Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 109 on the merits and to devise a procedure to adjudicate certain claims.534 However, such authority to formulate rules and procedures stops short of permitting a trial court to strike or dismiss a PAGA claim outright. The Supreme Court stated that in order for PAGA claims to be “effectively tried,” trial courts can limit the type of evidence a plaintiff may present, or otherwise limit the scope of the PAGA claim.535 This includes limiting witness testimony and other forms of evidence when determining the number of violations that occurred and the amount of penalties to assess. The Supreme Court also declared that trial courts can issue rulings on demurrer or summary judgment to effectively manage claims which are pleaded in an overbroad and unspecific manner, to the extent that plaintiff is unable to prove liability as to all or most of the employees they are seeking to represent (meaning the scope of the claims and of the aggrieved employees can be limited). The Supreme Court also agreed with the arguments of Royalty and amici that employer-defendants have a due process right to present affirmative defenses. Accordingly, an employer must still be permitted to “introduce its own evidence, both to challenge the plaintiffs' showing and to reduce overall damages” and if plaintiffs seek to use a statistical model to prove their claims, defendants “must be given a chance to impeach that model or otherwise show that its liability is reduced.”536 F. Release of PAGA Claims Through Class Settlement Plaintiffs’ lawyers generally try to avoid characterizing any money from a settlement as being attributed to PAGA claims,537 as three-quarters of any such money goes to the state. In some cases, plaintiffs’ counsel do not even allege PAGA claims. If the case settles, however, the employer generally insists that the release cover all claims arising out of the same underlying facts, including any claims for PAGA penalties.538 Otherwise, the employer would face the risk of a PAGA action on the same issues.539 A dispute may arise if a class member in a settled class action lawsuit that did not include PAGA claims later seeks to bring a PAGA action. The PAGA plaintiff could argue that the class representative had not exhausted administrative remedies under PAGA and thus never had a right to release PAGA claims. Rather, until administrative remedies are exhausted, the PAGA plaintiff could argue, the PAGA claim is the property of the 534 Id. at *7. 535 Id. at *18. 536 Id. at *16. 537 See Nordstrom Com’n Cases, 186 Cal. App. 4th 576, 589 (2010) (affirming trial court’s approval of a class wide settlement that apportioned zero dollars to PAGA claims); Magadia v. Wal-Mart Assocs., Inc., 384 F. Supp. 3d 1058, 1100 (N.D. Cal. 2019), rev'd in part, vacated in part, 999 F.3d 668 (9th Cir. 2021) (court could not find any case that awarded a PAGA penalty so disproportionately high relative to applicable statutory damages; “in wage and hour class action cases that settle, which are the overwhelming majority of such cases, very little of the total settlement is paid to PAGA penalties in order to maximize payments to class members”). But see O'Connor v. Uber Techs., Inc., 201 F. Supp. 3d 1110 (N.D. Cal. 2016) (rejecting preliminary approval of proposed settlement of PAGA claim where amount allocated to that claim represented only 0.1% of potential exposure). 538 In such circumstances, it may be advisable to negotiate, as part of a settlement, a requirement that the plaintiff amend his complaint to specifically plead a PAGA claim. 539 If a PAGA claim is alleged in an action, any settlement must be approved by the Court, even if no money is allocated to the PAGA claim. Lab. Code § 2699(l)(2) (prior to the 2016 amendment to PAGA, only settlements where money was allocated to PAGA required court approval). Furthermore, the notice of proposed settlement must also simultaneously be submitted to the LWDA. Lab. Code § 2699(l)(1).
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