Wednesday, December 15, 2010

Northern District Holds CAFA Not Implicated in PAGA Representative Action: Sample v. Big Lots Stores, Inc.

On November 29, 2010, Northern District Court judge, Saundra Brown Armstrong, granted plaintiff’s motion to remand a PAGA action (predicated on alleged overtime, meal and rest period violations) on the grounds that a PAGA representative action does not trigger CAFA jurisdiction as a matter of law. See Sample v. Big Lots Stores, Inc., 2010 U.S. Dist. LEXIS 131130 (N.D. Cal. Nov. 29, 2010).

In evaluating the defendant’s removal under CAFA, the Court explained that “[t]he salient issue presented is whether a representative enforcement action under PAGA is a ‘class action’ subject to removal under CAFA.” See id., at 6. Relying largely on the California Supreme Court's decision in Arias v. Super. Ct., 46 Cal.4th 969 (2009) – which concluded that a PAGA action is distinct from a class action, and therefore, not subject to the requirements necessary maintain a class action – the Court held that it was not. See id., at 6-8. As reasoned by the Court, Arias’ explanation of PAGA as fundamentally a law enforcement action to recover penalties on behalf of the State removes PAGA claims from the reach of CAFA:
While it is true that Arias did not address CAFA per se, the California Supreme Court's decision nonetheless informs the Court's analysis in this case. C.f., Murtishaw v. Woodford, 255 F.3d 926, 964 (9th Cir. 2001) (noting that the California Supreme Court's interpretations of California law are binding on federal courts). On its face, CAFA applies only to state statutes or procedural rules that are "similar" to a federal class action brought under Rule 23. While Arias may not have directly involved CAFA, it clarifies that a PAGA claim is fundamentally distinct in both purpose and effect from a class action. Arias, 46 Cal.4th at 986. "Unlike a class action seeking damages or injunctive relief for injured employees, the purpose of PAGA is to incentivize private parties to recover civil penalties for the government that otherwise may not have been assessed and collected by overburdened state enforcement agencies." Ochoa-Hernandez v. Cjaders Foods, Inc., No. C 08-2073 MHP, 2010 U.S. Dist. LEXIS 32774, 2010 WL 1340777, at *4 (N.D. Cal. April 2, 2010) (citing Arias, 46 Cal.4th at 986) (Patel, J.). As such, Arias instructs that "PAGA claims are law enforcement actions, not class actions." Mendez v. Tween Brands, Inc., No. 2:10-CV-00072-MCE-DAD, 2010 U.S. Dist. LEXIS 66454, 2010 WL 2650571, 4 (E.D. Cal., July 1, 2010) (emphasis added).
See id., at 8-9.

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