Split Of Authority Emerges Regarding Whether Employers Can Dismiss PAGA Lawsuits On Manageability Grounds

Published date08 April 2022
Subject MatterEmployment and HR, Litigation, Mediation & Arbitration, Employment Litigation/ Tribunals, Class Actions, Trials & Appeals & Compensation
Law FirmSheppard Mullin Richter & Hampton
AuthorMs Hilary Habib

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 opposition 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...

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