California Supreme Court Rejects PAGA Manageability Argument

January 22, 2024

Defendants have long argued that Private Attorneys General Act (PAGA) claims can be unwieldy and that courts should strike such claims where individual issues make them unmanageable. In Estrada v. Royalty Carpet Mills, Inc., the California Supreme Court unanimously held that trial courts lack the inherent authority to dismiss PAGA claims — which seek civil penalties for violations of the California Labor Code on behalf of “aggrieved employees” — based on manageability.

The court first noted that trial courts do not have inherent authority to strike any type of claim, irrespective of its nature, merely to foster judicial economy. It also noted that the California Code of Civil Procedure does not provide trial courts with any broad inherent authority to strike a claim due to manageability concerns. Ultimately, the court clarified that its ruling was not “taking away” any of the trial court’s power, but instead was refusing to endorse “a broad new power” that the trial court never possessed.

As to the narrower question of whether trial courts can dismiss PAGA claims on manageability grounds, the court concluded that manageability was a “class action-based” concept bearing on questions of superiority and predominance of common issues. Building off that explanation, the court noted that “class claims differ significantly from PAGA claims” and there are no superiority or predominance requirements that PAGA claims must meet. The court further pointed to PAGA’s description as an “administrative enforcement action” and reasoned that a manageability requirement would undermine the legislative objective of enforcing PAGA’s provisions.

While the court rejected manageability as a defense to a PAGA claim, it acknowledged that there is a wide variance in PAGA claims that are brought and stated that courts have “numerous tools” that can be used to manage PAGA cases. Those tools identified included but were not limited to:

  • Deskbook on the Management of Complex Civil Litigation, Judicial Council of California, (2016).
  • Evidence other than individual testimonies, such as representative testimonies, surveys and statistical analyses.
  • Statistical methods designed to reveal generalized characteristics of a population.
  • Limitations on the type of evidence a plaintiff may present or use, such as limiting witness testimony.
  • Limiting the scope of the PAGA claim.
  • Substantive rulings, including those on demurrer or motions for summary judgment or judgment notwithstanding the verdict.

Without the option to seek dismissal of PAGA claims based on manageability, defendants will need to prioritize and put additional efforts into developing a coherent and practical case management plan. Such plans should seek to find ways to maximize the opportunity to introduce evidence in support of affirmative defenses and minimize plaintiffs’ abilities to utilize statistical models and evidence that may not accurately reflect Labor Code violation rates. As there appears to be no slowdown in the number of PAGA claims being filed, defendants will need to be thoughtful and consider alternative approaches to defending against such claims now that manageability is off the table.