California Supreme Court limits the ability of PAGA litigants to intervene in overlapping PAGA actions
The Supreme Court’s ruling confirms that the courts and the Labor & Workforce Development Agency (“LWDA”) – and not competing PAGA litigants – have primary responsibility for overseeing PAGA settlements. The Supreme Court’s ruling confirms that the courts and the Labor & Workforce Development Agency (“LWDA”) – and not competing PAGA litigants – have primary responsibility for providing oversight of PAGA settlements.
The Procedural Background
In Turrieta, an individual who provided services as a driver using the Lyft App filed an action against Lyft seeking civil penalties under the California Private Attorneys General Act of 2004 (“PAGA”), alleging that the Company failed to pay minimum wages, overtime premiums, and business expense reimbursements in violation of the California Labor Code. Two other employees also filed separate PAGA lawsuits against Lyft alleging that the Company had failed to pay minimum wage, overtime premiums and business expense reimbursements. In December 2019, the Company reached a settlement with the Turrieta Plaintiff. The plaintiffs of the other PAGA cases filed motions to interfere in the Turrieta case and objected the settlement. The trial court denied the intervening plaintiffs’ motions for intervention and approved the settlement. The intervening plaintiffs then moved to vacate judgment, but the court denied their motion. The Court of Appeal upheld the settlement and the trial courts denial of the intervening Plaintiffs’ motions. The Court of Appeal determined that the trial court had properly denied the motions for intervention, that the intervening Plaintiffs lacked the standing to move to vacate judgment, and that they did not have standing to challenge settlement on appeal. One of the intervening plaintiffs sought review by the California Supreme Court, claiming that as a deputized agent of the State of California under PAGA, he had the right to intervene in the Turrieta action, to vacate the judgment, and to have the court consider his objections to the settlement agreement.
The California Supreme Court’s Decision
On August 1, the California Supreme Court issued a decision affirming the judgment of the Court of Appeal. The highest court in the State concluded that a competing PAGA plaintiff does not have the authority to intervene into the ongoing PAGA case of another plaintiff who has overlapping claims. Nor can a competing PAGA party require a court consider its objections to the proposed settlement in an overlapping action or move to vacate the judgment entered in this action. The Court reasoned such authority was inconsistent with the statutory scheme adopted by the California Legislature which gives sole responsibility for settlement oversight to the trial courts and the LWDA. The Legislature also required that parties submit a copy to the LWDA when they submitted the settlement agreement to trial court for approval. The Legislature also provided additional funds for the LWDA to perform its oversight duties. California Supreme Court stated when the Legislature addressed the issue of oversight, it “looked only to the courts and the LWDA.” The Court also noted that allowing competing PAGA parties to intervene in overlapping PAGA cases would create delays and complexity “of a completely different order” than those created by the statutory requirement for judicial approval. The Court acknowledged that trial courts can consider written comments made in response to settlement proposals, not as formal objections but as part the Court’s role to evaluate whether a PAGA Settlement is fair and reasonable. However, if a trial court refuses to consider such comments, the plaintiffs from other cases have no redress, no right to intervene, and no right to appeal an approval they believe to have been unreasonable.
Key Takeaways
The Turrieta decision represents a rare win for employers from the State’s highest court. The decision confirms that employers may enter into a settlement agreement for a PAGA case without fear that a competing PAGA litigant would intervene and disrupt the agreement. The Court’s decision will likely encourage PAGA litigants, who can now settle with any PAGA plaintiff (and not only the plaintiff of the first-filed case), to be more reasonable during settlement negotiations. Plaintiffs may argue that the employer has an unfair bargaining position, but if the ruling went the other way it would have created a perverse incentive for competing PAGA plaintiffs who would assert unfounded objections to the settlement or threaten lengthy appeals to extract concessions from the parties. The LWDA can object to a settlement that is truly unreasonable, and the trial court can reject it if this happens. As such, Turrieta gives PAGA plaintiffs and defendants incentives to be reasonable in settlement negotiations.
The Turrieta decision comes one month after the PAGA reform bills, Senate Bill 92 and Assembly Bill 2288, were signed into law by Governor Newsom. These bills include, as we reported previously, general caps on PAGA fines, further caps for proactive compliance, remediation and cure opportunities, and a cure opportunity to avoid litigation. The bills will likely change the landscape of PAGA litigation in California going forward. The Turrieta case is another example of how the litigation landscape has changed. It is important that employers consult their legal counsel when facing PAGA litigation.
