SANTA ANA, Calif. (Legal Newsline) - A lobbying group for California businesses lost a constitutional challenge to a state labor law that allows citizens to act as private attorneys general, as an appeals court rejected claims the law violates the separation of powers.
The U.S. Supreme Court recently trimmed the reach of the Private Attorneys General Act by allowing companies to enforce agreements requiring individual employees to arbitrate wage and hour disputes instead of joining lawsuits on behalf of groups of workers.
The California Business & Industrial Alliance sought a court order blocking enforcement of PAGA, which offers rich bonuses to people who win verdicts against companies over violations of state labor laws. The industry group argued PAGA violates the Fifth and 14th amendment rights to due process as well as California’s separation of powers doctrine, by giving private actors the power to enforce labor laws without any oversight by government officials.
A trial court dismissed the case and California’s Fourth Appellate District, Division Three, in a June 30 opinion, affirmed the decision. The California Supreme Court had already rejected attacks on the law based on the separation of powers argument, the appeals court ruled, and so there was no reason to revisit the question.
“PAGA is not meaningfully distinguishable from comparable qui tam statutes outside the employment context, including the California False Claims Act the Safe Drinking Water and Toxic Enforcement Act of 1986, colloquially known as Proposition 65 and many others,” the court ruled. “Plaintiff and its supporting amici fail to produce even one single case in which any of these many statutes has been held to violate California’s separation of powers doctrine.”
The industry plaintiffs argued the law allows the executive branch to evade its responsibility to exercise control over prosecutions and control of settlement discussions. The law generates millions of dollars a year in bounties and legal fees for litigants, some of them associated with labor unions, and companies complain they are subject to shakedown lawsuits over hyper-technical violations of wage-and-hour rules.
The appeals court rejected the argument, saying PAGA plaintiffs, like plaintiffs in whistleblower cases under other statutes, must notify the state of their intent to sue so it can intervene if it wants.
The Supreme Court, in its June 15 decision Viking River Cruises v. Moriana, invalidated a California law prohibiting waivers requiring individual arbitration of labor claims under PAGA. The 8-1 decision upheld California’s power to prohibit wholesale waivers of the right to sue under PAGA. Justice Sonia Sotomayor, in a concurrence, suggested the decision gives California lawmakers the power to amend the law to allow class actions under PAGA.