On March 23, 2022, in Estrada v. Royalty Carpet Mills, Inc., the California Court of Appeal for the Fourth District held that a trial court “cannot dismiss a PAGA claim based on manageability” in case that undermines employers’ defensive strategy to dismiss Private Attorneys General Act (PAGA) lawsuits alleging meal and rest breaks. This decision creates a split of authority with a separate court of appeal case decided in 2021, Wesson v. Staples The Office Superstore, LLC (2021) 68 Cal.App.5th 746, which held that trial courts could dismiss PAGA claims based on manageability due to individual assessments required to prove violations based on hundreds if not thousands of alleged aggrieved employees who have unique factual circumstances.
The Estrada court held that a trial court could still limit the evidence that may be admitted at trial to ensure a manageable trial, and that PAGA plaintiffs seeking to try an unmanageable claim “risk being awarded a paltry sum of penalties, if any” if violations cannot be easily shown. “If a plaintiff alleges widespread violations of the Labor Code by an employer in a PAGA action but cannot prove them in an efficient manner, it does not seem unreasonable for the punishment assessment assessed to be minimal,” the Estrada court held. “[C]ourts may, where appropriate and within reason, limit witness testimony and other forms of evidence when determining the number of violations that occurred and the amount of penalties to assess,” the Estrada court held. The Estrada court also “encourage[d] counsel to work with the trial courts during trial planning to define a workable group or groups of aggrieved employees for which violations can more easily be shown.” The Estrada court, however, expressly disapproved of the holding in Wesson, which held that “trial courts have inherent authority to ensure that PAGA claims will be manageable at trial, and to order so strike such claims if they cannot be managed.”
In another blow to employers, the Estrada court held that an employer’s meal period policy is unlawful if employees are not free to leave the work premises during their off-duty meal periods, even though the employees were paid for their regular wages during the 30-minute duty-free meal periods. The Estrada court held that the employer was not entitled to offset the one hour of premium pay it owed for each non-compliant meal period by the amount it paid employees for their 30-minute meal periods because “premium pay serves a different purpose than wages.”
Estrada is from the Fourth District Court of Appeal, which covers San Diego, Riverside, San Bernardino, Imperial, Inyo and Orange counties. Wesson is from the Second District Court of appeal, which covers Los Angeles, Santa Barbara, Ventura and San Luis Obispo counties. The Sacramento-based Third District Court of Appeal, San Francisco-based First District Court of Appeal, the Fresno-based Fifth District Court of Appeal and the San Jose-based Sixth District Court of Appeal have not decided this important PAGA manageability issue, which, after Wesson, had given employers hope of a new strategy to seek dismissal of costly PAGA claims. The split of authority raises the possibility that the California Supreme Court will need to decide the issue.
Questions
If you have any questions regarding this Legal Alert, please contact the following attorneys from our office or the attorney with whom you typically consult.
Bruce Scheidt
bscheidt@kmtg.com | 916.321.4502
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