2018-00236907-CU-OE

Penny Knight vs. Larry Jenkins Trucking, Inc.

Nature of Proceeding: Motion to Approve Private Attorney’s General Act Settlement and

Filed By: Shimoda, Galen T.

Plaintiff Penny Knight’s unopposed motion for approval of settlement of claims brought pursuant to the Private Attorney General Act of 2004 (“PAGA”) is granted.

Plaintiff seeks an order approving settlement of claims brought in this action as an authorized representative of the Labor and Workforce Development Agency and similarly situated individuals employed by Defendants Larry Jenkins Trucking, Inc. and Larry Jenkins from May 4, 2017 to the date the PAGA settlement is approved. The PAGA claims were premised on the alleged failure to pay overtime wages, minimum wages, provide meal and rest periods, provide accurate wage statements, etc. Approximately 16 employees suffered the alleged Labor Code violations during the relevant period. The PAGA settlement reached after mediation calls for Defendants to make a gross payment of $20,667. The settlement provides that attorneys’ fees of up to $7,000 (33.87% of the settlement), up to $5,000 in costs will be deducted from the gross settlement amount and 75% of the net settlement will first be distributed to the

LWDA and 25% to the aggrieved employees on a pro rata basis based on the number of pay periods worked during the relevant period. Plaintiff’s counsel believes that the $20,667 for PAGA penalties represents approximately 4.05% to 15.75% of the total available penalties if the case proceeded to trial and in light of the Court’s discretion to reduce PAGA penalties.

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.”

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(1)

(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).) Indeed, “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 such, “the settlement or fairness hearing is not to be turned into a trial or rehearsal for trial on the merits” or “judged against a hypothetical or speculative measure of what might have been achieved by the negotiators.” (See Id.)

Although the operative PAGA statute does not set forth the criteria on which a PAGA settlement is to be judged, it is presumed that a reviewing court may utilize some of the factors for review of a class action settlement under Fed. R. Civ. P. 23 (“Rule 23”), CCP. § 382 and Rule 3.769, Cal. Rules of Court, as courts within California have approved settlements of PAGA claims encompassed within class action settlements using Rule 23 criteria. However, it is important to underscore that not all Rule 23 factors can be applied, as “a PAGA claim asserted on a non-class representative basis . . . is not considered a class action but a law enforcement action, and therefore does not have to meet the requirements of Rule 23.” (See Casida v. Sears Holdings Corp, 2012 U.S. Dist. LEXIS 9302, 8 (E.D. Cal. Jan. 25, 2012); Thomas v. Aetna Health of Cal. Inc. 2011 U.S. Dist. LEXIS 59377 (E.D. Cal. June 2, 2011); Mendez v. Tween Brands, Inc, 2010 U.S. Dist. LEXIS 66454 (E.D. Cal. June 30, 2010). Based thereon, a court’s review of a PAGA settlement necessarily implicates the following unique features that render the approval process completely distinct from approval of a class action settlement under Rule 23 or CCP. § 382 and 15 Rule 3.769, Cal. Rules of Court

First, in evaluating the adequacy of the settlement amount, the Court’s focus is not concerned with the amount which “aggrieved employees” are to receive, but rather, must focus on the total settlement amount in achieving PAGA’s objective. Indeed, “[t] he remedy sought in a PAGA suit consists of civil penalties, not individual or class damages” [Mendez v. Tween Brands, Inc, 2010 U.S. Dist. LEXIS 66454, 11 (E.D. Cal. June 30, 2010)], and “[u]nlike class actions, these civil penalties are not meant to compensate unnamed employees because the action is fundamentally a law enforcement action.” (See Ochoa-Hernandez v. CJADERS Foods, Inc., 2010 U.S. Dist. LEXIS 32774, 12 (N.D. Cal. Apr. 2, 2010). Second, consistent with the fact that unnamed employees have no properly interest in a PAGA claim, “[u]named employees

need not be given notice of the PAGA claim, nor do they have the ability to opt-out of the representative PAGA claim.” (See Ochoa-Hernandez, 2010 U.S. Dist. LEXIS 32774, at 13.) Finally, unlike a class action settlement under Rule 23(e) or CCP. § 382, the scope of release permitted in a PAGA settlement is limited. While “judgment in [a PAGA] 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” [ Arias v. Superior Court (2009) 46 Cal. 4th 969, 986], “the nonparty employees, because they were not given notice of the action or afforded any opportunity to be heard, would not be bound by the judgment as to remedies other than civil penalties.” (See Id., at 987.) Thus, the scope of a release in a PAGA settlement is necessarily strictly confined to the civil penalties alleged in the first amended complaint.

In deciding whether to grant approval of the proposed Settlement, the primary issue to

be decided is whether the Settlement is fair, adequate and reasonable. As set forth
herein, the proposed Settlement embodies all of the features of a settlement that is
fair, reasonable, and adequate, as it is the product of (1) arms-length negotiations, (2)
negotiated by attorneys experienced in wage and hour issues, (3) subsequent to

undertaking sufficient investigation necessary to evaluate the relative strength and
value of the PAGA claim, and (4) it reflects a reasoned compromise based directly on
the relative strength and value of the PAGA claim, as well as the risks, expense,
complexity and likely duration of further litigation. The settlement was the product of
arms-length negotiations reached at mediation and was negotiated by counsel with
significant experience in wage and hour litigation and occurred after counsel

conducted significant investigation to evaluate the strength and potential value of the
PAGA claims and risks of litigating through trial. (Shimoda Decl. ¶¶ 3-8) In addition,
the settlement achieves a significant benefit given it results in a net recovery of
$20,667 for the PAGA penalties. Further, the scope of the release is narrowly tailored
and is only limited to the civil penalties asserted in the action under PAGA, in
conformity with Arias, supra, 46 Cal.4th at 987. 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). As a result,
the Court finds that the instant settlement is fair, adequate and reasonable and it is
approved.

In addition, the Court approves Plaintiff’s Counsel’s request for fees and costs. Counsel is entitled to recover attorneys’ fees and costs under the “common fund” doctrine as a matter of right. 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.) In Glendale City Employees’ Association v. City of Glendale (1975) 15 Cal.3d 328, 341 fn. 19, the California Supreme Court upheld an attorneys’ fee award based on a percentage of the common benefit obtained in a lawsuit by a city employees’ association for retroactive wages. “When assessing whether the percentage requested is reasonable, courts look to factors such as: (a) the results achieved; (b) the risk of litigation; (c) the skill required, (d) the quality of work;

(e) the contingent nature of the fee and the financial burden; and (f) the awards made in similar cases.” (See Vasquez v. Coast Valley Roofing, Inc, 266 F.R.D. 482, 492 (E.D. Cal. 2010).) Plaintiff’s Counsel’s request for attorneys’ fees in the amount of $7,000 (33.87%) from the $20,667 PAGA Settlement Sum falls well within the “zone of reasonableness.” It is important to highlight at the outset that the fee amount presently sought is not extraordinary, but actually falls at the “average” fee deemed reasonable under California State court authority, as it is recognized that “courts may award attorney’s fees in the 30-40% range in wage and hour class actions that result in recovery of a common fund under $10 million.” (See, e.g Martin v. AmeriPride Servs., 2011 U.S. Dist. LEXIS 61796, 23 (S.D. Cal. June 9, 2011). Moreover, taking into account the contingency risk Plaintiff’s Counsel agreed to incur for the benefit of the State of California (which elected not to take the case after receiving the PAGA Notice), and the significant results achieved – facts which justify the requested fee – Plaintiff’s Counsel’s requested fee is reasonable under all applicable standards. In addition the $5,000 in litigation costs are reasonable.

The Court will sign the proposed order.