California Supreme Court Holds PAGA Plaintiff Lacks Standing To Intervene in Another Plaintiff's Separate PAGA Action
In a long-awaited decision, the California Supreme Court resolved a split in appellate authority in Turrieta v. Lyft, Inc., holding that a plaintiff who files a claim under the state's Private Attorneys General Act (PAGA) does not have standing to intervene in a separate PAGA action filed by another plaintiff against the same defendant. Following on the heels of recent PAGA legislative reform, Turrieta is another positive development in the PAGA landscape, foreclosing a procedure that some PAGA plaintiffs have tried to use to disrupt settlements reached in other actions.
Procedural Background
In 2018, three drivers for ride-share company Lyft, Inc. (Lyft) filed separate actions seeking civil penalties under PAGA, asserting claims for unpaid minimum and overtime wages and failure to reimburse business expenses, based on their theory that Lyft misclassified drivers as independent contractors. In early 2019, one of the drivers (Turrieta) reached an agreement with Lyft to settle her action for $15 million. Before the settlement approval hearing, the two other drivers (Olson and Seifu) moved to intervene in Turrieta's action for the purpose of objecting to the settlement, which — if approved — would have the effect of eliminating their cases. The trial court denied the motions, approved the settlement and entered judgment, and later denied motions by Olson and Seifu seeking to vacate the judgment.
In 2021, the Court of Appeal affirmed the trial court's denial of the intervention motions and found that Olson and Seifu lacked standing to move to vacate the judgment or to challenge the judgment on appeal. The California Supreme Court granted Olson's petition for review.
California Supreme Court Ruling
In a 5-2 split decision, the California Supreme Court affirmed the appellate court's ruling and found that a PAGA plaintiff's status as the state's proxy does not confer the right to intervene or move to vacate the judgment in an overlapping PAGA action brought by another plaintiff, or the ability to require a court to receive and consider objections to a proposed settlement of that action.
The Supreme Court examined these issues in light of PAGA's statutory language and its broader statutory scheme, including PAGA's legislative history, evolution, and intent. The court observed that PAGA's plain language contains no language expressly referencing the right to intervene, object, or move to vacate a judgment entered in a separate PAGA action asserting overlapping claims. It would be inconsistent with PAGA's statutory scheme as a whole, the court determined, to find that such rights are necessarily implied in a PAGA plaintiff's authority to commence and prosecute a PAGA action on the state's behalf.
The majority rejected arguments by the would-be intervenors and the dissent that allowing intervention is necessary to prevent PAGA plaintiffs from agreeing to settle a case on unreasonable terms. The 2016 amendments to PAGA require court approval for all PAGA settlements and notice to the Labor & Workforce Development Agency (LWDA), and they facilitate and increase the LWDA's oversight and involvement in PAGA actions. PAGA's legislative history, the court observed, does not support the arguments that "courts are not adequately equipped to ' "sniff out bad deals" ' and 'assess[] [the] fairness' " of proposed settlements, that the LWDA's financial resources are insufficient to fully perform its oversight functions, or that joint oversight by the courts and the LWDA — as the PAGA statute expressly prescribes — is inadequate.
The court observed that allowing PAGA plaintiffs to intervene in PAGA actions brought by other plaintiffs would make PAGA litigation more difficult and more complex, creating situations where multiple proxies represented by multiple sets of lawyers all purporting to represent a single real party in interest — the state — disagree on how to proceed and seek to take over and control actions brought by the others. The court noted that intervening plaintiffs and their counsel have personal financial interests in disrupting a PAGA plaintiff's settlement in an overlapping action, while a neutral judge does not. The court specifically reserved the question of whether the LWDA has the ability to intervene, move to vacate a judgment, or require a court to receive and consider settlement objections.
The Supreme Court's ruling in Turrieta provides welcome clarity and reassurance that parties who negotiate good faith resolutions of PAGA actions will not be at risk of having their settlements derailed by a disappointed PAGA plaintiff's attempted intervention.
DWT will continue to monitor all PAGA-related issues and provide updates as developments arise. In the meantime, if you have any questions about this ruling or your company's compliance with California's laws, please feel free to contact a member of DWT's employment services group.