Duane Morris Takeaway:This week's episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and senior associate Ciara Dineen with their analysis of key developments in class action litigation in state courts, including significant rulings on the PAGA front in California.
Episode Transcript
Jennifer Riley: Thank you, listeners for being here again for the next episode of our weekly podcast, the Class Action Weekly Wire. I'm Jennifer Riley, partner at Duane Morris, and joining me today is Ciara Dineen. Thank you for being on the podcast, Ciara.
Ciara Dineen: It's great to be here, Jen. Thanks for having me.
Jennifer: So today, we wanted to discuss some trends and important developments in state court class action litigation, since the decision on where to file a class action will always be an important strategic decision for plaintiffs' lawyers seeking to maximize their odds for class certification as well as maximize their opportunity for larger verdicts and settlements. And as well as for defense lawyers in considering whether to remove a case from state court to federal court. Whether it is between state or federal court or deciding in which particular state to file, many factors impact this decision. Ciara, what are some of those factors?
Ciara: Yeah. Although almost all state law procedural requirements for class certification mirror Rule 23 of the Federal Rules, the plaintiffs' bar often perceives state courts as having a more positive predisposition towards their clients' interests, particularly where putative class members have connections to the state, and the events at issue occurred in the state where the action is filed. Beyond forum-shopping between state and federal court, the plaintiffs' bar also seeks out individual states that are believed to be plaintiff-friendly. These courts are thought to have more relaxed procedural rules related to discovery, consolidation, and class certification, a lower bar for evidentiary standards, and higher than average jury awards, among other considerations, all of which incentivize forum-shopping related to state class actions.
Jennifer: In reviewing key state court class action decisions and analyzing class certification rulings, although state courts tend to apply a fairly typical Rule 23-like analysis, many state decisions focus on the underlying claims at issue in addressing whether a class action should proceed. Nonetheless, understanding how state courts apply their respective Rule 23 analyses really is crucial toward effectively navigating the complexities of these types of lawsuits.
Ciara: Another important topic for companies is state private attorney general laws, in particular California's Private Attorneys General Act or PAGA. The PAGA authorizes workers to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for state labor code violations. Although California is the only state to have enacted this type of law so far, several other states are considering their own similar private attorney general laws, including New York, Washington, Oregon, New Jersey, and Connecticut. It will be crucial to monitor state legislation on this topic given the impact such laws will have on classification strategy.
Jennifer: As we discussed in the 2025 edition of the Duane Morris Class Action Review, PAGA filings are surging. According to the California Department of Industrial Relations, plaintiffs filed more than 9,400 PAGA notices in 2024. That's a near 22% increase over 2023 and a whopping 86,000% increase over the 11 PAGA notices filed in 2006.
Jennifer: So, the so-called PAGA reform legislation passed in 2024 by California lawmakers seemingly did little to curb interest in these cases, which continue to present one of the most viable workarounds to workplace arbitration agreements.
Ciara: That's right. In 2024, Governor Newsom in California announced that labor and business groups had inked a deal to alter the PAGA in return for removing the referendum to repeal the PAGA from the November 2024 ballot. The California Legislature quickly moved to approve two bills, Assembly Bill 2288 and Senate Bill 92. The alterations include reforms to the penalty structure, new defenses for employers, changes to the PAGA standing requirements, and a new "cure" process for small and large employers, among other changes. These reforms affect all PAGA notices filed on or after June 19, 2024, with some exceptions.
As is clear from the PAGA reform and activity, California is the epicenter of class actions filed in state courts. It has more class action litigation than any other state.
Jennifer: Thanks, Ciara. We have talked a lot about PAGA cases on the Weekly Wire, and we've previously discussed a couple of high-profile rulings from 2024. Have there been any significant PAGA rulings so far in 2025?
Ciara: Absolutely, Jen. So far, in 2025, there has been a new ruling on "headless" actions — those actions that only allege representative, or non- individual, PAGA claims and therefore cannot be ordered to arbitration. In Parra Rodriguez, et al. v. Packers Sanitation Services LTD, the plaintiff filed a lawsuit under the PAGA against the defendant, his former employer, seeking civil penalties for alleged labor code violations. The defendant moved to compel arbitration, pointing to an agreement the plaintiff signed at the commencement of his employment which mandated individual arbitration for employment related disputes. The defendant argued that under the U.S. Supreme Court decision Viking River Cruises, Inc. v. Moriana, the plaintiff's individual PAGA claim must be arbitrated and the remainder of the case dismissed. The plaintiff contended he was not asserting any individual PAGA claims, only representative ones, and thus nothing in his complaint was subject to arbitration. The trial court denied the defendant's motion, stating that at the time the arbitration agreement was signed, California law prohibited arbitration of any PAGA claims. The defendant appealed, arguing that the plaintiff's complaint necessarily included an individual component. The California Court of Appeal, Fourth Appellate District affirmed the trial court's ruling. The Court of Appeal ruled that the plaintiff's complaint clearly stated he was not seeking individual relief and had deliberately drafted his complaint to omit such claims. Though the defendant argued that simply identifying the plaintiff as an aggrieved employee proved the presence of an individual claim, the Court of Appeal opined that this identification was only necessary for standing, and did not mean that the plaintiff was pursuing individual penalties. The Court of Appeal stated that whether a complaint includes an individual claim must be determined by examining the complaint itself, not by legal assumptions about what a PAGA action should include, and that courts cannot impose claims the plaintiffs have chosen not to assert.
Jennifer: Thanks so much for that overview, Ciara. That decision is incredibly interesting, among other reasons, because it runs counter to a ruling from late December from the Second Appellate District in Leeper v. Shipt, Inc. That ruling stated that all PAGA actions necessarily have "individual" and "representative" components, regardless of whether the plaintiff pleads those individual claims. Under Leeper, then an employer could compel arbitration of the absent individual PAGA claims, and request that the trial court stay the pending representative action pending the completion of that arbitration.
Ciara: Exactly, and that's why the Parra Rodriguez ruling was so meaningful. Since that decision early this year, the California Supreme Court has granted review of both rulings. In Leeper, the Supreme Court has limited the review to two questions: (i) does every PAGA action necessarily include both individual and non-individual PAGA claims, regardless of whether the complaint specifically alleges individual claims; and (ii) can a plaintiff choose to bring only a non-individual PAGA action? After granting review in Parra Rodriguez, the Supreme Court noted that any ruling in this case will be deferred pending "consideration and disposition of related issues" in Leeper.
Jennifer: Well, we will be sure to keep our listeners updated on those upcoming California Supreme Court rulings, to resolve that split among the Courts of Appeal on whether these "headless" PAGA actions are permissible and can continue. Thank you so much for your insights and analysis, Ciara, and thank you to our listeners for tuning in.
Ciara: Thanks so much, Jen.
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