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Class Action Defense Cases-Arias v. Superior Court: California Court Holds State Unfair Competition Law (UCL) Representative Claims Must Be Brought As Class Action Because UCL Suits Must Comply With Class Action Statute

Because California’s Unfair Competition Law (UCL) Requires Compliance With State’s Class Action Statutes, UCL Representative Claims Must be Brought as Class Action Lawsuits California Court Holds, but PAGA (Private Attorney General Act) Representative Actions under Labor Code need not Satisfy Class Action Pleading Requirements

Plaintiff filed suit in California state court against his employer, Angelo Dairy, and others alleging, inter alia, that he was not paid overtime and did not receive meal and rest breaks required by law; the action purported to be a representative action under California’s Unfair Competition Law (UCL) and under the Private Attorney General Act (PAGA) contained in the state’s labor code. Arias v. Superior Court, ___ Cal.App.4th ___, 63 Cal.Rptr.3d 272, 273 (Cal.App. 2007). Defense attorneys moved to strike the representative claims on the ground that the complaint did not meet the requirements for pleading a class action, id. The trial court agreed and dismissed the complaint. The California Court of Appeal affirmed, holding that “the UCL requires that a representative claim be brought as a class action because the UCL requires compliance with the class action provisions” of state law, id.

The appellate court noted that while California’s UCL previously permitted a private party to file representative or class action lawsuits even if he or she had not suffered any injury, the passage of Proposition 64 in 2004 materially amended the UCL so that it “now requires that a plaintiff have suffered damages,” and additionally requires compliance with California’s class action statute, Code of Civil Procedure section 382, for representative actions. Arias, at 274. Section 382 “is the primary statutory authority for class actions in California,” id., at 275 (citations omitted). Thus, while plaintiff’s lawyer correctly noted that Proposition 64, on its face, “contains no requirement that a representative suit be brought as a class action,” the Court of Appeal held that Proposition 64 does “require[] that the claim comply with section 382, which is commonly understood to authorize class actions.” Id. Based on the appellate court’s statutory construction analysis, the amendments to the UCL occasioned by the passage of Proposition 64 necessarily require compliance with the requirements for pleading a class action under section 382 in order to pursue a representative action, id., at 275-78. It therefore affirmed the trial court order striking the UCL representative claims, holding that plaintiff “must amend his complaint to allege them either individually on his own behalf, or as a class action.” Id., at 278.

The Court of Appeal reached a different conclusion as to the PAGA claim, however, holding that “the Labor Code statute authorizing a private enforcement action is an exception to the class action requirement.” Arias, at 278. The appellate court explained at page 279 that “[b]oth the language of the PAGA and the express intent of the Legislature indicate that an aggrieved employee may bring an action on behalf of other employees without complying with the requirements of a class action.” Thus, representative actions under PAGA may be pursued without complying with the pleadings requirements applicable to class action complaints, id., at .279. The Court of Appeal therefore issued a writ of mandate directing the trial court to vacate its order dismissing the PAGA claims for failure to plead the requirements of a class action, id., at 280.

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