California Business & Industrial Alliance v. Becerra ( 2022 )

Filed 6/30/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
CALIFORNIA BUSINESS &
INDUSTRIAL ALLIANCE,
G059561
Plaintiff and Appellant,
(Super. Ct. No. 30-2018-01035180)
v.
OPINION
XAVIER BECERRA, as Attorney General,
etc.,
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County, Peter J.
Wilson, Judge. Affirmed.
Epstein Becker & Green, Richard J. Frey, Robert H. Pepple, David M.
Prager, Brock J. Seraphin, Devin L. Lindsay; Nixon Peabody and Richard J. Frey for
Plaintiff and Appellant.
Eimer Stahl, Robert E. Dunn, John D Tripoli, and Collin J. Vierra for
Chamber of Commerce of the United States of America as Amicus Curiae on behalf of
Plaintiff and Appellant.
LevatoLaw and Ronald C. Cohen for California Business Roundtable as
Amicus Curiae on behalf of Plaintiff and Appellant.
Rob Bonta, Attorney General, Thomas S. Patterson, Assistant Attorney
General, Paul Stein and Aaron Jones, Deputy Attorneys General, for Defendant and
Respondent.
* * *
Plaintiff California Business & Industrial Alliance appeals from a judgment
of dismissal entered after the trial court sustained the demurrer of defendant Xavier
Becerra, in his official capacity as Attorney General of the State of California, without
leave to amend. Plaintiff, a lobbying group for small and midsized businesses in
California, filed this action seeking a judicial declaration that the Labor Code Private
Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.), is unconstitutional
under various theories and an injunction forbidding defendant from implementing or
enforcing PAGA. PAGA allows California employees to sue their employers and pursue
civil penalties on behalf of the state for violations relating not only to themselves, but
also to other California employees of the same employer.
On appeal, plaintiff asserts a single theory: that PAGA violates
California’s separation of powers doctrine by allowing private citizens to seek civil
penalties on the state’s behalf without the executive branch exercising sufficient
prosecutorial discretion. We reject this theory for two reasons. First, our Supreme Court
held in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348(Iskanian), that “PAGA does not violate the principle of separation of powers under the
California Constitution.” (Id. at p. 360.) Despite plaintiff’s allegation in its complaint
that Iskanian is “incorrect,” and its arguments before us that this statement is either
“dictum” or is limited to a different type of separation of powers challenge, Iskanian is
directly on point and controlling, and we have no authority to defy its mandate.
2
Second, even if Iskanian did not require this result, we would reach it
anyway through application of California’s preexisting separation of powers doctrine.
PAGA is not meaningfully distinguishable from comparable qui tam statutes outside the
employment context, including the California False Claims Act (Gov. Code, § 12650 et
seq.) the Insurance Frauds Prevention Act (Ins. Code, § 1871 et seq.) the Safe Drinking
Water and Toxic Enforcement Act of 1986, colloquially known as Proposition 65 (Health
& Saf. Code § 25249.5 et seq.) and many others. 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. Nor do they identify any sufficiently
significant distinctions between those statutes and PAGA, or any other compelling reason
for us to break new ground.
Accordingly, we affirm the judgment of the trial court.
FACTS AND PROCEDURAL HISTORY
Plaintiff California Business & Industrial Alliance is a lobbying group,
organized in Washington, D.C., which represents small and midsized businesses in
California. While plaintiff’s general purpose is promoting the interests of these
businesses, its specific animating purpose is “accomplishing the repeal or reform of
PAGA.” In service of that goal, plaintiff sued defendant Xavier Becerra, then
California’s Attorney General, in his official capacity, seeking declaratory and injunctive
relief. Plaintiff sought a judicial declaration that PAGA was unconstitutional and
injunctive relief barring defendant from implementing or enforcing PAGA.
1
Plaintiff’s first amended complaint (the complaint) contains extensive
allegations regarding perceived defects in PAGA, both legal and practical. The
1
Defendant demurred to plaintiff’s original complaint, which resulted in
the filing of the first amended complaint.
3
complaint begins with a recitation of the background legal principles and sources of
authority. In pure legal terms, plaintiff alleges PAGA violates the Eighth Amendment’s
prohibition against excessive fines, plaintiff’s members’ Fifth and Fourteenth
Amendment rights to due process, California’s separation of powers doctrine, and the
Fourteenth Amendment’s guarantee of equal protection. On a practical level, plaintiff
contends the various provisions of the California Labor Code that are enforceable through
PAGA are “unclear, cumbersome, counterintuitive, impossible to follow, or all of the
foregoing.” As an example, plaintiff complains that compliance with California’s meal
period requirements is “impracticable,” “preposterous,” and “hopeless.” Plaintiff also
alleges California’s wage statement requirements have “spawned countless lawsuits
alleging hyper-technical violations that have required employers to incur significant legal
expenses in their defense as well as large settlements and damage awards in numerous
cases.” Plaintiff summarizes California’s labor laws as “a daunting and confusing web of
obligations for employers, robust and generous remedies for employees, and a framework
that encourages vigorous enforcement through private rights of action.”
Plaintiff’s complaint next describes the history of PAGA, including certain
portions of its legislative history, the coalition of “labor union and applicant attorney
special interest groups” that supported it, and the identity of various opponents of the
2
bill. Plaintiff then sets forth the nuts and bolts of PAGA, describing the various
categories of violations that can be asserted through PAGA, the resulting civil penalties,
various procedural differences between PAGA and class action lawsuits, and the rules for
providing notice of a PAGA action to the state. Plaintiff’s complaint also discusses
various cases interpreting and applying PAGA, including a particularly lengthy
discussion of the Supreme Court’s decision in Iskanian. Lastly, before setting forth its
causes of action, plaintiff complains at length about practical consequences of PAGA that
2
In this section, plaintiff also discusses a subsequent amendment to PAGA
which is irrelevant to the issues on this appeal.
4
plaintiff deems unfair, including a hypothetical calculation of very high civil penalties
resulting from a PAGA enforcement action brought based upon a very modest
underpayment of wages, various allegations of unethical or undesirable tactics by
plaintiffs’ attorneys in PAGA actions, and charts naming law firms which have
frequently filed PAGA notices with the state and listing various nonprofits, charities,
hospitals, and similar entities which have been “targeted” by PAGA.
The complaint contains five causes of action, only one of which is relevant
here: plaintiff’s cause of action for violation of California’s separation of powers
doctrine. In connection with this cause of action, plaintiff alleges PAGA’s provisions “as
a whole, viewed from a realistic and practical perspective, operate to arrogate, defeat,
and/or materially impair, the exercise of the core powers and/or constitutional functions”
of the executive and judicial branches of California’s state government. Plaintiff also
specifically alleges that this challenge to PAGA is not barred by Iskanian for various
reasons.
Defendant demurred, arguing three of plaintiff’s five causes of action
(relating to plaintiff’s separation of powers and due process arguments) fail as a matter of
law. The trial court sustained the demurrer without leave to amend, concluding
plaintiff’s separation of powers claim was barred by Iskanian and plaintiff’s due process
claims failed in view of the rights of any PAGA defendant to notice and a hearing.
Plaintiff’s final remaining causes of action (relating to issues irrelevant to this appeal)
were disposed of via summary judgment. All of plaintiff’s claims having thus been
defeated, the trial court entered judgment for defendant. Defendant timely appealed.
DISCUSSION
On appeal, plaintiff challenges only the trial court’s ruling on defendant’s
demurrer to plaintiff’s cause of action relating to California’s separation of powers
doctrine, and only as to the executive branch, not the judicial branch. Further, plaintiff
5
argues solely that the demurrer should not have been sustained, and does not contend
leave to amend should have been granted. This limits the scope of our analysis to a
single issue of law: whether PAGA violates California’s separation of powers doctrine
by depriving the executive branch of control over enforcement of California’s labor laws.
We conclude the Supreme Court has already decided this issue against plaintiff’s position
in Iskanian, supra, 59 Cal.4th 348. Moreover, even if Iskanian were not applicable, we
would nevertheless conclude PAGA does not violate California’s separation of powers
doctrine.
1. PAGA’s History and Structure
In 2001, the California Assembly Committee on Labor and Employment
held hearings regarding the effectiveness of the enforcement of wage and hour laws by
the Department of Industrial Relations (DIR) in enforcing California’s wage and hour
laws. (Assem. Com. on Labor and Employment, Analysis of Sen. Bill No. 796 (Reg.
Sess. 2003-2004) as amended July 2, 2003, p. 3.) The committee found that, despite the
DIR’s status as the single largest state labor law enforcement organization in the United
States, it was failing to achieve effective enforcement of California’s labor laws. (Ibid.)
“Estimates of the size [of] California’s ‘underground economy’—businesses operating
outside the state’s tax and licensing requirements—ranged from 60 to 140 billion dollars
a year, representing a tax loss to the state of three to six billion dollars annually. Further,
a U.S. Department of Labor study of the garment industry in Los Angeles, which
employs over 100,000 workers, estimated the existence of over 33,000 serious and
ongoing wage violations by the city’s garment industry employers, but the DIR was
issuing fewer than 100 wage citations per year for all industries throughout the state.”
(Ibid.)
Animated by these findings, the Legislature enacted PAGA, which allowed
current and former employees to bring actions against their employers for civil penalties
6
on behalf of the state, effectively “deputizing employees to prosecute Labor Code
violations on the state’s behalf.” (Iskanian, supra, 59 Cal.4th at p. 360.) The “‘statute
requires the employee to give written notice of the alleged Labor Code violation to both
the employer and the Labor and Workforce Development Agency, and the notice must
describe facts and theories supporting the violation.’” (Id. at p. 380.) The agency has 60
days to decide whether to investigate. (Lab. Code, § 2699.3, subd. (a)(2)(A).) If the
agency fails to respond to the notice or declines to investigate, the employee may
immediately commence a civil action. (Ibid.) If the agency chooses to investigate, it
must decide whether to issue a citation within 120 days. (Id., subd. (a)(2)(B).) If the
agency decides not to issue a citation or provides no notice of its decision within the time
period, the employee may immediately commence a civil action. (Ibid.) Having
commenced the action, if the employee proves a violation of the Labor Code, the
employer must pay a civil penalty for each employee, and each pay period affected by the
violation. (Lab. Code, § 2699, subd. (f).) The penalty is divided between the affected
employees, who receive 25 percent of the penalty amount, and the state, which receives
75 percent. (Id., subd. (i).)
PAGA actions are qui tam actions. A qui tam action is “‘[a]n action
brought under a statute that allows a private person to sue for a penalty, part of which the
government or some specified public institution will receive.’” (People ex rel. Allstate
Ins. Co. v. Weitzman (2003) 107 Cal.App.4th 534, 538 [quoting Black’s Law Dict. (7th
ed.1999) p. 1262, col. 1].) Qui tam actions predate the founding of the United States by a
considerable margin, originating in England “around the end of the 13th century, when
private individuals who had suffered injury began bringing actions in the royal courts on
both their own and the Crown’s behalf.” (Vermont Agency of Nat. Resources v. U.S.
(2000) 529 U.S. 765, 774.)
Perhaps the most well-known qui tam statute is the federal False Claims
Act (31 U.S.C. § 3729 et seq.), which “was originally adopted following a series of
7
sensational congressional investigations into the sale of provisions and munitions to the
War Department” during the American Civil War. (United States. v. McNinch (1958)
356 U.S. 595, 599.) California has its own False Claims Act, which, like the federal
False Claims Act, allows qui tam plaintiffs to sue government contractors who submit
false claims to the government for payment. (Gov. Code, § 12650 et seq.) In addition to
PAGA and the False Claims Act, California also has numerous other qui tam statutes,
including the Insurance Frauds Prevention Act (Ins. Code, § 1871 et seq.), Proposition
65, and many others.
2. Iskanian Bars Plaintiff’s Claim
In Iskanian, an employee sued his employer for various violations of the
Labor Code. (Iskanian, supra, 59 Cal.4th at p. 361.) The employee sought to bring a
class action on behalf of similarly situated employees, and to assert a qui tam action
under PAGA. (Iskanian, at p. 361.) In response, the employer sought to compel
arbitration, citing its arbitration agreement with the plaintiff, and arguing that the United
States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion (2011) 563 U.S.
333 preempted any contrary California law preventing arbitration of employment class
3
action litigation or PAGA claims. (Iskanian, at p. 361.)
Before the Supreme Court, the employer raised another argument: that
“PAGA violates the principle of separation of powers under the California Constitution.
(Iskanian, supra, 59 Cal.4th at p. 389.) More specifically, the employer argued PAGA
violated California’s separation of powers doctrine “by authorizing financially interested
3
After oral argument, the United States Supreme Court decided Viking River
Cruises, Inc. v. Moriana (2022) 596 U.S. ___ [2022 U.S. Lexis 2940], which the
Attorney General cited to us under California Rules of Court, rule 8.254. We considered
the case, which abrogates in part the California Supreme Court’s holding in Iskanian on
arbitrability of PAGA claims. We conclude it has no material impact on our decision, as
it does not address the separation of powers issue.
8
private citizens to prosecute claims on the state’s behalf without government
supervision.” (Iskanian, at pp. 389-390.) The employer cited County of Santa Clara v.
Superior Court (2010) 50 Cal.4th 35, which was, in turn, based on People ex rel. Clancy
v. Superior Court (1985) 39 Cal.3d 740. Both cases involved the permissibility of
contingent fee agreements between public entities and attorneys prosecuting public
nuisance cases, and the degree of supervision by “neutral” government attorneys
necessary in such cases.
The Supreme Court rejected this argument, pointing out that its analysis in
those cases was not applicable in the qui tam context, and that “our case law contains no
indication that the enactment of qui tam statutes is anything but a legitimate exercise of
legislative authority.” (Iskanian, supra, 59 Cal.4th at p. 390.) The Supreme Court also
specifically held that “PAGA does not violate the principle of separation of powers under
the California Constitution.” (Id. at p. 360.)
Plaintiff raises several objections to the trial court’s application of
Iskanian’s holding in this case. First, plaintiff argues Iskanian’s separation of powers
holding is “arguably nothing more than dictum.” Plaintiff is mistaken. Dictum is “‘[a]
judicial comment made while delivering a judicial opinion, but one that is unnecessary to
the decision in the case and therefore not precedential (although it may be considered
persuasive).’” (People v. Vang (2011) 52 Cal.4th 1038, 1047 fn. 3 [citing Black’s Law
Dict. (9th ed. 2009) p. 1177, col. 2].)
The employee in Iskanian argued the employer had not properly raised the
separation of powers argument by failing to mention it in its answer to the employee’s
petition for review. (Iskanian, supra, 59 Cal.4th at p. 389.) However, the Supreme Court
rejected this argument stating, “[W]e will decide the merits of this question.” (Ibid.) The
Supreme Court’s resolution of the question also determined the outcome of the case. Had
the Supreme Court decided PAGA violated California’s separation of powers doctrine, it
would not have instructed the trial court to consider on remand whether to bifurcate the
9
case between arbitrable (Labor Code violation) and nonarbitrable (PAGA) claims.
(Iskanian, at pp. 391-392.) Thus, the Supreme Court’s holding is precedential, not
dictum, and we are bound to follow it.
Second, plaintiff argues Iskanian is distinguishable on procedural
grounds—namely that Iskanian arose from an attempt to enforce an arbitration agreement
and PAGA waiver, while the present case arises from a demurrer to a declaratory relief
action directly challenging PAGA’s constitutionality. On the question this case presents
to us, this procedural distinction has no effect. The question presented is the same: Does
PAGA violate California’s separation of powers doctrine? The standard of review for
this purely legal question is the same as well: de novo review. Plaintiff’s argument that
its complaint includes an as-applied challenge to PAGA, which could trigger factual
analysis and potentially a different standard, also lacks merit. Plaintiff’s separation of
powers challenge to PAGA is premised on legislative overreach, and the Legislature has
done nothing affecting PAGA’s enforcement other than pass laws.
Lastly, plaintiff argues Iskanian only stands for a narrower proposition in
the separation of powers context: the Supreme Court’s rejection of the employer’s
argument, which in turn was based on the public nuisance cases County of Santa Clara
and Clancy. Plaintiff argues the separation of powers challenge in Iskanian was, by
virtue of being based on these cases, directed at legislative intrusions on judicial power,
not executive power, and is therefore not relevant here.
It is true, as plaintiff points out, that “‘cases are not authority for
propositions that are not considered.’” (Kim v. Reins International California, Inc.
(2020) 9 Cal.5th 73, 85 fn. 4.) And “‘[it] is axiomatic that an unnecessarily broad
holding is “informed and limited by the fact[s]” of the case in which it is articulated.’”
(Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1153.) But the argument
considered and rejected by the Supreme Court in Iskanian is not as far removed from
plaintiff’s argument as plaintiff suggests.
10
Here, plaintiff argues PAGA “divests the executive branch of: (1) its
prosecutorial discretion by authorizing PAGA plaintiffs to prosecute Labor Code
violations the executive branch has never reviewed; and (2) any control over PAGA
prosecutions or settlements, thereby usurping the executive branch’s enforcement
authority.” In short, plaintiff contends PAGA is unconstitutional because it provides
insufficient mechanisms for the executive branch to supervise PAGA plaintiffs. The
Supreme Court in Iskanian rejected the argument that PAGA was unconstitutional
because it “authoriz[es] financially interested private citizens to prosecute claims on the
state’s behalf without governmental supervision.” (Iskanian, supra, 59 Cal.4th at pp.
389-390.) To be sure, the argument in Iskanian was couched somewhat different. It
focused on prosecutorial neutrality, which is subtly distinct from prosecutorial discretion,
and it appears to have involved little discussion of the executive branch’s enforcement
authority. But at its core, the basic idea is the same. Plaintiff, like the employer in
Iskanian, argues the separation of powers requires greater governmental oversight over
PAGA plaintiffs. The Iskanian court rejected that argument, and we are bound to do the
same.
3. PAGA Does Not Violate California’s Separation of Powers Doctrine
Even if we were not bound by Iskanian, we would reach the same result by
application of California’s separation of powers doctrine.
California’s separation of powers doctrine prohibits the enactment of
statutes that “as a whole, viewed from a realistic and practical perspective, operate to
defeat or materially impair the executive branch’s exercise of its constitutional
functions.” (Marine Forests Society v. California Coastal Com. (2005) 36 Cal.4th 1, 15.)
At the same time, “the separation of powers doctrine does not create an absolute or rigid
division of functions.” (Lockyer v. City and County of San Francisco (2004) 33 Cal.4th
1055, 1068.) And it “‘“does not mean that the three departments of our government are
11
not in many respects mutually dependent”’ [citation], or that the actions of one branch
may not significantly affect those of another branch. Indeed, upon reflection, the
substantial interrelatedness of the three branches’ actions is apparent and commonplace:
the judiciary passes upon the constitutional validity of legislative and executive actions,
the Legislature enacts statutes that govern the procedures and evidentiary rules applicable
in judicial and executive proceedings, and the Governor appoints judges and participates
in the legislative process through the veto power. Such interrelationship, of course, lies
at the heart of the constitutional theory of ‘checks and balances’ that the separation of
powers doctrine is intended to serve.” (Superior Court v. County of Mendocino (1996)
13 Cal.4th 45, 52-53.)
As discussed above, plaintiff contends PAGA violates the separation of
powers doctrine—i.e., defeats or materially impairs the executive branch’s exercise of its
constitutional functions—by depriving the executive branch of (1) prosecutorial
discretion in PAGA cases, and (2) control over PAGA prosecutions or settlements.
Plaintiff argues PAGA thus prevents the executive branch from performing its core
function of enforcing the law by replacing the Attorney General and other prosecutors
4
with private parties and attorneys.
Plaintiff’s chief obstacles in making this argument are the various
provisions of PAGA itself which give the executive branch notice of, and discretion to
4
We cannot help but note the irony inherent in the procedural posture of
this lawsuit. Plaintiff, a private actor, insists that the Legislature has deprived the
executive branch, including specifically the Attorney General, of the ability to exercise
one of its core constitutional functions, by devolving those functions to private actors. To
effectuate its argument, plaintiff sued the Attorney General, who, for his part, has argued
vigorously that his powers are not being usurped. While we do not see the Attorney
General’s present position as dispositive of the issue, we note at least one court has
relied, at least in part, on the Attorney General taking a similar position to resolve a
similar separation of powers issue. (National Paint & Coatings Assn. v. State of
California (1997) 58 Cal.App.4th 753, 764.)
12
exercise control over, PAGA claims. PAGA requires notice to be given to the executive
branch before commencement of a PAGA claim (Lab. Code, § 2699.3, subd. (a)),
immediately after the commencement of any such claim (Lab. Code, § 2699, subd.
(l)(1)), upon submission of any proposed settlement of a PAGA claim for court approval
(Lab. Code, § 2699, subd. (l)(2)), and upon issuance of judgment or other dispositive
order in any PAGA civil action (Lab. Code, § 2699, subd. (l)(3)). PAGA also allows the
executive to investigate and cite employers for Labor Code violations asserted in a
PAGA notice. (Lab. Code, § 2699.3, subd. (a)(2)(B).) PAGA also prohibits the filing of
any PAGA action “on the same facts and theories” as a citation issued by the executive or
an action brought by the executive under Labor Code section 98.3. (Lab. Code, § 2699,
subd. (h).)
In analogous past cases, California and federal courts have held that
provisions of this type (giving the executive notice of or permitting it to exercise control
over qui tam actions) cured any separation of powers issues arising from qui tam
5
statutes. (See, e.g., National Paint & Coatings Assn. v. State of California, supra, 58
Cal.App.4th at pp. 762-764 [holding Proposition 65 does not violate separation of powers
doctrine in part due to notice provisions]; U.S. ex rel. Kelly v. Boeing Co. (9th Cir. 1993)
9 F.3d 743, 745-746, 752-755 [holding federal False Claims Act does not violate
separation of powers doctrine in part due to provisions granting executive ability to
obtain notice of and exercise control over qui tam actions in certain situations]; Riley v.
5
California’s separation of powers doctrine is substantively identical to the
federal doctrine on this point. (National Paint & Coatings Assn. v. State of California,
supra, 58 Cal.App.4th at p. 762; compare Loving v. U.S. (1996) 517 U.S. 748, 757 [“the
separation-of-powers doctrine requires that a branch not impair another in the
performance of its constitutional duties”] with Marine Forests Society v. California
Coastal Com., supra, 36 Cal.4th at p. 15 [separation of powers doctrine prohibits statutes
that “as a whole, viewed from a realistic and practical perspective, operate to defeat or
materially impair the executive branch’s exercise of its constitutional functions”].)
13
St. Luke’s Episcopal Hosp. (5th Cir. 2001) 252 F.3d 749, 753-757 [same]; U.S. ex rel.
Taxpayers Against Fraud v. Gen. Elec. (6th Cir. 1994) 41 F.3d 1032, 1040-1041 [same].)
To deal with these provisions and distinguish this case from these past
cases, plaintiff cites differences between PAGA’s notice provisions and comparable
provisions in other qui tam statutes, including Proposition 65 and the California False
Claims Act. Plaintiff highlights three such differences: (1) the absence of an
“evidentiary threshold” for the filing of a PAGA claim; (2) the absence of specific
statutory authorization for imposition of sanctions to penalize the filing of a frivolous
PAGA claim; and (3) PAGA’s relatively short deadlines for the executive to respond to a
PAGA notice and investigate the allegations, which plaintiff claims allows PAGA
plaintiffs to then proceed “without any executive oversight.”
However, plaintiff fails to cite any authority for the proposition that any of
these differences creates a separation of powers problem. As for the first two items, it is
not obvious why either would do so. The absence of an “evidentiary threshold” (a
category plaintiff creates to lump together Proposition 65’s certificate of merit procedure
with the California False Claims Act’s in camera filing procedure) for private plaintiffs to
commence PAGA litigation has no connection with executive control over PAGA claims.
Similarly, sanctions for frivolous PAGA claims have nothing to do with the interplay of
executive and legislative authority.
Plaintiff’s last claim, that the short deadlines allow plaintiffs to proceed
6
without executive oversight, is simply false. Even after PAGA’s deadlines elapse and a
PAGA action is initiated by a private plaintiff, the executive’s role does not end. As
described above, PAGA plaintiffs must still provide notice of the commencement of a
6
We assume for the sake of argument that PAGA’s notice periods are
shorter than comparable California qui tam statutes, although plaintiff provides no
authority for this proposition, and we note that the California False Claims Act’s notice
period (the only other one discussed in plaintiff’s brief) is an identical 60 days.
(Compare Lab. Code, § 2699.3, subd. (a) with Gov. Code, § 12652.)
14
PAGA action, the submission of any proposed settlement to the court for approval, and
the issuance of any judgment or other dispositive order. Should the action itself or a
proposed settlement violate California’s public policy in some manner, the executive will
receive notice and can take whatever steps it deems appropriate.
Plaintiff points out that, unlike the federal False Claims Act, PAGA does
not contain an express provision authorizing the executive to intervene in the action. But
California law independently requires courts to permit intervention in an action by any
person who “claims an interest relating to the property or transaction that is the subject of
the action and that person is so situated that the disposition of the action may impair or
impede that person’s ability to protect that interest, unless that person’s interest is
adequately represented by one or more of the existing parties” (Code Civ. Proc., § 387,
subd. (d)(1)(B)) and allows intervention at the discretion of the trial court by any person
who “has an interest in the matter in litigation, or in the success of either of the parties, or
an interest against both.” (Id., subd. (d)(2).) In the event of an abusive or improper
settlement of a PAGA claim (in which a plaintiff might improperly characterize the bulk
of the settlement as damages, payable solely to the plaintiff, while minimizing civil
penalties owed in part to the state), California law plainly permits the Attorney General to
intervene to protect the state’s interest in recovering its share of the civil penalties and
oppose judicial approval of the settlement. Indeed, that is the obvious purpose of the
provisions of PAGA requiring timely notice to be given to the executive upon submission
of a proposed settlement to the court for approval.
Plaintiff also cites Abbott Laboratories v. Superior Court (2020) 9 Cal.5th
642, arguing it shows “the requisite degree of control that the Attorney General must
retain over actions prosecuted on behalf of the state,” namely that the Attorney General
must be permitted to intervene. Leaving aside that Abbott is not a separation of powers
case and does not involve qui tam actions whatsoever, plaintiff’s argument for Abbott’s
relevance here is premised on the mistaken supposition that “[n]either PAGA, the
15
California [C]onstitution, nor any other California statute, authorizes the Attorney
General (or any other arm of the executive branch) to intervene in or control the
prosecution or settlement of PAGA actions once an aggrieved employee files a civil
action.” As we explain above, section 387, subdivision (d) of the Code of Civil
Procedure does precisely that.
In summary, we conclude, as the trial court did, that we are bound to follow
our Supreme Court’s conclusion in Iskanian that “PAGA does not violate the principle of
separation of powers under the California Constitution.” (Iskanian, supra, 59 Cal.4th at
p. 360.) And even if Iskanian did not bind us, applying California’s separation of powers
doctrine to PAGA leads us to the same conclusion reached by the trial court: PAGA is
constitutional.
DISPOSITION
The judgment is affirmed. Defendant shall recover costs on appeal.
SANCHEZ, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
MOORE, J.
16