Court Of Appeal Holds That Exhaustion Of Administrative Remedies Is Procedural, Not Jurisdictional

• Published date: 10 October 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Employee Benefits & Compensation, Trials & Appeals & Compensation
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Ms Sina S. Safvati, Jonathan Slowik and Gregory Knopp

On September 12, 2022, the California Court of Appeal, 4th District, issued its decision in Acevedo v. CashCall, Inc., 2022 WL 4129106 (Cal. Ct. App. Sept. 12, 2022), affirming the lower court's decision dismissing a Private Attorneys General Act (PAGA) lawsuit under claim preclusion principles based on a settlement in a substantially similar lawsuit against the same employer. The Court rejected the plaintiff's claim that the prior plaintiff's failure to exhaust administrative remedies invalidated the prior judgment, holding that exhaustion of administrative remedies is a procedural-not a jurisdictional-requirement.

The plaintiff in Acevedo brought a PAGA claim for failure to pay overtime wages, failure to provide rest breaks and a derivative final pay claim. The employer moved for judgment on the pleadings, arguing that the lawsuit was barred by the settlement in a substantially similar action (the "Le" action) filed by another former employee. The trial court agreed, holding that claim preclusion barred Acevedo from litigating PAGA claims that were released in Le, and dismissed the action with prejudice.

On appeal, Acevedo argued that Le's prefiling letter to the Labor & Workforce Development Agency (LWDA) was defective, so Le never properly exhausted her administrative remedies. Further, Acevedo argued that this failure deprived the trial court of jurisdiction over Le's claims, so the Le judgment was void. The Court of Appeal disagreed...