As we reported last year, the Alameda Superior Court in Rose v. Hobby Lobby Stores, Inc., ordered the Labor Workforce Development Agency (LWDA)—you read that correctly, the state of California itself—pay $125,000 in costs, because California law provides that “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding,” and Hobby Lobby was the prevailing party at trial in a PAGA action.

In a move that surprised no one, the LWDA appealed the trial court’s order. After a year and a half, the Court of Appeal rendered its decision in Rose v. Hobby Lobby Stores, Inc., 111 Cal. App. 5th 162, 175 (2025). The Court reversed.

The Court of Appeal offered two reasons why the LWDA was not liable for Hobby Lobby’s costs:

• Although a PAGA plaintiff is often called a “representative,” “agent,” or “proxy” of the LWDA, there is no agency relationship between a PAGA plaintiff and the LWDA such that the latter would be responsible for the acts and liabilities of its agent. Because PAGA does not impose any “express fiduciary obligations” on those suing under the PAGA statute, the Rose Court concluded that the LWDA is not a PAGA plaintiff’s principal and therefore cannot be liable for costs.
• California law provides that a prevailing defendant is entitled to recover its costs from the party or parties over which it prevailed. According to the Rose Court, if the LWDA is not a party to the litigation, then it cannot be liable for costs. After surveying the nature of PAGA litigation, the Court of Appeal concluded that the LWDA does not have any control or involvement in the litigation and thus is not a party to a PAGA action.

Although the Court of Appeal reversed, the Rose decision may provide a few silver linings. For example, in footnote 4 of its opinion, the Court expressed “no opinion as to whether the LWDA might be liable for costs in a case where it intervened before judgment was entered.” Should employers that are facing a likely potential PAGA trial inform the LWDA that it will seek to recover costs from it if the employer wins at trial? This may force the LWDA’s hand to intervene and acquire the party status the Rose Court decided was necessary for it to be liable for costs.

Also, the Rose Court did not opine on whether a prevailing employer can recover costs from the named plaintiff, a question the trial court may revisit on remand. That said, on June 23, 2025, Hobby lobby petitioned the California Supreme Court for review. We will continue to follow the proceedings.