SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
| NIKA MILLER, EMI BRUEMMER,
MARIO SACCHERI, JR., individuals, on behalf themselves, and on behalf of all persons similarly situated, Plaintiffs, vs. MATTRESS FIRM, INC., a corporation; and DOES 1 to 50, inclusive, Defendants. |
Case No.:? 17CV313148
TENTATIVE RULING RE: ?MOTION TO APPROVE PAGA SETTLEMENT
|
The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on December 7, 2018, at 9:00 a.m. in Department 5.? The Court now issues its tentative ruling as follows:
- ???? INTRODUCTION
The original Complaint in this action was filed on July 18, 2017.? On September 29, 2017, Plaintiffs Nika Miller, Emi Bruemmer, Mario Saccheri, Jr., Shannon Peete, and Arthur Robinson (?Plaintiffs?) filed a First Amended Complaint (?FAC?).? Plaintiffs allege that Defendants Mattress Firm, Inc. and The Sleep Train, Inc. (?Defendants?) had a uniform policy and practice of failing to compensate its employees for missed meal breaks and rest periods.? Based on these allegations, the FAC alleged five causes of action:? (1) Unfair Competition in Violation of Cal. Bus. & Prof. Code ?? 17200 et seq.; (2)?Failure to Provide Accurate Itemized Statements in Violation of Cal. Lab. Code ??226; (3)?Failure to Reimburse Employees for Required Expenses in Violation of Cal. Lab. Code ??2802; (4) Failure to Provide Wages When Due in Violation of Cal. Lab. Code ???201, 202 and 203; and (5) Violation of the Private Attorneys General Act (?PAGA?).
On October 30, 2017, the Court entered a Stipulation and Order to Dismiss Class Allegations, Proceed with Arbitration of the Individual Claims, and Stay the PAGA Claim.? As a consequence, Plaintiffs? individual claims were submitted for American Arbitration Association, the class allegations were dismissed without prejudice, and the PAGA claim was severed and stayed.
On May 23, 2018, the parties participated in a mediation before Louis M. Marlin, Esq., an experienced mediator with JAMS.? The parties reached a settlement of Plaintiffs? individual claims and the PAGA claim.? On October 5, 2018, Defendants filed for Chapter 11 bankruptcy, which stayed this action.? The bankruptcy was quickly resolved, and on November 27, 2018, the stay on this action was lifted.
Before the Court now is Plaintiffs? Motion to Approve PAGA Settlement.? Defendants do not oppose the motion.
- ???? SETTLEMENT TERMS
The Settlement Agreement was executed by the parties at the end of August 2018.? (Decl.?of Kyle Nordrehaug in Support of Motion to Approve PAGA Settlement, Ex. 1.)? It provides that Defendants will pay $3,750,000 to resolve this matter.? Of this amount, $12,000 will be paid to each of the eleven individuals who pursued their individual claims (?Individual Claimants?); $1,250,000 will be paid to Plaintiffs? attorneys for payment of attorneys? fees; $20,000 will be paid to Plaintiffs? attorneys for payment of costs; and $8000 will be paid for settlement administration costs.[1]? The remaining $2,340,000 is the amount to be paid to settle the PAGA claim (the ?PAGA Payment?).
The Settlement Agreement specifically allocates the PAGA Payment:? 75 percent will be paid as a Labor Code section 558 payment to ?Aggrieved Employees? and 25 percent will be paid as a Labor Code section 2699 payment.? The section 2699 payment will be further broken down:? 75 percent will be paid to the California Labor Workforce Development Agency (?LWDA?) and 25 percent will be paid to ?Aggrieved Employees.?? In sum, $292,500 will be paid to the LWDA, and $2,047,500 will be paid to ?Aggrieved Employees.?? LWDA has been provided notice of the terms of the Settlement Agreement and this Motion.
?Aggrieved Employees? is defined in the Settlement Agreement as retail sales employees who worked in California for Defendants between June 16, 2016 and July 30, 2018, excluding employees who previously released their claims.? Defendants have identified 758 individuals that meet this definition.? (Decl. of Jay J. Wang, Esq. Re: Non-Opposition to Motion to Approve PAGA Settlement, ??11.)? Payments to Aggrieved Employees will be based on each employees? share of the workweeks the Aggrieved Employees collectively worked.? Based on the Court?s own math, the average payment to each Aggrieved Employee will be approximately $2700.
Plaintiffs state that the maximum penalties available under PAGA for the alleged violations total $7,177,748.? Consequently, Plaintiffs state the Settlement Agreement provides payments that constitute 32 percent of the maximum PAGA penalties that could be awarded to the Aggrieved Employees if there were a trial in this action.? They also state that if there were a trial, the Court could reduce the PAGA penalties significantly.
In exchange for their settlement payments, the Individual Claimants will release all claims against Defendants.? The Aggrieved Employees will release only the civil penalties that might be recovered pursuant to Labor Code sections 558 and 2699.? Any future claims by Aggrieved Employees for wrongful termination, unemployment insurance, disability, and workers? compensation, and all claims outside the June 16, 2016 to July 30, 2018 period, for example, are not released.
- APPLICABLE LAW
Under PAGA, an aggrieved employee may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations.? (Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal.4th 348, 380.)? Seventy-five percent of any PAGA penalties go to the LWDA, leaving the remaining 25 percent for the employees.? (Ibid.)? PAGA is intended ?to augment the limited enforcement capability of [LWDA] by empowering employees to enforce the Labor Code as representatives of the Agency.?? (Id. at p. 383.)? A judgment in a PAGA action binds all those who would be bound by a judgment in an action brought by the government.? (Id. at p.?381.)
A PAGA action need not meet the requirements of a class action lawsuit.? (Arias v. Superior Court (2009) 46 Cal.4th 969, 975.)? A court does not, for example, have a fiduciary duty to protect putative class members.? Nonetheless, Labor Code section 2699, subdivision (l), provides that ?[t]he superior court shall review and approve any penalties sought as part of a proposed settlement agreement pursuant to [PAGA].?? The relief provided in a PAGA settlement must ?be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public.?.?.?.?? (Villalobos v. Calandri Sonrise Farm LP (C.D. Cal., July 22, 2015, No. CV122615PSGJEMX) 2015 WL 12732709, at *13.)? The settlement must be reasonable in light of the potential verdict value.? (See O?Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110, 1135.)? A settlement may be substantially discounted, however, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even when a claim succeeds a trial. ?(See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No.?15?CV-02198-EMC) 2016 WL 5907869, at *8-9).)
- DISCUSSION
- Reasonableness of Settlement Payments
Plaintiffs state the proposed settlement is the result of arms?-length negotiations by an experienced mediator. ?The average recovery for each Aggrieved Employee is approximately $2700.? The settlement payments constitute 32 percent of the maximum PAGA penalties that could be recovered by the Aggrieved Employees.? Aggrieved Employees are not waiving their right to pursue claims in a future action for damages.? They are only waiving their right to pursue civil penalties under sections 558 and 2699 of the Labor Code.[2]
Based on the facts in this particular case and the requirements for PAGA settlements, the Court approves the settlement, including the PAGA penalties.? The settlement provides genuine and meaningful relief and eliminates the risk and expense of further litigation. ?Aggrieved Employees are releasing future claims for civil penalties, but they retain their right to pursue damages in all non-PAGA claims.? Settling the action now also protects Aggrieved Employees from the risk that Defendants will succumb to the financial problems that caused it to file for bankruptcy and not be able to pay anything in the future.
- Reasonableness of Attorneys? Fees
A prevailing PAGA plaintiff is entitled to no more than his or her ?reasonable [attorney] fees.?? (Harrington v. Payroll Entertainment Services, Inc. (2008) 160 Cal.App.4th 589, 594, emphasis original; Labor Code ??2699, subd. (g)(1).)? In class actions, a recovery of one-third of the total settlement is typical.? (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488.)? Here, the attorneys? fees are one-third of the total settlement.? They total $1,250,000.? The?Court finds the requested attorneys? fees are reasonable.
- ???? DISPOSITION
Based on the foregoing, the Court GRANTS Plaintiffs? Motion to Approve PAGA Settlement.? In light of the settlement, this action shall be dismissed with prejudice.? The Court retains jurisdiction, however, under Code of Civil Procedure section 664.6.? The parties shall bear their own costs.
A compliance hearing is now scheduled on August 30, 2019 at 10:00 a.m. in Department?5. ?At least ten court days before the hearing, a representative of the settlement administrator shall submit a declaration setting forth the date the settlement checks were mailed, the number and value of any undeliverable and/or uncashed checks, and a confirmation that the unpaid amounts have been deposited into the Department of Industrial Relations Unpaid Wage Fund as provided in the Settlement Agreement.
The Court will prepare the final order if this tentative ruling is not contested.? The Court requests, however, that if there are any mistakes, omissions, or misunderstandings in this tentative ruling that the parties appear either in person or telephonically.
[1] The Settlement Agreement, and the proposed order, state that ILYM Group, Inc. will administer the settlement.? The Memorandum of Points and Authorities, and Kyle Nordrehaug?s declaration, indicate that KCC Class Action Services will administer the settlement.? Both administrators are reputable, so the Court is not concerned with this discrepancy.
[2] As noted above, Plaintiffs are subject to a full release, including a waiver of rights set forth in Civil Code section 1542.