On January 18, 2024, the California Supreme Court issued its opinion in Estrada v. Royalty Carpet Mills, Inc., concluding that trial courts do not have inherent authority to strike a PAGA claim on the grounds that it is unmanageable. Most discourse on the Estrada decision paints a picture of doom and gloom for California employers. But, a close read of the Estrada decision affirms that trial courts retain authority to limit and control PAGA claims as necessary to render them manageable. Moreover, the decision does not completely prohibit trial courts from striking a PAGA claim, as the Court recognized the possibility that an unmanageable PAGA claim may violate an employer’s right to due process.

Below is a closer inspection of Estrada, examining the meaning of “inherent power to strike” and “manageability,” and how this decision may guide employers facing unwieldy and overbroad PAGA litigation.

A Trial Court’s “Inherent Power to Strike” Claims

The phrase, “inherent authority to strike,” as used in Estrada means the “inherent authority to dismiss with prejudice.” In other words, Estrada merely holds that trial courts may not dismiss a PAGA claim, with prejudice, based solely on the grounds that the PAGA claim is unmanageable.

Remarkably, however, the Court noted that trial courts may have discretion to dismiss a PAGA claim, with prejudice, in order to preserve a defendant’s right to due process, and that other circumstances may justify such a dismissal.

“Manageability” of Complex Litigation

As explained in Estrada, the term “manageability” encompasses “two related but distinct concepts” concerning judicial economy.

First, manageability may refer to the degree to which a trial court may use case management techniques to fairly and efficiently adjudicate an action before and during trial. This concept of manageability applies in any complex civil litigation. Some of these case management techniques include requiring case management plans and/or trial plans, entering scheduling orders, ordering sequenced discovery or bifurcated proceedings, permitting data sampling and statistical analysis evidence, and limiting the number of testifying witnesses. These are but some of the tools a trial court may use to render any complex case more manageable.

Second, manageability may refer to one of several elements that must be established for a court to certify a class claim. In that context, manageability requires a finding that joining putative class members’ claims for resolution is superior to adjudicating their individual claims and that their claims present common issues of law and fact. California courts have consistently and repeatedly explained that a PAGA claim need not satisfy class action requirements.

In Estrada, the California Supreme Court reiterated that the manageability factor applicable to class action cases does not apply in representative PAGA cases. The Court found that importing the class action manageability requirement into the PAGA context would be improper for a number of reasons. However, the Court affirmed the “unremarkable proposition” that parties and trial courts “must endeavor to fairly and efficiently adjudicate the action.”

Trial Courts Can and Should Restrict Unmanageable PAGA Claims

The California Supreme Court explained “a court always has access to a variety of techniques” to render a PAGA action manageable, including substantive rulings. The Court noted that rulings on demurrer or motions for summary judgment may be issued to fairly and efficiently adjudicate a PAGA action “in which a plaintiff pleads the claim in such an overbroad or unspecific manner that the plaintiff is unable to prove liability as to all or most employees.” In other words, the Court affirmed a trial court’s ability to dismiss, or at least limit, PAGA claims that are based on overly broad or unspecific alleged violations. That is a significant step in the right direction for PAGA litigation in California.

But trial courts are unlikely to take it upon themselves to limit unwieldy PAGA claims. California employers faced with such PAGA claims must assess the scope and nature of each claim and identify the most appropriate procedural mechanisms for challenging them. And California employers should assert a PAGA manageability affirmative defense in their Answer to preserve their right to make those procedural challenges.

Attacking Unmanageable PAGA Claims By Aggressively Enforcing the PAGA’s Notice Requirements

Most PAGA cases are unmanageable, in the general sense, because they are predicated on overbroad and unspecific allegations in the plaintiff’s pre-lawsuit notice letter. Upon receipt of a vague PAGA notice, the LWDA cannot reasonably investigate the alleged violations and address them with the employer—they do not know where to begin. Because the complaint in the ensuing PAGA lawsuit will generally rely on the same vague allegations, the scope of the claims and related discovery is seemingly unlimited. These circumstances are often the source of unmanageable PAGA litigation. The Estrada decision, coupled with other recent California appellate court decisions, establish that trial courts have both the methods and means for preventing such unwieldy, unmanageable, PAGA claims.

Specifically, in August 2023, the First District California Court of Appeal, decided two cases—LaCour v. Marshalls of California, LLC and Accurso v. In-N-Out Burgers—in which the court homed in the effect of a PAGA notice. In both cases, the appellate court explained that the scope of a plaintiff’s authority to pursue PAGA claims is limited to the specific facts and theories stated in the plaintiff’s pre-lawsuit notice to the employer and LWDA. In Accurso, the appellate court explained that the “delegation of enforcement power from the LWDA to the aggrieved employee is not open-ended. It gives the proxy control of the penalty claims identified in his written notice to the LWDA, but is limited in scope to the specific facts and theories stated in the notice.” In LaCour, the court explained that the pre-lawsuit notice “provides an objective source of proof for the scope of [the plaintiff’s] authorized enforcement interest” and the plaintiff is “not authorized to pursue and settle claims … encompassing allegations beyond the 'facts and theories' specified" therin.

These cases, along with Estrada’s guidance, indicate that California trial courts should be more willing to sustain a demurrer and enter summary judgment in favor of employers if the plaintiff failed to specify facts and theories of liability in his/her pre-lawsuit notice letter. Moreover, trial courts should be more willing to enter rulings that prevent a PAGA plaintiff from prosecuting claims untethered to the specific facts and theories of liability in the plaintiff’s pre-lawsuit notice.

Such enforcement of the PAGA’s notice requirement is necessary and consistent with the PAGA’s purpose of remedying “systemic underenforcement” of the Labor Code.

California employers should be utilizing the pre-lawsuit notice as walls, to fence in the scope of the PAGA lawsuit, and trial courts should welcome that approach. Having unmanageable PAGA cases pending on court dockets for years is in no one’s best interest, save for the plaintiffs bar, and Estrada supports a PAGA defendant’s efforts to ensure better management of and limitations on most PAGA lawsuits.