Olguin v. Talamo Food Services, Inc., et al.

LINE # CASE # CASE TITLE RULING LINE 1 18CV328915 Uzair v. Google, LLC (Class Action) Hearing: Motion for Final Approval is GRANTED

Click on lines 1-2 for tentative ruling LINE 2 18CV328915 Uzair v. Google, LLC (Class Action) Hearing: Motion for Fees and Costs is GRANTED

Click on lines 1-2 for tentative ruling LINE 3 19CV354554 Leedeman v. Midland Credit Hearing: Motion for Final Management, Inc. (Class Action) Approval GRANTED

Click on lines 3-4 for tentative ruling LINE 4 19CV354554 Leedeman v. Midland Credit Hearing: Motion for Fees Management, Inc. (Class Action) and Costs GRANTED

Click on lines 3-4 for tentative ruling LINE 5 22CV394263 Garcia v. Norcal Pool Construction Motion: Preliminary Inc. (Class Action/PAGA) Approval is GRANTED

Click on line 5 for tentative ruling LINE 6 23CV413920 Rangel v. President and Board of Hearing: Discovery Motion Trustees of Santa Clara College (Class to Enforce and Request for Action) Sanctions is GRANTED

Click on line 6 for tentative ruling LINE 7 23CV426584 Olguin v. Talamo Food Service, Inc. Motion: Approval (PAGA) GRANTED

Click on line 7 for tentative ruling LINE 8 23CV427637 Fuentes v. La Cumbre Enterprises, Motion: Compel is Inc., et al. (PAGA) GRANTED

Click on line 8 for tentative ruling

Calendar Line 7

Case Name: Olguin v. Talamo Food Services, Inc., et al. Case No.: 23CV426584

This is a representative action under the Private Attorneys General Act (“PAGA”). Plaintiff Anabel Olguin alleges that defendant Talamo Food Service, Inc. committed various wage and hour violations and she seeks PAGA penalties for those violations.

Before the Court is Plaintiff’s motion for approval of PAGA settlement, which is unopposed. As discussed below, the Court GRANTS the motion.

XXI. BACKGROUND

According to the allegations of the operative Complaint, Defendant is in the business of processing cheese for food service, retailers, and commercial businesses. (Complaint, ¶ 12.) Plaintiff was employed as a Production Packer from approximately 2018 to May 31, 2023, and her primary duties included packing different types of cheese and sealing it in the appropriate labeled bag. (Complaint, ¶ 13.) Defendant failed to: provide compliant meal periods or compensation in lieu thereof; provide rest periods or compensation in lieu thereof; pay overtime wages; pay minimum wages; timely pay wages during employment; pay all wages due to discharged and quitting employees; and furnish accurate itemized wage statements.

Based on the foregoing, Plaintiff initiated this action on November 30, 2023, with the filing of the operative Complaint seeking a single claim for civil penalties under PAGA.

Plaintiff now seeks an order: approving the PAGA settlement; approving reasonable attorneys’ fees; approving Phoenix Settlement Administrators (“Phoenix”) as the administrator; approving administration costs to Phoenix; and dismissing this action with prejudice.

XXII. LEGAL STANDARD FOR APPROVING PAGA SETTLEMENT

Under PAGA, an aggrieved employee may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations. (Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal.4th 348, 380, overruled on other grounds by Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 [2022 U.S. LEXIS 2940.) 75 percent of any penalties recovered go to the Labor and Workforce Development Agency (LWDA), leaving the remaining 25 percent for the employees. (Ibid.) PAGA is intended “to augment the limited enforcement capability of [LWDA] by empowering employees to enforce the Labor Code as representatives of the Agency.” (Id. at p. 383.) A judgment in a PAGA action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government. (Id. at p. 381.)

Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The court’s review “ensur[es] that any negotiated resolution is fair to those affected.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) “[C]lass certification is not required” in this context as in a class action. (Haralson v. U.S. Aviation Servs. Corp. (N.D. Cal. 2019) 383 F. Supp. 3d 959, 971 (Haralson).)

Similar to its review of class action settlements, the 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 (Moniz).) It must make this assessment “in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Id. at p. 77; see also Haralson, supra, 383 F. Supp. 3d at p. 971 [“when a PAGA claim is settled, the relief provided for under the PAGA [should] be genuine and meaningful, consistent with the underlying purpose of the statute to benefit the public ....”], quoting LWDA guidance discussed in O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016) 201 F.Supp.3d 1110 (O’Connor).)

The settlement must be reasonable in light of the potential verdict value. (See O’Connor, supra, 201 F.Supp.3d at p. 1135 [rejecting settlement of less than one percent of the potential verdict].) But a permissible settlement may be substantially discounted, given that courts often exercise their discretion to award PAGA penalties below the statutory maximum even where a claim succeeds at trial. (See Viceral v. Mistras Group, Inc. (N.D. Cal., Oct. 11, 2016, No. 15-CV-02198-EMC) 2016 WL 5907869, at *8–9.)

XXIII. PLAINTIFF’S INVESTIGATION, SETTLEMENT PROCESS, AND THE PARTIES’ AGREEMENT

Plaintiff initiated this action on November 30, 2023, with the filing of the operative Complaint seeking a single claim for civil penalties under PAGA. Prior to filing her Complaint, Plaintiff gave notice to the Labor and Workforce Development Agency (“LWDA”).

The parties engaged in formal and informal discovery, which included the exchange of wage and hour documents regarding Defendant’s alleged Labor Code violations. Defendant produced documents such as Plaintiff’s employee files, 50% of time records and wage statements of Aggrieved Employees, policy documents relating compensation, and start end dates.

The parties engaged in extensive settlement negotiations and eventually executed the settlement agreement (“Settlement”) currently before the Court.

Pursuant to the Settlement, Defendant will pay a non-reversionary gross settlement of $150,000, which is comprised of $50,000 in attorneys’ fees, litigation costs not to exceed $20,000, and $4,500 in administration costs. The $75,500 in PAGA penalties will be distributed 75% ($56,625) to the LWDA and 25% ($18,875) will be distributed to “PAGA Members” who are defined as “all persons who are or were employed by Defendant as hourly paid, non-exempt employees in the State of California at any time during the PAGA Period [September 26, 2022 to April 3, 2025].” It is estimated there are 124 PAGA Members.

In exchange for settlement, PAGA Members will release:

Any and all claims for civil penalties, under the California Private Attorneys General Act of 2004, California Labor Code sections 2698 et seq. (“PAGA”)

alleged in the operative Complaint in the Action and notice submitted to the LWDA or that could have been pled based on the facts alleged in the operative Complaint in the Action and notice submitted to the LWDA in connection with the Action, including all interest, fees, and costs as against the Released Parties during the Release Period. The Released Claims include claims for civil penalties under PAGA for the following alleged violations of the California Labor Code and related regulations during the Release Period: failure to pay minimum wages, straight time compensation, overtime compensation, and double-time compensation; failure to provide compliant meal periods; failure to provide compliant rest periods; failure to pay proper meal and rest period penalties; failure to maintain accurate records, including records of hours worked; failure to provide and maintain accurate itemized wage statements; failure to pay vacation time; failure to timely pay wages during employment; failure to timely pay wages at separation of employment; the failure to indemnify employees for necessary expenditures and/or losses incurred from the discharge of their duties; waiting time penalties; and including without limitation any and all potential claims for penalties recoverable under PAGA predicated upon California Labor Code Sections 201, 202, 203, 204, 210, 226, 226.3, 226.7, 227, 227.3, 510, 512, 558, 1174, 1174.5, 1194, 1197, 1197.1, 1198, 1199, 2698, 2699, 2800 and 2802, and any duplicative or similar provisions arising under the Wage Orders of the California Industrial Welfare Commission, including Industrial Wage Order No.

5.

The release is appropriately tailored to the allegations at issue, and does not release any claims other than those for PAGA penalties. (See Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 537; Moniz, supra, 72 Cal.App.5th at p. 82 [release of “all known and unknown claims under PAGA ... that were or could have been pled based on the allegations of the Complaint” was appropriately approved].)

XXIV. DISCUSSION

A. Potential Verdict Value

In the Complaint, Plaintiffs allege meal period violations, rest break violations, unpaid wages, failure to pay overtime wages, failure to pay timely wages, and failure to maintain records. Plaintiff’s counsel calculates Defendant’s maximum exposure as $730,000 based on multiplying 7,300 pay periods by $100 each.

Plaintiff’s counsel then considered the risk of significant delay, uncertainty associated with litigation, the defendants asserted by Defendant, potential appellate issues, and the potential that the PAGA penalties would be significantly reduced.

The gross settlement amount represents approximately 20.5% of the maximum exposure. This is within the percentage range typically approved by courts. (See Cavazos v. Salas Concrete, Inc. (E.D. Cal., Feb. 18, 2022, No. 1:19-cv-00062-DAD-EPG) 2022 U.S.Dist. LEXIS 30201, at *41-42 [citing cases approving settlements in the range of 5 to 35 percent of the maximum potential exposure].)

Given this, as well as the risks attendant to proceeding to trial, Defendant’s defenses and the likelihood that PAGA penalties would be significantly reduced in line with numerous appellate decisions, the Court finds that the proposed settlement is fair to those affected and is genuine, meaningful, and reasonable in light of the statute’s purposes.

B. Attorneys’ Fees

While the PAGA statute does not expressly require judicial review of claimed attorney fees, the Court believes it cannot adequately fulfill its statutory duty to review the penalties associated with PAGA settlements without also considering attorney fees. The Court thus finds that it must scrutinize the attorney fee arrangement associated with a PAGA settlement. This is consistent with the observation of many courts that PAGA claims are analogous to “qui tam” suits like those under the federal False Claims Act: when reviewing settlements of qui tam claims, courts should and do consider any associated attorney fee arrangement. (See U.S. v. Texas Instruments Corp. (9th Cir. 1994) 25 F.3d 725, 728 [attorney fee award must be considered by the trial court as part of its review of the “entire settlement arrangement”].)

As articulated above, Plaintiff seeks a fee award of $50,000 in attorneys’ fees. Plaintiff’s counsel submits a lodestar figure of $78,975 based on 105.1 hours at billing rates ranging from $750 to 800 per hour resulting on a negative multiplier of 0.63. This is well short of the range of multipliers that courts typically approve. (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488, 503–504 (Laffitte) [trial court did not abuse its discretion in approving fee award of 1/3 of the common fund, cross-checked against a lodestar resulting in a multiplier of 2.03 to 2.13]; Wershba v.

Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 255 [“[m]ultipliers can range from 2 to 4 or even higher”]; Vizcaino v. Microsoft Corp. (9th Cir. 2002) 290 F.3d 1043, 1051, fn. 6 [stating that multipliers ranging from one to four are typical in common fund cases and citing the court’s own survey of large settlements finding “a range of 0.6–19.6, with most (20 of 24, or 83%) from 1.0–4.0 and a bare majority (13 of 24, or 54%) in the 1.5–3.0 range”].)

Here, given the amount of work performed by Plaintiff’s counsel, and because the requested multiplier sought by them is well short of the range of multipliers regularly approved by California courts in similar actions, the Court finds counsel’s requested fee award is reasonable and therefore it is approved.

C. Other Costs and Expenses

Plaintiffs’ counsel requests litigation costs in the amount of $14,773.02. This is supported by the declarations of Plaintiff’s counsel Justin Lo and Jarrod Nakano and it is below the $20,000.00 provided for in the Settlement. Thus, this amount appears reasonable and is approved.

Administration costs of $4,500 are also approved.

XXV. ADMINISTRATION PROCESS

Pursuant to the terms of the Settlement, within 21 days of Court approval of its terms, Defendant will provide settlement administrator Phoenix with a list of all PAGA Members

with the relevant identifying information (including the last known home address) and the number of pay periods worked. Within 7 days of receiving the PAGA Member Data, Phoenix will provide Plaintiff’s counsel with the number of unique PAGA Members and the number of pay periods worked during the PAGA Period. Phoenix will issue payments within 7 calendar days of the Settlement Funding Date. Each PAGA Member will be sent a check in the appropriate amount. Any checks returned as non-deliverable will promptly be re-mailed to the forwarding address provided; if none is, Phoenix will attempt to locate one using a skip trace or other search method. Any checks returned as undeliverable or that remain uncashed after 180 days will be transmitted to California Controller’s Unclaimed Property Fund. These administrative procedures are appropriate and are approved.

XXVI. ORDER AND JUDGMENT

Plaintiff’s motion for approval of the parties’ PAGA settlement is GRANTED. The covered individuals are: all persons who are or were employed by Defendant as hourly paid, non-exempt employees in the State of California at any time during the PAGA Period.

Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and PAGA Members shall take from the PAGA claim in their operative pleading only the relief set forth in the parties’ settlement agreement and this order and judgment. The Court retains jurisdiction over the parties to enforce the terms of the PAGA settlement agreement and the final order and judgment.

The Court sets a compliance hearing for March 18, 2027 at 2:30 P.M. in Department 22. At least ten court days before the hearing, Plaintiff’s counsel and the settlement administrator shall submit a summary accounting of the net settlement fund identifying distributions made as ordered herein; the number and value of any uncashed checks; amounts remitted the cy pres recipient; the status of any unresolved issues; and any other matters appropriate to bring to the Court’s attention. Counsel may appear at the compliance hearing remotely.

The Court will prepare the order.

- oo0oo -

- oo0oo -

5