Edward Lee vs Gilroy IM 2 LLC

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 Action (“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 non-exempt, hourly employees who worked for Gilroy IM 2 LLC at any time during the period from September 30, 2020 through the date of preliminary approval. (Declaration of John G. Islas (“Islas Decl.”), Ex. 2 (“Agreement”), ¶ 1.5.)

The settlement includes a subset PAGA class of Aggrieved Employees, defined as, “all non-exempt, hourly employees who worked for Gilroy in California at any time from January 13, 2024 through the date of preliminary approval.” (Id. at ¶ 1.4).)

Defendant will pay a non-reversionary gross settlement amount of $110,000. The gross settlement amount includes attorney fees of up to one-third of the gross settlement amount $36,666.67; litigation costs of approximately $20,000; a PAGA allocation of $5,000 (65 percent of which will be paid to the LWDA and 35 percent of which will be paid to PAGA Employees as individual PAGA payments); a service payment of up to $10,000; and settlement administration costs estimated at $3,500.

The Agreement provides that Phoenix Class Action Administration Solutions (“Phoenix”) will serve as the neutral entity that will administer the settlement. The Court appoints Phoenix as the 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, ¶ 4.3.3.)

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 and allegations in the Action that are alleged to have occurred during the Class Period.” (Agreement, ¶¶ 1.38, 5.2.)

PAGA Aggrieved Employees will be 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 and allegations in the Action that are alleged to have occurred during the PAGA Period and the PAGA Notice...” (Id. at ¶¶ 1.38, 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 that the Agreement meets the standards for preliminary approval. (Motion, pp. 11:27–16:18.)

Plaintiff’s counsel states that the parties participated in a full-day mediation with William O. Kampf on November 6, 2025. (Islas Decl., ¶ 6.)

Prior to mediation, Defendant produced class data including the number of pay periods, time and payroll records, employment handbooks and policies, and job descriptions. (Id. at ¶ 9.)

According to the analysis by Plaintiff’s counsel, Defendant’s estimated total maximum exposure for all claims is approximately $914,661, and counsel’s risk-adjusted estimate is approximately $111,282. (Id. at ¶¶ 9–21; Motion, pp. 13:8–6:18.)

The gross settlement amount of $110,000 represents approximately 12 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.

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 seeks a service award of $10,000 and has provided a declaration describing his participation in this action. The Court is inclined to approve a service award and will issue its determination regarding the approved amount at the final approval hearing.

Class counsel will seek attorney fees of up to one-third of the gross settlement amount. 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

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 32 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 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 modifications to the notice prior to its mailing, the notice is approved.

III.

Conclusion

The Court GRANTS the motion for preliminary approval and sets a final approval hearing for January 13, 2027 at 1:30 p.m. in Department 5.

Case Management Conferences on July 1, 2026 in both related cases 24CV448348 and 25CV456417 are VACATED.

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

- oo0oo -

5