lab. Code § 2699(l)(2).) A prevailing employee is entitled to an award of reasonable attorney fees and costs incurred in the action. ((Lab. Code, § 2699(g)(1).) “[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, including the administration of this part, and for 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(i).)

As noted by Rosales, there is no statutory or common law standards for approval of a PAGA settlement, therefore, the Court finds that the standards used for approval of class action settlements are instructive. “[A] presumption of fairness 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 Court is satisfied that the parties reached the settlement through arm’s-length bargaining and that the parties engaged in substantive discovery. (See Campbell Decl., ¶ 7.) However, the copy of the Settlement Agreement attached as Exhibit 1 to the Declaration of Jessica L. Campbell does not include Kelly Paper’s signature. The parties may bring a copy thereof to the hearing that does include Kelly Paper’s signature and attach it to a declaration from counsel. Although Rosales does not provide any evidence that suggests his counsel and counsel for Kelly Paper are experienced in similar litigation, the Court will allow the parties to present such evidence via declaration at the hearing on this matter. Finally, the last element, percentage of objectors, is inapplicable to PAGA. ((See Arias v. Superior Court (2009) 46 Cal.4th 969, 984-985 [rejecting the argument the representative actions under PAGA violate the due process rights of “nonparty aggrieved employees who are not given notice of, and an opportunity to be heard”].) Considering the above factors, the Court finds that the settlement is entitled to a presumption of fairness.

Moreover, the Court finds that the Settlement Agreement is compliant with Labor Code section 2699. The proposed settlement was submitted to the California Labor and Workforce Development Agency (“LWDA”) per Labor Code section 2699(l)(2). (Campbell Decl., Ex. 3.) Substantively, the Court finds the Settlement Agreement compliant with Labor Code section 2699(i). The parties have agreed that Kelly Paper will pay a total of $215,000.00 for PAGA Penalties. (Campbell Decl., ¶ 13, Ex. 1.) Up to $71,666.67 in attorneys’ fees and up to $10,000 in litigation costs will be paid to Rosales’s counsel for reasonable attorneys’ fees and costs. (Campbell Decl., Ex. 1, ¶ 5.2.) Up to $10,000 will be paid to the Settlement Administrator for costs associated with administration of the settlement, and up to $5,000 will be paid to Rosales in recognition of his efforts with the lawsuit. (Campbell Decl., Ex. 1, ¶¶ 5.3 and 5.4.) The net amount, $118,333.33, will be paid to the Net PAGA Settlement Fund. Of that, 50% is designated as penalties to recover underpaid wages pursuant to Labor Code section 558, all of which will be paid to Kelly Paper’s nonexempt employees who worked for Kelly Paper in California between March 1, 2015 and October 12, 2017. (Campbell Decl., Ex. 1, ¶ 5.5.1; see Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112, 1144 [finding that Labor Code section 558 provides for a civil penalty that consists of both $50 or $100 penalties and any underpaid wages, with the underpaid wages going entirely to the affected employees].) The other 50% shall be divided, with 75% (or $44,375.00) being paid to the LWDA and the remaining 25% (or $14,791.67) being added to the amount designated as penalties and paid to the aggrieved employees. (Campbell Decl., Ex. 1, ¶ 5.5.2.)

Additional factors that are useful to consider here are the factors to evaluate the reasonableness of a class action settlement agreement, which includes the strength of a plaintiff’s case, the risk, expense, complexity and likely duration of further litigation, the amount offered in settlement, the extent of discovery completed, and the experience and views of counsel. ((See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)

In terms of the risks of litigation and strength of Rosales’s case, Rosales submits that his expert analyzed Kelly Paper’s time records, which showed a 33% violation rate. (Campbell Decl., ¶ 10.) Further, Kelly Paper maintained a lawful policy regarding rest and meal breaks, and meal periods were provided 95% of shifts over six hours, making it difficult to prove that missed meal periods were not waived voluntarily. (Campbell Decl., ¶ 10.) Additionally, Rosales contends that at trial, Kelly Paper could have argued that its policies did not result in systematic denials of proper meal and rest periods, and that their bonuses were discretionary. (Campbell Decl., ¶ 11.) Rosales could also have argued that the subsequent violations under PAGA only start to accrue after employers receive notice through a citation from the Labor Commissioner, which would have significantly decreased Kelly Paper’s exposure. (Campbell Decl., ¶ 11.) Rosales’s counsel calculated the total realistic recovery within a range from $12,400 to $619,000. (Campbell Decl., ¶ 12.) Also, Kelly Paper employed only 261 aggrieved employees during the relevant PAGA period, and Kelly Paper had already executed individual settlement and release agreements with 137 of the aggrieved employees. (Campbell Decl., ¶ 9.) In light of the foregoing, the Court finds that the settlement agreement appears reasonable.

California Rules of Court, rule 3.769(b) requires that “[a]ny agreement… with respect to the payment of attorney’s fees or the submission of an application for the approval of attorney’s fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action.” Despite any agreement by the parties to the contrary, “the court ha[s] an independent right and responsibility to review the attorney fee provision of the settlement agreement and award only so much as it determined reasonable.” ((Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 128.)

Here, Rosales has set forth the parties’ agreement with respect to the submission of an application for the approval of attorney fees, namely, that Kelly Paper will not oppose a request by Rosales for attorneys’ fees of up to one-third of the total settlement amount and of costs of up to $10,000. (Campbell Decl., Ex. 1, ¶ 5.2.) Since Rosales is not seeking approval of a specific attorneys’ fee amount in the instant motion, the Court rules that the attorney’s fee agreement complies with California Rules of Court, rule 3.769(b).

Conclusion

Based on the foregoing, Rosales’s motion for approval of settlement of his PAGA action is granted. Rosales must file and serve a proposed judgment within 10 days of this Order.

Rosales is ordered to give notice of this Order.

DATED: May 3, 2018 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court