Court Of Appeal Case Explains Why Failure To Exhaust Administrative Remedies May Prevent Substitution Of PAGA Plaintiffs

• Published date: 16 June 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Ms Sina S. Safvati, Jonathan Slowik and Gregory Knopp

On June 9, 2022, the California Court of Appeal, 4th District, issued its decision in Hargrove v. Legacy Healthcare, Inc., No. E076240, 2022 WL 2071982 (Cal. Ct. App. June 9, 2022), which affirmed a trial court decision dismissing a Private Attorneys General Act (PAGA) lawsuit for lack of a proper plaintiff and denying leave to substitute a different plaintiff. The decision highlights the necessity of exhausting administrative remedies as a prerequisite to bringing a PAGA claim, and explains an important limitation of a ruling by the court earlier this year.

PAGA requires an allegedly aggrieved employee to provide written notice of his or her claims to the Labor & Workforce Development Agency (LWDA) before filing a civil lawsuit so that the state agency may decide in the first instance whether to investigate the alleged violations. Cal. Lab. Code ' nbsp;2699.3. Only after the LWDA takes no action for 65 days (or, less commonly, informs the employee it intends to take no action), can the employee file a PAGA action. In Hargrove, the original plaintiff provided notice to the LWDA in August 2016 and filed her lawsuit in October 2016. She died in February 2020, during discovery.

After the plaintiff's death, her attorneys sought leave to amend the complaint to substitute a different former employee, Makiya Cornell, to prosecute the PAGA claims in Hargrove's stead. Cornell served her LWDA notice in May 2020. By substituting Cornell as a plaintiff, the attorneys hoped to take advantage of the original limitations period established by Hargrove, which stretched back four years earlier than the limitations period that would otherwise apply to Cornell's claims.

The trial court dismissed the action and denied leave to amend, and the Court of Appeal affirmed. In doing so, the Court of Appeal applied the framework adopted by the California Court of Appeal, 1st District, earlier this year in Hutcheson v. Superior Court, 74 Cal. App. 5th 932, 935 (2022). Under Hutcheson, a representative plaintiff may substitute for another in a PAGA action if (1) the substituting plaintiff satisfies PAGA's prerequisites of standing, notice and statute of limitations; and (2) if the claims in...