Moniz v. Adecco USA

Filed 11/30/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
RACHEL MONIZ,
Plaintiff and Respondent,
A159410 & A160133
v.
ADECCO USA, INC., (San Mateo County
Super. Ct. No. 17-CIV-
Defendant and
01736)
Respondent;
PAOLA CORREA et al.,
Movants and Appellants.
ADECCO USA, INC.,
Defendant, Cross-
complainant and Appellant, A159978
v. (San Mateo County
PAOLA CORREA et al., Super. Ct. No. 17-CIV-
01736)
Cross-defendants and
Appellants.
Under the Private Attorneys General Act of 2004 (PAGA)
(Lab. Code,1 § 2698 et seq.), an employee aggrieved by his or her
employer’s alleged Labor Code violations may be authorized to
act as an agent of the Labor Workforce and Development Agency
(LWDA) to bring a civil action to recover civil penalties. If an
Unless otherwise specified, subsequent statutory
1
references are to the Labor Code.
1
aggrieved employee settles such an action, the trial court must
review and approve the settlement, and the civil penalties are
distributed 75 percent to the LWDA and 25 percent to the
aggrieved employees. (§ 2699, subds. (i), (l)(2).)
In separate PAGA representative actions, Rachel Moniz
and Paola Correa sued respondent Adecco to recover civil
penalties for Adecco’s alleged violations of the Labor Code. Moniz
settled her case first, and the trial court approved the settlement.
In this current set of consolidated appeals, Correa attacks many
aspects of the settlement process and approval, including the
manner in which the trial court treated objections to the
settlement by Correa and the LWDA, the standard used by the
trial court to approve the settlement, numerous alleged legal
deficiencies of the settlement, and its overall fairness. She also
contests the trial court’s ruling denying her attorney fees and an
incentive payment.
We find that the trial court applied an appropriate
standard of review by inquiring whether the settlement was “fair,
adequate, and reasonable” as well as meaningful and consistent
with the purposes of PAGA, and we reject many of Correa’s
contentions regarding the settlement’s purported substantive and
procedural deficiencies. Nonetheless, we reverse the judgment
because we cannot infer from the record that the trial court
assessed the fairness of the settlement’s allocation of civil
penalties between the affected aggrieved employees or whether
such allocation comports with PAGA.
2
BACKGROUND
I. The Parties
Defendant Adecco is a staffing firm that supplies
temporary labor to a variety of companies. Adecco hires
temporary employees called “Associates” and full-time employees
called “Colleagues.” Moniz was a Colleague who managed
Adecco’s relationship with Google, and Correa was an Associate
assigned to work at Google. Moniz worked for Adecco until
spring of 2016, and Correa worked for Adecco until December
2016.
II. Doe and Moniz
In December 2016, John Doe filed a PAGA complaint
against Google in San Francisco Superior Court (Doe, et al. v.
Google, et al. (Super Ct. S.F. City & County, 2016, No. CGC-16-
556034) (Doe)). He alleged that Google’s non-disclosure
agreements, policies, and practices violated numerous provisions
of the California Labor and Business and Professions Codes.
On February 1, 2017, Moniz filed a PAGA notice with the
LWDA alleging that Adecco maintained and implemented
unlawful limitations on the disclosure of information in violation
of the Labor Code. For example, she stated that Adecco
impermissibly required her to agree to several illegal terms in
Adecco’s “Employment Agreement for Colleagues in California.”
Moniz’s PAGA notice stated that she intended to file a complaint
against Adecco on behalf of “all current and former employees,
including but not limited to ‘Colleagues,’ who worked for Adecco
in California.”
3
On February 14, 2017, Correa submitted to the LWDA a
PAGA notice alleging, among other things, that Adecco’s non-
disclosure agreements, policies, and practices violated sections
96, subdivision (k) (96(k)), 98.6, 232, 232.5, 432.5, 1102.5, and
1197.5, subdivision (k) (1197.5(k)). Correa’s PAGA notice
incorporated the facts alleged in Doe. In March 2017, John Doe
added Correa as a plaintiff and added Adecco as a defendant in
Doe. The Doe plaintiffs alleged that the defendants’
confidentiality rules prevent employees from engaging in lawful
conduct during non-work hours and violated state statutes
entitling employees to disclose wages, working conditions, and
illegal conduct, including sections 96(k), 98.6, 232, 232.5, 1102.5,
and 1197.5(k).
Moniz filed her PAGA representative action in San Mateo
County Superior Court in April of 2017 (Moniz v. Adecco USA,
Inc. (Super Ct. San Mateo County, 2017, No. 17-CIV-01736)
(Moniz)). She alleged that Adecco violated sections 232, 232.5,
432.5, and 1102.5, and 1197.5(k) by requiring employees to sign a
form employment agreement that prohibited disclosure of wages,
working conditions, and non-public information of commercial
value. The following month, Moniz served Correa with a notice of
related case stating that Moniz and Doe “involve[d] the same
parties and [are] based on the same or similar claims,” and arose
“from the same or substantially identical transactions.”
In both Doe and Moniz, Adecco demurred on the basis that
all the plaintiffs’ claims were subject to federal “Garmon
preemption.” (San Diego Unions v. Garmon (1959) 359 U.S. 236.)
4
The San Francisco Superior Court sustained the demurrers
before it and ruled that nearly all the plaintiffs’ claims were
subject to Garmon preemption. The Doe plaintiffs appealed from
the subsequent judgment.2 Meanwhile, the court in Moniz
overruled Adecco’s demurrer.
While the Doe appeal was pending, Correa sought to
intervene in Moniz.3 She argued that she was entitled to
mandatory intervention because she had an interest relating to
the property or transaction at issue, because the eventual
disposition in Moniz could impair her ability to protect that
interest, and because Moniz did not adequately represent that
interest. The trial court denied Correa’s motion on timeliness
grounds and because she did not meet the requirements for
mandatory or permissive intervention. This court affirmed the
trial court’s denial order, holding that Correa had not established
she was entitled to mandatory intervention because she did not
2 In September 2020¸ this court reversed the trial court’s
ruling in Doe and remanded the case for further proceedings.
(Doe v. Google (2020) 54 Cal.App.5th 948, 952.) In this appeal,
Correa filed a request for judicial notice of a joint case
management statement submitted in Doe after our remand. She
filed an additional request for judicial notice of a September 2021
LWDA email stating that the LWDA stands by its arguments
below but will not file anything in this appeal. We deny both
requests as irrelevant to our disposition.
3Adecco filed a petition for coordination of Doe and Moniz,
which was denied before Correa sought to intervene in Moniz.
The coordination petition was denied because, at that time it was
ruled upon, the trial court in Doe had sustained Google’s and
Adecco’s demurrers, and the only cause of action left in Doe was
not being pursued in Moniz.
5
establish the inadequacy of Moniz’s representation. (Moniz v.
Adecco USA, Inc. (February 11, 2020, A155474) [nonpub. opn.]
(Moniz I).) We also affirmed the denial of her request for
permissive intervention because the trial court did not abuse its
discretion in finding that the interests opposing intervention
outweighed Correa’s alleged interest in the action.
Meanwhile, in the trial court, Moniz and Adecco disputed
whether Moniz’s PAGA notice and complaint encompassed claims
relating to employment agreements signed by both Colleagues
and Associates, and Adecco sought to limit the scope of Moniz to
claims for civil penalties for alleged violations of sections 232,
232.5, 432.5, 1102.5, and 1197.5(k) committed against Colleagues
who signed the same employment agreement that Moniz signed.4
The parties stipulated that these issues could be resolved
through motions for summary adjudication (Code of Civ. Proc.,
§ 437c, subdivision (t)). On Moniz’s motion for summary
adjudication, characterizing the “issue presented” to be “the scope
of the representative action,” the trial court ruled that Moniz
adequately exhausted her administrative prerequisites to pursue
PAGA claims on behalf of Adecco Colleagues and Associates “for
the time period February 1, 2016 to the present for alleged
violations of Labor Code Sections 232, 1197.5(k), 232.5, 1102.5,
and 432.5.” The trial court denied Adecco’s motion seeking to
establish that “[t]he scope of ‘aggrieved persons’ in Plaintiff’s
4The trial court and the parties referred to this debate
regarding whether Moniz covered alleged violations as to both
Colleagues and Associates as the “scope issue.”
6
Private Attorneys General Act claims (First through Fifth Causes
of Action) is limited to Adecco Colleagues who signed the same
Employment Agreement for Colleagues in California as that
executed by Ms. Moniz.” After this ruling, the parties conducted
additional discovery regarding Associates.
III. The Moniz Settlement Approval
On or around May 13, 2019, after two mediation sessions
with an experienced mediator, the Moniz parties moved for
approval of a settlement agreement they reached through
mediation. The trial court held a hearing and declined
settlement approval, finding that the agreed-upon release was too
broad because it included a release of aggrieved employees’ non-
PAGA claims, including claims under Business & Professions
Code section 17200 and federal law. The court required the
parties to submit information regarding their costs and fees, and
it set a further approval hearing.
On June 3, 2019, the parties executed a settlement
agreement with a narrowed release. On July 3, 2019, after an
additional hearing, the trial court approved the settlement and
entered judgment. Thereafter, the LWDA moved ex parte to
intervene, objecting to the settlement and seeking to vacate the
judgment because, among other things, the final settlement had
not been timely served on the LWDA. At an ex parte hearing, the
LWDA informed the trial court that it did not want to intervene
or take over prosecution of the case, but it desired to present a
postjudgment motion to vacate. Correa also filed a postjudgment
motion to vacate the judgment. After a hearing, the trial court
7
vacated the judgment because timely notice of the settlement had
not been provided to the LWDA.
On September 6, 2019, Moniz filed a renewed motion to
approve the settlement, which Adecco joined. The LWDA filed
comments and objections to the settlement on the following
grounds: (1) the settlement release was overbroad to the extent
that it included claims not listed in Moniz’s PAGA notice (the
LWDA did not take issue with the trial court’s ruling that Moniz
had provided sufficient notice to pursue alleged violations of
sections 232, 232.5, 432.5, 1102.5, and 1197.5(k) with respect to
Associates); and (2) the settlement agreement could not release
claims of aggrieved employees, and it should not say that the
LWDA, as opposed to Moniz on behalf of the LWDA, was
releasing claims. Correa filed an opposition to the motion for
approval and objections to the settlement, as well as a motion for
attorney fees and costs for herself should the settlement be
approved. Her counsel moved to intervene for purposes of
seeking attorney fees.
On October 16, 2019, the court held a settlement approval
hearing. The LWDA appeared and argued. The trial court
received Correa’s written opposition and objection, but it denied
her oral argument on the question of settlement approval.
On November 22, 2019, the trial court issued an order
approving the settlement. The court recounted the following key
settlement terms: The settlement was for a non-reversionary
$4.5 million in civil penalties. The settlement was for alleged
violations against aggrieved employees, called the “PAGA
8
Settlement Members,” defined as “current and former employees
of Defendant who worked as an Associate or Colleague in
California at any point during” the period February 1, 2016 to the
date of final approval. There were approximately 62,000 such
aggrieved employees. Adecco agreed to “revise its Colleague
Agreement and Associate Agreement and related policies which
allegedly limit employees from disclosing their own salary,
wages, benefits and related working conditions; and/or from
discussing [the] same with others; and/or from engaging in
whistleblowing activity.” The net proceeds of the settlement were
allocated 75 percent to the LWDA and 25 percent to the
aggrieved employees. Of that 25 percent, 88 percent was
allocated to the Associates and 12 percent was allocated to the
Colleagues.
Adecco received the following release: “[T]he LWDA and
PAGA Settlement Members release any and all known and
unknown claims under the PAGA against the Released Parties
that were or could have been pled based on the factual
allegations of the Complaint, including but not limited to
Plaintiff’s allegation that Defendant unlawfully prohibited
current and former employees from: (1) disclosing certain
information including but not limited to salary, benefits, wages,
identities of other employees, training and operations methods,
and office protocols and systems and programs and systems; (2)
discussing the wages of others, engaging in whistleblower
activity, or disclosing or discussing their working conditions.
This includes, but is not limited to, PAGA claims for violation of
9
California Labor Code sections 232, 232.5, 432.5, 1102.5,
1197.5(k), and 2699 et seq.[ ] For avoidance of doubt, the only
claims being released by the LWDA and PAGA Settlement
Members are claims that were or could have been brought under
the PAGA, based on the allegations in Plaintiff’s Complaint.”
The settlement release included a waiver of rights under
Civil Code section 1542, as follows: “The PAGA Settlement
Members’ Released Claims include all such respective claims,
whether known or unknown by the releasing party. Thus, even if
a PAGA Settlement Member (including Plaintiff) discovers facts
in addition to or different from those that they now know or
believe to be true with respect to the subject matter of the PAGA
Settlement Members’ Released Claims, e.g. the claims brought in
Plaintiff’s Complaint or that could have been brought based on
the facts therein, those claims will remain released and forever
barred. Therefore, with respect to those respective released
claims, Plaintiff and the PAGA Settlement Members expressly
waive and relinquish the provisions, rights and benefits of
California Civil Code section 1542 . . . .” Moniz also individually
released Adecco from all claims under Business and Professions
Code section 17200, section 1833 of title 18 of the United States
Code, and section 240.21F of title 17 of the Code of Federal
Regulations.
The trial court acknowledged the lack of binding authority
providing a standard by which a PAGA settlement should be
reviewed, and applied the “fair, reasonable, and adequate”
standard applicable to “analogous class actions.” The court also
10
stated that no binding authority required it to apply the standard
the LWDA advocated—that a trial court must closely scrutinize a
PAGA settlement and find it “meaningful, and consistent with
the underlying purposes of the statute to benefit the public.”
Nonetheless, the trial court applied that standard and engaged in
its own analysis of the settlement’s fairness. It found,
“The . . . proposed $4.5 million settlement of PAGA civil penalties
for violations of the Labor Code . . . is fair, reasonable, and
adequate. Even if the ‘standard’ asserted by LWDA is applied,
the Court finds that the $4.5 million Settlement, which includes a
change of policy by Adecco in the language of its employment
agreements to directly address the concerns raised by this
lawsuit, is ‘meaningful, and consistent with the underlying
purpose of the statute to benefit the public.’ [¶] This Court finds
that this Settlement is consistent with the stated purpose of
PAGA that ‘the vigorous assessment and collection of civil
penalties as provided in the Labor Code’ is the ‘meaningful
deterrent to unlawful conduct’. (Legislative History of PAGA,
Section 1 of Stats. 2003 c[h]. 906 . . . .)”
In January 2020, the trial court approved up to $78,000 for
payment of costs, fees, and expenses to the settlement
administrator, $32,000 for Moniz’s costs, a $12,000 additional fee
for Moniz’s release and service as plaintiff, and $1.5 million for
Moniz’s attorney fees. The court denied Correa’s counsel’s motion
to intervene, as well as Correa’s request for attorney fees and an
incentive payment. Correa filed a notice of appeal from the
11
November 22, 2019 order and the January 15, 2020 order (appeal
No. A159410).5
On February 10, 2020, the trial court entered judgment.
Correa moved for a new trial under Code of Civil Procedure
sections 657 and 659 and to vacate the judgment under Code of
Civil Procedure sections 663 and 473, subdivision (d). The trial
court denied these requests without a hearing. On April 3, 2020,
Correa filed a notice of appeal listing the February 10, 2020
judgment (appeal No. A159978). On April 17, 2020, Correa filed
a notice of appeal from the order denying her posttrial motions
(appeal No. A160133). This court consolidated the three appeals.
DISCUSSION
Adecco raises certain procedural challenges to Correa’s
appeals, which we address before turning to Correa’s substantive
challenges.
I. Procedural Challenges
Adecco urges dismissal on three procedural grounds. First,
Adecco asserts that Correa’s appeal of the November 22, 2019
order and the January 2020 order (appeal No. A159410) should
be dismissed because these prejudgment orders were not
appealable. Second, Adecco argues that Correa was not a party
to Moniz, so she lacks standing to appeal the judgment and the
prejudgment orders (appeal Nos. A159410 and A159978). Third,
Adecco asks us to find that Moniz forfeited her appeal by failing
5On March 9, 2020, this court summarily denied Adecco’s
motion to dismiss the appeal on the basis that those orders were
non-appealable.
12
to adequately brief her arguments. (Cahill v. San Diego Gas &
Electric Co. (2011) 194 Cal.App.4th 939, 956 [“The absence of
cogent legal argument or citation to authority allows this court to
treat the contention as waived”].) For the reasons set forth
below, we reject Adecco’s procedural challenges.
“The existence of an appealable judgment is a jurisdictional
prerequisite to an appeal.” (Jennings v. Marralle (1994)
8 Cal.4th 121, 126.) “A reviewing court has jurisdiction over a
direct appeal only when there is (1) an appealable order or (2) an
appealable judgment.” (Griset v. Fair Political Practices Com.
(2001) 25 Cal.4th 688, 696.) Correa does not dispute Adecco’s
claims regarding the non-appealable nature of the orders at issue
in appeal No. A159410, instead arguing that she can challenge
these orders via her later appeal from the judgment (appeal
No. A159978). Adecco, in turn, does not dispute the validity of
Correa’s notices of appeal from the judgment or the postjudgment
orders. Thus, we have appellate jurisdiction over this matter by
virtue of Correa’s second and third notices of appeal.6
To have standing to appeal a judgment, an appellant must
be a party of record and aggrieved by the challenged judgment or
order. (Code Civ. Proc., § 902; County of Alameda v. Carleson
6In these circumstances, we dismiss appeal No. 159410 as
an appeal from non-appealable orders. There is no need to treat
that notice of appeal as premature but valid (Vienna v. California
Horse Racing Bd. (1982) 133 Cal.App.3d 387, 389, fn. 2) because
Correa filed a timely notice of appeal (A159978) after the entry of
judgment. Even if the notice of appeal in appeal No. A159410
was valid, the resolution of the issues in appeal No. A159978 and
appeal No. A160133 render it moot.
13
(1971) 5 Cal.3d 730, 736 (Carleson).) A judgment aggrieves a
person if it has an “ ‘ “immediate, pecuniary, and substantial” ’ ”
injurious effect on the person’s rights or interests. (Carleson, at
p. 737.) We liberally construe standing and resolve doubts in
favor of the right to appeal. (E.g., Vitatech Internat., Inc. v.
Sporn (2017) 16 Cal.App.5th 796, 804.)
Adecco’s argument that Correa lacks standing to challenge
the judgment because she is a nonparty is not well-taken. For
purposes of appellate standing, an unnamed party may become a
party to an action through intervention (Code Civ. Proc., § 387) or
by filing an appealable motion to set aside and vacate the
judgment. (Hernandez v. Restoration Hardware, Inc. (2018) 4
Cal.5th 260, 267 [discussing motion under Code of Civil
Procedure section 663]; Carleson, supra, 5 Cal.3d at p. 736
[same]; see In re Marriage of Burwell (2013) 221 Cal.App.4th 1,
13–14 [addressing a motion for a new trial under Code of Civil
Procedure section 657 and interpreting the Carleson rule to apply
to any motion to vacate or set aside judgment].) Where a
postjudgment motion to vacate is denied, the moving party may
appeal from that denial and challenge the underlying judgment.
(Hernandez, at p. 273 [“Had [nonparty] Muller properly
intervened in the class action or filed a section 663 motion to
vacate the judgment, and been denied relief, she would have had
a clear path to challenge the attorney fees award (or settlement
or judgment) on appeal”].) Correa filed a motion under Code of
Civil Procedure sections 663 and 657. As such, the “party of
14
record” requirement does not prevent Correa from challenging
the judgment.7
Although respondents do not argue in their briefing that
Correa lacks standing to appeal because she is not “aggrieved” by
the judgment confirming the settlement, we address this issue
because a party must be aggrieved to appeal. (Code Civ. Proc.,
§ 902; Carleson, supra, 5 Cal.3d at p. 736.)
Recently, our colleagues in the Second District held that a
PAGA representative in one action does not have standing to
move to vacate a judgment following a settlement of another
PAGA action with overlapping PAGA claims or to appeal that
judgment. (Turrieta v. Lyft, Inc. (2021) 69 Cal.App.5th 955, 967–
968 (Turrieta).) In Turrieta, appellants and Turrieta filed
separate PAGA representative actions alleging that Lyft
misclassified its drivers as independent contractors, thereby
violating multiple provisions of the Labor Code. (Id. at p. 962.)
Turrieta settled her lawsuit with Lyft first, and appellants moved
to intervene, moved to vacate the judgment entered after the
court approved the settlement, and appealed the judgment. (Id.
at pp. 964–967.) Turrieta and Lyft challenged appellants’
standing to appeal (Code Civ. Proc., § 902). (Id. at p. 970.)
Appellants countered that they were aggrieved as PAGA
representatives because the settlement had an “immediate,
pecuniary, and substantial” effect on the state (and on them as
7 Moniz makes the additional argument that Correa lacks
standing to challenge the trial court’s favorable ruling on
summary adjudication. We address this argument in Section
III(C)(1)(b) of our Discussion, post.
15
proxies for the state) by extinguishing the claims they were
deputized to pursue for less than pennies on the dollar, and
further asserted that they had an interest “ ‘in representing the
State’s interest’ ” in “ ‘achieving the maximum recovery possible
for Lyft’s misdeeds,’ and deterring future violations.” (Id. p. 971.)
Appellants additionally argued that they were aggrieved as
nonparty employees who would be bound by the judgment. (Id.
at p. 973.)
The appellate court rejected the Turrieta appellants’ claim
that they were aggrieved as nonparty employees, observing that
a PAGA judgment does not extinguish individual claims of
nonparty employees. (Turrieta, supra, 69 Cal.App.5th at
pp. 973–974.) The court also found that they were not aggrieved
because they, as PAGA representatives, did not possess a
personal interest in the settlement of another PAGA claim.
(Id. at p. 971.) “Because it is the state’s rights, and not
appellants’, that are affected by a parallel PAGA settlement,
appellants are not aggrieved parties with standing to seek to
vacate the judgment or appeal. Nor can appellants claim a
pecuniary interest in the penalties at issue, as the ‘civil penalties
recovered on the state’s behalf are intended to “remediate present
violations and deter future ones,” not to redress employees’
injuries.’ ” (Id. at p. 972.)
We disagree with Turrieta’s conclusion that status as a
PAGA plaintiff in one action is insufficient to confer standing on
that PAGA plaintiff to appeal a judgment following an allegedly
unfair settlement in another PAGA action with overlapping
16
claims.8 While the Turrieta appellants indisputably did not own
a personal claim for PAGA civil penalties (Williams v. Superior
Court (2017) 3 Cal.5th 531, 547, fn. 4 (Williams)), Turrieta
appears to have discounted their role as designated proxies of the
state. The Turrieta appellants, like Correa, were deputized
under PAGA to prosecute their employer’s Labor Code violations
on behalf of the state. Accepting the premise that PAGA allows
concurrent PAGA suits as Turrieta did (Turrieta, supra,
69 Cal.App.5th at p. 969),9 where two PAGA actions involve
overlapping PAGA claims and a settlement of one is purportedly
unfair, it follows that the PAGA representative in the separate
action may seek to become a party to the settling action and
8 Uribe v. Crown Building Maintenance Co. (2021)
70 Cal.App.5th 986, 992 (Uribe), addressed a similar standing
issue and held that Garibay, the appellant and intervenor who
had also initiated a separate PAGA lawsuit, had standing as an
aggrieved party to appeal a judgment entered after respondents
reached a settlement in Uribe and the settlement resolved a
PAGA claim similar to the one Garibay alleged in her complaint
in intervention. “Garibay has standing to appeal because, having
intervened and yet unable to opt out of the other parties’
settlement of Uribe’s PAGA claim, Garibay’s PAGA cause of
action in this same lawsuit was resolved against her by the trial
court’s entry of judgment on its final approval of the settlement.
She is therefore a party ‘aggrieved’ by the judgment. As one
court has explained, the ‘prejudice’ giving rise to standing arises
when ‘ “the settlement strips the party of a legal claim or cause of
action.” ’ ” (Id. at p. 1001.) The court distinguished Turrieta
because Garibay asserted a PAGA claim in the settling lawsuit
and the trial court’s decision to maintain Garibay as an
intervenor in that lawsuit had gone unchallenged. (Id. at
p. 1002.)
9 No party in this litigation challenges this premise.
17
appeal the fairness of the settlement as part of his or her role as
an effective advocate for the state. Correa has done just this.
Thus, she represents interests that are sufficiently aggrieved to
satisfy Code of Civil Procedure section 902, a remedial statute to
be liberally construed in favor of the right to appeal.10 (Vitatech
Internat., Inc., supra, 16 Cal.App.5th at p. 804.)
Finally, we decline Adecco’s invitation to resolve the appeal
of the trial court’s postjudgment orders on forfeiture grounds.
Correa sets forth her arguments regarding legal error, abuse of
discretion, and the erroneous judgment in light of the facts in a
manner sufficient to preserve her right to appeal.
II. PAGA Overview
Before addressing Correa’s substantive challenges, we
begin with a brief discussion of PAGA. “In September 2003, the
Legislature enacted [PAGA] (Lab. Code, § 2698 et seq.; Stats.
2003, ch. 906, § 2, eff. Jan. 1, 2004). The Legislature declared
that adequate financing of labor law enforcement was necessary
to achieve maximum compliance with state labor laws, that
staffing levels for labor law enforcement agencies had declined
and were unlikely to keep pace with the future growth of the
labor market, and that it was therefore in the public interest to
10 Moniz asserts that this court previously affirmed a
finding that Correa did not have an interest in this case sufficient
to warrant intervention. That is not accurate: This court
affirmed the denial of Correa’s motion to intervene, but in so
doing, we assumed without deciding that she had an interest
sufficient for intervention. There is thus no tension between
Moniz I and our conclusion here that Correa is sufficiently
aggrieved to challenge the judgment approving the settlement.
18
allow aggrieved employees, acting as private attorneys general, to
recover civil penalties for Labor Code violations, with the
understanding that labor law enforcement agencies were to
retain primacy over private enforcement efforts. (Stats. 2003,
ch. 906, § 1.)” (Arias v. Superior Court (2009) 46 Cal.4th 969, 980
(Arias).)
“A PAGA claim is legally and conceptually different from
an employee's own suit for damages and statutory penalties.”
(Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73,
81 (Kim).) An aggrieved employee suing under PAGA “does so as
the proxy or agent of the state’s labor law enforcement agencies.”
(Arias, supra, 46 Cal.4th at p. 986.) Every PAGA action is “a
dispute between an employer and the state.” (Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 386
(Iskanian).)
In a PAGA lawsuit, “the employee plaintiff represents the
same legal right and interest as state labor law enforcement
agencies—namely, recovery of civil penalties that otherwise
would have been assessed and collected by the [LWDA].” (Arias,
supra, 46 Cal.4th at p. 986.) Thus, the civil penalties a PAGA
plaintiff may recover on the state’s behalf are distinct from the
statutory damages or penalties that may be available to
employees suing for individual violations. (Iskanian, supra,
59 Cal.4th 348 at p. 381.) An action under PAGA “ ‘is
fundamentally a law enforcement action’ ” and relief is
“ ‘designed to protect the public and not to benefit private
parties.’ ” (Arias, at p. 986.) “A PAGA representative action is
19
therefore a type of qui tam action,” conforming to all “traditional
criteria, except that a portion of the penalty goes not only to the
citizen bringing the suit but to all employees affected by the
Labor Code violation.” (Iskanian, at p. 382.) The “government
entity on whose behalf the plaintiff files suit is always the real
party in interest.” (Ibid.)
Only an “aggrieved employee” has standing to bring a civil
action under PAGA. (§ 2699, subd. (a).) An “aggrieved employee”
is “any person who was employed by the alleged violator and
against whom one or more of the alleged violations was
committed.” (§ 2699, subd. (c).) Before suing, however, “[a]s a
condition of suit,” the aggrieved employee “must provide notice to
the employer and the [LWDA] ‘of the specific provisions of [the
Labor Code] alleged to have been violated, including the facts and
theories to support the alleged violation.’ [Citations.] If the
agency elects not to investigate, or investigates without issuing a
citation, the employee may then bring a PAGA action.”
(Williams, supra, 3 Cal.5th at p. 545.) Once the procedural
prerequisites are met, the aggrieved employee can bring a PAGA
action. (See §§ 2699, subd. (a), 2699.3.)
III. Substantive Challenges
In this appeal, Correa argues that the trial court
improperly dealt with the objections to the settlement; the
settlement was beyond the trial court’s authority; the settlement
should not have been approved because there was no meeting of
the minds; the trial court used the wrong standard to approve the
settlement; the trial court abused its discretion in finding the
20
settlement amount and allocation was fair; and the trial court
ignored evidence of collusion. Correa additionally complains that
the trial court erred in denying her request for attorney fees and
an incentive payment. We address certain of her challenges
below, starting with the standard of review.
A. Trial Court and Appellate Standard of Review
This appeal raises what federal district courts have
referred to as the “vexing” question of what standard a trial court
should use to review a PAGA settlement. (Flores v. Starwood
Hotels & Resorts Worldwide (C.D. Cal. 2017) 253 F.Supp.3d 1074,
1075.) Aside from the requirement that the court “review and
approve” a settlement in a civil action filed under PAGA (§ 2699,
subd. (l)(2)), PAGA itself does not provide a standard for this
review and approval in the majority of PAGA cases. (See Flores,
at p. 1075 [“[PAGA] is surprisingly short on specifics”].) Further,
neither the Legislature, nor any published California authority
has provided a definitive answer to this question. (Ibid.) We do
so now.
Correa contends that, in approving a PAGA settlement, the
trial court acts as a fiduciary to absent parties and must closely
scrutinize the settlement to determine whether it is fair, genuine,
meaningful, and consistent with the underlying purposes of
PAGA. Although the LWDA did not suggest the trial court acted
as a fiduciary, it argued below that the same settlement approval
standard should be applied. While Correa maintains that the
trial court failed to apply the standard urged, Adecco correctly
points out that the trial court in fact applied that standard,
21
finding that the “non-reversionary [s]ettlement of $4.5 million is
fair, adequate, [and] reasonable,” as well as “meaningful[] and
consistent with the underlying purpose of the statute to benefit
the public.” The court further found that the settlement
“advances the purposes of the Labor Code.” We conclude the trial
court used the appropriate standard.
As the trial court did in part here, many federal district
courts have applied the “fair, reasonable, and adequate” standard
from class action cases to evaluate PAGA settlements.
(Chamberlain v. Baker Hughes, a GE Co., LLC (E.D. Cal. July 29,
2020, No. 1:19-cv-00831-DAD-JLT) 2020 U.S. Dist. Lexis 134582
at *10–*11; Rincon v. West Coast Tomato Growers, LLC (S.D. Cal.
Feb. 12, 2018, No. 13-CV-2473-JLS) 2018 U.S. Dist. Lexis 22886
at *6.) In class actions, courts have a fiduciary duty to protect
the interests of absent class members, whose individual claims
will be discharged. (Kullar v. Foot Locker Retail, Inc. (2008)
168 Cal.App.4th 116, 129.) The requirement of court approval
serves to prevent fraud, collusion, unfairness, and to protect
unnamed class members “whose rights may not have been given
due regard by the negotiating parties.” (Dunk v. Ford Motor Co.
(1996) 48 Cal.App.4th 1794, 1800–1801 (Dunk).) In this role, the
trial court conducts an “independent assessment of the adequacy
of the settlement terms,” which requires that the court have
before it a record from which it can discern sufficient information
about the amount in controversy and the realistic range of
outcomes. (Kullar, at pp. 120, 132; Munoz v. BCI Coca-Cola
Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 409.) The
22
court is vested with a broad discretion in making its
determination, and it may consider a number of non-exhaustive
factors in its analysis, including “the strength of plaintiffs’ case,
the risk, expense, complexity and likely duration of further
litigation, the risk of maintaining class action status through
trial, the amount offered in settlement, the extent of discovery
completed and the stage of the proceedings, the experience and
views of counsel, the presence of a governmental participant, and
the reaction of the class members to the proposed settlement.”
(Dunk, at p. 1801.)
Despite the fact that “ ‘a representative action under PAGA
is not a class action’ ” (Kim, supra, 9 Cal.5th at p. 87), and is
instead a “type of qui tam action” (Iskanian, supra, 59 Cal.4th at
p. 382), a standard requiring the trial court to determine
independently whether a PAGA settlement is fair and reasonable
is appropriate. Class actions and PAGA representative actions
have many differences, with one salient difference being that
certain due process protections afforded to unnamed class
members are not part of PAGA litigation because aggrieved
employees do not own personal claims for PAGA civil penalties.
(Williams, supra, 3 Cal.5th at p. 547, fn. 4; see Kim, at p. 87.)
Nonetheless, the trial court must “review and approve” a PAGA
settlement (§ 2699, subd. (l)(2)), and the Supreme Court has in
dictum referred to this review as a “safeguard[ ].” (Kim, at p. 88.)
The Supreme Court has also observed that trial court approval
“ensur[es] that any negotiated resolution is fair to those affected.”
(Williams, at p. 549; see Amaro v. Anaheim Arena Management,
23
LLC (2021) 69 Cal.App.5th 521, 542–543 [reviewing PAGA
portion of class action settlement to determine its fairness].)
When trial court approval is required for certain settlements in
other qui tam actions in this state, the statutory standard is
whether the settlement is “fair, adequate, and reasonable under
all the circumstances.” (Gov. Code, § 12652, subd. (e)(2)(B)
[standard for approval of government settlement over qui tam
plaintiff’s objection]; see Ins. Code, § 1871.7, subd. (f)(2)(B) [same
under Insurance Fraud Prevention Act].) Thus, while PAGA does
not require the trial court to act as a fiduciary for aggrieved
employees, adoption of a standard of review for settlements that
prevents “ ‘ “ ‘fraud, collusion or unfairness’ ” ’ ” (Dunk, supra,
48 Cal.App.4th at pp. 1800–1801), and protects the interests of
the public and the LWDA in the enforcement of state labor laws
is warranted. Because many of the factors used to evaluate class
action settlements bear on a settlement’s fairness—including the
strength of the plaintiff’s case, the risk, the stage of the
proceeding, the complexity and likely duration of further
litigation, and the settlement amount—these factors can be
useful in evaluating the fairness of a PAGA settlement.
Given PAGA’s purpose to protect the public interest, we
also agree with the LWDA and federal district courts that have
found it appropriate to review a PAGA settlement to ascertain
whether a settlement is fair in view of PAGA’s purposes and
policies. (O’Connor v. Uber Technologies, Inc. (N.D. Cal. 2016)
201 F.Supp.3d 1110, 1132–1134; Jordan v. NCI Group, Inc. (Jan.
5, 2018, No. EDCV 16-1701-JVS) 2018 U.S. Dist. Lexis 25297, at
24
*3–*4; Chamberlain v. Baker Hughes, a GE Co., LLC, supra,
2020 U.S. Dist. Lexis 134582 at *10–*11; see Consumer Advocacy
Group, Inc. v. Kintetsu Enterprises of America (2006)
141 Cal.App.4th 46, 59, 61–62 [where the Legislature required
court approval of private settlements of Proposition 65 actions
brought to vindicate the public interest, court must evaluate the
resulting consent decree to determine if it is “just” and “serves
the public interest”].)11 We therefore hold that a trial court
should evaluate a PAGA settlement to determine whether it is
fair, reasonable, and adequate in view of PAGA’s purposes to
remediate present labor law violations, deter future ones, and to
maximize enforcement of state labor laws. (See Williams, supra,
3 Cal.5th at p. 546 [PAGA “sought to remediate present
violations and deter future ones”]; Arias, supra, 46 Cal.4th at
p. 980 [the declared purpose of PAGA was to augment state
11 Kintetsu declined to expressly read a “fair, reasonable,
and adequate” class action standard into Health & Safety Code
section 25249.7, subdivision (f)(4), which sets forth three
requirements for approving a Proposition 65 (Health & Safe.
Code, § 25249.5 et seq.) settlement. But the court adopted what
it called a “similar” standard, and, in doing so, it cited with
approval the standard used to review certain federal
environmental consent judgments. ( Kintetsu, supra,
141 Cal.App.4th at pp. 61–62 & fn. 11; see U.S. v. Southeastern
Penn. Transp. Authority (3d Cir. 2000) 235 F.3d 817, 823
[CERCLA consent decree must be “fair, reasonable, and
consistent with CERCLA’s goals”]; U.S. v. Akzo Coatings of
America, Inc. (6th Cir. 1991) 949 F.2d 1409, 1435 [CERCLA
consent decree must be “fair, reasonable and adequate” and
“ ‘consistent with the purposes that CERCLA is intended to
serve’ ”].)
25
enforcement efforts to achieve maximum compliance with labor
laws].) The trial court below used this standard.
There is also no established appellate standard of review
for a PAGA settlement, but the parties agree that this court
should apply an abuse of discretion standard. Given the lack of
express statutory standard or criteria for approving PAGA
settlements, and the obvious discretion a trial court must
exercise in determining the settlement’s fairness, we find this
standard to be appropriate. Under this standard of review, we
determine only whether the trial court acted within its broad
discretion in approving the settlement. (See Munoz v. BCI Coca-
Cola Bottling Co. of Los Angeles, supra, 186 Cal.App.4th at
p. 407.) We review the trial court’s findings of fact for substantial
evidence and its conclusions of law de novo. (Cellphone
Termination Fee Cases (2009) 180 Cal.App.4th 1110, 1118.)
B. The Trial Court’s Treatment of Settlement Objections
Once an aggrieved employee files a PAGA lawsuit, the
statutory scheme recognizes that the employee may settle that
lawsuit on behalf of the state. (§ 2699, subds. (a) & (l)(2).) In
those circumstances, the trial court must approve the settlement
and the “proposed settlement shall be submitted to the [LWDA]
at the same time that it is submitted to the court.” (§ 2699, subd.
(l)(2).) Despite the brevity of this statutory language, Correa
claims that, when approving a PAGA settlement, the trial court
is also required to: 1) hear from the LWDA and give the LWDA’s
comments “deference, weight, and respect,” and 2) entertain
objections from aggrieved employees pursuing similar PAGA
26
representative actions. She asserts that the trial court erred in
failing to do either.
Addressing Correa’s first contention, the trial court did not
err in its treatment of the LWDA’s comments. Correa relies on
authority espousing the general rule of administrative law that
an agency’s interpretation of a statute is entitled to
“consideration and respect.” (Yamaha Corp. of America v. State
Bd. of Equalization (1998) 19 Cal.4th 1, 7 (Yamaha).) Adecco
responds that, in contrast to statutory language stating that the
Division of Occupational Health and Safety can comment on a
settlement and requiring the court to give these comments
“appropriate weight” in PAGA suits alleging OSHA violations
(§ 2699.3, subd. (b)(4)), the language governing other PAGA
settlements does not afford the LWDA the right to comment.
Adecco also argues that there would be no reversible error in any
event because the trial court heard and considered the LWDA’s
objections. We agree with Adecco’s second assertion and do not
address its first. Here, the LWDA’s objection to the scope of
release hinged largely on legal interpretation of PAGA and its
administrative notice requirements. Heeding the command that
statutory interpretation is ultimately the responsibility of the
judicial branch (Yamaha, supra, 19 Cal.4th at pp. 7–8), the trial
court disagreed with the LWDA’s interpretation, but it heard and
considered the LWDA’s position.12
12We address the correctness of this interpretation, post,
although Correa does not argue that the language of the
settlement must be styled such that Moniz released claims on
27
Next, PAGA does not provide that aggrieved employees
must be heard on the approval of PAGA settlements. Citing only
Harvey v. Morgan Stanley Smith Barney LLC (N.D. Cal. Mar. 3,
2020, No. 18-cv-02835-WHO) 2020 U.S. Dist. Lexis 37580, *34–
*36, Correa states that courts have “generally allowed and
considered settlement objections by PAGA agents.” However, as
Adecco points out, Correa concedes that PAGA provides no
mechanism for aggrieved employees, including those pursuing
PAGA lawsuits, to be heard in objection to another PAGA
settlement. This concession is dispositive, and we will not read a
requirement into a statute that does not appear therein. (See,
e.g., Scottsdale Indemnity Co. v. National Continental Ins. Co.
(2014) 229 Cal.App.4th 1166, 1172 [in construing statutes, courts
generally will not add words to the statutory language].) That
the federal district court in Harvey opted to consider the
objections made by another PAGA plaintiff (while at the same
time recognizing she had no statutory right to object) does not
change this. (Harvey, at *31–*34.)
Correa advances numerous policy considerations for why
PAGA representative plaintiffs from other cases should be heard
on PAGA settlements, including that such participation would
help prevent reverse auctions and would promote the fairness of
PAGA settlements. Although PAGA does not contain an express
statutory mechanism for aggrieved employees pursuing
representative actions to object to a separate PAGA settlement,
behalf of the LWDA, and the LWDA did not appeal. We
accordingly do not address this LWDA objection.
28
Adecco does not argue that the trial court lacked inherent power
to hear and consider such objections. Given the history of
appellate litigation in this case and in Doe, and especially since
further proceedings will be required, as discussed in Section
III.D, post, we perceive no reason why the trial court should not
hear Correa’s objections on remand.13
C. The Trial Court’s Alleged Lack of
Authority/Jurisdiction
Release of Claims Not Listed in the PAGA Notice
Correa next argues that the settlement is invalid because it
encompassed a release of claims that were not listed in Moniz’s
PAGA notice. Her argument appears to have two components.
First, she contends that the trial court incorrectly ruled that
Moniz’s PAGA notice authorized Moniz to act as the state’s agent
to seek civil penalties for the specified Labor Code violations with
respect to Associates. Second, as did the LWDA did below,
Correa contends that because Moniz’s PAGA notice necessarily
could not have included unknown or unlisted PAGA claims,
Moniz was not authorized under PAGA to act as the agent of the
state to execute a release of such claims. In other words, Correa
contends that a PAGA plaintiff may release only the specific
claims listed in his or her PAGA notice as part of a PAGA
settlement. After a brief review of PAGA’s notice requirements,
we address each of these arguments below.
13 We make no observations regarding the propriety of a
trial court hearing objections from aggrieved employees who have
not brought PAGA representative actions.
29
a. PAGA’s Notice Requirement
“As a condition of suit” under PAGA, an aggrieved
employee must provide notice to the employer and the state of the
specific provisions of the Labor Code alleged to have been
violated, including “the facts and theories to support the alleged
violation.” (§ 2699.3, subd. (a)(1)(A); see id., subd. (c)(1)(A)
[same]; Williams, supra, 3 Cal.5th at p. 545.) The “evident
purpose” of this notice requirement is to afford the LWDA the
opportunity to decide whether to allocate scarce resources to an
investigation of the violations alleged and to allow the employer
to submit a response to the LWDA. (Williams, at pp. 545–546.)
PAGA’s notice requirement demands more than bare allegations
of Labor Code violations. (Brown v. Ralphs Grocery Co. (2018) 28
Cal.App.5th 824, 836; Alcantar v. Hobart Service (2015) 800 F.3d
1047, 1057.) What matters is that the notice provides the LWDA
and the employer adequate information about the alleged
violations so that each may respond in an informed manner.
(Williams, at pp. 545–546; Alcantar, at p. 1057.)
b. Claims for Civil Penalties for Alleged Violations of Sections
232, 232.5, 432.5, 1102.5, and 1197.5(k) Against Associates
On the question of whether Moniz could sue for violations
as to both Colleagues and Associates, the trial court analyzed
Moniz’s PAGA notice and ruled, “Moniz has adequately
exhausted her administrative prerequisites to pursue a PAGA
claim on behalf of Adecco full-time employees (called Colleagues)
and temporary employees (called Associates) for the time period
February 1, 2016 to the present for allege[d] violations of Labor
Code Sections 232, 1197.5(k), 232.5, 1102.5, and 432.5, based
30
upon . . . Adecco allegedly requiring Colleagues and Associates to
agree in writing not to discuss or disclose their working
conditions including salary, benefits, and compensation.” Correa
contests this ruling, ultimately arguing that the settlement is
invalid because it resolves PAGA claims for Adecco’s alleged
violations of sections 232, 232.5, 432.5, 1102.5, and 1197.5(k)
with respect to Associates when Moniz’s PAGA notice was limited
to Colleagues. We find that Correa’s challenge to the summary
adjudication order fails on procedural and substantive grounds.
As a matter of procedure, Correa does not have standing to
challenge the summary adjudication order because it was
favorable to the state. (See Marich v. MGM/UA
Telecommunications, Inc. (2003) 113 Cal.App.4th 415, 431
[appellant could not challenge favorable ruling below].) Correa
counters that she can challenge this order on appeal because it
“caused the State to be aggrieved, and Correa stands in the
State’s shoes.” But the trial court’s ruling allowed for a broader
potential recovery of civil penalties for the LWDA. Furthermore,
the LWDA—whose interests Correa purports to represent—did
not take issue with this ruling, informing the court below, “The --
second of all, the language of the settlement agreement was --
and I appreciate and understand the parties’ arguments and the
Court pointing out the issue of the colleagues versus the
associates. That’s not the issue that’s the problem for us.” (Italics
added.) Correa thus lacks standing to challenge the summary
adjudication ruling.
31
Even assuming Correa had standing, her challenge to the
court’s summary adjudication ruling also fails because the ruling
was correct. Moniz began her PAGA notice by stating that she
would file a complaint for all current and former Adecco
California employees, “including but not limited to ‘Colleagues.’ ”
The basis for the proposed lawsuit was that “Adecco maintained
and implemented unlawful limitations on the disclosure of
information in violation of, inter alia, the California Labor Code.”
Specifically set forth as an “example” of the unlawful limitations
at issue, Moniz stated that she signed an “Employment
Agreement for Colleagues in California,” and she believed all
Colleagues were required to execute this form contract. She
wrote that this contract contained a non-disclosure provision
essentially precluding Colleagues from divulging “confidential
information” without Adecco’s written consent, including salary
and benefits data as well as non-public information and
knowledge having “some commercial value.” Moniz then listed
the statutes violated by the required execution of the form
agreements and explained why they were violated. She
concluded, “The aggrieved employees include all current and
former Adecco employees, including but not limited to Colleagues,
who are or were subject to the policies set forth above.” Moniz
did not mention Associates in her PAGA notice by name, but she
clearly set forth her intent to sue on behalf of any Adecco
employee subject to unlawful disclosure limitations imposed
through Adecco’s form employment contracts, of which her form
employment agreement was an exemplar. And, again, the LWDA
32
did not dispute the scope of Moniz’s PAGA notice, indicating that
it received notice sufficient under PAGA. The trial court
therefore did not err in ruling on summary adjudication that
Moniz’s PAGA notice covered both Colleagues and Associates.
c. Release of Other Claims Not Listed in the PAGA Notice
Correa next argues, as did the LWDA below, that the
settlement release is invalid because Moniz could not release any
PAGA claim not listed in her PAGA notice, yet the release covers
“all known and unknown claims under PAGA . . . that were or
could have been pled based on the allegations of the Complaint.”
She contends that, because an aggrieved employee must give the
LWDA notice before suing, the content of that notice fixes the
scope of his or her authority to act for the state and sets an outer
limit on the PAGA claims he or she is authorized to release when
settling the PAGA representative action. Adecco, on the other
hand, defended the validity of release below by representing that
it released only PAGA claims that were or could have been pled
based on the primary rights at issue in the complaint, and such a
release preserved Adecco’s res judicata defense.14 The trial court
rejected the LWDA’s argument that the settlement release in this
case was invalid because it extended beyond claims listed in
Moniz’s PAGA notice. “The language of the Release itself is
designed to specifically be limited to claims available under
14 We express no view as to the validity of Adecco’s view
that the release merely preserves its res judicata defense. As
explained more fully below, issues relating to the application of
the res judicata doctrine and substantive reach of the release
must be addressed by other courts.
33
PAGA only, and for such claims that might arise only from the
factual allegations made by Plaintiff in this case . . . . As the
California Supreme Court held in Arias, the aggrieved employees
who are not named parties in this case are barred by collateral
estoppel or res judicata from filing another PAGA lawsuit arising
from these same facts, upon entry of judgment on this
Settlement. Accordingly, the Release so providing is consistent
with law . . . .”
Although Correa’s argument does not lack in superficial
appeal, the trial court was correct in finding that the release in
this case was not invalid because it purported to include PAGA
claims not listed in Moniz’s PAGA notice. That the doctrine of
res judicata applies to PAGA judgments informs this conclusion.
(Arias, supra, 46 Cal.4th at p. 986 [“with respect to the recovery
of civil penalties, nonparty employees as well as the government
are bound by the judgment in an action brought under [PAGA]”];
Robinson v. Southern Counties (2020) 53 Cal.App.5th 476, 482–
483 [claim preclusion prevented second PAGA representative
action]; Magana v. Zara USA, Inc. (9th Cir. 2021) 856 Fed.Appx.
83, 85–87 [claim preclusion did not bar second PAGA
representative suit with claim implicating different primary
right].) Res judicata consists of claim and issue preclusion.
(DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 (DKN
Holdings)); Guerrero v. Department of Corrections &
Rehabilitation (2018) 28 Cal.App.5th 1091, 1098 (Guerrero).)
Issue preclusion prohibits the relitigation of issues argued and
34
decided in a prior case.15 (DKN Holdings, at p. 824.) Claim
preclusion prevents relitigation of the same “cause of action,”
defined under our primary rights doctrine as “the right to obtain
redress for a harm suffered, regardless of the specific remedy
sought or the legal theory (common law or statutory) advanced.”
(Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 798.)16
Claim preclusion extends to claims that were brought or could
have been brought. (Guerrero, at p. 1098.) Taken together,
PAGA’s statutory scheme and the principles of preclusion allow,
or “authorize,” a PAGA plaintiff to bind the state to a judgment
through litigation that could extinguish PAGA claims that were
not specifically listed in the PAGA notice where those claims
involve the same primary right litigated. Because a PAGA
plaintiff is authorized to settle a PAGA representative action
with court approval (§ 2699, (l)(2)), it logically follows that he or
she is authorized to bind the state to a settlement releasing
claims commensurate with those that would be barred by res
judicata in a subsequent suit had the settling suit been litigated
to judgment by the state.17 Thus, it was reasonable for the trial
15 Issue preclusion applies “(1) after final adjudication (2) of
an identical issue (3) actually litigated and necessarily decided in
the first suit and (4) asserted against one who was a party in the
first suit, or one in privity with that party.” (DKN Holdings,
supra, 61 Cal.4th at p. 825.)
16The application of claim preclusion requires (1) the same
cause of action (2) between the same parties (3) after a final
judgment on the merits in the first suit. (DKN Holdings, supra,
61 Cal.4th at p. 824.)
17We do not rely on what Adecco incorrectly claims are the
“binding” decisions in Villacres v. ABM Indus. Inc. (2010)
35
court to reject the LWDA’s argument in this case and approve the
release language Adecco claimed was designed to “preserve” its
res judicata defense.
Correa also relies on Iskanian for the proposition that a
settlement release must be limited to the claims listed in the
PAGA notice because “a PAGA agent cannot waive PAGA claims
pre-dispute,” but Iskanian does not assist Correa. In Iskanian,
the plaintiffs signed arbitration agreements with PAGA
representative action waivers as part of their employment, and
their employer later sought to use these waivers to prevent them
from litigating representative PAGA claims in any forum.
(Iskanian, supra, 59 Cal.4th at pp. 360–361.) Iskanian held that
the agreements’ ban on bringing PAGA actions in any forum
violated public policy. (Iskanian, at pp. 384–389.) Iskanian
teaches that an individual employee cannot waive the right to
bring a PAGA representative action in any forum before any
dispute arises because such waiver would interfere with
California’s public policy to encourage the enforcement of the
Labor Code through PAGA actions. (Julian v. Glenair, Inc.
(2017) 17 Cal.App.5th 853, 867.) A release by a PAGA
representative in a court-approved settlement of a PAGA
representative action does not hinder the enforcement of the
Labor Code in the way that concerned the Iskanian court.
189 Cal.App.4th 562, and Shine v. Williams-Sonoma, Inc. (2018)
23 Cal.App.5th 1070, and we express no opinion on the validity of
those decisions. Those cases are not on point, as they did not
address the argument that a PAGA representative may only
release PAGA claims listed in his or her PAGA notice.
36
We emphasize that we are not addressing the preclusive
effect of any settlement in this case on Doe or any other litigation,
nor could we. “The preclusive effect of a prior judgment is
determined by the court in which it is asserted, not the court that
rendered it.” (Fireside Bank Cases (2010) 187 Cal.App.4th 1120,
1131.) We similarly express no view as to the merits of Adecco’s
claim that the release here does no more than preserve its res
judicata defense under the primary rights doctrine. It is for
future courts to decide the preclusive effect of any judgment in
this case. (Ibid.) We simply reject Correa’s argument that the
release in this case was invalid because it purported to extend
beyond a release of claims listed in Moniz’s PAGA notice.18
Release of “Unpled Claims”
Correa next argues that the settlement is invalid because it
releases “unpled claims,” and a PAGA representative does not
adequately represent the state in doing so. She does not
elaborate on what she means by “unpled claims” in her opening
brief, but her reliance on Trotsky v. Los Angeles Fed. Sav. & Loan
Assn. (1975) 48 Cal.App.3d 134 (Trotsky), suggests that she
means to address the alleged “unpled” claims for civil penalties
18 As noted, the settlement includes Moniz’s release of her
individual claims under Business and Professions Code section
17200, section 1833 of title 18 of the United States Code, and
section 240.21F of title 17 of the Code of Federal Regulations.
Although the record does not reflect its precise terms, Moniz also
previously settled certain individual claims against Adecco. As
the issue is not and cannot be presented in this appeal, we also
express no opinion on whether res judicata would bar a
subsequent suit by Moniz asserting individual claims seeking
remedies other than civil penalties.
37
for alleged violations of sections 232, 232.5, 432.5, 1102.5, and
1197.5(k) suffered by Associates. We reject this argument
because Trotsky is distinguishable.
In Trotsky, the complaint challenged the validity of three
provisions contained in a form of trust deed and sought damages
for moneys collected under these provisions. (Trotsky, supra,
48 Cal.App.3d at p. 140.) Plaintiffs’ second amended complaint
withdrew any challenge to the second of the three deed of trust
provisions, and another plaintiff filed a separate class action
regarding that provision. (Id. at p. 141.) The Trotsky parties
settled the class action in an agreement that released the
defendant from liability relating to all three deed of trust
provisions. The appellate court reversed the settlement approval,
finding that the settlement was outside the scope of the amended
complaint, plaintiffs could not settle the claims of a class of
plaintiffs they did not represent, and they could not provide
adequate representation for a claim they did not allege and did
not share with the class. (Id. at pp. 148–149.) The court noted
that, although courts have concluded they have the power to
approve the inclusion of additional claims in a settlement, broad
releases should be avoided in class actions. (Id. at p. 148.) “Any
attempt to include in a class settlement terms which are outside
the scope of the operative complaint should be closely scrutinized
by the trial court to determine if the plaintiff genuinely contests
those issues and adequately represents the class.” (Ibid.) The
appellate court was also concerned because the parties failed to
disclose the other class action to the court. (Id. at pp. 148–150.)
38
Unlike in Trotsky, the complaint here was sufficiently
broad to include the alleged violations committed against
Associates. Moniz alleged that she brought the action “on behalf
of herself and other similarly situated individuals who have
worked for [Adecco].” Her allegation that she challenged the
“policy and practice of compelling employees to execute an
‘Employment Agreement for Colleagues in California’ (‘Form
Employment Agreement’) containing an unlawful non-disclosure
provision as a condition of their employment” may suggest a
narrow challenge based on a single agreement. But Moniz also
alleged that, “On information and belief, Adecco has continuously
required its California employees to accept the terms of
substantially the same Form Employment Agreement as a
condition of their employment since December 21, 2007.” And,
while she recounted being required to sign the “Form
Employment Agreement” that she attached to her complaint and
alleged this conduct violated the Labor Code, she also broadly
alleged, “[o]n information and belief, [Adecco’s] conduct has been
substantially the same at all relevant times throughout the state
of California.” By suing for those “who have worked for Adecco”
and alleging that employees had to accept the terms of form
employment agreements that were “substantially the same” as
the one attached to the complaint, the complaint extended to
other form employment agreements signed by Adecco employees,
including Associates. Therefore, even assuming the legal
principles at issue in Trotsky are applicable to this PAGA action,
we are unpersuaded by Correa’s argument that Moniz is an
39
inadequate representative with respect to alleged “unpled
claims.”19
Due Process Challenge
Invoking procedural due process, Correa contends that the
trial court could not approve a release of PAGA or other claims
that belong to nonparty aggrieved employees because the court
lacked personal jurisdiction over these nonparties. In so arguing,
Correa repeats the LWDA’s objection in the trial court that “to
the extent that [the settlement] purports to release the aggrieved
employees’ claims,” it was void for lack of personal jurisdiction.
For the same reason, Correa contends that the trial court could
not approve a settlement waiving rights under Civil Code section
1542 for nonparty aggrieved employees. Correa’s argument
assumes that the settlement releases non-PAGA claims and that
PAGA claims belong to nonparty aggrieved employees. Both
assumptions are incorrect.
First, the released claims do not include nonparty
employees’ individual claims. The parties’ May 2019 settlement
purported to release claims beyond PAGA by releasing claims of
aggrieved employees under other federal and state laws, but the
trial court required the parties to narrow the scope of the release.
Thus, as the trial court acknowledged, the redefined “released
19 We note that this is not a class action like Trotsky, and
PAGA does not subject a PAGA plaintiff or his or her counsel to
scrutiny with respect to the ability to represent a class.
(Williams, supra, 3 Cal.5th at pp. 546–547 & fn. 4; Kim, supra,
9 Cal.5th at p. 87.) Nonetheless, a different form of adequacy of
representation is implicated by aspects of the settlement in this
case, as we discuss, post.
40
claims” are “any and all known and unknown claims under the
PAGA against the Released Parties that were or could have been
pled based on the factual allegations of the Complaint.” The trial
court similarly found that the Civil Code section 1542 waiver
applied to the “respective released claims,” and was limited to
PAGA claims. The court did not err in so ruling.
Second, to the extent Correa suggests that due process
prevents a PAGA settlement from including a release of PAGA
claims because those claims belong to nonparty aggrieved
employees, our Supreme Court has instructed otherwise.
(Williams, supra, 3 Cal.5th at p. 547, fn. 4 [“absent employees do
not own a personal claim for PAGA civil penalties”];
Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior
Court (2009) 46 Cal.4th 993, 1003 [an aggrieved employee cannot
assign a PAGA claim because the employee does not own an
assignable interest].) And nonparty employees’ personal claims
for relief are not at stake in a PAGA representative action.
(Iskanian, supra, 59 Cal.4th at p. 381.)
D. Settlement Fairness
Correa’s final challenge is to the fairness of the settlement
itself. She identifies the following alleged settlement deficiencies,
which she contends show that the trial court abused its discretion
in approving the settlement: (1) the parties did not provide
sufficient information to support the settlement “discount,” and
the court abused its discretion in deciding the settlement amount
was fair; (2) the trial court ignored evidence of collusion; and (3)
the settlement allocation of the aggrieved employees’ share of
41
civil penalties was unjustified and unfair. We find that Correa’s
third argument has merit and warrants reversal, so we decline to
address the other two arguments.
We agree with Correa that the settlement’s allocation of
shares of civil penalties to Colleagues that are fifteen times
greater than the shares allocated to Associates does not seem to
have been justified below and may be contrary to PAGA’s
purposes. A “ ‘[PAGA representative] action to recover civil
penalties “is fundamentally a law enforcement action designed to
protect the public and not to benefit private parties.” ’ ”
(Iskanian, supra, 59 Cal.4th at p. 381.) PAGA’s allocation of a 25
percent share of civil penalties does not go disproportionately to
the PAGA plaintiff and instead must be shared by all aggrieved
employees. (Moorer v. Noble L.A. Events, Inc. (2019)
32 Cal.App.5th 736, 742–743 [affirming order denying request for
entry of a default judgment where PAGA plaintiff refused to
comply with order to distribute 25 percent of the civil penalties to
23 aggrieved employees on a pro rata basis]; see Iskanian, supra,
59 Cal.4th at p. 382 [a PAGA representative action “conforms to
the[ ] traditional criteria” for bringing a qui tam action, “except
that a portion of the penalty goes not only to the citizen bringing
the suit but to all employees affected by the Labor Code
violation”]; Williams, supra, 3 Cal.5th at p. 545 [PAGA
“deputiz[es] employees harmed by labor violations to sue on
behalf of the state and collect penalties, to be shared with the
state and other affected employees”].)
42
Here, the record does not reveal any basis for the
disproportionate allocation of civil penalties amongst Colleagues
and Associates. There were 61,634 aggrieved employees,
consisting of 542 Colleagues and 61,092 Associates. In
estimating the potential recovery in the case to evaluate the
fairness of the settlement, the trial court assumed one violation
of sections 232, 232.5, 432.5, and 1197.5(k) per employee given
that employees signed the allegedly offending employment
agreements once. On appeal, Adecco maintains that the trial
court reasonably focused “on potential penalties calculated on a
per-employee basis” rather than a per-pay period basis.
Assuming a “realistic maximum” recovery of $100 for each of the
four violations as the trial court did, each aggrieved employee
would receive $100 (§ 2699, subds. (f)(2) & (i)). But the
settlement allocated 88 percent of the aggrieved employees’ share
of the civil penalties to Associates and 12 percent to Colleagues,
and, given the number of aggrieved employees in each group,
each Associate was to receive $10.27 whereas each Colleague was
to receive $157.92.20
20 The trial court expressed doubt regarding Moniz’s
recovery on the section 1102.5 claim. “Plaintiff also alleged a
claim under Section 1102.5, which prohibits an employer from
preventing, barring, or retaliating against an employee who is a
whistleblower to government agencies and regulators.
Subsection f thereof states: ‘In addition to other penalties, an
employer that is a corporation or limited liability company is
liable for a civil penalty not exceeding ten thousand dollars
($10,000) for each violation of this section.’ ‘Not to exceed’ means
that it could be as little as $1. No evidence is presented that
anyone was actually prevented or impeded from an attempt to be
43
Importantly, this uneven allocation was not addressed in
the trial court’s order or at the hearings on the final proposed
settlement, and respondents did not address it in their briefing
on appeal. At oral argument, respondents stated that the
allocation was justified by the strength of the Colleagues’ claims
versus the Associates’ claims. Adecco also argued that the trial
court’s consideration of the fairness of the disparate allocation is
demonstrated by its broad statement, “The settling parties have
also set forth facts—and issues for which there is a lack of
established case law—demonstrating the risks of proceeding to
trial and difficulties of proof.” Moniz, however, conceded at oral
argument that the trial court focused on the overall settlement
amount and the state’s recovery, not on the allocation of civil
penalties between Associates and Colleagues. The record
supports Moniz’s concession. In her motion for settlement
approval, Moniz noted that there were substantive differences in
the contract provisions, but she concluded, “Adecco has
continually disputed that either of these provisions violate the
California Labor Code, and Plaintiff faced significant risks
associated with proving that either agreement violated the
statutory provisions at issue.”
Moniz and Adecco did not directly address the reasons for
the difference in the allocation between Colleagues and
Associates in their briefing below. Further, the only discussion of
a whistleblower. Accordingly it is highly unlikely that $10,000,
or multiples of $10,000, in civil penalties would be [assessed]
against Defendants for any allege[d] violation of Section 1102.5.”
44
the allocation of civil penalties between Colleagues and
Associates that we have found occurred at the initial May 2019
settlement approval hearing as follows: “[The Court]: Okay. And
the division between the people that were the full time versus the
part time, giving a greater bulk to the part-time people, is that
because there’s so many of them? [Moniz’s Counsel]: Yes, Your
Honor.” This dialogue does not support Adecco’s position at oral
argument that the trial court considered the fairness of the
allocation between Colleagues and Associates in light of the
purportedly greater strength of the Colleagues’ claims. We
therefore cannot infer, as Adecco suggests, that the analysis set
forth in the trial court’s approval order necessarily indicates that
the court assessed the allocation and concluded it was fair. As
such, we find that the trial court abused its discretion in
approving the settlement.21
In reaching our conclusion, we are mindful that adequate
representation is required to bind certain nonparties to a
judgment under preclusion principles. As our high court has
explained, in “ ‘certain limited circumstances,’ ” a nonparty may
be bound by a judgment because she was “ ‘adequately
represented by someone with the same interests who [wa]s a
party’ ” to the suit. (Taylor v. Sturgell (2008) 553 U.S. 880, 894–
895.) These circumstances include representative suits brought
21In light of our disposition, we do not address Correa’s
challenge to the trial court’s ruling that she was not entitled to
attorney fees and an incentive award or her argument that the
settlement must be invalidated because there was no “meeting of
the minds.”
45
on a nonparty’s behalf by an agent or proxy, such as this PAGA
action. (Arias, supra, 46 Cal.4th at p. 986; Taylor v. Sturgell, at
pp. 894–895; Rest.2d Judgments, § 41.) In review and approval
of a proposed settlement under section 2699, subd. (l)(2), a trial
court thus must scrutinize whether, in resolving the action, a
PAGA plaintiff has adequately represented the state’s interests,
and hence the public interest. The unsubstantiated and
disproportionate allocation of civil penalties between Associates
and Colleagues provides sufficient cause for us to question the
scrutiny applied here and remand the matter.
DISPOSITION
The judgment is reversed.
BROWN, J.
WE CONCUR:
POLLAK, P. J.
STREETER, J.
Moniz v. Adecco USA, Inc. (A159410, A159978, A160133)
46
Trial Court: San Mateo County Superior Court
Trial Judge: Hon. Marie S. Weiner
Counsel:
Baker Curtis & Schwartz, Christopher D. Baker, Deborah R.
Schwartz; Outten & Golden, Jahan C. Sagafi, Rachel Williams
Dempsey, Julio Sharp-Wasserman for Movant and Appellant.
Schneider Wallace Cottrell Konecky, Carolyn Cottrell, David C.
Leimbach, Kyle G. Bates for Plaintiff and Respondent.
Jackson Lewis, Adam Y. Siegel, Scott P. Jang, Mia Farber, Dylan
B. Carp for Defendant and Respondent.
47