Business Law Journal

Unlike a traditional lawsuit, a PAGA lawsuit allows a plaintiff-employee to “stand in the shoes” of the state by filing an action against their employer for civil penalties for wage and hour violations.  Since its passage in 2004 PAGA has allowed private attorneys and their clients to sue employers to collect civil penalties that were previously only recoverable by the State of California.  PAGA cases are usually brought by a single employee who seeks to recover penalties on behalf of all of the employees of the company.  The recovery in PAGA lawsuits is payable 75% to the State of California and 25% is distributed to the allegedly aggrieved employees.  PAGA lawsuits also allow for the employee’s attorney to recover her/his attorneys’ fees and costs in addition to the civil penalty recovery.

Typically, PAGA actions are filed in the county where the plaintiff worked or where the employer’s principal place of business is located.  In Crestwood Behavioral Health v. Superior Court, the employer (“Crestwood”) argued that Plaintiff Fragoza improperly filed the PAGA action in Alameda County because Plaintiff never worked there and Crestwood is not based there.  Crestwood, Case No. A160523 (Cal. Ct. App. Feb. 17, 2021). The Court of Appeal rejected Crestwood’s argument and ruled that in bringing a PAGA action, a plaintiff is not limited to the county in which he or she performed work.  The Court reasoned that because a plaintiff serves “as a proxy of the state” in a PAGA action, there is no reason to restrict the venue of a PAGA action to where the named plaintiff’s claims arose.  The Court noted that this is especially so since the purpose of a PAGA action is for the plaintiff to pursue civil penalties on behalf of the state for alleged Labor Code violations suffered by the plaintiff and other aggrieved employees.  Thus, if other aggrieved employees suffered Labor Code violations in varying counties across the State, the plaintiff may properly file the PAGA action in any one of the counties that any employee worked.  The Court in Crestwood Behavioral Health v. Superior Court held that venue in Alameda County was proper even if Plaintiff Fragoza never worked there because the PAGA action alleged that other employees performed work in Crestwood’s facility in Alameda County.

This decision is significant for employers because it means plaintiffs in PAGA actions will have considerably more flexibility with forum shopping — that is, selecting a location where they prefer to litigate the case.  Any county where an employer has employees perform work is now fair game as a potential location where the employer may have to defend itself in a lawsuit even if that is different than the county in which the employer is located or where the suing employee performed work.  For employers with field-based employees such as construction, transportation, and home healthcare this drastically increases the places in which you could find yourself in a lawsuit.  The case represents a continued trend of pro-employee PAGA rulings from the California courts.

This AALRR post is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 

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