representative actions

Seyfarth Synopsis: Members of the plaintiffs’ bar submit about 500 PAGA notices each month to California’s Labor and Workforce Development Agency. Each notice presages yet another PAGA lawsuit against yet another hapless California employer. But today we consider a new sort of PAGA-focused lawsuit. This recent complaint filed last week is not on behalf of a California law enforcement agency against some employer, but rather is on behalf of employers, and against a law enforcement official—California Attorney General Xavier Becerra. This lawsuit seeks injunctive and declaratory relief from PAGA because of the ways in which it violates the state and federal constitutions.

Filed by the California Business & Industrial Alliance (CABIA), this lawsuit is a counterpunch by aggrieved employers. CABIA, a trade organization of business executives and entrepreneurs, was formed as one business owner’s response to his personal experience with a PAGA lawsuit. That ordeal imposed a million dollar cost on his business, which has fewer than 200 employees. The ordeal also made the employer feel it had no choice but to comply literally with Labor Code provisions and thereby implement workplace changes (such as arbitrary times for meal periods) that were adverse to the interests of the employer’s workers.

Although the business owner settled that lawsuit, he remained disturbed by the hostile business and legal conditions that the California Legislature created in enacting PAGA. With likeminded business owners, he formed CABIA. Last week the organization sued.

The lawsuit, noting that PAGA lacks sufficient oversight from both the executive and the judicial branches of government, asserts that PAGA violates the constitutional separation of powers doctrine. CABIA contends that PAGA does not achieve its stated purpose to assist employees in righting workplace wrongs where the state lacks resources to do so itself. The lawsuit amply illustrates the point—well known to experienced employers—that PAGA primarily serves the interests of the plaintiffs’ bar, not the employees they nominally represent in court.

The 54-page complaint explains several ways in which PAGA runs afoul of both the California and United States Constitutions. The complaint explains that PAGA as enacted and as applied violates constitutional guarantees of procedural and substantive due process, as well as constitutional prohibitions against excessive fines and unusual punishments.

The lawsuit also cites the recent passage of AB1654, which exempts construction employers with certain collective bargaining agreements from PAGA lawsuits. Since it is unconstitutional to deny any person equal protection of the laws, the lawsuit contends that there is no basis to exempt one industry from the burdens that PAGA generally imposes on all employers.

However quixotic this lawsuit may seem (the California Supreme Court has already rejected constitutional challenges to PAGA), the lawsuit ably catalogs the many ways in which PAGA is unjust. Any employer that has had to defend itself in a PAGA lawsuit is familiar with the statute’s shocking procedural and substantive aspects. Regardless of whether CABIA’s lawsuit prevails, California employers should appreciate its efforts to be heard.