D077323
Cal. Ct. App.Jul 14, 2021Background
- In July 2018 Ghandi Ali filed a representative PAGA action against Auto Nation; separate PAGA suits by Devonte Mitchem and others had been filed earlier and overlapped on many alleged violations.
- Ali and Auto Nation mediated, reached a settlement, amended the complaint/notice, and filed a joint motion for court approval of the PAGA settlement.
- Mitchem moved to intervene (mandatory and permissive) and objected to the proposed settlement as unfair (arguing inadequate valuation, overbroad release, reverse-auction conduct); Ali and defendants opposed.
- The trial court denied Mitchem’s intervention requests (but considered his objections), approved the PAGA settlement, entered judgment, and the settlement funds were distributed before appeal.
- Mitchem appealed the denial of intervention and the settlement approval; the Court of Appeal affirmed, concluding denial of intervention was proper and, assuming standing, the settlement approval was not an abuse of discretion.
Issues
| Issue | Plaintiff's (Mitchem) Argument | Defendant's (Ali/Auto Nation) Argument | Held |
|---|---|---|---|
| Timeliness of intervention | Mitchem waited until settlement filing to intervene because only then did he know Ali would release additional claims; application therefore timely | Mitchem knew earlier and could have sought coordination or intervention; motion was untimely | Denial affirmed: intervention untimely; court reasonably concluded Mitchem should have acted earlier |
| Mandatory intervention (interest in action) | Mitchem as overlapping PAGA plaintiff/"proxy" has an interest that will be impaired by the settlement | The real party in interest in PAGA is the state; Ali already represented the state's interests, so Mitchem has no independent interest | Denial affirmed: Mitchem lacked the requisite direct interest—Ali adequately represented the state |
| Adequacy of representation | Ali inadequately represented the state (no payroll/time analysis; undervalued claims); thus intervention required | Ali’s representation of state interests was adequate; disagreements over tactics not a basis for intervention | Denial affirmed: presumption of adequacy applied; Mitchem did not overcome it |
| Permissive intervention | Permissive intervention needed because Mitchem’s rights would be affected and he has immediate interest | Intervention would unduly burden the litigation and duplicate state proxy; Ali represents same interests | Denial affirmed: Mitchem lacked a direct/immediate interest and his reasons did not outweigh opposition |
| Standing and mootness to appeal settlement | Mitchem claimed standing as an aggrieved employee to challenge settlement; appeal not moot despite distribution | Ali/Auto Nation argued appeal is moot and/or Mitchem lacks appellate standing because funds distributed and state accepted proceeds | Court assumed standing for purposes of review and declined to dismiss as moot, reasoning distribution alone did not necessarily defeat appellate review |
| Fairness of PAGA settlement (sufficiency/scope/reverse auction) | Settlement was not ‘genuine and meaningful’: inadequate valuation, overbroad release period and added predicates, secretive/reverse-auction bargaining | Parties provided pay-period data, mediation history, confirmatory discovery, and LWDA notice; settlement reflected negotiated assessment of liability and risks | Denial affirmed: trial court did not abuse discretion. Record showed adversarial mediation, adequate information, reasonable valuation, acceptable release scope, and no evidence of reverse auction |
Key Cases Cited
- Kim v. Reins Int’l Cal., Inc., 9 Cal.5th 73 (California Supreme Court) (explains PAGA standing and that PAGA claims are representative of the state)
- Arias v. Superior Court, 46 Cal.4th 969 (California Supreme Court) (PAGA deputizes employees to act on behalf of the state and judgment binds nonparty aggrieved employees)
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (California Supreme Court) (PAGA actions are representative actions where the state is real party in interest)
- Amalgamated Transit Union Local 1756 v. Superior Court, 46 Cal.4th 993 (California Supreme Court) (PAGA does not create individual property rights; employee represents public interest)
- Hernandez v. Restoration Hardware, Inc., 4 Cal.5th 260 (California Supreme Court) (unnamed class members generally cannot appeal class judgment unless they intervened)
- Williams v. Superior Court, 3 Cal.5th 531 (California Supreme Court) (trial court must ensure PAGA settlements are fair to those affected)
- Huff v. Securitas Sec. Servs. USA, Inc., 23 Cal.App.5th 745 (Cal. Ct. App.) (discusses that PAGA plaintiff represents state interests and employees have no personal right to PAGA penalties)
- O’Connor v. Uber Techs., Inc., 201 F.Supp.3d 1110 (N.D. Cal.) (discusses evaluating whether a PAGA settlement is genuine and meaningful)