Executive Summary: A new California appellate court decision provides much needed guidance regarding the proper scope of discovery in representative actions brought under the California Private Attorneys' General Act of 2004 (PAGA), Cal. Lab. Code sections 2698, et seq. Specifically, the opinion now allows lower courts to take an incremental approach to discovery, requiring the named plaintiff to demonstrate that s/he was actually subjected to wage and hour violations – and after that, subjected to uniform employment policies and practices – before authorizing statewide discovery. The opinion is the first published California decision concerning how courts should approach discovery in PAGA actions.
If a lawsuit is not a class action, should you be entitled to class-wide discovery?
Common sense dictates that the answer would be no, but surprisingly, the answer to this question has evaded PAGA litigants for years. For those unfamiliar with California's unique wage and hour laws, the PAGA purportedly "deputizes" private litigants to bring enforcement actions on the state's behalf for California Labor Code violations. Such actions are typically brought on a representative basis on behalf of all current and former employees, and, in most cases, are not subject to class certification requirements. On top of that, and depending on future pending litigation, PAGA actions may not be waived by employees through arbitration agreements. California courts have upheld these propositions due, in part, to the general understanding that PAGA actions are government enforcement actions – at least as argued by the plaintiffs' bar. Needless to say, the PAGA has been a source of confusion and headaches for many employers facing PAGA litigation in California. This is likely because although the PAGA is more than ten years old, it only emerged as a procedure relied on by the plaintiffs' bar in the wake of the U.S. Supreme Court's 2011 decision in AT&T Mobility v. Concepcion, which upheld the use of mandatory class and collection action waivers in arbitration agreements. As a result, there is a virtual absence of legal authority regarding the proper scope of discovery in PAGA actions. That now appears to have changed after the Second Appellate District for the California Court of Appeal's recent decision in Michael Williams v. Superior Court, Case No. B259967 (Cal. Ct. App. 2d Dist., May 15, 2015).
Decision in Williams
In Williams, the plaintiff brought a PAGA action against his employer for various wage and hour violations. At the litigation's outset, and before the plaintiff had even presented himself for deposition, the plaintiff sought the production of identities and contact information for all of the employer's non-exempt employees in California. The employer objected to the production, contending that the requested statewide discovery was irrelevant, overbroad, unduly burdensome, and implicated the privacy rights of its employees. The plaintiff later moved to compel the employer to produce the information, arguing that the information "was routinely discoverable in representative employee actions and vital to the prosecution of his PAGA claims." Ironically, the dearth in case law related to discovery in PAGA cases permitted the plaintiff to argue that production of statewide discovery – discovery normally permitted in class actions – was allowed, even though PAGA actions by their nature are akin to, but are not, class actions. Despite this argument, the lower court ultimately limited production to the one store location at which the plaintiff worked. However, the court allowed the plaintiff to renew his motion after he had been deposed and could potentially present evidence demonstrating any violations he purportedly suffered were implemented in other store locations in the state. The plaintiff subsequently petitioned the Court of Appeal to vacate the lower court's ruling, arguing he was entitled to statewide discovery because he had brought an action seeking to represent all aggrieved employees within the state.
On review, the Williams court found that the lower court did not abuse its discretion in denying statewide discovery to the plaintiff. In so ruling, the court noted that it was "eminently reasonable for the trial judge to proceed with discovery in an incremental fashion, first requiring that plaintiff provide some support for his own, local claims and then perhaps later broadening the inquiry to discovery whether some reason exists to suspect [the employer's] local practices extend statewide."
Employers' Bottom Line
The decision is the first published state court decision concerning the scope of PAGA discovery, and provides litigants with much needed ammunition in reining in PAGA plaintiffs who may try to use the costs and burdens of statewide discovery as a weapon against employers. Given the Williams court's sanctioning of a "measured approach" to discovery, plaintiffs in PAGA claims will not only need to prove that they were actually subjected to violations, but also that the violations potentially stemmed from uniform employment practices, before courts will allow broad and extensive statewide discovery.