Whitworth v. SolarCity Corp.

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RAVI WHITWORTH, et al., Plaintiffs, v. SOLARCITY CORP., et al., Defendants.

No. 16-cv-01540-JSC

United States District Court, N.D. California

May 1, 2023

ORDER RE: PRIVATE ATTORNEYS GENERAL ACT SETTLEMENT Re: Dkt. No. 190

JACQUELINE SCOTT CORLEY UNITED STATES DISTRICT JUDGE

Plaintiffs Ravi Whitworth, Javier Frias, Greg Carranza, and Joshua Arguelles request approval of a Private Attorneys General Act (“PAGA”) settlement under California Labor Code section 2698, et seq., with Defendants SolarCity Corp. and Tesla Energy Operations, Inc. (Dkt. No. 190.^[1]) Having reviewed Plaintiffs' unopposed motion, the relevant legal authority, and Plaintiffs' supplemental submissions, the Court GRANTS the motion for approval of the PAGA Settlement and GRANTS IN PART and DENIES IN PART the request for attorneys' fees, costs, and service awards.

BACKGROUND

The Court incorporates by reference the factual and procedural background in Plaintiffs' unopposed motion for approval. (Dkt. No. 190 at 11-13.)

THE SETTLEMENT AGREEMENT

A. PAGA Settlement Employees

The Settlement Agreement defines the PAGA Settlement Employees as “all current and former non-exempt employees who worked for Defendants with job titles such as Photo Installer, Junior Installer, Crew Lead, PV Installer and other similar job roles to install, repair, and/or maintain solar power units located in customers' homes or worksites in California during the PAGA Period (April 14, 2015, through September 1, 2022).” (Dkt. No. 190-1 at 60 (Settlement Agreement § I.17.) There are 4,622 such employees. (Dkt. No. 190-1, Humphrey Decl. at ¶ 42.A.)

B. The Payment Terms

Defendants have agreed to pay a gross settlement amount of $1,500,000 which includes:

1. the PAGA Fund (75% of which is payable to the California Labor and Workforce Development Agency (the “LWDA”) and 25% of which is payable to the Aggrieved Employees in individual PAGA payments;

2. the settlement administrator's fees and costs;

3. attorney fees and costs; and

4. individual service awards for the named plaintiffs.

(Settlement Agreement at § I.8.) The gross settlement amount is non-reversionary. (Id.)

The PAGA Settlement Employees shares shall be calculated and apportioned on a pro rata basis based on the number of eligible pay periods they worked during the eligible period. (Settlement Agreement at § V.2.) Twenty-five percent of the PAGA Payment will be divided by the aggregate total number of eligible pay periods, resulting in a “Pay Period Value.” (Id.) Then, “[e]ach PAGA Settlement Employee's Individual PAGA Payment will be calculated by multiplying each PAGA Settlement Employee's total number of Eligible Pay Periods by the Pay Period Value based on the number of Eligible Pay Periods PAGA Settlement.” (Id.)

C. Attorneys' Fees and Costs, and Individual Service Awards

Defendants agree not to oppose Plaintiffs' counsel's request for attorneys' fees not to exceed 40% or $600,000 of the Gross Settlement Amount, or to oppose a request for costs not to exceed $180,000. (Settlement Agreement at § IV.4.a.) If the Court awards a lower amount in attorneys' fees and/or costs than requested, the difference will be added to the PAGA payment. (Id.)

Subject to Court approval, the Settlement Agreement also provides for individual service awards of up to $10,000 for each named plaintiff. (Settlement Agreement at § IV.4.c.) If the Court awards less than this amount, the difference will be added to the PAGA payment. (Id.)

D. Settlement Administration

The Parties have chosen ILYM Group, Inc., as the settlement administrator following a competitive bidding process. (Settlement Agreement at § I.21; Dkt. No. 190-2 at ¶ 33.) The settlement administration costs are currently estimated to be less than $22,500, although the settlement agreement provides for up to $25,000 in settlement administration costs. (Dkt. No. 190-2 at ¶ 36; Dkt. No. 190-1, Settlement Agreement at § IV.4.b.) The settlement administrator's tasks include updating the PAGA Settlement Employees addresses, determining the individual PAGA payment amount for each PAGA Settlement Employee, distributing the payments to the PAGA Settlement Employees and the LWDA, performing tax related accounting and administrative services, and distributing funds from undeliverable or uncashed settlement checks to the cy pres. (Id. at § V.1.)

E. Scope of Release

The PAGA released claims include: any “PAGA [claims] that are alleged or that could have been reasonably alleged based on the facts asserted in the operative complaints in the Actions or LWDA Letters, including claims based on alleged violations and recoverable penalties under Labor Code sections 201-205, 210, 216, 221, 223, 225.5, 226, 226.2, 226.3, 226.7, 256, 510, 511, 512, 516, 551, 552, 553, 558, 1174, 1174.5, 1182.12, 1194-1197.1, 1198, and 2802.” (Settlement Agreement at § 1.14.) Plaintiffs release these claims on behalf of “the LWDA, the State of California, and any other individual or entity acting on behalf of or purporting to act on behalf of the LWDA and/or the State shall be barred from asserting any of the PAGA Released Claims in any future litigation, arbitration, or other legal forum.” (Settlement Agreement § IV.5.a.) Plaintiffs also release these claims on behalf of the PAGA Settlement Employees and their heirs, successors, assigns, attorneys and agents. (Id. at § IV.5.b.)

The Plaintiffs themselves personally release:

all known and unknown claims, including any wage and hour claims, claims under California Business & Professions Code section 17200, claims under the Labor Code, and all claims for indemnity or reimbursement of business expenses, overtime compensation, minimum wages, timely payment of wages, wage statement claims, meal and rest period claims, penalties, liquidated damages, and interest, and all other claims under state, federal, and local laws, as well as the common law, including laws related to maintaining payroll records, payment of sick leave, fraud, trespass, conversion, discrimination, harassment, or retaliation. Plaintiffs further agree that they expressly waive and relinquish to the fullest extent permitted by law, the rights and benefits of California Civil Code section 1542.

(Id. at § IV.5.c.)

DISCUSSION

A PAGA representative action is not a class action, but “is instead a type of qui tam action.” Moniz v. Adecco USA, Inc., 72 Cal.App. 5th 56, 76 (2021) (cleaned up). A plaintiff who brings a PAGA claim “does so as the proxy or agent of the state's labor law enforcement agencies.” Arias v. Superior Court, 46 Cal.4th 969, 986 (2009). “Such a plaintiff also owes responsibility to the public at large; they act, as the statute's name suggests, as a private attorney general and 75% of the penalties go to the LWDA ‘for enforcement of labor laws ... and for education of employers and employees about their rights and responsibilities under this code.'” O'Connor v. Uber Tech., Inc., 201 F.Supp.3d 1110, 1134 (N.D. Cal. 2016) (quoting Cal. Lab. Code § 2699(i))). “This duty imposed upon the PAGA representative is especially significant given that PAGA does not require class action procedures, such as notice and opt-out rights.” Id.

When PAGA claims are settled, the court must “review and approve” the settlement. Cal. Lab. Code § 2699(1). Under PAGA, courts may exercise their discretion to lower the amount of civil penalties awarded “if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” Cal. Labor Code § 2699(e)(2). However, “neither the California legislature, nor the California Supreme Court, nor the California Courts of Appeal, nor the [LWDA] has provided any definitive answer” as to what the appropriate standard is for approval of a PAGA settlement. Flores v. Starwood Hotels & Resorts Worldwide, Inc., 253 F.Supp.3d 1074, 1075 (C.D. Cal. 2017). Generally, courts apply a Rule 23-like standard, asking whether the settlement of the PAGA claims is “fundamentally fair, adequate, and reasonable in light of PAGA's policies and purposes.” Haralson v. U.S. Aviation Servs. Corp., 383 F.Supp.3d 959, 972 (N.D. Cal. 2019) (collecting cases). As such, several courts have evaluated proposed PAGA settlements under the fairness factors set forth in Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998), which courts use to determine the fairness of a settlement under Rule 23(e). See Boddie v. Signature Flight Support Corp., No. 19-CV-03044-DMR, 2021 WL 2651369, at *5 (N.D. Cal. June 28, 2021) (collecting cases).

I. Adequacy of the Settlement Agreement

A. Statutory Notice Requirement

First, to bring an action under PAGA, an aggrieved employee must first provide written notice to the LWDA as well as to the employer. Cal. Lab. Code § 2699.3(a)(1). Plaintiffs did so here. (Dkt. No. 190-1, Humphrey's Decl. at ¶¶ 11-13.) Second, a party seeking approval of a PAGA settlement must simultaneously submit the proposed settlement to the LWDA to allow the LWDA to comment on the settlement if the LWDA so desires. See Cal. Labor Code § 2699(1)(2). Plaintiffs served the LWDA with a copy of the settlement agreement and the motion for approval on January 14, 2023. (Dkt. No. 202-2.)

B. The Fairness Factors

The Court evaluates the settlement under the relevant Hanlon factors: 1) the strength of the plaintiff's case; 2) the risk, expense, complexity, and likely duration of further litigation; 3) the amount offered in settlement; 4) the extent of discovery completed and the stage of the proceedings; 5) the experience and views of counsel; and 6) the presence of government participation. Hanlon, 150 F.3d at 1026. The court will also evaluate the proposed settlement in light of PAGA's...