Posts belonging to Category PAGA



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

Rojas-Cifuentes v. Sup. Ct.: MSA Based on “Insufficient Facts and Theories” in PAGA Notice Letter Overturned on Writ of Mandate

In Rojas-Cifuentes v. The Superior Court of San Joaquin County, Cal. Ct. App. 3d Dist., No. C085643, Dec. 21, 2020 (“Rojas-Cifuentes”) (slip op. available here), the Court of Appeal issued a writ of mandate directing the Superior Court of San Joaquin County to set aside its order granting summary adjudication of an employee’s claim under the Private Attorneys General Act of 2004 (“PAGA”) in favor of the defendant, American Modular Systems, Inc. (“AMS”), and enter a new order denying the MSA. AMS’s motion was brought on the grounds that Plaintiff Rojas-Cifuentes’ PAGA notice letter to AMS and the Labor and Workforce Development Agency failed to include sufficient “facts and theories” (Cal. Lab. Code § 2699.3) to support his claimed Labor Code violations.

The “facts and theories” requirement for a PAGA notice letter, however, is not high and provides little fodder for employers seeking a procedural loophole to PAGA claims. The purpose of the PAGA notice requirement is to afford the Labor and Workforce Development Agency “the opportunity to decide whether to allocate scarce resources to an investigation.” Slip. op. at 6 (citing Williams v. Superior Court, 3 Cal.5th 531, 545-546 (2017)). Thus, to require a PAGA notice letter to “satisfy a particular threshold of weightiness . . . would undercut the clear legislative purposes the act was designed to serve.” Id. Following cases such as Williams and Brown v. Ralphs Grocery Co., 28 Cal.App.5th 824 (2018), Rojas-Cifuentes found “few ‘facts and theories’ are needed to satisfy PAGA’s notice requirement.” Id. at 7. Rojas-Cifuentes also confirmed that a PAGA notice letter need only allege broadly a class of “aggrieved employees” such as “current and former California non-exempt employees of AMS.” Id. at 10.

Considering the legislative purposes of PAGA, as cases such as Rojas-Cifuentes, Williams, and Brown all confirm, challenges to the sufficiency of PAGA notices have no legitimate purpose. They harm the interests of the State of California, in collecting civil penalties; of employees, as victims of Labor Code violations; and our overburdened judiciary, forcing the courts to address repeated, groundless challenges to the PAGA statute.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

Olson v. Lyft: PAGA Waivers Remain Unenforceable UnderIskanian, Says Another CA Ct. of Appeal

In Brandon Olson v. Lyft, Inc., Cal. Ct. App. 4th Dist., No. A156322, Oct. 29, 2020 (slip op. available here), Lyft appealed an order denying its motion to compel Olson’s PAGA claims to arbitration. Lyft argued that the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) (precluding enforcement of PAGA waivers) was “wrongly decided” and no longer good law in light of the United States Supreme Court’s decision in Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018). Slip op. at 1.

The court disposed of the first argument in a footnote, pointing out that arguing that a California Supreme Court decision was “wrongly decided” is “not productive” in either a trial or appellate court. Slip op. at 5. The court then rejected the second argument, noting that an “identical argument” was rejected in Correia v. N.B. Baker Electric, Inc., 32 Cal.App.5th 602 (2019). Slip op. at 1. In doing so, the First District joined a growing number of courts following Correia. E.g. Collie v. The Icee Co., 52 Cal.App.5th 477, 480 (2020) (“[w]e also join Correia . . . in holding that Epic Systems . . . does not undermine the reasoning of Iskanian”); Provost v. YourMechanic, Inc., 55 Cal.App.5th 982 (2020) (“[w]e reaffirm here our analysis and decision in Correia that Epic did not overrule Iskanian”) (Provost was previously covered on the ILJ here).

Epic cannot overrule Iskanian because Epic did not address private attorney general laws like PAGA or qui tam suits. “Epic held that an employee who agrees to individualized arbitration cannot avoid this agreement by asserting claims on behalf of other employees under the FLSA or federal class action procedures.” Slip op. at 11, quoting the trial court. But, a PAGA claim is a qui tam type action, and the PAGA litigant’s status is as “the proxy or agent” of the state, acting “on behalf of state law enforcement agencies.” Id. at p. 12, discussing Iskanian, 59 Cal.4th at 238 (emphasis added). No employee can waive PAGA claims because the claims are not theirs to waive. “[A] PAGA claim is a dispute between the state on the one hand, and the employer on the other.” Slip op. at 6, citing Iskanian at pp. 385-387.  Yet another court reiterates that, since Epic did not overrule Iskanian, PAGA waivers remain unenforceable in California.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

Provost v. YourMechanic: PAGA Plaintiff Cannot Be Compelled to Arbitrate Whether He Is An “Aggrieved Employee”

In Provost v. YourMechanic, Inc., Cal. Ct. App. 4th Dist., No. D076569, Oct. 15, 2020 (slip op. available here), a California Court of Appeal again thwarted an employer’s attempt to defeat an action brought under the Private Attorneys General Act of 2004 (“PAGA”) (Cal. Lab. Code § 2699, et seq.) by seeking to compel arbitration of the plaintiff’s standing as an “aggrieved employee.” The PAGA statute defines an “aggrieved employee” as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.”  Cal. Lab. Code § 2699(c).

The plaintiff’s action alleges that YourMechanic violated a myriad of Labor Code sections and that he and other “aggrieved employees” were misclassified as independent contractors. YourMechanic argued that this presents a “threshold issue” of whether Provost was an employee (as he contends) or an independent contractor. The defendant’s position was that, under its arbitration agreement with the plaintiff, “any private dispute arising out of or relating to [the plaintiff’s] relationship with the Company” was required to be arbitrated before he could proceed with his PAGA action. YourMechanic moved to compel the plaintiff to arbitrate whether he was an “aggrieved employee” within the meaning of the Labor Code.

The trial court denied the motion, and the Court of Appeal affirmed, largely based on Williams v. Superior Court, 237 Cal.App.4th 642 (2015), and its progeny. In Williams, the trial court granted the employer’s motion to compel a plaintiff’s “individual claim” that he had been subject to Labor Code violations, and was therefore an aggrieved employee. Williams held that a single representative cause of action under PAGA cannot be split into an arbitable “individual” claim and a non-arbitrable representative claim. Id. at 645. A long series of cases have followed Williams on this point. Slip op. at 11-12 (collecting cases).

Provost’s conclusion was buttressed by the recent decision in Kim v. Reins International California, Inc., 9 Cal.5th 73 (2020) (holding that employee who settles and dismisses individual claims for Labor Code violations does not lose standing to pursue a claim under PAGA). Kim cited with approval cases in which “[a]ppellate courts have rejected efforts to split PAGA claims into individual and representative components.” Id. at 88. Following Kim, Provost noted that, in PAGA-only actions, “standing . . . cannot be dependent on the maintenance of an individual claim because there is no claim for individual relief.” Slip op. at 14. In other words, “a PAGA-only representative action is not an individual action at all, but instead is one that is indivisible and belongs solely to the state.” Id. at 2 (emphasis in original).  Therefore, no part of any PAGA-only action can be compelled to arbitration. Id.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC