Court Opinion

ID: 9906595
Source: CourtListenerOpinion
Date Created: 2023-12-04 18:03:01.111598+00
Date Added: 2024-06-11T09:25:15.219658
License: Public Domain

Filed 12/4/23 Mendocino Farms Wage and Hour Cases CA3
                                           NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                      THIRD APPELLATE DISTRICT
                                                     (Sacramento)
                                                            ----

 MENDOCINO FARMS WAGE AND HOUR                                                                C096869
 CASES.
                                                                                        (JCCP No. 5153)

                                                                              (Sacramento Super. Ct. No. 34-
                                                                               2020-00277871; Los Angeles
                                                                              Super. Ct. Nos. 20STCV15652,
                                                                              20STCV27610, 20STCV34641)

         The appeal in this coordinated proceeding arises from an order and judgment
granting approval of a class action settlement reached between plaintiffs Sean Lalor
(Lalor), Yaneth Elias (Elias), et al. (collectively, plaintiffs) and defendant Mendocino
Farms, LLC (Mendocino Farms). Appellant Michael Moreli (Moreli) is a settlement
class member who objected to the proposed settlement and subsequently filed a motion to
vacate the judgment. He contends that we should reverse the judgment because the trial

                                                             1
court (1) failed to apply the correct legal standard when reviewing the settlement; (2) did
not receive sufficient information about the maximum potential value of each claim to
make an informed evaluation of the settlement; and (3) did not receive sufficient
documentation to support its attorney fee award.
       We conclude that Moreli has not met his burden to show the trial court failed to
proceed in the manner required by law or otherwise abused its discretion in determining
that the settlement was fair, adequate, and reasonable. Accordingly, we affirm.
                  FACTUAL AND PROCEDURAL BACKGROUND
       A.     The Lalor and Elias Complaints
       Defendant Mendocino Farms owns and operates a chain of fast-casual restaurants
in California. At various times between 2018 and 2020, plaintiffs worked for Mendocino
Farms as nonexempt employees.
       In or about May 2020, plaintiff Lalor filed a putative wage and hour class action
complaint against Mendocino Farms (Sacramento County case No. 34-2020-00277871)
(the Lalor action).1 Lalor generally alleged that Mendocino Farms failed to provide
required meal and rest periods and, as a result, failed to maintain and provide accurate
wage statements and pay all wages owed. Lalor’s complaint alleged causes of action for
(1) violation of California’s unfair competition law (Bus. & Prof. Code, § 17200, et seq.);
(2) failure to provide accurate itemized wage statements; (3) failure to pay minimum
wages; (4) failure to provide required meal and rest periods; (5) waiting time penalties;
(6) failure to pay overtime wages, and (7) failure to reimburse business expenses. Lalor
later filed a first amended complaint adding plaintiffs Jemelle Jordan and Alexandria

1      Although plaintiffs contend the Lalor complaint was submitted to the trial court’s
drop box in March 2020, the complaint was not filed until May 6, 2020. Plaintiffs’
estimate of the defendant’s maximum exposure is tied to the May 6, 2020 filing date.

                                             2
Wheeler and a claim for civil penalties under the Labor Code Private Attorneys General
Act of 2004 (Lab. Code, § 2698 et seq.)2 (PAGA).
       Around the same time, plaintiff Elias filed a separate wage and hour class action
complaint against Mendocino Farms (Los Angeles County case No. 20STCV15652) (the
Elias action). Elias alleged the same causes of action as Lalor, plus an additional claim
for failure to maintain required records. Plaintiffs and their counsel subsequently agreed
to coordinate their efforts and signed a joint prosecution agreement.
       Mendocino Farms disputed plaintiffs’ claims, arguing that class treatment was not
appropriate and that it complied with all applicable wage and hour laws. Among other
things, the company claimed that the putative class members were paid for all hours
worked and were automatically paid premium wages for missed meal break periods.
Mendocino Farms also claimed that many of the class members had signed mandatory
arbitration agreements covering the class claims.
       In June 2020, plaintiffs and Mendocino Farms (collectively, the Parties) agreed to
mediate the Lalor and Elias actions before the Hon. Louis M. Meisinger (Ret.) a former
superior court judge with extensive wage and hour class action and PAGA representative
claim experience. Before the mediation, the Parties exchanged a significant amount of
information through informal discovery. In addition to employment policies and related
documents, Mendocino Farms produced data on the number of putative class members, a
class list with hire and termination dates for the relevant four-year period, and payroll and
timekeeping records for 2,292 individuals (or approximately 47 percent of the 4,928
putative class members), which represented 393,019 shifts, 50,024 pay periods and
95,310 workweeks. The payroll and timekeeping data included information about job
titles, pay periods and workweeks, type of compensation paid (e.g., tips, overtime,

2      Undesignated section references are to the Labor Code.

                                             3
regular wages), as well as hourly wage rates for the period from March/April 2016
through August 2020.
        All told, Mendocino Farms produced 778,465 rows of data, which plaintiffs’
counsel reviewed and analyzed. The Parties additionally conducted their own
investigations and research, including interviews of putative class members, to ascertain
whether Mendocino Farms’s employment policies were understood and followed. The
Parties also separately engaged experts to analyze the time and payroll data and prepare
an estimate of Mendocino Farms’s potential exposure.
        B.     Moreli’s Complaints
        Like plaintiffs, plaintiff Moreli is a former employee of Mendocino Farms. He
worked as an hourly, nonexempt “[m]anager in [t]raining” from May 2019 until March
2020.
        In July 2020, after the Parties agreed to mediate the Lalor and Elias actions,
Moreli filed a putative class action complaint and a separate representative PAGA
complaint against Mendocino Farms (Los Angeles County case Nos. 20STCV27610 and
20STCV34641), alleging causes of action similar to those in the Lalor and Elias actions.
        In November 2020, Moreli filed a motion to intervene in the Lalor action, which
was denied. Moreli also filed a petition to coordinate his cases with the Lalor and Elias
actions. The trial court granted the petition and assigned the coordinated cases to the
Sacramento County Superior Court as the Mendocino Farms Wage and Hour Cases,
JCCP No. 5153.
        C.     The Settlement Agreement
        On December 8, 2020, after more than eight hours of mediation with retired Judge
Meisinger, the Parties agreed to the core terms of a settlement for the Lalor and Elias
actions. A few months later, the Parties executed a joint stipulation of settlement
agreement (the Settlement).

                                              4
       The Settlement provides for a class consisting of all nonexempt employees
employed by Mendocino Farms in California at any time from March 18, 2016, to
January 31, 2021, estimated to include 5,209 class members. The Settlement provides for
a (non-reversionary) gross settlement amount of $1,500,000. From that amount, the
Settlement provides that $75,000 is to be allocated to the PAGA claims; $10,000 to each
class representative as a service award; approximately $50,000 to a settlement
administrator; and (up to) $499,950.00 to class counsel for attorney’s fees incurred in
prosecuting the actions. The remaining net settlement amount of approximately
$834,000 is to be paid to the settlement class based upon the number of workweeks each
participating class member worked in a nonexempt position during the relevant period.
The average payout to class members is expected to be approximately $160.
       D.     Court Approval of the Settlement
       In March 2021, plaintiffs filed a motion requesting conditional certification of the
class and preliminary approval of the Settlement. In support of the motion, plaintiffs
submitted declarations describing what class counsel did to investigate the claims and
why plaintiffs believed the Settlement was fair, adequate, and reasonable.
       Plaintiffs estimated Mendocino Farms’s maximum exposure at approximately
$38,517,473, calculated as follows: $11,419,946 for rest break violations (assuming one
rest period violation per 3.5-hour shift), plus $2,304,388 for meal break violations (based
on total unique meal period violations), plus $4,330,300 for wage statement penalties
(based on 2,568 employees and 44,587 pay periods), plus $49,025 for unpaid overtime,
plus $11,492,764 for waiting time penalties (based on 4,262 former employees), plus
$260,450 for unreimbursed expenses (based on the estimated cost of $50 times the
number of class members), for a total of $29,856,873 for the class claims; plus an
additional $8,660,600 in PAGA penalties (based on 2,568 employees and 44,587 pay
periods from May 6, 2019, to December 8, 2020). After balancing the merits of the
claims against the costs, risks, and delays of litigation, the uncertainties involved in

                                              5
achieving class certification, the difficulties in establishing liability, the assertion that
many of the claims are governed by an arbitration agreement, the trial court’s discretion
in reducing PAGA penalties, and the high likelihood of an appeal, plaintiffs concluded
the proposed Settlement was fair, adequate, and reasonable.
       Moreli objected to the motion for preliminary approval on the grounds plaintiffs
had “dramatically undervalued” the maximum possible value of the claims and therefore
settled the lawsuits too cheaply. Moreli argued that Mendocino Farms’ true maximum
exposure was in excess of $102 million.
       The trial court preliminarily approved the Settlement, while granting Moreli’s
request for discovery of all non-privileged information previously provided to plaintiffs.
Mendocino Farms subsequently provided Moreli with the payroll and timekeeping data
and other information provided to class counsel.
       After the trial court’s preliminary approval, a notice of settlement was
disseminated to the putative class members. Out of the 5,209 putative class members,
there were six requests for exclusion and one objection—from Moreli.
       In April 2022, plaintiffs filed their motion for final approval of the settlement.
Plaintiffs argued that Moreli’s objections to the Settlement lacked merit and that the trial
court should approve the Settlement as fair, adequate, and reasonable.
       In May 2022, Moreli filed a formal objection to the motion for final approval of
the Settlement. As before, Moreli claimed that plaintiffs had underestimated the
maximum potential value of the claims by more than $60 million.
       Both plaintiffs and Mendocino Farms responded to Moreli’s objections. After a
hearing, the trial court issued a 14-page ruling rejecting Moreli’s objections and granting
final approval to the Settlement. The court found the parties’ arguments “persuasive” and
the Settlement, as a whole, to be fair, adequate, and reasonable. The court likewise
approved the fee requests as reasonable and appropriate. The court subsequently entered
a formal order and judgment granting final approval of the Settlement.

                                                6
       E.     Moreli’s Motion to Vacate the Judgment
       Moreli filed a motion to vacate the judgment under Code of Civil Procedure
section 663 on three grounds: (1) the trial court failed to apply the heightened standard
required to approve a precertification class action settlement; (2) plaintiffs failed to
properly value the claims being released and therefore underestimated the maximum
value of the case by more than $60 million; and (3) plaintiffs failed to provide sufficient
evidence to support the attorney fee award. Plaintiffs and Mendocino Farms opposed the
motion. The trial court issued an order denying the motion to vacate on July 22, 2022.
This appeal followed. Moreli challenges the order and judgment approving the
settlement, as well as the order denying his postjudgment motion to vacate.
                                       DISCUSSION
                                               I
                                Background Legal Principles
       A.     Class Action Settlements
       “A trial court must approve a class action settlement agreement and may do so
only after determining it is fair, adequate, and reasonable. [Citation.]” (In re Microsoft I-
V Cases (2006) 135 Cal.App.4th 706, 723.) The trial court is vested with “broad
discretion” in making this determination. (Ibid.) In exercising its discretion, the court
“should consider relevant factors, such as 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 v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801
(Dunk); accord, Cho v. Seagate Technology Holdings, Inc. (2009) 177 Cal.App.4th 734,
743.) The most important factor is the strength of the plaintiff’s case, balanced against

                                              7
the amount offered in settlement. (Kullar v. Foot Locker Retail, Inc. (2008)
168 Cal.App.4th 116, 130 (Kullar).)
       California law requires that class action settlements be scrutinized more carefully
when they are settled before class certification proceedings. (Luckey v. Superior Court
(2014) 228 Cal.App.4th 81, 94; In re Bluetooth Headset Products Liability Litigation (9th
Cir. 2011) 654 F.3d 935, 946.) This more exacting review is warranted to ensure that
class representatives and their counsel have not allowed self-interest to infect the
negotiations. (Bluetooth, at p. 947.)
       At the same time, because public policy generally favors the settlement of
complex class action lawsuits, “[d]ue regard should be given to what is otherwise a
private consensual agreement between the parties.” (Dunk, supra, 48 Cal.App.4th at
p. 1801; Microsoft I-V Cases, supra, 135 Cal.App.4th at p. 723.) Accordingly, even
bearing in mind the need for heightened scrutiny, “precertification settlements are not
necessarily flawed and in fact are routinely approved if found to be fair and reasonable.”
(Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 248 (Wershba),
disapproved on other grounds by Hernandez v. Restoration Hardware, Inc. (2018)
4 Cal.5th 260, 269-270; accord, Cho v. Seagate Technology Holdings, supra,
177 Cal.App.4th at p. 743.)
       The burden is on the proponent to demonstrate that a proposed settlement is fair,
adequate, and reasonable. (Wershba, supra, 91 Cal.App.4th at p. 245.) However, a
presumption of fairness exists when: “ ‘(1) the settlement is reached through arm’s-
length bargaining; (2) investigation and discovery are sufficient to allow counsel and the
court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the
percentage of objectors is small. [Citation.]’ ” (Ibid.) The objector bears the burden to
rebut that presumption. (Carter v. City of Los Angeles (2014) 224 Cal.App.4th 808, 820;
accord, Dunk, supra, 48 Cal.App.4th at p. 1800; 7-Eleven Owners for Fair Franchising v.
Southland Corp. (2000) 85 Cal.App.4th 1135, 1165-1166 (7-Eleven).)

                                               8
       Our review of the trial court’s approval of a settlement is limited. We do not
reweigh the evidence or make an independent determination of whether the terms of the
settlement are fair, adequate, and reasonable. (Nordstrom Com. Cases (2010)
186 Cal.App.4th 576, 581.) We instead examine only whether there is a strong showing
of a clear abuse of discretion by the trial court in approving the settlement. (Ibid.)
       B.     PAGA Settlements
       “The Legislature enacted PAGA almost two decades ago in response to
widespread violations of the Labor Code and significant underenforcement of those laws.
[Citations.] Before PAGA’s enactment, tools for enforcing the Labor Code were
limited. Some statutes allowed employees to sue their employers for damages resulting
from Labor Code violations such as unpaid wages. [Citations.] Other Labor Code
violations were punishable only as criminal misdemeanors, which local prosecutors
tended not to prioritize. [Citation.] Additionally, several statutes provided civil penalties
for Labor Code violations, but only state labor law enforcement agencies could bring an
action for civil penalties and those agencies lacked sufficient enforcement resources.
[Citations.]” (Adolph v. Uber Technologies, Inc. 14 Cal.5th 1104, 1116 (Adolph).)
PAGA addressed these problems by creating civil penalties for most Labor Code
violations and by empowering “ ‘aggrieved employees’ ” to sue on behalf of themselves
and other employees to recover those penalties. (Adolph, supra, at p. 1116; Arias v.
Superior Court (2009) 46 Cal.4th 969, 980.)
       A PAGA claim is “ ‘legally and conceptually different’ ” from an employee’s
individual claim for damages and statutory penalties. (Moniz v. Adecco USA, Inc. (2021)
72 Cal.App.5th 56, 74.) An aggrieved employee suing under PAGA does so as the proxy
or agent of the state, acting as private attorneys general, to recover civil penalties that
otherwise would have been assessed and collected by the state’s labor law enforcement
agencies. (Ibid.) A PAGA representative action is therefore “ ‘ “fundamentally a law
enforcement action” ’ and relief is ‘ “designed to protect the public [rather than] benefit

                                               9
private parties.” ’ ” (Ibid.) If an employee successfully recovers an award of civil
penalties, PAGA requires that 75 percent of the recovery be paid to the Labor and
Workforce Development Agency, leaving only twenty-five percent for the aggrieved
employees. (Adolph, supra, 14 Cal.5th at p. 1116; § 2699, subd. (i).)
       PAGA claims are subject to a one-year statute of limitations. (Code Civ. Proc.,
§ 340, subd. (a).) The Labor and Workforce Development Agency must be provided
with notice of any proposed settlement,3 and any final settlement requires review and
approval by the trial court. (§ 2699, subd. (l)(2).)
       Although PAGA itself does not provide a standard for the trial court’s review,
caselaw establishes that trial courts should review a PAGA settlement to ascertain
whether it is fair, reasonable, and adequate in view of PAGA’s purposes and policies.
(Moniz v. Adecco USA, Inc., supra, 72 Cal.App.5th at p. 77.) The trial court’s approval
of a PAGA settlement is reviewed for abuse of discretion. (Id. at p. 78.)
                                              II
                                    Moreli’s Arguments
       Moreli argues, as he did in his motion to vacate, that the trial court erred in
approving the Settlement because the court (1) failed to apply the heightened scrutiny
required when reviewing a precertification class action settlement; (2) lacked sufficient
information about the potential value of the claims to make an informed evaluation of the
proposed settlement; and (3) lacked the documentation necessary to determine a
reasonable attorney fee award. We find no abuse of discretion.

3     Plaintiffs sent the executed Settlement agreement to the Labor and Workforce
Development Agency on February 28, 2021.

                                             10
       A.        Failure to Apply the Heightened Scrutiny
       As a threshold issue, we reject Moreli’s contention that the trial court erred by
failing to apply the heightened scrutiny required for settlements reached before class
certification.
       Moreli argues that because the trial court did not expressly state that it applied
heightened scrutiny, we must presume it did not. Controlling legal principles dictates the
opposite result. In the absence of contrary evidence, we must presume that judicial duties
were properly performed and that the trial court followed the law. (In re Marriage of
Winternitz (2015) 235 Cal.App.4th 644, 653-654; Ross v. Superior Court of Sacramento
County (1977) 19 Cal.3d 899, 913-914; Denham v. Superior Court (1970) 2 Cal.3d 557,
564.) We find no reason to depart from that presumption here. The trial court’s lengthy
order shows that it carefully analyzed the evidence, including Moreli’s own evidence and
arguments, before approving the Settlement. Moreli, in contrast, cites nothing to support
his contention that the court failed to apply the required level of scrutiny. Accordingly,
we reject Moreli’s claim that the court failed to apply the correct standard in approving
the Settlement.
       B.        Sufficiency of the Record
       Moreli next contends that the trial court was not sufficiently informed of the value
of plaintiffs’ claims to intelligently evaluate the Settlement. In particular, he claims that
the plaintiffs failed to properly estimate the maximum potential value of each claim
released in the Settlement, thereby understating Mendocino Farms’ total exposure in the
case by more than $60 million. As a result, he contends the court lacked a sufficient
understanding of the amount in controversy to assess the reasonableness, adequacy, and
fairness of the Settlement. We disagree.
       We begin with some general observations about what the law requires—and what
it does not—when a trial court reviews a proposed class action settlement involving
PAGA claims.

                                              11
       First, we reject Moreli’s contention that the law requires the trial court to evaluate
the fairness of a settlement on a claim-by-claim basis. It is the settlement as a whole, not
just its constituent parts, that must be examined for fairness. (Dunk, supra,
48 Cal.App.4th at p. 1801; Lane v. Facebook, Inc. (9th Cir. 2012) 696 F.3d 811, 823.)
       Second, we reject Moreli’s contention that the law requires evidence of the
theoretical “maximum value of each claim” released in the settlement. Moreli’s reliance
on Kullar, supra, 168 Cal.App.4th 116 is misplaced. Kullar does not “require the record
in all cases to contain evidence in the form of an explicit statement of the maximum
amount the plaintiff class could recover if it prevailed on all its claims.” (Munoz v. BCI
Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 409 (Munoz).) It
only requires a record that is sufficiently developed to allow the court to understand the
amount in controversy and the realistic range of outcomes of the litigation. (Ibid.) Thus,
while a court must receive basic information about the nature and magnitude of the
claims in question, and the basis for concluding that the consideration being paid for the
release of those claims is reasonable, the court need not determine the maximum potential
recovery for each released claim. (See Lane v. Facebook, Inc., supra, 696 F.3d at
p. 823.) A proposed settlement is not to be judged against a hypothetical or speculative
measure of the maximum amount the plaintiffs could have obtained at trial, but whether
the settlement is “within the ‘ballpark’ of reasonableness” under all the circumstances.
(Wershba, supra, 91 Cal.App.4th at pp. 246, 250; Kullar, at p. 133; Chavez v. Netflix, Inc.
(2008) 162 Cal.App.4th 43, 55.) Starting with the absolute maximum value of a case and
discounting from that amount based on the risks of litigation is certainly one way to
arrive at a realistic understanding of the amount in controversy, but it is not the only way.
       Third, although the moving parties have the burden to show that a proposed
settlement is fair and reasonable, “in the final analysis it is the court that bears the
responsibility to ensure that the recovery represents a reasonable compromise . . . .”
(Kullar, supra, 168 Cal.App.4th at p. 129.) While the trial court should not give a

                                               12
rubber-stamp approval, the settlement hearing also should not be turned into a trial or
rehearsal for trial on the merits. (7-Eleven, supra, 85 Cal.App.4th at p. 1145; accord,
Wershba, supra, 91 Cal.App.4th at p. 246.) “ ‘Neither the trial court nor this court is to
reach any ultimate conclusions on the contested issues of fact and law which underlie the
merits of the dispute, for it is the very uncertainty of outcome in litigation and avoidance
of wasteful and expensive litigation that induce consensual settlements.’ [Citation.]” (7-
Eleven, at p. 1145.)
       Fourth, when reviewing a settlement in a lawsuit that includes both class claims
and PAGA penalties, the trial court may apply a sliding scale in determining whether the
PAGA settlement is reasonable. For example, where there is a robust settlement of class
claims, settlement of the PAGA claims may be substantially reduced below their
standalone settlement value. (See, e.g., Stoddart v. Express Servs. (E.D.Cal., Oct. 6,
2020, No. 2:12-cv-01054-KJM-CKD) 2020 U.S.Dist. LEXIS 186315, at pp. *43-44;
Slavkov v. Fast Water Heater Partners I, LP (N.D.Cal., July 25, 2017, No. 14-cv-04324-
JST) 2017 U.S.Dist. LEXIS 116303, at p. *5; Swain v. Anders Grp., LLC (E.D.Cal., Apr.
17, 2023, No. 1:21-cv-00197-SKO) 2023 U.S.Dist. LEXIS 67162, at pp. *19-20.)
       Applying these principles, we reject Moreli’s claim that the trial court lacked
sufficient information about the nature and magnitude of plaintiffs’ claims to evaluate the
fairness of the Settlement. The information before the court included declarations from
experienced class counsel describing how counsel investigated the merits of the class
claims and potential damages through informal discovery and exchange of documents
with the defendant. Specifically, the record shows that Mendocino Farms provided
plaintiffs with data on the number of putative class members, a class list with hire and
termination dates, relevant wage and hour policies, and several years’ worth of payroll
and timekeeping records. The combined data sample amounted to nearly three-quarters
of a million lines of data, and represented more than 393,000 shifts, 50,000 pay periods,
and 95,000 workweeks. In addition, plaintiffs retained an expert to review the time and

                                             13
payroll data and prepare an analysis of meal and rest break violations, premium wages
paid and owed, unpaid wages, interest, and penalties. Plaintiffs also engaged in extensive
negotiations and participated in a private, arm’s-length mediation with Mendocino Farms
before a mediator experienced in the legal issues before him.
       Based on their investigation, plaintiffs determined that “a generous likely total
exposure for the asserted claims” is approximately $38.5 million. Plaintiffs described
how they arrived at the estimate. They explained that the assigned value for meal break
claims, about $2.3 million, was based on a calculated total of unique meal period
violations, multiplied by average pay rates. The assigned value for rest break claims,
about $10.3 million, was based on the assumption of one rest period violation per shift
over 3.5 hours, multiplied by average pay rates. The assigned value for wage statement
violations, about $4.3 million, was calculated based on 2,568 employees and 44,587 pay
periods. The assigned value for waiting time penalties, about $11.5 million, was
calculated based on 4,262 former employees. The assigned value for unreimbursed
business expenses, less than $300,000, was based on an assumed cost of $50 per cell
phone multiplied by 5,209 class members. The assigned value for PAGA penalties was
approximately $8.7 million (also based on 2,568 employees and 44,587 pay periods).
Plaintiffs explained that their investigations did not reveal significant issues with respect
to unpaid overtime or off-the-clock claims.
       While acknowledging that the maximum potential exposure could exceed $38
million, plaintiffs asserted that $38 million was believed to be the “likely maximum
recovery if Plaintiffs and the class were to prevail at trial on all claims.” After taking
account of the costs and risks of litigation, such as class certification, the possibility of
arbitration, proving liability at trial, and the possibility that an award of civil penalties
would be reduced by the court, plaintiffs determined that the proposed gross settlement
amount of $1.5 million was fair and reasonable.

                                               14
       To be sure, plaintiffs’ showing was not perfect. Plaintiffs could have done more to
explain how they valued the PAGA penalties and why they determined the overtime
claims had little or no value. However, the trial court was not limited to the information
presented by plaintiffs in support of their motion. The court also was able to consider
Moreli’s opposition, and the responses to that opposition.
       Using essentially the same data as plaintiffs, Moreli prepared and submitted his
own valuation analysis in support of his opposition. According to Moreli, his valuation
showed that plaintiffs underestimated the maximum value of the class claims by more
than $5 million and the maximum value of the PAGA penalties by more than $70 million.
       Moreli explained how he arrived at his estimates and why he believed plaintiffs’
valuations were too low. Specifically, he argued that plaintiffs: (1) ignored penalties for
wage statement violations available under section 226.3; (2) improperly released section
226.3 penalties for no value; (3) failed to include additional penalties for recurring
violations under section 210; (4) wrongly assumed that multiple PAGA penalties cannot
be imposed (“stacked”) for the same underlying conduct; (5) wrongly assumed that
heightened PAGA penalties for a “subsequent” violation cannot be imposed without
notice of the prior violation; (6) improperly assumed certain PAGA penalties had no
value; (7) failed to include the cost of cell phone service in valuing the expense
reimbursement claim; (8) underestimated meal and rest break claims by at least $1
million; and (9) failed to assign any value to off-the-clock (and related minimum wage)
claims related to meal breaks.
       In response, the settling Parties explained why they believed Moreli’s evidence
and arguments did not show the Settlement was unfair, inadequate, or unreasonable. To
begin, plaintiffs argued that “his valuations of the most valuable claims—rest break, meal
break, unpaid overtime, waiting time penalties, statutory wage statement penalty—are
either remarkably similar or identical” to plaintiffs’ estimates, with the primary
differences attributable to interest calculations and an additional two months of

                                             15
extrapolated damages. The settling Parties also disagreed that the reimbursement claim
should include the full cost of cell phone service since Mendocino Farms did not require
employees to use their personal cell phones for business purposes and had a policy
prohibiting employees from using personal devices except on breaks.
       The Parties further disputed the claim that they ignored significant off-the-clock
(and minimum wage) claims. The Parties pointed to evidence in the record showing that
hourly managers “did not clock out” for meal periods during their shifts and therefore
generally did not work off-the-clock. Thus, they asserted, the realistic exposure for such
claims was likely “very modest,” less than $150,000, and would not render the Settlement
unreasonable.
       As to the PAGA penalties, the Parties cited legal authority showing that it is not
improper to release all known and unknown claims that were or could have been pled
based on the allegations of the complaint (see, e.g., Villacres v. ABM Industries Inc.
(2010) 189 Cal.App.4th 562, 586-587; Carter v. City of Los Angeles, supra,
224 Cal.App.4th at pp. 820-821), and that an employer generally cannot be subject to
heightened PAGA penalties for “subsequent” (recurring) violations unless it received
notice of the prior violation (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157,
1209; Bernstein v. Virgin Am., Inc. (9th Cir. 2021) 3 F.4th 1127, 1144; Trang v. Turbine
Engine Components Technologies Corp. (C.D. Cal., Dec. 19, 2012, No. CV 12-07658
DDP RZX) 2012 WL 6618854, at p. *5.)
       They also showed that it is (at best) legally uncertain whether PAGA penalties
may be recovered under section 226.3 for inaccurate wage statements,4 and whether

4      Compare Gunther v. Alaska Airlines, Inc. (2021) 72 Cal.App.5th 334, with Raines
v. Coastal Pacific Food Distributors, Inc. (2018) 23 Cal.App.5th 667. (See also Lopez v.
Friant & Associates, LLC (2017) 15 Cal.App.5th 773, 784, fn. 6.

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multiple PAGA penalties may be recovered for the same underlying conduct.5 Plaintiffs
further explained that calculating exposure for a PAGA claim is inherently speculative
because courts have discretion to reduce PAGA penalties where an award would be
unjust or oppressive. (§ 2699, subd. (e)(2); see also § 226.3)
       The trial court was able to consider Moreli’s evidence and arguments, and the
settling Parties’ responses to it, before approving the Settlement. In our view, this
information, together with the other evidence presented in support of the motion, was
sufficient for the court to make an informed evaluation of the Settlement.
       Kullar, supra, 168 Cal.App.4th 116, which Moreli relies upon, is distinguishable.
In Kullar, there was “nothing” before the court to establish the sufficiency of the
investigation other than an assurance from class counsel that “they had seen what they
needed to see.” (Id. at pp. 126, 129; Munoz, supra, 186 Cal.App.4th at p. 410.) The
court did not receive even basic information about the nature and magnitude of the claims
in question and the basis for concluding that the consideration received for the release of
the claims was reasonable. (Kullar, at pp. 129, 133.) Here, in contrast, the record
contains ample information from which the court could evaluate whether the Settlement
was fair, adequate, and reasonable.

5       Compare Snow v. United Parcel Service, Inc. (C.D. Cal., Apr. 1, 2020, No.
EDCV20025PSGAFMX) 2020 WL 1638250, at pp. *3-4; Smith v. Lux Retail North
America, Inc. (N.D. Cal., June 13, 2013, No. C 13-01579 WHA) 2013 WL 2932243, at
p. *3; and Posephny v. AMN Healthcare Inc. (N.D. Cal., July 9, 2020, No. 18-CV-06284-
KAW) 2020 WL 13612298, at p. *3; with Schiller v. David’s Bridal, Inc. (E.D. Cal.,
July 14, 2010, No. 1:10-CV-00616 AWI) 2010 WL 2793650, at p. *6 [it is conceivable
that plaintiff could stack PAGA penalties for each violation]; Salazar v. PODS
Enterprises, LLC (C.D. Cal., May 8, 2019, No. EDCV19260MWFKKX) 2019 WL
2023726, at p. *6 [holding that it is possible “although highly unlikely” plaintiff could
stack PAGA penalties for each violation]; and Steenhuyse v. UBS Financial Services, Inc.
(N.D. Cal. 2018) 317 F.Supp.3d 1062, 1070 [allowing stacking].

                                             17
       We acknowledge Moreli’s concern that class counsel took an overly pessimistic
view of the maximum value of the PAGA penalties. However, we must be mindful of the
limited scope of our review. We reiterate that our role is not to make an independent
determination whether the terms of the Settlement are fair, adequate, and reasonable.
(Munoz, supra, 186 Cal.App.4th at p. 407.) Nor should we reach any dispositive
conclusions on the unsettled issues of fact and law underlying the merits of the dispute.
(7-Eleven, supra, 85 Cal.App.4th at p. 1146; Wershba, supra, 91 Cal.App.4th at p. 246.)
We only determine whether the trial judge, whose views are entitled to great weight,
acted within the scope of his or her broad discretion.6 (Munoz, at p. 410.)
       We see no basis for finding an abuse of discretion here. The record before the
court established that the Settlement was entitled to a presumption of fairness, and Moreli
failed to adequately rebut that presumption.
       On appeal, Moreli asserts the same basic argument that he raised below, i.e., that
plaintiffs underestimated the maximum potential value of the claims and therefore settled
too cheaply. However, as plaintiffs showed, the assumptions underlying his valuation are
either contrary to law or rest on unresolved legal and factual issues that are fraught with
risk and uncertainty.
       In sum, the trial court was informed of the differing valuations and the reasons
why they differed. The court carefully considered the arguments and weighed the
evidence before it and determined that Moreli’s objections were not a basis for rejecting
the agreement. Nothing Moreli argues on appeal has convinced us that this was an abuse
of discretion. We find that the trial court understood the amount in controversy and the

6      Although not dispositive, we note again that plaintiffs sent the executed Settlement
agreement to the PAGA unit in the Labor and Workforce Development Agency and the
agency did not object to its terms. (See Turrieta v. Lyft, Inc. (2021) 69 Cal.App.5th 955,
973 [“the [Labor and Workforce Development Agency] may provide the trial court with
comments on or objections to a proposed settlement, and has done so in the past”],
review granted Jan. 5, 2022, S271721.)

                                               18
realistic range of outcomes in the litigation. We are not persuaded the trial court
misapplied the law by rejecting Moreli’s differing opinions. Accordingly, even bearing
in mind the heightened scrutiny that applies to precertification settlements, we conclude
the trial court did not abuse its discretion in approving the Settlement.
       C.     Approval of the Fee Award
       As part of the Settlement, the Parties agreed that no more than one-third of the
gross settlement amount would be paid to class counsel as attorney fees. After hearing
Moreli’s objections to the Settlement, the trial court approved the maximum fee award of
$499,950, representing one-third of the common fund. Moreli challenges the fee award,
arguing the court erred by using a percentage-of-recovery method without requiring
detailed time sheets and performing a “lodestar for fees as a cross-check.”
       We review an attorney fee award under an abuse of discretion standard. (Laffitte
v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 488 (Laffitte).) We find no abuse here.
       There are two primary methods of determining a reasonable attorney fee in the
context of class action litigation. (Laffitte, supra, 1 Cal.5th at p. 489.) The percentage-
of-recovery method calculates the fee as a percentage of a common fund recovered on
behalf of the class. (Ibid.) The lodestar method calculates the fee by multiplying the
number of hours reasonably expended by counsel by a reasonable hourly rate, which
amount then may be adjusted based on other factors. (Ibid.)
       In Laffitte, the Supreme Court held that trial courts have the discretion to choose
between the two fee calculation methods. (Laffitte, supra, 1 Cal.5th at p. 504.) An
objecting class member in that case argued that courts should not be permitted to use the
percentage-of-recovery method and that fee awards should be calculated only under the
lodestar method. (Id. at p. 486.) The court disagreed, holding that it is not an abuse of
discretion to use the percentage method to calculate a fee in a common fund case. (Id. at
p. 503.)

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       The court further held that trial courts have the discretion to blend the two fee
calculation methods, using one method to “cross-check” the reasonableness of the other’s
result. (Laffitte, supra, 1 Cal.5th at pp. 496, 506.) Thus, when percentage-of-recovery is
used as the primary fee calculation method, trial courts have the discretion to “cross-
check” the reasonableness of that fee through a lodestar calculation. (Id. at pp. 488, 496,
504.) But the Supreme Court was clear that a lodestar cross-check is not required: Trial
courts “also retain the discretion to forgo a lodestar cross-check and use other means to
evaluate the reasonableness of a requested percentage fee.” (Id. at p. 506.)
       In this case, the trial court elected not to perform a lodestar cross-check. Instead,
it used other means to satisfy itself that the requested fee was reasonable, including a
comparison of the requested fee to the “ ‘going rate’ ” for counsel in similar actions. The
methodology employed by the trial court is consistent with Laffitte and the resulting
percentage fee award is consistent with awards in other cases. (Laffitte, supra, 1 Cal.5th
at pp. 485-486 [approving a one-third attorney fee award]; Chavez v. Netflix, Inc., supra,
162 Cal.App.4th at p. 66, fn. 11 [noting that fee awards average around one-third of the
recovery]; In re Activision Sec. Litigation (N.D.Cal. 1989) 723 F.Supp. 1373, 1378 [the
benchmark is at approximately 30 percent].) We therefore conclude the trial court did
not abuse its discretion in approving the fee award.

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                                      DISPOSITION
       The order and judgment approving the Settlement, and the postjudgment order
denying the motion to vacate, are affirmed. The respondents shall recover their costs on
appeal. (Cal. Rules of Court, rule 8.278(a) (1) & (2).)

                                                      \s\                  ,
                                                 Krause, J.

We concur:

     \s\                    ,
Duarte, Acting P. J.

     \s\                    ,
Boulware Eurie, J.

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