SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

JOSE ORNELAS, on behalf of himself and all aggrieved employees and the State of California,

Plaintiff,

vs.

MAPLEBEAR, INC. (d/b/a/ INSTACART) and DOES 1-25,

Defendants.
Case No. 2018-1-CV-323046

TENTATIVE RULING RE: MOTION TO APPROVE PAGA SETTLEMENT

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on October 18, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

This is a case for recovery of penalties under the California Labor Code Private Attorneys General Act of 2004 (“PAGA”). The Complaint, filed on February 7, 2018, sets forth the following causes of action: (1) PAGA Penalties for Failure to Pay Wages Owed; (2) PAGA Penalties for Failure to Provide Meal Periods; (3) PAGA Penalties for Waiting Time Penalties; and (4) PAGA Penalties for Itemized Wage Statement and Recordkeeping Violations. Notably, each cause of action is based on PAGA.

The parties have reached a settlement. Plaintiff Jose Ornelas (“Plaintiff”) moves for approval of the settlement.

II. LEGAL STANDARD

A superior court must review and approve any PAGA settlement. (Lab. Code, § 2699, subd. (l)(2).) The proposed settlement must be submitted to the Labor and Workforce Development Agency (“LWDA”) at the same time it is submitted to the court. (Ibid.)

As discussed by one court:

PAGA does not establish a clear standard for evaluating PAGA settlements. . . .

Accordingly, certain courts have been willing to approve PAGA settlements only if (1) the statutory requirements set forth by PAGA have been satisfied, and (2) the settlement agreement is fair, reasonable, and adequate in view of PAGA’s public policy goals.

(Patel v. Nike Retail Services, Inc. (N.D. Cal. 2019) 2019 WL 2029061 at *2.)

Courts have evaluated proposed PAGA settlements under the relevant factors from Hanlon v. Chrysler Corp. (9th Cir. 1998) 150 F.3d 1011, 1026. (Patel v. Nike Retail Services, Inc., supra, 2019 WL 2029061 at *2.) “Of the Hanlon factors, the following are relevant to evaluating [a] PAGA settlement: (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the amount offered in settlement; (4) the extent of discovery completed and the stage of the proceedings; (5) the presence of government participation; and (6) the expertise and views of counsel. (Ibid.)

III. DISCUSSION

Pursuant to the settlement, defendant Maplebear, Inc. (“Defendant”) will pay a total amount of $350,000. (Declaration of Ryan L. Hicks Supporting Motion to Approve PAGA Private Attorney General Act Settlement, Ex. 1 (“Settlement Agreement”), ¶ 4.) This amount includes attorneys’ fees of $116,666.67, costs of $18,431.65, settlement administration fees of $15,000, and a service award of $5,000. The net settlement amount is split so that 20% is designated the “PAGA Civil Penalties Amount.” As required under PAGA, 75% of “PAGA Civil Penalties Amount” will be paid to the LWDA. The Settlement Agreement calls for the remaining 80% of the net settlement amount to be designated the “PAGA Unpaid Wages Amount.” That entire amount is to be paid to the settlement group for unpaid wages under Labor Code section 558. (Settlement Agreement, ¶ 5(c).)

Distributing the entirety of the “PAGA Unpaid Wages Amount” to the settlement group is not permitted under the law. To the extent this amount is a penalty, 75% must be distributed to the LWDA; it cannot be paid in whole to the settlement group. (Lab. Code, § 2699, subd. (i).) To the extent this amount reflects unpaid wages, the Settlement Agreement runs afoul of a recent California Supreme Court case which states: “a PAGA claim does not include unpaid wages under section 558.” (ZB, N.A. v. Superior Court of San Diego County (2019) 8 Cal.5th 175, 245.) Moreover, there are no non-PAGA causes of action in the Complaint, and “section 558 has no private right of action.” (Id. at p. 244.)

Consequently, the settlement as currently structured is fatally defective. The motion to approve PAGA settlement is DENIED.

The Court will prepare the 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.