253 F. Supp. 3d 1074
C.D. Cal.2017Background
- Plaintiffs and defendant jointly moved for court approval of a settlement resolving plaintiffs’ PAGA (Cal. Lab. Code § 2698 et seq.) claims.
- The Court reviewed the joint submission and, despite procedural and briefing shortcomings by plaintiffs’ counsel, found the settlement provides adequate relief consistent with PAGA’s public‑interest purposes.
- The parties allocated civil penalties under Cal. Lab. Code § 2699(i); the Court approved that allocation but required one modification.
- The Court ordered parties to show cause after raising numerous questions about proper standards and procedures for PAGA settlement approval; plaintiffs’ counsel failed to appear or otherwise respond.
- Exercising its discretion because of counsel’s noncompliance, the Court increased total PAGA civil penalties payable to the named plaintiffs and the LWDA by one‑third, taking the additional amount from plaintiffs’ counsel’s attorney fees only; defendants’ payments and individual plaintiffs’ recoveries were unaffected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard for court review of PAGA settlements | Settlement should be approved as fair and adequate under the parties’ submission | Settlement meets public‑interest goals and allocation of penalties is appropriate | Court approved settlement as "fair and adequate in view of the purposes and policies of the statute," but noted lack of controlling standards and reviewed closely |
| Applicability of Rule 23 fairness standard to PAGA | Implicitly relied on fairness/adequacy concepts | Argued Rule 23 framework not directly applicable; PAGA is representative enforcement | Court agreed Rule 23(e) is not particularly apt; PAGA is a qui tam‑style, state enforcement proxy and requires different analysis |
| Notice and procedural protections for LWDA and nonparty aggrieved employees | Parties provided LWDA notice and allocated penalties | Defense asserted notice and allocation were sufficient | Court highlighted unresolved questions about LWDA and nonparty notice but found parties’ LWDA notice and allocation adequate in this case |
| Remedy for procedural/noncompliance by plaintiffs’ counsel | No specific remedy urged | N/A | Because plaintiffs’ counsel failed to comply with court orders and appear, court exercised discretion to increase civil penalties to plaintiffs and LWDA by one‑third, taking the difference from counsel’s fees only |
Key Cases Cited
- O’Connor v. Uber Techs., Inc., 201 F. Supp. 3d 1110 (N.D. Cal. 2016) (discussing whether PAGA settlements should be assessed for fairness and adequacy in view of the statute’s purposes)
- Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117 (9th Cir. 2014) (distinguishing PAGA representative actions from Rule 23 class actions)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (characterizing PAGA actions as a form of qui tam representative enforcement)
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (explaining that PAGA suits are prosecuted as proxies for the state and bind nonparty aggrieved employees)
- Arias v. Superior Court, 46 Cal.4th 969 (Cal. 2009) (describing PAGA’s role in supplementing public enforcement due to agency resource limits)