SANTA ANA, Calif. (CN) - A judge asked attorneys for a California trade group on Thursday to present further arguments on why a state law that empowers private citizens to file labor lawsuits impedes employers’ due process rights.
The California Business & Industrial Alliance said in its 2018 lawsuit that the state’s Private Attorneys General Act unlawfully prevents employers from defending against labor complaints in courts or before state labor agencies.
The trade group claims that the law strips away due process rights from employers, impedes the Labor Workforce Development Agency from performing its functions and allows private attorneys to exploit the law for personal gain.
The law, enacted in 2004 during a state budget crisis, originally sought to alleviate understaffed state labor agencies by allowing employees to file labor code violation complaints against employers on the state’s behalf while represented by private attorneys.
In March, Orange County Superior Court Judge Peter Wilson denied nominal defendant Attorney General Xavier Becerra’s attempt to dismiss the lawsuit, finding that the trade group has standing to bring claims on behalf of its business-owner members that the law is unconstitutional.
In court Thursday on the state’s demurrer motion, the trade group’s attorney Paul DeCamp of Epstein, Becker & Green told Wilson that the law has created a paradigm where the prospect of businesses having to pay penalties - on top of court-related fees - from labor disputes forces many to settle otherwise frivolous complaints.
“The fines aggregate, sometimes in excess of the net worth of defendants,” DeCamp told Wilson, adding that potential penalties impede businesses from mounting a defense in court. “As a defendant, sometimes you cannot proceed to trial even if you believe in your defense.”
Wilson said DeCamp was making a “leap of faith in arguments” and repeatedly asked him to cite a case that shows that the group can be granted a trial even before the judge rules on the facial challenge to the statute’s constitutionality.
“This is your chance to explain to me why this is a denial of due process,” Wilson said.
DeCamp told Wilson that while he could not cite a case, a trial is the only way to resolve the facial challenge since there are no ways to address it in state government.
“Why am I not then constrained by the face of the statute in determining whether it’s facially unconstitutional,” Wilson asked. “All I’m told is, ‘we really don’t like this and so it shouldn’t stand.’ What authority allows me to go beyond facial challenge?”
Attorney Richard Frey, also representing the trade group, told Wilson he could review well pled facts in the complaint and statements by the Labor Workforce Development Agency that the law impedes them from handling labor disputes.
“Normally these cases are brought by the agency,” Frey told Wilson, adding that the impediment violates separation of powers.
Deputy Attorney General Aaron Jones told Wilson that the California Supreme Court made clear that facial challenges could only review the face of the statute itself.
Tom Manzo, a spokesperson for the trade group, said in a statement that the law is "depriving employers of their due process."
"The stakes are high: PAGA has negatively affected thousands of small business owners, and it will affect countless more if this harmful law isn’t reformed," Manzo said. "If we ultimately prevail and the Court strikes PAGA as unconstitutional, the result will fundamentally reshape litigation in California."
The state’s demurrer motion is under submission and Wilson said he would issue a ruling soon. A status conference is scheduled for Sept. 27.
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