Judge: David S. Cunningham, Case: 19STCV12719, Date: 2024-03-20 Tentative Ruling


Case Number: 19STCV12719    Hearing Date: March 20, 2024    Dept: 11

19STCV12719 (Wright)

 

Tentative Ruling Re: Second Renewed Motion to Strike

 

Date:                           3/20/24

Time:                          9:00 am

Moving Party:           CitiStaff Solutions, Inc. (“CitiStaff”) and Dependable Highway Express, Inc. (“DHE”) (jointly “Defendants”)

Opposing Party:        Marvin Wright (“Plaintiff”)

Department:              11

Judge:                         David S. Cunningham III

________________________________________________________________________

 

TENTATIVE RULING

 

Defendants’ second renewed motion to strike is denied without prejudice.

 

BACKGROUND

 

DHE “is a shipping and transportation company with locations throughout California.”  (Opposition, p. 1.)  CitiStaff “is a staffing company.”  (Id. at pp. 1-2.)  CitiStaff allegedly assigned Plaintiff and other “hourly, non-exempt workers to DHE’s facility on Olympic Boulevard in Los Angeles, California.”  (Id. at p. 3.)

 

Plaintiff alleges wage-and-hour violations and seeks civil penalties under the Private Attorneys General Act (“PAGA”).

 

On May 2, 2022, the Court heard Defendants’ motion to strike the PAGA cause of action.  Defendants argued that the PAGA cause of action is unmanageable.  The Court found the motion premature and denied it without prejudice.

 

On September 13, 2022, Defendants filed a renewed motion to strike.

 

On October 6, 2022, the Court heard the renewed motion and continued the hearing to January 6, 2023.  The Court continued the matter because it was waiting for a decision by the California Supreme Court in a case called Estrada v. Royalty Carpet Mills, Inc. 

 

Subsequently, the parties agreed to several additional continuances.

 

On January 18, 2024, the California Supreme Court issued the Estrada opinion.

 

On February 27, 2024, Defendants filed a second renewed motion to strike.  The moving brief is different than the moving brief for the first renewed motion.  Defendants appear to intend for it to supersede the first renewed motion.

 

The issue here is whether the second renewed motion to strike should be granted.

 

LAW

 

Wesson v. Staples the Office Superstore, LLC (2021) 68 Cal.App.5th 746

 

Defendants based their first renewed motion on Wesson.  There, the plaintiff filed a PAGA claim on behalf of himself and 345 other general managers.  The trial court granted the defendant’s motion to strike, and the Second District Court of Appeal affirmed:

 

Wesson's claim asserted Labor Code violations as to 346 Staples GMs, premised on Staples's alleged misclassification of those employees as exempt executives. By their nature, claims involving employee misclassification are highly fact-dependent, as the inquiry focuses on the work actually performed by the employee, as well as the employer's realistic expectations and the realistic requirements of the job. Thus, trials involving misclassification claims often involve significant amounts of factual minutiae and therefore tend to be lengthy even when they involve only a few employees.

 

In the class action context, our Supreme Court acknowledged that misclassification cases “can pose difficult manageability challenges.” It explained: “Although common proof may be possible if there are uniform job requirements or policies, an employer's liability for misclassification under most Labor Code exemptions will depend on employees’ individual circumstances. Liability to one employee is in no way excused or established by the employer's classification of other employees.”

 

The record in this case raised significant manageability concerns. Staples adduced evidence that the GM position was not standardized, and that there was great variation in how Staples GMs performed their jobs and the extent to which they performed non-exempt tasks. The evidence showed that Staples stores varied widely in size, sales volume, staffing levels, labor budgets, and other variables that affected GMs’ work experience. Staples's evidence also showed that how GMs spent their time depended on their experience, aptitude, and managerial approaches, among other factors. The trial court credited this evidence, and Wesson does not contest it on appeal. Based on this evidence, Staples argued that Wesson's claims would require individualized assessments of each GM's classification and would lead to “an unmanageable mess” that “would waste the time and resources of the Court and the parties . . . .”

 

Wesson agreed that Staples's affirmative defense would require individualized assessments of the 346 GMs, stating in his briefing to the court that “Staples [would] need to proffer ‘a GM-by-GM, week-by-week analysis’ throughout the entire relevant time period that all of the GMs were properly classified as exempt executives.” And he did not suggest there was a manageable way to litigate Staples's exemption defense. Instead, Wesson argued that the manageability inquiry need not consider a defendant's affirmative defenses, asserting that “a manager misclassification PAGA claim is ‘manageable’ so long as [the] [p]laintiff's prima facie case, concerning each aggrieved employee at issue, is provable by resort to common evidence.” Thus, in addressing the litigation of Staples's exemption defense in the trial plan he proposed to the court, Wesson insisted that it would be improper for him to “dictate how Staples should go about proving its exemption defense,” and simply pledged that he would not attempt to prevent Staples from proving its affirmative defense as it saw fit. At the hearing on the issue, the parties estimated they would need six trial days per GM to litigate GMs’ classification individually, or roughly eight years.

 

The evidence and argument before the trial court revealed no apparent way to litigate Staples's affirmative defense in a fair and expeditious manner, as the defense turned in large part on GMs’ actual work experience, yet there was extensive variability in the group of Staples's GMs. The parties agreed that individualized litigation of the issue as to each of 346 GM would require a trial spanning several years with many hundreds of witnesses. The trial court reasonably concluded that such a trial would “not meet any definition of manageability.”

 

To be sure, Staples would have been able to offer common proof relating to its realistic expectations as to how GMs should spend their time and the realistic requirements of the job. In the unpublished portion of this opinion, we concluded its common evidence on those issues precluded summary adjudication. But the fact that certain evidence is minimally sufficient for purposes of summary adjudication does not mean that a factfinder would find it credible and persuasive at trial. Thus, Staples could not be expected to limit its defense to common evidence on its realistic expectations and the realistic requirements of the job, while ignoring the issue of how individual GMs actually spent their time -- the “first and foremost” consideration under the IWC wage order.

 

Wesson's argument below that a court should ignore affirmative defenses in assessing manageability makes little sense. That a plaintiff may prove his or her prima facie case relatively quickly and efficiently is of little comfort if any fair presentation of a cognizable defense would seize the court's resources for years to come.

 

For the first time on appeal, Wesson contends that Staples had no due process right to call every GM as a witness at trial, and thus that the trial court could have rendered a trial on his claim manageable simply by limiting Staples's ability to litigate its defense individually as to each GM. In support, Wesson points to certain language by our Supreme Court in Duran. The language he references does not support his contention.

 

In holding that the trial court impermissibly constrained the defendant's ability to present a defense, the Duran court explained, “While class action defendants may not have an unfettered right to present individualized evidence in support of a defense, ... a class action trial management plan may not foreclose the litigation of relevant affirmative defenses, even when these defenses turn on individual questions.” The court further stated: “No case, to our knowledge, holds that a defendant has a due process right to litigate an affirmative defense as to each individual class member. However, if liability is to be established on a classwide basis, defendants must have an opportunity to present proof of their affirmative defenses within whatever method the court and the parties fashion to try these issues.”

 

This language, cited by Wesson, indicates that a defendant is not categorically entitled, in every case, to litigate an affirmative defense individually as to each class member. Yet in the same breath, the court stressed that defendants must have a fair opportunity to litigate their affirmative defenses in some way, even if that entails individualized evidence. A trial court thus may not “significantly impair[]” the defendant's ability to present a defense. As discussed, the evidence before the trial court supported its determination that Staples's affirmative defense could not be fairly litigated through common proof, and no evidence before the court suggested it could.

 

In his reply brief, Wesson summarily asserts for the first time that Staples could have sought to manage individual issues through “ ‘pattern and practice evidence, statistical evidence, sampling evidence, expert testimony, and other indicators of ... centralized practices ....’ ” He made no such claim below, relying instead on the assertion that the manageability of Staples's defense was irrelevant. Moreover, nothing in the record suggested that these were feasible means of proving how individual GMs spent their time, and Wesson's argument on appeal is woefully insufficient to establish that the trial court abused its discretion in concluding to the contrary.

 

We do not hold that a PAGA misclassification case can never be managed through common-proof methods. However, Wesson's lack of cooperation with the trial court's inquiry in this regard stymied the court's efforts to devise a plan that would allow the action to proceed, in whole or in part. On the record before us, the trial court's determination that Wesson's PAGA claim was unmanageable was eminently reasonable. Accordingly, we find no abuse of discretion in the court's decision to strike Wesson's PAGA claim.

 

(Wesson, supra, 68 Cal.App.5th at 772-775, underlined case names added, citations and footnotes omitted.)

 

Estrada v. Royalty Carpet Mills, Inc. (2022) 76 Cal.App.5th 685

 

In Estrada, the Fourth District Court of Appeal “reach[ed] the opposite conclusion”:

 

. . . Based on our reading of pertinent Supreme Court authority, chiefly Arias v. Superior Court (2009) 46 Cal.4th 969 . . . and Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73 . . . , we find a court cannot strike a PAGA claim based on manageability. These cases have made clear that PAGA claims are unlike conventional civil suits and, in particular, are not class actions. Allowing dismissal of unmanageable PAGA claims would effectively graft a class action requirement onto PAGA claims, undermining a core principle of these authorities. It would also interfere with PAGA's purpose as a law enforcement mechanism by placing an extra hurdle on PAGA plaintiffs that is not placed on the state. That said, courts are not powerless when facing unwieldy PAGA claims. Courts may still, where appropriate and within reason, limit the amount of evidence PAGA plaintiffs may introduce at trial to prove alleged violations to other unrepresented employees. If plaintiffs are unable to show widespread violations in an efficient and reasonable manner, that will just reduce the amount of penalties awarded rather than lead to dismissal.

 

(Estrada, supra, 76 Cal.App.5th 685, 2022 WL 855568, at *1, underlined case names added.)

 

Estrada v. Royalty Carpet Mills, Inc. (Cal. Sup. Ct. 2024) 541 P.3d 466

 

The California Supreme Court agreed with the Fourth District:

 

We now conclude that trial courts lack inherent authority to strike PAGA claims on manageability grounds. In reaching this conclusion, we emphasize that trial courts do not generally possess a broad inherent authority to dismiss claims. Nor is it appropriate for trial courts to strike PAGA claims by employing class action manageability requirements. And, while trial courts may use a vast variety of tools to efficiently manage PAGA claims, given the structure and purpose of PAGA, striking such claims due to manageability concerns – even if those claims are complex or time-intensive – is not among the tools trial courts possess.

 

(Estrada, supra, 541 P.3d at 470, footnote omitted.)

 

DISCUSSION

 

Defendants’ second renewed motion is denied to the extent Defendants ask the Court to strike the representative PAGA claim as unmanageable.  Estrada is clear that “a trial court ‘cannot dismiss a PAGA claim based on manageability.’”  (Id. at 488.)

 

The next issue concerns due process. Defendants claim Estrada allows courts to strike representative PAGA claims for due process reasons.  (See Second Renewed Motion, pp. 5-6; see also Reply, pp. 2-3.)  They contend trying the PAGA claim “on a representative basis” would violate their “due process rights.”  (Second Renewed Motion, p. 2.)  Specifically, Defendants contend Plaintiff’s trial plan is defective because it fails to:

 

– explain how Plaintiff’s expert’s surveys “would work, what questions would be used, and how the results would be extrapolated to a larger group” (id. at p. 6; see also Reply, pp. 5-7);

 

– provide a way for Defendants to challenge statements made by former warehouse workers and to cross-examine the survey participants (Second Renewed Motion, pp. 6-7; see also id. at pp. 10-11 [claiming “the Court should prohibit any ‘testimony or survey evidence’ that fails to afford Defendants an opportunity to test its veracity, which in the case of a declaration or deposition testimony, would include cross-examination by Defendants”]; Reply, pp. 4-5, 7-8); and

 

– show how Plaintiff’s testimony and time records could be used to establish violations related to other aggrieved employees (Second Renewed Motion, pp. 7-9 [arguing that Plaintiff lacks personal knowledge “regarding the work of the warehouse workers”]; see also id. at pp. 9-10 [arguing that Plaintiff’s claims are atypical and that he “failed to obtain pay records and time records for anyone other than himself”]; Reply, pp. 6, 8-10).

 

In response, Plaintiff asserts:

 

– the second renewed motion is a disguised manageability motion (see Opposition, pp. 4-5);

 

– Defendants’ “lone wolf” argument is unavailing (see id. at pp. 5-6 [arguing that (1) class requirements like typicality do not apply, (2) Plaintiff has standing because he is an aggrieved employee, and (3) common evidence can be used to prove the alleged violations since Defendants had “uniform practices and procedures at DHE’s worksite”]);

 

– Plaintiff is entitled to perform a survey (see id. at pp. 6-7);

 

– Defendants are not entitled to depose all aggrieved employees (see ibid.);

 

– Plaintiff’s expert has proposed collaborating with Defendants on the survey questions (see id. at pp. 7-8); and

 

– Defendants misstate the nature of the expert’s work (see id. at pp. 8-9 [representing that the expert “will not be gathering declarations or sworn testimony”].)

 

The Court turns to Estrada.  A whole section of the opinion addresses due process.  It states:

 

Royalty's brief also could be read to raise the claim that the retrial of the plaintiffs’ representative PAGA claim mandated by the Court of Appeal will violate its right to due process. We are unpersuaded.

 

Royalty argues that defendants, including employers in class or representative actions, have a due process right to present an affirmative defense. [Citation.] We agree. In discussing class actions in Duran, we said that “defendants must have an opportunity to present proof of their affirmative defenses.” [Citation.] There is no reason to think defendants have lesser due process rights in defending against representative PAGA claims.

 

However, we reject Royalty's and amici curiae's suggestion that a defendant's right to present an affirmative defense as recognized in Duran [citation] carries with it a concomitant right to present the testimony of an unlimited number of individual employees in support of such affirmative defense. Indeed, in Duran, immediately after stating that “defendants must have an opportunity to present proof of their affirmative defenses,” we added that such adjudication is to occur “within whatever method the court and the parties fashion to try these issues.” [Citation.]

 

In fact, we suggested that class action defendants do “not have an unfettered right to present individualized evidence in support of a defense.” [Citation.] We also added, “No case, to our knowledge, holds that a defendant has a due process right to litigate an affirmative defense as to each individual class member.” [Citation.] Further, we emphasized that courts may exercise discretion regarding how to adjudicate such defenses, so long as the defendant is permitted “to introduce its own evidence, both to challenge the plaintiffs’ showing and to reduce overall damages.” [Citation.] In particular, if plaintiffs seek to prove their claims using a statistical model, we explained that the defendant “must be given a chance to impeach that model or otherwise show that its liability is reduced.” [Citation.]

 

Royalty fails to demonstrate why these limitations on the right to present an affirmative defense in class actions do not also apply to the defense of representative PAGA claims. Accordingly, we reject Royalty's and amici curiae's contention that certain affirmative defenses to representative PAGA claims require the testimony of nearly all alleged aggrieved employees in a case. We further reject their contention that to limit the presentation of individual employees’ testimony in such cases necessarily amounts to an abridgment of the meaningful right to present an affirmative defense and a violation of an employer's right to due process under Duran.

 

In light of these principles, we are unpersuaded by Royalty's suggestion that retrial of plaintiffs’ representative PAGA claim would violate its right to due process. Royalty argues that “where determining whether employees’ late or missed meal periods were violations of the Labor Code will require testimony from each one, the Court of Appeal's only response is ‘limit witness testimony and other forms of evidence.’ [Citation.] This will deprive the PAGA defendant of any meaningful ability to present the affirmative defense that the employee group whom the plaintiff is representing (or many individuals within it) are not ‘aggrieved’ within the meaning of the statute.”

 

In this case, however, it bears emphasis that Royalty presented the testimony of just two former employees and one expert witness at the initial trial. The trial court did not prohibit Royalty from calling additional witnesses. It was only after the presentation of evidence at trial that the trial court struck the plaintiffs’ representative PAGA claim. Under these circumstances, Royalty has not established that it has a due process right to present the individual testimony of each allegedly aggrieved employee. And it has not established that the retrial of plaintiffs’ representative PAGA claim would violate its right to due process by failing to permit such testimony.

 

Royalty and amici curiae also appear to raise the broader claim that trial courts have inherent authority to strike a PAGA claim to protect a defendant's due process rights generally. While certain characteristics of some PAGA claims, occasioned by the statute's broad standing rules and the lack of need for common proof or class certification, may present trial courts with challenges in ensuring that a defendant's due process rights are preserved, we express no opinion as to the hypothetical questions of whether, and under what circumstances, a defendant's right to due process might ever support striking a PAGA claim.

 

We also emphasize that trial courts have numerous tools that can be used to manage complex cases generally, and PAGA cases in particular, that do not involve striking a PAGA claim. All of those case management tools remain undisturbed by our decision in this case. To that end we note that the Judicial Council has described many of the tools that courts may use in managing discovery, other pretrial proceedings, and the trial of complex cases, including cases involving PAGA claims. [Citations.]

 

Indeed, in cases involving many employees or distinct types of violations over a long period of time or in different locations, the adjudication of PAGA claims may benefit from evidence other than, or in addition to, individual testimonies. With respect to the alleged Labor Code violation at issue in this case, we have recently held that, when adjudicating the affirmative defense of waiver to a meal break claim in the class action context, “ ‘Representative testimony, surveys, and statistical analysis,’ along with other types of evidence, ‘are available as tools to render manageable determinations of the extent of liability.’ [Citation.]” [Citation.]

 

Such tools may also be used to help efficiently adjudicate PAGA cases, including affirmative defenses to alleged PAGA violations. Indeed, given that the purpose of the recovery of civil penalties in a PAGA action is to “ ‘remediate present violations and deter future ones’ ” rather than to “redress employees’ injuries” [citation], statistical methods “designed to reveal generalized characteristics of a population” seem particularly appropriate for use in adjudicating such claims. [Citation.] In other words, evidence that reveals the “generalized characteristics” of a population [citation] may be useful to estimate the number of aggrieved employees, even if such evidence cannot demonstrate the extent of any particular injury.

 

We also emphasize that our holding that trial courts lack inherent authority to strike a PAGA claim on manageability grounds does not preclude trial courts from limiting the types of evidence a plaintiff may present or using other tools to assure that a PAGA claim can be effectively tried. [Citations.]

 

In addition, as the Court of Appeal observed, since the plaintiff has the burden of proving a PAGA claim and the trial court may limit the presentation of evidence, it behooves the PAGA plaintiff to ensure that trial of the action is manageable so the maximum number of potential violations may be established. [Citation.]

 

And, of course, a trial court may issue substantive rulings, including those on demurrer, or on motions for summary judgment or judgment notwithstanding the verdict, provided for in the Code of Civil Procedure to fairly and efficiently adjudicate an action in cases in which a plaintiff pleads the claim in such an overbroad or unspecific manner that the plaintiff is unable to prove liability as to all or most employees.

 

In sum, Justice Tobriner once said that “[n]o class action is inherently unmanageable,” because “a court always has access to a variety of techniques” to render the action manageable, and “[t]he critical question . . . is whether the techniques necessary to render . . . [the] action manageable are unconstitutional, or so distort the values a particular cause of action is meant to further that class suit would be improper.” [Citation.] The same is true with PAGA claims. Trial courts face the sometimes difficult task of employing case management techniques in a way that preserves the parties’ statutory and constitutional rights. For the reasons we have explained ante, striking a PAGA claim on manageability grounds alone, as the trial court did in this case, is inconsistent with a plaintiff's statutory right to bring such a claim and is beyond a trial court's inherent authority. And while we do not foreclose the possibility that a defendant could demonstrate that a trial court's use of case management techniques so abridged the defendant's right to present a defense that its right to due process was violated, that showing has not been made here.

 

(Estrada, supra, 541 P.3d at 484-488, emphasis in original, underlined case names added, footnotes omitted.)

 

Four points stand out.  One, due process does not require a defendant to be allowed to depose all or most aggrieved employees in presenting an affirmative defense.  (See id. at 485-486.)  Two, the Supreme Court declined to identify any instance when striking a representative PAGA claim based on due process would be appropriate.  (See id. at 486-487.)  Three, “[r]epresentative testimony, surveys, and statistical analysis” are expressly approved – and encouraged – for use at trial.  (Id. at 487.)  Four, courts retain access to numerous tools to make representative PAGA trials manageable and to protect due process and other constitutional considerations.  (See id. at 487-488.) 

 

These points support Plaintiff’s position.  The survey has not occurred yet; we do not know how many aggrieved employees will be included in the survey or how many of them Plaintiff intends to call at trial, if any; the question of whether the expert’s methodology is sufficient to select a representative sample is premature; and expert discovery is incomplete.  Bottom line, Defendants’ contentions are speculative, hypothetical, and unripe at this point. Striking the representative PAGA claim in a vacuum now instead of exploring other tools and options on a full record later would violate the letter and spirit of Estrada.

 

The better approach is to deny Defendant’s second renewed motion without prejudice and to grant Defendants leave to file motions in limine targeting specific evidence once the survey is complete and discovery is closed.

 

One last issue.  Defendants contend the Court should at least “narrow the pool of allegedly aggrieved employees” to Plaintiff only because he was the lone delivery driver at DHE.  (Second Renewed Motion, p. 11; see also Reply, p. 2.)  The Court disagrees.  The effect of Defendants’ argument is to impose a typicality requirement, but class elements do not apply.  (See Estrada, supra, 541 P.3d  at 479 [instructing that a “‘an employee’s representative action against an employer . . . seeking civil penalties under [PAGA]’ need not ‘satisfy class action requirements’”].)  Plaintiff has standing to bring the representative PAGA claim since he is an aggrieved employee, which is enough at this time.  Whether his representative evidence is adequate to demonstrate liability is an issue for another day.