PAGA Settlement May Release Claims from Outside of the Limitations Period

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On September 28, 2021, the California Court of Appeal (4th District) issued a counterintuitive decision in Amaro v. Anaheim Arena Mgmt., LLC, Case No. G058371, holding that a PAGA settlement may release claims from outside of the limitations period. In Amaro, a class action and PAGA settlement released PAGA claims dating back to December 5, 2010, even though notice was not submitted to the Labor & Workforce Development Agency (LWDA) until February 21, 2017. Slip op. at 20. Thus, an intervenor objected that the settlement could release only PAGA claims arising on or after February 21, 2016. Id.

The trial court disagreed, and the appellate court affirmed. Noting that the statute of limitations is an affirmative defense and not a jurisdictional bar, the court explained that “[n]othing in the statute prohibits [a plaintiff] from releasing PAGA claims outside the limitations period of her own claim.” Id. “Nor is this practice contrary to PAGA’s purposes,” because a PAGA plaintiff can proceed only after the LWDA first declines to investigate or respond to the alleged Labor Code violations. Id. at 20-22.

The practical effect of this ruling may be limited. As Amaro also pointed out, “A trial court may still refuse to approve such a release if it is unfair given the circumstances of the case.” Id. at 23. Thus, for example, trial courts may still refuse to approve a settlement if there are claims that appear to be released without consideration. However, this ruling may be relevant to cases involving parallel PAGA cases being litigated simultaneously against the same employer. Under this authority, such cases could be extinguished in their entirety by a settlement in a single case (subject to court approval), even if that case was not the first case filed.

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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