Two recent Private Attorney General Act (PAGA) cases underscore the importance of effectively using procedural motions in defending such cases.
1. Rodriguez v. Packers Sanitation Services LTD., LLC
The first case, Rodriguez v. Packers Sanitation Services LTD., LLC, involved the question of arbitrability in a so-called “headless” PAGA action. In a headless PAGA action, the plaintiff seeks to avoid arbitration by filing a complaint that asserts a PAGA claim solely on behalf of others while the PAGA plaintiff disclaims any individual claim for relief that would be subject to an arbitration.
In Rodriguez the California’s Fourth District Court of Appeal held that, in such cases, trial courts cannot order arbitration of the unasserted individual PAGA claims even if it is true that an individual PAGA claim is a necessary component of every PAGA action.
This decision is odds with the Second District Court of Appeal’s recently published decision in Leeper v. Shipt. In Leeper the appellate court held that trial courts may compel arbitration of unasserted individual PAGA claims because the court concluded that every PAGA action necessarily includes an individual PAGA claim. (For further analysis on Leeper see our prior blog post.)
The Rodriguez decision does not create a split of authority on the issue of whether every PAGA action includes an individual PAGA claim; the appellate court expressly declined to consider that issue. Instead, the Rodriguez decision concludes that trial courts resolving motions to compel arbitration must adopt the PAGA plaintiff’s representations about the scope of their PAGA claim.
However, the Rodriguez case will not necessarily lead to bad outcomes for California employers. In Rodriguez, the plaintiff represented to the appellate court that “he has forgone individual PAGA relief and [they] accepted that representation.” “As a result,” the appellate court found that he “will be precluded from taking a contrary position in the future” and the “conclusion that the complaint does not assert individual PAGA claims will be the law of the case.” In other words, the Rodriguez complaint will next be subject to a motion to dismiss for lack of standing.
Although the Rodriguez case will not necessarily lead to bad outcomes for California employers, it incorrectly places form over substance and will create waste. The appellate court should have given no credence to the plaintiff’s assertion that he has forgone relief under PAGA. It is well established that aggrieved employees cannot opt out of a PAGA settlement or judgment, and that a portion of any civil penalty award must be distributed to each aggrieved employee, including the plaintiff. Thus, PAGA does not allow aggrieved employees to forgo their share of a civil penalty award.
The Rodriguez decision also fails to recognize that, under Viking River v. Moriana and Adolph v. Uber, the arbitrable portion of a PAGA action is the threshold issue of whether the plaintiff is an aggrieved employee, not the ultimate issue of whether the court should award a civil penalty. Accordingly, where a PAGA plaintiff signed an agreement requiring arbitration of any claim, dispute, or controversy concerning alleged Labor Code violations, trial courts should order arbitration so long as the plaintiff claims that they are an aggrieved employee under PAGA—that they suffered a Labor Code violation. It should not matter that the plaintiff may claim to have “purely representative” PAGA claims and to have disavowed any “individual relief.”
The Rodriguez decision indicates that it would be prudent for employers to seek dismissal of headless PAGA actions as deficiently pled. However, that may be a trap for the unwary. If an employer seeks dismissal based on representations in the complaint that the plaintiff has no individual PAGA claim and is not seeking individual relief, the plaintiff will oppose the motion by relying on allegations that they are an aggrieved employee, which is sufficient to establish standing under PAGA. The plaintiff will win on that argument, and then claim the employer waived their right to enforce the arbitration agreement by litigating that dispute. Do not fall into this trap. Instead, consider filing a motion for dismissal of the headless PAGA action and, in the alternative, to compel arbitration.
2. Moniz v. Adecco USA, Inc.
The second case, Moniz v. Adecco USA, Inc., involved a PAGA settlement between one employee (Moniz) and the employer. A second employee, Correa, who had filed a separate PAGA action with overlapping claims challenged the settlement leading to a series of appeals. Ultimately, the trial court approved the settlement, over Correa’s objections, denied Correa’s request for a service award and largely denied her request for an award of attorney’s fees. Unsurprisingly, Correa again appealed. Following the California Supreme Court’s decision in Turrieta v. Lyft Inc. the Moniz court concluded that Correa did not have standing to intervene, move to vacate, or appeal the judgment and settlement in Moniz's separate PAGA action.
The Moniz court also rejected Correa’s arguments that she had personal interest sufficient to provide her standing to intervene and object to Moniz’s settlement. The “personal interests” asserted by Correa included: (1) bringing a PAGA claim, (2) collecting her share of 25% of recovered penalties, (3) collecting attorneys’ fees and costs, (4) a prevailing party determination that would protect her from any claim to pay the employer’s costs, and (5) collecting a service award. The Moniz court concluded that these “personal interests” arise from PAGA and are mostly derivative of her status as a representative of the state as a PAGA plaintiff and therefore were not sufficient to grant her standing considering the Supreme Court’s reasoning in Turrieta.
In light of Moniz, employers should strenuously oppose attempts by PAGA plaintiffs and their counsel to intervene, object, or oppose settlements in other PAGA cases with overlapping claims made with different employees.
These cases provide valuable insights for employers on the complexities of PAGA actions and the importance of staying informed about legal developments in this area to effectively manage compliance and litigation strategies. CDF will continue to monitor and report on such developments.
