On March 23, 2022, the California Court of Appeal for the Fourth District in Estrada v. Royalty Carpet Mills, Inc., ruled that courts do not have authority to strike a claim under the Private Attorneys General Act (“PAGA”) due to a lack of manageability at trial. Estrada creates a split of authority with a pro-employer decision, Wesson v. Staples the Office Superstore, LLC, 68 Cal. App. 5th 746 (2021). The Court in Wesson found that trial courts have inherent authority to dismiss PAGA claims as unmanageable. Wesson was discussed in detail in a prior blog article.
In Estrada, after the trial court dismissed a PAGA claim for being unmanageable, the plaintiffs appealed. The appellate court agreed with the plaintiffs that the trial court improperly struck the PAGA claim because the PAGA statute does not have a manageability requirement. First, the court noted the differences between class and PAGA actions, explaining a class action is a procedural device for aggregating claims when the parties are numerous, and it is impracticable to bring them all before the court. The court distinguished PAGA actions as “administrative law enforcement actions” that were created to “empower employees to enforce the Labor Code as representatives of the [Labor & Workforce Development Agency (‘LWDA’)].” The court advised that due to these differences, highlighted in California Supreme Court decisions Arias v. Superior Court, 46 Cal. 4th 969 (2009) and Kim v. Reins Int’l California, Inc., 9 Cal. 5th 73 (2020), when seeking PAGA penalties, plaintiffs are not required to meet class certification requirements. The court found that because the dismissal of a PAGA claim based on manageability is rooted in class action procedure, “requiring that PAGA claims be manageable would graft a crucial element of class certification onto PAGA claims” and “undercut” Supreme Court precedent.
As noted above, the court’s holding came to the opposite conclusion of Wesson. In Wesson, the court of appeal held that the authority to declare cases unmanageable derives from courts’ inherent authority to manage complex litigation to prevent it from “monopolizing the services of the court to the exclusion of other litigants.” It also explained that the PAGA statute’s lack of an express manageability requirement is not determinative. As an illustration of this, it noted that courts require class action representatives to demonstrate individual issues will not predominate a class action despite the fact that Code of Civil Procedure section 382 (the statute governing class actions) does not include an explicit manageability requirement.
Despite the court’s disagreement with Wesson’s key holding, it acknowledged concerns may arise about unmanageable claims. It held that “[s]ome PAGA claims involve hundreds or thousands of alleged aggrieved employees, each with unique factual circumstances” and that the ruling is not intended to mean that in such scenarios, each alleged aggrieved employee must be examined at trial. Instead, the court suggested that where appropriate and within reason, courts may limit testimony and other forms of evidence during PAGA trials. The court encouraged plaintiffs’ counsel to exercise prudence in their approach to PAGA claims so they can efficiently prove alleged violations. It also advised that counsel should “work with the trial courts during trial planning to define a workable group or groups of aggrieved employees for which violations can be more easily shown,” such as by narrowing alleged violations to employees at a “single location or department.” Otherwise, a PAGA plaintiff seeking to try an unmanageable claim “risk[s] being awarded a paltry sum of penalties, if any,” due to problems of proof. The court’s concerns regarding the practical limitations of actually trying a PAGA lawsuit provide an opportunity for employers to still argue that PAGA lawsuits should be tailored to a smaller number of employees.
Estrada creates a split of authority among appellate courts regarding whether a court may strike a PAGA claim as unmanageable. California state trial courts are now free to decide if they will follow Estrada or Wesson. Given the split of authority, the California Supreme Court most likely will rule on this issue in the near future.
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