Wage and Hour Case Notes

• Publication year: 2024
• Citation: Vol. 38 No. 2
• Author: Lauren Teukolsky

WAGE AND HOUR CASE NOTES

AUTHOR^*

Lauren Teukolsky

NO AUTHORITY TO STRIKE 'UNMANAGEABLE' PAGA CLAIM

Estrada v. Royalty Carpet Mills, Inc., 2024 Cal. LEXIS 123 (2024)

This decision is a qualified win for Private Attorneys General Act (PAGA)¹ plaintiffs.

On one hand, trial courts may not dismiss PAGA claims with prejudice solely based on manageability concerns. On the other, they may limit the scope of unwieldy PAGA claims by limiting the evidence to be presented at trial, and may impose "minimal" penalties when a plaintiff is unable to prove PAGA claims efficiently.

Plaintiffs were employees at manufacturing facilities operated by Royalty Carpet Mills. They alleged class and PAGA claims for meal and rest period violations, with their primary claim that Royalty Carpet unlawfully required employees to remain on the premises during their 30-minute meal periods. The trial court originally certified a class, but decertified it after evidence was presented at trial. The trial court also dismissed the PAGA claims as unmanageable.

The court of appeal reversed, holding that trial courts lack the authority to dismiss PAGA claims on manageability grounds. The court of appeal in this case disagreed with another division in an earlier decision in Wesson v. Staples the Office Superstore, LLC,² which held that trial courts may dismiss PAGA claims based on unmanageability.

After the court of appeal decided Estrada, a second division of the appellate court, in Woodworth v. Loma Linda University Medical Center,³ agreed that PAGA claims have no manageability requirement. The California Supreme Court granted review in Estrada and a grant and hold in the Woodworth case.

The supreme court resolved the split between the Estrada and Wesson approaches, unequivocally holding that trial courts may not dismiss PAGA claims based on concerns about manageability. It explained that trial courts have the inherent authority to dismiss claims with prejudice only in two narrow situations, when the plaintiff:

1. Has failed to prosecute diligently; or
2. Has no valid cause of action because the complaint is a sham.

Neither situation was present in this case. Royalty Carpet failed to identify any cases in which courts have recognized a broad inherent power to strike a claim simply to foster judicial economy. And neither California's statutes nor its rules of court provide trial courts with that authority. The supreme court was not willing to sanction a "broad new power" it had never before recognized.

The court also rejected Royalty Carpet's argument that a class action manageability requirement should be applied to PAGA cases. It noted that class actions and PAGA actions are very different.

The court explained that unlike class actions, which are procedural devices used to aggregate disparate claims, PAGA claims are enforcement actions by the state that do not involve adjudicating individual claims. It also noted that PAGA and class actions serve...