PAGA Paraphrased – Taduran v. James R. Glidewell, Dental Ceramics, Inc.

Seyfarth Synopsis: The Fourth Appellate District affirmed the trial court’s broad discretion to reduce PAGA civil penalties, holding that courts may use “any reasonable method” to reduce penalties and are not bound by any single calculation method — whether per pay period, per employee, or otherwise — and upheld the application of a 0.70 multiplier to the lodestar attorney fee amount when calculating a fee award.

In Taduran, the plaintiff brought a PAGA action against his former employer alleging overtime wage, rest period, wage statement, and recordkeeping violations under the Labor Code. Liability was established through summary adjudication and stipulation on all four claims, leaving the amount of civil penalties as the sole triable issue. Plaintiff argued penalties totaled approximately $55.9 million at the statutory maximum, while Defendant urged significant reductions based on the technical nature of the violations and minimal harm. The trial court awarded $515,965 in total civil penalties (i.e. <1% of requested penalties) and applied a modifier of 0.70 to the lodestar, awarding $733,440 in attorney fees against the approximately $1.57 million sought based on a requested 1.5 multiplier.

The Fourth District held that Labor Code section 2699, subdivision (e)(2) authorizes a court to award a “lesser amount” than the maximum civil penalty where, based on the facts and circumstances of the case, the maximum award would be “unjust, arbitrary and oppressive, or confiscatory.” The court rejected Plaintiff’s argument that reductions must be applied on a per pay period basis, finding that trial courts retain full discretion to use “any reasonable method” — including a percentage, per pay period, or per employee basis. On attorney fees, the court upheld the 0.70 negative multiplier, finding the trial court properly considered the straightforward nature of the claims and the significant disparity between the amount sought and recovered. The court noted that in representative actions such as PAGA claims, the percentage of recovery relative to the amount sought may properly support a negative multiplier.

The decision serves as an important reminder for employers that trial courts have broad flexibility in fashioning PAGA penalty reductions without being locked into any single methodology and that attorney fee awards will consider the nature of the claims and any disparity between the amount sought and recovered.