Judge Narrows Scope of California Labor Law Challenge

SANTA ANA, Calif. (CN) – A judge Wednesday narrowed a California trade group’s lawsuit challenging a state law empowering citizens to bring labor disputes to court, saying the group failed to show how the policy violated separation of powers and due process rights.

The California Business & Industrial Alliance said in its 2018 lawsuit that the state’s Private Attorneys General Act, or PAGA, prevents employers from defending against worker lawsuits.

Under the law, employees can file labor code violation complaints in court against employers on the state’s behalf while represented by private attorneys.

The trade group claims PAGA strips away due process rights from employers and allows attorneys to exploit the law for personal gain.

In a demurrer filed in Orange County Superior Court, nominal defendant California Attorney General Xavier Becerra argued the lawsuit should exclude claims that PAGA violates separation of powers law and due process rights.

In a Sept. 5 hearing before Orange County Superior Court Judge Peter Wilson, the trade group’s attorney Paul DeCamp of Epstein, Becker & Green said businesses defending lawsuits filed under PAGA have been forced to settle frivolous complaints.

Attorney Richard Frey, also representing the trade group, told Wilson that the law impedes state labor agencies from handling labor disputes.

But Wilson disagreed, writing in 4-page minute order Wednesday that the trade group failed to support their claims that the law – and any monetary penalties that result from PAGA lawsuits – impedes businesses’ due process rights.

Under California law, the trade group cannot bring a due process challenge against PAGA simply on claims that it may result in future harm, Wilson wrote in the order.

“A PAGA action is a civil action with the parties, both plaintiffs and defendants, afforded all of the rights and remedies available to parties in civil actions,” the order said.

Attorneys for the trade group also rested their due process argument on a California Supreme Court ruling in California Teachers Association v. California, which held that a statute requiring teachers to pay half the costs of a hearing officer was unconstitutional.

“Those considerations do not apply here, where nothing in the PAGA statute operates to deter hearings and/or to diminish or restrict a defendant’s right to a full and fair hearing on the merits,” the order said.

Wilson also ruled the court is bound by a ruling in Iskanian v. CLS Transportation Los Angeles, which held that PAGA does not violate separation of powers laws in the California Constitution.

“It precludes any separation of powers claim under the California Constitution regardless of whether it is based on new theories or facts,” Wilson wrote in the ruling. “And the Court is bound to follow this holding.”

Wilson did not grant the trade group leave to amend. Trade group spokesperson Tom Manzo said the fight will go on.

“We always knew the fight to reform PAGA wouldn’t be easy. While we’re disappointed with the judge’s ruling on three of our claims, we’re moving full speed ahead on the equal protection claim,” Manzo said in an email. “We intend to show that the problems PAGA caused for unionized construction companies are felt equally, or more severely, by its other victims. CABIA will not stop fighting until this deeply harmful law is either fixed by the Legislature or struck down by the courts.”

A spokesperson for the Attorney General’s office did not immediately respond to an email requesting comment on the ruling on Wednesday.

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