Here is the problem with getting people to care about the Private Attorneys General Act (PAGA) and its deleterious effects on small business in California: it’s a complicated morass—intentionally made so by plaintiff’s attorneys, in order to erode the power of the employer and business owner to run their business as they see fit. This erosion affects employees in terms of not only quality and flexibility of the work environment, but in bonuses, promotions, and workplace security and safety. Why hasn’t your boss given everyone a raise in two years? Maybe because he or she had to pay out for a PAGA claim and those coffers he or she could use for such things are now empty.
California entrepreneur Blaine Eastcott, owner of Rockcreation Climbing gyms said it plain:
“I [would] have to borrow money to pay [a PAGA lawsuit] off, which means if I am paying a PAGA lawsuit, I’m not paying my employees a better wage.
I’m not paying the bonuses when, you know Christmas rolls around, or the company does better, because it’s burdened by these loans. I’m not buying amenities that improve the operation for the community of people that use the facilities.”
Doesn’t get more bottom line than that. Yet, the taxpaying public still remains blissfully unaware of how PAGA affect their lives and communities.
Thankfully, the Supreme Court seems to have taken a renewed interest in the Federal Arbitration Act and lawsuit claims that add to the PAGA morass and its end-runs around the FAA. One of the cases the SCOTUS justices chose to review addresses this: Viking River Cruises, Inc. v. Moriana. This case has been watched closely because a favorable ruling for the petitioner Viking River Cruises could go far to limit PAGA and its damages, forcing reform of the act.
On Wednesday, SCOTUS heard oral arguments for this case. It was the perfect opportunity for the California Business and Industrial Alliance (CABIA) group to organize a rally on the Supreme Court steps in order to bring more attention to the abuses of PAGA from the viewpoint of the business owners who have been adversely affected.
PAGA is a huge money maker for the State of California as well as the attorneys that bring these claims. CABIA wrote on their blog about an attorney who chooses to brag on his license plate how much money he bilks from businesses through PAGA claims.
Daniel Gaines hails from Gaines & Gaines law, a firm well-known for filing lawsuits under the Private Attorneys General Act (PAGA). In fact, the firm ranks 4th in California for the number of PAGA claims it files.
You might think that someone who makes a living filing frivolous lawsuits against unsuspecting small businesses might not flaunt their profession; with Gaines, it’s quite the opposite.
It has recently come to our attention that Gaines drives a white Rolls Royce proudly bearing the license plate “MR PAGA.” We couldn’t believe it either, but as they say: A picture is worth a thousand words.
Trial attorneys have been profiting off of PAGA lawsuits for too long, and our state’s businesses have suffered for it. It’s bad enough that these attorneys have made careers out of going after entrepreneurs, but to advertise it so blatantly (on a Rolls Royce no less) just adds insult to injury.
Named and shamed. Although anyone who would drive a Rolls Royce sporting that license plate obviously has none. The hope is that if SCOTUS rules in favor of petitioner Viking River Cruises, relegating this attorney and his ilk ineffective. In other words, we want to send them back to ambulance chasing.
Until then, CABIA continues to advocate for these California businesses, and submitting an amicus curiae brief in coordination with Viking River Cruises Inc. v. Moriana was a part of that.
The Rally was also a huge gambit. California business owners took time away from their companies to travel 3,000 miles to tell their stories, and make their voices heard. But the oral arguments are what will be the pivot point on whether Viking wins their petition, and if PAGA gets cut off at the knees or further reinforced by the highest court in the land.
From SCOTUS Blog:
This case involves PAGA, California’s Private Attorneys General Act. Under that statute, any employee can bring an action against her employer, asserting claims against the employer on behalf of all employees. For example, in a recent PAGA action against Lyft, a single employee asserted claims on behalf of more than 500,000 Lyft drivers; cases involving tens of thousands of employees are routine. To explain further, PAGA authorizes any individual employee to bring any claim that the employer has violated California’s Labor Code; 75% of the award goes to the state and the remainder is distributed to the aggrieved employees as a group. The employee in this case (Angie Moriana) sought relief under PAGA against Viking River Cruises, alleging that the company failed to pay all wages due, failed to pay overtime, and committed other violations. Viking argued that the action should fail because Moriana’s employment agreement called for individualized arbitration of all disputes about her employment with Viking and explicitly waived her right to assert such claims through PAGA.
Former California businessman and former Missouri state senator John Loudon is now Vice President of Government Affairs for CABIA. He was there participating in the Rally, and had this to say.
“What’s so sinister about PAGA is that it’s a conspiracy of the plaintiff’s bar of the state inspiring to suck money out of companies on the back of workers.”
This is an all-too-familiar tactic of progressive government, and the unions. Use the workers as the face of “reform” in order to enrich themselves.
It needs to come to an end.
Unfortunately, the California courts continue to support their mo’ money lawyers, and uphold the decisions that entrench support of PAGA. This is one of the many reasons why it ended up in the Supreme Court.
It surprised nobody when the Supreme Court granted review. Viking argues that the decisions of the California courts are a flagrant departure from the Supreme Court’s rulings in the area and that a decision in its favor follows directly from Concepcion. For Viking, Moriana’s agreement to individualized arbitration means that neither courts nor legislatures in California have the power to move the dispute to another forum or to aggregate the claims of multiple employees in the same proceeding. It argues that the same problems that motivated the Supreme Court to reject California’s mandate for class-based arbitration compel rejection of the PAGA proceeding here. Most obviously, a PAGA proceeding presenting claims of tens of thousands of employees is so remote from a bilateral individualized arbitration proceeding that it ruins the streamlined efficiency for which Viking River claims it bargained.
After the Rally, I listened to the oral arguments. The justices were slightly testy, but not all that contentious. The most striking revelation was that Justices Elena Kagan, Stephen Breyer, and Sonia Sotomayor suddenly had a renewed interest in federalism. If you read their dissent in the 6-3 decision to strike Biden’s employer vaccine mandate, the government is the be-all, end-all over corporations, and they have no right to oppose any inroads made through federal fiat.
However, they appear to have no problem with this state-engineered FAA workaround. PAGA is essentially the King of this, and other state plaintiff bars are starting to pay attention. California leads the way… in enriching corrupt lawyers nationwide.
Just as in the oral arguments concerning the vaccine mandates, Justice Sotomayor once again showed herself uninformed and using spoon-fed information to form her questions. She argued with the counsel for Viking, Paul D. Clement, that the company was seeking to destroy the state’s ability to enforce its labor law violations.
SOTOMAYOR: That’s what you’re banking on. You’re banking on destroying the state’s mechanism for enforcing its law –for enforcing labor law violations, aren’t you?
MR. CLEMENT: No, Justice Sotomayor, we’re not. Moriana can still bring her claims. Those claims are backed by attorneys’ fee provisions.
Mr. Clement held his own with the Justices’ questions, the conservative policymakers I spoke with felt good about the tenor of the arguments.
In the meantime, California business owners keep standing and keep fighting for the reform of PAGA.
My commentary and Rally highlights.