California Appeals Court Upheld $400,000 Cannabis Driver Settlement

The appeals court found that the dispatcher couldn’t demonstrate that the settlement was either unfair or that the company had insufficiently investigated the wage-and-hour claims before agreeing to the settlement.

Magnetti v. The Highest Craft CA4/1

Joshua Magnetti worked from May until November 2021 as a delivery driver for The Highest Craft, LLC (known as THC HyperWolf), which provides on-demand delivery of cannabis to customers throughout Southern California. A month after leaving THC, Magnetti filed a class action complaint on behalf of himself and all other similarly situated employees alleging several violations of the Labor Code:

• failure to pay wages, meal and rest period violations,
• failure to reimburse for necessary business expenses (including a reasonable portion of monthly cell phone bills),
• wage statement violations,
• waiting time penalties
• violation of the unfair competition law

According to court documents, Magnetti claimed that THC employees were required to load their vehicles with product before clocking in; had to install THC’s propriety smartphone application on their personal phones, which they were required to answer at all times (including during meal and rest periods); and often worked more than eight hours a day or 40 hours a week without overtime pay. When the Labor and Workforce Development Agency (LWDA) declined to investigate the case, Magnetti filed an amended complaint in 2022, adding a PAGA cause of action.

Magnetti and dispatcher Maria Lopez simultaneously sued their employer under the Private Attorneys General Act (PAGA) but Magnetti and THC reached a settlement agreement first. Lopez successfully intervened in Magnetti’s case after he sought approval of the settlement in the trial court, and she raised several objections to the settlement, to no avail.

Around the same time when Magnetti filed his complaint, he wrote a letter to the LWDA, with service to THC, giving notice of his intention to pursue civil penalties against THC pursuant to PAGA. In September 2022 Magnetti and THC attended private mediation and eventually reached a settlement agreement. By April 2023 the trial court granted preliminary approval of the settlement.

Lopez Intervenes

Lopez filed a motion for leave to intervene under Code of Civil Procedure section 387.

Lopez was a dispatcher for THC from July to October 2020. In February 2021, she filed a class and PAGA action on behalf of all nonexempt employees working for defendants, contesting the same Labor Code and unfair competition violations that Magnetti claimed. Lopez and defendants set mediation for January 2023. A month earlier, THC filed and served a Notice of Related Case, informing her and the court in her case of Magnetti ’s action for the first time. Defendants then canceled her mediation. When Lopez became aware of the preliminary approval of the settlement agreement in Magnetti ’s case, she gathered the information necessary to prepare her intervention motion.

Lopez argued that Magnetti didn’t adequately represent the interests of the class members and aggrieved employees. She argued that counsel failed to analyze the claim for unreimbursed business expenses. She further argued that the trial court could not approve the settlement because Magnetti failed to provide sufficient prelitigation notice to the LWDA and the “Late Added Defendants,” ( CDL, Hyper Technologies, Telo, Wolin, and Hyper, Inc.) She added that the settlement “significantly expands the scope of the action to include all Late Added Defendants and all non- exempt employees” whereas Magnetti’s prelitigation notice only concerned defendant THC and employees who worked as delivery drivers. Therefore, Magnetti “failed to exhaust his administrative remedies as to the Late Added Defendants [and] non-exempt employees other than delivery drivers.”

The court concluded that there was “no evidence that Magnotti [ sic ] or his counsel failed to investigate the claims being settled or colluded with the defense to reach an unfair settlement.” As well, Magnetti submitted proper presettlement notice to the LWDA, and the agency had no objections to the proposed settlement which clearly defined the “late” Defendants and defined “Aggrieved Employees” as “all other current and former as a non -exempt, hourly-paid employee and/or independent contractors employed by Defendants”.