Court of Appeal Holds That Exhaustion Requires Identification of Each Separate Theory of Liability (Update)

Akin Gump Strauss Hauer & Feld LLP

On September 30, 2021, the California Court of Appeal (4th District) decided Uribe v. Crown Building Maintenance Co., Case No. G057836. At issue in Uribe was a Private Attorneys General Act (PAGA) settlement that purported to release claims for failure to reimburse business expenses under Labor Code Section 2802, including, among other things, expenses for personal cell phone use. A plaintiff in a parallel action seeking PAGA penalties for failure to reimburse cell phone expenses objected that the release was overbroad because Uribe’s letter to the Labor and Workforce Development Agency (LWDA) mentioned expenses “for purchasing slip resistant shoes and maintaining his uniform,” but never mentioned cell phone expenses.

In an unpublished decision, the Court of Appeal agreed that the release was too broad because Uribe’s PAGA notice did not put cell phones at issue. Relying primarily on Brown v. Ralphs Grocery Co., 28 Cal. App. 5th 824 (2018), and Williams v. Superior Court, 3 Cal. 5th 531 (2017), the Court explained that while even minimal “facts and theories” may constitute proper notice to the LWDA under Labor Code Section 2699.3(a)(1)(A), a PAGA plaintiff is confined to the theories actually identified in the LWDA notice. “Uribe’s bare reference to section 2802 and its indemnification requirement was insufficient to preserve a PAGA claim as to cell phone usage because his notice stated no ‘facts’ whatsoever as to that ‘theor[y]’ of an alleged PAGA violation.” Slip op. at 22 (quoting Cal. Lab. Code § 2699.3(a)(1)(A)). Although this decision was focused on a release, employers may be able to use this same reasoning to argue that a plaintiff has not exhausted a particular theory of liability.

The court also held that the petitioner on appeal—an alleged “aggrieved employee” in the Uribe action—had standing to challenge the settlement because it would impact PAGA claims she was prosecuting in a parallel action. Interestingly, this portion of the opinion contradicts Turrieta v. Lyft, Inc., a published decision by the 2nd District issued the same day. To read about the Turrieta decision, click here.

Update: On October 26, 2021, the court modified its opinion, explaining that the petitioner had standing, not because she was prosecuting a parallel action, but because the trial court had allowed her to intervene in Uribe. It distinguished Turrieta on the basis that the petitioners in that appeal had not been permitted to intervene in the trial court, and opined that trial courts may (but are not required to) permit alleged aggrieved employees to intervene. The court also certified the decision for publication.

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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