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Court of Appeal:
PAGA Party Is Not Agent of State for Fee Recovery Purposes
Opinion Says Litigation Costs Are Not Recoverable Against Labor Board That Did Not Participate in Suit
By Kimber Cooley, associate editor
Div. Two of the First District Court of Appeal has held that a prevailing defendant in a representative action filed under the Private Attorneys General Act of 2004 for alleged violations of the Labor Code may not recover its costs against the state agency on behalf of which the plaintiff filed the claims where the organization did not participate in the litigation.
In an opinion by Justice Marla J. Miller, the court noted that the issue of whether a prevailing defendant in such cases may recover litigation costs against the California Labor and Workforce Development Agency (“LWDA”), under Code of Civil Procedure §1032(b), despite a fee provision in the PAGA scheme expressly anticipating fee awards only for successful plaintiffs, “does not appear to have been addressed in any published opinions.” Miller declared:
“We conclude that even if a prevailing defendant in a PAGA action is entitled to recover its costs under the general cost recovery rule set forth in section 1032(b)—an issue we need not decide—those costs are not recoverable against the LWDA where it did not participate in the litigation.”
The question arose after Kelly Rose, a former cashier for Hobby Lobby Stores Inc., filed a complaint against the company, alleging that the employer had violated the “suitable seating” provisions of governing wage orders. She sought civil penalties under PAGA on behalf of herself, the state of California, and other hourly workers.
Then-Alameda Superior Court Judge Evelio Grillo (now a private arbitrator) found for the defendant following a nine-day bench trial. After judgment was entered, Hobby Lobby filed a memorandum of costs totaling $474,707.80, and Rose moved to tax, arguing that PAGA authorizes awards only to prevailing plaintiffs and contending that the request was unreasonable.
After Hobby Lobby responded that the costs claimed were allowable as against Rose and the LWDA, jointly and severally, the organization successfully moved to intervene and asserted that it could not be found liable for litigation expenses in a suit to which it was not a party or an active participant.
Grillo disagreed with the agency and awarded $124,585.24 in costs to Hobby Lobby as against LWDA only.
Wednesday’s opinion, in which Acting Presiding Justice James A. Richman and Justice Tara M. Desautels joined, reverses the order.
Representative Relationship
Hobby Lobby asserts that the LWDA was a “party” to Rose’s action from the time the plaintiff filed her complaint, even if the agency did not intervene until after judgment had been entered.
Pointing to Civil Code §2330, which provides that “an agent represents his principal for all purposes within the scope of his actual or ostensible authority, and all the rights and liabilities which would accrue to the agent from transactions within such limit…accrue to the principal,” Hobby Lobby argues that PAGA plaintiffs act as agents for LWDA in litigation under the act’s provisions.
Rejecting this assertion, the jurist said that a “PAGA plaintiff is defined by PAGA itself, not by the general law of agency” and said that there were notable differences between the typical proxy association and the relationship between Rose and LWDA. She remarked:
“PAGA…does not impose ‘any express fiduciary obligations’ on a plaintiff, neither to the LWDA nor to the other aggrieved employees on whose behalf the plaintiff has filed suit….
“Nor does PAGA give the LWDA control over litigation brought by a PAGA plaintiff….PAGA gives the LWDA ‘notice of, and discretion to exercise control over, PAGA claims’…, but contrary to Hobby Lobby’s assertion, PAGA does not ‘require[e] the [LWDA] to oversee and control all PAGA’ litigation.”
Under these circumstances, she concluded:
“The LWDA did not sue Hobby Lobby. The LWDA was not a party to Rose’s lawsuit, nor did it take any action in the lawsuit until it moved to intervene, which it did only after it got word that Hobby Lobby sought to impose its costs on the LWDA. Accordingly, Hobby Lobby cannot recover its costs from the LWDA.”
Qui Tam Action
Miller acknowledged that “a PAGA action is a type of qui tam action, and therefore the LWDA is the real party in interest in the action,” but did not agree with Hobby Lobby’s contention that this designation makes the agency liable for litigation costs.
She commented:
“This argument is unpersuasive because Hobby Lobby cites no case in which litigation costs were imposed against a real party in interest that did not participate in the litigation….More to the point, Hobby Lobby cites no qui tam case in which litigation costs were imposed against a government entity real party in interest where the entity did not participate in the litigation.”
Miller added:
“In sum, we conclude that even if a prevailing defendant in a PAGA action is entitled to recover litigation costs under section 1032(b), those costs are not recoverable against the LWDA if, as here, the LWDA did not become a party to the litigation by intervening before judgment and did not participate in the litigation as real party in interest.”
The case is Rose v. Hobby Lobby Stores Inc., 2025 S.O.S. 1303.
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