On July 13, 2017, the California Supreme Court greatly expanded the scope of discovery available under California's Labor Code Private Attorneys General Act of 2004 ("PAGA"). In Williams v. Superior Court (Marshalls of CA, LLC), ___Cal. 5th ___ (Jul. 13, 2017), the court held that the breadth of discovery in a PAGA action should be no less than what is normally permitted in a class action. Additionally, the Court held that as an essential first step to prosecuting any representative action, a PAGA plaintiff is presumptively entitled in the early stages of litigation to obtain from the employer-defendant the contact information of those the plaintiff purports to represent in early stages of litigation.
Marshalls of CA, LLC is a retail chain with stores throughout California; the plaintiff was an employee at a one of its stores in Costa Mesa. He brought an action under PAGA, alleging meal and rest break violations as well as other related Labor Code violations. (As a reminder, PAGA authorizes an employee alleging California Labor Code violations to file a representative action on behalf of himself and other aggrieved employees.)
Early in the fact discovery phase of the case, the plaintiff served an interrogatory seeking the names and contact information of all non-exempt, California Marshalls employees from March 2012 through February 2014. Marshalls objected on the grounds that the request was overbroad because it extended beyond plaintiff's store and job classification; unduly burdensome because it sought private information without first demonstrating that plaintiff or others were aggrieved; and that the request invaded the privacy of third parties protected by the California Constitution.
The trial court ordered Marshalls to produce the names and contact information of all employees at the plaintiff's store, but not for employees at other stores statewide. The trial court explained that the plaintiff could only obtain access to contact information for employees outside his store by first showing his wage and hour claims had some merit. The state appellate court refused to review the trial court's order, but the California Supreme Court granted review to resolve an issue of first impression: the appropriate scope of discovery in a PAGA action.
The California Supreme Court's Decision
The Supreme Court ultimately disagreed with the trial court, finding that the plaintiff was presumptively entitled to the contact information he sought in his interrogatory. The court held that the strength or weakness of the plaintiff's individual claim was immaterial. Rather, Marshalls had the burden of establishing cause to justify its refusal to answer, and it failed to meet that burden. Moreover, the court seemingly acknowledged that a plaintiff in a PAGA case was entitled to very broad discovery, and had the Legislature wanted to prohibit "fishing expeditions," it could have done so.
As to Marshall's overbreadth objection, the Court noted that plaintiff's complaint alleged Marshalls committed various Labor Code violations, pursuant to systemic companywide policies, and sought penalties and injunctive relief for himself and all non-exempt employees statewide. The Court further noted that plaintiff's interrogatory sought to identify other aggrieved employees and obtain admissible evidence as a first step, and explained that prior to its decision, all Courts of Appeal uniformly treated such a request as clearly within the scope of discovery permitted under California's Code of Civil Procedure. The Court stated that the approach of the Courts of Appeal should be the "default position."
The Court also looked at PAGA's legislative history and found no evidence of an intent to impose a heightened preliminary proof requirement for discovery in PAGA actions and stated that imposing such a requirement would undercut California's public policy of affording employees workplaces free of Labor Code violations. The Court also found that the similarities between a class action and a PAGA action mandate that contact information is relevant and discoverable here because in both actions, fellow class members are potential percipient witnesses. In addition, the Court noted that absent employees will be bound by the outcome of a PAGA action, just like absent class members are bound to the outcome of a class action. Accordingly, imposing a higher discovery standard on PAGA claims would increase the risk that PAGA class members will be bound by a judgment of which they were unaware and had no opportunity to support or oppose.
The Court held that Marshalls did not satisfy its evidentiary burden of showing that the interrogatory imposed an undue burden. Although Marshalls identified the total number of employees statewide (16,500), it did not provide the trial court with any information regarding the cost of providing the information necessary to respond to plaintiff's interrogatory. Instead, Marshalls argued that Williams should be required to submit proof that he had good cause for seeking the contact information. The Court dismissed Marshall's argument for "plac[ing] the cart before the horse".
Finally, the Court held that the trial court did not engage in a proper evaluation of the employees' privacy interests. The Court ruled that any privacy objections could be assuaged by issuing a Belaire-West notice to the employees. The Court reasoned that if the trial court had analyzed the privacy objection properly, it would have concluded that employees would not expect their information to be withheld from a plaintiff seeking to prove labor law violations on their behalf. Additionally, the Court found that a "serious invasion of privacy" was absent in this case because the contact information for plaintiff's store was protected with a Belaire notice, and employees at the other stores should be treated the same. Further, the Court disapproved of several California court cases that required a party seeking discovery of private information to always establish a compelling interest without regard to the considerations mentioned above.
DEFENDING AGAINST PAGA CLAIMS AFTER WILLIAMS
Despite the sweeping (and somewhat surprising) ruling, there is a silver lining, as the court provided employers with a few guidelines for limiting access to employee contact information and protecting their privacy interests:
- The court recognized that, in some cases, there may be a special reason to limit or postpone a representative plaintiff's access to contact information of those he seeks to represent. However, the court also did not articulate any examples of such reasons, leaving it to the employer to define.
- The court suggested that privacy interests could be addressed by conditioning discovery on the issuance of a Belaire-West notice, or by ordering that the contact information come within the scope of a protective order prohibiting disclosure for purposes other than the lawsuit.
- The court established that a trial court nonetheless retains the authority to "limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence." This suggests that a party opposing discovery can still defeat or limit the discovery request "by evidence showing the quantum of work required."
- The court also acknowledged that if a party shows "good cause," the trial court may establish the sequence and timing of discovery for the convenience of parties and witnesses and in the "interests of justice."
Williams makes it clear that the scope of permissible PAGA discovery is at least as broad as class action discovery. This, coupled with the Supreme Court's prior holding that PAGA cases need not comply with class certification requirements, ensures that employers will continue to face a steady stream of PAGA litigation for some time to come.
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