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Olivo v. Fresh Harvest, Inc.

United States District Court, S.D. California

November 25, 2019

FRESH HARVEST, INC. et al., Defendants.


          Hon. M. James Lorenz, United States District Judge.

         Pending before the Court in this action for violation of California and federal labor laws is Joint Motion for Approval of Amended Settlement Agreement pursuant to California Labor Code § 2699(1)(2). (Doc. no. 75 ("Motion"); doc. no. 76 ("Amended Agreement").) For the reasons which follow, the Motion is granted.

         I. BACKGROUND

         Plaintiff Lourdes Olivo was a seasonal hourly farmworker employed by Defendants to work in the lettuce fields in the Imperial Valley and in the vicinity of Yuma, Arizona. (Doc. no. 21-1; see also doc. no. 22.) During the harvesting season, she was given work on a daily basis. Along with her co-workers, she was required to report at a fixed location in or around Calexico to take a crew bus to the work site for the day. Plaintiff claims the crew bus was operated by Defendants, and that the workers were not paid for the travel time, or for the time they spent waiting with the bus en route for the forepersons to complete necessary banking or other errands on behalf of Defendants, waiting for the frost or dew to dissipate in the morning, waiting for the forepersons to complete their duties on site before the work could begin and at the end of the day, and waiting for the bus for the return trip.

         In addition to the wages and hours claims, Plaintiff alleges wrongful termination. She claims she was interviewed for an internal company investigation and truthfully responded that the forewoman did not allow the crew to take mandatory scheduled breaks. Shortly thereafter, the forewoman was removed and replaced by her husband, who demoted Plaintiff from the position of foreperson's assistant, which she had held for the previous fifteen years. Plaintiff was not re-hired the following season. She claims she was demoted and not re-hired because of her cooperation in the internal investigation. Plaintiff also maintains that she and other workers were unlawfully replaced by temporary foreign workers.

         Plaintiff alleges failure to pay minimum wages, failure to pay overtime wages, failure to pay contractual wages due, failure to furnish accurate wage statements, failure to timely pay all wages due upon termination, and adverse employment action in violation of California public policy. She also alleges that Defendants violated California's Unfair Competition Law, Cal. Bus. & Prof. Code §§17200 et seq., and the Agricultural Worker Protection Act ("AWPA"), 29 U.S.C. §§1831-1854. She brings this action individually as well as pursuant to the Labor Code California Private Attorney General Act ("PAGA"), Cal. Lab. Code §§ 2698 et seq., on behalf of Other Aggrieved Employees, defined as

approximately 582 individuals who performed work as romaine lettuce harvesters or packers for Defendant Fresh Harvest between February 14, 2016 and the end of the 2017-18 lettuce harvest season and were transported on buses or vans owned or operated by Defendant Fresh Harvest, from Calexico to various locations in the Imperial Valley and Yuma, Arizona vicinity.

(Doc. no. 76 at 8.)[1] Plaintiff seeks damages, penalties, restitution, and other relief. The Court has subject matter jurisdiction pursuant to 28 U.S.C. §1331 over the AWPA claim, and supplemental jurisdiction pursuant to 28 U.S.C. §1367 over the related state law claims.

         Defendants dispute Plaintiff's claims on multiple bases, including merits and statute of limitations. The strengths and weaknesses of Plaintiff's claims and Defendants' defenses are discussed in the Motion, and the discussion is incorporated herein by reference. (Doc. no. 75-1 at 9-14, 22-24; doc. no. 75-2 at 6-13.) After conducting extensive discovery and investigation, the parties settled with the assistance of Magistrate Judge Gallo. (Doc. no. 75-1 at 14-16.)

         The parties filed a joint motion for approval of settlement. The Court initially required supplemental briefing (doc. no. 72) because of inconsistencies between the settlement agreement and distribution plan, and between the notice of settlement and the claim form. Although Plaintiff timely filed a supplemental brief and counsel's declaration (doc. no. 73), material discrepancies remained. Accordingly, the initial motion for settlement approval was denied without prejudice. (Doc. no. 74.) The parties subsequently amended the settlement agreement and filed the pending motion. (Docs no. 75, 76.)


         A. Monetary Terms

         Defendants are to pay $1 million into a non-reversionary settlement fund to be distributed according to a plan of distribution (doc. no. 76 at 16-20) as follows:

1. Payment to Simpluris, Inc. of $11, 000 for claim administration. If actual claim administration expenses exceed $11, 000, the claim administrator may receive up to $15, 000 based on an itemized accounting.
2. Payment to Plaintiff within ten business days of settlement approval in the sum of $45, 000 for her underpaid wages, damages, penalties, and interest.
3. Payment to the California Labor and Workforce Development Agency ("LWDA") within ten business days of settlement approval of $41, 250 for the LWDA's share of PAGA civil penalties, representing 75% of total PAGA civil penalties awarded under the settlement. See Cal. Lab. Code §2699(i) (allocating 75% of the penalties to the LWDA and 25% to the aggrieved employees).
4. Allocation of no less than $698, 750 for pro rata payments to Other Aggrieved Employees who submit claims, of which $13, 750 consists of the employees' total portion of PAGA civil penalties, and the remainder consists of their underpaid wages, liquidated damages, and waiting time penalties. The amount due each employee is calculated according to a formula in the distribution plan and pro rated based on the number of weeks the employee worked for Defendants. Payments to Other Aggrieved Employees are to be made in two installments: (1) $500 per employee within 30 days of verifying the employee's claim; and (2) the remaining portion at the end of the claims period.
5. Subject to Court approval, Plaintiff's attorneys are to receive up to $200, 000 for fees and costs within ten business days of settlement approval. If the Court approves a higher sum, up to a total of $330, 000, any excess over $200, 000 is to be paid to the extent settlement funds remain available after payment to Other Aggrieved Employees.
6. Any remaining funds are to be deposited with the LWDA as additional civil penalties.

         B. Releases

         The proposed settlement includes two release provisions, the Mutual Release in the body of the Amended Agreement, and the Release of Claims form for signature by each Other Aggrieved Employee who submits a claim. The Mutual Release applies only to the "Parties" (doc. no. 76 at 11-12), defined as "Plaintiff and Defendants collectively" (id. at 6). Nevertheless, Other Aggrieved Employees are "bound by the judgment in an action under the PAGA, but only with respect to recovery of civil penalties." ZB, N.A. v. Super. Ct. (Lawson), 8 Cal.5th 175, 196 (2019). They "retain all rights 'to pursue or recover other remedies available under state or federal law, either separately or concurrently with' [the PAGA action.]" Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1123 (9th Cir. 2014) (quoting Cal. Lab. Code § 2699(g)(1)).

This is because the PAGA authorizes a representative action only for the purpose of seeking civil penalties for Labor Code violations, and an action to recover civil penalties is fundamentally a law enforcement action, not one for the benefit of private parties.

ZB, 8 Cal.5th at 196-97 (internal quotation marks, brackets and citation omitted); see also Sakkab v. Luxittica Retail N. Am., Inc., 803 F.3d 425, 435 (9th Cir. 2015) ("PAGA does not give absent employees any substantive right to bring their 'own' PAGA claims").

         With regard to "rights to pursue other . . . remedies," Baumann, 747 F.3d at 1123, a Release of Claims must be signed by each Other Aggrieved Employee who submits a claim. (Doc. no. 76 at 24.) Accordingly, Other Aggrieved Employees who do not sign a Release of Claims remain free to pursue other remedies against Defendants.[2]

         C. Notice

         Plaintiff has complied with the PAGA's notice requirement, Cal. Lab. Code § 2699(1)(2), by submitting the proposed settlement to the LWDA. (See doc. no. 75-2 at 20, 139.) The LWDA has not responded.

         With regard to Other Aggrieved Employees, the proposed settlement requires Defendants to provide the claim administrator with their names, addresses and payroll records. After verifying the contact information for Defendants' former employees, the claim administrator will send a notice packet by first class mail. The notice packet is to contain English and Spanish versions of the notice of settlement, claim form, an estimate of each employee's settlement payment, and a Release of Claims form. A skip trace or other search is to be performed for every returned notice packet, and the packet re-sent by first class mail to any updated addresses found.

         The notice describes the nature of this action and includes an estimate of each employee's payment. (Doc. no. 76 at 22-23.) The estimate provides the maximum settlement amount for each employee for underpaid wages and liquidated damages, including the number of work weeks on which the estimate is based, and indicates that each employee would receive "an amount for waiting time penalties." (Id. at 23.) It also indicates that the actual amount received "will depend on how many claims are filed." (Id. at 22.) It further states that the distribution will be made in two payments, and that actual distribution may be less than estimated, but an initial payment of $500 to ...

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