The Supreme Court of California decided a case earlier this month effectively foreclosing manageability defenses to plaintiffs’ claims in Private Attorney General Act representative actions (PAGA). California businesses should be extra careful with their Labor Code compliance efforts.

The Private Attorney General Act allows individuals to bring lawsuits on their own behalf or on behalf of other purported employees against purported employers and collect civil penalties for violations of the labor code. (See Cal. Lab. Code § 2699(a).) PAGA actions brought on others’ behalf, sometimes called “representative” or “non-individual” lawsuits, may involve large numbers of people, like a traditional class action, and perhaps understandably some defendants began bringing ideas from class actions into representative PAGA lawsuits.

One factor specifically considered when a court is deciding whether to allow a lawsuit to proceed as a class action is “manageability”, whether the individual issues can be litigated in a fair and efficient manner. (See Duran v. U.S. Bank National Assn. (2014) 59 Cal. 4th 1, 28-29.) Defendants in large representative PAGA lawsuits argued that manageability should be a consideration in that context too, and that representative claims that seemed too complex to manage efficiently could and should be dismissed by the courts. The intermediate appellate courts in California split on the question (compare Wesson v. Staples the Office Superstore, LLC (2021) 68 Cal.App.5th 746 (upholding trial court’s dismissal of claims as unmanageable) with Woodworth v. Loma Linda University Medical Center, (2023) 93 Cal.App.5th 1038 (concluding trial courts may not strike PAGA claims on manageability grounds)), which was finally resolved by the California Supreme Court.

In Estrada v. Royalty Carpet Mills (January 18, 2024) 2024 Cal. LEXIS 123 the Court decided that manageability, standing alone, cannot be a reason for dismissing a representative PAGA claim. The court reasoned that class action standards had deep historical roots in judicially created doctrines and a related body of federal law, whereas PAGA actions were unique to California and based entirely on statutes, and it would be inappropriate to incorporate those standards without a basis in the statutory language.

PAGA actions employers and purported employers who hire independent contractors have one less potential defense against large representative PAGA suits.

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