Wanderer v. Kiewit Infrastructure West Co. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 STEPHEN WANDERER, as an Case No. 2:18-cv-02898 WBS-DB individual and in his 13 representative capacity, MEMORANDUM AND ORDER RE: JOINT MOTION TO APPROVE 14 Plaintiff, SETTLEMENT OF AND DISMISS CLAIM UNDER THE PRIVATE 15 v. ATTORNEYS’ GENERAL ACT 16 KIEWIT INFRASTRUCTURE WEST CO.; and DOES 1 through 25, 17 inclusive, 18 Defendants. 19 20 ----oo0oo---- 21 Plaintiff Stephen Wanderer (“Plaintiff”), individually 22 and in a representative capacity, brought this lawsuit against 23 Defendant Kiewit Infrastructure West Co. (“Defendant”) alleging 24 wrongful termination, retaliation in violation of California 25 Labor Code §§ 1102.5 and 98.6, violations of wage and hour laws, 26 and seeking civil penalties under the Private Attorneys’ General 27 Act (“PAGA”) based on the alleged misclassification of plaintiff 28 and other employees as exempt from overtime. (First Am. Compl. 1 “FAC”) (Docket No. 10).) Before the court is the parties’ Joint 2 Motion to Approve of Settlement and to Dismiss Plaintiff’s Claim 3 under the PAGA. (“Joint Mot. for Settlement”) (Docket No. 28.) 4 I. Factual and Procedural Background 5 Defendant Kiewit is a construction company incorporated 6 under the laws of the State of Delaware and with its “nerve 7 center” located in the State of Nebraska. (Notice of Removal 8 (“NOR”) (Docket No. 1 at ¶¶ 12–13).) Defendant employed 9 plaintiff as a Site Safety and Health Officer (“SSHO”) at various 10 locations within California, including the Oroville Dam, the 11 Folsom Dam, and Kiewit’s Fairfield Office, from on or around 12 September 15, 2013 until May 12, 2018. (FAC at ¶¶ 6–12.) 13 On July 5, 2018, plaintiff sent defendant a letter 14 stating that he intended to pursue a PAGA claim based on 15 defendant allegedly misclassifying him as exempt from overtime. 16 (See Mem. of Points and Authorities in Supp. of Joint Mot. to 17 Approve Settlement and to Dismiss Claim under the PAGA 18 (“Settlement Mem.”) at 1 (Docket No. 29).) Plaintiff submitted 19 the same letter (“PAGA Letter”) to the California Labor Workforce 20 Development Agency (“LWDA”). (See Settlement Mem. at 1.) The 21 LWDA did not respond to the PAGA Letter. (Id.) 22 The operative complaint asserts eight causes of action: 23 (1) wrongful termination in violation of public policy; (2) 24 retaliation in violation of California Labor Code §§ 1102.5 and 25 98.6; (3) violation of California Labor Code § 201; (4) failure 26 to pay overtime wages in violation of California Labor Code § 27 510; (5) violation of California Labor Code § 1174; (6) violation 28 of California Labor Code § 226(a); (7) civil penalties under PAGA 1 for violations of the above Labor Code provisions; and (8) unfair 2 competition in violation of Business and Professions Code § 3 17200. (See FAC at 4–13.) 4 After exchanging extensive discovery, the parties 5 reached a settlement through the court’s Voluntary Dispute 6 Resolution Program with Douglas Robert Thorn of Thorn Law Firm. 7 (See Settlement Mem. at 2.) Mr. Thorn has practiced law for over 8 thirty years, had extensive trial experience, and has served as a 9 neutral in over 200 cases, including employment cases. (See id. 10 at 3.) 11 Pursuant to the settlement agreement, the parties 12 agreed to settle plaintiff’s individual claims, without admission 13 of fault or liability, for a general release and dismissal upon 14 the Court’s approval of the parties’ settlement as to the PAGA 15 claim. (See id. at 2.) The parties entered into a separate 16 confidential settlement related to plaintiff’s other claims. 17 (See id.) The parties settled plaintiff’s individual claims 18 only,1 and the PAGA Settlement Agreement does not release any 19 claim on behalf of any other allegedly affected employee. (See 20 id.) The settlement of plaintiff’s claims is contingent on the 21 court issuing a final Order which approves the settlement 22 agreement, dismisses the action (including plaintiff’s PAGA 23 Claim) with prejudice as to the plaintiff and without prejudice 24 as to other allegedly affected employees, and denies an award of 25 civil penalties to the plaintiff. (See id.) 26 27 1 The parties have not given any indication as to the amount that plaintiff and plaintiff’s counsel will receive in the 28 settlement of the individual claims. 1 II. Discussion 2 A. PAGA Settlement 3 “[A] PAGA action is a statutory action in which the 4 penalties available are measured by the number of Labor Code 5 violations committed by the employer.” Sakkab v. Luxottica 6 Retail N. Am., Inc., 804 F.3d 425, 435 (9th Cir. 2015). The 7 employees bringing the action do so as agents or proxies of the 8 state’s labor law enforcement agencies. See id. Any agreement 9 to waive PAGA claims is an agreement to limit the penalties 10 plaintiff-employees may recover on behalf of the State. See id. 11 at 436. Because a settlement of PAGA claims settles claims that 12 could otherwise be brought by the State, the trial court must 13 “review and approve” any settlement of PAGA claims. See Cal. 14 Lab. Code. § 2669(I)(2). Before the trial court can review and 15 approve of any settlement of PAGA claims, “[t]he proposed 16 settlement shall be submitted to the [LWDA] at the same time that 17 it is submitted to the court.” Id. Plaintiff provided a copy of 18 the proposed settlement agreement to the LWDA on July 15, 2020, 19 concurrently with the filing of the Joint Mot. for Settlement.2 20 (Decl. of Rachel Renno in Supp. of Joint Mot. for Settlement at ¶ 21 2 (“Renno Decl.”) (Docket No. 30)). 22 The trial court, in reviewing the award of civil 23 penalties under the PAGA, may exercise its discretion to lower 24 the amount of penalties awarded if “to do otherwise would result 25 in an award that is unjust, arbitrary and oppressive, or 26 confiscatory.” See Cal. Lab. Code § 2699(e)(2). Because State 27 2 The LWDA has not appeared in this case and has not filed 28 any objection to the proposed joint settlement. 1 law enforcement agencies are the real parties in interest, the 2 court’s task is to ensure that the State’s interest in enforcing 3 the law is upheld. See Rodriguez v. RCO Reforesting Inc., No. 4 2:16-cv-2523 WBS DMC, 2019 WL 331159, at *3 (E.D. Cal Jan. 24, 5 2019) (citing Sakkab, 803 F.3d at 435). 6 Other than the provisions previously discussed, “PAGA 7 does not establish a standard for evaluating PAGA settlements.” 8 See Rodriguez, 2019 WL 331159 at *4 (citing Smith v. H.F.D. No. 9 55, Inc., No. 2:15-CV-01293 KJM KJN, 2018 WL 1899912, at *2 (E.D. 10 Cal. Apr. 20, 2018)). The LWDA itself has stated that it is not 11 aware of any existing case law definitively establishing a 12 standard to review PAGA settlements. Id. (citing Ramirez v. 13 Benito Valley Farms, LLC, No. 16-CV-04708-LHK, 2017 WL 3670794, 14 at *3 (N.D. Cal. Aug. 25, 2017)). At least a few district courts 15 have applied the factors in Hanlon v. Chrysler Corp., 150 F.3d 16 1011, 1026 (9th Cir. 1998), to evaluate a PAGA settlement. See, 17 e.g., Smith, 2018 WL 1899912, at *2; Ramirez, 2017 WL 3670794, at 18 *3; O’Connor v. Uber Techs., 201 F. Supp. 3d 1110, 1134 (N.D. 19 Cal. 2016). The Hanlon factors, which are traditionally used to 20 evaluate class action settlements, include (1) the strength of 21 plaintiffs’ case; (2) the risk, expense, complexity, and likely 22 duration of further litigation; (3) the risk of maintaining class 23 action status throughout the trial; (4) the amount offered in 24 settlement; (5) the extent of discovery completed; (6) the 25 expertise and views of counsel; (7) the presence of government 26 participation; and (8) the reaction of class members to the 27 proposed settlement. See Hanlon, 150 F.3d at 1026. “Many of 28 these factors are not unique to class action lawsuits and bear on 1 whether a settlement is fair and has been reached through an 2 adequate adversarial process.” See Ramirez, 2017 WL 3670794, at 3 *3. Thus, the court finds these factors useful in evaluating a 4 settlement of PAGA claims. 5 The third, seventh, and eighth factors, however, are 6 not relevant to this settlement because it is not a class action 7 and the LWDA has not participated. See Smith, 2018 WL 1899912, 8 at *2 (holding that these factors were inapplicable in a PAGA 9 settlement that was not a class action, which resolved only the 10 plaintiff’s individual PAGA claims, and where the LWDA had filed 11 no submission reflecting a position on the settlement.) In 12 addition to analyzing the settlement under the five remaining 13 Hanlon factors, the court must determine whether the settlement 14 would be “unjust, arbitrary and oppressive, or confiscatory” with 15 respect to defendant, see Cal. Lab. Code § 2699(e)(2), and 16 whether “the settlement provisions are at least as effective as 17 the protections or remedies provided by state and federal law or 18 regulation for the alleged violation.” See Cal. Lab. Code § 19 2699.3(b)(4). 20 First, there is no indication that the settlement would 21 be unjust, arbitrary and oppressive, or confiscatory as to 22 defendants. Both sides have agreed that the settlement is fair 23 and reasonable. (See Settlement Mem. at 4.) Defendant has given 24 no indication that the settlement would be unduly burdensome or 25 unjust. Based on the exchange of substantial information and Mr. 26 Thorn’s recommendation, both sides have agreed to allocate zero 27 dollars to plaintiff’s individual PAGA claim. (See id. at 3.) 28 Plaintiff voluntarily entered into an agreement to accept a 1 monetary benefit to settle his individual claims and not pursue 2 his PAGA claim. (See id. at 4.) Given that both sides have 3 agreed to the settlement and to avoid the further expense of 4 litigation, and the Settlement Agreement does not release any 5 claim on behalf of any other allegedly affected employee, the 6 court concludes that a settlement would not be “unjust, arbitrary 7 and oppressive, or confiscatory.” See Rodriguez, 2019 WL 331159, 8 at *4. 9 Second, the “strength of plaintiff’s case” factor also 10 favors approval of settlement. The parties exchanged substantial 11 information at mediation, and the parties’ mediator, Mr. Thorn, 12 concluded that the defendant presented compelling evidence and 13 arguments that it properly classified plaintiff as exempt under 14 California’s administrative exemption. (See Settlement Mem. at 15 3.) Mr. Thorn likewise concluded that defendant raised a 16 convincing argument that plaintiff did not comply with PAGA’s 17 administrative requirement because his PAGA letter referred only 18 to plaintiff and did not place the LWDA or defendant on notice of 19 his intention to pursue a representative claim. (See id. at 3.); 20 see Khan v. Dunn-Edwards Corp., 19 Cal. App. 5th 804, 809 (2nd 21 Dist. 2018) (affirming summary judgment for defendant where 22 notice “expressly applied only to [plaintiff]” and failed to give 23 the LWDA an adequate opportunity to decide whether to investigate 24 a representative action or provide the company an adequate 25 opportunity to respond to the agency.).) These defenses present 26 a substantial risk to plaintiff’s PAGA Claim and the likelihood 27 that the penalties sought by the plaintiff, either in whole or in 28 part, will not be awarded. Courts have noted that legal 1 uncertainty favors approval of a settlement. See Smith, 2018 WL 2 1899912, at *3. 3 Third, “the risk, expense, complexity, and likely 4 duration of further litigation” factor strongly favors approval 5 of the settlement. The parties reached this settlement after 6 nearly two years of litigation. The parties have conducted 7 extensive investigation, discovery, and arms-length negotiation 8 between experienced and informed counsel and with the assistance 9 of a seasoned and well-respected mediator. (See Settlement Mem. 10 at 3.) Further litigation would necessitate further expenses and 11 costs for both parties. Where a settlement “provides timely, 12 certain, and meaningful recovery,” it ought to be favored. See 13 Ramirez, 2017 WL 3670794, at *5. 14 Fourth, the settlement reflects the parties’ mutual 15 agreement to allocate zero dollars to plaintiff’s individual PAGA 16 claim. (See Settlement Mem. at 3.) The parties arrived at this 17 claim based on the exchange of substantial information, 18 Defendant’s anticipated defenses and Mr. Thorn’s recommendation. 19 (Id.) Plaintiff voluntarily entered into an agreement to accept 20 a monetary benefit to settle his individual claims and not pursue 21 his PAGA claim. (Id. at 4.) Courts have previously approved 22 settlements where parties mutually agree to allocate zero dollars 23 or another nominal amount to a PAGA claim. See Nordstrom Comm’n 24 Cases, 186 Cal. App. 4th 576, 589 (4th Dist. 2010)(holding that 25 there was “no abuse of discretion in the trial court’s approval 26 of the settlement agreement” which allocated zero dollars for 27 PAGA penalty claims as part of the overall settlement of the 28 case.); see also Alcala v. Meyer Logistics, Inc., No. CV 17-7211 1 PSG(AGRx), 2019 WL 4452961, at *9 (C.D. Cal. June 17, 2019) 2 (observing that courts have approved PAGA claims which fall 3 “within the zero to two percent range.”) Moreover, plaintiff’s 4 settlement does not impair the rights or release the claims of 5 other allegedly aggrieved employees. (See Settlement Mem. at 4.) 6 Accordingly, “the amount offered in settlement” factor favors 7 approval. 8 Fifth, regarding the extent of discovery completed and 9 the stage of the proceedings, the parties conducted informal and 10 formal investigation and discovery into plaintiff’s claims. (See 11 id. at 3.) The parties engaged in written discovery, including 12 requests for production, requests for admission, and 13 interrogatories. (Decl. of Billie D. Wenter in Supp. of Joint 14 Mot. for Settlement at ¶ 2(“Wenter Decl.”) (Docket No. 31).). 15 Defendant produced over 12,000 pages in response to requests for 16 production. Id. In addition, defendant deposed plaintiff on 17 February 11, 2020. Id. Moreover, on June 30, 2020, the parties 18 mediated the action through the court’s Voluntary Dispute 19 Resolution Program with Mr. Thorn. (See Settlement Mem. at 2.) 20 Both sides thereby developed a good sense of the risks and 21 benefits of continuing litigation. See Ontiveros v. Zamora, 303 22 F.R.D. 356, 371 (E.D. Cal. 2014) (Shubb, J.)(observing that the 23 parties use of mediation, which took place after significant 24 discovery, and their reliance on the mediator’s proposal 25 demonstrated that they had carefully considered and evaluated the 26 strength of their arguments.) Accordingly, this factor weighs in 27 favor of approval. 28 Sixth, with respect to the experience and views of 1 counsel, plaintiff was represented by experienced counsel who 2 arrived at this Settlement Agreement through arms-length 3 negotiations and by participating in mediation through the 4 court’s Voluntary Dispute Resolution Program with the assistance 5 of Mr. Thorn. (See Settlement Mem. at 1.) Plaintiff’s counsel 6 believes that the dismissal of the PAGA claim appropriately 7 accounts for the challenges and potential risks of continuing 8 litigation. (See id.) Thus, counsel’s conclusion that this 9 settlement is plaintiffs’ best chance at recovery is given 10 considerable weight. See Rodriguez, 2019 WL 331159 at *5. 11 Accordingly, this factor weighs in favor of approval. 12 Seventh, and finally, this settlement is “at least as 13 effective as the protections or remedies provided by state and 14 federal law or regulation for the alleged violation.” See Cal. 15 Lab. Code § 2699.3(b)(4). As mentioned previously, this 16 settlement resolves only plaintiff’s individual claims for civil 17 penalties; it is not a class settlement and therefore does not 18 impair the rights or release the claims of any other allegedly 19 aggrieved employees. (See Settlement Mem. at 1.) Here, Mr. 20 Thorn concluded that plaintiff was properly classified as an 21 employee exempt from overtime under California’s administrative 22 exemption. (Id. at 3); See 8 Cal. Code Regs. § 11040(1)(A)(2). 23 “Given the statutory language [of PAGA], a plaintiff cannot 24 recover on behalf of individuals whom the plaintiff has not 25 proven suffered a violation of the Labor Code by the defendant.” 26 Cardenas v. McLane Foodservice, Inc., No. SACV 10-473 DOC (FFMx), 27 2011 WL 379413 at *3 (C.D. Cal. 2011). The plaintiff has not 28 demonstrated the violation of the Labor Code by defendant for any 1 additional employees and may not even be able to demonstrate a 2 violation of the Labor Code by defendant in his own case. The 3 court, therefore, finds that the settlement satisfies this 4 provision of the California Labor Code. 5 Accordingly, because every relevant factor favors final 6 approval of the settlement, the court will approve the parties’ 7 settlement of plaintiff’s PAGA claims. 8 B. Attorneys’ Fees 9 PAGA provides for the recovery of attorneys’ fees and 10 costs in any successful action. See Cal. Lab. Code § 2699(g)(1) 11 (“Any employee who prevails in any action shall be entitled to an 12 award of reasonable attorney’s fees and costs.”). Here, the 13 parties have agreed to bear their own attorneys’ fees and costs 14 related to this action, and plaintiff’s counsel waives any and 15 all rights to further attorneys’ fees and costs in connection 16 with this action, except as separately agreed upon between 17 plaintiff and plaintiff’s counsel. See Stipulated Settlement 18 Agreement (Docket No. 31-1 at 4.) The parties have also agreed 19 to a mutual waiver of any right to pursue recovery of costs. 20 (See Settlement Mem. at 4.) As plaintiff has not prevailed on 21 any PAGA claim, he is not entitled to any attorney’s fees under 22 PAGA. Accordingly, the court approves of the joint decision by 23 the parties to bear their own attorney’s fees and waive their 24 rights to pursue recovery of costs. 25 IT IS THEREFORE ORDERED that the parties’ Joint Mot. 26 for Settlement (Docket No. 28) be, and the same hereby is, 27 GRANTED. Plaintiff is not entitled to any civil penalties under 28 PAGA. This action, including plaintiff’s PAGA Claim, is WOAOe £2.40 UV YVEOYVO □□ RDYWI YR MYVVUITIOITI VO VOrOtiey OAyt 460 VI +e 1 DISMISSED WITH PREJUDICE as to plaintiff, and DISMISSED WITHOUT 2 PREJUDICE as to any individual or representative claims, 3 including any PAGA claim, that may be brought by any other 4 employees that may have been affected by defendant’s alleged 5 conduct. 6 The Clerk of Court is instructed to enter judgment 7 accordingly. g | Dated: August 28, 2020 dete 4h. Ag Le 9 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12