Case Name: Paul Hancock v. Magnolia Hi-Fi, LLC, et al.
Case No.: 17-CV-315727

This is an action under the Private Attorneys General Act (“PAGA”) by employees of defendants Magnolia Hi-Fi, LLC and Best Buy Stores, L.P. Before the Court is defendants’ motion for summary judgment, which plaintiff opposes.

I. Allegations of the Operative Complaint

According to the operative Second Amended Complaint (“SAC”), plaintiff was hired by defendants to work as a Systems Designer in August 2015. (SAC, ¶ 7.) He was employed by defendants until August 2017. (Ibid.) Plaintiff alleges that he and other employees received wage statements that failed “to identify the correct rates of pay and number of hours worked for incentive overtime wages, … including but not limited to Reg Comm OT and Spiffs OT wage payments.” (Id. at ¶ 16.)

Based on these allegations, plaintiff asserts a single claim under PAGA.

II. Request for Judicial Notice

Defendants’ request for judicial notice of filings in this action, which is unopposed, is GRANTED. (Evid. Code, § 452, subd. (d).)

III. Legal Standard for a Defendant Seeking Summary Judgment

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; see also Code Civ. Proc., § 437c, subd. (p)(2).)

This standard provides for a shifting burden of production; that is, the burden to make a prima facie showing of evidence sufficient to support the position of the party in question. (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851.) The burden of persuasion remains with the moving party and is shaped by the ultimate burden of proof at trial. (Ibid.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Ibid.) The opposing party must produce substantial responsive evidence that would support such a finding; evidence that gives rise to no more than speculation is insufficient. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163.)

The traditional method for a defendant to meet its burden on summary judgment is by “negat[ing] a necessary element of the plaintiff’s case” or establishing a defense with its own evidence. (Guz v. Bechtel Nat’l, Inc. (2000) 24 Cal.4th 317, 334.) The defendant may also demonstrate that an essential element of plaintiff’s claim cannot be established by “present[ing] evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence-as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 855.)

On summary judgment, “the moving party’s declarations must be strictly construed and the opposing party’s declaration liberally construed.” (Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717; see also Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64 [the evidence is viewed in the light most favorable to the opposing plaintiff; the court must “liberally construe plaintiff’s evidentiary submissions and strictly scrutinize defendant’s own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiff’s favor”].) Summary judgment may not be granted by the court based on inferences reasonably deducible from the papers submitted, if such inferences are contradicted by other inferences which raise a triable issue of fact. (Hepp v. Lockheed-California Co., supra, 86 Cal.App.3d at pp. 717-718.)

IV. Analysis

Defendants move for summary judgment on the grounds that (1) plaintiff’s notices to the Labor and Workforce Development Agency (“LWDA”) were deficient and plaintiff has thus failed to satisfy PAGA’s administrative exhaustion requirement and (2) plaintiff lacks standing to pursue a PAGA claim because he dismissed his underlying Labor Code section 226 claim and the statute of limitations on that claim has expired.

The facts upon which defendants’ motion is based are undisputed. Plaintiff received his final wage statement on August 24, 2017. (Separate Statement of Undisputed Material Facts ISO Mot., nos. 2-3.) He sent an initial notice to the LWDA of his PAGA claim on September 8, 2017. (Id., no. 4.) He sent an amended PAGA notice on March 7, 2018. (Id., no. 6.) The contents of these notices are not disputed. Meanwhile, also in March 2018, plaintiff dismissed his individual and putative class claims under Labor Code section 226 in light of an arbitration agreement that covered those claims. (Id., no. 9.)

A. LWDA Notices

“Before bringing a PAGA claim, a plaintiff must comply with administrative procedures outlined in section 2699.3, requiring notice to the LWDA and allowing the employer an opportunity to cure” certain violations. (Lopez v. Friant & Associates, LLC (2017) 15 Cal.App.5th 773, 785.) The notice requirement was added to PAGA to improve the statute “by allowing the [LWDA] to act first on more ‘serious’ violations such as wage and hour violations and give employers an opportunity to cure less serious violations.” (Caliber Bodyworks, Inc. v. Superior Court (Herrera) (2005) 134 Cal.App.4th 365, 375; see also Williams v. Superior Court (Marshalls of CA, LLC) (2017) 3 Cal.5th 531, 545-546 [“The evident purpose of the notice requirement is to afford the relevant state agency, … the opportunity to decide whether to allocate scarce resources to an investigation, a decision better made with knowledge of the allegations an aggrieved employee is making and any basis for those allegations.”; the requirement also allows the employer to submit a response to the agency “again thereby promoting an informed agency decision as to whether to allocate resources toward an investigation”].) Consistent with these goals, the notice must identify “the specific provisions of [the Labor Code] alleged to have been violated,” including the “facts and theories” to support the alleged violation. (Williams v. Superior Court, supra, 3 Cal.5th at p. 545, quoting Lab. Code, § 2699.3.) Nothing in the statue indicates the “facts and theories” provided in support of “alleged” violations “must satisfy a particular threshold of [evidentiary] weightiness, beyond the requirements of nonfrivolousness generally applicable to any civil filing.” (Ibid.)

While section 2699.3 requires notice of the “specific provisions” of the Labor Code alleged to have been violated and the “facts and theories” supporting those claims, it does not indicate that any particular details regarding the group of aggrieved employees the plaintiff seeks to represent be included in the notice. However, Khan v. Dunn-Edwards Corp. (2018) 19 Cal.App.5th 804 recently held that a PAGA notice must, at a minimum, indicate that the plaintiff does seek to represent aggrieved employees other than him- or herself. Khan held that the following notice was inadequate in this regard:

“This correspondence shall constitute written notice under Labor Code § 2699.3 of my claims against my former employer, Dunn–Edwards Corporation (‘Dunn Edwards’ or ‘Defendant’). Specifically, I allege that Dunn Edwards:

“1. Violated Labor Code § 226(a) by failing to identify all of the required information on my final paycheck stub/itemized wage statement that I received, including but not limited to the pay period begin date, the correct pay date, and the total hours worked.

“2. Violated Labor Code §§ 201–203 by failing to pay all of my earned wages immediately upon termination and failure to pay waiting time penalties as a result thereof.” (Italics added.)

(Khan v. Dunn-Edwards Corp., supra, 19 Cal.App.5th at p. 807.) The opinion emphasized that “Khan admitted that his notice ‘makes no mention of any other Labor Code violations and does not reference any other current or former employee besides Khan.’ (Italics added.)” (Ibid.) It briefly reasoned that because the plaintiff’s notice expressly applied only to him,

it failed to give the Labor and Workforce Development Agency an adequate opportunity to decide whether to allocate resources to investigate Khan’s representative action. Because Khan referred only to himself, the agency may have determined that no investigation was warranted. Additionally, the notice failed to provide Dunn–Edwards with an adequate opportunity to respond to the agency since the notice suggested only an individual violation.

(Khan v. Dunn-Edwards Corp., supra, 19 Cal.App.5th at p. 809.)

Here, there does not appear to be any dispute that the first notice plaintiff sent to the LWDA, dated September 8, 2017, was effectively identical to the notice deemed inadequate by Khan, as it refers only to plaintiff’s individual claim and does not reference any other employee. However, on March 7, 2018, plaintiff sent an amended notice alleging that defendants failed to provide “me and other employees with accurate and complete itemized wage statements.” “Specifically, the Company violated section 226(a) [by] failing to identify the correct rates of pay and number of hours worked for incentive overtime wages, … including, but not limited to, Reg Comm OT and Spiffs OT wage payments.”

Defendant contends that this notice was also inadequate, citing Gunn v. Family Dollar Stores, Inc. (S.D. Cal., Dec. 2, 2016, No. 3:14-CV-1916-GPC-BGS) 2016 WL 7030363 for the proposition that a PAGA notice must “expressly identify the group of allegedly ‘aggrieve employees’ the individual seeks to represent” and/or must “identify [plaintiff’s] job title.” However, while Gunn discussed these aspects of the PAGA notice before it, it did not expressly hold that the notice must provide a certain level of detail regarding the group of allegedly aggrieved employees; rather, it held more generally that “[t]he notice provided in Plaintiff’s letter parrots” the language of the Labor Code provision alleged to have been violated “without providing any factual details or any semblance of a theory of liability.” (Gunn v. Family Dollar Stores, Inc., supra, 2016 WL 7030363, at *4.) In any event, Gunn does not bind this Court, and to the extent it suggests that a PAGA notice must set forth a specific definition of the group of employees aggrieved by the violation at issue, the Court declines to follow it. The PAGA statute itself does not contain such a requirement, and Khan requires only that a notice be clear that more than an individual violation is asserted.

Here, plaintiff’s amended notice describes the “facts and theories” supporting his claim in more detail than a bare citation to the Labor Code provision alleged to have been violated would suggest, and the level of “seriousness” of the alleged violations is deducible from the description provided. It is clear that defendants’ practice of failing to identify the rates of pay and number of hours worked for “Reg Comm OT” and “Spiffs OT” payments is the practice giving rise to plaintiff’s claim; further investigation may be required to determine exactly which employees received such payments. This fulfills the statue’s purpose of allowing the LWDA the opportunity to decide whether to investigate plaintiff’s claim. (See Stockett v. Association of California Water Agencies Joint Powers Ins. Authority (2004) 34 Cal.4th 441, 447-449 [in construing similar notice requirement under the Tort Claims Act, noting that “[a]s the purpose of the claim is to give the government entity notice sufficient for it to investigate and evaluate the claim, not to eliminate meritorious actions, the claims statute should not be applied to snare the unwary where its purpose has been satisfied”], internal citations and quotations omitted.)

The amended PAGA notice is consequently adequate, and defendants’ motion on this ground must fail.

B. Standing

Defendants also contend that plaintiff lacks standing to pursue a PAGA claim because he dismissed his underlying Labor Code claim and the statute of limitations on the underlying claim has since expired. In support of this argument, they cite Cabrera v. CVS Rx Services, Inc. (N.D. Cal., Sept. 25, 2018, No. C 17-05803 WHA) 2018 WL 4585678. Cabrera relied on Kim v. Reins Internat. California, Inc. (2017) 18 Cal.App.5th 1052, review granted Mar. 28, 2018, No. S246911, 413 P.3d 1132, to hold that plaintiffs who abandoned their individual Labor Code claims to avoid arbitration waived these claims and consequently lost their standing to serve as PAGA representatives.

As an initial matter, because the Supreme Court of California has granted review in Kim, that opinion has only persuasive value and does not bind the Court. (See Cal. Rules of Court, rule 8.1115(e) [unless otherwise ordered by the Supreme Court, pending review of a published opinion of a Court of Appeal, the opinion “has no binding or precedential effect, and may be cited for potentially persuasive value only”].) Cabrera, an unpublished federal opinion, does not bind the Court, either. The Court thus considers these opinions for their persuasive value only.

With regard to standing, section 2699, subdivision (c) of the PAGA statute defines an “aggrieved employee” who may bring a PAGA action as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” In Huff v. Securitas Security Services USA, Inc. (2018) 23 Cal.App.5th 745, the Court of Appeal for the Sixth District rejected the argument that a PAGA plaintiff must have suffered each of the violations alleged in his or her complaint to have standing, explaining that it interpreted PAGA’s standing provision by its terms “to mean that any Labor Code penalties recoverable by state authorities may be recovered in a PAGA action by a person who was employed by the alleged violator and affected by at least one of the violations alleged in the complaint.” (At p. 754 [“Indeed, we cannot readily derive any meaning other than that from the plain statutory language.”].) The court explained that PAGA is akin to a qui tam statute and consequently has nontraditional standing requirements:

As observed by the California Supreme Court in Iskanian (citing the Federal False Claims Act as an example), traditional standing requirements do not necessarily apply to qui tam actions since the plaintiff is acting on behalf of the government: “The qui tam plaintiff under the federal False Claims Act has standing in federal court under article III of the United States Constitution, even though the plaintiff has suffered no injury in fact, because that statute ‘can reasonably be regarded as effecting a partial assignment of the Government’s damages claim. [Citation.]’ ” So in this context, not being injured by a particular statutory violation presents no bar to a plaintiff pursuing penalties for that violation. Although a PAGA suit differs from a pure qui tam action (such as under the Federal False Claims Act) in that PAGA’s standing requirement prevents the general public from bringing an action, the even more stringent standing requirement urged by Securitas is not found in the statute. For PAGA standing a plaintiff need only have been employed by the violator and affected by “one or more” of the alleged violations. That requirement strikes a reasonable balance, requiring a plaintiff to have some connection to the employer’s unlawful practices, while also advancing the state’s interest in vigorous enforcement.

(Huff v. Securitas Security Services USA, Inc., supra, 23 Cal.App.5th at p. 757, internal citations omitted.)

Consistent with Huff, the Court interprets PAGA’s standing provision to require only that a plaintiff (1) was employed by the alleged violator and (2) was affected by at least one of the violations alleged in the complaint. Plaintiff meets those requirements here.

Unlike Huff, Kim imposed additional standing requirements not found in the PAGA statute itself and failed to recognize that “[t]he traditional standing analysis … does not apply in a qui tam action.” (Huff v. Securitas Security Services USA, Inc., supra, 23 Cal.App.5th at p. 760.) Departing from the statutory language, Kim held that an aggrieved employee who settled and dismissed his underlying individual Labor Code claims lost standing to pursue a PAGA action based on the same Labor Code violations, reasoning that

[t]he legislative history makes clear that the PAGA was not intended to allow an action to be prosecuted by any person who did not have a grievance against his or her employer for Labor Code violations. Here, Kim initially asserted that he had been harmed by Reins’s alleged violations of the Labor Code. But by accepting the settlement and dismissing his individual claims against Reins with prejudice, Kim essentially acknowledged that he no longer maintained any viable Labor Code-based claims against Reins. As a result, following the dismissal with prejudice Kim no longer met the definition of “aggrieved employee” under PAGA.

(Kim v. Reins Internat. California, Inc., supra,18 Cal.App.5th at pp. 1058-1059.)

The Court finds this reasoning unpersuasive, at least when applied beyond the specific factual context in which Kim was decided. (See Kim v. Reins Internat. California, Inc., supra, 18 Cal.App.5th at p. 1059 [“We note that our holding is confined to the specific circumstances at issue in this case: Kim asserted both individual Labor Code claims and a PAGA claim in the same lawsuit, and he voluntarily chose to settle and dismiss his individual Labor Code claims with prejudice.”].) Nothing in the PAGA statute suggests that for a plaintiff to serve as a PAGA representative, he or she must simultaneously maintain standing to pursue individual claims under the Labor Code, even after his or her PAGA claim has been filed. PAGA actions are representative in nature and PAGA does not incorporate the standing requirements of a direct action under the Labor Code, but has its own, distinct standing requirements. Indeed, as held by Huff, a plaintiff who never had standing to pursue individual Labor Code claims based on certain alleged violations may nonetheless serve as a PAGA representative as to those violations, so long as he or she suffered one other violation at the hands of the defendant employer. The Legislature concluded that this was a sufficient connection to the employer’s unlawful practices to avoid the risk of a flood of lawsuits by “members of the general public” who “suffered no harm from the alleged wrongful act.” (See Kim v. Reins Internat. California, Inc., supra, 18 Cal.App.5th at p. 1058 [discussing legislative history materials reflecting these concerns].) The Court will not second-guess this assessment.

Defendants’ motion on this ground must fail as well.

V. Conclusion and Order

For the reasons discussed above, defendants’ motion for summary judgment is DENIED.

The Court will prepare the order.