The Private Attorneys General Act (PAGA) has been a thorn in the side of California employers since its inception, but it looks like a recent decision in the Second District Court of Appeals may effectively limit massive lawsuits that are not only extremely costly to the employer, but also have the effect of burdening the entire court system. On September 9, the Court issued a ruling stating in part that:
- courts have the authority to rule on whether they can fairly and efficiently hear PAGA claims, and if not, to strike down claims that are unmanageable
- the court’s assessment of manageability should consider the defendants’ due process rights to have the opportunity to litigate affirmative defenses
The question of manageability of PAGA claims has long been an employer defense, but previous court decisions have not tackled the manageability issue because PAGA itself does not include such a requirement, and because there were no previous decisions to provide guidance on manageability until now.
For employers throughout Southern California who are facing PAGA claims, it is essential to have an effective defense that limits liability and controls the financial effect of an adverse ruling.
The Private Attorneys General Act
The Labor Code PAGA, enacted in 2004, allows aggrieved employees to file a lawsuit for Labor Code violations not only on behalf of themselves, but also other employees and the State of California. Called the Hero Labor Law, it effectively deputized workers to act as private attorneys general to file for labor code penalties on behalf of other workers to address the significant lag in the processing of Labor Code violations claims through labor enforcement agencies.
The result, however, has been a hodge-podge of claims involving huge numbers of employees, sometimes with significantly individualized grievances, that have unduly burdened the court system. With PAGA, a single employee may file a claim on behalf of hundreds or even thousands of other employees without having to go through the procedures of a class-action lawsuit, such as showing common issues that unite them under the claim.
In the case of Wesson v. Staples the Office Superstore, LLC, this would have meant that the trial would have gone on for years. By ruling that the case was unmanageable, the court has effectively established precedent for future rulings, and argued that its decision is not inconsistent with PAGA’s objectives.