Crestwood Behavioral Health, Inc. v. Sup. Ct.: PAGA Venue is Proper Anywhere Aggrieved Employees Suffer Labor Code Violations, Says CA Ct. of Appeal

In Crestwood Behavioral Health, Inc. v. The Superior Court of Alameda County, Maricris Fragoza, Real Party in Interest, Cal. Ct. App. 1st Dist., No. A160523, Feb. 17, 2021 (“Fragoza”) (slip op. available here), the California Court of Appeal decided “a significant and recurring issue of first impression.” What is the proper venue for an action under the Labor Code Private Attorneys General Act (“PAGA”) (Cal. Lab. Code § 2698, et seq.), where the representative plaintiff suffered Labor Code violations in one county, but filed her PAGA action in another county where other “aggrieved employees” were employed?

In Fragoza, the employer (“Crestwood”) filed a petition for writ of mandate seeking a ruling from the Court of Appeal that venue is properly located in the county where the representative plaintiff worked, but not other counties where other aggrieved employees worked. The Court of Appeal came to the opposite conclusion, stating, “We hold that venue is proper in any county in which an aggrieved employee worked and Labor Code violations allegedly occurred.” Slip. op. at 5 (emphasis added).

The plaintiff worked for Crestwood in its Solano County facility, and suffered Labor Code violations in Solano County. However, the plaintiff filed her PAGA action in Alameda County, where other “aggrieved employees” suffered violations, because Crestwood also had a facility in Alameda County. Crestwood argued that, although the plaintiff could seek PAGA penalties for Labor Code violations against other aggrieved employees, the only proper venue to file her PAGA action is Solano County, where the violations against Fragoza herself occurred. The argument was based on Cal. Code Civ. Proc. § 393, which provides that for recovery of a penalty, venue is proper in “the county in which the cause, or some part of the cause, arose.”

The court stated that the problem with the defendant’s argument is that it “misapprehends the purpose of Fragoza’s personal allegations.” Slip. op at 6. The plaintiff’s allegations that she suffered Labor Code violations are necessary to establish her standing as a PAGA representative, not to establish venue. Id. “Once she established standing, Fragoza is suing as a proxy for the state, not as an individual. [Citation omitted] She has no individual claim.” Id. at 6-7. It follows that, under section 393, Crestwood’s liability or “some part of the cause [] arose” in Alameda County because Labor Code violations occurred there, at Crestwood’s facility. Id. at 7. Hence, the Court of Appeal’s holding that in PAGA actions, venue is proper in any county in which aggrieved employees allegedly suffered Labor Code violations.  

Employers’ advocates have bemoaned this decision as a pro-employee PAGA ruling that promotes “forum shopping” by employees. It is not, because Fragoza simply applies long-standing venue rules to the realities of the PAGA. The Supreme Court of California holds that PAGA actions have no individual component; PAGA plaintiffs may pursue civil penalties “only as the state’s designated proxy, suing on behalf of all affected employees.” Kim v. Reins International California, Inc., 9 Cal.5th 73, 87 (2020). Under section 323, the proper venue for a PAGA action is any county in which their Labor Code violations against these affected employees allegedly occurred. 

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC