Class Action/PAGA Release Was Overly Broad, But Not Collusive

Amaro v. Anaheim Arena Mgmt., LLC, 69 Cal. App. 5^th 521 (2021)

In 2017, Irean Amaro filed this wage and hour class action and Private Attorneys General Act (PAGA) claim against her employer; there already were two existing class actions asserting the same claims, which were filed in 2014 and 2016.  After Amaro reached a global settlement in her lawsuit, which included the claims asserted in the two earlier-filed lawsuits, an employee from one of the two earlier lawsuits (Rhiannon Aller) intervened to object to the Amaro settlement.  Ultimately, the trial court approved the settlement over Aller’s objections.  On appeal, Aller argued that the court’s approval of the settlement was erroneous because the settlement agreement was overly broad.  The Court of Appeal held that the release was overbroad in that it covered “potential claims… in any way relating” to the facts pled in the complaint, thus potentially including claims that may only be tangentially related to the allegations in Amaro’s complaint.  The Court further held, however, that the FLSA’s written consent requirement does not apply to a release in a class settlement of state wage and hour claims.  Finally, the Court held the trial court had not abused its discretion in finding the settlement was not the product of a collusive reverse auction (i.e., a process by which the defendant picks the most ineffectual class counsel with which to negotiate a weak settlement that precludes all the other class action claims).

The Court held there is nothing “inherently wrong” with the settlement process that was followed in this case, which resulted in a settlement being reached that bypassed the plaintiffs from the earlier-filed lawsuits.  Also, there was no evidence of unfairness to the class or misconduct to support a collusive reverse auction finding.  See also Turrieta v. Lyft, Inc., 2021 WL 4472080 (Cal. Ct. App. 2021) (PAGA plaintiffs from separate actions do not have standing to move to vacate a judgment that resulted from a settlement to which they were not parties; trial court properly denied plaintiffs’ intervention request because the settlement was fair and adequate); Uribe v. Crown Bldg. Maint. Co., 2021 WL 4962724 (Cal. Ct. App. 2021) (intervenor had standing to challenge PAGA settlement; settlement should not have included unreimbursed cell phone expenses because PAGA notice did not encompass such a claim).

Court Has Power To Strike PAGA Claims That Will Be Unmanageable At Trial

Wesson v. Staples the Office Superstore, LLC, 68 Cal. App. 5^th 746 (2021)

Fred Wesson sued Staples under PAGA, seeking $36 million in civil penalties for Labor Code violations related to an alleged misclassification of its store general managers.  At trial, Staples moved to strike Wesson’s PAGA claim, arguing that the number of employees and the nature of the allegations made the PAGA action “unmanageable,” which would violate Staples’ due process rights.  The trial court invited Wesson to submit a trial plan showing that his PAGA action would be manageable at trial, but Wesson insisted the trial court lacked authority to require that his claim was manageable.  The trial court disagreed and granted Staples’ motion to strike the PAGA claim on manageability grounds.  The Court of Appeal affirmed, holding that trial courts have inherent authority to ensure that PAGA claims can be fairly and efficiently tried and, further, that defendants are entitled to a fair opportunity to litigate their affirmative defenses and a court’s manageability assessment should account for them.