Khatanbaatar v. Infogain Technologies, Inc. et al.

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 Act (“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 current and former non-exempt employees of Defendant who worked in California during the Class Period [October 27, 2019 through May 30, 2025]. (Declaration of Marta Manus (“Manus Decl.”), ¶ 14, Ex. 1 (“Agreement”), § 1.12.)

The settlement includes a subset PAGA group of Aggrieved Employees, defined as “all current and former non-exempt employees of Defendant who worked in California” during the PAGA Period [October 27, 2022 through May 30, 2025]. (Id. at §§ 1.4, 1.34.) Defendant will pay a non-reversionary gross settlement amount of $307,500. The gross settlement amount includes attorney fees of up to one-third of the gross settlement amount ($102,500); litigation costs of up to $25,000; a PAGA allocation of $15,000 (75 percent of which, or $11,250, will be paid to the LWDA and 25 percent of which, or $3,750, will be paid to Aggrieved Employees as individual PAGA payments); a service payment of up to $10,000; and settlement administration costs estimated at up to $8,000. (Motion, pp. 3:14–4:12; Manus Decl., ¶ 8.)

The estimated net settlement amount of approximately $147,000 will be distributed to approximately 122 class members on a pro rata basis according to workweeks worked, yielding an estimated average individual settlement payment of approximately $1,204.92. (Manus Decl., ¶ 8.) The Agreement provides that Apex Class Action, LLC (“Apex”) will serve as the neutral entity that will administer the settlement. (Agreement, § 7.1.) The Court appoints Apex as the settlement administrator.

The Agreement further provides that funds from uncashed and cancelled settlement checks will be transmitted to the California State Controller’s 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 Participating Class Members agree to release Defendant and related persons and entities from “all claims arising during the Class Period that were alleged, or reasonably could have been alleged, based on the facts stated in the Operative Complaint.” (Agreement, § 5.2.) Aggrieved Employees will be deemed to release Defendant and related persons and entities from “all claims for civil penalties under PAGA arising during the PAGA Period that were alleged, or reasonably could have been alleged, based on the facts stated in the Operative Complaint and PAGA Notice” (dated October 27, 2023). (Id. at § 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. 8:16–11:3.) Plaintiff’s counsel states that the parties participated in mediation with Brandon McKelvey, Esq., on March 31, 2025. (Manus Decl., ¶ 6.) Prior to mediation, Defendant produced a representative sample of class-member time and pay data, along with its wage and hour policy documents and other relevant information, which Plaintiff’s counsel analyzed. (Id. at ¶¶ 18, 20.)

According to the analysis by Plaintiff’s counsel, the estimated maximum potential value of the class and PAGA claims is approximately $3,215,158.35, and the estimated realistic value of these claims is approximately $559,180.92. (Id. at ¶¶ 23–33; Motion, pp. 10:12–11:3.) The gross settlement amount of $307,500 represents approximately 9.6 percent of the maximum value of the claims and approximately 59 percent of the estimated realistic value of the claims, which is within the general range of percentage recoveries that California courts have found to be reasonable.

In addition, Plaintiff’s counsel has adequately explained the settlement process and the rationale supporting the gross settlement amount. 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 her participation in this action, including approximately 40 hours devoted to the litigation. (Declaration of Orgil Khatanbaatar, ¶¶ 6–9.) The Court is inclined to approve the service award in the amount requested and will issue its determination at the final approval hearing.

Class counsel will seek attorney fees of up to one-third of the gross settlement amount ($102,500). 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 that 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 that there are approximately 122 class members who can be identified from a review of Defendant’s employment and payroll records. (Manus Decl., ¶ 14.) The Court finds that there are common questions regarding whether class members were subjected to Defendant’s allegedly unlawful wage and hour policies and practices, and that the 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 the payment to the named plaintiff, and it will be translated into Spanish. The notice informs class members that they may appear at the final approval hearing to object to the settlement.

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 19, 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 March 3, 2027 at 1:30 p.m. in Department 5. Case Management Conference at 2:30 p.m. is VACATED.

The prevailing party shall prepare the order in accordance with California Rules of Court, rule 3.1312.

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