Whitworth v. SolarCity Corp.

Background

Plaintiffs Ravi Whitworth, Javier Frias, Greg Carranza, and Joshua Arguelles sought approval of a settlement under California’s Private Attorneys General Act (PAGA), California Labor Code section 2698 and following provisions. PAGA allows an aggrieved employee to act as a representative of California’s labor-law enforcement agencies and seek civil penalties for alleged Labor Code violations. The court explained that a PAGA case is not a class action and does not require ordinary class-action procedures such as notice and the right to opt out.

The settlement covered 4,622 current and former non-exempt employees who worked for SolarCity Corp. and Tesla Energy Operations, Inc. in California in solar-installation and related roles during the PAGA period, April 14, 2015, through September 1, 2022. The alleged violations involved meal and rest breaks, expense reimbursement, overtime calculations, payment for all hours worked, wage statements, and final wages.

Settlement Terms and Fairness Review

The defendants agreed to pay a non-reversionary gross settlement of $1.5 million. The amount included the PAGA fund, settlement-administration expenses, attorney fees and costs, and service awards if approved. Seventy-five percent of the PAGA penalties would go to the California Labor and Workforce Development Agency, and 25 percent would be distributed to eligible employees based on their eligible pay periods. The court estimated that, after deductions, approximately $655,000 would remain for PAGA penalties and that employees would receive an average estimated payment of $35, assuming all requested deductions were approved.

The court found that the plaintiffs had satisfied PAGA’s notice requirements and had provided the proposed settlement to the Labor and Workforce Development Agency. Applying fairness factors similar to those used for class-action settlements, the court considered the strength of the claims, the risks and costs of continued litigation, the settlement amount, the investigation and discovery completed, counsel’s experience and views, and government participation. The court found the settlement fair and reasonable and concluded that reducing the penalties would not be unjust, arbitrary and oppressive, or confiscatory.

The settlement administrator was ILYM Group, Inc. The court approved the administration costs and appointed ILYM Group as administrator. The parties later changed the recipient of uncashed checks from the originally proposed organizations to California Rural Legal Assistance, Inc. The court found that organization appropriate because of its labor and employment work.

Fees, Costs, and Service Awards

Plaintiffs requested $600,000 in attorney fees, equal to 40 percent of the gross settlement, and $180,000 in litigation costs. Counsel reported a lodestar of $1,881,305, meaning the reasonable hours worked multiplied by reasonable hourly rates, based on more than 3,000 hours. After supplemental submissions addressing the court’s concerns, the court found the requested fees reasonable and approved $600,000. The court also found the requested $180,000 in out-of-pocket litigation costs reasonable.

Plaintiffs requested service awards of $10,000 for each named plaintiff. The court declined to award them. It noted that none of the plaintiffs was a current employee, three had obtained individual settlements, and Arguelles had worked for the defendants for six months, was never deposed, and did not attend the mediations. The court also found that the requested awards would amount to between $100 and $500 per hour based on the plaintiffs’ estimated time and would conflict with PAGA’s public-enforcement purpose.

Ruling and Additional Orders

Judge Corley granted the motion to approve the PAGA settlement. The court granted in part and denied in part the request for attorney fees, costs, and service awards: it approved $600,000 in attorney fees and $180,000 in costs, but declined the service awards. The court also approved the settlement-administration costs, appointed ILYM Group as settlement administrator, approved California Rural Legal Assistance, Inc. as the cy pres recipient for uncashed checks, and granted Plaintiffs’ administrative motion to seal.

Although the case was not a class action, the court ordered counsel to follow the Northern District of California’s settlement-reporting guidance. After distribution, counsel must file and post an accounting describing items including payments, uncashed checks, cy pres distributions, administrative costs, and attorney fees and costs. The order disposed of Docket No. 190.