I haven't posted anything yet about Epiq Systems Corp. v. Lewis (what's there to say that hasn't been kicking around for years in various ways), but certainly that decision motivates a renewed focus on PAGA claims in California. And would you look at that?! Here's a new decision about PAGA. In Huff v. Securitas Security Services USA, Inc., the Court of Appeal (Sixth Appellate District) examined the following question:
This case presents the question of whether a plaintiff who brings a representative action under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698, et seq.) may seek penalties not only for the Labor Code violation that affected him or her, but also for different violations that affected other employees.
Slip op., at 1. So at this point, I must admit that my assumption for about 5 seconds was that the answer would be a big "No, they may not." To my surprise, the Court held to the contrary:
As we will explain, we conclude that PAGA allows an “aggrieved employee” –– a person affected by at least one Labor Code violation committed by an employer –– to pursue penalties for all the Labor Code violations committed by that employer.
Slip op., at 1. That was unexpected.
The Court's primary analysis is well summarized by this passage:
When we interpret a statute our primary task is to ascertain the Legislature’s intent and effectuate the purpose of the law. We look first to the words of the statute itself as the most direct indicator of what the Legislature intended. (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.) PAGA provides in section 2699, subdivision (a) that “any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.” The statute then specifically defines “aggrieved employee” in section 2699, subdivision (c): “ ‘aggrieved employee’ means any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.”
As the trial court did, we interpret those provisions to mean that any Labor Code penalties recoverable by state authorities may be recovered in a PAGA action by a person who was employed by the alleged violator and affected by at least one of the violations alleged in the complaint. Indeed, we cannot readily derive any meaning other than that from the plain statutory language, and Securitas does not offer a reasonable alternative for what those provisions mean when read together.
Slip op., at 5-6. After this, the Court spent a lot of time rejecting arguments that it should look to the legislative history (the Court held that when a statute is clear, it is not to consider legislative history) and other arguments about absurd results. It rejected all of those arguments.
Of course, in good Apple presentation fashion, this case has a couple of items that qualify as a "one more thing" moment. One of those moments included the following:
Section 2699, subdivision (f) creates a civil penalty for any Labor Code violation for which a penalty is not provided elsewhere in the law. The penalties under section 2699, subdivision (f) are “one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.” Securitas posits that using the definition of aggrieved employees in section 2699, subdivision (c) to calculate those penalties would allow over-counting in some cases to include weeks worked by employees affected by just one of the Labor Code violations alleged in the complaint, even if it is not the one giving rise to the penalties imposed by section 2699, subdivision (f). To the contrary, it is entirely possible to harmonize the two provisions. The method of calculation under section 2699, subdivision (f) imposes penalties based on the total number of employees that have been affected by an employer’s Labor Code violations. Though Securitas calls that “over-counting,” it is not impermissible for the Legislature to impose penalties measured in that way. Even if the method of calculation provided for by section 2699, subdivision (f) is something of a blunt instrument, it is not our role to rewrite the statute. (People v. Garcia (1999) 21 Cal.4th 1, 14.) Separation of powers principles require us to interpret the law as written, “and leave for the People and the Legislature the task of revising it as they deem wise.” (Id. at p. 15.) We also note that PAGA gives a court broad discretion to “award a lesser amount than the maximum civil penalty amount … if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.” (§ 2699, subd. (e)(2).) So the statute incorporates a remedy if the penalty calculation is unfair or arbitrary as applied to a particular employer.
Slip op., at 12-13. Let that sink in for a moment. If I am not imaging things, I believe that this means that for subdivision (f) penalties, the Court held that the correct method of counting up the penalties would be to count the total number of employees that qualify as "aggrieved" by any violation an multiply that number by the $100 or $200 penalty. Oh my. So, if this stands the test of time, more employers will avoid class actions with class waivers in their arbitration agreements, but if there are violations of any of the sections included in PAGA, the penalty calculation for that one year will be absolutely brutal. Big winner? The LWDA. For California employers in the long run it will likely be a slight loss. While Epiq will cut into class actions, that will be countered with larger penalty recoveries. And since the statutory period is just one year, an employer that doesn't fully correct issues will see plaintiffs returning to that well with regularity.
Respondent and Plaintiff was successfully represented by Michael Millen.
UPDATE: In response to a question about my post, I want to clarify something that is potentially unclear. When I wrote, “…if there are violations of any of the sections included in PAGA, the penalty calculation for that one year will be absolutely brutal,” I was referring to the penalty look-back period of one year prior to filing. In other words, I was not saying that a specific one year period was implicated by this decision. I was only observing that the penalties for a one-year statute of limitation could be high, compared to a four-year statute in a wage and hour class action (plus whatever time passes while a case is pending).
