Employer Perspective: Paga 15 Years Later

• Publication year: 2019
• Author: By Laura Reathaford

Employer Perspective: PAGA 15 Years Later

By Laura Reathaford

Laura Reathaford has defended employers in over 100 wage and hour class and PAGA actions. She frequently contributes to important PAGA legal developments at the trial and appellate levels, including the submission of two recent amicus curie briefs pending in Kim v. Reins and Ferra v. Loews Hollywood Hotel, LLC. Laura is currently a partner in the employment group in the Los Angeles office of Blank Rome, LLP.

This year marks 15 years since the California Legislature enacted the Private Attorneys General Act of 2004,¹ or what is commonly referred to as "PAGA." PAGA allows an individual to collect civil penalties on behalf of the State of California for purported Labor Code violations experienced by him or herself and other employees (on a representative basis). Since PAGA's enactment, courts have considered constitutionality, removability, manageability, arbitrability, and the proper scope of discovery, among other litigation issues.

In 2009, the California Supreme Court in Arias v. Superior Court² held that class certification requirements do not apply to PAGA representative actions—even though PAGA bears many similarities to class actions. In 2012, the Court in Iskanian v. CLS Transportation Los Angeles, LLC³ held that individual arbitration agreements with class action waivers cannot be enforced against employees who filed representative PAGA claims.

Even though most PAGA representative actions exceed $5 million in exposure, in 2013, the Ninth Circuit Court of Appeals in Urbino v. Orkin Services of California⁴ held that the Class Action Fairness Act⁵ (CAFA) did not apply to PAGA actions because the civil penalties that employees could collect could not be combined to meet the $5 million amount in controversy requirement. Thus, plaintiffs can file "PAGA only" lawsuits without the threat of having their potentially high value representative cases removed to federal court.

In 2017, the California Supreme Court in Williams v. Superior Court⁶ held that a PAGA representative plaintiff is entitled to receive the names and addresses of any and all "aggrieved employees" (no matter how broadly defined) without having to show any indicia of harm by himself or herself to justify such disclosure.

In 2018, the court of appeal in Huff v. Securitas Services USA, Inc.⁷ held that a PAGA plaintiff could bring a PAGA claim and sue for Labor Code violations that did not directly affect him or her. Thus, if an employee missed a meal period, for instance, he or she could seek penalties for violations of California's overtime laws even without having worked one minute of overtime himself or herself.

In short, over the past 15 years, PAGA's reach has become broad, deep, and arguably out of control.

Recognizing this insurgence of unfavorable case law for employers, a California industry group, California Business & Industrial Alliance (CABIA), says it wants the state "to enforce its own labor laws, rather than giving trial attorneys the power to do so."⁸ Its approach: suing the State of California and challenging PAGA as unconstitutional on an "as-applied" basis.

Challenging PAGA as unconstitutional is nothing new. Many courts (including the California Supreme Court) have already weighed in on many of CABIA's claims. However, what makes this lawsuit unique is CABIA's attack on court decisions (including those noted above) and the plaintiffs' bar. The Complaint states:

[T]he current construction of PAGA by California courts (which have their own constitutional infirmities) gives rise to the following unconstitutional framework: valid and binding arbitration agreements are rendered unenforceable; private contingency-fee attorneys are permitted to litigate on behalf of the State without oversight or

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