By Martin P. Vigodnier, Esq.
and
Jaimee K. Wellerstein, Esq.
On September 9, 2021, the California Court of Appeal handed down an important victory for employers in Wesson v. Staples The Office Superstore LLC, (No. B302988) that will help employers assert defenses against lawsuits brought under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code § 2698 et seq.). Resolving a matter of first impression, this case was the first published California appellate decision to confirm that trial courts have the authority to strike unmanageable PAGA claims.
Wesson involved both class and derivative PAGA claims brought on behalf of 346 General Managers alleging Staples misclassified them as exempt executive employees when they should have been classified as hourly non-exempt employees. In his underlying PAGA claim, Wesson sought almost $36 million in civil penalties for alleged Labor Code violations, all premised on the theory that Staples had misclassified its GMs as exempt executives.
At the trial level, after successfully opposing class certification, Staples moved to strike Wesson’s PAGA claim. It argued that given the number of employees it covered and the nature of Plaintiff’s allegations, the action would be “unmanageable” because of the nature of Staples’ affirmative defense – that it would have to elicit individualized proof as to each of the 346 GMs in order to prove they were properly classified.
In response, Plaintiff contended that the trial court did not have the authority to determine whether PAGA claims were manageable. Although the trial court invited him to submit a trial plan showing that the PAGA claim was manageable, Plaintiff declined to do so. Instead, he argued that his only burden was to prove his prima facie case. The trial court summarily struck the PAGA claim.
Plaintiff appealed the ruling.
The court of appeal agreed with Staples, holding that courts have the inherent authority to ensure that PAGA claims will be manageable at trial – that includes the authority to strike the PAGA claim, if necessary.
Factually, the Court of Appeals made it a point to highlight that both Plaintiff and Staples estimated they would need a total of six days per General Manager to litigate whether each one was properly classified as an exempt employee. Based on that estimate, the trial would have lasted eight years! Such a trial – involving testimony from hundreds of employees and requiring such an extensive amount of time from so many witnesses – would clearly be unmanageable.
Employer Takeaway:
In light of this ruling, PAGA defendants are advised to consider whether there are manageability issues involved in pending litigation. If proving (or disproving) liability may require extensive individualized inquiries, then there may be manageability concerns. Particularly in misclassification cases, employers defending PAGA lawsuits would be wise to demand that plaintiffs provide a trial plan (as early as possible), demonstrating how they intend to litigate their case in a manageable and efficient manner. If individualized issues will predominate, then a motion to strike the PAGA claim as unmanageable may now be appropriate.
If you have any questions about how this decision may impact your obligations, or need assistance with PAGA or any other business or employment needs, please feel free to contact Bradley, Gmelich & Wellerstein LLP. We are here to help.
Martin P. Vigodnier, Esq. is a Senior Associate in Bradley, Gmelich & Wellerstein LLP’s Employment Law Department. Martin focuses his practice on labor and employment litigation, class actions, and Private Attorney General Act (PAGA) actions, including wage and hour claims, discrimination, leaves of absence, reasonable accommodation, defamation, trade secrets, retaliation, harassment, wrongful termination, breach of contract, and fraud. Martin also drafts, in both English and Spanish, contracts, regulatory compliance materials, agreements, and policies such as anti-harassment, discrimination, and retaliation policies, OSHA safety policies, employee reimbursement policies, employee stock purchase plans, independent contractor agreements, arbitration agreements, settlement agreements, cross-purchase buy sell agreements, and employee handbooks.
Prior to joining the firm, Martin was President and Founder of his solo law practice handling various employment matters. Prior to practicing law, he was an extern for the Equal Employment Opportunity Commission (EEOC) and awarded the prestigious Peggy Browning Fellowship to work for the Federal Labor Relations Authority (FLRA), assisting the Office of General Counsel analyze unfair labor practice charges against government agencies.
Martin is a native Spanish speaker and writer, and a former amateur boxer.
mvigodnier@bgwlawyers.com
Jaimee K. Wellerstein, Esq. is a Partner at Bradley, Gmelich & Wellerstein LLP, and the Head of the firm’s Employment Department. Jaimee concentrates her practice in representing employers in all aspects of employment law, including defense of wage and hour class actions, PAGA claims, discrimination, retaliation, harassment, wrongful discharge, misclassification, and other employment related lawsuits. She also provides employment counseling and training in all of these areas.
Jaimee routinely represents employers in federal and state courts and in arbitration proceedings throughout the state, as well as at administrative proceedings before the Equal Employment Opportunity Commission, the California Department of Labor Standards Enforcement, the United States Department of Labor, and other federal and state agencies.
Jaimee assists as a Legal Advisor to CALSAGA, and is a member of ASIS International. She is rated AV-Preeminent by Martindale-Hubbell, the highest peer rating available.