SAN FRANCISCO (Legal Newsline) - A California appeals court threw out a jury’s award of millions of dollars in penalties against a state university for violating state labor laws but taxpayers will still be stuck with a $7.8 million bill to pay the plaintiff’s lawyers.
While the California Private Attorneys General Act applies to state universities, the First Appellate Division ruled, the defendant wasn’t a “person” as defined under the part of the law that actually provides for financial penalties. The lawyers who brought the case still should be rewarded for bringing the plaintiff’s safety concerns to light, the appeals court concluded, however.
Thomas Sargent, a technician at Sonoma State University, sued the school in 2014 after he claims his manager retaliated against him for reporting safety violations including an incident during which employees used a leaf blower to clean an area contaminated with lead paint dust. Sargent’s duties also included asbestos management and he collected a dust sample from another building and sent it off for testing, which he said showed dangerous levels of contamination.
Sargent had a troubled relationship with his supervisors and one human-resources manager testified at trial he was “abusive and mean spirited and counterproductive, and insubordinate.” Sargent said he suffered retaliation after reporting what he considered to be safety violations, including being forced to account for his time in 15-minute increments and being ordered not to discuss safety issues with his fellow employees. He quit in 2015, he says, because he “literally couldn’t take it anymore.”
After a 2017 trial a jury awarded Sargent $272,00 in past and future economic damages, but he elected to be reinstated instead of taking the money. The jury also assessed $2.9 million in penalties under PAGA, which gives employees and their lawyers a financial incentive to sue over violations of California labor laws by awarding plaintiffs 25% of any penalties and paying their lawyers’ fees.
The court awarded Sargent’s lawyers $7.8 million fees, based on a “lodestar” amount of $3.9 million, or about $450 an hour, tripled to reflect the risk and difficulty of the case.
The California State University system appealed the verdict, saying it isn’t subject to PAGA because of a law that exempts the university system from all laws affecting state agencies that were passed after 1997. PAGA was enacted in 2004.
The appeals court disagreed. In the March 5 decision, it held that the law protecting the state university system didn’t reach as far as PAGA. But PAGA’s penalty provisions refer to violations by a “person,” the court went on, which can include corporations and associations but not taxpayer-funded public entities.
That meant the $2.9 million in penalties the jury ordered Sonoma State to pay were invalid. Since Sargent couldn’t claim to have been personally injured by any of the violations that provide for penalties and other parts of the law don’t award penalties, the court concluded, the PAGA damages must be thrown out.
Not so his attorneys’ fees, though. Citing “public policy” to encourage lawyers to bring challenging cases like Sargent’s, the appeals court said, the award of fees was justified.
“Appellants focus on the fact the award will fall on the taxpayers and be paid to private attorneys,” the court concluded. “While we agree that courts should not thoughtlessly impose a fee multiplier against a public entity, the court here did no such thing.”