Labor & Employment Law Blog

On January 18, 2024, the California Supreme Court issued Estrada v. Royalty Carpet Mills, Inc., and found that there is no manageability requirement in represented claims brought under the lawsuits, taking away one of the very few defenses available to employers facing PAGA claims.

Citing their inherent authority to manage cases before them, trial courts had previously limited or stricken unmanageable representative PAGA claims.  See Wesson v. Staples the Office Superstore, LLC, 68 Cal.App.5th 746 (2021). Based on the existing authority such as Wesson, the trial court in Estrada v. Royalty Carpet Mills, Inc. struck representative PAGA claims on a finding that they were unmanageable.  The Court of Appeal disagreed, holding that there is no authority, statutory or otherwise, to narrow or strike PAGA claims prior to trial.  The California Supreme Court agreed with the Court of Appeal holding that the trial court did not have the authority to strike the representative PAGA claims on the basis that it was unmanageable. 

In Estrada, as in many wage and hour PAGA claims, the plaintiffs brought a representative action against their former employer seeking penalties for various wage and hour violations, including the failure to provide meal periods.  After hearing testimony from almost twenty employees, the trial court held that there were too many individualized issues to support representative treatment for the meal period penalties. The trial court dismissed the representative PAGA claim for meal period violations on the basis that the claim was “unmanageable.”  The trial court did not believe that there was an efficient manner to determine the liability on a group basis.

The California Supreme Court upheld the Court of Appeal’s order and found that trial courts do not have the inherent authority to strike unmanageable PAGA claims for purposes of judicial economy.  Without providing clear guidance, however, the California Supreme Court also held that trial courts do have the authority to limit the scope of a PAGA claim and evidence presented at trial, and may impose “minimal” penalties when a plaintiff who has alleged widespread violations is unable to prove PAGA claims in an efficient manner. 

Nevertheless, employers may find comfort in that the decision still allows for trial courts to strike PAGA claims for reasons other than judicial efficiency and effectively manage PAGA claims by other means, short of striking the claims outright.  For example, overbroad and unwieldy PAGA claims may still be limited in scope by narrowing the plaintiff’s definition of “aggrieved employees.” 

Given that the California Supreme Court has once again limited the defenses available to employers fighting PAGA claims, it is recommended that employers review their wage and hour practices and policies as compliance is the first step in minimizing claims and reducing risk.  Employers are encouraged to conduct regular wage and hour reviews and audits to identify potential areas of risk.  If you have questions about PAGA claims, contact the authors or your usual trusted counsel at AALRR.

This AALRR posting is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 

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