*1 Filed 7/14/21 Ali v. Auto Nation CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE STATE OF CALIFORNIA GHANDI ALI, D077323
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2018-00037616- CU-OE-CTL) AUTO NATION, INC. et al., Defendants and Respondents;
DEVONTE MITCHEM et al.,
Movants and Appellants.
APPEAL from an order and judgment of the Superior Court of San Diego County, Ronald F. Frazier, Judge. Affirmed.
Matern Law Group, Matthew J. Matern, Launa Adolph, Debra J. Tauger and Kayvon Sabourian, for Movants and Appellants.
Ackermann & Tilajef, Craig J. Ackerman, Sam Vahedi; Winston Law Group, David S. Winston; Melmed Law Group and Jonathan Melmed, for Plaintiff and Respondent.
Fisher & Phillips, Christopher C. Hoffman and Megan E. Walker, for Defendants and Respondents.
INTRODUCTION
Devonte Mitchem and Niki Phuong Ngo filed a representative action against their employer Auto Nation, Inc. (Auto Nation) in April 2018. In July 2018, Ghandi Ali filed a separate, representative action against the defendants, identifying many of the same labor law violations. Ali and the defendants proceeded to mediation and reached a settlement. When they filed their joint motion for court approval of the settlement, Mitchem and Ngo moved to intervene in the matter as a right and, in the alternative, they sought permissive intervention. Mitchem and Ngo also objected to the settlement, arguing it was not fair. The court denied their requests to intervene, but it considered their objections before approving the PAGA settlement. Before the time elapsed for Mitchem and Ngo to appeal the denial of their requests to intervene, the settlement funds were distributed to the state and to the aggrieved employees.
Mitchem and Ngo appeal the denial of their requests to intervene, as well as the entry of judgment, arguing the settlement was improper and unfair. Ali and Auto Nation contend the court properly denied the requests to intervene, challenge Mitchem and Ngo’ s standing to appeal the judgment, question whether the appeal is moot in light of the distribution of settlement funds, and maintain that the court properly concluded the settlement was fair. We agree with Ali and Auto Nation that the court рroperly denied the requests to intervene. We question whether the parties to the settlement can avoid appellate review based on the distribution of settlement funds and whether Mitchem and Ngo have standing to appeal the judgment, but even *3 assuming Mitchem and Ngo have standing to challenge the judgment, we affirm because the court’s approval of the settlement did not abuse its discretion.
BACKGROUND AND PROCEDURAL FACTS
On July 24, 2018, Ali filed a representative action pursuant to the Private Attorney General Act (PAGA) (Labor Code, § 2698 et seq.) against Auto Nation and several other related entities (the Ali matter). His complaint was brought on behalf of nine groups of allegedly aggrieved employees, including those who were paid on a commission basis, those who earned less than half their compensation from commissions, and those who had resigned or had been discharged. It alleged a variety of violations of the Labor Code and two wage orders, and it sought civil penalties.
Defendants filed their answer September 26, 2018. Defendants also filed a notice of related cases, identifying fivе other PAGA actions brought by different plaintiffs in state and federal court, three of which were pending. One of the pending cases had been filed on April 26, 2018 by Appellants Devonte Mitchem and Niki Phuong Ngo (collectively referred to as Mitchem hereafter).
On December 28, 2018, the court stayed the Ali matter for 60 days so that the parties could participate in mediation. In their February 21, 2019 joint case management statement, the parties indicated that a mediation session was scheduled for March 26, 2019. On March 29, 2019, Ali filed an amended notice letter with the Labor Workforce Development Agency (LWDA).
The parties in the Ali matter filed a joint case management statement April 25, 2019 in which they reported that they were in the process of *4 finalizing a settlement, which would be submitted for the court’s review and approval in June 2019.
On June 6, 2019, the parties stipulated to allow Ali to file a first amended complaint, which Ali filed June 11, 2019. The first amended complaint named a number of Doe defendants and added Labor Code violations. It was brought as a representative action under PAGA on behalf of five groups of aggrieved current and former еmployees dating back to February 20, 2017: current nonexempt employees, current nonexempt employees paid on a commission-only basis, current employees who worked in shifts of more than four hours or a fraction thereof and who were paid on a commission draw basis and/or a commission only basis; current employees who worked during pay periods in which the pay did not exceed one and a half times minimum wage and/or employees who earned less than half their compensation from commissions and worked overtime; and employees who had been terminated or had resigned.
The parties filed a joint motion for approval of the representative PAGA settlement on July 1, 2019. The motion explained the parties had participated in an adversarial mediation process before an experienced mediator whose services were necessary to reach a settlement. It detailed the penalties they considered and discounted, explained that the settlement was dependent оn post-mediation discovery, which had been completed, and it identified the risks of pursuing litigation in light of the strength of the claims and the use of a separate entity defense, which had been recently used successfully by the defendants in another case.
On August 22, 2019, Arnold Alix, a plaintiff in a different PAGA action against the defendants, filed an ex parte application for an order shortening time to hear his motion to intervene and to stay the action. In Alix’s *5 memorandum, he noted that he had filed a class action and PAGA representative action on December 29, 2017 alleging similar violations.
On August 23, 2019, Mitchem filed an ex parte application to intervene or, in the alternative, for an order shortening time to hear the motion to intervene. In the memorandum of points and authorities, Mitchem argued he had previously filed a PAGA action and was entitled to intervene as a matter of right under Code of Civil Procedure1 section 387, subdivision (b) as an aggrieved employee and designated proxy for the state, given that he had filed suit April 26, 2018. Mitchem argued in the alternative that discretionary intеrvention was proper.
Counsel for Mitchem explained he had discussed cooperating on the p ending litigation with Ali’s attorneys, but Ali’s attorneys did not follow up. Mitchem had also scheduled mediation on a statewide basis for June 10, 2019 and stayed formal discovery pending that mediation. Auto Nation took the mediation off calendar on May 7, 2019, after it filed the joint case management statement indicating it was finalizing a PAGA settlement with Ali. Auto Nation rescheduled mediation with Mitchem for October 28, 2019. Mitchem learned of the proposed settlement on August 13, 2019 from Alix’s attorney.
Concurrent with the motion to intervene, Mitchem filed objections to the proposed PAGA settlement. The objections argued the proposed settlement did not provide “ ‘ genuine and meaningful relief ’ ” because it amounted to approximately $2.50 per pay period in exchange for a release of claims, which Mitchem contended was not significant enough to deter violations. Mitchem maintained that Ali focused on the value of claims for 1 Further unspecified section referencеs are to the Code of Civil Procedure.
commission-eligible employees but then reduced their value and did not calculate a maximum value for all individually-identified claims being released. He further contended that Ali ’s legal representation was inadequate because he did not analyze time or payroll records, did not attribute any value to claims that were added to the first amended complaint, and failed to consider the value of the separate entity defense.
The objections argued the settlement released claims dating back to February 20, 2017, which was not a date corresponding to Ali’s initial PAGA Notice, and the release was overly broad because it extended the tolling period and released claims not raised in the original complaint. Finally, the objections contended that the parties to the settlement had concealed the negotiations while extinguishing claims raised by would-be intervenors and asked the court to scrutinize the settlement as a potential reverse auction.
Ali opposed the requests to intervene on both factual and legal grounds. Ali’s counsel reported proposing a joint prosecution to Mitchem’s counsel, and he reported that Mitchem’s attorney failed to accept the offer, instead scheduling separate mediation. Ali also argued Mitchem ’s motion to intervene lacked merit because it was untimely, and he had no personal or individual interests in the PAGA action, and because Mitchem did not have the right to object.
The court heard from the parties, and on August 28, 2019, it denied the request for an order shortening time on the motions to intervene.
After hearing arguments about the proposed settlement, including ones raised at the hearing by Mitchem, on September 20, 2019, the court took the matter under submission.
On October 17, 2019, Mitchem filed a motion for leave to intervene in the matter. The corresponding memorandum argued he was entitled to *7 intervene as a matter of right, and in the alternative, he met the requirements for permissive intervention. Ali and the defendants opposed the motion.
On October 24, 2019, the court granted the motion tо approve the PAGA settlement. In its order, the court noted that several nonparty aggrieved employees filed objections to the settlement; it noted they were not entitled to be heard, but it nonetheless considered their objections and found them to lack merit. The court explained the settlement complied with Labor Code requirements and was fair because it complied with the purpose of PAGA to enforce labor laws and collect penalties on behalf of the state.
The court heard oral arguments on Mitchem ’s m otion to intervene on November 8, 2019 and took the matter under submission before denying it November 12. The court explained it had already considered the substance of the nonparties’ objections and concluded they lacked merit. It also concluded that Ali had adequately represented the state as its proxy under PAGA and that Mitchem did not demonstrate entitlement to mandatory intervention or meet the requirements for permissive intervention.
The court entered judgment approving the proposed PAGA sеttlement and retaining jurisdiction over the action to effectuate and enforce its terms.
On December 20, 2019, Mitchem moved to set aside and vacate the judgment. The court denied the motion.
On December 23, 2019, Mitchem appealed the order denying the ex parte application for an order shortening time on the motion to intervene, the order approving the PAGA settlement, the order denying the motion to intervene, and the judgment.
Ali filed a motion to dismiss the appeal as moot, arguing the settlement terms had already been satisfied and the funds had been distributed in December 2019. Mitchem opposed the motion.
DISCUSSION
I
PRIVATE ATTORNEY GENERAL ACT (PAGA)
We begin with a brief discussion of the law. Before the Legislature
enacted PAGA, only the state could sue for civil penalties. (
Kim v. Reins
International California, Inc.
(2020)
PAGA deputizes employees who have suffered a Labor Code violation
or violations of Industrial Welfare Commission (IWC) wage order provisions,
permitting them to bring a representative lawsuit on behalf of the state to
enforce labor laws. (
Kim
,
Before filing a PAGA lawsuit, an aggrieved employee must file a notice
with the LWDA and notify the employer of the specific violations and theories
to support the claims. (Labor Code, § 2699.3, subd. (a)(1)(A).) This gives the
LWDA the opportunity to investigate the alleged violations if it so chooses.
(
Kim
,
supra
,
If successful, the PAGA penalties are distributed with 75 percent to the LWDA and 25 percent to the aggrieved employees. (Labor Code, § 2699, subd. (i); Arias , supra , 46 Cal.4th at pp. 980-981.)
Overlapping PAGA actions may be brought by different employees who
allege the same violations and use the same theories. (
Julian v. Glenair, Inc.
(2017)
II
MOTIONS TO INTERVENE
We next turn to the orders denying Mitchem’s requests to intervene
because those are the foundation upon which the remaining challenges to the
judgment are built. Section 387 allows for either mandatory intervention,
*10
governed by subdivision (d)(1), or permissive intervention, governed by
subdivision (d)(2). The appropriate standard of review for the denial of a
mandatory intervention is subject to dispute; several appellate courts have
implicitly applied the de novo standard of review, but at least one has
reviewed for abuse of discretion. (
Siena Court Homeowners Assn. v. Green
Valley Corp.
(2008)
A. Timeliness
Both mandatory and permissive intervention require a motion to
intervene to be made “upon timely application.” (§ 387, subd s. (d)(1), (2);
Edwards v. Heartland Payment Systems, Inc.
(2018)
Mitchem argues that the date for determining the timeliness is when
the third party knew or should have known his interests were not being
adequately represented, not when he first became aware of the competing or
overlapping suit. (
Ziani Homeowners Assn. v. Brookfield Ziani
LLC (2015)
The court did not make an express finding regarding timeliness. Independent review leads us to conclude the motion was not timely under the circumstances before the court, and the court’s denial was therefore proper under either the de novo or abuse of discretion standards of review.
Mitchem acknowledges that he could have coordinated or collaborated with Ali early in the case, when it was immediately clear from Ali’s original complaint that Labor Code section 2802 was not included in the violations for which Ali was seeking penalties. Mitchem’s attorneys also could have assessed the scope of alleged viоlations during the discussions with Ali’s attorneys about coordinating their actions. Mitchem implies that he did not have an opportunity to consolidate or coordinate the actions because, although his attorneys were agreeable to working with Al i’s attorneys and never communicated an unwillingness to do so, Ali’s attorneys did not follow up. But Mitchem does not go so far as to say that he offered to consolidate or that his attorneys followed up with Ali’s to pursue coordinating the actions. In other words, it appears that Mitchem’s attorneys did not inform Ali’s attorneys that they were willing to cooperate on the PAGA litigation.
As a PAGA plaintiff himself, Mitchem knows that an aggrieved
employee can seek civil penalties for violations the employee does not
personally experience. (
Kim
If Mitchem were concerned that Ali would not represent his interests as an aggrieved employee or member of the public after the initial communication with Ali’s attorneys, he could have intervened at that point in the litigation instead of more than a year later, only after settlement had been reached. And the changed scope of Labor Code violations, as well as how far back they were related, was evident in June 2019, when Ali filed a first amended complaint.
Another reason Mitchem offers for the timing of his request to intervene is his suggestion that Ali behaved secretly and collusively by negotiating with the defendants without informing Mitchem of his plans. But Mitchem cites no authority that requires parties to a PAGA action to inform parties to related cases of their plans to negotiate a settlement. And Mitchem similarly planned to negotiate with Auto Nation in mediation on a statewide basis in his own, separate action. It appears that Mitchem’s failure to intervene earlier was less about lack of informatiоn and more about strategy.2
Mitchem’s request to intervene was not made upon timely application; thus, the denial was proper. But even were the request timely, as we next explain, the court did not err because Mitchem did not meet the other requirements for either mandatory or permissive intervention.
2 The judgment awarded attorney fees to Ali’s attorneys in the amount of $283,666.67. Had Mitchem reached statewide settlement with the defendants, his attorneys would have been entitled to attorney fees. (See Labor Code, § 2699, subd. (g).)
B. Mandatory Intervention
Section 387 subdivision (d)(1) provides that upon a timely application,
the trial court shall permit a nonparty to intervene if there is a legal
provision that confers an unconditional right to intervene or “[t]he person
seeking intervention claims an interest relating to the property or
transaction that is the subject of the action and that person is so situated
that the disposition of the action may impair or impede that person’s ability
to protect that interest, unless that person’s intere st is adequately
represented by onе or more of the existing parties.” (§ 387, subds. (d)(1)(A) &
(B).) In evaluating whether mandatory intervention applies, courts do not
consider whether intervention would expand the issues in the case, create
delay, or adversely affect the original parties. (
California Physicians’
Service v. Superior Court
(1980)
1.
Interest Relating to Subject Property or Transaction
In a PAGA action, the employee acts as a proxy or agent for the state
labor law enforcement agencies and represents the legal rights and interest
of those agencies to benefit the public, not to benefit any private parties.
(
Amalgamated Transit Union, Local 1756, CIO v. Superior Court
(2009) 46
Cal.4th 993, 1003 (
Amalgamated
).) Thus, even though PAGA plaintiffs are
eligible to receive part of the recovery as compensation (Labor Code, § 2699,
subd. (i) [25 percent of recovered penalties distributed to aggrieved
employees]), the employee does not act as an agent for other employees
*14
(
Huff v. Securitas Security Services USA, Inc.
(2018)
Mitchem sought to intervene in the
Ali
matter as an aggrieved
employee, as a designated proxy in a different lawsuit, and as a named
plaintiff in a separate PAGA action. But none of these roles gives him the
right to intervene because the real party in interest in a PAGA action is the
state (
Iskanian
,
supra
,
Mitchem also contends he has an interest in the underlying litigation because he has an interest in defendants’ employment practices, which constitute transactions. And he argues that approval of the settlement would impair those interests because it would preclude him from pursuing PAGA claims on behalf of the state and other aggrieved employees. His position is that as an overlapping or alternative proxy for state agencies, he is entitled to intervene. But he does not detail why his interest in doing so supersedes the interests of the proxy in the current matter, and he cites no law that supports this position.
Because Ali was already acting as a proxy for the state and adequately representing the state’s interests, 3 Mitchem ’s role as an alternative proxy for the state or as a proxy in a different case does not demonstrate any direct interest in the settlement, as that role is already filled by Ali. The state could not intervene in the action because it was already a party.
3 We address the adequacy of Ali’s representation post .
Mitchem next argues he has an interest in the transaction underlying
the litigation between Ali and Auto Nation because he has an interest in the
defendants’ employment practices. This interest derives from his roles as an
aggrieved employee and a member of the public, neither of which gives
Mitchem a specific interest in a PAGA matter. And Mitchem’s individual or
personal interest in enforcing those employment practices is not at stake in
the
Ali
matter because Mitchem’s personal claims are not impacted by a
PAGA settlement. (See
Kim
,
supra
,
Finally, Mitchem contends that the court incorrectly considered
whether his rights outside of PAGA would be implicated rather than asking if
he would be prejudiced by his inability to seek penalties as a proxy under
PAGA. Mitchem cannot be prejudiced personally for being unable to collect
civil penalties because he has no personal right to them. (
Amalgamated
,
supra
,
2. Adequacy of Representation
In addition to failing to demonstrate any interest relating to the underlying transactions beyond the potentially duplicative or overlapping role as a state proxy, Mitchem failed to demonstrate Ali inadequately represented the interests of the state in pursuing the penalties.
“ ‘ [W]here an applicant for intervention and an existing party “ have the
same
ultimate objective
, a presumption of adequacy of representation
arises. ” ’ [Citation.]” (
League of United Latin Am. Citizens v. Wilson
(9th Cir.
1997)
As we have noted, because Mitchem and Ali each represent the interest of the state labor agencies to ensure compliance with labor law, their interests are identical. Mitchem claims that were he permitted to intervene, he would retain an expert to review payroll and timekeeping records to assess the underlying claims’ value, consistent with how class actions have been handled, and that this would lead to a higher settlement amount. 5 But he 4 Federal Rule of Civil Procеdure 24 is the substantive counterpart to California’s intervention rule, and California takes guidance from federal law in assessing the requirements of intervention. ( Edwards 29 Cal.App.5th at pp. 730, 732).
5 Mitchem cites two federal district court cases to argue that Ali was inadequate because “a statistically significant sampling of time and payroll records” along with the “analysis of those records. . . . is necessary ‘to prosecute this action, which seeks to enforce California’s labor laws.’ ( Hill v. *17 provides no authority that a PAGA plaintiff must follow class action strategies and approaches to adequately represent the state’s interests or that this is an appropriate comparison for determining adequacy of representation. These contentions do not demonstrate inadequate representation. Aside from this, Mitchem does not point to any conduct that demonstrates that Ali’s representation was not adequate.
Mitchem appears to argue that Ali’s re presentation was inadequate
because the settlement was unfair. But as we detail
post
, the court did not
abuse its discretion in approving the settlement, which was genuine and
meaningful, and consistent with the goal of benefitting the public by
enforcing labor laws. (See
O’Connor v. Uber Techs., Inc.
(N.D.Cal. 2016)
C. Permissive Intervention
Mitchem does not fare better in his bid for permissive intervention.
Permissive intervention is available when a would-be intervenor meets four
criteria: “(1) the proper procedures have been followed; (2) the nonparty has
a direct and immediate interest in the action; (3) the intervention will not
Eddie Bauer
(C.D.Cal. [2007] )
1. Proper Procedures & Interest in the Action
Setting aside the issue of timeliness, which we addressed ante , the parties do not dispute that Mitchem complied with the remaining procedural requirements for permissive intervention. The court concluded, however, that Mitchem had no direct and immediate interest in this action and lacked standing as a representative of the state, presumably because the state’s interests were already represented by Ali. And the trial court noted that Mitchem did not have any substantive rights under PAGA as an aggrieved employee. We agree.
As we have explained, only the state holds an interest in the
enforcement of penalties under PAGA; aggrieved employees have no
individual substantive or property rights in a PAGA action. (
Amalgamated
,
supra
,
2. Enlarged Issues and Reasons for Intervention as Compared to Opposition
None of the parties addresses the third element in any detail. The defendants claim that if the intervention results in undoing the settlement, that would be an enlargement of the issues. But we fail to see how an intervention for the purpose of challenging the fairness of a PAGA settlement agreement before the trial court, which has a gatekeeping function of approving the settlement, enlarges the issues. This already exists as part of the court’s tasks.
The court concluded that Mitchem did not meet the fourth element,
whether Mitchem’s desire to protect the state’s rights outweighed the
opposition of the parties already involved in the action. Because Mitchem
and Ali represented the same interests, the state’s interest s in enforcing
labor laws , Mitchem’s desire to be the individual responsible for protecting
those rights does not outweigh the opposition raised by those already tasked
with doing so. Given the work the parties had already put into mediating the
settlement and the adversarial nature of the settlement negotiations, the
court’s conclusion on this point was not arbitrary or capricious. (See
City and
County of San Francisco
Finally, even had the court improperly denied Mitche m’s request to intervene, because it considered the substance of his objections before approving the settlement, neither Mitchem nor the state as the real party in interest was harmed by the court denying his requests to intervene.
III
SETTLEMENT FAIRNESS A. Standing
The parties to this appeal do not dispute that Mitchem had standing to challenge the denial of his requests to intervene. And Mitchem acknowledges that no California Court of Appeal has determined who has standing to appeal a PAGA settlement. But he argues we should consider him an aggrieved party for purposes of section 902 because he meets the definition of “aggrieved employe e. ”
Labor Code section 2699, subdivision (a) provides that any “aggrieved
employee” has standing to pursue a PAGA action as a proxy for the state. It
is a term of art used in the PAGA statute to describe “any person who was
employed by the alleged violator and against whom one or more of the alleged
violations was committed.” (Labor Code, § 2699, subd. (c);
Kim
,
Under section 902, an y “party aggrieved” may appeal a judgment, and in the context of this statute, “ ‘one who is de nied the right to intervene in an *21 action ordinarily may not appeal from a judgment subsequently entered in the case. [Citations.] Instead, he may appeal from the order denying intervention.’ [Citation.]” ( Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260, 263.) Hernandez held that unnamеd class members could not appeal a class judgment, settlement, or attorney fees award unless they had intervened in the action, ( ibid ) but it did not address PAGA. Although Mitchem appears to be an “aggrieved employee,” it is not clear that he is an “aggrieved party” with respect to judgment.
We decline to wade into this issue because, even assuming Mitchem has standing to challenge the PAGA settlement as a third party non- intervenor member of the public, we conclude the court did not abuse its discretion approving it.
B. Mootness
Ali and Auto Nation each contend this appeal is moot because there is no actual or legal remedy available, as the funds have been distributed to thousands of individuals and the real party in interest, the state, accepted the benefits of the settlement.6
6 Mitchem submitted four requests for judicial notice: Request for
Judicial Notice in support of the appeal, filed October 26, 2000 (RJN 1);
Supplemental Request for Judicial Notice in Support of Appeal, filed
November 6, 2000 (SRJN); Request for Judicial Notice in Opposition to
Motion to Dismiss, filеd November 6, 2000 (RJN 2), and Second
Supplemental Request for Judicial Notice in Support of Appeal, filed April 23,
2021 (SSRJN). RJN 2 and SRJN ask us to take judicial notice of four
documents related to the depublication of
Starks v. Vortex Industries, Inc.
(2020)
We question whet her the LWDA’s acceptance of its share of the
judgment proceeds is sufficient to moot the appeal in light of Mitchem’s
challenge to the court’s ruling on intervention and request to vacate the
judgment approving the settlement. We note that the real party in interest,
the LWDA, agreed to the terms of the settlement before depositing or
distributing the judgment funds, and the challenge here is by a party
claiming the same rights and status as the LWDA. But we also recognize the
formal requirement that administrative agencies deposit funds within five
working days of receipt (Cal. Dept. of General Services, State Admin. Manual
(2015) § 8032.1 [accumulated money will not remain undeposited for more
than five working days]), and that a party does not lose its right to appeal a
judgment through conduct arising under compulsion or risk of forfeiture
(
Lee v. Brown
(1976)
C. Settlement Fairness
Labor Code section 2699, subdivision (
l
)(2) requires the trial court to
review and approve a PAGA settlement, and the Supreme Court has
commented tha t in doing so, the court “ensur[es] that any negotiated
resolution is fair to those affected.” (
Williams v. Superior Court
(2017) 3
Cal.5th 531, 549.) There is no published California authority that has
identified the standard a trial court should employ in evaluating PAGA
settlements. (See
Flores v. Starwood Hotels & Resorts Worldwide
(C.D.Cal.
2017)
Although the purposes of and requirements for reviewing class action and PAGA settlements differ, as we explain more fully post , we will review the trial court’s approval of the PAGA settlement and corresponding entry of 7 Among other things, Mitchem proposes a standard that requires the court to “weigh the full monetary value of relevant penalties” in evaluating a PAGA settlement. The proposed standard is taken from an amicus brief filed by the Labor Commissioner in Price v. Uber Technologies, Inc. (L.A. Sup. Ct., No. BC554512), which Mitchem asks us to take judicial notice of in RJN 1. We decline because the brief was filed in an unrelated matter and would not be helpful to our decision here. (See Deveny 139 Cal.App.4th at p. 418.) The proposed requirement has not been adopted by the Legislature or any published case law.
judgment here for an abuse of discretion. We apply this standard because the
statute does not detail specific requirements for a trial court’s review, leaving
the court to exercise its judgment and discretion to assess whether the
settlement achieves the goals of PAGA (see
Fasuyi v. Permatex, Inc.
(2008)
In the class action context, trial courts consider whether a settlement is
fair, adequate, and reasonable. (
Cellphone Termination Fee Cases
(2009) 180
Cal.App.4th 1110, 1118.) They consider the substance of the proposed
settlement to avoid fraud, collusion, or unfairness to the class. (
Id.
at
p. 1117.) Trial courts have broad discretion, and their determination is
reviewed for abuse of discretion. (
Id.
at p. 1118.) “ ‘To merit reversal, both
an abuse of discretion by the trial court must be “clear” and the
demonstration of it on appeal must be “strong.” ’ ” (
Cho v. Seagate
Technology Holdings, Inc.
(2009)
However, the court’s gatekeeping function in the class action context
differs from its role in reviewing PAGA cases. In class actions, courts have a
fiduciary duty to protect the interests of absent class members, whоse
individual claims for wrongfulness will be discharged. (
Kullar v. Foot Locker
Retail, Inc.
(2008)
But a PAGA representative action is “not akin to a class action”; it “is a
species of
qui tam
action.” (
Flores
,
supra
,
Mitchem identifies three alleged deficiencies in the settlement, which he contends demonstrate the agreement is not genuine and meaningful, consistent with the underlying purposes of PAGA. We address each in turn.
1. Sufficiency of Available Information
Mitchem contends that the trial court did not have sufficient information from which it could evaluate the quality of the settlement. Although there is no published authority that requires independent *26 evaluation of the fairness of a PAGA settlement to the parties affected,8 the parties to the Ali matter provided the trial court with sufficient information for it to conclude that the settlement was genuine and meaningful.
Prior to mediation, the defendants provided Ali with the number of nonexempt employees and the number of pay periods for commissioned and noncommissioned employees, as well as itemized wage statements and employment policies. This information was a starting point to evaluate the possible penalties, which are based on pay period and class of aggrieved employees. (Labor Code, § 2699, subd. (f).)
The parties participated in an adversarial mediation that required the
guidance of an experienced mediator to reach agreement. During mediation,
they considered penalties covering a possible 200,935 pay periods during the
relevant time period. They focused on the value of claims for the commission-
8 Mitchem points to
O’Connor
to argue the trial court erred because it
did not weigh the full monetary value of the relevant penalties to determine
if the proposed penalties would effectively minimize any economic advantage
to the employer. Although we will conclude the court had sufficient
information to draw conclusions about the recovery deterring labor law
violations, we separаtely note here that in
O’Connor
the court was not tasked
with simply considering the likely impact of the PAGA penalties on employer
behavior because the parties there negotiated a class settlement as well. The
court’s concern in
O’Connor
was that there could be “temptation to include a
PAGA claim in a lawsuit to be used merely as a bargaining chip,” so that the
rights of nonclass members could be essentially “waived for little additional
consideration in order to induce the employer to agree to a settlement with
the class.” (
O’Conner
,
supra
,
eligible employees and calculated it, without stacking penalties,9 to equal $1,186,200. They focused on this group of aggrieved employees because they agreed that defendants would likеly have prevailed on the noncommissioned employee claims during the pay periods at issue based on a review of the documentation, which indicated the defendants had complied with the law. This resulted in dismissing from penalty consideration claims for 6,500 noncommissioned employees, though they were included in the complaint as aggrieved employees. The parties thus considered the total number of pay periods likely to show liability was 5,931. At $100 per pay period, the maximum value of the claims was between $593,100 (for the 5,931 identified employees) and $1,186,200 (for all commission-eligible employees, without regard to likely liability). After accounting for the likely number of pay periods in which violations occurred and negotiating at an arm’s length, the parties agreed on a net PAGA penalty payment totaling $519,800.62, primarily relying on the claims of identified employees. This also took into consideration the discretionary nature of the civil penalties and the fact that defendants had changed their commission payment plans shortly before Ali 9 “Stacking” pеnalties occurs when a civil penalty is re covered for each violation within a single pay period. Ali’s attorney noted that no appellate court had ruled on the issuing of stacking and argued to the trial court that the availability of stacking, particularly in a PAGA settlement, is unclear because Labor Code section 2699, subdivision (f ) references “a” penalty for “a” violation, while subdivision (g ) references “the” civil penalty on behalf of employees against whom “one or more of the alleged violations.” *28 sent the LWDA a PAGA notice, reducing possible liability for that group.10 The settlement provided for one credit for each period worked for all aggrieved employees plus four pay period credits for those who were commission-only employees, based on the comparative strength of those claims, demonstrating the parties evaluated the strengths and weaknesses of claims. And the mediated settlement agreement was subject to confirmatory discovery, which the parties completed before seеking approval.
The parties also presented to the court information about the potential strengths and weaknesses of the PAGA civil penalties claims by explaining the risk factors that could preclude any recovery of penalties, including a separate entity defense, which defendants had successfully litigated to summary judgment in another case. They noted the complexities, expenses, and duration of continued litigation and provided the court with their analysis and reasoning. Given the information provided to the court, we cannot say it lacked sufficient information to draw its conclusion, thereby abusing its discretion.
2. Scope of Release
Mitchem next contends the scope of the release was unduly broad, so it
was improper for the court to approve its terms. Mitchem’s contention is
based on two concerns he raised in his objections, and which the trial court
considered before reaching its conclusion. First, he argues the release
impermissibly extended beyond the time period for which Ali was authorized
by the state to seek PAGA penalties beсause it covered violations dating back
10 RJN 1 is denied. The first two items are documents in the record, so
granting judicial notice would be duplicative and unnecessary. The fifth
through seventh items are documents from Mitchem’s suit against the
defendants and are not helpful to our resolution of the issues before us. (See
Deveny
to February 20, 2017 when the PAGA notice only allowed for Ali to make claims dating back to May 25, 2017. Second, Mitchem contends the release is overbroad because it includes predicate Labor Code violations not included in the original PAGA notice or the original complaint.
A PAGA notice is required to provide reasonably detailed facts and
theories and to identify aggrieved employees, but plaintiffs are not expected
to know every potential fact, future theory, or even group of aggrieved
employees at the time they file this notice; this information will become more
complete through discovery.11 (
Cardenas v. McLane Foodservices, Inc.
(C.D.Cal. 2011)
Additionally, statute of limitations and administrative exhaustion
requirements are affirmative defenses subject to forfeiture or waiver by a
defendant. (See
Moor v. City of Los Angeles
(2007)
Mitchem contends the added claims must be closely scrutinized to
verify adequate representation of affected employees. But this argument
misses the mark; no employees’ rights are affected because they do not
release their personal employment claims in a PAGA settlement agreement.
(
Kim
,
Finally, Mitchem implies that the parties did not adequately explore and evaluate the additional predicate violations, suggesting that Ali was not sufficiently adversarial in representing the state on these additional claims. But Mitchem offers no evidence that shows Ali inadequately represented those specific claims, and the evidence indicates the negotiations were adversarial. The court did not abuse its discretion in approving the settlement based on the scope of the relеase or the time period it covers.
3. Reverse Auction
Although Mitchem accuses the defendants of secretly negotiating their settlement without first notifying Mitchem of their plans, he provides no evidentiary basis for his claim that this settlement should be viewed as a 12 Mitchem’s reply brief argument that he has standing to assert this defense is not persuasive because Mitchem’s proxy standing in a different matter is not co- equal with Ali’s proxy standing in this case, as we have discussed ante .
reverse auction. Mitchem also argues that Auto Nation ’s act of rescheduling its mediation with Mitchem for a date after the hearing on the settlement approval lacked candor and is evidence of reverse auction. But Mitchem was aware of the pending litigation between Ali and the defendants and opted not to seek consolidation or coordination of the actions. And Mitchem, like Ali, prepared to enter into a statewide litigation with the defendants, presumably without informing Ali of his plans. This does not make the activity collusion.
Further, the record does not reflect clandestine activities by the parties to the settlement. In their February 21, 2019 joint case management statement, the parties indicated they were planning a mediation session on March 26. The following month, April 25, 2019, their joint case management statement reported they were finalizing a settlement and anticipated submittal of it for court approval in June. This occurred before Auto Nation took the June 10 mediation in the Mitchem action off calendar. The fact of their mediation was public record, as was their intention to settle. Their first amended complaint, filed June 11, 2019, added defendants and Labor Code violations and set the date back to February 20, 2017, which made it clear that the claims being settled subsumed those in other, related PAGA actions like Mitchem’s. Then the following month, the parties filed a joint motion for approval on July 1. Mitchem did not ask to intervene until August 23, 2019, more than four months after the parties indicated they had reached a tentative settlement agreement. The parties did not act in secret or conceal the settlement; they simply did not give notice to Mitchem.
DISPOSITION
The judgment is affirmed. Parties to bear their own costs on appeal. HUFFMAN, Acting P. J. WE CONCUR:
O'ROURKE, J.
IRION, J.