California Supreme Court Prohibits Trial Courts From Striking PAGA Claims Due To Unmanageability

• Published date: 22 February 2024
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Law Firm: Crowell & Moring LLP
• Author: Ms Christopher J. Banks and Kimberley Johnson

On January 18, 2024 in Estrada v. Royalty Carpet Mills, Inc. (Cal., Jan. 18, 2024, No. S274340) 2024 WL 188863, the California Supreme Court resolved a split in authority among the California Courts of Appeal regarding whether or not trial courts have the inherent authority to dismiss Private Attorneys General Act ("PAGA") claims due to unmanageability. The Supreme Court held that trial courts do not have this authority, and instead must address manageability concerns by using the variety of "tools" at their disposal, such as placing limitations on testimony and types of evidence and using representative testimony and surveys.

For employers, this decision renders an already challenging PAGA litigation landscape increasingly so. PAGA allows a plaintiff, standing as a "private attorney general," to pursue penalties on behalf of the state for alleged Labor Code violations against a cohort of "aggrieved employees," with 25% of the proceeds going to the aggrieved employees and 75% of the proceeds going to the state. The statute creates a representative action, somewhat akin to a class action proceeding, but without the traditional class certification requirements such as typicality or commonality. For example, unlike in a class action, a plaintiff bringing a PAGA claim may bring claims based not only on Labor Code violations allegedly committed against the plaintiff, but also for any other Labor Code violations allegedly committed against other employees - regardless of whether those same types of violations were committed against the plaintiff. All the plaintiff needs to do is allege that some Labor Code violation was committed against her or him...