Tentative Ruling: Erik Franco vs SBR9 LP
Case Number
24CV04218
Case Type
Hearing Date / Time
Mon, 05/18/2026 - 10:00
Nature of Proceedings
CMC; Motion: Approval Preliminary Approval of Class Action Settlement
Tentative Ruling
Franco v. SBR9, L.P., DBA Rare Society
Case No. 24CV04218
Hearing Date: May 18, 2026
HEARING: Motion for Preliminary Approval of Class Action Settlement and PAGA Settlement
ATTORNEYS: For Plaintiff Erik Franco: Nazo Koulloukian, Hilary Silvia, Koul Law Firm
For Defendant SBR9, L.P., DBA Rare Society: Debra Meppen, Sonia J. Taylor, Jordan Meppen, Gordon Rees Scully Mansukhani
TENTATIVE RULING:
The motion of plaintiff Erik Franco for preliminary approval of class action and PAGA settlement is granted. The court approves certification of the provisional settlement class as requested by plaintiff and approves the proposed notice attached as exhibit A to the settlement agreement. The provisional settlement class consists of “all current or former hourly, non-exempt employees who were employed by Defendant in California during the Class Period.” Plaintiff Erik Franco is appointed as representative for the settlement class, plaintiff’s counsel of record is appointed as counsel for the settlement class, and ILYM Group, Inc., is appointed as settlement administrator. The final approval hearing shall take place on November 16, 2026, at 10:00 a.m. in this department. The parties shall promptly carry out the notice procedures set forth on pages 10 through 15 of the settlement agreement.
Background:
On July 29, 2025, plaintiff Erik Franco initiated this action by filing a complaint against defendant SBR9, L.P., DBA Rare Society, setting forth nine causes of action for (1) failure to pay all hours worked, (2) failure to pay all wages owed twice per month, (3) failure to pay minimum wage, (4) failure to provide rest breaks, (6) failure to reimburse required business expenses, (7) failure to pay wages due upon termination, (8) failure to provide accurate wage statements and violation of record keeping requirements, and (9) unlawful business practices.
The complaint alleges that plaintiff worked as a restaurant server for defendant in Santa Barbara. (Compl., ¶ 2.) Plaintiff and class members were required to report to work up to 30 minutes before their shift start times to assist in setting up the restaurant. (Compl., ¶ 16.) This work was performed off-the-clock. (Ibid.) Plaintiff and class members were permitted to clock in at their shift start time, after already working for up to 30 minutes unpaid. (Ibid.) Plaintiff and class members were interrupted during unpaid meal periods because defendant did not provide employees with a breakroom. (Ibid.) From time-to-time, defendant failed to pay all wages owed twice per month, failed to pay the minimum wage, failed to maintain a policy that provides its employees with timely breaks, failed to reimburse for business expenses, failed to pay wages due upon termination, and failed to provide timely, accurate, and itemized wage statements to employees. (Compl., ¶¶ 17-23.)
On October 4, 2025, plaintiff filed a first amended complaint (FAC) adding a tenth cause of action for violation of the Private Attorneys General Act of 2004 (PAGA).
On November 5, 2025, the parties filed a joint status report indicating that the parties attended mediation, reached a settlement, and were finalizing a long-form settlement agreement.
On January 27, 2026, plaintiff filed this motion for preliminary approval of class action settlement and PAGA settlement. This motion is unopposed.
Analysis:
(1) Procedures for Preliminary Approval of Class Action Settlement
“Rule 3.769 of the California Rules of Court (CRC) sets forth the procedures for settlement of class actions in California. [Citation.] A two-step process is required. First, the court preliminarily approves the settlement and the class members are notified as directed by the court. [Citation.] ‘The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.’ [Citation.] Second, the court conducts a final approval hearing to inquire into the fairness of the proposed settlement. [Citation.] If the court approves the settlement, a judgment is entered with provision for continued jurisdiction for the enforcement of the judgment. [Citation.]” (Cellphone Termination Fee Cases (2009) 180 Cal.App.4th 1110, 1118.)
“Any party to a settlement agreement may serve and file a written notice of motion for preliminary approval of the settlement. The settlement agreement and proposed notice to class members must be filed with the motion, and the proposed order must be lodged with the motion.” (Cal. Rules of Court, rule 3.769, subd. (c).) “The court may make an order approving or denying certification of a provisional settlement class after the preliminary settlement hearing.” (Id., subd. (d).) “If the court grants preliminary approval, its order must include the time, date, and place of the final approval hearing; the notice to be given to the class; and any other matters deemed necessary for the proper conduct of a settlement hearing.” (Id., subd. (e).) A full inquiry into the fairness of the proposed settlement occurs at the final approval hearing. (Id., subd. (g).)
(2) The Agreement
Plaintiff submitted for preliminary approval an agreement entitled, “Class Action and PAGA Settlement Agreement and Class Notice” (Agreement). (Koulloukian Decl., Ex. 1.) The Agreement is between plaintiff and defendant. (Ibid.) The settlement class includes all current or former hourly, non-exempt employees employed by defendant in California during the class period. (Id., at ¶¶ 1.4, 1.11, 8.) The class period is from July 29, 2020, to the date the court grants preliminary approval, subject to defendant’s option under the escalator clause set forth in paragraph eight of the Agreement. (Ibid.) The settlement class is estimated to include approximately 121 individuals who collectively worked approximately 5,700 workweeks during the class period. (Koulloukian Decl., Ex. 1 at ¶ 8.)
The gross settlement amount is $88,350 (GSA). (Id., Ex. 1 at ¶¶ 1.11, 8.) From the GSA, plaintiff will receive an incentive award of up to $5000, plaintiff’s attorneys will receive attorney fees of up to than one-third of the GSA (estimated to be $29,447) and up to $10,000 for reimbursement of litigation costs, the settlement administrator will receive up to $6,950 in settlement administration costs, and PAGA penalties will be paid up to $8,000. (Id. at ¶¶ 3.2 – 3.2.5.2.) After deducting these payments from the GSA, the remining amount is the net settlement amount (NSA) which is paid to settlement class members as individual class payments on a pro rata basis. (Id. at ¶¶ 1.21, 1.22, 1.26, 3.2.4.) If the court approves less than the requested incentive award, attorney fees, litigation costs, settlement administration costs, or PAGA penalties, the remainder of these items is re-allocated to the NSA thereby increasing the payments to settlement class members. (Id. at ¶¶ 3.2 – 3.2.5.2.) There is no reversion to defendant. (Ibid.)
In exchange for these payments, “[a]ll Participating Class Members, on behalf of themselves and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, release Released Parties from all claims that were alleged, or reasonably could have been alleged, based on the facts stated in the Operative Complaint … and any other claims arising, or which could have arisen, from the Operative Complaint ….” (Koulloukian Decl., Ex.1 at ¶ 5.2.) The release is “appropriately tethered to the complaint’s factual allegations….” (Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 538.)
“The trial court has broad discretion to determine whether the settlement is fair. [Citation.] It 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. [Citation.] The list of factors is not exhaustive and should be tailored to each case. Due regard should be given to what is otherwise a private consensual agreement between the parties. The inquiry ‘must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.’ ” (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801 (Dunk).) “[A] a presumption of fairness exists where: (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.” (Id. at p. 1802.)
It appears counsel for plaintiff performed an adequate factual and legal investigation. (Koulloukian Decl., Ex. 1 at ¶¶ 6, 7, 11.) The parties appear to have engaged in arm’s length settlement negotiations before an experienced mediator. (Ibid.) The GSA appears reasonable in light of the potential liability and likelihood of success on the merits. (Id. at ¶¶ 14-19.) Plaintiff’s counsel appears qualified with experience in this area of law. (Id., ¶¶ 20-30.) The proposed class administrator, ILYM Group, Inc., also appears qualified and the settlement administration costs appear within the range for approval. (Mullins Decl., ¶¶ 2-9.) The requested attorney fees are within the range of approval, typically between 25 percent and 33 percent of the gross settlement. (See Consumer Privacy Cases (2009) 175 Cal.App.4th 545, 557, fn. 13.) Incentive awards to a class action plaintiff are permitted based on a number of factors. (See Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804; Golba v. Dick’s Sporting Goods, Inc. (2015) 238 Cal.App.4th 1251, 1272.) The court will evaluate these proposed fees and other aspects of the proposed settlement in more detail at the final approval hearing.
Having evaluated the motion, the memoranda, and the declarations, the court finds the Agreement is within the range for possible approval. The Agreement does not appear to be the product of fraud or overreaching by, or collusion between, the negotiating parties. The settlement appears reasonable given the legal and factual hurdles for each set of claims, the benefits of early settlement, and the reality that a disputed certification motion might not be fully successful. (Koulloukian Decl., Ex. 1 at ¶¶ 6, 7, 11-19.) Plaintiff has met his burden to establish that, for purposes of preliminary approval, the proposed settlement is fair, reasonable, adequate and in the best interests of the putative class. (See Dunk, supra, 48 Cal.App.4th at p. 1801.)
(3) Provisional Settlement Class
“The court may make an order approving or denying certification of a provisional settlement class after the preliminary settlement hearing.” (Cal. Rules of Court, rule 3.769, subd. (d).) Code of Civil Procedure section 382 authorizes class actions “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all.” (Code Civ. Proc., § 382.) “Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. [Citation.]” (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.)
To determine whether a class is ascertainable, the court examines “(1) the class definition, (2) the size of the class, and (3) the means available for identifying class members. [Citation.]” (Reyes v. San Diego County Bd. of Supervisors (1987) 196 Cal.App.3d 1263, 1271.) “A related inquiry is manageability of the proposed class[.]” (Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 849.) “The community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.” (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) “The burden is on the party seeking certification to establish the existence of both an ascertainable class and a well-defined community of interest among the class members.” (Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 913.)
For purposes of the proposed settlement class, plaintiff’s claims appear typical of those of the putative class and he appears to be an adequate representative. (Franco Decl., ¶¶ 3-16.) Plaintiff’s claims appear to arise from the same course of conduct that give rise to the claims of other putative class members. (FAC, ¶¶ 15-90.) Plaintiff’s counsel appears adequate based on their experience and qualifications. (Koulloukian Decl., Ex. 1 at ¶¶ 20-30.) For purposes of settlement, there appears to be a well-defined community of interests community and a class action appears to be the superior method to resolve the issues presented in this action. The settlement class members can be identified from defendant’s records. The parties have identified approximately 121 putative class members ostensibly subjected to the same policies and practices, based on the same legal standards. (Id., ¶ 15.) The circumstances of this action are typical of wage and hour cases that are settled via the class action process. Plaintiff has met his burden to establish the requirements for certification of a settlement class as defined in the Agreement.
(4) Preliminary Evaluation of PAGA Settlement
PAGA is set forth in Labor Code sections 2698 through 2699.8. 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 doing so, the employee acts as proxy for the state labor law enforcement agency; the proceeding 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 (Kim).) “Of the civil penalties recovered, [65] percent goes to the Labor and Workforce Development Agency [LWDA], leaving the remaining [35] percent for the ‘aggrieved employees.’ ” (Id.; see Lab. Code, § 2699, subd. m.)
The purpose of PAGA is not to recover damages, restitution, or redress the employees’ injuries, but to recover civil penalties to remediate present violations and deter future ones. (Kim, supra, 9 Cal.5th at p. 86.) While a PAGA action is representative in nature, it is not a class action and is effectuated by different procedures. (Id.) “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).)
Here, a “PAGA Settlement Employee” means all current or former hourly, non-exempt employees who were employed by Defendant in California during the PAGA period. (Koulloukian Decl., Ex. 1 at ¶ 1.33.) The PAGA period is from July 26, 2023, to the date the court grants preliminary approval (subject to the escalator clause). (Id. at Ex. 1 at ¶¶ 1.29, 8.) The PAGA penalties under the Agreement are $8,000 to be paid from the GSA, 35 percent of which is paid to aggrieved employees based on their pro rata share and 65 percent of which is paid to the LWDA (Id. at ¶ 3.2.5.)
In exchange for the PAGA payments, “[a]ll PAGA Settlement Employees … are
deemed to release, on behalf of themselves, the LWDA, and their respective former and present representatives, agents, attorneys, heirs, administrators, successors, and assigns, the Released Parties from all claims for PAGA penalties that were alleged, or reasonably could have been alleged, based on the PAGA Period facts stated in the Operative Complaint and the PAGA Notices to the LWDA …. This release excludes the release of claims not permitted by law….” (Koulloukian Decl., Ex. 1 at ¶ 5.3.) The release appears sufficiently tethered to the facts and transactions in the FAC giving rise to the PAGA penalties at issue in the PAGA period. (See Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 83, disapproved on another ground in Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664, 709-710.)
The penalties at issue in this action carry an estimated potential of $100 for each aggrieved employee per pay period. (See Lab. Code, § 2699, subd. (f)(2)(A); Koulloukian Decl., ¶ 14(h).) However, the court has discretion to “award a lesser amount than the maximum civil penalty amount specified by this part … if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” (Lab. Code, § 2699, subd. (e)(2).) Plaintiff’s counsel estimated defendant’s total exposure on the PAGA claim at approximately $180,000. (Koulloukian Decl., ¶ 14(h).) The potential PAGA penalties substantially overlap with the violations at issue in the proposed class settlement. Under these circumstances, the court finds that the purposes of PAGA to remediate prior violations and deter future ones is largely achieved by the proposed class settlement. The PAGA penalties as part of the overall settlement structure appears reasonable, fair, and adequate.
(5) Content of Proposed Notice to Settlement Class Members
“The content of the class notice is subject to court approval. If class members are to be given the right to request exclusion from the class, the notice must include the following: [¶] (1) A brief explanation of the case, including the basic contentions or denials of the parties; [¶] (2) A statement that the court will exclude the member from the class if the member so requests by a specified date; [¶] (3) A procedure for the member to follow in requesting exclusion from the class; [¶] (4) A statement that the judgment, whether favorable or not, will bind all members who do not request exclusion; and [¶] (5) A statement that any member who does not request exclusion may, if the member so desires, enter an appearance through counsel.” (Cal. Rules of Court, rule 3.766, subd. (d).)
“In determining the manner of the notice, the court must consider: [¶] (1) The interests of the class; [¶] (2) The type of relief requested; [¶] (3) The stake of the individual class members; [¶] (4) The cost of notifying class members; [¶] (5) The resources of the parties; [¶] (6) The possible prejudice to class members who do not receive notice; and [¶] (7) The res judicata effect on class members.” (Cal. Rules of Court, rule 3.766, subd. (e).)
ILYM Group, Inc. (ILYM), will act as settlement administrator. (Koulloukian Decl., Ex. 1 at ¶ 7.1.) ILYM will mail the class notice within 14 days of its receipt of the class data. (Id. at ¶ 7.4.2.) Within 3 business days of receiving a class notice returned as undeliverable, ILYM will mail the notice to the forwarding address if one is provided. (Id. at ¶ 7.4.3.) If no forwarding address is provided, ILYM will “search for current Class Member mailing addresses using all reasonably available sources, methods and means including, but not limited to, the National Change of Address database, skip traces, and direct contact by the Administrator with Class Members” and “re-mail the Class Notice to the most current address obtained.” (Id. at ¶¶ 1.9, 7.4.3.)
The proposed notice contains a brief explanation of the case (Koulloukian Decl., Ex. 1 at p. 23), a statement that the court will exclude a member if the request is submitted by a specified date (id. at p. 24), a procedure for the member to follow in requesting exclusion from the class (id. at p. 27), a statement that the settlement if approved will bind all members who do not request exclusion and that certain claims will be released (id. at pp. 27-28), and a statement that a party who wishes to participate may object and appear through separate counsel (id. at pp. 30-31).
The court finds the notice easy to understand, sufficient to apprise the members of their rights and obligations in connection with the proposed settlement, and sufficient to notify those members of their right and opportunity to opt out of or present objections to the settlement. For these reasons, the court finds that the proposed class notice complies with due process. (See Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 694-695.) The cost of the notice and administration appears reasonable under the circumstances. The proposed notice appears to meet the statutory requirements. (See Cal. Rules of Court, rule 3.766, subds. (d)-(f).)
(6) Conclusion
For the reasons stated herein, the court will grant plaintiff’s motion for preliminary approval.