enforcement action

Pulling the Seat From Under PAGA Plaintiffs

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From the time of its enactment, the California Private Attorneys General Act of 2004 (“PAGA”) has been a thorn in the side of employers.  For example, the California Supreme Court insists PAGA actions are not class actions, but that hasn’t stopped aggrieved employees from seeking class-wide discovery.  And because PAGA permits employees to seek penalties for unconventional causes of action previously off-limits to private plaintiffs (such as the California Wage Order’s suitable seating requirement), employers must grapple with new uncertainties. 

But one aspect of PAGA that provides some relief to employers is the requirement that plaintiffs exhaust administrative remedies before filing a lawsuit.  To satisfy this this requirement, a plaintiff is required to send a notice to her employer and the Labor Workforce Development Agency (“LWDA”) setting forth the “specific provisions” of the Labor Code allegedly violated and explaining the “facts and theories to support the alleged violation” and then wait 65 days before filing suit.  This notice requirement has two purposes: (1) to give the LWDA sufficient information to determine whether the alleged violation justifies an investigation and/ or citation and (2) to put the employer on notice so that it may voluntarily cure the alleged violation. Oftentimes, however, plaintiffs’ notice letters are deficient because they fail to include sufficient facts and theories to inform the employer or the LWDA of the nature of the claims.  In such cases, plaintiffs have failed to exhaust administrative remedies. 

Judge Gonzalo Curiel’s recent decision in Gunn v. Family Dollar Stores, Inc., Case No.: 3:14-cv-1916-GPC-BGS (S.D. Cal. Dec. 2, 2016), reminds us of the standard that notice letters must meet.  Plaintiff Gunn’s notice letter advised the LWDA of his intent to file a PAGA action for violations of Wage Order 7-2001, Section 14, and “[s]pecifically . . . allege[d] that Family Dollar failed to provide suitable seats to Plaintiff and other current and former employees when the nature of their work reasonably permits the use of seats, in violation of California Labor Code section 1198 and Wage Order 7-2001, section 14.”  Judge Curiel held that such an allegation was insufficient to meet PAGA’s standards.  As he noted, plaintiffs must detail the “facts and theories” supporting their alleged violations. But here, the plaintiff’s allegations simply parroted the language of the underlying regulation, amounting to nothing more than a “string of legal conclusions” devoid of any of the facts or theories required by the Labor Code.  The court rejected the plaintiff’s contention that facts could be implied by his allegations (i.e., that the class of employees at issue would not include office employees because they have seats). 

The most notable aspect of Judge Curiel’s opinion, however, was his denial of the plaintiff’s request for leave to amend.  Although the court recognized leave to amend tends to be granted freely, he disagreed that applied to defective PAGA notices.  The court stated that “courts have granted PAGA claimants leave to amend only when the plaintiff’s complaint failed to adequately plead exhaustion, not when Plaintiff provided defective notice to the LWDA” (emphasis added).  Indeed, granting the plaintiff leave here would tacitly endorse a strategy that precludes the LWDA from receiving the information necessary “to intelligently assess the seriousness of the alleged violation,” thereby frustrating the purpose of PAGA’s statutory notice requirement.

While the unpublished opinion in Gunn will not likely mark a sea change in how courts treat PAGA actions, it is nevertheless a victory for California employers.  Those facing suitable seats claims, which are based on a notoriously ambiguous statute, may have the most to gain. 

 

Whistle While You Work: SEC Whistleblower Office Releases Its 2016 Annual Report

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The SEC released its Fiscal Year 2016 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 15, 2016. The Report analyzes the tips received over the last twelve months by the SEC’s Office of the Whistleblower (“OWB”), provides additional information about the whistleblower awards to date, discusses the OWB’s efforts to combat agreements that chill whistleblowers, and describes the OWB’s recent activity in the anti-retaliation arena.

Breakdown of Tips Received in FY 2016

The OWB reported a modest increase in the number of whistleblower tips and complaints that it received in 2016–4,218 tips in 2016 compared to 3,923 tips in 2015. Overall, the 2016 whistleblower tips were similar in number and type of whistleblower tips reported in 2015. As in 2015, the most common types of allegations in 2016 were Corporate Disclosure and Financials (22%), Offering Fraud (15%), and Manipulation (11%). Most whistleblowers, however, selected “Other” when asked to describe their allegations.

The OWB received whistleblower tips and complaints from all 50 states, the District of Columbia, and Puerto Rico. Domestically, the largest number of whistleblower complaints and tips were from California (547), New York (296), Florida (239), and Ohio (230). Additionally, the OWB received whistleblower tips from individuals located in 67 foreign countries. Of these, the countries from which the largest number of tips originated were Canada (68), the United Kingdom (63), Australia (53), the People’s Republic of China (35), Mexico (29), and India (20), with Germany, Ireland, and Taiwan being other countries from which the SEC received more than 10 tips.

Hittin’ The Trifecta: Latest Whistleblower Bounty Makes Three Awards In One Week

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On Friday, May 20th, the SEC’s Office of the Whistleblower issued an order determining that it would award two whistleblowers $450,000 for voluntarily providing original information to the agency that led to a successful enforcement action.  The two tipsters will split the award evenly.  While the order does not provide any specific facts related to the action or the parties, the SEC’s press release describes it as a “corporate accounting investigation.”

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Tipping the Scales: Whistleblower Awarded $3.5 Million For Information That Advanced SEC Investigation

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Last Friday, the SEC announced a whistleblower award of more than $3.5 million to an employee whose tip advanced an SEC investigation into the whistleblower’s company.  According to the Order, while the information the whistleblower provided did not cause the SEC to open a new line of inquiry, the information “significantly contributed” to the SEC’s ongoing investigation by focusing the Commission on a particular issue and providing the agency with additional settlement leverage during its negotiations with the company.

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Three’s Company: SEC Awards Nearly $2 Million to Whistleblower Trio

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On March 8, 2016, the Securities and Exchange Commission (SEC) issued an order awarding a trio of whistleblowers a bounty of almost $2 million.

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For Whom The Whistle Blows:  SEC Whistleblower Office Issues Its 2015 Annual Report

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The SEC released its Fiscal Year 2015 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 16, 2015. The Report analyzes the tips received over the last twelve months by the SEC’s Office of the Whistleblower (“OWB”), provides additional information about the whistleblower awards to date, and discusses the OWB’s efforts to combat retaliation against whistleblowers.

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Testing the Limits of Employee Privacy: Ninth Circuit Allows EEOC To Obtain Extensive Personal Information About Employees Despite Privacy Concerns

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The Ninth Circuit recently held that during the course of an investigation, the EEOC can force employers to produce “pedigree information” (i.e., name, telephone number, address, and Social Security number) of applicants and workers other than the charging party if the information is relevant to the underlying investigation.

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