CA Court Affirms That Courts Have Authority to Ensure Manageability of PAGA Claims

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On September 9, 2021, the California Court of Appeal issued its opinion in Wesson v. Staples, Inc., holding that (1) courts have inherent authority to ensure that Private Attorneys General Act (PAGA) claims can be fairly and efficiently tried and, if necessary, may strike claims that cannot be rendered manageable; (2) as a matter of due process, defendants are entitled to a fair opportunity to litigate available affirmative defenses, and a court’s manageability assessment should account for them; and (3) the trial court did not abuse its discretion in striking plaintiff Fred Wesson’s PAGA claim as unmanageable.

Wesson worked for Staples as a store general manager and brought a PAGA action on behalf of himself and 345 other current and former Staples general managers on the basis that Staples had misclassified its general managers as exempt executives.

Staples moved to strike Wesson’s PAGA claim, arguing that given the number of employees it covered and the nature of his allegations, the action would be “unmanageable” and would require individualized proof as to each general manager to establish affirmative defenses, making the claim unable to be litigated fairly and efficiently. The trial court granted the motion and held that courts have inherent power to manage litigation, that PAGA defendants have due-process rights to impeach each employee’s claims or to assert affirmative defenses, and that courts may determine whether a PAGA plaintiff has presented a manageable trial plan.

The court of appeal affirmed the judgment in Staples’ favor, finding that courts have inherent authority to ensure that a PAGA claim will be manageable at trial—including the power to strike the claim, if necessary—and that this authority is not inconsistent with PAGA procedures and objections or with applicable precedent. In making this decision, the appellate court noted that there was great variation in how Staples general managers performed their jobs and the extent to which they performed their tasks. The evidence showed that Staples stores varied widely in size, sales volume, staffing levels, labor budgets and other variables that affected the general managers’ work experience.

The case required individualized assessments of the 346 aggrieved employees that could be determined only through an employee-by-employee, week-by-week analysis throughout the entire relevant time period. There was no apparent way to litigate Staples’ affirmative defenses in a fair and expeditious manner, as the defense turned in large part on each individual’s actual work experience.

Accordingly, the appellate court held that generally, a need for individualized proof pertaining to a very large number of employees will raise manageability concerns.

Why it matters: Employers have been imploring courts for years to exercise their inherent rights to control and limit unwieldy PAGA cases, with inconsistent success. While federal courts have been more willing to do so, California state courts have been reluctant given the lack of direction from either the legislature or the appellate courts on this issue. With the publication of the Wesson case, trial courts have guidance and authority to rely on to strike unmanageable PAGA cases. Given the active role the California Supreme Court has taken in PAGA cases, it remains to be seen whether this appellate decision will be the final word on this issue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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