California Courts Have Inherent Authority to Strike Unmanageable PAGA Claims

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A California Court of Appeal has held – for the first time – that “trial courts have inherent authority to ensure that PAGA [Private Attorneys General Act] claims will be manageable at trial, and to strike such claims if they cannot be managed.” While other courts have recognized that this authority may exist based on similar contexts, this is the first time a California appellate court has done so. Manageability is an important consideration for defending PAGA claims. This ruling can be used to leverage unmanageability to limit the scope of the claims at trial which, in turn, can reduce the potential liability and encourage settlement.

Facts

In Wesson v. Staples, Cal. App. 5th (Cal. App., Sept. 9, 2021), Wesson sought to recover almost $36 million dollars in PAGA penalties on behalf of 346 allegedly misclassified current and former Staples GMs. Staples moved to strike the PAGA claims, arguing it would be unmanageable to litigate its defense that the managers were properly classified as exempt, which requires individual proof. Wesson, in response, insisted the trial court lacked authority to require manageability. At the court’s request, Wesson submitted a trial plan, which did not address litigating Staples’s exemption defense. The Parties estimated it would take six days per each GM during trial, totaling about eight years. The trial court concluded the PAGA claim was not manageable, and granted Staples’s motion to strike.

The Court of Appeal’s Decision  

Wesson appealed, claiming Staples had not proved that individualized evidence would be required, that the trial court did not have authority to strike his claim as unmanageable, and that a manageability assessment need not include consideration of affirmative defenses. The Court of Appeal disagreed, holding:

(1) courts have inherent authority to ensure that 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) given the state of the record and Wesson's lack of cooperation with the trial court's manageability inquiry, the court did not abuse its discretion in striking his PAGA claim as unmanageable.

While the Court affirmed the trial court’s grant of Staples’s motion to strike, this will not always be the result after a determination of unmanageability. As the decision notes, courts should try to work with the parties to develop a feasible trial plan or limit the scope of the claims. However, due to Wesson’s refusal to cooperate with the trial court in this, the trial court did not abuse its discretion in striking the PAGA claim.

Practical Implications

This decision is the first instance of a California appellate court acknowledging a trial court’s ability to assess manageability for PAGA claims and to dismiss claims that it determined are not manageable. Previous federal district court decisions applying California law had split as to whether court’s have this apparent authority, concerned that such power would be inconsistent with PAGA’s objectives of allowing employees to pursue labor violations as a representative of the State.

This decision leaves open questions. The court did not provide concrete guideposts as to what is “manageable” (beyond a broad reference to ensuring the trial may proceed “fairly and efficiently”), in particular for claims that would require fewer than eight years’ worth of trial testimony. The court also did not address which party bears the burden of proof as to manageability – whether the plaintiff must prove manageability, or the defendant must prove unmanageability. Although Wesson did not address this issue, the prevailing law as to class actions requires plaintiffs to establish manageability. While we can expect to see future decisions addressing these and other questions, Wesson is an important development for defending PAGA actions.   

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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