Magana v. CW Strong Restaurants California DHC LLC, et al.

The most important factor is the strength of the plaintiffs’ case on the merits, balanced against the amount offered in settlement. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.)

Similar to its review of class action settlements, a trial court must review and approve any settlement of an action filed under the Private Attorneys General Act (“PAGA”). (Lab. Code, § 2699, subd. (s)(2).)

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 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 current and former non-exempt employees that worked either directly or via a staffing agency for Defendant at any location in California at any time from March 5, 2020 to July 31, 2024. (Declaration of Sepideh Ardestani in Support of Motion for Preliminary Approval (“Ardestani Decl.”), (“Agreement”), ¶ 1.5.)

The settlement is also made on behalf of PAGA “Aggrieved Employees,” defined as all current and former non-exempt employees that worked either directly or via a staffing agency for Defendant at any location in California at any time from January 1, 2023 to July 31, 2024.” (Id. at ¶ 1.4.)

Under the Agreement’s terms, Defendant will pay a gross settlement amount of $400,000. (See Memorandum, pp. 4:21–5:3; Agreement, ¶ 3.)

The gross settlement amount includes attorney fees of up to one third of the gross settlement amount ($133,333.33); litigation costs up to $20,000; a PAGA allocation of $40,000 (75 percent of which will be paid to the LWDA and 25 percent of which will be paid to Class Members on pro rata basis); an enhancement payment to Plaintiff of up to $10,000; and settlement administration costs up to $9,000.

The Agreement provides that Phoenix Class Action Administration Solutions (“Phoenix”) will serve as the neutral entity that will administer the settlement. (Agreement, ¶ 7.1; Declaration of Jodey Lawrence, Ex. B.)

The Court appoints Phoenix as settlement administrator.

The Agreement further provides that funds from uncashed settlement checks will be tendered to the California State Controller Unclaimed Property Fund in the name of the Class Member. (Agreement, ¶ 4.4.3.)

Code of Civil Procedure section 384 mandates that unclaimed or abandoned class members’ funds be given to “nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons, or that promote the law consistent with the objectives and purposes of the underlying cause of action, to child advocacy programs, or to nonprofit organizations providing civil legal services to the indigent.”

In the Court’s view, the Agreement’s Unclaimed Funds provision at paragraph 4.4.3 does not comply with Code of Civil Procedure section 384.

Therefore, prior to mailing of the Class Notice, the parties shall meet and confer to designate a cy pres beneficiary and amend the Class Notice accordingly.

In exchange for the settlement, the Class Members agree to release Defendant and related entities and persons from “all claims that were alleged, or reasonably could have been alleged, based on the facts stated in the Operative Complaints, including ... any and all claims involving any alleged failure to pay minimum wages, overtime wages, premium wages, reimbursement of business expenses, failure to issue accurately itemized wage statements, and failure to pay all wages upon separation of employment [during the Class Period].” (Agreement, ¶¶ 1.40, 1.42, 5.2.)

Aggrieved Employees are deemed to release Defendant and related entities and persons from “all claims for PAGA penalties that were alleged, or reasonably could have been alleged, based on the facts stated in the Operative Complaints and the PAGA Notice, including, failure to pay all minimum wages, overtime wages, premium wages, reimbursement of business expenses, failure to issue accurately itemized wage statements, and failure to pay all wages upon separation of employment during the PAGA Period.” (Id. at ¶¶ 1.41, 1.42, 5.3.)

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

Plaintiff contends the Agreement meets requisite factors and is within the range of reasonableness. (Motion, pp. 10:21–16:24.)

Plaintiff’s counsel states that the proposed settlement is the product of negotiations facilitated by Abe Melamed, Esq., in October 2025. (Ardestani Decl., ¶ 9.)

The parties engaged in informal discovery, and Defendant produced payroll records, policies and handbooks, personnel files, as well as pay and time records for the putative class. (Id. at ¶ 8.)

Plaintiff’s counsel provides an analysis of the value of the claims. (Id. at ¶¶ 24–35.)

According to this analysis, Defendant’s total maximum exposure is $2,606,250 for the class claims and over $3,600,000 for the PAGA claims, for a total combined potential exposure of approximately $6,206,250.

The gross settlement amount of $400,000 represents approximately 6.4 percent of Defendant’s estimated total maximum exposure, which is within the general range of percentage recoveries that California courts have found to be reasonable.

Plaintiff’s counsel has sufficiently explained the rationale supporting the settlement amount, particularly in light of the risks inherent in seeking class certification and the Court’s discretion to reduce PAGA penalties.

The Court has reviewed Plaintiff’s written submissions and is satisfied that the settlement is fair and may be approved.

C. Service Award, Fees and Costs

Plaintiff will seek a service award of $10,000.

Plaintiff has submitted a declaration describing her participation in this litigation.

She estimates she has spent approximately 20 hours working on this case.

The Court will determine the approved service award amount at the final approval hearing.

Class counsel will seek attorney fees of up to one-third of the gross settlement amount ($133,333.33).

Prior to the final approval hearing, class counsel shall submit lodestar information (including hourly rates and hours worked) as well as evidence of actual litigation costs incurred and settlement administration costs.

D. Conditional Certification of Class

Plaintiff requests 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 ...”

Plaintiff states there are approximately 312 class members who can be identified from a review of Defendant’s records.

The Court finds that there are common questions regarding whether class members were subjected to unlawful conduct and that proposed class may be conditionally certified for settlement purposes.

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 and payment to the named plaintiff.

The notice informs class members that they may appear at the final fairness hearing to make an oral objection without filing a written objection.

As discussed above, the Court instructs the parties to meet and confer to designate a cy pres beneficiary in accordance with Code of Civil Procedure section 384 – and to amend the Class Notice accordingly – prior to its mailing.

In addition, the following language regarding the final approval hearing shall be added to the notice: Class members may appear at the final approval hearing in person or remotely using the link for Department 11 (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 modifications to the notice prior to its mailing, the notice is approved.

III.

Conclusion

The Court GRANTS the motion for preliminary approval (subject to the conditions set forth above), VACATES the Case Management Conference scheduled for June 3, 2026 at 2:30 p.m., and sets a final approval hearing for January 6, 2026 at 1:30 p.m. in Department 11.

Plaintiff shall prepare the order in accordance with California Rules of Court, rule 3.1312.

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