Earlier today, the California Supreme Court dealt a potential blow to employers (and alleged employers where independent contractors claim they are misclassified) defending actions for penalties under the California Private Attorneys General Act (PAGA) by ruling in Estrada v. Royal Carpet Mills, Inc. that PAGA actions are not governed by the same kinds of manageability requirements that apply to class actions.

In general, if a class action is unmanageable (such as when individual members of a large class must present evidence in court to prevail on their claims or to answer an employer’s defenses), it should not be adjudicated on a class-wide basis. While PAGA actions are different from class actions in several important respects, employers defending PAGA actions frequently seek to dismiss those cases as unmanageable for the same reasons. Some California trial and appellate courts have been receptive to those defenses. However, the California Supreme Court foreclosed that option by holding in no uncertain terms that trial courts may not dismiss PAGA actions simply because they are unmanageable.

While the California Supreme Court was clear in Estrada that dismissal is not an option for dealing with unmanageable PAGA actions, the Court offered little guidance for how trial courts or litigants should handle manageability issues in PAGA cases going forward. The best the California Supreme Court could do was to remind trial courts that they remain obligated to fairly and efficiently adjudicate all actions and that trial courts are free to use unspecified case management tools at their disposal to mitigate manageability issues. This lack of clarity will likely lead to more confusion about how to handle manageability problems in PAGA cases going forward, and, unfortunately, more litigation. However, one thing is certain: today’s ruling will only further embolden plaintiffs’ attorneys to pursue PAGA claims in addition to or as an alternative to seeking class-wide relief for alleged violations of the California Labor Code.

For questions regarding this development, contact Scopelitis Partners James Hanson, Angela Cash, Adam Smedstad, Andrew Butcher, Charles Andrewscavage, Christopher McNatt, and R. Jay Taylor, Jr.