RACHEL MONIZ, Plaintiff and Respondent, v. ADECCO USA, INC.,
A159410 & A160133, A159978
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR
Filed 11/30/21
CERTIFIED FOR PUBLICATION; (San Mateo County Super. Ct. No. 17-CIV-01736)
Under the Private Attorneys General Act of 2004 (PAGA) (
In separate PAGA representative actions, Rachel Moniz and Paola Correa sued respondent Adecco to recover civil penalties for Adecco‘s alleged violations of the Labor Code. Moniz settled her case first, and the trial court approved the settlement. In this current set of consolidated appeals, Correa attacks many aspects of the settlement process and approval, including the manner in which the trial court treated objections to the settlement by Correa and the LWDA, the standard used by the trial court to approve the settlement, numerous alleged legal deficiencies of the settlement, and its overall fairness. She also contests the trial court‘s ruling denying her attorney fees and an incentive payment.
We find that the trial court applied an appropriate standard of review by inquiring whether the settlement was “fair, adequate, and reasonable” as well as meaningful and consistent with the purposes of PAGA, and we reject many of Correa‘s contentions regarding the settlement‘s purported substantive and procedural deficiencies. Nonetheless, we reverse the judgment because we cannot infer from the record that the trial court assessed the fairness of the
BACKGROUND
I. The Parties
Defendant Adecco is a staffing firm that supplies temporary labor to a variety of companies. Adecco hires temporary employees called “Associates” and full-time employees called “Colleagues.” Moniz was a Colleague who managed Adecco‘s relationship with Google, and Correa was an Associate assigned to work at Google. Moniz worked for Adecco until spring of 2016, and Correa worked for Adecco until December 2016.
II. Doe and Moniz
In December 2016, John Doe filed a PAGA complaint against Google in San Francisco Superior Court (Doe, et al. v. Google, et al. (Super Ct. S.F. City & County, 2016, No. CGC-16-556034) (Doe)). He alleged that Google‘s non-disclosure agreements, policies, and practices violated numerous provisions of the California Labor and Business and Professions Codes.
On February 1, 2017, Moniz filed a PAGA notice with the LWDA alleging that Adecco maintained and implemented unlawful limitations on the disclosure of information in violation of the Labor Code. For example, she stated that Adecco impermissibly required her to agree to several illegal terms in Adecco‘s “Employment Agreement for Colleagues in California.” Moniz‘s PAGA notice stated that she intended to file a complaint against Adecco on behalf of “all current and former employees, including but not limited to ‘Colleagues,’ who worked for Adecco in California.”
On February 14, 2017, Correa submitted to the LWDA a PAGA notice alleging, among other things, that Adecco‘s non-disclosure agreements, policies, and practices violated sections
Moniz filed her PAGA representative action in San Mateo County Superior Court in April of 2017 (Moniz v. Adecco USA, Inc. (Super Ct. San Mateo County, 2017, No. 17-CIV-01736) (Moniz)). She alleged that Adecco violated sections
In both Doe and Moniz, Adecco demurred on the basis that all the plaintiffs’ claims were subject to federal “Garmon preemption.” (San Diego Unions v. Garmon (1959) 359 U.S. 236.)
The San Francisco Superior Court sustained the demurrers before it and ruled that nearly all the plaintiffs’ claims were subject to Garmon preemption. The Doe plaintiffs appealed from the subsequent judgment.2 Meanwhile, the court in Moniz overruled Adecco‘s demurrer.
While the Doe appeal was pending, Correa sought to intervene in Moniz.3 She argued that she was entitled to mandatory intervention because she had an interest relating to the property or transaction at issue, because the eventual disposition in Moniz could impair her ability to protect that interest, and because Moniz did not adequately represent that interest. The trial court denied Correa‘s motion on timeliness grounds and because she did not meet the requirements for mandatory or permissive intervention. This court affirmed the trial court‘s denial order, holding that Correa had not established she was entitled to mandatory intervention because she did not establish the inadequacy of Moniz‘s representation. (Moniz v. Adecco USA, Inc. (February 11, 2020, A155474) [nonpub. opn.] (Moniz I).) We also affirmed the denial of her request for permissive intervention because the triаl court did not abuse its discretion in finding that the interests opposing intervention outweighed Correa‘s alleged interest in the action.
Meanwhile, in the trial court, Moniz and Adecco disputed whether Moniz‘s PAGA notice and complaint encompassed claims relating to employment
III. The Moniz Settlement Approval
On or around May 13, 2019, after two mediation sessions with an experienced mediator, the Moniz parties moved for approval of a settlement agreement they reached through mediation. The trial court held a hearing and declined settlement approval, finding that the agreed-upon release was too broad because it included a release of aggrieved employees’ non-PAGA claims, including claims under
On June 3, 2019, the parties executed a settlement agreement with a narrowed release. On July 3, 2019, after an additional hearing, the trial court approved the settlement and entered judgment. Thereafter, the LWDA moved ex parte to intervene, objecting to the settlement and seeking to vacate the judgment because, among other things, the final settlement had not been timely served on the LWDA. At an ex parte hearing, the LWDA informed the trial court that it did not want to intervene or take over prosecution of the case, but it desired to present a postjudgment motion to vacate. Correa also filed a postjudgment motion to vacate the judgment. After a hearing, the trial court vacated thе judgment because timely notice of the settlement had not been provided to the LWDA.
On September 6, 2019, Moniz filed a renewed motion to approve the settlement, which Adecco joined. The LWDA filed comments and objections
On October 16, 2019, the court held a settlement approval hearing. The LWDA appeared and argued. The trial court received Correa‘s written opposition and objection, but it denied her oral argument on the question of settlement approval.
On November 22, 2019, the trial court issued an order approving the settlement. Thе court recounted the following key settlement terms: The settlement was for a non-reversionary $4.5 million in civil penalties. The settlement was for alleged violations against aggrieved employees, called the “PAGA Settlement Members,” defined as “current and former employees of Defendant who worked as an Associate or Colleague in California at any point during” the period February 1, 2016 to the date of final approval. There were approximately 62,000 such aggrieved employees. Adecco agreed to “revise its Colleague Agreement and Associate Agreement and related policies which allegedly limit employees from disclosing their own salary, wages, benefits and related working conditions; and/or from discussing [the] same with others; and/or from engaging in whistleblowing activity.” The net proceeds of the settlement were allocated 75 percent to the LWDA and 25 percent to the aggrieved employees. Of that 25 percent, 88 percent was allocated to the Associates and 12 percent was allocated to the Colleagues.
Adecco received the following release: “[T]he LWDA and PAGA Settlement Members release any and all known and unknown claims under the PAGA against the Released Parties that were or could have been pled based on the factual allegations of the Complaint, including but not limited to Plaintiff‘s allegation that Defendant unlawfully prohibited current and former employees from: (1) disclosing certain information including but not limited to salary, benefits, wages, identities of other employees, training and operations methods, and office protocols and systems and programs and systems; (2) discussing the wages of others, engaging in whistleblower activity, or disclosing or discussing their working conditions. This includes, but is not limited to, PAGA claims for violation of
The settlement release included a waiver of rights under
The trial court acknowledged the lack of binding authority providing a standard by which a PAGA settlement should be reviewed, and applied the “fair, reasonable, and adequate” standard applicable to “analogous class actions.” The court also stated that no binding authority required it to apply the standard the LWDA advocated—that a trial court must closely scrutinize a PAGA settlement and find it “meaningful, and consistent with the underlying purposes of the statute to benefit the public.” Nonetheless, the trial court applied that standard and engaged in its own analysis of the settlement‘s fairness. It found,
“The... proposed $4.5 million settlement of PAGA civil penalties for violations of the Labor Code . . . is fair, reasonable, and adequate. Even if the ‘standard’ asserted by LWDA is applied, the Court finds that the $4.5 million Settlement, which includes a change of policy by Adecco in the language of its employment agreements to directly address the concerns raised by this lawsuit, is ‘meaningful, and consistent with the underlying purpose of the statute to benefit the public.’ [[] This Court finds that this Settlement is consistent with the stated purpose of PAGA that ‘the vigorous assessment and collection of civil penalties as provided in the Labor Code’ is the ‘meaningful deterrent to unlawful conduct‘. (Legislative History of PAGA, Section 1 of Stats. 2003 c[h]. 906 . . . .)”
In January 2020, the triаl court approved up to $78,000 for payment of costs, fees, and expenses to the settlement administrator, $32,000 for Moniz‘s costs, a $12,000 additional fee for Moniz‘s release and service as plaintiff,
On February 10, 2020, the trial court entered judgment. Correa moved for a new trial under
DISCUSSION
Adecco raises certain procedural challenges to Correa‘s appeals, which we address before turning to Correa‘s substantive challenges.
I. Procedural Challenges
Adecco urges dismissal on three procedural grounds. First, Adecco asserts that Correa‘s appeal of the November 22, 2019 order and the January 2020 order (appeal No. A159410) should be dismissed because these prejudgment orders were not appealable. Second, Adecco аrgues that Correa was not a party to Moniz, so she lacks standing to appeal the judgment and the prejudgment orders (appeal Nos. A159410 and A159978). Third, Adecco asks us to find that Moniz forfeited her appeal by failing to adequately brief her arguments. (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 [“The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived“].) For the reasons set forth below, we reject Adecco‘s procedural challenges.
“The existence of an appealable judgment is a jurisdictional prerequisite to an appeal.” (Jennings v. Marralle (1994) 8 Cal.4th 121, 126.) “A reviewing court has jurisdiction over a direct appeal only when there is (1) an appealable order or (2) an appealable judgment.” (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 696.) Correa does not dispute Adecco‘s claims regarding the non-appealable nature of the orders at issue in appeal
To have standing to appeal a judgment, an appellant must be a party of record and aggrieved by the challenged judgment or order. (
Adecco‘s argument that Correa lacks standing to challenge the judgment because she is a nonparty is not well-taken. For purposes of appellate standing, an unnamed party may become a party to an action through intervention (
Recently, our colleagues in the Second District held that a PAGA representative in one action does not have standing to move to vacate a judgment following a settlement of another PAGA action with overlapping PAGA claims or to appeal that judgment. (Turrieta v. Lyft, Inc. (2021) 69 Cal.App.5th 955, 967-968 (Turrieta).) In Turrieta, appellants and Turrieta filed separate PAGA representative actions alleging that Lyft misclassified its drivers as independent contractors, thereby violating multiple provisions of the Labor Code. (Id. at p. 962.) Turrieta settled her lawsuit with Lyft first, and appellants moved to intervene, moved to vacate the judgment entered after the court approved the settlement, and appealed the judgment. (Id. at pp. 964-967.) Turrieta and Lyft challenged appellants’ standing to appeal (
The appellate court rejected the Turrieta appellants’ claim that they were aggrieved as nonparty employees, observing that a PAGA judgment does not extinguish individual claims of nonparty employees. (Turrieta, supra, 69 Cal.App.5th at pp. 973-974.) The court also found that they were not aggrieved because they, as PAGA representatives, did not possess a personal interest in the settlement of another PAGA claim. (Id. at p. 971.) “Because it is the state‘s rights, and not appellants‘, that are affected by a parallel PAGA settlement, appellants are not aggrieved parties with standing to seek to vacate the judgment or appeal. Nor can appellants claim a pecuniary interest in the penalties at issue, as the ‘civil penalties recovered on the state‘s behalf are intended to “remediate present violations and deter future ones,” not to redress employees’ injuries.’ ” (Id. at p. 972.)
We disagree with Turrieta‘s conclusion that status as a PAGA plaintiff in one action is insufficient to confer standing on that PAGA plaintiff to appeal a judgment following an allegedly unfair settlement in another PAGA
Finally, we decline Adecco‘s invitation to resolve the appeal of the trial court‘s postjudgment orders on forfeiture grounds. Correa sets forth her arguments regarding legal error, abuse of discretion, and the erroneous judgment in light of the facts in a manner sufficient to preserve her right to appeal.
II. PAGA Overview
Before addressing Correa‘s substantive challenges, we begin with a brief discussion of PAGA. “In September 2003, the Legislature enacted [PAGA]
“A PAGA claim is legally and conceptually different from an employee‘s own suit for damages and statutory penalties.” (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 81 (Kim).) An aggrieved employee suing under PAGA “does so as the proxy or agent of the state‘s labor law enforcement agencies.” (Arias, supra, 46 Cal.4th at p. 986.) Every PAGA action is “a dispute between an employer and the state.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 386 (Iskanian).)
In a PAGA lawsuit, “the employee plaintiff represents the same legal right and interest as state labor law enforcement agencies—namely, recovery of civil penalties that otherwise would have been assessed and collected by the [LWDA].” (Arias, supra, 46 Cal.4th at p. 986.) Thus, the civil penalties a PAGA plaintiff may recover on the state‘s behalf are distinct from the statutory damages or penalties that may be available to employees suing for individual violations. (Iskanian, supra, 59 Cal.4th 348 at p. 381.) An action under PAGA “is fundamentally a law enforcement action” and relief is “designed to protect the public and not to benefit private parties.” (Arias, at p. 986.) “A PAGA representative action is therefore a type of qui tam action,” conforming to all “traditional criteria, except that a portion of the penalty goes not only to the citizen bringing the suit but to all employees affected by the Labor Code violation.” (Iskanian, at p. 382.) The “government entity on whose behalf the plaintiff files suit is always the real party in interest.” (Ibid.)
Only an “aggrieved employee” has standing to bring a civil action under PAGA. (
III. Substantive Challenges
In this appeal, Correa argues that the trial court improperly dealt with the objections to the settlement; the settlement was beyond the trial court‘s authority; the settlement should not have been approved because there was no meeting of the minds; thе trial court used the wrong standard to approve the settlement; the trial court abused its discretion in finding the
settlement amount and allocation was fair; and the trial court ignored evidence of collusion. Correa additionally complains that the trial court erred in denying her request for attorney fees and an incentive payment. We address certain of her challenges below, starting with the standard of review.A. Trial Court and Appellate Standard of Review
This appeal raises what federal district courts have referred to as the “vexing” question of what standard a trial court should use to review a PAGA settlement. (Flores v. Starwood Hotels & Resorts Worldwide (C.D. Cal. 2017) 253 F.Supp.3d 1074, 1075.) Aside from the requirement that the court “review and approve” a settlement in a civil action filed under PAGA (
Correa contends that, in approving a PAGA settlement, the trial court acts as a fiduciary to absent parties and must closely scrutinize the settlement to determine whether it is fair, genuine, meaningful, and consistent with the underlying purposes of PAGA. Although the LWDA did not suggest the trial court acted as a fiduciary, it argued below that the same settlement approval standard should be applied. While Correa maintains that the trial court failed to apply thе standard urged, Adecco correctly points out that the trial court in fact applied that standard, finding that the “non-reversionary [s]ettlement of $4.5 million is fair, adequate, [and] reasonable,” as well as “meaningful[] and consistent with the underlying purpose of the statute to benefit the public.” The court further found that the settlement “advances the purposes of the Labor Code.” We conclude the trial court used the appropriate standard.
As the trial court did in part here, many federal district courts have applied the “fair, reasonable, and adequate” standard from class action cases
Despite the fact that “‘a representative action under PAGA is not a class action‘” (Kim, supra, 9 Cal.5th at p. 87), and is instead a “type of qui tam action” (Iskanian, supra, 59 Cal.4th at p. 382), a standard requiring the trial court to determine independently whether a PAGA settlement is fair and reasonable is appropriate. Class actions and PAGA representative actions have many differences, with one salient difference being that certain due process protections afforded to unnamed class members are not part of PAGA litigation because aggrieved employees do not own personal claims for PAGA civil penalties. (Williams, supra, 3 Cal.5th at p. 547, fn. 4; see Kim, at p. 87.) Nonetheless, the trial court must “review and approve” a PAGA settlement (
When trial court approval is required for certain settlements in other qui tam actions in this state, the statutory standard is whether the
Given PAGA‘s purpose to protect the public interest, we also agree with the LWDA and federal district courts that have found it appropriate to review a PAGA settlement to ascertain whether a settlement is fair in view of PAGA‘s purposes and policies. (O‘Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110, 1132-1134; Jordan v. NCI Group, Inc. (Jan. 5, 2018, No. EDCV 16-1701-JVS) 2018 U.S. Dist. Lexis 25297, at *3-*4; Chamberlain v. Baker Hughes, a GE Co., LLC, supra, 2020 U.S. Dist. Lexis 134582 at *10-*11; see Consumer Advocacy Group, Inc. v. Kintеtsu Enterprises of America (2006) 141 Cal.App.4th 46, 59, 61-62 [where the Legislature required court approval of private settlements of Proposition 65 actions brought to vindicate the public interest, court must evaluate the resulting consent decree to determine if it is “just” and “serves the public interest“].)11 We therefore hold that a trial court should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in view of PAGA‘s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws. (See Williams, supra, 3 Cal.5th at p. 546 [PAGA “sought to remediate present violations and deter future ones“]; Arias, supra, 46 Cal.4th at p. 980 [the declared purpose of PAGA was to augment state enforcement efforts to achieve maximum compliance with labor laws].) The trial court below used this standard.
B. The Trial Court‘s Treatment of Settlement Objections
Once an aggrieved employee files a PAGA lawsuit, the statutory scheme recognizes that the employee may settle that lawsuit on behalf of the state. (
Addressing Correa‘s first contention, the trial court did not err in its treatment of the LWDA‘s comments. Correa relies on authority espousing the general rule of administrative law that an agency‘s interpretation of a statute is entitled to “consideration and respect.” (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7 (Yamaha).) Adecco responds that, in contrast to statutory language stating that the Division of Occupational Health and Safety can comment on a settlement and requiring the court to give these comments “appropriate weight” in PAGA suits alleging OSHA violations (
Next, PAGA does not provide that aggrieved employees must be heard on the approval of PAGA settlements. Citing only Harvey v. Morgan Stanley Smith Barney LLC (N.D. Cal. Mar. 3, 2020, No. 18-cv-02835-WHO) 2020 U.S. Dist. Lexis 37580, *34-*36, Correa states that courts have “generally allowed and considered settlement objections by PAGA agents.” However, as Adecco points out, Correa concedes that PAGA provides no mechanism for aggrieved employees, including those pursuing PAGA lawsuits, to be heard in objection to another PAGA settlement. This concession is dispositive, and we will not read a requirement into a statute that does not appear therein. (See, e.g., Scottsdale Indemnity Co. v. National Continental Ins. Co. (2014) 229 Cal.App.4th 1166, 1172 [in construing statutes, courts generally will not add words to the statutory language].) That the federal district court in Harvey opted to consider the objections made by another PAGA plaintiff (while at the same time recognizing she had no statutory right to object) dоes not change this. (Harvey, at *31-*34.)
Correa advances numerous policy considerations for why PAGA representative plaintiffs from other cases should be heard on PAGA settlements, including that such participation would help prevent reverse auctions and would promote the fairness of PAGA settlements. Although PAGA does not contain an express statutory mechanism for aggrieved employees pursuing representative actions to object to a separate PAGA settlement, Adecco does not argue that the trial court lacked inherent power to hear and consider such objections. Given the history of appellate litigation in this case and in Doe, and especially since further proceedings will be required, as discussed in Section III.D, post, we perceive no reason why the trial court should not hear Correa‘s objections on remand.13
C. The Trial Court‘s Alleged Lack of Authority/Jurisdiction
1. Release of Claims Not Listed in the PAGA Notice
Correa next argues that the settlement is invalid because it encompassed a release of claims that were not listed in Moniz‘s PAGA notice. Her argument
a. PAGA‘s Notice Requirement
“As a condition of suit” under PAGA, an aggrieved employee must provide notice to the employer and the state of the specific provisions of the Labor Code alleged to have been violated, including “the facts and theories to support the alleged violation.” (
b. Claims for Civil Penalties for Alleged Violations of Sections 232, 232.5, 432.5, 1102.5, and 1197.5(k) Against Associates
On the question of whether Mоniz could sue for violations as to both Colleagues and Associates, the trial court analyzed Moniz‘s PAGA notice and ruled, “Moniz has adequately exhausted her administrative prerequisites to pursue a PAGA claim on behalf of Adecco full-time employees (called Colleagues) and temporary employees (called Associates) for the time period February 1, 2016 to the present for allege[d] violations of Labor Code Sections 232, 1197.5(k), 232.5, 1102.5, and 432.5, based upon . . . Adecco allegedly requiring Colleagues and Associates to agree in writing not to discuss or disclose their working conditions including salary, benefits, and compensation.” Correa contests this ruling, ultimately arguing that the settlement is invalid because it resolves PAGA claims for Adecco‘s alleged violations of
As a matter of procedure, Correa does not have standing to challenge the summary adjudication order because it was favorable to the state. (See Marich v. MGM/UA Telecommunications, Inc. (2003) 113 Cal.App.4th 415, 431 [appellant could not challenge favorable ruling below].) Correa counters that she can challenge this order on appeal because it “caused the State to be aggrieved, and Correa stands in the State‘s shoes.” But the trial court‘s ruling allowed for a broader potential recovery of civil penalties for the LWDA. Furthermore, the LWDA—whose interests Correa purports to represent—did not take issue with this ruling, informing the court below, “The -- second of all, the language of the settlement agreement was -- and I appreciate and understand the parties’ arguments and the Court pointing out the issue of the colleagues versus the associates. That‘s not the issue that‘s the problem for us.” (Italics added.) Correa thus lacks standing to challenge the summary adjudication ruling.
Even assuming Correa had standing, her challenge to the court‘s summary adjudication ruling also fails because the ruling was correct. Moniz began her PAGA notice by stating that she would file a complaint for all current and former Adecco California employees, “including but not limited to ‘Colleagues.‘” The basis for the proposed lawsuit was that “Adecco maintained and implemented unlawful limitations on the disclosure of information in violation of, inter alia, the California Labor Code.” Specifically set forth as an “example” of the unlawful limitations at issue, Moniz stated that she signed an “Employment Agreement for Colleagues in California,” and she believed all Colleagues were required to execute this form contract. She wrote that this contract contained a non-disclosure provision essentially precluding Colleagues from divulging “confidential information” without Adecco‘s written consent, including salary and benefits data as well as non-public information and knowledge having “some commercial value.” Moniz then listed the statutes violated by the required execution of the form agreements and explained why they were violated. She concluded, “The aggrieved employees include all current and former Adecco employees, including but not limited to Colleagues, who are or were subject to the policies set forth above.” Moniz did not mention Associates in her PAGA notice by name, but she clearly set forth her intent to sue on behalf of any Adecco employee subject to unlawful disclosure limitations imposed through Adecco‘s form employment contracts, of which her form employment agreement was an exemplar. And, again, the LWDA did not dispute the scope of Moniz‘s PAGA notice, indicating that it
c. Release of Other Claims Not Listed in the PAGA Notice
Correa next argues, as did the LWDA below, that the settlement release is invalid because Moniz could not release any PAGA claim not listed in her PAGA notice, yet the release covers “all known and unknown claims under PAGA . . . that were or could have been pled based on the allegations of the Complaint.” She contends that, because an aggrieved employee must give the LWDA notice before suing, the content of that notice fixes the scope of his or her authority to act for the state and sets an outer limit on the PAGA claims he or she is authorized to release when settling the PAGA representative action. Adecco, on the other hand, defended the validity of release below by representing that it released only PAGA claims that were or could have been pled based on the primary rights at issue in the complaint, and such a release preserved Adecco‘s res judicata defense.14 The trial court rejected the LWDA‘s argument that the settlement release in this case was invalid because it extended beyond claims listed in Moniz‘s PAGA notice. “The language of the Release itself is designed to specifically be limited to claims available under PAGA only, and for such claims that might arise only from the factual allegations made by Plaintiff in this case . . . . As the California Supreme Court held in Arias, the aggrieved employees who are not named parties in this case are barred by collateral estoppel or res judicata from filing another PAGA lawsuit arising from these same facts, upon entry of judgment on this Settlement. Accordingly, the Release so providing is consistent with law. . . .”
Although Correa‘s argument does not lack in superficial appeal, the trial court was correct in finding that the release in this case was not invalid because it purported to include PAGA claims not listed in Moniz‘s PAGA notice. That the doctrine of res judicata applies to PAGA judgments informs this conclusion. (Arias, supra, 46 Cal.4th at p. 986 [“with respect to the recovery of civil penalties, nonparty employees as well as the government are bound by the judgment in an action brought under [PAGA]“]; Robinson v. Southern Counties (2020) 53 Cal.App.5th 476, 482-483 [claim preclusion prevented second PAGA representative action]; Magana v. Zara USA, Inc. (9th Cir. 2021) 856 Fed.Appx. 83, 85-87 [claim preclusion did not bar second PAGA representative suit with claim implicating different primary right].) Res judicata consists of claim and issue preclusion.
Correa also relies on Iskanian for the proposition that a settlement release must be limited to the claims listed in the PAGA notice because “a PAGA agent cannot waive PAGA claims pre-dispute,” but Iskanian does not assist Correa. In Iskanian, the plaintiffs signed arbitration agreements with PAGA representative action waivers as part of their employment, and their employer later sought to use these waivers to prevent them from litigating representative PAGA claims in any forum. (Iskanian, supra, 59 Cal.4th at pp. 360-361Iskanian held that the agreements’ ban on bringing PAGA actions in any forum violated public policy. (Iskanian, at pp. 384-389.) Iskanian teaches that an individual employee cannot waive the right to bring a PAGA representative action in any forum before any dispute arises because such waiver would interfere with California‘s public policy to encourage the enforcement of the Labor Code through PAGA actions. (Julian v. Glenair, Inc. (2017) 17 Cal.App.5th 853, 867.) A release by a PAGA representative in a court-approved settlement of a PAGA representative action does not hinder the enforcement of the Labor Code in the way that concerned the Iskanian court.
We emphasize that we are not addressing the preclusive effect of any settlement in this case on Doe or any other litigation, nor could we. “The preclusive effect of a prior judgment is determined by the court in which it is asserted, not the court that rendered it.” (Fireside Bank Cases (2010) 187 Cal.App.4th 1120, 1131.) We similarly express no view as to the merits of Adecco‘s claim that the release here does no more than preserve its res judicata defense under the primary rights doctrine. It is for future courts to decide the preclusive effect of any judgment in this case. (Ibid.) We simply reject Correa‘s argument that the release in this case was invalid because it purported to extend beyond a release of claims listed in Moniz‘s PAGA notice.18
2. Release of “Unpled Claims”
Correa next argues that the settlement is invalid because it releases “unpled claims,” and a PAGA representative does not adequately represent the state in doing so. She does not elaborate on what she means by “unpled claims” in her opening brief, but her reliance on Trotsky v. Los Angeles Fed. Sav. & Loan Assn. (1975) 48 Cal.App.3d 134 (Trotsky), suggests that she means to address the alleged “unpled” claims for civil penalties for alleged violations of
In Trotsky, the complaint challenged the validity of three provisions contained in a form of trust deed and sought damages for moneys collected under these provisions. (Trotsky, supra, 48 Cal.App.3d at p. 140.) Plaintiffs’
Unlike in Trotsky, the complaint here was sufficiently broad to include the alleged violations committed against Associates. Moniz alleged that she brought the action “on behalf of herself and other similarly situated individuals who have worked for [Adecco].” Her allegation that she challenged the “policy and practice of compelling employees to execute an ‘Employment Agreement for Colleagues in California’ (‘Form Employment Agreement‘) containing an unlawful non-disclosure provision as a condition of their employment” may suggest a narrow challenge based on a single agreement. But Moniz also alleged that, “On information and belief, Adecco has continuously required its California employees to accept the terms of substantially the same Form Employment Agreement as a condition of their employment since December 21, 2007.” And, while she recounted being required to sign the “Form Employment Agreement” that she attached to her complaint and alleged this conduct violated the Labor Code, she also broadly alleged, “[o]n information and belief, [Adecco‘s] conduct has been substantially the same at all relevant times throughout the state of California.” By suing for those “who have worked for Adecco” and alleging that employees had to accept thе terms of form employment agreements that were “substantially the same” as the one attached to the complaint, the complaint extended to other form employment agreements signed by Adecco employees, including Associates. Therefore, even assuming the legal principles at issue in Trotsky are
3. Due Process Challenge
Invoking procedural due process, Correa contends that the trial court could not approve a release of PAGA or other claims that belong to nonparty aggrieved employees because the court lacked personal jurisdiction over these nonparties. In so arguing, Correa repeats the LWDA‘s objection in the trial court that “to the extent that [the settlement] purports to release the aggrieved employees’ claims,” it was void for lack of personal jurisdiction. For the same reason, Correa contends that the trial court could not approve a settlement waiving rights under
First, the released claims do not include nonparty employees’ individual claims. The parties’ May 2019 settlement purported to release claims beyond PAGA by releasing claims of aggrieved employees under other federal and state laws, but the trial court required the parties to narrow the scope of the release. Thus, as the trial court acknowledged, the redefined “released claims” are “any and all known and unknown claims under the PAGA against the Released Parties that were or could have been pled based on the factual allegations of the Complaint.” The trial court similarly found that the
Second, to the extent Correa suggests that due process prevents a PAGA settlement from including a release of PAGA claims because those claims belong to nonparty aggrieved employees, our Supreme Court has instructed otherwise. (Williams, supra, 3 Cal.5th at p. 547, fn. 4 [“absent employees do not own a personal claim for PAGA civil penalties“]; Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003 [an aggrieved employee cannot assign a PAGA claim because the employee does not own an assignable interest].) And nonparty employees’ personal claims for relief are not at stake in a PAGA representative action. (Iskanian, supra, 59 Cal.4th at p. 381.)
Correa‘s final challenge is to the fairness of the settlement itself. She identifies the following alleged settlement deficiencies, which she contends show that the trial court abused its discretion in approving the settlement: (1) the parties did not provide sufficient information to support the settlement “discount,” and the court abused its discretion in deciding the settlement amount was fair; (2) the trial court ignored evidence of collusion; and (3) the settlement allocation of the aggrieved employees’ share of civil penalties was unjustified and unfair. We find that Correa‘s third argument has merit and warrants reversal, so we decline to address the other two arguments.
We agree with Correa that the settlement‘s allocation of shares of civil penalties to Colleagues that are fifteen times greater than the shares allocated to Associates does not seem to have been justified below and may be contrary to PAGA‘s purposes. A “[PAGA representative] action to recover civil penalties ‘is fundamentally a law enforcement action designed to protect the public and not to benefit private parties.‘” (Iskanian, supra, 59 Cal.4th at p. 381.) PAGA‘s allocation of a 25 percent share of civil penalties does not go disproportionately to the PAGA plaintiff and instead must be shared by all aggrieved employees. (Moorer v. Noble L.A. Events, Inc. (2019) 32 Cal.App.5th 736, 742-743 [affirming order denying request for entry of a default judgment where PAGA plaintiff refused to comply with order to distribute 25 percent of the civil penalties to 23 aggrieved employees on a pro rata basis]; see Iskanian, supra, 59 Cal.4th at p. 382 [a PAGA representative action “conforms to the[] traditional criteria” for bringing a qui tam action, “except that a portion of the penalty goes not only to the citizen bringing the suit but to all employees affected by the Labor Code violation“]; Williams, supra, 3 Cal.5th at p. 545 [PAGA “deputiz[es] employees harmed by labor violations to sue on behalf of the state and collect penalties, to be shared with the state and other affected employees“].)
Here, the record does not reveal any basis for the disproportionate allocation of civil penalties amongst Colleagues and Associates. There were 61,634 aggrieved employees, consisting of 542 Colleagues and 61,092 Associates. In estimating the potential recovery in the case to evaluate the fairness of the settlement, the trial court assumed one violation of
Importantly, this uneven allocation was not addressed in the trial court‘s order or at the hearings on the final proposed settlement, and respondents did not address it in their briefing on appeal. At oral argument, respondents stated that the allocation was justified by the strength of the Colleagues’ claims versus the Associates’ claims. Adecco also argued that the trial court‘s consideration of the fairness of the disparate allocation is demonstrated by its broad statement, “The settling parties have also set forth facts—and issues for which there is a lack of established case law—demonstrating the risks of proceeding to trial and difficulties of proof.” Moniz, however, conceded at oral argument that the trial court focused on the overall settlement amount and the state‘s recovery, not on the allocation оf civil penalties between Associates and Colleagues. The record supports Moniz‘s concession. In her motion for settlement approval, Moniz noted that there were substantive differences in the contract provisions, but she concluded, “Adecco has continually disputed that either of these provisions violate the California Labor Code, and Plaintiff faced significant risks associated with proving that either agreement violated the statutory provisions at issue.”
Moniz and Adecco did not directly address the reasons for the difference in the allocation between Colleagues and Associates in their briefing below. Further, the only discussion of the allocation of civil penalties between Colleagues and Associates that we have found occurred at the initial May 2019 settlement approval hearing as follows: “[The Court]: Okay. And the division between the people that were the full time versus the part time, giving a greater bulk to the part-time people, is that because there‘s so many of them? [Moniz‘s Counsel]: Yes, Your Honor.” This dialogue does not support Adecco‘s position at oral argument that the trial court considered the fairness of the allocation between Colleagues and Associates in light of the purportedly greater strength of the Colleagues’ claims. We therefore cannot infer, аs Adecco suggests, that the analysis set forth in the trial court‘s approval order necessarily indicates that the court assessed the allocation and
In reaching our conclusion, we are mindful that adequate representation is required to bind certain nonparties to a judgment under preclusion principles. As our high court has explained, in “‘certain limited circumstances,‘” a nonparty may be bound by a judgment because she was “‘adequately represented by someone with the same interests who [wa]s a party‘” to the suit. (Taylor v. Sturgell (2008) 553 U.S. 880, 894-895.) These circumstances include representative suits brought on a nonparty‘s behalf by an agent or proxy, such as this PAGA action. (Arias, supra, 46 Cal.4th at p. 986; Taylor v. Sturgell, at pp. 894-895; Rest.2d Judgments, § 41.) In review and approval of a proposed settlement under
DISPOSITION
The judgment is reversed.
BROWN, J.
WE CONCUR:
POLLAK, P. J.
STREETER, J.
Moniz v. Adecco USA, Inc. (A159410, A159978, A160133)
Trial Court: San Mateo County Superior Court
Trial Judge: Hon. Marie S. Weiner
Counsel:
Baker Curtis & Schwartz, Christopher D. Baker, Deborah R. Schwartz; Outten & Golden, Jahan C. Sagafi, Rachel Williams Dempsey, Julio Sharp-Wasserman for Movant and Appellant.
Schneider Wallace Cottrell Koneсky, Carolyn Cottrell, David C. Leimbach, Kyle G. Bates for Plaintiff and Respondent.
Jackson Lewis, Adam Y. Siegel, Scott P. Jang, Mia Farber, Dylan B. Carp for Defendant and Respondent.