(July 10, 2009) In two companion cases recently decided, the California Supreme Court provided clarification on whether cases brought as “representative” actions by unions under California’s Unfair Competition Law (UCL) and Labor Code Private Attorneys General Act of 2004 (PAGA ) must meet class action requirements.

In Arias v. Superior Court (Angelo Dairy), the court held that a plaintiff seeking relief on behalf of others under the UCL must satisfy the requirements for a class action as required by Proposition 64. The court based its decision on the plain language and voter intent behind Proposition 64, which amended the standing requirements of the UCL to preclude uninjured plaintiffs from seeking relief on behalf of others.

With respect to the PAGA claim, however, the court held that an individual may pursue a representative claim for penalties without satisfying statutory class action requirements.  The court reasoned that PAGA, in contrast to the UCL, contains no express requirement that an individual comply with the requirements of Proposition 64.

Proposition 64, overwhelmingly approved by California voters, required that plaintiffs in lawsuits filed under the state’s UCL must actually have suffered harm. This reform was intended to provide companies doing business in California with significant relief from the numerous frivolous lawsuits clogging the court system.

In the second case, Amalgamated Transit Union Local 1756 v. Superior Court of Los Angeles (First Transit, Inc.), the court held that a third party, such as a union, may not bring a representative action under PAGA and California’s UCL  because the party was neither impacted by nor directly involved with the alleged violations

The California Chamber of Commerce filed a “friend of the court” brief in Amalgamated because of the cases’ impact on California businesses, which continue to be hit with representative and class action lawsuits, particularly in the area of wage and hour law.  CalChamber believes that narrowing the scope of who may bring the lawsuits will curtail the swift progression and trend of representative actions. Defending against such actions, particularly those that lack merit, is extremely costly to businesses.

Staff Contact: Erika Frank