Herrera v. PrideStaff, Inc., et al.

[A] trial court should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in view of PAGA's purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws. (See Williams, supra, 3 Cal.5th at p. 546, 220 Cal.Rptr.3d 472, 398 P.3d 69 [PAGA “sought to remediate present violations and deter future ones”]; Arias, supra, 46 Cal.4th at p. 980, 95 Cal.Rptr.3d 588, 209 P.3d 923 [the declared purpose of PAGA was to augment state enforcement efforts to achieve maximum compliance with labor laws].) (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77.)

“Thus, while PAGA does not require the trial court to act as a fiduciary for aggrieved employees, adoption of a standard of review for settlements that prevents “ ‘ “ ‘fraud, collusion or unfairness’ ” ’ ” (Dunk, supra, 48 Cal.App.4th at pp. 1800–1801, 56 Cal.Rptr.2d 483), and protects the interests of the public and the LWDA in the enforcement of state labor laws is warranted. Because many of the factors used to evaluate class action settlements bear on a settlement's fairness—including the strength of the plaintiff's case, the risk, the stage of the proceeding, the complexity and likely duration of further litigation, and the settlement amount—these factors can be useful in evaluating the fairness of a PAGA settlement.” (Moniz, supra, (2021) 72 Cal.App.5th 56, 77.)

Under the former general provisions of the PAGA scheme, 75% of the civil penalties recovered goes to the state while the remaining amount is given to the aggrieved employees. (former Lab. Code, § 2699, subd. (i).) Here, 75% of the settlement amount, after deduction of attorney fees, costs, administration expenses and incentive payment, is to be paid to the LWDA. As of July 1, 2024 Labor Code section 2699, subdivision (m) was amended to provide a greater share of PAGA penalties to the aggrieved employees, 65% of the penalties recovered going to the state and the remaining 35% given to the aggrieved employees. This action was filed before the amendment was effective and the settlement distribution reflects the statute at that time.

1. Notice to LWDA

“An employee plaintiff suing, as here, under [PAGA], does so as the proxy or agent of the state's labor law enforcement agencies.” (Raines v. Coastal Pacific Food Distributors, Inc. (2018) 23 Cal.App.5th 667, 674, internal quotations omitted.) For that reason, Labor Code section 2699, subdivision (s)(2) requires that any proposed settlement of a PAGA claim be submitted to the Labor Workforce Development Agency at the same time it was submitted to the court. The submission provided in evidence indicates the Settlement Agreement and previous moving papers were submitted to the LWDA on November 3, 2025 and the renewed motion together with the Settlement Agreement was submitted on May 14, 2026. (Hawkins Decl., ¶ 24-25, Ex. 6 and 7.)

2. Fairness of the Settlement Amount

As mentioned above, the Court of Appeal in Moniz v. Adecco USA, Inc., supra, 72 Cal.App.5th 56 stated that the trial court should review PAGA settlements to determine 8

whether they are fair, adequate and reasonable. (Moniz, supra, at pp. 75-77.) “Because many of the factors used to evaluate class action settlements bear on a settlement's fairness—including the strength of the plaintiff's case, the risk, the stage of the proceeding, the complexity and likely duration of further litigation, and the settlement amount—these factors can be useful in evaluating the fairness of a PAGA settlement.” (Id. at p. 77.)

“Given PAGA's purpose to protect the public interest, we also agree with the LWDA and federal district courts that have found it appropriate to review a PAGA settlement to ascertain whether a settlement is fair in view of PAGA's purposes and policies. We therefore hold that a trial court should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in view of PAGA's purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Ibid, internal citations and footnote omitted.)

a. Strength of the Case

The declaration of attorney James R. Hawkins sets out the maximum statutory liability of $3.36 million for the Labor Code violations for which PAGA penalties are sought and assesses the realistic exposure to be $963,598. (Hawkins Decl., ¶¶ 28, 30-31.) These calculations are premised on a total of 7,859 pay periods in the PAGA period. (Ibid.) The amount of pay periods is greater than those attested to for Distribution Management, Inc. and Pridestaff, Inc., which total only 7,077. The declaration of Rachel Freedman on behalf of defendant Distribution Management, Inc. confirms that during the PAGA period there were 121 employees who worked 5,501 pay periods. (Id., Ex. 4, Freeman Decl., ¶¶ 3-4.)

The declaration of Elliot Meme on behalf of PrideStaff, Inc. confirms that during the PAGA period there were 198 temporary workers placed with Supplies Network who worked approximately 1,576 pay periods. (Id., Ex. 5, Meme Decl., ¶ 2.) This w

Counsel provides a thorough discussion of his assessment of the strengths and weaknesses in evaluating each of the Labor Code claims. (Hawkins Decl., ¶ 30.) The discussion of the potential value of the case is adequately supported by evidence of the total workweeks and supports finding the settlement is fair, reasonable, and adequate.

b. Stage of the Proceeding

A presumption of fairness exists where the settlements is reached through arm’s length mediation between adversarial parties, where there has been investigation and discovery sufficient to allow counsel and the court to act intelligently, and where counsel is experienced in similar litigation. (Dunk v. Ford Motor Company (1996) 48 Cal. App 4th 1794, 1802.) Here, the case settled after the parties attended mediation and reached a global settlement of the claims in the action. (Hawkins Decl., ¶ 12.)

Counsel attests to the settlement as a product of investigation of the potential value and strength of plaintiffs’ claims while taking into account the legal issues related to the PAGA claim and the costs and risks of continuing litigation. (Hawkins Decl., ¶¶ 10- 11.)

Regarding pre-settlement discovery, counsel attests to having engaged in informal discovery and independent investigation to evaluate the claims and defenses. (Hawkins Decl. ¶ 10.) Defendant produced a sample of pay and time records, detailed policies and practices regarding timekeeping, meal and rest periods, overtime calculations, plaintiff’s wage statements, handbooks and job descriptions and other personnel-related documentation which was reviewed to evaluate the plaintiffs’ claims. (Ibid.)

The case settled after a mediation session on December 18, 2024, approximately 26 months after the class action complaint was filed. This stage of the proceeding appears appropriate for settlement.

c. Risks of Litigating Case through Trial

The moving papers indicate risks in continuing to trial included defendants’ disputed liability and assertion of defenses, including that any violations were not a result of company policy but of an employee’s voluntary choice. Additionally cited in is the court’s wide latitude to reduce civil penalties within the PAGA statute itself. (Lab. Code, § 2699, subd. (e)(2).) Although the analysis appear to be applicable to any PAGA action and not unique to plaintiff’s claims, the court finds this factors weighs in favor of approval.

d. Amount of Settlement

The gross settlement is $320,000, and, as discussed above with regard to the strengths of the case, this figure represents about one-third of the realistic exposure of $963,598. (Hawkins Decl., ¶ 31.) This is a reasonable settlement amount.

e. Experience and Views of Counsel

Plaintiff’s counsel with James Hawkins APLC law firm are experienced in wage and hour and employment litigation including individual claims and class actions. (Hawkins Decl., ¶¶ 38-48.) Attorney Hawkins has stated that the settlement is fair, adequate and reasonable under the circumstances which weighs in favor of approving the settlement.

f. Government Participation

No government entity participated in the case, so this factor does not favor either approval or disapproval of the settlement.

3. Attorney’s Fees and Costs

The settlement agreement provides that plaintiffs’ counsel would get up to $112,000 (35% of the total gross recovery) in attorney’s fees, plus another costs of up to $26,000. (Settlement Agreement, ¶ 3.2.1.) Plaintiffs’ actual costs are $25,156.63 and actual costs are requested to be approved. (Hawkins Decl., ¶ 68, Exh. 13.)

Courts have approved awards of fees in class actions that are based on a percentage of the total common fund recovery. (Laffitte v. Robert Half Internat. (2016) 1 Cal.5th 480, 503.) It appears that the same reasoning would apply to PAGA settlements, 10

which bear similarities to class actions. However, the court may also perform a lodestar calculation to double check the reasonableness of the fee request. (Laffitte, supra, at pp. 504-506.) Labor Code section 2699, subdivision (g)(1) states that the prevailing employee “shall be entitled to an award of reasonable attorney’s fees and costs.”

Records by counsel of the time actually spent on a matter are the starting point for any lodestar determination. (Horsford v. Board of Trustees (2005) 132 Cal. App. 4th 359, 394.)

A court assessing attorney’s fees begins with a touchstone or lodestar figure, based on the ‘careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case." Serrano v. Priest (Serrano III) (1977) 20 Cal.3d 25, 48. As our Supreme Court has repeatedly made clear, the lodestar consists of "the number of hours reasonably expended multiplied by the reasonable hourly rate. . . ." PLCM Group, Inc. v. Drexler (2000) 22 Cal. 4th 1084, 1095, italics added; Ketchum v. Moses (2001) 24 Cal.4th 1122, 1134.)

Reasonable hourly compensation is the "hourly prevailing rate for private attorneys in the community conducting noncontingent litigation of the same type" (Ketchum v. Moses, supra, 24 Cal.4th at p. 1133.)

Here, the fee request is 35% of the gross settlement, which is somewhat higher than the average request of one-third of the gross settlement. In support of the requested fees, counsel attests to the experience of himself and three associate attorneys, their hourly rates, tasks completed, and the number of hours spend on those litigation activities. (Hawkins Decl., ¶¶ 54-57.) Counsel’s hourly rates range from $450 to $1,050 per hour and the attorneys spend a combined 234.9 hours litigating this action. (Ibid.) Counsel additionally attests to the paralegal billing rate of $220 and a total of 52.7 hours attributed to this action. (Id., ¶ 58.) The lodestar is calculated to be $205,254, which is supported by billing records through May 5, 2026. (Id., ¶ 50, Ex. 10.)

The hourly rates of the attorneys of the James Hawkins APLC law firm greatly exceed those of the local community. As a starting point in assessing the lodestar the billing rates were reduced to better reflect those of local counsel, ranging from $150 for a paralegal to $550 per hour for Mr. Hawkins. The reduction adjusts the lodestar to approximately the $112,000 sought approved in this motion. As such, finding the lodestar and percentage-based fees requested to be nearly equal, the court finds the percentage-based fee reasonable and will approve the attorney fees requested.

The court’s approval of actual costs of $25,156.63 is requested. (Hawkins Decl., ¶ 68, Ex. 13.) The court intends to approve the request.

4. Incentive Payment to Plaintiff

Plaintiff Sophia Herrera is to be paid $2,500 as “PAGA Representative Service Payment” in recognition of her work in this litigation and the reputational risks assumed in litigating against a former employer. Plaintiff argues the purpose of such an award is to incentivize aggrieved employees to step forward to enforce the Labor Code.

There is nothing in PAGA that specifically authorizes an additional incentive payment to the named plaintiff. PAGA only authorizes awards of penalties to aggrieved employees based on actual violations of the Labor Code. (Labor Code § 2699(m).) It is unclear whether additional payments to named plaintiffs are proper in PAGA actions, although such payments are common in class actions. (Rodriguez v. West Publishing Corp. (2009) 563 F.3d 948, 958.) “Given the potential for recovery of significant civil penalties if the PAGA claims are successful, as well as attorney fees and costs, plaintiffs have ample financial incentive to pursue the remaining representative claims under the PAGA ... .” (Munoz v. Chipotle Mexican Grill, Inc. (2015) 238 Cal.App.4th 291, 311.)

In support of the requested deviation from the PAGA statutory scheme, the plaintiff cites to several persuasive authorities but none this court must follow. The court intends to deny the requested “PAGA Representative Service Payment” as it is not within the PAGA statutory scheme.

5. Settlement Administration

The parties request approval of up to $4,775 for settlement administration costs to Apex Class Action Administration. (Hawkins Decl., ¶ 22, Ex. 14, Hartranft Decl., ¶¶ 5-7, Ex. B.) The court intends to approve the settlement administration costs as requested.

6. Scope of the Release

... PAGA's statutory scheme and the principles of preclusion allow, or “authorize,” a PAGA plaintiff to bind the state to a judgment through litigation that could extinguish PAGA claims that were not specifically listed in the PAGA notice where those claims involve the same primary right litigated. Because a PAGA plaintiff is authorized to settle a PAGA representative action with court approval (§ 2699, (l)(2)), it logically follows that he or she is authorized to bind the state to a settlement releasing claims commensurate with those that would be barred by res judicata in a subsequent suit had the settling suit been litigated to judgment by the state. (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 83.)

Here, the settlement agreement provides that the following claims would be released:

[A]ll claims for PAGA penalties, attorneys’ fees, costs, or interest recoverable under PAGA that were alleged, or reasonably could have been alleged, in the Actions, arising during the PAGA Period based on the facts stated in the PAGA Notice and/or in the Actions, including, but not limited to, violations of California Labor Code sections 201, 202, 203, 204, 210, 216, 225.5, 226, 226.3, 510, 512, 558, 1174, 1174.5, 1175, 1182.12, 1194, 1194.2, 1197, 1197.1, and 1198, as well as all associated statutes and applicable Industrial Welfare Commission ("IWC") Wage Orders, for failure to pay wages due, including minimum, regular, and overtime wages; failure to timely pay all wages due upon separation of employment; failure to provide accurate and itemized wage statements; and failure to maintain requisite payroll records. 12

(Settlement Agreement, ¶ 5.1.)

The scope of the release appears to be appropriately limited to the PAGA claims asserted in this action, and those for which the LWDA was provided notice in plaintiff’s October 25, 2022 written notice to the LWDA and defendants. (Hawkins Decl., Ex. 2.)

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling

Issued By: SMC on July 27, 2026. (Judge’s initials) (Date)

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