Duane Morris Private Attorneys General Act Review – 2024

judgment, which the district court granted in full on the basis it was unable to enforce the plaintiff’s MRB Rules claims under the 2018 order. Id . at *2. On appeal, the Ninth Circuit affirmed the district court’s ruling. The plaintiff asserted that the 2018 order did not preclude claims predicated on conduct pre-dating the order. The Ninth Circuit rejected that position. It explained that it previously had found that it lacked authority to enforce preempted claims arising under California's MRB Rules no matter when the conduct occurred. Id . at *2-3. Accordingly, the Ninth Circuit ruled that the district court did not err by granting the defendant’s motion for summary judgment. IX. California Supreme Court PAGA Decisions And The Proposed Measure To Repeal PAGA On January 18, 2024, the California Supreme Court issued its opinion in Estrada, et al. v. Royalty Carpet Mills, No. S274340 (Cal. Jan. 18, 2024). It is a game changer for employers operating in California. The Supreme Court held, in a unanimous decision, that trial courts lack inherent authority to dismiss claims under the Private Attorneys General Act of 2004 – the “PAGA”- with prejudice due to lack of manageability. The Supreme Court declined to address whether, and under what circumstances, a defendant’s right to due process might ever support striking a PAGA claim. As such, the decision in Estrada is a required read for employers and their decision-makers. Jorge Estrada filed a putative class and PAGA action against his former employer asserting, as relevant here, meal period violations. After two classes comprised of 157 individuals were certified, the case was tried to the bench. The trial court ultimately decertified the classes, finding there were too many individualized issues to support class-wide treatment. Although the trial court awarded relief to four individual plaintiffs, it dismissed the non-individual PAGA claim on the grounds that it was not manageable. On appeal, Estrada argued that PAGA claims have no manageability requirement, and the Court of Appeal agreed in Estrada, et al. v. Royalty Carpet Mills, Inc., 76 Cal.App.5th 685 (2022). The Court of Appeal reasoned that class action requirements do not apply in PAGA actions and, therefore, the manageability requirement rooted in class action procedure was inapplicable. Further, the Court of Appeal reasoned that “[a]llowing courts to dismiss PAGA claims based on manageability would interfere with PAGA’s express design as a law enforcement mechanism.” Id . at 712. The Court of Appeal acknowledged the difficulty that employers and trial courts face with PAGA claims involving thousands of allegedly aggrieved employees, each with unique factual circumstances, but concluded that dismissal for lack of manageability was not an available tool for a trial court to utilize. The Court of Appeal in Estrada recognized its holding was contrary to the holding in Wesson, et al. v. Staples the Office Superstore, LLC , 68 Cal.App.5th 746 (2021), and created a split in authority. In Wesson , the trial court struck a PAGA claim as unmanageable, and the Court of Appeal affirmed. The claims at issue in Wesson involved the alleged misclassification of 345 store managers. The employer’s exemption affirmative defense turned on individualized issues as to each manager’s performance of exempt versus non-exempt tasks which varied based on a number of factors including store size, sales volume, staffing levels, labor budgets, store hours, customer traffic, all of which varied across the stores. The split in authority prompted the California Supreme Court to grant review in Estrada. At the outset, the California Supreme Court noted that the issue before it was whether trial courts possess inherent authority to “strike” PAGA claims for lack of manageability, defining the word “strike” to mean a dismissal with prejudice. Jan. 18 Opinion at 7. The Supreme Court then addressed, and rejected, the employer’s argument that trial courts possess inherent authority to, for judicial economy purposes, strike any claim a plaintiff asserts. The Supreme Court explained that the power to dismiss a claim with prejudice is limited to cases involving a failure to prosecute, frivolous claims, or egregious misconduct, and that judicial economy does not warrant the dismissal of any claim. The Supreme Court rejected the employer’s argument that the manageability requirement for class actions

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