California Supreme Court expands employee rights to discovery in PAGA actions

In a major setback for California employers, the California Supreme Court issued a decision in the matter of Williams v. Superior Court, wherein it ruled that an individual employee asserting a Private Attorney General Act (PAGA) action had the right to seek contact information of every other company employee throughout the entire state.

In Williams, a retail worker asserted various wage and hour violations against his employer, Marshall’s, as a representative action under the PAGA statute. Although the employee was located in the Costa Mesa store, Plaintiff’s counsel propounded discovery requests seeking the name, address, telephone number, and company employment history of each nonexempt California employee that had worked for Marshall’s throughout the state in the last two years. In response, Marshall’s refused to provide the information on the basis that the request for contact and employment information statewide was overbroad considering that the request extended beyond Williams‘s particular store and job classification and there were approximately 16,500 employees; unduly burdensome because Williams sought private information without first demonstrating he was aggrieved or that others were aggrieved; and an invasion of the privacy of third parties under California Constitution, Article I, section 1. Plaintiff filed a motion to compel in Los Angeles Superior Court.

Interestingly enough, during the hearing process, Plaintiff reduced its initial demand and instead stated he was willing to accept information from a representative sample of 10 to 20 percent of employees. However, the trial court denied the reduced request and instead ordered Marshall’s to provide information only for the Costa Mesa store where Williams worked, subject to a “Belaire-West” notice to the affected employees to guard their privacy rights. Williams appealed but the appellate court upheld the trial court’s order.

A unanimous California Supreme Court rejected Marshall’s arguments stating that “[c]ontact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case.” The Curt further stated that limiting discovery “would grant the defendant a monopoly on access to its customers or employees and their experiences and artificially tilt the scales in the ensuing litigation.”

The Supreme Court also rejected that the procedural differences between PAGA representative actions and traditional class actions. In PAGA, unlike in class actions, employees identified in discovery are not considered parties or clients of plaintiff‘s counsel and do not subject plaintiff or counsel to scrutiny with respect to the ability to represent a large class. Putting these differences aside, the Supreme Court stated that the interests of plaintiff, counsel, and other potentially aggrieved employees are largely aligned as all “stand to gain from proving as convincingly as possible as many Labor Code violations as the evidence will sustain, thereby maximizing the recovery for aggrieved employees as well as any potential attorney fee award.”

The Supreme Court rejected the argument that the disclosure of the information should be limited or conditional. The Court held there was no basis for courts to condition the disclosure of contact information on prior proof of a uniform or companywide policy. Moreover, the Court held that the privacy interests of fellow employees elsewhere in California are addressed by conditioning disclosure on the sending of a Belaire-West notice, as was done for Plaintiff’s store.

This decision tips the scales in favor of employees such that Plaintiff’s counsel will now be able to broadly seek contact information for employees as a means to increase the value of its case. Defense counsel must now be aggressive in reducing the contours of PAGA claims at the pleading stage before the discovery process begins. Counsel will now have to be creative and aggressive in ensuring that some limits are placed on the information disclosed.

Contact our firm if you have any further questions about how to further structure your business in light of this result or if you are facing a PAGA lawsuit.

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