Estrada v. Royalty Carpet Mills, Inc.

Estrada v. Royalty Carpet Mills, Inc.

Opinion

MOORE, Acting P. J.—Plaintiffs in this case were employees at three separate carpet manufacturing facilities operated by defendant Royalty Carpet Mills, Inc. (Royalty), which is now known as Royalty Carpet Mills, LLC. They alleged representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.),³ and class claims primarily based on purported meal and rest period violations. They sought premium pay under section 226.7 for these violations and asserted derivative claims for waiting time and wage statement penalties, among others. The trial court initially certified two classes: one for employees that worked at a facility in Porterville (the Porterville class) and another for employees that worked in [**2]  two separate facilities in Orange County (the Dyer/Derian class). Following the presentation of evidence at trial, the court decertified the Dyer/Derian class and then entered judgment. The results were mixed and both sides appeal.

 [*697] 

Plaintiffs make several contentions on appeal: (1) certain releases in settlement agreements that Royalty made with individual class members prior to trial are invalid; (2) the court erred in finding the Porterville class's meal period claim, which was added in an amended complaint, did not relate back to any prior complaint; (3) the court abused its discretion by decertifying the Dyer/Derian class; (4) the court incorrectly applied a 7 percent prejudgment interest rate to premium pay awarded under section 226.7 rather than a 10 percent rate; (5) the court's judgment for Royalty on the Porterville class's derivative waiting time and wage statement claims was wrong; and (6) the court mistakenly dismissed the PAGA meal period claims of the Dyer/Derian employees on unmanageability grounds. As explained in this opinion, we agree with three of these contentions. We find the court erred in failing to apply the relation back doctrine, in decertifying the Dyer/Derian class, [**3]  and dismissing the PAGA claims as unmanageable.

CA(1)(1) We publish this opinion primarily due to our discussion concerning unmanageable PAGA claims. Currently, only one published California opinion, Wesson v. Staples the Office Superstore, LLC (2021) 68 Cal.App.5th 746 [283 Cal. Rptr. 3d 846] (Wesson), addresses this issue. It concluded courts have inherent authority to strike unmanageable PAGA claims. (Wesson, at pp. 766–767.) While we understand the concerns expressed in Wesson, we reach the opposite conclusion. Based on our reading of pertinent Supreme Court authority, chiefly Arias v. Superior Court (2009) 46 Cal.4th 969 [95 Cal. Rptr. 3d 588, 209 P.3d 923], and Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73 [259 Cal. Rptr. 3d 769, 459 P.3d 1123], we find ] a court cannot strike a PAGA claim based on manageability. These cases have made clear that PAGA claims are unlike conventional civil suits and, in particular, are not class actions. Allowing dismissal of unmanageable PAGA claims would effectively graft a class action requirement onto PAGA claims, undermining a core principle of these authorities. It would also interfere with PAGA's purpose as a law enforcement mechanism by placing an extra hurdle on PAGA plaintiffs that is not placed on the state. That said, courts are not powerless when facing unwieldy PAGA claims. Courts may still, where appropriate and within reason, limit the amount of evidence PAGA plaintiffs may introduce at trial to prove alleged violations to other [**4]  unrepresented employees. If plaintiffs are unable to show widespread violations in an efficient and reasonable manner, that will just reduce the amount of penalties awarded rather than lead to dismissal.

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