Employers who are sued under the Private Attorneys General Act of 2004 (PAGA) have limited arguments toward dismissal of PAGA claims. Thanks to the California Supreme Court, companies may now have one less weapon in their arsenal when it comes to striking PAGA claims on “manageability” grounds.
Labor Code Violations
In Estrada v. Royalty Carpet Mills, Inc., current and former employees alleged a variety of Labor Code violations, including failure to properly provide meal and rest breaks in a timely fashion. A class action and PAGA action ensued. The defense argued that both the class action and PAGA action should be dismissed as “not manageable.” In general, class claims can be subject to de-certification where it is necessary to preserve judicial resources and to prevent trials from becoming “excessively complex and time-consuming.” In recent years, employers have successfully argued that courts also have authority to strike down PAGA claims that are not manageable. But, the Supreme Court in Estrada disagreed, finding that PAGA matters are distinct from class actions and that trial courts do not possess the “inherent authority” to dismiss a PAGA action solely on the basis that it appears unmanageable.
The Court did not shut the door completely on the issue:
“However, we do not decide the hypothetical questions of whether a defendant’s right to due process can ever support striking a PAGA claim, and if so, the circumstances under which such striking would be appropriate.”
In general, there are still procedural and other options available to employers in attempting to defend otherwise vague and overbroad PAGA actions. At a minimum, employers should still make the argument that any PAGA action is unmanageable (because it always is, right?) and should aggressively pursue court efforts to limit or dismiss the PAGA action, especially where a plaintiff is unable to prove liability “as to all or most employees.”
PAGA continues to plague California employers and create financial havoc for well-intentioned businesses. Stay tuned for updates on potential legislative solutions to rampant PAGA litigation.
