The landscape of California PAGA litigation continues to shift. In our previous analysis of the Fifth Appellate District’s decision in CRST Expedited, we discussed the court’s controversial endorsement of “headless” PAGA claims —actions where a plaintiff seeks civil penalties solely for Labor Code violations suffered by other employees, not themselves. The CRST Expedited court interpreted the pre-July 2024 version of the statutory language of PAGA to allow such claims, reading “and” in the phrase “on behalf of himself or herself and other current or former employees” as ambiguous and susceptible to a liberal construction that includes “or.” This interpretation, the court argued, best serves PAGA’s enforcement purpose, even though it again ignored the fact that the legislature could have – but did not – rewrite the statute to explicitly allow “headless” claims by clarifying that it meant “and/or” rather than “and” in the July 2024 amendments to PAGA.
Galarsa v. Dolgen California: Affirming and Extending CRST Expedited
The recent decision in Galarsa v. Dolgen California, LLC, consolidates and extends the reasoning of CRST Expedited. The Galarsa court addressed two key questions: (1) whether the pre-July 2024 version of PAGA authorized “headless” actions, and (2) whether a plaintiff’s status as an “aggrieved employee” must be arbitrated before such a claim can proceed in court.
On the first question, Galarsa unsurprisingly reaffirmed its conclusion in CRST Expedited that “headless” PAGA actions are permissible under the prior version of the statute. The court again found the statutory language ambiguous and concluded that PAGA’s purpose is best served by allowing actions for violations suffered only by other employees, only by the plaintiff, or both.
On the second question, Galarsa parsed the arbitration agreement language to conclude the agreement was only to arbitrate claims the employee may have against the employer. Then the court concluded that whether the plaintiff has standing to pursue PAGA claims is a dispute between the LWDA (represented by the plaintiff) and the employer – not the employee and the employer. Thus, employers cannot force arbitration of the threshold standing issue in “headless” PAGA cases, and such claims may proceed in court even if the plaintiff’s individual claims are subject to arbitration.
This extension of CRST Expedited completely ignores statutory language and the CA Supreme Court’s guidance in Adolph v. Uber Technologies. To have standing under the pre-2024 PAGA statute, an employee must be an “aggrieved employee” - meaning that they were employed by the alleged violator and suffered one or more Labor Code violations. The issue of whether an employee suffered one or more Labor Code violations by their employer is quite clearly a dispute between an employee and employer. Further the CA Supreme Court in the Adolph v. Uber case contemplated arbitration of a plaintiff’s individual PAGA claim would involve a determination of whether the plaintiff is “an aggrieved employee” and therefore determine the plaintiff’s standing to prosecute the non-individual claims.
Limitations and Implications
There are some key limitations to the Galarsa decision. First, this is case is only partially published. The portion of the decision affirming CRST Expedited is published but the portion holding that the issue of standing is a dispute between the LWDA and the employer and is not arbitrable is unpublished – meaning that part cannot be cited as precedent in other cases. Second, the case is limited to PAGA claims filed prior to July 2024. Third, there continues to be a split between the Fifth Appellate District (which permits “headless” PAGA claims) and the Second Appellate District (which does not).
While the California Supreme Court’s forthcoming decisions in Leeper v. Shipt and Williams v. Alacrity Solutions Group will resolve the split in authority, for now, defense strategies must account for the possibility of “headless” PAGA actions surviving demurrer and avoiding arbitration. Employers should review and, if necessary, revise their arbitration agreements and PAGA compliance strategies in light of these developments.
Navigating PAGA litigation is increasingly complex and evolving. Staying informed is critical, so subscribe for updates as the law continues to develop. If your company is facing PAGA claims, retaining experienced and knowledgeable counsel is key. If you have questions, reach out to the author or your favorite CDF attorney.
