(January 23, 2008) The California Chamber of Commerce and other business groups have filed a “friend of the court” brief with the California Supreme Court to protect California businesses from non-class representative actions brought by unions under the "sue your boss" law and unfair competition law.
 
In the case of Amalgamated Transit Union Local 1756 v. Superior Court of Los Angeles (First Transit, Inc.), the issues presented before the court relate to whether the right to bring a representative action under the Labor Code Private Attorneys General Act of 2004 (PAGA) and California’s Unfair Competition Law (UCL) may be assigned to a third party, such as a union, which was neither impacted by nor directly involved with the alleged violations.

Also joining in filing the "friend of the court" brief were the Employers Group, the California Employment Law Council and the U.S. Chamber of Commerce.  

Read the brief.
    
The court’s decision will determine whether unions may sue in a non-class representative action under the PAGA without receiving permission from all representative members in the case. Similarly, the decision will confirm that claims brought under the UCL must not only meet specific standing requirements, but also cannot be assigned to a third party, such as a union.

The court’s decision will have an impact on California businesses, which continue to be hit with representative and class action lawsuits, particularly in the area of wage and hour law.  Narrowing the scope of who may bring the lawsuits will curtail the swift progression and trend of representative actions, the defense of which are extremely costly to businesses, particularly those actions that lack merit.

In the brief, the CalChamber urged the court to hold that the unions bringing the claims lack standing to pursue any claim under PAGA -- whether on behalf of an individual union member who purported to assign his or her PAGA claim, or on behalf of  other union members who did not -- because PAGA claims are not assignable as a matter of law.

The CalChamber believes that the Court of Appeal correctly held that because PAGA claims are for statutory penalties, such claims are not assignable.

If an employee could seek all of the benefits of proceeding with a representative action under PAGA without even attempting to show either an ascertainable class or a community of interest, the opportunity for abuse would be rampant, the CalChamber argued in its brief.

On top of the burden on trial courts in attempting to preside over representative PAGA claims that could not be certified as class actions, the CalChamber urged the court to also consider the potential for employees to use representative, non-class action under PAGA to blackmail employers. Unlike class actions, which contain procedural safeguards to protect the interests of the class, nothing would prevent a plaintiff from compromising a representative PAGA claim for his or her own benefit. In light of the impossibility of defending representative PAGA claims with respect to which individual issues predominate (and which, therefore, could not be certified as class actions), the employer would have little choice but to pay plaintiffs’ settlement demands -- however unreasonable.

In its brief, the CalChamber also argues that the right to represent others under the UCL is not and should not be assignable and may only proceed as certified class actions. The attempt to “buy” the right to sue under the UCL is a clear end-run around the will of the California voters who passed Proposition 64 in 2004, seeking to limit abusive UCL suits by limiting them to plaintiffs who suffered an injury in fact and lost money or property as a result.

A lawsuit on behalf of an unnamed third party under the UCL should be maintainable only by an injured person with similar interest -- not merely an assignee of such person -- and should be maintainable only as a certified class action, the CalChamber argued.

The case has been fully briefed and the California Supreme Court may set the case for oral arguments at any time.

Read the brief.

Staff Contact: Erika Frank