Category Archives: PAGA

Ninth Circuit Clarifies “Day of Rest” Rule in Dismissing PAGA Claim

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In Mendoza v. Nordstrom, Inc., 9th Cir. No. 12-57130 (8/03/2017), the Ninth Circuit affirmed a judgment against Nordstrom, Inc. for violation of California’s “day of rest” law. Plaintiff Christopher Mendoza had argued that Nordstrom violated Labor Code section 551, which grants employees a right to one “day’s rest” in seven and section 552, which provides that no employer “shall cause his employees to work more than six days in seven,” and thus was subject to penalties. Mendoza had claimed that he had worked more than six days three times during his employment, including times where he worked 11, 7, and 8 days. The district court had held that the seven-day period was “rolling” and based on any consecutive 7-day period, rather than based on a workweek, but that here this did not apply because Nordstrom employed Mendoza for six hours or less “on at least one day” of a week, triggering an exemption under section 556, and that there was no coercion (Mendoza willingly performed the work).

On appeal, the Ninth Circuit held that the District Court was incorrect on two counts.
First, sections 551 and 552 should be based on a workweek basis, such that each 7-day workweek (usually Monday through Sunday or Sunday through Saturday) operated as its own 7-day period. Employees are only entitled to one day of rest in each workweek. Second, the Court held that the exemption under section 556 only applied if the employee did not work more than 6 hours in any day of a workweek,, not just one day of a workweek.

However, the district court’s errors did not change the ultimate result because Mendoza (and other plaintiffs) were not “aggrieved employees” under the Private Attorneys General Act, because in each instance in which they worked 7 or more days in a row, those days were split over two workweeks, and in each one of those workweeks there was at least one day of rest. Therefore, a dismissal of the PAGA claim was appropriate.

Cal. Supremes Affirm Discovery Rights to PAGA Plaintiffs

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In Williams v. Superior Court, Cal. Ct. App. Case No. S227228 (7/13/2017), the California Supreme Court held that a plaintiff in a claim under the Private Attorneys General Act (PAGA) may conduct discovery regarding the identities of other aggrieved employees to the same extent as in a class action. Further, a trial court cannot require a plaintiff to make a prima facie case as a condition of compelling the defendant to disclose employee contact information.

Briefly, Michael Williams worked for a Marshalls department store, and claimed that Marshalls failed to provide compliant meal and rest periods under California law, including because company policy resulted in stores being understaffed and managers had the authority to revise employee time records to eliminate meal break violatoins. statements.

After the case was filed, Williams sought the personal contact information of all California hourly employees during the statutory period. The trial court conditioned the disclosure of contact information on Plaintiff making a “threshold showing” of merit after having his deposition taken. The Court of Appeal rejected Williams’ writ petition. The California Supreme Court granted review.

At the outset, the Court noted that “Williams was presumptively entitled to an answer to his interrogatory seeking the identity and contact information of his fellow Marshalls employees.”
In reviewing Marshall’s objection that the request was overbroad, the Court explained that because the objection did not involve privilege, the question of discoverability depended on whether the request was “reasonably calculated to lead to the discovery of admissible evidence,” i.e., within the scope of discovery.

Second, the Court found that the interrogatory was not unduly burdensome, and even if there is some burden, the trial court should consider alternatives less than completely barring discovery to address that burden. But the Court found that simply providing contact information is not unduly burdensome, although seeking detailed payroll and timekeeping documentation may give rise to such an objection.

Finally, the Court held that there was no sufficient privacy interest in the identities of the aggrieved employees to preclude production and that it was too high of a threshold to require a “compelling need” to produce such information.

Court of Appeal Reaffirms PAGA Claims Are Not Subject to Binding Arbitration

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Roberto Betancourt sued Prudential, alleging a single cause of action under the Private Attorney Generals Act (Labor Code 2698 et seq.), in which he sought civil penalties on behalf of himself and other aggrieved Prudential employees for failure to pay overtime, failure to provide meal and rest periods, failure to pay minimum wage, failure to reimburse business expenses, and other claims. Prudential moved to compel arbitration under a 2006 agreement, whereby Betancourt agreed Betancourt agreed “to forego any right to bring claims on a representative or class member basis.” The Court of Appeal found that the trial court correctly denied the motion because, under settled law (Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal.4th 349), a defendant cannot compel arbitration in a PAGA case, which is brought on behalf of the state.

Prudential made several arguments attempting to limit Iskanian, the most creative being that although “Iskanian held predispute waivers of the right to bring a representative action are unenforceable,” it did not hold that where an employer has agreed to litigate the PAGA claim in arbitration, which Prudential agreed to do here (despite contrary language in the agreement), “the agreement on the forum for the PAGA claim is enforceable.” The Court disagreed, holding again that becaue PAGA claims are brought on behalf of the state, “the fact that Betancourt may have entered into a predispute agreement to arbitrate does not bind the state to arbitration.”

Perhaps the most legally significant argument should a PAGA case ever get before the U.S. Supreme Court is that “if Iskanian is interpreted as prohibiting arbitration of all PAGA claims, then that state law prohibiting arbitration is preempted by the Federal Arbitration Act (FAA).” The Court of Appeal sidestepped that question — basically saying that if Betancourt had AGREED to arbitrate, then it could have done so, or at least that question isn’t before the Court. However, since employees rarely agree to arbitrate (where recovery is often lower), it remains true that for all intents and purposes a PAGA case will never be arbitrated, which a conservative SCOTUS could find to be an FAA violation. But that remains to be seen.

The takeaway for employees is that, once again, a published opinion harshly dismantled the arguments of an employer attempting to enforce an arbitration of PAGA claims. For employers, it will more often be the case that, where an employee has signed an arbitration agreement, they will find themselves on the receiving end of a one-count lawsuit seeking only PAGA penalties as was done here.

Betancourt v. Prudential Overall Supply, 2017 S.O.S. 1202
(Cal. Ct. App., 4th Dist. Mar. 7, 2017) http://sos.metnews.com/sos.cgi?0317//E064326.