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June 29, 2006 | Law Alert

Arias v. Superior Court (June 29, 2006)

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Employee plaintiffs must satisfy class action requirements when suing employers under California’s unfair competition law, but not when seeking civil penalties under the Labor Code Private Attorneys General Act

The Labor Code Private Attorneys General Act of 2004 (“PAGA”) authorizes an aggrieved employee to act as a private attorney general and to file suit to recover civil penalties from an employer for labor code violations. PAGA essentially deputizes an individual to act on behalf of the government, prosecuting violations of labor code sections, to promote the public interest and to compensate for a lack of government resources. A PAG A plaintiff can act on behalf of herself and as a representative of other former and current employees.

California unfair competition law prohibits any unlawful, unfair, or fraudulent business act or practice. In 2004, the electorate passed Proposition 64, which established that a plaintiff under the unfair competition law must suffer injury in fact, i.e., must have lost money or property as a result of the unfair competition. Unfair competition law also authorizes a representative action by the plaintiff, but only if the plaintiff “complies with section 382 of the Code of Civil Procedure.”

In Arias, the plaintiff filed suit against his former employer on behalf of himselfand as a representative of other formerand current employees. He alleged a cause of action under PAGA, as well as violations of California unfair competition law. The trial court dismissed all the plaintiff’s representative claims, including the PAGA and unfair competition claims, because he failed to comply with the pleading requirements for class actions.

The Court of Appeal reversed the trial court’s decision with regard to the PAGA claims only, because: (1) the plain language of PAGA states that a plaintiff may bring a representative action “not withstanding any other provision of law”; (2) similar language in Business & Professions Code §17204 permitted a representative action without being brought as a class action; (3) PAGA does not require a party to comply with section 382 of the Code of Civil Procedure (which has been interpreted to mean meeting class action requirements); and (4) a private plaintiff under PAGA is bringing an action designed to protect the public. It distinguished PAGA from the plaintiff’s causes of action under the unfair competition law, which did require a plaintiff to meet class action requirements.

The Supreme Court affirmed. Rejecting the employer’s arguments, it held that the Court of Appeals decision was consistent with the legislative history of PAGA and that defendant employers were not subjected to unfairness as a result of allowing a plaintiff to proceed without meeting the class action requirements. Because PAGA actions are brought on behalf of state enforcement agencies, the plaintiff is a proxy of the government. Therefore, any judgment obtained by the PAGA plaintiff is binding on that plaintiff, the government agencies themselves, as well as all non-party employees. The very nature of a PAGA claim obviated the need for a plaintiff to meet class action requirements.

Practice Area: Employment

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