Recent PAGA Settlement Demonstrates Why PAGA Cases Are Typically Worth Far Less Than The Maximum Theoretical Recovery

• Published date: 24 January 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Mr Jonathan Slowik and Gregory W. Knopp

On January 11, 2022, Judge Cunningham of the Los Angeles Superior Court conditionally approved a $7.5 million agreement to settle three overlapping Private Attorneys General Act (PAGA) actions, the lead case titled Reyes v. Kellermeyer Bergensons Servs., LLC. The consolidated settlement is perhaps the largest settlement approved since the California Court of Appeal defined the standard for reviewing a PAGA settlement in Moniz v. Adecco USA, Inc., 72 Cal. App. 4th 56 (2021). (To read about the Moniz decision, click here.)

The decision is notable not only for the size of the settlement, but for a lengthy tentative decision that provides a pithy summary of the many reasons why a PAGA plaintiff's realistic recovery is often far less than the maximum possible exposure. Although the plaintiffs estimated a maximum exposure of over $104 million, for several reasons, the court agreed that the $7.5 million settlement amount was "fair, reasonable, and adequate" in light of the realistic recovery and the risks inherent in pursuing a PAGA claim.

• First, the maximum exposure assumed that more than one PAGA penalty could be awarded to an aggrieved employee for a single violation (often referred to as "stacking"). As the defendant pointed out, there do not appear to be any known court decisions authorizing stacking.
• Second, the maximum exposure assumed that the court could award heightened penalties for "subsequent" violations. As multiple courts have held, such penalties are not available unless the Labor Commissioner has previously cited employer for the violation. (To read about the Gunther v Alaska Airlines, Inc., 72 Cal. App. 5th 334 (2021) decision on this point, click here.)
• Third, if the claims are not susceptible of common proof, then the plaintiff "would still face significant practical problems in aggregating any material exposure," because "each violation would need to be proven as to each person and for each period for which...