Friday, March 13, 2020
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California Supreme Court:
Employee Settling Individual Claims May Maintain PAGA Suit
By a MetNews Staff Writer
An employee who settles a personal claim for wage-and-hour violations against his or her employer may remain the plaintiff in an action on behalf of all of the company’s “aggrieved employees,” the California Supreme Court declared yesterday.
Justice Carol Corrigan wrote the opinion for a unanimous court, noting that the case is one of first impression.
Her opinion reverses a Dec. 29, 2017 decision by Div. Four of this district’s Court of Appeal. That court affirmed the dismissal by Los Angeles Superior Court Judge Kenneth R. Freeman of Justin Kim’s action under the Private Attorneys General Act of 2004 (“PAGA”) because he had settled his individual claims against his employer, Reins International California, Inc.
Noting that only an “aggrieved employee” may maintain an action under PAGA, Justice Audrey Collins wrote:
“We hold that where an employee has brought both individual claims and a PAGA claim in a single lawsuit, and then settles and dismisses the individual employment causes of action with prejudice, the employee is no longer an ‘aggrieved employee’ as that term is defined in the PAGA, and therefore that particular plaintiff no longer maintains standing under PAGA.”
‘Aggrieved Employee’
Rejecting that view, Corrigan said:
“Reins contends Kim is no longer an ‘aggrieved employee’ because he accepted compensation for his injury. The logic here is illusive. The Legislature defined PAGA standing in terms of violations, not injury. Kim became an aggrieved employee, and had PAGA standing, when one or more Labor Code violations were committed against him….Settlement did not nullify these violations. The remedy for a Labor Code violation, through settlement or other means, is distinct from the fact of the violation itself.”
She pointed out that Labor Code §2699(c) defines an ‘aggrieved employee’ as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.”
Corrigan declared that the statute “does not require the employee to claim that any economic injury resulted from the alleged violations,” adding:
“Reins’s use of ‘aggrieved’ as synonymous with having an unredressed injury is at odds with the statutory definition.
“Reins’s interpretation would add an expiration element to the statutory definition of standing. It would expand section 2699(c) to provide that an employee who accepts a settlement for individual damage claims is no longer aggrieved. Of course, the Legislature said no such thing.”
Agent of State
A PAGA action is unlike a class action, in which a representative plaintiff loses standing if his or her individual claim is settled, Corrigan continued, explaining that a PAGA plaintiff is not seeking vindication of personal interests but is suing as an agent of the state.
“Reins’s injury-based view of standing would deprive many employees of the ability to prosecute PAGA claims, contrary to the statute’s purpose to ensure effective code enforcement,” the jurist said.
This, she remarked, “would thwart the Legislature’s clear intent to deputize employees to pursue sanctions on the state’s behalf.”
Corrigan observed that if settling employees no longer viewed as “aggrieved employees,” monetary penalties that are recoverable—calculated in accordance with the number of “aggrieved employees”—would decrease. Also, she said, the settling employees would not be eligible to receive shares of the penalties, 25 percent of which go to “aggrieved employees.”
The case is Kim v. Reins International California, Inc., 2020 S.O.S.
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