On November 30, 2021, the California Court of Appeal (First District) issued its decision in Moniz v. Adecco USA, Inc., Case No. A159410, 2021 WL 5578298, which defines the standard for courts to apply when reviewing settlements under the Private Attorneys General Act (PAGA). In a published decision, the Court of Appeal held that the trial court must ensure that the settlement 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.” Id. at *9.

In Moniz, the settling parties sought to release PAGA claims alleging that the defendant violated the California Labor Code by requiring employees to sign agreements that prohibited them from disclosing their wages, benefits and related working conditions. The trial court approved the settlement over the objection of a plaintiff in a parallel PAGA action, and the objector appealed.

Labor Code Section 2699(l)(2) requires courts to “review and approve” PAGA settlements, but does not define the standard of review. Before Moniz, neither had any appellate court. Many federal district courts had imported class action settlement approval principles, demanding that PAGA settlements be “fair, reasonable, and adequate,” and weighing factors such as “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[.]” Id. at *8-9 (collecting cases). Observing that “PAGA’s purpose” is to “protect the public interest”-especially the allegedly aggrieved employees-the Court agreed with this district court authority, concluding that much the same principles that ensure fairness in class action settlements serve the public interest in the PAGA context.

The Court also addressed the issue of whether the nonparty plaintiff in the parallel PAGA action had standing to appeal-an issue about which a split of authority has emerged in recent months. The Court found that “where two PAGA actions involve overlapping PAGA claims and a settlement of one is purportedly unfair,” the plaintiff in the separate action “may seek to become a party to the settling action and appeal the fairness of the settlement as part of his or her role as an effective advocate for the state.” Id. at *6. This decision and Uribe v. Crown Building Maintenance Co., 70 Cal. App. 5th 986 (2021) now comprise a 2-1 majority among the appellate cases to consider the issue, with Turrieta v. Lyft, Inc., 69 Cal. App. 5th 955 (2021) now in the minority. To read about the Uribe and Turrieta decisions, click here and here.