A federal appeals court has reversed a $102 million damages award in a case that alleged faulty wage statement itemization under the California Labor Code and the Private Attorneys General Act (PAGA).
The U.S. Court of Appeals for the Ninth Circuit decision in Magadia v. Wal-Mart Associates, which was issued late last month, underscores the problems with the PAGA statute, Tom Manzo, founder and president of the California Business and Industrial Alliance (CABIA), told the Northern California Record by email.
“Although Walmart completely prevailed as to the paystub claims (judgment reversed and remanded with instructions to enter judgment for Walmart), Magadia’s meal break claims were allowed to proceed in state court (judgment vacated with instructions to remand to state court),” Manzo said. “Whatever becomes of the balance of Magadia’s lawsuit, the Ninth Circuit opinion represents a devastating blow to PAGA plaintiffs who seek to obtain damages or penalties for certain ‘true-up’ violations or who seek to represent other ’aggrieved employees’ for injuries they personally did not suffer.”
The court held that “Magadia lacks standing to bring a PAGA claim” for alleged meal-break violations since he himself did not incur injury.
“Magadia’s conclusion that PAGA is not a traditional qui tam statute that can confer Article III standing on a plaintiff who has not suffered personal injury re-invigorates arguments that PAGA is constitutionally infirm, as Epstein Becker & Green is currently arguing on appeal in CABIA v. Becerra,” Manzo said.
The number of PAGA claims filed has risen about 1,000 percent since the law was passed in 2004.
“Every Private Attorney General Act lawsuit takes the business recovery for California additional steps backwards, and will continue to do so until the state does their job of enforcing alleged labor law violations,” Manzo said. “Allowing privatized justice only enriches the trial lawyers.”
Two bills introduced this legislative session to amend the PAGA law remain before the Assembly Committee on Labor and Employment.
Magadia highlights the complexity of PAGA litigation and the necessity of vigilant compliance with California law, Manzo said.
“California is the only state with such a law,” Manzo said. “While other states have considered PAGA-like laws, California is the example of how poorly run this law is and how severely it is being abused by the trial lawyers, and based on that, no other state has passed a similar law.”