On February 7, 2022 a California Court of Appeal issued its decision in Hutcheson v. The Superior Court of Alameda County (UBS Financial Services, Inc.). The case addresses the relation back doctrine in the context of a Private Attorneys General Act of 2004 (the “PAGA”) lawsuit, and will have important consequences for PAGA cases moving forward.
The original Complaint in Hutcheson was filed by an employee named Larry Van Steenhuyse. Mr. Steenhuyse worked for UBS Financial Services, Inc. as a financial advisor, and he gave notice to the Labor Workforce and Development Agency and UBS of his intention to seek penalties under the PAGA for UBS’ alleged Labor Code violations on December 22, 2017 (the specifics of the alleged violations are not important here). Van Steenhuyse filed his civil Complaint on February 26, 2018, after the LWDA failed to respond or investigate his notice letter within the required 65-day period.
Andrew Hutcheson also worked for UBS as a financial advisor, and he too gave notice to UBS and the LWDA of his intention to seek penalties under the PAGA for UBS’ alleged Labor Code violations. Hutcheson’s claims were duplicative of those brought by Steenhuyse. Hutcheson submitted his notice to the LWDA on April 18, 2018. He then waited until February 2019 to file a civil Complaint against UBS. Both Hutcheson and Van Steenhuyse filed their Complaints in Alameda County Superior Court.
In March 2019, Hutcheson filed a motion to intervene in Van Steenhuyse’s lawsuit and replace Van Steenhuyse as the named-plaintiff. The parties then agreed to the filing of an amended Complaint that added Hutcheson to Van Steenhuyse’s lawsuit and dismissed Van Steenhuyse as a plaintiff. The parties could not, however, agree on the applicable limitations period for the lawsuit or whether the doctrine of relation back would apply.
Hutcheson took the position that the statute of limitations should date back to December 22, 2016, which was one year before Van Steenhuyse filed his letter with the LWDA, relying on the relation back doctrine. UBS argued that Hutcheson could only seek penalties dating back to December 19, 2017, one year and 65 days before he filed his own lawsuit. UBS moved for summary adjudication on the proposed liability period for the lawsuit on the grounds that the relation back doctrine did not apply to extend the liability period for Hutcheson’s representative claims. The trial court agreed with UBS and granted the motion. The trial court presumed that the general requirements for the relation back doctrine were met, but granted the motion for summary adjudication because it reasoned the relation back doctrine could not apply to PAGA claims as it would frustrate PAGA’s notice requirements to the LWDA and the employer.
Hutcheson filed a petition for a writ of mandate that was initially denied, but later granted after he appealed to the California Supreme Court. Hutcheson’s writ was granted on the narrow issue of whether, under the specific facts of the case, the relation back doctrine applied to a PAGA claim. The Court of Appeal held that it does, and reversed the trial court’s grant of summary adjudication and entered an order denying UBS’ motion. Specifically, the Court of Appeal relied on two factors in the case that favored applying the relation back doctrine: (1) the State of California, through the LWDA, was the real party in interest in the case (not Hutcheson or Van Steenhuyse); and (2) Hutcheson would have recovered under the broader liability period had Van Steenhuyse prevailed in his case. Indeed, neither the LWDA nor Hutcheson stood to recover more if the relation back doctrine was applied than what Van Steenhuyse would have potentially recovered had he not dropped out of the lawsuit. Importantly, Hutcheson had filed his own notice with the LWDA and filed a separate civil lawsuit alleging PAGA claims, thereby complying with PAGA’s exhaustion and notice requirements. Accordingly, the court held that both individuals had standing under the PAGA to bring their claims, and not applying the relation back doctrine would frustrate PAGA’s purpose of allowing aggrieved employees to recover penalties for Labor Code violations. The court relied on a series of recent appellate and California Supreme Court decisions that have taken an expansive view of the PAGA when explaining its reasoning.
The Court of Appeal also rejected the employer’s argument that applying the relation back doctrine would frustrate the administrative notice requirement of the PAGA. The court explained the notice requirement serves the dual purpose of giving the LWDA notice of the claims to allow it to investigate them and allowing the employer to respond. The court held the purpose of the administrative requirements would not be frustrated in a situation where the LWDA and employer had notice of the claims from both allegedly aggrieved employees for the full time period, and that the absence of language in the PAGA about the relation back doctrine did not mean it could not apply.
In conclusion, the Court of Appeal held that, where a trial court concludes the three factors of the relation back doctrine are met, there is nothing in PAGA’s language or statutory scheme that prevents its application to a later-substituted plaintiff. This represents yet another example of California courts expanding the reach and scope of the PAGA, and employers should continue to be mindful of courts’ broad approach when litigating these claims because the application of the relation back doctrine may extend an employer’s liability period by additional months or years if the employer faces multiple successive PAGA lawsuits.