Private Attorneys General Act Review – 2025

did not receive union benefits for these days. The defendant argued that even non-union actors could be covered by CBAs, and it was unclear whether the plaintiff was truly non-union on those dates. The court found that the plaintiff’s claims were not based on rights created by the CBA as she was not covered by the CBA on the days that she worked. The court also determined that the plaintiff’s claims regarding non-discretionary incentive pay and meal and rest period premiums were governed by state law and did not necessitate interpretation of the CBA. The court therefore granted the plaintiff’s motion to remand, since her claims were not preempted by the Labor Management Relations Act of 1947 and should be heard in state court. In Galvan, et al. v. First Student Management, LLC, 2024 U.S. Dist. LEXIS 146793 (N.D. Cal. Aug. 16, 2024, the plaintiffs filed a class action alleging that the defendant failed to provide meal and rest breaks, failed to pay overtime compensation, and failed to provide expense reimbursements and maintain accurate wage statements. The parties ultimately settled the matter and the plaintiffs filed a motion seeking preliminary approval for a class action settlement. The court denied the motion. The proposed settlement divided a $3.5 million fund into two sub-classes, including a “Driver Class” and “Non-Driver Class,” with specific periods and conditions for each. Id. at *7-8. The court found that the plaintiffs’ proposed settlement agreement failed to address previous issues with the predominance of common questions required for class certification. The court also stated that the plaintiffs failed to adequately estimate the defendants’ maximum potential liability, making it difficult to assess the fairness of the settlement. Moreover, the court determined that the plaintiffs’ counsel did not adequately represent the interests of the class by failing to perform the fact and expert discovery that would have allowed them to win their class certification motion, and then they presented the same deficient record in their motion for preliminary approval — even though the court’s order denying certification identified the information that the plaintiffs’ counsel would need to show predominance. Id. at *18-19. The court also took issue with the terms of the settlement agreement. The court ruled that the estimated settlement amount of $3.5 million, which included a $250,000 PAGA payment, was insufficient when compared to the potential maximum liability of $24.7 million. Additionally, the court determined that the proposed settlement distribution formula might unfairly treat different class members, particularly those who are current employees versus those who have left the company. For these reasons, the court determined that the plaintiffs’ counsel failed to meet the adequacy requirement, the class failed to meet the predominance requirement, the parties failed to provide evidence that the settlement amount was fair and adequate, and the plaintiffs’ lawyers did not establish that class members would be treated equitably by the settlement terms. For these reasons, the court denied the motion for preliminary settlement approval. Courts often will refuse to hold a settlement fair and adequate if the attorneys’ fee request is inflated. For example, the plaintiff in Madrigal, et al. v. SMG Extol, LLC, 2024 U.S. Dist. LEXIS 1293 (N.D. Cal. Jan. 3, 2024), filed a class action against the defendant alleging wage and hour violations, retaliation, wrongful termination, and unfair competition. The parties ultimately settled the matter and the plaintiff filed a motion for preliminary settlement approval. The court denied the motion. The parties defined the settlement class as all current and former hourly-paid employees in California from August 2018 to July 2023. Under the terms of the settlement, class members would receive a non-reversionary gross amount of $550,000. From this, deductions included attorneys’ fees of $183,333.33, costs of $20,000, a service award of $5,000 to the named plaintiff, and administration costs of $6,450. An additional $45,000 was allocated for a settlement share under the PAGA, with 75% directed to the California Labor and Workforce Development Agency. The court evaluated the fairness, adequacy, and reasonableness of the settlement under Rule 23(e), and raised concerns over the discount applied to the class claims compared to their maximum potential value. The court also stated that the settlement agreement lacked a detailed valuation of the potential claims and found some issues regarding collusion due to the sizeable attorneys’ fee request (60% of the settlement fund) and the presence of a clear- sailing provision. The court determined that the named plaintiff could have potential conflicts with class members due to the allocation of settlement funds between class and individual claims. Accordingly, the court found insufficient evidence to determine the fairness and adequacy of the proposed settlement and denied the motion. 4. Other California State Court PAGA Decisions A former employee in Miranda, et al. v. Guess? Retail, Inc., 2024 Cal. App. Unpub. LEXIS 3932 (Cal. App. 2d Dist. June 25, 2024), filed a PAGA action alleging that Guess failed to reimburse employees for necessary expenses, such as purchasing Guess clothing and using personal cell phones for work. Guess filed a motion to

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