California Court of Appeal Holds Trial Courts Can Strike Unmanageable PAGA Claims
Los Angeles, Calif. (September 20, 2021) - On September 9, 2021, in a significant victory for California employers, the California Court of Appeal issued the first published appellate opinion in Wesson v. Staples the Office Superstore, LLC holding that trial courts have authority to ensure the manageability of PAGA claims, which includes the power to strike unmanageable PAGA claims as necessary.
The Private Attorneys General Act of 2004 (PAGA) deputizes "aggrieved employees" to stand in the shoes of the state and bring a representative action against their employer to recover civil penalties under the Labor Code on behalf of themselves, other aggrieved employees, and the State of California. To be considered an "aggrieved employee" within the meaning of the statute, the employee bringing the suit must have been subjected to at least one Labor Code violation by the employer. The civil penalties available under PAGA are steep and arguably draconian.
Unlike with class actions, there are no requirements of typicality or manageability built into PAGA’s statutory scheme, which means that representative groups are often larger and more varied than are those that would proceed in a class action. As such, the burden to bring a PAGA representative action is comparably lower and easier to satisfy than the showing required for a plaintiff to pursue and certify a class action. Employers have long argued that trial courts can and should strike all or part of PAGA actions on manageability grounds. In making these arguments, employers have appealed to the trial court’s inherent power to manage litigation before it, often citing to favorable but non-binding federal opinions in support of this proposition. Before the Court of Appeal’s recent decision, there were no binding California appellate cases that employers could cite to for these arguments.
In Wesson v. Staples the Office Superstore, LLC, the California Court of Appeal explicitly held that trial courts have inherent authority to ensure that PAGA claims will be manageable at trial: “Given that PAGA actions involve comparable or greater manageability concerns than other representative claims, we hold that trial courts may similarly exercise their inherent authority to ensure the manageability of PAGA claims and, if necessary, may preclude the use of this procedural device.” In its discussion, the court acknowledged that PAGA claims “may well present more significant manageability concerns than those involved in class actions” due to the absence of any requirement that PAGA plaintiffs demonstrate a well-defined community of interest wherein common questions predominate over individualized ones, as is necessary in the class action context.
In support of its motion to strike the plaintiff’s PAGA claim, which was premised on the theory that Staples had misclassified its general managers as exempt, Staples pointed to evidence that the general manager position was not standardized, evidence showing variation in how these employees performed their jobs and the extent to which general managers performed non-exempt tasks, and evidence showing that how general managers spent their time was dependent on factors such as their experience and the size and composition of their management teams.
The trial court granted Staples’ motion to strike the plaintiff’s PAGA claim on manageability grounds, citing the plaintiff’s deficient trial plan ,which failed to address how Staples’ affirmative defense could be litigated, and acknowledged Staples’ evidence, which tended to show the variation in performance of the general manager position and the varying extent of non-managerial tasks performed by the general managers. The plaintiff appealed, challenging the trial court’s striking of his PAGA claim on the basis that the trial court lacked the authority to do so.
In its decision, the Court of Appeal found that the trial court did not abuse its discretion in striking the plaintiff’s PAGA claims on manageability grounds, as the plaintiff had failed to submit a trial plan showing that the action would be manageable and instead laid out his plan to prove his prima facie case using common proof, yet neglected to address how Staples’ affirmative defense might be litigated.
This decision is a rare positive development for employers and represents clear authority in support of our longstanding position that trial courts have the authority to limit PAGA actions. In light of this decision, employers and their counsel should be evaluating all PAGA cases for potential manageability arguments and consider asserting such arguments through a motion to strike when appropriate.
For more information on this decision, contact the author or editor of this alert. Visit our Labor & Employment Practice page for more alerts in this area.
Casey N. Engstrom, Associate
Ashleigh Reif Kasper, Partner