Wage And Hour Update: California Supreme Court Holds PAGA Plaintiffs Cannot Intervene in Separate Settlements

?On Thursday, August 1, 2024, the California Supreme Court, in a 5-2 decision in Turrieta v. Lyft, held that a plaintiff bringing a representative action under the California Labor Code Private Attorneys General Act (PAGA) does not have a right to intervene in another PAGA action involving overlapping claims or to object to a proposed settlement.

BACKGROUND

PAGA authorizes “aggrieved employees” to sue their employers on behalf of the State of California for alleged violations of the California Labor Code. Before filing a PAGA lawsuit, an employee must give notice of the alleged Labor Code violations to the California Labor & Workforce Development Agency (LWDA). If an employee prevails on his or her claims, he or she can recover civil penalties for each pay period in which a Labor Code violation occurred. Similar to class actions, PAGA settlements require court approval to ensure fairness and adequacy of the settlement. Once approved, the settlement generally bars lawsuits by other employees over the same, or similar, PAGA claims. Thus, PAGA settlements can effectively preclude other PAGA lawsuits or extinguish a contemporaneously filed, competing PAGA claim.?

In 2018, Tina Turrieta brought a PAGA action against Lyft, claiming that she and other drivers using Lyft’s platform were misclassified as independent contractors. In 2019, Turrieta and Lyft settled the dispute for $15 million, with Lyft agreeing to pay more than $3 million to the LWDA. The parties gave the LWDA notice of their settlement as is required by statute.

Contemporaneous to Turrieta’s action, another Lyft driver, Brandon Olson brought a substantially similar misclassification claim. When Turrieta moved for approval of the PAGA settlement, Olson moved to intervene in Turrieta’s action. The trial court denied Olson’s motion to intervene and approved the settlement, ruling that Olson lacked standing to intervene since the State was the real party in interest. The trial court likewise denied Olson’s later motion to vacate the resulting judgment. And the California Court of Appeal affirmed, holding that Olson lacked a sufficient stake in Turrieta’s action to intervene in the case or challenge the judgment.

Another California Court of Appeal reached a different conclusion in Accurso v. In-N-Out. The Accurso court held that “in situations where PAGA claimants with their own overlapping claims in other pending cases show up and wish to provide input, [the Court] sees no reason why they should not be given a seat at the table.”

The California Supreme Court resolved this split in authority, disagreeing with the reasoning in Accurso. The California Supreme Court held that “an aggrieved employee’s status as the State’s proxy in a PAGA action does not give that employee the right to seek intervention in the PAGA action of another employee, to move to vacate a judgment entered in the other employee’s action, or to require a court to receive and consider objections to a proposed settlement of that action.”

IMPACT ON EMPLOYERS

The Court left open two questions that could further shape PAGA: (1) can the State, itself, intervene in a PAGA settlement and (2) can employees intervene to protect their own personal interests (rather than the representative interests of all aggrieved employees). Further developments from the California Courts of Appeal and Supreme Court will continue to shape how PAGA impacts employers.

In addition, future PAGA cases – including those under the new PAGA procedures discussed here – may involve earlier attempts to coordinate or consolidate multiple PAGA cases.

Ultimately, the decision is a benefit to California employers in that it provides finality to PAGA settlements without last minute risk that an intervening party upends fair and reasonable agreements. It should be noted that the decision does not abrogate the trial court’s responsibility in ensuring that the PAGA settlement is fair to the aggrieved employees and not the result of collusion between parties to reach a “reverse auction” of the claims.

QUESTIONS

Please contact the attorney that you normally consult with, or Alec D. Tyra or David W. Tyra.