Ramirez v. Benito Valley Farms, LLC

Filing 61

Order by Hon. Lucy H. Koh Granting 53 Motion for Settlement.(lhklc2S, COURT STAFF) (Filed on 8/25/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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FRANCISCA RAMIREZ,
Plaintiff,

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ORDER APPROVING SETTLEMENT

v.

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Case No. 16-CV-04708-LHK

Re: Dkt. No. 53

BENITO VALLEY FARMS, LLC,
Defendant.

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Before the Court is Plaintiff’s Motion for Settlement Approval. Having considered the

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briefing and declarations of the parties, the arguments at the July 27, 2017 hearing, and the record

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in this case, the Court GRANTS the motion for settlement approval.

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I.

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BACKGROUND
A. Factual Background
Plaintiff Francisca Ramirez (“Plaintiff”) worked for Benito Valley Farm, LLC

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(“Defendant”) from 2006 to 2016 as a seasonal agricultural worker harvesting green beans. ECF

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No. 54 at 2. During this time Plaintiff lived with her family in housing owned by Defendant. Id.

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Plaintiff alleges that her supervisor, Foreman Alfonso Flores, created a hostile work environment

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and engaged in discrimination and retaliation directed at Plaintiff. Id. at 3. Plaintiff also alleges

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Defendant failed to comply with its legal duties in the provision of housing because the employee

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housing in which Plaintiff resided contained serious habitability issues, including inadequate

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flooring and the presence of rats and flies. Id. Plaintiff complained about these habitability issues,

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but Defendant failed to adequately address the issues. Id. Plaintiff also alleges that Defendant

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repeatedly failed to compensate employees for all hours worked, failed to pay overtime wages, and

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between 2012 and 2014, failed to provide rest and meal breaks. Id. Plaintiff also alleges that

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Defendant’s payroll records and paycheck registers were defective and contain inaccurate

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information. Id.

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B. Procedural History
Plaintiff filed the complaint in the instant case on August 17, 2016. ECF No. 1. Plaintiff

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Northern District of California

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filed an amended complaint (“FAC”) on September 15, 2016. ECF No. 14. The FAC contained

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twenty claims, which sought damages for Plaintiff’s nineteen individual claims and civil penalties

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under the PAGA. Defendant filed an answer, apparently to the original complaint, on October 25,

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2016. ECF No. 20. Defendant then filed an answer to the FAC on December 9, 2016. ECF No. 34.

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Before and after the filing of the complaint, Plaintiff conducted extensive investigation of

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the claims involved in the instant case. “The pre-suit investigation included extensive interviews

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with Plaintiff, a thorough review of potential witnesses and other corroborating evidence, as well

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as inspections of the employer-provided housing.” ECF No. 54 at 3. After the filing of the

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complaint, “Defendant disclosed a sampling of employee records, which Plaintiff analyzed for

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wage and hour violations.” Id. at 4.
On March 10, 2017, the parties attended a mediation session and reached a tentative

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settlement. Id. After several more rounds of negotiation, the parties executed a settlement

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agreement on June 12, 2017. Id. This settlement agreement, discussed in more detail below,

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provides $40,700 in compensation for Plaintiff’s individual damages, $27,500 in civil penalties

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under the PAGA, injunctive relief, and $41,800 in attorney’s fees, for a total settlement amount of

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$110,000.

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II.

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RELEVANT SETTLEMENT PROVISIONS
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Under the PAGA, “court[s] shall review and approve any settlement of any civil action

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filed pursuant to [PAGA].” California Labor Code § 2699(1)(2). Therefore, in the instant case, the

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Court is not required to approve settlement provisions resolving Plaintiff’s individual claims.

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However, the Court is required to approve the settlement provisions related to Plaintiff’s PAGA

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claims. Additionally, Plaintiff has requested approval of the settlement provisions providing for

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attorney’s fees and costs. Therefore, in discussing the settlement, the Court will discuss only those

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provisions of the settlement that are relevant to the PAGA claims and the request for attorney’s

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fees and costs.

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The settlement provides for $27,500 allocated to civil penalties to resolve Plaintiff’s
PAGA claims; this amount is referred to as the PAGA settlement fund. Settlement Agreement,

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Northern District of California

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Part II.A.(iii). Under the agreement, 226 employees are eligible to receive a share of the PAGA

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settlement fund. Id. A claims process will allocate the PAGA settlement fund to participating

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Eligible Employees who submit a timely claim. Each Eligible Employee who submits a claim to

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receive a share of the PAGA settlement fund is a “Claimant.” Each Claimant will receive a share

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in proportion to the number of hours he or she worked relative to the cumulative total number of

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hours worked by all Eligible Employees. Id.

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If any Eligible Employee does not submit a timely claim, their unclaimed share of the

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PAGA settlement funds will be reallocated to Claimants. Id. Each Claimant will receive a share of

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the total unclaimed funds in proportion to the number of hours he or she worked relative to the

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cumulative total hours worked by all Claimants. Id. To determine how much each Claimant will

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receive, the total hours worked by the Claimant is divided by the total number of hours worked by

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all Claimants, and then multiplied by the total amount of unclaimed funds. Settlement Agreement,

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Part II.A.iii.(4). If no Eligible Employees make a claim before the close of the claims period, the

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parties have agreed that, consistent with California Labor Code § 2699(i), the $27,500.00 will be

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paid in full to the LWDA. Id.

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The settlement also provides for injunctive relief to resolve issues that gave rise to the
instant case, including Defendants’ violations of the PAGA. Defendant has agreed to comply with
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all California wage and hour laws, including properly paying workers for hours worked and

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maintaining proper payroll records. Defendant has agreed to an audit of its payroll by Plaintiff’s

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counsel in March 2018 to confirm compliance. Settlement Agreement, Part I.A–F. Defendant has

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agreed to join a Farm Employer Association, and to ensure that its supervisory and non-

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supervisory employees are fully trained, as required under California law, regarding their

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obligation to prevent and respond to claims of sexual harassment. Id. In addition, at least one time

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during each harvesting season, the crew foremen will conduct a “tail-gate” meeting with their

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crew members on the topic of preventing sexual harassment and retaliation where the company’s

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anti-harassment policies and complaint processes will be reviewed. Id. Defendant has also agreed
to establish and communicate to its employees in Spanish a procedure for making complaints,

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including providing a telephone number for reporting harassment directly to the owner of Benito

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Valley Farm. Id.
Finally, the settlement provides for $41,800 for attorney’s fees and costs.

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III.

DISCUSSION
A. Settlement Approval

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“An employee bringing a PAGA action does so as the proxy or agent of the state’s labor

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law enforcement agencies, . . . who are the real parties in interest.” Sakkab v. Luxottica Retail N.

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Am. Inc., 803 F.3d 425, 435 (9th Cir. 2015) (internal citations omitted). Thus, “[a]n action brought

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under the PAGA is a type of qui tam action.” Id. at 429. Because a PAGA action is brought as

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proxy of law enforcement agencies, “[t]here is no requirement that the Court certify a PAGA

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claim for representative treatment like in Rule 23 . . . .” Villalobos v. Calandri Sonrise Farm LP,

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2015 WL 12732709, at *5 (C.D. Cal. July 22, 2015). However, because a settlement of PAGA

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claims compromises a claim that could otherwise be brought by the state, the PAGA provides that

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“court[s] shall review and approve any settlement of any civil action filed pursuant to [PAGA].”

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California Labor Code § 2699(1)(2).

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A party seeking approval of a PAGA settlement must simultaneously submit the proposed
settlement to the California Labor and Workforce Development Agency (LWDA) to allow the
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LWDA to comment on the settlement if the LWDA so desires. The PAGA also states that courts

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may exercise their discretion to lower the amount of civil penalties awarded “if, based on the facts

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and circumstances of the particular case, to do otherwise would result in an award that is unjust,

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arbitrary and oppressive, or confiscatory.” Cal. Labor Code § 2699(e)(2). Because state law

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enforcement agencies are the “real parties in interest” for PAGA claims, the Court’s task in

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reviewing the settlement is to ensure that the state’s interest in enforcing the law is upheld.

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Sakkab, 803 F.3d at 435.
Other than the provisions discussed above, however, the PAGA does not establish a

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standard for evaluating PAGA settlements. Indeed, the LWDA has stated that “[t]he LWDA is not

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aware of any existing case law establishing a specific benchmark for PAGA settlements, either on

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their own terms or in relation to the recovery on other claims in the action.” LWDA Response at 3,

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O’Connor v. Uber Techns., No. 13-CV-03826-EMC, Docket No. 736 (N.D. Cal. July 29, 2016).

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At least one court has applied the factors in Hanlon v. Chrysler Corp., 150 F.3d 1011,

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1026 (9th Cir. 1998), to evaluate a PAGA settlement. See O’Connor v. Uber Techs., 201 F. Supp.

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3d. 1110, 1134 (N.D. Cal. 2016) The Hanlon factors, which are used to evaluate class action

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settlements, include (1) the strength of plaintiffs’ case; (2) the risk, expense, complexity, and

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likely duration of further litigation; (3) the risk of maintaining class action status throughout the

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trial; (4) the amount offered in settlement; (5) the extent of discovery completed; (6) the expertise

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and views of counsel; (7) the presence of government participation; and (8) the reaction of class

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members to the proposed settlement. See Hanlon, 150 F.3d at 1026. Many of these factors are not

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unique to class action lawsuits and bear on whether a settlement is fair and has been reached

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through an adequate adversarial process. Thus, the Court finds that these factors are useful in

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evaluating a PAGA settlement. However, three of the Hanlon factors – risk of maintaining class

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action status, presence of a governmental participant, and reaction of class members – are not

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relevant to a PAGA settlement that is not a class action and in which the LWDA is not involved.

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Additionally, Plaintiff argues that another section of the PAGA may contain a factor
relevant to the Court’s analysis. Specifically, for PAGA claims based on health and safety
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violations, the PAGA requires courts to “review and approve any proposed settlement . . . to

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ensure that the settlement provisions are at least as effective as the protections or remedies

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provided by state and federal law or regulation for the alleged violation.” Cal. Labor Code

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§ 2699.3(b)(4). By its terms, this provision does not apply to the instant settlement, because the

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instant case involves wage and hour claims rather than health and safety violations. However, the

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Court agrees that determining whether settlement provisions are “at least as effective as the

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protections or remedies provided by state and federal law” may be useful in determining whether

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the instant settlement is fair and reasonable. Id.
For these reasons, the Court evaluates the PAGA settlement in light of the PAGA

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requirement that the award not be “unjust, arbitrary and oppressive, or confiscatory.” Cal. Labor

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Code § 2699(e)(2). The Court also considers the five relevant Hanlon factors and discusses

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whether “the settlement provisions are at least as effective as the protections or remedies provided

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by state and federal law or regulation.” Cal. Labor Code § 2699.3(b)(4).

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Before considering these factors, however, the Court first notes one additional feature of

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the instant settlement. The parties characterize all PAGA penalties recovered in the instant case as

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underpaid wages. See Settlement Agreement at 3 (describing $27,500 as “PAGA wage payments

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to Eligible Employees who submit claims . . . .”); ECF No. 58, at 2 (same); ECF No. 59 (“With

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respect to the PAGA claims on behalf of the Defendant’s employees, the parties came to the

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conclusion that the claim with the most likelihood of success and of the highest benefit to the

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representative class was the unpaid wage claim . . . .”). In this case, Plaintiff alleged 19 individual

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causes of action and one PAGA cause of action. Because no federal or state claim was brought on

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a putative class action basis, the employees eligible to receive a share of the PAGA settlement

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fund, other than the plaintiff, will receive compensation for their underpaid wages only through

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the PAGA cause of action. Thus, classifying the PAGA penalties in this case solely as underpaid

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wages is reasonable.

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Under the PAGA, “underpaid wages go[] entirely to the affected employee or employees
as an express exception to the general rule that civil penalties recovered in a PAGA action are
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distributed 75 percent to the Labor and Workforce Development Agency (LWDA) and 25 percent

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to the aggrieved employees.” Thurman v. Bayshore Transit Mgmt., Inc., 203 Cal. App. 4th 1112,

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1145, 138 Cal. Rptr. 3d 130, 157 (2012); see also Esparza v. KS Indus., L.P., 2017 WL 3276363,

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at *7 (Cal. Ct. App. Aug. 2, 2017) (same). Indeed, in the instant case, the LWDA filed a letter with

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the Court stating that the LWDA would not seek any penalties. ECF No. 60. LWDA did not object

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to the settlement in the instant case. Id.

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Therefore, with the understanding that all PAGA penalties recovered in the instant

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settlement are classified as underpaid wages, the settlement properly provides that the PAGA

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settlement fund shall be paid entirely to the aggrieved employees. The Court next considers each

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of the factors discussed above.

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Northern District of California

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1. “Unjust, Arbitrary and Oppressive, or Confiscatory” as to Defendant

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This factor favors approval of the proposed settlement. There is no indication that the

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settlement in the instant case would be “unjust, arbitrary and oppressive, or confiscatory.” Cal.

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Labor Code § 2699(e)(2). To the contrary, in the negotiation process and the resulting settlement,

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the parties took account of Defendant’s weak financial condition and ensured that the settlement

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would not significantly weaken Defendant further. Linda Chu, the owner of Benito Valley Farm,

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has filed a declaration in support of the motion for settlement approval. ECF No. 53-5. In this

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declaration, Chu states that due to recent rain storms and flooding, Defendant has suffered an

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estimated loss of $300,000. Id. ¶¶ 4–5. Chu has applied for a bank loan and a United States

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Department of Agriculture grant in order to “keep [Benito Valley Farm] going.” Id. ¶¶ 6–7.

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During the preliminary approval hearing, Plaintiffs’ counsel stated that they had confirmed

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Defendant’s weak financial condition through a review of Defendant’s financial records. Settling

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at this early stage prevents further expensive litigation for Defendant. See ECF No. 54 at 11 (“[I]t

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has become clear that Defendant, from an economic standpoint based on its tax returns and other

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data, does not have the resources to withstand significant litigation, let alone a sizable judgment.”).

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2. Strength of Plaintiff’s Case

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This factor favors approval. Courts have noted that legal uncertainty favors approval of a

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settlement. See, e.g., Browning v. Yahoo! Inc., 2007 WL 4105971, at *10 (N.D. Cal. Nov. 16,

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2007) (“[L]egal uncertainties at the time of settlement—particularly those which go to

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fundamental legal issues—favor approval.”). The parties reached a settlement early on in the

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instant case, before any motions practice. Although Plaintiff’s counsel investigated the case in

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depth, there was significant uncertainty in continuing the litigation. Additionally, as Plaintiff

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points out, further litigation to strengthen Plaintiff’s case would drain Defendant of resources that

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it could otherwise use to pay a settlement and improve its business practices.

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3. Risk, Expense, Complexity, and Likely Duration of Further Litigation

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This factor strongly favors approval. The parties reached a settlement early on in the
litigation. As discussed above, further litigation would necessitate further expenses and costs for

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both Plaintiff and Defendant. Given Defendant’s weak financial condition, continuing litigation

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would decrease the amount available for settlement and would financially weaken Defendant.

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Thus, further litigation may harm Defendant to such an extent that there are few resources

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available for a monetary recovery or for injunctive relief. Indeed, continuing litigation, even if it

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strengthens Plaintiff’s legal argument, may harm Plaintiff because it may render Defendant less

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able to pay any final judgment. The settlement provides a timely, certain, and meaningful

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recovery, while the outcome at trial—and any subsequent appeal—is not certain, and in any event

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would substantially delay recovery.

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4. Amount of Settlement

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This factor favors approval. The settlement provides for $27,500 in PAGA penalties.

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Although this represents only 4.5% of the total estimated possible recovery for PAGA civil

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penalties, considering the very early stage of this litigation and Defendant’s weak financial

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condition, this percentage is reasonable. Additionally, the settlement’s injunctive relief provides

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that Defendant will comply with California wage and hour laws in the future, that Defendant will

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join a Farm Employer Association, and that Defendant will ensure that employees are fully trained

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to prevent and respond to claims of sexual harassment. The settlement also provides that

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Defendant will hold meetings to discuss preventing sexual harassment and retaliation with

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Defendant’s crew foreperson every harvesting season and will provide a telephone number to

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report harassment in English or Spanish. Finally, the settlement provides that Defendant will

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submit to an audit of its payroll by Plaintiff’s counsel in March 2018.

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Together, these provisions represent a significant recovery, especially considering the early

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stage of the litigation. Additionally, considering Defendant’s weakened financial state, the

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proposed settlement is the most significant recovery that Plaintiff is likely to receive. Therefore,

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the amount of the settlement weighs in favor of approval.

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5. Extent of Discovery Completed and Stage of the Proceedings

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This factor weighs in favor of approval. Although this case settled very early in the
litigation process, Plaintiff’s counsel had conducted an extensive review of the evidence. As

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Northern District of California

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discussed above, “[t]he pre-suit investigation included extensive interviews with Plaintiff, a

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thorough review of potential witnesses and other corroborating evidence, as well as inspections of

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the employer-provided housing.” ECF No. 54 at 3. After the filing of the complaint, “Defendant

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disclosed a sampling of employee records, which Plaintiff analyzed for wage and hour violations.”

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Id. at 4. Thus, at the time of settlement, both sides had a well-developed sense of the risks and

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benefits of continuing litigation.

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6. Experience and Views of Counsel

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This factor favors approval. The parties here are represented by competent, experienced,

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and sophisticated counsel who favor settlement. Particularly, Plaintiff’s counsel, California Rural

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Legal Assistance (“CRLA”), has expertise in cases involving the rights of farm workers and has

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significant experience in PAGA litigation. See, e.g., ECF No. 53-4 ¶ 2 (“I have participated in the

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settlement of six to eight PAGA lawsuits in state court.”). Thus, CRLA’s view of the possible

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results and risks from this type of litigation is entitled to great weight.

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7. Whether the Settlement is “at Least as Effective as the Protections or Remedies
Provided by State and Federal Law or Regulation”

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As discussed above, the settlement provides for significant injunctive relief. The settlement
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provides that Defendant will comply with California wage and hour laws in the future, that
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Defendant will join a Farm Employer Association, and that Defendant will ensure that employees

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are fully trained to prevent and respond to claims of sexual harassment in English or Spanish. The

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settlement also provides that Defendant will hold meetings to discuss preventing sexual

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harassment and retaliation with Defendant’s crew foreperson every harvesting season and will

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provide a telephone number to report harassment in English or Spanish. Finally, the settlement

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provides that Defendant will submit to an audit of its payroll by Plaintiff’s counsel in March 2018.

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In the motion for approval, Plaintiff states that the injunctive provisions included in the

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settlement agreement “are the type that LWDA would likely impose, though they reach more

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broadly to address other issue areas, such as the prevention of sexual harassment and retaliation.”
ECF No. 54 at 12. Additionally, LWDA wrote a letter to the Court and did not object to the

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settlement. ECF No. 60. Therefore, this factor is also met.

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8. Conclusion

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Thus, each of the seven relevant factors discussed above favors final approval. The

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settlement of the PAGA claims in the instant case was reached only after a thorough investigation

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and extensive negotiations involving counsel with significant experience in PAGA cases.

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Additionally, the $27,500 PAGA settlement fund and the injunctive relief represent a significant

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recovery that strongly vindicates California state law enforcement agencies’ interest in enforcing

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the law. For these reasons, the Court finds that the proposed settlement is fair and reasonable and

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promotes the purposes of the PAGA. Therefore, the Court GRANTS Plaintiff’s motion for

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settlement approval.

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B. Attorney’s Fees
The Court also finds that an award of $41,800 for attorney’s fees and costs is warranted.

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The PAGA provides that “[a]ny employee who prevails in any action shall be entitled to an award

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of reasonable attorney’s fees and costs.” Cal. Labor Code § 2699(g)(1). The PAGA does not

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provide a specific standard for evaluating attorney’s fees in connection with a settlement of PAGA

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claims. However, the parties agree that the lodestar method is the preferable method for measuring

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attorney’s fees in the instant case. Additionally, the lodestar method is a well-established method

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for determining the reasonableness of an attorney’s fee award. See, e.g., Nitsch v. DreamWorks

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Animation SKG Inc., 2017 WL 2423161, at *8 (N.D. Cal. June 5, 2017).

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Therefore, the Court applies the lodestar method in determining whether the requested

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attorney’s fees are reasonable in the instant case. Under the lodestar method, a “lodestar figure is

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calculated by multiplying the number of hours the prevailing party reasonably expended on the

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litigation (as supported by adequate documentation) by a reasonable hourly rate for the region and

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for the experience of the lawyer.” In re Bluetooth, 654 F.3d 935, 941 (9th Cir. 2011) (citing Staton

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v. Boeing Co., 327 F.3d 938, 965 (9th Cir. 2003)).
Under the Civil Local Rules for United States District Court for the Northern District of

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California, a motion for attorneys’ fees and costs must include (1) the number of hours spent on

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Northern District of California

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the litigation by each biller, (2) detailed billing records showing how much time was spent on each

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task, and (3) each biller’s billable rate and justification for such rate.

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Plaintiff’s counsel reports a total lodestar of $101,212.75 up to the time of the March 10,

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2017. This lodestar does not include work performed since the March 10, 2017. This total lodestar

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includes $95,306.50 for 365.97 hours worked by attorneys and $5,906.25 for 78.75 hours worked

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by community workers. Specifically, Plaintiff’s counsel requests fees for the following attorneys

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and community workers with the following hourly rates:

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247.65 hours expended by Maria Vizzuzi, ($250.00 per hour);

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12 hours expended by Michael Meuter, ($450.00 per hour);

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1.5 hours expended by Blanca Banuelos, ($450.00 per hour);

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14.42 hours expended by Lisa Cisneros, ($450.00 per hour);

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34.25 hours expended by Lisel Holdenried, ($350.00 per hour);

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1.4 hours expended by Cynthia Rice, ($450.00 per hour);

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21 hours expended by Ana Vicente, ($150.00 per hour);

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33.75 hours expended by Liliana Garcia, ($150.00 per hour);

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75.75 hours expended by Mariano Alvarez, ($75.00 per hour);

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3 hours expended by Jesus Lopez, ($75.00 per hour)

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Plaintiff has provided detailed, contemporaneous billing records that indicate that the hours spent

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on the instant litigation were justified. However, Plaintiff does not provide information to justify

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the individual rates of all billers. Instead, Plaintiff includes information regarding the education

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and experience of only four billers: Lisa Cisneros, Michael Meuter, Maria Vizzuzi, and Blanca

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Banuelos. ECF Nos. 53-3, 53-2. Having reviewed this information, the Court finds that the

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education and experience of each attorney justifies these four attorneys’ requested rates.

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Therefore, the Court finds that the billing rates of these four attorneys are adequately justified.
The Court lacks information to justify the billing rates of the other six billers. Ordinarily,

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the Court would require more detailed justifications of the billing rates for these billers before

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awarding attorney’s fees. However, in the instant case, the lodestar of the four attorneys whose

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rates Plaintiff has justified is more than sufficient to make the requested $41,800 in attorney’s fees

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and costs reasonable. Specifically, the lodestar of Lisa Cisneros, Michael Meuter, Maria Vizzuzi,

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and Blanca Banuelos totals $74,476.50.1 Thus, the requested $41,800 represents a significant

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discount from even this subset of Plaintiff’s lodestar. The $41,800 requested fee reflects a 56.1%

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multiplier of the $74,476.50 lodestar for which Plaintiff has provided adequate justification of

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individual billing rates. The $41,800 requested fee reflects a 41.3% multiplier of Plaintiff’s total

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lodestar of $101,212.75.
Thus, even if the Court considers only the subset of the lodestar for which Plaintiff has

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provided adequate justification of billing rates, the Court finds that the requested attorney’s fees

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award is justified. This is especially true because Plaintiff has not requested attorney’s fees for the

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significant amount of work performed after the March 10, 2017 mediation or the work that

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Plaintiff’s counsel will continue to do, including the March 2018 audit of Defendant to ensure

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compliance with wage and hour laws.
Plaintiff has achieved a significant result that strongly vindicates the state’s interest in

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enforcing wage and hour laws. Defendant has agreed to pay $27,500 as civil penalties under

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Indeed, the lodestar of Maria Vizzuzi alone totals $61,912.5.
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PAGA and has agreed to significant injunctive relief. Additionally, Plaintiff’s counsel devoted

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significant resources to the difficult task of investigating Plaintiff’s claims, analyzing Defendant’s

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records, and negotiating a settlement that allows for maximum recovery despite Defendant’s

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weakened financial state.
For these reasons, the Court finds that the requested $41,800 in attorney’s fees is

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reasonable within the meaning of California Labor Code § 2699(g)(1). Therefore, the Court

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GRANTS Plaintiff’s request for attorney’s fees in connection with the PAGA settlement.

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IV.

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CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff’s motion for settlement approval

and Plaintiff’s request for attorney’s fees. The Clerk shall close the file.

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IT IS SO ORDERED.

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Dated: August 25, 2017
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LUCY H. KOH
United States District Judge

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Case No. 16-CV-04708-LHK
ORDER APPROVING SETTLEMENT