Second Appellate District of California Reinforces the Importance of the PAGA Letter and Rejects a Plaintiff’s Attempt to Get a Second Bite of the PAGA Apple

Author: Orlando Arellano

Guest Editor: Alla Policastro

December 17, 2018 9:00am

Let’s face it.  Some administrative procedure requirements in employment law are like locking a door with a Cheeto – pretty pointless.  For example, California employees wanting to sue their employers for harassment or discrimination pursuant to the Fair Employment and Housing Act (“FEHA”) must first obtain a “right to sue letter.”  Conveniently they can get one automatically by filing a complaint form with the Department of Fair Employment and Housing (“DFEH”).  There is no close scrutiny of the claims, or any scrutiny for that matter, before a right to sue letter is issued by the DFEH.

But what about obtaining the right to pursue civil penalties for Labor Code violations under California’s Private Attorney General Act of 2004 (Labor Code §2698, et. seq.)?  Civil penalties are generally recovered by the government.  But PAGA allow private citizens to recover civil penalties for themselves and others ($100 for the first violation and $200 for subsequent violations for most wage and hour violations).  And the amount of potential penalties can be exorbitant where there are a lot of employees.  Should the PAGA-door also be secured with meerly a Cheeto?

In a case that just keeps giving, Brown v. Ralphs Grocery Company (2018) 28 Cal.App.5th 824, the California Second Appellate District Court reiterated that the answer was a definitive “No!”  The Court held Labor Code §2699.3(a)(1) requirement that the PAGA letter provide the “facts and theories supporting the violation” actually has a valid purpose and must be complied with.

Plaintiff Terri Brown originally sent her PAGA letter on October 12, 2009.  Her original PAGA letter only asserted the failure to provide meal and rest breaks, or compensation in lieu thereof, and failure to provide accurate wage statements (sections 226.7, 512, 204, and 226).  However, her PAGA letter only stated that the aggrieved employees did not take all meal and rest breaks and that defendant did not pay for all missed breaks.  She filed her putative class action and PAGA complaint on October 14, 2009.  Then a three-year delay occurred when Ralphs moved to compel arbitration, lost the motion, appealed, and then obtained a trial court decision compelling arbitration of Brown’s claims apart from her PAGA claim.

The now terminated Brown, dropped her arbitrable claims, and proceeded only with her PAGA claims.  She then moved to add new claims under PAGA including the failure to pay all wages upon termination (the new sections to be added included 201, 202, 203, 558 and 1198).  Ralphs demurred and the trial court sustained the demurrer with leave to amend.  The trial court held that the PAGA letter was insufficient and that the new Labor Code sections could not be added as the original PAGA letter did not mention them.  Unabated, Brown sent a new PAGA letter adding these previously un-mentioned claims.  She also added additional facts regarding her previously mentioned meal and rest break claims.  Brown then moved again to add these claims to the lawsuit.  Ralphs demurred again, and the trial court sustained the demurrer — again.  Brown appealed.

The Second Appellate District Court affirmed in part, citing other PAGA cases, and reiterated the importance of the PAGA letter’s role in informing the LWDA and the employer so they can take appropriate action in response:

“But with one exception, the 2009 Notice was a string of legal conclusions that parroted the allegedly violated Labor Code provisions.  It did not state facts and theories supporting the alleged violations not implied by reference in the Labor Code.  The notice did not give sufficient information for the LWDA to assess the seriousness of the alleged violations and decide whether to allocate scarce resources to an investigation, or for defendants to determine what policies or practices were being complained of, have an opportunity to cure the violations, and prepare a meaningful response.”  (Brown, 28 Cal.App.5th at 824.)

The Court also rejected Brown’s attempt to get a second bite at the PAGA apple with her new PAGA letter and held it was too late: “Plaintiff waited until March 2016 to file the 2016 Notice alleging violations of section 201, 202, 203, 1174, subdivision (d), and 1198 and to seek to file the third amended complaint based on the 2016 Notice.  By then, the one-year statute of limitations on her PAGA claims for violations of those provisions had long snice run.”  (Id.)  The Second Appellate District also rejected Brown’s arguments for equitable tolling, estoppel, etc.

Takeaway

The takeaway is a PAGA letter must contain sufficient facts and legal theories to apprise the LWDA and the employer of why the employee believes that the listed Labor Code sections were violated.  Companies would do well to scrutinize any PAGA letters sent to them to determine whether they have sufficient information to respond.  If not, they should move to strike or dismiss the PAGA claims.  And since judicial decisions are retroactive, employers that have already been sued for PAGA claims should scrutinize the PAGA letters previously asserted in the lawsuit.  Who knows, not only might plaintiff’s PAGA letter be deficient, it might be too late for plaintiff to fix it, just like in Brown.

 

For questions on employment related matters, please contact Regina Silva at rsilva@tysonmendes.com or Andy Smith at asmith@tysonmendes.com.

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