Nelson v. Southern California Gas: Court of Appeal Underscores Arias Rule that PAGA Actions Needn’t Satisfy Class Certification Requirements

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California’s Second Appellate District has held that a trial court erred by dismissing the plaintiffs’ PAGA action (Cal. Lab. Code §§ 2698 et seq.) for essentially the same reasons as it denied the plaintiff’s class certification motion. Nelson v. Southern California Gas Co., No. B238845 (Cal. Ct. App. May 30, 2013) (Slip opinion available here). The oral argument in Nelson – which strongly suggested that the Second District would rule as it did – was covered here

In Nelson, the plaintiffs, drivers for the SoCal Gas Company, brought a putative class action seeking unpaid wages and other damages arising from alleged meal and rest break violations, “off-the-clock” work, and other derivative violations. Slip op. at 2. The plaintiffs also sought separate relief, as the proxy of the State seeking the recovery of civil penalties pursuant to PAGA. Slip op. at 3. The defendant filed a motion for an order that would both declare the suit inappropriate for class treatment and deny the plaintiffs’ PAGA claim. Soon after, the plaintiffs filed a motion for class certification. The trial court denied the motion for class certification, reasoning that common questions would not predominate. Applying substantially the same analysis, the trial court also held that the plaintiffs could not bring their PAGA claim “because individual issues would predominate and a representative action would not be manageable.” Slip op. at 13.

The plaintiffs appealed both the trial court’s denial of their class certification motion and the effective dismissal of the PAGA claim. While this Court of Appeal held that the trial court had not abused its discretion in denying class certification (see slip op. at 14-29), it reversed the trial court’s PAGA analysis and holding, concluding that “the trial court abused its discretion in applying class action requirements to the PAGA claim.” Slip op. at 29.

Although Arias v. Superior Court, 46 Cal.4th 969 (2009), firmly held that class action requirements are inapplicable to PAGA, Arias did not address a case where the PAGA claim is alleged alongside class claims, which is a common type of pleading. The Arias court therefore had no occasion to draw rigorous distinctions between class actions and PAGA representative actions. Indeed, the Nelson trial court was convinced by the defendant’s argument that it could dismiss the plaintiffs’ PAGA claim on the ground that the PAGA litigation would be “unmanageable”― an element found nowhere in the PAGA statute but which is functionally identical to one aspect of the class certification “superiority” analysis. See slip op. at 31. The Court of Appeal identified the fallacy in the defendant’s argument, noting that the trial court’s conclusion that the PAGA claims would be unmanageable was based entirely on a class certification commonality analysis, and found that “[s]ince, under Arias, a plaintiff need not even plead a representative PAGA claim in accordance with class action requirements, it seems anomalous to require that the plaintiff establish the community of interest class action requirement with respect to a PAGA claim, in the context of a class certification procedure.” Slip op. at 31.

Though Nelson has been designated “unpublished,” it is expected that requests for publication will be filed by the June 19th deadline, at least as to the decision’s PAGA reasoning and holding.