Vargas v. Central Freight Lines, Inc. et al
Filing
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ORDER Granting 50 Third Revised Joint Motion to Dismiss Claims. Signed by Magistrate Judge Jill L. Burkhardt on 12/5/2017. (dsn)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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David Vargas,
Case No.: 16-cv-00507-JLB
Plaintiff,
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v.
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ORDER GRANTING THIRD REVISED
JOINT MOTION TO DISMISS
CLAIMS UNDER THE PRIVATE
ATTORNEYS GENERAL ACT OF
2004 (“PAGA”)
Central Freight Lines, Inc.,
Defendant.
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[ECF No. 50]
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The parties’ Third Revised Joint Motion to Dismiss Claims Under the Private
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Attorneys General Act of 2004 (“PAGA”) (ECF No. 50) and the Declaration of Todd
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Militzer Re: Third Revised Joint Motion to Dismiss Claims Under PAGA (ECF No. 52)
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are presently before the Court. Based on the record, the Court GRANTS the parties’ Third
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Revised Joint Motion to Dismiss Claims Under PAGA (ECF No. 50) as the parties have
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made a sufficient showing that the proposed “PAGA settlement is fair and adequate in view
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of the purposes and policies of the statute.” O’Connor v. Uber Techs., Inc., 201 F. Supp.
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3d 1110, 1135 (N.D. Cal. 2016).
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FOLLOWS:
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1.
Accordingly, IT IS HEREBY ORDERED AS
With the exception of the duration of the Court’s retained jurisdiction, the
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Court approves and incorporates by reference the terms and conditions of the Settlement
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Agreement attached to the Third Revised Joint Motion (ECF No. 50-1, Ex. 1) and directs
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the implementation of all remaining terms, conditions, and provisions of the Settlement
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16-cv-00507-JLB
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Agreement. The Settlement Agreement is attached hereto as Exhibit 1. The Court’s
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retained jurisdiction outlined in Section H of the Settlement Agreement shall expire on
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July 20, 2018.
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2.
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PREJUDICE;
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3.
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Plaintiff’s Sixth Cause of Action for PAGA penalties is DISMISSED WITH
The Clerk of Court shall enter judgment on the terms set forth above and close
this case.
IT IS SO ORDERED.
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Dated: December 5, 2017
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16-cv-00507-JLB
Exhibit 1
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Christopher A. Olsen CA Bar No. 236928
caolsen@caolsenlawoffices.com
OLSEN LAW OFFICES, APC
1010 Second Ave., Ste. 1835
San Diego, CA 92101
Telephone: 858.550.9352
Facsimile: 858.923.2747
caolsen@caolsenlawoffices.com
Attorneys for Plaintiff David Vargas
Spencer C. Skeen CA Bar No. 182216
spencer.skeen@ogletreedeakins.com
Tim L. Johnson CA Bar No. 265794
tim.johnson@ogletreedeakins.com
OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.
4370 La Jolla Village Drive, Suite 990
San Diego, CA 92122
Telephone: 858.652.3100
Facsimile: 858.652.3101
Attorneys for Defendant Central Freight Lines, Inc.
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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DAVID VARGAS, on behalf of himself
and all others similarly situated,
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Plaintiff,
Case No. 3:16-cv-00507-L-JLB
SETTLEMENT AGREEMENT AND
RELEASE OF PAGA CLAIMS
v.
CENTRAL FREIGHT LINES, INC., and
DOES 1 through 100, inclusive,
Defendants.
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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Plaintiff David Vargas, individually and in his capacity as a representative of the
State of California on behalf of other aggrieved employees, and Defendant Central
Freight Lines, Inc. hereby enter into this Settlement Agreement and Release of Private
Attorneys General Act of 2004 Claims (“Settlement”) as follows:
I.
DEFINITIONS
As used in this Settlement, the following terms shall have the following meanings:
A.
“Action” means the civil action entitled “David Vargas v. Central Freight
Lines, Inc., et al., filed in the United States District Court, Southern District of California,
Case No. 16-cv-00507-L-JLB.
B.
“Defendant” means Central Freight Lines, Inc.
C.
“Defense Counsel” means Spencer C. Skeen and Tim L. Johnson of
Ogletree Deakins, Nash, Smoak, & Stewart P.C.
D.
“Effective Date” of the Settlement means the date upon which both of the
following have occurred: (i) approval of the Settlement is granted by the United States
District Court, or other court assuming jurisdiction of this matter, and (ii) the Court’s
Judgment approving the Settlement becomes Final. Final shall mean the latest of: (i) if
there is an appeal of the Court’s Judgment, the date the Judgment is affirmed on appeal,
the date of dismissal of such appeal, or the expiration of the time to file a petition for
writ of certiorari to the Supreme Court; or (ii) if a petition for writ of certiorari is filed,
the date of denial of the petition for writ of certiorari, or the date the Judgment is
affirmed pursuant to such petition; or (iii) if no appeal is filed, the expiration date of the
time for filing or noticing any appeal of the Judgment.
E.
“LWDA” means the California Labor & Workforce Development Agency.
F.
“PAGA” means the Labor Code Private Attorneys General Act of 2004,
California Labor Code §§ 2698 et seq.
G.
“PAGA Period” means February 26, 2015 through the date of entry of an
order by the Court in this Action approving this Agreement.
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
36459439v.2
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H.
Central Freight Lines, Inc. as Pick Up and Delivery Drivers during the PAGA Period.
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I.
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K.
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“Released Claims” means any and all claims for the recovery for civil
penalties under PAGA, whether known or unknown, to recover wages, damages,
penalties, attorney fees, litigation costs, restitution, or equitable relief, which Plaintiff
and/or the PAGA Settlement Members had, or may claim to have, against Released
Parties, arising out of the violations alleged in Plaintiff's Sixth Cause of Action.
"Released Claims" does not include the underlying substantive claims for failure to
provide meal periods, failure to provide rest breaks, failure to pay wages of terminated
or resigned employees, knowing and intentional failure to comply with itemized wage
statement provisions, or violations of the unfair competition law.
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“Parties” means Plaintiff and Defendant.
L.
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“Plaintiff’s Counsel” means Christopher A. Olsen of Olsen Law Offices,
APC.
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“Plaintiff” means David Vargas individually and in his capacity as a
representative of the State of California on behalf of other aggrieved employees.
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“PAGA Settlement Members” means all persons employed in California by
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“Released Parties” means Defendant and all of its past and present owners,
officers, directors, shareholders, employees, agents, assigns, attorneys, insurers, parent
companies, subsidiaries, and affiliates, and their respective predecessors, successors, and
assigns.
II.
RECITALS
A.
On February 23, 2016, Plaintiff’s Counsel sent a letter to the LWDA on
behalf of Plaintiff under California Labor Code § 2699.3. Plaintiff sought to represent
himself and all PAGA Settlement Members. More than 33 days passed after the letter
was sent to the LWDA, and the LWDA did not indicate that it intended to investigate the
alleged violations referenced in the letter.
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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B.
District Court, Southern District of California. On April 5, 2016, Plaintiff filed a First
Amended Complaint, which contained a cause of action under PAGA.
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C.
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discovery prior to the mediation. The Parties also engaged in extensive settlement
negotiations at the mediation, which involved substantive offers and counteroffers
between the Parties. The Parties also participated in numerous telephonic conferences
and exchanged information about the financial condition of Defendant. Ultimately,
negotiations resulted in this Settlement.
D.
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principles applicable to the claims asserted against Defendant. Plaintiff’s Counsel has
concluded that the Settlement is fair, reasonable, and adequate in light of all known facts
and circumstances, including the defenses asserted by Defendant, potential adverse
findings regarding liability, and numerous potential appellate issues. Plaintiff and
Plaintiff’s Counsel also acknowledge they may have difficulty recovering a large PAGA
penalty from Defendant given its financial situation.
E.
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Defendant denies, and continues to deny, each and every claim and
contention alleged in the Action, and has always maintained that it never engaged in any
unlawful acts regarding any of the matters alleged in the Action.
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Counsel for all Parties have thoroughly investigated the facts relating to the
claims alleged in the operative complaint and made a thorough study of the legal
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The Parties agreed to engage in a mediation, which took place on January
12, 2017, before the Hon. Herbert Hoffman. The Parties engaged in formal and informal
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On February 26, 2015, Plaintiff filed a complaint in the United States
NOW, THEREFORE, in consideration of the mutual covenants, promises, and
conditions set forth, the Parties agree as follows:
III.
NON-ADMISSION OF LIABILITY
A.
Based on the factual and legal issues involved, the expense and time
necessary to prosecute the Action through trial, the risks, uncertainty and costs of further
prosecution, the financial status of Defendant, the financial status of Defendant, the
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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difficulty of proof necessary to establish a class for purposes of liability, and the relative
benefits to the PAGA Settlement Members of an expeditious resolution to the Action,
the Parties have concluded that the terms set forth in this Settlement are fair, reasonable,
adequate and in the best interests of the PAGA Settlement Members.
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B.
By entering into this Settlement, Defendant denies any liability for any of
the claims in the Action, as well as any other potential or unknown claims based on
wage and hour violations under California or federal law. Neither this Settlement, nor
any document referred to or contemplated herein, nor any action taken to carry out this
Settlement, may be construed as, or may be used as, an admission, concession, or
indication by or against Defendant of any unlawful conduct, fault, wrongdoing or
liability whatsoever. Defendant specifically denies that it has engaged in any unlawful or
wrongful conduct against Plaintiff or the PAGA Settlement Members.
IV.
TERMS OF THE PAGA SETTLEMENT
A.
The Total Settlement Payment
Defendant shall pay a settlement payment in a total amount not to exceed $7,500
(“Total Settlement Payment”). The Total Settlement Payment is the maximum amount
Defendant can be required to pay under this Settlement.
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Settlement Administration Fees and Costs
Settlement administration shall be done by Defendant. Accordingly, the Parties
did not allocate any funds for settlement administration.
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C.
PAGA Fund
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The Total Settlement Payment shall be allocated toward payment to the LWDA
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and PAGA Settlement Members (“PAGA Fund”). 75% of the PAGA Fund will be sent
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to the LWDA and 25% of the PAGA Fund will be allocated among the PAGA
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Settlement Members based on his or her proportionate share of the weeks worked during
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the PAGA Period.
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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V.
COMPUTATION/DISTRIBUTION OF TOTAL SETTLEMENT FUND
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A.
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Within 30 days after the Effective Date, Defendant shall distribute the Settlement
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Payment of Total Settlement Payment
Funds to the LWDA and the PAGA Settlement Members.
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B.
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The portion of the PAGA Fund that is paid to each PAGA Settlement Member
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shall be determined based on the following formula:
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Formula for Calculating Share of PAGA Fund
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The payment to PAGA Settlement Members will be based on the
number of weeks worked by each PAGA Settlement Member during the PAGA Period.
Partial weeks will be counted as full work weeks.
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2.
The amount to be paid per week worked by a PAGA Settlement
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Member will be calculated by dividing the value of the portion of the PAGA Fund that
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will be paid to PAGA Settlement Members by the total number of weeks worked by all
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PAGA Settlement Members during the PAGA Period.
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3.
Defendant’s records shall be determinative for purposes of
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calculating the number of weeks worked and any payments to PAGA Settlement
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Members.
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C.
Distribution of PAGA Fund
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Defendant shall pay to the LWDA an amount equivalent to 75% of
the PAGA Fund, or as otherwise directed by the Court.
2.
Defendant shall distribute to PAGA Settlement Members their
individual portion of the PAGA Fund (“Individual Payment”), or as otherwise directed
by the Court.
3.
Defendant will send the Individual Payment to the PAGA Settlement
Members by postmarked First Class U.S. Mail.
4.
Defendant shall maintain a list of the postmark date for the original
mailing of the Individual Payment to the PAGA Settlement Members and a list of PAGA
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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Settlement Members who did not receive the Individual Payment due to the inability to
locate a valid address.
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5.
from the date of their mailing by Defendant. After 180 days from the date of their
mailing by Defendant, any uncashed checks will be void and escheat to the State of
California Department of Industrial Relations, Unclaimed Wages Fund in the names of
the PAGA Settlement Members.
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All settlement checks will remain valid and negotiable for 180 days
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No later than January 31, 2018, Defendant will prepare and issue IRS
Form 1099 to PAGA Settlement Members who received a payment.
VI.
INJUNCTIVE RELIEF
Defendant disputes injunctive relief may be obtained under PAGA. Defendant
further denies it has engaged in any unlawful conduct under California law. Nevertheless,
in consideration for the releases and other consideration set forth herein, Defendant
agrees to the following injunctive relief within 30 days of the Effective Date: (1)
distribute written meal and rest break policies that inform employees of their ability to
take off-duty meal and rest breaks in compliance with California law; (2) provide
training to all California hourly employees regarding their ability to take off-duty meal
and rest breaks in compliance with California law; (3) implement a reporting procedure
through which employees report when they have not been provided a duty-free meal or
rest break; and (4) implement a policy to pay meal and rest break premiums whenever
the foregoing does not fully accomplish the objective of ensuring off-duty meal and rest
breaks in compliance with California law.
VII. CLAIMS RELEASED BY PAGA SETTLEMENT MEMBERS
A.
Claims Released By the LWDA and the PAGA Settlement Members
Upon the Effective Date, the LWDA and PAGA Settlement Members, including
Plaintiff, fully release and forever discharge the Released Parties from any and all
Released Claims during the PAGA Period. As a result of this release, the PAGA
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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Settlement Members will be unable to bring a claim under, or recover in any other claim
brought under, the California Private Attorneys General Act, California Labor Code §§
2698 et seq., for any violations of the Released Claims that took place during the PAGA
Period.
B.
Tax Treatment and Tax Indemnification
PAGA Settlement Members will assume any tax obligations or consequences
which may arise from this Settlement. PAGA Settlement Members release any and all
claims that they have or may have against Defendant or Released Parties for any claims,
demands, deficiencies, levies, assessments, executions, judgments, penalties, taxes,
indemnification, and any other recoveries related to any payments made under this
Settlement or any compensation provided at any time by Defendant or any of the
Released Parties. The PAGA Settlement Members shall not contact Defendant, any of
the Released Parties, or Defense Counsel.
VIII. MISCELLANEOUS PROVISIONS
A.
Voiding the Settlement
A failure of the Court to approve any material condition of this Settlement shall
render the entire Settlement voidable and unenforceable as to Plaintiff and Defendant, at
the option of Plaintiff or Defendant.
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B.
Mutual Full Cooperation
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Plaintiff, Defendant, Plaintiff’s Counsel, and Defense Counsel agree to fully
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cooperate with each other to accomplish the terms of this Settlement, including, but not
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limited to, execution of such documents and to take such other action as may reasonably
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be necessary to implement the terms herein. Defendant will cooperate with Plaintiff to
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provide support to substantiate its financial condition. The Parties agree to use their best
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efforts and any other efforts that may become necessary by Order of the Court, or
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otherwise, to effectuate this Settlement.
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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C.
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The signatories hereto represent that they are fully authorized to enter into this
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Parties’ Authority
Settlement.
D.
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Binding Nature of the Settlement
1.
This Settlement shall be binding upon, and inure to the benefit of, the
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successors or assigns of the Released Parties. Plaintiff represents, covenants, and
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warrants that he has not directly or indirectly, assigned, transferred, encumbered, any
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claim, demand, action, cause of action or rights released in the Released Claims in this
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Settlement. This Settlement shall be binding upon Plaintiff and the PAGA Settlement
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Members.
2.
This Settlement may be amended or modified only by a written
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instrument signed by Plaintiff’s Counsel and Plaintiff, as well as Defense Counsel and
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Defendant. No rights under this Settlement may be waived except in writing.
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3.
This Settlement and any attached exhibits constitute the entire
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agreement between Plaintiff and Defendant relating to the terms contained herein. All
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prior or contemporaneous agreements, understandings and statements, whether oral or
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written, whether express or implied, and whether by a party or its counsel, concerning
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this Settlement are merged herein. No oral or written representations, warranties or
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inducements have been made to any party concerning this Settlement or its exhibits
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other than the representations, warranties and covenants contained and memorialized in
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such documents.
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4.
Paragraph titles or captions contained herein are inserted as a matter
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of convenience and for reference, and in no way define, limit, extend, or describe the
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scope of this Settlement or any of its provisions. Each term of this Settlement is intended
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to be contractual and not merely a recital.
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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E.
Joint Drafting of Settlement Documents
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Plaintiff’s Counsel and Defense Counsel have arrived at this
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Settlement as a result of a series of arm’s-length negotiations, taking into account all
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relevant factors, present and potential.
2.
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This Settlement has been drafted jointly by Plaintiff’s Counsel and
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Defense Counsel and, therefore, in any construction or interpretation of this Settlement,
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the same shall not be construed against any of the Parties.
3.
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Plaintiff and Plaintiff’s Counsel agree that none of the documents
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provided to them by Defendant shall be used for any purpose other than the settlement of
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this Action. Specifically, none of the documents provided shall be used to pursue any
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subsequent claims or litigation against Defendant or the Released Parties.
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F.
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This agreement may be executed in one or more counterparts and by facsimile. All
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executed copies of this Settlement and photocopies thereof shall have the same force and
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effect and shall be as legally binding and enforceable as the original.
Execution of the Settlement
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G.
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Plaintiff and Plaintiff’s Counsel, as well as Defendant and Defense Counsel agree
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that they will not issue any media or press release, initiate any contact with the media or
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the press, respond to any media or press inquiry or have any communications with the
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media or the press about the fact, amount or terms of this Settlement. Plaintiff and
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Plaintiff’s Counsel shall not publicize or refer to the fact or amount of the Settlement, on
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their websites, social media, any other marketing materials, or legal publication. Plaintiff
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and Plaintiff’s Counsel will not state on their websites, social media, any other
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marketing materials, or legal publications, that Defendant engaged in any act contrary to
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California law, or denied payment owed to individuals classified as independent
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contractors or employees, or otherwise disparage Defendant, or otherwise identify
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Defendant. Defendant shall be allowed to report the Settlement or results of this lawsuit
No Press Release or Publicity Regarding the Terms of Settlement
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if required to do so by public disclosure regulatory requirements or with respect to any
financial or other disclosures which in their judgment are necessary.
H.
Continuing Jurisdiction of the Court
The Parties agree that the Court shall retain jurisdiction over the Parties, and over
this Settlement, in order to: (i) monitor and enforce compliance of Settlement, and/or (ii)
resolve any disputes over this Settlement or the administration of the benefits of this
Settlement.
[Signatures on next page]
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SETTLEMENT AGREEMENT AND RELEASE OF PAGA CLAIMS
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DEFENDANT AND DEFENDANT’S COUNSEL
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DATED: November 2, 2017
By:
DATED: November 2, 2017
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Todd Militzer
V.P. and Chief Financial Officer
Authorized to sign on behalf of Defendant
Central Freight Lines, Inc.
By: /s/ Spencer C. Skeen
Spencer C. Skeen
Tim L. Johnson
Attorneys for Defendant
Central Freight Lines, Inc.
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