The California Supreme Court recently held that Private Attorneys General Act (PAGA) plaintiffs do have standing to pursue their representative PAGA claims in state court even if their individual PAGA claims are compelled to arbitration.
On June 15, 2022, the U.S. Supreme Court decided Viking River Cruises, Inc. v. Moriana, No. 20-1573, holding that the Federal Arbitration Act (FAA) preempts a rule of California law insofar as it precludes agreeing to arbitrate only an employee’s individual claims under California’s Labor Code Private Attorneys General Act (PAGA).
On September 9, 2021, the Second District of the California Courts of Appeal ruled in Fred Wesson v. Staples the Office Superstore, LLC that trial courts have “inherent authority” to strike claims under the California Private Attorneys General Act (PAGA) if they will not be manageable at trial. As the first precedential decision on this issue from a California court, this case provides employers with a welcome potential defense to some PAGA claims.
Facts and Background
Under PAGA, employees in California are empowered to bring claims on behalf of other employees (and the state of California) for violations of the California Labor Code. Critically, plaintiffs need not meet class action requirements or go through class action procedures to bring claims under PAGA on behalf of other employees. As a result, unlike class actions, employers have had relatively limited recourse to challenge wide-reaching PAGA claims, sometimes brought on behalf of hundreds or thousands of employees.
In Magadia v. Wal-Mart Associates, Inc., the Ninth Circuit Court of Appeals tossed a $100 million-plus judgment against Walmart and held that employees lack standing to bring a claim under California’s Private Attorneys General Act (PAGA) for labor code violations that they themselves did not suffer. Among other highlights, the federal appeals court found that California’s wage-statement law does not require employers to list a corresponding hourly rate when making a lump sum overtime adjustment payment. The decision provides helpful precedent for businesses litigating wage-and-hour class and representative actions, as well as employers with similar bonus schemes to Walmart.
Earlier this week, Wendy Moore, a former partner at Jones Day, filed a representative action against the law firm in San Francisco Superior Court, alleging a single cause of action pursuant to the California Private Attorneys General Act (“PAGA”) for alleged violations of the California Equal Pay Act, as amended by the Fair Pay Act of 2015, and related violations of the California Labor Code. The PAGA permits employees to bring civil suits to recover penalties on behalf of themselves and other aggrieved employees for Labor Code violations. Unlike class actions, PAGA claims can proceed regardless of whether the plaintiff can meet the requirements to certify a class.
In a blow to the defense bar—and, in particular, retail employers—the California Supreme Court, in Williams v. Superior Court (Marshalls of CA, LLC), S227228 (July 13, 2017), held that there is nothing unique about claims filed under the California Labor Code Private Attorneys General Act of 2004 (PAGA) that would justify restricting the scope of discovery under California law. The Supreme Court reversed a decision of the California Court of Appeal that would have precluded PAGA plaintiffs from obtaining the contact information of other potentially aggrieved employees beyond the discrete location at which they work(ed) without first making a threshold evidentiary showing that (a) they were aggrieved employees and (b) they had knowledge of systemic statewide Labor Code violations. Rather, to justify disclosure of the contact information of all employees in California, the Supreme Court found that it is sufficient for a named plaintiff to allege that the at-issue violations occurred, that plaintiff himself or herself was aggrieved, and that the defendant employer had a systemic, statewide policy that caused injury to other employees across California.
Continue reading “California Supreme Court Ruling on Right to Statewide Discovery in PAGA Actions Is Not as Bad for Employers as It Looks”