California Court of Appeals: Employees Cannot Opt Out of PAGA Settlement

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Richard Robinson was a truck driver who tried to sue his former employer for civil penalties pursuant to the California Private Attorney’s General Act (“PAGA”). Unfortunately for him, his employer settled another PAGA action while his case was still pending, and despite opting out of the other settlement, the Court of Appeals dismissed the case because he no longer had standing to bring his own PAGA claim once the other had settled.

Mr. Robinson worked as a truck driver for Southern Counties Oil Company. After completing the prerequisite steps for bringing a PAGA action against his former employer, Mr. Robinson brought suit against Southern Counties Oil seeking civil penalties on behalf of himself and other aggrieved employees for failure to provide meal and rest breaks, timely wages, proper wage statements, and wages upon termination. While his PAGA action was still pending, Southern County Oil settled another PAGA action in San Diego that sought PAGA penalties for the same alleged Labor Code violations. Robinson and three other employees “opted out” of the settlement in an attempt to maintain their own PAGA action.

Following the San Diego settlement, the trial court dismissed Robinson’s PAGA action, even though Robinson had opted out. The trial court found that Robinson lacked standing to bring the a PAGA claim based on the same claims that had already been settled in the San Diego action.

On appeal, the court affirmed the trial court’s decision—effectively finding that a plaintiff could not opt out of a PAGA settlement and bring his own action alleging the same Labor Code violations. Unlike a class action, a PAGA claim “functions as a substitute for an action brought by the government itself, a judgment in that action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government.” Because Robinson stood in the shoes of the state when he brought his PAGA action, and the state had already settled the same issues in the San Diego settlement, Robinson was effectively precluded from pursing his PAGA claims.

This decision explains a key difference between PAGA actions and class actions. While a normal class action is brought on behalf of the plaintiffs, PAGA actions are brought on behalf of the state and so individual plaintiffs cannot “opt out” and refuse to be bound by what is effectively the “state’s” settlement. In short, this decision should offer encouragement to employers that when they do settle a PAGA claim they create a clean slate up to the point of settlement even if some employees try to “opt out.”

[View source.]

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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