Marcie Hamilton v. JUUL Labs, Inc.

Background

Marcie Hamilton and Private Attorneys General Act (PAGA) Representative Jim Isaacson sued Hamilton’s former employer, JUUL Labs, Inc. They alleged that JUUL’s nondisclosure, non-disparagement, termination, and severance agreements, along with workplace practices, restricted or discouraged whistleblowing, discussion of wages and working conditions, political activity, and competition in violation of California law. The action sought civil penalties and injunctive relief.

The court had previously dismissed some claims and allowed others to continue. In the amended complaint, four of the five PAGA claims survived JUUL’s motions to dismiss, and the court also allowed a claim for public injunctive relief under California’s unfair competition law to proceed. The parties conducted extensive discovery, including production of more than 28,000 pages of documents, and reached a settlement with the assistance of a mediator.

Settlement Terms

The settlement covered JUUL’s non-executive employees and former employees who were California-based during the covered period. The group consisted of 1,145 former employees and 509 current employees. The covered period ran from August 10, 2018, through the date of settlement approval. The agreement included a reserve and challenge procedure for people who disputed their inclusion or the number of California pay periods attributed to them.

The settlement amount was $34.03 multiplied by the total number of employee pay periods. Based on 65,236 pay periods, the total was $2,219,981.08. After approved deductions, 75% would go to the California Labor and Workforce Development Agency and 25% to the affected employees. The portion attributable to current employees, $956,140.91, would be suspended and forgiven over two years if JUUL substantially complied with the required programmatic relief.

The programmatic relief required JUUL to notify former employees of their rights to whistleblow, discuss wages and working conditions, engage in political activity, and compete as permitted by California law. JUUL also had to revise agreements and policies, announce nine protected-activity principles to its workforce, maintain a webpage describing those principles, and avoid acting contrary to them. JUUL had to certify compliance under penalty of perjury every six months during the two-year suspension-and-forgiveness period. The court retained jurisdiction to enforce the settlement.

The settlement released the specified PAGA claims based on the factual allegations in the action and the PAGA notices submitted to the state agency. It did not release non-PAGA claims generally, although Hamilton also released her individual claim for a public injunction under California’s unfair competition law.

Court’s Analysis of Settlement Approval

The court approved the PAGA settlement. It concluded that the programmatic relief addressed the alleged California labor-law violations, encouraged future compliance, supported the state’s enforcement efforts, and provided benefits to current and former employees. The court found a rational basis for the settlement in light of the litigation risks, unresolved legal and factual issues, the claimed maximum exposure, and the extensive nonmonetary relief. It also found no indication that the settlement was collusive or unfair.

The court noted that the settlement amount was substantially below the plaintiffs’ estimated maximum exposure, but found that the maximum estimate depended on disputed assumptions about liability, penalty stacking, subsequent violations, and discretionary penalty reductions. The court also considered JUUL’s changes to its nondisclosure agreement and policies after the action began. The court emphasized that the settlement addressed alleged chilling effects on employee speech and provided continuing compliance obligations rather than only a monetary payment.

Fees, Costs, and Service Awards

The court approved $555,000 in attorneys’ fees. It treated the settlement’s minimum value as at least $2,219,981.08, including the $956,140.91 in conditional relief, and found the fee request consistent with the federal 25% percentage-of-recovery benchmark and with a lodestar calculation using a multiplier of approximately 1.25. Counsel documented 540.30 hours at hourly rates ranging from $495 to $875, producing a lodestar of $443,152.50.

The opinion states that counsel incurred $22,721 in litigation costs, mostly for electronic-discovery storage and experts, and concludes that the state and affected employees should collectively bear reasonable litigation costs. The court’s final order granted the motion for fees and awards.

Hamilton and Isaacson each requested a $22,000 service award. The court instead granted each a $10,000 service award. It found the higher-than-presumptive amount warranted because Hamilton pursued the PAGA claims after resolving her individual claims, worked on the case for more than 60 hours over nearly two years, and participated in mediation, settlement conferences, and discovery. The court found that Isaacson spent 20 hours on the case and faced a risk of being sued or facing a counterclaim because of his participation after termination.

Disposition

The court granted Hamilton’s motion to approve the PAGA settlement and granted the motion for attorneys’ fees and awards. The order disposed of Docket Nos. 80 and 81, directed the clerk to enter the accompanying judgment, and closed the case.