The U.S. Supreme Court recently heard oral arguments in Estrada v. Royalty Carpet Mills, Inc. A decision in the case is expected to address the current split in California Appellate courts on the issue of trial court authority when it comes to limiting California Private Attorneys General Act (PAGA) claims and addressing manageability.

PAGA authorizes aggrieved employees to file lawsuits against employers on behalf of themselves, other employees, and on behalf of the State of California for Labor Code violations. The issue before the Court in Estrada is whether a trial court has the discretion to ensure PAGA claims will be manageable at trial, and to strike or narrow claims if they cannot be managed. Currently, a split of authority between the Second and Fourth Appellate Districts has the question up in the air.

A U.S Supreme Court ruling in favor of the Second Appellate District and its Wesson v. Staples of the Offices Superstore, LLC, decision would see authority vested in the trial courts to hear arguments and preclude claims that would render the case unmanageable.

PAGA claims can involve hundreds – and in some cases thousands – of potentially aggrieved employees equating to millions in civil penalties. Where positions are not standardized and involve critical variations (e.g., how jobs are performed, experience, managerial approaches) requiring individualized assessments across a broad range of classifications, a PAGA trial could potentially lead to innumerable min-trials involving countless court hours and resources.

A ruling in Estrada is expected by February 2024.v