By John S. Keeney
On September 9, 2021, the California Court of Appeal for the Second Appellate District issued an important win for California employers in Wesson v. Staples the Office Superstore, No. B8302988 (Cal. Ct. App. Sept. 9, 2021), holding that trial courts have the inherent authority to strike unmanageable claims brought under the Private Attorneys General Act (“PAGA”).
The plaintiff, Fred Wesson, worked as a General Manager (“GM”) for Staples in California. Among other things, Wesson brought a representative action under PAGA seeking nearly $36 million in civil penalties against Staples on behalf of himself and 345 other current and former GMs in California, alleging Staples had misclassified its GMs as exempt executives (who are not entitled to meal and rest periods, or overtime pay).
Staples moved to strike Wesson’s PAGA claim as unmanageable, arguing that to prove its affirmative defense—that the GMs were properly classified as exempt—would require individual proof for each GM, which made it impossible for the claims to be fairly and efficiently litigated as a representative action. Staples argued that because the GM position was not standardized, and there was substantial variation in how each of the 345 GMs performed their jobs and the extent to which they performed non-managerial tasks, the claim was not susceptible to common proof.
The trial court invited Wesson to submit a trial plan to show the case was manageable at trial. Instead, however, Wesson argued that the court lacked the authority to strike his PAGA claim as unmanageable and argued that even if the court had such authority, all that mattered was that his part of the case was manageable, and that it was irrelevant whether Staples’ affirmative defense could be managed at trial.
The trial court disagreed with Wesson and granted Staples’ motion to strike the PAGA claim on manageability grounds. In doing so, the trial court found that Staples’ affirmative defenses could not be litigated by way of common proof and presenting evidence of individualized assessments of each GM’s classification would lead to “an unmanageable mess” that “would waste the time and resources of the Court and the parties.” At a subsequent hearing, the parties estimated they would need six days of trial per GM, which would have resulted in a trial lasting eight years. Accordingly, the trial court granted Staples’ motion, and Wesson appealed.
The California Court of Appeal affirmed the trial court’s ruling. Drawing on longstanding principles of the courts’ inherent authority to manage litigation, including ensuring the manageability of representative claims, the appellate court concluded that trial courts have the inherent authority to ensure that PAGA claims can be fairly and efficiently tried and, if necessary, may strike a claim that cannot be rendered manageable. In doing so, the Wesson court answered a question of first impression in California and resolved a dispute in federal district courts where cases are split on the issue.
Key Takeaways for Employers
The holding in Wesson is a substantial win for employers in several aspects. In addition to deterring harassing PAGA claims, the Wesson court resolved several areas of uncertainty in California by holding:
(1) Trial courts have the authority to limit or dispose of PAGA claims that are unmanageable;
(2) The proper procedural challenge to a PAGA claim based on manageability is through a motion to strike;
(3) Defendant employers are entitled to a fair opportunity to litigate and present evidence as to all affirmative defenses in a representative action as a matter of due process; and
(4) A plaintiff’s lack of cooperation and ability to present an adequate trial plan is a relevant factor in the trial court’s manageability inquiry.
In post-Wesson litigation, employers should focus PAGA discovery efforts on forcing plaintiffs to prove their case can be efficiently tried through common proof evidence. When it cannot, employers should consider moving to strike the PAGA claims as unmanageable.
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This article was prepared by John S. Keeney (email@example.com) of Mortenson Taggart LLP. Mortenson Taggart LLP is a boutique litigation firm that provides legal services to franchisors, manufacturers and other companies in the areas of employment, trademark, trade secret, unfair competition, franchise, and distribution laws.
Disclaimer: While every effort has been made to ensure the accuracy of this article, it is not intended to provide legal advice as individual situations will differ and should be discussed with an experienced franchise lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.