©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 119 because to deny tolling in a California action would encourage a multiplicity of actions before the order denying class certification is final.416 But then the California Supreme Court granted review and transferred the matter back to the Court of Appeal with directions to vacate the opinion and to reconsider the case in light of the U.S. Supreme Court’s opinion in China Agritech, Inc. v. Resh.417 China Agritech held that, under federal law, successive class actions may not be filed after the original limitations period has expired.418 The Court of Appeal, on remand from the California Supreme Court, concluded that this federal authority is not inconsistent with California procedures and that applying the federal standard would not “result in unfairness under California law” and would contribute to a more “efficient and economical class action procedure.”419 Moreover, the plaintiff’s preference—tolling limitations in successive class claims—could result in endless tolling so long as new named plaintiffs successively come forward to promptly file new class complaints whenever class certification is denied, and there is “no basis under California law for potentially unlimited tolling” of limitations periods for class claims.420 In Montoya v. Ford Motor Company (2020), the California Court of Appeal reached the same conclusion and applied the holding in China Agritech. There, a plaintiff filed a class action lawsuit six years after the statute of limitations had expired.421 The plaintiff argued that his class action claims were timely, based on tolling of the earlier two class actions—certification was denied in the first class action, and a class action settlement was reached in the second case where the plaintiff opted out.422 In resolving the tolling issue, Montoya agreed with China Agritech and concluded that “multiple tolling periods cannot be ‘stacked’ here to extend a statute of limitations.”423 Montoya noted that both federal and state case authorities have uniformly held that tolling for individual claims may be available, but tolling for class action claims is not available.424 Montoya explained: “Tolling during a second class action–particularly this second class action– defeats the objectives of judicial economy and efficiency that were the foundations of American Pipe. It overlooks the problem of endless tolling that informed and suffused the China Agritech opinion.”425 5.15 PAGA Civil Penalty Claims for Labor Code Violations California’s Labor Code Private Attorneys General Act of 2004 (PAGA) is a bane to employers and a boon to the plaintiffs’ bar. PAGA is perhaps the California peculiarity par excellence. It has no precise precedent or analog in the American legal system, although recently other states have contemplated their own similar statutes. PAGA’s stated purpose is to enlist employee plaintiffs to stand in for the California Labor Commissioner to enforce the Labor Code, on the rationale that the Labor Commissioner lacks the resources to enforce the law and that, without PAGA, the level of law enforcement and the level of civil penalties would fail to deter employers from breaking labor laws. (For those who remember their maritime history, PAGA may bring to mind the letter of marque—a governmental license issued to enterprising ship captains that authorized them to fit out an armed vessel to capture enemy merchant shipping, through acts that otherwise would constitute piracy. Today’s PAGA pirates are enterprising plaintiffs’ lawyers who use PAGA as a vehicle to extract large settlements that often depend on hypertechnical, trivial violations of the Labor Code. Indeed, one prominent PAGA plaintiffs’ lawyer has a personalized license plate—”MR PAGA”—on his Rolls Royce.) PAGA aims to fix these perceived problems by authorizing employees to sue in the Labor Commissioner’s stead to seek civil penalties that go to the state and to “aggrieved employees,” with 75% of penalties going to the state and 25% of penalties going to the aggrieved employees.426 As interpreted by California courts, PAGA permits any current or former employee of a California company to sue the company on behalf of all “aggrieved employees.” Even though PAGA has a one-year limitations period, aPAGA action can seek massive civil penalties for virtually all violations of the Labor Code—no matter how trivial
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