On January 18th, our friends at the California Supreme Court finally issued the long-awaited decision in Estrada v Royalty Mills Inc and handed another blow to those of us trying to defend these PAGA cases. The Estrada decision held that trial courts lack the inherent authority to strike claims under PAGA based on the argument that a case is “unmanageable.” “Manageability” had been a favorite argument raised by defense attorneys like me in these cases. Unlike class actions, where a lawsuit goes through a hearing process like class certification to see if the named plaintiff has been similarly treated to the other class members, in a PAGA suit, every non-exempt “aggrieved” employee is included in the lawsuit, which can involve hundreds of different types of jobs and departments at a large organization. The trial can become unwieldy.
However, the Supreme Court urged that plaintiffs are still required to present a feasible trial plan, and I am certain this is where the emphasis will now be placed. Fight on, my fellow defense counsel.
In another case, albeit at the trial court level, employers saw a rare victory. A court in Alameda County involving Hobby Lobby awarded attorney’s fees in a PAGA case in FAVOR of the EMPLOYER, Hobby Lobby against (wait for it), THE STATE OF CALIFORNIA!
Some fun facts about the briefing in this case. In the motions for costs that were exchanged, the California Labor Workforce Development Agency (LWDA) asked the Division of Labor Enforcement (DLSE) to intervene on its behalf. The LWDA tried to make the argument that it had limited resources to pay any costs. In years past, that had worked for the State. But of course, as we all know, in recent years they have been the recipients of PAGA money, and this motion made the LWDA disclose just how much money they have received. In just the last three years, the LWDA has received over $375 million dollars in settlements. However, as we have always suspected, $107m of this money has been lent to the state’s “general fund,” which is not what the money is supposed to be used for. BUSTED!
Once it was established that the LWDA had the means to cover attorney’s fees, the court had no problem awarding fees and costs in favor of the employer. We suspect an appeal may be coming.
Remember, however, that it is still a RARE circumstance that an employer WINS a PAGA case at the trial court level. The Hobby Lobby case was a very unusual case of a single issue, suitable seating, decided by expert testimony. Most of our PAGA cases are not that. Don’t get all excited thinking we are going to take all these PAGA cases to trial and win. If we lose one issue, WE pay attorney’s fees, which most of the time is what happens. AND, if even if we win, the attorneys on the other side still pay nothing. Nor would the employee who started it all. Nevertheless, this Hobby Lobby victory isn’t nothing., and we will take the wins when we can get them.
