While a long-controversial California state law empowers workers and their trial lawyers to sue employers in the name of the state, that law doesn't empower them to interfere with attempts by other workers and their lawyers to settle separate, but similar lawsuits, in a bid to claim to drag out the proceedings to get more money, the California Supreme Court has ruled.
On Aug. 1, a divided state high court ruled 5-2 that California's Private Attorney General Act (PAGA), as it is currently written, doesn't allow for plaintiffs suing under the law to intervene in a separate PAGA action, simply because they may object to an attempt to settle the claims.
The majority decision was authored by Justice Martin J. Jenkins. Chief Justice Patricia Guerrero and justices Carol A. Corrigan, Leondra R. Kruger and Joshua P. Groban concurred.
California Supreme Court Justice Goodwin Liu
| California Supreme Court
Justice Goodwin H. Liu dissented from the majority decision, joined by Justice Kelli Evans.
For decades, California's unique PAGA law has given workers in the state the right to sue their employers for big money on behalf of their coworkers for often small or merely technical violations of California labor law. Essentially, under PAGA, the state has authorized workers and their private trial lawyers to step into court in place of California state labor officials.
Before enactment of the PAGA law, only California state officials were empowered to bring enforcement actions on behalf of entire workforces. In passing PAGA, California lawmakers hoped the law would improve enforcement of the state's labor rules and regulations, without overburdening state agents.
Employers targeted by actions under PAGA can face financial penalties, the bulk of which are paid to the state of California. But under PAGA, employers can also be made to pay another large chunk to cover the fee demands of the lawyers who sued them.
This has generated a cottage industry of plaintiffs' lawyers who critics say use PAGA lawsuits to rake in fees, while generating significantly less benefits for workers. Analyses indicate the law has spawned lawsuits against thousands of employers in California annually.
Published reports have indicated PAGA-related lawsuits have done relatively little for workers, while generating big and relatively easy paydays for lawyers and forcing employers to pay billions of dollars through the years to settle PAGA claims.
To curb what businesses perceived as the worst of the PAGA abuses, California state lawmakers this year passed a reform measure. The reforms were enacted in the face of a potential embarrassing defeat at the ballot box for the state's Democratic legislative supermajority and their trial lawyer allies under a referendum question placed on the ballot by a coalition of business advocates.
The referendum question would have eliminated the so-called "right of private action" that had fueled the lawsuits.
While that will remain, the reform measure will reduce the financial risk to employers and allow them in some cases to avoid lawsuits entirely.
In the meantime, litigation under PAGA has continued.
In the case decided by the California Supreme Court, plaintiff Tina Turrietta and her lawyers from The Graves Firm, of Sierra Madre, had sued Lyft in Los Angeles County Superior Court, accusing the rideshare giant of violations of California labor law and pressing claims under PAGA.
According to court documents, Turrietta and Lyft eventually reached a possible settlement in the action, and had presented it for court approval.
In the meantime, however, other plaintiffs, including one identified as Brandon Olson, and his attorneys from the firms of Outten & Golden and Olivier Schreiber & Chao, both of San Francisco, had filed separate actions under PAGA against Lyft, but with claims overlapping those in Turrietta's lawsuit.
When Turrietta advanced her case toward settlement, Olson and his lawyers, among others, filed a motion in L.A. court, asking permission to intervene in the action in an attempt to thwart the settlement.
They asserted the settlement would let Lyft off too easily, and they wished to win permission to force the company to pay more.
That permission was denied, however, as courts ruled Olson and other potential intervening plaintiffs don't have the right under the PAGA law to attempt to prevent other PAGA plaintiffs from settling their claims, simply because the potential objectors think the settlement is too small.
On appeal, the California Supreme Court majority agreed with the lower courts.
While state law would allow the California Attorney General or other state enforcement officials to step into a PAGA action and potentially undo a settlement, the majority said that power does not transfer to other PAGA plaintiffs. Suing in the name of the state under PAGA, the majority said, doesn't give them the same power and standing as the state government itself.
Further, the majority said, finding such a right to object in the PAGA law when it is not now explicitly included would run contrary to the apparent desire of California state lawmakers to ensure PAGA cases don't become bogged down and dragged out, simply to allow other trial lawyers to grab a cut of the proceeds.
Allowing "multiple PAGA plaintiffs, all representing the same state interest, to formally intervene in and become parties to the PAGA action of another PAGA plaintiff who is already representing that state interest" would create an unnecessarily chaotic situation for courts, who must then unravel the competing claims and determine who should get the right to truly act as representative of the state in the action.
The majority said they believe the state legislature, in PAGA, believed settlements should be subject to review only by the courts and by state regulators at the California Labor and Workforce Development Agency. In addition to the court, PAGA plaintiffs are required to submit potential settlements to the LWDA for review.
The majority said they did not believe lawmakers intended to give PAGA settlement review power to other PAGA plaintiffs.
In dissent, Liu sided with Olson and his lawyers, saying the majority's holding would result in a "race to the bottom," in which companies will seek to settle with plaintiffs willing to accept smaller deals.
Liu said he believed the law doesn't block other PAGA plaintiffs from asking the courts and LWDA to block potentially discounted deals, in the name of maximizing payment to the state, if not legal fees for the other trial lawyers.
Liu said the decision runs counter to PAGA's core premise that the threat of private lawsuits are needed to maximize enforcement of the state's labor laws. Liu and Olson's lawyers all agreed that the LWDA lacks the resources needed to properly evaluate the "thousands of settlements" presented by PAGA plaintiffs annually.
The majority, however, brushed aside those concerns, saying they did not believe such objections - no matter their underlying reasons - are authorized under PAGA.
"... Nothing in PAGA’s text, statutory scheme, or legislative history suggests the Legislature understood or intended an aggrieved employee’s authority to commence and prosecute a PAGA action on the state’s behalf to include the power to file objections to the settlement reached by another aggrieved employee representing the same state interest and also acting on the state’s behalf," Justice Jenkins wrote in the majority opinion.
The majority, rather, said it should fall to California state lawmakers to further revise PAGA to allow for such objections, if that is the desire in the state capitol.
Olson was represented before the California Supreme Court by attorney Monique Olivier, of Olivier & Schreiber, of Oakland.
Turrietta was represented by attorney Allen Graves, of The Graves Firm.
And Lyft was represented by attorney Felix Shafir, of Horvitz & Levy, of Burbank.