42 F.4th 1013
9th Cir.2022Background
- Carolyn Callahan, a former Brookdale employee, filed a PAGA action alleging multiple California Labor Code violations and later settled with Brookdale after mediation for a $920,000 gross fund allocation (LWDA, employee payments, fees, costs).
- Michelle Neverson was a plaintiff in a related/overlapping PAGA action against Brookdale and filed to intervene in Callahan’s federal suit to object to the settlement.
- The district court denied Neverson’s motion to intervene (both as of right under Fed. R. Civ. P. 24(a)(2) and permissively under Rule 24(b)) and approved the settlement (reducing attorney fees).
- Neverson appealed both the denial of intervention and the settlement approval; Ninth Circuit consolidated the appeals and requested supplemental briefing after its decisions in Magadia and Peck.
- The Ninth Circuit affirmed denial of intervention, held Neverson never became a party, and dismissed her appeal of the settlement approval because non-parties (and those not permitted to intervene) generally lack appellate standing to challenge a PAGA settlement.
Issues
| Issue | Neverson's Argument | Callahan/Brookdale's Argument | Held |
|---|---|---|---|
| Intervention as of right under Rule 24(a)(2) | Neverson claimed a protectable PAGA interest and that settlement would impair her ability to recover penalties; existing parties would not adequately represent her | Callahan represented LWDA interests and had access to discovery; Neverson’s interests were aligned with Callahan’s | Denied — Neverson failed the fourth Wilderness Soc’y factor because her interest was identical to Callahan’s and she did not compellingly show inadequate representation |
| Permissive intervention under Rule 24(b) | Neverson argued she would add an independent valuation/analysis of PAGA penalties that would aid the court | Callahan/Brookdale argued interests were the same, discovery was shared, and Neverson would not contribute materially to factual development | Denied — district court did not abuse discretion in weighing Spangler factors and concluding intervention would not significantly aid the case |
| Right to appeal approval of the PAGA settlement | Neverson asserted that overlapping PAGA plaintiffs (and state authorities) should be able to appeal settlement approval | Callahan/Brookdale argued Neverson was not a party because intervention was denied; under federal law only parties (or those properly joined) may appeal | Dismissed — because Neverson was not a party, she lacked appellate standing to challenge the settlement; court did not reach substantive fairness of settlement |
| Merits: whether the settlement was fundamentally fair, adequate, reasonable | Neverson contended the settlement undervalued PAGA penalties and that the court abused discretion in approval | Callahan/Brookdale defended the settlement valuation and process; district court approved (with reduced fees) | Not reached — appeal of settlement dismissed for lack of party status so Ninth Circuit did not review substantive fairness |
Key Cases Cited
- Wilderness Society v. U.S. Forest Serv., 630 F.3d 1173 (9th Cir. 2011) (sets four-part test for intervention as of right under Rule 24(a)(2))
- Arakaki v. Cayetano, 324 F.3d 1078 (9th Cir. 2003) (three-factor test for adequacy of representation in intervention analysis)
- Spangler v. Pasadena City Bd. of Educ., 552 F.2d 1326 (9th Cir. 1977) (discretionary factors for permissive intervention under Rule 24(b))
- Magadia v. Wal-Mart Associates, Inc., 999 F.3d 668 (9th Cir. 2021) (PAGA plaintiffs must satisfy Article III injury-in-fact standing)
- Saucillo v. Peck, 25 F.4th 1118 (9th Cir. 2022) (non-party objector to a PAGA settlement lacks appellate standing; only parties may appeal)
- Roes v. SFBSC Mgmt., LLC, 944 F.3d 1035 (9th Cir. 2019) (abuse-of-discretion standard for reviewing PAGA settlements)