Court rules on PAGA discovery

On Thursday, the California Supreme Court effectively burst open the floodgates for filing employment claims under the state's Private Attorneys General Act. In a long-awaited decision in Williams v. Superior Court, 2017 DJDAR 6879 (July 13, 2017), has finally answered the question of what discovery is permissible in a PAGA claim. The claims at issue concerned meal and rest break violations, wage statement violations, and related claims.

Michael Williams, the plaintiff, started working at Marshalls discount department store in Costa Mesa in 2012. After about a year, he sued the company under PAGA, alleging his employer failed to provide him and other aggrieved employees meal and rest periods or compensation in lieu of the required breaks (also known as premium pay). His attorneys requested the identity, contact information, and employment history of all of his fellow employees at all Marshalls stores for a two-year period. At the time, Marshalls had roughly 16,500 nonexempt employees in about 130 stores.

Marshalls objected, arguing that by seeking information beyond Williams's particular store and job classification the request was "unduly burdensome." Marshalls additionally argued that Williams should first be required to demonstrate that he was aggrieved or that others were aggrieved; and that the scope of the discovery request constituted an invasion of the privacy of third parties under the California Constitution.

The trial court said the plaintiff was only entitled to information about fellow employees at the Costa Mesa store, where Williams worked, subject to a Belaire-West privacy notice to those employees allowing them to opt out of having their information shared. It also determined that if Williams wanted more, he would first have to sit through at least six productive hours of deposition. Marshalls could then use any damaging testimony from the deposition in opposing Williams' request for more discovery.

In May 2015, The Court of Appeal affirmed the trial court ruling, concluding that Williams had to demonstrate a compelling need for discovery by showing the information being sought was "directly relevant and essential" to his PAGA lawsuit. Williams appealed again and the Supreme Court considered each of the objections Marshalls raised.

One objection was that the interrogatory was overbroad. Marshalls argued that (1) broad discovery in a PAGA case should be limited until a plaintiff has supplied proof of alleged violations; and (2) decisions involving discovery allowed in class actions should not be followed in the context of a PAGA action. The Supreme Court looked at allegations of a systematic, company-wide policy not to pay meal or rest break premiums and to "cleanse" time records of missed or noncompliant meal periods. It also looked at prior decisions involving class actions where this type of discovery is allowed.

The Supreme Court rejected both arguments. First, the court said PAGA was enacted to "remedy systemic under-enforcement of many worker protections." There is no requirement that the plaintiff "must satisfy a particular threshold of weightiness, beyond the requirements of non-frivolousness generally applicable to any civil filing. ... Moreover, to insert such a requirement into PAGA would undercut the clear legislative purposes the act was designed to serve."

The court also found no reason to differentiate the discovery standards in class actions from PAGA claims. "To allow broad discovery of contact information in one type of representative action but not the other, and impose unique hurdles in PAGA actions that inhibit communication with affected employees, would enhance the risk those employees will be bound by a judgment they had no awareness of and no opportunity to contribute to or oppose."

Another objection was Marshalls' claim that this would create an undue burden because it sought information for thousands of employees, without any showing that the plaintiff himself or anyone else had been subject to a Labor Code violation. The trial court denied the discovery until the plaintiff had been deposed. The Court of Appeal agreed with the trial court.

The Supreme Court disagreed, finding that PAGA "imposes no obligation on a party propounding interrogatories to establish good cause or prove up the merits of any underlying claims. ... California law has long made it clear that to require a party to supply proof of any claims or defenses as a condition of discovery in support of those claims or defenses is to place the cart before the horse." Furthermore, "the eventual proper scope of a putative representative action is as yet uncertain is no obstacle to discovery; a party may proceed with interrogatories and other discovery methods precisely in order to ascertain that scope."

As to employees' privacy, the court held that while employees have a bona fide privacy right in their contact information, they do not have an expectation that such information will be kept private from a fellow employee seeking relief for employment laws. In reaching its decision, the Supreme Court concluded that the privacy interests of fellow employees "could have been addressed by conditioning discovery on a Belaire-West notice" and that "trial courts may also supplement Belaire-West notices with a protective order prohibiting disclosure of any received contact information outside the confines of a specific lawsuit."

So, what does this all mean? Well, it's good news for employees. Now, an employee can simply file a non-frivolous PAGA claim, ask for the contact information for all fellow employees during the relevant timeframe, and then see what else they can find.

For employers, this decision will likely mean even more PAGA claims, which can be devastating to a company's bottom line. Employers should continue to carefully review their employment policies and practices to make sure they are fully compliant.