California Appellate Court Rules PAGA Actions Must be Manageable

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California Appellate Court Rules PAGA Actions Must be Manageable

A California Court of Appeals has ruled that trial courts have the authority to strike PAGA (Private Attorneys General Act) claims found to be unmanageable. This may give employers some much-needed protection from unreasonable PAGA actions dependent upon the subjective experiences of individual employees.

For some background, PAGA gives a single employee the right to file suit on behalf of themselves as well as other employees for supposed violations of the labor code without receiving certification as a class action. What this means is that a plaintiff can, through PAGA, file a suit seeking penalties for thousands of employees without the need to prove that an issue is common among the other employees.

This has resulted in PAGA actions becoming a commonplace threat to employers heavily influenced by the council seeking the large payouts these lawsuits represent. Often these lawsuits representing hundreds to thousands of employees can amount to multi-million-dollar payouts in which the plaintiff’s counsel may take up to a third of the relief for little effort.

Many employers have protested these PAGA cases arguing that if they prove to be unmanageable in a trial, the court should strike the claim. Often these claims would appear to be completely unmanageable due to the individual nature of the issues and the considerable number of employees they represent.

If a case requires hundreds of employees to testify about their individual experiences concerning an issue clearly, it could take years just to hear the testimony. However, courts have proven highly reluctant to limit cases on the basis of manageability as the statute itself provides no such requirement, and no upper courts have given any decisions regarding such a requirement.

However, now this has changed. In a recent decision, a California Court of Appeals has held that courts inherently possess the authority to determine if a PAGA claim will be manageable and strike the claim if it proves necessary.

In the case that brought the matter to the Court of Appeals, the court found that the evidence and argument were in large part based on the individual experiences of the group with considerable variability between them. This meant that there was no apparent way to expeditiously and fairly litigate the matter, and as such, the Court of Appeals affirmed the trial court’s decision that it would not be manageable.

With this decision, not only will the employer’s counsel have another strategy to consider in many PAGA cases, but the plaintiff’s counsel will likely find settlement a far more desirable prospect. This will likely drive down the value of settlements in many cases.