Callahan v. Brookdale Senior Living Cmtys., Inc.

38 F.4th 813

Carolyn D. CALLAHAN, on behalf of herself and all others similarly situated, Plaintiff-Appellee,

v.BROOKDALE SENIOR LIVING COMMUNITIES, INC., a Delaware corporation; Brookdale Employee Services, LLC, a Delaware corporation; Brookdale Employee Services Corporate, LLC, a Delaware corporation; Summerville at Atherton Court, LLC, a Delaware limited liability company; Brookdale Vehicle Holding, LLC, a Delaware limited liability company; BKD Personal Assistance Services, LLC, a Delaware limited liability company; Emeritus Corporation, a Washington corporation; Brookdale Living Communities, Inc., a Delaware corporation; BKD Twenty-One Management Company, Inc., a Delaware corporation; Brookdale Senior Living, Inc., a Delaware corporation; Does, 1 through 100, Inclusive, Defendants-Appellees,

v.Mishelle Neverson, Proposed Intervenor, Movant-Appellant.

Carolyn D. Callahan, on behalf of herself and all others similarly situated, Plaintiff-Appellee,

v.Brookdale Senior Living Communities, Inc., a Delaware corporation; Brookdale Employee Services, LLC, a Delaware corporation; Brookdale Employee Services Corporate, LLC, a Delaware corporation; Summerville at Atherton Court, LLC, a Delaware limited liability company; Brookdale Vehicle Holding, LLC, a Delaware limited liability company; BKD Personal Assistance Services, LLC, a Delaware limited liability company; Emeritus Corporation, a Washington corporation; Brookdale Living Communities, Inc., a Delaware corporation; BKD Twenty-One Management Company, Inc., a Delaware corporation; Brookdale Senior Living, Inc., a Delaware corporation; Does, 1 through 100, Inclusive, Defendants-Appellees,

v.Mishelle Neverson, Proposed Intervenor, Movant-Appellant,andNina Rejuso, Proposed Intervenor; Geneflor Sacro, Proposed Intervenor, Movants.

No. 20-55603

No. 20-55761

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 26, 2021 Pasadena, California

Filed June 29, 2022

Ryan H. Wu (argued) and Robert K. Friedl, Capstone Law APC, Los Angeles, California, for Movant-Appellant.

Joseph Socher (argued), Los Angeles, California; Andranik Tsarukyan and Armen Zenjiryan, Remedy Law Group LLP, Burbank, California; for Plaintiff-Appellee.

Keith A. Jacoby (argued), J. Kevin Lilly, Shannon R. Boyce, and Jeffrey J. Mann, Littler Mendelson P.C., Los Angeles, California; for Defendants-Appellees.

Before: Milan D. Smith, Jr. and John B. Owens, Circuit Judges, and Eduardo C. Robreno,^* District Judge.

ROBRENO, District Judge:

Carolyn Callahan is a plaintiff in an action brought against Brookdale Senior Living Communities, Inc. ("Brookdale"),¹ her former employer, pursuant to the California Private Attorneys General Act ("PAGA"), Cal. Lab. Code sections 2698 – 2699.5, which allows aggrieved employees to recover civil penalties for Labor Code violations on behalf of themselves, the state, or other current or former employees. After mediation, Callahan and Brookdale agreed to a settlement. Appellant Michelle Neverson, who was a plaintiff in an overlapping PAGA case against Brookdale, filed a motion to intervene in Callahan's action. The district court denied Neverson's motion and approved the PAGA settlement in Callahan's case in relevant part. Neverson appeals both the denial of her motion to intervene and the district court's order approving the Callahan settlement. We consolidated these two issues on appeal.

For the reasons set forth below, we affirm the district court's denial of Neverson's motion to intervene. We hold that Neverson is not a party to Callahan's case and may not appeal the approval of the PAGA settlement. Under these circumstances, we have no occasion to consider Neverson's substantive objections to the PAGA settlement.

FACTUAL AND PROCEDURAL BACKGROUND

Brookdale owns and operates senior living communities throughout the United States. Callahan worked for Brookdale as a concierge from approximately February 2006 to February 2018. On November 26, 2018, she sent the California Labor & Workforce Development Agency ("LWDA") notice of a number of Brookdale's alleged violations of the California Labor Code.

On November 27, 2018, Callahan filed a class action lawsuit against Brookdale in the Los Angeles County Superior Court. The complaint alleged violations of the Labor Code and California's Unfair Competition Law. She did not initially bring a claim under PAGA.

I. District Court Proceedings

On December 28, 2018, Brookdale removed the action to federal court pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d). That same day, Brookdale filed a notice of six related cases against it that included the action brought by Neverson (the "Related Actions").²

Callahan's case did not proceed to litigation. Rather, on January 31, 2019, Callahan and Brookdale filed a stipulation requesting that Callahan's individual claims be stayed and submitted to arbitration, that her class claims be dismissed, and that she be permitted to file an amended complaint asserting a PAGA claim after the notice period to the LWDA had been exhausted. The district court approved the stipulation on February 5, 2019. Callahan filed her amended complaint on February 6, 2019, which dismissed her class claims and added claims under PAGA.

After participating in mediation on the PAGA claim, Callahan and Brookdale agreed to settle Callahan's PAGA claim along with the related PAGA claims of other plaintiffs (including Neverson) that were pending against Brookdale. On October 17, 2019, Callahan sent an amended letter to the LWDA notifying it that the parties intended to resolve Callahan's PAGA action and all related PAGA actions against Brookdale, including Neverson's action. The LWDA did not elect to investigate or prosecute the Labor Code violations alleged in Callahan's original or amended notice letters during the statutorily provided sixty-day period. See Cal. Lab. Code § 2699.3(a)(2)(A).

On October 21, 2019, Callahan and Brookdale filed a Joint Notice of Settlement advising the district court they had settled the case as to all parties and causes of action. Three days later, Neverson filed a notice of intent to intervene to object to the PAGA settlement.

On February 13, 2020, Callahan filed a second amended complaint, which sought PAGA penalties based on predicate violations of Labor Code sections 201, 202, 203, 203.1, 222.5, 226, 226.7, 510, 512, 558, 1174, 1194, 1194.2, 2802, 2810.5 and Wage Order No. 4-2001. The second amended complaint also added all the named defendants from the Related Actions.

On March 4, 2020, Callahan and Brookdale filed a joint motion for approval of the PAGA settlement. Their proposed settlement was based on a Gross Settlement Fund of $920,000. The funds were allocated as follows: $417,240.72 to the LWDA, $139,080.24 to the aggrieved employees, $46,000.00 in administration costs, $306,666.67 in attorneys' fees, $8,512.36 in litigation costs and expenses, and $2,500.00 as a service award for Callahan as the named plaintiff.³

On March 13, 2020, Neverson filed her motion to intervene. On May 20, 2020, the district court denied her motion. The district court denied Neverson's intervention as a matter of right under Federal Rule of Civil Procedure 24(a) because she had "not cited, and the Court ha[d] not found, any cases in which a court has granted intervention as of right in a PAGA settlement." Callahan v. Brookdale Senior Living Cmtys., Inc. , No. 2:18-cv-10726-VAP-SSx, 2020 WL 4904653, at *4 (C.D. Cal. May 20, 2020). In considering whether to grant permissive intervention pursuant to Rule 24(b), the court found (1) that it had jurisdiction to permit intervention, (2) that Neverson's motion to intervene was timely, and (3) that there were common questions of law and fact between Neverson's and Callahan's claims. But the court ultimately denied permissive intervention because Neverson and Callahan represented the same legal interest and because "permitting intervention would not contribute to the factual development of issues in the case." Id. at *5.

On July 7, 2020, the district court entered an order granting in part the joint motion for approval of the PAGA settlement. The court approved the settlement amount, but reduced the amount allocated for attorneys' fees from $306,666.67 to $230,000.00.

Neverson timely appealed both the order denying her motion to intervene and the district court's order approving the PAGA settlement. We consolidated her two appeals on September 4, 2020.

II. Developments on Appeal

Neverson raises three arguments on appeal: (1) that she is entitled to intervene in Callahan's PAGA action as a matter of right; (2) that the district court abused its discretion in denying her permissive intervention; and (3) that the district court abused its discretion in finding that the PAGA settlement is fundamentally fair, adequate, and reasonable.

After the initial briefing was completed in this case, we issued two decisions that inform our judgment here. First, Magadia v. Wal-Mart Associates, Inc. , 999 F.3d 668 (9th Cir. 2021), held that a plaintiff seeking penalties under PAGA for California labor law violations must satisfy the traditional Article III standing requirement of an injury in fact. See id. at 677–78. After the Magadia decision was filed, we directed the parties to file supplemental briefs to address its impact on the motion to intervene, Callahan's standing to bring the PAGA suit, and Neverson's standing to object to the PAGA settlement.

Second, we decided Saucillo v. Peck , 25 F.4th 1118 (9th Cir. 2022), holding, as relevant here, that an objector to a PAGA settlement who was not a party to the underlying litigation may not appeal the approval of the settlement. Id. at 1122. The Peck opinion notes that unlike a class action, "[t]here is no individual component to a PAGA action because every PAGA action is a representative action on behalf of the state." Id. at 1126–27. And because objectors to a PAGA settlement have no individual stake in the action, they ...