California Court of Appeal Affirms Order Striking Unmanageable PAGA Claim

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Q: Are California courts concerned about the manageability of actions under the Private Attorneys General Act (PAGA)?

A: Yes, on September 9, the California Court of Appeal agreed that a PAGA action was unmanageable, and it affirmed an order granting the employer’s motion to strike and dismiss the PAGA claim. In Wesson v. Staples the Office Superstore, LLC, the court held that trial courts have the inherent authority to ensure PAGA claims will be tried fairly and efficiently. The court ruled that this authority includes the ability to strike a PAGA claim “that cannot be rendered manageable.”

Background

PAGA actions are similar to class actions in that both actions involve claims asserted on behalf of large numbers of employees.  PAGA actions, however, do not involve the same well-established procedural elements and safeguards as class actions, which has left PAGA actions with few discernable boundaries or limits.  For years, California employers have argued that PAGA claims should be subject to the same manageability requirements as class actions. Until Wesson, no published California state court decision has directly addressed this issue. Federal district courts have been split, with some agreeing to strike PAGA claims as unmanageable when they require a multitude of individual assessments. Other district courts have sided with employees, reasoning that a manageability requirement is inconsistent with PAGA’s purpose. Unpublished California state court decisions have split along the same lines.

Wesson v. Staples the Office Superstore, LLC

In Wesson, the plaintiff filed class and PAGA claims on behalf of himself and 345 other Staples general managers (GMs). Among other things, he argued Staples misclassified its California GMs as exempt and was therefore liable for unpaid overtime and failure to provide meal and rest breaks. As an affirmative defense, Staples asserted that it committed no Labor Code violations because it correctly classified its GMs as exempt. Staples later moved to strike the PAGA claim as unmanageable, arguing that the claim would require a vast number of individual assessments for each GM. In support, Staples offered evidence that each GM’s performance depended on numerous variables, such as differences in store size, sales volume, staffing levels, labor budgets, and other factors.

The plaintiff opposed Staples’ motion, arguing that manageability is irrelevant and inconsistent with PAGA’s purpose. After an initial round of briefing, the trial court ruled that it had the ability to strike the PAGA claim. The court asked the plaintiff to submit a trial plan demonstrating that the PAGA claim would be manageable. The plaintiff submitted a trial plan, discussing how he intended to prove his prima facie case, but not how the parties could litigate Staples’ affirmative defense. During the motion hearing, the parties estimated it would take six trial days per GM to litigate the misclassification issue. Based on the evidence presented, the trial court concluded the PAGA claim was unmanageable and granted Staples’ motion to strike.

The California Court of Appeal affirmed, holding that the inherent authority of courts to ensure the manageability of claims at trial includes the power to strike a PAGA claim that cannot be rendered manageable. In reaching this conclusion, the court cited prior decisions requiring litigation of individual issues to be manageable in the class action context. The court also cited a case applying the manageability requirement to a representative claim brought under the pre-2004 version of California’s Unfair Competition Law. Similar to other representative claims, the court noted that PAGA claims may involve large numbers of individuals who “may have markedly different experiences relevant to the alleged violations.”

With these principles in mind, the court noted that the parties’ estimated trial time per GM would result in a trial lasting multiple years and requiring hundreds of witnesses. Under those circumstances, the court found that the trial judge was reasonable in concluding that such a trial would “not meet any definition of manageability.” The appellate court cautioned, however, that trial courts should not lightly resort to striking a PAGA claim. Courts should, if possible, work with the parties to make the claim manageable by narrowing the scope or implementing a feasible trial plan. The appellate court observed that the plaintiff failed to cooperate in this regard, thereby hindering the trial court’s ability to create a viable plan. As a result, there was no abuse of discretion in striking the PAGA claim as unmanageable.

It remains to be seen if the plaintiff in Wesson will seek review by the California Supreme Court. 

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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