Litigation » California Employers Lose A Litigation Tool

California Employers Lose A Litigation Tool

February 6, 2024

California Employers Lose A Litigation Tool

The California Supreme Court has ruled that state trial courts have no inherent authority to strike claims brought under California’s Private Attorneys General Act (PAGA) on grounds that the claims are not manageable. 

Bryan Hawkins & Robert Sarkisian, writing on the Stoel Rives firm’s World of Employment blog, explain that the January 18, 2024 ruling upheld an earlier appeals court ruling in Estrada v. Royalty Carpet Mills.

Jorge Luis Estrada’s complaint alleged Labor Code violations, particularly related to the provision of first and second meal periods, plus a claim under PAGA, which allows an “aggrieved employee” to bring a representative action on behalf of all other “aggrieved employees.”

At trial, the court dismissed the PAGA claim on the grounds that it was unmanageable. The Court of Appeals reversed on the PAGA claim, ruling that dismissal on such grounds “would interfere with PAGA’s express design as a law enforcement mechanism.”

Royalty took the case to the Supreme Court, arguing that trial courts have inherent authority to strike any claim that is unmanageable for reasons of judicial economy; or at minimum, trial courts may strike any representative claim that is unmanageable.

The Supreme Court found that lower court authority derives from the inherent “supervisory or administrative powers which all courts possess to enable them to carry out their duties.” The exception? Procedures that conflict with statutory law when fashioning remedies for situations regarding manageability.

The Supreme Court did allow trial courts discretion to fashion procedural and administrative rules to ensure PAGA cases are as “manageable” as possible, for example limiting or excluding witness testimony and evidence such as representative statistical models.

The authors suggest an audit of wage-and-hour policies to minimize the potential for PAGA violations, and possible implementation of mandatory arbitration agreements requiring employees to waive their right to bring actions on a class and representative basis.

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