![\"CDF](\"https:\/\/www.send2press.com\/wire\/images\/23-0104-s2p-cdflabor-gavel-800x600.jpg\")
Image Caption: A PAGA Victory to Bring in the New Year.<\/em><\/p>\n
The lawsuit was based on allegations that Hobby Lobby failed to allow retail store workers to use suitable seats while they were working. Since the outset of the case in 2017, Hobby Lobby maintained that the placement of seats in retail stores and the use of seats by working employees would create a risk of injury. The lawsuit culminated in a three-week bench trial in February and March of 2023, which resulted in a complete victory for Hobby Lobby. The trial court filed its order requiring the LWDA to pay for Hobby Lobby\u2019s costs after several rounds of briefing related to the matter in which both the plaintiff and the State of California attempted to avoid any accountability for the failed PAGA claim.<\/p>\n
CDF Labor LLP<\/a> partners Brent M. Giddens<\/a> and Corey J. Cabral<\/a>, Chair of CDF’s PAGA Litigation Practice<\/a>, represented Hobby Lobby in this lawsuit since the time it was filed in 2017, at trial, and through the present.<\/p>\n Plaintiff\u2019s Effort to Avoid Liability for Costs<\/strong><\/p>\n After judgment was entered in Hobby Lobby\u2019s favor, the company sought to recover its costs as the prevailing party. California\u2019s general cost shifting rule, set forth in Code of Civil Procedure (CCP) section 1032, provides that prevailing parties are entitled to recover their costs as a matter of right unless \u201cotherwise expressly provided by statute.\u201d Recoverable costs are determined by statute. A prevailing party can only recover attorney fees as a recoverable cost if authorized by statute that \u201crefers to the award of \u2018costs and attorney\u2019s fees.\u2019\u201d (CCP \u00a7\u00a7 1033.5(a)(10)(B) and 1033.5(c)(5).)<\/p>\n Plaintiff responded to Hobby Lobby\u2019s effort to recover of costs by filing a motion to tax. Therein, she argued that the PAGA\u2019s attorney fee and cost provision, Labor Code section 2699(g)(1), serves as an exception to California\u2019s general cost shifting rule. The PAGA\u2019s fee and cost provision states, \u201cAny employee who prevails in any action shall be entitled to an award of reasonable attorney\u2019s fees and costs.\u201d Plaintiff also argued that public policy prohibits the recovery of costs by defendant-employers that successfully defend PAGA claims. She claimed that making PAGA plaintiffs liable for an employer\u2019s costs would have a \u201cchilling effect\u201d on PAGA litigation and undermine its purpose.<\/p>\n Hobby Lobby\u2019s Request to Recover Costs from the LWDA<\/strong><\/p>\n Hobby Lobby opposed Plaintiff\u2019s motion to tax, demonstrating that PAGA\u2019s fee and cost provision is not an express exception to the general cost shifting rule. It merely establishes that attorney fees are a recoverable cost for prevailing employees; it does not foreclose a prevailing employer from recovering its costs. As for Plaintiff\u2019s public policy arguments, Hobby Lobby made the novel argument that the LWDA is responsible for an employer\u2019s costs resulting from an unsuccessful PAGA lawsuit. The company\u2019s argument was predicated on the unique relationship between a PAGA plaintiff and the LWDA. Specifically, in any PAGA lawsuit, the LWDA is the \u201creal party in interest,\u201d the plaintiff serves as a \u201cproxy\u201d or \u201cagent\u201d of the LWDA, and the plaintiff has no personal right or interest at stake. And the LWDA retains \u201cprimacy over private enforcement efforts.\u201d Moreover, the California Supreme Court and Courts of Appeal have held that PAGA does not violate constitutional separation of powers requirements because the LWDA retains sufficient control over PAGA litigation to render it a constitutional delegation of authority.<\/p>\n Just three days after Hobby Lobby filed its opposition\u2014before the matter was fully briefed\u2014the trial court weighed in on the matter. The court entered an order continuing the hearing date for plaintiff\u2019s motion to tax, inviting the LWDA to file an amicus brief, and setting a schedule for supplemental briefing. The trial court requested that the LWDA and the parties address several topics, including the reciprocity of benefit and burden as it applies to the LWDA and factual information about the dollar value of civil penalties the LWDA collected through PAGA cases.<\/p>\n The LWDA\u2019s Response to the Trial Court\u2019s Order<\/strong><\/p>\n The LWDA declined to file an amicus brief and, instead, enlisted the Department of Labor Standards Enforcement (DLSE) to intervene on its behalf. The DLSE argued that it had a right to intervene on behalf of the LWDA because it was authorized to administer the PAGA pursuant to delegations from the LWDA and the Department of Industrial Relations, and because the LWDA had a material interest in the outcome of the trial court\u2019s decision of allocation of liability for Hobby Lobby\u2019s costs. However, as discussed further below, the DLSE parroted Plaintiff\u2019s arguments that no employer may recover costs resulting from a failed PAGA action.<\/p>\n Hobby Lobby opposed the DLSE\u2019s intervention, arguing that it was an unnecessary procedural tactic aimed at precluding the LWDA\u2019s liability for \u201cpre-intervention costs.\u201d The trial court ultimately granted the DLSE\u2019s request to intervene but noted that the intervention-status \u201cwill not determine the substantive issue of whether the LWDA is responsible for the costs.\u201d<\/p>\n The DLSE then filed a brief in support of Plaintiff\u2019s motion to tax costs and agreeing with Plaintiff\u2019s argument that employers have no right to recover costs as a prevailing party in a PAGA lawsuit. The DLSE claimed that the trial court should interpret the PAGA\u2019s fee and cost provision as a \u201cone-way cost shifting\u201d provision akin to that in California\u2019s minimum wage laws. The DLSE did not address the value of civil penalties the LWDA collected through PAGA cases. Nonetheless, the DLSE\u2019s argument relied on the oft-cited legislative purpose of the PAGA\u2014to supplement and increase enforcement of the Labor Code by public agencies which lack adequate resources. Moreover, the DLSE disavowed the LWDA\u2019s control over PAGA litigation. The DLSE went as far as to claim the \u201cLWDA cannot prevent an aggrieved employee from pursuing a PAGA claim that it would not otherwise prosecute.\u201d<\/p>\n CDF\u2019s Public Records Requests<\/strong><\/p>\n When the trial court invited the LWDA\u2019s amicus brief and requested financial information about PAGA civil penalties, Hobby Lobby\u2019s counsel doubted the DLSE would provide the information. Accordingly, soon after the trial court invited the LWDA\u2019s amicus brief, the firm submitted Public Record Act requests to the LWDA seeking financial information related to PAGA litigation, including the amount of civil penalties the LWDA recovered in recent years. In doing so, the firm obtained evidence that undermines the oft-cited and out-of-date findings that the LWDA has \u201cscarce\u201d or \u201climited\u201d resources.<\/p>\n As anticipated, the evidence established that the LWDA has received a staggering amount of civil penalties from PAGA litigation. In just the last three fiscal years, the LWDA has received approximately $375 million in civil penalties. The evidence also demonstrated the funds were not being used as required under PAGA. Specifically, Labor Code section 2699(i) states that the civil penalties received by the LWDA are \u201cfor enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes.\u201d The LWDA\u2019s records indicate the PAGA funds have been used to make a $107,000,000 \u201cloan\u201d to the General Fund, to supplant funding to the agency\u2019s various departments, and other non-enforcement uses. However, many of the funds are simply not allocated to any use and remain in the Labor and Workforce Development Fund.<\/p>\n Hobby Lobby\u2019s Supplemental Briefing<\/strong><\/p>\n In its supplemental briefing, Hobby Lobby buttressed its arguments that the PAGA\u2019s fee and cost shifting provision can only be interpreted as authorizing prevailing employees to recover attorney\u2019s fees as a cost under CCP sections 1032, 1033.5(a)(10)(B), and 1033.5(c)(5). The PAGA\u2019s fee and cost provision does not displace California\u2019s general cost shifting rule, and it is not a \u201cone-way cost shifting\u201d provision, as claimed by Plaintiff and the DLSE. Further, Hobby Lobby established that although the LWDA is not a formal party to PAGA litigation, it is the only \u201creal party in interest\u201d to a PAGA claim, and it has control over PAGA litigation. Hobby Lobby cited to the Legislature\u2019s delegation of authority to the LWDA to promulgate regulations under PAGA, the PAGA\u2019s notice provisions, and the LWDA\u2019s efforts to intervene in and control the resolution of other PAGA cases. Moreover, it is well established that if the LWDA directly enforced the Labor Code by filing an action and the employer prevailed, the LWDA would be liable for the employer\u2019s costs.<\/p>\n Hobby Lobby argued that the LWDA\u2019s failure to exercise control over PAGA litigation does not render it powerless to do so\u2014the LWDA has both available methods and the means to control PAGA claims and prevent wasteful litigation. To that point, Hobby Lobby maintained that \u201cthe significant amount of money the LWDA has received as a result of PAGA settlements and judgments in just the last few years should preclude the DLSE (and, frankly, all California courts) from continuing to rely on the oft-repeated notion that PAGA should be construed and applied with the understanding that the \u2018LWDA lacks adequate staffing and resources\u2026\u2019 \u201d Furthermore, Hobby Lobby demonstrated the if the LWDA did lack the ability to exercise such control over PAGA litigation, the statute would be subject to constitutional challenges based on a complete delegation of the LWDA\u2019s enforcement discretion to private attorneys.<\/p>\n The Trial Court\u2019s Order and Anticipated Appeals<\/strong><\/p>\n The trial court agreed with Hobby Lobby at every turn and, on December 28th, it issued a 35-page, full-throated order roundly rejecting the DLSE\u2019s arguments. You can find a copy of the order here<\/a> – https:\/\/www.callaborlaw.com\/_images\/blog_files\/2023.12.28_Order_Granting_in_Part_Motion_of_Plaintiff_to_Strike_.pdf<\/a>.<\/p>\n This appears to be the first occasion on which the LWDA has been found liable for the costs of a prevailing employer in a PAGA case.<\/p>\n Although the LWDA will undoubtedly appeal the decision\u2014just as plaintiff appealed the trial court\u2019s judgment on the merits\u2014we are confident that the trial court\u2019s analysis and decision will withstand scrutiny. While the effect of this order is yet to be seen, we believe it is a significant victory for California employers. One can reasonably suspect that the LWDA will begin taking a more active role in the PAGA notice process and any subsequent litigation to prevent, or put a stop to, the more frivolous and wasteful PAGA lawsuits that have been burdening employers and causing economic waste across the state.<\/p>\n Employers faced with PAGA claims can now implement strategies during the PAGA\u2019s notice period that may increase the chances of preventing a lawsuit and litigation strategies that will increase the likelihood of an earlier and more favorable resolution. But, if forced to defend unwarranted PAGA claims, employers should be able to hang their hat on actually recovering their litigation costs because the LWDA clearly has the funds to pay for them, unlike a judgment-proof plaintiff.<\/p>\n About CDF Labor Law LLP<\/strong><\/p>\n For close to 30 years, CDF Labor Law LLP<\/a> has distinguished itself as one of the top labor and employment defense firms in California, representing employers in single-plaintiff and class action lawsuits, and advising employers on related legal compliance and risk avoidance. The firm has five offices throughout California \u2013 in Sacramento, San Francisco, Los Angeles, Orange County and San Diego.<\/p>\n For more information, visit: https:\/\/www.cdflaborlaw.com\/<\/a> and find CDF on LinkedIn<\/a> or Twitter<\/a> to learn more about how the firm protects California employers.<\/p>\n![\"CDF](\"https:\/\/www.send2press.com\/wire\/images\/23-0726-s2p-cdf-laborlaw-800x600.jpg\")
Image Caption: CDF Labor Law LLP.<\/em><\/p>\n
![https:\/\/www.Send2Press.com\/300dpi\/23-0525-s2p-cdf-stackedblue-300dpi.jpg<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"SAN FRANCISCO, Calif., Jan. 4, 2024 (SEND2PRESS NEWSWIRE) — Last week a trial court in Alameda County entered an order permitting Hobby Lobby Stores, Inc. to recover nearly $125,000 in costs from the California Labor and Workforce Development Agency (LWDA). Hobby Lobby incurred these costs during six years of hard-fought litigation involving claims brought under California’s Private Attorneys General Act (PAGA), CDF Labor Law LLP announced today.<\/p>\n","protected":false},"author":9018,"featured_media":102632,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,12804,1,10,80,103],"tags":[19796,17176,19797],"class_list":["post-102633","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal-and-law-news","category-ap","category-business-news","category-california-news","category-employment-news","category-san-francisco-news","tag-california-labor-and-workforce-development-agency","tag-california-labor-laws","tag-private-attorneys-general-act","has-post-title","has-post-date","no-post-category","no-post-tag","no-post-comment","has-post-author"],"acf":[],"views":4549,"_links":{"self":[{"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/posts\/102633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/users\/9018"}],"replies":[{"embeddable":true,"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/comments?post=102633"}],"version-history":[{"count":0,"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/posts\/102633\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/media\/102632"}],"wp:attachment":[{"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/media?parent=102633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/categories?post=102633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.send2press.com\/wire\/wp-json\/wp\/v2\/tags?post=102633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/www.send2press.com\/300dpi\/23-0525-s2p-cdf-stackedblue-300dpi.jpg\"){kind=link}