In a blow for employers, the California Supreme Court held that trial courts may not strike PAGA claims on manageability grounds.

The Backdrop on PAGA Manageability

PAGA trials are a collection of mini trials, as opposed to class actions that are one trial for common claims. Class actions must be “certified” as consisting of similar enough claims before the class action can proceed to trial, while PAGA claims have no certification requirement. As a result, there are serious questions as to whether a PAGA trial (essentially consisting of many mini trials) in manageable—hence, the “manageability” argument.

In Wesson v. Staples the Office Superstore, LLC, 68 Cal. App. 5th 746 (2021), the trial court struck a PAGA claim after agreeing with the employer that courts have authority to ensure PAGA claims may be fairly and efficiently tried. The Court of Appeal agreed, reasoning, in part, that defendants have a right to present and litigate their defenses. As a result, the Court of Appeal held that trial courts have inherent authority to strike PAGA claims on manageability grounds. Shortly after, another Court of Appeal, in Estrada v. Royalty Carpet Mills, Inc., 76 Cal. App. 5th 685 (2022), disagreed with the Wesson Court, holding that trial courts have inherent authority to limit evidence presented at PAGA trials to ensure manageability, but they do not have authority to strike or even limit a PAGA claim on manageability grounds before trial.

The employer, Royalty Carpet, appealed in May 2022. The Court heard oral arguments in November 2023. The California Supreme Court finally issued its decision on Manageability—putting the manageability issue to rest.

The California Supreme Court’s Ruling Explained

The California Supreme Court emphasized that trial courts do not have broad inherent authority to dismiss claims. In affirming Wesson, the California Supreme Court relied on litany of legacy cases limiting the power of trial courts when their rulings would effectively nullify existing legislation or frustrate legitimate legislative policy. Specifically, the Court held that where “the legislature has provided for certain procedures in one context, courts generally lack inherent authority to apply the procedure in an inapposite context.” The Court further reasoned that “trial courts possess only a narrow inherent authority to dismiss claims based on limited circumstances undisputedly not present in this case (e.g., cases involving a failure to prosecute, frivolous claims, or egregious misconduct.)” In so ruling, the Court rejected the argument that class manageability requirements could be grafted onto PAGA claims where they otherwise do not exist—emphasizing the clear distinctions between class action and PAGA procedures. Consequently, the Court sided with Estrada, holding that trial Courts do not have inherent authority to strike a PAGA claim.

The Court, however, agreed that trial courts may limit the scope of evidence presented at a PAGA trial based on manageability grounds.

The Takeaway

While there are still some manageability arguments to make at a PAGA trial regarding the presentation of evidence, striking PAGA claims on manageability grounds is no longer viable. The sting of this ruling is even more painful to employers because it removes a useful pre-trial bargaining chip for PAGA claims that mostly resolve before trial.

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