July 14, 2017 California Supreme Court Allows Plaintiffs to Seek Statewide Discovery in PAGA Actions

Yesterday, the California Supreme Court issued its opinion in Williams v. Superior Court, clarifying the scope of discovery available to plaintiffs in Private Attorneys General Act (“PAGA”) actions.  PAGA allows plaintiffs bringing wage and hour claims to collect civil penalties under the California Labor Code.  PAGA claims are often brought along with class actions.  However, there are important differences between PAGA claims and class claims, and the Williams decision highlights one of the most important differences:  Plaintiffs asserting PAGA claims can pursue statewide discovery simply by filing a complaint and alleging PAGA claims on behalf of employees across the state.

Analysis

Plaintiff Michael Williams was employed by the Marshalls retail store chain in Costa Mesa, California. Williams brought an action against Marshalls under PAGA, seeking penalties for alleged Labor Code violations, including missed meal and rest breaks. Williams then served discovery on Marshalls demanding the names and contact information of all nonexempt Marshalls employees in California. Marshalls refused to provide the information on several grounds, including undue burden and the privacy rights of its employees. Williams filed a motion to compel Marshalls to provide the information.

The trial court granted Williams’ motion in part, ordering Marshalls to produce the names and contact information for employees at the Costa Mesa store, but not for other Marshalls stores in California. On review, the Court of Appeal agreed with the trial court that statewide discovery was not warranted at such an early stage in the proceedings, but the issue could be revisited if the plaintiff showed there was potential merit to his claims.

A unanimous California Supreme Court disagreed, explaining that under California law, a plaintiff’s right to discovery is very broad, and there is no requirement for a plaintiff to show good cause or prove his case has merit before obtaining information that is relevant to his claims.

In regards to privacy concerns, the Court explained that employees would not likely want their contact information to be concealed from plaintiffs asserting employment law violations on their behalf, and that any residual privacy concerns could be protected using an existing procedure whereby the impacted employees are provided notice and an opportunity to opt out of having their contact information released to the PAGA plaintiff.

What This Means For Employers

This is a troublesome decision for employers, as PAGA plaintiffs are now entitled to compel disclosure of employee information on a statewide level, without first establishing that their claims have merit or are susceptible to common proof. As such, we expect PAGA plaintiffs to issue broad discovery requests soon after filing their complaint, as a tool for waging litigation and leveraging settlement. This development makes collective wage and hour claims – a problem that is already a difficult and expensive one for California employers – even more problematic.

With this decision, it is even more important than ever for California employers to ensure that all their wage and hour practices are compliant with California law.

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This E-Update was authored by Jason A. Fischbein. For more information, please contact Mr. Fischbein or any other Paul, Plevin attorney by calling (619) 237-5200.