United States: California Supreme Court Reaffirms Broad Right To Discovery In PAGA Actions

The California Supreme Court issued its long awaited ruling in Williams v. Superior Court, in which it clarified the scope of discovery in actions brought under the Private Attorneys General Act of 2004, Labor Code § 2698 et seq., also known as PAGA. (Williams v. Superior Court, __ Cal.5th __ (July 13, 2017, S227228) ("Williams").) At first glance employers may be concerned by the breadth of discovery the California Supreme Court permits under PAGA, however, in reality the case generally reaffirms the status quo by holding that the scope of discovery in PAGA actions is essentially the same as the scope of discovery in class actions. Specifically, the Court holds that as in class actions, the contact information of the individuals a PAGA plaintiff purports to represent is generally discoverable in the same manner as it has been for many years in wage and hour class actions. While trial courts cannot condition disclosure of employee contact information on the plaintiff making a prima facie showing on the merits of his claims, the same defenses that exist in class actions to such discovery also exist in PAGA actions. While the employer has a substantial burden of proof, the California Supreme Court reaffirmed that employers still have defenses based on undue burden and the need to protect employee privacy rights to limit such discovery. With the overall discussion of discovery issues, the Court also makes pronouncements that can be helpful to employers in other aspects of PAGA litigation, such as its statements indicating that a PAGA action must be manageable to proceed to trial.

Background

Plaintiff Michael Williams worked for Marshalls of CA ("Marshalls"), a retail chain with stores throughout California. Williams worked in Marshalls' Costa Mesa store beginning in January 2012. In 2013, Williams sued Marshalls under PAGA, alleging that the company failed to provide Williams and other aggrieved employees with meal and rest periods or compensation in lieu of the required breaks. The complaint also alleged that Marshalls maintained companywide practices of understaffing stores, requiring employees to work during meal periods without compensation, directing managers to erase meal period violations from time records, and requiring employees to carry out company business without reimbursement. Williams further alleged that as a result of these violations, Marshalls failed to provide him and other aggrieved employees timely wage payment or complete and accurate wage statements.

During discovery, Williams served special interrogatories asking Marshalls to provide the personal contact information and employment history of each of the thousands of non-exempt California employees who had worked for Marshalls during the relevant period. Marshalls objected to the production and the trial court ultimately issued a compromise of sorts. First, Marshalls would be required to disclose the contact information for the employees who had worked in the one store where Plaintiff worked following a "Belaire-West notice," which is a postcard sent to employees giving them a chance to object to disclosure of their information within 30 days if the employee does not want it disclosed. The court conditioned any broader disclosure of contact information on Plaintiff sitting for 6 hours of deposition and then presenting at least a threshold showing that he had a reason to believe there was a statewide issue that would support such broad disclosure.

Williams filed a writ petition for appellate review which was granted, but the court of appeal affirmed that the trial court's actions were within the scope of the trial judge's discretion. The court of appeal reasoned that the trial court was within its discretion to find that Williams failed to "set forth specific facts showing good cause justifying the discovery sought." Alternatively, the court of appeal concluded that because third party privacy interests were implicated, Williams had to "demonstrate a compelling need for discovery" by showing "the discovery sought is directly relevant and essential to the fair resolution of the underlying lawsuit."

The California Supreme Court granted review of the court of appeal's decision to resolve the issues of first impression concerning the appropriate scope of discovery in a PAGA action. At the outset of its analysis, the California Supreme Court explained that "Williams was presumptively entitled to an answer to his interrogatory seeking the identity and contact information of his fellow Marshalls employees" and thus that Marshalls had the burden of establishing cause to refuse to provide that information. Thus, the trial court was limited to determining whether any of Marshalls' timely-asserted objections carried that burden. Marshalls had objected to Williams' interrogatory on three grounds: overbreadth; undue burden; and privacy. The California Supreme Court addressed each of Marshalls' objections in turn.

The California Supreme Court Holds That Contact Information of Aggrieved Employees Is Relevant and Presumptively Discoverable in PAGA Actions

Marshalls objected to Williams' request for statewide employee contact information on the ground that the request was overbroad because it sought information beyond the scope of permissible discovery in that it extended to individuals outside of the position, job classification, and location in which Williams worked. The California Supreme Court explained that because the objection did not involve privilege, whether the contact information for employees at other stores was discoverable turned on whether the request was reasonably calculated to lead to the discovery of admissible evidence.

The California Supreme Court rejected the notion that any special rules for PAGA discovery applied that differed from those that have been in place for many years with regard to class actions. As such, under the seminal decision, Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360 (2007)("Pioneer Electronics"), class and PAGA plaintiffs are generally entitled to learn the names and contact information of others in the putative class/universe of potentially "aggrieved parties" to gather information to support their allegations. While the individuals whose information is sought have a privacy interest in their contact information, it is a limited privacy interest and it can be protected by giving them a chance to either affirmatively object to the production or, by default, to have it disclosed to the counsel for the plaintiff. The California Supreme Court rejected Marshalls' interpretation that PAGA actions are different because the Plaintiff has a burden of showing that individuals are "aggrieved employees," which Marshalls argued involves some kind of prima facie showing of a violation of the statutes. Instead, the California Supreme Court held that, for purposes of obtaining contact information, the question is only whether the plaintiff alleges the employees at issue are aggrieved, much as the class definition pleaded in a class complaint typically defines the scope of people from whom contact information is sought.

The California Supreme Court Holds That Undue Burden Is a Defense to Disclosure of Statewide Contact Information in a PAGA Action

Next, the California Supreme Court addressed Marshalls' argument, which the trial court had accepted, that Williams' interrogatory was unduly burdensome because it sought contact information for thousands of employees without a prior showing that Williams or other employees had been subject to Labor Code violations. While the California Supreme Court did not reject the notion that a burdensomeness objection could ever be proper to limit or prevent the type of discovery at issue in the case, it noted that the employer has to actually make a concrete showing of the burden that would be required to comply, and the trial court should consider alternatives less than completely barring discovery to address that burden. Given that contact information is often maintained in a central database, it appears that it will be the exception rather than the rule that an employer will be able to make the showing necessary to claim the production of statewide contact information is too burdensome. However, it may be easier to make a case for undue burden for statewide discovery that goes beyond mere contact information (e.g., seeking all payroll and timekeeping information).

Marshalls also argued that the trial court had power to sequence discovery for the timing and convenience of the witnesses pursuant to Code of Civil Procedure section 2019.020, but the California Supreme Court refused to address the argument because it had not been raised below and was not the ground the trial court used to justify its ruling. So that argument is preserved, but even under Section 2019.020 the right to get to the next "sequence" of discovery of contact information cannot be premised on proving the merits of the plaintiff's claims.

The California Supreme Court Holds That Invasion of Privacy Is a Defense to Disclosure of Statewide Contact Information in a PAGA Action

Marshalls' third and final objection asserted that Williams' request for statewide contact information violated the privacy interests of the non-Costa Mesa employees and was therefore properly denied. In this area, the California Supreme Court simply affirmed that the rules that have largely been in place for years with respect to wage and hour class actions apply to PAGA actions as well. That is, the California Supreme Court held that notwithstanding the privacy right in one's personal contact information, trial courts do not have the right to completely preclude discovery of employee contact information or to require that the employees affirmatively consent to disclosure before allowing it. Rather, it is sufficient for a court to allow a Belaire-West privacy notice where the employees have the chance to affirmatively opt out, but the default result will be disclosure of contact information. Where more than contact information is sought, however, the California Supreme Court reaffirmed that more extensive protection of the information may be appropriate.

In issuing this fairly unremarkable ruling (which has been the rule in practice for the last decade in wage and hour class actions), the Court took the fairly extraordinary step of reversing a large swath of published decisions that had included statements that wherever a privacy right of any sort is implicated the party seeking the discovery must show a "compelling need" for production. The California Supreme Court held that this was too aggressive of a statement and that the degree of the privacy invasion is not always so great as to require a "compelling need" for production. The vast majority of the cases that the Court disapproved are not wage and hour cases, so this ruling may have a broader impact on other areas of law where privacy is asserted as a defense to discovery (e.g., request for production of a wrongful termination plaintiff's work history documentation), but it should not have much of an impact on how wage and hour class action discovery is handled.

The California Supreme Court Makes Clear That a PAGA Plaintiff Must Prove That the Action Is Manageable Before Bringing the Action to Trial

As is often the case with California Supreme Court decisions, the Williams opinion makes important points that are not central to the main holding of the case. In addressing defendant's argument that the employee should show an unlawful statewide companywide policy to support statewide discovery, the Court held as part of its broader holding that there was no such limitation on discovery. However, in doing so, the Court noted that a "uniform policy" across the state "is one way a plaintiff might seek to render the trial of the action manageable." By this statement, the Court recognizes that, even in a PAGA action where no class certification is required, there is a general requirement of "trial manageability" that must be satisfied to actually litigate a collective issue. Accordingly, Williams may be used as ammunition in a motion seeking to have collective PAGA claims dismissed on the ground that there are too many individualized issues to allow the action to be manageably tried.

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