Judge: Teresa A. Beaudet, Case: BC695541, Date: 2023-07-20 Tentative Ruling

Case Number: BC695541    Hearing Date: July 20, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background

On February 27, 2018, Plaintiff Yuliana Valdovinos, an individual, on behalf of herself and all others similarly situated (“Plaintiff”) filed this action against Defendants Adir International, LLC dba Curacao (“Adir”), Alex Hernandez, and Eric Vital Rubio (“Rubio”). The Complaint asserts a number of causes of action. The fifteenth cause of action is for recovery of civil penalties pursuant to the California Private Attorneys General Act (“PAGA”).

Adir and Rubio (jointly, “Defendants”) now move for an order striking Plaintiff’s fifteenth cause of action and the associated prayer for penalties. Plaintiff opposes.

On April 3, 2023, the Court issued an order continuing the hearing on the instant motion.  The Court’s April 3, 2023 Order provides, inter alia, that “Plaintiff may file a supplemental brief in opposition to Defendants’ motion to strike setting forth a trial plan to show that her PAGA cause of action would be manageable. Defendants may file a supplemental reply. Any supplemental opposition and reply papers must be filed and served per Code of Civil Procedure section 1005, subdivision (b) based on the new hearing date.”

On June 2, 2023, Plaintiff filed a “Proposed PAGA Trial Plan.” No supplemental reply was filed by Defendants.

Discussion

A court may strike any “irrelevant, false, or improper matter inserted in any pleading” or any part of a pleading “not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436.)

            As noted in the Court’s April 3, 2023 Order, Defendants move for an order striking Plaintiffs’ “Fifteenth Cause of Action for Recovery of Civil Penalties under the Private Attorneys General Act (‘PAGA’), and associated prayer for penalties.” (Notice of Mot. at          p. 1:24-26.) Defendants argue that the fifteenth cause of action should be stricken because it is unmanageable.

Defendants cite to Wesson v. Staples the Off. Superstore, LLC (2021) 68 Cal.App.5th 746, 765, where the Second District Court of Appeal concluded that “courts have inherent authority to ensure that PAGA claims can be fairly and efficiently tried and, if necessary, may strike a claim that cannot be rendered manageable.” The Wesson Court noted that 
“[u]nder PAGA, an aggrieved employee may recover civil penalties for Labor Code violations on behalf of himself or herself and other current or former employees…A PAGA action may thus cover a vast number of employees, each of whom may have markedly different experiences relevant to the alleged violations. Under those circumstances, determining whether the employer committed Labor Code violations with respect to each employee may raise practical difficulties and may prove to be unmanageable.” (Id. at pp. 765-766 [internal quotations and citations omitted].)

Here, Defendants assert that “[o]ver the course of the PAGA limitations period, Adir has employed 3,475 employees. These employees work across ten retail stores in Southern California, as well as three other locations in Tucson, Phoenix, and Las Vegas.” (Mot. at p. 2:21-24; Chung Decl., ¶¶ 3-4, 10, Ex. A (Pedroza Depo.) at pp. 29:15-25, 30:1-9.) Defendants state that Adir currently employs approximately 1,200 individuals. (Chung Decl., ¶ 10, Ex. A (Pedroza Depo.) at p. 33:10-12.)

Defendants assert that “Adir’s non-exempt employees span dozens of distinct and varied job titles and positions. General non-exempt job categories encompassed in this matter include laborers and sales associates in a wide variety of departments…Each position and department is unavoidably distinct and individualized, and overseen by different supervisors.” (Mot. at p. 3:1-6; Chung Decl., ¶ 5.) Defendants contend that “[e]ven narrowing the witness list to 50% of the universe of potentially aggrieved employees, the parties will have to call and subpoena at least 1,737 witnesses to testify at trial…” (Mot. at p. 4:4-6; Chung Decl., ¶ 7) Defendants assert that “[c]onservatively estimating that each witness examination will take 2 hours total for direct, cross-examination, and re-direct, including the review of exhibits, the Court will have to reserve at least 3,475 hours for trial. At 5 hours of actual trial time per day, the trial for the instant action will require a minimum of 695 days.” (Mot. at p. 4:10-13; Chung Decl., ¶ 9.)

As set forth in the Court’s April 3, 2023 Order, Plaintiff asserted that Defendants cannot show that there are manageability concerns on a motion to strike, because “[t]he grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437.) As set forth above, Defendants rely on their counsel’s declaration and other evidence in support of the motion. Defendants do not appear to address this point in the reply. However, the Court notes that in Wesson, the Court of Appeal “conclude[d] that courts have inherent authority to ensure that a PAGA claim will be manageable at trial—including the power to strike the claim, if necessary—and that this authority is not inconsistent with PAGA’s procedures and objectives, or with applicable precedent.” (Wesson v. Staples the Office Superstore, LLC, supra, 68 Cal.App.5th at pp. 762-763.)

Plaintiff also asserts that Wesson is “inapplicable to the situation here, where there are no misclassification claims, there is no class certification requirement…no evidentiary record, no agreement on factual issues, and no agreement on trial issues.” (Opp’n at p. 4:4-6.) In Wesson, “[e]ach of Wesson’s claims was premised on the theory that Staples had misclassified its California GMs as exempt executives (who are not entitled to overtime pay and off-duty meal and rest periods), when in fact they should have been classified as nonexempt, hourly employees. Wesson moved to certify a class of Staples California GMs, but the trial court denied the motion, concluding he had not demonstrated that his claims were susceptible to common proof.” (Wesson v. Staples the Office Superstore, LLC, supra, 68 Cal.App.5th at p. 757.)

“[T]he parties estimated they would need a total of six trial days per GM to litigate GMs’ classification as exempt executives on an individual basis. Based on that estimate, the trial would have lasted eight years.” (Wesson v. Staples the Office Superstore, LLC, supra, 68 Cal.App.5th at p. 758.) In addition, “[t]he trial court invited Wesson to submit a trial plan showing that his PAGA action would be manageable at trial. In response, Wesson continued to insist that the court lacked authority to require that his claim be manageable, and laid out his plan to prove his prima facie case using common proof, but declined to address how the parties could litigate Staples’s affirmative defense. Following this response, the court concluded that the PAGA claim could not be managed at trial and granted Staples’s motion to strike it.” (Id. at pp. 755-756.) The Court of Appeal found that the trial court “did not abuse its discretion in striking his PAGA claim as unmanageable.” (Id. at p. 756.)

As set forth in the Court’s April 3, 2023 Order, in Wesson, the trial court “invited Wesson to submit a trial plan showing that his claim would be manageable, and permitted him to file a supplemental brief in opposition to Staples’s motion.” (Wesson v. Staples the Office Superstore, LLC, supra, 68 Cal.App.5th at p. 758.)

In her proposed PAGA trial plan, Plaintiff cites to Estrada v. Royalty Carpet Mills, Inc. (2022) 76 Cal.App.5th 685, 711, where the Fourth District Court of Appeal noted that “we respectfully disagree with Wesson and agree with the reasoning of the district courts that have refused to dismiss PAGA claims based on manageability.” The Estrada Court concluded that “a court cannot dismiss a PAGA claim based on manageability.” (Id. at p. 711.) As set forth in the Court’s April 3, 2023 Order on the instant motion, the California Supreme Court has granted the defendant’s petition for review in Estrada on June 22, 2022. (Estrada v. Royalty Carpet Mills (2022) 511 P.3d 191.) “The issue to be briefed and argued is limited to the following: Do trial courts have inherent authority to ensure that claims under the Private Attorneys General Act (Lab. Code, § 2698 et seq.) will be manageable at trial, and to strike or narrow such claims if they cannot be managed?” (Ibid.) The California Supreme Court in Estrada v. Royalty Carpet Mills (2022) 511 P.3d 191, noted that “[p]ending review, the opinion of the Court of Appeal, which is currently published at 76 Cal.App.5th 685 [292 Cal. Rptr. 3d 1], may be cited, not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456 [20 Cal. Rptr. 321, 369 P.2d 937], to choose between sides of any such conflict.” The Court notes that the California Supreme Court does not yet appear to have issued an opinion in the Estrada matter.

As to the claims asserted in this action, Plaintiff’s fifteenth cause of action for recovery of civil penalties under PAGA alleges that Plaintiff is “pursuing civil penalties for violations of the Labor Code sections alleged herein.” (Compl., ¶ 211.)

Plaintiff’s eighth cause of action is for failure to pay compensation due for hours worked. Plaintiff’s ninth cause of action is for failure to pay compensation due pursuant to Labor Code section 226.7 (meal period wages). Plaintiff’s tenth cause of action is for failure to pay compensation due pursuant to Labor Code section 226.7 (rest period wages). Plaintiff’s eleventh cause of action is for wage statement and recordkeeping violations. Plaintiff’s twelfth cause of action is for violation of Labor Code section 2802.[1] Plaintiff’s thirteenth cause of action is for failure to pay waiting time wages pursuant to Labor Code section 203. Plaintiff’s fourteenth cause of action is for violation of Labor Code sections 98.6 and 1102.5.[2]

In support of Plaintiff’s proposed PAGA trial plan, Plaintiff submits the declaration of her counsel, who states that “Judge Michael Johnson was appointed as the discovery referee in this case on September 12, 2019.” (White Decl., ¶ 3.) Plaintiff’s counsel states that “Plaintiff has data produced by Defendant…which includes a PAGA List of Aggrieved Employees produced in 2020, and that “[t]he PAGA list addresses Defendant’s question of manageability, which provides the following data for approximately 2,399…Aggrieved Employees: 1) Employee Id; 2) Div; 3) Location; 4) Dept. Number; 5) Department; 6) First Name; 7) Last Name; 8) Date Hired; 9) Date Terminated; 10) Date Re-Hired; 11) Employee Status; 12) Job Title; 13) Address 1; 14) City; 15) State; 16) Zip Code.” (White Decl., ¶ 4.) Plaintiff’s counsel states that “[a]dditionally, to supplement this written discovery the Joint PMK deposition was scheduled to take place on May 1, 2023 and that matter is before Judge Johnson…” (White Decl., ¶ 4.)

Plaintiff’s counsel states that “Plaintiff and aggrieved employees will call their expert database and statistician to testify to the number of pay periods for each category of violation, based on his analysis and assessment of data/records produced by Defendant. The expert will rely on payroll and timekeeping data in order to assess the number of employee pay periods during which each of the aforementioned categories of violations occurred, broken out by initial and subsequent violations.” (White Decl., ¶ 6.) Plaintiff’s counsel further states that “[f]rom the pay and time records, Plaintiff’s expert will identify the individuals and the total number of pay periods in which Plaintiff contends the employees were ‘aggrieved’. This will establish the total number of violations at issue and the total number of aggrieved employees.” (White Decl., ¶ 9.) Plaintiff also asserts that “[a] small sample of data could determine if the employees terminated in fact complained of wage and hour practices at Curacao.” (Plaintiff’s Proposed PAGA Trial Plan at p. 13:17-18.)

In addition, Plaintiff’s counsel states that “[t]he representative Plaintiff will testify. Her testimony will be that she was never able to take a meal and/or rest period as required by law. The representative Plaintiff will also establish she is an aggrieved employee for purposes of the meal and/or rest period claim.” (White Decl., ¶ 7.)

Plaintiff’s counsel also states that “Plaintiff anticipates the respective expert witnesses will conduct an analysis of the data obtained from the depositions and present their statistical analysis at trial, negating the need to call hundreds of witnesses. There is an efficient way to present the issues at trial in both scenarios where the meal period waiver is determined to be invalid before trial or if the Court finds disputed questions remain. The Defendant already has been provided the opportunity to question witnesses and therefore the parties can stipulate to present testimony through depositions and/or expert witnesses. Further, the Parties’ respective expert witnesses can create a proposal of which witnesses should present live testimony at trial if it becomes necessary.” (White Decl., ¶ 8.)

Plaintiff’s counsel further asserts that “because Defendant’s data is maintained in an electronic format, it is generally a swift and straightforward process to produce large volumes of data. Typically, electronic data is stored in a database and a series of computational commands can be written to tell the database system which data to pull, e.g., for one employee or a specific group of employees during a particular time period. There are only two potential added “costs” associated with pulling data for a large number of employees: longer computational runtime and disk storage, neither of which usually makes the process burdensome or unmanageable.” (White Decl., ¶ 10.) In addition, Plaintiff’s counsel states that “[i]f Plaintiff is successful in establishing liability, Plaintiff will present through expert witness testimony, the maximum PAGA penalties to be awarded under the law. As to liability, Plaintiff will already have identified the aggrieved employees. Plaintiff’s expert will then present testimony from his analysis of the Defendant’s payroll records which will establish how many pay periods are at issue for each aggrieved employee and will present a comprehensive penalty assessment model providing the aggregate amount of penalties. The presentation of this damages and penalties evidence can be easily presented by a single witness, Plaintiff’s expert.” (White Decl., ¶ 12.)

As set forth above, Defendants did not file a supplemental reply. Thus, Defendants do not address or dispute Plaintiff’s proposed PAGA trial plan, or Plaintiff’s counsel’s declaration filed in support of the proposed PAGA trial plan.

Based on a consideration of the foregoing, the Court does not find that the circumstances warrant striking Plaintiff’s fifteenth cause of action for recovery of civil penalties pursuant to PAGA, or the associated prayer for penalties.

Conclusion

Based on the foregoing, Defendants’ motion to strike is denied.  

Plaintiff is ordered to provide notice of this Order.¿¿¿ 

DATED:  July 20, 2023                                  ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles