California Supreme Court Allows Unmanageable PAGA Claims To Survive Challenge

• Published date: 26 January 2024
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Law Firm: K&L Gates
• Author: Penny Chen Fox and Cassidy Young

On 18 January 2024, the Supreme Court of California (Court) unanimously held that trial courts lack inherent authority to dismiss with prejudice claims brought under the Labor Code Private Attorneys General Act of 2004 (PAGA) for lack of manageability.¹The Court's conclusion rested primarily on differences in the structure and jurisprudential history of PAGA and class action claims. In addition, the Court concluded that PAGA defendants' due process rights are not violated by virtue of not striking unmanageable PAGA claims before trial.

Conflicting Rulings of Lower Courts

The Estrada decision settled a split of authority among California Courts of Appeal, which disagreed about whether this form of inherent authority existed.²In Wesson, previously discussed here, a California Court of Appeal held that trial courts have inherent authority to ensure that PAGA claims will be manageable at trial and "if necessary, may preclude the use of this procedural device." ³In other words, a trial court has inherent authority to dismiss a PAGA claim with prejudice if it determines that the claim cannot be tried fairly and efficiently.

In Estrada, however, a different California Court of Appeal reached the opposite conclusion, reasoning that "dismissal of unmanageable PAGA claims would effectively graft a class action requirement onto PAGA claims, undermining a core principle" that distinguishes between PAGA claims and class actions.⁴In resolving this split of authority, the Supreme Court of California agreed with the Estrada Court of Appeal.

California Supreme Court's Reasoning

The Court began its decision by confirming that trial courts do not have inherent authority to dismiss "any type of claim, irrespective of its nature, to foster judicial economy."⁵The Court cited prior case law holding that trial courts' inherent power to dismiss cases with prejudice is "tightly circumscribed" and is reserved for cases involving a failure to prosecute, frivolous claims, or egregious misconduct.⁶Further, it concluded that no California statute supports the existence of such inherent authority.

The Court then held that PAGA claims do not present an exception to this general rule. While the concept of manageability arose in the class action context and may provide grounds to decline to certify or to decertify a class, the Court concluded that "class claims differ significantly from PAGA claims in ways that make it inappropriate to impose a class action-based manageability requirement...