California Supreme Court

California Supreme Court Resolves Split Among Courts of Appeal, Finding Trial Courts Do Not Have the “Inherent Authority” to Strike a PAGA Claim Based on Manageability

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By Andrea Chavez

On January 18, 2024, the California Supreme Court made a significant ruling in the case of Estrada v. Royalty Carpet Mills, Inc., finding that the trial court lacked the inherent authority to dismiss a California’s Private Attorneys General Act (PAGA) claim based on manageability grounds. Manageability considerations are often used in the class action context, but the Supreme Court has now found it has no applicability in the PAGA context.

PAGA provides for civil penalties for various Labor Code violations and authorizes “aggrieved employees,” acting as private attorneys general, to recover those penalties. A PAGA plaintiff will often seek penalties for violations involving aggrieved employees other than the PAGA plaintiff. Civil penalties recovered on a PAGA claim are split between the state and aggrieved employees, with 75 percent going to state labor law enforcement agency and 25 percent going to aggrieved employees.

“Manageability” in this context refers to a Continue reading →

California Confirms Meal and Rest Period Claims are a Hook for Attorney’s Fees Awards

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By Samuel Rose and Megan Shaked

A few months ago, we wrote a blog article on the California Supreme Court’s decision in Naranjo v. Spectrum Security Services, Inc., which held that premium pay for meal and rest break violations is considered “wages,” paving the way to award waiting time and wage statement penalties based on meal/rest period violations alone. We noted that the practical impact of the Naranjo decision could be to encourage class action and PAGA (Labor Code Private Attorneys General Act) litigation within California by providing further remedies in meal and rest period litigation and inflating the settlement value of these cases.

Now, we are starting to see the real impacts of the Naranjo decision. The California Court of Appeal has issued its decision in Betancourt v. OS Restaurant Services, LLC after remand from the Supreme Court with instructions to reconsider its initial opinion in light of Naranjo. Originally, the Court of Appeal decided in Betancourt that, based on Kirby v. Inmoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, an action brought for failure to provide meal and rest breaks is not based on nonpayment of wages. That meant that the Plaintiff could not recover for waiting time penalties and wage statement violations, and that the Plaintiff could not recover attorney fees under Labor Code section 218.5(a).

In applying Naranjo, the Court of Appeal in Betancourt had to reverse course, confirming that Continue reading →

US Supreme Court Splits the Baby on Arbitrability of PAGA Claims

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By Megan S. Shaked and Samuel S. Rose

In the latest chapter in the enforceability of employment arbitration agreements in California, the United States Supreme Court in Viking River Cruises, Inc. v. Moriana (Viking River) weighed in on whether the Federal Arbitration Act (FAA) preempts California Supreme Court precedent set in Iskanian v. CLS Transportation (2014) preventing the enforceability of California Private Attorneys General Act (PAGA) waivers.

In Iskanian, the California Supreme Court held, in part, that the FAA does not preempt state law prohibiting waiver of PAGA representative actions in employment agreements.  Specifically, the California Supreme Court determined that “an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy.”

Now with the Viking decision, rather than treating a PAGA waiver as simply unenforceable in its entirety, the US Supreme Court, relying on a severability clause in the arbitration agreement at issue, decided that Continue reading →