Tentative Ruling: Laura Brewer et al vs El Encanto Inc

Case Number

22CV00660

Case Type

Hearing Date / Time

Mon, 05/04/2026 - 10:00

Nature of Proceedings

CMC; Motion: Approval re PAGA Settlement

Tentative Ruling

Laura Brewer, et al. v. El Encanto, Inc.                               

Case No. 22CV00660

           

Hearing Date:      May 4, 2026                                                            

HEARING:              Motion of Plaintiffs Laura Brewer and Travis Pons for Approval of PAGA Settlement

ATTORNEYS:        For Plaintiffs Laura Brewer and Travis Pons: James R. Hawkins, Anthony Draper

                                    For Defendant El Encanto, Inc.: Emilie C. Woodhead, Samuel R. Freeman

TENTATIVE RULING: The motion of plaintiffs Laura Brewer and Travis Pons for approval of PAGA settlement is continued to June 15, 2026. On or before June 1, 2026, plaintiffs shall submit additional supporting information or documents as required in this ruling.

Background:

On February 17, 2022, plaintiffs Laura Brewer and Travis Pons initiated this action by filing a class action complaint against defendant El Encanto, Inc., setting forth eight causes of action for: (1) failure to pay lawful wages; (2) failure to provide lawful meal periods or compensation; (3) failure to provide lawful rest breaks; (4) failure to reimburse employee expenses; (5) failure to timely pay wages during employment; (6) failure to pay wages at termination; (7) knowing and intentional failure to comply with itemized employee wage statements; and (8) violation of unfair competition law.

On April 21, 2022, plaintiffs filed the operative first amended complaint (FAC) which added a ninth cause of action under the Private Attorneys General Act of 2004, Labor Code sections 2698 through 2699.8 (PAGA).

On May 23, 2022, defendant filed an answer to the FAC generally denying the allegations therein and setting forth 40 affirmative defenses.

On June 8, 2022, pursuant to the parties’ stipulation, the court stayed this action pending the ruling in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 [142 S.Ct. 1906, 213 L.Ed.2d 179].

On February 21, 2023, the court continued a status conference via a stipulated order and the parties reported they were evaluating potential settlement options.

On February 26, 2024, pursuant to the parties’ stipulation, the court continued a status conference based on the recitals that the parties participated in a mediation on January 10, 2024, the parties reached an agreement to settle the direct Labor Code claims and PAGA claims, the plaintiffs would dismiss their class claims, and the parties’ settlement would resolve the entire action. Pursuant to that order, plaintiffs were to dismiss their class claims.

On December 27, 2024, plaintiffs filed an initial motion (Initial Motion) for approval of PAGA settlement. This motion pertained to a long-form settlement agreement (Settlement Agreement) fully executed by the parties on December 18, 2024.

On March 24, 2025, the court denied plaintiffs’ Initial Motion without prejudice. (Minute Order, March 24, 2025.) The court noted that the proposed PAGA attorney fees were not properly supported. (Ibid.) In addition, the court raised questions about the notice to the Labor & Workforce Development Agency (LWDA) pertaining to the FAC. (Ibid.) The court also noted that “it would be improper to approve settlement of the PAGA portion of the claim while the Class Action still exists ….” (Ibid.) The court also noted that the evidence was insufficient to evaluate whether the settlement was fair. (Ibid.)

On October 28, 2025, the court dismissed the class claims in this action without prejudice pursuant to rule 3.770 of the Rules of Court. “[P]ursuant to California Rules of Court 3.770, and good cause appearing therefore, the class action claims in the above-entitled action are dismissed without prejudice. Plaintiffs’ individual claims and the representative cause of action under Labor Code § 2699 et. seq. the Private Attorneys General Act remain.” (Order Granting Plaintiffs’ Unopposed Motion to Dismiss Class Claims Without Prejudice, p. 2, ll. 2-6.)

On December 23, 2025, plaintiffs filed a second motion for approval of the Settlement Agreement. The Settlement Agreement at issue in this motion is the same agreement at issue in the Initial Motion. The Settlement Agreement only resolves the PAGA claims. Plaintiffs’ motion requests that the court grant approval of the Settlement Agreement, enter judgement on the Settlement Agreement, appoint Xpand Legal as the settlement administrator and approve its administration fees in the amount of $5,000, approve the award of attorney fees in the amount of $98,000 and litigation costs in the amount of $15,320.32, direct disbursement of the remaining net settlement amount as provided in the Settlement Agreement, and dismiss the action with prejudice. (Motion, p. 24, ll. 1-9.) This motion is unopposed.

On April 16, 2026, plaintiffs filed a supplemental declaration in support their motion for approval. This declaration attached a proposed amendment to the Settlement Agreement reflecting that defendant El Encanto, Inc. (El Encanto), had been merged into another entity, Belmond USA, Inc. (Belmond). Belmond succeeded El Encanto and assumed all its obligations under the Settlement Agreement. (Supp. Draper Decl., Ex. 1.) Belmond was also added as a released party as to the PAGA claims resolved by the Settlement Agreement. (Ibid.)

On April 20, 2026, the court continued plaintiffs’ approval motion to this hearing by minute order.

Analysis:

(1)       Standards for PAGA

A PAGA action is a type of qui tam action, in which a private party is authorized to bring an action to recover a penalty on behalf of the government and receive part of the recovery as compensation. (Huff v. Securitas Sec. Servs. USA, Inc. (2018) 23 Cal.App.5th 745, 753.) “In bringing such an action, the aggrieved employee acts as the proxy or agent of state labor law enforcement agencies, representing the same legal right and interest as those agencies, in a proceeding that is designed to protect the public, not to benefit private parties.” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.) The dispute is between the employer and the state. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 81.) “Of the civil penalties recovered, 75 percent goes to the [LWDA], leaving the remaining 25 percent for the ‘aggrieved employees.’ ” (Ibid.) Although this allocation has been changed by amendment, the 75/25 split still applies to this action since the PAGA notice was submitted on February 14, 2022. (Draper Decl., ¶ 3, Ex. 1; see Lab. Code, § 2699, subd. (v).)

“The superior court shall review and approve any settlement of any civil action filed pursuant to this part. The proposed settlement shall be submitted to the [LWDA] at the same time that it is submitted to the court.” (Lab. Code, § 2699, subd. (s)(2).) “A copy of the superior court’s judgment in any civil action filed pursuant to this part and any other order in that action that either provides for or denies an award of civil penalties under this code shall be submitted to the agency within 10 days after entry of the judgment or order.” (Id., subd. (s)(3).)

“Because many of the factors used to evaluate class action settlements bear on a settlement’s fairness—including the strength of the plaintiff’s case, the risk, the stage of the proceeding, the complexity and likely duration of further litigation, and the settlement amount—these factors can be useful in evaluating the fairness of a PAGA settlement. [¶] Given PAGA’s purpose to protect the public interest, we also agree with the LWDA and federal district courts that have found it appropriate to review a PAGA settlement to ascertain whether a settlement is fair in view of PAGA’s purposes and policies. [Citations.] We therefore hold that a trial court should evaluate a PAGA settlement to determine whether it is fair, reasonable, and adequate in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.” (Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 77 (Moniz), disapproved on other grounds in Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664, 710.)

“Taken together, PAGA’s statutory scheme and the principles of preclusion allow, or ‘authorize,’ a PAGA plaintiff to bind the state to a judgment through litigation that could extinguish PAGA claims that were not specifically listed in the PAGA notice where those claims involve the same primary right litigated. Because a PAGA plaintiff is authorized to settle a PAGA representative action with court approval [citation], it logically follows that he or she is authorized to bind the state to a settlement releasing claims commensurate with those that would be barred by res judicata in a subsequent suit had the settling suit been litigated to judgment by the state.” (Moniz, supra, 72 Cal.App.5th at p. 83.)

“Releases must be appropriately tethered to the complaint’s factual allegations.… Requiring a reasonable connection prevents the release from extending to claims that are only remotely related to the allegations in the complaint.” (Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 538 (Amaro) [discussing scope of releases in context of a class action].)

(2)       The Settlement Agreement

The Settlement Agreement is between plaintiffs and defendant El Encanto, Inc. (Draper Decl., Ex. 2 at p. 1.) The gross settlement amount is $280,000. (Id. at ¶¶ 3.2-3.2.3.) The gross settlement amount will be funded by defendant within 15 calendar days of the effective date. (Id. at ¶¶ 1.10, 4.2.) The net settlement amount is the gross settlement amount after deductions for attorney fees, litigation costs, administration costs, and PAGA payments to the LWDA, as approved by the court. (Id. at ¶ 1.17.) If the court approves an amount less than the fees, costs and PAGA payments requested by the plaintiffs, the remainder is re-allocated to the net settlement amount. (Id. at ¶¶ 3.2.1, 3.2.2, 3.2.3.2.)

The net settlement amount is to be paid to aggrieved employees as individual PAGA payments. (Draper Decl., Ex. 2 at ¶ 1.17.) The individual PAGA payments will be distributed to the aggrieved employees based on their pro rata share of pay periods during the PAGA period. (Id. at ¶¶ 1.13, 3.2.3.1.) The settlement administrator will distribute the required payments under the Settlement Agreement within 7 days after defendant funds the Settlement Agreement. (Id. at ¶ 4.3.)

The aggrieved employees covered by the Settlement Agreement are all non-exempt employees who worked for defendant in California from February 15, 2021, through the date of approval. (Draper Decl., Ex. 2 at ¶¶ 1.6, 1.24.) Defendant estimates that there are approximately 12,600 pay periods worked by aggrieved employees as of January 10, 2024. (Id. at ¶ 8.1.) If the actual number of pay periods during the PAGA period exceed 12,600 by a factor of 10 percent or more, i.e., exceed 13,860, defendant at its option can either (a) cut off the end date for the PAGA period as of the date the pay periods reached 13,860, or (b) increase the gross settlement amount pursuant to a specified formula. (Ibid.) However, if the total pay periods during the PAGA period exceeds 12,600 by a factor of 25 percent or more, defendant may at its option elect to terminate the Settlement Agreement. (Ibid.)

Upon funding of the gross settlement amount, the aggrieved employees release “any and all claims, known or unknown, for civil [PAGA] penalties … asserted in any complaint filed in the Action and/or Plaintiffs’ letter(s) to the LWDA (including any subsequently amended complaints or letters); and/or that could have been asserted in any complaint filed in the Action and/or any of Plaintiffs’ letter(s) to the LWDA … based on or related to the facts and/or allegations in any complaint filed in the Action and/or Plaintiffs’ letter(s) to the LWDA …. The release shall run through the date the Superior Court of the State of California, County of Santa Barbara, grants approval of the Settlement.” (Draper Decl., Ex. 2 at ¶ 5.1.)

The released parties include “El Encanto, Inc. and all of its former, present or future parents, subsidiaries, affiliates/affiliated companies, related companies/corporations, partnerships, divisions, assigns, and/or predecessors; and each of the foregoing’s present, former, or future owners, officers, directors, shareholders, partners, employees, insurers, successors, predecessors, contractors, assigns, and managing agents; any and all agents, legal representatives, and/or attorneys of all of the foregoing entities or individuals; and any potential or alleged joint employers, dual employers, common law employers, and/or co-employers.” (Draper Decl., Ex. 2 at ¶ 1.27.)

(3)       The Updated Corporate Status of Defendant

On April 16, 2026, plaintiffs submitted a supplemental declaration indicating that the Settlement Agreement was modified, subject to court approval, to reflect that, “[a]s of March 31, 2026, [defendant] El Encanto, Inc. shall be merged into Belmond USA, Inc., with Belmond USA, Inc. as the surviving entity, such that El Encanto, Inc. will cease to exist as a separate legal entity.” (Supp. Draper Decl., Ex. 1 at ¶ B.) “Effective as of March 31, 2026, Belmond USA, Inc. shall succeed to and assume all rights, duties, liabilities, and obligations of El Encanto, Inc. under the Agreement. Belmond shall step into the shoes of El Encanto for all purposes under the Agreement.” (Id., at ¶ 1.) Belmond and related persons and entities are also added as released parties. (Id., at ¶ 2.) The court is inclined to approve this addendum provided that the proposed final order and judgment incorporates these new provisions.

(4)       The Gross Settlement Amount

Considering all the circumstances and the maximum estimated PAGA liability of approximately $1,300,000, the court finds that the gross settlement amount and PAGA penalties appear fair, reasonable, and adequate in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws. (See Draper Decl., ¶¶ 16-20; Moniz, supra, 72 Cal.App.5th at p. 77.) The court has considered the gross settlement amount, the estimated net settlement amount, estimated PAGA penalties, the potential liability of the claims at issue, the risks and costs associated with further litigation, the potential benefits to the LWDA and aggrieved employees, and the public policy favoring settlement. (See Motion, p. 4, l. 24 – p. 17, l. 3.)

The court has also considered that the Settlement Agreement appears to have been reached through arm’s length bargaining and is based on a sufficient investigation with the assistance of experienced counsel. (See Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801-1802; see Draper Decl., ¶¶ 5-21.) The involvement of a mediator strongly weighs in favor of finding that the Settlement Agreement represents a non-collusive and arm’s-length agreement. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128-129.) “The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s length transaction entered without self-dealing or other potential misconduct.” (Id. at p. 129.)

(5)       The Scope of the Release

The court does have concerns about the scope of the release in comparison to the PAGA period. The PAGA period runs from February 15, 2021, through the date of approval, unless the defendant chooses to cut off the PAGA period at a sooner date under circumstances permitted under the Settlement Agreement. (Compare Draper Decl., Ex. 2 at ¶ 1.24 [“ ‘PAGA Period’ means the period from February 15, 2021 through the date the Court grants approval of this Settlement.”] with ¶ 8.1 [“Should the qualifying pay periods worked by the Aggrieved Employees during the PAGA Period ultimately increase by more than 10% … Defendant, at its option, can either choose to: (1) cut off the end date for the PAGA Period as of the date on which the number of pay periods reaches 13,860 or (2) increase the Gross Settlement Amount on a proportional basis equal to the percentage increase in the number of pay periods worked by the Aggrieved Employees above the 10% ….”].) However, the release appears to run through the date of approval regardless of whether the defendant chooses to cut off the PAGA period at an earlier date. (Id. at ¶ 5.1 [“The release shall run through the date the Superior Court of the State of California, County of Santa Barbara, grants approval of the Settlement.”].)

Defendant estimates that there are approximately 12,600 pay periods worked by aggrieved employees as of January 10, 2024. (Draper Decl., Ex. 2 at ¶ 8.1.) Now, over two years after this estimate, there is a possibility that the actual pay periods will exceed the original estimate by more than 10 percent. If so, this gives defendant the option to cut off the PAGA period at a date in advance of the approval date (rather than increasing the gross settlement amount). (Id. at  ¶ 5.1, 8.1.) Yet, defendant would seemingly still obtain a release through the approval date. (Ibid.) It seems the defendant would be incentivized to make this choice under the terms of the Settlement Agreement, rather than pay more money for the same release. (See ibid.) This may not have been the parties’ intent, but the court must evaluate the Settlement Agreement as it is written. (Amaro, supra, 69 Cal.App.5th at p. 539.)

This could result in the release of claims for work periods that are outside the PAGA period. This could result in the release of employee’s claims who do not receive individual settlement payments. This is improper. The court declines to approve a potential release of claims for work periods that are not compensated by the Settlement Agreement. The release under paragraph 5.1 should release only those claims that are within the PAGA period, even if the PAGA period is modified at the defendant’s option under paragraph 8.1. As drafted, the release is not sufficiently tethered to the PAGA period and the court finds this release as drafted is not fair and reasonable in the abstract. (See Moniz, supra, 72 Cal.App.5th at p. 83; Amaro, supra, 69 Cal.App.5th at p. 538.)

The court might reevaluate this issue if the plaintiffs were to provide competent evidence from defendant (not an estimate) that the pay periods from February 15, 2021, through the date of approval in fact do not exceed 13,860, or an addendum to the Settlement Agreement that defendant has in fact elected not to shorten the PAGA period under paragraph 8.1 of the Settlement Agreement. This would render this issue moot. There may be other ways to address this issue that are fair and reasonable. (See Amaro, supra, 69 Cal.App.5th at pp. 538-539.) The court will require that the release clearly lines up with the PAGA period and only releases claims that are resolved by the exchange of consideration under the Settlement Agreement.

(6)       The Calculation of Attorney Fees

As discussed, there is an agreed upon $280,000, non-reversionary gross settlement amount. (Draper Decl., Ex. 2 at ¶ 3.1.) The Settlement Agreement provides that counsel will receive no more than 35 percent of the gross settlement as attorney fees, or $98,000. (Draper Decl., Ex. 2 at ¶ 3.2.1.) However, “[i]f the Court approves … less than the amounts requested, the Administrator will allocate the remainder to the Net Settlement Amount.” (Ibid.) Counsel for plaintiffs seek to recover attorney fees in the amount of $98,000 by applying 35 percent to the gross settlement amount with a lodestar check.

The court is not inclined to calculate attorney fees by applying a percentage to the gross settlement amount. The court is aware that this approach has been approved in the class action context with a lodestar cross-check. (See Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 503-506.) However, the court is not aware of any binding appellate case law that expressly permits this approach in the context of a PAGA-only settlement. Plaintiffs do not cite the court to any such authority. As to the trial court rulings cited by plaintiffs, “a written trial court ruling has no precedential value.” (Schachter v. Citigroup, Inc. (2005) 126 Cal.App.4th 726, 738; see also Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 761 [same]; In re Molz (2005) 127 Cal.App.4th 836, 845 [“[T]rial decisions, of course, have no precedential authority.”].)

Under PAGA, “[a]ny employee who prevails in any action shall be entitled to an award of reasonable attorney’s fees and costs.” (Lab. Code, § 2699, subd. (k)(1).) Absent statutory authority or case law expressly permitting a percentage of the common fund to calculate attorney fees in a PAGA-only settlement, the court in its discretion is inclined to utilize the traditional lodestar method. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)

The court will require additional evidence on the issue of attorney fees, including evidence of the tasks performed and the time spent by the attorneys. Contemporary time records are preferred, but counsel may also submit time summaries as to each attorney with as much detail as possible as to time spent on specific tasks. The time entries should relate to counsel’s efforts in this PAGA action as to the PAGA claims that are resolved by the Settlement Agreement. The court will require an adequate factual record to support the requested attorney fee award.

(7)       Costs

The court is inclined to approve as reasonable counsel’s litigation costs of $15,320.32. (Draper Decl., ¶ 29, Ex. 4.) The court is also inclined to approve the settlement administration costs of $5,000, provided that plaintiffs submit evidence of the agreement and qualifications of Xpand Legal Consulting, LLC, to administer this settlement. (See Draper Decl., Ex. 2 at ¶ 1.2; Motion, p. 2, ll. 7-9.)

(8)       Notice

The court notes that plaintiffs submitted a proposed notice to aggrieved employees in connection with the Initial Motion filed on December 27, 2024. (Initial Draper Decl., Ex. 4.) The proposed notice and distribution methods appear reasonable and adequate for purposes of a PAGA-only settlement. (Ibid.) Plaintiffs submit evidence that the PAGA notice of this lawsuit containing the facts and theories asserted in the FAC was provided to the LWDA on February 14, 2022. (Id., ¶ 30, Ex. 5.) The FAC added the PAGA claims on April 21, 2022. (FAC.) Notice of the Settlement Agreement appears to have been provided to the LWDA. (Draper Decl., ¶ 11.)

(9)       Conclusion

The court will continue this matter until June 15, 2026. Provided plaintiffs sufficiently address the court’s concerns set forth in this ruling including the scope of the release in relation to the PAGA period, evidence of the requested attorney fees sufficient to apply a lodestar analysis, evidence that the settlement administrator has agreed to administer this settlement and is qualified to do so, and an updated proposed judgment and final order, the court will fully consider the Settlement Agreement for approval at the June 15 hearing.