Shadkam v. 3566 Stevens Creek Holdings of California, LLC, et al.

Plaintiff now seeks an order approving the representative action settlement (the “Settlement”).

XIX. 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.)

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

On June 16, 2024, Plaintiff filed his initial complaint, and his counsel sent a letter to the Labor and Workforce Development Agency (“LWDA”). On March 27, 2024, he filed the operative FAC, which added the PAGA claim. On November 8, 2024, the Court (Hon. Adams) granted Defendants’ motion to compel arbitration. Subsequently, Plaintiff dismissed his individual and class claims.

The parties agreed to attend private mediation. In preparation for mediation, the parties engaged in informal discovery and Defendants produced policy documents, a sample of time and payroll records, and a list of aggrieved employees with dates of employment to calculate the pay periods worked. Plaintiff’s counsel engaged an expert to conduct the exposure analysis.

On November 12, 2025, the parties attended mediation with Eve Wagner, a respected class and PAGA action mediator, which resulted in a Memorandum of Understanding. The parties continued to negotiate over the following months and finalized the terms of the Settlement in November 2025.

Pursuant to the parties’ agreement, Defendants will pay a non-reversionary gross settlement of $170,000, which is comprised of $56,666.67 in attorneys’ fees, up to $25,000 in litigation costs, and $5,150 in settlement administration costs. Plaintiff will seek a service award of $5,000.

Plaintiff’s counsel fails to provide the net settlement amount, however, based on the Court’s calculation, it is approximately $78,183.33. The net settlement amount will be distributed 75% ($58,637.50) to the LWDA and 25% ($19,545.83) will be distributed to “Aggrieved Employees,” who are defined as “a person employed by Defendants as a nonexempt employee in California during the PAGA Period [January 16, 2023 through November 12, 2025].” All funds associated with checks uncashed after 180 days will be transmitted to the State Controller’s Unclaimed Property Fund.

In exchange for settlement, Aggrieved Employees will release:

[A]ll claims for PAGA penalties arising during the PAGA Period that were alleged, or reasonably could have been alleged based on the facts stated in the Operative Complaint and the PAGA Notice.

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].)

XXI. DISCUSSION

A. Potential Verdict Value

In the Complaint, Plaintiff alleges meal period violations, rest break violations, unpaid wages, failure to pay overtime wages, failure to pay timely wages, and failure to provide itemized wage statements.

Plaintiff’s counsel estimated Defendants’ maximum exposure as $600,000 based on the initial violation rate of $100 per pay period as follows: 6,000 x $100 per pay period. However, Defendants raised various defenses during the settlement negotiations which could have defeated Plaintiff’s claims. The gross settlement amount represents 28.3% of the maximum exposure which is within the range of recoveries typically approved by California 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, Defendants’ 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 $56,666.67 in attorneys’ fees. Plaintiff’s counsel Julia Toscano (“Toscano”) submits a lodestar figure of $71,037.50 based on 88.4 hours of work at billing rates ranging from $625 to $950, resulting in a negative multiplier of 0.79. This is below 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 below the range of multipliers regularly approved by California courts in similar actions and it is supported by Toscano’s declaration, the Court finds counsel’s requested fee award is reasonable and therefore it is approved.

C. Other Costs and Expenses

Plaintiff’s counsel requests litigation costs in the amount of $21,849.30. This is supported by Toscano’s declaration and is below the $25,000 provided for in the settlement. Thus, this amount appears reasonable and is approved.

Administration costs of $5,150 is supported by the declaration of Bryn Bridley, Vice President of Business Development at Atticus Administration (“Atticus”). Thus, the amount appears reasonable, and it is approved.

Plaintiff moves for a service award of $5,000. The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation.

These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.

(Cellphone Termination Fee Cases (2010) 186 Cal.App.4th 1380, 1394-1395, internal punctuation and citations omitted.) Incentive awards are particularly appropriate where a plaintiff undertakes a significant reputational risk in bringing an action against an employer. (Covillo v. Specialty’s Café (N.D. Cal. 2014) 2014 U.S.Dist.LEXIS 29837, at *29.) Plaintiff states he spent approximately 50 hours on this action, which includes gathering and reviewing documents, providing information related to his employment, assisting counsel in preparing for mediation, communicating with counsel, and reviewing the Settlement. (Plaintiff’s Declaration (“Decl.”), ¶¶ 5-8.) He further states that he considered the personal and financial risks of participating in this litigation. (Plaintiff’s Decl., ¶¶ 10-11.)

Based on the foregoing, the Court finds Plaintiff is entitled to a service award and the amount requested is reasonable, thus, it is approved.

XXII. ADMINISTRATION PROCESS

Pursuant to the terms of the Settlement, the parties have selected Atticus as the Settlement administrator. Within 14 days of Court approval of its terms, Defendants will provide Atticus with the Aggrieved Employee data. Defendants shall fund the Settlement within 10 days of the Effective Date. Within 14 days of the funding, Attius will promptly issue checks for individual PAGA payments, LWDA PAGA payments, administrative expenses, individual settlement for Plaintiff, and Plaintiff’s counsels fees and costs. Within 7 days of receiving a returned check, Atticus shall re-mail checks to forwarding addresses or conduct an address search to obtain an updated address. Any checks returned as undeliverable or that remain uncashed after 180 days will be transmitted to the State Controller’s Unclaimed Property Fund. These administrative procedures are appropriate and are approved.

XXIII. ORDER AND JUDGMENT

Plaintiff’s motion for approval of the parties’ PAGA settlement is GRANTED. The following individuals are covered by the Settlement: a person employed by Defendants as a non-exempt employee in California during the PAGA Period.

Judgment shall be entered through the filing of this order and judgment. (Code Civ. Proc., § 668.5.) Plaintiff and the Aggrieved Employees shall take from the PAGA claim in their operative complaint 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 February 4, 2027 at 2:30 P.M. in Department 22. At least ten court days before the hearing, 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 to 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.

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