In recent years, California has seen a series of legal disputes revolving around the Private Attorney General Act (PAGA), a law that empowers employees to file lawsuits to recover civil penalties for Labor Code violations on behalf of themselves, other "aggrieved employees", and the State of California.
Just this year, the California Supreme Court in Adolph v. Uber Technologies, Inc. (2023) affirmed that the enforcement of arbitration for an individual employee's claim does not necessarily deprive that employee of their "aggrieved employee" status under PAGA. In other words, employees are still allowed to pursue representative PAGA claims even after their individual PAGA claim has been compelled to arbitration.
Now, another complex issue has arisen regarding subsequent PAGA suits; what happens when an employee brings a PAGA claim against their an employer after a similar PAGA claim by another employee has already been settled? Does the doctrine of claim preclusion, which prevents the same claim from being litigated again in a subsequent lawsuit between the same parties, prevent the second PAGA claim from proceeding? The recent Court of Appeal case of LaCour v. Marshalls of California, LLC, et. al. (2023) attempted to resolve this question.
In this case, Robert LaCour, a former Loss Prevention Specialist, initiated a PAGA action against his employer, Marshalls, in January 2021, citing various wage and hour violations. Marshalls countered by asserting that the allegations in LaCour's PAGA claim had already been addressed and released through the settlement of a prior PAGA claim, Rodriguez v. Marshalls of California, LLC (2020). According to Marshalls, claim preclusion should bar LaCour's current PAGA action, as Rodriguez had allegedly resolved all potential claims that could have been brought under the initial PAGA action.
LaCour contested this argument, claiming that the release associated with the Rodriguez settlement was unenforceable. He argued that the individual responsible for initiating the PAGA settlement in Rodriguez, a woman named Ms. Paulino, lacked the authority to settle claims that extended beyond the scope of her pre-suit notice to the Labor and Workforce Development Agency (LWDA).
For background, individuals must file a pre-suit LWDA notice form that includes details about their employer's alleged labor law violations before moving forward with a PAGA claim. Following submission of this notice, the LWDA decides whether or not to investigate. If the LWDA does not act within about 65 days, individuals are authorized to proceed with PAGA litigation.
LaCour argued that Ms. Paulino's notice to the LWDA contained Labor Code violations related specifically to off-the-clock work during anti-theft bag checks. In contrast, LaCour's notice to the LWDA encompassed a broader array of alleged Labor Code violations, including uniform maintenance, expenses like the use of personal phones and vehicles for work, and other violations that were not within the purview of Paulino's notice.
The trial court ultimately ruled against LaCour, asserting that Ms. Paulino did have the authority to settle all of LaCour's current claims on behalf of the LWDA. The court pointed to a footnote in Ms. Paulino's LWDA notice letter, which listed various Labor Code provisions, including those forming the legal basis for LaCour's PAGA claims. The trial court then held that, in her capacity as the LWDA's proxy, Ms. Paulino had the authority to settle on behalf of all aggrieved employees of Marshalls, which included LaCour.
Consequently, the trial court upheld Marshalls defense of claim preclusion, effectively preventing LaCour from pursuing his PAGA claim. In response, LaCour appealed his case to the California Court of Appeal First Appellate District.
On appeal, the Court rejected the trial court's application of claim preclusion based on the Rodriguez PAGA settlement. According to the Court, simply having a footnote including additional Labor Code violations is not enough to claim that those violations have effectively been "asserted" in the LWDA notice. As the Court highlighted, it is highly important for the LWDA to have sufficient notice in order for the agency to make informed decisions on whether or not to investigate Labor Code violations. To properly assert labor code violations in an LWDA notice, the Labor Code violations must be clearly articulated clearly in the notice itself. Therefore, the Rodriguez judgment did not control LaCour's distinct PAGA claim because it was based on a different and more extensive LWDA authorization.
However, the Court did clarify that LaCour could not receive double compensation for the same Labor Code violation that had already been addressed and resolved in the previous Rodriguez PAGA settlement brought by Ms. Paulino. He could only recover for the newly asserted labor violations in his own PAGA claim. This leaves the question of issue preclusion, a doctrine that prevents re-litigating the same legal issue between the same parties, for future court decisions to address.
LaCour v. Marshalls holds important implications for employers who may now face additional PAGA litigation, even after settling a prior PAGA claim during the same time period as the current action. As such, it is important for employers to be aware of the specific PAGA claims noticed to the LWDA by an employee, as any claim not effectively asserted in the notice can still be brought by another employee in a subsequent PAGA suit. We highly advise all employers dealing with PAGA claims to work with competent legal counsel.