Cruz v. Quantumscape et al.

Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.) Similar to its review of class action settlements, a trial court must also “review and approve” any settlement of an action filed under the Private Attorneys General Act (“PAGA”). (Lab. Code, § 2699, subd. (s)(2).) The trial court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56,

76-77.) A PAGA settlement may be substantially discounted, and courts often exercise their discretion to award PAGA penalties below the statutory maximum. (Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 529; Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1213.)

II.

Discussion

A. Provisions of the Settlement This case has been settled on behalf of the following class: All hourly, non-exempt employees who: (a) only ever signed arbitration agreements without a class waiver; (b) did not sign any release, separation, or settlement agreements waiving the claims alleged in the Actions (inclusive of any waiver of rights to participate in any class or representative PAGA settlement); and (c) worked for Defendant(s) in the State of California at any point between March 1, 2020 and July 6, 2025.

(Rodriguez Decl., Ex. A (“Agreement”), ¶ 1.4.) The settlement includes a subset PAGA group of Aggrieved Employees, defined as all hourly, non-exempt employees who did not sign separation agreements with an individual or non-representative PAGA claims waiver, did not sign valid releases of individual PAGA claims, and worked for Defendant(s) in the State of California at any point between December 4, 2022 and July 6, 2025. (Id. at ¶ 1.2) There are approximately 52 Class Members and 462 Aggrieved Employees. (Memorandum, p. 1:16.)

Defendants will pay a non-reversionary gross settlement amount of $735,000. (Agreement, ¶¶ 5.1, 5.6; Memorandum, p. 4.) The gross settlement amount includes attorney fees of up to one-third of the gross settlement amount ($245,000); litigation costs not to exceed $32,500; a PAGA allocation of $218,750 (75 percent, or $164,062.50, paid to the LWDA and 25 percent, or $54,687.50, paid to Aggrieved Employees); a service payment of up to $10,000 to plaintiff Hernandez; and up to $12,500 in settlement administration costs. (Agreement, ¶¶ 5.2–5.5; Memorandum, pp. 4–6.)

The Agreement provides that ILYM Group, Inc. will serve as the neutral entity that will administer the settlement. (Mem. p. 4; Mot. p. 1.) The Court appoints ILYM Group, Inc. as the settlement administrator. Funds from checks that remain uncashed after the void date will be

remitted to Legal Aid at Work as the designated cy pres recipient pursuant to Code of Civil Procedure section 384. (Agreement, ¶ 5.6.) The Court approves the cy pres designation. In exchange for the settlement, participating class members agree to release Defendants and related entities and persons from all claims alleged in the operative complaint, and all claims that reasonably could have been brought based on the facts alleged, through the Class Period. (Agreement, ¶¶ 1.33, 1.35, 6.1.) Aggrieved Employees will be deemed to release Defendants and related entities and persons from all PAGA claims alleged, and that reasonably could have been brought based on the facts alleged, in the LWDA notice letters through the PAGA Period. (Agreement, ¶¶ 1.34, 1.35, 6.2, 7.5.1.)

The release provisions are appropriately tailored to the factual allegations of the operative pleading. (See Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 538.)

B. Fairness of the Settlement Plaintiffs contend that the Agreement meets the standards for preliminary approval. (Memorandum. pp. 10–12.) Plaintiffs’ counsel states that the parties participated in a full-day mediation, which included a mediator’s proposal, following extended arm’s-length negotiations across three related proceedings. (Rodriguez Decl., ¶ 9; Memorandum, p. 3.) Prior to and in connection with mediation, the parties engaged in informal discovery, including the exchange of a representative sampling of employee data such as timecards, paystubs, payroll data, and relevant policies for the applicable limitations period. (Rodriguez Decl., ¶¶ 7–9; Kim Decl., ¶ 20; Memorandum, p. 3.)

According to the analysis by Plaintiffs’ counsel, the estimated maximum value of the class and PAGA claims is $15,393,363, while a more realistic range of recovery is between $1,097,932.90 to $4,476,117.45. (Rodriguez Decl., ¶ 11; Memorandum, p. 11.) The gross settlement amount of $735,000 represents approximately 4.8 percent of the estimated maximum value of the class and PAGA claims, and between 16.4 percent and 66.7 percent of counsel’s more realistic range of recovery. The net recovery for Class Members represents approximately 10.3 percent of the estimated maximum value of the class claims, and between 28.7 percent and 45.6 percent of the realistic range. (Memorandum, p. 11.)

The

average net payment to Class Members is approximately $4,182.69, or approximately $41.21 per workweek. (Ibid.) These recovery percentages fall within the general range of percentage recoveries that California courts have found to be reasonable at the preliminary approval stage. A presumption of fairness applies because the settlement was reached through arm’s-length bargaining, after investigation and informal discovery sufficient to allow counsel and the Court to act intelligently, by counsel experienced in wage and hour class and PAGA litigation. In sum, the Court has reviewed Plaintiffs’ written submissions and is satisfied that the settlement is fair and may be approved on a preliminary basis.

C. Service Award, Fees and Costs Plaintiff Hernandez seeks a service award of up to $10,000 and has provided a declaration describing his participation in this action, including an estimated 60 to 80 hours assisting counsel and the professional and financial risks and burdens he undertook as the proposed class representative. (Agreement, ¶ 5.4; Hernandez Decl., ¶¶ 8–9.) The Court is inclined to approve the service award and will issue its determination at the final approval hearing. The Court notes that Plaintiff Cruz is not named as a class representative under the Agreement and does not seek a service award. (Rodriguez Decl., ¶ 10; Agreement, ¶¶ 1.6, 5.4) Counsel explains that the scope of the class claims is limited to individuals who signed arbitration agreements with language similar to what was included in Plaintiff Hernandez’s arbitration agreement, and Plaintiff Cruz did not sign an arbitration agreement. (Rodriguez Decl., ¶ 10.)

Class counsel will seek attorney fees of up to one-third of the gross settlement amount, together with actual litigation costs not to exceed $32,500. Prior to the final approval hearing, class counsel shall submit lodestar information (including hourly rate and hours worked) as well as evidence of actual litigation costs incurred and settlement administration costs.

D. Conditional Certification of Class

Plaintiffs request that the class be conditionally certified for purposes of the settlement. California Code of Civil Procedure section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court ...” Plaintiffs state there are approximately 52 class members who can be identified from a review of Defendants’ payroll and personnel records. (Memorandum. pp. 1, 13–14.)

The Court finds that the class is ascertainable and sufficiently numerous, that there are common questions regarding whether class members were subjected to unlawful wage and hour practices, and that the predominance, typicality, and adequacy requirements are satisfied for settlement purposes. The Court conditionally certifies the proposed class for settlement purposes, appoints plaintiff Jose Hernandez as class representative, and appoints Shimoda & Rodriguez Law, PC as class counsel.

E. Class Notice California Rules of Court, rule 3.769, subdivision (f), provides, “If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.”

Here, the form of the notice is generally adequate subject to the modifications set forth below. It describes the lawsuit, explains the settlement, and states the settlement amounts, including attorney fees, litigation costs, the PAGA allocation, and the enhancement payment to the class representative. The notice fairly informs class members of their right to participate, to opt out, object, and appear at the final approval hearing. The final approval hearing will be held in Department 5. The parties shall add the following language regarding the final approval hearing: Class members may appear at the final approval hearing in person or remotely using the link for Department 5 (Afternoon Session), and should review the remote appearance instructions beforehand:

https://santaclara.courts.ca.gov/online-services/remote-hearings Class members who wish to appear remotely are encouraged to contact class counsel at least three days before the hearing, if possible, so that potential technology or audibility issues can be avoided or minimized.

On the condition that the parties make the above addition to the notice prior to its mailing, the notice is approved.

III.

Conclusion

For the reasons stated, the Court GRANTS the motion for preliminary approval, VACATES the Case Management Conference currently set in this matter for July 15, 2026 at 2:30 p.m. in Department 19, VACATES the Case Management Conference July 15, 2026 in related case 24CV439603, and sets a final approval hearing for January 27, 2027 at 1:30 p.m. in Department 5. Plaintiffs shall prepare the order in accordance with California Rules of Court, rule 3.1312.

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