Alvarez v. CEC Entertainment, LLC et al.

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. Settlement Terms and Administration

A. Provisions of the Settlement

Plaintiffs move for approval of a proposed settlement made on behalf of a group of Aggrieved Employees, defined as:

All current and former hourly paid, non-exempt California employees of Defendants who worked at any time during the Settlement Period [October 30, 2021 through May 14, 2025]. (Declaration of Raul Perez (“Perez Decl.”), Ex. 1 (“Agreement”), ¶¶ 1.2, 1.14.)

Under the terms of the settlement, Defendant will pay a gross settlement amount of $1,755,000. (See Memorandum, pp. 10:16–12:19; Agreement, ¶¶ 27–34.)

This amount includes attorney fees in the amount of $585,000 (one third of the gross settlement amount), litigation costs up to $30,000, service awards of $1,500 to each of the three Plaintiffs named in the First Amended Complaint, and settlement administration costs up to $20,000.

Of the remaining net settlement amount, 75 percent will be paid to the LWDA, and 25 percent will be distributed to the approximately 8,297 Aggrieved Employees based on the number of pay periods worked.

Funds from checks that are not cashed within 180 days from the date of issuance will be sent to the State of California Unclaimed Property Fund in the name of the Aggrieved Employee whose check went uncashed.

The Agreement further provides that Defendants will pay Plaintiffs $15,000 each as General Release Payments, to be paid separately from and in addition to the gross settlement amount, for general releases of all claims Plaintiffs may have arising out of their employment. (Agreement, ¶ 32.)

“The Parties agree to memorialize the terms and conditions pertaining to the General Release Payments in a separate agreement between Defendants and each of the three Plaintiffs.” (Ibid.)

In exchange for the settlement, Aggrieved Employees are deemed to release Defendant and related people and entities from “any and all claims for PAGA civil penalties under the California Labor Code, Wage Orders, regulations, and/or other provisions of law alleged or could have been alleged to have been violated in the Actions with respect to Aggrieved Employees based on the facts alleged in the Actions during the Settlement Period.” (Agreement, ¶¶ 11, 13, 33.)

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

Plaintiffs contend the PAGA settlement is fair and reasonable. (Memorandum, pp. 12:20–18:3; Perez Decl., ¶¶ 4–10; Declaration of Paolo Policastro (“Policastro Decl.”), ¶ 24.)

Plaintiffs’ counsel explains that the parties participated in mediation with Daniel Turner, Esq., on March 14, 2025. (Perez Decl., ¶ 4.)

Defendant provided Plaintiffs with discovery, including the relevant written policies and procedures, a list of non-exempt hourly positions, and random samples of time and pay records. (Id. at ¶ 9.)

Plaintiffs also retained private investigators to document workplace conditions at 21 different locations throughout California. (Ibid.)

Based on their investigation, Plaintiffs provide an analysis of Defendant’s exposure, according to which the Defendant faces a total maximum exposure of $129,756,600 and a riskadjusted exposure of $12,023,970. (Memorandum, pp. 14:6 –14:18.)

The gross settlement amount of $1,755,000 represents a recovery of approximately 1.4 percent of Defendant’s estimated total maximum exposure and 14.6 percent of Defendant’s risk-adjusted exposure.

Given that trial courts can and do exercise their discretion to reduce the total PAGA penalties imposed, the Court finds that Plaintiffs’ counsel has adequately explained the rationale behind the settlement amount. (See Carrington, supra, 30 Cal.App.5th at p. 529.)

The Court has reviewed Plaintiffs’ written submissions in support of the settlement and is satisfied that the PAGA settlement is fair and may be approved.

C. Incentive Award, Fees and Costs

Plaintiffs seek service awards in the amount of $1,500 each ($4,500 total). (Memorandum, p. 24:10–25:26.)

As referenced above, the Agreement provides the Defendants will pay each of the three Plaintiffs a $15,000 amount in exchange for a general release of all claims, and these payments will not come from the gross settlement amount.

The Court is satisfied that the service awards are justified and the amounts requested are reasonable.

Plaintiffs’ counsel seeks attorney fees $585,000 (one third of the gross settlement amount). (Memorandum, pp. 18:4–23:20; Perez Decl. ¶¶ 20–24; Policastro Decl., ¶¶ 12-22.)

Plaintiffs’ counsel submits that the current lodestar in this action is $408,775, based on a total of 521.6 hours billed at rates from $625–1,050. (Memorandum, p. 20:18–25.)

This results in a multiplier of 1.43, which is within the general range of multipliers that California courts have found to be reasonable.

The Court finds the requested fees to be reasonable as a percentage of the total recovery and therefore approves a fee award in the amount requested.

Plaintiffs’ counsel also requests reimbursement of litigation costs in the total amount of $23,049.02 and provides evidence of costs incurred in that amount. (Memorandum, pp. 23:21– 24:9; Perez Decl., ¶ 25; Policastro Decl., ¶ 23.)

The Court finds the costs to be reasonable and approves reimbursement of costs in the amount requested.

Plaintiffs also seek up to $10,000 in settlement administration costs to ILYM Group, Inc. (Memorandum, p. 8:20–21; Agreement, ¶ 34.)

The Court appoints ILYM Group, Inc. as settlement administrator and approves settlement administration costs up to $10,000, according to proof at the compliance hearing.

III.

Conclusion

The Court GRANTS the motion for approval of the PAGA settlement, VACATES the Case Management Conference set for 2:30 p.m. on June 3, 2026, and sets a compliance hearing for March 3, 2027 at 2:30 p.m. in Department 11.

Plaintiffs shall prepare the order.

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