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Calif. ‘private attorney general’ law is constitutional,

3 min read
  • Biz group said state must have oversight of worker lawsuits
  • But state law already provides it, appeals court ruled

(Reuters) – A California appeals court has rejected a business group’s claim that a unique law allowing workers to sue their employers on behalf of the state is unconstitutional.

A unanimous three-judge panel of the California Court of Appeal, Fourth Appellate District in Santa Ana on Thursday said the state Private Attorneys General Act (PAGA) does not violate the constitutional separation of powers because it bars workers from suing until they have notified the state of their claims and officials have passed on filing their own lawsuit.

The California Business & Industrial Alliance (CABIA), which represents small and mid-size businesses, had argued that PAGA violates the state constitution because it lacks a mechanism for the executive branch to supervise and intervene in lawsuits.

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The Fourth District said that claim had already been rejected by the California Supreme Court in the 2014 case Iskanian v. CLS Transportation Los Angeles LLC, and shot down CABIA’s attempts to distinguish that case from its own challenge.

CABIA’s president, Tom Manzo, said in an email it was unfortunate that the court did not recognize the harm PAGA causes to employers and that CABIA was considering an appeal.

“The court ignored the fact that the executive branch reviews less than one percent of all PAGA notices,” he said.

The California Attorney General’s office in a statement said it was pleased with the decision and added that PAGA is a critical part of the state’s efforts to protect the rights of workers.

The U.S. Chamber of Commerce backed the challenge in a December amicus brief, saying California businesses have faced a recent explosion in PAGA lawsuits and have often been forced to settle meritless cases, requiring many to lay off employees or shut down altogether.

PAGA, which was adopted in 2004, allows workers to bring certain wage-law claims against their employers on the state’s behalf and keep 25% of any penalties they win.

The law has become a crucial tool for workers since the Iskanian decision, which said PAGA claims can remain in court even when the workers who bring them have signed agreements to take legal disputes with their employers to individual arbitration.

The U.S. Supreme Court last month overturned the key holding in Iskanian, saying workers cannot use PAGA to circumvent arbitration agreements but did not address the California Supreme Court’s separate finding that PAGA did not violate the constitutional separation of powers.

CABIA made that claim in its lawsuit filed against the state in 2018.

The Fourth District rejected that argument, finding that PAGA gives the state a sufficient role in the litigation. PAGA requires workers to notify the state Labor and Workforce Development Agency before and immediately after commencing lawsuits, when there is a settlement or judgment in their case and prohibits workers from filing lawsuits that are identical to actions brought by the state, Justice Maurice Sanchez wrote.

The case is California Business & Industrial Alliance v. Becerra, California Court of Appeal, Fourth Appellate District, No. G059561.

For CABIA: Richard Frey of Nixon Peabody; Brock Seraphin of Epstein Becker & Green

For the state: Assistant Attorney General Thomas Patterson

(NOTE: This article has been updated to include a statement from the California Attorney General’s office.)

Read more:

U.S. Supreme Court deals major blow to California worker class actions

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Daniel Wiessner

Thomson Reuters

Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at [email protected]