Opinion
H048968
07-08-2022
ALEXANDER CHARLES et al., Plaintiffs and Respondents, v. VARSITY TUTORS LLC, Defendant and Appellant.
NOT TO BE PUBLISHED
(Santa Clara County Super. Ct. No. 19CV347249)
LIE, J.
In this representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) (PAGA), defendant Varsity Tutors LLC (Varsity) appeals an award of $7,055 in discovery sanctions. Varsity had unsuccessfully opposed as "premature" efforts by plaintiff tutors Alexander Charles and Henry Mulak (collectively, Plaintiffs) to compel production of contact information for other workers potentially aggrieved by Varsity's alleged Labor Code violations. In imposing sanctions, the trial court concluded that Varsity lacked substantial justification for delaying its compliance with what the California Supreme Court has deemed the "essential first step to prosecution of any representative action." (Williams v. Superior Court (2017) 3 Cal.5th 531, 544 (Williams).) We affirm.
I. BACKGROUND
In the operative first amended complaint, Plaintiffs sought civil penalties under PAGA on behalf of themselves and "other aggrieved employees" of Varsity for alleged Labor Code violations, including the failure to pay minimum wage, overtime, and reimbursement of necessary employee expenditures; intentional misclassification of employees as independent contractors; failure to provide timely, accurate, itemized wage statements; failure to provide meal and rest breaks; and requiring employees to waive all rights to pursue any dispute on a representative basis. Plaintiffs alleged that Charles exhausted the administrative prefiling requirements by sending a notice to the Labor and Workforce Development Agency (LWDA).
Plaintiffs served Varsity with form interrogatories, requests for document production, and requests for admission. Varsity responded principally with objections.After more than a year, the parties were unable to achieve more than a stipulated schedule for litigating the discovery dispute. Plaintiffs accordingly filed a motion to compel further responses, and Varsity filed a competing motion to establish the sequence and timing of discovery under Code of Civil Procedure section 2019.020.
Varsity objected that plaintiffs' discovery was "premature" and that "the term[s] 'VARSITY TUTORS' . . . and 'TUTORS' [are] overbroad, vague, ambiguous and thus unintelligible."
Varsity in the interim petitioned, unsuccessfully, for a stay of all proceedings pending arbitration of another tutor's claims, including by petition for writ of mandate that was denied by this court.
Plaintiffs argued that Varsity was required by Williams, supra, 3 Cal.5th 531 to produce contact information for potentially aggrieved employees statewide, subject to notice under Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554. Asserting that Varsity lacked substantial justification for its refusal to produce the required information, Plaintiffs also sought monetary sanctions of at least $17,799 under Code of Civil Procedure sections 2023.030, 2030.290, and 2031.300.
The "opt out" notice approved in Belaire-West required the notified employees to object in writing in order to prevent information about them from being disclosed to plaintiffs.
For its part, Varsity argued that the trial court should defer "PAGA[-] wide/representative discovery" until after discovery "as to whether Plaintiffs have even been subject to predicate Labor Code violations." Despite the age of the litigation, Varsity conceded its efforts to propound such discovery were "still in the beginning stages," but it asserted that "such discovery may demonstrate that Plaintiffs' claims are subject to summary adjudication or summary judgment for . . . lack of standing." Varsity postulated that "[u]pon completion of this discovery, Plaintiffs may not be able establish that they are aggrieved for PAGA purposes . . . . Upon further discovery, it may become clear that, even if Plaintiffs are themselves aggrieved, . . . they are not similarly aggrieved to other tutors or that they are only similarly aggrieved to a limited subset of California tutors." This anticipated possibility, Varsity argued, would moot the need for "broad and time-consuming" PAGA discovery of other tutors' contact information, because Plaintiffs' experiences varied from those of other tutors, and Mulak's noncompliance with administrative prefiling requirements barred him (though not Charles) from acting as a PAGA representative.
The trial court issued a written order in which it denied Varsity's motion, granted in part Plaintiffs' motion to compel, and granted in part Plaintiffs' requests for sanctions, directing Varsity to pay Plaintiffs monetary sanctions in the amount of $7,055.
Varsity timely appealed the award of monetary sanctions.
Varsity unsuccessfully petitioned for a writ of prohibition in this court, challenging the trial court's order compelling further responses and denying its motion under Code of Civil Procedure section 2019.020, subdivision (b). In this appeal, the parties contest only the determination that an award of sanctions was proper. Neither party takes issue with the amount fixed by the trial court.
II. DISCUSSION
Having unsuccessfully opposed plaintiffs' motion to compel, Varsity was subject to sanctions absent "substantial justification" for resisting production of contact information for potentially aggrieved employees. (See Code Civ. Proc., §§ 2023.010, subd. (h), 2023.030, subd. (a), 2030.300, subd. (d), 2031.310, subds. (h), (j) [trial court "shall impose" monetary sanction on party who unsuccessfully opposes motion to compel unless losing party "acted with substantial justification"].) Varsity thus bore the burden of providing a justification that is "clearly reasonable because it is well grounded in both law and fact." (Doe v. United States Swimming, Inc. (2011) 200 Cal.App.4th 1424, 1434 (United States Swimming); accord Kwan Software Engineering, Inc. v. Hennings (2020) 58 Cal.App.5th 57, 75; Padron v. Watchtower Bible & Tract Society of New York, Inc. (2017) 16 Cal.App.5th 1246, 1269.) Reviewing the award for abuse of discretion (United States Swimming, supra, 200 Cal.App.4th at p. 1435), we discern no error: Varsity's asserted justification for limiting or postponing discovery was foreclosed by Williams.
A. Scope of Discovery in PAGA Actions
In Williams, the California Supreme Court "resolve[d] issues of first impression concerning the appropriate scope of discovery in a PAGA action." (Williams, supra, 3 Cal.5th at p. 540.) Under Williams, "the default position" is that the contact information for alleged aggrieved employees is "within the proper scope of discovery, an essential first step to prosecution of any representative action." (Id. at p. 544, italics added.) The high court reasoned that such employees are both percipient witnesses to the alleged illegalities and also intended beneficiaries of the litigation, the outcome of which would be binding on them. (Id. at pp. 547-549.) The high court expressly rejected the trial court's conditioning such initial discovery on a PAGA plaintiff first establishing standing: "to show the merits of one's case has never been a threshold requirement for discovery in individual or class action cases; it is not a threshold requirement" here. (Id. at p. 558.) A PAGA defendant's entitlement to assert a plaintiff's lack of standing as an affirmative defense and to litigate standing by motion for summary adjudication or summary judgment does not entitle it to resist discovery until a representative plaintiff establishes standing. (Id. at pp. 558-559.) To impose a preliminary proof requirement before permitting discovery of other workers' contact information would "undercut the clear legislative purpose[]" of "advanc[ing] the state's public policy of affording employees workplaces free of Labor Code violations" by deputizing aggrieved employees to prosecute claims for civil penalties. (Id. at p. 546.)
The Williams Court left the door open to trial court orders "limit[ing] or postpon[ing] a representative plaintiff's access to contact information for those he or she seeks to represent": such orders may be proper "in a particular case" where there is "special reason" to do so. (Williams, supra, 3 Cal.5th at p. 544.) For example, if the employer resisting discovery demonstrated undue burden or the discovery device in question was subject to a statutory good cause requirement, a trial court could consider requiring a representative plaintiff to establish some merit to his or her personal claim and/or provide reasons to be certain others had similar claims. (Id. at p. 552.) But "the default position" remains that plaintiffs asserting PAGA claims be accorded the means to contact other workers potentially aggrieved. (Id. at p. 544.)
B. Analysis
Varsity contends that its discovery positions were substantially justified because they were addressed to "novel" legal questions regarding the proper timing and scope of PAGA discovery. Varsity frames the question as" 'what showing might suffice to warrant a court order sequencing discovery' in a PAGA representative action[?]" In purporting to answer that question in the trial court, Varsity attempted no such showing but argued that Williams did not categorically foreclose delaying PAGA discovery until after Varsity had challenged plaintiffs' standing. Rather than establish a "special reason" (Williams, supra, 3 Cal.5th at p. 544) that would make prohibitive or unreasonable the "first[-]step" production of contact information for potentially aggrieved workers, Varsity instead relied on a bare hypothesis that a challenge to plaintiffs' standing might- depending on the outcome of its own "beginning" discovery efforts-prove successful. Similarly, on appeal, Varsity also suggests that its reasons, special or otherwise, for seeking to delay compliance are immaterial: in Varsity's view, the very notion of sequencing discovery in PAGA litigation-untethered to the particulars of any case-is novel unto itself. As we will explain, Varsity's discovery positions lacked substantial justification because Varsity offered no factual basis for its claim that the present discovery dispute was not controlled by the plain holding of Williams.
As a threshold matter, we reject Varsity's framing of the question. The issue before the trial court was whether Varsity-on the record it developed-had furnished substantial justification for its failed argument that sequencing was appropriate in the case at hand, not whether Williams in the abstract contemplated that sequencing might be permissible upon a showing Varsity never undertook. That Williams allowed for the possibility of a PAGA defendant showing a "special reason" in "a particular case" (Williams, supra, 3 Cal.5th at p. 544) that might warrant an alternative sequence of discovery does not signify that any sequencing motion or opposition to a motion to compel would be substantially justified, no matter how perfunctory. Accordingly, the rationale underlying Varsity's requested sequence was critical to whether it could avoid sanctions.
On the merits, the trial court properly decided that Varsity's sequencing proposal lacked substantial justification because Varsity identified no case-specific reason that could support limiting or postponing PAGA discovery. (Williams, supra, 3 Cal.5th at p. 544.) It is clear, after Williams, that a defendant's desire to test a PAGA plaintiff's standing before responding to discovery is not, by itself, a sufficient basis to limit or postpone PAGA discovery. (Id. at pp. 552, 558-559.) Varsity relied exclusively on conclusory invocations of "judicial economy" and the utility of "preserv[ing] the resources of . . . the parties" to be promoted by first testing Plaintiffs' PAGA standing before engaging in PAGA discovery. But Varsity reads too much into Williams' acknowledgment that "in a particular case there may be special reason to limit or postpone a representative plaintiff's access to contact information." (Id. at p. 544.) The generic possibility of prevailing on the merits is not a "special reason" in a "particular case" for resisting timely compliance with the "default" course of discovery. (Id. at p. 544.) After Williams, Varsity's position was without substantial justification, absent a showing of need over and above the circumstances the Supreme Court there considered. As the trial court recognized, the contested motions "turn[ed] on an issue that [was] neither novel nor unsettled: a plaintiff asserting Labor Code violations on behalf of the State in a PAGA action is entitled to basic contact information discovery without the imposition of any proof requirement. . . . [T]he Supreme Court in Williams . . . settled that issue."
Varsity's contrary argument notwithstanding, the eventual dismissal of Mulak's PAGA claims is not material to our review. The discovery at issue was propounded jointly by both Charles-as to whom Varsity could raise no exhaustion argument-and Mulak. Assuming that the merits of Varsity's challenge to the pleadings were a proper consideration in postWilliams discovery litigation, Charles remained entitled to compel Varsity's further response and seek sanctions for its abuses. And Varsity offers no authority for its further suggestion that the adjudication of Mulak's claims on the pleading retroactively voided his right to collect sanctions previously ordered. (See Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App.4th 939, 956 [the absence of cogent legal argument or citation to authority allows this court to treat a contention as waived].)
The similarities between Williams and the present case are compelling. As in Williams, Plaintiffs alleged representative PAGA claims based on statewide Labor Code violations visited upon themselves and other aggrieved employees. (Williams, supra, 3 Cal.5th at p. 542-543.) As in Williams, Plaintiffs propounded an interrogatory seeking contact information for the other aggrieved employees. (Id. at p. 539.) As in Williams, Varsity opposed Plaintiffs' efforts to secure contact information on the ground that Plaintiffs may not be able to pursue a representative action due to substantive defects in their claims. (See id. at pp. 544-552.) And as in Williams, Varsity failed to provide the trial court with evidence of the burden that complying with Plaintiffs' discovery efforts would entail; Varsity did not contend that providing contact information discovery would be unduly burdensome. (Id. at p. 552.)
Similarly, we see no defect in the trial court's finding that Varsity's proposed "sequencing" order would conflict with the statutory scheme to an even greater extent than the order reversed in Williams. As the trial court observed: "First, the Williams order allowed some discovery of contact information, while [Varsity] proposes to preclude any such discovery. Second, the gating events for obtaining more discovery were, in Williams, within the control of the plaintiff (producing the plaintiff for deposition and making a renewed motion for discovery), while here [p]laintiffs cannot trigger or expedite the gating event ([Varsity's] motion for summary judgment)." The trial court further noted that Varsity's approach to the litigation evinced no movement toward this gating event: "[Varsity] has not identified a timeframe in which it would move for summary judgment, or explained why it has not already done so. . . . [Varsity] does not need this [sequencing] order to move for summary judgment. [Varsity] is free to make a summary judgment motion at any time, to argue that Plaintiffs cannot establish standing-subject, however, to the provisions of Code of Civil Procedure section 437c(h)." This finding is supported by the record of Varsity's efforts to stay the litigation entirely, and the corollary absence of any indication that Varsity had commenced any efforts to challenge plaintiffs' standing when the trial court ruled on the pertinent motions.
Varsity's reliance on Union Mutual Life Insurance Company v. Superior Court (1978) 80 Cal.App.3d 1 (Union Mutual), Diepenbrock v. Brown (2012) 208 Cal.App.4th 743 (Diepenbrock), and Yelp Inc. v. Superior Court (2017) 17 Cal.App.5th 1 (Yelp) is misplaced. Each of these cases involved discovery disputes that turned on the resolution of issues that the courts recognized as novel, which were specific to the claims to be litigated. (See Union Mutual, supra, 80 Cal.App.3d at pp. 11-15 [noting "lack of certainty in the law on the subject of national class actions"]; Diepenbrock, supra, 208 Cal.App.4th at p. 749 [noting "conflicting legal authority on an unsettled issue" of the scope of the exception to the marital privilege]; Yelp, supra, 17 Cal.App.5th at p. 21 [noting" 'evolving' and 'unsettled' area of law" on defendant's assertion of third-party Yelp reviewer's First Amendment rights].)
The fundamental difference between the Union Mutual line of cases cited above and the instant case is that the Supreme Court in Williams has already provided extensive guidance on the very issue contested by Varsity-the proper timing and scope of contact information discovery in PAGA cases. (See Williams, supra, 3 Cal.5th at pp. 542-559.) It is true that Williams reserved some questions for another day. But its definitive holding dispelled any novelty in Varsity's generic resistance to "default" PAGA discovery. Accordingly, the trial court acted within its discretion in determining, on the record presented, that Varsity failed to carry its burden of supplying a justification that is clearly reasonable because it is well grounded in both law and fact. (See United States Swimming, supra, 200 Cal.App.4th at p. 1434.)
Finally, Varsity is not helped by its contention, made for the first time on appeal, that the trial court erred by failing to weigh the actual or potential abuse of the PAGA procedure against the benefits that might be gained through PAGA discovery. For this new theory, Varsity relies on CVS Pharmacy, Inc. v. Superior Court (2015) 241 Cal.App.4th 300 (CVS). In CVS, a decision that predates Williams, the Court of Appeal ruled that the trial court was required to weigh the actual or potential abuse of the class action procedure against the benefits that might be gained through the precertification discovery in deciding whether to permit such discovery. (CVS, supra, 241 Cal.App.4th at p. 307.) That holding has no application in a PAGA action. Certification is not required in PAGA cases, so there can be no delineation between precertification and postcertification phases. (See, generally, Arias v. Superior Court (2009) 46 Cal.4th 969, 980-987.) To the extent actual or potential abuse may in certain cases constitute a "special reason" for limiting or postponing PAGA discovery under Williams, Varsity neither argued the issue at the trial court nor offered evidence of an abuse of the representative action process. Even if Varsity had asserted this argument below, the record supplies no evidentiary basis for the proposition that plaintiffs were abusing the representative action process. Varsity's implication to the contrary falls short of a justification that is "clearly reasonable" because it is "well grounded in both law and fact." (See United States Swimming, supra, 200 Cal.App.4th at p. 1434.)
III. DISPOSITION
The trial court's order granting Plaintiffs' $7,055 in monetary sanctions against Varsity is affirmed. Plaintiffs are awarded their costs on appeal.
WE CONCUR: GREENWOOD, P.J., GROVER, J.