CA Supreme Court ruling on manageability of PAGA actions appears to once again disfavor employers, but it may not be as bad on its face as it seems…
California’s 2004 Private Attorneys General Act (PAGA) is once again in the news, this time with a California Supreme Court ruling regarding the manageability of PAGA claims. As you know, PAGA allows employees to file a suit against their employers, as an individual or as a collective unit, on behalf of the state for breaking minimum wage, overtime, meal and rest break and other labor laws. Successful employees under PAGA are entitled to 25% of the penalties allocated by these laws, while the state receives the remainder.
The recent decision in Estrada v. Royalty Carpet Mills, Inc. may have caused employers some concern at first glance, where seemingly the court has yet again ruled in favor of employee actions against employers for labor violations. Let’s look at the California Supreme Court’s opinion a little more closely to see what the larger picture looks like.
In this case, employees as a collective unit sued the employer under PAGA for labor violations involving lack of meal and rest periods. At the trial level, the court found that due to the varying situations of the individual employees, the PAGA claim was unmanageable and was therefore stricken. The appellate court reversed and ordered the trial court to hear the labor violations and the PAGA claims.
Due to the contrary conclusions of this and past appellate decisions, the California Supreme Court agreed to resolve the issue of whether trial courts have the inherent authority to strike PAGA claims on the grounds of manageability. The short answer? Courts cannot strike claims on the issue of lack of manageability alone.
Nevertheless, although the Supreme Court ruled in favor of plaintiffs here, the issue of “manageability” seems very specific. Employers still have many safeguards in place to ensure a fair trial or even potential dismissal in certain situations.
- Trial courts can set up rules of procedure to facilitate the trial of causes on the merits and to devise a procedure to adjudicate certain claims. Numerous tools can be used to manage complex cases.
- Since the plaintiff has the burden of proving a PAGA claim and the trial court may limit the presentation of evidence, the PAGA plaintiff must ensure that trial of the action is manageable. The appellate court in Estrada noted that the trial court’s power to limit the presentation of evidence may encourage plaintiffs’ counsel to be prudent in their approach to PAGA claims and ensure they can efficiently prove alleged violations to unrepresented employees, since if a plaintiff alleges widespread violations of the Labor Code by an employer in a PAGA action but cannot prove them in an efficient manner, it does not seem unreasonable for the punishment assessed to be minimal.
- A trial court may issue substantive rulings, including those on demurrer, or on motions for summary judgment or judgment notwithstanding the verdict, to fairly and efficiently adjudicate an action in cases in which a plaintiff pleads the claim in such an overbroad or unspecific manner that the plaintiff is unable to prove liability as to all or most employees.
- Defendants must have an opportunity to present proof of their affirmative defenses and have no lesser due process rights in defending against representative PAGA claims.
- Trial courts retain authority to dismiss claims in two types of situations: (1) the plaintiff has failed to prosecute diligently; or (2) the complaint has been shown to be ‘fictitious or sham’ such that the plaintiff has no valid cause of action.”
The Estrada Supreme Court noted the following prudent guidance from Justice Tobriner: “No class action is inherently unmanageable,” because “a court always has access to a variety of techniques” to render the action manageable, and “[t]he critical question . . . is whether the techniques necessary to render . . . [the] action manageable are unconstitutional, or so distort the values a particular cause of action is meant to further that class suit would be improper.”
Rosasco Law Group is ready to serve any and all of employers’ needs in ensuring proper compliance with all labor and employment issues. In the event an issue does arise in the workplace, the firm is ready to use all resources to defend you in your time of need. Do not hesitate to give our office a call, and we can assist.
