An appellate court has upheld a lower court’s ruling that Private Attorneys General Act (PAGA) claims must be deemed manageable by the court in order to proceed to trial.
The California Second Appellate District ruling in Wesson v. Staples noted that the plaintiff’s case, which sought $36 million for alleged misclassification of general managers as exempt executives, would have required a roughly eight-year trial.
The PAGA claim was filed on behalf of 346 current and former general managers in California.
“At a subsequent hearing on Staples’s motion, the parties estimated they would need a total of six trial days per GM to litigate GMs’ classification as exempt executives on an individual basis. Based on that estimate, the trial would have lasted eight years,” presiding Justice Nora M. Manella wrote in the unanimous ruling.
It’s the first time a state appeals court has addressed the issue of PAGA manageability.
“No published California decision has considered trial courts’ power to ensure the manageability of PAGA claims. We conclude that courts have inherent authority to ensure that a PAGA claim will be manageable at trial - including the power to strike the claim, if necessary - and that this authority is not inconsistent with PAGA’s procedures and objectives, or with applicable precedent,” the ruling states. “Moreover, on the record before us, we conclude the trial court did not abuse its discretion in striking Wesson’s claim as unmanageable.”
The decision could lead to more defendants litigating PAGA claims instead of settling them, Tom Manzo, founder and president of the California Business and Industrial Alliance (CABIA), told the Northern California Record.
“It’s a win that the appellate courts are recognizing that PAGA is a problem,” Manzo said. “It’s an important decision and important for everybody to see because this truly shows how complex these PAGA cases really are.”
The business community has long sought reform of the controversial PAGA statute, which through in terrorem has led many to multimillion-dollar settlements, much of which goes the plaintiffs’ attorneys.
“This ruling is kind of a game changer,” Manzo said. “For employers it’s another tool in their toolbox to defend themselves. It places the onus of manageability on the plaintiff, and it primes the court to consider the impact of a lengthy trial on its docket.”