PAGA and Public Entities: The End of an Era
On August 30, 2024, the California Supreme Court considered the question of whether plaintiffs could recover PAGA penalties against public entities in a case called Stone v. Alameda Health System (“AHS”).
This question had previously been addressed in a court of appeal case called Sargent v. Board of Trustees of California State University (2021) 61 Cal.App.5th 658. In Sargent, the court held that PAGA penalties could be collected against public entities if the underlying Labor Code section provided for a specific penalty (as opposed to the default penalties under Labor Code section 2699(a)).
The Supreme Court concluded, contrary to Sargent, that public entity employers are not subject to PAGA suits for civil penalties for the following reasons:
- The Labor Code’s definition of “employers” did not include public entities; and
- PAGA exempts public entity employers from penalties for violations of Labor Code provisions carrying their own specific penalties.
A Win for Workers in the Fourth District Court of Appeal
The attorneys at Hunter Pyle Law (HPL), along with co-counsel Feinberg, Jackson, Worthman & Wasow (FJWW) recently received a favorable decision from the Fourth District Court of Appeal in a case called Uribe v. Crown Building Maintenence Co. (September 30, 2021, Case No. G057836). HPL and FJWW represent Isabel Garibay, a worker who intervened in the Uribe case because the defendant in that case was attempting to engineer a “reverse auction”-a strategic move whereby a defendant tries to settle the case by appealing to the lowest bidder. HPL and FJWW were able to block that settlement, returning the case to the trial court where they will seek justice and victory on behalf of the workers.
The underlying facts in Uribe are as follows. In 2015, HPL and FJWW filed a class action in Alameda County called Gama v. Able Services, et al. The Plaintiff in that case sought to represent a class of 20,000 janitors who were forced to use their cell phones for work-related purposes. (As a point of reference regarding the value of the case, HPL and FJWW had certified a class and subsequently resolved a similar case against another janitorial company for over $5 million.)
In 2016, Josue Uribe filed his lawsuit against the same defendants. Mr. Uribe’s case was not a class action; rather, it was a representative action under California’s Private Attorneys General Act (“PAGA”). Nor was it a cell phone case. Rather, Mr. Uribe’s case was originally about reimbursements for washing uniforms. (Mr. Uribe’s subsequent court filings seem to indicate that he later valued his uniform clam at zero dollars.)
HPL and FJWW litigated Gama aggressively, and were prepared to take the case to trial if it did not settle. However, once the defendants learned of this fact, they began to try to convince the lawyer who represented Mr. Uribe to settle the claims in the Gama case. Unfortunately, Mr. Uribe’s lawyer agreed to do that. He then tried to amend his case so that it included the claims at issue in Gama. Worst of all, Mr. Uribe’s attorney agreed to settle the janitor’s claims worth tens of millions of dollars for $370,000.
HPL and FJWW intervened in the Uribe case and tried to block the settlement at the trial court. However, they were unsuccessful in that regard, and were forced to file an appeal. Fortunately, they prevailed before the Fourth District Court of Appeal, which reversed the judgment.
The appellate court began its analysis by noting that Ms. Garibay (the worker represented by HPL and FJWW) had standing to bring her appeal. Ms. Garibay had intervened in the Uribe case for the purpose of opposing the settlement, but the Fourth District noted that that was not enough. Instead, the court focused on the fact that Ms. Garibay’s case predated Mr. Uribe’s and that she had invested substantial time and resources to pursuing her PAGA claim.
The appellate court then adopted wholesale the argument that Ms. Garibay had made in her briefs: that Mr. Uribe had not properly exhausted his remedies prior to amending his case to add a PAGA claim based on the failure to reimburse for cellular phone expenses. This argument had fallen on deaf ears at the trial court, but the court of appeal found it to be compelling, reaching the following conclusion:
Having no basis to sue on that ground, any settlement Uribe reached with Crown could not include settlement of PAGA claims for unreimbursed cell phone costs, and the trial court could not enter judgment confirming such a settlement.
The court of appeal noted that the settlement provided that if the court did not approve it “as provided herein” it was null and void. The court then found that the settlement could not stand because it was not approved as written. The case will therefore return to the trial court, where HPL and FJWW will continue to fight on behalf of the 20,000 or so workers who are affected by this case.
By a strange twist of fate, on September 30 2021, the same date that Uribe was decided, the Second District Court of Appeal reached the opposite conclusion in the case of Turrieta v. Lyft (September 30, 2021, Case No. B304701). There, the court concluded that the objectors to a PAGA settlement did not have standing to appeal from a judgment approving that settlement. The attorneys in Turrieta have indicated that they are going to seek review at the California Supreme Court. Check back here for future developments as that effort continues.
If you have questions about your rights in the workplace, please feel free to contact the attorneys at Hunter Pyle Law. We can be reached at (510) 444-4400, at inquire@hunterpylelaw.com, or at www.hunterpylelaw.com.
PAGA and Manageability: Some Lessons Learned from Wesson v. Staples
On September 9, 2021, in Wesson v. Staples the Office Superstore, LLC (Cal. Ct. App., Sept. 9, 2021, No. B302988) 2021 WL 4099059, Division 4 of the Second District Court of Appeal addressed an important question of first impression: whether trial courts have the authority to ensure that claims brought under California’s Private Attorneys General Act (“PAGA”) will be manageable at trial. The plaintiff in Wesson claimed that the Los Angeles Superior Court had no such authority, and that all that he was required to produce was his pan to prove his prima facie case. (A prima facie case means sufficient evidence that, if proven, would support a verdict in the plaintiff’s favor.)
In response, Staples, the defendant, argued that the trial court had to consider its affirmative defenses to the plaintiff’s claims, And, if those affirmative defenses involved individualized proof as to each class member, then the case was “unmanageable” and should be dismissed.
The trial court agreed with Staples, and ruled that it did have the authority to consider manageability. Furthermore, it found that the plaintiff had not shown that the PAGA claim was manageable and dismissed the case. The court of appeal affirmed. Absent review by the California Supreme Court, Wesson is likely to have a significant impact on PAGA cases going forward. This post explores what happened in that case and how it is likely to play out.
First, some background. In Wesson, the plaintiff had worked for Staples the Office Superstore, LLC (Staples) as a store general manager (GM). He claimed that Staples had illegally misclassified him as an exempt employee. Mr. Wesson sued Staples, asserting, among other things, a representative claim under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). He sought to bring claims on behalf of himself as well as 345 other current and former Staples GMs in California.
After several years of litigation, Mr. Wesson filed a motion to certify a class based on the misclassification claims. The trial court denied that motion, finding that important questions regarding how the GMs had spent their time at work could not be resolved on a classwide basis.
Staples then filed a motion to strike the plaintiff’s PAGA claim. Staples argued that that claim was “unmanageable” because of the nature of its affirmative defense-that it would have to elicit individualized proof as to each of the 346 GMs.
In response, Mr. Wesson contended that the trial court did not have the authority to determine whether PAGA claims were manageable. Although the trial court invited him to submit a trial plan showing that the PAGA claim was manageable, Mr. Wesson declined to do so. Instead, he argued that all that he had to do was to prove his prima facie case using common proof. The trial court then struck (meaning dismissed) the PAGA claim.
The court of appeal agreed, holding that courts have the inherent authority to ensure that a PAGA claims will be manageable at trial. That includes the authority to strike the PAGA claim, if necessary. The court further noted that PAGA claims may present more significant manageability issues than class actions for the following reasons:
PAGA claims do not require a showing that common questions predominate over individual ones.
PAGA claims do not require a showing of a uniform policy.
PAGA claims can cover a wide variety of employees and involve different kinds of violations.
Turning to the facts of the case, the court of appeal found that there was a large amount of variation from store to store in terms of how GMs performed their job duties. Surprisingly Mr. Wesson agreed that resolution of his claims on a classwide basis would require an analysis of how each GM spent his time. He also apparently agreed with Staples’ estimate that it would take eight years to try the case. Based on these facts, the court of appeal had no difficulty in finding that the trial court had not abused its discretion in striking the PAGA claims as unmanageable.
Defendants in PAGA claims will no doubt point to Wesson and argue that their cases too are unmanageable. But courts should not read Wesson too broadly. Among other things, in that case:
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Misclassification claims that turn on the workers’ job duties can be inherently fact specific, requiring individualized inquiries as to each person; and
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The plaintiff in Wesson refused to provide a trial plan showing how his PAGA claim could be efficiently managed; and
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The plaintiff apparently conceded that the trial would last eight years.
For these reasons, Wesson will have little or no impact on most PAGA cases. However, Wesson underscores the importance of ensuring that plaintiffs (1) have a trial plan that addresses all of the issues in the case, including any affirmative defenses, and (2) structure the case in a manner that demonstrates to the trial court that it can be resolved in a reasonable length of time.
The workers rights attorneys at Hunter Pyle Law have handles PAGA and class cases throughout California. If you have questions about your rights in the workplace, please feel free to contact us in order to utilize our free and confidential intake process. We can be reached at inquire@hunterpylelaw.com or at (510) 444-4400.
PAGA, Individual Claims, Public Entities, and Section 1102.5 Whistleblower Claims
On September 8, 2019, the Court of Appeal for the Second Appellate District issued an important decision in the case of Hawkins v. City of Los Angeles (Case Nos. B279719, B282416). That decision casts light on the following questions: (1) Whether PAGA claims can be brought on behalf of an individual, as opposed to a group of aggrieved employees; (2) Whether PAGA claims can be brought against public entities; and (3) Whether attorneys’ fees are recoverable under Labor Code section 1102.5.
Unpaid Wages and PAGA: A Third Approach in Zakaryan v. The Men’s Wearhouse
On March 28, 2019, a third California Court of Appeal weighed in on the issue of whether California employees who have signed arbitration agreements can bring claims under the Private Attorneys General Act (PAGA) for unpaid wages.
To set the stage, in Esparza v. KS Indus., L.P. (2017) 13 Cal.App.5th 1228, the Fifth District Court of Appeal held that a PAGA claim can be split, and that PAGA claims for unpaid wages under Labor Code section 558 can be sent to individual arbitration. In Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705, the Fourth District Court of Appeal disagreed, holding that employees can bring those PAGA claims on a representative basis in court.
The Second District Court of Appeal has now weighed in on this issue in the case of Zakaryan v. The Men’s Wearhouse (March 29, 2019) Case No. B289192. In that case, the court agreed with Lawson for the most part, but added this interesting twist: Of the unpaid wages recovered, 75 percent must go to the State, and 25 percent to the workers. In reaching this holding, the Zakaryan court relied on the fact that Labor Code section 558 was enacted before PAGA. Therefore, PAGA’s later-enacted rule regarding the distribution of civil penalties recovered under that statute must control. (more…)
Can I Be Fired for My Political Beliefs or Activities in California?
In this time of political turbulence, many people wonder if they can be fired for their political beliefs or activities. In California, the answer to that question is no, thanks to the provisions of California Labor Code sections 1101 and 1102.
Section 1101, which has been on the books since 1937, provides as follows:
No employer shall make, adopt, or enforce any rule, regulation, or policy:
(a) Forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office.
(b) Controlling or directing, or tending to control or direct the political activities or affiliations of employees.
Note that section 1101 is broad, and includes rules, regulations or policies that tend to control or direct the political activities or affiliations of employees. This would include terminating an employee for his or her beliefs, because doing so would tend to control his or her activities or affiliations.
Section 1102, also enacted in 1937, provides as follows:
No employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.
The California Supreme Court has interpreted these laws favorably for employees in a pair of cases. First, in Lockheed Aircraft Corp. v. Superior Court of Los Angeles County (1946) 28 Cal.2d 481, a group of employees had sued claiming that Lockheed fired them because of their political activities. In response, Lockheed raised a series of challenges to section 1101.
The Court rejected each of Lockheed’s challenges. The Court held first that section 1101 is not so uncertain or ambiguous as to be unconstitutional. The Court further held that section 1101 was not an arbitrary or unreasonable limitation on the right to contract.
Perhaps most importantly, the Court recognized that an employee who suffers a violation of section 1101 can bring a private right of action for damages resulting from a breach of his or her employment contract. In reaching this holding, the Court noted that Labor Code section 1105 provides that “Nothing in this chapter shall prevent the injured employee from recovering damages from his employer for injury suffered through a violation of this chapter.”
The Court then reasoned that, “a contract of employment must be held to have been made in the light of, and to have incorporated, the provisions of existing law. Hence, upon violation of the section, an employee has a right of action for damages for breach of his employment contract.” Lockheed Aircraft Corp., 28 Cal.2d at 486. (citations omitted)
Three decades later, the Court revisited sections 1101 and 1102 in Gay Law Students Assn. v. Pacific Tel. & Tel. Co. (1979) 24 Cal.3d 458. In that case, a group of students claimed that the defendant was discriminating against gays and lesbians by refusing to hire them, and that such conduct violated sections 1101 and 1102.[1]
The Court held that sections 1101 and 1102 “serve to protect ‘the fundamental right of employees in general to engage in political activity without interference by employers.’” 24 Cal.3d at 487. For this reason, the statutes should not be narrowly confined to partisan activity. Furthermore, “[t]he term ‘political activity’ connotes the espousal of a candidate or a cause, and some degree of action to promote the acceptance thereof by other persons.” (emphasis in original)
The Court then reiterated its holding in Lockheed that employees who are fired in violation of sections 1101 and 1102 can bring claims for damages.
If you are fired for your political beliefs or activities in California, you may be able to bring several different types of claims. First, you can sue under sections 1101 and 1102 directly. You may also be able to sue for wrongful termination in violation of public policy. See, e.g., Stevenson v. Superior Court (1997) 16 Cal.4th 880, 889–890. Third, you may be able to sue for breach of the covenant of good faith and fair dealing. See, e.g., Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.
It is not clear whether an employee who prevails under section 1101 or 1102 will be entitled to his or her attorneys’ fees. Therefore, you may also wish to explore bringing a claim under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.), which provides for reasonable attorneys’ fees and costs. See Cal. Lab. Code section 2699(g)(1).
If you have questions about your rights in the workplace, please feel free to contact Hunter Pyle Law for a free and confidential initial intake. We can be reached by phone or by text at (510) 444-4400 or at inquire@hunterpylelaw.com.
[1] At that time, sexual orientation was not a protected category under the Fair Employment and Housing Act. It is now. See Cal. Govt. Code section 12940(a)(1).
Employee Cannot Pursue PAGA Claim Against Employer after Settling and Dismissing Individual Labor Code Causes of Action
On December 29, 2017, the California Court of Appeal Second Appellate District held that an employee who settled and dismissed his individual wage and hour claims against his former employer no longer had standing to maintain a Private Attorneys General Act (PAGA) cause of action against that same employer. Kim v. Reins International California, Inc., 2d. Dist. Case No. B278642 (filed December 29, 2017). (more…)
PAGA and Arbitration: The Growing Conflict between State and Federal Court
In earlier posts, we have explored the question of whether arbitration agreements that are broad enough to include claims under California’s Private Attorneys General Act (Labor Code section 2698), or PAGA, should be enforced. As of March 2017 there is a growing split between state and federal courts on this issue. As a result, which court a case winds up in may very well determine how the court rules on this critical question. (more…)
No Arbitration of PAGA Claims
PAGA continues to be an important tool for workers in California seeking to enforce their rights under the Labor Code. Employers continue to try to force PAGA claims into arbitration, where they think that they have a decisive advantage. Yet courts continue to block these efforts. As a result, PAGA claims remain in court where they belong.
The latest case to hold that PAGA claims cannot be arbitrated is Hernandez v. Ross Stores, Inc. (2d DCA Pub. Order 1/3/17) E064026. There, the plaintiff, a warehouse worker, sought to bring a PAGA-only action against the discount store giant for failure to pay wages, failure to properly itemize hours, and failure to pay overtime. Ross attempted to compel Hernandez to arbitrate her individual claims, arguing that its arbitration agreement stated that it applied to “any disputes arising out of or relating to the employment relationship” between Ross and an employee. Ross contended, based upon this language, that before Hernandez could bring a PAGA action, she had to arbitrate the “dispute” over whether she was an aggrieved employee.
Not surprisingly, this too-clever-by-half argument failed. Both the trial court and Division Two of the Second District Court of Appeal held that Hernandez could not be compelled to arbitrate her PAGA claims. The trial court grounded its analysis in the seminal case of Iskanian v. CLS Transportation (2014) 59 Cal.4th 348, which held that PAGA actions-whether seeking penalties for one employee or for a group of them-are fundamentally law enforcement actions designed to protect the public. In PAGA cases, there are therefore no individual claims to arbitrate. (more…)