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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Claims Under California’s Private Attorneys General Act Not Subject To Removal Under CAFA, Says District Court

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Bailey v. Redfin Corp., 2015 WL 276849 (C.D. Cal. Jan. 21, 2015).

Relying on the Ninth Circuit’s ruling in Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1122 (9th Cir. 2014), a district court in the Central District of California held that claims under California’s Private Attorneys General Act (“PAGA”) cannot be a basis for removal under CAFA.

Plaintiffs, employed as real estate field agents by defendant, brought an action under PAGA, and alleging various violations of California labor laws. The defendant removed the action, alleging that diversity jurisdiction existed under CAFA, because there was diversity of citizenship among the parties and the amount-in-controversy was alleged to exceed $5 million.

The plaintiffs moved to remand, arguing that their claims did not trigger CAFA jurisdiction.  While numerous labor violations were alleged, plaintiffs only alleged a single PAGA claim.  Their complaint contained neither class allegations, nor did it assert any claims on behalf of a class.  Instead, plaintiffs sought civil penalties on behalf of themselves and other aggrieved employees in their alleged PAGA claim.

In Baumann, the Ninth Circuit held that PAGA actions were not sufficiently similar to Rule 23 class actions to trigger CAFA jurisdiction. Unlike Rule 23, PAGA has no notice requirements for unnamed aggrieved employees, nor may such employees opt out of a PAGA action.  In a PAGA action, a court does not inquire into the named plaintiffs and plaintiffs’ counsel’s ability to fairly and adequately represent unnamed employees, which are critical requirements in federal class actions under Rule 23(a)(4) and (g). Moreover, there are no requirements of numerosity, commonality, or typicality under a PAGA claim.

Furthermore, the court remarked that the finality of PAGA judgments distinctly differs from that of class action judgments.  In a class action, the class members who receive notice and decline to opt out are bound by a judgment, whereas PAGA expressly provides that employees retain all rights to pursue or recover other remedies available under state or federal law, either separately or concurrently with an action taken under this part. Additionally, the nature of PAGA penalties is also distinct from damages sought in Rule 23 class actions. In class actions, damages are typically restitution for wrongs done to class members, while PAGA actions seek to “vindicate the public interest in enforcement of California’s labor law.” Baumann, 747 F.3d 1117 at 1123.

Therefore, the court concluded that Rule 23 and PAGA were more dissimilar than alike, and that plaintiffs’ PAGA claims were not subject to removal under CAFA.