The Supreme Court of California held in Arias v. Super. Ct. of San Joaquin County that plaintiffs who sue in a representative capacity — i.e. on behalf of themselves and other employees — under the state’s unfair competition law must meet class certification requirements, whereas plaintiffs who sue in a representative capacity to recover penalties for themselves and other employees under the state’s Private Attorney General’s provision of the Labor Code (PAGA) need not establish such requirements.

Plaintiff Jose Arias sued his former employer, Angelo Dairy, asserting claims on behalf of himself and other current and former Angelo Dairy employees under PAGA and California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.). PAGA permits plaintiffs to recover civil penalties on behalf of themselves and other current or former employees, with 75% of any recovery distributed to the state’s Labor and Workforce Development Agency and the remaining 25% going to the aggrieved employees. The trial court dismissed Arias’ representative claims on the ground that he failed to meet class certification standards — for example, commonality among the class members — that apply to class actions brought under other state laws.

A state court of appeal reversed in part, holding that PAGA representative claims are not subject to class certification requirements. The Supreme Court of California affirmed. While the Supreme Court acknowledged that Proposition 64 — passed by California voters in 2004 — added a class certification requirement to class actions brought under the state’s unfair competition law, the court held that plaintiffs need not satisfy such requirements when seeking civil penalties under PAGA.

Not having to satisfy class certification requirements in a PAGA penalties class action gives plaintiffs a significant strategic advantage in pursing such claims against their current or former employers, and the Arias decision portends more wage/hour class actions in California.