Settlement Does Not Bar Private Attorney General Suit

• Pages: 24-25
• Date: 01 July 2022
• Author: Mark A. Flores
• Subject Matter: Civil Law

the Court [in Metro-North] expressly

forbade from coming in the front.” The

“exception would swallow the rule”

because a passenger could circumvent

the requirement of physical symptoms

simply by cleverly pleading a claim

under the second prong.

The court also cited public policy

concerns in limiting disease-based

emotional distress claims to those

where physical symptoms had mani-

fested. It reasoned that permitting

“exposure only” claims would present

the dangers of fraud, “a f‌lood of trivial

suits,” and “unlimited and unpredict-

able liability.”

Litigation Section leaders believe

that if the plaintis had had bet-

ter facts, they may have had a viable

claim. “The only thing that could have

saved their pleading was an allegation

that they were symptomatic or devel-

oped COVID-19, and those facts sim-

ply were not there to be pled in good

faith,” says Joshua F. Kahn, Baltimore,

MD, cochair of the Section’s Mass Torts

Litigation Committee’s Subcommittee

on Multi-District Litigation and Class

Procedures Practice.

Section leaders also agree that per-

mitting fear-based emotional distress

claims would lead to unpredictable

and unlimited liability. “We would all

have a potential tort claim against our

employer, a restaurant we visit, public

transportation, school, or other ser-

vice provider where there was some

potential risk of exposure to COVID-

19,” observes Sidney W. Degan III, New

Orleans, LA, cochair of the Section’s

Admiralty Litigation Committee.

Settlement Does Not

Bar Private Attorney

General Suit

By Mark A. Flo res, Litigation News

Associa te Editor

An employee retains standing to seek

civil penalties under the California

Private Attorneys General Act (PAGA)

even after settling his or her indi-

vidual employment claims based on

the same set of facts. In a case of f‌irst

impression, the California Supreme

Court made clear in Kim v. Reins

International California, Inc. that PAGA

does not operate like a class action

because the parties and remedies are

dierent. In a PAGA suit, the employee

represents the state rather than other

individuals and seeks to remediate

and deter legal violations via statutory

penalties rather than providing indi-

vidual relief. Citing the statutory text

and legislative purpose, the court con-

cluded that standing under PAGA did

not require an employee to have an

unredressed actual injury.

Justin Kim, a training man-

ager for restaurant operator Reins

International California, Inc., f‌iled a

putative class action in state court

alleging that he and other training

managers had been misclassif‌ied as

exempt from overtime laws, in viola-

tion of the California Labor Code. The

operative complaint also sought civil

penalties under PAGA. The parties

settled all of Kim’s individual non-

PAGA claims, which the trial court

dismissed along with the class claims.

Reins then moved for summary adju-

dication on the remaining PAGA cause

of action, arguing Kim was no longer

an “aggrieved employee” with the

requisite standing to sue.

The trial court entered judgment for

Reins, reasoning that since the settle-

ment had already compensated Kim

for his injuries, his rights were “com-

pletely redressed.” The appellate court

armed the judgment.

The California Supreme Court

reversed on appeal. It noted that the

statute required only that “[t]he plain-

ti must be an aggrieved employee,

that is, someone ‘who was employed by

the alleged violator’ and ‘against whom

one or more of the alleged violations

was committed.’” The court explained

that “[t]he Legislature def‌ined PAGA

standing in terms of violations, not

injury,” and thus, Kim acquired standing

once the Labor Code violations were

committed against him.

Nor did he lose that standing upon

settlement because “[t]he remedy for

a Labor Code violation, through settle-

ment or other means, is distinct from

the fact of the violation itself.” It fur-

ther observed that “the Legislature did

not intend to link PAGA standing to

the maintenance of individual claims”

because the statute explicitly con-

ferred standing upon an employee so

long as he suered “one or more of the

alleged violations.”

Additionally, the court held that add-

ing an injury requirement for standing

would contradict PAGA’s purpose of

increasing state agencies’ enforcement

capabilities, “seriously impair the state’s

ability to collect and distribute civil pen-

alties,” and allow employers to avoid

paying civil penalties through individual

settlement. In so holding, the court dis-

tinguished between PAGA suits and

class actions. It explained that “[t]here

is no individual component to a PAGA

action,” which is akin to state enforce-

ment action.

Essentially, the PAGA plainti is dep-

utized to represent the state against

an employer and seek recovery on

behalf of all aected employees. Reins

further stated that PAGA’s civil penal-

ties “are intended to ‘remediate pres-

ent violations and deter future ones’,

not to redress employees’ injuries.” By

contrast, class actions merely aggre-

gate numerous individual claims, and

even though the class action plainti

represents multiple people, ultimately,

he or she possesses only his or her own

claim. Thus, a class action plainti may

no longer represent the class after set-

tlement, because the settlement extin-

guishes the plainti’s interest in the

class action.

Finally, the California Supreme Court

concluded that an unredressed injury

requirement would conf‌lict with the rec-

ognized right of plaintis to bring stand-

alone PAGA claims, as well as Labor

Code provisions authorizing PAGA suits,

but not a private right of action.

PAGA and class actions—though

similar in form—are not similar in

function, explains Adam E. Polk, San

Francisco, CA, cochair of the ABA

Litigation Section’s Class Actions &

Derivative Suits Committee. While a

named plainti in a class action may

serve as the representative for the

entire class to assess the viability of

the class members’ claims, the same

does not apply for PAGA. “The PAGA

statute is, by its very nature, represen-

tative. It makes sense, therefore, that

someone that brings a PAGA action

cannot compromise the claims of the

persons that they are acting on behalf

of,” observes Polk. “PAGA is just saying

that there is harm that has been sus-

tained by employees across the board.

24 | LITIGATION SECTI ON

Published in Litigation News Volume 47, Number 4, Summer 2022. © 2022 b y the American Bar Ass ociation. Reproduc ed with permission. A ll rights reserv ed. This information or an y portion there of may not be copied or dis seminated in any

form or by any means or sto red in an electronic da tabase or retrieval sy stem without the ex press writt en consent of the Amer ican Bar Associatio n.

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