110 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com state. In short, the PAGA plaintiff argues that a prerequisite to a release of PAGA claims is the exhaustion of administrative remedies. The Court of Appeal addressed this issue in Villacres v. ABM Industries Inc.,540 which held that class members could indeed waive their right to pursue PAGA claims and that a judgment entered on such a class settlement creates a res judicata bar to those class members pursuing PAGA claims in a separate action.541 The court explained that the party in a PAGA action is the aggrieved employee, and thus rejected the plaintiff’s argument that the State of California is the real party in interest in a PAGA action. In Robinson v. Southern Counties Oil Co.,542 the Court of Appeal extended this principle to hold that a plaintiff who had previously opted out of prior PAGA/class settlement could not bring a separate PAGA action.543 Separate from the res judicata argument, however, an employer may seek to argue that when the class release provides that class members are releasing any PAGA claims that could be based on the same underlying facts as the Labor Code claims, the doctrine of release precludes any class member from pursuing PAGA relief. In other words, even if there is no sort of res judicata bar, basic contract principles of release would prevent someone who agreed to the release from suing on the released claim. This argument was approved in a federal decision, Waisbein v. UBS Financial Services Inc.,544 which is not binding on California courts but is persuasive authority.545 In 2020, the California Supreme Court eliminated the ability of employers to attack a PAGA action on the basis that the named plaintiff already settled his underlying Labor Code claims. In Kim v. Reins International, the plaintiff filed a class action alleging that he and other managers were misclassified. The complaint also included a representative claim under PAGA. Reins successfully compelled arbitration of the plaintiff’s individual claims and the trial court stayed the PAGA claim while the individual claims were litigated. Eventually, the plaintiff agreed to settle his individual claims in arbitration and the settlement agreement included a carve out for his pending PAGA claims. The employer then successfully moved for summary judgment on the basis that the plaintiff had been “completely redressed” and was no longer an “aggrieved employee” so, consequently, could not proceed with the PAGA claim. 540 Villacres v. ABM Industries Inc., 189 Cal. App. 4th 562 (2010). 541 The Ninth Circuit in In re Walgreen Co. Wage and Hour Litigation, 747 F. App'x 619 (9th Cir. 2019), held that a settlement agreement including a release and covenant not to participate in a PAGA action only precluded the employee from bringing an action with an “identical factual predicate.” There, the original wage-and-hour litigation concerned meal and rest periods, wage payments, wage statements, and business expenses. The second action was a “suitable seating” claim. The Ninth Circuit reasoned that the fact that both actions used California Labor Code section 1198 and PAGA as the legal mechanisms to assert the claims “sa[id] nothing about the factual predicate for each case” and that any similarity between the actions was “superficial” and thus insufficient to justify the release of the suitable seating claims by the settlement agreement. Id. at 619-20. 542 Robinson v. Southern Counties Oil Co., 53 Cal. App. 5th 476 (2020). 543 Robinson also held that the plaintiff lacked standing to pursue PAGA claims for period not covered by settlement, as he was no longer employed by the defendant at that time. Id. 544 Waisbein v. UBS Financial Services Inc., 2007 WL 4287334, at *8-9 (N.D. Cal. Dec. 5, 2007) (“[T]he question is whether the Bowman class members voluntarily entered into an agreement in which they accepted a monetary benefit from UBS in exchange for not pursuing their claims under PAGA. The indisputable answer to that question is ‘yes.’”). 545 Harris v. Investor’s Bus. Daily, Inc., 138 Cal. App. 4th 28, 34 (2006) (“even unpublished federal opinions have persuasive value in [the superior] court”).
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