October 29, 2020 Top Story

Settlement Does Not Bar Private Attorney General Suit

Employer may not end-run state enforcement action through individual settlement

By Mark A. Flores

An employee retains standing to seek civil penalties under the California Private Attorneys General Act (PAGA) even after settling his or her individual employment claims based on the same set of facts. In a case of first impression, the California Supreme Court made clear in Kim v. Reins International California, Inc. that PAGA does not operate like a class action because the parties and remedies are different. In a PAGA suit, the employee represents the state rather than other individuals and seeks to remediate and deter legal violations via statutory penalties rather than providing individual relief. Citing the statutory text and legislative purpose, the court concluded that standing under PAGA did not require an employee to have an unredressed actual injury.

The restaurant training manager claimed to be misclassified as exempt from overtime laws

The restaurant training manager claimed to be misclassified as exempt from overtime laws

Credit: TShum | iStockphoto by Getty Images

The Settlement of the Individual Claims

Justin Kim, a training manager for restaurant operator Reins International California, Inc., filed a putative class action in state court alleging that he and other training managers had been misclassified as exempt from overtime laws, in violation of the California Labor Code. The operative complaint also sought civil penalties under PAGA. The parties settled all of Kim’s individual non-PAGA claims, which the trial court dismissed along with the class claims. Reins then moved for summary adjudication on the remaining PAGA cause of action, arguing Kim was no longer an “aggrieved employee” with the requisite standing to sue.

The trial court entered judgment for Reins, reasoning that since the settlement had already compensated him for his injuries, his rights were “completely redressed.” The appellate court affirmed the judgment.

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