Kim v. Reins Internat. Cal., Inc.
9 Cal.5th 73
| Cal. | 2020

Background

  • PAGA deputizes "aggrieved employees" to recover Labor Code civil penalties on the State's behalf; an aggrieved employee is any person employed by the alleged violator and against whom one or more violations were committed (Lab. Code § 2699(c)).
  • Justin Kim sued Reins International alleging wage/overtime, meal/rest, wage statement, waiting-time, UCL, and PAGA claims; Reins compelled arbitration of Kim's individual claims but conceded PAGA claims could not be waived and stayed the PAGA claim.
  • Reins served a Code of Civil Procedure § 998 offer settling Kim’s individual claims for $20,000 (fees and costs); Kim accepted and dismissed the individual claims while expressly preserving the PAGA cause of action.
  • After the arbitration settlement, Reins moved for summary adjudication arguing Kim lacked PAGA standing because his individual injury had been redressed; the trial court granted judgment for Reins and the Court of Appeal affirmed.
  • The California Supreme Court reversed: settlement of a plaintiff’s individual claims does not extinguish PAGA standing, and claim-preclusion arguments fail where the settlement expressly excluded the PAGA claim.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether settling and dismissing a plaintiff's individual Labor Code claims eliminates PAGA standing Kim: PAGA standing is defined by statutory terms (employed by violator and subject to one or more violations); settlement of remedies does not erase the underlying violations or statutory standing Reins: PAGA standing depends on a continuing, redressable injury; once individual injury is compensated, plaintiff is no longer an "aggrieved employee" Held: No. Standing tracks the statutory definition of "aggrieved employee" (violation committed), not whether individual damages remain unsettled; settlement of individual claims does not defeat PAGA standing
Whether dismissal/settlement of individual claims precludes the PAGA claim by claim preclusion or retraxit Kim: The settlement expressly excluded the PAGA claim; parties may limit the preclusive effect of dismissals Reins: Settlement/dismissal of individual claims operates as a judgment on the merits and bars the PAGA action Held: No. Preclusion fails because the PAGA cause was expressly preserved; preclusion doctrine generally applies to later suits, and here all claims were joined and the PAGA cause remained pending

Key Cases Cited

  • Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (2014) (PAGA actions are the employee as the State's proxy; PAGA claims are representative enforcement actions)
  • Arias v. Superior Court, 46 Cal.4th 969 (2009) (PAGA civil penalties largely go to the LWDA; PAGA is qui tam–like and advances public enforcement)
  • Williams v. Superior Court, 3 Cal.5th 531 (2017) (statutory notice to LWDA allows agency to decide resource allocation; interpret PAGA remedially)
  • Amalgamated Transit Union, Local 1756 v. Superior Court, 46 Cal.4th 993 (2009) (unions lack PAGA standing because not "employed by" the violator)
  • Kirby v. Immoos Fire Protection, Inc., 53 Cal.4th 1244 (2012) (payment of a statutory remedy does not erase the existence of a Labor Code violation)
  • Raines v. Coastal Pacific Food Distributors, Inc., 23 Cal.App.5th 667 (2018) (absence of individual injury does not defeat a PAGA claim for civil penalties)
  • Lopez v. Friant & Associates, LLC, 15 Cal.App.5th 773 (2017) (PAGA claim is not derivative of an individual claim; injury requirement for individual relief is distinct from civil penalties)
  • Lu v. Hawaiian Gardens Casino, Inc., 50 Cal.4th 592 (2010) (no private right of action under certain Labor Code sections, highlighting PAGA's enforcement role)
  • ZB, N.A. v. Superior Court, 8 Cal.5th 175 (2019) (analysis of when private actions are available under wage statutes)
  • Boeken v. Philip Morris USA, Inc., 48 Cal.4th 788 (2010) (elements and purpose of claim preclusion doctrine)
  • DKN Holdings LLC v. Faerber, 61 Cal.4th 813 (2015) (claim preclusion arises when same cause, same parties, and final judgment on the merits exist)
  • Mycogen Corp. v. Monsanto Co., 28 Cal.4th 888 (2002) (res judicata promotes deciding all claims based on the same cause of action in a single suit)
  • Villacres v. ABM Industries Inc., 189 Cal.App.4th 562 (2010) (prior settlement can bar later PAGA claims when claims were litigable and could have been raised earlier)
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