Urzua v. Lyten, Inc.

Plaintiff now seeks an order approving the representative action settlement; approving PAGA counsel’s application for attorneys’ fees and litigation costs; approving costs to the settlement administrator, ILYM Group, Inc. (“ILYM”); and entering judgment approving the Settlement.

XI. 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.)

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

On April 5, 2024, Plaintiff initiated this action with the filing of the complaint and on June 10, 2024, Plaintiff filed the operative FAC. On December 17, 2024, the parties attended a mediation session with Lou Marin, a well-respected employment law mediator, which resulted in a settlement. Prior to mediation, the parties exchanged informal discovery and Defendant provided data, numbers, and documents including a version of the company’s handbook; a sample of aggrieved employees timekeeping and payroll data; information and documentation regarding Defendant’s wage and hour policies; Plaintiff’s wage statements and personnel file, meal period and rest period information, and Plaintiff’s signed arbitration agreement. Defendant also provided information relating to the number of Aggrieved Employees and PAGA pay periods.

Pursuant to the Settlement, Plaintiff filed a request for dismissal of the class action claims on September 23, 2025, which the Court granted on September 29, 2025.

Pursuant to the parties’ agreement, Defendant will pay a non-reversionary gross settlement of $155,000, which is comprised of $51,666.67 in attorneys’ fees, $17,671.97 in litigation costs, and $4,450 in administration costs. The $81,211.36 in PAGA penalties will be distributed 75% ($60,908.52) to the LWDA and 25% (20,302.84) will be distributed to “Aggrieved Employees,” who are defined as “all current and former non-exempt California employees that worked for Defendant during the PAGA Period [April 5, 2023 to February 8, 2025].” It is estimated there are 126 PAGA Employees who will have worked 3,611 pay periods within the PAGA Period. The average individual PAGA payment will be $161.13.

In exchange for settlement, Aggrieved Employees will release:

[A]ll claims for civil penalties under PAGA during the PAGA Period based on the facts that were alleged, or reasonably could have been alleged, in he Operative Complain 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].)

XIII. 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, failure to maintain records, and violation of various Labor Code sections including 203, 226, and 2802.

PAGA counsel estimated Defendant’s maximum exposure as $392,000 based on multiplying the total number of PAGA Pay Period (3,920) by $100 per violation. Plaintiff’s calculation of the total potential exposure on the PAGA claim was based on one PAGA penalty per PAGA pay period.

PAGA counsel then considered the many obstacles Plaintiff would have to overcome including, Defendant’s defenses; the possibility that the Court could exercise is discretion and reduce civil penalties; and uncertainty associated with litigation. PAGA counsel then applied a 55% discount to the maximum potential exposure resulting in a realistic potential exposure of $176,400.

The gross settlement represents approximately 39.5% of the maximum exposure which is above 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].) Moreover, it represents approximately 87.86% of the realistic exposure, which is well above the percentage range typically approved by courts.

Given this, as well as the risks attendant to proceeding to trial, Defendant’s 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 $55,666.67 in attorneys’ fees. PAGA counsel submits a lodestar figure of $80,561 based on 108.1 hours of work at billing rates ranging from $475 to $1,260 per hour, resulting in a negative multiplier of 0.69. This is well short 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 PAGA counsel, and because the requested multiplier sought by them is well short of the range of multipliers regularly approved by California courts in similar actions, the Court finds PAGA counsel’s requested fee award is reasonable and therefore it is approved.

C. Other Costs and Expenses

PAGA counsel requests litigation costs in the amount of $17,671.97. This is supported by PAGA counsel’s declaration and is below the $20,000 provided for in the settlement. Thus, this amount appears reasonable and is approved.

Administration costs of $4,450 is supported by the declaration of Lisa Mullins, Vice President for ILYM. Thus, the amount appears reasonable and it is approved.

XIV. ADMINISTRATION PROCESS

Pursuant to the terms of the settlement agreement, within 15 days of Court approval of its terms, Defendant will provide ILYM with a list of all Aggrieved Employees with the relevant identifying information (including the last known mailing address) and the number of pay periods worked. Within 20 days of Defendant funding of the Settlement, ILYM will pay the various amounts approved by the Court to PAGA counsel, ILYM, the LWDA, and each Aggrieved Employee. Each Aggrieved Employee will be sent a check in the appropriate amount.

Any checks returned as non-deliverable will promptly be re-mailed to the forwarding address provided; if none is, ILYM will attempt to locate one using a skip trace or other search method. 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.

XV. ORDER AND JUDGMENT

Plaintiff’s motion for approval of the parties’ PAGA settlement is GRANTED. The covered individuals are: all current and former non-exempt California employees that worked for Defendant 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 FAC 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 January 21, 2027 at 2:30 P.M. in Department 22. At least ten court days before the hearing, PAGA 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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