Trial Courts Have No Inherent Power to Strike PAGA Claims

Friday, January 19, 2024

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California Supreme Court:

Trial Courts Have No Inherent Power to Strike PAGA Claims

Conflict Among Courts of Appeal Is Resolved

By a MetNews Staff Writer

The California Supreme Court, in a unanimous opinion resolving an issue on which courts of appeal have been divided, held yesterday that trial courts do not have an inherent power to dismiss representative wage-and-hour claims based on unmanageability of handling numerous claims with individualized issues.

Chief Justice Patricia Guerrero authored the opinion which affirms a March 23, 2022 decision by Div. Three of the Fourth District Court of Appeal. That court held that Orange Superior Court Judge Randall J. Sherman lacked the power to dismiss claims that were brought against Royalty Carpet Mills pursuant to the Private Attorneys General Act (“PAGA”).

Guerrero wrote:

“We now conclude that trial courts lack inherent authority to strike PAGA claims on manageability grounds. In reaching this conclusion, we emphasize that trial courts do not generally possess a broad inherent authority to dismiss claims. Nor is it appropriate for trial courts to strike PAGA claims by employing class action manageability requirements. And, while trial courts may use a vast variety of tools to efficiently manage PAGA claims, given the structure and purpose of PAGA, striking such claims due to manageability concerns—even if those claims are complex or time-intensive—is not among the tools trial courts possess.”

Royal urged the Supreme Court to embrace the reasoning expressed by Div. Four of this district’s Court of Appeal in Wesson v. Staples the Office Superstore, LLC, handed down on Sept. 9, 2021. There, then-Presiding Justice Nora M. Manella (now retired) concluded that “courts have inherent authority to ensure that PAGA claims can be fairly and efficiently tried and, if necessary, may strike claims that cannot be rendered manageable.”

That decision was disapproved in yesterday’s opinion.

No Broad Authority

Royal contended in its Aug. 5, 2022 brief:

“In order to preserve judicial resources, prevent trials from becoming excessively complex and time-consuming, and—most of all—to protect the due process rights of the parties (especially defendants), every trial court may, and in fact must, ensure the manageability of the claims before it. If the court determines that traditional tools such as limiting the number of witnesses, accepting statistically-valid samples, using charts or summaries of voluminous documents, and so forth, will not succeed in making the trial manageable or will deprive the parties of due process, the court may strike or limit the problematic claim—be it PAGA or otherwise.”

The chief justice responded:

“Contrary to Royalty’s contention that trial courts possess a broad and general power to dismiss claims in the name of judicial economy, our case law has recognized that the inherent authority of trial courts to dismiss claims is limited and operates in circumstances that are not present here.”

She added:

“Our cases holding that courts possess some limited amount of inherent authority in other respects do not support Royalty’s contention that trial courts possess broad inherent authority to strike a claim for judicial economy reasons.”

Guerrero noted that trial courts’ various “case management tools remain undisturbed by our decision in this case.

Class Actions

The Court of Appeal, in an opinion in the case by Acting Presiding Justice Eileen C. Moore, said:

“PAGA claims are unlike conventional civil suits and, in particular, are not class actions. Allowing dismissal of unmanageable PAGA claims would effectively graft a class action requirement onto PAGA claims, undermining a core principle of these authorities. It would also interfere with PAGA’s purpose as a law enforcement mechanism by placing an extra hurdle on PAGA plaintiffs that is not placed on the state.”

(In a PAGA action, maintained by private individuals on behalf of the state, the state receives three-fourths of the civil penalties for Labor Code violations with the balance going to aggrieved employees.)

Royal said in a footnote in its brief:

“Just because PAGA suits ‘are not class actions’…—a statement with which no-one can disagree—does not mean that they are exempt from all requirements that class actions are subject to, merely that PAGA plaintiffs need not strictly satisfy all the same requirements that are needed for class certification. There are good reasons why both class actions and PAGA suits can and should be subject to overlapping requirements—such as the need for an ‘aggrieved’ group of individuals who have suffered actual injury, manageability, and so forth.”

Guerrero responded:

“[C]lass action requirements, including manageability, developed in large measure from California courts’ assertion of their inherent equitable powers as informed by federal law. In contrast, a PAGA claim is a pure statutory claim arising under California law. This differing doctrinal basis for class and PAGA actions serves as an additional reason to conclude that trial courts lack inherent authority to impose a manageability requirement in PAGA actions.”

She declared that “the Court of Appeal properly determined that a trial court’s authority to limit class claims on manageability grounds does not support the conclusion that trial courts also possess inherent authority to strike PAGA claims on manageability grounds.”

Due Process

Royal argued on appeal:

The employer asserted that “the Court of Appeal’s opinion is a recipe for defendant employers to be denied their due process rights in PAGA actions.”

Guerrero said:

“While certain characteristics of some PAGA claims, occasioned by the statute’s broad standing rules and the lack of need for common proof or class certification, may present trial courts with challenges in ensuring that a defendant’s due process rights are preserved, we express no opinion as to the hypothetical questions of whether, and under what circumstances, a defendant’s right to due process might ever support striking a PAGA claim.”

The case is Estrada v. Royalty Carpet Mills, 2024 S.O.S. 232.