On September 12, 2022, the California Court of Appeal, 4th District, issued its decision in Acevedo v. CashCall, Inc., 2022 WL 4129106 (Cal. Ct. App. Sept. 12, 2022), affirming the lower court's decision dismissing a Private Attorneys General Act (PAGA) lawsuit under claim preclusion principles based on a settlement in a substantially similar lawsuit against the same employer. The Court rejected the plaintiff's claim that the prior plaintiff's failure to exhaust administrative remedies invalidated the prior judgment, holding that exhaustion of administrative remedies is a procedural-not a jurisdictional-requirement.
The plaintiff in Acevedo brought a PAGA claim for failure to pay overtime wages, failure to provide rest breaks and a derivative final pay claim. The employer moved for judgment on the pleadings, arguing that the lawsuit was barred by the settlement in a substantially similar action (the "Le" action) filed by another former employee. The trial court agreed, holding that claim preclusion barred Acevedo from litigating PAGA claims that were released in Le, and dismissed the action with prejudice.
On appeal, Acevedo argued that Le's prefiling letter to the Labor & Workforce Development Agency (LWDA) was defective, so Le never properly exhausted her administrative remedies. Further, Acevedo argued that this failure deprived the trial court of jurisdiction over Le's claims, so the Le judgment was void. The Court of Appeal disagreed, explaining that any possible defects in Le's prefiling notice letter to LWDA were procedural, not jurisdictional. Thus, the judgment was not void, but instead, was at worst a valid but voidable judgment-similar to when a defendant is not properly served with a summons.
Acevedo also argued that the judgment in Le was overbroad because the release was broader than the claims pled in the operative complaint. The Court rejected this argument as well, siding with Amaro v. Anaheim Arena Mgmt., LLC, 69 Cal. App. 5th 521, 543 (2021), which permits the parties to a PAGA lawsuit to agree to a settlement that is broader than the pleadings, subject to Court approval. As this blog pointed out in discussing Amaro, the practical effect of this principle may be limited, because courts may be hesitant to approve settlements that go beyond the pleadings. (To read about the Amaro decision, click here.) However, it may provide a basis for a defendant to buy peace where additional PAGA claims are threatened or anticipated.
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