Jesus Guadarrama Estrada v. TN Truss Components, Inc.

The Court will decide the issue of the enhancement awards at the time of final approval.

MOTION TO APPROVE PAGA SETTLEMENT Moving Party: Plaintiff Jesus Guadarrama Estrada (Justice for Workers P.C.) Ruling: GRANT CONDITIONALLY on Plaintiff agreeing to a $7,500 service award and the parties mutually agreeing to excise the confidentiality clause (Sec. V.16.) Plaintiff Jesus Guadarrama Estrada (Plaintiff) requests approval of a Private Attorneys General Act (PAGA) settlement between himself and defendant TN Truss Components, Inc. (Defendant). The operative First Amended Complaint (FAC) alleges claims for PAGA penalties arising from violations of Labor Code sections 201-202, 204, 226, 226.7, 246, 510, 512, 516, 558, 1174, 1182.12, 1194, 1194.2, 1197, 1198, and 2802.

LEGAL STANDARDS Procedural Requirements Under Labor Code section 2699(l)(2): "The superior court shall review and approve any settlement of any civil action filed pursuant to this part. The proposed settlement shall be submitted to the agency at the same time that it is submitted to the court." (Lab. Code. Sec.2699(l)(2); see Williams v. Superior Court (2017) 3 Cal.5th 531, 549 [noting in passing that "PAGA settlements are subject to trial court review and approval, ensuring that any negotiated resolution is fair to those affected.") Reasonableness of Settlement PAGA was enacted to aid public agencies, which lack adequate funding, in enforcement of California's labor laws.

Private persons suing under the PAGA do so as proxies of the state. (ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 185 (Lawson).) Aggrieved employees suing under the PAGA are authorized to recover civil penalties, which advances a law enforcement function, designed to protect the public. (Ibid., citing Arias v. Superior Court (2009) 46 Cal.4th 969, 986 (Arias) and Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian)).) Labor Code Sec.2699(l)(2) requires courts to "review and approve any settlement of any civil action filed pursuant to this part."

The California Supreme Court explains that a PAGA claim is a form of a qui tam action. (Iskanian, supra, 59 Cal.4th 348, 382.) As such, the Court looks to the standards for evaluating a qui tam settlement in assessing this settlement, that is, whether the settlement is "fair, adequate, and reasonable." (Cf. Cal. Govt. Code Sec. 12652 [In a qui tam action a state or political subdivision may settle the action with the defendant notwithstanding the objections of the qui tam plaintiff if the court determines, after a hearing providing the qui tam plaintiff an opportunity to present evidence, that the proposed settlement is fair, adequate, and reasonable under all the circumstances].)

An application for approval of such a settlement must demonstrate that the proposed settlement is adequate, reasonable, and fair to all those affected by it. (Williams v. Superior Court (2017) 3 Cal.5th 531, 549.) Those affected by a PAGA settlement include: (1) the LWDA, who receives 75% of settlement funds (Lab. Code Sec. 2699(i)) and is "bound by the outcome of the proceeding to adjudicate the employee's PAGA claim" (Mejia v. Merchants Building Maintenance, LLC, supra, 38 Cal.App.5th at p. 732); (2) the aggrieved employees, both party and non-party, who receive 25% percent of settlement funds and are, like the LWDA, bound by a PAGA action judgment (Lab.

Code Sec. 2699(i); Arias v. Superior Court (2009) 46 Cal.4th 969, 985); (3) plaintiffs' counsel, who may be awarded "reasonable attorney's fees and costs" (Lab. Code Sec. 2699(g)(1); and (4) the defendant who pays the settlement. Assessing the fairness and adequacy of any settlement necessitates decision-making based on unknowns. In determining whether a settlement falls within the parameters of what may be considered reasonable, courts regularly rely on estimates of potential maximum values weighed against weaknesses of the claims.

Other important indicia of fairness include arms'-length negotiations, experienced counsel, and an adequate investigation of the claims. But the potential value of the claims being settled is primary to any evaluation. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802; Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 129-130.) DISCUSSION The proposed settlement is for a gross amount of $300,000.

1. Notice to the LWDA Labor Code section 2699(l)(2) requires that the settlement be provided to the Labor Workforce Development Agency (LWDA) at the same time as it is presented to the court. The settlement was submitted to the LWDA on August 6, 2026, when the settlement was presented to the Court. (Sung Decl., P. 37 and Ex. 5.) This requirement has been met.

2. Fairness of the Settlement a. Presumption of Fairness Under Dunk v. Ford Motor Co. (1996) 48 Cal.App.4 th 1794, a presumption of fairness exists where "(1) the settlement is reached through arm's-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small." (Id. at 1802.) The settlement has been reached through arm's-length bargaining. The parties engaged in informal discovery, including Defendant producing a complete list of all Aggrieved Employees and

Plaintiff's wage statements, as well as information on Defendant's piece-rate practices. (Sung Decl., P. 14.) Plaintiff's counsel retained an expert analyst to advise them on the negotiation of the settlement. (Id., P. 15.) The parties attended a mediation before Jeffrey Fuchsman, Esq., and reached a settlement. (Id., P. 16.) T he settlement was seemingly reached in good faith and is entitled to a presumption of fairness. b. Breadth of Release The release provision in the settlement agreement applicable to aggrieved employees reads: I.

DEFINITIONS The following terms, when used in this Settlement, shall have the following meanings: ... 12. "PAGA Released Claims" any and all claims or causes of action for PAGA penalties that were alleged, or could have been alleged, based on, or arising out of, the facts stated in the Complaint and Plaintiff's LWDA Letter, whether known or unknown, contingent or accrued, which arose during the PAGA Period, including without limitation to violations California Labor Code Sec.Sec. 201, 202, 203, 204, 210, 226, 226.2, 226.7, 246, 256, 510, 512, 516, 558, 558.1, 1174, 1194, 1197, 1197.1, and 1198. ...

6. PAGA Released Claims. Upon entry of an Order approving the Settlement and full payment by Defendant of the Gross Settlement Amount, all Aggrieved Employees, including Plaintiff, individually and on behalf of their respective agents, executors, personal representatives, heirs, executors, successors and assigns will release any and all PAGA Released Claims against the Released Parties that arose during the PAGA Period. Upon entry of the Order approving the Settlement and judgment entered thereon, as well as full payment by Defendant of the Gross Settlement Amount, Plaintiff and all Aggrieved Employees will be forever barred from pursuing any and all of the PAGA Released Claims that arose during the PAGA Period against the Released Parties.

This release is appropriately bounded to PAGA penalties arising out of the facts stated in the operative complaint and PAGA notice and will be approved. c. Amount of Attorney Fees and Costs Plaintiff requests $100,000 in attorney fees to Plaintiffs' counsel, which is one-third of the settlement amount. The requested fees are appropriate and will be approved. Plaintiff's counsel request $8,884.73 in litigation costs. (See Sung Decl., Ex. 4.) These costs appear reasonably incurred and reasonable in amount and will be approved.

Plaintiff requests $4,000 in settlement administration expenses to be paid to Phoenix Class Action Administration Solutions, who provides a bid in that amount. (See Lawrence Decl., Ex. A.) The requested expenses are approved. d. Gross Settlement Amount The $300,000 settlement represents penalties for approximately 9,350 pay periods worked by approximately 184 employees. (Motion, p. 1; Sung Decl., P. 36.) This is about $32.09 per pay period and an average of about $1,630.43 per employee, prior to fees and costs.

The Court is satisfied that the gross settlement amount is fair and reasonable under the circumstances. e. Division of Civil Penalties "[C]ivil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes; and 25 percent to the aggrieved employees." (Former Labor Code Sec. 2699(i).) "Except as provided in subdivision (n), civil penalties recovered by aggrieved employees shall be distributed as follows: 65 percent to the Labor and Workforce Development Agency for enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes; and 35 percent to the aggrieved employees." (Current Lab.

Code Sec. 2699(m).) The 65-35 breakdown applies to civil actions filed after June 19, 2024. (Lab. Code Sec. 2699(v)(1).) This action was filed on January 31, 2025. The civil penalties in the settlement are properly divided according to the calculation applicable to a case filed after June 19, 2024. f. Escalator Clause The settlement provides that if the number of pay periods is more than 10% above the estimated figure (i.e., over 9,662), Defendant can either proportionally increase the gross settlement amount to account for the amount in excess of 10% or modify the release date in the PAGA period or the PAGA Period will end on the date the number of weekly Pay Periods equals 9,662. (Sung Decl., Ex.

A, Sec. III.3.) This is properly drafted to prevent PAGA claims from falling off the further-off end of the PAGA period. Plaintiff's counsel reports that the total number of pay periods has been verified to be 9,350, which is below the escalator clause threshold, and so the escalator clause has not been

triggered. (Sung Decl., P. 36.) The Court commends counsel's attention to the escalator clause trigger in the first instance of this motion, which is otherwise a common cause of delay in these proceedings. g. Funding of Settlement The settlement will be funded by a non-reversionary lump sum, payable either within 30 days of the Court's entry of an order and judgment approving the settlement, or by January 18, 2027, whichever is later. (Sung Decl., Ex. A, Sec. III.2.) Settlement checks will issue within 14 days of the funding, which will remain payable for 180 days, after which the funds will be tendered to the State Controller's Office's Unclaimed Property Fund in the name of the aggrieved employees to whom the checks were issued. (Id., Sec.Sec.

III.3 and III.4.) This is acceptable and is approved. h. Service Award Plaintiff requests a service award of $10,000. The Court does not typically award more than $7,500 as a service award unless there are extraordinary circumstances. Plaintiff's declaration states that he communicated with his attorneys about the case, gathered documents, and agreed to place the interests of the former class and aggrieved employees ahead of his own interests. (See generally, Estrada Decl.) While this is commendable, it is not extraordinary.

The Court will award Plaintiff $7,500 as a service award, with the remainder going to the net settlement amount. i. Confidentiality Clause The settlement agreement provides: 16. Confidential. The Parties agree that this Settlement is confidential (except for purposes of enforcement) and that no Party will issue any press release nor other public or nonpublic representation regarding the settlement other than as necessary to obtain Court approval and effectuate the terms of the Settlement. The Parties and their counsel agree that they will not initiate or have any contact with the press, respond to any press inquiry, or have any communication with the press about this case. (Sung Decl., Ex.

A, Sec. V.16.) Although the parties may mutually desire to keep a private settlement secret, a PAGA suit "is fundamentally a law enforcement action designed to protect the public and not to benefit private parties[.]" (Arias v. Superior Court (2009) 46 Cal.4 th 969, 986.) Keeping the settlement confidential does nothing to further the enforcement of the law or protect the public. The Court cannot approve this clause. The parties must either agree to abandon this provision, or the Court must deny the motion.

Summary of Tentative Monetary Terms

Attorney Fees: | | $100,000.00 | 33.33% | | | | | | Net Settlement Amount: | $179,615.27 | | | | To the LWDA: | $116,749.93 | 65% | | To aggrieved employees: | $62,865.34 | 35% | Litigation Costs | $8,884.73 | | | Settlement Administration

| $4,000.00 | | Service Award to Plaintiff | $7,500.00 | | | | | | Total Settlement Amount: | $300,000.00 | 100% | | CONCLUSION For the foregoing reasons, the Court's tentative ruling on the motion is to GRANT CONDITIONED on Plaintiff agreeing to a $7,500 service award and the parties mutually agreeing to excise the confidentiality clause (Sec. V.16.) Otherwise, the Court must deny the motion. Plaintiff to give notice. | Home -->)" -->