A recent California Court of Appeals decision confirmed that courts have discretion to strike claims for penalties under the Private Attorneys General Act of 2004 (“PAGA”). The only requirement for such damages to be taken away from an action is that the trial Court hold that the claims will be “unmanageable at trial.”
PAGA cases, and resultant penalties, occur when counsel for Plaintiffs contend that the changes they are seeking in Judgment, exceed compensation for the initial, named Plaintiff, and include changes that will benefit other plaintiffs/employees going forward. The decision in this case will help employers defeat—or significantly pare down—the broad and unwieldy claims for PAGA penalties that have become popular with the plaintiffs’ bar.
Plaintiff in this action, Fred Wesson, worked at Staples as a General Manager. He alleged that there were certain basic benefits, such as overtime, meal and rest breaks which were denied not only to him, but also to some 345 other General Managers in California. Because this case was brought on behalf of all of the General Managers, his counsel sought PAGA penalties.
Of course, Staples asserted that the Plaintiff, and the other Manager, were, by definition, exempt employees. In order to establish that defense in this case, Staples would need to show that not only Wesson, but the other and numerous Managers, spent the majority of their time engaged in exempt job duties. It was this latter requirement that cause Staples to object that proving each and every Manager spent most of their time on exempt duties would result in an unmanageable burden at trial. The retailer filed a motion to strike Wesson’s claims, arguing that the claims would be unmanageable at trial and would violate the company’s due process rights, because Staples could not prove its affirmative defense using common proof, but instead would need to establish the exemption as to each GM individually. Staples argued this would require 346 mini trials, one for each GM. In the face of the disagreement regarding the management of the PAGA claims, the trial court struck those claims, and the Appellate Court agreed.
Wesson is the first decision by a California Court of Appeals addressing PAGA cases on the grounds of manageability. There have been other cases that held that manageability was not a basis for rejecting PAGA claims, given the goals of that legislation. This court disagreed.